Correspondence 0000897069-24-001077 from FARO TECHNOLOGIES INC (FARO) (CIK 0000917491)
FARO TECHNOLOGIES INC (FARO) (CIK 0000917491)
Date: May 14, 2024 · CIK: 0000917491 · Accession: 0000897069-24-001077
AI Filing Summary & Sentiment
File numbers found in text: 000-23081, 333-9911
Referenced dates: April 19, 2024, April 30, 2024
Letter
United States Securities and Exchange Commission Division of Corporation Finance Office of Industrial Applications and Services FARO Technologies, Inc. 10-K Filed February 28, 2024 8-K Filed February 27, 2024 Response Letter Dated April 19, 2024 File No. 000-23081
Dear Sir or Madam:
On behalf of FARO Technologies, Inc. (the “Company”), this letter responds to the comments of the Staff of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission contained in the letter dated April 30, 2024 (the “Comment Letter”) relating to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 28, 2024 (the “2023 Form 10-K”) and the Company’s Earnings Press Release contained in Exhibit 99.1 on Form 8-K filed on February 27, 2024 (the “Form 8-K Filed February 27, 2024”).
The headings and numbered paragraphs of this letter correspond to the headings and paragraph numbers contained in the Comment Letter, and to facilitate your review, we have reproduced the text of the Staff’s comments in boldfaced print below, followed by the Company’s response to each comment.
Form 8-K Filed February 27, 2024
Exhibit 99.1
1.
We note your response to comment 1. Notwithstanding its scope and magnitude, the inventory impairment charges recognized following the decision to simplify your product portfolio, discontinue certain legacy products, and cancel purchase commitments do not appear to be outside the normal course of your operations. With reference to Question 100.01 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures and ASC 420-10-S99-3, please confirm that you will no longer exclude these inventory impairments from your non-GAAP adjustments.
Response: We respectfully acknowledge the Staff’s comment and although the Company believes the non-GAAP adjustment for inventory impairment charges were appropriate (for the reasons discussed in our prior response letter and this letter), the Company confirms that it will not present the $9.3 million non-GAAP adjustment for inventory impairment charges in its future public disclosures. As a point of clarification regarding the prior disclosures, when considering the guidance in Question 100.01, because these charges were a direct result of the Company’s restructuring decision to simplify its product portfolio and discontinue certain legacy products and, as part of development ending, to cancel purchase commitments related to a recent acquisition, and in line with the Company’s integration plan approved by the Board of Directors on February 7, 2023, the Company believed these charges were separate and distinct from the costs the Company recognizes as part of its normal, recurring inventory balance review and were not a normal operating expense. The Company believed that excluding these costs was not misleading and instead helped readers of the Company’s public disclosures understand and measure the core operating performance of the Company on a consistent basis from period to period.
2.
We note your response to comment 2, including the disclosure you intend to provide for your tax adjustments. Please further expand the disclosure for the other tax adjustments to clearly disclose the nature and amount of each component that is material to non-GAAP net income (loss) for each period presented. In this regard, the draft disclosure identifies two components leaving approximately $4.7 million of the $16 million adjustment unidentified compared to non-GAAP net loss of $2.4 million for fiscal year 2023.
Response: We respectfully acknowledge the Staff’s comment and advise the Staff that the Company considered the guidance set forth in Question 102.11 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures.
In future filings, the Company will update its disclosures as demonstrated below to provide more detail for purposes of the guidance within Question 102.11 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures (figures below reflect the years ended December 31, 2023 and 2022 to disclose how the adjustment is calculated. Additions are indicated by underscored text and deletions indicated by struck-through text).
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Please do not hesitate to contact me at (407) 333-9911 if you require any further information or clarification regarding our response to your comments.
Thank you for your attention to this matter.
Sincerely,
/s/ Matthew Horwath
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FARO Technologies, Inc.
125 Technology Park, Lake Mary, FL 32746
Tel: +1.407.333.9911 | Toll Free: 800.736.0234
Fax: +1.407.333.4181
Nasdaq: FARO
www.FARO.com
May 14, 2024
United States Securities and Exchange Commission
Division of Corporation Finance
Office of Industrial Applications and Services
100 F Street, N.E.
Washington, DC 20549-7010
Re:
FARO Technologies, Inc.
10-K Filed February 28, 2024
8-K Filed February 27, 2024
Response Letter Dated April 19, 2024
File No. 000-23081
Dear Sir or Madam:
On behalf of FARO Technologies, Inc. (the “Company”), this letter responds to the comments of the Staff of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission contained
in the letter dated April 30, 2024 (the “Comment Letter”) relating to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed on February 28, 2024 (the “2023 Form 10-K”) and the Company’s Earnings Press Release
contained in Exhibit 99.1 on Form 8-K filed on February 27, 2024 (the “Form 8-K Filed February 27, 2024”).
The headings and numbered paragraphs of this letter correspond to the headings and paragraph numbers contained in the Comment Letter, and to facilitate your review, we have reproduced the text of the Staff’s comments in boldfaced print below, followed by the Company’s response to each comment.
Form 8-K Filed February 27, 2024
Exhibit 99.1
1.
We note your response to comment 1. Notwithstanding its scope and magnitude, the inventory impairment charges recognized following the decision to
simplify your product portfolio, discontinue certain legacy products, and cancel purchase commitments do not appear to be outside the normal course of your operations. With reference to Question 100.01 of the Compliance and Disclosure
Interpretations for Non-GAAP Financial Measures and ASC 420-10-S99-3, please confirm that you will no longer exclude these inventory impairments from your non-GAAP adjustments.
Response: We respectfully acknowledge the Staff’s comment and although the Company believes the non-GAAP adjustment for inventory impairment
charges were appropriate (for the reasons discussed in our prior response letter and this letter), the Company confirms that it will not present the $9.3 million non-GAAP adjustment for inventory impairment charges in its future public disclosures.
As a point of clarification regarding the prior disclosures, when considering the guidance in Question 100.01, because these charges were a direct result of the Company’s restructuring decision to simplify its product portfolio and discontinue
certain legacy products and, as part of development ending, to cancel purchase commitments related to a recent acquisition, and in line with the Company’s integration plan approved by the Board of Directors on February 7, 2023, the Company believed
these charges were separate and distinct from the costs the Company recognizes as part of its normal, recurring inventory balance review and were not a normal operating expense. The Company believed that excluding these costs was not misleading and
instead helped readers of the Company’s public disclosures understand and measure the core operating performance of the Company on a consistent basis from period to period.
2.
We note your response to comment 2, including the disclosure you intend to provide for your tax adjustments. Please further expand the disclosure for the
other tax adjustments to clearly disclose the nature and amount of each component that is material to non-GAAP net income (loss) for each period presented. In this regard, the draft disclosure identifies two components leaving approximately
$4.7 million of the $16 million adjustment unidentified compared to non-GAAP net loss of $2.4 million for fiscal year 2023.
Response: We respectfully acknowledge the Staff’s comment and advise the Staff that the Company considered the guidance set forth in Question
102.11 of the Compliance and Disclosure Interpretations for Non-GAAP Financial Measures.
In future filings, the Company will update its disclosures as demonstrated below to provide more detail for purposes of the guidance within Question 102.11 of the Compliance and
Disclosure Interpretations for Non-GAAP Financial Measures (figures below reflect the years ended December 31, 2023 and 2022 to disclose how the adjustment is calculated. Additions are indicated by underscored text and deletions indicated by
struck-through text).
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Please do not hesitate to contact me at (407) 333-9911 if you require any further information or clarification regarding our response to your comments.
Thank you for your attention to this matter.
Sincerely,
/s/ Matthew Horwath
Matthew Horwath
Chief Financial Officer
FARO Technologies, Inc.
CC: Tom McGimpsey, General Counsel, FARO Technologies, Inc.
Jonathan P. Witt, Foley & Lardner LLP
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