FARO Reports 21.8% Net Income Increase In First Quarter 2005;
Raises EPS Guidance for 2005 LAKE MARY, Fla., May 9
/PRNewswire-FirstCall/ -- FARO Technologies, Inc. (NASDAQ:FARO)
today reported net income for the first quarter ended April 2, 2005
of approximately $3.47 million or $0.24 per diluted share, a 21.8%
increase compared with $2.85 million, or $0.20 per diluted share in
the first quarter of 2004. Sales for the first quarter of 2005 were
approximately $27.6 million, an increase of $6.6 million, or 31.4%
from $21.0 million the first quarter of 2004. New order bookings
for the first quarter were approximately $25.1 million, an increase
of $6.0 million, or 31.4% compared with approximately $19.1 million
in the year-ago quarter. The sales increase in the first quarter of
2005 was higher than the 25%-30% annual growth forecast by the
Company for all of 2005. (Logo:
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Regionally sales increased 28.2% in the Americas to $10.9 million,
from $8.5 million in the first quarter of 2004. Sales increased
16.8% in Europe/Africa to $11.8 million from $10.1 million in the
first quarter of 2004. In the Asia/Pacific region sales increased
104% to $4.9 million from $2.4 million in the first quarter of
2004. "Our investment in the Asia/Pacific region continues to show
good returns as sales and new order bookings in Asia/Pacific in the
first quarter were approximately 17.6% and 20.1% of total sales and
total new order bookings in the quarter, respectively," said Simon
Raab, Chief Executive Officer. "This keeps us on track towards our
goal to have a third of our sales in that region in 2006." Gross
margin for the first quarter of 2005 was approximately 62.8%,
compared to 64.0% in the first quarter of 2004. Selling, general
and administrative ("SG&A") expenses were approximately $11.1
million, or 40.2% of sales in the first quarter, an increase of
$3.0 million from $8.1 million or 38.6% of sales in the first
quarter of 2004. SG&A expenses as a percentage of sales were
higher in the first quarter primarily as a result of the Company's
ongoing expansion of sales offices, especially in the Asia Pacific
region, and higher professional and legal expenses related to
Sarbanes-Oxley compliance, international tax planning, and the
filing of a registration statement on Form S-3 with the Securities
and Exchange Commission ("SEC"). Research and development expenses
were approximately $1.3 million for the first quarter of 2005,
compared to $1.4 million in the first quarter of 2004. Operating
margin for the first quarter of 2005 was approximately 15.2%, a
decrease of 0.7 percentage points from 15.9% in the first quarter
of 2004. The effective income tax rate in the first quarter of 2005
was approximately 19.2% compared to 21.2% in the year-ago quarter.
Revised Outlook for 2005 On March 29, 2005 the Company announced
its acquisition of iQvolution AG, a German manufacturer of a
software driven laser-based measurement product which the company
will sell under the name Laser Scanner LS. We expect this
acquisition to add $4.0 - $6.0 million to sales, and to have a
dilutive effect of approximately four to seven cents on earnings
per share in 2005. We expect this acquisition to be accretive to
earnings in 2006, as integration costs and a new sales force will
be fully deployed and productive. "We are enthusiastic about our
latest acquisition as we see a lot of similarities with our two
previous very successful acquisitions," said Raab. "We have a
long-term commitment from the iQvolution management and key
technical people, and their leading-edge technology and lower
pricing compared to the competition. Combining this with our
worldwide sales channel and name recognition should allow us to
capture a larger portion of the growing laser scanner market." The
SEC has postponed the implementation date for expensing stock
options until 2006, and this is expected to result in lowering our
expenses by approximately $2.0 million, or 14 cents per share
compared to our previous 2005 earnings per share guidance.
Therefore based on our actual first quarter results, the impact of
the iQvolution acquisition, the postponement of FAS 123(R), and a
20% income tax rate we are increasing our guidance to sales of $125
- $132 million, and earnings per share of $1.15 - $1.45 for 2005,
compared to our prior guidance of $121 - $126 million and $1.03 -
$1.36, respectively. Financial Table Follows 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 our plans,
objectives, projections, expectations, assumptions, strategies, or
future events. 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 "may," "believes,"
"anticipates," "expects," "intends," "plans," "seeks," "estimates,"
"will," "should," "could," "projects," "forecast," "target,"
"goal," and similar expressions or discussions of our strategy or
other intentions identify forward-looking statements. Other written
or oral statements, which constitute forward-looking statements,
also may be made by the Company from time to time. 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 forward-looking statements include, but are not
limited to: * Our inability to continue to grow sales in the Asia
Pacific region; * Our inability to effectively integrate the
iQvolution acquisition and achieve the expected benefits from it; *
Our inability to keep our financial results within our target goals
as a result of various potential factors, such as investments in
potential acquisitions or strategic sales, product, or other
initiatives; * Our inability to find less expensive alternatives to
stock options to attract and retain employees; * Our inability to
successfully identify and acquire target companies or achieve
expected benefits from acquisitions that are consummated; * The
fact that the market potential for the CAM2 market and the
potential adoption rate for our products are difficult to quantify
and predict; * The effects of increased competition as a result of
recent consolidation in the CAM2 market * Difficulty in predicting
our effective tax rate; * Our inability to further penetrate our
customer base; * Development by others of new or improved products,
processes or technologies that make our products obsolete or less
competitive; * Our inability to maintain our technological
advantage by developing new products and enhancing our existing
products; * The cyclical nature of the industries of our customers
and the financial condition of our customers; * The inability to
protect our patents and other proprietary rights in the United
States and foreign countries and the assertion of infringement
claims against us; * Fluctuations in our annual and quarterly
operating results as a result of a number of factors; * The
inability of our products to displace traditional measurement
devices and attain broad market acceptance; * The impact of
competitive products and pricing in the CAM2 market and the broad
market for measurement and inspection devices; * Risks associated
with expanding international operations, such as fluctuations in
currency exchange rates, difficulties in staffing and managing
foreign operations, political and economic instability, and the
burdens of complying with a wide variety of foreign laws and labor
practices; * The loss of our Chief Executive Officer, our President
and Chief Operating Officer, our Executive Vice President and
Treasurer, or our Chief Financial Officer or other key personnel; *
The failure to effectively manage our growth; * The loss of a key
supplier and the inability to find a sufficient alternative
supplier in a reasonable period or on commercially reasonable
terms; and * the other risks detailed in the Company's Annual
Report on Form 10-K and other filings from time to time with the
Securities and Exchange Commission. About FARO: FARO Technologies,
Inc. (NASDAQ:FARO) and its international subsidiaries design,
develop, and market software and portable, computerized measurement
devices. The Company's products allow manufacturers to perform
three- dimensional inspections of parts and assemblies on the shop
floor. This helps eliminate manufacturing errors, and thereby
increases productivity and profitability for a variety of
industries in FARO's worldwide customer base. Principal products
include the FARO Gage and Gage-Plus(TM), Platinum and Titanium
model Faro Arms(R), SI and X model FARO Laser Trackers(R), Laser
Scanner LS and a CAM2(R) family of advanced CAD-based measurement
and reporting software. FARO Technologies is ISO 9001 certified and
Guide 25 approved. Learn more at http://www.faro.com/ . FARO
TECHNOLOGIES, INC. AND SUBSIDIARIES SUMMARY FINANCIAL TABLE
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (amounts in
thousands, except per share data) Three Months Ended Apr. 2, Apr.
3, 2005 2004 SALES $27,617 $21,025 COST OF SALES 10,274 7,561 Gross
profit 17,343 13,464 OPERATING EXPENSES: Selling 7,666 5,563
General and administrative 3,467 2,567 Depreciation and
amortization 690 557 Research and development 1,327 1,441 Total
operating expenses 13,150 10,128 INCOME FROM OPERATIONS 4,193 3,336
OTHER INCOME (EXPENSES) Interest income 132 74 Other income, net
(29) 206 Interest expense (2) (2) INCOME BEFORE INCOME TAX 4,294
3,614 INCOME TAX EXPENSE 825 766 NET INCOME $3,469 $2,848 NET
INCOME PER SHARE - BASIC $0.25 $0.21 NET INCOME PER SHARE - DILUTED
$0.24 $0.20 Weighted average shares - Basic 14,037,027 13,522,921
Weighted average shares - Diluted 14,408,009 14,080,103 SELECTED
CONSOLIDATED BALANCE SHEET DATA (UNAUDITED) (in thousands) Apr. 2,
2005 Cash and investments $34,986 Current assets $81,938 Total
assets $113,935 Current liabilities $17,465 Obligations under
capital leases - less current portion $352 Total liabilities
$18,591 Total shareholders' equity $95,344 Total liabilities and
shareholders' equity $113,935 SELECTED CONSOLIDATED STATEMENT OF
CASH FLOWS DATA (UNAUDITED) (in thousands) Apr. 2, 2005 Net cash
provided by operating activities $1,743 Net cash (used in)
investing activities $(4,182) Net cash provided by financing
activities $184 Effect of Exchange Rate Changes on Cash $(601) Cash
and Cash Equivalents, Beginning of Period $16,357 Cash and Cash
Equivalents, End of Period $13,501
http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO
http://photoarchive.ap.org/ DATASOURCE: FARO Technologies, Inc.
CONTACT: Greg Fraser, EVP, FARO Technologies, Inc.,
+1-407-333-9911, or Vic Allgeier, The TTC Group, +1-212-227-0997,
for FARO Technologies, Inc. Web site: http://www.faro.com/
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