Revenue of $84.2 million, at the upper end of guidance range Q1 loss per share of $(0.38); Non-GAAP earnings per share ("EPS") of $0.09, above guidance range Cash flow from operations of $6.6 million LAKE MARY, Fla., May 1, 2024 /PRNewswire/ -- FARO® Technologies, Inc. (NASDAQ:FARO), a global leader in 4D digital reality solutions, today announced its financial results for the first quarter ended March 31, 2024. "We're pleased with our strong start to the year, with our first quarter financial performance providing a solid foundation from which we expect to continue to invest in our strategic initiatives within our core markets," said Peter Lau, President & Chief Executive Officer. "GAAP loss per share of $(0.38) and non-GAAP EPS of $0.09 exceeded the high end of our guidance range. GAAP net loss of $7.3 million and Adjusted EBITDA of $5.6 million, or 6.6% of revenue, demonstrates the progress we continue to make towards our aspirational financial goals. In addition, we again expanded our cash position by generating $6.6 million of operating cash flow in the quarter, driven by profitability and efficiencies in working capital." First Quarter 2024 Financial Summary Total sales of $84.2 million, down 1% year over year Gross margin of 51.4%, compared to 46.7% in the prior year period Non-GAAP gross margin of 51.8%, compared to 47.6% in the prior year period Operating expenses of $48.6 million, compared to $58.3 million in the prior year period Non-GAAP operating expenses of $40.7 million, compared to $48.8 million in the prior year period Net loss of $7.3 million, or $(0.38) per share compared to net loss of $21.2 million, or $(1.12) per share in the prior year period Non-GAAP net income of $1.7 million, or $0.09 per share compared to non-GAAP net loss of $7.1 million, or $(0.38) per share in the prior year period Adjusted EBITDA of $5.6 million, or 6.6% of total sales compared to negative $5.5 million, or 6.5% of total sales in the prior year period Cash, cash equivalents & short-term investments of $99.3 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 Second Quarter 2024 For the second quarter ending June 30, 2024, FARO currently expects: Revenue in the range of $79 to $87 million Gross margin in the range of 50.5% to 52.0%. Non-GAAP gross margin in the range of 51.0% to 52.5% Operating expenses in the range of $46 to $48 million. Non-GAAP operating expenses in the range of $41 to $43 million Net loss per share in the range of ($0.43) to ($0.23). Non-GAAP net loss to net income per share in the range of $(0.08) to $0.12. Conference Call The Company will host a conference call to discuss these results on Thursday, May 2, 2024, at 8:00 a.m. ET. Interested parties can access the conference call by dialing (888) 632-3384 (U.S.) or +1 (785) 424-1794 (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-PresentationsA 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, 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. In our first 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 second 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 (in thousands, except share and per share data) March 31, 2024 March 31, 2023 Sales Product $            63,536 $            65,240 Service 20,708 19,727 Total sales 84,244 84,967 Cost of sales Product 30,452 33,957 Service 10,485 11,294 Total cost of sales 40,937 45,251 Gross profit 43,307 39,716 Operating expenses Selling, general and administrative 39,593 41,376 Research and development 9,024 12,718 Restructuring costs — 4,238 Total operating expenses 48,617 58,332 Loss from operations (5,310) (18,616) Other (income) expense Interest expense 831 835 Other (expense) income, net 25 (220) Loss before income tax (6,166) (19,231) Income tax expense 1,101 1,933 Net loss $            (7,267) $          (21,164) Net loss per share - Basic $              (0.38) $              (1.12) Net loss per share - Diluted $              (0.38) $              (1.12) Weighted average shares - Basic 19,046,855 18,816,110 Weighted average shares - Diluted 19,046,855 18,816,110   FARO TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share and per share data) March 31,2024 December 31,2023 ASSETS Current assets: Cash and cash equivalents $                 79,518 $                 76,787 Short-term investments 19,763 19,496 Accounts receivable, net 88,908 92,028 Inventories, net 35,376 34,529 Prepaid expenses and other current assets 32,854 38,768 Total current assets 256,419 261,608 Non-current assets: Property, plant and equipment, net 19,855 21,181 Operating ...