LAKE MARY, Fla., April 30 /PRNewswire-FirstCall/ -- 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. 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 our plans, objectives, projections,
expectations, assumptions, strategies, or future events. 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
"may," "believes," "anticipates," "expects," "intends," "plans,"
"seeks," "estimates," "will," "should," "could," "projects,"
"forecast," "target," "goal," and similar expressions or
discussions of our strategy or other intentions identify
forward-looking statements. Other written or oral statements, which
constitute forward-looking statements, also may be made by the
Company from time to time. 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 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; -- our inability to successfully identify
and acquire target companies or achieve expected benefits from
acquisitions that are consummated; -- the cyclical nature of the
industries of our customers and the financial condition of our
customers; -- the fact that the market potential for the CAM2
market and the potential adoption rate for our products are
difficult to quantify and predict; -- the inability to protect our
patents and other proprietary rights in the United States and
foreign countries; -- fluctuations in our annual and quarterly
operating results and the inability to achieve our financial
operating targets as a result of a number of factors including,
without limitation (i) litigation and regulatory action brought
against us, (ii) quality issues with our products, (iii) excess or
obsolete inventory, (iv) raw material price fluctuations, (v)
expansion of our manufacturing capability and other inflationary
pressures, (vi) the size and timing of customer orders, (vii) the
amount of time that it takes to fulfill orders and ship our
products, (viii) the length of our sales cycle to new customers and
the time and expense incurred in further penetrating our existing
customer base, (ix) increases in operating expenses required for
product development and new product, marketing, (x) costs
associated with new product introductions, such as product
development, marketing, assembly line start-up costs and low
introductory period production volumes, (xi) the timing and market
acceptance of new products and product enhancements, (xii) customer
order deferrals in anticipation of new products and product
enhancements, (xiii) our success in expanding our sales and
marketing programs, (xiv) start-up costs associated with opening
new sales offices outside of the United States, (xv) fluctuations
in revenue without proportionate adjustments in fixed costs, (xvi)
the efficiencies achieved in managing inventories and fixed assets,
(xvii) investments in potential acquisitions or strategic sales,
product or other initiatives, (xviii) shrinkage or other inventory
losses due to product obsolescence, scrap or material price
changes, (xix) adverse changes in the manufacturing industry and
general economic conditions, (xx) compliance with government
regulations including health, safety, and environmental matters,
(xxi) the ultimate costs of the Company's monitoring obligations in
respect of the Foreign Corrupt Practices Act ("FCPA") matter; and
(xxii) other factors noted herein; -- changes in gross margins due
to changing product mix of products sold and the different gross
margins on different products; -- our inability to successfully
maintain the requirements of Restriction of use of Hazardous
Substances ("RoHS") and Waste Electrical and Electronic Equipment
("WEEE") compliance into our 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; -- the inability to
reach a final resolution of the FCPA matter with the DOJ or the SEC
or reaching a resolution on the FCPA matter that differs from the
resolution currently anticipated by the Company whether with
respect to monetary sanctions ultimately paid by the Company to the
SEC or DOJ or otherwise; -- unforeseen developments in our FCPA
matter or in complying with the FCPA in the future; -- the amount
of monetary sanctions ultimately paid by the Company to the SEC and
the DOJ; -- higher than expected increases in expenses relating to
our Asia Pacific expansion or our Singapore manufacturing facility;
-- our inability to find less expensive alternatives to stock
options to attract and retain employees; -- the loss of our Chief
Executive Officer or other key personnel; -- difficulties in
recruiting research and development engineers, and application
engineers; -- the failure to effectively manage our growth; --
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. -- the other risks detailed in the Company's
Annual Report on Form 10-K and other filings from time to time with
the Securities and Exchange Commission. 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 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 - BASIC $0.20 $0.22 NET INCOME
PER SHARE - DILUTED $0.20 $0.22 Weighted average shares - Basic
16,606,673 14,607,556 Weighted average shares - Diluted 16,738,891
14,700,094 FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (UNAUDITED) March 29, December 31, (in thousands,
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 46,237 49,040 Commitments and contingencies
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 benefit 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 DATASOURCE: FARO Technologies CONTACT: Keith Bair,
Senior Vice President and CFO, FARO Technologies, +1-407-333-9911,
Web site: http://www.faro.com/
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