⁽¹⁾ We exclude stock-based compensation, which is non-cash, from the non-GAAP financial measures because the Company believes that such exclusion provides a better comparison of results of ongoing operations for current and future periods with such results from past periods.

⁽²⁾ 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.

⁽³⁾ During the second quarter of 2023, we recorded a charge of $8.1 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.

⁽⁴⁾ The other tax adjustments primarily relate to the impact of certain jurisdictions maintaining a full valuation allowance where benefit is not accrued on U.S. GAAP pre-tax book losses.

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA

(UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2023

2022

2023

2022

Net loss

$      (28,245)

$        (8,574)

$      (49,409)

$      (18,261)

Interest (income) expense, net

1,003

(12)

1,838

(4)

Income tax expense

1,416

1,266

3,349

3,766

Depreciation and amortization

3,947

3,643

7,925

6,655

EBITDA

(21,879)

(3,677)

(36,297)

(7,844)

Other (income) expense, net

476

(1,636)

256

(1,649)

Stock-based compensation

4,950

3,491

8,584

6,358

Inventory reserve charge ⁽³⁾

8,132

—

8,132

—

Restructuring and other costs ⁽¹⁾

9,244

2,317

14,712

2,916

Adjusted EBITDA

$              923

$              495

$        (4,613)

$            (219)

Adjusted EBITDA margin ⁽²⁾

1.0 %

0.6 %

(2.7) %

(0.1) %