FARO Announces Fourth Quarter and Full Year Financial Results
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FARO Announces Fourth Quarter and Full Year Financial Results

LAKE MARY, Fla., Feb. 15, 2023 — (PRNewswire) — FARO® Technologies, Inc. (Nasdaq: FARO), a global leader in 4D digital reality solutions, today announced its financial results for the fourth quarter and full year ended December 31, 2022.

"Improving fourth quarter customer demand, with strength in Laser Scanners and the European market, as well as the addition of GeoSLAM resulted in year-on-year revenue growth of 10% to $110.5 million on a constant currency basis. Due to a stronger US dollar relative to last year, sales on an actual currency basis were $103.9 million, up 4% compared to the prior year period," stated Michael Burger, President and Chief Executive Officer. "With our recent acquisition of SiteScape, which enables iOS based low-resolution LiDAR 3D capture, FARO now offers one of the broadest sets of 3D capture devices and technology in the market.  Together with the success of our recent product releases and the launch of FARO Sphere, I am excited by the increasing level of customer engagement and the enormous market opportunity represented by digitalizing the physical world."

Fourth Quarter 2022 Financial Summary

* 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".

Full Year 2022 Financial Summary

Outlook for the First Quarter 2023

For the first quarter ending March 31, 2023, FARO currently expects:

Note:  Revenue performance on a constant currency basis is provided such that users of the financial statements may assess our underlying performance excluding the effect of foreign currency rate fluctuations.  To present this information, current period performance for entities reporting in currencies other than U.S. dollars are converted to United States dollars at the exchange rates in effect on December 31, 2021. 

Conference Call

The Company will host a conference call to discuss these results on Wednesday, February 15, 2023, at 5:00 p.m. ET. Interested parties can access the conference call by dialing (800) 245-3047 (U.S.) or +1 (203) 518-9765 (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 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 from operations, non-GAAP net income and non-GAAP net income per share, exclude the impact of purchase accounting intangible amortization expense and fair value adjustments, 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 loss before interest (income) expense, net, income tax expense and depreciation and amortization and fair value adjustments, 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 loss. We also present Adjusted EBITDA margin, which is calculated as Adjusted EBITDA as a percent of total sales.

In our fourth quarter reporting, 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 first quarter of 2023, 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 plan and the timing and amount of cost savings and other benefits expected to be realized from the restructuring plan 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:

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

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended


Twelve Months Ended

(in thousands, except share and per share data)

December 31,
2022


December 31,
2021


December 31,
2022


December 31,
2021

SALES








Product

$         83,265


$         78,355


$       265,280


$       251,103

Service

20,594


$         21,849


80,485


$         86,711

Total sales

103,859


100,204


345,765


337,814

COST OF SALES








Product

40,957


$         33,115


123,836


$       109,024

Service

11,867


$         11,382


46,166


$         44,863

Total cost of sales

52,824


44,497


170,002


153,887

GROSS PROFIT

51,035


55,707


175,763


183,927

OPERATING EXPENSES








Selling, general and administrative

37,923


35,859


146,657


136,234

Research and development

12,659


12,297


49,415


48,761

Restructuring costs

2,102


3,689


4,614


7,368

Total operating expenses

52,684


51,845


200,686


192,363

(LOSS) INCOME FROM OPERATIONS

(1,649)


3,862


(24,923)


(8,436)

OTHER (INCOME) EXPENSE








Other (income) expense, net

(159)


503


(3,236)


70

Interest (income) expense

(8)


1


(36)


55

(LOSS) INCOME BEFORE INCOME TAX EXPENSE

(1,482)


3,358


(21,651)


(8,561)

INCOME TAX EXPENSE

753


35,070


5,105


31,403

NET LOSS

$         (2,235)


$       (31,712)


$       (26,756)


$       (39,964)

NET LOSS PER SHARE - BASIC

$            (0.12)


$            (1.74)


$            (1.46)


$            (2.20)

NET LOSS PER SHARE - DILUTED

$            (0.12)


$            (1.74)


$            (1.46)


$            (2.20)

Weighted average shares - Basic

18,780,081


18,204,386


18,318,191


18,187,946

Weighted average shares - Diluted

18,780,081


18,204,386


18,318,191


18,187,946

















 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in thousands, except share and per share data)

December 31,
2022


December 31,
2021

ASSETS




Current assets:




Cash and cash equivalents

$           37,812


$         121,989

Accounts receivable, net

90,326


78,523

Inventories, net

50,026


53,145

Prepaid expenses and other current assets

41,201


19,793

Total current assets

219,365


273,450

Non-current assets:




Property, plant and equipment, net

19,720


22,194

Operating lease right-of-use asset

18,989


22,543

Goodwill

107,155


82,096

Intangible assets, net

48,978


25,616

Service and sales demonstration inventory, net

30,904


30,554

Deferred income tax assets, net

24,192


21,277

Other long-term assets

4,044


2,010

Total assets

$         473,347


$         479,740

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$           27,286


$           14,199

Accrued liabilities

23,345


28,208

Income taxes payable

6,767


4,499

Current portion of unearned service revenues

36,407


40,838

Customer deposits

6,725


5,399

Lease liability

5,709


5,738

Total current liabilities

106,239


98,881

Unearned service revenues - less current portion

20,947


22,350

Lease liability - less current portion

14,649


18,648

Deferred income tax liabilities

11,708


1,058

Income taxes payable - less current portion

8,706


11,297

Other long-term liabilities

49


1,047

Total liabilities

162,298


153,281

Common stock - par value $0.001, 50,000,000 shares authorized; 20,156,233 and
19,588,003 issued; 18,780,013 and 18,205,636 outstanding, respectively

20


20

Additional paid-in capital

328,227


301,061

Retained earnings

46,788


73,544

Accumulated other comprehensive loss

(33,331)


(17,374)

Common stock in treasury, at cost - 1,376,220 and 1,382,367 shares held, respectively

(30,655)


(30,792)

Total shareholders' equity

311,049


326,459

Total liabilities and shareholders' equity

$         473,347


$         479,740









 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Twelve Months Ended

December 31,

(in thousands)

2022


2021

CASH FLOWS FROM:




OPERATING ACTIVITIES:




Net loss

$          (26,756)


$          (39,964)

Adjustments to reconcile net loss to net cash used by operating activities:




Depreciation and amortization

13,983


13,396

Stock-based compensation

13,317


11,456

Provision for bad debts (net of recoveries)

163


176

Loss on disposal of assets

156


218

Provision for excess and obsolete inventory

 

(68)


2,297

Impairment of leasehold improvements

507


Impairment of intangibles

1,135


Deferred income tax expense

2,412


24,706

Change in operating assets and liabilities, net of acquisitions:




(Increase) decrease in:




Accounts receivable, net

(11,198)


(15,577)

Inventories

3,379


(6,706)

Prepaid expenses and other assets

(21,239)


5,996

(Decrease) increase in:




Accounts payable and accrued liabilities

4,777


(13,260)

Income taxes payable

(1,904)


847

Customer deposits

1,343


2,627

Unearned service revenues

(4,863)


312

Net cash used in operating activities

(24,856)


(13,476)

INVESTING ACTIVITIES:




Purchases of property and equipment

(6,371)


(7,035)

Cash paid for technology development, patents and licenses

(10,567)


(4,905)

Acquisitions of businesses and minority share investments, net of cash received

(32,959)


(33,800)

Net cash used in investing activities

(49,897)


(45,740)

FINANCING ACTIVITIES:




Payments on capital leases

(220)


(296)

Payments for taxes related to net share settlement of equity awards

(1,892)


(4,002)

Short term debt

1,115


Proceeds from issuance of stock related to stock option exercises


5,880

Net cash (used in) provided by financing activities

(997)


1,582

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(8,427)


(6,010)

DECREASE IN CASH AND CASH EQUIVALENTS

(84,177)


(63,644)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

121,989


185,633

CASH AND CASH EQUIVALENTS, END OF YEAR

$           37,812


$         121,989

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)



Three Months Ended December 31,


Twelve Months Ended December 31,

(dollars in thousands, except per share data)

2022


2021


2022


2021

Gross profit, as reported

$        51,035


$        55,707


$      175,763


$      183,927

Stock-based compensation (1)

294


165


1,050


635

Purchase accounting intangible amortization and

fair value adjustments

3,550



3,550


Non-GAAP adjustments to gross profit

3,844


165


4,600


635

Non-GAAP gross profit

$        54,879


$        55,872


$      180,363


$      184,562

Gross margin, as reported

49.1 %


55.6 %


50.8 %


54.4 %

Non-GAAP gross margin

52.8 %


55.8 %


52.2 %


54.6 %









Selling, general and administrative, as reported

$        37,923


$        35,859


$      146,657


$      136,234

Stock-based compensation (1)

(2,179)


(2,196)


(9,654)


(8,985)

Purchase accounting intangible amortization

(811)


(259)


(1,373)


(908)

Non-GAAP selling, general and administrative

$        34,933


$        33,404


$      135,630


$      126,341









Research and development, as reported

$        12,659


$        12,297


$        49,415


$        48,761

Stock-based compensation (1)

(818)


(438)


(2,611)


(1,836)

Purchase accounting intangible amortization

(488)


(1,072)


(2,010)


(2,133)

Non-GAAP research and development

$        11,353


$        10,787


$        44,794


$        44,792









Operating expenses, as reported

$        52,684


$        51,845


$      200,686


$      192,363

Stock-based compensation (1)

(2,997)


(2,634)


(12,265)


(10,821)

Restructuring and other costs (2)

(2,604)


(3,689)


(7,548)


(7,368)

Purchase accounting intangible amortization

(1,299)


(1,331)


(3,383)


(3,041)

Non-GAAP adjustments to operating expenses

(6,900)


(7,654)


(23,196)


(21,230)

Non-GAAP operating expenses

$        45,784


$        44,191


$      177,490


$      171,133









(Loss) Income from operations, as reported

$        (1,649)


$          3,862


$      (24,923)


$        (8,436)

Non-GAAP adjustments to gross profit

3,844


165


4,600


635

Non-GAAP adjustments to operating expenses

6,900


7,654


23,196


21,230

Non-GAAP income from operations

$          9,095


$        11,681


$          2,873


$        13,429









Net loss, as reported

$        (2,235)


$      (31,712)


$      (26,756)


$      (39,964)

Non-GAAP adjustments to gross profit

3,844


165


4,600


635

Non-GAAP adjustments to operating expenses

6,900


7,654


23,196


21,230

Income tax effect of non-GAAP adjustments

(2,149)


(1,191)


(6,163)


(5,432)

Other tax adjustments (3)

772


33,779


9,675


33,779

Non-GAAP net income

$          7,132


$          8,695


$          4,552


$        10,248









Net loss per share - Diluted, as reported

$           (0.12)


$           (1.74)


$           (1.46)


$           (2.20)

Stock-based compensation (1)

0.18


0.16


0.73


0.63

Restructuring and other costs (2)

0.14


0.20


0.41


0.40

Purchase accounting intangible amortization and
fair value adjustments

0.25


0.07


0.37


0.17

Income tax effect of non-GAAP adjustments

(0.11)


(0.06)


(0.33)


(0.30)

Other tax adjustments (3)

0.04


1.85


0.53


1.86

Non-GAAP net income per share - Diluted

$             0.38


$             0.48


$             0.25


$             0.56


 

(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. The Restructuring and other costs primarily consist of severance and related benefits.

 

(3) The other tax adjustments primarily relate to the impact of certain jurisdictions maintaining a full valuation allowance where benefit is not accrued on U.S. GAAP pre-tax book losses.

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)



Three Months Ended December 31,


Twelve Months Ended December 31,

(in thousands)

2022


2021


2022


2021

Net loss

$        (2,235)


$      (31,712)


$      (26,756)


$      (39,964)

Interest (income) expense, net

(8)


1


(36)


55

Income tax expense

753


35,070


5,105


31,403

Depreciation and amortization and fair value
adjustments

7,472


3,836


17,533


13,396

EBITDA

5,982


7,195


(4,154)


4,890

Other (income) expense, net

(159)


503


(3,236)


70

Stock-based compensation

3,291


2,799


13,315


11,456

Restructuring and other costs (1)

2,604


3,689


7,548


7,368

Adjusted EBITDA

$        11,718


$        14,186


$        13,473


$        23,784

Adjusted EBITDA margin (2)

11.3 %


14.2 %


3.9 %


7.0 %


 

(1) 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. The Restructuring and other costs primarily consist of severance and related benefits.


(2) Calculated as Adjusted EBITDA as a percentage of total sales.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

KEY SALES MEASURES

(UNAUDITED)



For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,

(in thousands)

2022


2021


2022


2021

Total sales to external customers as reported








Americas (1)

$           44,345


$           40,438


$         154,422


$         140,633

EMEA (1)

31,680


29,035


98,174


104,350

APAC (1)

27,834


30,731


93,169


92,831


$         103,859


$         100,204


$         345,765


$         337,814










For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,

(in thousands)

2022


2021


2022


2021

Total sales to external customers in constant currency (2)








Americas (1)

$           43,894


$           41,677


$         153,897


$         141,579

EMEA (1)

35,597


28,180


106,642


100,002

APAC (1)

30,987


30,356


100,502


91,552


$         110,478


$         100,213


$         361,041


$         333,133


 

(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.

 


For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,

(in thousands)

2022


2021


2022


2021









Hardware

$       70,322


$       64,661


$     220,919


$     206,024

Software

12,943


13,694


44,361


45,079

Service

20,594


21,849


80,485


86,711

Total Sales

$     103,859


$     100,204


$     345,765


$     337,814









Hardware as a percentage of total sales

67.7 %


64.5 %


63.9 %


61.0 %

Software as a percentage of total sales

12.5 %


13.7 %


12.8 %


13.3 %

Service as a percentage of total sales

19.8 %


21.8 %


23.3 %


25.7 %









Total Recurring Revenue (3)

$       18,088


$       16,468


$       68,272


$       64,067

Recurring revenue as a percentage of total sales

17.4 %


16.4 %


19.7 %


19.0 %

 

(3) Recurring revenue is comprised of hardware service contracts, software maintenance contracts, and subscription based software applications.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF OUTLOOK - GAAP TO NON-GAAP



Fiscal quarter ending March 31, 2023


Low


High

GAAP diluted loss per share range

$(0.80)


$(0.54)

Stock-based compensation

0.18


0.18

Purchase accounting intangible amortization

0.06


0.06

Restructuring and other costs

0.20


0.20

Non-GAAP tax adjustments

0.14


0.08

Non-GAAP diluted loss per share

$(0.22)


$(0.02)

 

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SOURCE FARO

Contact:
Company Name: FARO
Investor Contacts; FARO Technologies, Inc., Allen Muhich, Chief Financial Officer
Phone: +1 407-562-5005
Email Contact ;Sapphire Investor Relations, LLC, Michael Funari or Erica Mannion
Phone: +1 617-542-6180
Email Contact
Financial data for FARO