BEDFORD, Mass. iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended June 29, 2013.

 

“I am very excited to report that we had an excellent quarter following an outstanding Q1. Our Home Robot business delivered strong results both domestically and overseas, and the outlook continues to be good. We announced our second remote presence market initiative, Enterprise Telepresence, in partnership with Cisco, and our Defense & Security business performed as expected,” said Colin Angle, chairman and chief executive officer of iRobot.

“Based on our view of the rest of the year, our expectations for revenue and Adjusted EBITDA remain unchanged, but we are increasing the low end of our EPS range due to a one-time tax benefit received in Q2. We expect to deliver fiscal 2013 revenue of $485 to $495 million, EPS between $0.88 and $1.00 and Adjusted EBITDA of $55 to $61 million. Our strong second-quarter results, driven by our Home Robot business, give us confidence that we will achieve our full-year expectations.”

• Revenue for the second quarter of 2013 was $130.4 million, compared with $111.4 million for the same quarter one year ago. Revenue for the first half of 2013 was $236.6 million, compared with $209.3 million last year.
• Net income in the second quarter of 2013 was $8.3 million, compared with $7.4 million in the second quarter of 2012. For the first half, net income was $16.6 million, compared with $8.0 million a year ago.
• Quarterly earnings per share were $0.28, compared with $0.26 in the second quarter last year. First-half earnings per share were $0.57, compared with $0.28 in 2012. EPS in Q2 and first-half 2013 included a $0.07 one-time tax benefit associated with the prior period sale of government robots to the U.S. military, which were used outside of the U.S.
• Adjusted EBITDA for the second quarter of 2013 was $17.0 million, compared with $16.2 million in the second quarter of 2012. For the first half, Adjusted EBITDA was $32.3 million, compared with $22.3 million a year ago.

Business Highlights

• Domestic revenue growth of 26 percent, coupled with international growth of 18 percent, fueled a 20 percent year-over-year increase in Home Robot revenue.
• Announced contracts from Brazil totaling $7.2 million and a $3.0 million order under a $30.0 million IDIQ from the U.S. Army during the quarter, which gives us confidence that we will achieve our full-year Defense & Security expectations.
• Announced a joint marketing agreement with Cisco to bring the enterprise-grade Ava 500 video collaboration robot to market, the second initiative of our Remote Presence business.

Financial Expectations

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

Q3 2013:

Revenue

$124 - $128 million

Earnings Per Share

$0.20 - $0.25

Adjusted EBITDA

$14 - $17 million

Fiscal Year 2013:

Current

Prior

Revenue

$485 - $495 million

$485 - $495 million

Earnings Per Share

$0.88 - $1.00

$0.80 - $1.00

Adjusted EBITDA

$55 - $61 million

$55 - $61 million

Full-Year 2013 BU Revenue:

Home Robots

$435 - $440 million

Defense & Security Robots

$45 - $55 million

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

Date:						Wednesday, July 24, 2013
Time:						8:30 a.m. ET
Call-In Number:						847-619-6818
Passcode:						34160570

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=4897483. 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 August 1, and can be accessed by dialing 630-652-3000, passcode 34160570#.

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, operating performance and growth, demand for our robots, anticipated growth and performance of our Home Robots business, anticipated performance of our Defense & Security business, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2013 and the third quarter ending September 28, 2013, and anticipated business unit revenue for the 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, 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 six months ended
		June 29,				June 30,				June 29,				June 30,
			2013				2012				2013				2012
Revenue
Product revenue		$	127,966			$	107,760			$	229,371			$	199,502
Contract revenue			2,396				3,685				7,186				9,750
Total			130,362				111,445				236,557				209,252
Cost of Revenue
Product revenue			67,873				57,089				125,688				113,322
Contract revenue			884				1,540				2,737				4,562
Total			68,757				58,629				128,425				117,884
Gross Margin			61,605				52,816				108,132				91,368
Operating Expense
Research & development			15,997				14,182				30,405				28,682
Selling & marketing			22,309				17,976				33,006				30,309
General & administrative			15,395				10,022				27,853				21,064
Total			53,701				42,180				91,264				80,055
Operating income			7,904				10,636				16,868				11,313
Other income (expense), net			(105	)			60				(201	)			280
Income before income taxes			7,799				10,696				16,667				11,593
Income tax expense (benefit)			(495	)			3,321				18				3,565
Net income		$	8,294			$	7,375			$	16,649			$	8,028
Net income per common share:
Basic		$	0.29			$	0.27			$	0.59			$	0.29
Diluted		$	0.28			$	0.26			$	0.57			$	0.28
Shares used in per common share calculations:
Basic			28,416				27,522				28,173				27,441
Diluted			29,226				28,182				28,972				28,259
Stock-based compensation included in above figures:
Cost of product revenue		$	128			$	218			$	246			$	426
Cost of contract revenue			-				-				-				-
Research & development			793				446				1,294				906
Selling & marketing			118				179				484				416
General & administrative			2,224				2,059				4,168				3,667
Total		$	3,263			$	2,902			$	6,192			$	5,415

iRobot Corporation
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
		June 29,				December 29,
			2013				2012
Assets
Cash and equivalents		$	133,857			$	126,770
Short term investments			19,014				12,430
Accounts receivable, net			51,104				29,413
Unbilled revenues			1,051				1,196
Inventory			41,560				36,965
Deferred tax assets			19,245				19,266
Other current assets			13,598				8,853
Total current assets			279,429				234,893
Property, plant and equipment, net			23,060				24,953
Deferred tax assets			10,438				8,792
Goodwill			48,751				48,951
Intangible assets, net			24,506				28,224
Other assets			10,501				8,500
Total assets		$	396,685			$	354,313
Liabilities and stockholders' equity
Accounts payable		$	53,905			$	42,515
Accrued expenses			14,045				13,642
Accrued compensation			13,113				11,864
Deferred revenue and customer advances			3,274				6,257
Total current liabilities			84,337				74,278
Long term liabilities			4,138				4,218
Stockholders' equity			308,210				275,817
Total liabilities and stockholders' equity		$	396,685			$	354,313

iRobot Corporation
Consolidated Statements of Cash Flows
(unaudited, in thousands)
		For the three months ended									For the six months ended
		June 29,				June 30,					June 29,				June 30,
			2013				2012					2013				2012
Cash flows from operating activities:
Net income		$	8,294			$	7,375				$	16,649			$	8,028
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization			3,265				2,711					6,549				5,313
Loss on disposal of property and equipment			99				97					281				166
Goodwill and intangible assets impairment			1,988				-					1,988				-
Stock-based compensation			3,263				2,902					6,192				5,415
Deferred income taxes, net			(464	)			2,464					(913	)			(4,230	)
Tax benefit of excess stock based compensation deductions			(1,593	)			(330	)				(1,636	)			(1,035	)
Non-cash director deferred compensation			11				20					22				42
Changes in operating assets and liabilities — (use) source
Accounts receivable			(23,824	)			(9,620	)				(21,691	)			3,811
Unbilled revenue			1,201				(833	)				145				289
Inventory			(9,400	)			(2,916	)				(4,595	)			(3,508	)
Other assets			(3,787	)			(3,210	)				(4,770	)			(378	)
Accounts payable			24,101				910					11,390				(3,194	)
Accrued expenses			21				(5,255	)				400				(3,252	)
Accrued compensation			6,116				2,008					1,249				(8,141	)
Deferred revenue and customer advances			(355	)			(540	)				(2,983	)			355
Change in long term liabilities			(895	)			(120	)				(80	)			(186	)
Net cash (used in) provided by operating activities			8,041				(4,337	)				8,197				(505	)
Cash flows from investing activities:
Purchase of property and equipment			(1,751	)			(1,313	)				(2,828	)			(2,956	)
Change in other assets			-				-					(2,000	)			(6,000	)
Purchases of investments			(7,850	)			(5,086	)				(10,397	)			(5,086	)
Sales of investments			2,500				-					3,500				2,500
Net cash used in investing activities			(7,101	)			(6,399	)				(11,725	)			(11,542	)
Cash flows from financing activities:
Proceeds from stock option exercises			8,099				699					9,843				2,022
Income tax withholding payment associated with restricted stock vesting			(351	)			(548	)				(864	)			(775	)
Tax benefit of excess stock based compensation deductions			1,593				330					1,636				1,035
Net cash provided by financing activities			9,341				481					10,615				2,282
Net increase (decrease) in cash and cash equivalents			10,281				(10,255	)				7,087				(9,765	)
Cash and cash equivalents, at beginning of period			123,576				166,798					126,770				166,308
Cash and cash equivalents, at end of period		$	133,857			$	156,543				$	133,857			$	156,543

iRobot Corporation
Supplemental Information
(unaudited)
		For the three months ended									For the six months ended
		June 29,				June 30,					June 29,				June 30,
			2013				2012					2013				2012
Revenue: *
Home Robots		$	115,528			$	96,013				$	208,227			$	177,596
Domestic		$	39,178			$	31,126				$	70,569			$	52,944
International		$	76,350			$	64,887				$	137,658			$	124,652
Defense & Security		$	12,470			$	13,223				$	23,570			$	27,385
Domestic		$	11,579			$	11,013				$	20,713			$	21,128
International		$	891			$	2,210				$	2,857			$	6,257
Product		$	11,502			$	10,403				$	19,537			$	19,407
Contract		$	968			$	2,820				$	4,033			$	7,978
Product Life Cycle		$	3,041			$	4,524				$	9,121			$	9,108
Gross Margin Percent:
Home Robots			51.5	%			53.0	%				50.0	%			50.3	%
Defense & Security			47.5	%			45.9	%				47.5	%			37.7	%
Total Company			47.3	%			47.4	%				45.7	%			43.7	%
Units shipped:
Home Robots *			492				426					913				818
Defense & Security			424				42					442				174
Average gross selling prices for robot units:
Home Robots		$	225			$	225				$	233			$	220
Defense & Security *		$	20			$	140				$	24			$	59
Defense & Security Funded Product Backlog *		$	19,972			$	18,300				$	19,972			$	18,300
Days sales outstanding			37				34					37				34
Days in inventory			58				54					58				54
Headcount			517				604					517				604
* in thousands

iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
		For the three months ended									For the six months ended
		June 29,				June 30,					June 29,				June 30,
			2013				2012					2013				2012
Net income		$	8,294			$	7,375				$	16,649			$	8,028
Interest income, net			(153	)			(264	)				(317	)			(526	)
Income tax expense (benefit)			(495	)			3,321					18				3,565
Depreciation			2,221				2,485					4,440				4,879
Amortization			1,044				226					2,109				434
EBITDA			10,911				13,143					22,899				16,380
Stock-based compensation expense			3,263				2,902					6,192				5,415
Merger and acquisition expense			113				14					393				26
Net intellectual property litigation expense			170				34					203				71
Restructuring expense			2,575				129					2,575				407
Adjusted EBITDA		$	17,032			$	16,222				$	32,262			$	22,299
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.