LAKE MARY, Fla., Feb. 22, 2017 /PRNewswire/
-- FARO® (NASDAQ: FARO), the world's most trusted
source for 3D measurement and imaging solutions for factory
metrology, construction BIM-CIM, product design, public safety
forensics, and 3D solutions, today announced its financial results
for the fourth quarter and fiscal year ended December 31, 2016.
![](https://mma.prnewswire.com/media/95369/faro_technologies__inc__logo.jpg)
"2016 was a transformative year for FARO. We undertook a
major reorganization that aligned and harmonized our resources by
global vertical market segments, and modernized the efficiency of
our sales processes and other functional areas. We
accelerated and streamlined R&D to attain a sustained drumbeat
of new and enhanced product introductions, and increased
acquisition activity to further build out our product lines and
technological capabilities. We expect to complete the
remaining primary reorganization initiatives by mid-2017," stated
Dr. Simon Raab, President and Chief
Executive Officer. "In light of the substantial
reorganizational disruption, FARO was able to increase sales, gross
margin, and operating income, as well as generate cash flow from
operations sufficient to self-fund $27.7
million of acquisitions."
Fiscal Year 2016
Sales for fiscal year 2016 were $325.6
million, up 2.5% compared with $317.5
million for fiscal year ended December 31, 2015.
Excluding an unfavorable foreign exchange impact of approximately
$1.8 million, fiscal year 2016 sales
would have increased by 3.1%. Our sales increase was
primarily driven by marginally higher average selling prices and
higher service revenue, partially offset by a modest decrease in
units sold. New order bookings at $330.7 million increased by 1.6% compared with
$325.6 million for the prior fiscal
year.
Gross margin was 54.7%, representing an increase of 2.0
percentage points over the comparable prior year period mostly due
to higher average selling prices and improved inventory
management.
Operating income was $13.3
million, up 1.2% compared with $13.1
million for the prior year, reflecting an increase in gross
margin on slightly higher sales offset partly by an increase in
operating expenses arising largely from our investment in new
product development, acquisition-related expenses, higher
headcount, and increased incentive compensation. Operating
margin was 4.1% for both of our fiscal years 2016 and 2015.
Net income at $11.1 million or
$0.67 per diluted share in 2016 was
$1.7 million lower than prior year,
reflecting increased income taxes more than offsetting higher
operating income.
FARO generated $37.6 million in
cash flow from operations in 2016, up $9.6
million over the prior year largely as a result of improved
working capital management. The majority of this cash was
deployed for acquisitions, aggregating to $27.7 million for 2016. As of December 31, 2016 cash and short-term investments
totaled $149.1 million, of which
$87.3 million was held by foreign
subsidiaries.
Fourth Quarter 2016
Sales for the quarter ended December 31,
2016 were $91.7 million, up
0.4% compared with $91.3 million in
the fourth quarter last year. Excluding the effect of
approximately $1.5 million in
unfavorable foreign exchange impacts, fourth quarter 2016 sales
would have increased by 2.0% over fourth quarter of 2015. Our
sales increase was primarily driven by a significant increase in
service revenue, partially offset by lower product sales due both
to lower average selling prices arising from reducing service and
sales demonstration inventory and a decrease in units sold.
New order bookings were $95.8 million
for the fourth quarter of 2016, down 4.6% compared with
$100.4 million for the fourth quarter
of 2015.
Gross margin for the quarter was 53.1% unchanged compared with
the prior year period primarily due to strong service margin,
offset by lower average selling prices.
Operating income for the quarter was $3.6
million compared with $6.8
million in the prior year period reflecting growth-related
initiatives to increase selling headcount and accelerate new
product development. Operating margin was 3.9% in the fourth
quarter of 2016, compared with 7.4% in the prior year period.
Net income for the quarter was $3.5
million or $0.21 per diluted
share, compared with $8.9 million or
$0.52 per diluted share in the prior
year period.
Dr. Raab further stated, "In the fourth quarter, we introduced
our next generation Focuss Laser Scanner, acquired
MWF-Technology GmbH to provide our broad customer base with an
innovative product offering in augmented reality technology, and
invested in customer facing staffing to drive higher sales in the
upcoming year."
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.
FARO's global headquarters is located in Lake Mary, Florida. The Company also has
a technology center and manufacturing facility consisting of
approximately 90,400 square feet located in Exton, Pennsylvania containing research and
development, manufacturing and service operations of our FARO Laser
TrackerTM and FARO Cobalt Array Imager product
lines. The Company's European regional headquarters is
located in Stuttgart, Germany and
its Asia Pacific regional
headquarters is located in Singapore. FARO has other offices in
Australia, Brazil, Canada, China, France, Germany, India, Italy,
Japan, Malaysia, Mexico, the
Netherlands, Poland,
Portugal, Singapore, South
Korea, Spain, Switzerland, Thailand, Turkey, the United
Kingdom, the United States,
and Vietnam.
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,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
SALES
|
|
|
|
|
|
|
|
Product
|
$
|
73,778
|
|
|
$
|
77,558
|
|
|
$
|
256,010
|
|
|
$
|
259,842
|
|
Service
|
17,920
|
|
|
13,769
|
|
|
69,574
|
|
|
57,706
|
|
Total
sales
|
91,698
|
|
|
91,327
|
|
|
325,584
|
|
|
317,548
|
|
COST OF
SALES
|
|
|
|
|
|
|
|
Product
|
33,032
|
|
|
33,406
|
|
|
107,965
|
|
|
114,257
|
|
Service
|
9,989
|
|
|
9,398
|
|
|
39,659
|
|
|
36,055
|
|
Total cost of sales
(exclusive of depreciation and amortization, shown separately
below)
|
43,021
|
|
|
42,804
|
|
|
147,624
|
|
|
150,312
|
|
GROSS
PROFIT
|
48,677
|
|
|
48,523
|
|
|
177,960
|
|
|
167,236
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Selling and
marketing
|
23,634
|
|
|
21,328
|
|
|
79,870
|
|
|
79,837
|
|
General and
administrative
|
9,477
|
|
|
10,041
|
|
|
40,813
|
|
|
36,370
|
|
Depreciation and
amortization
|
4,135
|
|
|
3,195
|
|
|
13,868
|
|
|
11,217
|
|
Research and
development
|
7,815
|
|
|
7,195
|
|
|
30,125
|
|
|
26,690
|
|
Total operating
expenses
|
45,061
|
|
|
41,759
|
|
|
164,676
|
|
|
154,114
|
|
INCOME FROM
OPERATIONS
|
3,616
|
|
|
6,764
|
|
|
13,284
|
|
|
13,122
|
|
OTHER (INCOME)
EXPENSE
|
|
|
|
|
|
|
|
Interest income,
net
|
(45)
|
|
|
(19)
|
|
|
(164)
|
|
|
(55)
|
|
Other (income)
expense, net
|
(2)
|
|
|
(1,150)
|
|
|
822
|
|
|
371
|
|
INCOME BEFORE INCOME
TAX EXPENSE (BENEFIT)
|
3,663
|
|
|
7,933
|
|
|
12,626
|
|
|
12,806
|
|
INCOME TAX EXPENSE
(BENEFIT)
|
118
|
|
|
(952)
|
|
|
1,519
|
|
|
(7)
|
|
NET INCOME
|
$
|
3,545
|
|
|
$
|
8,885
|
|
|
$
|
11,107
|
|
|
$
|
12,813
|
|
NET INCOME PER SHARE
- BASIC
|
$
|
0.21
|
|
|
$
|
0.52
|
|
|
$
|
0.67
|
|
|
$
|
0.74
|
|
NET INCOME PER SHARE
- DILUTED
|
$
|
0.21
|
|
|
$
|
0.52
|
|
|
$
|
0.67
|
|
|
$
|
0.74
|
|
Weighted average
shares - Basic
|
16,676,764
|
|
|
17,051,427
|
|
|
16,654,786
|
|
|
17,288,665
|
|
Weighted average
shares - Diluted
|
16,720,571
|
|
|
17,103,622
|
|
|
16,681,710
|
|
|
17,389,473
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(UNAUDITED)
|
|
(in thousands, except
share data)
|
|
December 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
106,169
|
|
|
$
|
107,356
|
|
Short-term
investments
|
|
42,942
|
|
|
42,994
|
|
Accounts receivable,
net
|
|
61,364
|
|
|
69,918
|
|
Inventories,
net
|
|
51,886
|
|
|
45,571
|
|
Deferred income tax
assets, net
|
|
7,565
|
|
|
7,792
|
|
Prepaid expenses and
other current assets
|
|
16,304
|
|
|
18,527
|
|
Total current
assets
|
|
286,230
|
|
|
292,158
|
|
Property and
equipment:
|
|
|
|
|
Machinery and
equipment
|
|
57,063
|
|
|
54,124
|
|
Furniture and
fixtures
|
|
6,099
|
|
|
5,945
|
|
Leasehold
improvements
|
|
18,778
|
|
|
18,471
|
|
Property and
equipment at cost
|
|
81,940
|
|
|
78,540
|
|
Less: accumulated
depreciation and amortization
|
|
(50,262)
|
|
|
(42,594)
|
|
Property and
equipment, net
|
|
31,678
|
|
|
35,946
|
|
Goodwill
|
|
46,744
|
|
|
26,371
|
|
Intangible assets,
net
|
|
22,279
|
|
|
15,985
|
|
Service and sales
demonstration inventory, net
|
|
29,136
|
|
|
33,709
|
|
Deferred income tax
assets, net
|
|
6,742
|
|
|
4,050
|
|
Other long-term
assets
|
|
905
|
|
|
967
|
|
Total
assets
|
|
$
|
423,714
|
|
|
$
|
409,186
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
11,126
|
|
|
$
|
11,345
|
|
Accrued
liabilities
|
|
24,572
|
|
|
22,574
|
|
Income taxes
payable
|
|
618
|
|
|
—
|
|
Current portion of
unearned service revenues
|
|
27,422
|
|
|
26,114
|
|
Customer
deposits
|
|
2,872
|
|
|
2,998
|
|
Total current
liabilities
|
|
66,610
|
|
|
63,031
|
|
Unearned service
revenues - less current portion
|
|
13,813
|
|
|
15,025
|
|
Deferred income tax
liabilities
|
|
1,409
|
|
|
686
|
|
Other long-term
liabilities
|
|
2,225
|
|
|
2,800
|
|
Total
liabilities
|
|
84,057
|
|
|
81,542
|
|
|
|
|
|
|
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; 18,170,267 and
18,077,594 issued; 16,680,791 and 16,588,118 outstanding,
respectively
|
|
18
|
|
|
18
|
|
Additional paid-in
capital
|
|
212,602
|
|
|
206,996
|
|
Retained
earnings
|
|
183,436
|
|
|
172,329
|
|
Accumulated other
comprehensive loss
|
|
(24,561)
|
|
|
(19,861)
|
|
Common stock in
treasury, at cost - 1,489,476 shares
|
|
(31,838)
|
|
|
(31,838)
|
|
Total shareholders'
equity
|
|
339,657
|
|
|
327,644
|
|
Total liabilities and
shareholders' equity
|
|
$
|
423,714
|
|
|
$
|
409,186
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
(UNAUDITED)
|
|
|
|
Years ended
December 31,
|
(in
thousands)
|
|
2016
|
|
2015
|
|
2014
|
Net income
|
|
$
|
11,107
|
|
|
$
|
12,813
|
|
|
$
|
33,649
|
|
Currency translation
adjustments, net of tax
|
|
(4,700)
|
|
|
(13,166)
|
|
|
(13,961)
|
|
Comprehensive income
(loss)
|
|
$
|
6,407
|
|
|
$
|
(353)
|
|
|
$
|
19,688
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
Years Ended
December 31,
|
(in
thousands)
|
|
2016
|
|
2015
|
|
2014
|
CASH FLOWS
FROM:
|
|
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
11,107
|
|
|
$
|
12,813
|
|
|
$
|
33,649
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
13,868
|
|
|
11,217
|
|
|
7,428
|
|
Compensation for
stock options and restricted stock units
|
|
5,374
|
|
|
4,306
|
|
|
4,678
|
|
Provision for bad
debts (net recovery of)
|
|
898
|
|
|
346
|
|
|
(306)
|
|
Loss on disposal of
assets
|
|
860
|
|
|
947
|
|
|
—
|
|
Write-down of
inventories
|
|
4,134
|
|
|
10,878
|
|
|
3,272
|
|
Deferred income tax
benefit
|
|
(2,002)
|
|
|
(655)
|
|
|
(4,707)
|
|
Income tax benefit
from exercise of stock options
|
|
(357)
|
|
|
(313)
|
|
|
(169)
|
|
Change in operating
assets and liabilities:
|
|
|
|
|
|
|
Decrease (increase)
in:
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
6,727
|
|
|
9,584
|
|
|
(24,587)
|
|
Inventories,
net
|
|
(6,729)
|
|
|
(18,021)
|
|
|
(21,995)
|
|
Prepaid expenses and
other assets
|
|
3,588
|
|
|
(2,834)
|
|
|
(3,501)
|
|
(Decrease) increase
in:
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
534
|
|
|
(6,401)
|
|
|
8,867
|
|
Income taxes
payable
|
|
618
|
|
|
—
|
|
|
(1,560)
|
|
Customer
deposits
|
|
(1,310)
|
|
|
1,114
|
|
|
(724)
|
|
Unearned service
revenues
|
|
273
|
|
|
5,051
|
|
|
5,313
|
|
Net cash provided by
operating activities
|
|
37,583
|
|
|
28,032
|
|
|
5,658
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from sale of
investments
|
|
—
|
|
|
22,001
|
|
|
—
|
|
Purchases of property
and equipment
|
|
(7,720)
|
|
|
(14,169)
|
|
|
(18,722)
|
|
Payments for
intangible assets
|
|
(1,657)
|
|
|
(2,140)
|
|
|
(1,221)
|
|
Acquisition of
business, net of cash received
|
|
(27,708)
|
|
|
(12,066)
|
|
|
(1,150)
|
|
Net cash used in
investing activities
|
|
(37,085)
|
|
|
(6,374)
|
|
|
(21,093)
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
Payments on capital
leases
|
|
(8)
|
|
|
(8)
|
|
|
(8)
|
|
Payments of
contingent consideration for acquisitions
|
|
(774)
|
|
|
—
|
|
|
—
|
|
Repurchase of common
stock
|
|
—
|
|
|
(22,763)
|
|
|
—
|
|
Income tax benefit
from exercise of stock options
|
|
357
|
|
|
313
|
|
|
169
|
|
Proceeds from
issuance of stock, net
|
|
674
|
|
|
2,287
|
|
|
3,369
|
|
Net cash provided by
(used in) financing activities
|
|
249
|
|
|
(20,171)
|
|
|
3,530
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
(1,934)
|
|
|
(3,420)
|
|
|
(3,436)
|
|
DECREASE IN CASH AND
CASH EQUIVALENTS
|
|
(1,187)
|
|
|
(1,933)
|
|
|
(15,341)
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF YEAR
|
|
107,356
|
|
|
109,289
|
|
|
124,630
|
|
CASH AND CASH
EQUIVALENTS, END OF YEAR
|
|
$
|
106,169
|
|
|
$
|
107,356
|
|
|
$
|
109,289
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
SEGMENT REPORTING
SCHEDULES
|
(UNAUDITED)
|
|
|
|
Factory
Metrology
|
|
Construction
BIM-CIM
|
|
Other
|
|
Total
|
2016
|
|
|
|
|
|
|
|
|
Net sales to external
customers
|
|
$
|
236,313
|
|
|
$
|
65,056
|
|
|
$
|
24,215
|
|
|
$
|
325,584
|
|
Segment
profit
|
|
$
|
69,845
|
|
|
$
|
18,250
|
|
|
$
|
9,995
|
|
|
$
|
98,090
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
40,813
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
13,868
|
|
Research and
development
|
|
|
|
|
|
|
|
30,125
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
|
$
|
13,284
|
|
|
|
Factory
Metrology
|
|
Construction
BIM-CIM
|
|
Other
|
|
Total
|
2015
|
|
|
|
|
|
|
|
|
Net sales to external
customers
|
|
$
|
222,745
|
|
|
$
|
70,849
|
|
|
$
|
23,954
|
|
|
$
|
317,548
|
|
Segment
profit
|
|
$
|
63,463
|
|
|
$
|
16,299
|
|
|
$
|
7,637
|
|
|
$
|
87,399
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
36,370
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
11,217
|
|
Research and
development
|
|
|
|
|
|
|
|
26,690
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
|
|
|
|
|
|
$
|
13,122
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/faro-reports-fourth-quarter-and-fiscal-year-2016-financial-results-300411964.html
SOURCE FARO Technologies, Inc.