FARO has announced its financial results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Financial Summary
Total sales were $104.1 million for fourth quarter 2019, as compared with $112.8 million for fourth quarter 2018. The decrease was a result of continuing market softness in many of the Company’s served markets, with particular softness in the automotive and broader Asian markets. New order bookings were $116.9 million for the fourth quarter 2019, down 4% as compared to $122.2 million for the fourth quarter 2018.
The Company recorded non-cash charges of approximately $49 million in the fourth quarter of 2019 in connection with the implementation of its new strategic plan. The Company expects to incur an additional $26 million to $36 million of restructuring charges in the first half of 2020 related to the restructuring plan approved by the Board of Directors on February 14, 2020. Taken together, the Company expects to incur approximately $75 million to $85 million in total charges related to the implementation of its plans, approximately $18 million to $22 million of which are expected to result in cash payments.
The Company’s cash and short-term investments increased $14.5 million to $158.5 million as of the end of the fourth quarter of 2019, and the Company remained debt-free.
Full Year 2019 Financial Summary
Total sales were $381.8 million for the full year 2019, as compared with $403.6 million for 2018. New order bookings were $418.4 million for 2019, down 2% as compared to $425.3 million for 2018.
Gross margin was 51.9% for 2019, as compared to 54.9% for 2018.
Net loss was $62.1 million, as compared to net income of $4.9 million.
“In the fourth quarter, we completed our strategic planning process and have identified opportunities to leverage FARO’s strong market position that we expect will drive long-term profit growth,” stated Michael Burger, President and Chief Executive Officer. “We believe these strategic initiatives will enable long-term revenue growth from our targeted markets while also simplifying and reducing our cost structure by an estimated $40 million, on an annualized basis, in the fourth quarter of 2020. While the near-term overall market for our products remains soft, due in large part to conditions in the automotive and broader Asian markets, we are excited about our plans to transform FARO’s business and generate long-term shareholder value.”
Highlighted Strategic Initiatives
- Continue focus on core 3D growth markets; including 3D metrology, architecture, engineering and construction, or AEC, and public safety analytics
- Increase focus on software and solution offerings to create differentiated products that enhance customer value
- Revise go-to-market strategy to leverage industry proven customer intimacy model and improve the efficiency and effectiveness of FARO’s sales and marketing engine
- Implement a functional organization structure to simplify processes and materially reduce overhead expenses
- Enable an estimated $40 million in annualized pre-tax cost savings in Q4 2020 when compared to 2019 expense levels
- Target financial model of 55% to 60% non-GAAP gross margin and 40% to 43% non-GAAP operating expenses as a percentage of total sales
In a filing to the SEC the company stated: On February 14, 2020, the Company’s Board of Directors approved a global restructuring plan, which is intended to support its strategic plan in an effort to improve operating performance and ensure that the Company is appropriately structured and resourced to deliver sustainable value to its customers and shareholders. Key activities under the Restructuring Plan include a focus on efficiency and cost-saving efforts, which includes decreasing total headcount by approximately 500 employees upon the completion of the Restructuring Plan. These activities are expected to be substantially completed by the end of 2021.
At December 31, 2019, Faro had 1,818 full-time employees, consisting of 804 sales and marketing professionals, 308 customer service/training/application engineering specialists, 250 production and supply chain staff, 242 research and development staff, and 214 administrative staff.
For more information: www.faro.com