LAKE MARY, Fla., Nov. 4 /PRNewswire-FirstCall/ -- FARO Technologies, Inc. today announced results for the third quarter ended October 3, 2009. Net loss for the third quarter was $1.3 million, or $0.08 per diluted share, a decrease of $3.3 million, compared to net income of $2.0 million, or $0.12 per diluted share, in the third quarter of 2008.
Sales for the third quarter of 2009 decreased $13.4 million, or 27.3%, to $35.7 million from $49.1 million in the third quarter of 2008. New order bookings for the third quarter were $35.8 million, a decrease of $13.4 million, or 27.2%, compared with $49.2 million in the third quarter of 2008.
"Market conditions remain difficult, so we took additional steps in August to reduce our operating costs through one more reduction in force. As a result, I believe we are positioned well for the fourth quarter and beyond," stated Jay Freeland, FARO''s President and CEO. "Despite the ongoing market pressure, sales in the third quarter increased slightly over the second quarter of this year. Historically, we see about a 10% sequential decline between these two quarters, and we''re starting to see some stability in our customers'' operations and end-markets. We also launched the Ion Laser Tracker at the end of the third quarter, our latest generation of technology for large scale measurement. Initial demand for the Ion has been strong, with multiple orders booked within the first two weeks."
Gross margin for the third quarter of 2009 was 54.9%, compared to 59.1% in the third quarter of 2008. Gross margin decreased primarily due to a change in the sales mix between higher margin product sales and lower margin service revenue.
Selling expenses as a percentage of sales increased to 32.2% in the third quarter of 2009 from 31.3% in the third quarter of 2008, primarily as a result of the decline in sales. Selling expenses in the third quarter of 2009 decreased by $3.9 million to $11.5 million.
General and administrative expenses increased to 17.2% of sales for the third quarter of 2009 from 13.5% in the third quarter of 2008. General and administrative expenses in the third quarter of 2009 decreased by $0.5 million to $6.2 million from the third quarter of 2008.
R&D expenses were $2.8 million in the third quarter of 2009, a decrease from $3.2 million in the third quarter of 2008. R&D expenses were 7.8% of sales in the third quarter of 2009 compared to 6.6% of sales in the third quarter of 2008.
The operating loss for the third quarter of 2009 was $2.3 million, a decrease of $4.9 million from an operating profit of $2.6 million in the third quarter of 2008.
Income tax expense decreased by $1.3 million to a benefit of $0.8 million for the third quarter of 2009, from an expense of $0.5 million for the third quarter of 2008 due to a decrease in pretax income. The Company''s effective tax rate increased to a benefit of 37.6% for the third quarter of 2009 from an expense of 19.9% in the third quarter of 2008 primarily due to taxable losses in jurisdictions with higher tax rates.
"Despite some of the favorable signs we''re starting to see, there is still uncertainty in the marketplace. In response, we have reduced our operating costs substantially without sacrificing our global sales presence. More importantly, we have maintained our spending levels on Research & Development throughout the downturn, so I believe we are positioned to execute well in this environment," Mr. 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 the future state of the economy, FARO''s focus, plans and strategies, its ability to further reduce operating costs, and its future 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 our strategy 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; -- the cyclical nature of the industries of our customers and material adverse changes in customers'' access to liquidity and capital; -- further 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; -- fluctuations in the Company''s annual and quarterly operating results and the inability to achieve its financial operating targets; -- 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; -- 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, 2008.
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 20,000 installations and 9,500 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 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 OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended ------------------- ------------------ (in thousands, except share and per share data) Oct 3, 2009 Sep 27, 2008 Oct 3, 2009 Sep 27, 2008 ----------------- ----------- ------------ ----------- ------------ SALES Product $27,876 $41,100 $79,292 $131,019 Service 7,837 7,995 22,385 21,915 ----- ----- ------ ------ Total Sales 35,713 49,095 101,677 152,934 ------ ------ ------- ------- COST OF SALES Product 11,261 14,223 30,647 43,804 Service 4,850 5,863 15,805 16,176 ----- ----- ------ ------ Total Cost of Sales (exclusive of depreciation and amortization, shown separately below) 16,111 20,086 46,452 59,980 ------ ------ ------ ------ GROSS PROFIT 19,602 29,009 55,225 92,954 OPERATING EXPENSES: Selling 11,482 15,382 36,434 46,886 General and administrative 6,158 6,614 18,591 19,274 Depreciation and amortization 1,410 1,158 4,090 3,293 Research and development 2,802 3,237 9,566 9,122 ----- ----- ----- ----- Total operating expenses 21,852 26,391 68,681 78,575 ------ ------ ------ ------ (LOSS) INCOME FROM OPERATIONS (2,250) 2,618 (13,456) 14,379 ------ ----- ------- ------ OTHER (INCOME) EXPENSE Interest income (31) (547) (225) (1,624) Other (income) expense, net (183) 652 (359) 834 Interest expense 3 2 9 450 --- --- --- --- (LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE (2,039) 2,511 (12,881) 14,719 INCOME TAX (BENEFIT) EXPENSE (766) 500 (2,919) 2,965 ---- --- ------ ----- NET (LOSS) INCOME $(1,273) $2,011 $(9,962) $11,754 ------- ------ ------- ------- NET (LOSS) INCOME PER SHARE - BASIC $(0.08) $0.12 $(0.62) $0.71 ------ ----- ------ ----- NET (LOSS) INCOME PER SHARE - DILUTED $(0.08) $0.12 $(0.62) $0.70 ------ ----- ------ ----- Weighted average shares - Basic 16,093,759 16,637,497 16,131,680 16,624,784 ---------- ---------- ---------- ---------- Weighted average shares - Diluted 16,093,759 16,731,064 16,131,680 16,751,679 ---------- ---------- ---------- ---------- FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS October 3, December 31, (in thousands, except share data) 2009 2008 --------------------------------- ---- ---- ASSETS Unaudited Current Assets: Cash and cash equivalents $27,401 $23,494 Short-term investments 64,979 81,965 Accounts receivable, net 35,697 49,713 Inventories 28,212 33,444 Deferred income taxes, net 4,541 5,581 Prepaid expenses and other current assets 12,225 7,879 ------ ----- Total current assets 173,055 202,076 ------- ------- Property and Equipment: Machinery and equipment 19,557 22,685 Furniture and fixtures 5,250 4,099 Leasehold improvements 9,399 3,956 ----- ----- Property and equipment at cost 34,206 30,740 Less: accumulated depreciation and amortization (19,800) (16,604) ------- ------- Property and equipment, net 14,406 14,136 ------ ------ Goodwill 19,822 18,951 Intangible assets, net 8,199 8,580 Service inventory 12,751 12,843 Deferred income taxes, net 1,909 2,728 ----- ----- Total Assets $230,142 $259,314 -------- -------- LIABILITIES AND SHAREHOLDERS'' EQUITY Current Liabilities: Accounts payable $5,460 $10,813 Accrued liabilities 8,368 14,032 Income taxes payable - 1,988 Current portion of unearned service revenues 11,551 11,501 Customer deposits 626 425 Current portion of obligations under capital leases 27 87 --- --- Total current liabilities 26,032 38,846 Unearned service revenues - less current portion 5,591 6,772 Deferred tax liability, net 1,152 1,107 Obligations under capital leases - less current portion 285 281 --- --- Total Liabilities 33,060 47,006 ------ ------ Shareholders'' Equity: Common stock - par value $.001, 50,000,000 shares authorized; 16,793,289 and 16,741,488 issued; 16,102,331 and 16,658,552 outstanding, respectively 17 17 Additional paid-in-capital 151,487 149,298 Retained earnings 47,537 57,497 Accumulated other comprehensive income 7,116 5,742 Common stock in treasury, at cost - 680,235 and 55,808 shares, respectively (9,075) (246) ------ ---- Total Shareholders'' Equity 197,082 212,308 ------- ------- Total Liabilities and Shareholders'' Equity $230,142 $259,314 -------- -------- FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended ----------------- (in thousands) October 3, 2009 September 27, 2008 -------------- --------------- ------------------ CASH FLOWS FROM: OPERATING ACTIVITIES: Net (loss) income $(9,962) $11,754 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 4,090 3,293 Compensation for stock options and restricted stock units 1,827 1,686 Provision for bad debts 961 446 Deferred income tax expense (benefit) 1,919 (1,575) Change in operating assets and liabilities: Decrease (increase) in: Accounts receivable 14,040 9,198 Inventories 6,202 (9,681) Prepaid expenses and other current assets (4,234) (2,369) Income tax benefit from exercise of stock options (2) (45) Increase (decrease) in: Accounts payable and accrued liabilities (11,220) (7,654) Income taxes payable (1,965) (771) Customer deposits 186 (11) Unearned service revenues (1,490) 2,671 ------ ----- Net cash provided by operating activities 352 6,942 --- ----- INVESTING ACTIVITIES: Purchases of property and equipment (2,919) (4,377) Payments for intangible assets (504) (3,584) Purchases of short-term investments (64,979) (4,995) Proceeds from sales of short-term investments 81,965 - ------ --- Net cash provided by (used in) investing activities 13,563 (12,956) ------ ------- FINANCING ACTIVITIES: Payments on capital leases (55) (68) Income tax benefit from exercise of stock options 2 45 Repurchases of common stock (8,829) - Proceeds from issuance of stock, net 45 128 --- --- Net cash (used in) provided by financing activities (8,837) 105 ------ --- EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1,171) 271 ------ --- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,907 (5,638) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,494 25,798 ------ ------ CASH AND CASH EQUIVALENTS, END OF PERIOD $27,401 $20,160 ======= =======
FARO Technologies, Inc.
CONTACT: Keith Bair, Senior Vice President and CFO, FARO Technologies,
Inc., keith.bair@FARO.com, +1-407-333-9911
