Press Releases

iRobot Reports Record Third-Quarter Financial Results
Exceeds Expectations; Increases 2011 Outlook

BEDFORD, Mass., Oct 25, 2011 (BUSINESS WIRE) -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended October 1, 2011.

 

  • Revenue for the third quarter of 2011 increased 28 percent to $120.4 million, compared with $94.2 million for the same quarter one year ago. Revenue for the first nine months of 2011 increased 17 percent to $334.7 million from $287.0 million last year.
  • Net income in the third quarter of 2011 was $14.1 million, compared with $7.0 million in the third quarter of 2010. For the first nine months, net income was $29.6 million, up from $18.5 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. Net income for the third-quarter and nine-month periods in 2010 included a one-time tax benefit of $2.3 million.
  • Quarterly earnings per share grew by 85 percent to $0.50, compared with $0.27 in the third quarter last year. Nine-month earnings per share grew to $1.06, up from $0.70 in 2010. EPS included a one-time tax benefit of $0.12 in 2011 and $0.09 in 2010.
  • Adjusted EBITDA for the third quarter of 2011 was $20.2 million, or 17 percent of revenue, compared with $11.5 million, or 12 percent of revenue, in the third quarter of 2010. Adjusted EBITDA for the first nine months of 2011 was $51.7 million, compared with $37.6 million for the same period a year ago.

 

"Our third quarter and year-to-date results were excellent across all measures and far exceeded our expectations," said Colin Angle, chairman and chief executive officer of iRobot. "Due to strong performance by both divisions and our expectations for the fourth quarter, we are increasing our full-year 2011 expectations for the second time this year."

Business Highlights

 

  • International home robot business continued to perform well in long-term markets as it lays the groundwork to enter new markets. In Q3, international home robot revenue grew 56 percent over Q3 2010 and comprised 75 percent of total home robot revenue.
  • During the third quarter, Government and Industrial Robots division revenue grew 21 percent, and it received delivery orders totaling $51 million, primarily for delivery of PackBot and SUGV robots.
  • Operating cash flow was $25 million in Q3 2011, due to record net income and reduced inventory levels, compared with $10 million in the third quarter last year. Cash and investments totaled $145 million, up $38 million from Q3 last year.
  • Research and development expense increased 45 percent in Q3 2011 and 58 percent in the first nine months year over year.
  • Driven by expectations for a reduction in government-funded research in 2012, iRobot implemented a reduction in force in the Government and Industrial Robots division in the fourth quarter.

 

Financial Expectations

Management provides the following expectations with respect to the fourth quarter ending December 31, 2011.

Q4 2011:

Revenue                     $130 - $135 million

Earnings Per Share

                   

$0.26 - $0.30

Adjusted EBITDA                     $16 - $18 million
                       

Management raises its expectations for the full year ending December 31, 2011.

Fiscal Year 2011:

                   

Current

                   

Prior

Revenue                     $465 - $470 million                     $460 - $470 million
Earnings Per Share                     $1.32 - $1.36                     $1.04 - $1.10
Adjusted EBITDA                     $67 - $69 million                     $62 - $64 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 and outlook for 2011 financial performance. Pertinent details include:

          Date:           Wednesday, October 26, 2011
          Time:           8:30 a.m. ET
          Call-In Number:           617-597-5394
          Passcode:           14810709
                       

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-irhome. 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 2, and can be accessed by dialing 617-801-6888, passcode 71428742.

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 government and industrial robots protect those in harm's way. iRobot's consumer and military robots feature iRobot Aware(R) robot intelligence systems, proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence. For more information about iRobot, please visitwww.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, anticipated revenue, Adjusted EBITDA and earnings per share for fiscal year 2011 and the fourth quarter of 2011. 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 release includes Adjusted EBITDA, 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, restructuring expenses, net intellectual property litigation expenses and non-cash stock compensation. A reconciliation between net income and Adjusted EBITDA is 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
    October 1,   October 2,   October 1,   October 2,
    2011   2010   2011   2010
Revenue                
Product revenue   $ 109,993     $ 85,051   $ 304,100   $ 257,107
Contract revenue     10,380       9,172     30,632     29,850
Total     120,373       94,223     334,732     286,957
                 
Cost of Revenue                
Product revenue     63,670       54,472     177,695     165,897
Contract revenue     6,660       6,494     21,004     21,116
Total     70,330       60,966     198,699     187,013
                 
Gross Margin     50,043       33,257     136,033     99,944
                 
Operating Expense                
Research & development     8,948       6,185     25,823     16,375
Selling & marketing     14,553       10,734     40,301     30,959
General & administrative     10,962       8,904     31,659     26,693
Total     34,463       25,823     97,783     74,027
                 
Operating income     15,580       7,434     38,250     25,917
                 
Other income (expense), net     (92 )     299     258     368
                 
Pre-tax income     15,488       7,733     38,508     26,285
Income tax expense     1,436       701     8,955     7,771
Net income   $ 14,052     $ 7,032   $ 29,553   $ 18,514
                 
Net income per common share:                
Basic   $ 0.52     $ 0.28   $ 1.11   $ 0.73
Diluted   $ 0.50     $ 0.27   $ 1.06   $ 0.70
                 
Shares used in per common share calculations:                
Basic     26,902       25,428     26,568     25,293
Diluted     27,940       26,480     27,823     26,319
                 
                 
Stock-based compensation included in above figures:                
Cost of product revenue   $ 344     $ 310   $ 915   $ 997
Cost of contract revenue     115       101     365     337
Research & development     162       211     481     488
Selling & marketing     174       240     513     885
General & administrative     1,401       1,079     4,112     3,325
Total   $ 2,196     $ 1,941   $ 6,386   $ 6,032
 
 
iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)
         
    October 1,   January 1,
    2011   2011
         
Assets        
         
Cash and equivalents   $ 131,662   $ 108,383
Short term investments     13,662     13,928
Accounts receivable, net     41,400     34,056
Unbilled revenues     7,899     4,012
Inventory     31,989     27,160
Deferred tax assets     14,013     12,917
Other current assets     12,655     6,137
Total current assets     253,280     206,593
Property, plant and equipment, net     28,886     25,620
Deferred tax assets     6,307     8,338
Other assets     13,453     13,780
Total assets   $ 301,926   $ 254,331
         
Liabilities and stockholders' equity        
         
Accounts payable   $ 40,522   $ 38,689
Accrued expenses     15,237     15,790
Accrued compensation     15,045     17,827
Deferred revenue and customer advances     2,358     3,534
Total current liabilities     73,162     75,840
Long term liabilities     3,727     3,584
Stockholders' equity     225,037     174,907
Total liabilities and stockholders' equity   $ 301,926   $ 254,331
 
 
iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)
                 
                 
    For the three months ended   For the nine months ended
    October 1,   October 2,   October 1,   October 2,
    2011   2010   2011   2010
Cash flows from operating activities:                
Net income   $ 14,052     $ 7,032     $ 29,553     $ 18,514  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation and amortization     2,597       1,918       7,237       5,673  
Loss on disposal of property and equipment     3       70       476       117  
Stock-based compensation     2,196       1,941       6,386       6,032  
Deferred income taxes, net     1,614       (3,867 )     447       (3,867 )
Non-cash director deferred compensation     44       33       126       99  
Changes in operating assets and liabilities -- (use) source                

 

 
Accounts receivable     (6,871 )     (661 )     (7,344 )     7,377  
Unbilled revenue     135       (221 )     (3,887 )     (703 )
Inventory     2,213       (3,285 )     (4,829 )     (1,563 )
Other assets     (1,763 )     213       (6,572 )     1,010  
Accounts payable     7,249       3,909       1,833       5,118  
Accrued expenses     1,359       716       (530 )     (315 )
Accrued compensation     1,951       1,964       (2,782 )     (408 )
Deferred revenue     318       54       (1,176 )     (1,885 )
Change in long term liabilities     (123 )     (107 )     143       (322 )
Net cash provided by operating activities     24,974       9,709       19,081       34,877  
                 
Cash flows from investing activities:                
Purchase of property and equipment     (3,149 )     (1,869 )     (10,357 )     (7,537 )
Purchases of investments     -       (5,050 )     (5,000 )     (30,461 )
Sales of investments     -       11,500       5,000       19,000  
Net cash provided by (used in) investing activities     (3,149 )     4,581       (10,357 )     (18,998 )
                 
Cash flows from financing activities:                
Proceeds from stock option exercises     801       370       9,398       2,297  
Income tax withholding payment associated with restricted stock vesting     (36 )     (5 )     (845 )     (284 )
Tax benefit of excess stock based compensation deductions     347       138       6,002       855  
Net cash provided by financing activities     1,112       503       14,555       2,868  
                 
Net increase in cash and cash equivalents     22,937       14,793       23,279       18,747  
Cash and cash equivalents, at beginning of period     108,725       75,810       108,383       71,856  
Cash and cash equivalents, at end of period   $ 131,662     $ 90,603     $ 131,662     $ 90,603  
 
 
Supplemental Information
(unaudited)
                 
                 
    For the three months ended   For the nine months ended
    October 1,   October 2,   October 1,   October 2,
    2011   2010   2011   2010
                 
Revenue: *                
                 
Home Robots   $ 72,341     $ 54,650     $ 204,116     $ 160,101  
                 
Domestic   $ 17,961     $ 19,818     $ 58,415     $ 53,077  
International   $ 54,380     $ 34,832     $ 145,701     $ 107,024  
                 
                 
Government & Industrial   $ 48,032     $ 39,573     $ 130,616     $ 126,856  
                 
Domestic   $ 45,930     $ 36,013     $ 119,509     $ 112,624  
International   $ 2,102     $ 3,560     $ 11,107     $ 14,232  
                 
Product   $ 37,652     $ 30,401     $ 99,984     $ 97,006  
Contract   $ 10,380     $ 9,172     $ 30,632     $ 29,850  
                 
Product Life Cycle   $ 12,286     $ 9,060     $ 31,606     $ 26,649  
                 
                 
Gross Margin Percent:                
Home Robots     45.1 %     39.7 %     44.9 %     39.0 %
Government & Industrial     36.2 %     29.2 %     33.9 %     29.6 %
Total Company     41.6 %     35.3 %     40.6 %     34.8 %
                 
                 
Units shipped:                
Home Robots *     337       308       1,014       889  
Government & Industrial     194       186       500       702  
                 
                 
Average gross selling prices for robot units:                
Home Robots   $ 222     $ 185     $ 203     $ 187  
Government & Industrial *   $ 131     $ 115     $ 137     $ 100  
                 
                 
Government & Industrial Funded Product Backlog *   $ 28,036     $ 34,003     $ 28,036     $ 34,003  
                 
                 
Days sales outstanding     37       29       37       29  
                 
Days in inventory     46       57       46       57  
                 
Headcount     689       643       689       643  
                 
                 
* in thousands
 
 
iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
                 
                 
    For the three months ended   For the nine months ended
    October 1,   October 2,   October 1,   October 2,
    2011   2010   2011   2010
                 
Net income   $ 14,052     $ 7,032     $ 29,553     $ 18,514  
                 
Interest income, net     (214 )     (206 )     (755 )     (572 )
Income tax expense     1,436       701       8,955       7,771  
Depreciation     2,388       1,784       6,615       5,261  
Amortization     209       134       622       412  
                 
EBITDA     17,871       9,445       44,990       31,386  
                 
                 
Stock-based compensation expense     2,196       1,941       6,386       6,032  
Merger and acquisition expense     30       61       30       132  
Net intellectual property litigation expense     (11 )     31       171       71  
Restructuring expense     101       -       101       -  
                 
Adjusted EBITDA   $ 20,187     $ 11,478     $ 51,678     $ 37,621  

 

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
Non-GAAP 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
    October 1,   October 2,   October 1,   October 2,
    2011   2010   2011   2010
                 
GAAP net income   $ 14,052     $ 7,032     $ 29,553     $ 18,514  
                 
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance     -       (2,259 )     -       (2,259 )
                 
Less one-time net income tax benefit associated with Section 199 deductions and R&D tax credit true-ups     (3,455 )     -       (3,455 )     -  
                 
Non-GAAP net income   $ 10,597     $ 4,773     $ 26,098     $ 16,255  
                 
                 
GAAP net income per common share:                
Basic   $ 0.52     $ 0.28     $ 1.11     $ 0.73  
Diluted   $ 0.50     $ 0.27     $ 1.06     $ 0.70  
                 
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance                
Basic   $ -     $ (0.09 )   $ -     $ (0.09 )
Diluted   $ -     $ (0.09 )   $ -     $ (0.08 )
                 
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 )   $ -  
                 
Non-GAAP net income per common share:                
Basic   $ 0.39     $ 0.19     $ 0.98     $ 0.64  
Diluted   $ 0.38     $ 0.18     $ 0.94     $ 0.62  
                 
                 
Shares used in Per Common Share Calculations:                
Basic     26,902       25,428       26,568       25,293  
Diluted     27,940       26,480       27,823       26,319  

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 government and industrial 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 visitwww.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 concerning management's plans, objectives and strategies. 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. 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 including, without limitation, our most recent Annual Report on Form 10-K.

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