LAKE MARY, Fla., Aug. 1,
2017 /PRNewswire/ -- FARO® (NASDAQ: FARO), the
world's most trusted source for 3D measurement and imaging
solutions for factory metrology, construction BIM-CIM, product
design, public safety forensics and 3D machine vision, today
announced its financial results for the first six months and second
quarter of 2017. The company also announced the successful
completion of its 18-month global reorganization and highlighted
its 3-year strategic objectives.
Six months ended June 30, 2017
New order bookings for the six months ended June 30, 2017 were $175.8
million, an increase of 13.3%, compared with $155.1 million for the six months ended
June 30, 2016. Sales increased
to $164.2 million, an increase of
6.5%, for the six months ended June 30,
2017 from $154.3 million for
the six months ended June 30,
2016. Excluding an unfavorable foreign exchange impact of
approximately $2.7 million, sales for
the first six months of 2017 would have increased by 8.2% compared
with the same prior year period. Our sales increase was
primarily driven by higher service revenue and an increase in
product unit sales, especially in Construction BIM-CIM.
The book-to-bill ratio at the end of second quarter 2017 was
1.08 compared to 1.04 at the end of second quarter 2016. The
increase in book-to-bill ratio was primarily due to the demand for
the newly introduced FARO FocusM 70 laser scanner in
both the Construction BIM-CIM and Public Safety Forensics
verticals, which temporarily exceeded our production capacity late
in the second quarter.
Gross margin for the first six months of 2017 decreased to
55.1%, compared with 56.1% for the same prior year period.
The year-over-year decrease is related primarily to the production
start-up of new core platform products and lower average product
selling prices reflecting increased sales of aged sales
demonstration and service inventory.
Operating loss for the first six months of 2017 was $6.2 million, compared with an operating income
of $8.8 million for the first six
months last year. This decrease is primarily due to an
intentional increase in operating expenses related to our strategic
initiatives, including a 34% increase in the global vertical
salesforce from 468 at the end of second quarter 2016 to 627 at the
end of second quarter 2017 and increases in R&D spending from
recent technology acquisitions, as well as a modest decline in
gross margin.
Net loss for the first six months of 2017 was $5.1 million or $0.30 per share, compared with net income of
$6.5 million or $0.39 per share in the first six months of
2016.
Second Quarter 2017
New order bookings for second quarter 2017 were $89.0 million, an increase of 9.1%, compared with
$81.6 million for second quarter
2016. Sales increased to $82.7
million, an increase of 5.3%, for the three months ended
June 30, 2017 from $78.5 million for the three months ended
June 30, 2016. Excluding an
unfavorable foreign exchange impact of approximately $1.4 million, sales for second quarter 2017 would
have increased by 7.0% compared with the same prior year
period. Our sales increase was primarily driven by continued
service revenue growth and higher average selling prices.
Gross margin for second quarter 2017 increased to 56.6%,
compared with 55.9% for the second quarter last year, and increased
3.0 percentage points compared with first quarter 2017. The
increase is related primarily to higher average product selling
prices and improved production efficiency in our Factory Metrology
vertical.
Operating loss for second quarter 2017 was $4.2 million, compared with operating income of
$4.5 million in the second quarter
last year. This decrease is primarily due to an increase in
operating expenses related to our strategic initiatives, including
front-end loading the expansion of our salesforce and increased
R&D spending to support our new products and newly acquired
technologies for our new verticals.
Net loss for second quarter 2017 was $3.6
million or $0.22 per share,
compared with net income of $3.4
million or $0.20 per share in
the second quarter last year.
As of June 30, 2017, cash and
short-term investments was $139.6
million, of which $99.9
million was held by foreign subsidiaries.
"The end of our second quarter marks the successful completion
of an extraordinary 18-month process," stated Simon Raab, Ph.D., FARO's President and
CEO. "Today, there is an exciting energy across the whole
company. We are focused on growing the top line of our
verticals. Over the first half of 2017, our team delivered
13.3% orders growth overall with over 30% growth in Construction
BIM-CIM and 9% in Factory Metrology by effectively executing our
strategy to deliver a new product drumbeat and rapidly expand our
salesforce.
Over the last six quarters, we have used our cash, know-how, and
global marketing reach to build a far more agile and efficient
platform to support FARO's long-term growth. We have
harmonized literally hundreds of global processes, rapidly expanded
our salesforce personnel over last year, built new web-based
demonstration studios, activated the verticals, increased R&D,
initiated aggressive new product development, and acquired new
next-generation technology.
Our investment initiatives, including the natural one-year
maturation of new salespeople, system improvements and acquisitions
require the necessary amount of time to realize the resulting top
and bottom line impacts. The aggressive front-end loading of
sales staff in the new global verticals is aimed at accelerating
the achievement of our 3-year strategic plan objectives of double
digit revenue growth and operating margins. While our
loss year-to-date is substantially attributable to these
intentional strategic initiatives and the related costs, we can
already see the benefits of these investments and are confident in
the value being created.
In our upcoming earnings call I will review many of our current
initiatives in further detail."
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 and customer acceptance of FARO's products, 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
"is," "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, 2016 and Form 10-Q for
the quarters ended March 31, 2017 and
June 30, 2017.
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,
imaging and realization technology. The Company develops and
markets computer-aided measurement and imaging devices and software
for the following vertical markets:
- Factory Metrology - High-precision 3D measurement, imaging and
comparison of parts and complex structures within production and
quality assurance processes
- Construction BIM-CIM - 3D capture of as-built construction
projects and factories to document complex structures and perform
quality control, planning and preservation
- Public Safety Forensics - Capture and analysis of on-site real
world data to investigate crash, crime and fire, plan security
activities and provide virtual reality training for public safety
personnel
- Product Design - Capture detailed and precise 3D data from
existing products permitting CAD analysis and redesign, after
market design and legacy part replication
- 3D Machine Vision - 3D vision for both control and measurement
to the manufacturing floor through 3D sensors and custom
solutions
FARO's global headquarters is located in Lake Mary, Florida. The Company also has
a technology center and manufacturing facility consisting of
approximately 90,400 square feet located in Exton, Pennsylvania containing research and
development, manufacturing and service operations of our FARO Laser
Tracker™ and FARO Cobalt Array Imager product
lines. The Company's European regional headquarters is
located in Stuttgart, Germany and
its Asia-Pacific regional
headquarters is located 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,
India, China, Malaysia, Thailand, South
Korea, Japan, and
Australia.
More information is available at http://www.faro.com
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in thousands, except
share and per share data)
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
Sales
|
|
|
|
|
|
|
|
Product
|
$
|
62,533
|
|
|
$
|
61,640
|
|
|
$
|
124,913
|
|
|
$
|
120,952
|
|
Service
|
20,149
|
|
|
16,898
|
|
|
39,331
|
|
|
33,334
|
|
Total
sales
|
82,682
|
|
|
78,538
|
|
|
164,244
|
|
|
154,286
|
|
Cost of
Sales
|
|
|
|
|
|
|
|
Product
|
24,455
|
|
|
25,062
|
|
|
51,513
|
|
|
49,058
|
|
Service
|
11,467
|
|
|
9,542
|
|
|
22,222
|
|
|
18,623
|
|
Total cost of sales
(exclusive of depreciation and amortization, shown separately
below)
|
35,922
|
|
|
34,604
|
|
|
73,735
|
|
|
67,681
|
|
Gross
Profit
|
46,760
|
|
|
43,934
|
|
|
90,509
|
|
|
86,605
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Selling and
marketing
|
26,022
|
|
|
18,715
|
|
|
48,894
|
|
|
36,618
|
|
General and
administrative
|
11,877
|
|
|
10,242
|
|
|
22,576
|
|
|
20,392
|
|
Depreciation and
amortization
|
3,989
|
|
|
3,266
|
|
|
7,707
|
|
|
6,352
|
|
Research and
development
|
9,045
|
|
|
7,214
|
|
|
17,511
|
|
|
14,416
|
|
Total operating
expenses
|
50,933
|
|
|
39,437
|
|
|
96,688
|
|
|
77,778
|
|
(Loss) income from
operations
|
(4,173)
|
|
|
4,497
|
|
|
(6,179)
|
|
|
8,827
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest income,
net
|
(89)
|
|
|
(54)
|
|
|
(171)
|
|
|
(98)
|
|
Other expense,
net
|
459
|
|
|
240
|
|
|
467
|
|
|
991
|
|
(Loss) income before
income tax (benefit) expense
|
(4,543)
|
|
|
4,311
|
|
|
(6,475)
|
|
|
7,934
|
|
Income tax (benefit)
expense
|
(918)
|
|
|
919
|
|
|
(1,389)
|
|
|
1,462
|
|
Net (loss)
income
|
$
|
(3,625)
|
|
|
$
|
3,392
|
|
|
$
|
(5,086)
|
|
|
$
|
6,472
|
|
Net (loss) income per
share - Basic
|
$
|
(0.22)
|
|
|
$
|
0.20
|
|
|
$
|
(0.30)
|
|
|
$
|
0.39
|
|
Net (loss) income per
share - Diluted
|
$
|
(0.22)
|
|
|
$
|
0.20
|
|
|
$
|
(0.30)
|
|
|
$
|
0.39
|
|
Weighted average
shares - Basic
|
16,700,718
|
|
|
16,659,115
|
|
|
16,692,500
|
|
|
16,634,323
|
|
Weighted average
shares - Diluted
|
16,700,718
|
|
|
16,672,600
|
|
|
16,692,500
|
|
|
16,654,415
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
(in thousands, except
share data)
|
June 30, 2017
(unaudited)
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
117,594
|
|
|
$
|
106,169
|
|
Short-term
investments
|
21,970
|
|
|
42,942
|
|
Accounts receivable,
net
|
58,805
|
|
|
61,364
|
|
Inventories,
net
|
57,866
|
|
|
51,886
|
|
Prepaid expenses and
other current assets
|
22,989
|
|
|
16,304
|
|
Total current
assets
|
279,224
|
|
|
278,665
|
|
Property and
equipment:
|
|
|
|
Machinery and
equipment
|
62,937
|
|
|
57,063
|
|
Furniture and
fixtures
|
7,156
|
|
|
6,099
|
|
Leasehold
improvements
|
19,400
|
|
|
18,778
|
|
Property and
equipment, at cost
|
89,493
|
|
|
81,940
|
|
Less: accumulated
depreciation and amortization
|
(57,138)
|
|
|
(50,262)
|
|
Property and
equipment, net
|
32,355
|
|
|
31,678
|
|
Goodwill
|
51,417
|
|
|
46,744
|
|
Intangible assets,
net
|
23,313
|
|
|
22,279
|
|
Service and sales
demonstration inventory, net
|
35,259
|
|
|
29,136
|
|
Deferred income tax
assets, net
|
14,442
|
|
|
14,307
|
|
Other long-term
assets
|
1,058
|
|
|
905
|
|
Total
assets
|
$
|
437,068
|
|
|
$
|
423,714
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
12,651
|
|
|
$
|
11,126
|
|
Accrued
liabilities
|
25,619
|
|
|
24,572
|
|
Income taxes
payable
|
—
|
|
|
618
|
|
Current portion of
unearned service revenues
|
29,358
|
|
|
27,422
|
|
Customer
deposits
|
2,883
|
|
|
2,872
|
|
Total current
liabilities
|
70,511
|
|
|
66,610
|
|
Unearned service
revenues - less current portion
|
12,832
|
|
|
13,813
|
|
Deferred income tax
liabilities
|
1,570
|
|
|
1,409
|
|
Other long-term
liabilities
|
2,664
|
|
|
2,225
|
|
Total
liabilities
|
87,577
|
|
|
84,057
|
|
Shareholders'
equity:
|
|
|
|
Common stock - par
value $.001, 50,000,000 shares authorized; 18,194,509 and
18,170,267 issued, respectively; 16,708,033 and 16,680,791
outstanding, respectively
|
18
|
|
|
18
|
|
Additional paid-in
capital
|
216,511
|
|
|
212,602
|
|
Retained
earnings
|
178,053
|
|
|
183,436
|
|
Accumulated other
comprehensive loss
|
(13,262)
|
|
|
(24,561)
|
|
Common stock in
treasury, at cost; 1,486,476 and 1,489,476 shares,
respectively
|
(31,829)
|
|
|
(31,838)
|
|
Total shareholders'
equity
|
349,491
|
|
|
339,657
|
|
Total liabilities and
shareholders' equity
|
$
|
437,068
|
|
|
$
|
423,714
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2017
|
|
June 30,
2016
|
Cash flows
from:
|
|
|
|
Operating
activities:
|
|
|
|
Net (loss)
income
|
$
|
(5,086)
|
|
|
$
|
6,472
|
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
7,707
|
|
|
6,352
|
|
Stock-based
compensation
|
3,195
|
|
|
2,731
|
|
Provision for bad
debts
|
230
|
|
|
574
|
|
Loss on disposal of
assets
|
122
|
|
|
305
|
|
Provision for excess
and obsolete inventory
|
736
|
|
|
1,440
|
|
Deferred income tax
expense (benefit)
|
168
|
|
|
(261)
|
|
Income tax benefit
from exercise of stock options
|
—
|
|
|
(70)
|
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease (increase)
in:
|
|
|
|
Accounts
receivable
|
4,771
|
|
|
13,818
|
|
Inventories
|
(10,107)
|
|
|
(4,918)
|
|
Prepaid expenses and
other current assets
|
(6,489)
|
|
|
2,115
|
|
(Decrease) increase
in:
|
|
|
|
Accounts payable and
accrued liabilities
|
1,610
|
|
|
(1,596)
|
|
Income taxes
payable
|
(590)
|
|
|
522
|
|
Customer
deposits
|
(163)
|
|
|
(870)
|
|
Unearned service
revenues
|
(472)
|
|
|
1,114
|
|
Net cash (used in)
provided by operating activities
|
(4,368)
|
|
|
27,728
|
|
Investing
activities:
|
|
|
|
Proceeds from sale of
short-term investments
|
21,000
|
|
|
—
|
|
Purchases of property
and equipment
|
(3,669)
|
|
|
(2,580)
|
|
Payments for
intangible assets
|
(645)
|
|
|
(712)
|
|
Acquisition of
business
|
(5,496)
|
|
|
—
|
|
Net cash provided by
(used in) investing activities
|
11,190
|
|
|
(3,292)
|
|
Financing
activities:
|
|
|
|
Payments on capital
leases
|
(4)
|
|
|
(4)
|
|
Income tax benefit
from exercise of stock options
|
—
|
|
|
70
|
|
Proceeds from
issuance of stock, net
|
284
|
|
|
513
|
|
Net cash provided by
financing activities
|
280
|
|
|
579
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
4,323
|
|
|
1,170
|
|
Increase in cash
and cash equivalents
|
11,425
|
|
|
26,185
|
|
Cash and cash
equivalents, beginning of period
|
106,169
|
|
|
107,356
|
|
Cash and cash
equivalents, end of period
|
$
|
117,594
|
|
|
$
|
133,541
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
|
|
|
|
Three Months Ended
|
|
Six Months
Ended
|
(in
thousands)
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
Net (loss)
income
|
$
|
(3,625)
|
|
|
$
|
3,392
|
|
|
$
|
(5,086)
|
|
|
$
|
6,472
|
|
Currency translation
adjustments, net of income tax
|
7,140
|
|
|
(1,795)
|
|
|
11,299
|
|
|
4,826
|
|
Comprehensive
income
|
$
|
3,515
|
|
|
$
|
1,597
|
|
|
$
|
6,213
|
|
|
$
|
11,298
|
|
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SOURCE FARO Technologies, Inc.