FARO Technologies, Inc. (NASDAQ:FARO) Q3 2023 Earnings Call Transcript

FARO Technologies, Inc. (NASDAQ:FARO) Q3 2023 Earnings Call Transcript November 4, 2023

Operator: Good day, everyone, and welcome to the FARO Technologies Third Quarter 2023 Earnings Call. For opening remarks and introductions, I'll now turn the call over to Michael Funari at Sapphire Investor Relations. Please go ahead, sir.

Michael Funari: Thank you, and good morning. With me today from FARO are Peter Lau, President and Chief Executive Officer; and Allen Muhich, Chief Financial Officer. Yesterday, after market close, the company released its financial results for the third quarter of 2023. The related press release and Form 10-Q are available on FARO's website at www.faro.com. Please note certain statements in this conference call, which are not historical facts, may be considered forward-looking statements that involve risks and uncertainties, some of which are beyond our control and include statements regarding future business results, product and technology development, customer demand, inventory levels, our outlook and financial guidance, economic and industry projections or subsequent events.

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Various factors could cause actual results to differ materially. For a more detailed description of these and other risks and uncertainties, please refer to today's press release and our annual and quarterly SEC filings. Forward-looking statements reflect our views only as of today and except as required by law, we undertake no obligation to update or revise them. During today's conference call, management will discuss certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles or non-GAAP financial measures. In the press release, you will find additional disclosures regarding these non-GAAP measures, including reconciliations to comparable GAAP measures. While not recognized in our GAAP, management believes these non-GAAP financial measures provide investors with relevant period-to-period comparisons of core operations.

However, they should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP. Now I'd like to turn the call over to Peter Lau.

Peter Lau: Thank you, Mike. Good morning, and welcome, everyone, to our call. We made notable progress in the third quarter, exceeding the high end of our guidance range by delivering $86.8 million in revenue. In addition, due to our lower cost structure and sequential 90 basis point non-GAAP gross margin expansion, adjusted EBITDA improved by $2.6 million or 300 basis points over the second quarter despite a small sequential decline in revenue. From a top line perspective, the better-than-expected performance resulted from focused sales activities to increase our overall pipeline and acceleration in customer decision-making in our target markets that, combined with an improved material availability and improved sales and operations execution enabled higher-than-expected unit shipments.

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