TechWeb

FARO Reports Second Quarter 2011 Orders Growth of 42.4%, Sales Growth of 30.6% and EPS Growth of 127.3%

Aug 03, 2011 (04:08 PM EDT)
URL: http://www.techweb.com/show-press-release/X858412/faro-reports-second-quarter-2011-orders-growth-of-42-4-sales-growth-of-30-6-and-eps-growth-of-127-3.html

LAKE MARY, Fla., Aug. 3, 2011 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the quarter ended July 2, 2011.  Sales in the second quarter of 2011 increased 30.6%, to $59.7 million, from $45.7 million in the second quarter of 2010.  The Company reported net income increased to $4.2 million, or $0.25 per share, in the second quarter of 2011, from $1.8 million, or $0.11 per share, in the second quarter of 2010.

(Logo: http://photos.prnewswire.com/prnh/20110415/MM84316LOGO )

New order bookings for the second quarter of 2011 were $62.5 million, an increase of $18.6 million, or 42.4%, compared to $43.9 million in the second quarter of 2010.

"Market demand remains strong, demonstrated by our 42% growth in orders last quarter.  The Americas grew 57%, while Asia and Europe each grew 35%," stated Jay Freeland, FARO's President and CEO.  "We're seeing solid revenue growth in all product lines, and the Focus Laser Scanner continues to exceed our expectations."

Due to the sizable increase in laser scanner sales relative to the Company's historical product mix and the associated production start-up costs, gross margin for the second quarter of 2011 was 56.1%, compared to 59.3% in the second quarter of 2010.  The Company expects the start-up costs to diminish in the near term.

In order to reach a broader customer base for the laser scanner, the Company has and may increasingly use distributors in addition to its own sales force.  Sales through distributors generally carry lower gross margin.  However, there is a partially offsetting reduction in selling expenses.  As a result, the Company expects that higher laser scanner sales should generate improved operating margin and profits.

"Our results in the second quarter were extremely strong, as we delivered 127% EPS growth on a 31% increase in sales.  We expect positive momentum for our core metrology products as well as the Focus Laser Scanner to continue through the rest of 2011 and into 2012," 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


Six Months Ended



















(in thousands, except share and per share data)


July 2, 2011


July 3, 2010


July 2, 2011


July 3, 2010

SALES









Product


$     49,692


$      37,212


$     92,650


$     71,150

Service


10,019


8,493


19,627


16,824

Total Sales


59,711


45,705


112,277


87,974

COST OF SALES









Product


19,349


12,620


34,922


23,895

Service


6,846


5,997


13,567


11,600

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


26,195


18,617


48,489


35,495

GROSS PROFIT


33,516


27,088


63,788


52,479










OPERATING EXPENSES:









Selling


15,309


12,027


29,461


23,262

General and administrative


6,917


6,028


13,507


12,275

Depreciation and amortization


1,722


1,515


3,336


3,055

Research and development


3,814


2,997


7,446


5,986

Total operating expenses


27,762


22,567


53,750


44,578

INCOME FROM OPERATIONS


5,754


4,521


10,038


7,901

OTHER (INCOME) EXPENSE









Interest income


(39)


(26)


(65)


(45)

Other expense (income), net


124


1,839


(5)


2,344

Interest expense


2


2


31


29

INCOME BEFORE INCOME TAX  EXPENSE


5,667


2,706


10,077


5,573

INCOME TAX EXPENSE


1,434


869


2,601


1,672

NET INCOME


$       4,233


$        1,837


$       7,476


$       3,901

NET INCOME PER SHARE - BASIC


$         0.26


$          0.11


$         0.46


$         0.24










NET INCOME PER SHARE - DILUTED


$         0.25


$          0.11


$         0.45


$         0.24










Weighted average shares - Basic


16,448,229


16,148,233


16,349,190


16,136,447










Weighted average shares - Diluted


16,845,877


16,320,596


16,724,019


16,289,963



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













July 2,


December 31,



2011


2010

(in thousands, except share data)


(unaudited)



ASSETS





Current Assets:





Cash and cash equivalents


$    57,339


$        50,722

Short-term investments


64,992


64,986

Accounts receivable, net


46,951


51,862

Inventories, net


44,742


28,242

Deferred income taxes, net


4,471


4,455

Prepaid expenses and other current assets


10,621


8,045

Total current assets


229,116


208,312

Property and Equipment:





Machinery and equipment


27,713


24,840

Furniture and fixtures


6,213


5,700

Leasehold improvements


10,412


9,682

   Property and equipment at cost


44,338


40,222

Less: accumulated depreciation and amortization


(28,034)


(24,982)

   Property and equipment, net


16,304


15,240

Goodwill


20,044


19,015

Intangible assets, net


7,233


7,204

Service inventory


14,255


13,726

Deferred income taxes, net


2,680


2,522

Total Assets


$  289,632


$      266,019

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$    11,059


$        12,025

Accrued liabilities


17,174


15,208

Income taxes payable


266


1,138

Current portion of unearned service revenues


14,924


13,357

Customer deposits


2,017


3,679

Current portion of obligations under capital leases


47


91

     Total current liabilities


45,487


45,498

Unearned service revenues - less current portion


8,254


6,758

Deferred tax liability, net


1,192


1,161

Obligations under capital leases - less current portion


150


125

Total Liabilities


55,083


53,542

Commitments and contingencies - See Note R





Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares authorized; 17,256,199 and 16,894,374 issued; 16,575,964 and 16,214,139 outstanding, respectively


17


17

Additional paid-in capital


165,564


156,310

Retained earnings


65,459


57,983

Accumulated other comprehensive income


12,584


7,242

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


(9,075)


(9,075)

Total Shareholders' Equity


234,549


212,477

Total Liabilities and Shareholders' Equity


$  289,632


$      266,019



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








Six Months Ended






(in thousands)


July 2, 2011


July 3, 2010

CASH FLOWS FROM:





OPERATING ACTIVITIES:





Net income


$        7,476


$        3,901

Adjustments to reconcile net income to net cash provided by





   operating activities:





Depreciation and amortization


3,336


3,055

Compensation for stock options and restricted stock units


1,366


1,203

Provision for bad debts


1,082


806

Deferred income tax (benefit) expense


(16)


280

Change in operating assets and liabilities:





Decrease (increase) in:





Accounts receivable


5,920


(1,388)

Inventories, net


(14,773)


(4,950)

Prepaid expenses and other current assets


(2,032)


(1,837)

Income tax benefit from exercise of stock options


(1,013)


(16)

Increase (decrease) in:





Accounts payable and accrued liabilities


44


4,003

Income taxes payable


197


(275)

Customer deposits


(1,723)


328

Unearned service revenues


2,200


713

           Net cash provided by operating activities


2,064


5,823






INVESTING ACTIVITIES:





Purchases of property and equipment


(2,534)


(1,253)

Payments for intangible assets


(425)


(382)

       Net cash used in investing activities


(2,959)


(1,635)






FINANCING ACTIVITIES:





Proceeds from notes payable


-


2,490

Payments on notes payable


-


(2,490)

Payments on capital leases


(117)


(39)

Income tax benefit from exercise of stock options


1,013


16

Proceeds from issuance of stock, net


6,875


363

       Net cash provided by financing activities


7,771


340






EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(259)


2,323






INCREASE  IN CASH AND CASH EQUIVALENTS


6,617


6,851






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


50,722


35,078






CASH AND CASH EQUIVALENTS, END OF PERIOD


$      57,339


$      41,929



SOURCE FARO Technologies, Inc.