FARO Reports Fourth Quarter and Fiscal Year 2015 Financial Results

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

"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 Freestyle^3D 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

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SOURCE FARO Technologies, Inc.

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