TechWeb

FARO Reports First Quarter 2011 Orders Growth of 40.5%

May 04, 2011 (04:05 PM EDT)
URL: http://www.techweb.com/show-press-release/X843629/faro-reports-first-quarter-2011-orders-growth-of-40-5.html

Sales Growth of 24.4%

Net Income Growth of 57.1%

LAKE MARY, Fla., May 4, 2011 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the quarter ended April 2, 2011.  Sales in the first quarter of 2011 increased 24.4%, to $52.6 million, from $42.3 million in the first quarter of 2010.  The Company reported net income increased to $3.2 million, or $0.20 per share, in the first quarter of 2011, from $2.1 million, or $0.13 per share, in the first quarter of 2010.

New order bookings for the first quarter of 2011 were $55.9 million, an increase of $16.1 million, or 40.5%, compared to $39.8 million in the first quarter of 2010.

"Market demand was strong in the first quarter with all three regions posting solid double-digit orders and sales growth.  The success of the Focus 3D Laser Scanner, which we released in the fourth quarter of 2010, continued in the first quarter of 2011.  As a result, we once again received more orders for the Focus during the quarter than in any prior full year for the previous generation Laser Scanners," stated Jay Freeland, FARO's President and CEO.  "We released another new and disruptive product two weeks ago, the FARO Edge Arm, and we received our first order within three days of introduction.  The new product pipeline remains full, and more disruptive releases are on the way," Freeland explained.

Gross margin for the first quarter of 2011 declined to 57.6%, compared to 60.1% in the first quarter of 2010, primarily driven by the substantial increase in laser scanner sales, which currently carry slightly lower gross margins, while the Company ramps-up to full production efficiency, combined with lower new arm sales as some customers waited for the release of the new Edge Arm.   In addition, service costs increased as the Company added new application engineers and opened a direct service facility in Brazil to keep up with the overall growth in the Company's installed base.  

"We're getting good operating leverage and expect that to continue.  In total, we remain optimistic for 2011," 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 product releases, 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;
  • delays in the introduction of new products by the Company;
  • production delays caused by shortages of raw materials incorporated in the Company's products;
  • 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, 2010.

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 Focus 3D Laser Scanner; 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)


Apr 2, 2011


Apr 3, 2010

SALES





Product


$                        42,958


$                      33,938

Service


9,608


8,331

Total Sales


52,566


42,269

COST OF SALES





Product


15,573


11,275

Service


6,721


5,603

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


22,294


16,878

GROSS PROFIT


30,272


25,391






OPERATING EXPENSES:





Selling


14,152


11,235

General and administrative


6,590


6,247

Depreciation and amortization


1,614


1,540

Research and development


3,632


2,989

Total operating expenses


25,988


22,011

INCOME FROM OPERATIONS


4,284


3,380

OTHER (INCOME) EXPENSE





Interest income


(26)


(19)

Other (income) expense, net


(129)


505

Interest expense


29


27

INCOME BEFORE INCOME TAX  EXPENSE


4,410


2,867

INCOME TAX EXPENSE


1,167


803

NET INCOME


$                          3,243


$                        2,064

NET INCOME PER SHARE - BASIC


$                            0.20


$                          0.13






NET INCOME PER SHARE - DILUTED


$                            0.20


$                          0.13






Weighted average shares - Basic


16,253,121


16,124,886






Weighted average shares - Diluted


16,598,797


16,267,231



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













April 2,


December 31,



2011


2010

(in thousands, except share data)


(unaudited)



ASSETS





Current Assets:





Cash and cash equivalents


$                  53,282


$               50,722

Short-term investments


64,987


64,986

Accounts receivable, net


47,533


51,862

Inventories, net


36,932


28,242

Deferred income taxes, net


4,161


4,455

Prepaid expenses and other current assets


8,821


8,045

Total current assets


215,716


208,312

Property and Equipment:





Machinery and equipment


26,267


24,840

Furniture and fixtures


6,121


5,700

Leasehold improvements


9,977


9,682

   Property and equipment at cost


42,365


40,222

Less: accumulated depreciation and amortization


(26,631)


(24,982)

   Property and equipment, net


15,734


15,240

Goodwill


19,781


19,015

Intangible assets, net


7,363


7,204

Service inventory


13,795


13,726

Deferred income taxes, net


2,640


2,522

Total Assets


$                275,029


$             266,019

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$                  10,199


$               12,025

Accrued liabilities


15,113


15,208

Income taxes payable


93


1,138

Current portion of unearned service revenues


14,437


13,357

Customer deposits


4,522


3,679

Current portion of obligations under capital leases


67


91

     Total current liabilities


44,431


45,498

Unearned service revenues - less current portion


7,569


6,758

Deferred tax liability, net


1,184


1,161

Obligations under capital leases - less current portion


144


125

Total Liabilities


53,328


53,542






Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares authorized; 17,018,943 and 16,894,374 issued; 16,338,708 and 16,214,139 outstanding, respectively


17


17

Additional paid-in capital


159,719


156,310

Retained earnings


61,227


57,983

Accumulated other comprehensive income


9,813


7,242

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


(9,075)


(9,075)

Total Shareholders' Equity


221,701


212,477

Total Liabilities and Shareholders' Equity


$                275,029


$             266,019



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








Three Months Ended






(in thousands)


April 2, 2011


April 3, 2010

CASH FLOWS FROM:





OPERATING ACTIVITIES:





Net income


$                         3,243


$                         2,064

Adjustments to reconcile net income to net cash provided by





   operating activities:





Depreciation and amortization


1,614


1,540

Compensation for stock options and restricted stock units


642


564

Provision for bad debts


329


348

Deferred income tax expense


291


34

Change in operating assets and liabilities:





Decrease (increase) in:





Accounts receivable


5,412


506

Inventories, net


(7,525)


(2,748)

Prepaid expenses and other current assets


(509)


(3,039)

Income tax benefit from exercise of stock options


(237)


(6)

Increase (decrease) in:





Accounts payable and accrued liabilities


(2,447)


2,199

Income taxes payable


(742)


(234)

Customer deposits


762


(540)

Unearned service revenues


1,389


348

           Net cash provided by operating activities


2,222


1,036






INVESTING ACTIVITIES:





Purchases of property and equipment


(1,183)


(613)

Payments for intangible assets


(294)


(205)

       Net cash used in investing activities


(1,477)


(818)






FINANCING ACTIVITIES:





Proceeds from notes payable


-


2,490

Payments on capital leases


(22)


(19)

Income tax benefit from exercise of stock options


237


6

Proceeds from issuance of stock, net


2,529


275

       Net cash provided by financing activities


2,744


2,752






EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(929)


283






INCREASE  IN CASH AND CASH EQUIVALENTS


2,560


3,253






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


50,722


35,078






CASH AND CASH EQUIVALENTS, END OF PERIOD


$                       53,282


$                       38,331



SOURCE FARO Technologies, Inc.