"FARO delivered strong fourth quarter results, closing out a transformational year amid uncertainty caused by the pandemic. Our fourth quarter performance demonstrates the effectiveness of our more efficient sales organization and the profit potential of our lower cost structure. We enter 2021 as a stronger, more efficient business with a highly scalable financial model," stated Michael Burger, President and Chief Executive Officer. "As the business environment returns to normalized levels and we execute on our software and solution development initiatives, we believe we are well positioned to generate significant shareholder returns in the years ahead."
Fourth Quarter 2020 Financial Summary
Total sales were $93.0 million for fourth quarter 2020 representing a 31% sequential quarterly increase when compared to $70.7 million in the third quarter 2020, and an 11% decrease when compared with $104.1 million for fourth quarter 2019. The sales level fluctuations were primarily a result of the COVID-19 impact on customer demand in our served markets. Similarly, new order bookings of $95.1 million increased 32% sequentially compared to $72.0 million in the third quarter 2020, but were down 19% when compared to $116.9 million for the fourth quarter 2019.
Gross margin was 54.6% for the fourth quarter 2020, as compared to 41.9% for the same prior year period. Non-GAAP gross margin was 54.9% for the fourth quarter 2020 compared to 55.7% for the fourth quarter 2019. The annual decrease in non-GAAP gross margin was primarily a result of the impact of lower sales resulting from the COVID-19 pandemic.
Operating expense, which includes $2.9 million of non-recurring charges, was $48.1 million for the fourth quarter 2020, as compared to $91.8 million for the same prior year period. Non-GAAP operating expense was $43.0 million for the fourth quarter 2020 compared to $53.3 million for the fourth quarter 2019.
Net income was $27.4 million, or $1.52 per share, for the fourth quarter 2020, as compared to a net loss of $49.7 million, or $2.85 per share, for the fourth quarter 2019. GAAP Net Income included a $19 million gain that resulted from the booking of a deferred tax asset associated with the completion of a fourth quarter tax structure restructuring. Non-GAAP net income was $6.3 million, or $0.35 per share, for the fourth quarter 2020 compared to Non-GAAP net income of $3.1 million, or $0.18 per share, for the fourth quarter 2019.
Adjusted EBITDA was $11.1 million, or 12% of Non-GAAP total sales, for the fourth quarter of 2020 compared to Adjusted EBITDA of $8.1 million, or 8% of Non-GAAP total sales, for the fourth quarter of 2019.
*A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. An additional explanation of these measures is included below under the heading "Non-GAAP Financial Measures".
The Company's cash and short-term investments increased $22.0 million to $185.6 million as of the end of the fourth quarter of 2020, and the Company remained debt-free.
Full Year 2020 Financial Summary
Total sales were $303.8 million for the full year 2020, as compared with $381.8 million for 2019. Non-GAAP total sales were $304.4 million for 2020 compared to $387.6 million for 2019. New order bookings were $306.4 million for 2020, as compared to $418.4 million for 2019.
Gross margin was 52.6% for 2020, as compared to 51.9% for 2019. Non-GAAP gross margin was 52.9% for 2020 compared to 56.5% for 2019.
Net income was $0.6 million, or $0.04 per share, for 2020, as compared to net loss of $62.1 million, or $3.58 per share, for 2019. Non-GAAP net loss was $1.8 million, or $0.10 per share, for 2020 compared to net income of $11.2 million, or $0.65 per share, for 2019.
The Company will host a conference call to discuss these results on Thursday, February 18, 2021 at 8:00 a.m. ET. Interested parties can access the conference call by dialing (877) 876-9174 (U.S.) or +1 (785) 424-1669 (International) and using the passcode FARO. A live webcast will be available in the Investor Relations section of FARO's website at: https://www.faro.com/about-faro/investor-relations/events
A replay webcast will be available in the Investor Relations section of the company's web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.
For 40 years, FARO has provided industry-leading technology solutions that enable customers to quickly and easily measure their world, and then use that data to make smarter decisions faster. FARO continues to be a pioneer in bridging the digital and physical worlds through data-driven reliable accuracy, precision and immediacy. For more information, visit http://www.faro.com
Non-GAAP Financial Measures