EX-99.1 2 d716191dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

Peter Abram, Senior Vice President and CFO

Peter.Abram@faro.com, 407-333-9911

FARO Reports First Quarter 2014 Sales Growth of 12%

LAKE MARY, FL, April 29, 2014 – FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the first quarter ended March 29, 2014. Sales in the first quarter of 2014 increased 12.2% to $73.4 million, from $65.4 million in the first quarter of 2013. The Company reported net income increased to $5.0 million, or $0.29 per share, in the first quarter of 2014, from $4.6 million, or $0.27 per share, in the comparable period in 2013.

New order bookings for the first quarter of 2014 increased 9.8% to $70.9 million, from $64.6 million in the first quarter of 2013.

First quarter gross margin at 54.6%, was lower than 56.3% in the first quarter of 2013. This was primarily driven by a write-down of laser scanner demonstration and service loaner inventory that became obsolete through the highly successful release of the Focus3D and X330/X130 laser scanners. Partially offsetting this charge was favorable pricing and related gross margin arising from the Tracker and the new Laser Scanner product lines.

The Company’s operating margin for the first quarter was 9.5%, compared with 8.7% in the first quarter of 2013. Operating margin was favorably impacted by top line sales growth, solid cost management, and timing of planned R&D expenditures.

“The first quarter was a strong start to the new fiscal year, as our results were in-line with our internal expectations,” stated Jay Freeland, FARO’s President & CEO. “Customer demand in all three regions was solid, driving double-digit sales growth in the Americas and Asia and an improving European market where our orders achieved double-digit growth. While we continue to exercise prudent cost control across all departments, in 2014 we are accelerating our investments in R&D, creating new products for our early stage markets such as Architecture, Engineering and Construction and Forensics as well as our primary markets such as Aerospace, Automotive, and Heavy Industrial. We remain diligent in developing new ways to disrupt and transform the marketplace.”


This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, such as statements about FARO’s growth, demand for and customer acceptance of FARO’s products, anticipated improvement in the markets in which FARO operates, and FARO’s product development and product launches. Statements that are not historical facts or that describe the Company’s plans, objectives, projections, expectations, assumptions, strategies, or goals are forward-looking statements. In addition, words such as “continue,” “are,” “remain,” “will,” and similar expressions or discussions of FARO’s plans or other intentions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to various known and unknown risks, uncertainties, and other factors that may cause actual results, performances, or achievements to differ materially from future results, performances, or achievements expressed or implied by such forward-looking statements. Consequently, undue reliance should not be placed on these forward-looking statements.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to:

 

  development by others of new or improved products, processes or technologies that make the Company’s products less competitive or obsolete;

 

  the Company’s inability to maintain its technological advantage by developing new products and enhancing its existing products;

 

  declines or other adverse changes, or lack of improvement, in industries that the Company serves or the domestic and international economies in the regions of the world where the Company operates and other general economic, business, and financial conditions; and

 

  other risks detailed in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Forward-looking statements in this release represent the Company’s judgment as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law.

About FARO

FARO is the world’s most trusted source for 3D measurement technology. The Company develops and markets computer-aided measurement and imaging devices and software. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes. The devices are used for inspecting components and assemblies, rapid prototyping, documenting large volume spaces or structures in 3D, surveying and construction, as well as for investigation and reconstruction of accident sites or crime scenes.

Approximately 15,000 customers are operating more than 30,000 installations of FARO’s systems, worldwide. The Company’s global headquarters is located in Lake Mary, FL; its European regional headquarters in Stuttgart, Germany; and its Asia Pacific regional headquarters in Singapore. FARO has other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, Portugal, India, China, Malaysia, Vietnam, Thailand, South Korea and Japan.


More information is available at http://www.faro.com.

Financial tables to follow:


FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

     Three Months Ended  

(in thousands, except share and per share data)

   March 29, 2014     March 30, 2013  

SALES

    

Product

   $ 59,822      $ 52,482   

Service

     13,552        12,888   
  

 

 

   

 

 

 

Total sales

     73,374        65,370   
  

 

 

   

 

 

 

COST OF SALES

    

Product

     25,153        21,339   

Service

     8,138        7,206   
  

 

 

   

 

 

 

Total cost of sales (exclusive of depreciation and amortization, shown separately below)

     33,291        28,545   
  

 

 

   

 

 

 

GROSS PROFIT

     40,083        36,825   

OPERATING EXPENSES:

    

Selling

     17,433        16,650   

General and administrative

     8,413        7,515   

Depreciation and amortization

     1,847        1,833   

Research and development

     5,430        5,125   
  

 

 

   

 

 

 

Total operating expenses

     33,123        31,123   
  

 

 

   

 

 

 

INCOME FROM OPERATIONS

     6,960        5,702   
  

 

 

   

 

 

 

OTHER (INCOME) EXPENSE

    

Interest income

     (17     (16

Other expense, net

     160        115   

Interest expense

     —          1   
  

 

 

   

 

 

 

INCOME BEFORE INCOME TAX EXPENSE

     6,817        5,602   

INCOME TAX EXPENSE

     1,841        1,028   
  

 

 

   

 

 

 

NET INCOME

   $ 4,976      $ 4,574   
  

 

 

   

 

 

 

NET INCOME PER SHARE - BASIC

   $ 0.29      $ 0.27   
  

 

 

   

 

 

 

NET INCOME PER SHARE - DILUTED

   $ 0.29      $ 0.27   
  

 

 

   

 

 

 

Weighted average shares - Basic

     17,205,892        17,009,773   
  

 

 

   

 

 

 

Weighted average shares - Diluted

     17,364,373        17,176,876   
  

 

 

   

 

 

 


FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share data)

   March 29,
2014
(unaudited)
    December 31,
2013
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 122,716      $ 124,630   

Short-term investments

     64,994        64,994   

Accounts receivable, net

     64,739        66,309   

Inventories, net

     50,238        48,940   

Deferred income taxes, net

     5,082        4,601   

Prepaid expenses and other current assets

     15,183        14,645   
  

 

 

   

 

 

 

Total current assets

     322,952        324,119   
  

 

 

   

 

 

 

Property and equipment:

    

Machinery and equipment

     38,079        36,924   

Furniture and fixtures

     7,072        6,888   

Leasehold improvements

     12,307        11,765   
  

 

 

   

 

 

 

Property and equipment at cost

     57,458        55,577   

Less: accumulated depreciation and amortization

     (40,516     (39,126
  

 

 

   

 

 

 

Property and equipment, net

     16,942        16,451   
  

 

 

   

 

 

 

Goodwill

     19,336        19,358   

Intangible assets, net

     8,273        8,112   

Service inventory

     20,345        19,033   

Deferred income taxes, net

     4,415        4,423   
  

 

 

   

 

 

 

Total assets

   $ 392,263      $ 391,496   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 10,381      $ 14,881   

Accrued liabilities

     18,533        20,133   

Income taxes payable

     31        1,690   

Current portion of unearned service revenues

     22,404        21,331   

Customer deposits

     2,289        2,910   

Current portion of obligations under capital leases

     6        8   
  

 

 

   

 

 

 

Total current liabilities

     53,644        60,953   

Unearned service revenues - less current portion

     13,608        13,414   

Deferred income tax liability, net

     1,233        1,171   

Obligations under capital leases - less current portion

     8        8   
  

 

 

   

 

 

 

Total liabilities

     68,493        75,546   
  

 

 

   

 

 

 

Commitments and contingencies

    

Shareholders’ equity:

    

Common stock - par value $.001, 50,000,000 shares authorized; 17,913,793 and 17,868,372 issued; 17,233,558 and 17,188,137 outstanding, respectively

     18        18   

Additional paid-in capital

     194,797        191,874   

Retained earnings

     130,845        125,867   

Accumulated other comprehensive income

     7,185        7,266   

Common stock in treasury, at cost - 680,235 shares

     (9,075     (9,075
  

 

 

   

 

 

 

Total shareholders’ equity

     323,770        315,950   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 392,263      $ 391,496   
  

 

 

   

 

 

 


FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

     Three Months Ended  

(in thousands)

   March 29, 2014     March 30, 2013  

CASH FLOWS FROM:

    

OPERATING ACTIVITIES:

    

Net income

   $ 4,976      $ 4,574   

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

    

Depreciation and amortization

     1,847        1,833   

Compensation for stock options and restricted stock units

     1,246        1,018   

(Net recovery of) provision for bad debts

     (120     274   

Deferred income tax (benefit) expense

     (410     1,162   

Change in operating assets and liabilities:

    

Decrease (increase) in:

    

Accounts receivable

     1,869        7,541   

Inventories, net

     (2,541     (1,299

Prepaid expenses and other current assets

     (539     (2,069

Income tax benefit from exercise of stock options

     (58     (808

(Decrease) increase in:

    

Accounts payable and accrued liabilities

     (6,103     (676

Income taxes payable

     (1,619     (1,658

Customer deposits

     (645     5   

Unearned service revenues

     1,274        376   
  

 

 

   

 

 

 

Net cash (used in) provided by operating activities

     (823     10,273   
  

 

 

   

 

 

 

INVESTING ACTIVITIES:

    

Purchases of property and equipment

     (2,124     (256

Payments for intangible assets

     (419     (494
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,543     (750
  

 

 

   

 

 

 

FINANCING ACTIVITIES:

    

Payments on capital leases

     (50     (63

Income tax benefit from exercise of stock options

     58        808   

Proceeds from issuance of stock, net

     1,619        3,049   
  

 

 

   

 

 

 

Net cash provided by financing activities

     1,627        3,794   
  

 

 

   

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

     (175     (1,952
  

 

 

   

 

 

 

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

     (1,914     11,365   

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

     124,630        93,233   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 122,716      $ 104,598   
  

 

 

   

 

 

 


FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

 

     Three Months Ended  

(in thousands)

   March 29, 2014     March 30, 2013  

Net income

   $ 4,976      $ 4,574   

Currency translation adjustments, net of tax

     (81     (3,429
  

 

 

   

 

 

 

Comprehensive income

   $ 4,895      $ 1,145