FARO Technologies, Inc.

Good afternoon, everyone, and welcome to the Ferro Technologies second quarter 2022 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. Good afternoon. With me today from Ferro are Michael Berger, Chief Executive Officer, and Alan Muhic, Chief Financial Officer. Today, after market close the company released its financial results for the second quarter 2022 the related press release informed 10 Q are available on pharaoh's website at www dot pharaoh.com. Please note certain statements in this conference call which are not historical facts may be considered forward looking statements that have all the risks and uncertainties. And the 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 today's press release and are described at length in our annual and quarterly FCC 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 the 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'd like to turn the call over to Michael Berger.

Thank you, Mike. Welcome to our call. In the second quarter, demand across our markets remained healthy with noticeable increases in backlog, driven largely by demand for both our quantum max scanner and our newly released focus premium laser scanner. However, second quarter results were impacted by continued strengthening of the US dollar, which is up approximately 10% against major currencies from the start of the year. Roughly 60% of our revenue in the quarter was transacted outside the United States and impacted by the changes in the U.S. dollar exchange rate. For comparison purposes, on a constant currency basis, our second quarter revenue would have been $83.9 million, representing a 3% year-on-year increase and up over 7% sequentially. Nevertheless, customer feedback on our Quantum Max and Focus Premium products remains strong. with Quantum Max now qualified by a large portion of our historical customer base. Focus Premium's recent launch in April is following a similar trajectory of the Quantum Max. We believe the improved speed and ease of use of the Focus Premium scanner, coupled with Stream, our new mobile scanning application, are key differentiating features that compare favorably against our competitors' products. These two refresh product lines represent 75% of our historical hardware revenue. In the second quarter, shipments of our scan arm and our laser tracker product lines were sourced from Sanmina's Thailand facility. We continue to be pleased with Sanmina's quality levels as well as their ability to meet required volumes. At the end of the second quarter, and consistent with our plans, we completed the move of our laser scanner product line to Sanmina. As a result, our manufacturing outsource initiative is now largely complete. We continue to believe in the long-term financial and operational benefits of this transition. And while the timing of the previously mentioned $12 million in annual life savings is delayed due to the ongoing disruptions in supply chain, we're beginning to have line of sight. to a phased shifting of supply chain partners to Southeast Asia that will allow us to begin seeing savings in 2023. In the second quarter, we also launched our new three-dimensional digital reality capture and collaboration platform, which we call Ferro Sphere. Sphere is a cloud-based environment which enables full 3D model creation, storage, and collaboration. Sphere will be Pharaoh's platform for all future cloud-based software applications, workflows, as well as our service and training resources. Adoption rates of Sphere by current generation scanner customers has progressed as expected through our premium offering. While it is still early days, the conversion to paid subscription is on track as we continue to develop new value-added software applications that address the specific needs of customer workflows in the AEC and O&M markets. Turning to HoloBuilder, we remain pleased with the progress of the business and are very excited about the scale of the opportunity in front of us. In the year since acquiring HoloBuilder, the teams have made progress toward empowering construction professionals with solutions they need to effectively and efficiently monitor and track construction progress. We have continued to enhance our offering, releasing significant new features, including premium analytics, a HoloBuilder API, and snapshots. These powerful new tools continue to build upon HoloBuilder's strong foundation, providing new ways to realize productivity and enable strong industry demand for our SaaS-based solution. HoloBuilder's construction progress management application will be integrated into the Sphere platform by the end of this year. In June, we announced that Goldbeck, a leading European commercial construction firm, signed an enterprise agreement to deploy HoloBuilder's construction progress management workflow across its entire organization. Goldbeck site managers will use our platform to track and document the progress of their construction projects over time, linking cloud-based 360 photos of their site to the digitized building plans and storing them securely in the cloud. Goldbeck is a textbook example of a global firm realizing the full potential and competitive advantage of using Ferro's high accuracy 3D laser scanning technologies in concert with our real-time photo capture technology. We continue to believe there is a large and growing untapped market opportunity for Ferro's technology that leverages our high-accuracy laser scanning expertise, along with easy-to-use photo-based solutions coupled ultimately to our mobile scanning solution. With the launch of Ferrosphere, we are bringing these capabilities together to provide a one-stop experience across Ferro's application software, workflow insights, and customer support tools. The market potential for digitizing the physical world is enormous, and we are excited that our technology and expertise positions as well, both now and over the long term. We continue to execute on the areas we can control and are closely monitoring both the demand environment and our own operation, given the loud and consistent rhetoric related to recessionary and supply chain risks. While we have not seen direct effects on our opportunities or booking pace, we remain cautious and are managing our business accordingly. With that, I'll turn the call over to Alan to provide an overview of our second quarter financial results.