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
FARO Reports Second Quarter 2013 Results
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