IROBOT CORP - FORM 8-K - EX-99.1 - Q22013PRESSRELEASE - July 23, 2013

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EX-99.1
Contacts:
 
 
 
 
Elise Caffrey
 
Matthew Lloyd
 
 
Investor Relations
 
Media Relations
 
 
iRobot Corp.
 
iRobot Corp.
 
 
(781) 430-3003
 
(781) 430-3720
 
 
ecaffrey@irobot.com
 
mlloyd@irobot.com
 
 
 
 
 
 
 

iRobot Reports Second-Quarter Financial Results
Home Robot business drives 17 percent year-over-year growth

BEDFORD, Mass., July 23, 2013 - 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, 2013
 
June 30, 2012
 
June 29, 2013
 
June 30, 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, 2013
 
December 29, 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, 2013
 
June 30, 2012
 
June 29, 2013
 
June 30, 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, 2013
 
June 30, 2012
 
June 29, 2013
 
June 30, 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, 2013
 
June 30, 2012
 
June 29, 2013
 
June 30, 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.



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