FARO Reports Fourth Quarter and Full Year 2012 Results

            FARO Reports Fourth Quarter and Full Year 2012 Results

PR Newswire

LAKE MARY, Fla., Feb. 27, 2013

LAKE MARY, Fla., Feb. 27, 2013 /PRNewswire/ --FARO Technologies, Inc.
(NASDAQ: FARO) today announced results for the fourth quarter ended December
31, 2012. Sales in the fourth quarter of 2012 increased 4.7% to $80.7
million, from $77.1 million in the fourth quarter of 2011. The Company
reported net income decreased to $7.8 million, or $0.46 per share, in the
fourth quarter of 2012, from $9.5 million, or $0.56 per share, in the fourth
quarter of 2011.

(Logo: http://photos.prnewswire.com/prnh/20110415/MM84316LOGO)

Fiscal 2012 sales were $273.4 million, an increase of 7.6% compared to fiscal
2011 sales of $254.2 million. Net income for fiscal 2012 was $23.0 million
compared to $23.4 million in fiscal 2011. The decline in net income was
attributable in part to legal fees of $3.7 million in fiscal 2012, compared
with $1.3 million in 2011, associated with the FCPA Monitor and the Nikon
Patent case, both of which were substantially and favorably resolved during
2012. Cash flow from operating activities for 2012 was $27.9 million,
compared to $8.7 million in 2011.

New order bookings for the fourth quarter of 2012 were $82.1 million, an
increase of $5.0 million, or 6.5%, compared to $77.1 million in the fourth
quarter of 2011. New order bookings for fiscal 2012 were $276.2 million, an
increase of 8.0% from $255.7 million in fiscal 2011.

"Performance in the fourth quarter and for the full year was solid in light of
the economic headwinds we faced in most of our end markets. Although customer
interest was strong throughout the year and our new products were well
received, deal closure rates were slower reflecting continued economic
uncertainty," stated Jay Freeland, FARO's President & CEO. 

Sales of the Focus Laser Scanner were particularly strong. Gross margins on
this product are lower than the Company's other products primarily because of
greater reliance on the distribution channel compared to the Company's other
products. However, those sales involve minimal associated sales and marketing
expenses. Overall gross margin for the fourth quarter of 2012 was 53.4%,
compared to 56.5% in the fourth quarter of 2011.

The Company's operating margin for the fourth quarter decreased to 13.9%,
compared to 16.7% in the fourth quarter of 2011 and included approximately
$0.4 million of professional fees related to the Company's patent litigation.

"Although our overall 2012 results were satisfactory, they did not meet our
expectations. In 2013, we anticipate continuing market uncertainty. To
address this and drive improved performance, we expect to continue to
strengthen our product portfolio, increase sales coverage around the world,
and tighten cost controls across the Company's operations," Freeland
concluded.

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 demand for its products, and its
future operating results and financial condition. 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 "intend," "believe,"
"will," "expect" 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:

  odevelopment by others of new or improved products, processes or
    technologies that make the Company's products obsolete or less
    competitive;
  oproduction delays caused by shortages of raw materials incorporated in the
    Company's products;
  othe cyclical nature of the industries of the Company's customers and
    material adverse changes in customers' access to liquidity and capital;
  odeclines 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 financing conditions;
  orisks associated with international operations, such as fluctuations in
    currency exchange rates, difficulties in staffing and managing foreign
    operations, political and economic instability, compliance with import and
    export regulations, and the burdens and potential exposure of complying
    with a wide variety of U.S. and foreign laws and labor practices;
  oother 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, 2011.

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.

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 offices in
Brazil, Mexico, United Kingdom, France, Spain, Italy, Poland, Netherlands,
India, China, Malaysia, Vietnam, Thailand and Japan.

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

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                     Three Months Ended            Twelve Months Ended
(in thousands,
except share and per Dec 31, 2012   Dec 31, 2011    Dec 31, 2012  Dec 31, 2011
share data)
SALES
Product              $        $         $        $     
                      68,775        65,953         227,905      212,635
Service              11,895         11,127          45,490        41,529
Total Sales          80,670         77,080          273,395       254,164
COST OF SALES
Product              30,170         25,881          94,103        82,408
Service              7,431          7,687           29,673        28,067
Total Cost of Sales
(exclusive of
depreciation and     37,601         33,568          123,776       110,475
amortization, shown
separately below)
GROSS PROFIT         43,069         43,512          149,619       143,689
OPERATING EXPENSES:
Selling             18,413         17,960          64,446        62,117
General and          7,037          6,875           29,065        26,806
administrative
Depreciation and     1,812          1,665           6,976         6,712
amortization
Research and         4,580          4,159           17,578        15,196
development
Total operating      31,842         30,659          118,065       110,831
expenses
INCOME FROM          11,227         12,853          31,554        32,858
OPERATIONS
OTHER (INCOME)
EXPENSE
Interest income      (19)           (17)            (160)         (101)
Other expense, net   529            442             744           1,217
Interest expense     6              4               28            37
INCOME BEFORE INCOME 10,711         12,424          30,942        31,705
TAX EXPENSE
INCOME TAX EXPENSE   2,870          2,952           7,944         8,328
NET INCOME          $        $         $        $     
                      7,841        9,472          22,998      23,377
NET INCOME PER SHARE $        $         $        $     
- BASIC                0.46        0.57           1.36      1.42
NET INCOME PER SHARE $        $         $        $     
- DILUTED              0.46        0.56           1.34      1.39
Weighted average     16,966,063     16,668,567      16,910,830    16,503,773
shares - Basic
Weighted average     17,074,074     16,940,438      17,129,128    16,868,430
shares - Diluted





FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                              December 31,     December 31,
(in thousands, except share data)             2012             2011
ASSETS
Current Assets:
Cash and cash equivalents                     $    93,233  $    64,540
Short-term investments                        64,990           64,997
Accounts receivable, net                      62,559           57,512
Inventories, net                              48,894           49,934
Deferred income taxes, net                    7,216            5,297
Prepaid expenses and other current assets     11,186           9,207
Total current assets                          288,078          251,487
Property and Equipment:
Machinery and equipment                       32,236           29,171
Furniture and fixtures                        6,516            5,963
Leasehold improvements                        10,897           10,233
 Property and equipment at cost            49,649           45,367
Less: accumulated depreciation and            (34,305)         (29,134)
amortization
 Property and equipment, net               15,344           16,233
Goodwill                                      18,816           18,610
Intangible assets, net                        7,048            6,849
Service inventory                             19,125           17,316
Deferred income taxes, net                    2,396            2,296
Total Assets                                  $   350,807   $   312,791
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable                              $    10,413  $    13,396
Accrued liabilities                           18,216           18,076
Income taxes payable                          4,886            2,682
Current portion of unearned service revenues  19,460           15,638
Customer deposits                             2,662            4,072
Current portion of obligations under capital  45               84
leases
 Total current liabilities               55,682           53,948
Unearned service revenues - less current      11,221           9,540
portion
Deferred tax liability, net                   1,149            1,148
Obligations under capital leases - less       19               257
current portion
Total Liabilities                             68,071           64,893
Shareholders' Equity:
Common stock - par value $.001, 50,000,000
shares authorized; 17,653,879 and 17,381,110  18               17
issued; 16,973,644 and 16,700,875
outstanding, respectively
Additional paid-in capital                    181,094          169,780
Retained earnings                             104,358          81,360
Accumulated other comprehensive income        6,341            5,816
Common stock in treasury, at cost - 680,235   (9,075)          (9,075)
shares
Total Shareholders' Equity                    282,736          247,898
Total Liabilities and Shareholders' Equity    $   350,807   $   312,791





FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      Years Ended December 31,
(in thousands)                        2012         2011         2010
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income                           $  22,998  $  23,377  $    11,068
Adjustments to reconcile net income
to net cash provided by
 operating activities:
Depreciation and amortization         6,976        6,712        6,326
Compensation for stock options and    4,018        2,727        2,392
restricted stock units
Provision for (net recovery of) bad   (23)         2,169        2,408
debts
Deferred income tax benefit           (2,016)      (672)        (693)
Change in operating assets and
liabilities:
Decrease (increase) in:
Accounts receivable                   (4,840)      (8,979)      (13,018)
Inventories, net                     (844)        (27,329)     (6,273)
Prepaid expenses and other current    (1,870)      (1,417)      (2,172)
assets
Income tax benefit from exercise of   (1,135)      (1,593)      (133)
stock options
Increase (decrease) in:
Accounts payable and accrued          (3,079)      4,644        10,435
liabilities
Income taxes payable                  3,497        2,998        829
Customer deposits                     (1,374)      668          1,474
Unearned service revenues             5,565        5,384        2,338
 Net cash provided by      27,873       8,689        14,981
(used in) operating activities
INVESTING ACTIVITIES:
Purchases of property and equipment   (3,843)      (4,474)      (4,047)
Payments for intangible assets        (1,361)      (890)        (979)
 Net cash used in investing    (5,204)      (5,364)      (5,026)
activities
FINANCING ACTIVITIES:
Proceeds from notes payable           -            -            2,490
Payments on notes payable             -            -            (2,490)
Payments on capital leases            (132)        (163)        (84)
Income tax benefit from exercise of   1,135        1,593        133
stock options
Proceeds from issuance of stock, net  6,162        9,150        1,405
 Net cash provided by          7,165        10,580       1,454
financing activities
EFFECT OF EXCHANGE RATE CHANGES ON    (1,141)      (87)         4,235
CASH AND CASH EQUIVALENTS
INCREASE IN CASH AND CASH            28,693       13,818       15,644
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING  64,540       50,722       35,078
OF YEAR
CASH AND CASH EQUIVALENTS, END OF     $  93,233  $  64,540  $    50,722
YEAR





SOURCE FARO Technologies, Inc.

Website: http://www.faro.com
Contact: Keith Bair, Senior Vice President and CFO, keith.bair@FARO.com,
+1-407-333-9911
 
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