LAKE MARY, Fla., April 29 /PRNewswire-FirstCall/ -- FARO Technologies, Inc. today announced results for the first quarter ended April 4, 2009. Net loss for the first quarter was $6.6 million, or $0.41 per diluted share, a decrease of $10.0 million, compared to net income of $3.4 million, or $0.20 per diluted share, in the first quarter of 2008.
Sales for the first quarter of 2009 decreased $14.7 million, or 31.8%, to $31.4 million from $46.1 million in the first quarter of 2008. New order bookings for the first quarter were $27.4 million, a decrease of $19.6 million, or 41.7%, compared with $47.0 million in the first quarter of 2008.
"Orders and sales were significantly lower in the first quarter of this year and the weakness was consistent across all regions and verticals. Economic conditions are making it difficult for our customers to make capital goods purchases," stated Jay Freeland, FARO's President & CEO. "However, lead count and demo activity remain strong, and despite the current economic climate, we have a solid balance sheet. As such, we remain committed to finding innovative ways to meet our customers' needs during their tough times and returning FARO to a pattern of growth and profitability."
The Company initiated two reductions-in-force during the quarter, effective February 20, and April 3, 2009, respectively. In aggregate, these initiatives reduced the Company's workforce by approximately 21% and compensation costs on an annualized basis by approximately $11.9 million. Total severance costs incurred in the quarter were approximately $1.7 million.
Gross margin for the first quarter of 2009 was 51.7%, compared to 60.1% in the first 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 40.8% in the first quarter of 2009 from 31.3% in the first quarter of 2008 primarily as a result of the decline in sales. Selling expenses in the first quarter of 2009 decreased by $1.6 million to $12.8 million.
General and administrative expenses increased to 20.0% of sales for the first quarter of 2009 from 12.3% in the first quarter of 2008. General and administrative expenses in the first quarter of 2009 increased by $0.7 million to $6.3 million.
R&D expenses were $3.5 million in the first quarter of 2009, an increase from $2.7 million in the first quarter of 2008. R&D expenses were 11.1% of sales in the first quarter of 2009 compared to 5.9% of sales in the first quarter of 2008.
The operating loss for the first quarter of 2009 was $7.6 million, a decrease of $11.5 million from an operating profit of $3.9 million in the first quarter of 2008.
Income tax expense decreased by $2.5 million to a benefit of $1.6 million for the first quarter of 2009, from an expense of $0.9 million for the first quarter of 2008 due to a decrease in pretax income. The Company's effective tax rate decreased to 19.1% for the first quarter of 2009 from 21.8% in the first quarter of 2008.
"We expect the economic environment to continue to be weak throughout 2009. We have taken significant steps to reduce our operating costs through reductions in force and other cost-cutting measures and will continue to do so as necessary. These are very challenging times for most companies, but we believe FARO will remain well-positioned through all of it," 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, our plans and strategies, our ability to grow and achieve profitability and reduce operating costs, and our 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 "expect," "believe," "will," 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:
-- 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 material adverse changes in our 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; -- difficulty quantifying and predicting the market potential for the CAM2 market and the potential adoption rate for our products; -- fluctuations in the Company's annual and quarterly operating results and the inability to achieve its financial operating targets; -- further reductions in gross margins due to changing mix of products sold and the different gross margins on different 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; -- 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; and -- 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 19,600 installations and 9,200 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 share and per share data) April 4, 2009 March 29, 2008 ----------------------------------- ------------- -------------- SALES Product $24,214 $39,327 Service 7,235 6,763 ----- ----- Total Sales 31,449 46,090 ------ ------ COST OF SALES Product 9,127 13,534 Service 6,062 4,850 ----- ----- Total Cost of Sales (exclusive of depreciation and amortization, shown separately below) 15,189 18,384 ------ ------ GROSS PROFIT 16,260 27,706 OPERATING EXPENSES: Selling 12,824 14,428 General and administrative 6,299 5,646 Depreciation and amortization 1,291 1,015 Research and development 3,479 2,713 ----- ----- Total operating expenses 23,893 23,802 ------ ------ (LOSS) INCOME FROM OPERATIONS (7,633) 3,904 ------ ----- OTHER (INCOME) EXPENSE Interest income (158) (621) Other expense (income), net 661 (237) Interest expense 3 441 ----- ----- (LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE (8,139) 4,321 INCOME TAX (BENEFIT) EXPENSE (1,554) 943 ------ ------ NET (LOSS) INCOME $(6,585) $3,378 ------- ------ NET (LOSS) INCOME PER SHARE - BASIC $(0.41) $0.20 ------ ----- NET (LOSS) INCOME PER SHARE - DILUTED $(0.41) $0.20 ------ ----- Weighted average shares - Basic 16,227,363 16,606,673 ---------- ---------- Weighted average shares - Diluted 16,227,363 16,738,891 ---------- ---------- FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Unaudited Audited April, 4 December 31, (in thousands, except share data) 2009 2008 --------------------------------- ---- ---- ASSETS Current Assets: Cash and cash equivalents $61,227 $23,494 Short-term investments 32,975 81,965 Accounts receivable, net 30,701 49,713 Inventories 33,584 33,444 Deferred income taxes, net 6,426 5,581 Prepaid expenses and other current assets 8,746 7,879 ----- ----- Total current assets 173,659 202,076 ------- ------- Property and Equipment: Machinery and equipment 18,435 22,685 Furniture and fixtures 4,833 4,099 Leasehold improvements 8,560 3,956 ----- ----- Property and equipment at cost 31,828 30,740 Less: accumulated depreciation and amortization (17,220) (16,604) ------- ------- Property and equipment, net 14,608 14,136 ------ ------ Goodwill 18,679 18,951 Intangible assets, net 8,338 8,580 Service inventory 12,683 12,843 Deferred income taxes, net 1,799 2,728 ----- ----- Total Assets 229,766 259,314 ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable 5,023 10,813 Accrued liabilities 10,651 14,032 Income taxes payable - 1,988 Current portion of unearned service revenues 11,313 11,501 Customer deposits 375 425 Current portion of obligations under capital leases 58 87 ------ ------ Total current liabilities 27,420 38,846 Unearned service revenues - less current portion 6,078 6,772 Deferred tax liability, net 1,071 1,107 Obligations under capital leases - less current portion 256 281 ------ ------ Total Liabilities 34,825 47,006 ------ ------ Shareholders' Equity: Common stock - par value $.001, 50,000,000 shares authorized; 16,750,269 and 16,741,488 issued; 16,048,926 and 16,658,552 outstanding, respectively 17 17 Additional paid-in-capital 149,997 149,298 Retained earnings 50,913 57,497 Accumulated other comprehensive income 3,089 5,742 Common stock in treasury, at cost - 680,235 and 55,808 shares (9,075) (246) ------ ---- Total Shareholders' Equity 194,941 212,308 ------- ------- Total Liabilities and Shareholders' Equity $229,766 $259,314 -------- -------- FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended ------------------ April 4, 2009 March 29, 2008 ------------- -------------- CASH FLOWS FROM: OPERATING ACTIVITIES: Net (loss) income $(6,585) $3,378 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation and amortization 1,291 1,015 Compensation for stock options and restricted stock units 538 422 Provision for bad debts 397 138 Deferred income tax expense 30 471 Change in operating assets and liabilities: Decrease (increase) in: Accounts receivable 17,669 8,815 Inventories (1,078) (7,129) Prepaid expenses and other current assets (1,027) (2,745) Income tax benefit from exercise of stock options - (43) Increase (decrease) in: Accounts payable and accrued liabilities (8,835) (4,193) Income taxes payable (2,008) (1,135) Customer deposits (39) 177 Unearned service revenues (441) 921 ------ ------ Net cash (used in) provided by operating activities (88) 92 ------ ------ INVESTING ACTIVITIES: Purchases of property and equipment (1,647) (577) Payments for intangible assets (188) (331) Purchases of short-term investments (32,975) (32,025) Proceeds from sales of short-term investments 81,965 26,240 ------ ------ Net cash provided by (used in) investing activities 47,155 (6,693) ------ ------ FINANCING ACTIVITIES: Payments on capital leases (55) (58) Income tax benefit from exercise of stock options - 43 Repurchases of common stock (8,829) - Proceeds from issuance of stock, net - 80 ------ ------ Net cash (used in) provided by financing activities (8,884) 65 ------ ------ EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (450) 224 ------ ------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 37,733 (6,312) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,494 25,798 ------ ------ CASH AND CASH EQUIVALENTS, END OF PERIOD $61,227 $19,486 ======= =======
FARO Technologies, Inc.
CONTACT: Keith Bair, Senior Vice President and CFO, FARO Technologies,
Inc., +1-407-333-9911, keith.bair@FARO.com
Web Site: http://www.faro.com/
