(1) Late in the fourth quarter of 2018, during an internal review we preliminarily determined that certain of our pricing practices may have resulted in the U.S. Government being overcharged under our General Services Administration ("GSA") Federal Supply Schedule contracts (the "Contracts") (the "GSA Matter"). In fourth quarter 2018, we reduced our total sales by an estimated cumulative adjustment of $4.8 million. We also retained outside legal counsel and forensic accountants to conduct a comprehensive review of our pricing and other practices under the Contracts (the "Review"). In the first quarter 2019 we reduced our total sales by less than $0.1 million (the "GSA sales adjustment") and recorded imputed interest expense of $0.1 million related to the GSA Matter. |
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(2) 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. |
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(3) In connection with the GSA Matter, we retained outside legal counsel and forensic accountants to conduct the Review, which resulted in $0.6 million in advisory fees incurred during the three months ended March 31, 2019. |
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(4) 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. In connection with the Restructuring Plan, we recorded a pre-tax charge of approximately $13.7 million during the first quarter 2020 primarily consisting of severance and related benefits. |
FARO TECHNOLOGIES, INC. AND SUBSIDIARIES RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA (UNAUDITED) | |||||||
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| Three Months Ended March 31, | ||||||
(in thousands) | 2020 |
| 2019 | ||||
Net (loss) income | $ | (14,823) |
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| $ | 152 |
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Interest expense (income), net | 34 |
|
| (144) |
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Income tax (benefit) expense | (2,238) |
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| 155 |
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Depreciation and amortization | 3,759 |
|
| 4,749 |
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EBITDA | (13,268) |
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| 4,912 |
| ||
Loss on foreign currency transactions | 473 |
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| 195 |
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Stock-based compensation | 2,175 |
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| 2,564 |
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GSA sales adjustment (1) | — |
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| 35 |
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Advisory fees for GSA Matter (2) | — |
|
| 591 |
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Restructuring costs (3) | 13,688 |
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| — |
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Adjusted EBITDA | $ | 3,068 |
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| $ | 8,297 |
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Adjusted EBITDA margin (4) | 3.9 | % |
| 8.9 | % |
(1) Late in the fourth quarter of 2018, during an internal review we preliminarily determined that certain of our pricing practices may have resulted in the U.S. Government being overcharged under our General Services Administration ("GSA") Federal Supply Schedule contracts (the "Contracts") (the "GSA Matter"). In fourth quarter 2018, we reduced our total sales by an estimated cumulative adjustment of $4.8 million. We also retained outside legal counsel and forensic accountants to conduct a comprehensive review of our pricing and other practices under the Contracts (the "Review"). In the first quarter 2019 we reduced our total sales by less than $0.1 million (the "GSA sales adjustment") related to the GSA Matter. |
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(2) In connection with the GSA Matter, we retained outside legal counsel and forensic accountants to conduct the Review, which resulted in $0.6 million in advisory fees incurred during the three months ended March 31, 2019. |
|
(3) 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. In connection with the Restructuring Plan, we recorded a pre-tax charge of approximately $13.7 million during the first quarter 2020 primarily consisting of severance and related benefits. |
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(4) Calculated as Adjusted EBITDA as a percentage of Non-GAAP total sales, which adjusts for the GSA sales adjustment. |