Ouch!!!!!
FARO Reports Sales Decline of 31.8% for Q1 2009; Orders Decrease by 41.7%
On Wednesday April 29, 2009, 5:22 pm EDT
LAKE MARY, Fla., April 29 /PRNewswire-FirstCall/ -- FARO Technologies, Inc. (Nasdaq: FARO - News) today announced results for the first quarter ended April 4, 2009. Net loss for the first quarter was $6.6 million, or $0.41 per diluted share, a decrease of $10.0 million, compared to net income of $3.4 million, or $0.20 per diluted share, in the first quarter of 2008.
Sales for the first quarter of 2009 decreased $14.7 million, or 31.8%, to $31.4 million from $46.1 million in the first quarter of 2008. New order bookings for the first quarter were $27.4 million, a decrease of $19.6 million, or 41.7%, compared with $47.0 million in the first quarter of 2008.
"Orders and sales were significantly lower in the first quarter of this year and the weakness was consistent across all regions and verticals. Economic conditions are making it difficult for our customers to make capital goods purchases," stated Jay Freeland, FARO's President & CEO. "However, lead count and demo activity remain strong, and despite the current economic climate, we have a solid balance sheet. As such, we remain committed to finding innovative ways to meet our customers' needs during their tough times and returning FARO to a pattern of growth and profitability."
The Company initiated two reductions-in-force during the quarter, effective February 20, and April 3, 2009, respectively. In aggregate, these initiatives reduced the Company's workforce by approximately 21% and compensation costs on an annualized basis by approximately $11.9 million. Total severance costs incurred in the quarter were approximately $1.7 million.
Gross margin for the first quarter of 2009 was 51.7%, compared to 60.1% in the first quarter of 2008. Gross margin decreased primarily due to a change in the sales mix between higher margin product sales and lower margin service revenue.
Selling expenses as a percentage of sales increased to 40.8% in the first quarter of 2009 from 31.3% in the first quarter of 2008 primarily as a result of the decline in sales. Selling expenses in the first quarter of 2009 decreased by $1.6 million to $12.8 million.
General and administrative expenses increased to 20.0% of sales for the first quarter of 2009 from 12.3% in the first quarter of 2008. General and administrative expenses in the first quarter of 2009 increased by $0.7 million to $6.3 million.
R&D expenses were $3.5 million in the first quarter of 2009, an increase from $2.7 million in the first quarter of 2008. R&D expenses were 11.1% of sales in the first quarter of 2009 compared to 5.9% of sales in the first quarter of 2008.
The operating loss for the first quarter of 2009 was $7.6 million, a decrease of $11.5 million from an operating profit of $3.9 million in the first quarter of 2008.
Income tax expense decreased by $2.5 million to a benefit of $1.6 million for the first quarter of 2009, from an expense of $0.9 million for the first quarter of 2008 due to a decrease in pretax income. The Company's effective tax rate decreased to 19.1% for the first quarter of 2009 from 21.8% in the first quarter of 2008.
"We expect the economic environment to continue to be weak throughout 2009. We have taken significant steps to reduce our operating costs through reductions in force and other cost-cutting measures and will continue to do so as necessary. These are very challenging times for most companies, but we believe FARO will remain well-positioned through all of it," Freeland concluded.
