Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

FARO Announces Second Quarter Financial Results


LAKE MARY, Fla., Aug. 3, 2022 /PRNewswire/ -- FARO® Technologies, Inc. (Nasdaq: FARO), a global leader in 4D digital reality solutions, today announced its financial results for the second quarter ended June 30, 2022.

"Improving demand for our products, including the recently launched Focus Premium laser scanner and Quantum Max scan arm generated revenue of $79.9 million or $83.9 million on a constant currency basis, adjusting for the significant strengthening of the US dollar in the second quarter," stated Michael Burger, President and Chief Executive Officer. "We believe the building momentum for our updated product line-up demonstrates the progress we've made in aligning our hardware and software roadmaps to add value to our customer's workflows, resulting in differentiated offerings in our target markets."

Second Quarter 2022 Financial Summary

* A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. An additional explanation of these measures is included below under the heading "Non-GAAP Financial Measures".

Outlook for the Third Quarter 2022

For the third quarter ending September 30, 2022, FARO currently expects:

Conference Call

The Company will host a conference call to discuss these results on Wednesday, August 3, 2022 at 5:00 p.m. ET. Interested parties can access the conference call by dialing (800) 245-3047 (U.S.) or +1 (203) 518-9765 (International) and using the passcode FARO. A live webcast will be available in the Investor Relations section of FARO's website at: https://www.faro.com/en/About-Us/Investor-Relations/Financial-Events-and-Presentations

A replay webcast will be available in the Investor Relations section of the company's web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.

About FARO

FARO serves the 3D Metrology, AEC (Architecture, Engineering & Construction), O&M (Facilities Operations & Maintenance), and Public Safety Analytics markets. For over 40 years, FARO has provided industry-leading technology solutions that enable customers to digitize their world, and then use that data to make smarter decisions faster. FARO continues to be a pioneer in bridging the digital and physical worlds through data-driven accuracy, precision, and immediacy. For more information, visit http://www.faro.com

Non-GAAP Financial Measures

This press release contains information about our financial results that are not presented in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP (loss) income from operations, non-GAAP net (loss) income and non-GAAP net (loss) income per share, exclude the impact of purchase accounting intangible amortization expense, stock-based compensation, restructuring charges, transaction costs, and other tax adjustments, and are provided to enhance investors' overall understanding of our historical operations and financial performance.

In addition, we present EBITDA, which is calculated as net loss before interest (income) expense, net, income tax expense (benefit) and depreciation and amortization, and Adjusted EBITDA, which is calculated as EBITDA, excluding other (income) expense, net, stock-based compensation, restructuring charges, and transaction costs, as measures of our operating profitability. The most directly comparable GAAP measure to EBITDA and Adjusted EBITDA is net loss. We also present Adjusted EBITDA margin, which is calculated as Adjusted EBITDA as a percent of total sales.

In our second quarter reporting, we have included total sales on a constant currency basis, a new non-GAAP measure. The most directly comparable GAAP measure to total sales on a constant currency basis is total sales. We believe constant currency information is useful in analyzing underlying trends in our business and the commercial performance of our products by eliminating the impact of highly volatile fluctuations in foreign currency markets and allows for period-to-period comparisons of our performance. For simplicity, we may elect to omit this information in future periods if we determine a lack of material impact. To present this information, current period performance for entities reporting in currencies other than U.S. dollars are converted to U.S. dollars at the exchange rate in effect during the last day of the prior comparable period.

Management believes that these non-GAAP financial measures provide investors with relevant period-to-period comparisons of our core operations using the same methodology that management employs in its review of the Company's operating results. These financial measures are not recognized terms under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP.

These non-GAAP financial measures have limitations that should be considered before using these measures to evaluate a company's financial performance. These non-GAAP financial measures, as presented, may not be comparable to similarly titled measures of other companies due to varying methods of calculation. The financial statement tables that accompany this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

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 and customer acceptance of FARO's products, FARO's product development and product launches, FARO's growth, strategic and restructuring plans and initiatives, including but not limited to the additional restructuring charges expected to be incurred in connection with our restructuring plan and the timing and amount of cost savings and other benefits expected to be realized from the restructuring plan and other strategic initiatives, and FARO's growth potential and profitability. 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 "is," "will," "intend," "believe," "expect," "may," "could" or "should," 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:

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.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended


Six Months Ended

(in thousands, except share and per share data)

June 30, 2022


June 30, 2021


June 30, 2022


June 30, 2021

Sales








Product

$         59,702


$         60,275


$       116,432


$       114,910

Service

20,215


21,835


40,141


43,531

Total sales

79,917


82,110


156,573


158,441

Cost of sales








Product

28,169


25,455


52,504


50,259

Service

11,311


11,173


22,607


22,293

Total cost of sales

39,480


36,628


75,111


72,552

Gross profit

40,437


45,482


81,462


85,889

Operating expenses








Selling, general and administrative

36,018


33,594


71,508


66,942

Research and development

12,042


11,760


24,170


23,733

Restructuring costs

1,333


779


1,932


2,303

Total operating expenses

49,393


46,133


97,610


92,978

Loss from operations

(8,956)


(651)


(16,148)


(7,089)

Other (income) expense








Interest (income) expense, net

(12)


39


(4)


49

Other (income) expense, net

(1,636)


883


(1,649)


(732)

Loss before income tax benefit

(7,308)


(1,573)


(14,495)


(6,406)

Income tax expense (benefit)

1,266


(397)


3,766


(2,009)

Net loss

$          (8,574)


$          (1,176)


$        (18,261)


$          (4,397)

Net loss per share - Basic

$            (0.47)


$            (0.06)


$            (1.00)


$            (0.24)

Net loss per share - Diluted

$            (0.47)


$            (0.06)


$            (1.00)


$            (0.24)

Weighted average shares - Basic

18,266,747


18,161,110


18,267,783


18,133,368

Weighted average shares - Diluted

18,266,747


18,161,110


18,267,783


18,133,368

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 


(in thousands, except share and per share data)

June 30, 2022 (unaudited)


December 31, 2021

ASSETS




Current assets:




Cash and cash equivalents

$         101,969


$         121,989

Accounts receivable, net

70,915


78,523

Inventories, net

44,076


53,145

Prepaid expenses and other current assets

25,248


19,793

Total current assets

242,208


273,450

Non-current assets:




Property, plant and equipment, net

21,109


22,194

Operating lease right-of-use assets

20,154


22,543

Goodwill

79,595


82,096

Intangible assets, net

28,382


25,616

Service and sales demonstration inventory, net

29,692


30,554

Deferred income tax assets, net

19,635


21,277

Other long-term assets

2,174


2,010

Total assets

$         442,949


$         479,740

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$           13,635


$           14,199

Accrued liabilities

24,692


28,208

Income taxes payable

6,539


4,499

Current portion of unearned service revenues

36,372


40,838

Customer deposits

6,975


5,399

Lease liabilities

5,867


5,738

Total current liabilities

94,080


98,881

Unearned service revenues - less current portion

22,323


22,350

Lease liabilities - less current portion

16,053


18,648

Deferred income tax liabilities

1,010


1,058

Income taxes payable - less current portion

10,131


11,297

Other long-term liabilities

956


1,047

Total liabilities

144,553


153,281

Shareholders' equity:




Common stock - par value $.001, 50,000,000 shares authorized; 19,651,715 and 19,588,003
issued, respectively; 18,275,364 and 18,205,636 outstanding, respectively

20


20

Additional paid-in capital

306,119


301,061

Retained earnings

55,283


73,544

Accumulated other comprehensive loss

(32,369)


(17,374)

Common stock in treasury, at cost - 1,376,351 and 1,382,367 shares held, respectively

(30,657)


(30,792)

Total shareholders' equity

298,396


326,459

Total liabilities and shareholders' equity

$         442,949


$         479,740

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Six Months Ended

(in thousands)

June 30, 2022


June 30, 2021

Cash flows from:




Operating activities:




Net loss

$          (18,261)


$            (4,397)

Adjustments to reconcile net loss to net cash used in operating activities:




Depreciation and amortization

6,655


6,289

Stock-based compensation

6,358


5,377

Provisions for bad debts, net of recoveries

80


(43)

Loss on disposal of assets

82


86

Provision for excess and obsolete inventory

6


1,640

Deferred income tax expense (benefit)

(48)


(2,009)

Change in operating assets and liabilities:




Decrease (Increase) in:




Accounts receivable

5,102


3,964

Inventories

4,311


(7,495)

Prepaid expenses and other current assets

(6,101)


(982)

(Decrease) Increase in:




Accounts payable and accrued liabilities

(2,398)


(13,525)

Income taxes payable

1,007


(2,310)

Customer deposits

1,769


1,723

Unearned service revenues

(1,822)


(627)

Net cash used in operating activities

(3,260)


(12,309)

Investing activities:




Purchases of property and equipment

(3,481)


(2,072)

Cash paid for technology development, patents and licenses

(5,548)


(1,780)

Acquisition of business, net of cash acquired

?


(33,908)

Net cash used in investing activities

(9,029)


(37,760)

Financing activities:




Payments on finance leases

(116)


(167)

Payments for taxes related to net share settlement of equity awards

(1,165)


(3,779)

Proceeds from issuance of stock related to stock option exercises

?


5,165

Net cash (used in) provided by financing activities

(1,281)


1,219

Effect of exchange rate changes on cash and cash equivalents

(6,450)


(3,446)

Decrease in cash and cash equivalents

(20,020)


(52,296)

Cash and cash equivalents, beginning of period

121,989


185,633

Cash and cash equivalents, end of period

$         101,969


$         133,337

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)



Three Months Ended June 30,


Six Months Ended June 30,

(dollars in thousands, except per share data)

2022


2021


2022


2021

Gross profit, as reported

$        40,437


$        45,482


$        81,462


$        85,889

Stock-based compensation (1)

284


214


483


280

Non-GAAP adjustments to gross profit

284


214


483


280

Non-GAAP gross profit

$        40,721


$        45,696


$        81,945


$        86,169

Gross margin, as reported

50.6 %


55.4 %


52.0 %


54.2 %

Non-GAAP gross margin

51.0 %


55.7 %


52.3 %


54.4 %









Selling, general and administrative, as reported

$        36,018


$        33,594


$        71,508


$        66,942

Stock-based compensation (1)

(2,512)


(2,526)


(4,733)


(4,208)

Purchase accounting intangible amortization

(181)


(188)


(382)


(373)

Non-GAAP selling, general and administrative

$        33,325


$        30,880


$        66,393


$        62,361









Research and development, as reported

$        12,042


$        11,760


$        24,170


$        23,733

Stock-based compensation (1)

(695)


(543)


(1,142)


(889)

Purchase accounting intangible amortization

(490)


(313)


(1,035)


(641)

Non-GAAP research and development

$        10,857


$        10,904


$        21,993


$        22,203









Operating expenses, as reported

$        49,393


$        46,133


$        97,610


$        92,978

Stock-based compensation (1)

(3,207)


(3,069)


(5,875)


(5,097)

Restructuring and other costs (2)

(2,317)


(779)


(2,916)


(2,303)

Purchase accounting intangible amortization

(671)


(501)


(1,417)


(1,014)

Non-GAAP adjustments to operating expenses

(6,195)


(4,349)


(10,208)


(8,414)

Non-GAAP operating expenses

$        43,198


$        41,784


$        87,402


$        84,564









Loss from operations, as reported

$         (8,956)


$            (651)


$       (16,148)


$         (7,089)

Non-GAAP adjustments to gross profit

284


214


483


280

Non-GAAP adjustments to operating expenses

6,195


4,349


10,208


8,414

Non-GAAP (loss) income from operations

$         (2,477)


$          3,912


$         (5,457)


$          1,605









Net loss, as reported

$         (8,574)


$         (1,176)


$       (18,261)


$         (4,397)

Non-GAAP adjustments to gross profit

284


214


483


280

Non-GAAP adjustments to operating expenses

6,195


4,349


10,208


8,414

Income tax effect of non-GAAP adjustments

(1,775)


(1,144)


(2,742)


(2,622)

Other tax adjustments (3)

3,246


?


7,183


?

Non-GAAP net (loss) income

$            (624)


$          2,243


$         (3,129)


$          1,675









Net loss per share - Diluted, as reported

$           (0.47)


$           (0.06)


$           (1.00)


$           (0.24)

Stock-based compensation (1)

0.19


0.18


0.35


0.30

Restructuring and other costs (2)

0.13


0.04


0.16


0.13

Purchase accounting intangible amortization

0.04


0.02


0.08


0.05

Income tax effect of non-GAAP adjustments

(0.10)


(0.06)


(0.15)


(0.15)

Other tax adjustments (3)

0.18


?


0.39


?

Non-GAAP net (loss) income per share - Diluted

$           (0.03)


$             0.12


$           (0.17)


$             0.09



(1)

We exclude stock-based compensation, which is non-cash, from the non-GAAP financial measures because the Company believes that such exclusion provides a better comparison of results of ongoing operations for current and future periods with such results from past periods.

(2)

On February 14, 2020, our Board of Directors approved a global restructuring plan (the "Restructuring Plan"), which is intended to support our strategic plan in an effort to improve operating performance and ensure that we are appropriately structured and resourced to deliver increased and sustainable value to our shareholders and customers. The Restructuring and other costs primarily consist of severance and related benefits.

(3)

The other tax adjustments primarily relate to the impact of certain jurisdictions maintaining a full valuation allowance where benefit is not accrued on U.S. GAAP pre-tax book losses.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)



Three Months Ended June 30,


Six Months Ended June 30,

(in thousands)

2022


2021


2022


2021

Net loss

$         (8,574)


$         (1,176)


$       (18,261)


$         (4,397)

Interest (income) expense, net

(12)


39


(4)


49

Income tax expense (benefit)

1,266


(397)


3,766


(2,009)

Depreciation and amortization

3,643


3,099


6,655


6,289

EBITDA

(3,677)


1,565


(7,844)


(68)

Other (income) expense, net

(1,636)


883


(1,649)


(732)

Stock-based compensation

3,491


3,283


6,358


5,377

Restructuring and other costs (1)

2,317


779


2,916


2,303

Adjusted EBITDA

$              495


$          6,510


$            (219)


$          6,880

Adjusted EBITDA margin (2)

0.6 %


7.9 %


(0.1) %


4.3 %



(1)

On February 14, 2020, our Board of Directors approved a global restructuring plan (the "Restructuring Plan"), which is intended to support our strategic plan in an effort to improve operating performance and ensure that we are appropriately structured and resourced to deliver increased and sustainable value to our shareholders and customers. The Restructuring and other costs primarily consist of severance and related benefits.

(2)

 Calculated as Adjusted EBITDA as a percentage of total sales.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

KEY SALES MEASURES

(UNAUDITED)



For the Three Months Ended June 30,


For the Six Months Ended June 30,

(in thousands)

2022


2021


2022


2021

Total sales to external customers as reported








Americas (1)

$           34,667


$           33,702


$           71,344


$           66,251

EMEA (1)

21,555


26,474


43,691


51,928

APAC (1)

23,695


21,934


41,538


40,262


$           79,917


$           82,110


$         156,573


$         158,441










For the Three Months Ended June 30,


For the Six Months Ended June 30,

(in thousands)

2022


2021


2022


2021

Total sales to external customers in constant currency (2)








Americas (1)

$           34,658


$           33,764


$           71,218


$           66,281

EMEA (1)

24,194


26,109


47,427


51,044

APAC (1)

25,096


21,798


43,483


39,840


$           83,948


$           81,671


$         162,128


$         157,165



(1)

Regions represent North America and South America (Americas); Europe, the Middle East, and Africa (EMEA); and the Asia-Pacific (APAC).



(2)

We compare the change in the sales from one period to another period using constant currency disclosure. We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the exchange rate in effect during the last day of the prior comparable period, rather than the actual exchange rates in effect during the respective periods.

 


For the Three Months Ended June 30,


For the Six Months Ended June 30,

(in thousands)

2022


2021


2022


2021









Product

$        49,174


$        50,109


$        95,626


$        94,525

Software

10,528


10,166


20,806


20,385

Service

20,215


21,835


40,141


43,531

Total Sales

$        79,917


$        82,110


$      156,573


$      158,441









Product as a percentage of total sales

61.5 %


61.0 %


61.1 %


59.7 %

Software as a percentage of total sales

13.2 %


12.4 %


13.3 %


12.9 %

Service as a percentage of total sales

25.3 %


26.6 %


25.6 %


27.5 %









Total Recurring Revenue (3)

$        17,119


$        15,834


$        33,592


$        31,298

Recurring revenue as a percentage of total sales

21.4 %


19.3 %


21.5 %


19.8 %



(3)

Recurring revenue is comprised of hardware service contracts, software maintenance contracts, and subscription based software applications.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF OUTLOOK - GAAP TO NON-GAAP



Fiscal quarter ending September 30, 2022



GAAP diluted loss per share range

($0.45) - ($0.24)

Stock-based compensation

0.19

Purchase accounting intangible amortization

0.04

Restructuring and other costs

0.04

Non-GAAP tax adjustments

0.10 - 0.05

Non-GAAP diluted (loss) earnings per share

($0.08) - $0.08

 

SOURCE FARO


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