Press Releases

iRobot Reports Strong Third-Quarter Financial Results
Increases Full-Year 2017 Financial Expectations; U.S. Q3 Revenue Up 34%

BEDFORD, Mass., Oct. 24, 2017 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 30, 2017.

iRobot logo. (PRNewsFoto/iRobot Corp.)

"We delivered another outstanding quarter in which total revenue grew 22% over Q3 last year. Based on our Q3 results, and on our Q4 outlook fueled by continued positive momentum in the United States and in EMEA, where growth is accelerating, we are increasing our full-year 2017 financial expectations. The U.S. and EMEA are now expected to grow 40% and 45% respectively for the full year.

"And, we expect 2017 revenue of $870 to $880 million, a 33 – 34% increase over 2016 consumer revenue, operating income of between $55 and $65 million, and EPS of between $1.65 and $2.00, including the impact of our recent European distributor acquisition," said Colin Angle, chairman and chief executive officer of iRobot.

"U.S. household penetration of robotic vacuum cleaners is still less than 10%, so there is plenty of runway domestically and even more overseas. With the leading global segment share, at a time when adoption is accelerating, we are in an excellent position to capitalize on the momentum to drive future growth."  

Financial Results

  • Revenue for the third quarter of 2017 was $205.4 million, compared with $168.6 million for the third quarter of 2016.
  • Operating income in the third quarter of 2017 was $23.9 million, compared with $27.5 million in the third quarter of 2016.
  • Quarterly earnings per share were $0.76 for the third quarter of 2017, compared with $0.70 in the third quarter of 2016. Third-quarter 2017 EPS included a discrete tax benefit of $0.16 relating to the new 2017 stock compensation accounting standard and $0.08 from an adjustment to the original purchase price allocation for Japan.

Business Highlights

  • In the third quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q3 revenue growth of 22%. Third-quarter consumer revenue grew 34% in the United States, 31% in EMEA, and 65% in Japan over Q3 2016.
  • We successfully completed the acquisition of our largest European distributor, which we expect will enable us to capitalize on the current market momentum and drive robotic floor care adoption in EMEA.
  • We announced an agreement with Micro-Star International Co. representing an early win in an ongoing effort by iRobot to defend and protect its valuable intellectual property.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 30, 2017.

(Dollars in millions except Earnings Per Share)

Fiscal Year 2017

Previous

Current

Revenue

$840 - $860

$870 - $880

Operating Income

$50 - $60

$55 - $65

Earnings Per Share

$1.35 - $1.70

$1.65 - $2.00

Third-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the third fiscal quarter of 2017 and outlook for the fourth fiscal quarter of 2017 and fiscal year 2017 financial performance.

Pertinent details include:

Date:

Wednesday, October 25

Time:

8:30 a.m. ET

Call-In Number:

213-358-0894

Passcode:

15414375

A live, audio broadcast of the conference call also will be available at: http://investor.irobot.com/events/event-details/q3-2017-irobot-corp-earnings-conference-call.   

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 November 1, and can be accessed by dialing 404-537-3406, passcode 15414375.

About iRobot Corp.
iRobot, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba® Vacuuming Robot in 2002. Today, iRobot is a global enterprise that has sold more than 20 million robots worldwide. iRobot's product line, including the Roomba and the Braava™ family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot's engineers are building an ecosystem of robots and data to enable the smart home. 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; revenue growth; demand for our robots; and anticipated revenue, operating income and earnings per share for the fiscal year ended December 30, 2017. 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 and adoption 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, merger, acquisition and divestiture expense, gain on business acquisition, restructuring expense, net intellectual property litigation expense, and non-cash stock compensation 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 nine months ended 


September 30,

October 1,


September 30,

 October 1, 


2017

2016


2017

2016







Revenue

$       205,399

$       168,610


$       557,014

$       448,110

Cost of revenue

103,016

87,550


277,397

235,437







Gross margin

102,383

81,060


279,617

212,673







Operating expenses:






  Research and development

28,843

19,672


80,518

57,944

  Selling and marketing

28,646

17,925


91,344

66,972

  General and administrative

21,002

16,012


58,137

48,919

      Total operating expenses

78,491

53,609


229,999

173,835







Operating income

23,892

27,451


49,618

38,838







Other income, net

2,601

523


4,290

2,142







Income before income taxes

26,493

27,974


53,908

40,980

Income tax expense

4,411

8,462


7,565

12,722

Net income

$         22,082

$         19,512


$         46,343

$         28,258







Net income per share






   Basic

$            0.80

$            0.72


$            1.68

$            1.01

   Diluted

$            0.76

$            0.70


$            1.61

$            0.99







Number of shares used in per share calculations






   Basic

27,739

27,237


27,520

27,878

   Diluted

28,916

27,778


28,719

28,423













Stock-based compensation included in above figures:






        Cost of revenue

$             274

$             184


$             751

$             555

        Research and development

1,261

1,028


3,508

2,598

        Selling and marketing

728

444


1,869

1,316

        General and administrative

2,771

2,247


7,941

7,312

            Total

$           5,034

$           3,903


$         14,069

$         11,781

 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 






September 30,


 December 31, 


2017


2016





 Assets 








 Cash and cash equivalents 

$          241,786


$        214,523

 Short term investments 

36,442


39,930

 Accounts receivable, net 

76,956


72,909

 Unbilled revenue 

1,668


139

 Inventory 

92,813


50,578

 Other current assets 

18,395


5,591

   Total current assets 

468,060


383,670

 Property and equipment, net 

37,093


27,532

 Deferred tax assets 

35,088


30,585

 Goodwill 

41,041


41,041

 Intangible assets, net 

15,315


12,207

 Other assets 

14,064


12,877

 Total assets 

$          610,661


$        507,912





 Liabilities and stockholders' equity 








 Accounts payable 

$           88,798


$          67,281

 Accrued expenses 

28,949


19,854

 Accrued compensation 

23,773


21,015

 Deferred revenue and customer advances 

4,607


4,486

   Total current liabilities 

146,127


112,636

 Long term liabilities 

8,042


6,320

 Stockholders' equity 

456,492


388,956

 Total liabilities and stockholders' equity 

$          610,661


$        507,912

 

 iRobot Corporation 

  Condensed Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 








 For the nine months ended 


September 30,

October 1,


2017

2016

Cash flows from operating activities:



Net income

$          46,343

$          28,258

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



Depreciation and amortization 

14,569

10,376

Loss on equity method investment

32

-

Impairment on cost method investment

155

-

Gain on sale of business unit and cost method investment

(1,056)

(1,067)

Gain on business acquisition

(2,243)

-

Stock-based compensation 

14,069

11,781

Deferred income taxes, net

(3,226)

6,314

Tax benefit of excess stock-based compensation deductions

-

(1,115)

Non-cash director deferred compensation 

49

66

Changes in operating assets and liabilities — (use) source



Accounts receivable and unbilled revenue

(10,957)

30,979

Inventory 

(23,944)

(11,472)

Other assets 

(11,099)

(1,579)

Accounts payable 

20,824

(2,261)

Accrued liabilities

7,034

(56)

Deferred revenue and customer advances

(965)

(193)

Long term liabilities

1,513

(2,997)

Net cash provided by operating activities 

51,098

67,034




Cash flows from investing activities:



Additions of property and equipment 

(16,630)

(8,352)

Change in other assets

(1,374)

(435)

Proceeds from sale of business unit and cost method investment

1,056

24,154

Cash paid for business acquisition, net of cash acquired

(16,524)

-

Purchase of investments 

(7,034)

(16,556)

Sales and maturities of investments 

10,500

11,502

Net cash provided by (used in) investing activities 

(30,006)

10,313




Cash flows from financing activities:



Proceeds from stock option exercises 

8,990

4,496

Income tax withholding payment associated with restricted stock vesting

(2,974)

(1,300)

Stock repurchases

-

(97,021)

Tax benefit of excess stock-based compensation deductions

-

1,115

Net cash provided by (used in) financing activities 

6,016

(92,710)




Effect of exchange rate changes on cash and cash equivalents

155

-

Net increase (decrease) in cash and cash equivalents 

27,263

(15,363)

Cash and cash equivalents, at beginning of period 

214,523

179,915

Cash and cash equivalents, at end of period 

$        241,786

$        164,552

 

 iRobot Corporation 

Supplemental Information

(unaudited)














 For the three months ended 


 For the nine months ended 


September 30,

October 1,


September 30,

 October 1, 


2017

2016


2017

2016







Revenue: *












Consumer

$        205,360

$        167,962


$           556,757

$             443,754







    Domestic

$          87,626

$          65,466


$           269,998

$             195,109

    International

$        117,734

$        102,496


$           286,758

$             248,645













Defense & Security

$                    -

$                    -


$                      -

$                 3,075













Gross Margin Percent

49.8%

48.1%


50.2%

47.5%













Consumer units shipped*

906

779


2,358

2,002

      Vacuum

774

602


1,994

1,678

      Mopping

131

170


362

308







Consumer revenue**

$               205

$               168


$                 557

$                   444

      Vacuum***

$               186

$               144


$                 504

$                   402

      Mopping***

$                 21

$                 23


$                   55

$                     42







Average gross selling prices for robot units - Consumer

$               249

$               229


$                 260

$                   240







Days sales outstanding

35

37


35

37







Days in inventory

82

64


82

64







Headcount

798

572


798

572













* in thousands






** in millions






*** includes accessory revenue






 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 














 For the three months ended 


 For the nine months ended 


September 30,

October 1,


September 30,

October 1,


2017

2016


2017

2016







 Net income 

$          22,082

$          19,512


$          46,343

$          28,258







 Interest income, net 

(558)

(217)


(1,423)

(687)

 Income tax expense 

4,411

8,462


7,564

12,722

 Depreciation 

3,350

2,533


8,888

7,446

 Amortization 

2,419

909


5,605

2,725







 EBITDA 

31,704

31,199


66,977

50,464













 Stock-based compensation expense 

5,034

3,903


14,069

11,781

 Net merger, acquisition and divestiture expense 

681

376


2,452

1,229

 Gain on business acquisition 

(2,243)

-


(2,243)

-

 Net intellectual property litigation expense 

1,266

103


1,910

464

 Restructuring (income) expense 

-

(37)


-

1,665







 Adjusted EBITDA 

$          36,442

$          35,544


$          83,165

$          65,603































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 expense, gain on business acquisition, net intellectual property litigation expense, and restructuring (income) 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  

 Expected Incremental Impact of Robopolis Acquisition 

 (in millions, except per share amounts) 

 (unaudited) 
































 Fiscal Year 2017 


 Actual 


 Actual 


 Actual 


 Expected 


 Expected 


 Three 


 Three 


 Three 


 Three 


 Twelve 


 Months Ending 


 Months Ending 


 Months Ending 


 Months Ending 


 Months Ending 


April 1


 July 1 


 September 30 


 December 30 


 December 30 





















 Revenue 

-


-


-


 $25 - $35 


 $25 - $35 































 Net income (loss) per share 

($0.01)


($0.02)


($0.03)


 ($0.39 - 0.24) 


 ($0.45 - 0.30) 

 

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