Press Releases

iRobot Reports Strong Second-Quarter Financial Results
Increases Full-Year 2016 Financial Expectations; U.S. Q2 Revenue Up More Than 25%

BEDFORD, Mass., July 26, 2016 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended July 2, 2016.

iRobot logo.

"Our second quarter revenue was at the high end of our expectations, while Q2 earnings exceeded expectations. Based on our Q2 results, and our outlook for the rest of 2016, fueled by the U.S. momentum, we are increasing our full-year financial expectations. We now expect 2016 revenue of $640 to $645 million, Net Income of between $36 and $40 million, EPS of between $1.26 and $1.40 and Adjusted EBITDA of $85 to $90 million," said Colin Angle, chairman and chief executive officer of iRobot.

"These expectations reflect our confidence that consumer revenue will grow roughly 14% for the full year, driven by strong demand in the U.S. The success of the marketing programs we ran during Q2 for Mother's Day and Father's Day resulted in sell through that was up roughly 20% in the quarter versus last year. We anticipate this momentum to continue throughout 2016.

"The revenue split between Q3 and Q4 is always difficult to predict due to the timing and shipment of consumer products for the holiday season. At this point, we expect revenue to increase sequentially Q2 to Q3 and be much higher in Q4, consistent with last year."

Financial Results

  • Note: Financial results for the second quarter and first half of 2015 include the Defense & Security business which was sold on April 4, 2016. The results for the Defense & Security business included in our financial results for the second quarter of 2016 include $0.8 million for the gain on the sale and support services provided by iRobot, which are recorded as non-operating income, offset by $0.3 million of divestiture costs included in general and administrative expense. First-half 2016 results include first-quarter 2016 results for the Defense & Security business previously reported, and the net $0.6 million noted above.
  • Revenue for the second quarter of 2016 was $148.7 million, compared with $148.8 million for the second quarter of 2015. Revenue for the first half of 2016 was $279.5 million, compared with $266.7 million last year.
  • Net income in the second quarter of 2016 was $4.8 million, compared with $7.3 million in the second quarter of 2015. For the first half of 2016, net income was $8.7 million, compared with $12.0 million a year ago.
  • Quarterly earnings per share were $0.17 for the second quarter of 2016, compared with $0.24 in the second quarter of 2015. First-half earnings per share were $0.30, compared with $0.40 in the first half of 2015.
  • Adjusted EBITDA for the second quarter of 2016 was $15.9 million, compared with $17.8 million in the second quarter of 2015. For the first half of 2016, Adjusted EBITDA was $30.1 million, compared with $30.9 million a year ago.

Business Highlights

  • In the U.S., consumer revenue grew more than 25% year over year driven by demand for our high end Roomba 980, as well as for our 600 series Roomba and the Braava family of wet floor care robots.
  • Our new office and team in Shanghai are operating, and we have begun executing our more direct ecommerce strategy for China.
  • Japan sell through continued to accelerate in Q2 due to the successful implementation of iRobot marketing programs in that region, and we are on track to deliver modest year-over-year growth as originally anticipated.

Financial Expectations

Management provides the following expectations with respect to the third quarter ending October 1, 2016 and fiscal year ending December 31, 2016.

 

Q3 2016:


Revenue         

$155 - $160 million

Net Income      

$11 - $13 million

Earnings Per Share 

$0.40 - $0.45

Adjusted EBITDA      

$25 - $28 million



Fiscal Year 2016:


Revenue                    

$640 - $645 million

Net Income                 

$36 - $40 million

Earnings Per Share   

$1.26 - $1.40

Adjusted EBITDA        

$85 - $90 million 

 

Second-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the second fiscal quarter 2016, business outlook, and outlook for third-quarter and fiscal year 2016 financial performance. Pertinent details include: 

Date:             

Wednesday, July 27, 2016  

Time:           

8:30 a.m. ET

Call-In Number: 

847-619-6396

Passcode:        

40924298

 

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-EventDetails&EventId=5206141.  

An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event. A replay of the telephone conference call will be available through August 4, and can be accessed by dialing 630-652-3042, passcode 40924298#.

About iRobot Corp.

iRobot designs and builds robots that empower people to do more. The company's home robots help people find smarter ways to clean and accomplish more in their daily lives. iRobot's portfolio of solutions features proprietary technologies for the connected home and advanced concepts in navigation, mobility, manipulation and artificial intelligence. For more information about iRobot, please visit www.irobot.com.

For iRobot Investors

Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, iRobot Corp.'s expectations regarding future financial performance, future operating performance and growth, demand for our robots, quarterly revenue growth, and anticipated revenue, net income, earnings per share and Adjusted EBITDA for fiscal year 2016 and the third quarter ending October 1, 2016. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market, the financial strength of our customers and retailers, general economic conditions, market acceptance of our products, and competition. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot Corp. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot Corp., see the disclosure contained in our public filings with the Securities and Exchange Commission.

This press release includes Adjusted EBITDA, which is a non-GAAP financial measure as defined by SEC Regulation G.  We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) expense, and restructuring expense. A reconciliation between net income and Adjusted EBITDA is provided in the financial tables at the end of this press release.

 

iRobot Corporation

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)














 For the three months ended


 For the six months ended


July 2,

June 27,


July 2,

 June 27,


2016

2015


2016

2015







Revenue

$       148,696

$       148,788


279,500

266,749

Cost of revenue

79,044

78,755


147,887

143,008







Gross margin

69,652

70,033


131,613

123,741







Operating expenses:






  Research and development

18,544

18,732


38,272

37,764

  Selling and marketing

29,107

27,329


49,047

41,517

  General and administrative

16,143

12,905


32,907

25,494

      Total operating expenses

63,794

58,966


120,226

104,775







Operating income

5,858

11,067


11,387

18,966







Other income (expense), net

1,419

(61)


1,619

(855)







Income before income taxes

7,277

11,006


13,006

18,111

Income tax expense

2,463

3,754


4,260

6,105

Net income

$           4,814

$           7,252


$           8,746

$         12,006







Net income per share






   Basic

$            0.18

$            0.24


$            0.31

$            0.40

   Diluted

$            0.17

$            0.24


$            0.30

$            0.40







Number of shares used in per share calculations






   Basic

27,360

29,785


28,198

29,719

   Diluted

27,836

30,268


28,717

30,283













Stock-based compensation included in above figures:






        Cost of revenue

$             150

$             177


$             371

$             392

        Research and development

741

942


1,570

1,774

        Selling and marketing

387

306


872

615

        General and administrative

2,708

2,030


5,065

3,781

            Total

$           3,986

$           3,455


$           7,878

$           6,562







 

 

iRobot Corporation

 Condensed Consolidated Balance Sheets

 (unaudited, in thousands)






July 2,


 January 2,


2016


2016





 Assets








 Cash and cash equivalents

$          138,466


$        179,915

 Short term investments

34,827


33,124

 Accounts receivable, net

59,191


104,679

 Unbilled revenue

139


452

 Inventory

46,899


61,678

 Other current assets

16,210


9,501

   Total current assets

295,732


389,349

 Property and equipment, net

25,833


26,850

 Deferred tax assets

30,435


31,721

 Goodwill

41,041


48,751

 Intangible assets, net

13,936


15,664

 Other assets

9,836


9,408

 Total assets

$          416,813


$        521,743





 Liabilities and stockholders' equity








 Accounts payable

$           43,545


$          61,655

 Accrued expenses

12,506


15,954

 Accrued compensation

12,550


15,752

 Deferred revenue and customer advances

1,279


3,265

   Total current liabilities

69,880


96,626

 Long term liabilities

7,392


7,706

 Stockholders' equity

339,541


417,411

 Total liabilities and stockholders' equity

$          416,813


$        521,743





 

 

iRobot Corporation

  Consolidated Statements of Cash Flows

 (unaudited, in thousands)








 For the six months ended


July 2,

 June 27,


2016

2015

Cash flows from operating activities:



Net income

$            8,746

$          12,006

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization

6,729

7,011

Loss on disposal of property and equipment

182

24

Gain on sale of business unit

(433)

-

Gain on sale of cost method investment

(634)

-

Stock-based compensation

7,878

6,562

Deferred income taxes, net

1,602

825

Tax benefit of excess stock-based compensation deductions

(776)

(725)

Non-cash director deferred compensation

50

75

Changes in operating assets and liabilities — (use) source



Accounts receivable

39,202

5,463

Unbilled revenue

198

1,729

Inventory

2,698

1,723

Other assets

(7,432)

(787)

Accounts payable

(16,496)

(12,096)

Accrued expenses

(3,126)

(3,136)

Accrued compensation

(2,717)

(4,816)

Deferred revenue and customer advances

(211)

(1,734)

Long term liabilities

164

(366)

Net cash provided by operating activities

35,624

11,758




Cash flows from investing activities:



Additions of property and equipment

(4,881)

(5,539)

Change in other assets

(428)

(1,015)

Proceeds from sale of business unit

23,520

-

Purchase of investments

(9,552)

(14,180)

Sales of investments

8,000

13,000

Proceeds from sale of cost method investment

634

-

Net cash provided by (used in) investing activities

17,293

(7,734)




Cash flows from financing activities:



Proceeds from stock option exercises

3,143

2,102

Income tax withholding payment associated with restricted stock vesting

(1,264)

(1,268)

Stock repurchases

(97,021)

(4,924)

Tax benefit of excess stock-based compensation deductions

776

725

Net cash used in financing activities

(94,366)

(3,365)




Net increase (decrease) in cash and cash equivalents

(41,449)

659

Cash and cash equivalents, at beginning of period

179,915

185,957

Cash and cash equivalents, at end of period

$        138,466

$        186,616




 

 

iRobot Corporation

Supplemental Information

(unaudited)














 For the three months ended


 For the six months ended


July 2,

June 27,


July 2,

June 27,


2016

2015


2016

2015







Revenue: *












Consumer

$        148,104

$        136,824


$           275,792

$             247,909







    Domestic

$          66,483

$          52,178


$           129,643

$               92,805

    International

$          81,621

$          84,646


$           146,149

$             155,104













Defense & Security

$                 -

$          11,790


$              3,075

$               18,316













Gross Margin Percent:






    Consumer

51.1%

51.1%


51.8%

51.1%

    Defense & Security

0.0%

42.2%


16.6%

39.0%

    Total Company

46.8%

47.1%


47.1%

46.4%



















Units shipped - Consumer*

674

592


1,224

1,083







Average gross selling prices for robot units - Consumer

$               240

$               246


$                 248

$                   243







Days sales outstanding

36

41


36

41







Days in inventory

54

53


54

53







Headcount

554

606


554

606













* in thousands






 

 

iRobot Corporation 


 Adjusted EBITDA Reconciliation to GAAP


 (unaudited, in thousands)

















 For the three months ended


 For the six months ended



July 2,

June 27,


July 2,

June 27,



2016

2015


2016

2015









 Net income

$            4,814

$            7,252


$            8,746

$          12,006









 Interest income, net

(198)

(176)


(470)

(330)


 Income tax expense

2,463

3,754


4,260

6,105


 Depreciation

2,446

2,529


4,913

5,150


 Amortization

908

921


1,816

1,861









 EBITDA

10,433

14,280


19,265

24,792
















 Stock-based compensation expense

3,986

3,455


7,878

6,562


 Net merger, acquisition and divestiture (income) expense

(505)

-


853

-


 Net intellectual property litigation (income) expense

305

30


361

(480)


 Restructuring expense

1,702

-


1,702

-









 Adjusted EBITDA

$          15,921

$          17,765


$          30,059

$          30,874





































Use of Non-GAAP Financial Measures














In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) expense, and restructuring expense. The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.














The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP.  Among other things, Adjusted EBITDA does not reflect the Company's actual cash expenditures.  Other companies may calculate similar measures differently than iRobot, limiting their usefulness as comparative tools.  iRobot compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.









 

 

iRobot Corporation 


 Reconciliation of GAAP to Non-GAAP Expectations


 (unaudited, in millions)













 Third Quarter Ending

 Full Year Ending



  October 1, 2016


  December 31, 2016







 Net income

 $11.0 - $13.0


 $36.0 - $40.0







 Interest income, net

 (0.0) - (0.2)


 (0.5) - (0.9)


 Income tax expense

 5.2 - 6.1


 17.1 - 19.0


 Depreciation

 2.3 - 2.7


 9.5 - 10.5


 Amortization

0.9


3.6







 EBITDA

 20.0 - 22.7


 66.0 - 72.6












 Stock-based compensation expense

 3.6 - 4.6


 15.5 - 16.3


 Net merger, acquisition and divestiture (income) expense

 0.1 - 0.2


 1.4 - 1.8


 Net intellectual property litigation (income) expense

 0.1 - 0.4


 0.4 - 0.8


 Restructuring expense

0.0


1.7







 Adjusted EBITDA

 $25.0 - $28.0


 $85.0 - $90.0



























Use of Non-GAAP Financial Measures










In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) expense, and restructuring expense. The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.












The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company's operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP.  Among other things, Adjusted EBITDA does not reflect the Company's actual cash expenditures.  Other companies may calculate similar measures differently than iRobot, limiting their usefulness as comparative tools.  iRobot compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.














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SOURCE iRobot Corp.

For further information: Elise Caffrey, Investor Relations, iRobot Corp., (781) 430-3003, ecaffrey@irobot.com, Matthew Lloyd, Media Relations, iRobot Corp., (781) 430-3720, mlloyd@irobot.com