Stock News Recap: FARO® (NASDAQ: FARO)

FARO® (NASDAQ: FARO) stock recently located move of -28.01% off 52-week high price and identified change of 9.51% away from 52-week low price. FARO stock has been recorded -17.10% away from 50 day moving average and -13.37% away from 200 day moving average. Moving closer, we can see that shares have been trading -6.53% off 20-day moving average. It has market worth of $848.06M.

FARO® (NASDAQ:FARO), the world’s most trusted source for 3D measurement and imaging solutions for 3D factory, construction BIM, 3D design, public safety forensics, and photonics applications, today announced its financial results for the third quarter and nine months ended September 30, 2018. Highlights from the first nine months of 2018 results included:

Continued our double-digit year-over-year sales growth at 14.3% year-to-date

Decreased operating expenses as a percentage of sales by 1.1 pts.

Continued our new product drumbeat with 14 new product releases

Increased ending sales headcount by 11.3% with improved salesforce efficiency

“We continued our new product drumbeat by releasing eight new important products since the start of July, highlighted by the introduction of our 6DoF Vantage Laser Tracker platform with 6Probe to expand the reach of large volume measurement,” stated Dr. Simon Raab, President and Chief Executive Officer.  “We continued our trend of year-over-year double-digit sales growth for a fifth consecutive quarter and invested in increasing our sales headcount while maintaining our trailing 12 months orders per sales FTE metric from the prior quarter. We added to our vertical footprint with a new Photonics vertical through a combination of acquisitions aimed at being a technology leader in laser steering. We enter our important fourth quarter with the most technically advanced and expansive product portfolio in our history.”

Nine months ended September 30, 2018

Total sales increased by $36.3 million, or 14.3%, to $290.8 million for the nine months ended September 30, 2018 from $254.5 million for the nine months ended September 30, 2017.  Our sales increase was primarily driven by strong growth of units sold in our construction BIM and emerging verticals segments, higher average selling prices in our 3D factory segment, and service revenue growth.  New order bookings increased by $36.7 million, or 13.8%, to $303.1 million for the nine months ended September 30, 2018 from $266.4 million for the nine months ended September 30, 2017.

During the third quarter of 2018, we performed an analysis of our inventory reserves in connection with our recent new product introductions and acquisitions and recorded a charge of $4.7 million, or approximately 5% of total inventory, increasing our reserve for excess and obsolete inventory based on the determination that quantities on-hand for certain legacy products exceeded our revised sales projections.

Gross margin increased to 56.3% for the first nine months of 2018, compared with 56.0% for the same prior year period mostly due to higher average selling prices and improvements in manufacturing efficiencies offset partly by the increase in our inventory reserve during the third quarter.  Excluding the $4.7 million increase in the inventory reserve during the third quarter of 2018, gross margin would have been 58.0%, up 2.0 percentage points compared with the same prior year period.

Net loss for the first nine months of 2018 was $0.8 million or a loss of $0.05 per share, compared with a net loss of $3.5 million or loss of $0.21 per share for the first nine months of 2017. Excluding the $4.7 million increase in the inventory reserve during the third quarter of 2018, net income would have been $3.2 million or $0.19 per share, up $0.40 per share compared with the same prior year period.

Third Quarter 2018

Total sales increased by $9.4 million, or 10.5%, to $99.7 million for the quarter ended September 30, 2018 from $90.3 million for the quarter ended September 30, 2017. Our third quarter sales increase was primarily driven by higher units sold and average selling prices across all segments, highlighted by a 17.4% year-over-year sales growth for our Asia Pacific region.  We entered the third quarter last year with additional order backlog of approximately $5 million between construction BIM and public safety forensics, as demand for our new Focus laser scanner models exceeded our production capacity at that time.  We shipped this additional backlog in the third quarter last year which shifted the timing of our quarterly sales with the third quarter in 2017 driven higher than our typical seasonality.

New order bookings increased by $10.0 million, or 11.0%, to $100.5 million for the quarter ended September 30, 2018 from $90.5 million for the quarter ended September 30, 2017. With our trailing 12 months new order bookings of $413.7 million and sales FTE headcount at 586, our trailing 12 months orders per sales FTE metric was approximately $706,000, same as prior quarter.

Gross margin was 52.5% for the third quarter of 2018, compared with 57.7% for the same prior year period, primarily driven by the increase in the inventory reserve, the product mix of used demo sales, and lower service margin. Excluding the $4.7 million increase in the inventory reserve, gross margin would have been 57.2%, down 0.5 percentage points compared with the same prior year period.

Net loss was $2.5 million or loss of $0.15 per share for the third quarter of 2018, compared with net income of $1.6 million or $0.10 per share for the third quarter last year. Excluding the $4.7 million increase in the inventory reserve, net income would have been $1.5 million or $0.09 per share, down $0.01 per share compared with the same prior year period.

As of September 30, 2018, cash and short-term investments totaled $135.0 million, of which $71.4 million was held by foreign subsidiaries.

The Technology sector company, FARO Technologies noticed change of 0.30% to $50.54 along volume of 79963 shares in recent session compared to an average volume of 72.33K. The stock observed return of 3.52% in 5 days trading activity. The stock was at -18.55% over one month performance. FARO’s shares are at -25.01% for the quarter and driving a -2.43% return over the course of the past year and is now at 7.53% since this point in 2018.

The average volatility for the week at 5.92% and for month was at 4.66%. There are 16.78M shares outstanding and 16.66M shares are floated in market. Right now the stock beta is 1.69.

About the Author

Kyle Webster
Kyle Webster
Kyle Webster is a self taught investor and follows the value investing approach to picking stocks. He possesses over 10 years of investment experience, an M.B.A. from Louisiana State University, and is also certified in Risk Management Assurance. Kyle is a Certified Internal Auditor, Data Miner, and author with a career broadly spanning over multiple business areas. He has exploited those observations and developed investment tactics within a fundamentally sound long-term investment strategy. He currently covers Research News category for our site. He can be reached via Email Contact -  kyle@mostvolatilestocks.com.

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