FARO® (Nasdaq: FARO), a global leader in 3D measurement and imaging solutions, today announced its financial results for the first quarter ended March 31, 2020.

"The implementation of our restructuring plan, which we announced in February, has progressed well in the first quarter and we remain on track to achieve our targeted $40 million in annualized savings by the end of the year. While these changes were not made anticipating COVID-19, when combined with our strong balance sheet they have positioned us well for the current environment," stated Michael Burger, President and Chief Executive Officer. "Further, while near-term demand visibility remains challenged due to the global pandemic, to date there has been limited disruption to our manufacturing supply chain and our sales team remains enthusiastic about our new go-to-market strategy. I am optimistic that our new strategy will enable FARO to emerge as a stronger, more efficient business with a highly scalable financial model when the business environment returns to normalized levels."

First Quarter 2020 Financial Summary

Total sales were $79.5 million for first quarter 2020, as compared with $93.6 million for first quarter 2019. The decrease was a result of continuing market softness in many of the Company's served markets, along with order pushouts at the end of March due to COVID-19 uncertainty.  New order bookings were $77.9 million for the first quarter 2020, down 23% as compared to $100.7 million for the first quarter 2019.

In the first quarter of 2020, the Company recorded additional non-recurring charges of approximately $13.8 million that were predominantly related to expected cash severance payments associated with the implementation of its new strategic plan.

Gross margin was 55.2% for the first quarter 2020, as compared to 56.6% for the same prior year period. Non-GAAP gross margin was 55.5% for the first quarter 2020 compared to 56.9% for the first quarter 2019.

Operating expense, which includes $13.7 million of non-recurring charges, was $60.4 million for the first quarter 2020, as compared to $52.7 million for the same prior year period.  Non-GAAP operating expense was $44.3 million for the first quarter 2020 compared to $48.9 million for the first quarter 2019.

Net loss was $14.8 million, or $0.84 per share, for the first quarter 2020, as compared to net income of $0.2 million, or $0.01 per share, for the first quarter 2019. Non-GAAP net loss was $0.4 million, or $0.02 per share, for the first quarter 2020 compared to Non-GAAP net income of $3.6 million, or $0.20 per share, for the first quarter 2019.

Adjusted Non-GAAP EBITDA was $3.1 million, or 4% of total sales, for the first quarter of 2020 compared to Adjusted EBITDA of $8.3 million, or 9% of total sales, for the first 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 $14.7 million to $173.2 million as of the end of the first quarter of 2020, and the Company remained debt-free. 

Conference Call

The Company will host a conference call to discuss these results on Wednesday, April 29, 2020 at 8:00 a.m. ET. Interested parties can access the conference call by dialing (877) 876-9173 (U.S.) or +1 (785) 424-1667 (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/conference-calls/

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.

About FARO
FARO is a leading global source for 3D measurement and imaging solutions for 3D metrology, architecture, engineering, and construction, and public safety analytics applications. The Company develops and markets computer-aided measurement and imaging devices and software enabling customers to easily and accurately connect the physical world to the virtual world.

More information is available at 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 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, and restructuring charges, 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) income before interest expense (income), net, income tax (benefit) expense 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, and restructuring costs, as measures of our operating profitability. The most directly comparable GAAP measure to Adjusted EBITDA is net (loss) income.

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 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:

• the Company's ability to realize the intended benefits of its undertaking to transition to a company that is reorganized around functions to improve the efficiency of its sales organization and to improve operational effectiveness;
• the Company's inability to successfully execute its new strategic plan and restructuring plan, including but not limited to additional impairment charges and/or higher than expected severance costs and exit costs, and its inability to realize the expected benefits of such plans;
• the outcome of the U.S. Government's review of, or investigation into, the GSA Matter; any resulting penalties, damages, or sanctions imposed on the Company and the outcome of any resulting litigation to which the Company may become a party; loss of future government sales; and potential impacts on customer and supplier relationships and the Company's reputation;
• development by others of new or improved products, processes or technologies that make the Company's products less competitive or obsolete;
• the Company's inability to maintain its technological advantage by developing new products and enhancing its existing products;
• 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 financial conditions;
• the effect of the COVID-19 pandemic, including on our business operations, as well as its impact on general economic and financial market conditions;
• the impact of fluctuations in foreign exchange rates; and
• 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, 2019 and in Part II, Item 1A. Risk Factors in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.

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, unless otherwise required by law.