FARO Technologies, Inc. (NASDAQ:FARO) Q4 2024 Earnings Call Transcript

FARO Technologies, Inc. (NASDAQ:FARO) Q4 2024 Earnings Call Transcript February 24, 2025

FARO Technologies, Inc. beats earnings expectations. Reported EPS is $0.5, expectations were $0.4.

Operator: Please standby. We are about to begin. Good day, everyone, and welcome to the FARO Technologies, Inc. Fourth Quarter and Full Year 2024 Earnings Call. You will have the opportunity to ask questions during our question and answer session. You may register to ask a question at any time by pressing star one on your telephone. Also, today’s call is being recorded. If you need any operator assistance during the call today, please press star zero. Now at this time, I will turn things over to Mr. Michael Funari at Sapphire Investor Relations. Please go ahead, sir.

Michael Funari: Thank you. Good afternoon. With you today from FARO Technologies, Inc. are Peter Lau, President and Chief Executive Officer, and Matthew Horwath, Chief Financial Officer. Today after market close, the company released its financial results for the fourth quarter and full year of 2024. The related press release and Form 10-K are available on FARO Technologies, Inc.’s website at www.faro.com. Please note certain statements in this conference call, which are not historical facts, may be considered forward-looking statements involving 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.

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

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

Peter Lau: Thank you, Michael. Good afternoon, and welcome everyone to our call. In the fourth quarter, we continued to make strides in optimizing our operations and again exceeded all of our targets. Revenue was $93.5 million, above the midpoint of our guidance range. Non-GAAP gross margin was 57.4%, expanding over 600 basis points year over year and at the high end of our guidance range. Non-GAAP operating expenses were $39.9 million, below the lower end of our targeted range of $40 million to $43 million per quarter. As a result, in the fourth quarter, we generated $0.50 of non-GAAP EPS, which was near the high end of our guidance range and represented the seventh straight quarter of exceeding our expectations. Adjusted EBITDA was $16.7 million or 17.9% of sales, the highest single quarter in over a decade, with operating cash flow of $17.3 million representing our fifth straight quarter of operating cash flow generation.

Q&A Session

It is also worth noting here that we delivered these results despite the FX headwinds we faced in the fourth quarter. Had exchange rates remained in line with the levels we saw during the third quarter, revenue would have been $2 million higher with a corresponding positive impact on both gross margins and EPS. From a top-line perspective, in the fourth quarter, we again saw stable demand in certain sectors such as 3D metrology, while facing ongoing challenges in others including commercial construction, in specific regions like China and Germany. Within our served markets, discretionary CapEx remains a key area of focus for our customers. In the Americas, we continue to see stability and demand following the election, while the European region is becoming increasingly cautious, and Asia is remaining pretty soft.

With the ongoing conversations we are having with our customers as well as broader industry sentiment indicators like global PMI, we remain cautious on the market outlook beyond the next quarter. Looking back, 2024 was a record year for FARO Technologies, Inc., and we are extremely proud of the team’s outstanding execution and focus towards optimizing our operations. Non-GAAP gross margins grew by 850 basis points year over year to 55.2%, while non-GAAP operating expenses as a result, 2024 marks the first time since 2018 that FARO Technologies, Inc. has achieved double-digit EBITDA margins and the first time in a decade we surpassed 11% EBITDA margins for the full year. As we discussed at our investor event last March, FARO Technologies, Inc.

is on an exciting multiyear journey, which can be categorized into three phases: The first phase is focused on operational excellence, instilling an 80/20 mindset throughout all aspects of our organization. This mindset has enabled us to execute on high return on investment items to enhance gross margins and optimize operating costs, resulting in a highly efficient organization and a financial base that gives us the ability to invest in key areas of growth. The outcomes of this first phase being consistent cash flow generation, and improved gross margin and EBITDA, building significant operating leverage in the business. The second phase continues to utilize 80/20 as a key tool and will allow us to capitalize on this operating leverage with the introduction of three organic growth initiatives to ensure FARO Technologies, Inc.

grows faster than the market over the near to medium term. The third and final phase shifts our focus back to strategic investments such as M&A and organic programs further away from our core. Given the risk associated with these higher reward investments though, we want to be disciplined and achieve our long-term aspirational goals first to ensure the organization has a solid foundation from which to build. Matthew will talk about the updated aspirational goals in just a few minutes. In 2024, we executed on the commitments we made and saw significant progress in phase one of our strategy. Remaining deeply focused on driving operational excellence across every aspect to exceed the aspirational margin goals we set last March well ahead of schedule.

Given the strong momentum, we are now driven by the ongoing optimization of both our operations and financial performance. While we will continue to identify opportunities for further optimization, as we enter 2025, our focus is transitioning to the next phase of our multiyear strategy: driving organic growth. Over the past several quarters, FARO Technologies, Inc. has invested in three key strategic initiatives designed to accelerate our growth beyond the market. These actions include refreshing our core solutions, expanding our core addressable opportunity with new offerings, and forging strategic partnerships to enhance our scale and reach. With regards to our core product portfolio, as we discussed on our last call, in the fourth quarter, we refreshed two cornerstone product lines.

First, with the FARO Arm Quantum X, building on our legacy of delivering the best accuracy available to the market. And second, the new Focus Premium Laser Scanner portfolio including the versatile Premium Max with an improved range of 400 meters and the fastest scan mode utilizing our unique flash technology. Building on that momentum, we launched our new ORBIS Premium Mobile Scanner in November, a game changer in digital reality capture. With a new powerful 360-degree camera and improved data quality making it a highly versatile solution whether you are a building professional looking to manage your assets, a scanning service provider expanding its capabilities, or a public safety expert collecting information for pre-incident planning. On the software front, in the first quarter, we updated our CAM2 software for 3D metrology applications.

Our updated version of CAM2 now offers different editions tailored to all customer needs. It includes options for scanning and probing devices and unifying data in the same software environment. CAM2 streamlines industrial metrology applications for incoming parts and first article inspections, part-to-CAD comparisons, assemblies, repeat part measurements, and geometric dimensioning and tolerancing. Across the board, receptivity from our customers remains strong and we look forward to seeing further traction in 2025. Turning to our initiatives to expand our addressable opportunities, I am pleased to share that in January, we successfully launched the FARO LEAP ST handheld scanner. This marks a significant milestone for FARO Technologies, Inc., as we enter a new category of handheld scanning approximately 35% to 40% of the $800 million addressable market.

LEAP ST further expands our product portfolio making FARO Technologies, Inc. a company that offers customers a complete range of portable 3D metrology devices and strengthens our presence across the manufacturing sector where speed, accuracy, and throughput are essential. Fast time to data with high data quality is assured for a vast number of customer profiles such as quality managers, product designers, product developers, and production managers. As a metrology-grade tool, it excels at measuring and verifying a variety of surfaces and parts. The design is compact, portable, and suitable for multiple industries and applications, making it extremely versatile. LEAP ST adds another tool to the toolkit of our direct sales force and represents a significant share of wallet expansion opportunity within our existing and future customer base.

As we have stated previously, our plan over the next several years is to increase our addressable opportunity by 40% through the introduction of solutions which are closely aligned with our core business and directly address the needs and the requests we have received from our customers. Our strategy here is really to build off the strength of our core business, where we have an extremely high brand loyalty, and deliver more solutions to our existing served market. As a result, we believe our revamped product roadmap that is geared towards where we play and if proven we can win has a much higher probability of being commercially successful than some of the other opportunities we had been pursuing. With a meaningful portion of this opportunity addressed with the launch of LEAP, our plan is to roll out more products in the coming quarters and years to address the remaining 60% to 65% to reach our target.

Lastly, as it relates to our global partnership initiative, I am pleased to say in the first quarter, we signed two meaningful partnership agreements that are both global in nature. The first, a multiyear collaboration and distribution agreement with Topcon, a worldwide leader in the digital reality space, which was announced last week. Our collaboration with Topcon launches in the first half of 2025 and is an exciting step to make FARO Technologies, Inc.’s state-of-the-art laser scanning hardware and software solutions more widely accessible. Topcon has a significant worldwide distribution channel that has expertise delivering solutions in key verticals such as construction, surveying, mapping, architecture, building information modeling, and industrial plant and process applications.

We expect this exciting relationship to continue to expand in the coming years. The second agreement that we signed in the first quarter was on the 3D metrology side. This is a multiyear OEM partnership agreement that aligns us with a leading metrology company and enables our partner to white label certain FARO Technologies, Inc. products and deliver them to the market in a broad manner through our partner’s extensive global marketing and supply chain network. This partnership is expected to be announced and launched to the market in the fourth quarter of 2025. We will plan to share more details closer to the launch event. To provide a sense though for the scale generated from these two partnerships, we expect to add over 200 new channel partners and 1,000 plus sellers of FARO Technologies, Inc.’s technology, which triples the number of feet on the street than what we have today.

Taking all three of these organic growth initiatives into account, we are thrilled about our momentum heading into 2025. While we recognize that it will take some time for these initiatives to ramp and meaningfully contribute to our top-line growth, we are very confident that they position us well for long-term success. The announcements we have made in the first quarter represent meaningful progress on the execution of these initiatives we committed to for Phase two. We will not rest on our laurels. We will continue to introduce more products and explore more partnerships as we move forward. These efforts are a clear testament to our commitment to our strategy and belief that FARO Technologies, Inc. can continue to outpace market growth in the years ahead, even amid the ongoing uncertainty in the broader market.

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. With that, I will turn it over to Matthew Horwath to provide an overview of our fourth quarter and full year financial results as well as an outlook for our first quarter.

Matthew Horwath: Thank you, Peter, and good afternoon, everyone. Fourth quarter revenue of $93.5 million was down 5% versus the prior year. Geographically, the Americas and European regions were down 5% and 2% respectively. In the Asia Pacific region, we experienced a decline of over 11% versus the fourth quarter of 2023 due primarily to continued weakness in China. Fourth quarter hardware revenue of $62.3 million was down 7% year over year, while software revenue of $11.6 million was down 5%, and service revenue of $19.7 million decreased by 2%. Recurring revenue was $17.1 million and represented 18% of sales and declined by 2% year over year. The GAAP gross margin was 56.7% and non-GAAP gross margin was 57.4% for the fourth quarter of 2024 compared to 51.3% in 2023.

GAAP operating expenses were $48.4 million and included approximately $3.9 million in acquisition-related intangible amortization. Non-GAAP operating expense of $39.9 million was down $1.4 million from Q4 last year as we continued to realize productivity improvements. GAAP operating income was $4.7 million in the fourth quarter of 2024, compared with operating income of $1.4 million in the fourth quarter of 2023. Non-GAAP operating income was $13.8 million in the fourth quarter of 2024, compared to operating income of $9.4 million in the fourth quarter of 2023. Adjusted EBITDA was $16.8 million or approximately 18% of sales, compared to $11.9 million in the fourth quarter of 2023. Our GAAP net loss was $986,000 or $0.05 per share. Our non-GAAP net income was $9.5 million or $0.50 per share for the fourth quarter of 2024, compared to a net income of approximately $5.8 million or $0.31 per share in Q4 2023.

Our cash and short-term investment balance at the end of the quarter was $98.7 million, up $9.8 million sequentially with cash flow from operations of $17.3 million representing our fifth consecutive positive quarter. As Peter mentioned, in the fourth quarter, the U.S. Dollar rapidly strengthened which had an adverse effect on our business outside the US. To help provide some perspective on this impact, had FX rates stayed at similar levels to the third quarter of 2024, our revenue would have been $2 million higher. Our gross margin would have been 50 basis points better and our non-GAAP EPS would have been $0.06 greater. This is important to highlight for comparison purposes as it more clearly reflects the progress we made in the fourth quarter including a year over year increase of approximately 650 basis points in non-GAAP gross margin and a $0.25 improvement in non-GAAP EPS.

Moving to our annual results, we are very pleased with the progress we have made in 2024. Despite a difficult macroeconomic environment throughout the year, on a year over year basis, we were able to deliver an 850 basis point improvement in gross margin, to 55%, a $15 million reduction in non-GAAP operating expense to $160.7 million, a $1.49 improvement in non-GAAP EPS to $0.97, and a $29.6 million increase in cash flow from operations to $30.6 million. With this significant improvement in cash flow, we were able to repurchase $3 million of principal from our outstanding convertible notes, repurchase $10 million of outstanding shares, and increase our cash and short-term investments on our balance sheet. As a result of our progress throughout the year, we updated our long-term aspirational goals versus the previously communicated goals during our investor event in March 2024, less than one year ago.

At $400 million of revenue, we now expect a gross margin of 59%, up 200 basis points from our prior goal, an EBITDA margin of 20%, an improvement of 500 basis points, and annual free cash flow of greater than $56 million, representing an increase of $16 million. Turning to our outlook, the macroeconomic environment remains choppy. We expect the headwinds we experienced last quarter to continue, resulting in a similar level of year over year market contraction in Q1. While we believe our growth initiatives will help offset industry softness as they gain momentum throughout the year, we remain mindful of broader challenges. With continued softness, tariff-related uncertainties, and potential government spending slowdowns, we want to remain thoughtful and measured in setting expectations for the first quarter of 2025.

As a result, at present FX rates, we expect first quarter revenue of between $77 million and $85 million. At those revenue levels and given corresponding non-GAAP gross margin between 55% and 56.5% and non-GAAP operating expenses of between $38.5 million and $40.5 million, we would expect non-GAAP earnings per share ranging from $0.10 per share to $0.30 per share for first quarter profitability. In addition, to help provide a more apples-to-apples comparison relative to last year given the rapid change in exchange rates, assuming an FX rate in line with the third quarter of 2024, the midpoint of our first quarter guidance would increase by $1.7 million in revenue, 40 basis points in non-GAAP gross margin, and $0.02 in non-GAAP earnings per share.

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

Operator: You may remove yourself from the queue by pressing star two. To Jim Ricchiuti of Needham and Company. Jim, please go ahead.

Jim Ricchiuti: Hi. Thank you. I wanted to go to the two OEM distribution agreements. And maybe we could start with Topcon. Peter, FARO Technologies, Inc. has had, at least going back a number of years ago, an OEM distribution agreement. I believe it was with Trimble on the laser scanning product. Can you give us a sense because that agreement, I think, produced mixed results. Talk to us a little bit about why this agreement might be different with Topcon. Obviously, it is a different company, but just, again, trying to get a sense as to how the agreements might be different and what it does for you in this part of the business.

Peter Lau: Yeah. Hey, Jim. Thanks for the question. I think, look, they are a really good partner, someone we have been talking with. As a part of our discussions and negotiations, we have been able to talk about how we really kind of take this partnership and deliver growth for both companies. And so we have talked about things like deal registration and certain geographies where one of us would take the lead versus the other. It is a very, very comprehensive plan, Jim, that we expect to deliver kind of into the eight figures for us at its full ramp. And obviously, we expect it to expand as we get going.

Jim Ricchiuti: So full ramp, could that occur by the end of the year? Is that your expectation?

Peter Lau: You know, it is something that we want to be very cautious about. I mean, the first thing we want to do is make sure that this is all about growth. And so, as we sort of look to the future, we will take a very pragmatic approach to make sure that we are delivering growth for both companies. And so we will just continue to watch and see how it grows.

Jim Ricchiuti: Got it. The second agreement, the digital metrology agreement, you obviously, I guess, will learn who this is down the road. But just want to make sure I understood. So in other words, we could see this agreement coming into play in late 2025. Is that correct?

Peter Lau: Yeah. I think that is what we are looking for. I mean, ultimately, the reason that we are not sharing all of the details right now is because our partner has not launched the product yet. And so we do not want to steal any thunder and that it is not available. But the target and the timeline, all indications point to the second half, fourth quarter of 2025.

Jim Ricchiuti: Is this relationship something that will help you geographically? I assume it is. Can you say, maybe you can, just whether what part of the digital metrology product line it covers? Any sense there?

Peter Lau: Yeah. I think, ultimately, it is a company that we believe helps us scale to a lot of different parts of the world. And a much larger customer base, obviously, with the addition of this partnership than the one that we have today. So it is global in nature. It serves every portion or part of the world. And we will start with one of our metrology products and likely over time expand that into more than one. But we have got one in mind that, again, we do not want to betray any confidence this year, but we will start with one and look to see how that relationship goes and then look to expand it over the coming years. Thanks. I will jump back in the queue.

Jim Ricchiuti: Thank you.

Peter Lau: Okay. Thanks, Jim.

Operator: We will go next now to Greg Palm of Craig Hallum.

Greg Palm: Yeah. Thanks. Congrats on the results, especially in light of that FX headwind that emerged in the quarter.

Peter Lau: Thanks, Greg. Good to hear you.

Greg Palm: You know, maybe just starting with if you look back in the quarter and maybe even kind of year to date, what you are seeing in Q1 and anything that surprises you whether that was the cadence throughout the quarter, something geographically, end market mix, maybe just a little bit more sort of detail on what you are seeing out there in the market.

Peter Lau: Yeah. I think largely, Greg, what we are seeing in the market is about what we saw in Q4. Obviously, we launched our LEAP ST and we have got good hopes for these partnerships. And so as it ramps, we expect obviously for these initiatives to help us grow faster than the market. But kind of what we are seeing is about what we saw in Q4. No material or meaningful change.

Greg Palm: And how do you sort of rate order the various growth initiatives that you have highlighted from the Topcon, the unnamed white label announcement, new products, and the wallet share expansion opportunity? And from like a timeline standpoint, do we think of that as being kind of a more of a full run rate impact next year? What type of contribution would you expect this year as it ramps up, or is it too early to say?

Peter Lau: Yeah. Look. I think it is a couple of things here. I think it is a little too early to say. But obviously, look, on the product side of the house, having refreshed products is a strategy that has worked tried and true for us over the last two decades. Right? So we are excited about that. Look, the new addressable opportunity expands this is a huge opportunity for us. Right? It has been a long time since we introduced a new product versus an updated product probably since 2010. Right? Since we have done that. And, you know, these are products that our customers are asking to buy from us. We feel reasonably confident about the commercial viability of these projects. And then again, the partnerships are companies that fit us well culturally.

The negotiations or the discussions have been very, very good. They have been very two-way in nature. And look, we believe all of these are really, really great opportunities for us. In terms of when we get to full run rate, hard to say, Greg, because we are not going to stop on the partnerships, and we are not going to stop on the new product. Right? So we are going to launch more products in 2025 and we are going to look at other parts as with everything new, new products and new partnerships, we want to be disciplined. We want to be thoughtful and measured as Matthew said. We want to make sure that we are not getting out over our skis, but we are very, very excited about what we have been able to deliver in that phase two that we talked about and are really bullish about our future.

Greg Palm: As we think about the LEAP specifically, you know, knowing it is only been on the market for a month, but are you able to talk about, you know, not maybe not necessarily order rates, but, you know, kind of feedback from the marketplace at all?

Peter Lau: Yeah. Look, I think all of the KPIs that we are tracking and so think pipeline, think discussions, think demos, think orders, all of those KPIs, I would say, are ahead of what our initial expectations were.

Greg Palm: Okay. Great. And then just lastly, you know, thinking about tariffs and, you know, trying to maybe figure out how your, you know, either better or worse impacted versus some of the competition. So maybe remind us in terms of the manufacturing footprint and any color on maybe the competitive landscape happens over the, you know, coming months or year.

Peter Lau: Yeah. No. Good question. It is something that we are obviously thinking about a lot. And I think right now as a reminder, most of and then most of and then all of our products by the end of the first quarter will be manufactured with our partner in Thailand. And so obviously not here in North America, over in Asia and in the country that likely has not been a huge target so far. But, nonetheless, you know, we think about reciprocal tariffs. We do think that there is potentially an impact but it is not a very sizable impact if you put it in absolute dollars. Look, I think we would probably in the beginning look to cover some of it with price. But we do retain with this partner the ability to potentially move our production around the world.

They are obviously a contract manufacturer with locations around the world. We do have 13 service centers across the world that still have the ability. They service the parts today. They calibrate the products. They test the products. And so we do have the ability to really, really go local for local and I think as more news comes out from a tariff standpoint, we will be able to really kind of be in a better position to talk about what our strategy is. And, you know, again, we think that at least early returns say, hey, it is a relatively low app and then figure out, you know, kind of how it goes from there. In terms of the competitive environment, I would say, you know, just broadly, maybe some puts and takes from what we know, but the reality is we just do not know a whole lot about the competitors.

And right now, Greg, we are just worried about ourselves and being able to deliver, you know, high-quality products that have high paybacks to our existing customer base.

Greg Palm: Yeah. Makes sense. Alright. I will leave it there. Best of luck. Thanks.

Peter Lau: Thank you, Greg.

Operator: Thank you. We will take a follow-up question now from Jim at Needham.

Jim Ricchiuti: Just wanted to address the question on tariffs. Maybe a little differently. I am just curious if as you are what you are hearing from your customer base, whether you are seeing any caution as they evaluate the tariff trade policy impacts on their own businesses.

Peter Lau: Yeah, Jim. It is a great question. I think Matthew briefly touched on it when he was talking about our, you know, kind of our view or outlook for the first quarter. And look, we have obviously unknown is not really productive for anybody. And so generally, when there are unknowns, we see customers kind of pinch their pennies a little bit. And look, we have been having those types of conversations. Obviously, you have got some customers who are moving forward, some customers who are going to be a little more cautious. And, you know, I think we will continue to monitor that and but we took that into account when we provided a thoughtful and measured guidance to Q1.

Jim Ricchiuti: Is the reaction that you are seeing, Peter, more pronounced in one vertical versus the other? You know, whether it is automotive or aerospace, or just say, yeah. I know you sell to a broad range.

Peter Lau: No. It is a good question. Actually, probably, I would speak to that more regionally. And, you know, obviously, in places like Canada and Latin America, probably it is the second thoughts are more prevalent in those areas of the world as we sit here right now, but obviously, again, we will continue to monitor that and do what we can to help those customers and do what we need to do to deliver a solid first quarter.

Jim Ricchiuti: Last question for me is just on pricing. You guys put through some price increases, I believe, in early January. I am just curious how they have been received and whether you can give us a sense as to how broadly that covers the metrology product line and whether you are seeing any similar pricing actions from some of your competitors.

Matthew Horwath: Yeah. Jim, this is Matthew. You know, we did increase our list prices as of January 1, 2025. So there was an initial kind of first time since COVID, we had increased our list prices back in January 2024, and then we did so January 2025 as well. And I would say, you know, we did see some nice realization of that price increase in 2024. And I think, you know, early days in 2025, you know, with a month and a half, almost two months under our belt, you know, we give some opportunity that if we are in a competitive deal that we would, you know, allow our team to discount. That is a great thing as we have increased list prices, but, you know, we do have the ability to discount when needed in a competitive deal. And you know, they are increasing their prices.

We are increasing ours. And we feel like we need to go get the value for our products that our products deserve. And that is kind of how our sales organization treats it, and that is kind of what we have seen early days in 2025.

Jim Ricchiuti: Thank you. And congrats on the results and the enhancements.

Peter Lau: Thank you, Jim.

Operator: Thank you. And gentlemen, it appears we have no further questions this afternoon. Mr. Lau, I would like to turn things back to you, sir, for any closing comments.

Peter Lau: Good. Thank you, operator. I would just like to take a moment to really and sincerely thank all of our employees for their dedication and hard work in delivering an outstanding 2024. Despite facing a challenging market environment, we exceeded our target in every area within our control. And we also made significant progress on several of our key strategic growth initiatives. In short, our team executed well on everything we said we were going to do. While we remain focused on identifying additional opportunities to further enhance these results, the success we have achieved so far gives us strong confidence moving forward. As we execute on our organic growth initiatives in the coming quarters, we are confident that we will be well-positioned to outgrow the market and unlock significant value for our shareholders both in the short and long term.

We look forward to sharing our progress and execution in the quarters ahead. This concludes our call today. Thank you very much, everyone.

Operator: Thank you, Mr. Lau. Again, ladies and gentlemen, that will conclude today’s FARO Technologies, Inc. fourth quarter earnings call. Again, thanks so much for joining us, and we wish you all a great day. Goodbye.