FARO Reports Sales Decline of 31.8% for Q1 2009; Orders Decrease by 41.7%
LAKE MARY, Fla.,
Sales for the first quarter of 2009 decreased
"Orders and sales were significantly lower in the first quarter of this
year and the weakness was consistent across all regions and verticals.
Economic conditions are making it difficult for our customers to make capital
goods purchases," stated
The Company initiated two reductions-in-force during the quarter,
effective
Gross margin for the first quarter of 2009 was 51.7%, compared to 60.1% in the first 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 40.8% in the first
quarter of 2009 from 31.3% in the first quarter of 2008 primarily as a result
of the decline in sales. Selling expenses in the first quarter of 2009
decreased by
General and administrative expenses increased to 20.0% of sales for the
first quarter of 2009 from 12.3% in the first quarter of 2008. General and
administrative expenses in the first quarter of 2009 increased by
R&D expenses were
The operating loss for the first quarter of 2009 was
Income tax expense decreased by
"We expect the economic environment to continue to be weak throughout 2009. We have taken significant steps to reduce our operating costs through reductions in force and other cost-cutting measures and will continue to do so as necessary. These are very challenging times for most companies, but we believe FARO will remain well-positioned through all of it," 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 the future state of the economy, our plans and strategies, our ability to grow and achieve profitability and reduce operating costs, and our 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 "expect," "believe," "will," 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:
-- our inability to further penetrate our customer base;
-- development by others of new or improved products, processes or
technologies that make our products obsolete or less competitive;
-- our inability to maintain our technological advantage by developing
new products and enhancing our existing products;
-- the cyclical nature of the industries of our customers and material
adverse changes in our 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;
-- difficulty quantifying and predicting the market potential for the
CAM2 market and the potential adoption rate for our products;
-- fluctuations in the Company's annual and quarterly operating results
and the inability to achieve its financial operating targets;
-- further reductions in gross margins due to changing mix of products
sold and the different gross margins on different products;
-- the inability of our products to displace traditional measurement
devices and attain broad market acceptance;
-- the impact of competitive products and pricing in the CAM2 market and
the broader market for measurement and inspection devices;
-- the effects of increased competition as a result of recent
consolidation in the CAM2 market;
-- 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;
-- variations in the effective income tax rate and the difficulty in
predicting the tax rate on a quarterly and annual basis; and
-- the loss of key suppliers and the inability to find sufficient
alternative suppliers in a reasonable period or on commercially
reasonable terms; 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, 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 19,600 installations and 9,200 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 INCOME
(UNAUDITED)
Three Months Ended
-------------------
(in thousands, except share and per
share data) April 4, 2009 March 29, 2008
----------------------------------- ------------- --------------
SALES
Product $24,214 $39,327
Service 7,235 6,763
----- -----
Total Sales 31,449 46,090
------ ------
COST OF SALES
Product 9,127 13,534
Service 6,062 4,850
----- -----
Total Cost of Sales (exclusive of
depreciation and amortization, shown
separately below) 15,189 18,384
------ ------
GROSS PROFIT 16,260 27,706
OPERATING EXPENSES:
Selling 12,824 14,428
General and administrative 6,299 5,646
Depreciation and amortization 1,291 1,015
Research and development 3,479 2,713
----- -----
Total operating expenses 23,893 23,802
------ ------
(LOSS) INCOME FROM OPERATIONS (7,633) 3,904
------ -----
OTHER (INCOME) EXPENSE
Interest income (158) (621)
Other expense (income), net 661 (237)
Interest expense 3 441
----- -----
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT)
EXPENSE (8,139) 4,321
INCOME TAX (BENEFIT) EXPENSE (1,554) 943
------ ------
NET (LOSS) INCOME $(6,585) $3,378
------- ------
NET (LOSS) INCOME PER SHARE - BASIC $(0.41) $0.20
------ -----
NET (LOSS) INCOME PER SHARE - DILUTED $(0.41) $0.20
------ -----
Weighted average shares - Basic 16,227,363 16,606,673
---------- ----------
Weighted average shares - Diluted 16,227,363 16,738,891
---------- ----------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Unaudited Audited
April, 4 December 31,
(in thousands, except share data) 2009 2008
--------------------------------- ---- ----
ASSETS
Current Assets:
Cash and cash equivalents $61,227 $23,494
Short-term investments 32,975 81,965
Accounts receivable, net 30,701 49,713
Inventories 33,584 33,444
Deferred income taxes, net 6,426 5,581
Prepaid expenses and other current assets 8,746 7,879
----- -----
Total current assets 173,659 202,076
------- -------
Property and Equipment:
Machinery and equipment 18,435 22,685
Furniture and fixtures 4,833 4,099
Leasehold improvements 8,560 3,956
----- -----
Property and equipment at cost 31,828 30,740
Less: accumulated depreciation and
amortization (17,220) (16,604)
------- -------
Property and equipment, net 14,608 14,136
------ ------
Goodwill 18,679 18,951
Intangible assets, net 8,338 8,580
Service inventory 12,683 12,843
Deferred income taxes, net 1,799 2,728
----- -----
Total Assets 229,766 259,314
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable 5,023 10,813
Accrued liabilities 10,651 14,032
Income taxes payable - 1,988
Current portion of unearned service revenues 11,313 11,501
Customer deposits 375 425
Current portion of obligations under capital
leases 58 87
------ ------
Total current liabilities 27,420 38,846
Unearned service revenues - less current
portion 6,078 6,772
Deferred tax liability, net 1,071 1,107
Obligations under capital leases - less
current portion 256 281
------ ------
Total Liabilities 34,825 47,006
------ ------
Shareholders' Equity:
Common stock - par value $.001 , 50,000,000
shares authorized; 16,750,269 and
16,741,488 issued; 16,048,926 and
16,658,552 outstanding, respectively 17 17
Additional paid-in-capital 149,997 149,298
Retained earnings 50,913 57,497
Accumulated other comprehensive income 3,089 5,742
Common stock in treasury, at cost -
680,235 and 55,808 shares (9,075) (246)
------ ----
Total Shareholders' Equity 194,941 212,308
------- -------
Total Liabilities and Shareholders' Equity $229,766 $259,314
-------- --------
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
------------------
April 4, 2009 March 29, 2008
------------- --------------
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net (loss) income $(6,585) $3,378
Adjustments to reconcile net (loss)
income to net cash (used in) provided
by operating activities:
Depreciation and amortization 1,291 1,015
Compensation for stock options and
restricted stock units 538 422
Provision for bad debts 397 138
Deferred income tax expense 30 471
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 17,669 8,815
Inventories (1,078) (7,129)
Prepaid expenses and other current assets (1,027) (2,745)
Income tax benefit from exercise of stock
options - (43)
Increase (decrease) in:
Accounts payable and accrued liabilities (8,835) (4,193)
Income taxes payable (2,008) (1,135)
Customer deposits (39) 177
Unearned service revenues (441) 921
------ ------
Net cash (used in) provided by
operating activities (88) 92
------ ------
INVESTING ACTIVITIES:
Purchases of property and equipment (1,647) (577)
Payments for intangible assets (188) (331)
Purchases of short-term investments (32,975) (32,025)
Proceeds from sales of short-term
investments 81,965 26,240
------ ------
Net cash provided by (used in)
investing activities 47,155 (6,693)
------ ------
FINANCING ACTIVITIES:
Payments on capital leases (55) (58)
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 (8,884) 65
------ ------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (450) 224
------ ------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 37,733 (6,312)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 23,494 25,798
------ ------
CASH AND CASH EQUIVALENTS, END OF PERIOD $61,227 $19,486
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SOURCE
Inc.
keith.bair@FARO.com
/Web Site: http://www.faro.com
(FARO FARO)