iRobot Second-Quarter Financial Results Exceed Expectations

Reaffirms Full-Year 2015 Financial Expectations

Jul 21, 2015, 16:01 ET from iRobot Corp.

BEDFORD, Mass., July 21, 2015 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended June 27, 2015.

"Our second quarter results exceeded our expectations. Home Robot revenue was up slightly over last year while Defense & Security revenue more than doubled. Incremental marketing investments we made in the United States and overseas have successfully driven sell-through that we expect to result in second half replenishment orders," said Colin Angle, chairman and chief executive officer of iRobot.

"Based on our Q2 results and our outlook for the rest of 2015, we are reaffirming our full year expectations. Although Q2 was above expectations, this was primarily due to timing. Predicting individual quarterly results is challenging, but our over performance in Q2 alleviates some pressure on the second-half ramp. We continue to expect 2015 revenue of $625 to $635 million, driven by Home Robot growth, EPS of between $1.25 and $1.35 and Adjusted EBITDA of $85 to $90 million, or roughly 14% of revenue. These expectations continue to reflect our confidence that Home Robot revenue will grow 11-13% for the full year. We expect all three regions to grow year over year, driven by strong performance in the United States and China.

"It is always difficult to predict the revenue split between Q3 and Q4 due to the timing and shipment of Home Robot products for the holiday season and the inherent lumpiness in our D&S business. This year we expect second-half revenue to be lower in Q3 and higher in Q4, consistent with last year."

Financial Results

  • Revenue for the second quarter of 2015 was $148.8 million, compared with $139.8 million for the same quarter one year ago. Revenue for the first half of 2015 was $266.7 million, compared with $254.0 million last year.
  • Net income in the second quarter of 2015 was $7.3 million, compared with $8.5 million in the second quarter of 2014. For the first half of 2015, net income was $12.0 million, compared with $13.8 million a year ago.
  • Quarterly earnings per share were $0.24 for the second quarter of 2015, compared with $0.28 in the second quarter last year. First-half earnings per share were $0.40, compared with $0.46 in 2014. Q2 2014 EPS and first-half 2014 EPS included a $0.07 benefit resulting from the release of a valuation allowance relating to certain tax attributes associated with our acquisition of Evolution Robotics.
  • Adjusted EBITDA for the second quarter of 2015 was $17.8 million, compared with $16.2 million in the second quarter of 2014. For the first half of 2015, Adjusted EBITDA was $30.9 million, compared with $30.4 million a year ago.

Business Highlights

  • In the U.S., Home Robot revenue grew 24% year over year driven by sales of Roomba 800, which were slightly higher than expected.
  • Internationally, Home Robot revenue in China was up 60% in Q2 2015 over Q2 2014, partially offsetting the expected quarter-on-quarter declines in Japan and EMEA.
  • Defense & Security revenues grew more than 100% over last year, due to the delivery of robots and spares under the Canadian contract awarded in Q3 2014.
  • iRobot recently announced that Tim Saeger will join iRobot as SVP, Engineering. Formerly VP and GM of Home Entertainment at Bose, he was responsible for all aspects of product and technology development. Tim's expertise will help the company continue to build upon its world-class consumer technology Home Robot organization as well as the design and development of technology and products across the company.

Financial Expectations Management provides the following expectations with respect to the third quarter ending September 26, 2015 and fiscal year ending January 2, 2016.

Q3 2015:

Revenue  

$143 - $146 million

Earnings Per Share

$0.20 - $0.24                          

Adjusted EBITDA    

$17 - $19 million

Fiscal Year 2015:                 

Revenue                                

$625 - $635 million                                         

Earnings Per Share                 

$1.25 - $1.35                                      

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 2015, business outlook, and outlook for third-quarter and fiscal year 2015 financial performance. Pertinent details include: 

Date: 

Wednesday, July 22, 2015  

Time:  

8:30 a.m. ET

Call-In Number:

847-619-6396

Passcode:

38036260

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=5168627.

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 29, and can be accessed by dialing 630-652-3042, passcode 38036260#.

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, 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, the impact of our marketing investments, the timing of orders for our robots, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the third quarter ending September 26, 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 six months ended 

June 27,

 June 28, 

June 27,

 June 28, 

2015

2014

2015

2014

Revenue

148,788

139,803

266,749

254,007

Cost of revenue

78,755

77,682

143,008

140,176

Gross margin

70,033

62,121

123,741

113,831

Operating expenses:

  Research and development

18,732

17,245

37,764

34,179

  Selling and marketing

27,329

23,535

41,517

38,067

  General and administrative

12,905

11,666

25,494

23,930

      Total operating expenses

58,966

52,446

104,775

96,176

Operating income

11,067

9,675

18,966

17,655

Other income (expense), net

(61)

92

(855)

(95)

Income before income taxes

11,006

9,767

18,111

17,560

Income tax expense

3,754

1,237

6,105

3,750

Net income

$           7,252

$           8,530

$         12,006

$         13,810

Net income per share

   Basic

$            0.24

$            0.29

$            0.40

$            0.47

   Diluted

$            0.24

$            0.28

$            0.40

$            0.46

Number of shares used in calculations per share

   Basic

29,785

29,533

29,719

29,361

   Diluted

30,268

30,129

30,283

30,122

Stock-based compensation included in above figures:

        Cost of revenue

$             177

$             166

$             392

$             335

        Research and development

942

828

1,774

1,559

        Selling and marketing

306

203

615

541

        General and administrative

2,030

1,950

3,781

3,790

            Total

$           3,455

$           3,147

$           6,562

$           6,225

 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 

June 27,

 December 27, 

2015

2014

 Assets 

 Cash and equivalents 

$          186,616

$        185,957

 Short term investments 

37,227

36,166

 Accounts receivable, net 

65,593

71,056

 Unbilled revenues 

885

2,614

 Inventory 

45,977

47,857

 Deferred tax assets 

21,284

21,505

 Other current assets 

10,491

9,704

   Total current assets 

368,073

374,859

 Property, plant and equipment, net 

29,826

31,297

 Deferred tax assets 

8,314

8,409

 Goodwill 

48,751

48,751

 Intangible assets, net 

17,401

19,146

 Other assets 

11,766

10,751

 Total assets 

$          484,131

$        493,213

 Liabilities and stockholders' equity 

 Accounts payable 

$           46,167

$          60,256

 Accrued expenses 

15,604

18,701

 Accrued compensation 

11,419

16,235

 Deferred revenue and customer advances 

2,115

3,849

   Total current liabilities 

75,305

99,041

 Long term liabilities 

3,370

3,736

 Stockholders' equity 

405,456

390,436

 Total liabilities and stockholders' equity 

$          484,131

$        493,213

 

 iRobot Corporation 

  Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 

 For the six months ended 

June 27,

 June 28, 

2015

2014

Cash flows from operating activities:

Net income

$          12,006

$          13,810

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

operating activities:

Depreciation and amortization 

7,011

6,320

(Gain)/Loss on disposal of property and equipment

24

(10)

Stock-based compensation 

6,562

6,225

Deferred income taxes, net

825

464

Tax benefit of excess stock based compensation deductions

(725)

(2,692)

Non-cash director deferred compensation 

75

22

Changes in operating assets and liabilities — (use) source

Accounts receivable 

5,463

(14,532)

Unbilled revenue 

1,729

(6)

Inventory 

1,723

(5,326)

Other assets 

(787)

(9,853)

Accounts payable 

(12,096)

6,966

Accrued expenses 

(3,136)

2,133

Accrued compensation 

(4,816)

(8,900)

Deferred revenue and customer advances

(1,734)

(2,034)

Change in long term liabilities

(366)

(384)

Net cash provided by (used in) operating activities 

11,758

(7,797)

Cash flows from investing activities:

Purchase of property and equipment 

(5,539)

(5,524)

Change in other assets

(1,015)

-

Purchases of investments 

(14,180)

(20,714)

Sales of investments 

13,000

7,500

Net cash used in investing activities 

(7,734)

(18,738)

Cash flows from financing activities:

Proceeds from stock option exercises 

2,102

7,651

Income tax withholding payment associated with restricted stock vesting

(1,268)

(1,494)

Stock repurchases

(4,924)

-

Tax benefit of excess stock based compensation deductions

725

2,692

Net cash provided by (used in) financing activities 

(3,365)

8,849

Net increase (decrease) in cash and cash equivalents 

659

(17,686)

Cash and cash equivalents, at beginning of period 

185,957

165,404

Cash and cash equivalents, at end of period 

$        186,616

$        147,718

 

 iRobot Corporation 

Supplemental Information

(unaudited)

 For the three months ended 

 For the six months ended 

June 27,

June 28,

June 27,

June 28,

2015

2014

2015

2014

Revenue: *

Home Robots

$        136,824

$        133,235

$        247,909

$        241,270

    Domestic

$          52,178

$          42,023

$          92,805

$          83,054

    International

$          84,646

$          91,212

$        155,104

$        158,216

Defense & Security

$          11,790

$            5,100

$          18,316

$          10,701

    Domestic

$            2,408

$            2,357

$            6,261

$            5,491

    International

$            9,382

$            2,743

$          12,055

$            5,210

    Product

$          11,463

$            5,097

$          17,835

$          10,688

    Contract

$               327

$                   3

$               481

$                 13

    Product Life Cycle

$            3,380

$            1,873

$            8,108

$            5,406

Gross Margin Percent:

    Home Robots

51.1%

48.8%

51.1%

49.5%

    Defense & Security

42.2%

36.7%

39.0%

36.9%

    Total Company

47.1%

44.4%

46.4%

44.8%

Units shipped:

    Home Robots *

592

565

1,083

1,030

    Defense & Security

41

40

69

78

Average gross selling prices for robot units:

    Home Robots

$               246

$               238

$               243

$               240

    Defense & Security *

$               197

$                 80

$               141

$                 67

Defense & Security Funded Product Backlog *

$            6,628

$          20,882

$            6,628

$          20,882

Days sales outstanding

41

36

41

36

Days in inventory

53

60

53

60

Headcount

606

548

606

548

* in thousands

 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 

 For the three months ended 

 For the six months ended 

June 27,

June 28,

June 27,

June 28,

2015

2014

2015

2014

 Net income 

$            7,252

$            8,530

$          12,006

$          13,810

 Interest income, net 

(176)

(170)

(330)

(315)

 Income tax expense 

3,754

1,237

6,105

3,750

 Depreciation 

2,529

2,215

5,150

4,382

 Amortization 

921

963

1,861

1,938

 EBITDA 

14,280

12,775

24,792

23,565

 Stock-based compensation expense 

3,455

3,147

6,562

6,225

 Merger and acquisition expense 

-

-

-

-

 Net intellectual property litigation expense 

30

276

(480)

645

 Restructuring expense 

-

-

-

-

 Adjusted EBITDA 

$          17,765

$          16,198

$          30,874

$          30,435

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.



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