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): April 29, 2014
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
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 April 29, 2014, FARO Technologies, Inc. (the “Company”) issued a press release announcing its results of operations for the first fiscal quarter ended March 29, 2014. 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 April 29, 2014 | |
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) | ||||||
| April 29, 2014 | /s/ Peter Abram | |||||
| By: | Peter Abram | |||||
| Its: | Senior Vice President and Chief Financial Officer | |||||
Exhibit 99.1
Peter Abram, Senior Vice President and CFO
Peter.Abram@faro.com, 407-333-9911
FARO Reports First Quarter 2014 Sales Growth of 12%
LAKE MARY, FL, April 29, 2014 – FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the first quarter ended March 29, 2014. Sales in the first quarter of 2014 increased 12.2% to $73.4 million, from $65.4 million in the first quarter of 2013. The Company reported net income increased to $5.0 million, or $0.29 per share, in the first quarter of 2014, from $4.6 million, or $0.27 per share, in the comparable period in 2013.
New order bookings for the first quarter of 2014 increased 9.8% to $70.9 million, from $64.6 million in the first quarter of 2013.
First quarter gross margin at 54.6%, was lower than 56.3% in the first quarter of 2013. This was primarily driven by a write-down of laser scanner demonstration and service loaner inventory that became obsolete through the highly successful release of the Focus3D and X330/X130 laser scanners. Partially offsetting this charge was favorable pricing and related gross margin arising from the Tracker and the new Laser Scanner product lines.
The Company’s operating margin for the first quarter was 9.5%, compared with 8.7% in the first quarter of 2013. Operating margin was favorably impacted by top line sales growth, solid cost management, and timing of planned R&D expenditures.
“The first quarter was a strong start to the new fiscal year, as our results were in-line with our internal expectations,” stated Jay Freeland, FARO’s President & CEO. “Customer demand in all three regions was solid, driving double-digit sales growth in the Americas and Asia and an improving European market where our orders achieved double-digit growth. While we continue to exercise prudent cost control across all departments, in 2014 we are accelerating our investments in R&D, creating new products for our early stage markets such as Architecture, Engineering and Construction and Forensics as well as our primary markets such as Aerospace, Automotive, and Heavy Industrial. We remain diligent in developing new ways to disrupt and transform the marketplace.”
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 growth, demand for and customer acceptance of FARO’s products, anticipated improvement in the markets in which FARO operates, 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 “continue,” “are,” “remain,” “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, 2013. |
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 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 other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, Portugal, India, China, Malaysia, Vietnam, Thailand, South Korea and Japan.
More information is available at http://www.faro.com.
Financial tables to follow:
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | ||||||||
| (in thousands, except share and per share data) |
March 29, 2014 | March 30, 2013 | ||||||
| SALES |
||||||||
| Product |
$ | 59,822 | $ | 52,482 | ||||
| Service |
13,552 | 12,888 | ||||||
|
|
|
|
|
|||||
| Total sales |
73,374 | 65,370 | ||||||
|
|
|
|
|
|||||
| COST OF SALES |
||||||||
| Product |
25,153 | 21,339 | ||||||
| Service |
8,138 | 7,206 | ||||||
|
|
|
|
|
|||||
| Total cost of sales (exclusive of depreciation and amortization, shown separately below) |
33,291 | 28,545 | ||||||
|
|
|
|
|
|||||
| GROSS PROFIT |
40,083 | 36,825 | ||||||
| OPERATING EXPENSES: |
||||||||
| Selling |
17,433 | 16,650 | ||||||
| General and administrative |
8,413 | 7,515 | ||||||
| Depreciation and amortization |
1,847 | 1,833 | ||||||
| Research and development |
5,430 | 5,125 | ||||||
|
|
|
|
|
|||||
| Total operating expenses |
33,123 | 31,123 | ||||||
|
|
|
|
|
|||||
| INCOME FROM OPERATIONS |
6,960 | 5,702 | ||||||
|
|
|
|
|
|||||
| OTHER (INCOME) EXPENSE |
||||||||
| Interest income |
(17 | ) | (16 | ) | ||||
| Other expense, net |
160 | 115 | ||||||
| Interest expense |
— | 1 | ||||||
|
|
|
|
|
|||||
| INCOME BEFORE INCOME TAX EXPENSE |
6,817 | 5,602 | ||||||
| INCOME TAX EXPENSE |
1,841 | 1,028 | ||||||
|
|
|
|
|
|||||
| NET INCOME |
$ | 4,976 | $ | 4,574 | ||||
|
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|||||
| NET INCOME PER SHARE - BASIC |
$ | 0.29 | $ | 0.27 | ||||
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|||||
| NET INCOME PER SHARE - DILUTED |
$ | 0.29 | $ | 0.27 | ||||
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|
|||||
| Weighted average shares - Basic |
17,205,892 | 17,009,773 | ||||||
|
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|
|
|||||
| Weighted average shares - Diluted |
17,364,373 | 17,176,876 | ||||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (in thousands, except share data) |
March 29, 2014 (unaudited) |
December 31, 2013 |
||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 122,716 | $ | 124,630 | ||||
| Short-term investments |
64,994 | 64,994 | ||||||
| Accounts receivable, net |
64,739 | 66,309 | ||||||
| Inventories, net |
50,238 | 48,940 | ||||||
| Deferred income taxes, net |
5,082 | 4,601 | ||||||
| Prepaid expenses and other current assets |
15,183 | 14,645 | ||||||
|
|
|
|
|
|||||
| Total current assets |
322,952 | 324,119 | ||||||
|
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|
|
|
|||||
| Property and equipment: |
||||||||
| Machinery and equipment |
38,079 | 36,924 | ||||||
| Furniture and fixtures |
7,072 | 6,888 | ||||||
| Leasehold improvements |
12,307 | 11,765 | ||||||
|
|
|
|
|
|||||
| Property and equipment at cost |
57,458 | 55,577 | ||||||
| Less: accumulated depreciation and amortization |
(40,516 | ) | (39,126 | ) | ||||
|
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|
|
|
|||||
| Property and equipment, net |
16,942 | 16,451 | ||||||
|
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|
|
|
|||||
| Goodwill |
19,336 | 19,358 | ||||||
| Intangible assets, net |
8,273 | 8,112 | ||||||
| Service inventory |
20,345 | 19,033 | ||||||
| Deferred income taxes, net |
4,415 | 4,423 | ||||||
|
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|
|
|
|||||
| Total assets |
$ | 392,263 | $ | 391,496 | ||||
|
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 10,381 | $ | 14,881 | ||||
| Accrued liabilities |
18,533 | 20,133 | ||||||
| Income taxes payable |
31 | 1,690 | ||||||
| Current portion of unearned service revenues |
22,404 | 21,331 | ||||||
| Customer deposits |
2,289 | 2,910 | ||||||
| Current portion of obligations under capital leases |
6 | 8 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
53,644 | 60,953 | ||||||
| Unearned service revenues - less current portion |
13,608 | 13,414 | ||||||
| Deferred income tax liability, net |
1,233 | 1,171 | ||||||
| Obligations under capital leases - less current portion |
8 | 8 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
68,493 | 75,546 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| Shareholders’ equity: |
||||||||
| Common stock - par value $.001, 50,000,000 shares authorized; 17,913,793 and 17,868,372 issued; 17,233,558 and 17,188,137 outstanding, respectively |
18 | 18 | ||||||
| Additional paid-in capital |
194,797 | 191,874 | ||||||
| Retained earnings |
130,845 | 125,867 | ||||||
| Accumulated other comprehensive income |
7,185 | 7,266 | ||||||
| Common stock in treasury, at cost - 680,235 shares |
(9,075 | ) | (9,075 | ) | ||||
|
|
|
|
|
|||||
| Total shareholders’ equity |
323,770 | 315,950 | ||||||
|
|
|
|
|
|||||
| Total liabilities and shareholders’ equity |
$ | 392,263 | $ | 391,496 | ||||
|
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|
|
|
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended | ||||||||
| (in thousands) |
March 29, 2014 | March 30, 2013 | ||||||
| CASH FLOWS FROM: |
||||||||
| OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 4,976 | $ | 4,574 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
||||||||
| Depreciation and amortization |
1,847 | 1,833 | ||||||
| Compensation for stock options and restricted stock units |
1,246 | 1,018 | ||||||
| (Net recovery of) provision for bad debts |
(120 | ) | 274 | |||||
| Deferred income tax (benefit) expense |
(410 | ) | 1,162 | |||||
| Change in operating assets and liabilities: |
||||||||
| Decrease (increase) in: |
||||||||
| Accounts receivable |
1,869 | 7,541 | ||||||
| Inventories, net |
(2,541 | ) | (1,299 | ) | ||||
| Prepaid expenses and other current assets |
(539 | ) | (2,069 | ) | ||||
| Income tax benefit from exercise of stock options |
(58 | ) | (808 | ) | ||||
| (Decrease) increase in: |
||||||||
| Accounts payable and accrued liabilities |
(6,103 | ) | (676 | ) | ||||
| Income taxes payable |
(1,619 | ) | (1,658 | ) | ||||
| Customer deposits |
(645 | ) | 5 | |||||
| Unearned service revenues |
1,274 | 376 | ||||||
|
|
|
|
|
|||||
| Net cash (used in) provided by operating activities |
(823 | ) | 10,273 | |||||
|
|
|
|
|
|||||
| INVESTING ACTIVITIES: |
||||||||
| Purchases of property and equipment |
(2,124 | ) | (256 | ) | ||||
| Payments for intangible assets |
(419 | ) | (494 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in investing activities |
(2,543 | ) | (750 | ) | ||||
|
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|
|
|
|||||
| FINANCING ACTIVITIES: |
||||||||
| Payments on capital leases |
(50 | ) | (63 | ) | ||||
| Income tax benefit from exercise of stock options |
58 | 808 | ||||||
| Proceeds from issuance of stock, net |
1,619 | 3,049 | ||||||
|
|
|
|
|
|||||
| Net cash provided by financing activities |
1,627 | 3,794 | ||||||
|
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|
|||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS |
(175 | ) | (1,952 | ) | ||||
|
|
|
|
|
|||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(1,914 | ) | 11,365 | |||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
124,630 | 93,233 | ||||||
|
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|
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|
|||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 122,716 | $ | 104,598 | ||||
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Three Months Ended | ||||||||
| (in thousands) |
March 29, 2014 | March 30, 2013 | ||||||
| Net income |
$ | 4,976 | $ | 4,574 | ||||
| Currency translation adjustments, net of tax |
(81 | ) | (3,429 | ) | ||||
|
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|
|
|
|||||
| Comprehensive income |
$ | 4,895 | $ | 1,145 | ||||
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