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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
FORM 8-K

  CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2024
FARO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
Florida 0-23081 59-3157093
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		 (IRS Employer
Identification No.)
125 Technology Park, Lake Mary, Florida 32746
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (407) 333-9911
N/A
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.001FARONasdaq Global Select Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 2.02. Results of Operations and Financial Condition.
On February 27, 2024, FARO Technologies, Inc. (the “Company”) issued a press release announcing its results of operations for the fourth fiscal quarter and year ended December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information furnished pursuant to Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.

Item 9.01.     Financial Statements and Exhibits.
(d) Exhibits

The following exhibits are furnished with this Current Report on Form 8-K:
EXHIBIT INDEX
Exhibit
Number		  Description
104
Cover Page Interactive Data File - The cover page of this Current Report on Form 8-K filed on February 27, 2024, formatted in Inline XBRL



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
         
      FARO Technologies, Inc.
    
  February 27, 2024   /s/ Matthew Horwath
      By:Matthew Horwath
      Its:SVP & Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)




Exhibit 99.1
imagea.jpg
FARO Announces Fourth Quarter and Full Year 2023 Financial Results

•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, FL, February 27, 2024 - 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.

Investor Contacts

FARO Technologies, Inc.
Matthew Horwath, Chief Financial Officer
+1 407-562-5005
IR@faro.com

Sapphire Investor Relations, LLC
Michael Funari or Erica Mannion
+1 617-542-6180
IR@faro.com




FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

 
 Three Months EndedTwelve Months Ended
(in thousands, except share and per share data)December 31, 2023December 31, 2022December 31, 2023December 31, 2022
Sales
Product$78,818 $83,265 $278,572 $265,280 
Service20,022 20,594 80,259 80,485 
Total sales98,840 103,859 358,831 345,765 
Cost of sales
Product37,781 40,957 150,472 123,836 
Service10,773 11,867 43,360 46,166 
Total cost of sales48,554 52,824 193,832 170,002 
Gross profit50,286 51,035 164,999 175,763 
Operating expenses
Selling, general and administrative39,429 37,923 157,336 146,657 
Research and development9,238 12,659 41,806 49,415 
Restructuring costs263 2,102 15,393 4,614 
Total operating expenses48,930 52,684 214,535 200,686 
Income (loss) from operations1,356 (1,649)(49,536)(24,923)
Other (income) expense
Interest expense (income)819 (8)3,348 (36)
Other expense (income), net1,303 (159)1,178 (3,236)
Loss before income tax(766)(1,482)(54,062)(21,651)
Income tax (benefit) expense(2,354)7532,515 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 - Basic18,961,632 18,780,081 18,917,778 18,318,191 
Weighted average shares - Diluted21,086,277 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 investments19,496 — 
Accounts receivable, net92,028 90,326 
Inventories, net34,529 50,026 
Prepaid expenses and other current assets38,768 41,201 
Total current assets261,608 219,365 
Non-current assets:
Property, plant and equipment, net21,181 19,720 
Operating lease right-of-use asset12,231 18,989 
Goodwill109,534 107,155 
Intangible assets, net47,891 48,978 
Service and sales demonstration inventory, net23,147 30,904 
Deferred income tax assets, net25,027 24,192 
Other long-term assets4,073 4,044 
Total assets$504,692 $473,347 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$27,404 $27,286 
Accrued liabilities29,930 23,345 
Income taxes payable5,699 6,767 
Current portion of unearned service revenues40,555 36,407 
Customer deposits4,251 6,725 
Lease liability5,434 5,709 
Total current liabilities113,273 106,239 
Loan - 5.50% Convertible Senior Notes72,760 — 
Unearned service revenues - less current portion20,256 20,947 
Lease liability - less current portion10,837 14,649 
Deferred income tax liabilities13,308 11,708 
Income taxes payable - less current portion5,629 8,706 
Other long-term liabilities23 49 
Total liabilities236,086 162,298 
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, respectively20 20 
Additional paid-in capital346,277 328,227 
(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’ equity268,606 311,049 
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)20232022
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 amortization15,377 13,983 
Stock-based compensation17,833 13,317 
Inventory write-downs9,340 — 
Asset impairment charges5,707 507 
Provision for bad debts, net of recoveries1,030 163 
Amortization of debt discount and issuance costs450 — 
Loss on disposal of assets274 156 
Provision for excess and obsolete inventory2,361 (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)
Inventories736 3,379 
Prepaid expenses and other assets3,387 (21,239)
(Decrease) increase in:
Accounts payable and accrued liabilities4,421 4,777 
Income taxes payable(3,808)(1,904)
Customer deposits(2,533)1,343 
Unearned service revenues2,786 (4,863)
Other liabilities367 — 
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 awards217 (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 interest72,310 — 
Payment of contingent consideration for business acquisition(1,098)— 
Net cash provided by (used in) financing activities71,275 (997)
Effect of exchange rate changes on cash and cash equivalents115 (8,427)
Increase (Decrease) in cash and cash equivalents38,975 (84,177)
Cash and cash equivalents, beginning of period37,812 121,989 
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)2023202220232022
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 profit1,623 3,844 12,052 4,600 
Non-GAAP gross profit$51,909 $54,879 $177,051 $180,363 
Gross margin, as reported50.9 %49.1 %46.0 %50.8 %
Non-GAAP gross margin52.5 %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 profit1,622 3,844 12,052 4,600 
Non-GAAP adjustments to operating expenses7,632 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 profit1,622 3,844 12,052 4,600 
Non-GAAP adjustments to operating expenses7,632 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 adjustments0.06 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)2023202220232022
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 
EBITDA3,702 5,982 (35,337)(4,154)
Other (income) expense, net1,303 (159)1,178 (3,236)
Stock-based compensation5,557 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)2023202220232022
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)2023202220232022
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)2023202220232022
Hardware$66,640 $70,322 $234,124 $220,919 
Software12,178 12,943 44,448 44,361 
Service20,022 20,594 80,259 80,485 
Total Sales$98,840 $103,859 $358,831 $345,765 
Hardware as a percentage of total sales67.4 %67.7 %65.2 %63.9 %
Software as a percentage of total sales12.3 %12.5 %12.4 %12.8 %
Service as a percentage of total sales20.3 %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 sales17.6 %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)2023202220232022
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 Flow14,748 (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
LowHigh
GAAP gross margin49.0%50.5%
Stock-based compensation0.5%0.5%
Non-GAAP gross margin49.5%51.0%

Fiscal quarter ending March 31, 2024
(in thousands)LowHigh
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
LowHigh
GAAP diluted loss per share range$(0.66)$(0.46)
Stock-based compensation0.190.19
Purchase accounting intangible amortization0.060.06
Restructuring and other costs0.110.11
Non-GAAP tax adjustments0.100.10
Non-GAAP diluted loss per share$(0.20)$0.00

v3.24.0.1
Cover Document
Feb. 27, 2024
Cover [Abstract]  
Document Type 8-K
Entity Registrant Name FARO TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code FL
Entity File Number 0-23081
Entity Tax Identification Number 59-3157093
Entity Address, Address Line One 125 Technology Park
Entity Address, City or Town Lake Mary
Entity Address, State or Province FL
Entity Address, Postal Zip Code 32746
City Area Code 407
Local Phone Number 333-9911
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $.001
Trading Symbol FARO
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0000917491
Document Period End Date Feb. 27, 2024
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