iRobot Reports Second-Quarter Financial Results Home Robot Revenue Grew in All Three Regions; Up 15 percent in the Second Quarter Over Last Year

BEDFORD, Mass., July 22, 2014 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended June 28, 2014.

"I am pleased to report a successful second quarter, with results that met our expectations," said Colin Angle, chairman and chief executive officer of iRobot. "Our Home Robot business continues to deliver strong growth on an ever-increasing base in all three geographic regions while our Defense & Security business built a substantial order backlog for delivery in the second half of 2014.

"Additionally, based on increased confidence in Home Robots, we are raising the low end of our full-year revenue expectations for our Home Robot business to $505 million from $500 million. Further, strong backlog growth during the quarter in Defense & Security, coupled with several expected near-term orders, and the overall growth of high probability pipeline has significantly improved visibility for 2014. The increased visibility has clarified that certain order deliveries are being requested by the customers for early 2015, resulting in a decrease of the 2014 revenue expectation for Defense & Security by $5 million to $45 million

"For the company, we now expect revenue of $555 to $565 million, driven by Home Robot growth of 18-20 percent; EPS of between $1.10 and $1.20 and Adjusted EBITDA of $74 to $78 million, or roughly 14 percent of revenue."

Financial Results

  • Revenue for the second quarter of 2014 was $139.8 million, compared with $130.4 million for the same quarter one year ago. Revenue for the first half of 2014 was $254.0 million, compared with $236.6 million last year.
  • Net income in the second quarter of 2014 was $8.5 million, compared with $8.3 million in the second quarter of 2013. For the first half of 2014, net income was $13.8 million, compared with $16.6 million a year ago.
  • Quarterly earnings per share were $0.28 for the second quarter of 2014, compared with $0.28 in the second quarter last year. First-half earnings per share were $0.46, compared with $0.57 in 2013. Q2 EPS and first-half 2014 EPS were ahead of our expectations due to a $0.07 benefit resulting from the release of a valuation allowance relating to certain tax attributes associated with our acquisition of Evolution Robotics. 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 United States. 
  • Adjusted EBITDA for the second quarter of 2014 was $16.2 million, compared with $17.0 million in the second quarter of 2013. For the first half, Adjusted EBITDA was $30.4 million, compared with $32.3 million a year ago.

Business Highlights

  • International revenue growth of 19 percent, coupled with domestic growth of 7 percent, fueled a 15 percent year-over-year increase in Home Robot revenue.
  • Defense & Security backlog totaling $21 million at the end of Q2 2014 gives us confidence in delivering our full-year Defense & Security expectations.
  • Remote Presence business began shipping our Ava 500 Video Collaboration Robot to customers.

Financial Expectations

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

Q3 2014:



Revenue                                              

$133 - $136 million


Earnings Per Share                              

$0.32 - $0.35                          


Adjusted EBITDA                               

$21 - $23 million





Fiscal Year 2014:                              

Current                                  

Prior

Revenue                                              

$555 - $565 million                 

$560 - $570 million

Earnings Per Share                              

$1.10 - $1.20                          

$1.00 - $1.15

Adjusted EBITDA                               

$74 - $78 million                     

$74 - $78 million




Full-Year 2014 BU Revenue:                                               


Home Robots                                      

$505 - $515 million                 

$500 - $515 million     

Defense & Security Robots                  

$45 million                               

$50 million

Remote Presence                                 

$5 million                                 

$5 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 2014, business outlook, and outlook for third-quarter and fiscal year 2014 financial performance. Pertinent details include:

    Date:

Wednesday, July 23, 2014  

    Time:

8:30 a.m. ET     

    Call-In Number: 

847-619-6396

    Passcode:

35939092

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=5041608. 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 630-652-3042, passcode 35939092#.

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 our businesses, the timing of delivery of orders for our Defense & Security robots, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2014 and the third quarter ending September 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 and amortization, merger and acquisition expense, net intellectual property litigation expense, restructuring expense, and stock-based compensation 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 six months ended 


 June 28, 

 June 29, 


 June 28, 

 June 29, 


2014

2013


2014

2013







Revenue

139,803

130,362


254,007

236,557

Cost of Revenue

77,682

68,757


140,176

128,425







Gross Margin

62,121

61,605


113,831

108,132







Operating Expense






  Research & development

17,245

15,997


34,179

30,405

  Selling & marketing

23,535

22,309


38,067

33,006

  General & administrative

11,666

15,395


23,930

27,853

      Total

52,446

53,701


96,176

91,264







Operating income

9,675

7,904


17,655

16,868







Other income (expense), net

92

(105)


(95)

(201)







Income before income taxes

9,767

7,799


17,560

16,667

Income tax expense (benefit)

1,237

(495)


3,750

18

Net income

$           8,530

$           8,294


$         13,810

$         16,649







Net income per common share:  






   Basic

$            0.29

$            0.29


$            0.47

$            0.59

   Diluted

$            0.28

$            0.28


$            0.46

$            0.57







Shares used in per common share calculations: 






   Basic

29,533

28,416


29,361

28,173

   Diluted

30,129

29,226


30,122

28,972













Stock-based compensation included in above figures:






        Cost of revenue

$             166

$             128


$             335

$             246

        Research & development

828

793


1,559

1,294

        Selling & marketing

203

118


541

484

        General & administrative

1,950

2,224


3,790

4,168

            Total

$           3,147

$           3,263


$           6,225

$           6,192







 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 






 June 28, 


 December 28, 


2014


2013





 Assets 








 Cash and equivalents 

$          147,718


$        165,404

 Short term investments 

34,986


21,954

 Accounts receivable, net 

53,880


39,348

 Unbilled revenues 

862


856

 Inventory 

50,796


46,107

 Deferred tax assets 

21,054


20,144

 Other current assets 

16,701


6,848

   Total current assets 

325,997


300,661

 Property, plant and equipment, net 

25,808


23,661

 Deferred tax assets 

11,192


10,095

 Goodwill 

48,751


48,751

 Intangible assets, net 

20,891


22,668

 Other assets 

10,501


10,501

 Total assets 

$          443,140


$        416,337





 Liabilities and stockholders' equity 








 Accounts payable 

$           48,668


$          41,344

 Accrued expenses 

17,083


14,880

 Accrued compensation 

10,706


19,606

 Deferred revenue and customer advances 

3,051


5,085

   Total current liabilities 

79,508


80,915

 Long term liabilities 

4,349


4,733

 Stockholders' equity 

359,283


330,689

 Total liabilities and stockholders' equity 

$          443,140


$        416,337





 

 iRobot Corporation 

  Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 








 For the six months ended 


 June 28, 

 June 29, 


2014

2013

Cash flows from operating activities:



Net income

$          13,810

$          16,649

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



Depreciation and amortization 

6,320

6,549

(Gain)/Loss on disposal of property and equipment

(10)

281

Goodwill and intangible assets impairment

-

1,988

Stock-based compensation 

6,225

6,192

Deferred income taxes, net

464

(913)

Tax benefit of excess stock based compensation deductions

(2,692)

(1,636)

Non-cash director deferred compensation 

22

22

Changes in operating assets and liabilities — (use) source



Accounts receivable 

(14,532)

(21,691)

Unbilled revenue 

(6)

145

Inventory 

(5,326)

(4,595)

Other assets 

(9,853)

(4,770)

Accounts payable 

6,966

11,390

Accrued expenses 

2,133

400

Accrued compensation 

(8,900)

1,249

Deferred revenue and customer advances

(2,034)

(2,983)

Change in long term liabilities

(384)

(80)

Net cash (used in) provided by operating activities 

(7,797)

8,197




Cash flows from investing activities:



Purchase of property and equipment 

(5,524)

(2,828)

Change in other assets

-

(2,000)

Purchases of investments 

(20,714)

(10,397)

Sales of investments 

7,500

3,500

Net cash used in investing activities 

(18,738)

(11,725)




Cash flows from financing activities:



Proceeds from stock option exercises 

7,651

9,843

Income tax withholding payment associated with restricted stock vesting

(1,494)

(864)

Tax benefit of excess stock based compensation deductions

2,692

1,636

Net cash provided by financing activities 

8,849

10,615




Net increase (decrease) in cash and cash equivalents 

(17,686)

7,087

Cash and cash equivalents, at beginning of period 

165,404

126,770

Cash and cash equivalents, at end of period 

$        147,718

$        133,857




 

 iRobot Corporation 

Supplemental Information

(unaudited)














 For the three months ended 


 For the six months ended 


 June 28, 

 June 29, 


 June 28, 

 June 29, 


2014

2013


2014

2013







Revenue: *












Home Robots

$        133,235

$        115,528


$        241,270

$        208,227







    Domestic

$          42,029

$          39,178


$          83,059

$          70,569

    International

$          91,206

$          76,350


$        158,211

$        137,658













Defense & Security

$            5,100

$          12,470


$          10,702

$          23,570







    Domestic

$            1,338

$          11,579


$            4,529

$          20,713

    International

$            3,762

$               891


$            6,173

$            2,857







    Product

$            5,097

$          11,502


$          10,689

$          19,537

    Contract

$                   3

$               968


$                 13

$            4,033







    Product Life Cycle

$            1,873

$            3,041


$            5,406

$            9,121













Gross Margin Percent:






    Home Robots

48.8%

51.5%


49.5%

50.0%

    Defense & Security

36.7%

47.5%


36.9%

47.5%

    Total Company

44.4%

47.3%


44.8%

45.7%













Units shipped:






    Home Robots *

565

492


1,030

913

    Defense & Security

40

424


78

442













Average gross selling prices for robot units:






    Home Robots

$               238

$               225


$               240

$               233

    Defense & Security *

$                 80

$                 20


$                 67

$                 24













Defense & Security Funded Product Backlog *

$          20,882

$          19,972


$          20,882

$          19,972













Days sales outstanding

36

37


36

37







Days in inventory

60

58


60

58







Headcount

548

517


548

517













* in thousands






 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 














 For the three months ended 


 For the six months ended 


 June 28, 

 June 29, 


 June 28, 

 June 29, 


2014

2013


2014

2013







 Net income 

$            8,530

$            8,294


$          13,810

$          16,649







 Interest income, net 

(170)

(153)


(315)

(317)

 Income tax expense (benefit) 

1,237

(495)


3,750

18

 Depreciation 

2,215

2,221


4,382

4,440

 Amortization 

963

1,044


1,938

2,109







 EBITDA 

12,775

10,911


23,565

22,899













 Stock-based compensation expense 

3,147

3,263


6,225

6,192

 Merger and acquisition expense 

-

113


-

393

 Net intellectual property litigation expense 

276

170


645

203

 Restructuring expense 

-

2,575


-

2,575







 Adjusted EBITDA 

$          16,198

$          17,032


$          30,435

$          32,262







 

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.



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