- Revenue of $88.2 million, up 10%
year over year, exceeded expectations
- Implemented cost reduction activities to realize targeted
expense levels in third quarter
- Significant improvement in cash flow results in positive second
quarter Free Cash Flow
LAKE
MARY, Fla., Aug. 2, 2023
/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,
2023.
"Second quarter revenue of $88.2 million, increased 10% year over year
or 6% excluding the impact of prior year acquisitions, exceeded our
expectations and was enabled by improved shipments of Quantum Max
Arms and Vantage Laser Trackers," said Yuval Wasserman, Executive Chairman.
"Further, we were able to execute our cost reduction
activities one quarter ahead of plan and now expect to realize our
lower cost base in the third quarter. We remain focused on the
execution of our hardware and software enabled strategy of
providing 4D digital reality solutions to our customers in the
large and growing 3D Metrology, AECO and Public Safety Analytics
end markets."
Second Quarter 2023 Financial Summary
- Total sales of $88.2 million, up
10% year over year or 6% excluding the impact of prior year
acquisitions
- Software sales of $10.8 million,
up 2% compared to the prior year period
- Recurring revenue of $16.4
million, down 4% year on year
- Gross margin of 37.8%, compared to 50.6% in the prior year
period with the reduction primarily as a result of inventory
write-offs that resulted from a sharper focus on core hardware
products and material cost increases
- Non-GAAP gross margin of 48.0%, compared to 51.0% in the prior
year period
- Operating expenses of $58.7
million, compared to $49.4
million in the prior year period with the increase primarily
a result of $8.8 million in
restructuring and other one-time charges
- Non-GAAP operating expenses of $44.1
million, compared to $43.2
million in the prior year period
- Net loss of $28.2 million, or
$(1.49) per share compared to net
loss of $8.6 million, or $(0.47) per share in the prior year period
- Non-GAAP net loss of $2.6
million, or $(0.14) per share
compared to non-GAAP net loss of $0.6
million, or $(0.03) per share
in the prior year period
- Adjusted EBITDA of $0.9 million,
or 1.0% of total sales compared to an approximate $0.5 million, or 0.6% of total sales in the prior
year period
- Cash and short-term investments of $88.5
million, compared to $88.6
million as of March 31,
2023
* 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 2023
For the third quarter ending September
30, 2023, FARO currently expects:
- Revenue in the range of $76 to
$84 million
- Gross margin in the range of 45% to 47%. Non-GAAP gross margin
in the range of 46% to 48%
- Operating expenses in the range of $50.9 to $53.4
million. Non-GAAP operating expenses in the range of
$41.0 to $42.5
million
- Net loss per share in the range of ($1.25) to ($0.71).
Non-GAAP net loss per share in the range of ($0.35) to ($0.10)
Conference Call
The Company will host a conference call to discuss these results
on Wednesday, August 2, 2023, 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
For 40 years, FARO has provided industry-leading technology
solutions that enable customers to measure 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 reliable accuracy, precision, and immediacy. For more
information, visit 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 margin, non-GAAP operating
expenses, non-GAAP net loss and non-GAAP net loss per share,
exclude the impact of purchase accounting intangible amortization
expense and fair value adjustments, stock-based compensation,
inventory reserve charge, restructuring and other charges, 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 and
depreciation and amortization, and Adjusted EBITDA, which is
calculated as EBITDA, excluding other (income) expense, net,
stock-based compensation, inventory reserve charge, and
restructuring and other charges, as measures of our operating
profitability. The most directly comparable GAAP measure to EBITDA
and Adjusted EBITDA is net loss.
Free Cash Flow represents cash from operating activities less
capital spending. Adjusted Free Cash Flow represents free cash flow
further adjusted to exclude restructuring cash payments.
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 the outlook for the third quarter of 2023, demand for and
customer acceptance of FARO's products, FARO's product
acquisitions, development and product launches, and FARO's growth,
investment, strategic and restructuring plans and initiatives,
including but not limited to the timing and amount of cost savings
and other benefits expected to be realized from our strategic
initiatives. 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,"
"continue," "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:
- the Company's ability to realize the intended benefits of its
undertaking to transition to a company that is reorganized around
functions to improve the efficiency of its sales organization and
to improve operational effectiveness;
- the Company's inability to successfully execute its new
strategic plan and restructuring plan, including but not limited to
additional impairment charges and/or higher than expected severance
costs and exit costs, and its inability to realize the expected
benefits of such plans;
- the outcome of the U.S. Government's review of, or
investigation into, the GSA Matter;
- any resulting penalties, damages, or sanctions imposed on the
Company and the outcome of any resulting litigation to which the
Company may become a party;
- loss of future government sales;
- potential impacts on customer and supplier relationships and
the Company's reputation;
- development by others of new or improved products, processes or
technologies that make the Company's products less competitive or
obsolete;
- the Company's inability to maintain its technological advantage
by developing new products and enhancing its existing
products;
- 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
financial conditions;
- the effect of general economic and financial market conditions,
including in response to public health concerns;
- assumptions regarding the Company's financial condition or
future financial performance may be incorrect;
- the impact of fluctuations in foreign exchange rates and
inflation rates; and
- other risks and uncertainties discussed in Part I, Item 1A.
Risk Factors in the Company's Annual Report on Form 10-K for the
year ended December 31, 2022, filed
with the Securities and Exchange Commission on February 15, 2023, as supplemented by the
Company's Quarterly Reports on Form 10-Q, and in other SEC
filings.
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,
2023
|
|
June 30,
2022
|
|
June 30,
2023
|
|
June 30,
2022
|
Sales
|
|
|
|
|
|
|
|
Product
|
$
67,603
|
|
$
59,702
|
|
$
132,843
|
|
$
116,432
|
Service
|
20,608
|
|
20,215
|
|
40,335
|
|
40,141
|
Total sales
|
88,211
|
|
79,917
|
|
173,178
|
|
156,573
|
Cost of
sales
|
|
|
|
|
|
|
|
Product
|
44,094
|
|
28,169
|
|
78,051
|
|
52,504
|
Service
|
10,794
|
|
11,311
|
|
22,088
|
|
22,607
|
Total cost of
sales
|
54,888
|
|
39,480
|
|
100,139
|
|
75,111
|
Gross profit
|
33,323
|
|
40,437
|
|
73,039
|
|
81,462
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
38,561
|
|
36,018
|
|
79,937
|
|
71,508
|
Research and
development
|
11,662
|
|
12,042
|
|
24,380
|
|
24,170
|
Restructuring
costs
|
8,450
|
|
1,333
|
|
12,688
|
|
1,932
|
Total operating
expenses
|
58,673
|
|
49,393
|
|
117,005
|
|
97,610
|
Loss from
operations
|
(25,350)
|
|
(8,956)
|
|
(43,966)
|
|
(16,148)
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest expense
(income)
|
1,003
|
|
(12)
|
|
1,838
|
|
(4)
|
Other expense
(income), net
|
476
|
|
(1,636)
|
|
256
|
|
(1,649)
|
Loss before income
tax
|
(26,829)
|
|
(7,308)
|
|
(46,060)
|
|
(14,495)
|
Income tax
expense
|
1,416
|
|
1,266
|
|
3,349
|
|
3,766
|
Net loss
|
$
(28,245)
|
|
$
(8,574)
|
|
$
(49,409)
|
|
$
(18,261)
|
Net loss per share -
Basic
|
$
(1.49)
|
|
$
(0.47)
|
|
$
(2.62)
|
|
$
(1.00)
|
Net loss per share -
Diluted
|
$
(1.49)
|
|
$
(0.47)
|
|
$
(2.62)
|
|
$
(1.00)
|
Weighted average shares
- Basic
|
18,920,675
|
|
18,266,747
|
|
18,871,007
|
|
18,267,783
|
Weighted average shares
- Diluted
|
18,920,675
|
|
18,266,747
|
|
18,871,007
|
|
18,267,783
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
|
|
(in thousands, except share and per share
data)
|
June 30,
2023
|
|
December
31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
68,228
|
|
$
37,812
|
Short-term
investments
|
20,240
|
|
—
|
Accounts receivable,
net
|
88,293
|
|
90,326
|
Inventories,
net
|
41,560
|
|
50,026
|
Prepaid expenses and
other current assets
|
38,551
|
|
41,201
|
Total current
assets
|
256,872
|
|
219,365
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment, net
|
23,247
|
|
19,720
|
Operating lease
right-of-use assets
|
13,315
|
|
18,989
|
Goodwill
|
108,883
|
|
107,155
|
Intangible assets,
net
|
48,643
|
|
48,978
|
Service and sales
demonstration inventory, net
|
23,063
|
|
30,904
|
Deferred income tax
assets, net
|
24,221
|
|
24,192
|
Other long-term
assets
|
4,039
|
|
4,044
|
Total assets
|
$
502,283
|
|
$
473,347
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
21,241
|
|
$
27,286
|
Accrued
liabilities
|
29,979
|
|
23,345
|
Income taxes
payable
|
10,056
|
|
6,767
|
Current portion of
unearned service revenues
|
35,767
|
|
36,407
|
Customer
deposits
|
5,584
|
|
6,725
|
Lease
liabilities
|
5,140
|
|
5,709
|
Total current
liabilities
|
107,767
|
|
106,239
|
Loan - 5.50%
Convertible Senior Notes
|
72,491
|
|
—
|
Unearned service
revenues - less current portion
|
21,017
|
|
20,947
|
Lease liabilities -
less current portion
|
12,463
|
|
14,649
|
Deferred income tax
liabilities
|
11,928
|
|
11,708
|
Income taxes payable -
less current portion
|
5,292
|
|
8,706
|
Other long-term
liabilities
|
39
|
|
49
|
Total
liabilities
|
230,997
|
|
162,298
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock - par
value $0.001, 50,000,000 shares authorized; 20,321,490 and
20,156,233 issued, respectively; 18,946,798 and 18,780,013
outstanding, respectively
|
20
|
|
20
|
Additional paid-in
capital
|
336,534
|
|
328,227
|
Retained
earnings
|
(2,621)
|
|
46,788
|
Accumulated other
comprehensive loss
|
(31,992)
|
|
(33,331)
|
Common stock in
treasury, at cost - 1,374,692 and 1,376,220 shares held,
respectively
|
(30,655)
|
|
(30,655)
|
Total shareholders'
equity
|
271,286
|
|
311,049
|
Total liabilities and
shareholders' equity
|
$
502,283
|
|
$
473,347
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Six Months Ended June
30,
|
(in thousands)
|
2023
|
|
2022
|
Cash flows
from:
|
|
|
|
Operating
activities:
|
|
|
|
Net loss
|
$
(49,409)
|
|
$
(18,261)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
7,925
|
|
6,655
|
Stock-based
compensation
|
8,584
|
|
6,358
|
Inventory
write-downs
|
8,132
|
|
—
|
Asset impairment
charges
|
4,571
|
|
—
|
Deferred income tax
expense (benefit) and other non-cash charges
|
(41)
|
|
80
|
Provision for excess
and obsolete inventory
|
1,033
|
|
82
|
Amortization of debt
discount and issuance costs
|
181
|
|
—
|
Loss on disposal of
assets
|
130
|
|
6
|
Provisions for bad
debts, net of recoveries
|
408
|
|
(48)
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease (Increase)
in:
|
|
|
|
Accounts
receivable
|
3,280
|
|
5,102
|
Inventories
|
1,587
|
|
4,311
|
Prepaid expenses and
other current assets
|
3,105
|
|
(6,101)
|
(Decrease) Increase
in:
|
|
|
|
Accounts payable and
accrued liabilities
|
(277)
|
|
(2,398)
|
Income taxes
payable
|
(263)
|
|
1,007
|
Customer
deposits
|
(1,210)
|
|
1,769
|
Unearned service
revenues
|
(750)
|
|
(1,822)
|
Other
liabilities
|
(193)
|
|
—
|
Net cash used in
operating activities
|
(13,207)
|
|
(3,260)
|
Investing
activities:
|
|
|
|
Purchases of property
and equipment
|
(4,312)
|
|
(3,481)
|
Purchases of
short-term investments
|
(20,024)
|
|
—
|
Cash paid for
technology development, patents and licenses
|
(3,616)
|
|
(5,548)
|
Net cash used in
investing activities
|
(27,952)
|
|
(9,029)
|
Financing
activities:
|
|
|
|
Payments on finance
leases
|
(105)
|
|
(116)
|
Payments for taxes
related to net share settlement of equity awards
|
(277)
|
|
(1,165)
|
Proceeds from issuance
of 5.50% Convertible Senior Notes, due 2028, net of discount,
issuance cost and accrued interest
|
72,310
|
|
—
|
Net cash provided by
(used in) financing activities
|
71,928
|
|
(1,281)
|
Effect of exchange rate
changes on cash and cash equivalents
|
(353)
|
|
(6,450)
|
Increase (Decrease) in
cash and cash equivalents
|
30,416
|
|
(20,020)
|
Cash and cash
equivalents, beginning of period
|
37,812
|
|
121,989
|
Cash and cash
equivalents, end of period
|
$
68,228
|
|
$
101,969
|
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)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Gross profit, as
reported
|
$
33,323
|
|
$
40,437
|
|
$
73,039
|
|
$
81,462
|
Stock-based
compensation (1)
|
419
|
|
284
|
|
691
|
|
483
|
Inventory reserve
charge (3)
|
8,132
|
|
—
|
|
8,132
|
|
—
|
Restructuring and
other costs (2)
|
435
|
|
—
|
|
870
|
|
—
|
Non-GAAP adjustments
to gross profit
|
8,986
|
|
284
|
|
9,693
|
|
483
|
Non-GAAP gross
profit
|
$
42,309
|
|
$
40,721
|
|
$
82,732
|
|
$
81,945
|
Gross margin, as
reported
|
37.8 %
|
|
50.6 %
|
|
42.2 %
|
|
52.0 %
|
Non-GAAP gross
margin
|
48.0 %
|
|
51.0 %
|
|
47.8 %
|
|
52.3 %
|
|
|
|
|
|
|
|
|
Selling, general and
administrative, as reported
|
$
38,561
|
|
$
36,018
|
|
$
79,937
|
|
$
71,508
|
Stock-based
compensation (1)
|
(3,554)
|
|
(2,512)
|
|
(6,122)
|
|
(4,733)
|
Purchase accounting
intangible amortization
|
(688)
|
|
(181)
|
|
(1,361)
|
|
(382)
|
Non-GAAP selling,
general and administrative
|
$
34,319
|
|
$
33,325
|
|
$
72,454
|
|
$
66,393
|
|
|
|
|
|
|
|
|
Research and
development, as reported
|
$
11,662
|
|
$
12,042
|
|
$
24,380
|
|
$
24,170
|
Stock-based
compensation (1)
|
(977)
|
|
(695)
|
|
(1,771)
|
|
(1,142)
|
Purchase accounting
intangible amortization
|
(541)
|
|
(490)
|
|
(1,040)
|
|
(1,035)
|
Non-GAAP research and
development
|
$
10,144
|
|
$
10,857
|
|
$
21,569
|
|
$
21,993
|
|
|
|
|
|
|
|
|
Operating expenses, as
reported
|
$
58,673
|
|
$
49,393
|
|
$ 117,005
|
|
$
97,610
|
Stock-based
compensation (1)
|
(4,531)
|
|
(3,207)
|
|
(7,893)
|
|
(5,875)
|
Restructuring and
other costs (2)
|
(8,809)
|
|
(2,317)
|
|
(13,842)
|
|
(2,916)
|
Purchase accounting
intangible amortization
|
(1,229)
|
|
(671)
|
|
(2,401)
|
|
(1,417)
|
Non-GAAP adjustments
to operating expenses
|
(14,569)
|
|
(6,195)
|
|
(24,136)
|
|
(10,208)
|
Non-GAAP operating
expenses
|
$
44,104
|
|
$
43,198
|
|
$
92,869
|
|
$
87,402
|
|
|
|
|
|
|
|
|
Loss from operations,
as reported
|
$ (25,350)
|
|
$
(8,956)
|
|
$ (43,966)
|
|
$ (16,148)
|
Non-GAAP adjustments
to gross profit
|
8,986
|
|
284
|
|
9,693
|
|
483
|
Non-GAAP adjustments
to operating expenses
|
14,569
|
|
6,195
|
|
24,136
|
|
10,208
|
Non-GAAP loss from
operations
|
$
(1,795)
|
|
$
(2,477)
|
|
$ (10,137)
|
|
$
(5,457)
|
|
|
|
|
|
|
|
|
Net loss, as
reported
|
$ (28,245)
|
|
$
(8,574)
|
|
$ (49,409)
|
|
$ (18,261)
|
Non-GAAP adjustments
to gross profit
|
8,986
|
|
284
|
|
9,693
|
|
483
|
Non-GAAP adjustments
to operating expenses
|
14,569
|
|
6,195
|
|
24,136
|
|
10,208
|
Income tax effect of
non-GAAP adjustments
|
(5,888)
|
|
(1,775)
|
|
(8,457)
|
|
(2,742)
|
Other tax adjustments
(4)
|
7,959
|
|
3,246
|
|
14,342
|
|
7,183
|
Non-GAAP net
loss
|
$
(2,619)
|
|
$
(624)
|
|
$
(9,695)
|
|
$
(3,129)
|
|
|
|
|
|
|
|
|
Net loss per share -
Diluted, as reported
|
$
(1.49)
|
|
$
(0.47)
|
|
$
(2.62)
|
|
$
(1.00)
|
Stock-based
compensation (1)
|
0.26
|
|
0.19
|
|
0.46
|
|
0.35
|
Restructuring and
other costs (2)
|
0.49
|
|
0.13
|
|
0.78
|
|
0.16
|
Inventory reserve
charge (3)
|
0.43
|
|
—
|
|
0.43
|
|
—
|
Purchase accounting
intangible amortization
|
0.06
|
|
0.04
|
|
0.13
|
|
0.08
|
Income tax effect of
non-GAAP adjustments
|
(0.31)
|
|
(0.10)
|
|
(0.45)
|
|
(0.15)
|
Other tax adjustments
(4)
|
0.42
|
|
0.18
|
|
0.76
|
|
0.39
|
Non-GAAP net loss per
share - Diluted
|
$
(0.14)
|
|
$
(0.03)
|
|
$
(0.51)
|
|
$
(0.17)
|
(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 7, 2023, our Board of Directors approved an integration
plan (the "Integration Plan"), which is intended to streamline and
simplify operations, particularly around our recent acquisitions
and the resulting redundant operations and offerings. The
Restructuring and other costs primarily consist of severance and
related benefits.
|
|
(3) During
the second quarter of 2023, we recorded a charge of $8.1 million,
increasing our reserve for excess and obsolete inventory, based on
our analysis of our inventory reserves in connection with our
strategy to simplify our product portfolio and cease selling
certain products.
|
|
(4) 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)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net loss
|
$ (28,245)
|
|
$
(8,574)
|
|
$ (49,409)
|
|
$ (18,261)
|
Interest (income)
expense, net
|
1,003
|
|
(12)
|
|
1,838
|
|
(4)
|
Income tax
expense
|
1,416
|
|
1,266
|
|
3,349
|
|
3,766
|
Depreciation and
amortization
|
3,947
|
|
3,643
|
|
7,925
|
|
6,655
|
EBITDA
|
(21,879)
|
|
(3,677)
|
|
(36,297)
|
|
(7,844)
|
Other (income)
expense, net
|
476
|
|
(1,636)
|
|
256
|
|
(1,649)
|
Stock-based
compensation
|
4,950
|
|
3,491
|
|
8,584
|
|
6,358
|
Inventory reserve
charge (3)
|
8,132
|
|
—
|
|
8,132
|
|
—
|
Restructuring and
other costs (1)
|
9,244
|
|
2,317
|
|
14,712
|
|
2,916
|
Adjusted
EBITDA
|
$
923
|
|
$
495
|
|
$
(4,613)
|
|
$
(219)
|
Adjusted EBITDA margin
(2)
|
1.0 %
|
|
0.6 %
|
|
(2.7) %
|
|
(0.1) %
|
(1) On
February 7, 2023, our Board of Directors approved an integration
plan (the "Integration Plan"), which is intended to streamline and
simplify operations, particularly around our recent acquisitions
and the resulting redundant operations and offerings. The
Restructuring and other costs primarily consist of severance and
related benefits.
|
|
(2)
Calculated as Adjusted EBITDA as a percentage of total
sales.
|
|
(3) During
the second quarter of 2023, we recorded a charge of $8.1 million,
increasing our reserve for excess and obsolete inventory, based on
our analysis of our inventory reserves in connection with our
strategy to simplify our product portfolio and cease selling
certain products.
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
KEY SALES
MEASURES
(UNAUDITED)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Total sales to external customers as
reported
|
|
|
|
|
|
|
|
Americas
(1)
|
$
41,358
|
|
$
34,667
|
|
$
83,701
|
|
$
71,344
|
EMEA
(1)
|
24,855
|
|
21,555
|
|
49,020
|
|
43,691
|
APAC
(1)
|
21,998
|
|
23,695
|
|
40,457
|
|
41,538
|
|
$
88,211
|
|
$
79,917
|
|
$
173,178
|
|
$
156,573
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Total sales to external customers in constant
currency (2)
|
|
|
|
|
|
|
|
Americas
(1)
|
$
40,973
|
|
$
34,752
|
|
$
83,211
|
|
$
71,241
|
EMEA
(1)
|
23,944
|
|
21,159
|
|
47,633
|
|
41,848
|
APAC
(1)
|
22,688
|
|
23,188
|
|
41,232
|
|
39,812
|
|
$
87,605
|
|
$
79,099
|
|
$
172,076
|
|
$
152,901
|
(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.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Hardware
|
$
56,816
|
|
$
49,174
|
|
$ 111,778
|
|
$
95,626
|
Software
|
10,786
|
|
10,528
|
|
21,065
|
|
20,806
|
Service
|
20,609
|
|
20,215
|
|
40,335
|
|
40,141
|
Total Sales
|
$
88,211
|
|
$
79,917
|
|
$ 173,178
|
|
$ 156,573
|
|
|
|
|
|
|
|
|
Hardware as a
percentage of total sales
|
64.4 %
|
|
61.5 %
|
|
64.5 %
|
|
61.1 %
|
Software as a
percentage of total sales
|
12.2 %
|
|
13.2 %
|
|
12.2 %
|
|
13.3 %
|
Service as a percentage
of total sales
|
23.4 %
|
|
25.3 %
|
|
23.3 %
|
|
25.6 %
|
|
|
|
|
|
|
|
|
Total Recurring Revenue
(3)
|
$
16,396
|
|
$
17,119
|
|
$
33,081
|
|
$
33,592
|
Recurring revenue as a
percentage of total sales
|
18.6 %
|
|
21.4 %
|
|
19.1 %
|
|
21.5 %
|
(3)
Recurring revenue is comprised of hardware service contracts,
software maintenance contracts, and subscription based software
applications.
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
FREE CASH FLOW
RECONCILIATION
(UNAUDITED)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
(in thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash used in
operating activities
|
$
5,137
|
|
$
3,777
|
|
$
(13,207)
|
|
$
(3,260)
|
Purchases of property
and equipment
|
(2,624)
|
|
(1,039)
|
|
(4,312)
|
|
(3,481)
|
Cash paid for
technology development, patents and
licenses
|
(1,796)
|
|
(2,936)
|
|
(3,616)
|
|
(5,548)
|
Free Cash
Flow
|
717
|
|
(198)
|
|
(21,135)
|
|
(12,289)
|
Restructuring cash
payments
|
3,192
|
|
2,161
|
|
3,988
|
|
2,835
|
Adjusted Free Cash
Flow
|
$
3,909
|
|
$
1,963
|
|
$
(17,147)
|
|
$
(9,454)
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF
OUTLOOK - GAAP TO NON-GAAP
|
|
|
Fiscal Quarter Ending
9/30/2023
|
|
Low
|
|
High
|
GAAP diluted loss per
share range
|
$(1.25)
|
|
$(0.71)
|
Stock-based
compensation
|
0.29
|
|
0.29
|
Purchase accounting
intangible amortization
|
0.07
|
|
0.07
|
Restructuring and
other costs
|
0.34
|
|
0.13
|
Non-GAAP tax
adjustments
|
0.20
|
|
0.12
|
Non-GAAP diluted loss
per share
|
$(0.35)
|
|
$(0.10)
|
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SOURCE FARO