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FARO Reports Second Quarter 2013 Results

                   FARO Reports Second Quarter 2013 Results

PR Newswire

LAKE MARY, Fla., July 30, 2013

LAKE MARY, Fla., July 30, 2013 /PRNewswire/ --FARO Technologies, Inc.
(NASDAQ: FARO) today announced results for the second quarter ended June 29,
2013. Sales in the second quarter of 2013 increased to $68.3 million, from
$66.8 million in the second quarter of 2012. The Company reported net income
of $3.6 million, or $0.21 per share, in the second quarter of 2013, compared
to $4.7 million, or $0.28 per share, in the second quarter of 2012.

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

New order bookings for the second quarter of 2013 were $66.7 million, a
decrease of 6.1% from $71.0 million in the second quarter of 2012.

Gross margin for the second quarter of 2013 was 54.0%, compared to 55.5% in
the second quarter of 2012. Gross margins were slightly lower primarily due
to lower average selling prices for certain metrology products.

The Company's operating margin for the second quarter decreased to 8.0%,
compared to 10.3% in the second quarter of 2012. Operating expenses increased
due to staffing costs and related expenses of $1.8 million primarily in our
sales and marketing and research and development organizations, offset by
lower legal and professional fees of approximately $1.0 million.

"Our results in the second quarter were impacted by ongoing economic softness
in Europe and Asia. While interest in FARO products remains strong, many
customers have deferred purchase decisions in light of economic uncertainty,"
stated Jay Freeland, FARO's President and CEO. "The Americas region continues
to show signs of strength, generating double-digit sales growth in the quarter
and our product development pipeline remains robust. To capitalize on
anticipated improvement in our markets, we added staff to our sales and
research and development organizations, which adversely impacted our second
quarter results but positions the Company well looking forward. We expect the
second half of 2013 should provide an opportunity for improvement driven by
the global increase in new sales account managers. However, if the overall
macroeconomic environment remains stagnant for the rest of 2013, our markets
may remain under some pressure."

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,
anticipated improvement in the markets in which it operates, its product
development pipeline, its ability to capitalize on market conditions, 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;
  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, 2012.

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        Six Months Ended
(in thousands, except  June 29, 2013  June 30,    June 29, 2013  June 30, 2012
share data)                           2012
SALES
Product                $           $         $           $  
                       55,174        55,432     107,656        109,856
Service                13,155         11,330      26,043         22,135
Total Sales            68,329         66,762      133,699        131,991
COST OF SALES
Product                22,921         22,320      44,260         42,826
Service                8,482          7,382       15,688         14,919
Total Cost of Sales
(exclusive
of depreciation and    31,403         29,702      59,948         57,745
amortization, shown
separately below)
GROSS PROFIT           36,926         37,060      73,751         74,246
OPERATING EXPENSES:
Selling               16,716         15,841      33,366         31,879
General and            7,826          8,134       15,341         14,762
administrative
Depreciation and       1,736          1,689       3,569          3,368
amortization
Research and           5,162          4,525       10,287         8,933
development
Total operating        31,440         30,189      62,563         58,942
expenses
INCOME FROM OPERATIONS 5,486          6,871       11,188         15,304
OTHER (INCOME) EXPENSE
Interest income        (19)           (20)        (35)           (121)
Other expense, net     504            401         619            261
Interest expense       0              7           1              20
INCOME BEFORE INCOME
TAX                   5,001          6,483       10,603         15,144
 EXPENSE
INCOME TAX EXPENSE     1,370          1,749       2,398          3,660
NET INCOME            $          $        $          $   
                       3,631         4,734      8,205         11,484
NET INCOME PER SHARE - $         $       $         $     
BASIC                  0.21          0.28       0.48          0.68
NET INCOME PER SHARE - $         $       $         $     
 DILUTED              0.21          0.28       0.48          0.67
Weighted average       17,097,973     16,921,012  17,054,354     16,861,221
shares - Basic
Weighted average
shares -               17,173,015     17,140,115  17,177,748     17,157,185
 Diluted





FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                         June 29,             December 31,
                                         2013                 2012
(in thousands, except share data)        (unaudited)
ASSETS
Current Assets:
Cash and cash equivalents                $     111,308   $     93,233
Short-term investments                   64,993               64,990
Accounts receivable, net                 51,717               62,559
Inventories, net                         47,781               48,894
Deferred income taxes, net               5,925                7,216
Prepaid expenses and other current       11,823               11,186
assets
Total current assets                     293,547              288,078
Property and Equipment:
Machinery and equipment                  33,296               32,236
Furniture and fixtures                   6,443                6,516
Leasehold improvements                   10,884               10,897
 Property and equipment at cost       50,623               49,649
Less: accumulated depreciation and       (36,326)             (34,305)
amortization
 Property and equipment, net          14,297               15,344
Goodwill                                 18,656               18,816
Intangible assets, net                   7,252                7,048
Service inventory                        17,784               19,125
Deferred income taxes, net               2,370                2,396
Total Assets                             $     353,906   $    350,807
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable                         $       7,386  $     10,413
Accrued liabilities                      16,443               18,216
Income taxes payable                     1,088                4,886
Current portion of unearned service      19,431               19,460
revenues
Customer deposits                        3,047                2,662
Current portion of obligations under     15                   45
capital leases
 Total current liabilities          47,410               55,682
Unearned service revenues - less         11,344               11,221
current portion
Deferred tax liability, net              1,152                1,149
Obligations under capital leases - less  16                   19
current portion
Total Liabilities                        59,922               68,071
Commitments and contingencies
Shareholders' Equity:
Common stock - par value $.001,
50,000,000 shares authorized;
 17,788,200 and 17,653,879 issued;      18                   18
17,107,965 and 16,973,644
 outstanding, respectively
Additional paid-in capital               187,098              181,094
Retained earnings                        112,563              104,358
Accumulated other comprehensive income   3,380                6,341
Common stock in treasury, at cost -      (9,075)              (9,075)
680,235 shares
Total Shareholders' Equity               293,984              282,736
Total Liabilities and Shareholders'      $     353,906   $    350,807
Equity

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                             Six Months Ended
(in thousands)                               June 29, 2013     June 30, 2012
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income                                  $     8,205  $    11,484
Adjustments to reconcile net income to net
cash provided by
 operating activities:
Depreciation and amortization                3,569             3,368
Compensation for stock options and           2,105             1,866
restricted stock units
Provision for bad debts                      315               (84)
Deferred income tax expense (benefit)        1,281             (744)
expense
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable                          9,644             3,535
Inventories, net                            1,101             (6,173)
Prepaid expenses and other current assets    (765)             (1,569)
Income tax benefit from exercise of stock    (814)             (1,114)
options
Increase (decrease) in:
Accounts payable and accrued liabilities     (4,565)           (6,313)
Income taxes payable                         (2,868)           933
Customer deposits                            458               317
Unearned service revenues                    594               1,191
 Net cash provided by operating   18,260            6,697
activities
INVESTING ACTIVITIES:
Purchases of property and equipment          (891)             (2,533)
Payments for intangible assets               (832)             (443)
 Net cash used in investing           (1,723)           (2,976)
activities
FINANCING ACTIVITIES:
Payments on capital leases                   (76)              (98)
Income tax benefit from exercise of stock    814               1,114
options
Proceeds from issuance of stock, net         3,084             5,601
 Net cash provided by financing       3,822             6,617
activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND  (2,284)           (130)
 CASH EQUIVALENTS
INCREASE IN CASH AND CASH EQUIVALENTS       18,075            10,208
CASH AND CASH EQUIVALENTS, BEGINNING OF      93,233            64,540
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD     $    111,308   $    74,748





FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
                             Three Months Ended      Six Months Ended
(in thousands)               June 29,    June 30,     June 29,     June 30,
                             2013        2012         2013         2012
Net income                   $       $        $        $   
                             3,631       4,734        8,205        11,484
Currency translation         468         (3,022)      (2,961)      (1,688)
adjustments
Comprehensive income         $       $        $        $    
                             4,099       1,712        5,244        9,796



SOURCE FARO Technologies, Inc.

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