FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(UNAUDITED)

Three Months Ended December 31,

Twelve Months Ended December 31,

(in thousands)

2023

2022

2023

2022

Net income (loss)

$          1,588

$        (2,235)

$      (56,577)

$      (26,756)

Interest (income) expense, net

819

(8)

3,348

(36)

Income tax (benefit) expense

(2,354)

753

2,515

5,105

Depreciation and amortization and fair value adjustments

3,649

7,472

15,377

17,533

EBITDA

3,702

5,982

(35,337)

(4,154)

Other (income) expense, net

1,303

(159)

1,178

(3,236)

Stock-based compensation

5,557

3,291

17,833

13,315

Inventory reserve charge⁽³⁾

1,208

—

9,340

—

Restructuring and other costs ⁽¹⁾

1,380

2,604

19,043

7,548

Adjusted EBITDA

$        13,150

$        11,718

$        12,057

$        13,473

Adjusted EBITDA margin ⁽²⁾

13.3 %

11.3 %

3.4 %

3.9 %

⁽¹⁾

On February 14, 2020, our Board of Directors approved a global restructuring plan (the "Restructuring Plan"), which is intended to support our strategic plan in an effort to improve operating performance and ensure that we are appropriately structured and resourced to deliver increased and sustainable value to our shareholders and customers. On February 7, 2023, our Board of Directors approved an integration plan (the "Integration Plan"), which is intended to streamline and simplify operations, particularly around our recent acquisitions and the resulting redundant operations and offerings. The Restructuring and other costs primarily consist of severance and related benefits.

⁽²⁾

Calculated as Adjusted EBITDA as a percentage of total sales.

⁽³⁾

During 2023, we recorded a charge of $9.3 million, increasing our reserve for excess and obsolete inventory, based on our analysis of our inventory reserves in connection with our strategy to simplify our product portfolio and cease selling certain products.