- Revenue of $86.8 million,
exceeded high-end of expectations
- First full quarter of cost reductions achieved quarterly
expense expectations
- Profitability exceeded expectations
LAKE
MARY, Fla., Nov. 1, 2023
/PRNewswire/ -- FARO® Technologies, Inc. (Nasdaq: FARO), a global
leader in 4D digital reality solutions, today announced its
financial results for the third quarter ended September 30,
2023.
"Third quarter financial performance with revenue of
$86.8 million and non-GAAP EPS
of $0.02, exceeded the high-end of
our expectations driven by a combination of moderate improvements
in end market demand and operational performance," said
Peter Lau, President & Chief
Executive Office of FARO. "We are excited about the mid to
long-term prospects for our business and remain focused on improved
execution of our hardware and software enabled strategy,
exemplified by the recent launch of the highly differentiated Orbis
Mobile Scanner and release of an enhanced version of FARO Sphere
XG."
Third Quarter 2023 Financial Summary
- Total sales of $86.8 million, up
2% year over year
- Software sales of $11.2 million,
up 6% compared to the prior year period
- Recurring revenue of $17.1
million, up 3% year on year
- Gross margin of 48.0%, compared to 50.7% in the prior year
period
- Non-GAAP gross margin of 48.9%, compared to 51.0% in the prior
year period
- Operating expenses of $48.6
million, compared to $50.4
million in the prior year period
- Non-GAAP operating expenses of $41.5
million, compared to $44.3
million in the prior year period
- Net loss of $8.8 million, or
$(0.46) per share compared to net
loss of $6.3 million, or $(0.34) per share in the prior year period
- Non-GAAP net income of $0.5
million, or $0.02 per share
compared to non-GAAP net gain of $0.5
million, or $0.03 per share in
the prior year period
- Adjusted EBITDA of $3.5 million,
or 4.1% of total sales compared to $2.0
million, or 2.3% of total sales in the prior year
period
- Cash and cash equivalent of $79.9
million, compared to $88.5
million as of June 30,
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 Fourth Quarter 2023
For the fourth quarter ending December
31, 2023, FARO currently expects:
- Revenue in the range of $92 to
$100 million
- Gross margin in the range of 49.5% to 51.0%. Non-GAAP gross
margin in the range of 50.5% to 52.0%
- Operating expenses in the range of $47.5 to $49.5
million. Non-GAAP operating expenses in the range of
$41.0 to $43.0
million
- Net loss per share in the range of ($0.30) to ($0.15).
Non-GAAP net income per share in the range of $0.18 to $0.34
Conference Call
The Company will host a conference call to discuss these results
on Thursday, November 2, 2023, at
8:00 a.m. ET. Interested parties can
access the conference call by dialing (800) 343-4849 (U.S.) or +1
(203) 518-9843 (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 strategic
plan, restructuring plan and integration 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 any litigation to which the Company is or 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
|
|
Nine Months
Ended
|
(in thousands, except
share and per share data)
|
September 30,
2023
|
|
September 30,
2022
|
|
September 30,
2023
|
|
September 30,
2022
|
Sales
|
|
|
|
|
|
|
|
Product
|
$
66,911
|
|
$
65,581
|
|
$
199,754
|
|
$
182,015
|
Service
|
19,902
|
|
19,751
|
|
60,237
|
|
59,891
|
Total sales
|
86,813
|
|
85,332
|
|
259,991
|
|
241,906
|
Cost of
sales
|
|
|
|
|
|
|
|
Product
|
34,640
|
|
30,375
|
|
112,691
|
|
82,879
|
Service
|
10,499
|
|
11,692
|
|
32,587
|
|
34,299
|
Total cost of
sales
|
45,139
|
|
42,067
|
|
145,278
|
|
117,178
|
Gross profit
|
41,674
|
|
43,265
|
|
114,713
|
|
124,728
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
37,970
|
|
37,226
|
|
117,907
|
|
108,734
|
Research and
development
|
8,188
|
|
12,586
|
|
32,568
|
|
36,756
|
Restructuring
costs
|
2,442
|
|
580
|
|
15,130
|
|
2,512
|
Total operating
expenses
|
48,600
|
|
50,392
|
|
165,605
|
|
148,002
|
Loss from
operations
|
(6,926)
|
|
(7,127)
|
|
(50,892)
|
|
(23,274)
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest expense
(income)
|
691
|
|
(24)
|
|
2,529
|
|
(28)
|
Other income,
net
|
(381)
|
|
(1,428)
|
|
(125)
|
|
(3,077)
|
Loss before income
tax
|
(7,236)
|
|
(5,675)
|
|
(53,296)
|
|
(20,169)
|
Income tax
expense
|
1,520
|
|
586
|
|
4,869
|
|
4,352
|
Net loss
|
$
(8,756)
|
|
$
(6,261)
|
|
$
(58,165)
|
|
$
(24,521)
|
Net loss per share -
Basic
|
$
(0.46)
|
|
$
(0.34)
|
|
$
(3.08)
|
|
$
(1.34)
|
Net loss per share -
Diluted
|
$
(0.46)
|
|
$
(0.34)
|
|
$
(3.08)
|
|
$
(1.34)
|
Weighted average shares
- Basic
|
18,953,251
|
|
18,436,615
|
|
18,899,954
|
|
18,336,537
|
Weighted average shares
- Diluted
|
18,953,251
|
|
18,436,615
|
|
18,899,954
|
|
18,336,537
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS
(UNAUDITED)
|
|
(in thousands, except
share and per share data)
|
September
30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
79,919
|
|
$
37,812
|
Accounts receivable,
net
|
88,363
|
|
90,326
|
Inventories,
net
|
40,095
|
|
50,026
|
Prepaid expenses and
other current assets
|
37,325
|
|
41,201
|
Total current
assets
|
245,702
|
|
219,365
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment, net
|
22,207
|
|
19,720
|
Operating lease
right-of-use assets
|
12,521
|
|
18,989
|
Goodwill
|
106,873
|
|
107,155
|
Intangible assets,
net
|
46,999
|
|
48,978
|
Service and sales
demonstration inventory, net
|
22,662
|
|
30,904
|
Deferred income tax
assets, net
|
24,093
|
|
24,192
|
Other long-term
assets
|
4,047
|
|
4,044
|
Total assets
|
$
485,104
|
|
$
473,347
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
23,408
|
|
$
27,286
|
Accrued
liabilities
|
24,994
|
|
23,345
|
Income taxes
payable
|
12,083
|
|
6,767
|
Current portion of
unearned service revenues
|
34,493
|
|
36,407
|
Customer
deposits
|
5,237
|
|
6,725
|
Lease
liabilities
|
5,258
|
|
5,709
|
Total current
liabilities
|
105,473
|
|
106,239
|
Loan - 5.50%
Convertible Senior Notes
|
72,604
|
|
—
|
Unearned service
revenues - less current portion
|
20,893
|
|
20,947
|
Lease liabilities -
less current portion
|
11,495
|
|
14,649
|
Deferred income tax
liabilities
|
11,497
|
|
11,708
|
Income taxes payable -
less current portion
|
4,020
|
|
8,706
|
Other long-term
liabilities
|
30
|
|
49
|
Total
liabilities
|
226,012
|
|
162,298
|
Commitments and
contingencies
|
|
|
|
Shareholders'
equity:
|
|
|
|
Common stock - par
value $0.001, 50,000,000 shares authorized;
20,328,417 and 20,156,233 issued, respectively; 18,953,725 and
18,780,013
outstanding, respectively
|
20
|
|
20
|
Additional paid-in
capital
|
340,414
|
|
328,227
|
Retained
earnings
|
(11,377)
|
|
46,788
|
Accumulated other
comprehensive loss
|
(39,310)
|
|
(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
|
259,092
|
|
311,049
|
Total liabilities and
shareholders' equity
|
$
485,104
|
|
$
473,347
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(UNAUDITED)
|
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
Cash flows
from:
|
|
|
|
Operating
activities:
|
|
|
|
Net loss
|
$
(58,165)
|
|
$
(24,521)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
11,728
|
|
10,061
|
Stock-based
compensation
|
12,276
|
|
10,024
|
Inventory
write-downs
|
8,132
|
|
—
|
Asset impairment
charges
|
5,333
|
|
—
|
Deferred income tax
(benefit) expense and other non-cash charges
|
(82)
|
|
568
|
Provision for excess
and obsolete inventory
|
1,754
|
|
209
|
Amortization of debt
discount and issuance costs
|
294
|
|
—
|
Loss on disposal of
assets
|
(155)
|
|
356
|
Provisions for bad
debts, net of recoveries
|
834
|
|
80
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease (Increase)
in:
|
|
|
|
Accounts
receivable
|
1,282
|
|
867
|
Inventories
|
(544)
|
|
2,129
|
Prepaid expenses and
other current assets
|
4,047
|
|
(14,566)
|
(Decrease) Increase
in:
|
|
|
|
Accounts payable and
accrued liabilities
|
(2,802)
|
|
(2,249)
|
Income taxes
payable
|
653
|
|
1,008
|
Customer
deposits
|
(1,534)
|
|
588
|
Unearned service
revenues
|
(1,198)
|
|
(2,710)
|
Other
liabilities
|
567
|
|
—
|
Net cash used in
operating activities
|
(17,580)
|
|
(18,156)
|
Investing
activities:
|
|
|
|
Purchases of property
and equipment
|
(5,016)
|
|
(4,978)
|
Cash paid for
technology development, patents and licenses
|
(5,071)
|
|
(9,154)
|
Acquisition of
business, net of cash acquired
|
—
|
|
(29,068)
|
Net cash used in
investing activities
|
(10,087)
|
|
(43,200)
|
Financing
activities:
|
|
|
|
Payments on finance
leases
|
(154)
|
|
(172)
|
Payments for taxes
related to net share settlement of equity awards
|
(89)
|
|
(1,584)
|
Proceeds from issuance
of 5.50% Convertible Senior Notes, due 2028, net of discount,
issuance cost and accrued interest
|
72,310
|
|
—
|
Payment of contingent
consideration for business acquisition
|
(1,098)
|
|
—
|
Net cash provided by
(used in) financing activities
|
70,969
|
|
(1,756)
|
Effect of exchange rate
changes on cash and cash equivalents
|
(1,195)
|
|
(10,343)
|
Increase (Decrease) in
cash and cash equivalents
|
42,107
|
|
(73,455)
|
Cash and cash
equivalents, beginning of period
|
37,812
|
|
121,989
|
Cash and cash
equivalents, end of period
|
$
79,919
|
|
$
48,534
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
(UNAUDITED)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(dollars in thousands,
except per share data)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Gross profit, as
reported
|
$
41,674
|
|
$
43,265
|
|
$ 114,713
|
|
$ 124,728
|
Stock-based
compensation (1)
|
280
|
|
273
|
|
972
|
|
756
|
Inventory reserve
charge (3)
|
—
|
|
—
|
|
8,132
|
|
—
|
Restructuring and
other costs (2)
|
456
|
|
—
|
|
1,326
|
|
—
|
Non-GAAP adjustments
to gross profit
|
736
|
|
273
|
|
10,430
|
|
756
|
Non-GAAP gross
profit
|
$
42,410
|
|
$
43,538
|
|
$ 125,143
|
|
$ 125,484
|
Gross margin, as
reported
|
48.0 %
|
|
50.7 %
|
|
44.1 %
|
|
51.6 %
|
Non-GAAP gross
margin
|
48.9 %
|
|
51.0 %
|
|
48.1 %
|
|
51.9 %
|
|
|
|
|
|
|
|
|
Selling, general and
administrative, as reported
|
$
37,970
|
|
$
37,226
|
|
$ 117,907
|
|
$ 108,734
|
Stock-based
compensation (1)
|
(3,588)
|
|
(2,742)
|
|
(9,710)
|
|
(7,475)
|
Purchase accounting
intangible amortization
|
(663)
|
|
(180)
|
|
(2,024)
|
|
(562)
|
Non-GAAP selling,
general and administrative
|
$
33,719
|
|
$
34,304
|
|
$ 106,173
|
|
$ 100,697
|
|
|
|
|
|
|
|
|
Research and
development, as reported
|
$
8,188
|
|
$
12,586
|
|
$
32,568
|
|
$
36,756
|
Stock-based
compensation (1)
|
176
|
|
(651)
|
|
(1,594)
|
|
(1,793)
|
Purchase accounting
intangible amortization
|
(501)
|
|
(487)
|
|
(1,541)
|
|
(1,522)
|
Non-GAAP research and
development
|
$
7,863
|
|
$
11,448
|
|
$
29,433
|
|
$
33,441
|
|
|
|
|
|
|
|
|
Operating expenses, as
reported
|
$
48,600
|
|
$
50,392
|
|
$ 165,605
|
|
$ 148,002
|
Stock-based
compensation (1)
|
(3,411)
|
|
(3,393)
|
|
(11,304)
|
|
(9,268)
|
Restructuring and
other costs (2)
|
(2,495)
|
|
(2,028)
|
|
(16,337)
|
|
(4,944)
|
Purchase accounting
intangible amortization
|
(1,164)
|
|
(667)
|
|
(3,565)
|
|
(2,084)
|
Non-GAAP adjustments
to operating expenses
|
(7,070)
|
|
(6,088)
|
|
(31,206)
|
|
(16,296)
|
Non-GAAP operating
expenses
|
$
41,530
|
|
$
44,304
|
|
$ 134,399
|
|
$ 131,706
|
|
|
|
|
|
|
|
|
Loss from operations,
as reported
|
$
(6,926)
|
|
$
(7,127)
|
|
$ (50,892)
|
|
$ (23,274)
|
Non-GAAP adjustments
to gross profit
|
737
|
|
273
|
|
10,430
|
|
756
|
Non-GAAP adjustments
to operating expenses
|
7,070
|
|
6,088
|
|
31,206
|
|
16,296
|
Non-GAAP loss from
operations
|
$
881
|
|
$
(766)
|
|
$
(9,256)
|
|
$
(6,222)
|
|
|
|
|
|
|
|
|
Net loss, as
reported
|
$
(8,756)
|
|
$
(6,261)
|
|
$ (58,165)
|
|
$ (24,521)
|
Non-GAAP adjustments
to gross profit
|
737
|
|
273
|
|
10,430
|
|
756
|
Non-GAAP adjustments
to operating expenses
|
7,070
|
|
6,088
|
|
31,206
|
|
16,296
|
Income tax effect of
non-GAAP adjustments
|
(1,952)
|
|
(1,272)
|
|
(10,409)
|
|
(4,014)
|
Other tax adjustments
(4)
|
3,358
|
|
1,720
|
|
17,700
|
|
8,903
|
Non-GAAP net
gain/(loss)
|
$
457
|
|
$
548
|
|
$
(9,238)
|
|
$
(2,580)
|
|
|
|
|
|
|
|
|
Net loss per share -
Diluted, as reported
|
$
(0.46)
|
|
$
(0.34)
|
|
$
(3.08)
|
|
$
(1.34)
|
Stock-based
compensation (1)
|
0.19
|
|
0.20
|
|
0.65
|
|
0.55
|
Restructuring and
other costs (2)
|
0.16
|
|
0.11
|
|
0.93
|
|
0.27
|
Inventory reserve
charge (3)
|
—
|
|
—
|
|
0.43
|
|
—
|
Purchase accounting
intangible amortization
|
0.06
|
|
0.04
|
|
0.19
|
|
0.11
|
Income tax effect of
non-GAAP adjustments
|
(0.10)
|
|
(0.07)
|
|
(0.55)
|
|
(0.22)
|
Other tax adjustments
(4)
|
0.18
|
|
0.09
|
|
0.94
|
|
0.49
|
Non-GAAP net
income/(loss) per share - Diluted
|
$
0.02
|
|
$
0.03
|
|
$
(0.49)
|
|
$
(0.14)
|
|
(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 nine months ended September 30, 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
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net loss
|
$
(8,756)
|
|
$
(6,261)
|
|
$ (58,165)
|
|
$ (24,521)
|
Interest (income)
expense, net
|
691
|
|
(24)
|
|
2,529
|
|
(28)
|
Income tax
expense
|
1,520
|
|
586
|
|
4,869
|
|
4,352
|
Depreciation and
amortization
|
3,803
|
|
3,406
|
|
11,728
|
|
10,061
|
EBITDA
|
(2,742)
|
|
(2,293)
|
|
(39,039)
|
|
(10,136)
|
Other (income)
expense, net
|
(381)
|
|
(1,428)
|
|
(125)
|
|
(3,077)
|
Stock-based
compensation
|
3,692
|
|
3,666
|
|
12,276
|
|
10,024
|
Inventory reserve
charge (3)
|
—
|
|
—
|
|
8,132
|
|
—
|
Restructuring and
other costs (1)
|
2,951
|
|
2,028
|
|
17,663
|
|
4,944
|
Adjusted
EBITDA
|
$
3,520
|
|
$
1,973
|
|
$
(1,093)
|
|
$
1,755
|
Adjusted EBITDA margin
(2)
|
4.1 %
|
|
2.3 %
|
|
(0.4) %
|
|
0.7 %
|
|
(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
nine months ended September 30, 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
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Total sales to
external customers as reported
|
|
|
|
|
|
|
|
Americas
(1)
|
$
41,033
|
|
$
38,732
|
|
$
124,734
|
|
$
110,077
|
EMEA
(1)
|
25,621
|
|
22,802
|
|
74,641
|
|
66,494
|
APAC
(1)
|
20,159
|
|
23,798
|
|
60,616
|
|
65,335
|
|
$
86,813
|
|
$
85,332
|
|
$
259,991
|
|
$
241,906
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Total sales to
external customers in constant currency
(2)
|
|
|
|
|
|
|
|
Americas
(1)
|
$
40,220
|
|
$
38,675
|
|
$
123,148
|
|
$
109,825
|
EMEA
(1)
|
23,074
|
|
22,232
|
|
67,557
|
|
61,320
|
APAC
(1)
|
20,121
|
|
23,112
|
|
59,109
|
|
60,862
|
|
$
83,415
|
|
$
84,019
|
|
$
249,814
|
|
$
232,007
|
|
(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
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
Hardware
|
$
55,706
|
|
$
54,971
|
|
$ 167,484
|
|
$ 150,597
|
Software
|
11,205
|
|
10,610
|
|
32,270
|
|
31,418
|
Service
|
19,902
|
|
19,751
|
|
60,237
|
|
59,891
|
Total Sales
|
$
86,813
|
|
$
85,332
|
|
$ 259,991
|
|
$ 241,906
|
|
|
|
|
|
|
|
|
Hardware as a
percentage of total sales
|
64.2 %
|
|
64.4 %
|
|
64.4 %
|
|
62.3 %
|
Software as a
percentage of total sales
|
12.9 %
|
|
12.4 %
|
|
12.4 %
|
|
13.0 %
|
Service as a percentage
of total sales
|
22.9 %
|
|
23.1 %
|
|
23.2 %
|
|
24.8 %
|
|
|
|
|
|
|
|
|
Total Recurring Revenue
(3)
|
$
17,056
|
|
$
16,591
|
|
$
50,137
|
|
$
50,184
|
Recurring revenue as a
percentage of total sales
|
19.6 %
|
|
19.4 %
|
|
19.3 %
|
|
20.7 %
|
|
(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
September 30,
|
|
Nine Months Ended
September 30,
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net cash used in
operating activities
|
$
(4,373)
|
|
$
(14,896)
|
|
$
(17,580)
|
|
$
(18,156)
|
Purchases of property
and equipment
|
(704)
|
|
(1,497)
|
|
(5,016)
|
|
(4,978)
|
Cash paid for
technology development, patents and
licenses
|
(1,455)
|
|
(3,606)
|
|
(5,071)
|
|
(9,154)
|
Free Cash
Flow
|
(6,532)
|
|
(19,999)
|
|
(27,667)
|
|
(32,288)
|
Restructuring and
other cash payments (1)
|
6,279
|
|
3,075
|
|
11,014
|
|
5,910
|
Adjusted Free Cash
Flow
|
$
(253)
|
|
$
(16,924)
|
|
$
(16,653)
|
|
$
(26,378)
|
|
(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 cash payments primarily consist of
severance and related benefits.
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES RECONCILIATION OF OUTLOOK - GAAP TO
NON-GAAP
|
|
|
Fiscal Quarter Ending
12/31/2023
|
|
Low
|
|
High
|
GAAP diluted loss per
share range
|
$(0.30)
|
|
$(0.15)
|
Stock-based
compensation
|
0.19
|
|
0.19
|
Purchase accounting
intangible amortization
|
0.06
|
|
0.06
|
Restructuring and
other costs
|
0.13
|
|
0.13
|
Non-GAAP tax
adjustments
|
0.10
|
|
0.11
|
Non-GAAP diluted loss
per share
|
$0.18
|
|
$0.34
|
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SOURCE FARO