FARO Raises Earnings Guidance For 2004 Following 22 Cents Per
Diluted Share In The Third Quarter LAKE MARY, Fla., Nov. 4
/PRNewswire-FirstCall/ -- FARO Technologies, Inc. (NASDAQ:FARO)
today reported net income of $3.1 million, or 22 cents per diluted
share in the third quarter of 2004, compared to $3.3 million, or 26
cents per diluted share in the third quarter of 2003, which
included $1.1 million (8 cents per diluted share) in other income
related to a settlement from arbitration. Sales for the quarter
increased $4.2 million, or 21.9% to $23.4 million, from $19.2
million in the third quarter of 2003. New orders in the third
quarter increased $6.1 million, or 35.3% to $23.4 million, compared
to $17.3 million in the third quarter of 2003. Gross margin
increased 5.6 percentage points to 63.1% in the quarter, from 57.5%
in the third quarter of 2003. (Logo:
http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO ) Income
from operations increased $1.1 million from $2.7 million in the
third quarter of 2003 to $3.8 million in the third quarter of 2004.
This increase was primarily a result of an increase in gross profit
of $3.8 million, offset by a $2.4 million increase in SG&A
expenses. Operating margin improved to 16.4% in the third quarter
of 2004, compared to 14.1% in the third quarter of 2003. Income tax
expense in the third quarter of 2004 was $690,000 or 18% of income
before taxes, compared to $488,000 or 13% in the year-ago quarter.
Regionally, sales in the Americas decreased marginally from $10.4
million in the third quarter of 2003 to $9.9 million in the third
quarter of 2004, while new orders increased 22.4% from $8.5 million
in the third quarter of 2003 to $10.4 million in the third quarter
of 2004. Sales in the Europe/Africa region increased 50.0% to $9.9
million from $6.6 million in the third quarter of 2003 resulting in
large part from the successful deployment of 20 new sales people.
Sales in the Asia/Pacific region grew 66.7% to $3.5 million, from
$2.1 million in the third quarter of 2003 primarily due to $1.0
million in sales from the Company's new sales offices in China. "As
we forecast last quarter, higher sales in Asia and Europe along
with a continued strong gross margin helped to offset higher
G&A costs in part related to our Sarbanes Oxley Section 404
compliance activities, and start up costs in Korea and India," said
Simon Raab, CEO. "We expect to incur an additional $500,000 in
professional fees in the fourth quarter to assist FARO in its
Sarbanes Oxley Section 404 compliance activities. In addition to
our international expansion, we will continue to invest in new
research and development initiatives and the addition of
application engineers to support our newer products. We are taking
these steps in an effort to create and capture an increasing
portion of the large, underserved CAM2 market." Outlook for the
remainder of 2004 We expect sales in the fourth quarter to be in
the range of $25.5 - $31.5 million, which will bring our total for
2004 to our previously announced increased range of $94-$100
million. The fourth quarter is usually the strongest, based on our
typical seasonality. As a result of our year-to-date earnings per
share and our forecasted sales or the fourth quarter, we are
raising our earlier forecast for net income of $0.85-$1.00 per
diluted share in 2004 to $0.95-$1.05. A conference call reviewing
the third quarter of 2004 will be held Friday, November 5, 2004
beginning at 11:00 AM (Eastern)/ 8:00 AM (Pacific). To participate
please dial 800.223.9488 five minutes prior to start time.
International callers should dial 785.832.1508. The Conference ID
is "FARO". A recording of the call will be available until February
5, 2005 by dialing 800.839.5687. International callers should dial
402.220.2569. No access code is needed for the replay. The call
will be simultaneously broadcast over the Internet at:
http://phx.corporate-ir.net/phoenix.zhtml?p=iroleventDetails&c=99722&event
ID=960288 The call will be archived at the Company's website at
http://www.faro.com/. Financial Tables Follow 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," 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 maintain historical or projected
fourth quarter sales growth rates; * our inability to maintain or
reduce operating expenses or maintain or increase our gross margin
or operating margin; * difficulties in ramping up sales in Asia *
higher than expected increases in expenses relating to our Asian
expansion or our Swiss manufacturing facility; * difficulties in
recruiting research and development engineers, and application
engineers * 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; * the cyclical
nature of the industries of our customers and the financial
condition of our customers; * the inability to protect our patents
and other proprietary rights in the United States and foreign
countries and the assertion of infringement claims against us; *
fluctuations in our annual and quarterly operating results as a
result of (i) the size and timing of customer orders, (ii) the
amount of time that it takes to fulfill orders and ship our
products, (iii) the length of our sales cycle to new customers and
the time and expense incurred in further penetrating our existing
customer base, (iv) increases in operating expenses required for
product development and new product marketing, (v) costs associated
with new product introductions, such as assembly line start-up
costs and low introductory period production volumes, (vi) the
timing and market acceptance of new products and product
enhancements, (vii) customer order deferrals in anticipation of new
products and product enhancements, (viii) our success in expanding
our sales and marketing programs, (ix) start- up costs associated
with opening new sales offices outside of the United States, (x)
fluctuations in revenue and without proportionate adjustments in
fixed costs, (xi) the efficiencies achieved in managing inventories
and fixed assets; and (xii) adverse changes in the manufacturing
industry and general economic condition; * 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 broad market for measurement and
inspection devices; * risks associated with expanding international
operations, such as fluctuations in currency exchange rates,
difficulties in staffing and managing foreign operations, political
and economic instability, and the burdens of complying with a wide
variety of foreign laws and labor practices; * the loss of our CEO
or Executive VP or other key personnel; * our inability to
identify, consummate, or achieve expected benefits from
acquisitions; * the failure to effectively manage our growth; * the
loss of a key supplier and the inability to find a sufficient
alternative supplier 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. FARO TECHNOLOGIES, INC.
AND SUBSIDIARIES SUMMARY FINANCIAL TABLE CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended Oct 2,
Sep 27, Oct 2, Sep 27, 2004 2003 2004 2003 SALES $23,375,534
$19,183,956 $68,477,573 $48,831,690 COST OF SALES 8,618,268
8,153,080 25,028,540 20,235,693 Gross profit 14,757,266 11,030,876
43,449,033 28,595,997 OPERATING EXPENSES: Selling 5,803,462
4,331,615 17,599,453 12,603,913 General and administrative
3,216,588 2,380,333 8,416,165 6,577,951 Depreciation and
amortization 566,610 471,789 1,661,305 1,599,434 Research and
development 1,335,896 1,135,452 3,983,645 3,079,075 Total Operating
Expenses 10,922,556 8,319,189 31,660,568 23,860,373 INCOME (LOSS)
FROM OPERATIONS 3,834,710 2,711,687 11,788,465 4,735,624 OTHER
INCOME (EXPENSES) Interest income 85,847 14,541 233,826 50,695
Other income, net (163,687) 1,109,155 215,471 1,443,625 Interest
expense (1,283) (13,345) (6,006) (47,903) NET INCOME BEFORE INCOME
TAX 3,755,587 3,822,038 12,231,756 6,182,041 INCOME TAX EXPENSE
690,176 488,150 2,215,346 800,738 NET INCOME $3,065,411 $3,333,888
$10,016,410 $5,381,303 NET INCOME PER SHARE - BASIC $0.22 $0.28
$0.73 $0.45 NET INCOME PER SHARE - DILUTED $0.22 $0.26 $0.72 $0.42
Weighted average shares - Basic 13,932,463 12,036,348 13,677,119
11,938,627 Weighted average shares - Diluted 14,064,767 12,946,088
13,831,998 12,666,995 SELECTED CONSOLIDATED BALANCE SHEET DATA
(UNAUDITED) Oct 2, 2004 Cash and investments $35,260,219 Current
assets $77,261,918 Total assets $94,485,521 Current liabilities
$11,295,133 Long-term debt - less current portion $78,957 Total
liabilities $12,538,397 Total shareholders' equity $81,947,124
Total liabilities and shareholders' equity $94,485,521 SELECTED
CONSOLIDATED STATEMENT OF CASH FLOWS DATA (UNAUDITED) Oct 2, 2004
Net cash provided by (used in) operating activities $3,359,047 Net
cash provided by (used in) investing activities $(9,601,607) Net
cash provided by (used in) financing activities $1,146,254 Effect
of Exchange Rate Changes on Cash $(154,224) Cash and Cash
Equivalents, Beginning of Period $17,424,901 Cash and Cash
Equivalents, End of Period $12,174,371
http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO
http://photoarchive.ap.org/ DATASOURCE: FARO Technologies, Inc.
CONTACT: Greg Fraser, Executive Vice President & CFO, FARO,
+1-407-333-9911, or Vic Allgeier, The TTC Group, +1-212-227-0997,
for FARO Web site: http://www.faro.com/
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