FARO Reports Second Quarter 2012 Sales and Net Income Growth of 11.8%
LAKE MARY, Fla., July 31, 2012 /PRNewswire/ — FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the second quarter ended June 30, 2012. Sales in the second quarter of 2012 increased 11.8% to $66.8 million, from $59.7 million in the second quarter of 2011. The Company reported net income increased by 11.8% to $4.7 million, or $0.28 per share, in the second quarter of 2012, from $4.2 million, or $0.25 per share, in the second quarter of 2011.
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New order bookings for the second quarter of 2012 were $71.0 million, an increase of 13.6% from $62.5 million in the second quarter of 2011.
“We had strong results in Asia and the Americas with sales increasing by 28.8% and 17.4%, respectively, over the second quarter of last year. Despite a sluggish and uncertain European economy, sales in Europe increased 9.4% when measured in Euros. However, due to the strengthening of the US dollar, European sales showed a modest decline of 2.9% when translated to US dollars,” stated Jay Freeland, FARO’s President and CEO. “Net income grew at the same pace as revenue even after absorbing considerable expenses related to litigation, the completion of FCPA monitoring activities and the unfavorable effect of exchange rates.”
Gross margin for the second quarter of 2012 was 55.5%, compared to 56.1% in the second quarter of 2011 and reflects lower average selling prices resulting from promotions to reduce inventory in preparation for new product introductions and an increase in sales of the Laser Scanner products sold through our distributor channel.
The Company’s operating margin for the second quarter increased to 10.3%, compared to 9.6% in the second quarter of 2011 and included approximately $1.2 million of professional fees related to the final review by the FCPA Monitor and an increase in patent litigation expenses of $0.4 million. The Company does not expect to incur further expenses related to FCPA matter going forward.
“In the second half of the year, we expect continuing economic headwinds in Europe that could spill over to other regions. Accordingly, we will be vigilant in cost containment while continuing to invest in product development and driving aggressive sales and marketing activities,” 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 demand for its products, 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;
- production delays caused by shortages of raw materials incorporated in the Company’s products;
- 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, 2011.
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 over 30,000 installations and 15,000 customers globally, FARO Technologies, Inc. designs, develops, and markets portable, computerized measurement and imaging 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 Focus 3D Laser Scanner; 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 BALANCE SHEETS
June 30, December 31,
2012 2011
(in thousands, except share data) (Unaudited)
-------------------------------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $74,748 $64,540
Short-term investments 64,989 64,997
Accounts receivable, net 53,246 57,512
Inventories, net 54,057 49,934
Deferred income taxes, net 6,190 5,297
Prepaid expenses and other current assets 10,617 9,207
Total current assets 263,847 251,487
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Property and Equipment:
Machinery and equipment 30,587 29,171
Furniture and fixtures 6,197 5,963
Leasehold improvements 10,728 10,233
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Property and equipment at cost 47,512 45,367
Less: accumulated depreciation and amortization (31,373) (29,134)
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Property and equipment, net 16,139 16,233
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Goodwill 18,339 18,610
Intangible assets, net 6,670 6,849
Service inventory 18,160 17,316
Deferred income taxes, net 2,240 2,296
Total Assets $325,395 $312,791
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $9,295 $13,396
Accrued liabilities 15,674 18,076
Income taxes payable 2,448 2,682
Current portion of unearned service revenues 16,751 15,638
Customer deposits 4,339 4,072
Current portion of obligations under capital leases 38 84
Total current liabilities 48,545 53,948
Unearned service revenues - less current portion 9,232 9,540
Deferred tax liability, net 1,279 1,148
Obligations under capital leases - less current portion 65 257
Total Liabilities 59,121 64,893
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Shareholders' Equity:
Common stock - par value $.001, 50,000,000 shares authorized; 17,626,558 18 17
and 17,381,110 issued; 16,946,323 and 16,700,875 outstanding, respectively
Additional paid-in capital 178,361 169,780
Retained earnings 92,844 81,360
Accumulated other comprehensive income 4,126 5,816
Common stock in treasury, at cost - 680,235 shares (9,075) (9,075)
Total Shareholders' Equity 266,274 247,898
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Total Liabilities and Shareholders' Equity $325,395 $312,791
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
------------------ ----------------
(in thousands, except share and per share data) June 30, 2012 July 2, 2011 June 30, 2012 July 2, 2011
---------------------------------------------- ------------- ------------ ------------- ------------
SALES
Product $55,432 $49,692 $109,856 $92,650
Service 11,330 10,019 22,135 19,627
Total Sales 66,762 59,711 131,991 112,277
------ ------ ------- -------
COST OF SALES
Product 22,320 19,349 42,826 34,922
Service 7,382 6,846 14,919 13,567
Total Cost of Sales (exclusive of depreciation and amortization, shown separately below) 29,702 26,195 57,745 48,489
------ ------ ------ ------
GROSS PROFIT 37,060 33,516 74,246 63,788
OPERATING EXPENSES:
Selling 15,841 15,309 31,879 29,461
General and administrative 8,134 6,917 14,762 13,507
Depreciation and amortization 1,689 1,722 3,368 3,336
Research and development 4,525 3,814 8,933 7,446
Total operating expenses 30,189 27,762 58,942 53,750
------ ------ ------ ------
INCOME FROM OPERATIONS 6,871 5,754 15,304 10,038
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OTHER (INCOME) EXPENSE
Interest income (20) (39) (121) (65)
Other (income) expense, net 401 124 261 (5)
Interest expense 7 2 20 31
--- --- --- ---
INCOME BEFORE INCOME TAXEXPENSE 6,483 5,667 15,144 10,077
INCOME TAX EXPENSE 1,749 1,434 3,660 2,601
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NET INCOME $4,734 $4,233 $11,484 $7,476
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NET INCOME PER SHARE - BASIC $0.28 $0.26 $0.68 $0.46
----- ----- ----- -----
NET INCOME PER SHARE - DILUTED $0.28 $0.25 $0.67 $0.45
----- ----- ----- -----
Weighted average shares - Basic 16,921,012 16,448,229 16,861,221 16,349,190
---------- ---------- ---------- ----------
Weighted average shares - Diluted 17,140,115 16,845,877 17,157,185 16,724,019
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
------------------ ----------------
(in thousands) June 30, 2012 July 2, 2011 June 30, 2012 July 2, 2011
------------- ------------- ------------ ------------- ------------
Net income $4,734 $4,233 $11,484 $7,476
Currency translation adjustments (3,022) 2,771 (1,688) 5,342
Comprehensive income $1,712 $7,004 $9,796 $12,818
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FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
----------------
(in thousands) June 30, 2012 July 2, 2011
------------- ------------- ------------
CASH FLOWS FROM:
OPERATING ACTIVITIES:
Net income $11,484 $7,476
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 3,368 3,336
Compensation for stock options and restricted stock units 1,866 1,366
Provision for (net recovery of) bad debts (84) 1,082
Deferred income tax benefit (744) (16)
Change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable 3,535 5,920
Inventories, net (6,173) (14,773)
Prepaid expenses and other current assets (1,569) (2,032)
Income tax benefit from exercise of stock options (1,114) (1,013)
Increase (decrease) in:
Accounts payable and accrued liabilities (6,313) 44
Income taxes payable 933 197
Customer deposits 317 (1,723)
Unearned service revenues 1,191 2,200
----- -----
Net cash provided by operating activities 6,697 2,064
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INVESTING ACTIVITIES:
Purchases of property and equipment (2,533) (2,534)
Payments for intangible assets (443) (425)
---- ----
Net cash used in investing activities (2,976) (2,959)
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FINANCING ACTIVITIES:
Payments on capital leases (98) (117)
Income tax benefit from exercise of stock options 1,114 1,013
Proceeds from issuance of stock, net 5,601 6,875
----- -----
Net cash provided by financing activities 6,617 7,771
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EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH (130) (259)
EQUIVALENTS
INCREASEIN CASH AND CASH EQUIVALENTS 10,208 6,617
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 64,540 50,722
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CASH AND CASH EQUIVALENTS, END OF PERIOD $74,748 $57,339
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SOURCE FARO Technologies, Inc.
