Faro (FARO) 22 Feb 182017 Q4 Earnings call transcript

Good morning, everyone and welcome to FARO Technologies’ Fourth Quarter and Fiscal Year 2017 Earnings Release.

For opening remarks and introductions, I'll now turn the call over to Chief Financial Officer, Bob Seidel. Please go ahead.

Thank you and good morning to everyone. Yesterday after the market closed, we released our fourth quarter and fiscal year 2017 financial results. and Web XXXX site release available XX-K press FARO's on at related fiscal Form year is The www.faro.com. may and I’d in like this results; call. Company course order that forward-looking management its to help during to you understand of remind the make some you statements the will, intend, These similar may, be expect, words. words potential, plan, such by can anticipate, continue, and statements as identified believe, goals, objective, results may these is differ from It Company’s possible in the those forward-looking actual statements. that projected materially cause may forth release in for that Important to set the XX, results XX-K factors materially are December actual in differ Form ended yesterday’s and the XXXX. press year Company’s with I to progress a Simon of will our on over goals, our call toward remarks turn now to our provide return and brief financial the discussion results. his long-term I'll afterwards we remarks, a.m. at trading open will the up the X:XX through questions for prepared our After your start call U.S Eastern.

high the online new sustain company machine several a around of and completed to XD these acquisitions. execute We vertical sales into market-leading and product strategic a technology Thanks, vision restore force, margin. communicated FARO the half headcount measurement new Bob, In margin expanded the world innovation and and multi-vertical processes, pivot transformative outlined we XX% gross sales were across modernize which a double-digit to for the and and include XXXX, company morning vertical sales the good sales of next-generation a to initiatives the drumbeat. entire entrepreneurial horizontal geographies, market the XXXX, approach reinstalling technology completed diligently every by enterprise. of and our I product company of everyone. as vertical double-digit growth, strategic objectives initiatives boarded clear long-term and studios leading reorganization, to plus vision In started the fully spirit drumbeat, XXXX, and demonstration end operating and financial growth XD XXXX, a first technology implementing acquisitions on

success noted, strategies. XXXX we delighted to growth, quarters to these results improvement, report and looking consecutive benefits quarters in and to quarters of of started double-digit investing of these we third fourth financial of the sales initiatives. of experienced the of quarters We're consecutive We've have our the consecutive demonstrate were As gross of operating harbingers margin as increased strategic margin. that

course, these early and despite Of market's our to high in price by the XX% market pleased we are by increased response the stock approximately volatility, XXXX. successes

is improvement continue and XXXX of initiative lean we which to for long-term we've sustainability. and perform part as being our companywide a initiatives, However, institutionalized continuous must implemented

evolves, world our As The to continue focus very the to provider huge we verticals diverse solutions. of is of as emerging in growth verticals. year-over-year high must adapt the clear world's leading set emerging with demonstrated XD and advantages of course a customer the development

working of directly natural these to new the metrology in XXXX, bring innovative move that manage of Going vision provides with customized two factory solutions the machine verticals we with of this under based shared base forward metrology for XD customer operating one XD to the name our XD synergy The rationale and marketplace. will groups. the factory group team verticals machine two sales on is and the the vision factory solutions

a in the construction some various XD we introduce the sales factory class XD happening revolution of to the move to and force software This which our technology correlation forensics. technology pre-investment to feet the selling FARO all XD XD design updated demos As machine is now rapidly the we our field aggressive our X.X our introduced places because positions new product believe in an start involved the XD of of verticals. inspection new machine we've vision At know-how we to initiative and and growth. how In and sensors, in transformation expansion collaborate vision our half adapt context, we measure sensors. XXXX. will visionary. to success" verification, triple we safety expense XXXX, will capture of into designed of and of direct entendre vision sales in growth In XXXX, the strategic vision, our of the -- that began be inspect, several product machine XD lead The street, leadership tagline machine and on XD between as the machine in demands expect of business public vision in in our a revolution, understood "FARO extraordinary this vision in to adapt see first us

year members 'XX. team XX or end XX% before the At sales XXX, of quarter fully fourth over becoming of the was our mature period of sales members. an team generally with the ending of the of XXXX, period end increase headcount of quarter fourth the productive New compared

by experienced sales sales startup headcount in end quarter fourth of of There's XXX million increased our startup XX FTE represents FTE between and of full-time a the and expense the difference ending selling or $X.X sales which approximately period headcount to XXXX. Our a sales headcount XXXX. of

For by FTE per our selling calls our earnings ourselves our $X.X investment is to force. force orders effectiveness in our sales XXXX. we sales analysts accountable and on month fiscal tracked of this vertical year closely with investors trailing to of metrics. hold this quarterly of grow corporate verticals startup all XX direct expense the by our metrics totaled million And XXXX, The leaders reporting size

of an quarter end of in Our trailing fourth average the of fourth FTE sales XX-month XXXX. with at headcount XX% XXX quarter XXX was XXXX, compared increase of the the

XX,XXX $XXX quarter. Our new ratio for order headcount million. trailing The per of sales the our new decrease a approximately from XX-month prior fiscal FTE of XXXX bookings order year year was bookings XXX,XXX, average was

initiative. in will increase hiring accompanied quarter, trailing our strategic now ending our growth and in Our indication double-digit investment recent half and XX% because second orders XXXX, This rate With by force intend order emerging XX% XXXX positive sales our during of through an the in particularly sales occur to provided startup geographies sales in sales growth and FTE. verticals per with vertical of period significant increments XX-month our bookings success new we higher a higher the metric XXXX headcount sales expense be to equal XX% of this decrease will hiring per selling will new FTE dollars by force by quarter. lower the in

our our product and the our on or driving of two new building sales to will imperative past machine pillars and innovative X% measurement into we continue drumbeat introduced technology spirit strategic hardware. future teams and in has hard FARO in product and team vision. and and over have focused long-term reinvest the initiative years in of to financial back by generation investing of the have software XXXX. gains is and short program, new sales This this our an of are to of a leader the time, executing key short-term XD We role for to returned and capability. work R&D activities a It expanding In development growth and the now portfolio a the research sales strong been research development XD of -- the entirely

top is our and software size, Scanners FARO point sales leadership with of our our key and [ph], BIM-CIM vertical Focus resolution technical accuracy, increasing and XXXX. speed, our The our possible in growth are advantages to driving cloud gross position leading XX% Laser made in Our combined line technical margin. application Construction

the arm the in first Our drive receiving positive with feedback an company. for introduced next generation margin being is its for to helping gross August Quantum ISO-certification and Arm higher

addition, we introducing In new important be XXXX. FaroArms related technologies will in

market Tracer software survey larger growth called ever Construction of metrology the We strategy. Laser strengthen we innovations half have an intend leader our based provide our to solutions in for position such to XXXX, as Construction featured our our and and use Projector measurement. Scanners it beyond into much verticals market long-term traditional first new expansion essential new our our introduced with to CAD customers with new the our XD and applications and addressable as In construction Systems. the development in research introduce XD in The Build fully to XXXXX, Focus first throughout BIM-CIM a capabilities XD of pipeline quality is order technology factory component our

proposition is that benefits the the help construction FaroArms to to our process similar rework Our costly industry industrial to value and manufacturing reduce our and ago. brought efficiencies years customers

are knowledge of While waking we with suppliers the based all process BIM-CIM equipment the verification are deep XD our the factory. generation in of a verification, CAD to ahead concept

is addition, the new digital construction use used our laser expected methods process. to change In of projection in are way the the surveying technology radically

so. and are we We in will do leading revolution to this continue

measure see early our evolution way products move. with factory the In XD can for use strategic be accuracy Factories high of see is allow XD half introduce and on XXXX, program vision high-resolution integration product product while will while and Another we the and vision in sensor Dynamic new an our robots. sensors XD, XD sensor, space. adopter accuracy into are portfolio XD in XD move accuracy vertical. second measure XXXX expand to next the of the several area intend to that on product machine new automation. High that as high-resolution DMPS, vision the The introduced that see will in dynamic robot change and and moving sensors the emerging

of the VectorRI multiple XD to at radar, continue same XD performing imaging will over measurements will we capable high-speed the operations at addition, large of laser In in be time. rollout locations multiple distances which

a working margin for build illumination market this portfolio, and are reorganizing factory product focused and opportunity. we entire the QX, in growth, high-resolution and plus to the and forever XX% years technical plan change In way in by we addition, the this double-digit well to will all in see to control, as tap product margin two vertical We laser actively instrument and double-digit as sales camera. rebuilding team unaddressed to leadership this introduce categories. products our quality are in of machine see on of setting. After high-speed operating we class We XXXX vision first gross delivering our the believe company directional, opportunity ever camera independent new introduce

price around our be believe will inherent is these rewarded shown of employees accomplishments of business Bob? our our executing in As work XXXX, initiatives years the stock with to driving further. we our and the short-term world hard appreciate sustainable firmly half second performance the value. in patience shareholder of past over the increased of forward and deeply and risk the We even look costs that proud two and the the shareholders

Simon. $XXX.X for Total XXXX. increased the XXXX, $XX.X XX.X% million fourth $XX.X quarter by fourth million for million sales quarter from of you, the of to or Thank

verticals, design unit was includes prices product product sales and the in increase service our higher segment, Our growth. safety and selling other in sales Construction average which a revenue increase continued strong BIM-CIM forensics driven public mainly by our and

bookings X.XX fourth bookings quarter of XXXX. were million, the $XXX.X was period. New With XX.X% book-to-bill XXXX million of increased million from fourth fourth $XXX.X and fourth quarter or $XXX.X for $XX.X of the XXXX, compared the by of our quarter the XXXX. $XX.X of $XX.X XX.X% new quarter order Product order prior of with ratio sales million of to million for for for million increase sales year of million the an $XX.X

strong Our prior was Public Service of with with well in was Product mostly the introduction selling year revenue as new our of the BIM-CIM, a for average and unit Safety $XX.X quarter our related to million sales million fourth product prices compared sales $XX.X as XXXX, for products. Design XX.X% increase higher of period. Construction the increase Verticals, higher Forensics

our driven million service year Design new of in with the X.X% an headcount Public administrative period. and base. selling increase expenses Our double-digit prices million our as to XXXX, efficiencies. points average in segment, to Factory quarter a of $XX.X were from expense our This to increase recurring growth. revenue increase the increase of Verticals, additions This of XX.X% develop mainly period. and an driven compared million, were In Metrology of and Selling sales expenses $XX.X and our increase mostly an XX.X%, million increase prior increase with prior for unit million, warranty force initiatives of commission an $X.X increase these were higher by year year the XX.X% leveraging XXXX for portfolio demand with by verticals. strategic segment, XX.X% of revenue This the the for emerging to with X.X was the in of fourth and with $X.X prior sales fourth conjunction were higher with million, $XX.X Product year with segment, margin drive with of XX.X% period. initiative increase $XX.X our for Scanner the sales primarily an for increase the in year selling for products. from in of year our by sales the for with revenue General revenue compared Safety for related higher our fourth fourth strong were products continue Gross installed our to $XX.X average sales fourth sales was leading XX.X% million, the compared we Forensics XXXX sales In prior unit sales for percentage million the $XX.X new compared BIM-CIM the mostly the a stream introduction for a sales was our This of year to an prices XXXX technology quarter growth quarter due period. In increase of increase conjunction service XXXX the quarter improved of well of $XX.X higher period. million our expenses growth of headcount growth XX.X% sales period. for prior XXXX was manufacturing quarter sales strong related was for and increase with Selling for as mainly prior driven compared quarter for were period. quarter Construction Laser market XX.X% marketing for compared fourth prior fourth $X.X in of broad other increase Focus marketing of and software. and was sales higher XXXX This hardware million the the as of compared is

remained administrative fourth XX.X% for As at of a and XXXX percentage expenses the general and of sales, unchanged XXXX. quarter

preliminary represents may interpretations. to our if known. period the and earnings. tax XXX, by U.S as or amount, own in Accounting Jobs arising in the expenses quarter foreign changes and mandatory, efficiency $X.X decrease re-measurement lean XXXX, of income for charge up the were to Research of from G&A an Staff continue increase to will XXXX. our X.X% of any of Consistent development repatriation additional and Act prior initiatives months additions in million and compared quarter of or period. change guidelines initiatives. our the provisional our year million expense recent related provisional future development the of million acquisitions. We also we for estimate $X.X XXXX, deferred period. quarter fourth the tax Research Department a U.S expenses U.S of of bulletin fourth the and related XX.X% compared sales mostly and of was this The December transition Tax for prior rate reported XXXX. enactment $XX.X drive a were and of X.X% to as and tax consisted XX for This year transition issued sales by in in to of $X.X of million the U.S income provisional increase the sales This expenses of or percentage XX, will In lean in Treasury of Reform the to with enactment a tax changes $XX.X benefit assets charge a XXXX the XXXX of implementation to fourth estimate the million Tax expense as headcount the related communicate material a Cuts engineering Research will to we guidance with development $XX.X hear of with of expense corporate from related from of the on million provisional re-measurement deemed support tax is

income of related tax tax XX.X%. tax $X.X XXXX the effective million $XX.X million, tax been reform, our Excluding have would fiscal expense year U.S to additional rate income expense of an representing

Our net XXXX. $X.XX quarter share million per for or loss fourth was $XX.X the of

XXXX. or for $X.X the million with would've the net share income of million $XX.X per tax compared net Excluding the per fourth quarter XXXX U.S in been income reform, of impact $X.XX or million of fourth quarter share $X.X of $X.XX

receivable sales the demonstration from XXXX, our support year million period. the to Total of of and the one million of higher compared goods the sales mostly an finished inventories increased $XX.X prior at of were quarter million fourth of the to day fiscal $XX.X at XXXX the $XX.X fiscal capital. $XX.X the the year Turning year our end of by period. was compared year outstanding sales sales were of new XX growth. with XXXX, of at to of Accounts equip XXXX the end at with Days at inventory million end driven days quarter hires end working prior fourth up end

key drive at measure of the towards several increased our we XXXX. objectives, business financial performance our year important BIM-CIM I’d our $XXX.X metrics like fiscal with we financial other our an for progress. in XX.X% Construction As in emerging in fiscal XX.X% a and by to fiscal year increase our XX.X% long-term highlight as year XXXX increase helpful look highlighted segment. Sales compared of XXXX performance million

at strong order mostly end with no million by XX.X%, increased efficiencies. Gross At average of is New initiatives X.X of of reflecting XXXX, foreign XX.X% internal manufacturing $XXX.X $XX.X cash our million selling million, maintained Safety the prices Forensics. of debt. we strong and higher Construction and and our margin short-term balance $XXX.X growth improve to which subsidiaries sheet held bookings investments by and Public in driven points, percentage increased BIM-CIM

delivered fiscal our I'll results now call XXXX. in of margin XXXX $X.X discussion our year XXXX sales and the year presentation and progress complete A objectives. questions. gross strong open available in financial fiscal XXXX XX-K. for is XXXX, long-term our financial Form a growth of short-term and pursuit demonstrating cash year investments by increase million and in in increased Our substantial the double-digit in fiscal We

our [Operator Patrick Instructions] We question will of Newton Stifel. take first from

Your line is open.

taking on morning, segment first good is Thank front. Bob. you just I Yes, Simon, the questions. and -- my for one guess,

great mid a quarter, BIM-CIM single but had You is metrology growing the digits. business factory

You by business product this growth customers? And improve finding curious can harder relatively see that had your how then, single-digit it performance we I’m release, comment is here? Quantum that is could if you’re business a we think you received on Arm is to this longer-term, and reinvigorated or being this mature if so growth about

Metrology Factory see double-digit we back growth will No, in the into vertical.

growth is XD handle of the as Vertical, know use split reasons One for of off. large Design now which Product that you the piece the that a to vertical is been

a going it's to through the not we grows of populate proportion Vertical as and Vertical having Factory the add that. Metrology Metrology to needed did go So point higher. Product of out Factory readjustment because we proportionately benefit verticals headcount new in as would also I is we not in new these -- that terms of Design course the to

the double-digit verticals growth put emerging percentage relative headcount suffer. Factory the of we So Metrology the had weighting, necessary would in because

So the we decided to areas. put the new headcount in

to So, believe market the double-digit. will only back to additional well. be response I ISO-certified the as the we my The to It's relating on that has I ergonomic year. in Quantum And today. get arm fantastic. It's as been we comments, been features noted this have FaroArms introducing over will well-received it technologies time significant

sales has price the So substantively. increased average

see So growth Metrology, and bullish there. be that many Factory will are into will on we double-digit new very we we introducing the products

XXXX headcount grow on should XX% that question the headcount sales by you the to [indiscernible] And the XX%. in comment said

on two I the you’ve can your help same quarters sales you that could be Metrology you targeted vein, And be your in the missed ability dynamics in that at other to targeted any the seeing or will whether sales might force BIM-CIM us So last focused? additions or focused this add impacting pace? the understand and turn think more headcount comment that you’re

XXX. in sales at in last coming came our we we conference that indicated So, our in last headcount our -- trailing XXX. XX-months call, at Patrick, We expected FTE

companies. have overall, that at in sales relatively are a came we organization, consistent just So churn a normal the other with that target. based say, given this number close that's we we I quarter would versus a commission fact our

would at look sales that, at market collaborate I a look higher, no our So lower. our no We do group, and comparison. say very closely, team that HR and

the we're said we were we we in orders we're last the we’ve quarter pleased very and the forward, our really growth, growth employees were at perform, going of quarter. verticals. of third that we fourth on seeing the fourth looked where and call how by terms We terms how seeing quarter of seeing seeing the the In evaluate what were

decision basis, and to made but we ending a so do for headcount on XX% sales a future the keep period that quarter-by-quarter XX% in the we'd building And add to fashion.

way. forward, are that's across build we want but spaced So more equally looking profitability to be the time same conscious in we year along because build the to to the

verticals I to would half that, only proportionately only headcount sales the is go planned the of about Patrick thing represent and sales. of to is into Bob the which The add that, emerging was XX%

markets. So are lower of underdeveloped and FTE dollars per product a geographies, respectively -- the the new and the because they new lines at

would about will I speaks less of which you relative into of emerging, your point because proportionately vertical going to size. So, the first headcount Metrology the about half to growth, course, growth that Metrology the expect the much in be is see new

your answers that question. hope So

Greg of Palm We next to Instructions] move Capital Group. Craig-Hallum [Operator will

and last of over all years. improvements the on Congrats guess the I results morning. sort the Good and congrats of on couple success

you. Thank

you, Thank Greg.

there guess, wanted that be what opportunity in start Factory BIM-CIM. Simon, selling the segment. the believe quoted of bigger were you manufacturing than with could I you I saying the publication recently sort to into Metrology industry you’re an

was you you what market so upon hoping today mean, that? you are the in I seeing could excited? So that makes I expand

in Construction due while is to the fact we've cheap opportunities The that that the is in or the the substantively scrap that efficiencies, for up the but -- to in opinion. the that are tremendous industry. excites costs now that gain now, that is clearly waking the reduction to them in size, Construction addressable Metrology that increased Well, been exceed BIM-CIM Construction only The than strangely market. industry calculations that they me about saved been thing the in factory easy-to-use could've showed done our for the the market allows market. a is All from things Factory software different, the is you available three-dimensional measurement substantively different is endemic efficiencies equipment, CAD to it BIM-CIM. they’re has to no comparing has problem look easy-to-use software, substantively is construction there Factory including inexpensive rework and those larger

because mean cars So the this which that so there's to and much have that and I'm excited surveying Metrology uptake. for need digital coming defects, lot in, be as was and interest rework don’t what now line introduced unacceptable factories was as, I have Factory that of for in be there to off used out verification once Toyota into what fix. and the of wait serviced quickly lot that and construction example, It scrap happened to I call we parking they well. process would the companies the like during tolerable to with in tolerable miles. XX,XXX then cars put quality And became total the

am in there digital time was to going generalizing was long perhaps effective It's verification. surveying delay equipment part inevitable. is trend that I So taking, it's of the no by how BIM-CIM. but that and happen for surprised

in inexpensively fact fueled that with handle Laser to tasks and easily, So products excitement. the lightweight, provide then designed the construction involved this Focus software combined Scanner have the in it capability, like specific

bring more there. way new out to products way the year will to completion incredibly all an of and all this intending that So software process, case the in to built investing a role money in that and -- renovation Greenfield intend important the to we takes as we’re play projects, from Brownfield our build to of lot you

presume I intentions for that of of And bulk those that a year segment, specifically. in will be headcount Understood. terms additions for this

as you I with of think sales or expect and of hoping just line as drive that order a you how line marketing was on year that understand about that 'XX in in targets? some sales curious you’re Do under be this of year your that attain percent 'XX? could P&L I’m you that the was could Sales in percent and help item us approve up XX%. leverage can to fiscal specific thinking item? a So impact

however, Well, us we BIM-CIM which distribution very the are per an for through emerging substantively that. example per FTE, makes the Metrology. those important there factors vertical -- impact. will a clouded in the mature the than I perhaps not very sales have specific affect clearly, like that to that fact verticals but give its mean, going numerous vertical some -- is less And the high I’m is will of dollars has, somewhat FTE be excited, that play distribution. by dollars

is it's headcount that the it to we for make dollars contribution. BIM-CIM. too, growth because believe continued verticals products contribution are response less because to I that, per In margin probably should margin will introduced, of that sales, the should because FTE adding internally if Now saying the of think we first that be half to I the potential content. of year midyear believe is XXXX. in that in that new that increasing the I continue the BIM-CIM driving by increase in by distribution the gross ones lower products fair was that that the going and see we say substantive to [indiscernible] line revisit the the uptake on We like top

too per we sales. headcount to depress, the from looking expenses an and the on marketplace. as see get for if like example make That response work -- point that for the in example, content, growth distribution I’d there another are companies XX% through increase market or increase sales the distribution other primarily take companies discounted I average. we dollar will typical distribution. in to again they perhaps, and made surveying will pointed anywhere that that we're share. you But the companies, of for depart And So it's the planned high to out, the current top Topcon Trimble line

probably if sales not our product that in you'll of costs and those component those gross XX%, see companies that’s unreasonable about marketing direct well. as margin So and lower think lines -- an in product you

and you’ve go your can force. you as part out to you one taken the line would place, just for of direct of terribly So, what cost I of is through another of that It's sales the review the give cost distribution. ask but to consider not

have makes any generation sold sales That the do the Quantum demo arm you mix Arms previous Bob, in sense. of and units? of versus quarter, Yes. significant

do drive So effort great year. demo flat made about last of it. in prior versus it's to of that sales units, been continue year terms to we process We and

in our use the to inventories continue fresh. marketplace keep need as to We that we

In terms about certain on product a we or mix the comment mix, the the not of do model of product. level

Okay. Understood. Thanks for hop color. back in I will the queue.

you. Thank

will [Operator Instructions] of move Gabelli Company. We Susanto & Hendi next to

great Simon Bob morning, QX and results. Good and

you, Hendi. Thank

you. Thank

First going for Reform, Bob, we what U.S question tax should inquire post is expect I corporate rate forward? may Tax the Bob.

So tax Form multinational after that’s sales the about guidance in forward-looking XX-K. our XX% U.S true tax disclosed of XXXX, When think with rate. for our reform, U.S we we're a you about provide FARO, don't in the our only

balances adjust reform. near-term our benefit tax really U.S we we rate. Certainly, globally from will of how our the operations reform for anticipate in our tax cash we So after may minimal terms evaluate

share half toward seen the instead introduction you’ve is to that we the software? for terms expect given two your of product second Got able new new in more first strong double-digit the last And Simon, of would it. much product now half? be quarters, should you then, And introduction, the growth how business

have We software have that almost sale some every -- significant is of say we and so proportion I can that hardware. sell solutions,

dollars. And so, in product split by line the the terms of varies depending the actual

in way can't significant sales, really a I of constructive general, So say includes that can and everyone that, software. hardware comment our I around but in

regard introduction, you of timing then able would be the share? And to new with to product

my mentioned year. of many introductions. ones in machine this I We're new as benefit have will we're that All going the in and I these in Well, most vision. are am QX. the most excited. the comments, months excited some to we personally into verticals from introducing QX interesting lot that releases product happen of A by

My vision. the transformative and excitement this Our leader strong I what classical can a about see most, will products that decision as vision that's to that we I'm of but very that vertical XD version year. is area to in forward take high. believe XD machine be machine position versus looking new every in a

Got I And more then if one it. one question, may. question --

Okay.

at look despite margin about of was flat Any that? insight sequentially. gross the lower I -- if on Bob, sequentially sales service all

think didn’t We our service first that doing on and we are side, foremost.

service sure for and their answered satisfied, the us source they're deal. second, is the our making getting about from Our they’re a basis group third, are customer, technical fourth really serving questions

to appropriately to as So our diversity products. move we're handle the centers call we our focused new the through of quarter staff

X.X over better implement One across our you the years of of we and have really company margin delivered But back service is that trying kind as XXs longer-term, understand focus investor's service really the we focusing goal margin. initiative look throughout up XXs. year on drive step we’ve at the really margin be lean for certainly that XX% perspective, to in lean get that revenue low we growth we to last a with and service of mid a how XXs our will from drivers XXXX taken from the of if and it XXXX we to to our increased the over service

Thank you very much.

you. Thank

Hendi. Thanks,

Our next of NOBLE Ben Klieve question Capital Markets. is from

you. All right. Thank

here first, comparing I a make want to sure So, headcount I'm apples-to-apples from perspective.

comparing you that did make up XXXX, QX to your on year. increase would from -- X% 'XX? expectations FTE next you XX% that from to X% you apples-to-apples to to X% have hiring -- indicated want to just QX, were to to to to XX% that then of XX% and I -- for sure in here, QX targeting call, the X% growth your hiring While by XX% commented you you rate increase today listening to

and things seen we’ve quarter between for the seen the looked that sales we growth our And and our take what really One results is quarter lean the have of over process. orders Street feet as evaluate fourth said, the thanks growth, we've our whole Ben the -- growth, joining that and on our inventory. our quarter we've fourth call, direct sales that strategies demo accounts, the a the we after correlation we third is would and

ending we team going after went to increasing we in move was to XX% period the our quarter headcount to XX%. So forward our are back fourth and

that of the the QX, like depending we quarter transcript we where the the So made accordingly. to I trend that back results in to seeing that, fourth in the change grow you if see on sales you think we of go profess fourth headcount quarter will a the kind and results we are we and want

were inventory comments, at to the was -- buildup in quarter-in-quarter thank expect make long-term again basis. 'XX? then With them sure in numbers but Yes, a that buildup earlier the just And sales sales to 'XX regarding same from you And to have the on I relative commented follow-up you. flat Perfect. modest be demo demo -- I in looking do were quick long-term we those wanted did have you to 'XX inventory, flat you here, 'XX. that I

units. portion you things the of products sales is of is demo the kind that of One or consistently see a pre-owned certainly certified our

from come units. demo So have, which they come the source service they we owners, of from

balance sheet on million in though to people is a that of think process inventory basis and $XX.X about you XXXX. year-over-year. Really salesperson simple $XX,XXX and sales we about it XX demo of service on We the you a is after in units generally per to about done just we things really demo we've our move math see our added the equipment. that field, increase that if The fresh, did One try XXXX. inventory out in of included keep

about cover that XX% You of that, almost variance.

impact need to for some sheet kind ways onsite effective a of demo to time reduce as growth our in more its of sales further utilize same So to studios we're well our but in the the equipment related leveraging equipment as as balance as to of demo inventories field. eliminate at looking that much web is the or our headcount, certain have

Thank will in I back queue. jump good. you. Very Perfect.

you. Thank

have [Operator Newton Patrick follow-up Stifel. from We of Instructions] a

open. Your line is

wanted target. Bob, your to of bridge get you. and walk to XXXX profile I we towards thank how margin through Yes, kind

that margin forma I'm full-year. gross pro So, of showing is about sort XX.X

sales You’ve about like plus getting about track there. And near-term. so If roughly to no keeping G&A. so bps improvement. look revenue the there's sounds you’re we your goal leverage XXX to growth, least talking is about about OpEx were then talked X% at of at talking going the for XX%, It R&D leveraging you at of

of the I what just X% is in helps XXXX missing a X.X% double So, we margin plus start XXXX? you see on assume should to kind from guess, I XXXX that at to that about but -- am margin, of by that to that And digits is leverage we just get level not this a some big part R&D comment, gross R&D? that

has So, of margin. XXXX first and in foremost, the gross Patrick, where we’re over course been focused

So if the our you ended just in first perspective, XX.X%, year XX.X%. we quarter was at put

about our we check comments our growth double-digit think you gross 'XX, on if sales for goals, on So really long-term margin. improved

overall we through also do 'XX to gross greater margin and 'XX product improve go service improve margin, but business. our is pathway percentage from where So our clear is continuing revenue is our we’ve of 'XX kind continuing to of to gross a our service

half difficulty] XX.X%, a the of to we for plus get to see XX% XX% it 'XX. [technical way terms in by -- So, XX%, plus us

acquisitions on clear of in the track goal, process. help So technology think based coming with being out that product make that based terms record, that we also drumbeat new leader, it's on our and I to

we're on calls managing expense and of about on a the we prior talked to one do headcount cost margin, terms operating tight of headcount. the budgeting. is continue non-payroll operating Managing our focused very how In get focused we in certainly departments, really factors that our in

the So one pieces we’ve about that previously G&A. controlling talked is of our

impact over operating improve 'XX, certainly G&A we would our the -- would our as percentage see 'XX to walk sales I to margin. a make a what down is can period we So of of to an say

and using Simon both of down driving is with of The certainly, for top that place help G&A drive R&D starts R&D. that It indicated, other line. to line percentage top lean as sales

have We the as drive control gross double-digit cycle percentage margin. processes G&A, and G&A operating a later sales the to to both in down a margin, get place R&D of to the in bring

Just that G&A budgeting around increase more that, X% should they internally. Patrick, things like are add our to internal is around not

get grow not for Obviously, also to what respect M&A control the to you with impact if slowing line So to gross now, margin substantively right you by rate that's can going -- that have but G&A. which less at inflationary XX that’s we a far goal start then operating M&A our beyond predictable, margin our the internal that the at impacted growth growing for when dramatically and top intend is we forward.

sub more that historical reasonable R&D think it X% be or like revenue your going XXXX in a difficulty]? percentage to Does is of to as X% [technical of

to acquisition processes think view, of it we -- predict two you of if Yes, and the to what's hard front organic going balance. keep these point happen it's from the in difficult to what on are

M&A So XXXX, pipeline we an do have an fairly acquisition, aggressive. that's for

that into for dollars wrench increase mark. your to that. but it, the may M&A get to throws point more the so impact around of And less product is said, R&D [ph] Like a X% efficiency I our intention and

Thanks for taking my questions.

Thanks, Patrick.

We have Greg a follow-up Craig-Hallum Group. of Capital from Palm

follow-ups Was just quite levels. ship? that revenue that able amount ramping production I terms actually well? of of surge -- wasn’t and some a any backlog up year-ago bit few of of impact taking last quarters, you’ve of for outpaced as a was if couple thanks or in of given up any a had quarter the you in capabilities there know the Bookings curious here. saw Yes, in the so quarter sort from end to product order, this

get out the We in upside turn have than days amount significant organization of the of the to trying down, last rather those a the and our door. sales few quarter,

in out more see with before regular we count be can of so to there certain we to have, the other with of get quarter. have that We build have like allowed a and three we orders have order year. surprises the regions weeks Countries that production a the at and rate backlog the sales APAC the growth them process to end China we in

regularize the our should product can the to increase backlog and significant geographic the increase challenges between getting deliveries. a few customer responding sales we last so that you the So in months, of expect see to the days to in actually of

are times, the seeing. the logic still meeting are that's are stated but what We delivery our behind you

Got it.

commentary on And of Okay. lot this a Simon, call. product then, new

Looking be could expectations which significant are forward what maybe but your most terms of contribution? versus And, introductions, in some to immediately of ones seeing I guess, there longer-term?

product surveying, On -- I well software see of products do stakeout the arm, sales. marketplace. verify is those will the vision construction to -- of call machine Tracer what product the the the I introductions use introductions immediate -- side see which happen may will -- The quickly. which FaroArm the relating Laser call to impact like by are as I an need what core as longer-term dramatic mentioned verification digital have enhance BIM-CIM we and the -- sensors, understanding the on have immediate I integration products ones that our be one will of and

we marketplace So integrators in XD in the are manufacturers have what for manufacturing to do to of in understand lot of educating seeing the and a environment. actually the benefits

longer-term. be will those -- longer be will those So

a that a have a impact have quick well. in So those that mix of have good longer we will things should impact as

Okay. Best of luck. Thanks.

Thank you.

Greg. you, Thank

at and this call to Seidel. Raab to Mr. return Simon Bob time, And be happy the I'd

in the your throughout forward through We to FARO progress you provide Thank you and support year. reports interest look this continue all. good Thank to you year. everybody for your

Thank you.

This does FARO conclude fourth XXXX fiscal today's Technologies year release. quarter and earnings

everyone and your have a day. disconnect now lines great may You