- Quarterly sales of $98.2 million, up 18.8% year-over-year
- 3D factory quarterly sales up 13.3% year-over-year, construction BIM up 25.0%, emerging verticals up 50.3%
- Strengthened gross margin to 58.7% for the quarter
- Increased quarterly operating margin by 7.0 percentage points year-over-year
"For the fourth consecutive quarter, we delivered double-digit sales growth and increased gross margin year-over-year demonstrating improved execution of our strategy and FARO's technological leadership in our vertical markets," stated Dr. Simon Raab, President and Chief Executive Officer. "All segments reported strong year-over-year orders and sales growth, highlighted by our 3D factory segment. In the second quarter and extending into the current quarter, important new product releases will continue the expansion of our product range to better meet the technical needs and budgets of our customers. We have also accelerated our pace of acquisitions this year, having completed four year-to-date and adding important new technologies including 3D scanning for the dental market. Our global initiative of FAROBest! is aimed at operational excellence and will contribute to controlling our G&A and R&D expenses as a percentage of sales. Our actions delivered a 7-point improvement in operating margin year-over-year for the quarter."
Second Quarter 2018
Total sales increased by $15.5 million, or 18.8%, to $98.2 million for the quarter ended June 30, 2018 from $82.7 million for the quarter ended June 30, 2017. Our second quarter sales increase was primarily a result of growth in product unit sales across all segments and higher average selling prices, primarily in our 3D factory segment. New order bookings increased by $17.5 million, or 19.7%, to $106.5 million for the quarter ended June 30, 2018 from $89.0 million for the quarter ended June 30, 2017.
Gross margin for the quarter was 58.7%, up 2.1 percentage points compared with 56.6% for the same prior year period primarily due to higher average selling prices and improved manufacturing efficiencies.
Our operating income increased by $6.1 million to $1.9 million for the second quarter of 2018, compared with an operating loss of $4.2 million for same prior year period. Operating margin increased to 2.0% for the second quarter of 2018, up 7.0 percentage points compared with the second quarter of 2017.
Net income for the second quarter of 2018 was $1.2 million or $0.07 per share, compared with a net loss of $3.6 million or loss of $0.22 per share for the second quarter last year.
Six months ended June 30, 2018
Total sales increased by $26.9 million, or 16.3%, to $191.1 million for the six months ended June 30, 2018 from $164.2 million for the six months ended June 30, 2017. Our sales increase was primarily driven by strong growth of product unit sales in our construction BIM and emerging verticals segments, higher average selling prices in our 3D factory segment, and service revenue growth. New order bookings increased by $26.8 million, or 15.2%, to $202.6 million for the six months ended June 30, 2018 from $175.8 million for the six months ended June 30, 2017.
Gross margin was 58.3% for the first six months of 2018, up 3.2 percentage points over the same prior year period mostly due to higher average selling prices and improved manufacturing efficiencies.
Operating income was $2.6 million for the six months ended June 30, 2018, reflecting an increase of $8.8 million compared with an operating loss of $6.2 million for the same prior year period.
Our net income for the six months ended June 30, 2018 was $1.7 million, or $0.10 per share, compared with a net loss of $5.1 million or loss of $0.30 per share for the first six months of 2017.
As of June 30, 2018, cash and short-term investments totaled $144.6 million, of which $88.4 million was held by foreign subsidiaries.
About FARO
FARO is the world's most trusted source for 3D measurement, imaging and realization technology. The Company develops and markets computer-aided measurement and imaging devices and software for the following vertical markets:
- Factory Metrology - High-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes
- Construction BIM - 3D capture of as-built construction projects and factories to document complex structures and perform quality control, planning and preservation
- Public Safety Forensics - Capture and analysis of on-site real world data to investigate crash, crime and fire, plan security activities and provide virtual reality training for public safety personnel
- Product Design - Capture detailed and precise 3D data from existing products permitting CAD analysis and redesign, after market design and legacy part replication
- 3D Machine Vision - 3D vision for both control and measurement to the manufacturing floor through 3D sensors and custom solutions
FARO's global headquarters is located in Lake Mary, Florida. The Company also has a technology center and manufacturing facility consisting of approximately 90,400 square feet located in Exton, Pennsylvania containing research and development, manufacturing and service operations of our FARO Laser Tracker and FARO Cobalt Array Imager product lines. The Company's European regional headquarters is located in Stuttgart, Germany and its Asia-Pacific regional headquarters is located in Singapore. FARO has other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, India, China, Malaysia, Thailand, South Korea, Japan, and Australia.
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 demand for and customer acceptance of FARO's products, 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 "is," "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 less competitive or obsolete;
- the Company's inability to maintain its technological advantage by developing new products and enhancing its existing products;
- 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 financial conditions; 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, 2017 and in Part II, Item 1A. Risk Factors in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.
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.
More information is available at http://www.faro.com.
|
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
|
(UNAUDITED) | |||||||||||||||
|
| |||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended | ||||||||||||
|
(in thousands, except share and per share data) |
June 30, 2018 |
|
June 30, 2017 |
|
June 30, 2018 |
|
June 30, 2017 | ||||||||
|
Sales |
|
|
|
|
|
|
| ||||||||
|
Product |
$ |
75,720 |
|
|
$ |
62,533 |
|
|
$ |
146,301 |
|
|
$ |
124,913 |
|
|
Service |
22,524 |
|
|
20,149 |
|
|
44,777 |
|
|
39,331 |
| ||||
|
Total sales |
98,244 |
|
|
82,682 |
|
|
191,078 |
|
|
164,244 |
| ||||
|
Cost of Sales |
|
|
|
|
|
|
| ||||||||
|
Product |
27,878 |
|
|
24,455 |
|
|
54,762 |
|
|
51,513 |
| ||||
|
Service |
12,675 |
|
|
11,467 |
|
|
24,839 |
|
|
22,222 |
| ||||
|
Total cost of sales (exclusive of depreciation and
|
40,553 |
|
|
35,922 |
|
|
79,601 |
|
|
73,735 |
| ||||
|
Gross Profit |
57,691 |
|
|
46,760 |
|
|
111,477 |
|
|
90,509 |
| ||||
|
Operating Expenses |
|
|
|
|
|
|
| ||||||||
|
Selling and marketing |
30,084 |
|
|
26,022 |
|
|
58,355 |
|
|
48,894 |
| ||||
|
General and administrative |
11,320 |
|
|
11,877 |
|
|
22,393 |
|
|
22,576 |
| ||||
|
Depreciation and amortization |
4,377 |
|
|
3,989 |
|
|
8,720 |
|
|
7,707 |
| ||||
|
Research and development |
9,983 |
|
|
9,045 |
|
|
19,389 |
|
|
17,511 |
| ||||
|
Total operating expenses |
55,764 |
|
|
50,933 |
|
|
108,857 |
|
|
96,688 |
| ||||
|
Income (loss) from operations |
1,927 |
|
|
(4,173) |
|
|
2,620 |
|
|
(6,179) |
| ||||
|
Other expense (income) |
|
|
|
|
|
|
| ||||||||
|
Interest income, net |
(87) |
|
|
(89) |
|
|
(160) |
|
|
(171) |
| ||||
|
Other expense, net |
509 |
|
|
459 |
|
|
693 |
|
|
467 |
| ||||
|
Income (loss) before income tax expense (benefit) |
1,505 |
|
|
(4,543) |
|
|
2,087 |
|
|
(6,475) |
| ||||
|
Income tax expense (benefit) |
300 |
|
|
(918) |
|
|
427 |
|
|
(1,389) |
| ||||
|
Net income (loss) |
$ |
1,205 |
|
|
$ |
(3,625) |
|
|
$ |
1,660 |
|
|
$ |
(5,086) |
|
|
Net income (loss) per share - Basic |
$ |
0.07 |
|
|
$ |
(0.22) |
|
|
$ |
0.10 |
|
|
$ |
(0.30) |
|
|
Net income (loss) per share - Diluted |
$ |
0.07 |
|
|
$ |
(0.22) |
|
|
$ |
0.10 |
|
|
$ |
(0.30) |
|
|
Weighted average shares - Basic |
16,966,928 |
|
|
16,700,718 |
|
|
16,902,390 |
|
|
16,692,500 |
| ||||
|
Weighted average shares - Diluted |
17,264,642 |
|
|
16,700,718 |
|
|
17,210,054 |
|
|
16,692,500 |
| ||||
|
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
|
| |||||||
|
(in thousands, except share and per share data) |
June 30, 2018 (unaudited) |
|
December 31, 2017 | ||||
|
ASSETS |
|
|
| ||||
|
Current assets: |
|
|
| ||||
|
Cash and cash equivalents |
$ |
133,554 |
|
|
$ |
140,960 |
|
|
Short-term investments |
10,998 |
|
|
10,997 |
| ||
|
Accounts receivable, net |
71,641 |
|
|
72,105 |
| ||
|
Inventories, net |
60,349 |
|
|
53,786 |
| ||
|
Prepaid expenses and other current assets |
21,086 |
|
|
16,311 |
| ||
|
Total current assets |
297,628 |
|
|
294,159 |
| ||
|
Property and equipment: |
|
|
| ||||
|
Machinery and equipment |
70,332 |
|
|
66,514 |
| ||
|
Furniture and fixtures |
6,650 |
|
|
6,945 |
| ||
|
Leasehold improvements |
20,039 |
|
|
19,872 |
| ||
|
Property and equipment at cost |
97,021 |
|
|
93,331 |
| ||
|
Less: accumulated depreciation and amortization |
(66,321) |
|
|
(61,452) |
| ||
|
Property and equipment, net |
30,700 |
|
|
31,879 |
| ||
|
Goodwill |
53,584 |
|
|
52,750 |
| ||
|
Intangible assets, net |
23,842 |
|
|
22,540 |
| ||
|
Service and sales demonstration inventory, net |
38,346 |
|
|
39,614 |
| ||
|
Deferred income tax assets, net |
15,691 |
|
|
15,606 |
| ||
|
Other long-term assets |
4,678 |
|
|
2,030 |
| ||
|
Total assets |
$ |
464,469 |
|
|
$ |
458,578 |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| ||||
|
Current liabilities: |
|
|
| ||||
|
Accounts payable |
$ |
11,764 |
|
|
$ |
11,569 |
|
|
Accrued liabilities |
24,950 |
|
|
27,362 |
| ||
|
Income taxes payable |
1,672 |
|
|
4,676 |
| ||
|
Current portion of unearned service revenues |
30,179 |
|
|
29,674 |
| ||
|
Customer deposits |
2,944 |
|
|
2,604 |
| ||
|
Total current liabilities |
71,509 |
|
|
75,885 |
| ||
|
Unearned service revenues - less current portion |
13,291 |
|
|
11,815 |
| ||
|
Deferred income tax liabilities |
590 |
|
|
695 |
| ||
|
Income taxes payable - less current portion |
14,578 |
|
|
15,952 |
| ||
|
Other long-term liabilities |
1,798 |
|
|
2,165 |
| ||
|
Total liabilities |
101,766 |
|
|
106,512 |
| ||
|
Shareholders' equity: |
|
|
| ||||
|
Common stock - par value $.001, 50,000,000 shares authorized; 18,440,073 and
|
18 |
|
|
18 |
| ||
|
Additional paid-in capital |
233,755 |
|
|
223,055 |
| ||
|
Retained earnings |
172,649 |
|
|
168,624 |
| ||
|
Accumulated other comprehensive loss |
(11,985) |
|
|
(7,822) |
| ||
|
Common stock in treasury, at cost; 1,461,315 and 1,480,258 shares, respectively |
$ |
(31,734) |
|
|
$ |
(31,809) |
|
|
Total shareholders' equity |
$ |
362,703 |
|
|
$ |
352,066 |
|
|
Total liabilities and shareholders' equity |
$ |
464,469 |
|
|
$ |
458,578 |
|
|
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
|
(UNAUDITED) | |||||||
|
| |||||||
|
|
Six Months Ended | ||||||
|
(in thousands) |
June 30, 2018 |
|
June 30, 2017 | ||||
|
Cash flows from: |
|
|
| ||||
|
Operating activities: |
|
|
| ||||
|
Net income (loss) |
$ |
1,660 |
|
|
$ |
(5,086) |
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in)
|
|
|
| ||||
|
Depreciation and amortization |
8,720 |
|
|
7,707 |
| ||
|
Stock-based compensation |
3,400 |
|
|
3,195 |
| ||
|
Provision for bad debts |
211 |
|
|
230 |
| ||
|
Loss on disposal of assets |
165 |
|
|
122 |
| ||
|
Provision for excess and obsolete inventory |
504 |
|
|
736 |
| ||
|
Deferred income tax (benefit) expense |
(190) |
|
|
168 |
| ||
|
Change in operating assets and liabilities: |
|
|
| ||||
|
Decrease (increase) in: |
|
|
| ||||
|
Accounts receivable |
252 |
|
|
4,771 |
| ||
|
Inventories |
(6,664) |
|
|
(10,107) |
| ||
|
Prepaid expenses and other current assets |
(3,526) |
|
|
(6,489) |
| ||
|
(Decrease) increase in: |
|
|
| ||||
|
Accounts payable and accrued liabilities |
(2,901) |
|
|
1,610 |
| ||
|
Income taxes payable |
(4,378) |
|
|
(590) |
| ||
|
Customer deposits |
382 |
|
|
(163) |
| ||
|
Unearned service revenues |
2,372 |
|
|
(472) |
| ||
|
Net cash provided by (used in) operating activities |
7 |
|
|
(4,368) |
| ||
|
Investing activities: |
|
|
| ||||
|
Proceeds from sale of investments |
— |
|
|
21,000 |
| ||
|
Purchases of property and equipment |
(5,164) |
|
|
(3,669) |
| ||
|
Payments for intangible assets |
(1,186) |
|
|
(645) |
| ||
|
Acquisition of businesses |
(3,965) |
|
|
(5,496) |
| ||
|
Equity investments and advances to affiliates |
(1,786) |
|
|
— |
| ||
|
Net cash (used in) provided by investing activities |
(12,101) |
|
|
11,190 |
| ||
|
Financing activities: |
|
|
| ||||
|
Payments on capital leases |
(46) |
|
|
(4) |
| ||
|
Proceeds from issuance of stock related to stock option exercises |
7,133 |
|
|
284 |
| ||
|
Net cash provided by financing activities |
7,087 |
|
|
280 |
| ||
|
Effect of exchange rate changes on cash and cash equivalents |
(2,399) |
|
|
4,323 |
| ||
|
(Decrease) increase in cash and cash equivalents |
(7,406) |
|
|
11,425 |
| ||
|
Cash and cash equivalents, beginning of period |
140,960 |
|
|
106,169 |
| ||
|
Cash and cash equivalents, end of period |
$ |
133,554 |
|
|
$ |
117,594 |
|
|
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
|
(UNAUDITED) | |||||||||||||||
|
| |||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended | ||||||||||||
|
(in thousands) |
June 30, 2018 |
|
June 30, 2017 |
|
June 30, 2018 |
|
June 30, 2017 | ||||||||
|
Net income (loss) |
$ |
1,205 |
|
|
$ |
(3,625) |
|
|
$ |
1,660 |
|
|
$ |
(5,086) |
|
|
Currency translation adjustments, net of income tax |
(9,377) |
|
|
7,140 |
|
|
(4,163) |
|
|
11,299 |
| ||||
|
Comprehensive (loss) income |
$ |
(8,172) |
|
|
$ |
3,515 |
|
|
$ |
(2,503) |
|
|
$ |
6,213 |
|
|
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
|
UNAUDITED SUPPLEMENTAL DATA | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
Three Months Ended |
|
Six Months Ended | ||||||||||||||||||
|
(revenue in thousands) |
|
Q2 2018
|
|
Q2 2017
|
|
% Change |
|
Q2 2018
|
|
Q2 2017 Sales |
|
% Change | ||||||||||
|
Reporting Segments |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
3D Factory(1) |
|
$ |
64,970 |
|
|
$ |
57,363 |
|
|
13.3 |
% |
|
$ |
126,328 |
|
|
$ |
114,584 |
|
|
10.2 |
% |
|
Construction BIM(2) |
|
23,567 |
|
|
18,859 |
|
|
25.0 |
% |
|
46,249 |
|
|
37,800 |
|
|
22.4 |
% | ||||
|
Emerging Verticals(3) |
|
9,707 |
|
|
6,460 |
|
|
50.3 |
% |
|
18,501 |
|
|
11,860 |
|
|
56.0 |
% | ||||
|
Total |
|
$ |
98,244 |
|
|
$ |
82,682 |
|
|
18.8 |
% |
|
$ |
191,078 |
|
|
$ |
164,244 |
|
|
16.3 |
% |
|
| ||||||||||||||||||||||
|
(1) The 3D Factory reporting segment (formerly known as Factory Metrology) includes our Factory Metrology and 3D Machine Vision verticals. | ||||||||||||||||||||||
|
(2) The Construction BIM reporting segment contains solely our Construction BIM vertical (formerly known as Construction BIM-CIM). | ||||||||||||||||||||||
|
(3) The Emerging Verticals reporting segment (formerly known as Other) includes our Product Design and Public Safety Forensics verticals. | ||||||||||||||||||||||
View original content with multimedia:
http://www.prnewswire.com/news-releases/faro-reports-second-quarter-2018-financial-results-300686628.html
SOURCE FARO
| Contact: |
| Company Name: FARO
Nancy L. Setteducati, 407.333.9911 Web: http://www.faro.com Financial data for FARO |
