FARO Q1 Revenue Up 14% to $46M with $3.4M Profit
 LAKE
MARY, FL, May 1, 2008 - FARO Technologies, Inc. (Nasdaq: FARO) today
announced results for the first quarter ended March 29, 2008. Net
income for the first quarter was $3.4 million, or $0.20 per diluted
share, an increase of $0.2 million, compared to $3.2 million, or
$0.22 per diluted share, in the first quarter of 2007.
Sales for the first quarter of 2008 were $46.1 million, an
increase of $5.8 million, or 14.4%, from $40.3 million in the first
quarter of 2007. New order bookings for the first quarter were $47.0
million, an increase of $8.8 million, or 23.0%, compared with $38.2
million in the year-ago quarter.
"We had strong growth in new orders during the first quarter,
once again validating our belief that FARO's world-class technology
is in the early stages of a very large market opportunity," stated
Jay Freeland, FARO's President & CEO. "We also maintained our
historical balance of approximately 50% of our orders coming from
new customers and 50% from existing customers. This remains a good
indicator of the adaptability and versatility of our technology.
Shipments, however, were lower than orders, driven by a large number
of new orders received at the end of the quarter which had customer
delivery requirements in April. Overall, lower orders growth in the
U.S. during the first quarter was offset by strength in Europe and
Asia and we continue to see the right "buy" signals from our
customers in all three regions."
Gross margin for the first quarter of 2008 was 60.1%, compared to
59.2% in the first quarter of 2007. Gross margin increased primarily
as the result of a change in the sales mix resulting from an
increase in unit sales of product lines with a lower than average
cost of sales. Gross margin for the first quarter of 2008 was in
line with previously issued full-year guidance of approximately
58.0% to 60.0%.
Selling expenses as a percentage of sales increased to 31.3% in
the first quarter of 2008 compared to 30.5% in the first quarter of
2007 driven primarily by costs associated with new sales personnel
who were added to continue driving the Company's growth.
General and administrative expenses were 12.2% of sales for the
first quarter of 2008 compared to 12.5% of sales in the first
quarter of 2007.
Research and development expenses were $2.7 million for the first
quarter of 2008, up from $2.0 million in the first quarter of 2007.
This increase reflects the Company's continued investment in new
growth platforms.
Operating margin for the first quarter of 2008 was 8.5%, compared
to 8.6% in the year ago quarter.
First quarter 2008 results also included an accrual for interest
expense of approximately $0.4 million associated with the Company's
Foreign Corrupt Practices Act resolution. The Company has executed
settlement documents with both the U.S. Department of Justice and
the U.S. Securities and Exchange Commission with respect to the FCPA
matter and is awaiting formal approval from both parties with
respect to those documents.
Income tax expense was $0.9 million for the first quarter of 2008
compared to $0.8 million in the first quarter of 2007 primarily as a
result of an increase in pretax income. The Company's effective tax
rate was 21.8% in the first quarter of 2008 compared to 20.5% in the
first quarter of 2007 due to an increase in taxable income in
jurisdictions with higher tax rates.
"We are well-positioned for the second quarter and the rest of
2008. First quarter orders growth was well within our target range
for the year. That strength in demand also allowed us to stay firm
on price, keeping gross margins above 60%. As a company, we've
always had fluctuations from one quarter to the next and the first
quarter has historically been our slowest. It is for this reason
that we consistently focus on and forecast full-year results only.
Based on all of these factors, we are maintaining our
previously-stated full year 2008 guidance of approximately 20-25%
sales growth and gross margin of 58-60%," Freeland concluded.
About FARO
With approximately 17,000 installations and 7,600 customers
globally, FARO Technologies, Inc. designs, develops, and markets
portable, computerized measurement 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 INCOME
(UNAUDITED)
Three Months Ended
(in thousands, except
per share data)
Mar 29, 2008 Mar 31, 2007
SALES
$46,090
$40,289
COST OF SALES (exclusive
of depreciation and
amortization, shown
separately below)
18,384
16,453
GROSS PROFIT
27,706
23,836
OPERATING EXPENSES:
Selling
14,428
12,304
General and administrative 5,646
5,023
Depreciation and amortization 1,015
1,091
Research and development 2,713
1,972
Total operating expenses 23,802
20,390
INCOME FROM OPERATIONS
3,904
3,446
OTHER (INCOME) EXPENSE
Interest income
(621)
(256)
Other (income) expense, net (237)
(325)
Interest expense
441
2
INCOME BEFORE INCOME TAX
4,321
4,025
INCOME TAX EXPENSE
943
827
NET INCOME
$3,378
$3,198
NET INCOME PER SHARE
$0.20
$0.22
- BASIC
NET INCOME PER SHARE
$0.20
$0.22
- DILUTED
Weighted average shares
16,606,673 14,607,556
- Basic
Weighted average shares
16,738,891 14,700,094
- Diluted
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands,
March 29, December 31,
except share data)
2008
2007
ASSETS
Current Assets:
Cash and cash equivalents $19,486
$25,798
Short-term investments 83,160
77,375
Accounts receivable, net 48,146
54,767
Inventories
37,022
29,100
Deferred income taxes, net 4,013
2,841
Prepaid expenses and other
current assets
9,646
6,719
Total current assets
201,473
196,600
Property and Equipment:
Machinery and equipment 13,696
12,895
Furniture and fixtures
5,398
5,008
Leasehold improvements
3,567
3,296
Property and equipment
at cost
22,661
21,199
Less: accumulated
depreciation and
amortization
(15,036)
(13,672)
Property and equipment, net 7,625
7,527
Goodwill
20,096
19,117
Intangible assets, net
6,391
5,970
Service Inventory
12,001
10,865
Deferred income taxes, net 1,934
3,460
Total Assets
$249,520
$243,539
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$12,997
$12,450
Accrued liabilities
13,914
17,989
Income taxes payable
1,201
2,266
Current portion of
unearned service revenues 9,523
8,594
Customer deposits
398
337
Current portion of
obligations under capital
leases
55
18
Total current liabilities 38,088
41,654
Unearned service revenues
- less current portion
6,865
6,091
Deferred tax liability, net 1,158
1,073
Obligations under capital
leases -less current portion 126
222
Total Liabilities
Commitments and contingencies 46,237
49,040
Shareholders' Equity:
Common stock - par value $.001,
50,000,000 shares authorized;
16,714,454 and 16,700,966 issued;
16,617,540 and 16,604,052
outstanding, respectively 17
17
Additional paid-in-capital 147,034
146,489
Retained earnings
46,924
43,545
Accumulated other
comprehensive income
9,459
4,599
Common stock in treasury,
at cost - 40,000 shares
(151)
(151)
Total Shareholders' Equity 203,283
194,499
Total Liabilities and
Shareholders' Equity
$249,520
$243,539
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED
Three Months Ended
March 29, 2008 March 31, 2007
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income
$3,378
$3,198
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization
1,015
1,092
Amortization of stock
options and restricted
stock units
422
199
Provision for bad debts 138
31
Deferred income tax benefi 471
111
Change in operating assets
and liabilities:
Decrease (increase) in:
Accounts receivable
8,815
2,960
Inventories
(7,129)
1,242
Prepaid expenses and
other current assets
(2,745)
(1,754) Income tax benefit from
exercise of stock options
(43)
(1,422)
Increase (decrease) in:
Accounts payable and
accrued liabilities
(4,193)
(5,509)
Income taxes payable (1,135)
(1,171)
Customer deposits
177
(266)
Unearned service revenues 921
1,647
Net cash provided by
operating activities
92
358
INVESTING ACTIVITIES:
Purchases of property
and equipment
(577)
(719)
Payments for intangible
assets
(331)
(42)
Purchases of short-term
investments
(5,785)
-
Net cash used in
investing activities
(6,693)
(761)
FINANCING ACTIVITIES:
Payments of capital leases (58)
9
Income tax benefit from
exercise of stock options
43
1,422
Proceeds from issuance
of stock, net
80
1,224
Net cash provided by
financing activities
65
2,655
EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS
224
(650)
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS
(6,312)
1,602
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD
25,798
15,689
CASH AND CASH EQUIVALENTS,
END OF PERIOD
$19,486
$17,291
For more information, visit
www.faro.com.
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News
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Nov 6 - FARO to Present at Robert Baird Industrial Conference
Oct 23 - FARO Q3 Conference Call on Oct 30, 11AM ET
Sep 10 - FARO Announces CAM2 Q 1.1 for Metrology Measurement
Jul 30 - FARO Q2 Revenue Up 21% to $58M with $6.4M Profit
Jul 8 - FARO Names Yuri Malinkevich as Director of Engineering
Jul 2 - FARO Offers 'Gage-PLUS' Online Video for QC Technology
Jun 9 - FARO CEO Freeland Gets Ernst & Young's Entrepreneur Award
Jun 6 - FARO Settles FCPA Matter with $1-2M Monitoring Debt
May 1 - FARO Q1 Revenue Up 14% to $46M with $3.4M Profit
Apr 24 - FARO Q1 Conference Call on May 1, 11AM ET
Apr 24 - FARO to Present at Baird Stock Conference
Feb 27 - FARO to Settle Class Action Lawsuit
Feb 14 - FARO Q4 Revenue Up 34.9% to $59.2M with $8.4M Profit
Feb 7 - FARO Q4 Conference Call on Feb 14, 11AM ET
Feb 6 - FARO Appoints John Donofrio to Board of Directors
Jan 30 - FARO Named in Forbes 'Tech Fast 25' List
Jan 22 - FARO to Release CAM2 Q for Metrology Measurement
Jan 18 - FARO Names Steve Garwood Sr VP, Managing Dir, Asia Pacific
Jan 15 - FARO Names Jim West as Chief Technology Officer
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