- Revenue of $82.6 million, at the
upper end of guidance range
- Gross margin of 55.7%; Non-GAAP gross margin 56.1%, above
guidance range
- Loss per share of $(0.02);
Non-GAAP earnings per share ("EPS") of $0.21, above guidance range
- Cash flow from operations of $2.6
million
- Share repurchases of $10 million
during the quarter
LAKE
MARY, Fla., Nov. 6, 2024
/PRNewswire/ -- FARO® Technologies, Inc. (Nasdaq: FARO), a global
leader in 4D digital reality solutions, today announced its
financial results for the third quarter ended September 30, 2024.
"I am proud of our ongoing progress in profitability, achieving
55.7% gross margins, GAAP net loss of $0.3
million and $8.9 million of
adjusted EBITDA, or 10.7% of revenue, all exceeding our
expectations for the third quarter. This marks a significant
transformation in our operations over the past year, as its the
first time that we have delivered back-to-back double-digit
quarterly adjusted EBITDA margins in almost a decade," said
Peter Lau, President & Chief
Executive Officer. "Looking ahead, we are committed to executing on
our growth initiatives, even in a difficult macroeconomic
environment. With our recent product launches, including the
Quantum X Arm and next generation Focus Premium Max Laser Scanner,
we are excited about the actions we are taking to drive organic
revenue growth over the longer term."
Third Quarter 2024 Financial Summary
- Total sales of $82.6 million,
down 5% year over year
- Gross margin of 55.7%, compared to 48.0% in the prior year
period
- Non-GAAP gross margin of 56.1%, compared to 48.9% in the prior
year period
- Operating expenses of $43.8
million, compared to $48.6
million in the prior year period
- Non-GAAP operating expenses of $40.1
million, compared to $41.5
million in the prior year period
- Net loss of $0.3 million, or
$(0.02) per share compared to net
loss of $8.8 million, or $(0.46) per share in the prior year period
- Non-GAAP net income of $4.0
million, or $0.21 per share
compared to non-GAAP net income of $0.5
million, or $0.03 per share in
the prior year period
- Adjusted EBITDA of $8.9 million,
or 10.7% of total sales compared to $3.5
million, or 4.1% of total sales in the prior year
period
- Cash, cash equivalents & short-term investments of
$88.9 million compared to
$96.3 million as of December 31, 2023
* A reconciliation of the non-GAAP financial measures to the
most directly comparable GAAP financial measures is provided in the
financial schedules portion at the end of this press release. An
additional explanation of these measures is included below under
the heading "Non-GAAP Financial Measures".
Outlook for the Fourth Quarter 2024
For the fourth
quarter ending December 31, 2024,
FARO currently expects:
- Revenue in the range of $88 to
$96 million
- Gross margin in the range of 55.6% to 57.1%. Non-GAAP gross
margin in the range of 56.0% to 57.5%
- Operating expenses in the range of $47.4 to $49.4
million. Non-GAAP operating expenses in the range of
$40.5 to $42.5
million
- Net (loss) income per share in the range of ($0.15) to $0.05.
Non-GAAP net income per share in the range of $0.32 to $0.52.
Conference Call
The Company will host a conference
call to discuss these results on Wednesday, November 6, 2024,
at 4:30 p.m. ET. Interested parties
can access the conference call by dialing (800) 343-4849 (U.S.) or
+1 (785) 424-1699 (International) and using the passcode FARO. A
live webcast will be available in the Investor Relations section of
FARO's website at:
https://www.faro.com/en/About-Us/Investor-Relations/Financial-Events-and-Presentations
A replay webcast will be available in the Investor Relations
section of the Company's web site approximately two hours after the
conclusion of the call and will remain available for approximately
30 calendar days.
About FARO
For over 40 years, FARO has provided
industry-leading technology solutions that enable customers to
measure their world, and then use that data to make smarter
decisions faster. FARO continues to be a pioneer in bridging the
digital and physical worlds through data-driven reliable accuracy,
precision, and immediacy. For more information, visit
www.faro.com.
Non-GAAP Financial Measures
This press release
contains information about our financial results that are not
presented in accordance with U.S. generally accepted accounting
principles ("GAAP"). These non-GAAP financial measures, including
non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP income (loss) from operations, non-GAAP net
income (loss) and non-GAAP net income (loss) per share, exclude the
impact of purchase accounting intangible amortization expense,
stock-based compensation, restructuring and other charges, and
other tax adjustments, and are provided to enhance investors'
overall understanding of our historical operations and financial
performance.
In addition, we present EBITDA, which is calculated as net
income (loss) before interest (income) expense, net, income tax
benefit (expense) and depreciation and amortization, and Adjusted
EBITDA, which is calculated as EBITDA, excluding other (income)
expense, net, stock-based compensation, and restructuring and other
charges, as measures of our operating profitability. The most
directly comparable GAAP measure to EBITDA and Adjusted EBITDA is
net income (loss). We also present Adjusted EBITDA margin, which is
calculated as Adjusted EBITDA as a percent of total sales.
We have included non-GAAP total sales on a constant currency
basis. The most directly comparable GAAP measure to total sales on
a constant currency basis is total sales. We believe constant
currency information is useful in analyzing underlying trends in
our business and the commercial performance of our products by
eliminating the impact of highly volatile fluctuations in foreign
currency markets and allows for period-to-period comparisons of our
performance. For simplicity, we may elect to omit this information
in future periods if we determine a lack of material impact. To
present this information, current period performance for entities
reporting in currencies other than U.S. dollars are converted to
U.S. dollars at the exchange rate in effect during the last day of
the prior comparable period.
Management believes that these non-GAAP financial measures
provide investors with relevant period-to-period comparisons of our
core operations using the same methodology that management employs
in its review of the Company's operating results. These financial
measures are not recognized terms under GAAP and should not be
considered in isolation or as a substitute for a measure of
financial performance prepared in accordance with GAAP.
These non-GAAP financial measures have limitations that should
be considered before using these measures to evaluate a company's
financial performance. These non-GAAP financial measures, as
presented, may not be comparable to similarly titled measures of
other companies due to varying methods of calculation. The
financial statement tables that accompany this press release
include a reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP financial measures.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
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 the outlook for the
fourth quarter of 2024, demand for and customer acceptance of
FARO's products, FARO's product development and product launches,
FARO's growth, strategic and restructuring plans and initiatives,
including but not limited to the additional restructuring charges
expected to be incurred in connection with our restructuring and
integration plans and the timing and amount of cost savings and
other benefits expected to be realized from the restructuring and
integration plans and other strategic initiatives, and FARO's
growth potential and profitability. 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:
- the Company's ability to realize the intended benefits of its
undertaking to transition to a company that is reorganized around
functions to improve the efficiency of its sales organization and
to improve operational effectiveness;
- the Company's inability to successfully execute its strategic
plan, restructuring plan and integration plan, including but not
limited to additional impairment charges and/or higher than
expected severance costs and exit costs, and its inability to
realize the expected benefits of such plans;
- the changes in our executive management team in 2023 and 2024
and the loss of any of our executive officers or other key
personnel, which may be impacted by factors such as our inability
to competitively address inflationary pressures on employee
compensation and flexibility in employee work arrangements;
- the outcome of any litigation to which the Company is or may
become a party;
- loss of future government sales;
- potential impacts on customer and supplier relationships and
the Company's reputation;
- 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;
- the effect of general economic and financial market conditions,
including in response to public health concerns;
- assumptions regarding the Company's financial condition or
future financial performance may be incorrect;
- the impact of fluctuations in foreign exchange rates and
inflation rates; and
- other risks and uncertainties discussed in Part I, Item 1A.
Risk Factors in the Company's Annual Report on Form 10-K for the
year ended December 31, 2023, filed
with the Securities and Exchange Commission on February 28, 2024, as supplemented by the
Company's Quarterly Reports on Form 10-Q, and in other SEC
filings.
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.
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
(in thousands, except
share and per share data)
|
September
30,
2024
|
|
September
30,
2023
|
|
September
30,
2024
|
|
September
30,
2023
|
|
Sales
|
|
|
|
|
|
|
|
|
Product
|
$
61,461
|
|
$
66,911
|
|
$
186,309
|
|
$
199,754
|
|
Service
|
21,102
|
|
19,902
|
|
62,583
|
|
60,237
|
|
Total sales
|
82,563
|
|
86,813
|
|
248,892
|
|
259,991
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
Product
|
26,246
|
|
34,640
|
|
82,817
|
|
112,691
|
|
Service
|
10,341
|
|
10,499
|
|
32,003
|
|
32,587
|
|
Total cost of
sales
|
36,587
|
|
45,139
|
|
114,820
|
|
145,278
|
|
Gross profit
|
45,976
|
|
41,674
|
|
134,072
|
|
114,713
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
34,041
|
|
37,970
|
|
106,224
|
|
117,907
|
|
Research and
development
|
9,771
|
|
8,188
|
|
28,628
|
|
32,568
|
|
Restructuring
costs
|
—
|
|
2,442
|
|
616
|
|
15,130
|
|
Total operating
expenses
|
43,812
|
|
48,600
|
|
135,468
|
|
165,605
|
|
Income (loss) from
operations
|
2,164
|
|
(6,926)
|
|
(1,396)
|
|
(50,892)
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
|
Interest
expense
|
1,023
|
|
691
|
|
2,615
|
|
2,529
|
|
Other (income)
expense, net
|
175
|
|
(381)
|
|
157
|
|
(125)
|
|
Income (loss) before
income tax
|
966
|
|
(7,236)
|
|
(4,168)
|
|
(53,296)
|
|
Income tax
expense
|
1,255
|
|
1,520
|
|
3,912
|
|
4,869
|
|
Net loss
|
$
(289)
|
|
$
(8,756)
|
|
$
(8,080)
|
|
$
(58,165)
|
|
Net loss per share -
Basic
|
$
(0.02)
|
|
$
(0.46)
|
|
$
(0.42)
|
|
$
(3.08)
|
|
Net loss per share -
Diluted
|
$
(0.02)
|
|
$
(0.46)
|
|
$
(0.42)
|
|
$
(3.08)
|
|
Weighted average shares
- Basic
|
19,266,217
|
|
18,953,251
|
|
19,218,004
|
|
18,899,954
|
|
Weighted average shares
- Diluted
|
19,266,217
|
|
18,953,251
|
|
19,218,004
|
|
18,899,954
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
|
|
|
(in thousands, except
share and per share data)
|
September 30,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
88,913
|
|
$
76,787
|
|
Short-term
investments
|
—
|
|
19,496
|
|
Accounts receivable,
net
|
83,208
|
|
92,028
|
|
Inventories,
net
|
39,055
|
|
34,529
|
|
Prepaid expenses and
other current assets
|
34,252
|
|
38,768
|
|
Total current
assets
|
245,428
|
|
261,608
|
|
Non-current
assets:
|
|
|
|
|
Property, plant and
equipment, net
|
19,544
|
|
21,181
|
|
Operating lease
right-of-use assets
|
17,208
|
|
12,231
|
|
Goodwill
|
110,972
|
|
109,534
|
|
Intangible assets,
net
|
46,325
|
|
47,891
|
|
Service and sales
demonstration inventory, net
|
21,436
|
|
23,147
|
|
Deferred income tax
assets, net
|
24,826
|
|
25,027
|
|
Other long-term
assets
|
3,891
|
|
4,073
|
|
Total assets
|
$
489,630
|
|
$
504,692
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
30,438
|
|
$
27,404
|
|
Accrued
liabilities
|
25,208
|
|
29,930
|
|
Income taxes
payable
|
6,881
|
|
5,699
|
|
Current portion of
unearned service revenues
|
41,495
|
|
40,555
|
|
Customer
deposits
|
4,282
|
|
4,251
|
|
Lease
liabilities
|
4,645
|
|
5,434
|
|
Total current
liabilities
|
112,949
|
|
113,273
|
|
Loan - 5.50%
Convertible Senior Notes
|
70,096
|
|
72,760
|
|
Unearned service
revenues - less current portion
|
20,051
|
|
20,256
|
|
Lease liabilities -
less current portion
|
15,412
|
|
10,837
|
|
Deferred income tax
liabilities
|
13,048
|
|
13,308
|
|
Income taxes payable -
less current portion
|
2,510
|
|
5,629
|
|
Other long-term
liabilities
|
46
|
|
23
|
|
Total
liabilities
|
234,112
|
|
236,086
|
|
Commitments and
contingencies
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock - par
value $0.001, 50,000,000 shares authorized;
20,869,974 and
20,343,359 issued, respectively; 18,908,076 and
18,968,798
outstanding,
respectively
|
20
|
|
20
|
|
Additional paid-in
capital
|
354,765
|
|
346,277
|
|
Retained
earnings
|
(17,869)
|
|
(9,789)
|
|
Accumulated other
comprehensive loss
|
(40,729)
|
|
(37,247)
|
|
Common stock in
treasury, at cost - 1,961,898 and 1,374,561 shares held,
respectively
|
(40,669)
|
|
(30,655)
|
|
Total shareholders'
equity
|
255,518
|
|
268,606
|
|
Total liabilities and
shareholders' equity
|
$
489,630
|
|
$
504,692
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
Cash flows
from:
|
|
|
|
|
Operating
activities:
|
|
|
|
|
Net loss
|
$
(8,080)
|
|
$
(58,165)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
11,709
|
|
11,728
|
|
Stock-based
compensation
|
8,471
|
|
12,276
|
|
Inventory
write-downs
|
—
|
|
8,132
|
|
Asset impairment
charges
|
—
|
|
5,333
|
|
Deferred income tax
(benefit) and other non-cash charges
|
(1,230)
|
|
(82)
|
|
Provision for excess
and obsolete inventory
|
861
|
|
1,754
|
|
Amortization of debt
discount and issuance costs
|
336
|
|
294
|
|
Loss on disposal of
assets
|
974
|
|
(155)
|
|
Provisions for bad
debts, net of recoveries
|
966
|
|
834
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
Decrease (Increase)
in:
|
|
|
|
|
Accounts
receivable
|
6,864
|
|
1,282
|
|
Inventories
|
(8,097)
|
|
(544)
|
|
Prepaid expenses and
other current assets
|
4,298
|
|
4,047
|
|
(Decrease) Increase
in:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
(1,722)
|
|
(2,802)
|
|
Income taxes
payable
|
(1,884)
|
|
653
|
|
Customer
deposits
|
144
|
|
(1,534)
|
|
Unearned service
revenues
|
778
|
|
(1,198)
|
|
Other
liabilities
|
(1,033)
|
|
567
|
|
Net cash provided by
(used in) operating activities
|
13,355
|
|
(17,580)
|
|
Investing
activities:
|
|
|
|
|
Purchases of property
and equipment
|
(3,559)
|
|
(5,016)
|
|
Maturity of short-term
investments
|
20,009
|
|
—
|
|
Cash paid for
technology development, patents and licenses
|
(4,822)
|
|
(5,071)
|
|
Net cash provided by
(used in) investing activities
|
11,628
|
|
(10,087)
|
|
Financing
activities:
|
|
|
|
|
Payments on finance
leases
|
(135)
|
|
(154)
|
|
Cash settlement of
equity awards
|
—
|
|
(89)
|
|
Repurchases of common
stock
|
(10,014)
|
|
—
|
|
Proceeds from issuance
of 5.50% Convertible Senior Notes, due 2028, net of
discount,
issuance cost and
accrued interest
|
—
|
|
72,310
|
|
Repayment of 5.50%
Convertible Senior Notes, due 2028
|
(2,685)
|
|
—
|
|
Payment of contingent
consideration for business acquisition
|
—
|
|
(1,098)
|
|
Net cash (used in)
provided by financing activities
|
(12,834)
|
|
70,969
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(23)
|
|
(1,195)
|
|
Increase in cash and
cash equivalents
|
12,126
|
|
42,107
|
|
Cash and cash
equivalents, beginning of period
|
76,787
|
|
37,812
|
|
Cash and cash
equivalents, end of period
|
$
88,913
|
|
$
79,919
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP
TO NON-GAAP
(UNAUDITED)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(dollars in thousands,
except per share data)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Gross profit, as
reported
|
$
45,976
|
|
$
41,674
|
|
$ 134,072
|
|
$ 114,713
|
|
Stock-based
compensation (1)
|
381
|
|
280
|
|
1,085
|
|
972
|
|
Restructuring and
other costs (2)
|
—
|
|
456
|
|
2
|
|
1,326
|
|
Non-GAAP adjustments
to gross profit
|
381
|
|
736
|
|
1,087
|
|
2,298
|
|
Non-GAAP gross
profit
|
$
46,357
|
|
$
42,410
|
|
$ 135,159
|
|
$ 117,011
|
|
Gross margin, as
reported
|
55.7 %
|
|
48.0 %
|
|
53.9 %
|
|
44.1 %
|
|
Non-GAAP gross
margin
|
56.1 %
|
|
48.9 %
|
|
54.3 %
|
|
45.0 %
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative, as reported
|
$
34,041
|
|
$
37,970
|
|
$ 106,224
|
|
$ 117,907
|
|
Stock-based
compensation (1)
|
(1,858)
|
|
(3,588)
|
|
(5,996)
|
|
(9,710)
|
|
Restructuring and
other costs (2)
|
—
|
|
—
|
|
(3,453)
|
|
—
|
|
Purchase accounting
intangible amortization
|
(283)
|
|
(663)
|
|
(1,167)
|
|
(2,024)
|
|
Non-GAAP selling,
general and administrative
|
$
31,900
|
|
$
33,719
|
|
$
95,608
|
|
$ 106,173
|
|
|
|
|
|
|
|
|
|
Research and
development, as reported
|
$
9,771
|
|
$
8,188
|
|
$
28,628
|
|
$
32,568
|
|
Stock-based
compensation (1)
|
(529)
|
|
176
|
|
(1,390)
|
|
(1,594)
|
|
Purchase accounting
intangible amortization
|
(1,085)
|
|
(501)
|
|
(2,089)
|
|
(1,541)
|
|
Non-GAAP research and
development
|
$
8,157
|
|
$
7,863
|
|
$
25,149
|
|
$
29,433
|
|
|
|
|
|
|
|
|
|
Operating expenses, as
reported
|
$
43,812
|
|
$
48,600
|
|
$ 135,468
|
|
$ 165,605
|
|
Stock-based
compensation (1)
|
(2,387)
|
|
(3,411)
|
|
(7,386)
|
|
(11,304)
|
|
Restructuring and
other costs (2)
|
—
|
|
(2,495)
|
|
(4,069)
|
|
(16,337)
|
|
Purchase accounting
intangible amortization
|
(1,368)
|
|
(1,164)
|
|
(3,256)
|
|
(3,565)
|
|
Non-GAAP adjustments
to operating expenses
|
(3,755)
|
|
(7,070)
|
|
(14,711)
|
|
(31,206)
|
|
Non-GAAP operating
expenses
|
$
40,057
|
|
$
41,530
|
|
$ 120,757
|
|
$ 134,399
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations, as reported
|
$
2,164
|
|
$
(6,926)
|
|
$
(1,396)
|
|
$ (50,892)
|
|
Non-GAAP adjustments
to gross profit
|
381
|
|
737
|
|
1,087
|
|
2,298
|
|
Non-GAAP adjustments
to operating expenses
|
3,755
|
|
7,070
|
|
14,711
|
|
31,206
|
|
Non-GAAP income (loss)
from operations
|
$
6,300
|
|
$
881
|
|
$
14,402
|
|
$ (17,388)
|
|
|
|
|
|
|
|
|
|
Net loss, as
reported
|
$
(289)
|
|
$
(8,756)
|
|
$
(8,080)
|
|
$ (58,165)
|
|
Non-GAAP adjustments
to gross profit
|
381
|
|
737
|
|
1,087
|
|
2,298
|
|
Non-GAAP adjustments
to operating expenses
|
3,755
|
|
7,070
|
|
14,711
|
|
31,206
|
|
Income tax effect of
non-GAAP adjustments (3)
|
(819)
|
|
(1,952)
|
|
(3,532)
|
|
(10,409)
|
|
Other tax adjustments
(3)
|
967
|
|
3,358
|
|
4,861
|
|
17,700
|
|
Non-GAAP net income
(loss)
|
$
3,995
|
|
$
457
|
|
$
9,047
|
|
$ (17,370)
|
|
|
|
|
|
|
|
|
|
Net loss per share -
Diluted, as reported
|
$
(0.02)
|
|
$
(0.46)
|
|
$
(0.42)
|
|
$
(3.08)
|
|
Stock-based
compensation (1)
|
0.14
|
|
0.19
|
|
0.44
|
|
0.65
|
|
Restructuring and
other costs (2)
|
—
|
|
0.16
|
|
0.21
|
|
0.93
|
|
Purchase accounting
intangible amortization
|
0.08
|
|
0.06
|
|
0.17
|
|
0.19
|
|
Income tax effect of
non-GAAP adjustments (3)
|
(0.04)
|
|
(0.10)
|
|
(0.18)
|
|
(0.55)
|
|
Other tax adjustments
(3)
|
0.05
|
|
0.18
|
|
0.25
|
|
0.94
|
|
Non-GAAP net income
(loss) per share - Diluted
|
$
0.21
|
|
$
0.03
|
|
$
0.47
|
|
$
(0.92)
|
|
|
|
(1)
|
We exclude stock-based
compensation, which is non-cash, from the non-GAAP financial
measures because the Company believes that such exclusion provides
a better comparison of results of ongoing operations for current
and future periods with such results from past periods.
|
|
|
|
(2)
|
On February 14, 2020,
our Board of Directors approved a global restructuring plan (the
"Restructuring Plan"), which is intended to support our strategic
plan in an effort to improve operating performance and ensure that
we are appropriately structured and resourced to deliver increased
and sustainable value to our shareholders and customers. On
February 7, 2023, our Board of Directors approved an integration
plan (the "Integration Plan"), which is intended to streamline and
simplify operations, particularly around our recent acquisitions
and the resulting redundant operations and offerings. The
Restructuring and other costs primarily consist of severance and
related benefits associated with the Restructuring Plan,
Integration Plan, and executive transitions.
|
|
|
|
(3)
|
The Income tax effect
of non-GAAP adjustments is calculated by applying a statutory tax
rate to Non-GAAP adjustments, including Stock-based compensation,
Restructuring and other costs, non-recurring Inventory reserve
charges, and Purchase accounting intangible amortization and fair
value adjustments. In addition, when estimating our Non-GAAP income
tax rate, we exclude the impact of items that impact our reported
income tax rate that we do not believe are representative of our
ongoing operating results, including the impact of valuation
allowances we are currently recording in certain jurisdictions and
certain discrete items such as adjustments to uncertain tax
position reserves, as these items are difficult to predict and can
impact our effective income tax rate. Specifically, Other tax
adjustments during the nine months ended September 30,
2024 were comprised of $4.4 million related to the impact of
valuation allowance adjustments and $0.5 million related to
other discrete items. During the three months ended September 30,
2024, Other tax adjustments were comprised of $0.8
million related to the impact of valuation allowance
adjustments and $0.2 million related to other discrete items.
In 2023, Other tax adjustments during the nine months ended
September 30, 2023 were comprised of $11.2 million related to
the impact of valuation allowance adjustments and $6.5 million
related to other items, including equity based compensation book to
tax differences, non-GAAP adjustments impact on Global intangible
low-taxed income and Prepaid tax on intercompany profit. During the
three months ended September 30, 2023, Other tax adjustments were
comprised of $2.0 million related to the impact of valuation
allowance adjustments and $1.4 million related to other items,
including equity based compensation book to tax differences,
non-GAAP adjustments impact on Global intangible low-taxed income
and Prepaid tax on intercompany profit.
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF NET
INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net loss
|
$
(289)
|
|
$
(8,756)
|
|
$
(8,080)
|
|
$ (58,165)
|
|
Interest expense,
net
|
1,023
|
|
691
|
|
2,615
|
|
2,529
|
|
Income tax
expense
|
1,255
|
|
1,520
|
|
3,912
|
|
4,869
|
|
Depreciation and
amortization
|
3,921
|
|
3,803
|
|
11,709
|
|
11,728
|
|
EBITDA
|
5,910
|
|
(2,742)
|
|
10,156
|
|
(39,039)
|
|
Other expense
(income), net
|
175
|
|
(381)
|
|
157
|
|
(125)
|
|
Stock-based
compensation
|
2,768
|
|
3,692
|
|
8,471
|
|
12,276
|
|
Restructuring and
other costs (1)
|
—
|
|
2,951
|
|
4,071
|
|
17,663
|
|
Adjusted
EBITDA
|
$
8,853
|
|
$
3,520
|
|
$
22,855
|
|
$
(9,225)
|
|
Adjusted EBITDA margin
(2)
|
10.7 %
|
|
4.1 %
|
|
9.2 %
|
|
(3.5) %
|
|
|
|
(1)
|
On February 14, 2020,
our Board of Directors approved the Restructuring Plan, which is
intended to support our strategic plan in an effort to improve
operating performance and ensure that we are appropriately
structured and resourced to deliver increased and sustainable value
to our shareholders and customers. On February 7, 2023, our Board
of Directors approved the Integration Plan, which is intended to
streamline and simplify operations, particularly around our recent
acquisitions and the resulting redundant operations and offerings.
The Restructuring and other costs primarily consist of severance
and related benefits associated with the Restructuring Plan,
Integration Plan, and executive transitions.
|
|
|
|
(2)
|
Calculated as Adjusted
EBITDA as a percentage of total sales.
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
KEY SALES
MEASURES
(UNAUDITED)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total sales to
external customers as reported
|
|
|
|
|
|
|
|
|
Americas
(1)
|
$
40,353
|
|
$
41,033
|
|
$
117,748
|
|
$
124,734
|
|
EMEA
(1)
|
25,461
|
|
25,621
|
|
75,496
|
|
74,641
|
|
APAC
(1)
|
16,749
|
|
20,159
|
|
55,648
|
|
60,616
|
|
$
82,563
|
|
$
86,813
|
|
$
248,892
|
|
$
259,991
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Total sales to
external customers in constant currency (2)
|
|
|
|
|
|
|
|
|
Americas
(1)
|
$
40,707
|
|
$
40,879
|
|
$
118,126
|
|
$
124,682
|
|
EMEA
(1)
|
24,278
|
|
24,954
|
|
73,127
|
|
73,060
|
|
APAC
(1)
|
16,497
|
|
19,883
|
|
55,441
|
|
58,437
|
|
$
81,482
|
|
$
85,716
|
|
$
246,694
|
|
$
256,179
|
|
|
|
(1)
|
Regions represent North
America and South America ("Americas"); Europe, the Middle East,
and Africa ("EMEA"); and the Asia-Pacific ("APAC").
|
|
|
|
(2)
|
We compare the change
in the sales from one period to another period using constant
currency disclosure. We present constant currency information to
provide a framework for assessing how our underlying business
performed excluding the effect of foreign currency rate
fluctuations. To present this information, current and comparative
prior period results for entities reporting in currencies other
than United States dollars are converted into United States dollars
at the exchange rate in effect during the last day of the prior
comparable period, rather than the actual exchange rates in effect
during the respective periods.
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
|
|
|
|
|
|
Hardware
|
$
50,301
|
|
$
55,706
|
|
$ 152,968
|
|
$ 167,484
|
|
Software
|
11,159
|
|
11,205
|
|
33,341
|
|
32,270
|
|
Service
|
21,103
|
|
19,902
|
|
62,583
|
|
60,237
|
|
Total Sales
|
$
82,563
|
|
$
86,813
|
|
$ 248,892
|
|
$ 259,991
|
|
|
|
|
|
|
|
|
|
Hardware as a
percentage of total sales
|
60.9 %
|
|
64.2 %
|
|
61.5 %
|
|
64.4 %
|
|
Software as a
percentage of total sales
|
13.5 %
|
|
12.9 %
|
|
13.4 %
|
|
12.4 %
|
|
Service as a percentage
of total sales
|
25.6 %
|
|
22.9 %
|
|
25.1 %
|
|
23.2 %
|
|
|
|
|
|
|
|
|
|
Total Recurring Revenue
(3)
|
$
17,431
|
|
$
17,056
|
|
$
51,287
|
|
$
50,137
|
|
Recurring revenue as a
percentage of total sales
|
21.1 %
|
|
19.6 %
|
|
20.6 %
|
|
19.3 %
|
|
|
|
(3)
|
Recurring revenue is
comprised of hardware service contracts, software maintenance
contracts, and subscription based software applications.
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
FREE CASH FLOW
RECONCILIATION
(UNAUDITED)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
(in
thousands)
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net cash provided by
(used in) operating activities
|
$
2,568
|
|
$
(4,373)
|
|
$
13,355
|
|
$
(17,580)
|
|
Purchases of property
and equipment
|
(1,871)
|
|
(704)
|
|
(3,559)
|
|
(5,016)
|
|
Cash paid for
technology development, patents and licenses
|
(1,430)
|
|
(1,455)
|
|
(4,822)
|
|
(5,071)
|
|
Free Cash
Flow
|
(733)
|
|
(6,532)
|
|
4,974
|
|
(27,667)
|
|
Restructuring and
other cash payments (1)
|
343
|
|
6,279
|
|
3,100
|
|
11,014
|
|
Adjusted Free Cash
Flow
|
$
(390)
|
|
$
(253)
|
|
$
8,074
|
|
$
(16,653)
|
|
|
|
(1)
|
On February 7, 2023,
our Board of Directors approved the Integration Plan, which is
intended to streamline and simplify operations, particularly around
our recent acquisitions and the resulting redundant operations and
offerings. The Restructuring and other costs primarily consist of
severance and related benefits associated with the Restructuring
Plan, Integration Plan, and executive transitions.
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF
OUTLOOK - GAAP TO NON-GAAP
|
|
|
Fiscal quarter ending
December 31, 2024
|
|
Low
|
|
High
|
|
GAAP gross
margin
|
55.6 %
|
|
57.1 %
|
|
Stock-based
compensation
|
0.4 %
|
|
0.4 %
|
|
Non-GAAP gross
margin
|
56.0 %
|
|
57.5 %
|
|
|
|
Fiscal quarter ending
December 31, 2024
|
|
(in
thousands)
|
Low
|
|
High
|
|
GAAP operating
expenses
|
$47,400
|
|
$49,400
|
|
Stock-based
compensation
|
(3,600)
|
|
(3,600)
|
|
Purchase accounting
intangible amortization
|
(1,100)
|
|
(1,100)
|
|
Restructuring and
other costs
|
(2,200)
|
|
(2,200)
|
|
Non-GAAP operating
expenses
|
$40,500
|
|
$42,500
|
|
|
|
Fiscal quarter ending
December 31, 2024
|
|
Low
|
|
High
|
|
GAAP diluted earnings
per share range
|
$(0.15)
|
|
$0.05
|
|
Stock-based
compensation
|
0.21
|
|
0.21
|
|
Purchase accounting
intangible amortization
|
0.06
|
|
0.06
|
|
Restructuring and
other costs
|
0.11
|
|
0.11
|
|
Non-GAAP tax
adjustments
|
0.09
|
|
0.09
|
|
Non-GAAP diluted
earnings per share
|
$0.32
|
|
$0.52
|
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SOURCE FARO
