FARO Reports Fourth Quarter and Fiscal Year 2015 Financial Results

LAKE MARY, Fla., Feb. 24, 2016 /PRNewswire/ -- FARO Technologies, Inc. FARO today announced its financial results for the fourth quarter and fiscal year ended December 31, 2015. 

FARO logo

"FARO performed well in 2015 on many levels," stated Dr. Simon Raab, Chairman and Interim Chief Executive Officer. "Although our financial results did not meet our internal targets, we successfully launched the FARO Freestyle3D laser scanner, completed two acquisitions to expand our position in the AEC and public safety markets, completed our implementation of our new global enterprise resource planning system as well as continued the development of new products in our R&D pipeline, culminating most recently in our January launch of the new FARO Cobalt Array Imager.  We will build on these successes and many other initiatives in 2016."

Fourth quarter results

Revenues for the quarter ended December 31, 2015 were $91.3 million, compared with $104.2 million in the fourth quarter last year. 

Gross margin for the quarter was 53.3%, compared with 55.0% in the prior year period reflecting higher costs consistent with lower production volume as well a $0.7 million severance charge for production and service workforce reductions that commenced in the third quarter.  Gross profit of $48.7 million in the fourth quarter of 2015 compared with $57.3 million in the fourth quarter of 2014 reflecting lower sales volume.

Operating income for the quarter was $6.8 million compared with $13.0 million in the prior year period, reflecting lower sales volume and a total of $2.0 million in severance charges, partially offset by lower operating expenses.

Net income and EPS for the quarter was $8.9 million and $0.52, respectively, compared with $11.1 million and $0.64, respectively, in the prior year period.  Excluding the impact of the $2.0 million in severance costs, EPS would have been $0.60.

In the quarter, FARO repurchased 809,241 shares at a total cost of $22.8 million.

Full year results

Revenues for the full year 2015 were $317.5 million, 7.1% lower than the $341.8 million generated in 2014.  Revenues were essentially flat with 2014 when adjusted for a 7% unfavorable foreign exchange impact.

Gross margin for the year was 52.8%, compared with 55.3% in the prior year period primarily reflecting a third quarter inventory reserve adjustment of $7.9 million and fourth quarter severance costs of $0.7 million.  Excluding the impact of the inventory adjustment and severance charges, gross margin would have been 55.5%. Gross profit for the year was $167.7 million, or $21.2 million lower than the prior year. 

Operating income of $13.1 million was down from $37.3 million in 2014 reflecting lower revenue, an inventory reserve adjustment and severance charges.

Net income for the full year was $12.8 million, or $0.74 per share compared with $33.6 million, or $1.93 per share, in 2014.  Excluding the effect of the inventory reserve adjustment and severance charges, EPS would have been $1.15 in 2015.

"As one of FARO's founders and now assuming the interim CEO position, I am encouraged by the depth of talent in the organization, the robustness of our R&D programs and the strength of our long-standing customer relationships," stated Dr. Raab.  "I am as excited about FARO's future as I was in the early days of the Company's formation.  There is an array of opportunities to be explored in current and adjacent vertical markets where FARO can leverage its technologies and capabilities.  We are undertaking several important initiatives to target specific vertical markets, better leverage our sales organization through process modernization, and harmonize global functions to improve efficiencies and reduce SG&A as a percentage of sales while also accelerating the drumbeat of new product introductions.  We are looking forward to sharing these initiatives in more detail on our earnings call."

The financial information included in this press release is preliminary as the Company has not yet issued its audited financial statements and may differ from those results.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, such as statements about FARO's long-term growth, demand for and customer acceptance of FARO's products, anticipated improvement in the markets in which FARO operates, and FARO's product development and product launches. Statements that are not historical facts or that describe the Company's plans, objectives, projections, expectations, assumptions, strategies, or goals are forward-looking statements. In addition, words such as "is," "are," "expects," "continues," "may," "will," and similar expressions or discussions of FARO's plans or other intentions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to various known and unknown risks, uncertainties, and other factors that may cause actual results, performances, or achievements to differ materially from future results, performances, or achievements expressed or implied by such forward-looking statements. Consequently, undue reliance should not be placed on these forward-looking statements.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to:

  • the Company's inability to successfully identify and acquire target companies or achieve expected benefits from acquisitions that are consummated;
  • development by others of new or improved products, processes or technologies that make the Company's products less competitive or obsolete;
  • the Company's inability to maintain its technological advantage by developing new products and enhancing its existing products;
  • declines or other adverse changes, or lack of improvement, in industries that the Company serves or the domestic and international economies in the regions of the world where the Company operates and other general economic, business, and financial conditions;
  • the impact of fluctuations of foreign exchange rates; and
  • Other risks detailed in Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

Forward-looking statements in this release represent the Company's judgment as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law.

About FARO

FARO is the world's most trusted source for 3D measurement technology. The Company develops and markets computer-aided measurement and imaging devices and software. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes. The devices are used for inspecting components and assemblies, rapid prototyping, documenting large volume spaces or structures in 3D, surveying and construction, as well as for investigation and reconstruction of accident sites or crime scenes.

The Company's global headquarters is located in Lake Mary, FL; its European regional headquarters in Stuttgart, Germany; and its Asia Pacific regional headquarters in Singapore. FARO has other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, Portugal, India, China, Malaysia, Vietnam, Thailand, South Korea, and Japan.

More information is available at http://www.faro.com

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)












Three Months Ended 


Twelve Months Ended 



















(in thousands, except share and per share data)


December 31, 2015


December 31, 2014


December 31, 2015


December 31, 2014

SALES









Product


$                 77,558


$                 89,362


$               259,842


$               284,147

Service


13,769


14,791


57,706


57,679

Total sales


91,327


104,153


317,548


341,826

COST OF SALES 









Product


33,331


36,809


113,983


114,994

Service


9,347


10,071


35,888


37,918

Total cost of sales (exclusive of depreciation and amortization, shown separately below)


42,678


46,880


149,871


152,912

GROSS PROFIT


48,649


57,273


167,677


188,914










OPERATING EXPENSES









Selling and marketing


21,194


23,950


79,306


80,157

General and administrative


10,368


10,367


37,474


36,479

Depreciation and amortization


3,195


1,908


11,217


7,428

Research and development


7,128


8,070


26,558


27,510

Total operating expenses


41,885


44,295


154,555


151,574

INCOME FROM OPERATIONS


6,764


12,978


13,122


37,340

OTHER (INCOME) EXPENSE









Interest expense (income), net


(19)


(27)


(55)


(88)

Other expense (income), net


(1,150)


(16)


371


(94)

INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)

7,933


13,021


12,806


37,522

INCOME TAX (BENEFIT) EXPENSE


(952)


1,899


(7)


3,873

NET INCOME 


$                   8,885


$                 11,122


$                 12,813


$                 33,649

NET INCOME PER SHARE - BASIC


$                     0.52


$                     0.64


$                     0.74


$                     1.95










NET INCOME PER SHARE - DILUTED


$                     0.52


$                     0.64


$                     0.74


$                     1.93










Weighted average shares - Basic


17,051,427


17,288,507


17,288,665


17,247,727










Weighted average shares - Diluted


17,103,622


17,467,066


17,389,473


17,416,453










 

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)













December 31,


December 31,

(in thousands, except share data)


2015


2014

ASSETS





Current assets:





Cash and cash equivalents


$      107,356


$      109,289

Short-term investments


42,994


64,995

Accounts receivable, net


69,918


83,959

Inventories, net


45,571


43,094

Deferred income taxes, net


7,792


5,936

Prepaid expenses and other current assets


18,527


16,079

Total current assets


292,158


323,352

Property and equipment:





Machinery and equipment


54,124


45,254

Furniture and fixtures


5,945


6,156

Leasehold improvements


18,471


19,676

    Property and equipment at cost


78,540


71,086

Less: accumulated depreciation and amortization


(42,594)


(41,741)

    Property and equipment, net


35,946


29,345

Goodwill


26,371


19,205

Intangible assets, net


15,985


9,109

Service and sales demonstration inventory, net


33,709


36,886

Deferred income taxes, net


4,050


6,624

Other long-term assets


967


942

Total assets


$      409,186


$      425,463

LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$        11,345


$        15,437

Accrued liabilities


22,574


26,127

Current portion of unearned service revenues


26,114


23,572

Customer deposits


2,998


2,046

      Total current liabilities


63,031


67,182

Unearned service revenues - less current portion


15,025


13,799

Deferred income tax liability


686


-

Other long-term liabilities


2,800


628

Total liabilities


81,542


81,609











Shareholders' equity:





Preferred stock - par value $0.01, 10,000,000 shares authorized; none issued


-


-

Common stock - par value $.001, 50,000,000 shares authorized; 18,077,594 and 17,997,665 issued; 16,588,118 and 17,317,430 outstanding, respectively


18


18

Additional paid-in capital


206,996


200,090

Retained earnings


172,329


159,516

Accumulated other comprehensive loss


(19,861)


(6,695)

Common stock in treasury, at cost - 1,489,476 and 680,235 shares, respectively


(31,838)


(9,075)

Total shareholders' equity


327,644


343,854

Total liabilities and shareholders' equity


$      409,186


$      425,463






 

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)










Years ended December 31, 

(in thousands)


2015


2014


2013















Net income


$                 12,813


$                 33,649


$                 21,509

Currency translation adjustments, net of tax


(13,166)


(13,961)


925

Comprehensive (loss) income


$                 (353)


$                 19,688


$                 22,434








 

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)










Years Ended December 31,








(in thousands)


2015


2014


2013

CASH FLOWS FROM:







OPERATING ACTIVITIES:







Net income 


$                 12,813


$                 33,649


$                 21,509

Adjustments to reconcile net income to net cash provided by







    operating activities:







Depreciation and amortization


11,217


7,428


7,038

Compensation for stock options and restricted stock units


4,306


4,678


4,367

Provision for bad debts (net recovery of)


346


(306)


1,001

Loss on disposal of assets


947


-


-

Write-down of inventories


10,878


3,272


1,167

Deferred income tax (benefit) expense


(655)


(4,707)


645

Income tax benefit from exercise of stock options


(313)


(169)


(969)

Change in operating assets and liabilities:







Decrease (increase) in:







Accounts receivable


9,584


(24,587)


(4,053)

Inventories


(18,021)


(21,995)


(1,286)

Prepaid expenses and other assets


(2,834)


(3,501)


(3,346)

(Decrease) increase in:







Accounts payable and accrued liabilities


(6,401)


8,867


6,108

Income taxes payable


-


(1,560)


(2,028)

Customer deposits


1,114


(724)


353

Unearned service revenues


5,051


5,313


3,772

        Net cash provided by operating activities


28,032


5,658


34,278








INVESTING ACTIVITIES:







Proceeds from sale of investments


22,001


-


-

Purchases of property and equipment


(14,169)


(18,722)


(4,350)

Payments for intangible assets


(2,140)


(1,221)


(2,204)

Purchase of business acquired, net of cash 


(12,066)


(1,150)


-

        Net cash used in investing activities


(6,374)


(21,093)


(6,554)








 FINANCING ACTIVITIES:







Payments on capital leases


(8)


(8)


(93)

Repurchase of common stock


(22,763)


-


-

Income tax benefit from exercise of stock options


313


169


969

Proceeds from issuance of stock, net


2,287


3,369


5,444

        Net cash (used in) provided by financing activities


(20,171)


3,530


6,320








EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(3,420)


(3,436)


(2,647)








(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(1,933)


(15,341)


31,397








CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR


109,289


124,630


93,233








CASH AND CASH EQUIVALENTS, END OF YEAR


$               107,356


$               109,289


$               124,630








 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/faro-reports-fourth-quarter-and-fiscal-year-2015-financial-results-300225668.html

SOURCE FARO Technologies, Inc.

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