FARO Reports First Quarter 2010 Sales Growth of 34.4%

LAKE MARY, Fla., May 5 /PRNewswire-FirstCall/ -- FARO Technologies, Inc. (Nasdaq: FARO) today announced results for the first quarter ended April 3, 2010.  Sales in the first quarter of 2010 increased 34.4%, to $42.3 million, from $31.4 million in the first quarter of 2009.  The Company reported net income of $2.1 million, or $0.13 per share, compared to a net loss of $0.41 per share in the first quarter of 2009.

New order bookings for the first quarter of 2010 were $39.8 million, an increase of $12.4 million, or 45.3%, compared to $27.4 million in the first quarter of 2009.

"All three regions posted strong double-digit sales growth in the first quarter.  Even more encouraging was our new orders growth rate of 45%, driven by a 79% increase in Asia and a 60% increase in the Americas.  Overall, our top line performance in the first quarter was the result of continued momentum in our end-markets and improved productivity from our sales team," stated Jay Freeland, FARO's President and CEO.

Gross margin for the first quarter of 2010 was 60.1%, compared to 51.7% in the first quarter of 2009. Gross margin increased primarily due to an increase in the proportion of higher margin product sales relative to lower margin service revenue.

Selling expenses as a percentage of sales decreased to 26.6% in the first quarter of 2010 from 40.8% in the first quarter of 2009, primarily as a result of an increase in sales and lower compensation costs.  Selling expenses in the first quarter of 2010 decreased by $1.6 million from the first quarter of 2009 to $11.2 million.

General and administrative expenses decreased to 14.8% of sales in the first quarter of 2010 from 20.0% in the first quarter of 2009.  General and administrative expenses in the first quarter of 2010 decreased by $0.1 million to $6.2 million from $6.3 million in the first quarter of 2009.  General and administrative expenses included $0.4 million related to patent litigation expenses in the first quarter of 2010.    

R&D expenses were $3.0 million in the first quarter of 2010, a decrease of $0.5 million from $3.5 million in the first quarter of 2009.  R&D expenses were 7.1% of sales in the first quarter of 2010 compared to 11.1% of sales in the first quarter of 2009.

Operating income for the first quarter of 2010 increased by $11.0 million, to $3.4 million, from an operating loss of $7.6 million in the first quarter of 2009.  Operating margin for the first quarter of 2010 was 8.0% compared to an operating loss of 24.3% in the first quarter of 2009.

Income tax expense increased by $2.4 million to $0.8 million for the first quarter of 2010 from a benefit of $1.6 million in the first quarter of 2009 due to an increase in pretax income of $11.0 million

"In addition to our strong orders and sales performance in the first quarter, we are also pleased by the speed with which gross margin and operating income have improved.  This is a direct result of the cost actions and positioning moves we made last year," Freeland concluded.

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 FARO's focus, plans and strategies, and its future operating results and financial condition. 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 "intend," "believe," "will," "expect" and similar expressions or discussions of our strategy 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:

• development by others of new or improved products, processes or technologies that make the Company's products obsolete or less competitive;

• the cyclical nature of the industries of the Company's customers and material adverse changes in customers' access to liquidity and capital;

• declines or other adverse changes, or lack of improvement, in industries that the Company serves or the domestic and international economies in the regions of the world where the Company operates and other general economic, business, and financing conditions;

• fluctuations in the Company's annual and quarterly operating results and the inability to achieve its financial operating targets;

• risks associated with expanding international operations, such as fluctuations in currency exchange rates, difficulties in staffing and managing foreign operations, political and economic instability, compliance with import and export regulations, and the burdens and potential exposure of complying with a wide variety of U.S. and foreign laws and labor practices;

• other risks detailed in Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2009.

Forward-looking statements in this release represent the Company's judgment as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

About FARO

With approximately 20,000 installations and 10,000 customers globally, FARO Technologies, Inc. designs, develops, and markets portable, computerized measurement and imaging devices and software used to create digital models -- or to perform evaluations against an existing model -- for anything requiring highly detailed 3-D measurements, including part and assembly inspection, factory planning and asset documentation, as well as specialized applications ranging from surveying, recreating accident sites and crime scenes to digitally preserving historical sites.

FARO's technology increases productivity by dramatically reducing the amount of on-site measuring time, and the various industry-specific software packages enable users to process and present their results quickly and more effectively.

Principal products include the world's best-selling portable measurement arm -- the FaroArm; the world's best-selling laser tracker -- the FARO Laser Tracker X and Xi; the FARO Laser ScanArm; FARO Photon Laser Scanners; the FARO Gage, Gage-PLUS and PowerGAGE; and the CAM2 Q family of advanced CAD-based measurement and reporting software. FARO Technologies is ISO-9001 certified and ISO-17025 laboratory registered.

SOURCE FARO Technologies, Inc.

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