iRobot Reports Fourth-Quarter and Full-Year Financial Results

Home Robot Business Up 19 Percent in 2014, Expected to Drive Continued Growth in 2015

News provided by

iRobot Corp.

Feb 04, 2015, 04:01 ET

BEDFORD, Mass., Feb. 4, 2015 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the fourth quarter and full year ended December 27, 2014.

"2014 was a great year for iRobot. Our Home Robot business increased 19 percent over 2013, driven by growth in both domestic and overseas markets," said Colin Angle, chairman and chief executive officer of iRobot. "All three of our businesses met our expectations and made significant progress against their strategic plans, setting us up well for 2015.

"In 2015 our financial performance will continue to be driven by our Home Robot business. In the United States, we expect strong Home Robot revenue growth in the mid teens while overseas growth will be tempered by macros and currency devaluations.  Overall, Home Robot revenue is expected to grow 11 to 13 percent in 2015 and comprise 90 percent of total company revenue.  We anticipate Defense & Security will grow for the first time since 2011, and our Remote Presence business will focus on improving the scalability of our solution while holding revenue flat at 2014 levels.

"For 2015, we expect revenue of $625 to $635 million, EPS of between $1.25 and $1.45, and Adjusted EBITDA of $85 to $95 million. Additionally, 2015 will be an important year for iRobot as we begin to roll out and monetize investments we have been making in crucial robotic technology."

Financial Results

  • Revenue for the fourth quarter of 2014 was $159.3 million, compared with $126.3 million for the fourth quarter of 2013. Revenue for the full year 2014 was $556.8 million, compared with $487.4 million for the full year 2013.
  • Net income for the fourth quarter of 2014 was $9.4 million, compared with $3.2 million for the fourth quarter of 2013. Net income for the full year 2014 was $37.8 million, compared with $27.6 million for full-year 2013.
  • Quarterly earnings per share were $0.31, compared with $0.11 in the fourth quarter last year. Full-year earnings per share were $1.25, compared with $0.94 last year.
  • Adjusted EBITDA for the fourth quarter of 2014 was $19.7 million, compared with $12.8 million in the fourth quarter of 2013. Adjusted EBITDA for the full year 2014 was $79.8 million, compared with $62.2 million for full-year 2013.

Business Highlights

  • Full-year domestic Home Robot revenue growth of more than 20 percent, coupled with international Home Robot revenue growth of 17 percent, drove a 19 percent year-over-year increase in full-year Home Robot revenue.
  • Our Defense & Security business delivered results consistent with our expectations, exited the year with a solid backlog, and is positioned for healthy growth in 2015.
  • Our Remote Presence business continued to ramp sales of telemedicine robots to our partner InTouch Health for use in hospitals, and Ava 500 Video Collaboration Robots to several Fortune 500 customers.

Financial Expectations

Management provides the following expectations with respect to the year ending January 2, 2016 and first quarter ending March 28, 2015.

Fiscal Year 2015:
Revenue                           $625 - $635 million
Earnings Per Share           $1.25 - $1.45
Adjusted EBITDA              $85 - $95 million

Full-Year 2015 BU Revenue:                                              
Home                               $565 - $575 million                 
Defense & Security            $55 - $60 million
Remote Presence              $3 million

Q1 2015:
Revenue                            $114 - $117 million
Earnings Per Share            $0.08 - $0.10                          
Adjusted EBITDA               $10 - $11 million

Fourth-Quarter and Full-Year Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter and full year 2014, and outlook for 2015 financial performance. Pertinent details include: 

Date:                       Thursday, February 5, 2015  
Time:                       8:30 a.m. ET
Call-In Number:         847-619-6397
Passcode:                38036844

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=5168619. 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 February 12, and can be accessed by dialing 630-652-3042, passcode 38036844#.

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 future performance of our businesses, demand for our robots, the impact of our investments to develop robotic technology, anticipated fiscal year 2015 revenue for our businesses, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the first quarter ending March 28, 2015.  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 twelve months ended 

December 27,

 December 28, 

December 27,

 December 28, 

2014

2013

2014

2013




Revenue

159,342

126,343

556,846

487,401

Cost of Revenue

83,007

67,413

298,791

266,247




Gross Margin

76,335

58,930

258,055

221,154




Operating Expense




  Research & development

17,886

18,008

69,408

63,649

  Selling & marketing

32,180

22,199

86,091

71,529

  General & administrative

13,501

14,010

49,439

53,358

      Total

63,567

54,217

204,938

188,536




Operating income

12,768

4,713

53,117

32,618




Other income (expense), net

(239)

(154)

(708)

(203)




Income before income taxes

12,529

4,559

52,409

32,415

Income tax expense

3,143

1,371

14,606

4,774

Net income

$     9,386

$     3,188

$     37,803

$      27,641




Net income per common share:  




   Basic

$      0.32

$      0.11

$         1.28

$         0.97

   Diluted

$      0.31

$      0.11

$         1.25

$         0.94




Shares used in per common share calculations: 




   Basic

29,626

28,902

29,485

28,495

   Diluted

30,240

29,712

30,210

29,354










Stock-based compensation included in above figures:




        Cost of revenue

$       239

$       204

$          865

$          700

        Research & development

934

737

3,359

2,700

        Selling & marketing

436

414

1,296

1,246

        General & administrative

2,153

2,385

8,258

8,763

            Total

$     3,762

$     3,740

$     13,778

$     13,409




 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 



December 27,

 December 28, 

2014

2013


 Assets 






 Cash and equivalents 

$          185,957

$        165,404

 Short term investments 

36,166

21,954

 Accounts receivable, net 

71,056

39,348

 Unbilled revenues 

2,614

856

 Inventory 

47,857

46,107

 Deferred tax assets 

21,505

20,144

 Other current assets 

9,704

6,848

   Total current assets 

374,859

300,661

 Property, plant and equipment, net 

31,297

23,661

 Deferred tax assets 

8,409

10,095

 Goodwill 

48,751

48,751

 Intangible assets, net 

19,146

22,668

 Other assets 

10,751

10,501

 Total assets 

$          493,213

$        416,337


 Liabilities and stockholders' equity 






 Accounts payable 

$           60,256

$          41,344

 Accrued expenses 

18,701

14,880

 Accrued compensation 

16,235

19,606

 Deferred revenue and customer advances 

3,849

5,085

   Total current liabilities 

99,041

80,915

 Long term liabilities 

3,736

4,733

 Stockholders' equity 

390,436

330,689

 Total liabilities and stockholders' equity 

$          493,213

$        416,337


 iRobot Corporation 

  Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 





 For the twelve months ended 

December 27,

 December 28, 

2014

2013

Cash flows from operating activities:

Net income

$    37,803

$     27,641

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

Depreciation and amortization 

13,049

12,169

Loss on disposal of property and equipment

246

189

Goodwill and intangible assets impairment

-

1,988

Stock-based compensation 

13,778

13,409

Deferred income taxes, net

3,101

(768)

Tax benefit of excess stock based compensation deductions

(3,051)

(2,406)

Non-cash director deferred compensation 

49

44

Changes in operating assets and liabilities — (use) source

Accounts receivable 

(31,708)

(9,935)

Unbilled revenue 

(1,758)

340

Inventory 

(2,387)

(9,365)

Other assets 

(2,856)

1,980

Accounts payable 

16,249

(1,743)

Accrued expenses 

3,695

1,255

Accrued compensation 

(3,371)

7,751

Deferred revenue and customer advances

(1,236)

(1,172)

Change in long term liabilities

(997)

515

Net cash provided by operating activities 

40,606

41,892

Cash flows from investing activities:

Purchase of property and equipment 

(13,774)

(6,829)

Change in other assets

(250)

(2,000)

Purchases of investments 

(31,219)

(17,946)

Sales of investments 

16,500

8,044

Proceeds from sale of assets

-

650

Net cash used in investing activities 

(28,743)

(18,081)

Cash flows from financing activities:

Proceeds from stock option exercises 

8,943

13,629

Income tax withholding payment associated with restricted stock vesting

(1,626)

(1,212)

Stock repurchases

(1,678)

-

Tax benefit of excess stock based compensation deductions

3,051

2,406

Net cash provided by financing activities 

8,690

14,823

Net increase in cash and cash equivalents 

20,553

38,634

Cash and cash equivalents, at beginning of period 

165,404

126,770

Cash and cash equivalents, at end of period 

$    185,957

$    165,404

 iRobot Corporation 

Supplemental Information

(unaudited)











 For the three months ended 

 For the twelve months ended 

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013




Revenue: *










Home Robots

$  134,131

$  108,263

$  507,414

$  427,853




    Domestic

$    57,759

$     47,843

$  187,648

$  154,112

    International

$    76,372

$     60,420

$  319,766

$  273,741










Defense & Security

$    24,133

$    16,339

$    45,502

$    50,003




    Domestic

$    16,483

$    10,035

$    26,081

$    34,193

    International

$      7,650

$      6,304

$    19,421

$    15,810




    Product

$    21,367

$    16,321

$    42,314

$    45,612

    Contract

$      2,766

$           18

$      3,188

$      4,391




    Product Life Cycle

$    16,290

$    11,625

$    27,493

$    26,097










Gross Margin Percent:




    Home Robots

52.2%

49.6%

50.5%

49.3%

    Defense & Security

47.4%

59.4%

46.4%

50.1%

    Total Company

47.9%

46.6%

46.3%

45.4%










Units shipped:




    Home Robots *

571

494

2,174

1,933

    Defense & Security

135

49

265

534










Average gross selling prices for robot units:




    Home Robots

$         255

$         233

$         245

$         231

    Defense & Security *

$           37

$           96

$           56

$           36










Defense & Security Funded Product Backlog *

$    18,188

$      8,765

$    18,188

$      8,765










Days sales outstanding

42

29

42

29




Days in inventory

53

63

53

63




Headcount

572

528

572

528










* in thousands











 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 











 For the three months ended 

 For the twelve months ended 

December 27,

December 28,

December 27,

December 28,

2014

2013

2014

2013




 Net income 

$      9,386

$      3,188

$    37,803

$    27,641




 Interest income, net 

(174)

(131)

(673)

(660)

 Income tax expense 

3,143

1,371

14,606

4,774

 Depreciation 

2,516

2,153

9,192

8,077

 Amortization 

955

987

3,857

4,092




 EBITDA 

15,826

7,568

64,785

43,924










 Stock-based compensation expense 

3,762

3,740

13,778

13,409

 Merger and acquisition expense 

-

7

-

400

 Net intellectual property litigation expense 

73

758

1,214

1,202

 Restructuring expense 

-

721

-

3,296




 Adjusted EBITDA 

$    19,661

$    12,794

$    79,777

$    62,231
















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, amortization, stock-based compensation expense, merger and acquisition expense, net intellectual property litigation expense, and restructuring expense. 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.