FARO TECHNOLOGIES, INC. AND SUBSIDIARIES | |||||||||||||||
RECONCILIATION OF NET (LOSS) INCOME TO EBITDA AND ADJUSTED EBITDA | |||||||||||||||
(UNAUDITED) | |||||||||||||||
|
| |||||||||||||||
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| Three Months Ended September 30, |
| Nine Months Ended September 30, | ||||||||||||
(in thousands) | 2020 |
| 2019 |
| 2020 |
| 2019 | ||||||||
Net loss | $ | (3,024) |
|
| $ | (6,199) |
|
| $ | (26,779) |
|
| $ | (12,452) |
|
Interest expense (income), net | 161 |
|
| (24) |
|
| 407 |
|
| 72 |
| ||||
Income tax benefit | (1,739) |
|
| (182) |
|
| (7,336) |
|
| (444) |
| ||||
Depreciation and amortization | 3,352 |
|
| 4,798 |
|
| 10,631 |
|
| 14,120 |
| ||||
EBITDA | (1,250) |
|
| (1,607) |
|
| (23,077) |
|
| 1,296 |
| ||||
(Gain) Loss on foreign currency transactions | (256) |
|
| 514 |
|
| 334 |
|
| 863 |
| ||||
Stock-based compensation | 2,084 |
|
| 3,387 |
|
| 6,429 |
|
| 8,703 |
| ||||
GSA sales adjustment (1) | — |
|
| — |
|
| 608 |
|
| 5,840 |
| ||||
Advisory fees for GSA Matter (2) | — |
|
| — |
|
| — |
|
| 1,244 |
| ||||
Executive severance costs | — |
|
| 1,217 |
|
| — |
|
| 1,217 |
| ||||
Executive sign-on bonuses & relocation costs | — |
|
| 270 |
|
| — |
|
| 845 |
| ||||
Present4D impairment (3) | — |
|
| — |
|
| — |
|
| 1,535 |
| ||||
| Restructuring costs (4) | 239 |
|
| — |
|
| 14,563 |
|
| — |
| ||||
| Adjusted EBITDA | $ | 817 |
|
| $ | 3,781 |
|
| $ | (1,143) |
|
| $ | 21,543 |
|
| Adjusted EBITDA margin (5) | 1.2 | % |
| 4.2 | % |
| (0.5) | % |
| 7.6 | % | ||||
|
|
| (1) Late in the fourth quarter of 2018, during an internal review we preliminarily determined that certain of our pricing practices may have resulted in the U.S. Government being overcharged under our General Services Administration ("GSA") Federal Supply Schedule contracts (the "Contracts") (the "GSA Matter"). In fourth quarter 2018, we reduced our total sales by an estimated cumulative adjustment of $4.8 million. We also retained outside legal counsel and forensic accountants to conduct a comprehensive review of our pricing and other practices under the Contracts (the "Review"). During the nine months ended September 30, 2020 and September 30, 2019, we reduced our total sales by $0.6 million and $5.8 million, respectively, (the "GSA sales adjustment") and recorded imputed interest expense of $0.6 million and $0.6 million, respectively, related to the GSA Matter. |
|
|
| (2) In connection with the GSA Matter, we retained outside legal counsel and forensic accountants to conduct the Review, which resulted in $1.2 million in advisory fees incurred during the nine months ended September 30, 2019. |
|
|
| (3) On April 27, 2018, we invested $1.8 million in present4D GmbH ("present4D"), a software solutions provider for professional virtual reality presentations and training environments, in the form of an equity capital contribution. During the second quarter of 2019, we determined it is more likely than not that we will not recover our cost basis in present4D and recorded an impairment charge of $1.5 million, which is included in Other expense, net. |
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| (4) On February 14, 2020, our Board of Directors approved a global restructuring plan (the "Restructuring Plan"), which is intended to support our strategic plan in an effort to improve operating performance and ensure that we are appropriately structured and resourced to deliver increased and sustainable value to our shareholders and customers. In connection with the Restructuring Plan, we recorded a pre-tax charge of approximately $14.6 million during the first nine months of 2020 primarily consisting of severance and related benefits. |
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| (5) Calculated as Adjusted EBITDA as a percentage of Non-GAAP total sales, which adjusts for the GSA sales adjustment. |
