FARO Technologies, Inc.

Good morning, everyone, and welcome to today's Ferro Technology second quarter 2021 earnings call. For opening remarks and introductions, I will now turn the call over to Michael Finari at Sapphire Investor Relations. Please go ahead.

Thank you and good morning. With me today from Ferro are Michael Berger, Chief Executive Officer, and Alan Muhich, Chief Financial Officer. Yesterday after the market closed, the company released its financial results for the second quarter of 2021. The related press release and Form 10-Q for the second quarter are available on FARO'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 that involve risks and uncertainties and include statements regarding future business results, product and technology development, customer demand, inventory levels, economic and industry projections, or subsequent events. Various factors could cause actual results to differ materially. Some of these factors have been set forth in yesterday's press release and are described at length in our annual and quarterly SEC filings. Forward-looking statements reflect our views only as of today, and except it's 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'll 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 to substitute for a measure of financial performance prepared in accordance with GAAP. Now, I'd like to turn the call over to Michael. Thank you, Mike.

Good morning. Welcome to our call. Demand for our products in the second quarter reflected a return to a seasonal growth and typically following the typically soft first quarter. On a geographic basis, the Asia-Pacific market, and in particular China, performed well, while U.S. and Europe markets continued to recover, albeit at a slower pace. With the second quarter improvement across our served markets, we continue to believe the demand environment will improve throughout 2021 as our customers' activities normalize. Taken together with our ongoing flow of new product introductions, we believe year-end demand levels will be similar to those experienced in the fourth quarter of 2019. That said, we remain cautious as market uncertainties such as the continuing softness in commercial construction starts, the prioritization of capacity expansion over quality control initiatives, and the ongoing steps local governments take to combat the pandemic may adversely impact the ultimate slope and the timing of our recovery. We remain focused on laying the foundation for expanding the breadth and depth of our product offerings while streamlining our operations to continue to capture the long-term opportunities ahead. As discussed in our prior calls, Ferro is in the process of transitioning to a marketing-led organization focused on understanding our customers' problems and delivering hardware and software solutions to meet their needs. As an example of these efforts, An example of this effort could be found in our recently announced Quantum Max scan arm solution. Quantum Max was conceived by identifying our customer's need for both speed and accuracy. As a result, we have developed an advanced portable measurement solution which features three purpose-built, hot-swappable laser line probes, each of which offer distinct advantages for specific use cases. The XR probe, provides 30% better accuracy and resolution for high-precision measurement tasks. The XS increases scanning speeds by over 65%, and the versatile XP offers a balance of the XR's resolution and the XS's speed. Unlike prior physical arm solutions, the Quantum Max allows customers to swap laser heads on the fly, creating a versatile tool which meets a wide spectrum of speed, accuracy, and resolution needs in a single solution. This unique solution results in a productivity and value increase of over 30% compared to prior generation devices. Another critical component of the scan arm solution was the launch of our latest version of CAM2, our metrology software, which greatly improved scanning with our new laser probes. Through the combination of our new arm, probes, and the latest software, we believe we've set a new standard in the industry for metrology grade measurement solutions. While we continue to introduce new solutions throughout the year, it's worth highlighting that between launching a workflow solution and generating meaningful revenue takes time. That said, we are very encouraged by our recent customer feedback. In addition to our internal product development roadmaps, we continue to expand the breadth of our offering through acquisitions. Building off last year's ATS acquisition, which focused on high precision digital twin applications, In the second quarter, we expanded our capabilities with the acquisition of HoloBuilder, a leading photogrammetry-based 3D platform which delivers hardware-agnostic image capture, registration, and viewing. With an initial focus on construction management, HoloBuilder's platform provides general contractors a solution to efficiently capture and virtually manage construction progress using off-the-shelf panoramic cameras. Hello Builder's SaaS platform adds a fast and easy reality capture photo documentation and remote access capabilities to Ferro's highly accurate 3D point cloud-based laser scanning to create an industry's first end-to-end digital twin solution. The combined solution will provide a comprehensive scanning and image management capabilities for digital twin market aimed at robotic assembly simulation, construction management, facilities operation and management, and incident pre-planning in the public safety market. Ultimately, these digital twin capabilities will be brought into our soon-to-be-announced cloud-based solution, which we call Ferro Sphere, with its underlying subscription model representing Ferro's future long-term software go-to-market. Shifting to operations, two weeks ago, we announced the signing of an agreement to outsource our manufacturing to Sandvina Corporation. As the next step in our business transformation, we plan to transition ferro production from three manufacturing sites in Lake Mary, Florida, Exxon, Pennsylvania, and Stuttgart, Germany, to a Sanmina facility based in Thailand. Following a rigorous selection process, we chose Sanmina as our partner based upon their proven ability to deliver quality products on the required timelines. Together, we are very confident in our ability to meet our customers' demand throughout this transition process. Once complete, our new operational model greatly simplifies operations, reduces cost, and allows our management team to focus on the development and sale of differentiated solutions to customers in our target markets. Alan will discuss the financial impact of these changes in a few minutes. Taken together, these actions form the basis of our strategic transition, namely developing a deep understanding of our customer workflows, which allow us to further differentiate our capabilities in the marketplace while at the same time placing a solid operating structure in place to ensure incremental top line growth translates to greater operating leverage and higher shareholder value over time. Finally, we announced the election of two new members to our board of directors. As previously disclosed, a key element of enabling our successful transformation is ensuring that we maintain the right experience set on our board to help guide us. I am particularly pleased with the addition of Moonhee Chen, and Alec Davrin to the FERA Board. They each have demonstrated success in leading hardware and cloud-based software businesses in markets that are closely aligned with our strategic direction. I very much look forward to their contributions as they officially join us on October 1st. With that, I'll turn the call over to Alan for an overview of our second quarter financial results.