iRobot Reports Third-Quarter Financial Results
Results Exceeded Expectations; Driven by Growth in Home Robots

BEDFORD, Mass., Oct. 21, 2014 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended September 27, 2014.

iRobot logo

"I am pleased to report an outstanding third quarter, with results that exceeded our expectations, as a number of orders, in both Home and D&S, originally expected in Q4 were received and delivered in Q3," said Colin Angle, chairman and chief executive officer of iRobot. "Home Robot growth of 19 percent year-over-year drove total company revenue growth of 15 percent in Q3.  Revenue in our Defense & Security business exceeded our expectations for the third quarter, and we exited Q3 with $25 million in backlog.

"Based on our visibility into the fourth quarter, we are maintaining our full-year revenue expectations and increasing our EPS and Adjusted EBITDA expectations. We continue to expect revenue to be $555 to $565 million. We now expect EPS of between $1.20 and $1.25 and Adjusted EBITDA of $77 to $80 million, or roughly 14 percent of revenue."

Financial Results

  • Revenue for the third quarter of 2014 was $143.5 million, compared with $124.5 million for the same quarter one year ago.
  • Net income in the third quarter of 2014 was $14.6 million, compared with $7.8 million in the third quarter of 2013.
  • Quarterly earnings per share were $0.48 for the third quarter of 2014, compared with $0.26 in the third quarter last year.
  • Adjusted EBITDA for the third quarter of 2014 was $29.7 million, compared with $17.2 million in the third quarter of 2013.

Business Highlights

  • Domestic growth of 31 percent, coupled with International revenue growth of 13 percent, fueled a 19 percent year-over-year increase in Home Robot revenue.
  • Defense & Security revenue was up six percent, and backlog was $25 million at the end of Q3 2014, providing us with increased confidence in delivering our full-year Defense & Security expectations.
  • Remote Presence sold eight Ava 500 robots to customers including AT&T, while additional robot trials are being conducted with a multinational law firm, manufacturing, pharmaceutical and financial services companies to enable remote collaboration, customer service and executive management.

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and the fiscal year ending December 27, 2014.

 

Q4 2014:

Revenue

$158 - $167 million

Earnings Per Share

$0.26 - $0.31

Adjusted EBITDA

$17 - $20 million



Fiscal Year 2014:

Current

Prior

Revenue

$555 - $565 million

$555 - $565 million

Earnings Per Share

$1.20 - $1.25

$1.10 - $1.20

Adjusted EBITDA

$77 - $80 million

$74 - $78 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 2014, business outlook, and outlook for fourth-quarter and fiscal year 2014 financial performance. Pertinent details include:


Date:

Wednesday, October 22, 2014

Time:

8:30 a.m. ET

Call-In Number:

847-619-6396

Passcode:

35967590

 

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=5041609.  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 29, and can be accessed by dialing 630-652-3042, passcode 35967590#.

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 proprietary technologies 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, outlook for and performance of our businesses, demand for our robots, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2014 and the fourth quarter ending December 27, 2014. 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, amortization, stock-based compensation expense, merger and acquisition expense, net intellectual property litigation 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 nine months ended

September 27,

September 28,

September 27,

September 28,

2014

2013

2014

2013




Revenue

143,497

124,501

397,504

361,058

Cost of Revenue

75,608

70,440

215,784

198,865

Gross Margin

67,889

54,061

181,720

162,193




Operating Expense




  Research & development

17,343

15,212

51,522

45,617

  Selling & marketing

15,844

16,317

53,911

49,323

  General & administrative

12,008

11,495

35,938

39,348

      Total

45,195

43,024

141,371

134,288




Operating income

22,694

11,037

40,349

27,905




Other income (expense), net

(374)

152

(469)

(49)




Income before income taxes

22,320

11,189

39,880

27,856

Income tax expense

7,713

3,385

11,463

3,403

Net income

$         14,607

$           7,804

$         28,417

$         24,453




Net income per common share:  




   Basic

$            0.49

$            0.27

$            0.97

$            0.86

   Diluted

$            0.48

$            0.26

$            0.94

$            0.84




Shares used in per common share calculations: 




   Basic

29,595

28,733

29,439

28,359

   Diluted

30,183

29,582

30,169

29,207










Stock-based compensation included in above figures:




        Cost of revenue

$             291

$             250

$             626

$             496

        Research & development

866

669

2,425

1,963

        Selling & marketing

319

348

860

832

        General & administrative

2,315

2,210

6,105

6,378

            Total

$           3,791

$           3,477

$         10,016

$           9,669




 

iRobot Corporation

Condensed Consolidated Balance Sheets

(unaudited, in thousands)



September 27,

December 28,

2014

2013


 Assets 






 Cash and equivalents 

$          148,424

$        165,404

 Short term investments 

38,336

21,954

 Accounts receivable, net 

68,347

39,348

 Unbilled revenues 

1,179

856

 Inventory 

54,148

46,107

 Deferred tax assets 

20,962

20,144

 Other current assets 

12,255

6,848

   Total current assets 

343,651

300,661

 Property, plant and equipment, net 

26,862

23,661

 Deferred tax assets 

10,948

10,095

 Goodwill 

48,751

48,751

 Intangible assets, net 

20,019

22,668

 Other assets 

10,501

10,501

 Total assets 

$          460,732

$        416,337


 Liabilities and stockholders' equity 






 Accounts payable 

$           46,386

$          41,344

 Accrued expenses 

17,831

14,880

 Accrued compensation 

11,770

19,606

 Deferred revenue and customer advances 

2,709

5,085

   Total current liabilities 

78,696

80,915

 Long term liabilities 

4,266

4,733

 Stockholders' equity 

377,770

330,689

 Total liabilities and stockholders' equity 

$          460,732

$        416,337


 

iRobot Corporation

Consolidated Statements of Cash Flows

(unaudited, in thousands)





For the nine months ended

September 27,

September 28,

2014

2013

Cash flows from operating activities:

Net income

$                    28,417

$                   24,453

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 

9,578

9,029

(Gain)/Loss on disposal of property and equipment

27

(351)

Goodwill and intangible assets impairment

-

1,988

Stock-based compensation 

10,016

9,669

Deferred income taxes, net

793

(662)

Tax benefit of excess stock based compensation deductions

(2,707)

(2,238)

Non-cash director deferred compensation 

34

33

Changes in operating assets and liabilities — (use) source

Accounts receivable 

(28,999)

(24,614)

Unbilled revenue 

(323)

(360)

Inventory 

(8,678)

(11,888)

Other assets 

(5,407)

2,697

Accounts payable 

4,943

4,129

Accrued expenses 

2,859

(216)

Accrued compensation 

(7,836)

3,004

Deferred revenue and customer advances

(2,376)

(4,231)

Change in long term liabilities

(467)

338

Net cash (used in) provided by operating activities 

(126)

10,780

Cash flows from investing activities:

Purchase of property and equipment 

(9,168)

(5,309)

Change in other assets

-

(2,000)

Purchases of investments 

(24,214)

(12,897)

Sales of investments 

7,500

8,044

Proceeds from sale of assets

-

650

Net cash used in investing activities 

(25,882)

(11,512)

Cash flows from financing activities:

Proceeds from stock option exercises 

7,853

12,364

Income tax withholding payment associated with restricted stock vesting

(1,532)

(909)

Tax benefit of excess stock based compensation deductions

2,707

2,238

Net cash provided by financing activities 

9,028

13,693

Net increase (decrease) in cash and cash equivalents 

(16,980)

12,961

Cash and cash equivalents, at beginning of period 

165,404

126,770

Cash and cash equivalents, at end of period 

$                  148,424

$                   139,731

 

iRobot Corporation

Supplemental Information

(unaudited)











For the three months ended

For the nine months ended

September 27,

September 28,

September 27,

September 28,

2014

2013

2014

2013




Revenue: *










Home Robots

$        132,013

$        111,363

$        373,283

$        319,590




    Domestic

$          46,830

$          35,700

$        129,889

$        106,269

    International

$          85,183

$          75,663

$        243,394

$        213,321










Defense & Security

$          10,667

$          10,094

$          21,369

$          33,664




    Domestic

$            4,850

$            3,467

$            9,379

$          24,158

    International

$            5,817

$            6,627

$          11,990

$            9,506




    Product

$          10,258

$            9,754

$          20,947

$          29,291

    Contract

$               409

$               340

$               422

$            4,373




    Product Life Cycle

$            5,797

$            5,347

$          11,203

$          14,468










Gross Margin Percent:




    Home Robots

50.7%

47.6%

49.9%

49.2%

    Defense & Security

53.3%

40.7%

45.1%

45.5%

    Total Company

47.3%

43.4%

45.7%

44.9%










Units shipped:




    Home Robots *

573

526

1,603

1,439

    Defense & Security

52

43

130

485










Average gross selling prices for robot units:




    Home Robots

$               244

$               225

$               242

$               230

    Defense & Security *

$                 86

$               103

$                 75

$                 31










Defense & Security Funded Product Backlog *

$          25,170

$          13,318

$          25,170

$          13,318










Days sales outstanding

44

41

44

41




Days in inventory

65

64

65

64




Headcount

562

525

562

525










* in thousands




 

iRobot Corporation

Adjusted EBITDA Reconciliation to GAAP

(unaudited, in thousands)











For the three months ended

For the nine months ended

September 27,

September 28,

September 27,

September 28,

2014

2013

2014

2013




 Net income 

$          14,607

$            7,804

$          28,417

$          24,453




 Interest income, net 

(184)

(212)

(499)

(529)

 Income tax expense 

7,713

3,385

11,463

3,403

 Depreciation 

2,294

1,484

6,676

5,924

 Amortization 

964

996

2,902

3,105




 EBITDA 

25,394

13,457

48,959

36,356










Stock-based compensation expense 

3,791

3,477

10,016

9,669

Merger and acquisition expense 

-

-

-

393

Net intellectual property litigation expense 

496

241

1,141

444

Restructuring expense 

-

-

-

2,575




 Adjusted EBITDA 

$          29,681

$          17,175

$          60,116

$          49,437
















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.

 

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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