FARO Reports Second Quarter 2010 Sales Growth of 32.4%
Orders Growth of 24.0%
Net Income of $1.8 million
LAKE MARY, Fla., Aug 04, 2010 /PRNewswire via COMTEX/ --
FARO Technologies, Inc. (Nasdaq: FARO) today announced results for the second quarter ended July 3, 2010. Sales in the second quarter of 2010 increased 32.4%, to $45.7 million, from $34.6 million in the second quarter of 2009. The Company reported net income of $1.8 million, or $0.11 per share, compared to a net loss of $0.13 per share in the second quarter of 2009. Net income in the second quarter of 2010 includes the effects of foreign currency transaction losses of $1.8 million, or $0.08 per share, related to the weakening of the Euro on the value of intercompany account balances.
New order bookings for the second quarter of 2010 were $43.9 million, an increase of $8.5 million, or 24.0%, compared to $35.4 million in the second quarter of 2009.
"FARO's ongoing dedication to serving our customers, combined with strong global demand for our product offerings, drove sales growth of more than 30% in the second quarter," stated Jay Freeland, FARO's President and CEO. "We continued to see increased activity from all verticals and across all three regions in the second quarter. Asia showed substantial strength, growing more than 50% for the second quarter in a row, with Europe and the Americas also delivering high double-digit growth."
Gross margin for the second quarter of 2010 was 59.3%, compared to 56.1% in the second quarter of 2009. Gross margin increased primarily due to an increase in the proportion of higher margin product sales relative to lower margin service revenue.
"Gross margin has returned to historical levels and we've been able to maintain stable prices. Tight cost controls allowed us to leverage the efficiency we created within the business last year and as a result, generated operating margin of 9.9%, or $4.5 million, almost a 20 point improvement from 2009. I'm very pleased with the Company's performance in the first half and we remain cautiously optimistic about 2010. However, because of the ongoing economic uncertainty around the world, I am maintaining our practice of not providing guidance for this year," 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 FARO's focus, plans and strategies, 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 our strategy 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 obsolete or less competitive;
- the cyclical nature of the industries of the Company's customers andmaterial adverse changes in customers' access to liquidity and capital;
- 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 operatesand other general economic, business, and financing conditions;
- fluctuations in the Company's annual and quarterly operating results and the inability to achieve its financial operating targets;
- risks associated with expanding 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;
- other risks detailed inPart I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2009.
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
With approximately 20,000 installations and 11,000 customers globally, FARO Technologies, Inc. designs, develops, and markets portable, computerized measurement and imaging devices and software used to create digital models -- or to perform evaluations against an existing model -- for anything requiring highly detailed 3-D measurements, including part and assembly inspection, factory planning and asset documentation, as well as specialized applications ranging from surveying, recreating accident sites and crime scenes to digitally preserving historical sites.
FARO's technology increases productivity by dramatically reducing the amount of on-site measuring time, and the various industry-specific software packages enable users to process and present their results quickly and more effectively.
Principal products include the world's best-selling portable measurement arm -- the FaroArm; the world's best-selling laser tracker -- the FARO Laser Tracker X and Xi; the FARO Laser ScanArm; FARO Photon Laser Scanners; the FARO Gage, Gage-PLUS and PowerGAGE; and the CAM2 Q family of advanced CAD-based measurement and reporting software. FARO Technologies is ISO-9001 certified and ISO-17025 laboratory registered.
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
------------------
(in thousands, except share and per share Jul 3, Jul 4,
data) 2010 2009
----------------------------------------- ------- -------
SALES
Product $37,212 $27,203
Service 8,493 7,313
Total Sales 45,705 34,516
------ ------
COST OF SALES
Product 12,620 10,259
Service 5,997 4,893
Total Cost of Sales (exclusive of
depreciation and amortization, shown
separately below) 18,617 15,152
------ ------
GROSS PROFIT 27,088 19,364
OPERATING EXPENSES:
Selling 12,027 12,128
General and administrative 6,028 6,134
Depreciation and amortization 1,515 1,389
Research and development 2,997 3,285
Total operating expenses 22,567 22,936
------ ------
INCOME (LOSS) FROM OPERATIONS 4,521 (3,572)
OTHER (INCOME) EXPENSE
Interest income (26) (36)
Other expense (income), net 1,839 (837)
Interest expense 2 4
--- ---
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT) 2,706 (2,703)
INCOME TAX EXPENSE (BENEFIT) 869 (599)
--- ----
NET INCOME (LOSS) $1,837 $(2,104)
------ -------
NET INCOME (LOSS) PER SHARE - BASIC $0.11 $(0.13)
----- ------
NET INCOME (LOSS) PER SHARE - DILUTED $0.11 $(0.13)
----- ------
Weighted average shares - Basic 16,148,233 16,069,312
---------- ----------
Weighted average shares - Diluted 16,320,596 16,069,312
---------- ----------
Six Months Ended
----------------
(in thousands, except share and per share Jul 3, Jul 4,
data) 2010 2009
----------------------------------------- ------- -------
SALES
Product $71,150 $51,416
Service 16,824 14,548
Total Sales 87,974 65,964
------ ------
COST OF SALES
Product 23,895 19,386
Service 11,600 10,955
Total Cost of Sales (exclusive of
depreciation and amortization, shown
separately below) 35,495 30,341
------ ------
GROSS PROFIT 52,479 35,623
OPERATING EXPENSES:
Selling 23,262 24,952
General and administrative 12,275 12,433
Depreciation and amortization 3,055 2,680
Research and development 5,986 6,764
Total operating expenses 44,578 46,829
------ ------
INCOME (LOSS) FROM OPERATIONS 7,901 (11,206)
OTHER (INCOME) EXPENSE
Interest income (45) (194)
Other expense (income), net 2,344 (176)
Interest expense 29 6
--- ---
INCOME (LOSS) BEFORE INCOME TAX EXPENSE
(BENEFIT) 5,573 (10,842)
INCOME TAX EXPENSE (BENEFIT) 1,672 (2,153)
----- ------
NET INCOME (LOSS) $3,901 $(8,689)
------ -------
NET INCOME (LOSS) PER SHARE - BASIC $0.24 $(0.53)
----- ------
NET INCOME (LOSS) PER SHARE - DILUTED $0.24 $(0.53)
----- ------
Weighted average shares - Basic 16,136,447 16,408,259
---------- ----------
Weighted average shares - Diluted 16,289,963 16,408,259
---------- ----------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 3,
2010 December 31,
(in thousands, except share data) Unaudited 2009
--------------------------------- --------- ----
ASSETS
Current Assets:
Cash and cash equivalents $41,929 $35,078
Short-term investments 64,985 64,986
Accounts receivable, net 40,348 42,944
Inventories, net 27,184 26,582
Deferred income taxes, net 4,242 4,473
Prepaid expenses and other current assets 7,471 6,016
Total current assets 186,159 180,079
------- -------
Property and Equipment:
Machinery and equipment 21,916 19,867
Furniture and fixtures 5,013 5,225
Leasehold improvements 9,366 9,434
----- -----
Property and equipment at cost 36,295 34,526
Less: accumulated depreciation and
amortization (22,040) (20,788)
------- -------
Property and equipment, net 14,255 13,738
------ ------
Goodwill 18,249 19,934
Intangible assets, net 7,208 7,985
Service inventory 12,192 12,079
Deferred income taxes, net 1,677 1,895
----- -----
Total Assets $239,740 $235,710
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $9,701 $8,985
Accrued liabilities 10,860 8,173
Income taxes payable - 229
Current portion of unearned service revenues 11,888 12,226
Customer deposits 2,486 2,173
Current portion of obligations under capital
leases 43 80
Total current liabilities 34,978 31,866
Unearned service revenues -less current
portion 5,932 5,910
Deferred tax liability, net 1,008 1,143
Obligations under capital leases -less
current portion 203 193
Total Liabilities 42,121 39,112
------ ------
Shareholders' Equity:
Common stock -par value $.001, 50,000,000
shares authorized; 16,839,592 and 16,795,289
issued; 16,159,357 and 16,115,054
outstanding, respectively 17 17
Additional paid-in capital 153,961 152,380
Retained earnings 50,816 46,915
Accumulated other comprehensive income 1,900 6,361
Common stock in treasury, at cost -680,235
shares (9,075) (9,075)
Total Shareholders' Equity 197,619 196,598
------- -------
Total Liabilities and Shareholders' Equity $239,740 $235,710
-------- --------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
----------------
July 3, July 4,
(in thousands) 2010 2009
-------------- --------- ---------
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income (loss) $3,901 $(8,689)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 3,055 2,680
Compensation for stock options and
restricted stock units 1,203 1,201
Provision for bad debts 806 649
Deferred income tax expense 280 180
Change in operating assets and
liabilities:
Decrease (increase) in:
Accounts receivable (1,388) 16,208
Inventories, net (4,950) 4,088
Prepaid expenses and other current
assets (1,837) (2,402)
Income tax benefit from exercise of
stock options (16) -
Increase (decrease) in:
Accounts payable and accrued
liabilities 4,003 (12,451)
Income taxes payable (275) (1,990)
Customer deposits 328 462
Unearned service revenues 713 (688)
--- ----
Net cash provided by (used in)
operating activities 5,823 (752)
----- ----
INVESTING ACTIVITIES:
Purchases of property and equipment (1,253) (2,663)
Payments for intangible assets (382) (291)
Purchases of short-term investments - (64,972)
Proceeds from sales of short-term
investments - 81,967
--- ------
Net cash (used in) provided by
investing activities (1,635) 14,041
------ ------
FINANCING ACTIVITIES:
Proceeds from notes payable 2,490 -
Payments on notes payable (2,490) -
Payments on capital leases (39) (61)
Income tax benefit from exercise of
stock options 16 -
Purchases of treasury stock - (8,829)
Proceeds from issuance of stock, net 363 -
--- ---
Net cash provided by (used in)
financing activities 340 (8,890)
--- ------
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS 2,323 (1,103)
----- ------
INCREASE IN CASH AND CASH
EQUIVALENTS 6,851 3,296
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 35,078 23,494
------ ------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $41,929 $26,790
======= =======
SOURCE FARO Technologies, Inc.