iRobot Reports Second-Quarter Financial Results
Double-Digit Revenue Growth in All Regions

BEDFORD, Mass., July 23, 2019 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the second quarter ended June 29, 2019.

iRobot logo. (PRNewsfoto/iRobot Corp.)

"We delivered 15% revenue growth as a result of double-digit expansion in each major geographic region," said Colin Angle, chairman and chief executive officer of iRobot. "We took steps to adjust spending during the quarter, which enabled us to deliver higher-than-expected operating income and EPS results. The successful launch of our new Roomba s9 vacuums and Braava jet m6 mops at the end of May represented an important milestone in our plans to strengthen Roomba leadership, extend the portfolio beyond vacuuming and advance our position in the Smart Home." 

Commenting on the Company's outlook for 2019, Angle stated, "Although we achieved our U.S. revenue target in the second quarter, we believe that the direct and indirect impacts of the ongoing U.S.-China trade war and the recently implemented 25% tariffs are likely to constrain U.S. market segment growth in the second half of the year below our expectations at the start of 2019. Given our results for the year-to-date and the anticipated impact of higher tariffs on domestic segment growth, we believe it is prudent to update our 2019 full-year expectations. We now anticipate full-year 2019 revenue of $1.2 to $1.25 billion, which represents year-over-year growth of approximately 10% to 14%, full-year 2019 operating income of $75 to $100 million, and full-year 2019 EPS of $2.40 to $3.15."

"Even as we operate in a higher tariff environment in the U.S., 2019 is shaping up to be another successful year of double-digit revenue growth and impressive global segment leadership. Moving forward, we remain enthusiastic about the many attractive opportunities we see to advance key elements of our strategy that underpin our efforts to drive sustainable growth and shareholder value," concluded Angle.

Financial Results

  • Revenue for the second quarter of 2019 was $260.2 million, compared with $226.3 million for the second quarter of 2018. Revenue for the first half of 2019 was $497.8 million, compared with $443.4 million last year.
  • Operating income in the second quarter of 2019 was $5.3 million, compared with $13.4 million in the second quarter of 2018. For the first half of 2019, operating income was $27.5 million, compared with $38.8 million a year ago.
  • Quarterly earnings per share were $0.25 for the second quarter of 2019, compared with $0.37 in the second quarter of 2018. First-half earnings per share were $1.03, compared with $1.08 in the first half of 2018. 

Q219 and Recent Business Highlights

  • Delivered double-digit Q2 revenue growth in all major geographic markets.
    • Q2 revenue grew 18% internationally and 12% in the U.S.
  • Investments in R&D continued to yield tangible results. 
    • Launched the Roomba® s9 vacuum and Braava jet® m6 mop in Q2 – two of three new products planned for 2019.
  • Continued progress with manufacturing diversification initiatives. 
  • Appointed Eva Manolis to the iRobot Board of Directors, bringing substantial product development and global ecommerce experience within the consumer technology space.
  • Roomba was featured as part of Amazon Prime Day for the fifth consecutive year, and was specifically touted by Amazon as one of the event's top-selling smart home devices.  

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 28, 2019.

Fiscal Year 2019:   

Current    

Previous 




Revenue    

$1.2 - $1.25 billion   

$1.28 - $1.31 billion 

Operating Income 

$75 - $100 million   

$108 - $118 million 

Earnings Per Share    

$2.40 - $3.15  

$3.15 - $3.40     

Second-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the second fiscal quarter 2019, business outlook, and outlook for fiscal year 2019 financial performance. Pertinent details include:

Date:  

Wednesday, July 24, 2019  

Time: 

8:30 a.m. ET

Call-In Number:  

213-358-0894

Passcode: 

8832179

A live, audio broadcast of the conference call will also be available at https://investor.irobot.com/events/event-details/q2-2019-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 July 30, and can be accessed by dialing 404-537-3406, passcode 8832179.

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® Robot Vacuum in 2002. Today, iRobot is a global enterprise that has sold more than 25 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 engineers are building an ecosystem of robots and technologies 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; growth and investment strategy; demand for robots; new product introductions; and anticipated revenue, operating income and earnings per share for the fiscal year ending December 28, 2019. 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; the impact of tariffs on goods imported into the United States; 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.

 

 

iRobot Corporation

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)


















For the three months ended


For the six months ended


June 29, 2019


June 30, 2018


June 29, 2019


June 30, 2018









Revenue

$           260,172


$           226,317


$           497,833


$           443,385

Cost of revenue:








Cost of product revenue

138,891


103,712


253,929


200,213

Amortization of acquired intangible assets

3,111


4,679


6,188


9,461

Total cost of revenue

142,002


108,391


260,117


209,674









Gross profit

118,170


117,926


237,716


233,711









Operating expenses:








Research and development

35,650


34,924


70,919


67,869

Selling and marketing

56,409


45,910


95,245


77,239

General and administrative

20,592


23,468


43,499


49,301

Amortization of acquired intangible assets

269


269


540


542

Total operating expenses

112,920


104,571


210,203


194,951









Operating income

5,250


13,355


27,513


38,760









Other income, net

1,533


1,507


2,813


2,026









Income before income taxes

6,783


14,862


30,326


40,786

Income tax (benefit) expense

(424)


4,391


599


9,914

Net income

$               7,207


$             10,471


$             29,727


$             30,872









Net income per share:








Basic

$                 0.26


$                 0.38


$                 1.06


$                 1.11

Diluted

$                 0.25


$                 0.37


$                 1.03


$                 1.08









Number of shares used in per share calculations:







Basic

28,079


27,615


27,970


27,802

Diluted

28,763


28,337


28,779


28,658

















Stock-based compensation included in above figures:





Cost of revenue

$                  405


$                  347


$                  783


$                  688

Research and development

2,547


1,794


4,925


3,483

Selling and marketing

916


750


1,719


1,488

General and administrative

3,726


3,540


7,031


6,718

Total

$               7,594


$               6,431


$             14,458


$             12,377

 

 

iRobot Corporation

Condensed Consolidated Balance Sheets

(unaudited, in thousands)






June 29, 2019


December 29, 2018





Assets








Cash and cash equivalents

$             132,795


$                   130,373

Short term investments

23,984


31,605

Accounts receivable, net

90,401


162,166

Inventory

192,010


164,633

Other current assets

41,960


25,660

Total current assets

481,150


514,437

Property and equipment, net

71,728


57,026

Operating lease right-of-use assets

50,002


-

Deferred tax assets

33,862


36,979

Goodwill

120,538


118,896

Intangible assets, net

18,636


24,273

Other assets

25,099


15,350

Total assets

$             801,015


$                   766,961





Liabilities and stockholders' equity








Accounts payable

$               86,848


$                   136,742

Accrued expenses

63,629


71,259

Deferred revenue and customer advances

2,101


5,756

Total current liabilities

152,578


213,757

Operating lease liabilities

58,068


-

Deferred tax liabilities

2,110


4,005

Other long-term liabilities

8,683


13,877

Total long-term liabilities

68,861


17,882

Total liabilities

221,439


231,639

Stockholders' equity

579,576


535,322

Total liabilities and stockholders' equity

$             801,015


$                   766,961

 

 

iRobot Corporation

Consolidated Statements of Cash Flows

(unaudited, in thousands)










For the six months ended


June 29, 2019


June 30, 2018

Cash flows from operating activities:




Net income

$             29,727


$             30,872

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




Depreciation and amortization

17,905


17,606

Stock-based compensation

14,458


12,377

Deferred income taxes, net

535


(4,208)

Other

3,106


384

Changes in operating assets and liabilities — (use) source




Accounts receivable

67,808


66,085

Inventory

(27,112)


(10,303)

Prepaid and other current assets

(14,246)


(12,764)

Accounts payable

(52,835)


(46,519)

Accrued expenses and other liabilities

(18,043)


(27,211)

Net cash provided by operating activities

21,303


26,319





Cash flows from investing activities:




Additions of property and equipment

(14,705)


(14,284)

Change in other assets

(4,541)


(1,837)

Proceeds from sale of equity investment

-


629

Cash paid for business acquisitions, net of cash acquired

(2,817)


-

Purchases of investments

-


(6,438)

Sales and maturities of investments

5,880


7,000

Net cash used in investing activities

(16,183)


(14,930)





Cash flows from financing activities:




Proceeds from employee stock plans

4,680


2,605

Income tax withholding payment associated with restricted stock vesting

(7,277)


(3,532)

Stock repurchases

-


(50,000)

Net cash used in financing activities

(2,597)


(50,927)





Effect of exchange rate changes on cash and cash equivalents

(101)


(314)

Net increase (decrease) in cash and cash equivalents

2,422


(39,852)

Cash and cash equivalents, at beginning of period

130,373


128,635

Cash and cash equivalents, at end of period

$           132,795


$             88,783

 

 

iRobot Corporation

Supplemental Information

(unaudited)


















For the three months ended


For the six months ended


June 29, 2019


June 30, 2018


June 29, 2019


June 30, 2018

Revenue: *
















Consumer

$           260,172


$           226,317


$           497,833


$           443,385









Domestic

$           124,472


$           111,526


$           238,537


$           218,388

International

$           135,700


$           114,791


$           259,296


$           224,997









Gross margin

45.4 %


52.1 %


47.8 %


52.7 %









Consumer units shipped*

1,074


953


1,950


1,768

Vacuum

935


819


1,699


1,530

Mopping

139


134


251


237









Consumer revenue**

$                  260


$                  226


$                  498


$                  443

Vacuum***

$                  237


$                  204


$                  458


$                  405

Mopping***

$                    23


$                    22


$                    40


$                    38









Average gross selling prices for robot units - Consumer

$                  296


$                  285


$                  307


$                  296









Days sales outstanding

32


30


-


-









Days in inventory

123


97


-


-









Headcount

1,120


982


-


-

















* in thousands








** in millions








*** includes accessory revenue








 

 

iRobot Corporation
Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this earnings release contains references to the non-GAAP financial measures described below. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items. We also provide a non-GAAP financial measure of Adjusted EBITDA, as described below. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Amortization of acquired intangible assets: Amortization of acquired intangible assets consists of amortization of intangible assets including completed technology, customer relationships, and reacquired distribution rights acquired in connection with business combinations. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Net Merger, Acquisition and Divestiture (Income) Expense: Net merger, acquisition and divestiture (income) expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures. The occurrence and amount of these costs will vary depending on the timing and size of these transactions. We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Stock-Based Compensation: Stock-based compensation is a non-cash charge relating to stock-based awards. We exclude this expense as it is a non-cash expense, and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies.

IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising infringements, or to oppose or defend against interparty actions related to intellectual property. Any settlement payment or proceeds resulting from these infringements are included or netted against the costs. We exclude these costs from our non-GAAP measures as we do not believe these costs have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigations and settlements.

Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes fair value adjustments, realized gains and losses on the sales of these investments and losses on the impairment of these investments. We exclude these items from our non-GAAP measures because we do not believe they correlate to the performance of our core business and may vary in size based on market conditions and events. We believe that the exclusion of these gains or losses provides investors with a supplemental view of our operational performance.

Income tax adjustments: Income tax adjustments include the tax effect of the non-GAAP adjustments, calculated using the appropriate statutory tax rate for each adjustment. We also exclude certain tax items that are not reflective of income tax expense incurred as a result of current period earnings. These certain tax items include, among other non-recurring tax items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based compensation windfall benefits. We believe disclosure of the income tax provision before the effect of such tax items is important to permit investors' consistent earnings comparison between periods.

Adjusted EBITDA:  We define 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 expense. Management believes this non-GAAP measure is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

 

 

iRobot Corporation

Supplemental Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited, in thousands)


















For the three months ended


For the six months ended


June 29, 2019


June 30, 2018


June 29, 2019


June 30, 2018

GAAP Net Income

$               7,207


$             10,471


$             29,727


$             30,872









Interest income, net

(682)


(196)


(1,530)


(495)

Income tax (benefit) expense

(424)


4,391


599


9,914

Depreciation

5,801


3,942


11,177


7,603

Amortization of acquired intangible assets

3,380


4,948


6,728


10,003









EBITDA

15,282


23,556


46,701


57,897

















Stock-based compensation

7,594


6,431


14,458


12,377

Net merger, acquisition and divestiture (income) expense

143


164


295


23

IP litigation expense, net

(676)


759


(207)


3,330









Adjusted EBITDA

$             22,343


$             30,910


$             61,247


$             73,627

Adjusted EBITDA as a % of revenue

8.6 %


13.7 %


12.3 %


16.6 %

 

 

iRobot Corporation

Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals

(in thousands, except per share amounts)

(unaudited)
















For the three months ended


For the six months ended


June 29, 2019


June 30, 2018


June 29, 2019


June 30, 2018

GAAP Revenue

$                 260,172


$             226,317


$                     497,833


$                443,385









GAAP Gross Profit

118,170


117,926


237,716


233,711

Amortization of acquired intangible assets

3,111


4,679


6,188


9,461

Stock-based compensation

405


347


783


688

Non-GAAP Gross Profit

$                 121,686


$             122,952


$                     244,687


$                243,860









GAAP Operating Income

$                     5,250


$               13,355


$                       27,513


$                  38,760

Amortization of acquired intangible assets

3,380


4,948


6,728


10,003

Stock-based compensation

7,594


6,431


14,458


12,377

Net merger, acquisition and divestiture (income) expense

143


164


295


23

IP litigation expense, net

(676)


759


(207)


3,330

Non-GAAP Operating Income

$                   15,691


$               25,657


$                       48,787


$                  64,493









GAAP Income Tax (Benefit) Expense

$                      (424)


$                 4,391


$                            599


$                    9,914

Tax effect of non-GAAP adjustments

1,797


2,830


3,622


6,170

Other tax adjustments

1,461


(2,440)


5,527


(1,728)

Non-GAAP Income Tax Expense

$                     2,834


$                 4,781


$                         9,748


$                  14,356









GAAP Net Income

$                     7,207


$               10,471


$                       29,727


$                  30,872

Amortization of acquired intangible assets

3,380


4,948


6,728


10,003

Stock-based compensation

7,594


6,431


14,458


12,377

Net merger, acquisition and divestiture (income) expense

143


164


295


23

IP litigation expense, net

(676)


759


(207)


3,330

(Gain)/loss on strategic investments

(629)


(682)


(572)


(401)

Income tax effect

(3,258)


(390)


(9,149)


(4,442)

Non-GAAP Net Income

$                   13,761


$               21,701


$                       41,280


$                  51,762









GAAP Net Income Per Diluted Share

$                       0.25


$                   0.37


$                           1.03


$                      1.08

Amortization of acquired intangible assets

0.12


0.17


0.24


0.35

Stock-based compensation

0.26


0.23


0.50


0.43

Net merger, acquisition and divestiture (income) expense

-


-


0.01


-

IP litigation expense, net

(0.02)


0.03


(0.01)


0.12

(Gain)/loss on strategic investments

(0.02)


(0.02)


(0.02)


(0.01)

Income tax effect

(0.11)


(0.01)


(0.32)


(0.16)

Non-GAAP Net Income Per Diluted Share

$                       0.48


$                   0.77


$                           1.43


$                      1.81

 

SOURCE iRobot Corp.

For further information: Andrew Kramer, Investor Relations, iRobot Corp., (781) 430-3003, akramer@irobot.com or Matthew Lloyd, Media Relations, iRobot Corp., (781) 430-3720, mlloyd@irobot.com