Press Releases

iRobot Reports Third-Quarter Financial Results
Provides mid-high teen preliminary revenue growth estimate for 2014
BEDFORD, Mass.-- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended September 28, 2013.

 

“I am pleased to report that we delivered Q3 results in line with our expectations. We saw strong growth in our Home Robot business, and are excited to announce a next generation home robot for the fourth quarter. Overseas, strong demand in Asia continued and we are seeing signs of recovery in Europe. We shipped additional RP-VITA robots to InTouch Health, while our Remote Presence unit gained further traction in the video collaboration market. And, our Defense & Security business performed as expected,” said Colin Angle, chairman and chief executive officer of iRobot.

“Our businesses continue to perform in line with the expectations we laid out in Q1. Accordingly we are narrowing our full year 2013 expectation ranges to: revenue of between $485 and $490 million, EPS of $0.90 to $0.95 and Adjusted EBITDA of $58 to $61 million.

“Based on our robust product pipeline and expectations over the next three years, we continue to expect to achieve by 2016:

  • Mid-high teen revenue CAGR;
  • High teen Adjusted EBITDA margin; and,
  • High single digit Operating Cash Flow margin.

For 2014, our preliminary revenue expectations are for mid-high teen growth, consistent with the financial targets.”

Financial Results

  • Revenue for the third quarter of 2013 was $124.5 million, compared with $126.3 million for the same quarter one year ago. Revenue for the first nine months of 2013 was $361.1 million compared with $335.6 million for the first nine months one year ago.
  • Net income in the third quarter of 2013 was $7.8 million, compared with $15.2 million in the third quarter of 2012. For the first nine months, net income was $24.5 million, compared with $23.2 million a year ago.
  • Quarterly earnings per share were $0.26, compared with $0.54 in the third quarter last year. Nine-month earnings per share were $0.84 in 2013, compared with $0.82 for the first nine months of 2012.
  • Adjusted EBITDA for the third quarter of 2013 was $17.2 million, compared with $29.2 million in the third quarter of 2012. For the first nine months of 2013 Adjusted EBITDA was $49.4 million, compared with $51.5 million for the same period a year ago.
  • During the third quarter of 2012, there were a number of items recorded, one of which resulted in a $7.7 million revenue increase. The positive net impact of all these items was $0.10 in earnings per share and $5.2 million in Adjusted EBITDA.

Business Highlights

  • Home Robot revenue increased 16 percent in Q3 2013, over last year, driven by strong growth in Japan.
  • Defense & Security results met our Q3 expectations. While the U.S. government shutdown hampered our efforts in both the domestic and international markets we continue to expect to deliver full year Defense & Security revenue of roughly $50 million.
  • We are in discussions to sign our first Cisco distributor for the AVA 500 video collaboration robot and plan to be in full beta with three external users for the product by early December.

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and fiscal year ending December 28, 2013.

Q4 2013:

                           
Revenue             $124 - $129 million              
Earnings Per Share             $0.06 - $0.11              
Adjusted EBITDA             $9 - $12 million              
                             

Fiscal Year 2013:

           

Current

           

Prior

Revenue             $485 - $490 million             $485 - $495 million
Earnings Per Share             $0.90 - $0.95             $0.88 - $1.00
Adjusted EBITDA             $58 - $61 million             $55 - $61 million
                             

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 2013, business outlook, and outlook for fourth-quarter and fiscal year 2013 financial performance. Pertinent details include:

          Date:           Wednesday, October 23, 2013
          Time:           8:30 a.m. ET
          Call-In Number:           847-619-6818
          Passcode:           34160574

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=4897484. 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 October 30, and can be accessed by dialing 630-652-3000, passcode 34160574#.

About iRobot Corp.

iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, its defense & security robots protect those in harm’s way, and its remote presence robots enable virtual presence from anywhere in the world. iRobot’s consumer and military robots feature iRobot Aware® robot intelligence systems, proprietary technology incorporating 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, fiscal year 2014 revenue growth, the timing of new product introductions, the timing of our achievement of product development milestones, demand for our robots, anticipated growth and performance of our businesses, Defense & Security revenue for fiscal year 2013, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2013 and the fourth quarter ending December 28, 2013. 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, changes in government policies or spending priorities, 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 and amortization, merger and acquisition expenses, net intellectual property litigation expenses, restructuring expenses, and non-cash stock compensation. A reconciliation between net income (loss) 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 28,   September 29,     September 28,   September 29,
            2013   2012     2013   2012
Revenue                          
Product revenue           $ 122,647   $ 121,174     $ 352,018     $ 320,676
Contract revenue             1,854     5,124       9,040       14,874
Total             124,501     126,298       361,058       335,550
                           
Cost of Revenue                          
Product revenue             69,628     65,852       195,316       179,174
Contract revenue             812     1,970       3,549       6,532
Total             70,440     67,822       198,865       185,706
                           
Gross Margin             54,061     58,476       162,193       149,844
                           
Operating Expense                          
Research & development             15,212     13,040       45,617       41,722
Selling & marketing             16,317     11,376       49,323       41,685
General & administrative             11,495     11,326       39,348       32,390
Total             43,024     35,742       134,288       115,797
                           
Operating income             11,037     22,734       27,905       34,047
                           
Other income (expense), net             152     197       (49 )     477
                           
Income before income taxes             11,189     22,931       27,856       34,524
Income tax expense             3,385     7,724       3,403       11,289
Net income           $ 7,804   $ 15,207     $ 24,453     $ 23,235
                           
Net income per common share:                          
Basic           $ 0.27   $ 0.55     $ 0.86     $ 0.84
Diluted           $ 0.26   $ 0.54     $ 0.84     $ 0.82
                           
Shares used in per common share calculations:                          
Basic             28,733     27,650       28,359       27,520
Diluted             29,582     28,321       29,207       28,323
                           
                           
Stock-based compensation included in above figures:                          
Cost of product revenue           $ 250   $ 289     $ 496     $ 715
Cost of contract revenue             -     -       -       -
Research & development             669     365       1,963       1,271
Selling & marketing             348     158       832       574
General & administrative             2,210     1,796       6,378       5,463
Total           $ 3,477   $ 2,608     $ 9,669     $ 8,023
                           
                           
iRobot Corporation
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
                   
            September 28,     December 29,
            2013     2012
                   
Assets                  
                   
Cash and equivalents           $ 139,731     $ 126,770
Short term investments             16,948       12,430
Accounts receivable, net             54,027       29,413
Unbilled revenues             1,556       1,196
Inventory             48,853       36,965
Deferred tax assets             19,517       19,266
Other current assets             6,131       8,853
Total current assets             286,763       234,893
Property, plant and equipment, net             24,039       24,953
Deferred tax assets             10,464       8,792
Goodwill             48,751       48,951
Intangible assets, net             23,587       28,224
Other assets             10,501       8,500
Total assets           $ 404,105     $ 354,313
                   
Liabilities and stockholders' equity                  
                   
Accounts payable           $ 46,644     $ 42,515
Accrued expenses             13,409       13,642
Accrued compensation             14,868       11,864
Deferred revenue and customer advances             2,026       6,257
Total current liabilities             76,947       74,278
Long term liabilities             4,556       4,218
Stockholders' equity             322,602       275,817
Total liabilities and stockholders' equity           $ 404,105     $ 354,313
                       
                       
iRobot Corporation
Consolidated Statements of Cash Flows
(unaudited, in thousands)
                           
                           
            For the three months ended     For the nine months ended
            September 28,   September 29,     September 28,   September 29,
            2013   2012     2013   2012
Cash flows from operating activities:                          
Net income           $ 7,804     $ 15,207       $ 24,453     $ 23,235  
Adjustments to reconcile net income to net cash provided by operating activities:                      
Depreciation and amortization             2,480       2,868         9,029       8,181  
(Gain)/loss on disposal of assets             (632 )     612         (351 )     778  
Goodwill and intangible assets impairment             -       -         1,988       -  
Stock-based compensation             3,477       2,608         9,669       8,023  
Deferred income taxes, net             251       1,375         (662 )     (2,855 )
Tax benefit of excess stock based compensation deductions             (602 )     (426 )       (2,238 )     (1,461 )
Non-cash director deferred compensation             11       22         33       64  
Changes in operating assets and liabilities — (use) source                          
Accounts receivable             (2,923 )     (13,852 )       (24,614 )     (10,041 )
Unbilled revenue             (505 )     380         (360 )     669  
Inventory             (7,293 )     2,005         (11,888 )     (1,503 )
Other assets             7,467       3,644         2,697       3,266  
Accounts payable             (7,261 )     (6,895 )       4,129       (10,089 )
Accrued expenses             (616 )     4,848         (216 )     1,596  
Accrued compensation             1,755       (701 )       3,004       (8,842 )
Deferred revenue and customer advances             (1,248 )     236         (4,231 )     591  
Change in long term liabilities             418       (129 )       338       (315 )
Net cash provided by operating activities             2,583       11,802         10,780       11,297  
                           
Cash flows from investing activities:                          
Purchase of property and equipment             (2,481 )     (1,111 )       (5,309 )     (4,067 )
Change in other assets             -       -         (2,000 )     (6,000 )
Purchases of investments             (2,500 )     -         (12,897 )     (5,086 )
Sales of investments             4,544       -         8,044       2,500  
Proceeds from sale of assets             650       -         650       -  
Net cash (used in)/provided by investing activities             213       (1,111 )       (11,512 )     (12,653 )
                           
Cash flows from financing activities:                          
Proceeds from stock option exercises             2,521       2,000         12,364       4,022  
Income tax withholding payment associated with restricted stock vesting             (45 )     (2 )       (909 )     (777 )
Tax benefit of excess stock based compensation deductions             602       426         2,238       1,461  
Net cash provided by financing activities             3,078       2,424         13,693       4,706  
                           
Net increase in cash and cash equivalents             5,874       13,115         12,961       3,350  
Cash and cash equivalents, at beginning of period             133,857       156,543         126,770       166,308  
Cash and cash equivalents, at end of period           $ 139,731     $ 169,658       $ 139,731     $ 169,658  
                                           
                                           
iRobot Corporation
Supplemental Information
(unaudited)
                           
                           
            For the three months ended     For the nine months ended
            September 28,   September 29,     September 28,   September 29,
            2013   2012     2013   2012
                           
Revenue: *                          
                           
Home Robots           $ 111,363     $ 96,291       $ 319,590     $ 273,887  
                           
Domestic           $ 35,700     $ 32,925       $ 106,269     $ 85,869  
International           $ 75,663     $ 63,366       $ 213,321     $ 188,018  
                           
                           
Defense & Security           $ 10,094     $ 27,832       $ 33,664     $ 55,217  
                           
Domestic           $ 3,467     $ 26,667       $ 24,158     $ 49,957  
International           $ 6,627     $ 1,165       $ 9,506     $ 5,260  
                           
Product           $ 9,754     $ 23,912       $ 29,291     $ 43,319  
Contract           $ 340     $ 3,920       $ 4,373     $ 11,898  
                           
Product Life Cycle           $ 5,347     $ 14,910       $ 14,468     $ 24,018  
                           
                           
Gross Margin Percent:                          
Home Robots             47.6 %     52.2 %       49.2 %     51.0 %
Defense & Security             40.7 %     46.8 %       45.5 %     42.3 %
Total Company             43.4 %     46.3 %       44.9 %     44.7 %
                           
                           
Units shipped:                          
Home Robots *             526       416         1,439       1,234  
Defense & Security             43       71         485       245  
                           
                           
Average gross selling prices for robot units:                          
Home Robots           $ 225     $ 223       $ 230     $ 221  
Defense & Security *           $ 103     $ 127       $ 31     $ 79  
                           
                           
Defense & Security Funded Product Backlog *           $ 13,318     $ 11,944       $ 13,318     $ 11,944  
                           
                           
Days sales outstanding             41       40         41       40  
                           
Days in inventory             64       44         64       44  
                           
Headcount             525       590         525       590  
                           
                           
* in thousands                          
                           
                           
iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
                     
                     
          For the three months ended     For the nine months ended
          September 28, September 29,     September 28, September 29,
          2013 2012     2013 2012
                     
Net income         $ 7,804   $ 15,207       $ 24,453   $ 23,235  
                     
Interest income, net           (212 )   (289 )       (529 )   (815 )
Income tax expense           3,385     7,724         3,403     11,289  
Depreciation           1,484     2,601         5,924     7,480  
Amortization           996     267         3,105     701  
                     
EBITDA           13,457     25,510         36,356     41,890  
                     
                     
Stock-based compensation expense           3,477     2,608         9,669     8,023  
Merger and acquisition expense           -     661         393     687  
Net intellectual property litigation expense           241     58         444     129  
Restructuring expense           -     367         2,575     774  
                     
Adjusted EBITDA         $ 17,175   $ 29,204       $ 49,437   $ 51,503  
                     
                     
                     
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 and amortization, merger and acquisition expenses, net intellectual property litigation expenses, restructuring expenses and non-cash stock compensation. 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.

Contact:

Elise Caffrey
Investor Relations
iRobot Corp.
(781) 430-3003
ecaffrey@irobot.com
Matt Lloyd
Media Relations
iRobot Corp.
(781) 430-3720
mlloyd@irobot.com