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FARO Announces Third Quarter Financial Results

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FARO Technologies reported its third quarter 2024 financial results. The company achieved revenue of $82.6 million, at the upper end of its guidance range. Gross margin was 55.7%, with a non-GAAP gross margin of 56.1%, both above guidance. The net loss was $0.3 million, or $(0.02) per share, while non-GAAP EPS was $0.21, exceeding expectations. Cash flow from operations was $2.6 million, and the company repurchased $10 million in shares. Operating expenses decreased to $43.8 million, with non-GAAP operating expenses at $40.1 million. Adjusted EBITDA improved to $8.9 million, or 10.7% of revenue. Looking forward, FARO expects fourth-quarter revenue between $88 and $96 million and non-GAAP EPS between $0.32 and $0.52. The company remains focused on growth initiatives despite economic challenges.

FARO Technologies ha comunicato i risultati finanziari del terzo trimestre 2024. L'azienda ha raggiunto un fatturato di 82,6 milioni di dollari, al limite superiore della sua previsione. Il margine lordo è stato del 55,7%, con un margine lordo non-GAAP del 56,1%, entrambi superiori alle attese. La perdita netta è stata di 0,3 milioni di dollari, corrispondente a $(0,02) per azione, mentre l'EPS non-GAAP è stato di 0,21 dollari, superando le aspettative. Il flusso di cassa dalle operazioni è stato di 2,6 milioni di dollari e l'azienda ha riacquistato 10 milioni di dollari in azioni. Le spese operative sono diminuite a 43,8 milioni di dollari, con spese operative non-GAAP pari a 40,1 milioni di dollari. L'EBITDA rettificato è migliorato a 8,9 milioni di dollari, ovvero 10,7% del fatturato. Nello sguardo al futuro, FARO prevede un fatturato per il quarto trimestre compreso tra 88 e 96 milioni di dollari e un EPS non-GAAP tra 0,32 e 0,52 dollari. L'azienda rimane concentrata sulle iniziative di crescita nonostante le sfide economiche.

FARO Technologies ha dado a conocer sus resultados financieros del tercer trimestre de 2024. La compañía alcanzó un ingreso de 82,6 millones de dólares, en el extremo superior de su rango de guía. El margen bruto fue del 55,7%, con un margen bruto no-GAAP del 56,1%, ambos por encima de las expectativas. La pérdida neta fue de 0,3 millones de dólares, o $(0,02) por acción, mientras que el EPS no-GAAP fue de 0,21 dólares, superando las expectativas. El flujo de efectivo de las operaciones fue de 2,6 millones de dólares, y la compañía repurchaseó 10 millones de dólares en acciones. Los gastos operativos disminuyeron a 43,8 millones de dólares, con gastos operativos no-GAAP en 40,1 millones de dólares. El EBITDA ajustado mejoró a 8,9 millones de dólares, o 10,7% de los ingresos. Mirando hacia adelante, FARO espera ingresos del cuarto trimestre entre 88 y 96 millones de dólares y un EPS no-GAAP entre 0,32 y 0,52 dólares. La empresa sigue enfocada en iniciativas de crecimiento a pesar de los desafíos económicos.

FARO Technologies2024년 제3분기 재무 결과를 발표했습니다. 이 회사는 8천260만 달러매출을 달성하여 가이던스 범위의 상한선에 도달했습니다. 총 이익률55.7%였으며, 비GAAP 총 이익률56.1%로, 두 수치 모두 예상치를 초과했습니다. 순손실30만 달러, 즉 $(0.02) 주당으로 나타났고, 비GAAP EPS0.21 달러로 예상치를 초과했습니다. 영업으로부터의 현금 흐름260만 달러였으며, 회사는 1천만 달러의 주식을 재구매했습니다. 운영 비용은 4천380만 달러로 감소했으며, 비GAAP 운영 비용은 4천100만 달러였습니다. 조정된 EBITDA는 890만 달러매출의 10.7%로 개선되었습니다. 앞으로 FARO는 4분기 매출이 8천800만에서 9천600만 달러가 될 것으로 예상하고 있으며, 비GAAP EPS는 0.32에서 0.52 달러 사이로 예상하고 있습니다. 회사는 경제적 도전 과제에도 불구하고 성장 이니셔티브에 집중하고 있습니다.

FARO Technologies a annoncé ses résultats financiers du troisième trimestre 2024. L'entreprise a réalisé un chiffre d'affaires de 82,6 millions de dollars, au niveau supérieur de ses prévisions. La marge brute était de 55,7%, avec une marge brute non-GAAP de 56,1%, toutes deux supérieures aux prévisions. La perte nette s'élevait à 0,3 million de dollars, soit $(0,02) par action, tandis que l'EPS non-GAAP était de 0,21 dollar, dépassant les attentes. Le flux de trésorerie provenant des opérations était de 2,6 millions de dollars, et l'entreprise a racheté 10 millions de dollars d'actions. Les dépenses d'exploitation ont diminué à 43,8 millions de dollars, avec des dépenses d'exploitation non-GAAP à 40,1 millions de dollars. L'EBITDA ajusté s'est amélioré à 8,9 millions de dollars, soit 10,7% du chiffre d'affaires. En regardant vers l'avenir, FARO s'attend à un chiffre d'affaires du quatrième trimestre compris entre 88 et 96 millions de dollars et un EPS non-GAAP compris entre 0,32 et 0,52 dollars. L'entreprise reste concentrée sur des initiatives de croissance malgré les défis économiques.

FARO Technologies hat die Finanzergebnisse für das dritte Quartal 2024 veröffentlicht. Das Unternehmen erzielte Einnahmen von 82,6 Millionen US-Dollar, am oberen Ende der Prognose. Die Bruttomarge betrug 55,7%, mit einer non-GAAP Bruttomarge von 56,1%, beide über den Erwartungen. Der netto Verlust belief sich auf 0,3 Millionen US-Dollar, oder $(0,02) pro Aktie, während das non-GAAP EPS bei 0,21 US-Dollar lag, was die Erwartungen übertraf. Der Cashflow aus operativer Tätigkeit betrug 2,6 Millionen US-Dollar, und das Unternehmen hat 10 Millionen US-Dollar an Aktien zurückgekauft. Die Betriebsausgaben sanken auf 43,8 Millionen US-Dollar, mit non-GAAP Betriebsausgaben von 40,1 Millionen US-Dollar. Das angepasste EBITDA verbesserte sich auf 8,9 Millionen US-Dollar, oder 10,7% der Einnahmen. Blickt man in die Zukunft, erwartet FARO im vierten Quartal Einnahmen zwischen 88 und 96 Millionen US-Dollar und ein non-GAAP EPS zwischen 0,32 und 0,52 US-Dollar. Das Unternehmen bleibt trotz wirtschaftlicher Herausforderungen auf Wachstumsinitiativen fokussiert.

Positive
  • Revenue of $82.6 million, at the upper end of guidance.
  • Gross margin of 55.7%, above guidance.
  • Non-GAAP EPS of $0.21, above guidance.
  • Operating expenses decreased to $43.8 million.
  • Adjusted EBITDA of $8.9 million, or 10.7% of revenue.
  • Share repurchases of $10 million.
Negative
  • Total sales down 5% year-over-year.
  • Net loss of $0.3 million.

Insights

FARO's Q3 results show significant operational improvements despite revenue headwinds. The company achieved $82.6 million in revenue, with notably improved profitability metrics. The 55.7% gross margin represents substantial improvement from 48.0% year-over-year, while adjusted EBITDA margin reached 10.7%, marking the first back-to-back double-digit quarterly performance in nearly a decade.

The transformation is particularly evident in the bottom line, with non-GAAP EPS of $0.21 compared to $0.03 last year. However, the 5% revenue decline and reduced cash position ($88.9 million vs $96.3 million) warrant attention. The $10 million share repurchase demonstrates management's confidence, but may impact financial flexibility.

Q4 guidance suggests continued margin strength but uncertain revenue trajectory, with a wide range of $88-96 million reflecting macroeconomic uncertainties.

  • Revenue of $82.6 million, at the upper end of guidance range
  • Gross margin of 55.7%; Non-GAAP gross margin 56.1%, above guidance range
  • Loss per share of $(0.02); Non-GAAP earnings per share ("EPS") of $0.21, above guidance range
  • Cash flow from operations of $2.6 million
  • Share repurchases of $10 million during the quarter

LAKE MARY, Fla., Nov. 6, 2024 /PRNewswire/ -- FARO® Technologies, Inc. (Nasdaq: FARO), a global leader in 4D digital reality solutions, today announced its financial results for the third quarter ended September 30, 2024.

"I am proud of our ongoing progress in profitability, achieving 55.7% gross margins, GAAP net loss of $0.3 million and $8.9 million of adjusted EBITDA, or 10.7% of revenue, all exceeding our expectations for the third quarter. This marks a significant transformation in our operations over the past year, as its the first time that we have delivered back-to-back double-digit quarterly adjusted EBITDA margins in almost a decade," said Peter Lau, President & Chief Executive Officer. "Looking ahead, we are committed to executing on our growth initiatives, even in a difficult macroeconomic environment. With our recent product launches, including the Quantum X Arm and next generation Focus Premium Max Laser Scanner, we are excited about the actions we are taking to drive organic revenue growth over the longer term."

Third Quarter 2024 Financial Summary

  • Total sales of $82.6 million, down 5% year over year
  • Gross margin of 55.7%, compared to 48.0% in the prior year period
  • Non-GAAP gross margin of 56.1%, compared to 48.9% in the prior year period
  • Operating expenses of $43.8 million, compared to $48.6 million in the prior year period
  • Non-GAAP operating expenses of $40.1 million, compared to $41.5 million in the prior year period
  • Net loss of $0.3 million, or $(0.02) per share compared to net loss of $8.8 million, or $(0.46) per share in the prior year period
  • Non-GAAP net income of $4.0 million, or $0.21 per share compared to non-GAAP net income of $0.5 million, or $0.03 per share in the prior year period
  • Adjusted EBITDA of $8.9 million, or 10.7% of total sales compared to $3.5 million, or 4.1% of total sales in the prior year period
  • Cash, cash equivalents & short-term investments of $88.9 million compared to $96.3 million as of December 31, 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".

Outlook for the Fourth Quarter 2024
For the fourth quarter ending December 31, 2024, FARO currently expects:

  • Revenue in the range of $88 to $96 million
  • Gross margin in the range of 55.6% to 57.1%. Non-GAAP gross margin in the range of 56.0% to 57.5%
  • Operating expenses in the range of $47.4 to $49.4 million. Non-GAAP operating expenses in the range of $40.5 to $42.5 million
  • Net (loss) income per share in the range of ($0.15) to $0.05. Non-GAAP net income per share in the range of $0.32 to $0.52.

Conference Call
The Company will host a conference call to discuss these results on Wednesday, November 6, 2024, at 4:30 p.m. ET. Interested parties can access the conference call by dialing (800) 343-4849 (U.S.) or +1 (785) 424-1699 (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 over 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 (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) per share, exclude the impact of purchase accounting intangible amortization expense, 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 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.

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 fourth 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, filed with the Securities and Exchange Commission on February 28, 2024, as supplemented by the Company's Quarterly Reports on Form 10-Q, 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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended


Nine Months Ended

(in thousands, except share and per share data)

September 30,

2024


September 30,

2023


September 30,

2024


September 30,

2023

Sales








Product

$            61,461


$            66,911


$          186,309


$          199,754

Service

21,102


19,902


62,583


60,237

Total sales

82,563


86,813


248,892


259,991

Cost of sales








Product

26,246


34,640


82,817


112,691

Service

10,341


10,499


32,003


32,587

Total cost of sales

36,587


45,139


114,820


145,278

Gross profit

45,976


41,674


134,072


114,713

Operating expenses








Selling, general and administrative

34,041


37,970


106,224


117,907

Research and development

9,771


8,188


28,628


32,568

Restructuring costs


2,442


616


15,130

Total operating expenses

43,812


48,600


135,468


165,605

Income (loss) from operations

2,164


(6,926)


(1,396)


(50,892)

Other (income) expense








Interest expense

1,023


691


2,615


2,529

Other (income) expense, net

175


(381)


157


(125)

Income (loss) before income tax

966


(7,236)


(4,168)


(53,296)

Income tax expense

1,255


1,520


3,912


4,869

Net loss

$               (289)


$            (8,756)


$            (8,080)


$          (58,165)

Net loss per share - Basic

$              (0.02)


$              (0.46)


$              (0.42)


$              (3.08)

Net loss per share - Diluted

$              (0.02)


$              (0.46)


$              (0.42)


$              (3.08)

Weighted average shares - Basic

19,266,217


18,953,251


19,218,004


18,899,954

Weighted average shares - Diluted

19,266,217


18,953,251


19,218,004


18,899,954

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(in thousands, except share and per share data)

September 30,
2024


December 31,
2023

ASSETS




Current assets:




Cash and cash equivalents

$                 88,913


$                 76,787

Short-term investments


19,496

Accounts receivable, net

83,208


92,028

Inventories, net

39,055


34,529

Prepaid expenses and other current assets

34,252


38,768

Total current assets

245,428


261,608

Non-current assets:




Property, plant and equipment, net

19,544


21,181

Operating lease right-of-use assets

17,208


12,231

Goodwill

110,972


109,534

Intangible assets, net

46,325


47,891

Service and sales demonstration inventory, net

21,436


23,147

Deferred income tax assets, net

24,826


25,027

Other long-term assets

3,891


4,073

Total assets

$               489,630


$               504,692

LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$                 30,438


$                 27,404

Accrued liabilities

25,208


29,930

Income taxes payable

6,881


5,699

Current portion of unearned service revenues

41,495


40,555

Customer deposits

4,282


4,251

Lease liabilities

4,645


5,434

Total current liabilities

112,949


113,273

Loan - 5.50% Convertible Senior Notes

70,096


72,760

Unearned service revenues - less current portion

20,051


20,256

Lease liabilities - less current portion

15,412


10,837

Deferred income tax liabilities

13,048


13,308

Income taxes payable - less current portion

2,510


5,629

Other long-term liabilities

46


23

Total liabilities

234,112


236,086

Commitments and contingencies




Shareholders' equity:




Common stock - par value $0.001, 50,000,000 shares authorized;

20,869,974 and 20,343,359 issued, respectively; 18,908,076 and 18,968,798

outstanding, respectively

20


20

Additional paid-in capital

354,765


346,277

Retained earnings

(17,869)


(9,789)

Accumulated other comprehensive loss

(40,729)


(37,247)

Common stock in treasury, at cost - 1,961,898 and 1,374,561 shares held,

respectively

(40,669)


(30,655)

Total shareholders' equity

255,518


268,606

Total liabilities and shareholders' equity

$               489,630


$               504,692

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Nine Months Ended September 30,

(in thousands)

2024


2023

Cash flows from:




Operating activities:




Net loss

$            (8,080)


$          (58,165)

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




Depreciation and amortization

11,709


11,728

Stock-based compensation

8,471


12,276

Inventory write-downs


8,132

Asset impairment charges


5,333

Deferred income tax (benefit) and other non-cash charges

(1,230)


(82)

Provision for excess and obsolete inventory

861


1,754

Amortization of debt discount and issuance costs

336


294

Loss on disposal of assets

974


(155)

Provisions for bad debts, net of recoveries

966


834

Change in operating assets and liabilities:




Decrease (Increase) in:




Accounts receivable

6,864


1,282

Inventories

(8,097)


(544)

Prepaid expenses and other current assets

4,298


4,047

(Decrease) Increase in:




Accounts payable and accrued liabilities

(1,722)


(2,802)

Income taxes payable

(1,884)


653

Customer deposits

144


(1,534)

Unearned service revenues

778


(1,198)

Other liabilities

(1,033)


567

Net cash provided by (used in) operating activities

13,355


(17,580)

Investing activities:




Purchases of property and equipment

(3,559)


(5,016)

Maturity of short-term investments

20,009


Cash paid for technology development, patents and licenses

(4,822)


(5,071)

Net cash provided by (used in) investing activities

11,628


(10,087)

Financing activities:




Payments on finance leases

(135)


(154)

Cash settlement of equity awards


(89)

Repurchases of common stock

(10,014)


Proceeds from issuance of 5.50% Convertible Senior Notes, due 2028, net of discount,

issuance cost and accrued interest


72,310

Repayment of 5.50% Convertible Senior Notes, due 2028

(2,685)


Payment of contingent consideration for business acquisition


(1,098)

Net cash (used in) provided by financing activities

(12,834)


70,969

Effect of exchange rate changes on cash and cash equivalents

(23)


(1,195)

Increase in cash and cash equivalents

12,126


42,107

Cash and cash equivalents, beginning of period

76,787


37,812

Cash and cash equivalents, end of period

$            88,913


$            79,919

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)



Three Months Ended September 30,


Nine Months Ended September 30,

(dollars in thousands, except per share data)

2024


2023


2024


2023

Gross profit, as reported

$        45,976


$        41,674


$      134,072


$      114,713

Stock-based compensation (1)

381


280


1,085


972

Restructuring and other costs (2)


456


2


1,326

Non-GAAP adjustments to gross profit

381


736


1,087


2,298

Non-GAAP gross profit

$        46,357


$        42,410


$      135,159


$      117,011

Gross margin, as reported

55.7 %


48.0 %


53.9 %


44.1 %

Non-GAAP gross margin

56.1 %


48.9 %


54.3 %


45.0 %









Selling, general and administrative, as reported

$        34,041


$        37,970


$      106,224


$      117,907

Stock-based compensation (1)

(1,858)


(3,588)


(5,996)


(9,710)

Restructuring and other costs (2)



(3,453)


Purchase accounting intangible amortization

(283)


(663)


(1,167)


(2,024)

Non-GAAP selling, general and administrative

$        31,900


$        33,719


$        95,608


$      106,173









Research and development, as reported

$          9,771


$          8,188


$        28,628


$        32,568

Stock-based compensation (1)

(529)


176


(1,390)


(1,594)

Purchase accounting intangible amortization

(1,085)


(501)


(2,089)


(1,541)

Non-GAAP research and development

$          8,157


$          7,863


$        25,149


$        29,433









Operating expenses, as reported

$        43,812


$        48,600


$      135,468


$      165,605

Stock-based compensation (1)

(2,387)


(3,411)


(7,386)


(11,304)

Restructuring and other costs (2)


(2,495)


(4,069)


(16,337)

Purchase accounting intangible amortization

(1,368)


(1,164)


(3,256)


(3,565)

Non-GAAP adjustments to operating expenses

(3,755)


(7,070)


(14,711)


(31,206)

Non-GAAP operating expenses

$        40,057


$        41,530


$      120,757


$      134,399









Income (loss) from operations, as reported

$          2,164


$        (6,926)


$        (1,396)


$      (50,892)

Non-GAAP adjustments to gross profit

381


737


1,087


2,298

Non-GAAP adjustments to operating expenses

3,755


7,070


14,711


31,206

Non-GAAP income (loss) from operations

$          6,300


$              881


$        14,402


$      (17,388)









Net loss, as reported

$            (289)


$        (8,756)


$        (8,080)


$      (58,165)

Non-GAAP adjustments to gross profit

381


737


1,087


2,298

Non-GAAP adjustments to operating expenses

3,755


7,070


14,711


31,206

Income tax effect of non-GAAP adjustments (3)

(819)


(1,952)


(3,532)


(10,409)

Other tax adjustments (3)

967


3,358


4,861


17,700

Non-GAAP net income (loss)

$          3,995


$              457


$          9,047


$      (17,370)









Net loss per share - Diluted, as reported

$           (0.02)


$           (0.46)


$           (0.42)


$           (3.08)

Stock-based compensation (1)

0.14


0.19


0.44


0.65

Restructuring and other costs (2)


0.16


0.21


0.93

Purchase accounting intangible amortization

0.08


0.06


0.17


0.19

Income tax effect of non-GAAP adjustments (3)

(0.04)


(0.10)


(0.18)


(0.55)

Other tax adjustments (3)

0.05


0.18


0.25


0.94

Non-GAAP net income (loss) per share - Diluted

$             0.21


$             0.03


$             0.47


$           (0.92)



(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 associated with the Restructuring Plan, Integration Plan, and executive transitions.



(3)

The Income tax effect of non-GAAP adjustments is calculated by applying a statutory tax rate to Non-GAAP adjustments, including Stock-based compensation, Restructuring and other costs, non-recurring Inventory reserve charges, and Purchase accounting intangible amortization and fair value adjustments. In addition, when estimating our Non-GAAP income tax rate, we exclude the impact of items that impact our reported income tax rate that we do not believe are representative of our ongoing operating results, including the impact of valuation allowances we are currently recording in certain jurisdictions and certain discrete items such as adjustments to uncertain tax position reserves, as these items are difficult to predict and can impact our effective income tax rate. Specifically, Other tax adjustments during the nine months ended September 30, 2024 were comprised of $4.4 million related to the impact of valuation allowance adjustments and $0.5 million related to other discrete items. During the three months ended September 30, 2024, Other tax adjustments were comprised of $0.8 million related to the impact of valuation allowance adjustments and $0.2 million related to other discrete items. In 2023, Other tax adjustments during the nine months ended September 30, 2023 were comprised of $11.2 million related to the impact of valuation allowance adjustments and $6.5 million related to other items, including equity based compensation book to tax differences, non-GAAP adjustments impact on Global intangible low-taxed income and Prepaid tax on intercompany profit. During the three months ended September 30, 2023, Other tax adjustments were comprised of $2.0 million related to the impact of valuation allowance adjustments and $1.4 million related to other items, including equity based compensation book to tax differences, non-GAAP adjustments impact on Global intangible low-taxed income and Prepaid tax on intercompany profit.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)



Three Months Ended September 30,


Nine Months Ended September 30,

(in thousands)

2024


2023


2024


2023

Net loss

$            (289)


$        (8,756)


$        (8,080)


$      (58,165)

Interest expense, net

1,023


691


2,615


2,529

Income tax expense

1,255


1,520


3,912


4,869

Depreciation and amortization

3,921


3,803


11,709


11,728

EBITDA

5,910


(2,742)


10,156


(39,039)

Other expense (income), net

175


(381)


157


(125)

Stock-based compensation

2,768


3,692


8,471


12,276

Restructuring and other costs (1)


2,951


4,071


17,663

Adjusted EBITDA

$          8,853


$          3,520


$        22,855


$        (9,225)

Adjusted EBITDA margin (2)

10.7 %


4.1 %


9.2 %


(3.5) %



(1)   

On February 14, 2020, our Board of Directors approved 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 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 associated with the Restructuring Plan, Integration Plan, and executive transitions.



(2) 

Calculated as Adjusted EBITDA as a percentage of total sales.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

KEY SALES MEASURES

(UNAUDITED)



Three Months Ended September 30,


Nine Months Ended September 30,

(in thousands)

2024


2023


2024


2023

Total sales to external customers as reported








Americas (1)

$          40,353


$          41,033


$        117,748


$        124,734

EMEA (1)

25,461


25,621


75,496


74,641

APAC (1)

16,749


20,159


55,648


60,616


$          82,563


$          86,813


$        248,892


$        259,991










Three Months Ended September 30,


Nine Months Ended September 30,

(in thousands)

2024


2023


2024


2023

Total sales to external customers in constant currency (2)








Americas (1)

$          40,707


$          40,879


$        118,126


$        124,682

EMEA (1)

24,278


24,954


73,127


73,060

APAC (1)

16,497


19,883


55,441


58,437


$          81,482


$          85,716


$        246,694


$        256,179



(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.

 


Three Months Ended September 30,


Nine Months Ended September 30,

(in thousands)

2024


2023


2024


2023









Hardware

$        50,301


$        55,706


$      152,968


$      167,484

Software

11,159


11,205


33,341


32,270

Service

21,103


19,902


62,583


60,237

Total Sales

$        82,563


$        86,813


$      248,892


$      259,991









Hardware as a percentage of total sales

60.9 %


64.2 %


61.5 %


64.4 %

Software as a percentage of total sales

13.5 %


12.9 %


13.4 %


12.4 %

Service as a percentage of total sales

25.6 %


22.9 %


25.1 %


23.2 %









Total Recurring Revenue (3)

$        17,431


$        17,056


$        51,287


$        50,137

Recurring revenue as a percentage of total sales

21.1 %


19.6 %


20.6 %


19.3 %



(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 September 30,


Nine Months Ended September 30,

(in thousands)

2024


2023


2024


2023

Net cash provided by (used in) operating activities

$              2,568


$            (4,373)


$            13,355


$          (17,580)

Purchases of property and equipment

(1,871)


(704)


(3,559)


(5,016)

Cash paid for technology development, patents and licenses

(1,430)


(1,455)


(4,822)


(5,071)

Free Cash Flow

(733)


(6,532)


4,974


(27,667)

Restructuring and other cash payments (1)

343


6,279


3,100


11,014

Adjusted Free Cash Flow

$               (390)


$               (253)


$              8,074


$          (16,653)



(1)  

On February 7, 2023, our Board of Directors approved 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 associated with the Restructuring Plan, Integration Plan, and executive transitions.

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF OUTLOOK - GAAP TO NON-GAAP



Fiscal quarter ending December 31, 2024


Low


High

GAAP gross margin

55.6 %


57.1 %

Stock-based compensation

0.4 %


0.4 %

Non-GAAP gross margin

56.0 %


57.5 %




Fiscal quarter ending December 31, 2024

(in thousands)

Low


High

GAAP operating expenses

$47,400


$49,400

Stock-based compensation

(3,600)


(3,600)

Purchase accounting intangible amortization

(1,100)


(1,100)

Restructuring and other costs

(2,200)


(2,200)

Non-GAAP operating expenses

$40,500


$42,500




Fiscal quarter ending December 31, 2024


Low


High

GAAP diluted earnings per share range

$(0.15)


$0.05

Stock-based compensation

0.21


0.21

Purchase accounting intangible amortization

0.06


0.06

Restructuring and other costs

0.11


0.11

Non-GAAP tax adjustments

0.09


0.09

Non-GAAP diluted earnings per share

$0.32


$0.52

 

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SOURCE FARO

FAQ

What were FARO's third-quarter 2024 earnings results?

FARO reported a net loss of $0.3 million, or $(0.02) per share, and non-GAAP EPS of $0.21.

What was FARO's revenue for the third quarter of 2024?

FARO's revenue for the third quarter of 2024 was $82.6 million.

What is FARO's gross margin for Q3 2024?

FARO's gross margin for Q3 2024 was 55.7%, with a non-GAAP gross margin of 56.1%.

How much did FARO repurchase in shares during the third quarter of 2024?

FARO repurchased $10 million in shares during the third quarter of 2024.

What is FARO's revenue guidance for the fourth quarter of 2024?

FARO expects fourth-quarter 2024 revenue to be between $88 and $96 million.

What is FARO's non-GAAP EPS guidance for Q4 2024?

FARO's non-GAAP EPS guidance for Q4 2024 is between $0.32 and $0.52.

Faro Technologies Inc

NASDAQ:FARO

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Scientific & Technical Instruments
Measuring & Controlling Devices, Nec
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