- Q4 revenue of $98.8 million, at
the upper end of our guidance range
- Q4 earnings per share ("EPS") of $0.08; Non-GAAP EPS of $0.36, above our guidance range
- Significant improvement in cash flow, which results
in positive Q4 and FY2023 cash flow from operations
LAKE
MARY, Fla., Feb. 27,
2024 /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,
2023.
"We are pleased with our improved financial performance and
remain excited about the long term prospects of our integrated
hardware and software solutions strategy to create customer value
in our core markets," said Peter
Lau, President & Chief Executive Officer. "GAAP EPS of
$0.08 and non-GAAP EPS of
$0.36 exceeded the high end of our
guidance range. GAAP net income of $1.6
million and Adjusted EBITDA of $13.2
million, an increase of 12% year over year, attributed to
higher than anticipated revenue and continued improvement in
operational execution. We also expanded our cash position by
generating $18.7 million of operating
cash flow in the quarter, driven by profitability and efficiencies
in working capital."
Fourth Quarter 2023 Financial Summary
- Total sales of $98.8 million,
down 5% year over year
- Gross margin of 50.9%, compared to 49.1% in the prior year
period
- Non-GAAP gross margin of 52.5%, compared to 52.8% in the prior
year period
- Operating expenses of $48.9
million, compared to $52.7
million in the prior year period
- Non-GAAP operating expenses of $41.3
million, compared to $45.8
million in the prior year period
- Net income of $1.6 million, or
$0.08 per share compared to net loss
of $2.2 million, or $(0.12) per share in the prior year period
- Non-GAAP net income of $6.8
million, or $0.36 per share
compared to net income of $7.1
million, or $0.38 per share in
the prior year period
- Adjusted EBITDA of $13.2 million,
or 13.3% of total sales compared to $11.7
million, or 11.3% of total sales in the prior year
period
- Cash, cash equivalents & short-term investments of
$96.3 million, compared to
$79.9 million as of September 30, 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".
Full Year 2023 Financial Summary
- Total sales of $358.8 million, up
4% compared to the prior year period
- Net loss of $56.6 million, or
$(2.99) per share compared to net
loss of $26.8 million, or
$(1.46) per share in the prior year
period
- Non-GAAP net loss of $2.4
million, or $(0.13) per share
compared to non-GAAP net income of $4.6
million, or $0.25 per share in
the prior year period
Outlook for the First Quarter 2024
For the first
quarter ending March 31, 2024, FARO
currently expects:
- Revenue in the range of $77 to
$85 million
- Gross margin in the range of 49.0% - 50.5%. Non-GAAP gross
margin in the range of 49.5% - 51.0%
- Operating expenses in the range of $47.5 - $49.5
million. Non-GAAP operating expenses in the range of
$41 - $43
million
- Net loss per share in the range of ($0.66) - ($0.46).
Non-GAAP loss per share in the range of ($0.20) to $0.00
Conference Call
The Company will host a conference
call to discuss these results on Wednesday, February 28, 2024,
at 8:00 a.m. ET. Interested parties
can access the conference call by dialing (800) 245-3047
(U.S.) or +1 (203) 518-9708 (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
income (loss) before interest (income) expense, net, income tax
benefit (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 income (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 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 that
will be filed with the SEC following this earnings release, 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
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
(in thousands, except
share and per share data)
|
December 31,
2023
|
|
December 31,
2022
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Sales
|
|
|
|
|
|
|
|
|
Product
|
$
78,818
|
|
$
83,265
|
|
$
278,572
|
|
$
265,280
|
|
Service
|
20,022
|
|
20,594
|
|
80,259
|
|
80,485
|
|
Total sales
|
98,840
|
|
103,859
|
|
358,831
|
|
345,765
|
|
Cost of
sales
|
|
|
|
|
|
|
|
|
Product
|
37,781
|
|
40,957
|
|
150,472
|
|
123,836
|
|
Service
|
10,773
|
|
11,867
|
|
43,360
|
|
46,166
|
|
Total cost of
sales
|
48,554
|
|
52,824
|
|
193,832
|
|
170,002
|
|
Gross profit
|
50,286
|
|
51,035
|
|
164,999
|
|
175,763
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
39,429
|
|
37,923
|
|
157,336
|
|
146,657
|
|
Research and
development
|
9,238
|
|
12,659
|
|
41,806
|
|
49,415
|
|
Restructuring
costs
|
263
|
|
2,102
|
|
15,393
|
|
4,614
|
|
Total operating
expenses
|
48,930
|
|
52,684
|
|
214,535
|
|
200,686
|
|
Income (loss) from
operations
|
1,356
|
|
(1,649)
|
|
(49,536)
|
|
(24,923)
|
|
Other (income)
expense
|
|
|
|
|
|
|
|
|
Interest expense
(income)
|
819
|
|
(8)
|
|
3,348
|
|
(36)
|
|
Other expense
(income), net
|
1,303
|
|
(159)
|
|
1,178
|
|
(3,236)
|
|
Loss before income
tax
|
(766)
|
|
(1,482)
|
|
(54,062)
|
|
(21,651)
|
|
Income tax (benefit)
expense
|
(2,354)
|
|
753
|
|
2,515
|
|
5,105
|
|
Net income
(loss)
|
$
1,588
|
|
$
(2,235)
|
|
$
(56,577)
|
|
$
(26,756)
|
|
Net income (loss) per
share - Basic
|
$
0.08
|
|
$
(0.12)
|
|
$
(2.99)
|
|
$
(1.46)
|
|
Net income (loss) per
share - Diluted
|
$
0.08
|
|
$
(0.12)
|
|
$
(2.99)
|
|
$
(1.46)
|
|
Weighted average shares
- Basic
|
18,961,632
|
|
18,780,081
|
|
18,917,778
|
|
18,318,191
|
|
Weighted average shares
- Diluted
|
21,086,277
|
|
18,780,081
|
|
18,917,778
|
|
18,318,191
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
|
|
|
(in thousands, except
share and per share data)
|
December 31,
2023
|
|
December 31,
2022
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
76,787
|
|
$
37,812
|
|
Short-term
investments
|
19,496
|
|
—
|
|
Accounts receivable,
net
|
92,028
|
|
90,326
|
|
Inventories,
net
|
34,529
|
|
50,026
|
|
Prepaid expenses and
other current assets
|
38,768
|
|
41,201
|
|
Total current
assets
|
261,608
|
|
219,365
|
|
Non-current
assets:
|
|
|
|
|
Property, plant and
equipment, net
|
21,181
|
|
19,720
|
|
Operating lease
right-of-use asset
|
12,231
|
|
18,989
|
|
Goodwill
|
109,534
|
|
107,155
|
|
Intangible assets,
net
|
47,891
|
|
48,978
|
|
Service and sales
demonstration inventory, net
|
23,147
|
|
30,904
|
|
Deferred income tax
assets, net
|
25,027
|
|
24,192
|
|
Other long-term
assets
|
4,073
|
|
4,044
|
|
Total assets
|
$
504,692
|
|
$
473,347
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
27,404
|
|
$
27,286
|
|
Accrued
liabilities
|
29,930
|
|
23,345
|
|
Income taxes
payable
|
5,699
|
|
6,767
|
|
Current portion of
unearned service revenues
|
40,555
|
|
36,407
|
|
Customer
deposits
|
4,251
|
|
6,725
|
|
Lease
liability
|
5,434
|
|
5,709
|
|
Total current
liabilities
|
113,273
|
|
106,239
|
|
Loan - 5.50%
Convertible Senior Notes
|
72,760
|
|
—
|
|
Unearned service
revenues - less current portion
|
20,256
|
|
20,947
|
|
Lease liability - less
current portion
|
10,837
|
|
14,649
|
|
Deferred income tax
liabilities
|
13,308
|
|
11,708
|
|
Income taxes payable -
less current portion
|
5,629
|
|
8,706
|
|
Other long-term
liabilities
|
23
|
|
49
|
|
Total
liabilities
|
236,086
|
|
162,298
|
|
Commitments and
contingencies
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock - par
value $0.001, 50,000,000 shares authorized; 20,343,359 and
20,156,233 issued; 18,968,798 and 18,780,013 outstanding,
respectively
|
20
|
|
20
|
|
Additional paid-in
capital
|
346,277
|
|
328,227
|
|
(Accumulated deficit)
Retained earnings
|
(9,789)
|
|
46,788
|
|
Accumulated other
comprehensive loss
|
(37,247)
|
|
(33,331)
|
|
Common stock in
treasury, at cost - 1,376,220 and 1,376,220 shares held,
respectively
|
(30,655)
|
|
(30,655)
|
|
Total shareholders'
equity
|
268,606
|
|
311,049
|
|
Total liabilities and
shareholders' equity
|
$
504,692
|
|
$
473,347
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
Twelve Months
Ended
December 31,
|
|
(in
thousands)
|
2023
|
|
2022
|
|
Cash flows
from:
|
|
|
|
|
Operating
activities:
|
|
|
|
|
Net loss
|
$
(56,577)
|
|
$
(26,756)
|
|
Adjustments to
reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
15,377
|
|
13,983
|
|
Stock-based
compensation
|
17,833
|
|
13,317
|
|
Inventory
write-downs
|
9,340
|
|
—
|
|
Asset impairment
charges
|
5,707
|
|
507
|
|
Provision for bad
debts, net of recoveries
|
1,030
|
|
163
|
|
Amortization of debt
discount and issuance costs
|
450
|
|
—
|
|
Loss on disposal of
assets
|
274
|
|
156
|
|
Provision for excess
and obsolete inventory
|
2,361
|
|
(68)
|
|
Impairment of
intangible assets
|
—
|
|
1,135
|
|
Deferred income tax
expense (benefit)
|
(26)
|
|
2,412
|
|
Change in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
(Increase) decrease
in:
|
|
|
|
|
Accounts receivable,
net
|
(50)
|
|
(11,198)
|
|
Inventories
|
736
|
|
3,379
|
|
Prepaid expenses and
other assets
|
3,387
|
|
(21,239)
|
|
(Decrease) increase
in:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
4,421
|
|
4,777
|
|
Income taxes
payable
|
(3,808)
|
|
(1,904)
|
|
Customer
deposits
|
(2,533)
|
|
1,343
|
|
Unearned service
revenues
|
2,786
|
|
(4,863)
|
|
Other
liabilities
|
367
|
|
—
|
|
Net cash provided by
(used in) operating activities
|
1,075
|
|
(24,856)
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
(6,817)
|
|
(6,371)
|
|
Purchases of
short-term investments
|
(19,496)
|
|
—
|
|
Cash paid for
technology development, patents and licenses
|
(7,177)
|
|
(10,567)
|
|
Acquisitions of
businesses and minority share investments, net of cash
received
|
—
|
|
(32,959)
|
|
Net cash used in
investing activities
|
(33,490)
|
|
(49,897)
|
|
Financing
activities:
|
|
|
|
|
Payments on capital
leases
|
(154)
|
|
(220)
|
|
Cash settlement of
equity awards
|
217
|
|
(1,892)
|
|
Short term
debt
|
—
|
|
1,115
|
|
Proceeds from issuance
of 5.50% Convertible Senior Notes, due 2028, net of discount,
issuance
cost and accrued interest
|
72,310
|
|
—
|
|
Payment of contingent
consideration for business acquisition
|
(1,098)
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
71,275
|
|
(997)
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
115
|
|
(8,427)
|
|
Increase (Decrease) in
cash and cash equivalents
|
38,975
|
|
(84,177)
|
|
Cash and cash
equivalents, beginning of period
|
37,812
|
|
121,989
|
|
Cash and cash
equivalents, end of period
|
$
76,787
|
|
$
37,812
|
|
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)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Gross profit, as
reported
|
$
50,286
|
|
$
51,035
|
|
$
164,999
|
|
$
175,763
|
|
Stock-based
compensation (1)
|
364
|
|
294
|
|
1,335
|
|
1,050
|
|
Inventory reserve
charge (3)
|
1,208
|
|
—
|
|
9,340
|
|
—
|
|
Restructuring and
other costs(2)
|
51
|
|
—
|
|
1,377
|
|
—
|
|
Purchase accounting
intangible amortization and fair value
adjustments
|
—
|
|
3,550
|
|
—
|
|
3,550
|
|
Non-GAAP adjustments
to gross profit
|
1,623
|
|
3,844
|
|
12,052
|
|
4,600
|
|
Non-GAAP gross
profit
|
$
51,909
|
|
$
54,879
|
|
$
177,051
|
|
$
180,363
|
|
Gross margin, as
reported
|
50.9 %
|
|
49.1 %
|
|
46.0 %
|
|
50.8 %
|
|
Non-GAAP gross
margin
|
52.5 %
|
|
52.8 %
|
|
49.3 %
|
|
52.2 %
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative, as reported
|
$
39,429
|
|
$
37,923
|
|
$
157,336
|
|
$
146,657
|
|
Stock-based
compensation (1)
|
(4,488)
|
|
(2,179)
|
|
(14,198)
|
|
(9,654)
|
|
Purchase accounting
intangible amortization
|
(634)
|
|
(811)
|
|
(2,658)
|
|
(1,373)
|
|
Non-GAAP selling,
general and administrative
|
$
34,307
|
|
$
34,933
|
|
$
140,480
|
|
$
135,630
|
|
|
|
|
|
|
|
|
|
Research and
development, as reported
|
$
9,238
|
|
$
12,659
|
|
$
41,806
|
|
$
49,415
|
|
Stock-based
compensation (1)
|
(705)
|
|
(818)
|
|
(2,300)
|
|
(2,611)
|
|
Purchase accounting
intangible amortization
|
(475)
|
|
(488)
|
|
(2,016)
|
|
(2,010)
|
|
Non-GAAP research and
development
|
$
8,058
|
|
$
11,353
|
|
$
37,490
|
|
$
44,794
|
|
|
|
|
|
|
|
|
|
Operating expenses, as
reported
|
$
48,930
|
|
$
52,684
|
|
$
214,535
|
|
$
200,686
|
|
Stock-based
compensation (1)
|
(5,194)
|
|
(2,997)
|
|
(16,498)
|
|
(12,265)
|
|
Restructuring and
other costs (2)
|
(1,329)
|
|
(2,604)
|
|
(17,666)
|
|
(7,548)
|
|
Purchase accounting
intangible amortization
|
(1,109)
|
|
(1,299)
|
|
(4,674)
|
|
(3,383)
|
|
Non-GAAP adjustments
to operating expenses
|
(7,632)
|
|
(6,900)
|
|
(38,838)
|
|
(23,196)
|
|
Non-GAAP operating
expenses
|
$
41,298
|
|
$
45,784
|
|
$
175,697
|
|
$
177,490
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations, as reported
|
$
1,356
|
|
$
(1,649)
|
|
$
(49,536)
|
|
$
(24,923)
|
|
Non-GAAP adjustments
to gross profit
|
1,622
|
|
3,844
|
|
12,052
|
|
4,600
|
|
Non-GAAP adjustments
to operating expenses
|
7,632
|
|
6,900
|
|
38,838
|
|
23,196
|
|
Non-GAAP income from
operations
|
$
10,610
|
|
$
9,095
|
|
$
1,354
|
|
$
2,873
|
|
|
|
|
|
|
|
|
|
Net income (loss), as
reported
|
$
1,588
|
|
$
(2,235)
|
|
$
(56,577)
|
|
$
(26,756)
|
|
Non-GAAP adjustments
to gross profit
|
1,622
|
|
3,844
|
|
12,052
|
|
4,600
|
|
Non-GAAP adjustments
to operating expenses
|
7,632
|
|
6,900
|
|
38,838
|
|
23,196
|
|
Income tax effect of
non-GAAP adjustments
|
(2,314)
|
|
(2,149)
|
|
(12,723)
|
|
(6,163)
|
|
Other tax adjustments
(4)
|
(1,738)
|
|
772
|
|
15,962
|
|
9,675
|
|
Non-GAAP net income
(loss)
|
$
6,790
|
|
$
7,132
|
|
$
(2,448)
|
|
$
4,552
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share - Diluted, as reported
|
$
0.08
|
|
$
(0.12)
|
|
$
(2.99)
|
|
$
(1.46)
|
|
Stock-based
compensation (1)
|
0.28
|
|
0.18
|
|
0.94
|
|
0.73
|
|
Restructuring and
other costs (2)
|
0.07
|
|
0.14
|
|
1.01
|
|
0.41
|
|
Inventory reserve
charge(3)
|
0.06
|
|
—
|
|
0.49
|
|
—
|
|
Purchase accounting
intangible amortization and fair value
adjustments
|
0.06
|
|
0.25
|
|
0.25
|
|
0.37
|
|
Income tax effect of
non-GAAP adjustments
|
(0.11)
|
|
(0.11)
|
|
(0.67)
|
|
(0.33)
|
|
Other tax adjustments
(4)
|
(0.08)
|
|
0.04
|
|
0.84
|
|
0.53
|
|
Non-GAAP net income
(loss) per share - Diluted
|
$
0.36
|
|
$
0.38
|
|
$
(0.13)
|
|
$
0.25
|
|
|
|
(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.
|
|
|
|
(3)
|
During 2023, we
recorded a charge of $9.3 million, increasing our reserve for
excess and obsolete inventory, based on our analysis of our
inventory reserves in connection with our strategy to simplify our
product portfolio and cease selling certain products.
|
|
|
|
(4)
|
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 INCOME (LOSS) TO
EBITDA AND ADJUSTED EBITDA
(UNAUDITED)
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net income
(loss)
|
$
1,588
|
|
$
(2,235)
|
|
$ (56,577)
|
|
$ (26,756)
|
|
Interest (income)
expense, net
|
819
|
|
(8)
|
|
3,348
|
|
(36)
|
|
Income tax (benefit)
expense
|
(2,354)
|
|
753
|
|
2,515
|
|
5,105
|
|
Depreciation and
amortization and fair value adjustments
|
3,649
|
|
7,472
|
|
15,377
|
|
17,533
|
|
EBITDA
|
3,702
|
|
5,982
|
|
(35,337)
|
|
(4,154)
|
|
Other (income)
expense, net
|
1,303
|
|
(159)
|
|
1,178
|
|
(3,236)
|
|
Stock-based
compensation
|
5,557
|
|
3,291
|
|
17,833
|
|
13,315
|
|
Inventory reserve
charge(3)
|
1,208
|
|
—
|
|
9,340
|
|
—
|
|
Restructuring and
other costs (1)
|
1,380
|
|
2,604
|
|
19,043
|
|
7,548
|
|
Adjusted
EBITDA
|
$
13,150
|
|
$
11,718
|
|
$
12,057
|
|
$
13,473
|
|
Adjusted EBITDA margin
(2)
|
13.3 %
|
|
11.3 %
|
|
3.4 %
|
|
3.9 %
|
|
|
|
(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.
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.
|
|
|
|
(2)
|
Calculated as Adjusted
EBITDA as a percentage of total sales.
|
|
|
|
(3)
|
During 2023, we
recorded a charge of $9.3 million, increasing our reserve for
excess and obsolete inventory, based on our analysis of our
inventory reserves in connection with our strategy to simplify our
product portfolio and cease selling certain products.
|
|
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)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Total sales to
external customers as reported
|
|
|
|
|
|
|
|
|
Americas
(1)
|
$
42,535
|
|
$
44,345
|
|
$
167,269
|
|
$
154,422
|
|
EMEA
(1)
|
33,657
|
|
31,680
|
|
108,298
|
|
98,174
|
|
APAC
(1)
|
22,648
|
|
27,834
|
|
83,264
|
|
93,169
|
|
$
98,840
|
|
$
103,859
|
|
$
358,831
|
|
$
345,765
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Twelve Months
Ended
December 31,
|
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Total sales to
external customers in constant currency
(2)
|
|
|
|
|
|
|
|
|
Americas
(1)
|
$
42,044
|
|
$
44,008
|
|
$
165,715
|
|
$
154,545
|
|
EMEA
(1)
|
33,028
|
|
33,109
|
|
105,545
|
|
99,355
|
|
APAC
(1)
|
23,873
|
|
28,392
|
|
85,948
|
|
92,268
|
|
$
98,945
|
|
$
105,509
|
|
$
357,208
|
|
$
346,168
|
|
|
|
(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)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Hardware
|
$
66,640
|
|
$
70,322
|
|
$ 234,124
|
|
$ 220,919
|
|
Software
|
12,178
|
|
12,943
|
|
44,448
|
|
44,361
|
|
Service
|
20,022
|
|
20,594
|
|
80,259
|
|
80,485
|
|
Total Sales
|
$
98,840
|
|
$ 103,859
|
|
$ 358,831
|
|
$ 345,765
|
|
|
|
|
|
|
|
|
|
Hardware as a
percentage of total sales
|
67.4 %
|
|
67.7 %
|
|
65.2 %
|
|
63.9 %
|
|
Software as a
percentage of total sales
|
12.3 %
|
|
12.5 %
|
|
12.4 %
|
|
12.8 %
|
|
Service as a percentage
of total sales
|
20.3 %
|
|
19.8 %
|
|
22.4 %
|
|
23.3 %
|
|
|
|
|
|
|
|
|
|
Total Recurring Revenue
(3)
|
$
17,360
|
|
$
18,088
|
|
$
67,497
|
|
$
68,272
|
|
Recurring revenue as a
percentage of total sales
|
17.6 %
|
|
17.4 %
|
|
18.8 %
|
|
19.7 %
|
|
|
|
(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
December 31,
|
|
Twelve Months Ended
December 31,
|
|
(in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Net cash provided by
(used in) operating activities
|
$
18,655
|
|
$
(6,700)
|
|
$
1,075
|
|
$
(24,856)
|
|
Purchases of property
and equipment
|
(1,801)
|
|
(1,393)
|
|
(6,817)
|
|
(6,371)
|
|
Cash paid for
technology development, patents and licenses
|
(2,106)
|
|
(1,413)
|
|
(7,177)
|
|
(10,567)
|
|
Free Cash
Flow
|
14,748
|
|
(9,506)
|
|
(12,919)
|
|
(41,794)
|
|
Restructuring and
other cash payments (1)
|
2,665
|
|
454
|
|
14,380
|
|
6,364
|
|
Adjusted Free Cash
Flow
|
$
17,413
|
|
$
(9,052)
|
|
$
1,461
|
|
$
(35,430)
|
|
|
|
(1)
|
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 cash payments primarily consist of severance and related
benefits.
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
RECONCILIATION OF OUTLOOK - GAAP TO
NON-GAAP
|
|
|
Fiscal quarter ending
March 31, 2024
|
|
Low
|
|
High
|
|
GAAP gross
margin
|
49.0 %
|
|
50.5 %
|
|
Stock-based
compensation
|
0.5 %
|
|
0.5 %
|
|
Non-GAAP gross
margin
|
49.5 %
|
|
51.0 %
|
|
Fiscal quarter ending
March 31, 2024
|
|
(in
thousands)
|
Low
|
|
High
|
|
GAAP operating
expenses
|
$47,500
|
|
$49,500
|
|
Stock-based
compensation
|
(3,300)
|
|
(3,300)
|
|
Purchase accounting
intangible amortization
|
(1,200)
|
|
(1,200)
|
|
Restructuring and
other costs
|
(2,000)
|
|
(2,000)
|
|
Non-GAAP operating
expenses
|
$41,000
|
|
$43,000
|
|
Fiscal quarter ending
March 31, 2024
|
|
Low
|
|
High
|
|
GAAP diluted loss per
share range
|
$(0.66)
|
|
$(0.46)
|
|
Stock-based
compensation
|
0.19
|
|
0.19
|
|
Purchase accounting
intangible amortization
|
0.06
|
|
0.06
|
|
Restructuring and
other costs
|
0.11
|
|
0.11
|
|
Non-GAAP tax
adjustments
|
0.10
|
|
0.10
|
|
Non-GAAP diluted loss
per share
|
$(0.20)
|
|
$0.00
|
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SOURCE FARO