FARO Technologies Inc (FARO) 2024 Q3 法說會逐字稿

Good afternoon, everyone and welcome to the Faro Technologies third quarter, 2024 earnings call for opening remarks and introductions. I will now turn the call over to Michael Funari at a Sapphire Investor Relations. Please go ahead.

大家下午好，歡迎參加 Faro Technologies 2024 年第三季財報電話會議的開場致詞和介紹。我現在將把電話轉給藍寶石投資者關係部的 Michael Funari。請繼續。

Thank you and good afternoon with me today from Faro are Peter Lau, President, Chief Executive Officer and Matthew Horwath, Chief Financial Officer.

謝謝大家，今天下午好，來自法魯的總裁兼首席執行官劉彼得 (Peter Lau) 和首席財務官馬修·霍瓦斯 (Matthew Horwath)。

Today after market close, the company released its financial results for the third quarter of 2024.

今天收盤後，該公司發布了 2024 年第三季的財務業績。

The related press release and form 10-Q is available on Faro's website at www.faro.com.

相關新聞稿和 10-Q 表格可在 Faro 網站 www.faro.com 上取得。

Please note certain statements in this conference call which are not historical facts may be considered for booking 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.

請注意，本次電話會議中的某些非歷史事實的陳述可能會被視為涉及風險和不確定性的預訂陳述，其中一些風險和不確定性超出了我們的控制範圍，包括有關未來業務成果、產品和技術開發、客戶需求、庫存水準的陳述、我們的展望和財務指導、經濟和產業預測或後續事件。

Various factors could cause actual results to differ materially.

各種因素可能導致實際結果有重大差異。

For 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 us generally accepted accounting principles or non-GAAP Financial measures.

有關這些以及其他風險和不確定性的更詳細描述，請參閱今天的新聞稿以及我們的年度和季度 SEC 文件，前瞻性陳述僅反映我們截至今天的觀點。除非法律要求，否則我們不承擔在今天的電話會議期間更新或修改這些財務措施的義務，管理層將討論某些未按照我們公認會計原則或非公認會計準則財務措施提出的財務措施。

In the press release, you'll find additional disclosures regarding these non-GAAP measures including reconciliations to comparable GAAP measures.

在新聞稿中，您會發現有關這些非公認會計準則衡量標準的其他揭露，包括與可比較公認會計準則衡量標準的調節。

While not our GAAP management believes these non-GAAP financial measures provide investors with relevant peer to peer comparisons of core operations.

雖然不是按照公認會計原則，但我們的管理階層認為，這些非公認會計原則財務指標為投資者提供了核心業務的相關同儕比較。

However, they should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP.

然而，它們不應被孤立地考慮或作為根據 GAAP 編制的財務業績衡量標準的替代品。

Now, I'd like to turn the call over to Peter Lau.

現在，我想把電話轉給劉彼得。

Thank you, Mike. Good afternoon and welcome everyone to our call in the third quarter. We continue to make progress towards optimizing our operations. We again exceeded our targets on all items within our control. Non-GAAP, gross margin was 56.1% expanding 730 basis points year over year and 110 basis points. Sequentially over the high bar that we set in the second quarter, non-GAAP operating expenses were $40.1 million remaining at the lower end of our targeted guidance range of $40 to $43 million per quarter.

謝謝你，麥克。下午好，歡迎大家參加我們第三季的電話會議。我們在優化營運方面不斷取得進展。我們再次超出了我們控制範圍內的所有項目的目標。非 GAAP 毛利率為 56.1%，較去年成長 730 個基點，較去年同期成長 110 個基點。與我們在第二季設定的高標準相比，非 GAAP 營運費用為 4,010 萬美元，仍處於我們每季 4,000 至 4,300 萬美元目標指引範圍的下限。

As a result in the third quarter, we generated $0.21 of non-GAAP EPS which was above the high end of our guidance range and represented the sixth straight quarter. Of exceeding our expectations adjusted EBIDA was $8.9 million or 10.7% of sales, bringing our adjusted EBIDA year-to-date up to $22.9 million.$36 million dollars in the trailing 12 months. More importantly, we continue to demonstrate the fundamental improvement in our operating structure over the past year. EBITA margins were above 10% for the second quarter in a row. And for the first time in almost a decade as a result, operating cash flow was again positive in the quarter, representing our fourth straight quarter of operating cash flow generation.

因此，第三季我們實現了 0.21 美元的非 GAAP 每股收益，高於我們指引範圍的上限，並且是連續第六個季度的結果。超出我們預期的調整後 EBIDA 為 890 萬美元，佔銷售額的 10.7%，使我們年初至今的調整後 EBIDA 達到 2290 萬美元。更重要的是，我們繼續展示過去一年營運結構的根本改善。EBITA 利潤率連續第二季超過 10%。結果，近十年來首次，本季營運現金流再次為正值，代表我們連續第四個季度實現營運現金流產生。

I'm very proud of the significant improvements in our operational efficiency this year. Despite the challenging macroeconomic landscape year-to-date, our gross margins have expanded by over 600 basis points and our EBITA margins have experienced even more rapid growth increasing by more than 900 basis points.

我對今年我們營運效率的顯著提高感到非常自豪。儘管今年迄今宏觀經濟情勢充滿挑戰，我們的毛利率仍成長了 600 多個基點，EBITA 利潤率成長更快，成長了 900 多個基點。

With our strong third quarter results, we have delivered on the margin targets that we set earlier this year. Well ahead of schedule. Looking ahead, we believe there is further upside over the long term as we expect to continue to optimize our operations through a number of ongoing initiatives.

憑藉強勁的第三季業績，我們已經實現了今年稍早設定的利潤目標。比計劃提前了很多。展望未來，我們相信從長遠來看還有進一步的上升空間，因為我們預計將透過一系列持續的舉措繼續優化我們的營運。

From a topline perspective. In the third quarter, we achieved $82.6 million in revenue reflecting stable demand in certain sectors such as 3D metrology while facing ongoing challenges and others including commercial construction in specific regions like China and Germany within our served markets, discretionary capital expenditure remains a key area of focus for our customers as they assess the macroeconomic landscape and its potential impacts on their businesses.

從頂線角度來看。第三季度，我們實現了8,260 萬美元的收入，反映出3D 計量等某些行業的需求穩定，同時面臨著持續的挑戰，以及我們所服務的市場中中國和德國等特定地區的商業建設等其他挑戰，可自由支配的資本支出仍然是我們服務的關鍵領域。

Given the ongoing conversations we're having with our customers as well as broader industry sentiment factors including the global PM I. We remain cautious on the outlook beyond next quarter, geographically demand within the Americas was consistent with the prior quarter. While demand within em increased sequentially driven by strength in France and Eastern Europe, offsetting this demand in Asia again declined this quarter. As economic challenges in that region persist operationally, our gross margin again came in ahead of expectations in the third quarter as we continue to realize incremental savings both from our supply chain localization plan, as well as our ongoing optimization efforts. Looking ahead, we expect that we will continue to benefit from these ongoing initiatives. However, we expect that volume and mix will play a larger role in sustainably growing gross margins above the current levels related to operating expenses. We remain focused on developing initiatives to help drive cost containment while delivering on our near and mid term objectives. As an example, we continue to implement a series of actions that dynamically reallocate resources both geographically and within operational functions to better align with the opportunities we currently see ahead of us by carefully evaluating and making incremental changes to our ongoing operational spend. We believe we will be in a better position to continue to maximize investments in key growth and operational areas. While at the same time, maintaining our overall spend at current levels, our focus on improving profitability and working capital has also led to our fourth consecutive quarter of positive operating cash flow. With the strengthening financial foundation of our business, we are increasingly confident in our ability to generate consistent earnings and cash flow.

鑑於我們與客戶正在進行的對話以及更廣泛的行業情緒因素，包括全球總理一號。我們對下個季度以後的前景保持謹慎，美洲地區的需求與上一季一致。儘管在法國和東歐強勁的推動下，新興市場的需求持續成長，但本季亞洲的需求再次下降，抵銷了這一影響。由於該地區的經濟挑戰在營運上持續存在，我們的毛利率在第三季度再次超出預期，因為我們繼續透過供應鏈本地化計劃以及持續的優化努力實現增量節約。展望未來，我們預計我們將繼續受益於這些正在進行的舉措。然而，我們預期銷售量和產品組合將在毛利率持續成長至高於目前營運費用水準方面發揮更大作用。我們仍然專注於制定舉措，以幫助推動成本控制，同時實現我們的近期和中期目標。例如，我們繼續實施一系列行動，在地理上和營運職能範圍內動態地重新分配資源，透過仔細評估和對我們正在進行的營運支出進行增量改變，更好地適應我們目前看到的機會。我們相信，我們將處於更好的位置，繼續最大限度地增加對關鍵成長和營運領域的投資。同時，在將我們的整體支出維持在當前水準的同時，我們對提高獲利能力和營運資本的關注也導致我們連續第四個季度實現正營運現金流。隨著我們業務的財務基礎不斷增強，我們對產生持續獲利和現金流的能力越來越有信心。

We believe this commitment is reflected in our ongoing efforts to optimize capital allocation in the third quarter. We repurchased $10 million of our outstanding shares.

我們相信這項承諾體現在我們在第三季優化資本配置的持續努力中。我們回購了 1000 萬美元的已發行股票。

Looking ahead, we'll continue to assess opportunities to redeploy our improving cash flow, whether through the remaining $8 million in our share repurchase program or by repurchasing debt like we did in the second quarter to maximize returns for our shareholders.

展望未來，我們將繼續評估重新部署不斷改善的現金流的機會，無論是透過股票回購計畫中剩餘的 800 萬美元，還是像第二季那樣回購債務，以實現股東回報最大化。

Looking beyond our operational initiatives, we continue to focus on the strategic investments and actions we're taking around customer experience, regional diversification and new products and technologies which we believe will enable us to improve our growth profile beyond the growth of the underlying market itself.

除了我們的營運計劃之外，我們繼續關注我們圍繞客戶體驗、區域多元化以及新產品和技術採取的策略性投資和行動，我們相信這將使我們能夠改善我們的成長狀況，超越基礎市場本身的成長。

During the quarter, I had the opportunity to meet with dozens of customers and participate in several global events such as Energeia in Stuttgart, and Imts in Chicago.

在本季度，我有機會會見了數十位客戶，並參加了多項全球活動，例如斯圖加特的 Energia 和芝加哥的 Imts。

I am extremely pleased with the reception of our solutions and the reaction of customers to faro service. I was also struck by the appetite from our customers for further advances in technology solutions and satisfied that our strategic priorities are very well aligned with not only the trends in the technology, but the wants and the needs of our current and future customers with that in mind. And as a part of our commitment to our strategic plan that we outlined in March, we continue to advance our product road map. I'm very excited to announce that we've recently refreshed two of our major product lines, the arm with quantum X and our next generation of laser scanners, both of which we announced in October. We believe these updates reflect our ongoing efforts to innovate and meet the evolving needs of our customers as well as advance our strategic growth initiatives we outlined in March refreshing our key solutions, adding solutions that increase addressable market and strategically adding partnerships to enhance our scale. We look forward to providing further updates on all of these growth factors in the coming quarters.

我對我們的解決方案受到歡迎以及客戶對 Faro 服務的回應感到非常滿意。我也對我們的客戶對技術解決方案進一步進步的興趣感到震驚，並感到滿意的是，我們的戰略重點不僅與技術趨勢非常一致，而且與我們當前和未來客戶的願望和需求非常一致。作為我們對三月概述的策略計劃承諾的一部分，我們將繼續推進我們的產品路線圖。我非常高興地宣布，我們最近更新了兩條主要產品線，即帶有量子 X 的手臂和我們的下一代雷射掃描儀，這兩個產品都是我們在 10 月發布的。我們相信這些更新反映了我們不斷努力創新和滿足客戶不斷變化的需求，並推進我們在三月份概述的戰略增長計劃，更新了我們的關鍵解決方案，增加了可擴大目標市場的解決方案，並戰略性地增加了合作夥伴關係以擴大我們的規模。我們期待在未來幾季提供所有這些成長因素的進一步更新。

Starting with our new arm offering. The quantum X is an exciting addition to our 3D metrology portfolio and represents another step forward in the technology that we help to pioneer with probing and scanning designed to improve manufacturing efficiency in a configurable and scalable solution. Quantum X offers up to a 15% increase in accuracy compared to the previous quantum max unlocking a range of 3d metrology opportunities for the manufacturing sector as we've done for over 40 years, Faro is setting the performance bar high to help our customers stay at the forefront of their industries.

從我們的新手臂產品開始。量子 X 是我們 3D 計量產品組合中令人興奮的補充，代表我們幫助開拓的探測和掃描技術又向前邁出了一步，旨在提高可配置和可擴展解決方案的製造效率。與之前的Quantum Max 相比，Quantum X 的精度提高了15%，為製造業釋放了一系列3D 計量機會，正如我們40 多年來所做的那樣，Faro 正在設定很高的性能標準，以幫助我們的客戶保持領先地位處於各自行業的前沿。

Moving on to our next generation of scanners with improved technology, we've extended scanning ranges across our existing focus portfolio. While at the same time introducing the focus premium max which adds long range features up to 400 m, enabling users to gather data from large outdoor environments. In addition to added range, we also simplified the full for portfolio enabling all users to reduce scanning time by up to 50% through hybrid reality capture. Powered by our flash technology solution that's included in each model flash technology is the first of its kind workflow that combines the accuracy of a terrestrial laser scanner with the speed of a panoramic camera through listening to valuable customer feedback. We've made some significant changes to the entire capture insights workflow. Now, customers who need more extensive range capabilities and faster data collection times can feel confident in their data capture. We believe this refreshed lineup gives existing and new customers more flexibility in choosing a solution that equips them with accurate data and actionable insights, keeping the focus lineup at the forefront of laser scanning.

轉向採用改良技術的新一代掃描儀，我們擴展了現有焦點產品組合的掃描範圍。同時推出 focus premium max，增加了長達 400 m 的長距離功能，使用戶能夠從大型戶外環境中收集資料。除了增加範圍之外，我們還簡化了完整的產品組合，使所有用戶能夠透過混合實境捕捉將掃描時間減少多達 50%。每個型號中都包含我們的閃光技術解決方案，閃光技術是同類工作流程中的第一個，透過聽取寶貴的客戶回饋，將地面雷射掃描儀的準確性與全景相機的速度結合起來。我們對整個捕獲洞察工作流程進行了一些重大更改。現在，需要更廣泛的範圍功能和更快的資料收集時間的客戶可以對他們的資料擷取充滿信心。我們相信，這個更新的產品系列可以讓現有和新客戶在選擇解決方案時更加靈活，為他們提供準確的數據和可操作的見解，使焦點系列保持在雷射掃描的最前沿。

In addition to our new offerings in the third quarter, we also saw continued success with the expansion opportunities within existing customers. For example, the Royal Bam Group, the largest construction company in the Netherlands recently awarded us a six figure annual license deal for our sphere XG software. After using our solution on a project by project basis for the last several years, they chose to migrate to a companywide subscription to standardize our solutions across all their teams in em with the ability to capture data on site six times faster than traditional two D photos and reduce data retrieval time by five times. The associated productivity gains created significant RO I for the customer. In addition, the increased productivity from fo solution created opportunities for new use cases such as virtual site walks with clients and construction progress, documentation with a corporate culture of innovation and adopting new technology to provide better outcomes for our customers. Faro is helping to support Royal Bam's move toward adopting more digital tools for construction.

除了第三季的新產品外，我們還看到現有客戶的擴張機會持續成功。例如，荷蘭最大的建築公司 Royal Bam Group 最近為我們的 sphere XG 軟體授予了六位數的年度授權協議。在過去幾年逐個專案使用我們的解決方案後，他們選擇遷移到全公司範圍內的訂閱，以在他們的所有團隊中標準化我們的解決方案，並能夠以比傳統二維照片快六倍的速度擷取現場資料並將資料檢索時間減少五倍。相關的生產力提升為客戶創造了顯著的 RO I。此外，fo 解決方案提高的生產力為新用例創造了機會，例如與客戶一起虛擬現場巡視和施工進度、具有創新企業文化的文件以及採用新技術為客戶提供更好的成果。Faro 正在幫助支持 Royal Bam 採用更多數位化工具進行建築的舉措。

In summary, we are very pleased with the progress we've made to date against our initial plans from mid last year and the margin targets we established earlier this year.

總之，我們對迄今為止根據去年年中的初步計劃和今年早些時候制定的利潤目標所取得的進展感到非常滿意。

Not only are we executing according to our strategy, but we're also exceeding our own expectations ahead of schedule by capitalizing on our strong brands and our reputation for innovation and high performance solutions. We believe Faro is well positioned to outpace growth in both our current markets and those we plan to enter coupled with our ongoing operational excellence initiatives designed to enhance profitability. We anticipate significant operating leverage as our revenue returns to growth. We are enthusiastic about our strategic direction in the coming years and are confident in our ability to drive substantial value for our shareholders.

我們不僅按照我們的策略執行，而且利用我們強大的品牌以及我們在創新和高性能解決方案方面的聲譽，提前超出了我們自己的預期。我們相信，再加上我們正在進行的旨在提高盈利能力的卓越營運計劃，Faro 處於有利地位，能夠超越我們當前市場和我們計劃進入的市場的成長。隨著我們的收入恢復成長，我們預計營運槓桿將顯著增加。我們對未來幾年的策略方向充滿熱情，並對我們為股東創造巨大價值的能力充滿信心。

Before turning the call over to Matt, I wanted to take a quick moment to say how excited we are to have Phil DNK join the team as Farrow's SVP of global sales. Phil brings a wealth of experience and sales leadership to Faro with a proven track record of driving revenue growth, profit growth and customer satisfaction across multiple product sectors. Over nearly two decades at Ingersoll Rand, I look forward to working closely with Phil as we continue to execute on our growth strategy in the quarters and years ahead with that. I'll turn it over to Matt to provide an in depth overview of our third quarter financial results and our fourth quarter outlook.

在將電話轉給 Matt 之前，我想花一點時間表達一下，我們對 Phil DNK 加入團隊擔任 Farrow 全球銷售高級副總裁感到多麼興奮。Phil 為 Faro 帶來了豐富的經驗和銷售領導力，在推動多個產品領域的收入成長、利潤成長和客戶滿意度方面擁有良好的記錄。在英格索蘭工作了近二十年，我期待與 Phil 密切合作，我們將在未來幾季和幾年繼續執行我們的成長策略。我將把它交給馬特，深入概述我們第三季的財務表現和第四季的前景。

Thank you, Peter and good afternoon everyone. Third quarter revenue of $82.6 million was down 5% versus prior year. Geographically, the Americas and European regions were down 2% and 1% respectively. While in the Asia Pacific region, we experienced a $3.4 million decline or 17% versus the third quarter of 2023 due primarily to continued weakness in China third quarter, hardware revenue of $50.3 million was down 10% year over year. While software revenue of $11.2 million was approximately flat and service revenue of $21.1 million increased by 6% recurring revenue with $17.4 million and represented 21% of sales and grew 2% year over year.

謝謝彼得，大家下午好。第三季營收為 8,260 萬美元，比去年同期下降 5%。從地理上看，美洲和歐洲地區分別下降了2%和1%。在亞太地區，我們的營收較 2023 年第三季下降了 340 萬美元，或 17%，這主要是由於中國第三季的持續疲軟，硬體營收為 5,030 萬美元，年減 10%。軟體收入為 1,120 萬美元，基本持平，而服務收入為 2,110 萬美元，增長了 6%，經常性收入為 1,740 萬美元，佔銷售額的 21%，同比增長 2%。

GAAP gross margin was 55.7% and Nongaap gross margin was 56.1% for the third quarter of 2024 compared to 48.9% in the third quarter of 2023. As Peter mentioned in the third quarter of 2024 we continued to execute on our variable cost productivity initiatives including incremental benefits from supply chain localization, nongaap gross margin increased over 100 basis points. Sequentially versus Q2 and 56.1% marks the highest quarterly level since 2019, GAAP, operating expenses were $43.8 million and included approximately $3.8 million in acquisition related and tangible amortization and stock compensation expenses.

2024 年第三季 GAAP 毛利率為 55.7%，Nongaap 毛利率為 56.1%，而 2023 年第三季為 48.9%。正如 Peter 在 2024 年第三季提到的，我們繼續執行可變成本生產力計劃，包括供應鏈本地化帶來的增量效益、nongaap 毛利率增長了 100 個基點以上。與第二季相比，以 GAAP 計算，營運費用為 4,380 萬美元，其中 56.1% 是自 2019 年以來的最高季度水平，其中包括約 380 萬美元的收購相關、有形攤銷和股票補償費用。

Nongaap operating expense of $40.1 million was down $1.4 million from Q3 last year as we continue to realize profitability and productivity improvements.

隨著我們繼續實現盈利能力和生產力的提高，Nongaap 營運費用為 4,010 萬美元，比去年第三季減少了 140 萬美元。

GAAP operating income was $2.2 million in the third quarter of 2024 compared with an operating loss of $6.9 million. In the third quarter of 2023 Nongaap operating income was $6.3 million in the third quarter of 2024. Compared to operating income of approximately $900,000 in the third quarter of 2023 adjusted but I was $8.9 million or approximately 11% of sales compared to $3.5 million in the third quarter of 2023.

2024 年第三季 GAAP 營業收入為 220 萬美元，而營業虧損為 690 萬美元。2023 年第三季度，Nongaap 的營業收入為 630 萬美元，2024 年第三季為 630 萬美元。相較之下，2023 年第三季調整後的營業收入約為90 萬美元，但調整後的營業收入為890 萬美元，約佔銷售額的11%，而2023 年第三季的營業收入為350 萬美元。

Our GAAP net loss was $300,000 or $0.2 per share. Our non-GAAP net income was $4 million or $0.21 per share for the third quarter of 2024. Compared to a non-GAAP net income of approximately $500,000 or $0.2 per share. In Q3 2023 our cash and short-term investment balance at the end of the quarter was $88.9 million down $9 million. Sequentially, as Peter mentioned, we repurchased $10 million of our outstanding shares in the third quarter at an average price of $16.99 excluding share repurchases cash and short-term investments increased $1 million sequentially given our current working capital levels expectations for revenue and our current expense base, we expect to be free cash flow positive in the fourth quarter of 2024.

我們的 GAAP 淨虧損為 300,000 美元，即每股 0.2 美元。2024 年第三季度，我們的非 GAAP 淨利潤為 400 萬美元，即每股 0.21 美元。相比之下，非 GAAP 淨利潤約為 500,000 美元或每股 0.2 美元。2023 年第三季度，季末我們的現金和短期投資餘額為 8,890 萬美元，減少 900 萬美元。隨後，正如Peter 所提到的，我們在第三季以16.99 美元的平均價格回購了1,000 萬美元的已發行股票，不包括股票回購現金和短期投資，考慮到我們目前的營運資本水準對收入和目前支出的預期，短期投資連續增加了100 萬美元在此基礎上，我們預計 2024 年第四季自由現金流將為正值。

We are very pleased with our third quarter results especially with double digit adjusted ebida margin and back to back quarters positive cash flow from operations in four consecutive quarters and our highest reported nongaap gross margin over the last five years.

我們對第三季的業績非常滿意，尤其是兩位數的調整後稅息折舊攤銷前利潤率、連續四個季度運營產生的連續四個季度的正現金流以及過去五年來我們報告的最高非公認會計原則毛利率。

As part of our ongoing cost and dynamic resource allocation initiatives. We have announced a restructuring plan which is intended to support our strategic plan and improve operating performance especially around underperforming countries. We expect these actions to offset expected increases in operating expenses over the near term including inflation and headcount investments in higher growth countries. As Peter discussed earlier on the call taken together. We expect to incur $6 million to $9 million in cash charges starting in Q4 2024 through the first half of 2025.

作為我們持續的成本和動態資源分配計劃的一部分。我們宣布了一項重組計劃，旨在支援我們的策略計劃並提高營運績效，特別是在表現不佳的國家/地區。我們預計這些行動將抵消近期營運支出的預期成長，包括通貨膨脹和高成長國家的員工投資。正如彼得之前在電話會議中討論的那樣。我們預計從 2024 年第四季開始到 2025 年上半年將產生 600 萬至 900 萬美元的現金費用。

Once complete, we anticipate an approximate $6 million reduction in annualized operating expenses that when taking into account planned inflation and additional investments in high growth countries, we believe will allow us to maintain our operating expenses at current levels over the near term assuming current FX rates, the macro environment remains choppy and we expect continued demand challenges especially in China together with manufacturing PMI remaining below 50 global uncertainty surrounding the recently announced results of the US election. We want to remain thoughtful and measured in setting expectations for the remainder of the year as a result at present FX rates, we expect fourth quarter revenue of between $88 million $96 million dollars at those revenue levels and given corresponding non-GAAP gross margin between 56% and 57.5%. And non-GAAP operating expenses of between $40.5 million and $42.5 million. We would expect non-GAAP earnings per share ranging from $0.32 per share to $0.52 per share for fourth quarter profitability.

一旦完成，我們預計年化營運費用將減少約600 萬美元，考慮到計劃的通貨膨脹和高成長國家的額外投資，我們相信，假設當前匯率，這將使我們在短期內將營運費用維持在當前水平宏觀環境仍然動盪，我們預計需求挑戰將持續，特別是在中國，而且圍繞著最近公佈的美國大選結果，全球製造業 PMI 仍低於 50 的不確定性。我們希望在設定今年剩餘時間的預期時保持深思熟慮和衡量，因此按照目前的匯率，我們預計第四季度的收入在這些收入水平上為8800 萬美元至9600 萬美元之間，並考慮到相應的非GAAP 毛利率為56 % 和 57.5%。非 GAAP 營運費用在 4,050 萬美元至 4,250 萬美元之間。我們預計第四季的非 GAAP 每股盈餘將在 0.32 美元至 0.52 美元之間。

This concludes our prepared remarks and at this time, we'd be pleased to take your questions.

我們準備好的演講到此結束，此時，我們很樂意回答您的問題。

Thank you very much as a reminder. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. If you'd like to remove yourself from the queue, please press star two and we'll take our first question from Greg Palm with Craig-Hallum Capital Group. Please go ahead.

非常感謝您的提醒。女士們先生們，如果您想提問，請按電話鍵盤上的星號一。如果您想將自己從佇列中刪除，請按二號星，我們將接受 Craig-Hallum Capital Group 的 Greg Palm 提出的第一個問題。請繼續。

Yeah. Thanks for taking the questions and congrats on the really good results and overall executions pretty been pretty impressed of you to date.

是的。感謝您提出問題，並祝賀取得了非常好的結果，迄今為止的整體執行給您留下了深刻的印象。

Thank you Greg.

謝謝格雷格。

So I'm, I'm, I want to start off maybe with the guide for, for Q4 knowing that we're still in a period of soft, you know, you know, Macro and, and not a whole lot of visibility but kind of curious what kind of went into that guidance assumptions sequentially, it assumes a lot less of a sequential increase than what you normally see in Q4. So I, I don't know if it's, if the guide is based on what, you know, you're seeing in October or maybe it's out of conservatism, so maybe we can start there.

所以我，我，我想從第四季度的指南開始，因為我知道我們仍然處於一個疲軟的時期，你知道，你知道，宏觀，並且沒有太多的可見性但有點好奇該指導假設是按順序進行的，它假設的連續增長比您通常在第四季度看到的要少得多。所以我，我不知道該指南是否基於你在十月看到的情況，或者可能是出於保守主義，所以也許我們可以從那裡開始。

Sure, Greg. Yeah, I think, I mean, look, there's the, as we said in the script of Macro remains uncertain and choppy and we, we feel like we've we've developed a good cadence and reputation for delivering on our commitments and, and making sure that we, that we meet our commitments, I would say not based, I think on anything that we've seen in October, but out of abundance of respect for what we see as an uncertain and choppy macro.

當然，格雷格。是的，我想，我的意思是，看，正如我們在宏觀劇本中所說的那樣，仍然不確定和不穩定，我們覺得我們已經在履行我們的承諾方面建立了良好的節奏和聲譽，並且，確保我們履行我們的承諾，我想說，我認為這不是基於我們在 10 月所看到的任何事情，而是出於對我們所看到的不確定和波動的宏觀環境的充分尊重。

Okay. Yeah, that, that's fair. And then I, I want to, you know, dive into, you know, some of those long term financial goals that you put out earlier in the year, I mean, you are trending, you know, well, well ahead of what you put out, you know, at sort of various revenue levels. So I guess the first question is, do we need to kind of rethink your, you know, both your earnings power and your free cash flow based on various revenue levels? Has there been anything maybe one time structural benefit that's, you know, kind of hit, you know, either these quarters, it doesn't sound like it is, but I just want to sort of dig into that and get your sense on kind of, you know, go forward and when we see that kind of revenue growth, you know, what sort of earnings power is that going to translate into?

好的。是的，那是公平的。然後我，我想，你知道，深入研究，你知道，你在今年早些時候提出的一些長期財務目標，我的意思是，你的趨勢，你知道，嗯，遠遠領先於你的目標你知道，以不同的收入水準發放。所以我想第一個問題是，我們是否需要根據不同的收入水平重新考慮你的獲利能力和自由現金流？有沒有什麼可能是一次性的結構性好處，你知道，有點打擊，你知道，無論是這些季度，聽起來不像是這樣，但我只是想深入研究一下並了解你的感受你知道，繼續前進，當我們看到這種收入成長時，你知道，這將轉化為什麼樣的獲利能力？

Yeah, I think Greg, you know, when we looked at the March kind of longer term aspirational model, certainly the gross margin levels that we're currently operating, we're a bit ahead of plan. You know, the drivers of that, right? We've been executing and kind of pulled in some of the localization initiative on the gross margin line as we localize the supply chain with Sanmina. So I'd say that line item is definitely ahead of schedule. And if you remember, you know, we kind of said, hey, operating expenses and until we start to see certain, you know, kind of revenue growth levels. We're going to operate in a cost controlled environment and we're going to ensure that we're delivering incremental levels of profitability. And I would say we're executing on those as well, obviously, with the ability to grow revenue and, and some of the operating leverage that comes along with that, you know, we'll look to maybe reset targets, Greg, you know, kind of kind of next year, we're really focused on the near term and then maybe we'll kind of go out and have reset targets as far as profit targets going into Q1 of next year.

是的，我認為格雷格，你知道，當我們考慮三月的長期理想模型時，當然是我們目前運營的毛利率水平，我們有點提前於計劃。你知道，這的驅動因素，對嗎？隨著我們與 Sanmina 一起實現供應鏈的本地化，我們一直在執行並在毛利率線上引入了一些本地化計劃。所以我想說該訂單項目肯定提前了。如果你還記得，你知道，我們有點說，嘿，營運費用，直到我們開始看到某些，你知道的，某種收入成長水準。我們將在成本受控的環境中運營，並確保不斷提高獲利水準。我想說，顯然，我們也在執行這些目標，有能力增加收入，以及隨之而來的一些營運槓桿，你知道，我們可能會重新設定目標，格雷格，你知道，明年，我們真的專注於近期，然後也許我們會走出去，重新設定目標，直到明年第一季的利潤目標。

And Greg, maybe I would just add, we feel really pleased with, with the work that we've done, I would say very much in our baseline and not affected by certain one timers this year. So we, as I said in the, in the, in the script, it feels or in the prepared remarks, it feels, it feels like we we, we've made a lot of progress in our, in our baseline.

格雷格，也許我會補充一點，我們對我們所做的工作感到非常滿意，我會在我們的基線中說很多，並且今年不受某些計時器的影響。因此，正如我在劇本中所說，感覺或在準備好的評論中，感覺我們在我們的基準方面取得了很大進展。

Yeah. Okay. And the restructuring that, you know, you're going to start here in, in, in Q4. Can you just talk a little bit about exactly, you know what that is, you know, whether there's any, you know, revenue, you know, offset to that. And then to be clear, I think you mentioned that you expect to hold this kind of level of. So we are we talking like a $40 million non-GAAP operating expense because that's, that's even been trending, you know, even even lower than I cannot, you know, what you put out back in March. But it sounds like that's kind of still the level to think about, you know, with the offsets of the inflation head count and the restructuring that you just announced.

是的。好的。你知道，你將從第四季開始進行重組。你能具體談談，你知道那是什麼，你知道，是否有任何，你知道，收入，你知道，抵消。然後要澄清的是，我想你提到過你希望保持這種水準。所以我們談論的是 4000 萬美元的非 GAAP 營運費用，因為這甚至是趨勢，你知道，甚至低於我不能，你知道，你在 3 月推出的費用。但聽起來這仍然是值得考慮的水平，你知道，考慮到通貨膨脹人數的抵消和你剛剛宣布的重組。

Yeah, I'd say Greg that the plan is really focused on, you know, getting operationally efficient and getting the right level of productivity. You know, China has been down for us pretty significantly over the last five or six quarters. And we feel like at this point in time, you know, the reallocation of those resources to higher growth countries where maybe we're seeing higher growth albeit at a lower level than the China revenue level, we feel like that's the right reallocation of resources. And so I think from that aspect, that's how we're thinking about it. It's reallocation dynamic allocation, not necessarily thinking about it from a you know, from a from a level where we would expect revenue to grow significantly from here, but really just optimizing the business. And if you think about the timing of that Greg, like we talked about on the prepared remarks, you know, kind of a portion of that will come in in Q4 and then a portion of it during the first half of 2025.

是的，我想說格雷格，該計劃的真正重點是，你知道，提高營運效率並獲得適當的生產力水平。你知道，在過去的五、六個季度裡，中國市場對我們來說已經大幅下滑。我們覺得在這個時候，你知道，將這些資源重新分配給高成長國家，儘管這些國家的收入水平低於中國的收入水平，但我們可能會看到更高的成長，我們認為這是正確的資源重新分配。所以我認為從這個方面來說，這就是我們的思考方式。這是重新分配動態分配，不一定是從我們期望收入大幅增長的水平來考慮，而實際上只是優化業務。如果你考慮一下 Greg 的時間安排，就像我們在準備好的評論中談到的那樣，你知道，其中一部分將在第四季度發布，然後一部分將在 2025 年上半年發布。

Got it. Okay. And then my last one on capital allocation, I I know you bought back some stock in the quarter. Did, did you mention if or how much you've bought during the current quarter or? I guess how much is, you know, left currently or is it just based on what was completed as of quarter end?

知道了。好的。然後是關於資本配置的最後一篇，我知道您在本季回購了一些股票。您有沒有提到您在本季是否購買了商品或購買了多少商品？我猜目前還剩下多少，還是僅基於截至季度末已完成的工作？

Yes, we bought back $10 million in Q3 at an average share price of $16.99.

是的，我們在第三季以 16.99 美元的平均股價回購了 1,000 萬美元。

And under the current program, we have about $8.3 million left to go in the current program.

根據當前計劃，我們還剩下大約 830 萬美元。

Okay.

好的。

All right. I will leave it there. Congrats again.

好的。我會把它留在那裡。再次恭喜。

Thanks Greg.

謝謝格雷格。

Thank you. And as a reminder, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad.

謝謝。提醒一下，女士們先生們，如果您想提問，請按電話鍵盤上的星號一。

We'll take our next question from Chris Grenga from Needham and Company. Please go ahead.

我們將回答來自 Needham and Company 的 Chris Grenga 的下一個問題。請繼續。

Hi, good afternoon. This is Chris on for Jim. Thank you very much for taking the questions.

嗨，下午好。這是克里斯替吉姆發言。非常感謝您接受提問。

I was just wondering if you could elaborate on what you're seeing in, in the construction market with, you know, maybe with respect to trends across regions and maybe even the type of commercial real estate. What if any are the differences are you seeing across that market? And are there any indicators that that that would, that would be improving for you?

我只是想知道您是否可以詳細說明您在建築市場中所看到的情況，您知道，也許是跨地區的趨勢，甚至是商業房地產的類型。如果您發現該市場有差異怎麼辦？有沒有任何跡象顯示這會對你有所改善？

Yeah, Chris, thanks and I appreciate the question. You know, I'd say obviously, it differs by geographic location and specifically when we, when we talk about China for example, I would say construction in China, you know, continues to be a drag even to the global construction market, for example. But I would say more broadly Chris, what what we see is, you know, a little less commercial construction, a little less industrial construction, but, you know, health care and you know, institutional or infrastructure construction continues to be a little bit better than say, you know, commercial construction. And so, you know, we'll, we'll continue to keep our, our, our, our eye on it. I would say, you know, certainly the interest rate cut in September. And maybe any future interest rate cut depending on, you know, what happens with, with the fed over the next, Certainly a couple of days and then, and then over the next 12 to 18 months, we believe that, you know, a reduction in interest rates is an overall tailwind for the construction industry. So, you know, we'll continue to monitor and apply the the right amount of resources as we, as we, as we get updates.

是的，克里斯，謝謝，我很欣賞這個問題。你知道，我想說，顯然，它因地理位置而異，特別是當我們談論中國時，我會說中國的建築，你知道，甚至繼續拖累全球建築市場，因為例子。但我想說更廣泛的是，克里斯，我們看到的是，你知道，商業建設減少了一點，工業建設減少了一點，但是，你知道，醫療保健，你知道，機構或基礎設施建設仍然減少了一點比說商業建築好。所以，你知道，我們將繼續密切關注它。我想說，你知道，九月一定會降息。也許未來的任何降息都取決於，你知道，聯準會接下來會發生什麼，當然是幾天，然後，然後在接下來的 12 到 18 個月裡，我們相信，你知道，利率的降低對建築業來說是一個整體的推動力。因此，您知道，當我們獲得更新時，我們將繼續監控並應用適量的資源。

Great. Thank you. You, you had mentioned the the sphere when in the quarter. What is the, what kind of activity and what kind of, I guess what the cadence of conversations that you're having with customers around, around the software side. And how is that sort of trended for you over the course of the year? And where, where does it stand currently.

偉大的。謝謝。你，你在本季時提到了球體。是什麼，什麼樣的活動，什麼樣的，我猜你與客戶圍繞軟體方面進行的對話的節奏是怎麼樣的。在這一年裡，您的趨勢是怎麼樣的？以及它目前在哪裡。

Yeah, I would say very much that our sphere XG offering since we launched it last year in Q4 has been a tailwind for us. It's it's it's being adopted fairly regularly from our customers and not just customers that buy software only but customers that buy software as a part of our, you know, hardware solutions and, and, and attach that software solution to our hardware. And so, you know, we continue to be I would say bullish on, on, on on the cloud infrastructure and our cloud offering and I think it's a bright spot in our portfolio. Certainly now and into the future.

是的，我非常想說，自從我們去年第四季推出 sphere XG 產品以來，它一直對我們來說是一股順風。我們的客戶經常採用它，不僅是只購買軟體的客戶，而且還購買軟體作為我們的硬體解決方案的一部分，並將該軟體解決方案附加到我們的硬體上。所以，你知道，我們繼續看好雲端基礎設施和我們的雲端產品，我認為這是我們產品組合中的亮點。當然是現在和未來。

Perfect. Thank you very much.

完美的。非常感謝。

Thank you, Chris.

謝謝你，克里斯。

Thank you. And at this time, I'd like to turn the call back over to Mr Peter Ly for any closing remarks.

謝謝。此時，我想將電話轉回給 Peter Ly 先生，讓其結束語。

Great. Thank you on behalf of all of our colleagues. I want to thank you for your interest in faro, despite a challenging and uncertain macro, we continue to deliver and exceed our targets. We're excited about our progress. Our third quarter performance demonstrates the operational leverage we've built into our business with gross margin, operating expenses, profitability and cash flow all tracking ahead of our multi year plan. While we continue to focus on ways to further improve these results, our success gives us confidence that as we execute on our ongoing organic growth initiatives in the quarters ahead, we believe we'll be in a position to unlock short and longer term shareholder value. We look forward to continuing to share our progress and execution in the quarters ahead and this concludes our call today. Thank you very much for your time and your interest in Faro.

偉大的。我代表我們所有同事感謝您。我要感謝您對 Faro 的興趣，儘管宏觀經濟充滿挑戰和不確定，但我們將繼續實現並超越我們的目標。我們對我們的進步感到興奮。我們第三季的業績證明了我們在業務中建立的營運槓桿，毛利率、營運費用、獲利能力和現金流都領先於我們的多年計劃。雖然我們繼續專注於進一步改善這些業績的方法，但我們的成功讓我們有信心，當我們在未來幾個季度執行持續的有機成長計劃時，我們相信我們將能夠釋放短期和長期股東價值。我們期待在未來幾季繼續分享我們的進展和執行情況，今天的電話會議到此結束。非常感謝您抽出寶貴的時間以及對法魯的興趣。

Thank you. And this does conclude today's conference. You may now disconnect your line.

謝謝。今天的會議到此結束。現在您可以斷開線路。