FARO Reports Second Quarter Results
LAKE MARY, Fla.,
Sales for the second quarter of 2009 decreased
"The global recession continued to adversely affect customers in the
markets we serve. As a result, our second quarter orders and sales declined
substantially year-over-year," stated
Gross margin for the second quarter of 2009 was 56.1%, compared to 62.8% in the second quarter of 2008. Gross margin decreased primarily due to a change in the sales mix between higher margin product sales and lower margin service revenue.
Selling expenses as a percentage of sales increased to 35.1% in the second
quarter of 2009 from 29.6% in the second quarter of 2008, primarily as a
result of the decline in sales. Selling expenses in the second quarter of
2009 decreased by
General and administrative expenses increased to 17.8% of sales for the
second quarter of 2009 from 12.1% in the second quarter of 2008. General and
administrative expenses in the second quarter of 2009 decreased by
R&D expenses were
The operating loss for the second quarter of 2009 was
Income tax expense decreased by
"The cost actions we took in the first quarter provided significant
savings in Q2, and we believe they will continue to yield benefits for the
duration of the year. In the second quarter of 2009, we also implemented cost
containment measures that we expect to yield an additional
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 the future state of the economy, FARO's focus, plans and strategies, its ability to further reduce operating costs, and its future 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 our customers and material
adverse changes in customers' access to liquidity and capital;
-- further 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 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 in Part I, Item 1A. Risk Factors in the Company's
Annual Report on Form 10-K for the year ended December 31, 2008 .
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 9,500 customers globally,
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, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
------------------ ----------------
(in thousands, except
share and per share
data) July 4, June 28, July 4, June 28,
2009 2008 2009 2008
------ ------- ------ -------
SALES
Product $27,203 $50,591 $51,416 $89,918
Service 7,313 7,158 14,548 13,921
----- ----- ------ ------
Total Sales 34,516 57,749 65,964 103,839
------ ------ ------ -------
COST OF SALES
Product 10,259 16,044 19,386 29,580
Service 4,893 5,466 10,955 10,314
----- ----- ------ ------
Total Cost of Sales
(exclusive of
depreciation and
amortization, shown
separately below) 15,152 21,510 30,341 39,894
------ ------ ------ ------
GROSS PROFIT 19,364 36,239 35,623 63,945
OPERATING EXPENSES:
Selling 12,128 17,076 24,952 31,504
General and
administrative 6,134 7,014 12,433 12,660
Depreciation and
amortization 1,389 1,120 2,680 2,135
Research and
development 3,285 3,172 6,764 5,885
----- ----- ----- -----
Total operating
expenses 22,936 28,382 46,829 52,184
------ ------ ------ ------
(LOSS) INCOME FROM
OPERATIONS (3,572) 7,857 (11,206) 11,761
------ ----- ------- ------
OTHER (INCOME) EXPENSE
Interest income (36) (456) (194) (1,077)
Other (income)
expense, net (837) 419 (176) 182
Interest expense 4 7 6 448
--- --- --- ---
(LOSS) INCOME BEFORE
INCOME TAX (BENEFIT)
EXPENSE (2,703) 7,887 (10,842) 12,208
INCOME TAX
(BENEFIT) EXPENSE (599) 1,522 (2,153) 2,465
---- ----- ------ -----
NET (LOSS) INCOME $(2,104) $6,365 $(8,689) $9,743
------- ------ ------- ------
NET (LOSS) INCOME PER
SHARE - BASIC $(0.13) $0.38 $(0.53) $0.59
------ ----- ------ -----
NET (LOSS) INCOME PER
SHARE - DILUTED $(0.13) $0.38 $(0.53) $0.58
------ ----- ------ -----
Weighted average
shares - Basic 16,069,312 16,627,540 16,408,259 16,618,333
---------- ---------- ---------- ----------
Weighted average
shares - Diluted 16,069,312 16,784,473 16,408,259 16,758,363
---------- ---------- ---------- ----------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 4, December 31,
(in thousands, except share data) 2009 2008
--------------------------------- ---- ----
ASSETS Unaudited
Current Assets:
Cash and cash equivalents $26,790 $23,494
Short-term investments 64,973 81,965
Accounts receivable, net 32,901 49,713
Inventories 29,580 33,444
Deferred income taxes, net 6,278 5,581
Prepaid expenses and other current assets 10,291 7,879
------ -----
Total current assets 170,813 202,076
------- -------
Property and Equipment:
Machinery and equipment 19,043 22,685
Furniture and fixtures 5,142 4,099
Leasehold improvements 9,217 3,956
----- -----
Property and equipment at cost 33,402 30,740
Less: accumulated depreciation and
amortization (18,509) (16,604)
------- -------
Property and equipment, net 14,893 14,136
------ ------
Goodwill 19,198 18,951
Intangible assets, net 8,222 8,580
Service inventory 12,551 12,843
Deferred income taxes, net 1,856 2,728
----- -----
Total Assets $227,533 $259,314
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $4,471 $10,813
Accrued liabilities 7,915 14,032
Income taxes payable - 1,988
Current portion of unearned service
revenues 11,675 11,501
Customer deposits 887 425
Current portion of obligations under
capital leases 41 87
-- --
Total current liabilities 24,989 38,846
Unearned service revenues - less current
portion 5,882 6,772
Deferred tax liability, net 1,114 1,107
Obligations under capital leases - less
current portion 266 281
--- ---
Total Liabilities 32,251 47,006
------ ------
Shareholders' Equity:
Common stock - par value $.001 , 50,000,000
shares authorized; 16,785,058 and
16,741,488 issued; 16,083,730 and
16,658,552 outstanding, respectively 17 17
Additional paid-in-capital 150,662 149,298
Retained earnings 48,809 57,497
Accumulated other comprehensive income 4,869 5,742
Common stock in treasury, at cost -
680,235 and 55,808 shares (9,075) (246)
------ ----
Total Shareholders' Equity 195,282 212,308
------- -------
Total Liabilities and Shareholders' Equity $227,533 $259,314
-------- --------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
----------------
(in thousands) July 4, 2009 June 28, 2008
-------------- ------------ -------------
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net (loss) income $(8,689) $9,743
Adjustments to reconcile net (loss)
income to net cash used in
operating activities:
Depreciation and amortization 2,680 2,135
Compensation for stock options and
restricted stock units 1,201 1,060
Provision for bad debts 649 446
Deferred income tax expense 180 (1,329)
Change in operating assets and
liabilities:
Decrease (increase) in:
Accounts receivable 16,208 4,049
Inventories 4,088 (8,856)
Prepaid expenses and other current
assets (2,402) (1,877)
Income tax benefit from exercise of
stock options - (43)
Increase (decrease) in:
Accounts payable and accrued
liabilities (12,451) (8,962)
Income taxes payable (1,990) (1,542)
Customer deposits 462 186
Unearned service revenues (688) 1,957
---- -----
Net cash used in
operating activities (752) (3,033)
---- ------
INVESTING ACTIVITIES:
Purchases of property and equipment (2,663) (1,952)
Payments for intangible assets (291) (3,333)
Purchases of short-term investments (64,972) (37,125)
Proceeds from sales of short-term
investments 81,967 36,735
------ ------
Net cash provided by (used
in) investing activities 14,041 (5,675)
------ ------
FINANCING ACTIVITIES:
Payments on capital leases (61) (81)
Income tax benefit from exercise of
stock options - 43
Repurchases of common stock (8,829) -
Proceeds from issuance of stock, net - 80
-- --
Net cash (used in)
provided by financing
activities (8,890) 42
------ --
EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (1,103) (375)
------ ----
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 3,296 (9,041)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 23,494 25,798
------ ------
CASH AND CASH EQUIVALENTS, END OF
PERIOD $26,790 $16,757
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SOURCE
Technologies, Inc.
keith.bair@FARO.com
(FARO)