IROBOT CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - February 4, 2015

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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 Fourth-Quarter and Full-Year Financial Results
Home Robot Business Up 19 Percent in 2014, Expected to Drive Continued Growth in 2015

BEDFORD, Mass., Feb. 4, 2015 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the fourth quarter and full year ended December 27, 2014.

“2014 was a great year for iRobot. Our Home Robot business increased 19 percent over 2013, driven by growth in both domestic and overseas markets,” said Colin Angle, chairman and chief executive officer of iRobot. “All three of our businesses met our expectations and made significant progress against their strategic plans, setting us up well for 2015.

“In 2015 our financial performance will continue to be driven by our Home Robot business. In the United States, we expect strong Home Robot revenue growth in the mid teens while overseas growth will be tempered by macros and currency devaluations. Overall, Home Robot revenue is expected to grow 11 to 13 percent in 2015 and comprise 90 percent of total company revenue. We anticipate Defense & Security will grow for the first time since 2011, and our Remote Presence business will focus on improving the scalability of our solution while holding revenue flat at 2014 levels.

“For 2015, we expect revenue of $625 to $635 million, EPS of between $1.25 and $1.45, and Adjusted EBITDA of $85 to $95 million. Additionally, 2015 will be an important year for iRobot as we begin to roll out and monetize investments we have been making in crucial robotic technology.”

Financial Results

•
Revenue for the fourth quarter of 2014 was $159.3 million, compared with $126.3 million for the fourth quarter of 2013. Revenue for the full year 2014 was $556.8 million, compared with $487.4 million for the full year 2013.
•
Net income for the fourth quarter of 2014 was $9.4 million, compared with $3.2 million for the fourth quarter of 2013. Net income for the full year 2014 was $37.8 million, compared with $27.6 million for full-year 2013.
•
Quarterly earnings per share were $0.31, compared with $0.11 in the fourth quarter last year. Full-year earnings per share were $1.25, compared with $0.94 last year.
•
Adjusted EBITDA for the fourth quarter of 2014 was $19.7 million, compared with $12.8 million in the fourth quarter of 2013. Adjusted EBITDA for the full year 2014 was $79.8 million, compared with $62.2 million for full-year 2013.









Business Highlights

•
Full-year domestic Home Robot revenue growth of more than 20 percent, coupled with international Home Robot revenue growth of 17 percent, drove a 19 percent year-over-year increase in full-year Home Robot revenue.
•
Our Defense & Security business delivered results consistent with our expectations, exited the year with a solid backlog, and is positioned for healthy growth in 2015.
•
Our Remote Presence business continued to ramp sales of telemedicine robots to our partner InTouch Health for use in hospitals, and Ava 500 Video Collaboration Robots to several Fortune 500 customers.
  
Financial Expectations

Management provides the following expectations with respect to the year ending January 2, 2016 and first quarter ending March 28, 2015.


Fiscal Year 2015:
 
 
Revenue
$625 - $635 million
 
Earnings Per Share
$1.25 - $1.45
 
Adjusted EBITDA
$85 - $95 million
 
 
 
 
Full-Year 2015 BU Revenue:
 
 
Home
$565 - $575 million
 
Defense & Security
$55 - $60 million
 
Remote Presence
$3 million
 
 
 
 
Q1 2015:
 
 
Revenue
$114 - $117 million
 
Earnings Per Share
$0.08 - $0.10
 
Adjusted EBITDA
$10 - $11 million
 

Fourth-Quarter and Full-Year Conference Call

iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter and full year 2014, and outlook for 2015 financial performance. Pertinent details include:
 
Date:
Thursday, February 5, 2015
Time:
8:30 a.m. ET
Call-In Number:
847-619-6397
Passcode:
38036844

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=5168619. 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 February 12, and can be accessed by dialing 630-652-3042, passcode 38036844#.





 
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 and future performance of our businesses, demand for our robots, the impact of our investments to develop robotic technology, anticipated fiscal year 2015 revenue for our businesses, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the first quarter ending March 28, 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 twelve months ended
 
December 27, 2014
 
December 28, 2013
 
December 27, 2014
 
December 28, 2013
Revenue
$
159,342

 
$
126,343

 
556,846

 
487,401

Cost of Revenue
83,007

 
67,413

 
298,791

 
266,247

Gross Margin
76,335

 
58,930

 
258,055

 
221,154

Operating Expense
 
 
 
 
 
 
 
  Research & development
17,886

 
18,008

 
69,408

 
63,649

  Selling & marketing
32,180

 
22,199

 
86,091

 
71,529

  General & administrative
13,501

 
14,010

 
49,439

 
53,358

      Total
63,567

 
54,217

 
204,938

 
188,536

Operating income
12,768

 
4,713

 
53,117

 
32,618

Other income (expense), net
(239
)
 
(154
)
 
(708
)
 
(203
)
Income before income taxes
12,529

 
4,559

 
52,409

 
32,415

Income tax expense
3,143

 
1,371

 
14,606

 
4,774

Net income
$
9,386

 
$
3,188

 
$
37,803

 
$
27,641

 
 
 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
 
 
   Basic
$
0.32

 
$
0.11

 
$
1.28

 
$
0.97

   Diluted
$
0.31

 
$
0.11

 
$
1.25

 
$
0.94

 
 
 
 
 
 
 
 
Shares used in per common share calculations:
 
 
 
 
 
 
 
   Basic
29,626

 
28,902

 
29,485

 
28,495

   Diluted
30,240

 
29,712

 
30,210

 
29,354

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
 
 
 
 
        Cost of revenue
$
239

 
$
204

 
$
865

 
$
700

        Research & development
934

 
737

 
3,359

 
2,700

        Selling & marketing
436

 
414

 
1,296

 
1,246

        General & administrative
2,153

 
2,385

 
8,258

 
8,763

            Total
$
3,762

 
$
3,740

 
$
13,778

 
$
13,409

 
 
 
 
 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
December 27, 2014
 
December 28, 2013
 
 
 
 
 Assets
 
 
 
 Cash and equivalents
$
185,957

 
$
165,404

 Short term investments
36,166

 
21,954

 Accounts receivable, net
71,056

 
39,348

 Unbilled revenues
2,614

 
856

 Inventory
47,857

 
46,107

 Deferred tax assets
21,505

 
20,144

 Other current assets
9,704

 
6,848

   Total current assets
374,859

 
300,661

 Property, plant and equipment, net
31,297

 
23,661

 Deferred tax assets
8,409

 
10,095

 Goodwill
48,751

 
48,751

 Intangible assets, net
19,146

 
22,668

 Other assets
10,751

 
10,501

 Total assets
$
493,213

 
$
416,337

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
60,256

 
$
41,344

 Accrued expenses
18,701

 
14,880

 Accrued compensation
16,235

 
19,606

 Deferred revenue and customer advances
3,849

 
5,085

   Total current liabilities
99,041

 
80,915

 Long term liabilities
3,736

 
4,733

 Stockholders' equity
390,436

 
330,689

 Total liabilities and stockholders' equity
$
493,213

 
$
416,337

 
 
 
 





 iRobot Corporation
Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the twelve months ended
 
December 27, 2014
 
December 28, 2013
Cash flows from operating activities:
 
 
 
Net income
$
37,803

 
$
27,641

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
   Depreciation and amortization
13,049

 
12,169

   Loss on disposal of property and equipment
246

 
189

   Goodwill and intangible assets impairment
—

 
1,988

   Stock-based compensation
13,778

 
13,409

   Deferred income taxes, net
3,101

 
(768
)
   Tax benefit of excess stock based compensation deductions
(3,051
)
 
(2,406
)
   Non-cash director deferred compensation
49

 
44

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
(31,708
)
 
(9,935
)
   Unbilled revenue
(1,758
)
 
340

   Inventory
(2,387
)
 
(9,365
)
   Other assets
(2,856
)
 
1,980

   Accounts payable
16,249

 
(1,743
)
   Accrued expenses
3,695

 
1,255

   Accrued compensation
(3,371
)
 
7,751

   Deferred revenue and customer advances
(1,236
)
 
(1,172
)
   Change in long term liabilities
(997
)
 
515

Net cash provided by operating activities
40,606

 
41,892

 
 
 
 
Cash flows from investing activities:
 
 
 
   Purchase of property and equipment
(13,774
)
 
(6,829
)
   Change in other assets
(250
)
 
(2,000
)
   Purchases of investments
(31,219
)
 
(17,946
)
   Sales of investments
16,500

 
8,044

   Proceeds from sale of assets
—

 
650

Net cash used in investing activities
(28,743
)
 
(18,081
)
 
 
 
 
Cash flows from financing activities:
 
 
 
   Proceeds from stock option exercises
8,943

 
13,629

   Income tax withholding payment associated with restricted stock vesting
(1,626
)
 
(1,212
)
   Stock repurchases
(1,678
)
 
—

   Tax benefit of excess stock based compensation deductions
3,051

 
2,406

Net cash provided by financing activities
8,690

 
14,823

 
 
 
 
Net increase in cash and cash equivalents
20,553

 
38,634

Cash and cash equivalents, at beginning of period
165,404

 
126,770

Cash and cash equivalents, at end of period
$
185,957

 
$
165,404

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the twelve months ended
 
December 27, 2014
 
December 28, 2013
 
December 27, 2014
 
December 28, 2013
 
 
 
 
 
 
 
 
Revenue: *
 
 
 
 
 
 
 
Home Robots
$
134,131

 
$
108,263

 
$
507,414

 
$
427,853

    Domestic
$
57,759

 
$
47,843

 
$
187,648

 
$
154,112

    International
$
76,372

 
$
60,420

 
$
319,766

 
$
273,741

 
 
 
 
 
 
 
 
Defense & Security
$
24,133

 
$
16,339

 
$
45,502

 
$
50,003

    Domestic
$
16,483

 
$
10,035

 
$
26,081

 
$
34,193

    International
$
7,650

 
$
6,304

 
$
19,421

 
$
15,810

 
 
 
 
 
 
 
 
    Product
$
21,367

 
$
16,321

 
$
42,314

 
$
45,612

    Contract
$
2,766

 
$
18

 
$
3,188

 
$
4,391

 
 
 
 
 
 
 
 
    Product Life Cycle
$
16,290

 
$
11,625

 
$
27,493

 
$
26,097

 
 
 
 
 
 
 
 
Gross Margin Percent:
 
 
 
 
 
 
 
    Home Robots
52.2
%
 
49.6
%
 
50.5
%
 
49.3
%
    Defense & Security
47.4
%
 
59.4
%
 
46.4
%
 
50.1
%
    Total Company
47.9
%
 
46.6
%
 
46.3
%
 
45.4
%
 
 
 
 
 
 
 
 
Units shipped:
 
 
 
 
 
 
 
    Home Robots *
571

 
494

 
2,174

 
1,933

    Defense & Security
135

 
49

 
265

 
534

 
 
 
 
 
 
 
 
Average gross selling prices for robot units:
 
 
 
 
 
 
 
    Home Robots
$
255

 
$
233

 
$
245

 
$
231

    Defense & Security *
$
37

 
$
96

 
$
56

 
$
36

 
 
 
 
 
 
 
 
Defense & Security Funded Product Backlog *
$
18,188

 
$
8,765

 
$
18,188

 
$
8,765

 
 
 
 
 
 
 
 
Days sales outstanding
42

 
29

 
42

 
29

 
 
 
 
 
 
 
 
Days in inventory
53

 
63

 
53

 
63

 
 
 
 
 
 
 
 
Headcount
572

 
528

 
572

 
528

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* in thousands
 
 
 
 
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the twelve months ended
 
December 27, 2014
 
December 28, 2013
 
December 27, 2014
 
December 28, 2013
 
 
 
 
 
 
 
 
 Net income
$
9,386

 
$
3,188

 
$
37,803

 
$
27,641

 
 
 
 
 
 
 
 
 Interest income, net
(174
)
 
(131
)
 
(673
)
 
(660
)
 Income tax expense
3,143

 
1,371

 
14,606

 
4,774

 Depreciation
2,516

 
2,153

 
9,192

 
8,077

 Amortization
955

 
987

 
3,857

 
4,092

 
 
 
 
 
 
 
 
 EBITDA
15,826

 
7,568

 
64,785

 
43,924

 
 
 
 
 
 
 
 
 Stock-based compensation expense
3,762

 
3,740

 
13,778

 
13,409

 Merger and acquisition expense
—

 
7

 
—

 
400

 Net intellectual property litigation expense
73

 
758

 
1,214

 
1,202

 Restructuring expense
—

 
721

 
—

 
3,296

 
 
 
 
 
 
 
 
 Adjusted EBITDA
$
19,661

 
$
12,794

 
$
79,777

 
$
62,231

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.






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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