faro-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-23081

FARO TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Florida			59-3157093
(State or other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

250 Technology Park,	Lake Mary,	Florida	32746
(Address of Principal Executive Offices)			(Zip Code)

(407) 333-9911

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001	FARO	Nasdaq Global Select Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x

There were 18,278,511 shares of the registrant’s common stock outstanding as of August 1, 2022.

Table of Contents

FARO TECHNOLOGIES, INC.

Quarterly Report on Form 10-Q

Quarter Ended June 30, 2022

INDEX


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

a)	Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	3

b)	Condensed Consolidated Statements of Operations (Unaudited) For the Three and Six Months Ended June 30, 2022 and June 30, 2021	4

c)	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) For the Three and Six Months Ended June 30, 2022 and June 30, 2021	5

d)	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2022 and June 30, 2021	6

e)	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) For the Three and Six Months Ended June 30, 2022 and June 30, 2021	7

f)	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	31

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 6.	Exhibits	34

SIGNATURES		35

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except share and per share data)	June 30, 2022 (unaudited)		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	101,969	$	121,989
Accounts receivable, net	70,915		78,523
Inventories, net	44,076		53,145
Prepaid expenses and other current assets	25,248		19,793
Total current assets	242,208		273,450
Non-current assets:
Property, plant and equipment, net	21,109		22,194
Operating lease right-of-use assets	20,154		22,543
Goodwill	79,595		82,096
Intangible assets, net	28,382		25,616
Service and sales demonstration inventory, net	29,692		30,554
Deferred income tax assets, net	19,635		21,277
Other long-term assets	2,174		2,010
Total assets	$	442,949	$	479,740
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	13,635	$	14,199
Accrued liabilities	24,692		28,208
Income taxes payable	6,539		4,499
Current portion of unearned service revenues	36,372		40,838
Customer deposits	6,975		5,399
Lease liabilities	5,867		5,738
Total current liabilities	94,080		98,881
Unearned service revenues - less current portion	22,323		22,350
Lease liabilities - less current portion	16,053		18,648
Deferred income tax liabilities	1,010		1,058
Income taxes payable - less current portion	10,131		11,297
Other long-term liabilities	956		1,047
Total liabilities	144,553		153,281
Commitments and contingencies - See Note 12
Shareholders’ equity:
Common stock - par value $0.001, 50,000,000 shares authorized; 19,651,715 and 19,588,003 issued, respectively; 18,275,364 and 18,205,636 outstanding, respectively	20		20
Additional paid-in capital	306,119		301,061
Retained earnings	55,283		73,544
Accumulated other comprehensive loss	(32,369)		(17,374)
Common stock in treasury, at cost - 1,376,351 and 1,382,367 shares held, respectively	(30,657)		(30,792)
Total shareholders’ equity	298,396		326,459
Total liabilities and shareholders’ equity	$	442,949	$	479,740

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended				Six Months Ended
(in thousands, except share and per share data)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Sales
Product	$	59,702	$	60,275	$	116,432	$	114,910
Service	20,215		21,835		40,141		43,531
Total sales	79,917		82,110		156,573		158,441
Cost of sales
Product	28,169		25,455		52,504		50,259
Service	11,311		11,173		22,607		22,293
Total cost of sales	39,480		36,628		75,111		72,552
Gross profit	40,437		45,482		81,462		85,889
Operating expenses
Selling, general and administrative	36,018		33,594		71,508		66,942
Research and development	12,042		11,760		24,170		23,733
Restructuring costs	1,333		779		1,932		2,303
Total operating expenses	49,393		46,133		97,610		92,978
Loss from operations	(8,956)		(651)

SEC Form 10-Q filed by FARO Technologies Inc.