FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

QUARTERLY RECONCILIATION OF GAAP TO NON-GAAP FOR 2019 RESULTS

(UNAUDITED)

Three months ended

(dollars in thousands, except per share data)

March 31,
2019

June 30,
2019

September 30,
2019

Total sales, as reported

$

93,617

$

93,491

$

90,516

GSA sales adjustment ⁽¹⁾

35

5,805

—

Non-GAAP total sales

$

93,652

$

99,296

$

90,516

Gross profit, as reported

$

53,018

$

50,741

$

50,772

GSA sales adjustment ⁽¹⁾

35

5,805

—

Stock-based compensation ⁽²⁾

233

268

270

Non-GAAP adjustments to gross profit

268

6,073

270

Non-GAAP gross profit

$

53,286

$

56,814

$

51,042

Gross margin, as reported

56.6

%

54.3

%

56.1

%

Non-GAAP gross margin

56.9

%

57.2

%

56.4

%

Operating expenses, as reported

$

52,661

$

55,633

$

56,663

Advisory fees for GSA Matter ⁽³⁾

(591)

(653)

—

Stock-based compensation ⁽²⁾

(2,331)

(2,484)

(3,117)

Executive severance costs

—

—

(1,217)

Executive sign-on bonuses & relocation costs

—

(575)

(270)

Purchase accounting intangible amortization

(852)

(889)

(924)

Non-GAAP adjustments to operating expenses

(3,774)

(4,601)

(5,528)

Non-GAAP operating expenses

$

48,887

$

51,032

$

51,135

Income (loss) from operations, as reported

$

358

$

(4,893)

$

(5,891)

Non-GAAP adjustments to gross profit

268

6,073

270

Non-GAAP adjustments to operating expenses

3,774

4,601

5,528

Non-GAAP income (loss) from operations

$

4,400

$

5,781

$

(93)

Other expense, net, as reported

$

51

$

1,929

$

490

Interest expense increase due to GSA sales adjustment ⁽¹⁾

(45)

(442)

(145)

Present4D impairment ⁽⁴⁾

—

(1,535)

—

Non-GAAP adjustments to other expense, net

(45)

(1,977)

(145)

Non-GAAP other expense, net

$

6

$

(48)

$

345

Net income (loss), as reported

$

152

$

(6,405)

$

(6,199)

Non-GAAP adjustments to gross profit

268

6,073

270

Non-GAAP adjustments to operating expenses

3,774

4,601

5,528

Non-GAAP adjustments to other expense, net

45

1,977

145

Income tax effect of non-GAAP adjustments

(672)

(2,360)

(1,452)

Other tax adjustments ⁽⁵⁾

—

864

1,555

Non-GAAP net income (loss)

$

3,567

$

4,750

$

(153)