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FARO Reports 2010 Sales Growth of 29.9%; 2010 Orders Growth of 30.5%; Net Income of $11.1 million
Feb 23, 2011 (04:02 PM EST)


LAKE MARY, Fla., Feb. 23, 2011 /PRNewswire/ -- FARO Technologies, Inc. (Nasdaq: FARO) today announced results for the fourth quarter ended December 31, 2010.  Sales in the fourth quarter of 2010 increased 27.1%, to $58.5 million, from $46.0 million in the fourth quarter of 2009.  The Company reported net income of $4.8 million, or $0.29 per share, compared to a net loss of $0.04 per share in the fourth quarter of 2009.

Fiscal 2010 sales were $191.8 million, an increase of 29.9%, compared to fiscal 2009 sales of $147.7 million.  New order bookings for fiscal 2010 were $197.9 million, an increase of 30.5%, from $151.7 million in fiscal 2009.  Net income for fiscal 2010 was $11.1 million compared to net loss of $10.6 million in fiscal 2009.

New order bookings for the fourth quarter of 2010 were $67.4 million, an increase of $14.3 million, or 26.9%, compared to $53.1 million in the fourth quarter of 2009.

"The fourth quarter was extremely strong for us, a significant accomplishment compared to the fourth quarter of 2009 when sales started to improve," stated Jay Freeland, FARO's President and CEO.  "Asia continued its rapid expansion, growing sales 43% in the fourth quarter and more than 50% for the year.  We finished 2010 with approximately $23 million in backlog, our highest level ever, providing a solid foundation for the first quarter of 2011.  Finally, the launch of the new Focus 3D Laser Scanner exceeded our expectations.  Orders for the Focus in the fourth quarter of 2010 were substantially higher than any total year for the previous laser scanner models.  We believe this reflects the disruptive nature of this product, with its cutting edge performance and market-leading size, weight, ease of use and price."

Gross margin for the fourth quarter of 2010 was 59.0%, compared to 55.4% in the fourth quarter of 2009. Gross margin increased primarily due to an increase in the proportion of higher margin product sales relative to lower margin service revenue.

"Overall, 2010 was an outstanding year.  We had excellent sales growth and ground-breaking product introductions.  We capitalized on the cost leverage we created in 2009 which added substantially to the bottom line and also allowed for the introduction of both the FARO Focus 3D and the FARO AMP.  The Company is positioned well for 2011, with equally exciting product introductions lined-up and additional capacity to leverage our structure.  We did not issue any guidance in 2009 and 2010 and we will not be issuing specific guidance for 2011.  However, we maintain the view that our markets remain highly underpenetrated and we believe we have the ongoing opportunity to achieve the annual 20-25% sales growth rates we historically achieved. Our top priority continues to be strengthening our position as the leader in this space," 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 FARO's focus, plans and strategies, and its future operating results and 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 the Company's customers and material adverse changes in customers' access to liquidity and capital;
  • 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, 2009.

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 over 20,000 installations and 11,000 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







































Three Months Ended


Twelve Months Ended










(in thousands, except share and per share data)


Dec 31, 2010


Dec 31, 2009


Dec 31, 2010


Dec 31, 2009

SALES









Product


$       49,456


$       38,422


$     157,331


$     117,714

Service


9,059


7,604


34,444


29,989

Total Sales


58,515


46,026


191,775


147,703

COST OF SALES









Product


17,775


15,646


54,571


46,293

Service


6,204


4,897


23,806


20,702

Total Cost of Sales (exclusive of depreciation and amortization, shown separately below)


23,979


20,543


78,377


66,995

GROSS PROFIT


34,536


25,483


113,398


80,708










OPERATING EXPENSES:









Selling


15,710


12,164


50,679


48,598

General and administrative


7,300


6,365


26,776


24,956

Depreciation and amortization


1,492


1,440


6,326


5,530

Research and development


3,854


3,047


12,690


12,613

Total operating expenses


28,356


23,016


96,471


91,697

INCOME (LOSS) FROM OPERATIONS


6,180


2,467


16,927


(10,989)

OTHER (INCOME) EXPENSE









Interest income


(22)


(28)


(105)


(253)

Other (income) expense, net


983


(233)


2,783


(592)

Interest expense


3


5


34


14

INCOME (LOSS) BEFORE INCOME TAX  EXPENSE (BENEFIT)


5,216


2,723


14,215


(10,158)

INCOME TAX EXPENSE


377


3,344


3,147


424

NET INCOME (LOSS)


$         4,839


$          (621)


$       11,068


$     (10,582)

NET INCOME (LOSS) PER SHARE - BASIC


$           0.30


$         (0.04)


$           0.69


$         (0.66)










NET INCOME (LOSS) PER SHARE - DILUTED


$           0.29


$         (0.04)


$           0.68


$         (0.66)










Weighted average shares - Basic


16,179,531


16,101,412


16,153,831


16,125,449










Weighted average shares - Diluted


16,424,638


16,101,412


16,365,826


16,125,449



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS








December 31,


December 31,

(in thousands, except share data)


2010


2009

ASSETS





Current Assets:





Cash and cash equivalents


$        50,722


$        35,078

Short-term investments


64,986


64,986

Accounts receivable, net


51,862


42,944

Inventories, net


28,242


26,582

Deferred income taxes, net


4,455


4,473

Prepaid expenses and other current assets


8,045


6,016

Total current assets


208,312


180,079

Property and Equipment:





Machinery and equipment


24,840


19,867

Furniture and fixtures


5,700


5,225

Leasehold improvements


9,682


9,434

   Property and equipment at cost


40,222


34,526

Less: accumulated depreciation and amortization


(24,982)


(20,788)

   Property and equipment, net


15,240


13,738

Goodwill


19,015


19,934

Intangible assets, net


7,204


7,985

Service inventory


13,726


12,079

Deferred income taxes, net


2,522


1,895

Total Assets


$      266,019


$      235,710

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$        12,025


$          8,985

Accrued liabilities


15,208


8,173

Income taxes payable


1,138


229

Current portion of unearned service revenues


13,357


12,226

Customer deposits


3,679


2,173

Current portion of obligations under capital leases


91


80

     Total current liabilities


45,498


31,866

Unearned service revenues - less current portion


6,758


5,910

Deferred income taxes, net


1,161


1,143

Obligations under capital leases - less current portion


125


193

Total Liabilities


53,542


39,112






Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares authorized; 16,894,374 and 16,795,289 issued; 16,214,139 and 16,115,054 outstanding, respectively


17


17

Additional paid-in-capital


156,310


152,380

Retained earnings


57,983


46,915

Accumulated other comprehensive income


7,242


6,361

Common stock in treasury, at cost - 680,235 shares


(9,075)


(9,075)

Total Shareholders' Equity


212,477


196,598

Total Liabilities and Shareholders' Equity


$      266,019


$      235,710



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS















Years Ended December 31,








(in thousands)


2010


2009


2008

CASH FLOWS FROM:







OPERATING ACTIVITIES:







Net income (loss)


$ 11,068


$ (10,582)


$ 13,952

Adjustments to reconcile net income (loss) to net cash provided by







   operating activities:







Depreciation and amortization


6,326


5,530


4,505

Compensation for stock options and restricted stock units


2,392


2,449


2,237

Provision for bad debts


2,408


1,852


1,092

Deferred income tax (benefit) expense


(693)


1,986


(1,972)

Change in operating assets and liabilities:







Decrease (increase) in:







Accounts receivable


(13,018)


5,769


2,993

Inventories, net


(6,273)


8,301


(6,429)

Prepaid expenses and other current assets


(2,172)


1,964


(1,187)

Income tax benefit from exercise of stock options


(133)


(4)


(45)

Increase (decrease) in:







Accounts payable and accrued liabilities


10,435


(7,891)


(5,317)

Income taxes payable


829


(1,749)


(355)

Customer deposits


1,474


1,736


82

Unearned service revenues


2,338


(396)


3,710

           Net cash provided by operating activities


14,981


8,965


13,266








INVESTING ACTIVITIES:







Purchases of property and equipment


(4,047)


(3,387)


(9,705)

Payments for intangible assets


(979)


(670)


(3,766)

Purchases of short-term investments


-


(64,986)


(81,965)

Proceeds from sales of short-term investments


-


81,965


77,375

       Net cash (used in) provided by investing activities


(5,026)


12,922


(18,061)








FINANCING ACTIVITIES:







Proceeds from notes payable


2,490


-


-

Payments on notes payable


(2,490)


-


-

Payments on capital leases


(84)


(88)


(11)

Income tax benefit from exercise of stock options


133


4


45

Purchases of treasury stock


-


(8,829)


(95)

Proceeds from issuance of stock, net


1,405


83


92

       Net cash provided by (used in) financing activities


1,454


(8,830)


31








EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


$   4,235


$   (1,473)


$   2,460








INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


15,644


11,584


(2,304)








CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


35,078


23,494


25,798








CASH AND CASH EQUIVALENTS, END OF PERIOD


$ 50,722


$  35,078


$ 23,494










SOURCE FARO Technologies, Inc.