FARO Technologies Inc. (NASDAQ:FARO) Q1 2018 Earnings Conference Call - Preliminary Transcript

Apr 26, 2018 • 08:15 am ET


FARO Technologies Inc. (NASDAQ:FARO) Q1 2018 Earnings Conference Call - Preliminary Transcript


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Good morning, everyone, and welcome to the FARO Technologies' conference call in conjunction with its Quarter One 2018 Earnings Release. For opening remarks and introductions, I will now turn the call over to Chief Financial Officer, Bob Seidel. Please go ahead.

Bob Seidel

Thank you and good morning, everyone. Yesterday after the market closed, we released our financial results for the first quarter of 2018. The related press release and Form 10-Q for the first quarter of 2018 is available on FARO's website at www.faro.com. I would like to remind you that in order to help you understand the company and its results, management may make some forward-looking statements during the course of this call. These statements can be identified by words, such as expect, will, believe, anticipate, plan, potential, continue, goal, objective, intent, may and similar words. It is possible that the company's actual results may differ materially from those projected in these forward-looking statements. Important factors that may cause actual results to differ materially are set forth in yesterday's press release and in the company's Form 10-K for the year ended December 31, 2017 and Form 10-Q for the quarter ended March 31, 2018.

I will now turn the call over to Simon to provide his remarks and afterwards, I will return with a discussion of our financial results. After our prepared remarks, we will open the call for your questions through the start of trading at 9,30 a.m. US Eastern.

Simon Raab

Thanks, Bob, and good morning, everyone. Our first quarter financial performance continues our trend from the second half of last year of driving towards our long-term financial objectives. As indicated in our press release, some of the highlights in the quarter are quarterly sales of $92.8 million, up 13.8% year-over-year, Construction BIM segment quarterly sales of $22.7 million, up 19.8% year-over-year, increased gross margin year-over-year to 57.9% for the quarter, up 4.3 percentage points, decreased G&A expense to 11.9% of sales, down 1.2 percentage points year-over-year.

We delivered double-digit sales growth, increased gross margin and continued growth in our emerging verticals with a 62.9% increase in sales. Even with additional investment expenses to grow our sales force and expand our R&D activities, we also increased our operating margin for the third consecutive quarter versus prior year and delivered an increase in operating income of $2.7 million compared to last year.

As mentioned during our fourth quarter earnings call, we combined the Factory Metrology and 3D Machine Vision verticals under the one name of 3D Factory with two operating groups starting in our first quarter financial reporting. The rationale for this move is based on the shared customer base of these two verticals and the natural synergy of the customized solutions that the 3D Machine Vision group provides working directly with the Factory Metrology sales team to bring innovative new solutions to the marketplace. Also we renamed our construction BIM/CIM vertical to Construction BIM as we believe it more accurately reflects our focus to be a hardware and software innovator in