UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2013
FARO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Florida | 0-23081 | 59-3157093 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
250 Technology Park, Lake Mary, Florida 32746
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (407) 333-9911
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On July 30, 2013, FARO Technologies, Inc. (the “Company”) issued a press release announcing its results of operations for the second fiscal quarter ended June 29, 2013. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information furnished pursuant to Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit is furnished with this Current Report on Form 8-K:
| Exhibit Number |
Description | |
| 99.1 | Press release dated July 30, 2013. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FARO Technologies, Inc. (Registrant) | ||
| July 30, 2013 |
/s/ Keith Bair | |
| By: Keith Bair | ||
| Its: Chief Financial Officer | ||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press release dated July 30, 2013. | |
Exhibit 99.1
Keith Bair, Senior Vice President and CFO
keith.bair@FARO.com, 407-333-9911
FARO Reports Second Quarter 2013 Results
LAKE MARY, FL, July 30, 2013 – 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.
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:
| • | 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 and material 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 operates and other general economic, business, and financing conditions; |
| • | risks 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; |
| • | 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, 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 share data) |
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | ||||||||||||
| SALES |
||||||||||||||||
| Product |
$ | 55,174 | $ | 55,432 | $ | 107,656 | $ | 109,856 | ||||||||
| Service |
13,155 | 11,330 | 26,043 | 22,135 | ||||||||||||
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|||||||||
| Total Sales |
68,329 | 66,762 | 133,699 | 131,991 | ||||||||||||
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| COST OF SALES |
||||||||||||||||
| Product |
22,921 | 22,320 | 44,260 | 42,826 | ||||||||||||
| Service |
8,482 | 7,382 | 15,688 | 14,919 | ||||||||||||
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| Total Cost of Sales (exclusive of depreciation and amortization, shown separately below) |
31,403 | 29,702 | 59,948 | 57,745 | ||||||||||||
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| GROSS PROFIT |
36,926 | 37,060 | 73,751 | 74,246 | ||||||||||||
| OPERATING EXPENSES: |
||||||||||||||||
| Selling |
16,716 | 15,841 | 33,366 | 31,879 | ||||||||||||
| General and administrative |
7,826 | 8,134 | 15,341 | 14,762 | ||||||||||||
| Depreciation and amortization |
1,736 | 1,689 | 3,569 | 3,368 | ||||||||||||
| Research and development |
5,162 | 4,525 | 10,287 | 8,933 | ||||||||||||
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| Total operating expenses |
31,440 | 30,189 | 62,563 | 58,942 | ||||||||||||
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| INCOME FROM OPERATIONS |
5,486 | 6,871 | 11,188 | 15,304 | ||||||||||||
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| OTHER (INCOME) EXPENSE |
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| Interest income |
(19 | ) | (20 | ) | (35 | ) | (121 | ) | ||||||||
| Other expense, net |
504 | 401 | 619 | 261 | ||||||||||||
| Interest expense |
0 | 7 | 1 | 20 | ||||||||||||
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| INCOME BEFORE INCOME TAX EXPENSE |
5,001 | 6,483 | 10,603 | 15,144 | ||||||||||||
| INCOME TAX EXPENSE |
1,370 | 1,749 | 2,398 | 3,660 | ||||||||||||
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| NET INCOME |
$ | 3,631 | $ | 4,734 | $ | 8,205 | $ | 11,484 | ||||||||
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| NET INCOME PER SHARE - BASIC |
$ | 0.21 | $ | 0.28 | $ | 0.48 | $ | 0.68 | ||||||||
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| NET INCOME PER SHARE - DILUTED |
$ | 0.21 | $ | 0.28 | $ | 0.48 | $ | 0.67 | ||||||||
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| Weighted average shares - Basic |
17,097,973 | 16,921,012 | 17,054,354 | 16,861,221 | ||||||||||||
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| Weighted average shares - Diluted |
17,173,015 | 17,140,115 | 17,177,748 | 17,157,185 | ||||||||||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (in thousands, except share data) |
June 29, 2013 (unaudited) |
December 31, 2012 |
||||||
| ASSETS |
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| Current Assets: |
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| 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 assets |
11,823 | 11,186 | ||||||
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| Total current assets |
293,547 | 288,078 | ||||||
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| Property and Equipment: |
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| Machinery and equipment |
33,296 | 32,236 | ||||||
| Furniture and fixtures |
6,443 | 6,516 | ||||||
| Leasehold improvements |
10,884 | 10,897 | ||||||
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| Property and equipment at cost |
50,623 | 49,649 | ||||||
| Less: accumulated depreciation and amortization |
(36,326 | ) | (34,305 | ) | ||||
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| Property and equipment, net |
14,297 | 15,344 | ||||||
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| 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 | ||||||
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| Total Assets |
$ | 353,906 | $ | 350,807 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| 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 revenues |
19,431 | 19,460 | ||||||
| Customer deposits |
3,047 | 2,662 | ||||||
| Current portion of obligations under capital leases |
15 | 45 | ||||||
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| Total current liabilities |
47,410 | 55,682 | ||||||
| Unearned service revenues - less current portion |
11,344 | 11,221 | ||||||
| Deferred tax liability, net |
1,152 | 1,149 | ||||||
| Obligations under capital leases - less current portion |
16 | 19 | ||||||
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| Total Liabilities |
59,922 | 68,071 | ||||||
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| Commitments and contingencies |
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| Shareholders’ Equity: |
||||||||
| Common stock - par value $.001, 50,000,000 shares authorized; 17,788,200 and 17,653,879 issued; 17,107,965 and 16,973,644 outstanding, respectively |
18 | 18 | ||||||
| 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 - 680,235 shares |
(9,075 | ) | (9,075 | ) | ||||
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| Total Shareholders’ Equity |
293,984 | 282,736 | ||||||
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| Total Liabilities and Shareholders’ Equity |
$ | 353,906 | $ | 350,807 | ||||
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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: |
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| OPERATING ACTIVITIES: |
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| 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 restricted stock units |
2,105 | 1,866 | ||||||
| Provision for bad debts |
315 | (84 | ) | |||||
| Deferred income tax expense (benefit) expense |
1,281 | (744 | ) | |||||
| 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 options |
(814 | ) | (1,114 | ) | ||||
| 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 | ||||||
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| Net cash provided by operating activities |
18,260 | 6,697 | ||||||
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| INVESTING ACTIVITIES: |
||||||||
| Purchases of property and equipment |
(891 | ) | (2,533 | ) | ||||
| Payments for intangible assets |
(832 | ) | (443 | ) | ||||
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| Net cash used in investing activities |
(1,723 | ) | (2,976 | ) | ||||
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| FINANCING ACTIVITIES: |
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| Payments on capital leases |
(76 | ) | (98 | ) | ||||
| Income tax benefit from exercise of stock options |
814 | 1,114 | ||||||
| Proceeds from issuance of stock, net |
3,084 | 5,601 | ||||||
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| Net cash provided by financing activities |
3,822 | 6,617 | ||||||
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| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(2,284 | ) | (130 | ) | ||||
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| INCREASE IN CASH AND CASH EQUIVALENTS |
18,075 | 10,208 | ||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
93,233 | 64,540 | ||||||
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| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 111,308 | $ | 74,748 | ||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months Ended | Six Months Ended | |||||||||||||||
| (in thousands) |
June 29, 2013 | June 30, 2012 | June 29, 2013 | June 30, 2012 | ||||||||||||
| Net income |
$ | 3,631 | $ | 4,734 | $ | 8,205 | $ | 11,484 | ||||||||
| Currency translation adjustments |
468 | (3,022 | ) | (2,961 | ) | (1,688 | ) | |||||||||
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| Comprehensive income |
$ | 4,099 | $ | 1,712 | $ | 5,244 | $ | 9,796 | ||||||||
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