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FARO Reports 20% Increase in Fourth Quarter Orders; Solid Financial Results

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SOURCE FARO Technologies, Inc.

LAKE MARY, Fla., Feb. 26, 2014 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the fourth quarter ended December 31, 2013.  Sales in the fourth quarter of 2013 increased 11.4% to $89.9 million, from $80.7 million in the fourth quarter of 2012.  The Company reported net income increased to $8.3 million, or $0.48 per share, in the fourth quarter of 2013, from $7.8 million, or $0.46 per share, in the comparable period in 2012.

FARO logo.

Fiscal 2013 sales were $291.8 million, an increase of 6.7% compared with the preceding year.  Net income for fiscal 2013 was $21.5 million compared with $23.0 million in fiscal 2012.  Cash flow from operations for 2013 was $34.3 million, compared to $27.9 million in 2012.

New order bookings for the fourth quarter of 2013 were $98.6 million, an increase of $16.5 million, or 20.1%, compared to $82.1 million in the fourth quarter of 2012.

Fourth quarter gross margin increased to 54.9%, from 53.4% in the fourth quarter of 2012.   This improvement resulted from lower manufacturing costs, higher overall pricing primarily from newly introduced products, and sales mix.

The Company's operating margin for the fourth quarter was 12.6%, compared with 13.9% in the fourth quarter of 2012, primarily driven by a planned investment in higher headcount in the sales and research and development organizations to support greater market activity and new product development activity in 2014.

"Our top line results in the fourth quarter reflect the outcome of cutting-edge new product innovation, solid execution across all Company disciplines, and a modest improvement in the markets we serve," stated Jay Freeland, FARO's President & CEO. "We enter 2014 with solid momentum from our growth in the second half of 2013, a portfolio of new products with high customer acceptance already in the market, a pipeline of new product launches planned for 2014, and increased resources deployed in sales and R&D to capitalize on improving market conditions and to expand and accelerate product development." 

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 growth, demand for and customer acceptance of FARO's products, anticipated improvement in the markets in which FARO operates, and FARO's product development and product launches. 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 "plan," "will," 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:

  • 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;
  • risks associated with 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; and
  • 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, 2012.

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.

About FARO
FARO is the world's most trusted source for 3D measurement technology. The Company develops and markets computer-aided measurement and imaging devices and software. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes. The devices are used for inspecting components and assemblies, rapid prototyping, documenting large volume spaces or structures in 3D, surveying and construction, as well as for investigation and reconstruction of accident sites or crime scenes.

Approximately 15,000 customers are operating more than 30,000 installations of FARO's systems, worldwide. The Company's global headquarters is located in Lake Mary, FL; its European regional headquarters in Stuttgart, Germany; and its Asia/Pacific regional headquarters in Singapore. FARO has offices in Brazil, Mexico, United Kingdom, France, Spain, Italy, Netherlands, Switzerland, Portugal, India, China, Malaysia, Vietnam, Thailand, South Korea and Japan.

More information is available at http://www.faro.com.

 










FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS













Three Months Ended 


Twelve Months Ended 



(unaudited)














(in thousands, except share data)


December 31,
2013


December 31,
2012


December 31,
2013


December 31,
2012

SALES









Product


$       76,171


$      68,775


$     238,841


$    227,905

Service


13,724


11,895


52,943


45,490

Total Sales


89,895


80,670


291,784


273,395

COST OF SALES 









Product


31,998


30,170


97,630


94,103

Service


8,576


7,431


32,261


29,673

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

40,574


37,601


129,891


123,776

GROSS PROFIT

49,321


43,069


161,893


149,619










OPERATING EXPENSES:








Selling 

21,957


18,413


71,689


64,446

General and administrative

7,984


7,037


30,600


29,065

Depreciation and amortization

1,770


1,812


7,038


6,976

Research and development

6,241


4,580


22,412


17,578

Total operating expenses

37,952


31,842


131,739


118,065

INCOME FROM OPERATIONS

11,369


11,227


30,154


31,554

OTHER (INCOME) EXPENSE








Interest income

(20)


(19)


(74)


(160)

Other expense (income), net

(71)


529


1,357


744

Interest expense

6


6


9


28

INCOME BEFORE INCOME TAX  EXPENSE 

11,454


10,711


28,862


30,942

INCOME TAX EXPENSE

3,192


2,870


7,353


7,944

NET INCOME 

$        8,262


$        7,841


$      21,509


$     22,998

NET INCOME PER SHARE - BASIC

$          0.48


$          0.46


$          1.26


$         1.36









NET INCOME PER SHARE - DILUTED

$          0.48


$          0.46


$          1.25


$         1.34









Weighted average shares - Basic

17,141,851


16,966,063


17,087,104


16,910,830










Weighted average shares - Diluted

17,299,227


17,074,074


17,241,115


17,129,128










 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


















December 31,


December 31,

(in thousands, except share data)


2013


2012

ASSETS





Current Assets:





Cash and cash equivalents


$     124,630


$      93,233

Short-term investments


64,994


64,990

Accounts receivable, net


66,309


62,559

Inventories, net


48,940


48,894

Deferred income taxes, net


4,601


7,216

Prepaid expenses and other current assets


14,645


11,186

Total current assets


324,119


288,078

Property and Equipment:





Machinery and equipment


36,924


32,236

Furniture and fixtures


6,888


6,516

Leasehold improvements


11,765


10,897

    Property and equipment at cost


55,577


49,649

Less: accumulated depreciation and amortization


(39,126)


(34,305)

    Property and equipment, net


16,451


15,344

Goodwill


19,358


18,816

Intangible assets, net


8,112


7,048

Service inventory


19,033


19,125

Deferred income taxes, net


4,423


2,396

Total Assets


$     391,496


$    350,807

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$       14,881


$      10,413

Accrued liabilities


20,133


18,216

Income taxes payable


1,690


4,886

Current portion of unearned service revenues


21,331


19,460

Customer deposits


2,910


2,662

Current portion of obligations under capital leases


8


45

Total current liabilities


60,953


55,682

Unearned service revenues - less current portion


13,414


11,221

Deferred income tax liability, net


1,171


1,149

Obligations under capital leases - less current portion


8


19

Total Liabilities


75,546


68,071

Commitments and contingencies 





Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares authorized; 17,868,372
and 17,653,879 issued; 17,188,137 and 16,973,644 outstanding, respectively

18


18

Additional paid-in capital


191,874


181,094

Retained earnings


125,867


104,358

Accumulated other comprehensive income


7,266


6,341

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


(9,075)


(9,075)

Total Shareholders' Equity


315,950


282,736

Total Liabilities and Shareholders' Equity


$     391,496


$    350,807






 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS











Years Ended December 31,








(in thousands)


2013


2012


2011

CASH FLOWS FROM:







OPERATING ACTIVITIES:







Net income 


$   21,509


$ 22,998


$ 23,377

Adjustments to reconcile net income to net cash provided by






    operating activities:







Depreciation and amortization


7,038


6,976


6,712

Compensation for stock options and restricted stock units

4,367


4,018


2,727

Provision for (net recovery of) bad debts


1,001


(23)


2,169

Deferred income tax expense (benefit)


645


(2,016)


(672)

Change in operating assets and liabilities:







Decrease (increase) in:







Accounts receivable


(4,053)


(4,840)


(8,979)

Inventories, net 


(119)


(844)


(27,329)

Prepaid expenses and other current assets


(3,346)


(1,870)


(1,417)

Income tax benefit from exercise of stock options

(969)


(1,135)


(1,593)

Increase (decrease) in:







Accounts payable and accrued liabilities


6,108


(3,079)


4,644

Income taxes payable


(2,028)


3,497


2,998

Customer deposits


353


(1,374)


668

Unearned service revenues


3,772


5,565


5,384

            Net cash provided by operating activities


34,278


27,873


8,689








INVESTING ACTIVITIES:







Purchases of property and equipment


(4,350)


(3,843)


(4,474)

Payments for intangible assets


(2,204)


(1,361)


(890)

        Net cash used in investing activities


(6,554)


(5,204)


(5,364)








 FINANCING ACTIVITIES:







Payments on capital leases


(93)


(132)


(163)

Income tax benefit from exercise of stock options


969


1,135


1,593

Proceeds from issuance of stock, net


5,444


6,162


9,150

        Net cash provided by financing activities


6,320


7,165


10,580








EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(2,647)


(1,141)


(87)








INCREASE  IN CASH AND CASH EQUIVALENTS


31,397


28,693


13,818








CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

93,233


64,540


50,722








CASH AND CASH EQUIVALENTS, END OF YEAR

$ 124,630


$ 93,233


$ 64,540








 

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