FARO Technologies(FARO) - 2025 Q1 - Quarterly Report

Restructuring and Operational Changes - FARO Technologies reported a total restructuring charge of $26.7 million since the approval of the Integration Plan, with cash payments of$10.4 million primarily for severance and related benefits[89]. - The company completed its Restructuring Plan actions as of March 31, 2023, with total payments of $24.8 million, mainly for severance and related benefits[88]. - The 2024 Restructuring Plan aims to improve operating performance and streamline operations, particularly in underperforming countries due to economic challenges in the manufacturing and construction sectors[90]. - FARO Technologies expects to recognize$0.1 million in employee severance and other costs associated with the 2024 Restructuring Plan in Q1 2025[91]. - The company has transitioned manufacturing services to Sanmina, which is expected to support volume requirements during 2025[86]. - The company has abandoned 17,000 square feet of unused manufacturing space in Exton, Pennsylvania, as part of its restructuring efforts[88]. - FARO Technologies is focused on consolidating its cloud-based offerings into a single customer platform to enhance operational efficiency[89]. Financial Performance - Total sales for the three months ended March 31, 2025, were $82.9 million, a decrease of$1.4 million or 1.7% compared to $84.2 million for the same period in 2024[99]. - Gross profit increased by$3.9 million, or 9.1%, to $47.2 million for the three months ended March 31, 2025, with a gross margin of 57.0$17.3 million, an increase from $16.7 million in the same period of 2024[93]. - Research and development expenses rose by$0.5 million, or 5.1%, to $9.5 million for the three months ended March 31, 2025, representing 11.4$5.8 million, or 14.6%, to $33.8 million for the three months ended March 31, 2025, accounting for 40.8$0.9 million, compared to a net loss of $7.3 million for the same period in 2024[108]. - Cash and cash equivalents increased by$3.7 million to $92.4 million at March 31, 2025, from$88.7 million at December 31, 2024[109]. Currency and Interest Rate Exposure - As of March 31, 2025, over 61% of the company's revenue was invoiced in foreign currencies, with approximately 42% of its assets denominated in foreign currencies[121]. - The company had short-term investments of $10.2 million and cash equivalents of$20.3 million, all denominated in U.S. dollars[122]. - The company does not believe that a 5% increase or decrease in interest rates would materially affect its business or financial condition[124]. - The company has not utilized off-balance sheet financial instruments for hedging foreign currency exchange rate exposure as of March 31, 2025[121]. - Future investment income may fall short of expectations due to changes in interest rates, potentially leading to losses in principal[123]. - The company’s exposure to foreign exchange risks may increase if the percentage of non-U.S. dollar revenues from international sales rises[121]. - Fixed rate securities may see a negative impact on market value due to rising interest rates, while floating rate securities may yield less income if rates fall[123]. Inflation and Economic Impact - Rising general inflation has negatively impacted the company's cost of sales and operating expenses, affecting customer purchasing power[125]. - The impact of future inflation fluctuations on the company's operations cannot be accurately predicted[125]. Other Information - The company released the first phase of FARO Sphere to customers in Q2 2022, with FARO Sphere XG announced on October 23, 2023, enhancing cloud-based software offerings[92]. - Interest expense for the three months ended March 31, 2025, was $0.9 million, compared to$0.8 million for the same period in 2024[104]. - The company has not experienced changes in critical accounting policies since its last annual report[119].