IROBOT CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 21, 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 First-Quarter Financial Results Exceed Expectations

BEDFORD, Mass., Apr. 21, 2015 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the first quarter ended March 28, 2015.

“Our first quarter results exceeded our expectations. Home Robot revenue was up slightly over last year while Defense & Security Robot revenue grew 17%. We are off to a good start in 2015 as we weather global macros and invest to drive Home Robot growth,” said Colin Angle, chairman and chief executive officer of iRobot.

“Based on our Q1 results and our outlook for the rest of 2015, we continue to expect revenue of $625 to $635 million, driven by Home Robot growth. We are reducing the high end of our EPS and Adjusted EBITDA ranges and now expect EPS of between $1.25 and $1.35, and adjusted EBITDA of $85 to $90 million, or approximately 14% of revenue. These expectations reflect our confidence that Home Robot revenue will grow 11-13% driven by growth in the United States and China, and our incremental marketing investments to strengthen awareness and support our international partners.”

Financial Results

•
Revenue for the first quarter of 2015 was $118.0 million, compared with $114.2 million for the first quarter of 2014.
•
Net income for the first quarter of 2015 was $4.8 million, compared with net income of $5.3 million for the first quarter of 2014.
•
Quarterly earnings per share were $0.16, compared with earnings per share of $0.18 in the first quarter of 2014.
•
Adjusted EBITDA for the first quarter of 2015 was $13.1 million, compared with $14.2 million in the first quarter of 2014.

Business Highlights

•
International Home Robot revenues were up 5% year over year driven by growth in EMEA and China from higher Roomba 800 sales.
•
Defense & Security revenues grew 17% in Q1 2015 from Q1 2014, and more than 70% of revenue was from spares and support.
•
We recently installed multiple Ava 500 robots at Fidelity Investments FCAT center in Boston for various applications including collaboration and FCAT tours for internal and external customers as well as partners.






  
Financial Expectations

Management provides the following expectations with respect to the second quarter ending June 27, 2015 and fiscal year ending January 2, 2016.

Q2 2015:
 
 
Revenue
$143 - $146 million
 
Earnings Per Share
$0.02 - $0.06
 
Adjusted EBITDA
$8 - $10 million
 
 
 
 
Fiscal Year 2015:
Current
Prior
Revenue
$625 - $635 million
$625 - $635 million
Earnings Per Share
$1.25 - $1.35
$1.25 - $1.45
Adjusted EBITDA
$85 - $90 million
$85 - $95 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 2015, business outlook, and outlook for second-quarter and fiscal year 2015 financial performance. Pertinent details include:
 
Date:
Wednesday, April 22, 2015
Time:
8:30 a.m. ET
Call-In Number:
847-619-6396
Passcode:
38036249

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=5168625. 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 38036249#.
 
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 investments to develop robotic technology, the impact of our marketing investments, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the second quarter ending June 27, 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
 
March 28, 2015
 
March 29, 2014
Revenue
$
117,961

 
$
114,204

Cost of revenue
64,253

 
62,494

Gross margin
53,708

 
51,710

Operating expenses:
 
 
 
  Research and development
19,032

 
16,934

  Selling and marketing
14,188

 
14,532

  General and administrative
12,589

 
12,264

      Total operating expenses
45,809

 
43,730

Operating income
7,899

 
7,980

Other income (expense), net
(794
)
 
(187
)
Income before income taxes
7,105

 
7,793

Income tax expense
2,351

 
2,513

Net income
$
4,754

 
$
5,280

 
 
 
 
Net income per share
 
 
 
   Basic
$
0.16

 
$
0.18

   Diluted
$
0.16

 
$
0.18

 
 
 
 
Number of shares used in calculations per share
 
 
 
   Basic
29,653

 
29,189

   Diluted
30,230

 
30,033

 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
        Cost of revenue
$
215

 
$
169

        Research and development
832

 
731

        Selling and marketing
309

 
338

        General and administrative
1,751

 
1,840

            Total
$
3,107

 
$
3,078

 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
March 28, 2015
 
December 27, 2014
 
 
 
 
 Assets
 
 
 
 Cash and cash equivalents
$
183,661

 
$
185,957

 Short term investments
37,256

 
36,166

 Accounts receivable, net
37,705

 
71,056

 Unbilled revenue
633

 
2,614

 Inventory
49,698

 
47,857

 Deferred tax assets
22,030

 
21,505

 Other current assets
9,501

 
9,704

   Total current assets
340,484

 
374,859

 Property and equipment, net
30,501

 
31,297

 Deferred tax assets
8,393

 
8,409

 Goodwill
48,751

 
48,751

 Intangible assets, net
18,274

 
19,146

 Other assets
11,265

 
10,751

 Total assets
$
457,668

 
$
493,213

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
35,666

 
$
60,256

 Accrued expenses
14,322

 
18,701

 Accrued compensation
7,805

 
16,235

 Deferred revenue and customer advances
1,769

 
3,849

   Total current liabilities
59,562

 
99,041

 Long term liabilities
3,819

 
3,736

 Stockholders' equity
394,287

 
390,436

 Total liabilities and stockholders' equity
$
457,668

 
$
493,213

 
 
 
 





 iRobot Corporation
Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 28, 2015
 
March 29, 2014
Cash flows from operating activities:
 
 
 
Net income
$
4,754

 
$
5,280

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
   Depreciation and amortization
3,561

 
3,142

   (Gain)/Loss on disposal of property and equipment
22

 
(10
)
   Stock-based compensation
3,107

 
3,078

   Deferred income taxes, net
(102
)
 
1,912

   Tax benefit of excess stock based compensation deductions
(560
)
 
(2,231
)
   Non-cash director deferred compensation
38

 
11

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
33,351

 
2,808

   Unbilled revenue
1,981

 
(75
)
   Inventory
(1,998
)
 
4,080

   Other assets
203

 
(3,588
)
   Accounts payable
(21,835
)
 
(7,924
)
   Accrued expenses
(4,374
)
 
(1,399
)
   Accrued compensation
(8,430
)
 
(11,862
)
   Deferred revenue and customer advances
(2,080
)
 
(665
)
   Long term liabilities
83

 
(319
)
Net cash provided by (used in) operating activities
7,721

 
(7,762
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Additions of property and equipment
(4,445
)
 
(2,177
)
Change in other assets
(515
)
 
—

Purchases of investments
(3,541
)
 
(11,211
)
Sales of investments
2,500

 
2,500

Net cash used in investing activities
(6,001
)
 
(10,888
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from stock option exercises
1,466

 
6,957

Income tax withholding payment associated with restricted stock vesting
(1,118
)
 
(1,118
)
Stock repurchases
(4,924
)
 
—

Tax benefit of excess stock based compensation deductions
560

 
2,231

Net cash provided by (used in) financing activities
(4,016
)
 
8,070

 
 
 
 
Net decrease in cash and cash equivalents
(2,296
)
 
(10,580
)
Cash and cash equivalents, at beginning of period
185,957

 
165,404

Cash and cash equivalents, at end of period
$
183,661

 
$
154,824

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 28, 2015
 
March 29, 2014
 
 
 
 
Revenue: *
 
 
 
Home Robots
$
111,085

 
$
108,035

    Domestic
$
40,627

 
$
41,030

    International
$
70,458

 
$
67,005

 
 
 
 
Defense & Security
$
6,526

 
$
5,602

    Domestic
$
3,853

 
$
3,135

    International
$
2,673

 
$
2,467

 
 
 
 
    Product
$
6,372

 
$
5,592

    Contract
$
154

 
$
10

 
 
 
 
    Product Life Cycle
$
4,728

 
$
3,533

 
 
 
 
Gross Margin Percent:
 
 
 
    Home Robots
51.1
%
 
50.4
%
    Defense & Security
33.2
%
 
37.2
%
    Total Company
45.5
%
 
45.3
%
 
 
 
 
Units shipped:
 
 
 
    Home Robots *
491

 
465

    Defense & Security
28

 
38

 
 
 
 
Average gross selling prices for robot units:
 
 
 
    Home Robots
$
238

 
$
243

    Defense & Security *
$
59

 
$
54

 
 
 
 
Defense & Security Funded Product Backlog *
$
13,655

 
$
12,444

 
 
 
 
Days sales outstanding
30

 
30

 
 
 
 
Days in inventory
71

 
61

 
 
 
 
Headcount
589

 
539

 
 
 
 
 
 
 
 
* in thousands
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
March 28, 2015
 
March 29, 2014
 
 
 
 
 Net income
$
4,754

 
$
5,280

 
 
 
 
 Interest income, net
(154
)
 
(145
)
 Income tax expense
2,351

 
2,513

 Depreciation
2,621

 
2,167

 Amortization
940

 
975

 
 
 
 
 EBITDA
10,512

 
10,790

 
 
 
 
 Stock-based compensation expense
3,107

 
3,078

 Merger and acquisition expense
—

 
—

 Net intellectual property litigation expense
(510
)
 
369

 Restructuring expense
—

 
—

 
 
 
 
 Adjusted EBITDA
$
13,109

 
$
14,237

 
 
 
 
 
 
 
 
 
 
 
 
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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