(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.
"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 .
