FARO Technologies(US:FARO)2023-08-01 16:00Restructuring and Charges - FARO Technologies reported total restructuring charges of $21.4 million related to its Integration Plan as of June 30, 2023[110]. - The company expects to incur total pre-tax charges between $22 million to $28 million through the end of fiscal year 2023, targeting annualized savings of approximately $20 million to $30 million[110]. - The company has paid $24.8 million in severance and related benefits since the approval of its Restructuring Plan[109]. - FARO's strategic plans include a focus on efficiency and cost-saving efforts, including a planned decrease in total headcount[108]. - The company has incurred employee severance costs of $3.1 million in Q2 2023, compared to $1.0 million in Q2 2022[112]. - Restructuring costs increased to $8.5 million for the three months ended June 30, 2023, from $1.3 million in the same period of 2022[128]. - Restructuring costs rose to $12.7 million for the six months ended June 30, 2023, from $1.9 million in the prior year, due to the Integration Plan[139]. Financial Performance - Total sales increased by $8.3 million, or 10.4%, to $88.2 million for the three months ended June 30, 2023, compared to $79.9 million for the same period in 2022[124]. - Total sales increased by $16.6 million, or 10.6%, to $173.2 million for the six months ended June 30, 2023, compared to $156.6 million for the same period in 2022[134]. - Total product sales rose by $16.4 million, or 14.1%, to $132.8 million, driven by demand for Quantum Max Arm products and GeoSLAM product sales[134]. - Net loss was $28.2 million for the three months ended June 30, 2023, compared to a net loss of $8.6 million for the prior year period[133]. - Net loss was $49.4 million for the six months ended June 30, 2023, compared to a net loss of $18.3 million for the same period in 2022[144]. Revenue and Profitability - Revenue from current software products was $10.8 million for the three months ended June 30, 2023, up from $10.5 million in the same period of 2022[115]. - Recurring revenue decreased to $16.4 million for the three months ended June 30, 2023, from $17.1 million in the same period of 2022[115]. - Gross profit decreased by $7.1 million, or 17.6%, to $33.3 million for the three months ended June 30, 2023, with a gross margin of 37.8%[125]. - Gross profit decreased by $8.4 million, or 10.3%, to $73.0 million, with gross margin declining by 9.8 percentage points to 42.2%[135]. - Selling, general and administrative expenses increased by $2.6 million, or 7.1%, to $38.6 million for the three months ended June 30, 2023[126]. - Selling, general and administrative expenses increased by $8.4 million, or 11.8%, to $79.9 million, primarily due to higher personnel costs from recent acquisitions[136]. - Research and development expenses decreased by $0.3 million, or 2.5%, to $11.7 million for the three months ended June 30, 2023[127]. - Research and development expenses remained relatively stable at $24.4 million, with a decrease in R&D expenses as a percentage of sales to 14.1%[138]. Cash Flow and Investments - Cash and cash equivalents increased by $30.4 million to $68.2 million as of June 30, 2023, primarily driven by the issuance of Notes[145]. - Cash used in operating activities was $13.2 million, compared to $3.3 million in the prior year, mainly due to a larger net loss[146]. - Cash provided by financing activities was $71.9 million during the six months ended June 30, 2023, compared to cash used of $1.3 million in the prior year, driven by the issuance of Notes[148]. - The company had short-term investments totaling $20.2 million in U.S. Treasury obligations as of June 30, 2023, aimed at capital preservation[158]. Market and Operational Insights - FARO's revenue is primarily derived from the sale of measurement equipment and related software, recognized upon shipment[104]. - The company has transitioned to a subscription-based business model for its software offerings, aiming to enhance operational effectiveness[98]. - FARO's manufacturing services agreement with Sanmina Corporation is expected to support production capacity during 2023[106]. - The company operates in international markets with sales offices in 20 countries, including the United States, Germany, and China[105]. - The company anticipates a positive impact on gross margins in 2024 due to a shift in supply chain sourcing to Southeast Asia[125]. - As of June 30, 2023, 58% of the company's revenue was invoiced in foreign currencies, with 61% of its assets denominated in foreign currencies, indicating significant exposure to foreign exchange risks[157]. - The company does not anticipate that a 100 basis point change in interest rates would materially affect its business or financial condition[160]. - Rising general inflation has negatively impacted the company's cost of sales and operating expenses, potentially leading to reduced customer orders[161]. - There were no changes in the company's internal control over financial reporting that materially affected its operations during the quarter ended June 30, 2023[166]. Acquisitions - The company acquired GeoSLAM on September 1, 2022, and SiteScape on December 1, 2022, to enhance its mobile scanning solutions and LiDAR technology[117][118].