LAKE MARY, Fla., Aug. 4, 2020 — (PRNewswire) — FARO® (Nasdaq: FARO), a global leader for 3D measurement, imaging and realization solutions for 3D metrology, architecture, construction and engineering, and public safety analytics applications, today announced its financial results for the second quarter ended June 30, 2020.
"I remain pleased with the progress we've made executing our strategic initiatives, despite the soft market environment. Our efforts combined with additional prudent cost control measures have enabled us to beat our non-GAAP operating expense objective a full six months earlier than expected. Further, the revitalized sales organization has embraced the new reality of a virtual sales model that I expect will continue to enable sales efficiencies when world conditions normalize," stated Michael Burger, President and Chief Executive Officer. "While the discretionary capital nature of our markets limits our visibility towards the timing of a recovery, we remain confident the actions we are taking will drive a meaningful increase in growth and profitability in the years ahead."
Second Quarter 2020 Financial Summary
Total sales were $60.6 million for second quarter 2020, as compared with $93.5 million for second quarter 2019, and included the unfavorable impact of an additional $0.6 million GSA sales adjustment identified through further review. Excluding the impact of the GSA sales adjustment in the second quarter 2020 and 2019, Non-GAAP total sales were $61.2 million and $99.3 million, respectively. The decrease in sales was primarily a result of end market demand softness related to the COVID-19 pandemic. New order bookings were $61.4 million for the second quarter 2020, down compared to $106.0 million for the second quarter 2019.
Gross margin was 47.7% for the second quarter 2020, as compared to 54.3% for the same prior year period. Non-GAAP gross margin was 48.4% for the second quarter 2020 compared to 57.2% for the second quarter 2019. The decrease in gross margin was primarily a result of the impact of lower sales resulting from the COVID-19 pandemic.
Operating expense, which includes $0.6 million of non-recurring charges, was $40.9 million for the second quarter 2020, as compared to $55.6 million for the same prior year period. Non-GAAP operating expense was $37.7 million for the second quarter 2020 compared to $51.0 million for the second quarter 2019.
Net loss was $8.9 million, or $0.50 per share, for the second quarter 2020, as compared to a net loss of $6.4 million, or $0.37 per share, for the second quarter 2019. Non-GAAP net loss was $6.3 million, or $0.36 per share, for the second quarter 2020 compared to Non-GAAP net income of $4.8 million, or $0.27 per share, for the second quarter 2019.
Adjusted EBITDA was negative $5.0 million, or 8% of Non-GAAP total sales, for the second quarter of 2020 compared to positive Adjusted EBITDA of $9.5 million, or 10% of Non-GAAP total sales, for the second quarter of 2019.
*A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. An additional explanation of these measures is included below under the heading "Non-GAAP Financial Measures".
The Company's cash and short-term investments increased $0.5 million to $173.7 million as of the end of the second quarter of 2020, and the Company remained debt-free.
The Company will host a conference call to discuss these results on Wednesday, August 5, 2020 at 8:00 a.m. ET. Interested parties can access the conference call by dialing (800) 347-7407 (U.S.) or +1 (203) 518-9704 (International) and using the passcode FARO. A live webcast will be available in the Investor Relations section of FARO's website at: https://www.faro.com/about-faro/investor-relations/events
A replay webcast will be available in the Investor Relations section of the company's web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.
For 40 years, FARO has provided industry-leading technology solutions that enable customers to quickly and easily measure their world, and then use that data to make smarter decisions faster. FARO continues to be a pioneer in bridging the digital and physical worlds through data-driven reliable accuracy, precision and immediacy. For more information, visit http://www.faro.com
Non-GAAP Financial Measures
This press release contains information about our financial results that are not presented in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures, including non-GAAP total sales, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net (loss) income and non-GAAP net (loss) income per share, exclude the GSA sales adjustment (as defined in the tables below), the impact of purchase accounting intangible amortization expense, stock-based compensation, advisory fees incurred related to the GSA Matter (as defined in the tables below), imputed interest expense recorded related to the GSA Matter, executive sign-on bonuses and relocation costs, Present4D impairment charges, restructuring charges, and other tax adjustments, and are provided to enhance investors' overall understanding of our historical operations and financial performance.
In addition, we present Adjusted EBITDA, which is calculated as net loss before interest expense, net, income tax benefit and depreciation and amortization, excluding loss on foreign currency transactions, the GSA sales adjustment, stock-based compensation, advisory fees incurred related to the GSA Matter, executive sign-on bonuses and relocation costs, Present4D impairment charges, and restructuring costs, as measures of our operating profitability. The most directly comparable GAAP measure to Adjusted EBITDA is net loss.
Management believes that these non-GAAP financial measures provide investors with relevant period-to-period comparisons of our core operations using the same methodology that management employs in its review of the Company's operating results. These financial measures are not recognized terms under GAAP and should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP. These non-GAAP financial measures have limitations that should be considered before using these measures to evaluate a company's financial performance. These non-GAAP financial measures, as presented, may not be comparable to similarly titled measures of other companies due to varying methods of calculation. The financial statement tables that accompany this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, such as statements about demand for and customer acceptance of FARO's products, FARO's strategic and restructuring plans and initiatives, including but not limited to the additional restructuring charges expected to be incurred in connection with our restructuring plan and the timing and amount of cost savings and other benefits expected to be realized from the restructuring plan and go-to-market strategy, and FARO's growth and profitability potential. Statements that are not historical facts or that describe the Company's plans, objectives, projections, expectations, assumptions, strategies, or goals are forward-looking statements. In addition, words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning or discussions of FARO's plans or other intentions identify forward-looking statements. Forward- looking statements are not guarantees of future performance and are subject to various known and unknown risks, uncertainties, and other factors that may cause actual results, performances, or achievements to differ materially from future results, performances, or achievements expressed or implied by such forward-looking statements. Consequently, undue reliance should not be placed on these forward-looking statements.
Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward- looking statements include, but are not limited to: