IROBOT CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 20, 2015

Attached files

file filename
8-K - 8-K - IROBOT CORPq32015earningsrelease.htm


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 Third-Quarter Financial Results
Meets Revenue; Exceeds Earnings Expectations


BEDFORD, Mass., October 20, 2015 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended September 26, 2015.

“Q3 revenue met our expectations due to continued strong growth in the United States and China, partially offset by softness in Japan. Q3 earnings exceeded expectations in part because we decided to curtail the planned Japan investment, as the overall economic climate in the region was dampening its impact. Although we expect continued strong growth in the U.S. and China, we are revising our full-year revenue expectations to $610 to $615 million, due to a slower than expected recovery in Japan and our continued caution in a few other international markets,” said Colin Angle, chairman and chief executive officer of iRobot.

“We are increasing our full year expectations for EPS and Adjusted EBITDA as we have reduced our spending plans for Q4 in order to offset the lower revenue. We will also be recording a gain on investment of $0.06 per share, or $3 million pre-tax income, from the sale of an investment we made several years ago that was not previously contemplated in our expectations. We now expect full-year earnings per share of $1.35 to $1.40 and Adjusted EBITDA of $89 to $91 million. These expectations continue to reflect our confidence that domestic Home Robot revenue will grow in the high teens for the full year, and that China and many European markets will also show significant growth.

“While we are experiencing weakness in a few isolated international markets, we expect the macro impact to be temporary. Global spending on robotic vacuum cleaners continues to grow, and we are maintaining our leadership position in the market despite several recent entrants in the category. We remain optimistic about the industry and our growth prospects in the coming years.

“On September 16, we launched the Roomba® 980, our first connected home robot with navigating and mapping capabilities. The reaction we have received has been tremendous, exceeding our expectations. The Roomba 980 is the first iRobot product to incorporate the VSLAM technology we acquired as part of acquisition of Evolution Robotics. This flagship Roomba is our first step into the Internet of Things, enabling new functionality today, such as remote app-control and systematic navigation, as well as paving the way for new products and capabilities in the future. We look forward to discussing our strategies to take advantage of these advances in other forums in coming months.”









Financial Results

•
Revenue for the third quarter of 2015 was $143.6 million, compared with $143.5 million for the same quarter one year ago, in line with expectations.
•
Net income in the third quarter of 2015 was $12.8 million, compared with $14.6 million in the third quarter of 2014, ahead of expectations.
•
Quarterly earnings per share were $0.42 for the third quarter of 2015, compared with $0.48 in the third quarter last year. Adjusted EBITDA for the third quarter of 2015 was $25.9 million, compared with $29.7 million in the third quarter of 2014. Both EPS and Adjusted EBITDA were ahead of expectations.
•
Re-purchased $20 million of stock under the stock repurchase plan in the quarter.

Business Highlights

•
Fourth-quarter year-over-year revenue growth of 26 to 29% expected. Full-year expectations imply U.S. revenue growth in high teens, growth in China of more than 70% and substantial growth in many larger EMEA countries.
•
Successfully launched the first connected Roomba, the 980, on the iRobot website and began shipping into U.S. retail and overseas markets for the holidays; U.S. Amazon rated 4.5 out of 5 stars.
•
Collecting insightful Roomba 980 usage information to inform future investments.
•
Received and fulfilled several Defense & Security orders, announced two significant new IDIQ contracts totaling $96 million and ended the quarter with $28 million in backlog.


Financial Expectations

Management provides the following expectations with respect to the fourth quarter and fiscal year ending January 2, 2016.

Q4 2015:
 
 
Revenue
$200 - $205 million
 
Earnings Per Share
$0.53 - $0.58
 
Adjusted EBITDA
$32 - $34 million
 
 
 
 
Fiscal Year 2015:
Current
Prior
Revenue
$610 - $615 million
$625 - $635 million
Earnings Per Share
$1.35 - $1.40
$1.25 - $1.35
Adjusted EBITDA
$89 - $91 million
$85 - $90 million

Third-Quarter Conference Call

iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the third fiscal quarter 2015, business outlook, and outlook for fourth-quarter and fiscal year 2015 financial performance. Pertinent details include:
 
 




Date:
Wednesday, October 21, 2015
Time:
8:30 a.m. ET
Call-In Number:
847-619-6396
Passcode:
38036803

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=5168629.
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 October 28, and can be accessed by dialing 630-652-3042, passcode 38036803#.
 
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, sales and marketing spending, demand for our robots, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the fourth quarter ending January 2, 2016. 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 nine months ended
 
September 26, 2015
 
September 27, 2014
 
September 26, 2015
 
September 27, 2014
Revenue
$
143,609

 
$
143,497

 
410,358

 
397,504

Cost of revenue
73,751

 
75,608

 
216,759

 
215,784

Gross margin
69,858

 
67,889

 
193,599

 
181,720

Operating expenses:
 
 
 
 
 
 
 
  Research and development
18,122

 
17,343

 
55,886

 
51,522

  Selling and marketing
19,379

 
15,844

 
60,896

 
53,911

  General and administrative
13,701

 
12,008

 
39,195

 
35,938

      Total operating expenses
51,202

 
45,195

 
155,977

 
141,371

Operating income
18,656

 
22,694

 
37,622

 
40,349

Other income (expense), net
(93
)
 
(374
)
 
(948
)
 
(469
)
Income before income taxes
18,563

 
22,320

 
36,674

 
39,880

Income tax expense
5,770

 
7,713

 
11,875

 
11,463

Net income
$
12,793

 
$
14,607

 
$
24,799

 
$
28,417

 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
   Basic
$
0.43

 
$
0.49

 
$
0.84

 
$
0.97

   Diluted
$
0.42

 
$
0.48

 
$
0.82

 
$
0.94

 
 
 
 
 
 
 
 
Number of shares used in per share calculations
 
 
 
 
 
 
 
   Basic
29,654

 
29,595

 
29,697

 
29,439

   Diluted
30,117

 
30,183

 
30,253

 
30,169

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
 
 
 
 
        Cost of revenue
$
270

 
$
291

 
$
662

 
$
626

        Research and development
963

 
866

 
2,737

 
2,425

        Selling and marketing
474

 
319

 
1,089

 
860

        General and administrative
2,193

 
2,315

 
5,974

 
6,105

            Total
$
3,900

 
$
3,791

 
$
10,462

 
$
10,016

 
 
 
 
 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
September 26, 2015
 
December 27, 2014
 
 
 
 
 Assets
 
 
 
 Cash and cash equivalents
$
176,430

 
$
185,957

 Short term investments
35,791

 
36,166

 Accounts receivable, net
76,314

 
71,056

 Unbilled revenue
580

 
2,614

 Inventory
58,665

 
47,857

 Deferred tax assets
20,338

 
21,505

 Other current assets
8,408

 
9,704

   Total current assets
376,526

 
374,859

 Property and equipment, net
28,553

 
31,297

 Deferred tax assets
7,688

 
8,409

 Goodwill
48,751

 
48,751

 Intangible assets, net
16,529

 
19,146

 Other assets
11,766

 
10,751

 Total assets
$
489,813

 
$
493,213

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
56,490

 
$
60,256

 Accrued expenses
13,752

 
18,701

 Accrued compensation
11,153

 
16,235

 Deferred revenue and customer advances
2,279

 
3,849

   Total current liabilities
83,674

 
99,041

 Long term liabilities
3,033

 
3,736

 Stockholders' equity
403,106

 
390,436

 Total liabilities and stockholders' equity
$
489,813

 
$
493,213

 
 
 
 





 iRobot Corporation
Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the nine months ended
 
September 26, 2015
 
September 27, 2014
Cash flows from operating activities:
 
 
 
Net income
$
24,799

 
$
28,417

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
   Depreciation and amortization
10,569

 
9,578

   Loss on disposal of property and equipment
201

 
27

   Stock-based compensation
10,462

 
10,016

   Deferred income taxes, net
2,289

 
793

   Tax benefit of excess stock-based compensation deductions
(795
)
 
(2,707
)
   Non-cash director deferred compensation
112

 
34

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
(5,258
)
 
(28,999
)
   Unbilled revenue
2,034

 
(323
)
   Inventory
(10,965
)
 
(8,678
)
   Other assets
1,296

 
(5,407
)
   Accounts payable
(1,285
)
 
4,943

   Accrued expenses
(6,127
)
 
2,859

   Accrued compensation
(5,082
)
 
(7,836
)
   Deferred revenue and customer advances
(1,570
)
 
(2,376
)
   Long term liabilities
(703
)
 
(467
)
Net cash provided by (used in) operating activities
19,977

 
(126
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Additions of property and equipment
(7,557
)
 
(9,168
)
Change in other assets
(1,015
)
 
—

Purchase of investments
(17,755
)
 
(24,214
)
Sales of investments
18,000

 
7,500

Net cash used in investing activities
(8,327
)
 
(25,882
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from stock option exercises
3,385

 
7,853

Income tax withholding payment associated with restricted stock vesting
(1,295
)
 
(1,532
)
Stock repurchases
(24,062
)
 
—

Tax benefit of excess stock-based compensation deductions
795

 
2,707

Net cash provided by (used in) financing activities
(21,177
)
 
9,028

 
 
 
 
Net decrease in cash and cash equivalents
(9,527
)
 
(16,980
)
Cash and cash equivalents, at beginning of period
185,957

 
165,404

Cash and cash equivalents, at end of period
$
176,430

 
$
148,424

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the nine months ended
 
September 26, 2015
 
September 27, 2014
 
September 26, 2015
 
September 27, 2014
 
 
 
 
 
 
 
 
Revenue: *
 
 
 
 
 
 
 
Home Robots
$
136,513

 
$
132,013

 
$
384,422

 
$
373,283

    Domestic
$
57,782

 
$
46,830

 
$
150,587

 
$
129,884

    International
$
78,731

 
$
85,183

 
$
233,835

 
$
243,399

 
 
 
 
 
 
 
 
Defense & Security
$
6,184

 
$
10,667

 
$
24,500

 
$
21,369

    Domestic
$
4,606

 
$
4,850

 
$
10,867

 
$
10,342

    International
$
1,578

 
$
5,817

 
$
13,633

 
$
11,027

 
 
 
 
 
 
 
 
    Product
$
6,061

 
$
10,258

 
$
23,896

 
$
20,947

    Contract
$
123

 
$
409

 
$
604

 
$
422

 
 
 
 
 
 
 
 
    Product Life Cycle
$
3,356

 
$
5,797

 
$
11,464

 
$
11,203

 
 
 
 
 
 
 
 
Gross Margin Percent:
 
 
 
 
 
 
 
    Home Robots
52.7
%
 
50.7
%
 
51.7
%
 
49.9
%
    Defense & Security
42.9
%
 
53.3
%
 
40.0
%
 
45.1
%
    Total Company
48.6
%
 
47.3
%
 
47.2
%
 
45.7
%
 
 
 
 
 
 
 
 
Units shipped:
 
 
 
 
 
 
 
    Home Robots *
582

 
573

 
1,665

 
1,603

    Defense & Security
123

 
52

 
192

 
130

 
 
 
 
 
 
 
 
Average gross selling prices for robot units:
 
 
 
 
 
 
 
    Home Robots
$
252

 
$
244

 
$
246

 
$
242

    Defense & Security *
$
22

 
$
86

 
$
65

 
$
75

 
 
 
 
 
 
 
 
Defense & Security Funded Product Backlog *
$
27,559

 
$
25,170

 
$
27,559

 
$
25,170

 
 
 
 
 
 
 
 
Days sales outstanding
49

 
44

 
49

 
44

 
 
 
 
 
 
 
 
Days in inventory
73

 
65

 
73

 
65

 
 
 
 
 
 
 
 
Headcount
606

 
562

 
606

 
562

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* in thousands
 
 
 
 
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the nine months ended
 
September 26, 2015
 
September 27, 2014
 
September 26, 2015
 
September 27, 2014
 
 
 
 
 
 
 
 
 Net income
$
12,793

 
$
14,607

 
$
24,799

 
$
28,417

 
 
 
 
 
 
 
 
 Interest income, net
(152
)
 
(184
)
 
(482
)
 
(499
)
 Income tax expense
5,770

 
7,713

 
11,875

 
11,463

 Depreciation
2,626

 
2,294

 
7,776

 
6,676

 Amortization
932

 
964

 
2,793

 
2,902

 
 
 
 
 
 
 
 
 EBITDA
21,969

 
25,394

 
46,761

 
48,959

 
 
 
 
 
 
 
 
 Stock-based compensation expense
3,900

 
3,791

 
10,462

 
10,016

 Merger and acquisition expense
—

 
—

 
—

 
—

 Net intellectual property litigation (income) expense
(13
)
 
496

 
(493
)
 
1,141

 Restructuring expense
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 Adjusted EBITDA
$
25,856

 
$
29,681

 
$
56,730

 
$
60,116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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


Stock widget

Investing forum

IROBOT CORP Reports