iRobot Reports Strong Second-Quarter Financial Results
Increases Full-Year 2016 Financial Expectations; U.S. Q2 Revenue Up More Than 25%
BEDFORD, Mass., July 26, 2016 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended July 2, 2016.
"Our second quarter revenue was at the high end of our expectations, while Q2 earnings exceeded expectations. Based on our Q2 results, and our outlook for the rest of 2016, fueled by the U.S. momentum, we are increasing our full-year financial expectations. We now expect 2016 revenue of $640 to $645 million, Net Income of between $36 and $40 million, EPS of between $1.26 and $1.40 and Adjusted EBITDA of $85 to $90 million," said Colin Angle, chairman and chief executive officer of iRobot.
"These expectations reflect our confidence that consumer revenue will grow roughly 14% for the full year, driven by strong demand in the U.S. The success of the marketing programs we ran during Q2 for Mother's Day and Father's Day resulted in sell through that was up roughly 20% in the quarter versus last year. We anticipate this momentum to continue throughout 2016.
"The revenue split between Q3 and Q4 is always difficult to predict due to the timing and shipment of consumer products for the holiday season. At this point, we expect revenue to increase sequentially Q2 to Q3 and be much higher in Q4, consistent with last year."
Financial Results
- Note: Financial results for the second quarter and first half of 2015 include the Defense & Security business which was sold on April 4, 2016. The results for the Defense & Security business included in our financial results for the second quarter of 2016 include $0.8 million for the gain on the sale and support services provided by iRobot, which are recorded as non-operating income, offset by $0.3 million of divestiture costs included in general and administrative expense. First-half 2016 results include first-quarter 2016 results for the Defense & Security business previously reported, and the net $0.6 million noted above.
- Revenue for the second quarter of 2016 was $148.7 million, compared with $148.8 million for the second quarter of 2015. Revenue for the first half of 2016 was $279.5 million, compared with $266.7 million last year.
- Net income in the second quarter of 2016 was $4.8 million, compared with $7.3 million in the second quarter of 2015. For the first half of 2016, net income was $8.7 million, compared with $12.0 million a year ago.
- Quarterly earnings per share were $0.17 for the second quarter of 2016, compared with $0.24 in the second quarter of 2015. First-half earnings per share were $0.30, compared with $0.40 in the first half of 2015.
- Adjusted EBITDA for the second quarter of 2016 was $15.9 million, compared with $17.8 million in the second quarter of 2015. For the first half of 2016, Adjusted EBITDA was $30.1 million, compared with $30.9 million a year ago.
Business Highlights
- In the U.S., consumer revenue grew more than 25% year over year driven by demand for our high end Roomba 980, as well as for our 600 series Roomba and the Braava family of wet floor care robots.
- Our new office and team in Shanghai are operating, and we have begun executing our more direct ecommerce strategy for China.
- Japan sell through continued to accelerate in Q2 due to the successful implementation of iRobot marketing programs in that region, and we are on track to deliver modest year-over-year growth as originally anticipated.
Financial Expectations
Management provides the following expectations with respect to the third quarter ending October 1, 2016 and fiscal year ending December 31, 2016.
| Q3 2016: |
|
| Revenue |
$155 - $160 million |
| Net Income |
$11 - $13 million |
| Earnings Per Share |
$0.40 - $0.45 |
| Adjusted EBITDA |
$25 - $28 million |
| Fiscal Year 2016: |
|
| Revenue |
$640 - $645 million |
| Net Income |
$36 - $40 million |
| Earnings Per Share |
$1.26 - $1.40 |
| Adjusted EBITDA |
$85 - $90 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 2016, business outlook, and outlook for third-quarter and fiscal year 2016 financial performance. Pertinent details include:
| Date: |
Wednesday, July 27, 2016 |
| Time: |
8:30 a.m. ET |
| Call-In Number: |
847-619-6396 |
| Passcode: |
40924298 |
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=5206141.
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 4, and can be accessed by dialing 630-652-3042, passcode 40924298#.
About iRobot Corp.
iRobot designs and builds robots that empower people to do more. The company's home robots help people find smarter ways to clean and accomplish more in their daily lives. iRobot's portfolio of solutions features proprietary technologies for the connected home and 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, demand for our robots, quarterly revenue growth, and anticipated revenue, net income, earnings per share and Adjusted EBITDA for fiscal year 2016 and the third quarter ending October 1, 2016. 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, 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, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) 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 six months ended |
||||
| July 2, |
June 27, |
July 2, |
June 27, |
||
| 2016 |
2015 |
2016 |
2015 |
||
| Revenue |
$ 148,696 |
$ 148,788 |
279,500 |
266,749 |
|
| Cost of revenue |
79,044 |
78,755 |
147,887 |
143,008 |
|
| Gross margin |
69,652 |
70,033 |
131,613 |
123,741 |
|
| Operating expenses: |
|||||
| Research and development |
18,544 |
18,732 |
38,272 |
37,764 |
|
| Selling and marketing |
29,107 |
27,329 |
49,047 |
41,517 |
|
| General and administrative |
16,143 |
12,905 |
32,907 |
25,494 |
|
| Total operating expenses |
63,794 |
58,966 |
120,226 |
104,775 |
|
| Operating income |
5,858 |
11,067 |
11,387 |
18,966 |
|
| Other income (expense), net |
1,419 |
(61) |
1,619 |
(855) |
|
| Income before income taxes |
7,277 |
11,006 |
13,006 |
18,111 |
|
| Income tax expense |
2,463 |
3,754 |
4,260 |
6,105 |
|
| Net income |
$ 4,814 |
$ 7,252 |
$ 8,746 |
$ 12,006 |
|
| Net income per share |
|||||
| Basic |
$ 0.18 |
$ 0.24 |
$ 0.31 |
$ 0.40 |
|
| Diluted |
$ 0.17 |
$ 0.24 |
$ 0.30 |
$ 0.40 |
|
| Number of shares used in per share calculations |
|||||
| Basic |
27,360 |
29,785 |
28,198 |
29,719 |
|
| Diluted |
27,836 |
30,268 |
28,717 |
30,283 |
|
| Stock-based compensation included in above figures: |
|||||
| Cost of revenue |
$ 150 |
$ 177 |
$ 371 |
$ 392 |
|
| Research and development |
741 |
942 |
1,570 |
1,774 |
|
| Selling and marketing |
387 |
306 |
872 |
615 |
|
| General and administrative |
2,708 |
2,030 |
5,065 |
3,781 |
|
| Total |
$ 3,986 |
$ 3,455 |
$ 7,878 |
$ 6,562 |
|
| iRobot Corporation |
|||
| Condensed Consolidated Balance Sheets |
|||
| (unaudited, in thousands) |
|||
| July 2, |
January 2, |
||
| 2016 |
2016 |
||
| Assets |
|||
| Cash and cash equivalents |
$ 138,466 |
$ 179,915 |
|
| Short term investments |
34,827 |
33,124 |
|
| Accounts receivable, net |
59,191 |
104,679 |
|
| Unbilled revenue |
139 |
452 |
|
| Inventory |
46,899 |
61,678 |
|
| Other current assets |
16,210 |
9,501 |
|
| Total current assets |
295,732 |
389,349 |
|
| Property and equipment, net |
25,833 |
26,850 |
|
| Deferred tax assets |
30,435 |
31,721 |
|
| Goodwill |
41,041 |
48,751 |
|
| Intangible assets, net |
13,936 |
15,664 |
|
| Other assets |
9,836 |
9,408 |
|
| Total assets |
$ 416,813 |
$ 521,743 |
|
| Liabilities and stockholders' equity |
|||
| Accounts payable |
$ 43,545 |
$ 61,655 |
|
| Accrued expenses |
12,506 |
15,954 |
|
| Accrued compensation |
12,550 |
15,752 |
|
| Deferred revenue and customer advances |
1,279 |
3,265 |
|
| Total current liabilities |
69,880 |
96,626 |
|
| Long term liabilities |
7,392 |
7,706 |
|
| Stockholders' equity |
339,541 |
417,411 |
|
| Total liabilities and stockholders' equity |
$ 416,813 |
$ 521,743 |
|
| iRobot Corporation |
||
| Consolidated Statements of Cash Flows |
||
| (unaudited, in thousands) |
||
| For the six months ended |
||
| July 2, |
June 27, |
|
| 2016 |
2015 |
|
| Cash flows from operating activities: |
||
| Net income |
$ 8,746 |
$ 12,006 |
| Adjustments to reconcile net income to net cash provided by operating activities: |
||
| Depreciation and amortization |
6,729 |
7,011 |
| Loss on disposal of property and equipment |
182 |
24 |
| Gain on sale of business unit |
(433) |
- |
| Gain on sale of cost method investment |
(634) |
- |
| Stock-based compensation |
7,878 |
6,562 |
| Deferred income taxes, net |
1,602 |
825 |
| Tax benefit of excess stock-based compensation deductions |
(776) |
(725) |
| Non-cash director deferred compensation |
50 |
75 |
| Changes in operating assets and liabilities — (use) source |
||
| Accounts receivable |
39,202 |
5,463 |
| Unbilled revenue |
198 |
1,729 |
| Inventory |
2,698 |
1,723 |
| Other assets |
(7,432) |
(787) |
| Accounts payable |
(16,496) |
(12,096) |
| Accrued expenses |
(3,126) |
(3,136) |
| Accrued compensation |
(2,717) |
(4,816) |
| Deferred revenue and customer advances |
(211) |
(1,734) |
| Long term liabilities |
164 |
(366) |
| Net cash provided by operating activities |
35,624 |
11,758 |
| Cash flows from investing activities: |
||
| Additions of property and equipment |
(4,881) |
(5,539) |
| Change in other assets |
(428) |
(1,015) |
| Proceeds from sale of business unit |
23,520 |
- |
| Purchase of investments |
(9,552) |
(14,180) |
| Sales of investments |
8,000 |
13,000 |
| Proceeds from sale of cost method investment |
634 |
- |
| Net cash provided by (used in) investing activities |
17,293 |
(7,734) |
| Cash flows from financing activities: |
||
| Proceeds from stock option exercises |
3,143 |
2,102 |
| Income tax withholding payment associated with restricted stock vesting |
(1,264) |
(1,268) |
| Stock repurchases |
(97,021) |
(4,924) |
| Tax benefit of excess stock-based compensation deductions |
776 |
725 |
| Net cash used in financing activities |
(94,366) |
(3,365) |
| Net increase (decrease) in cash and cash equivalents |
(41,449) |
659 |
| Cash and cash equivalents, at beginning of period |
179,915 |
185,957 |
| Cash and cash equivalents, at end of period |
$ 138,466 |
$ 186,616 |
| iRobot Corporation |
|||||
| Supplemental Information |
|||||
| (unaudited) |
|||||
| For the three months ended |
For the six months ended |
||||
| July 2, |
June 27, |
July 2, |
June 27, |
||
| 2016 |
2015 |
2016 |
2015 |
||
| Revenue: * |
|||||
| Consumer |
$ 148,104 |
$ 136,824 |
$ 275,792 |
$ 247,909 |
|
| Domestic |
$ 66,483 |
$ 52,178 |
$ 129,643 |
$ 92,805 |
|
| International |
$ 81,621 |
$ 84,646 |
$ 146,149 |
$ 155,104 |
|
| Defense & Security |
$ - |
$ 11,790 |
$ 3,075 |
$ 18,316 |
|
| Gross Margin Percent: |
|||||
| Consumer |
51.1% |
51.1% |
51.8% |
51.1% |
|
| Defense & Security |
0.0% |
42.2% |
16.6% |
39.0% |
|
| Total Company |
46.8% |
47.1% |
47.1% |
46.4% |
|
| Units shipped - Consumer* |
674 |
592 |
1,224 |
1,083 |
|
| Average gross selling prices for robot units - Consumer |
$ 240 |
$ 246 |
$ 248 |
$ 243 |
|
| Days sales outstanding |
36 |
41 |
36 |
41 |
|
| Days in inventory |
54 |
53 |
54 |
53 |
|
| Headcount |
554 |
606 |
554 |
606 |
|
| * in thousands |
|||||
| iRobot Corporation |
||||||
| Adjusted EBITDA Reconciliation to GAAP |
||||||
| (unaudited, in thousands) |
||||||
| For the three months ended |
For the six months ended |
|||||
| July 2, |
June 27, |
July 2, |
June 27, |
|||
| 2016 |
2015 |
2016 |
2015 |
|||
| Net income |
$ 4,814 |
$ 7,252 |
$ 8,746 |
$ 12,006 |
||
| Interest income, net |
(198) |
(176) |
(470) |
(330) |
||
| Income tax expense |
2,463 |
3,754 |
4,260 |
6,105 |
||
| Depreciation |
2,446 |
2,529 |
4,913 |
5,150 |
||
| Amortization |
908 |
921 |
1,816 |
1,861 |
||
| EBITDA |
10,433 |
14,280 |
19,265 |
24,792 |
||
| Stock-based compensation expense |
3,986 |
3,455 |
7,878 |
6,562 |
||
| Net merger, acquisition and divestiture (income) expense |
(505) |
- |
853 |
- |
||
| Net intellectual property litigation (income) expense |
305 |
30 |
361 |
(480) |
||
| Restructuring expense |
1,702 |
- |
1,702 |
- |
||
| Adjusted EBITDA |
$ 15,921 |
$ 17,765 |
$ 30,059 |
$ 30,874 |
||
| 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, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) 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. |
||||||
| iRobot Corporation |
||||
| Reconciliation of GAAP to Non-GAAP Expectations |
||||
| (unaudited, in millions) |
||||
| Third Quarter Ending |
Full Year Ending |
|||
| October 1, 2016 |
December 31, 2016 |
|||
| Net income |
$11.0 - $13.0 |
$36.0 - $40.0 |
||
| Interest income, net |
(0.0) - (0.2) |
(0.5) - (0.9) |
||
| Income tax expense |
5.2 - 6.1 |
17.1 - 19.0 |
||
| Depreciation |
2.3 - 2.7 |
9.5 - 10.5 |
||
| Amortization |
0.9 |
3.6 |
||
| EBITDA |
20.0 - 22.7 |
66.0 - 72.6 |
||
| Stock-based compensation expense |
3.6 - 4.6 |
15.5 - 16.3 |
||
| Net merger, acquisition and divestiture (income) expense |
0.1 - 0.2 |
1.4 - 1.8 |
||
| Net intellectual property litigation (income) expense |
0.1 - 0.4 |
0.4 - 0.8 |
||
| Restructuring expense |
0.0 |
1.7 |
||
| Adjusted EBITDA |
$25.0 - $28.0 |
$85.0 - $90.0 |
||
| 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, net merger, acquisition and divestiture (income) expense, net intellectual property litigation (income) 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.
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