TechWeb

FARO Reports Record Results for Fourth Quarter and Full Year 2011

Feb 28, 2012 (03:02 PM EST)
URL: http://www.techweb.com/show-press-release/X891213/faro-reports-record-results-for-fourth-quarter-and-full-year-2011.html

LAKE MARY, Fla., Feb. 28, 2012 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced record results for the fourth quarter and full year ended December 31, 2011.  Sales in the fourth quarter of 2011 increased 31.7% to $77.1 million, from $58.5 million in the fourth quarter of 2010.  The Company reported net income increased by 95.8% to $9.5 million, or $0.56 per share, in the fourth quarter of 2011, from $4.8 million, or $0.29 per share, in the fourth quarter of 2010.

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

Fiscal 2011 sales were $254.2 million, an increase of 32.5% compared to fiscal 2010 sales of $191.8 million.  Net income for fiscal 2011 was $23.4 million compared to $11.1 million in fiscal 2010.

New order bookings for fiscal 2011 were $255.7 million, an increase of 29.2% from $197.9 million in fiscal 2010.  New order bookings for the fourth quarter of 2011 were $77.1 million, an increase of $9.7 million, or 14.4%, compared to $67.4 million in the fourth quarter of 2010.  A sluggish European economy resulted in lower than expected orders in the fourth quarter.  However, orders in the other two regions met the Company's internal targets.  

"We had another strong quarter, growing sales by almost 32% and EPS by 93%," stated Jay Freeland, FARO's President and CEO.  "The Focus Laser Scanner continues to do well and the new FARO Edge Arm has been well-received by our customers.  We also generated additional operating margin leverage through the combination of increased sales and tight cost controls."

Gross margin for the fourth quarter of 2011 was 56.5%, compared to 59.0% in the fourth quarter of 2010 and in line with the 56.1% gross margins of Q2 and Q3 2011,  resulting from proportionately higher laser scanner sales, which currently have a lower gross margin relative to the Company's historical product mix.

The Company's operating margin for the fourth quarter increased to 16.7%, compared with 10.6% in the fourth quarter of 2010.  The increase was driven by a combination of continued cost containment and substantial operating leverage on the Company's cost structure.

"The Company is performing extremely well.  Our new products are creating strong demand, and we have more on the way in 2012.  We're entering an exciting new era for the Company.  We plan to introduce even more disruptive products as we go forward, and we will spend aggressively on R&D to drive our technology lead. FARO's market opportunity remains substantial and as a result, we believe that sales growth of 20 – 25% per year is an achievable target for the Company," 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 plans and strategies, product releases, demand for its products, spending on R&D, 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 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:

  • 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 26,000 installations and 13,000 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



Twelve Months Ended





















(in thousands, except share and per share data)


Dec 31, 2011


Dec 31, 2010



Dec 31, 2011


Dec 31, 2010

SALES










Product


$                        65,953


$                      49,456



$              212,635


$                      157,331

Service


11,127


9,059



41,529


34,444

Total Sales


77,080


58,515



254,164


191,775

COST OF SALES










Product


25,881


17,775



82,408


54,571

Service


7,687


6,204



28,067


23,806

Total Cost of Sales (exclusive of depreciation and amortization,

shown separately below)


33,568


23,979



110,475


78,377

GROSS PROFIT


43,512


34,536



143,689


113,398











OPERATING EXPENSES:










Selling


17,960


15,710



62,117


50,679

General and administrative


6,875


7,300



26,806


26,776

Depreciation and amortization


1,665


1,492



6,712


6,326

Research and development


4,159


3,854



15,196


12,690

Total operating expenses


30,659


28,356



110,831


96,471

INCOME FROM OPERATIONS


12,853


6,180



32,858


16,927

OTHER (INCOME) EXPENSE










Interest income


(17)


(22)



(101)


(105)

Other expense (income), net


442


983



1,217


2,783

Interest expense


4


3



37


34

INCOME BEFORE INCOME TAX  EXPENSE


12,424


5,216



31,705


14,215

INCOME TAX EXPENSE


2,952


377



8,328


3,147

NET INCOME


$                          9,472


$                        4,839



$                23,377


$                        11,068

NET INCOME PER SHARE - BASIC


$                            0.57


$                          0.30



$                    1.42


$                            0.69











NET INCOME PER SHARE - DILUTED


$                            0.56


$                          0.29



$                    1.39


$                            0.68











Weighted average shares - Basic


16,668,567


16,179,531



16,503,773


16,153,831











Weighted average shares - Diluted


16,940,201


16,424,638



16,868,471


16,365,826



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













December 31,


December 31,



2011


2010

(in thousands, except share data)





ASSETS





Current Assets:





Cash and cash equivalents


$                          64,540


$                     50,722

Short-term investments


64,997


64,986

Accounts receivable, net


57,512


51,862

Inventories, net


49,934


28,242

Deferred income taxes, net


5,297


4,455

Prepaid expenses and other current assets


9,207


8,045

Total current assets


251,487


208,312

Property and Equipment:





Machinery and equipment


29,171


24,840

Furniture and fixtures


5,963


5,700

Leasehold improvements


10,233


9,682

   Property and equipment at cost


45,367


40,222

Less: accumulated depreciation and amortization


(29,134)


(24,982)

   Property and equipment, net


16,233


15,240

Goodwill


18,610


19,015

Intangible assets, net


6,849


7,204

Service inventory


17,316


13,726

Deferred income taxes, net


2,296


2,522

Total Assets


$                        312,791


$                   266,019

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$                          13,396


$                     12,025

Accrued liabilities


18,076


15,208

Income taxes payable


2,682


1,138

Current portion of unearned service revenues


15,638


13,357

Customer deposits


4,072


3,679

Current portion of obligations under capital leases


84


91

     Total current liabilities


53,948


45,498

Unearned service revenues - less current portion


9,540


6,758

Deferred tax liability, net


1,148


1,161

Obligations under capital leases - less current portion


257


125

Total Liabilities


64,893


53,542






Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares

authorized; 17,381,110 and 16,894,374 issued;

16,700,875 and 16,214,139 outstanding,

respectively


17


17

Additional paid-in capital


169,780


156,310

Retained earnings


81,360


57,983

Accumulated other comprehensive income


5,816


7,242

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


(9,075)


(9,075)

Total Shareholders' Equity


247,898


212,477

Total Liabilities and Shareholders' Equity


$                        312,791


$                   266,019



FARO TECHNOLOGIES, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS















Years Ended December 31,








(in thousands)


2011


2010


2009

CASH FLOWS FROM:







OPERATING ACTIVITIES:







Net income (loss)


$                       23,377


$                       11,068


$                 (10,582)

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







   operating activities:







Depreciation and amortization


6,712


6,326


5,530

Compensation for stock options and restricted stock units


2,727


2,392


2,449

Provision for bad debts


2,169


2,408


1,852

Deferred income tax expense (benefit)


(672)


(693)


1,986

Change in operating assets and liabilities:







Decrease (increase) in:







Accounts receivable


(8,979)


(13,018)


5,769

Inventories, net


(27,329)


(6,273)


8,301

Prepaid expenses and other current assets


(1,417)


(2,172)


1,964

Income tax benefit from exercise of stock options


(1,593)


(133)


(4)

Increase (decrease) in:







Accounts payable and accrued liabilities


4,644


10,435


(7,891)

Income taxes payable


2,998


829


(1,749)

Customer deposits


668


1,474


1,736

Unearned service revenues


5,384


2,338


(396)

           Net cash provided by operating activities


8,689


14,981


8,965








INVESTING ACTIVITIES:







Purchases of property and equipment


(4,474)


(4,047)


(3,387)

Payments for intangible assets


(890)


(979)


(670)

Purchases of short-term investments


-


-


(64,986)

Proceeds from sales of short-term investments


-


-


81,965

       Net cash (used in) provided by investing activities


(5,364)


(5,026)


12,922








FINANCING ACTIVITIES:







Proceeds from notes payable


-


2,490


-

Payments on notes payable


-


(2,490)


-

Payments on capital leases


(163)


(84)


(88)

Income tax benefit from exercise of stock options


1,593


133


4

Purchases of treasury stock


-


-


(8,829)

Proceeds from issuance of stock, net


9,150


1,405


83

       Net cash provided by (used in) financing activities


10,580


1,454


(8,830)








EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(87)


4,235


(1,473)








INCREASE  IN CASH AND CASH EQUIVALENTS


13,818


15,644


11,584








CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


50,722


35,078


23,494








CASH AND CASH EQUIVALENTS, END OF PERIOD


$                       64,540


$                       50,722


$                   35,078



SOURCE FARO Technologies, Inc.