Press Releases

iRobot Reports Third-Quarter 2012 Financial Results
Restructures to invest in high growth business
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 29, 2012.
 
  • Revenue for the third quarter of 2012 was $126.3 million, compared with $120.4 million for the same quarter one year ago. Revenue for the first nine months of 2012 was $335.6 million compared with $334.7 million last year.
  • Net income in the third quarter of 2012 was $15.2 million, compared with $14.1 million in the third quarter of 2011. For the first nine months, net income was $23.2 million, compared with $29.6 million a year ago. Net income included a one-time tax benefit of $3.5 million in the third-quarter and nine-month periods in 2011.
  • Quarterly earnings per share were $0.54, compared with $0.50 in the third quarter last year. Nine-month earnings per share were $0.82 in 2012, compared with $1.06 in 2011. EPS included a one-time tax benefit of $0.12 in the third-quarter and nine-month periods in 2011.
  • Adjusted EBITDA for the third quarter of 2012 was $29.2 million, compared with $20.2 million in the third quarter of 2011. For the first nine months of 2012 Adjusted EBITDA was $51.5 million, compared with $51.7 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 these items was $0.10 in earnings per share and $5.2 million in Adjusted EBITDA.

“During the third-quarter we made several strategic decisions to strengthen the company. We announced our acquisition of Evolution Robotics (ER), hired key senior leaders and began to implement significant actions in our D&S business. Our Home Robot unit has had an outstanding year and we expect continued growth in that business. The 2012 outlook for D&S has deteriorated and we expect further declines in 2013. To right-size the business we have restructured D&S and taken costs out. These moves will result in a fourth quarter 2012 restructuring charge of $4-5 million,” said Colin Angle, chairman and chief executive officer of iRobot. “We are taking these actions in order to invest in our high growth Home Robot business as well as our emerging high potential remote presence business, while meeting our commitment to profitable growth,” he added.

Business Highlights

  • Home Robot revenue increased 33 percent in the third quarter 2012 fueled by strong growth in both U.S. and international markets.
  • Our Home Robot product return experience has improved as the result of our sustained investment in product quality. In the third quarter we adjusted our accrual rates for Home Robot product returns, resulting in a benefit to revenue and earnings.
  • We hired three seasoned executives, Frank Wilson, Senior Vice President & General Manager of D&S, Youssef Saleh, Vice President of Remote Presence, and Paolo Pirjanian, formerly CEO of Evolution Robotics, as CTO.
  • In Q4 2012, the total negative impact on earnings per share of acquiring Evolution Robotics and restructuring D&S is expected to be between ($0.28) – ($0.32). The negative impact on Adjusted EBITDA is expected to be ($5) – ($6) million. These are reflected in our Q4 and full year 2012 expectations.

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and full year ending December 29, 2012.

Q4 2012*:

       
Revenue   $98 - $102 million    
Loss Per Share   ($0.39) – ($0.33)    
Adjusted EBITDA loss   ($4) – ($2) million    
 

Fiscal Year 2012:

 

Current*

 

Prior

Revenue   $434 - $438 million   $465 - $485 million
Earnings Per Share   $0.44 - $0.50   $0.90 - $1.00
Adjusted EBITDA   $47 - $49 million   $59 - $63 million
 

Full-Year 2012 BU Revenue:

 

Current

 

Prior

Home Robots   $355 - $360 million*   $365 - $375 million
Defense & Security Robots   $75 - $80 million   $100 - $110 million
 

Preliminary 2013 Revenue Expectations

       
Home Robots   $425 - $435 million*    
Defense & Security Robots   $45 - $55 million    
 
*Including Evolution Robotics

Fourth-Quarter Conference Call

iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its results for the third fiscal quarter 2012, business outlook, and outlook for 2012 financial performance. Pertinent details include:

    Date:   Wednesday, October 24, 2012
    Time:   8:30 a.m. ET
    Call-In Number:   847-413-3362
    Passcode:   33524566

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=4249338. 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 31, and can be accessed by dialing 630-652-3042, passcode 33524566#.

About iRobot Corp.

iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, and its defense & security robots protect those in harm’s way. 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 and growth, demand for our robots, operating performance, restructuring charges to be incurred during the fourth quarter ending December 29, 2012, the impact on earnings per share and Adjusted EBITDA for the fourth quarter ending December 29, 2012 of the acquisition of Evolution Robotics, Inc., and Defense & Security restructuring, anticipated mix of revenue for the fourth quarter ending December 29, 2012 and fiscal year 2013, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2012 and the fourth quarter ending December 29, 2012, anticipated business unit revenue for the fiscal year 2012 and fiscal year 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, market acceptance of our products, 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, Adjusted net income and Adjusted net income per share, each of 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. We define Adjusted net income and Adjusted net income per share as net income and net income per share, respectively, excluding the impact of a one-time tax benefit. Reconciliations between net income and Adjusted EBITDA, net income and Adjusted net income, and net income per share and Adjusted net income per share are provided in the financial tables at the end of this press release.

iRobot Corporation
Consolidated Statement of Income
(in thousands, except per share amounts)
(unaudited)
                 
                 
    For the three months ended   For the nine months ended
    September 29,   October 1,   September 29,   October 1,
    2012   2011     2012   2011
Revenue                
Product revenue   $ 121,174   $ 109,993     $ 320,676   $ 304,100
Contract revenue     5,124     10,380       14,874     30,632
Total     126,298     120,373       335,550     334,732
                 
Cost of Revenue                
Product revenue     67,008     63,670       184,078     177,695
Contract revenue     4,388     6,660       13,110     21,004
Total     71,396     70,330       197,188     198,699
                 
Gross Margin     54,902     50,043       138,362     136,033
                 
Operating Expense                
Research & development     8,406     8,948       26,797     25,823
Selling & marketing     12,436     14,553       45,128     40,301
General & administrative     11,326     10,962       32,390     31,659
Total     32,168     34,463       104,315     97,783
                 
Operating income     22,734     15,580       34,047     38,250
                 
Other income (expense), net     197     (92 )     477     258
                 
Pre-tax income     22,931     15,488       34,524     38,508
Income tax expense     7,724     1,436       11,289     8,955
Net income   $ 15,207   $ 14,052     $ 23,235   $ 29,553
                 
Net income per common share:                
Basic   $ 0.55   $ 0.52     $ 0.84   $ 1.11
Diluted   $ 0.54   $ 0.50     $ 0.82   $ 1.06
                 
Shares used in per common share calculations:                
Basic     27,650     26,902       27,520     26,568
Diluted    

28,321

    27,940       28,323     27,823
                 
                 
Stock-based compensation included in above figures:              
Cost of product revenue   $ 306   $ 344     $ 892   $ 915
Cost of contract revenue     129     115       320     365
Research & development     219     162       773     481
Selling & marketing     158     174       574     513
General & administrative     1,796     1,401       5,464     4,112
Total   $ 2,608   $ 2,196     $ 8,023   $ 6,386
iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)
         
    September 29,   December 31,
    2012   2011
         
Assets        
         
Cash and equivalents   $ 169,658   $ 166,308
Short term investments     20,061     17,811
Accounts receivable, net     53,379     43,338
Unbilled revenues     1,693     2,362
Inventory     32,592     31,089
Deferred tax assets     14,882     15,344
Other current assets     4,608     7,928
Total current assets     296,873     284,180
Property, plant and equipment, net     24,838     29,029
Deferred tax assets     10,424     6,127
Other assets     18,599     12,877
Total assets   $ 350,734   $ 332,213
         
Liabilities and stockholders' equity        
         
Accounts payable   $ 38,317   $ 48,406
Accrued expenses     18,713     17,188
Accrued compensation     9,037     17,879
Deferred revenue and customer advances     2,118     1,527
Total current liabilities     68,185     85,000
Long term liabilities     3,940     4,255
Stockholders' equity     278,609     242,958
Total liabilities and stockholders' equity   $ 350,734   $ 332,213
iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)
                 
                 
    For the three months ended   For the nine months ended
    September 29,   October 1,   September 29,   October 1,
    2012     2011     2012     2011  
Cash flows from operating activities:                
Net income   $ 15,207     $ 14,052     $ 23,235     $ 29,553  
Adjustments to reconcile net income to net cash provided by operating activities:          
Depreciation and amortization     2,868       2,597       8,181       7,237  
Loss on disposal of property and equipment     612       3       778       476  
Stock-based compensation     2,608       2,196       8,023       6,386  
Deferred income taxes, net     1,375       1,961       (2,855 )     6,449  
Tax benefit of excess stock based compensation deductions     (426 )     (347 )     (1,461 )     (6,002 )
Non-cash director deferred compensation     22       44       64       126  
Changes in operating assets and liabilities — (use) source                
Accounts receivable     (13,852 )     (6,871 )     (10,041 )     (7,344 )
Unbilled revenue     380       135       669       (3,887 )
Inventory     2,005       2,213       (1,503 )     (4,829 )
Other assets     3,644       (1,763 )     3,266       (6,572 )
Accounts payable     (6,895 )     7,249       (10,089 )     1,833  
Accrued expenses     4,848       1,359       1,596       (530 )
Accrued compensation     (701 )     1,951       (8,842 )     (2,782 )
Deferred revenue     236       318       591       (1,176 )
Change in long term liabilities     (129 )     (123 )     (315 )     143  
Net cash provided by operating activities     11,802       24,974       11,297       19,081  
                 
Cash flows from investing activities:                
Purchase of property and equipment     (1,111 )     (3,149 )     (4,067 )     (10,357 )
Change in other assets     -       -       (6,000 )     -  
Purchases of investments     -       -       (5,086 )     (5,000 )
Sales of investments     -       -       2,500       5,000  
Net cash used in investing activities     (1,111 )     (3,149 )     (12,653 )     (10,357 )
                 
Cash flows from financing activities:                
Proceeds from stock option exercises     2,000       801       4,022       9,398  
Income tax withholding payment associated with restricted stock vesting     (2 )     (36 )     (777 )     (845 )
Tax benefit of excess stock based compensation deductions     426       347       1,461       6,002  
Net cash provided by financing activities     2,424       1,112       4,706       14,555  
                 
Net increase in cash and cash equivalents     13,115       22,937       3,350       23,279  
Cash and cash equivalents, at beginning of period     156,543       108,725       166,308       108,383  
Cash and cash equivalents, at end of period   $ 169,658     $ 131,662     $ 169,658     $ 131,662  
iRobot Corporation
Supplemental Information
(unaudited)
                 
                 
    For the three months ended   For the nine months ended
    September 29,   October 1,   September 29,   October 1,
      2012       2011       2012       2011  
                 
Revenue: *                
                 
Home Robots   $ 96,291     $ 72,341     $ 273,887     $ 204,116  
                 
Domestic   $ 32,925     $ 17,961     $ 85,921     $ 58,415  
International   $ 63,366     $ 54,380     $ 187,966     $ 145,701  
                 
                 
Defense & Security   $ 30,007     $ 48,032     $ 61,663     $ 130,616  
                 
Domestic   $ 27,872     $ 45,930     $ 53,271     $ 119,509  
International   $ 2,135     $ 2,102     $ 8,392     $ 11,107  
                 
Product   $ 24,883     $ 37,652     $ 46,789     $ 99,984  
Contract   $ 5,124     $ 10,380     $ 14,874     $ 30,632  
                 
Product Life Cycle   $ 15,023     $ 12,286     $ 24,785     $ 31,606  
                 
                 
Gross Margin Percent:                
Home Robots     50.6 %     45.1 %     49.4 %     44.9 %
Defense & Security     20.5 %     36.2 %     4.8 %     33.9 %
Total Company     43.5 %     41.6 %     41.2 %     40.6 %
                 
                 
Units shipped:                
Home Robots *     416       337       1,234       1,014  
Defense & Security     76       194       263       500  
                 
                 
Average gross selling prices for robot units:                
Home Robots   $ 223     $ 222     $ 221     $ 203  
Defense & Security *   $ 130     $ 131     $ 84     $ 137  
                 
                 
Defense & Security Funded Product Backlog *   $ 11,944     $ 28,036     $ 11,944     $ 28,036  
                 
                 
Days sales outstanding     40       37       40       37  
                 
Days in inventory     44       46       44       46  
                 
Headcount     590       689       590       689  
                 
                 
* in thousands
iRobot Corporation  
Adjusted EBITDA Reconciliation to GAAP  
(unaudited, in thousands)  
                       
                       
    For the three months ended       For the nine months ended  
    September 29,   October 1,       September 29,   October 1,  
    2012   2011       2012   2011  
                       
Net income   $ 15,207     $ 14,052         $ 23,235     $ 29,553    
                       
Interest income, net     (289 )     (214 )         (815 )     (755 )  
Income tax expense     7,724       1,436           11,289       8,955    
Depreciation     2,601       2,388           7,480       6,615    
Amortization     267       209           701       622    
                       
EBITDA     25,510       17,871           41,890       44,990    
                       
                       
Stock-based compensation expense     2,608       2,196           8,023       6,386    
Merger and acquisition expense     661       30           687       30    
Net intellectual property litigation expense     58       (11 )         129       171    
Restructuring expense     367       101           774       101    
                       
Adjusted EBITDA   $ 29,204     $ 20,187         $ 51,503     $ 51,678    
                       
                       
                       
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.

iRobot Corporation  
Adjusted Net Income and Earnings Per Share Reconciliations to GAAP  
(in thousands, except per share amounts)  
(unaudited)  
                       
                       
    For the three months ended       For the nine months ended  
    September 29,   October 1,       September 29,   October 1,  
    2012   2011         2012   2011    
                       
GAAP net income   $ 15,207   $ 14,052         $ 23,235   $ 29,553    
                       
Less one-time net income tax benefit associated with Section 199 deductions and R&D tax credit true-ups     -     (3,455 )         -     (3,455 )  
                       
Adjusted net income   $ 15,207   $ 10,597         $ 23,235   $ 26,098    
                       
                       
GAAP net income per common share:                      
Basic   $ 0.55   $ 0.52         $ 0.84   $ 1.11    
Diluted   $ 0.54   $ 0.50         $ 0.82   $ 1.06    
                       
Less one-time net income tax benefit associated with Section 199 deductions and R&D tax credit true-ups:                      
Basic   $ -   $ (0.13 )       $ -   $ (0.13 )  
Diluted   $ -   $ (0.12 )       $ -   $ (0.12 )  
                       
Adjusted net income per common share:                      
Basic   $ 0.55   $ 0.39         $ 0.84   $ 0.98    
Diluted   $ 0.54   $ 0.38         $ 0.82   $ 0.94    
                       
                       
Shares used in Per Common Share Calculations:                      
Basic     27,650     26,902           27,520     26,568    
Diluted    

28,321

    27,940           28,323     27,823    

In evaluating its business, iRobot also considers and uses Adjusted net income and Adjusted net income per common share as supplemental measures of its operating performance. The Company defines Adjusted net income and Adjusted net income per share as net income and net income per share, respectively, excluding the impact of a one-time tax benefit.

The terms Adjusted net income and Adjusted net income per common share are 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. When assessing the Company's operating performance, investors should not consider Adjusted net income, Adjusted net income per common share or both in isolation, or as a substitute for net income, net income per common share or other consolidated income statement data prepared in accordance with U.S. GAAP.

 

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