IROBOT CORP - FORM 8-K - EX-99.1 - EXHIBIT - April 22, 2014

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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 First-Quarter Financial Results Exceed Expectations
Home Robot Revenue Grew in All Three Regions; Up 17% in the First Quarter Over Last Year

BEDFORD, Mass., April 22, 2014 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the first quarter ended March 29, 2014.

“We kicked off 2014 with an excellent quarter. The results and outlook for our Home Robot business are excellent. We were very excited to announce the availability of our Ava 500 video collaboration robot, and our Defense & Security business performed as expected,” said Colin Angle, chairman and chief executive officer of iRobot.

“Based on our Q1 results and our outlook for the rest of 2014, we are reaffirming our full-year financial expectations of revenue between $560 and $570 million, EPS of $1.00 to $1.15 and Adjusted EBITDA of $74 to $78 million, or roughly 14 percent of revenue. These expectations are a strong next step in progressing towards our three-year targets.”

Financial Results

•
Revenue for the first quarter of 2014 was $114.2 million, compared with $106.2 million for the first quarter of 2013.
•
Net income in the first quarter of 2014 was $5.3 million, compared with net income of $8.4 million in the first quarter of 2013.
•
Quarterly earnings per share were $0.18, compared with earnings per share of $0.29 in the first quarter of 2013. Q1 2013 EPS included an $0.08 benefit from investment tax credits.
•
Adjusted EBITDA for the first quarter of 2014 was $14.2 million, compared with $15.2 million in the first quarter of 2013.

Business Highlights

•
Home Robot business delivered excellent growth on an ever-increasing base. Home robot revenue growth in all three geographic regions contributed to year-over-year growth of 17 percent for the first quarter over last year.
•
Launched the revolutionary new Roomba 880 in limited domestic retailers and select European and Asian markets; Scooba 450 floor scrubbing robot was launched on our website in January.
•
In April, received the first orders for Ava 500 video collaboration robot, launched in March in the United States, Canada and limited European markets through select certified Cisco resellers.









Financial Expectations

Management provides the following expectations with respect to the second quarter ending June 28, 2014 and fiscal year ending December 27, 2014.

Q2 2014:
 
 
Revenue
$138 - $145 million
 
Earnings Per Share
$0.15 - $0.25
 
Adjusted EBITDA
$13 - $17 million
 
 
 
 
Fiscal Year 2014:
 
 
Revenue
$560 - $570 million
 
Earnings Per Share
$1.00 - $1.15
 
Adjusted EBITDA
$74 - $78 million
 
 
 
 

First-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the first fiscal quarter 2014, business outlook, and outlook for second-quarter and fiscal year 2014 financial performance. Pertinent details include:
 
Date:
Wednesday, April 23, 2014
Time:
8:30 a.m. ET
Call-In Number:
847-619-6396
Passcode:
35939102

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=5041607. 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 April 30, and can be accessed by dialing 630-652-3042, passcode 35939102#.
 
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, and anticipated revenue, earnings per share




and Adjusted EBITDA for fiscal year 2014 and the second quarter ending June 28, 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
 
March 29, 2014
 
March 30, 2013
Revenue
$
114,204

 
$
106,195

Cost of Revenue
62,494

 
59,668

Gross Margin
51,710

 
46,527

Operating Expense
 
 
 
  Research & development
16,934

 
14,408

  Selling & marketing
14,532

 
10,697

  General & administrative
12,264

 
12,458

      Total
43,730

 
37,563

Operating income
7,980

 
8,964

Other income (expense), net
(187
)
 
(96
)
Income before income taxes
7,793

 
8,868

Income tax expense
2,513

 
513

Net income
$
5,280

 
$
8,355

 
 
 
 
Net income per common share:
 
 
 
   Basic
$
0.18

 
$
0.30

   Diluted
$
0.18

 
$
0.29

 
 
 
 
Shares used in per common share calculations:
 
 
 
   Basic
29,189

 
27,930

   Diluted
30,033

 
28,558

 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
        Cost of revenue
$
169

 
$
118

        Research & development
731

 
501

        Selling & marketing
338

 
366

        General & administrative
1,840

 
1,944

            Total
$
3,078

 
$
2,929

 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
March 29, 2014
 
December 28, 2013
 
 
 
 
 Assets
 
 
 
 Cash and equivalents
$
154,824

 
$
165,404

 Short term investments
30,540

 
21,954

 Accounts receivable, net
36,540

 
39,348

 Unbilled revenues
931

 
856

 Inventory
41,390

 
46,107

 Deferred tax assets
19,950

 
20,144

 Other current assets
10,436

 
6,848

   Total current assets
294,611

 
300,661

 Property, plant and equipment, net
25,119

 
23,661

 Deferred tax assets
10,433

 
10,095

 Goodwill
48,751

 
48,751

 Intangible assets, net
21,764

 
22,668

 Other assets
10,501

 
10,501

 Total assets
$
411,179

 
$
416,337

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
34,221

 
$
41,344

 Accrued expenses
13,563

 
14,880

 Accrued compensation
7,744

 
19,606

 Deferred revenue and customer advances
4,420

 
5,085

   Total current liabilities
59,948

 
80,915

 Long term liabilities
4,414

 
4,733

 Stockholders' equity
346,817

 
330,689

 Total liabilities and stockholders' equity
$
411,179

 
$
416,337

 
 
 
 





 iRobot Corporation
Consolidated Statement of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 29, 2014
 
March 30, 2013
Cash flows from operating activities:
 
 
 
Net income
$
5,280

 
$
8,355

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
   Depreciation and amortization
3,142

 
3,284

   Loss on disposal of property and equipment
(10
)
 
182

   Stock-based compensation
3,078

 
2,929

   Deferred income taxes, net
1,912

 
(449
)
   Tax benefit of excess stock based compensation deductions
(2,231
)
 
(43
)
   Non-cash director deferred compensation
11

 
11

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
2,808

 
2,133

   Unbilled revenue
(75
)
 
(1,056
)
   Inventory
4,080

 
4,805

   Other assets
(3,588
)
 
(983
)
   Accounts payable
(7,924
)
 
(12,711
)
   Accrued expenses
(1,399
)
 
379

   Accrued compensation
(11,862
)
 
(4,867
)
   Deferred revenue and customer advances
(665
)
 
(2,628
)
   Change in long term liabilities
(319
)
 
815

Net cash provided by (used in) operating activities
(7,762
)
 
156

 
 
 
 
Cash flows from investing activities:
 
 
 
   Purchase of property and equipment
(2,177
)
 
(1,077
)
   Change in other assets
—

 
(2,000
)
   Purchases of investments
(11,211
)
 
(2,547
)
   Sales of investments
2,500

 
1,000

Net cash used in investing activities
(10,888
)
 
(4,624
)
 
 
 
 
Cash flows from financing activities:
 
 
 
   Proceeds from stock option exercises
6,957

 
1,744

   Income tax withholding payment associated with restricted stock vesting
(1,118
)
 
(513
)
   Tax benefit of excess stock based compensation deductions
2,231

 
43

Net cash provided by financing activities
8,070

 
1,274

 
 
 
 
Net decrease in cash and cash equivalents
(10,580
)
 
(3,194
)
Cash and cash equivalents, at beginning of period
165,404

 
126,770

Cash and cash equivalents, at end of period
$
154,824

 
$
123,576

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 29, 2014
 
March 30, 2013
 
 
 
 
Revenue: *
 
 
 
Home Robots
$
108,035

 
$
92,699

    Domestic
$
41,030

 
$
31,391

    International
$
67,005

 
$
61,308

 
 
 
 
Defense & Security
$
5,602

 
$
11,100

    Domestic
$
3,191

 
$
9,112

    International
$
2,411

 
$
1,988

 
 
 
 
    Product
$
5,592

 
$
8,035

    Contract
$
10

 
$
3,065

 
 
 
 
    Product Life Cycle
$
3,533

 
$
6,083

 
 
 
 
Gross Margin Percent:
 
 
 
    Home Robots
50.4
%
 
48.2
%
    Defense & Security
37.2
%
 
47.5
%
    Total Company
45.3
%
 
43.8
%
 
 
 
 
Units shipped:
 
 
 
    Home Robots *
465

 
421

    Defense & Security
38

 
18

 
 
 
 
Average gross selling prices for robot units:
 
 
 
    Home Robots
$
243

 
$
230

    Defense & Security *
$
54

 
$
108

 
 
 
 
Defense & Security Funded Product Backlog *
$
12,444

 
$
30,110

 
 
 
 
Days sales outstanding
30

 
25

 
 
 
 
Days in inventory
61

 
51

 
 
 
 
Headcount
539

 
531

 
 
 
 
 
 
 
 
* in thousands
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 29, 2014
 
March 30, 2013
 
 
 
 
 Net income
$
5,280

 
$
8,355

 
 
 
 
 Interest income, net
(145
)
 
(164
)
 Income tax expense
2,513

 
513

 Depreciation
2,167

 
2,219

 Amortization
975

 
1,065

 
 
 
 
 EBITDA
10,790

 
11,988

 
 
 
 
 Stock-based compensation expense
3,078

 
2,929

 Merger and acquisition expense
—

 
280

 Net intellectual property litigation expense
369

 
33

 Restructuring expense
—

 
—

 
 
 
 
 Adjusted EBITDA
$
14,237

 
$
15,230

 
 
 
 
 
 
 
 
 
 
 
 
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.






iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ù 781.430.3000 Ù Fax 781.430.3001 Ù www.irobot.com


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