FARO Technologies(US:FARO)2021-07-27 16:00Financial Performance - Total sales increased by $21.5 million, or 35.6%, to $82.1 million for the three months ended June 30, 2021, compared to $60.6 million for the same period in 2020 [77]. - Total product sales rose by $18.0 million, or 42.6%, to $60.3 million for the three months ended June 30, 2021, driven by recovery from the COVID-19 pandemic [77]. - Gross profit increased by $16.6 million, or 57.4%, to $45.5 million for the three months ended June 30, 2021, with gross margin rising to 55.4% from 47.7% in the prior year [77]. - Total sales for the six months ended June 30, 2021, increased by $18.3 million, or 13.1%, to $158.4 million from $140.1 million in the prior year [80]. - Gross profit for the six months ended June 30, 2021, increased by $13.1 million, or 18.0%, to $85.9 million, with gross margin rising to 54.2% from 51.9% [80]. - Net loss was $1.2 million for the three months ended June 30, 2021, compared to a net loss of $8.9 million for the same period in 2020 [79]. - Net loss was $4.4 million for the six months ended June 30, 2021, a significant improvement from a net loss of $23.8 million for the prior year period [83]. Expenses and Charges - FARO Technologies recorded pre-tax charges of approximately $49 million in Q4 2019 related to its new strategic plan, including $21.2 million for goodwill impairment and $12.8 million for excess and obsolete inventory [72]. - The company recorded a pre-tax charge of approximately $15.8 million during the year ended December 31, 2020, primarily for severance and related benefits [74]. - FARO expects to incur a cash charge of approximately $6 million in the second half of 2021 related to a manufacturing services agreement with Sanmina Corporation [74]. - FARO aims for a target EBITDA margin of 20%, which may result in additional pre-tax charges ranging from $5 million to $15 million for fiscal year 2021 [74]. - Selling, general and administrative expenses increased by $3.6 million, or 11.8%, to $33.6 million for the three months ended June 30, 2021, while as a percentage of sales, it decreased to 40.9% from 49.6% [79]. - Selling, general and administrative expenses for the six months ended June 30, 2021, increased by $0.5 million, or 0.9%, to $66.9 million, with expenses as a percentage of sales decreasing to 42.3% from 47.4% [82]. - Research and development expenses increased by $1.6 million, or 15.5%, to $11.8 million for the three months ended June 30, 2021, with expenses as a percentage of sales decreasing to 14.3% from 16.8% [79]. - Research and development expenses increased by $3.1 million, or 15.2%, to $23.7 million for the six months ended June 30, 2021, compared to $20.6 million for the same period in 2020 [83]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $52.3 million to $133.3 million at June 30, 2021, primarily due to net cash used in operating and investing activities [85]. - Cash used in operating activities was $12.3 million during the six months ended June 30, 2021, compared to cash provided by operations of $16.1 million during the same period in 2020 [85]. - Cash used in investing activities was $37.8 million for the six months ended June 30, 2021, compared to cash provided by investing activities of $23.4 million in the prior year [85]. - The company believes that its working capital and anticipated cash flow from operations will be sufficient to fund long-term liquidity operating requirements for at least the next 12 months [85]. Foreign Exchange and Taxation - As of June 30, 2021, 61% of revenue was invoiced in foreign currencies, and 34% of assets were denominated in foreign currencies, indicating significant foreign exchange exposure [89]. - The effective tax rate was 31.4% for the six months ended June 30, 2021, compared to 19.1% in the prior year period, influenced by a lower pretax loss and changes in the geographic mix of pretax income [83]. Restructuring and Strategic Plans - The company plans to decrease total headcount by approximately 500 employees as part of its restructuring plan, expected to be completed by the end of 2021 [72]. - FARO's restructuring plan includes a focus on efficiency and cost-saving efforts to improve operating performance [72]. - The company had $40.9 million in purchase commitments expected to be delivered within the next 12 months as of June 30, 2021 [86]. - No stock repurchases were made during the six-month period ended June 30, 2021, leaving $18.3 million remaining under the share repurchase program [85]. Operations and Global Presence - The company operates manufacturing facilities in Switzerland, Singapore, and Florida to support customer orders across different regions [72]. - FARO's revenue is primarily derived from the sale of measurement equipment and related software, recognized upon shipment [72]. - The company has a global presence with sales offices in 20 countries, including the United States, Germany, and China [72]. - The company has not utilized off-balance sheet financial instruments to hedge foreign currency exchange rate exposure in the past [72].