IROBOT CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 25, 2017

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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 First-Quarter Financial Results
Strength in All Regions Drives 32% Year-Over-Year Consumer Revenue Growth
and Higher Full-Year Expectations


BEDFORD, Mass., April 25, 2017 - iRobot Corp. (NASDAQ: IRBT), a leader in consumer home robotics, today announced its financial results for the first quarter ended April 1, 2017.

“Our first quarter results were outstanding. Building off the strong momentum we experienced during the year-end holidays, iRobot delivered first quarter 2017 consumer revenue growth of 32% due to growth across all regions,” said Colin Angle, chairman and chief executive officer of iRobot.

“We also achieved an important strategic initiative with the completion of the purchase of our Japanese distributor shortly after the close of the first quarter. Based on our Q1 results and our outlook for the rest of 2017, we are increasing our full-year financial expectations. We now expect 2017 revenue of $780 to $790 million, EPS of between $1.45 and $1.70 and operating income of $60 to $70 million.

“These expectations reflect our confidence that the momentum we built during the 2016 holiday season, particularly in the United States and EMEA, will continue throughout 2017. In addition, greater control over marketing in China and Japan will enable us to accelerate growth in those regions.
 
“We are off to a great start in 2017 and tracking well to our near and longer term plans.”

Financial Results

•
Revenue for the first quarter of 2017 was $168.5 million, compared with $130.8 million for the first quarter of 2016. Q1 2016 included $3.0 million of revenue from the Defense & Security business divested at the beginning of Q2 2016.
•
Net income for the first quarter of 2017 was $16.4 million, compared with net income of $3.9 million for the first quarter of 2016.
•
Quarterly earnings per share were $0.58, compared with earnings per share of $0.13 in the first quarter of 2016. The divestiture of the Defense & Security business negatively impacted Q1 2016 earnings per share by ($0.12). In addition, in Q1 2017, we adopted the new accounting standard related to stock compensation expense. As a result, we recorded a $0.06 discrete tax benefit.
•
Adjusted EBITDA for the first quarter of 2017 was $30.2 million, compared with $14.1 million in the first quarter of 2016.





Business Highlights

•
We delivered year-over-year Q1 quarterly revenue growth in the United States of 34% over record growth in Q1 last year.
•
International revenue grew 29% in the first quarter, driven by growth in all overseas regions. China was up 23%; Japan was up 21%; and EMEA was up 36% in Q1 2017 from a year ago.
•
Shortly after the end of the quarter, we closed the previously announced acquisition of our Japanese distributor, enabling us to extend our leadership position and accelerate the growth of our business in Japan.
•
We recently filed a legal action against several well-known appliance brands and Chinese manufacturers in the United States District Court and with the International Trade Commission after determining that each had infringed on numerous iRobot patents.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 30, 2017.

Fiscal Year 2017:
Current
Previous
Revenue
$780 - $790 million
$770 - $785 million
Earnings Per Share
$1.45 - $1.70
$1.35 - $1.65
Operating Income
$60 - $70 million
$57 - $70 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 2017, business outlook, and outlook for fiscal year 2017 financial performance. Pertinent details include:

Date:
Wednesday, April 26, 2017
Time:
8:30 a.m. ET
Call-In Number:
213-358-0894
Passcode:
15400565

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=5242675. 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 May 3, and can be accessed by dialing 404-537-3406, passcode 15400565.
 
About iRobot Corp.
iRobot, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba® Vacuuming Robot in 2002. Today, iRobot is a global enterprise that has sold more than 15 million robots worldwide. iRobot's product line, including the Roomba and the Braava™ family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot's engineers are building an ecosystem of robots and data to enable the smart home. 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, revenue growth, demand for our robots, the impact of our marketing efforts including, without limitation, in China and Japan, and anticipated revenue, earnings per share and operating income for the fiscal year ended December 30, 2017.  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, 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, net merger, acquisition and divestiture 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
 
April 1,
2017
 
April 2,
2016
Revenue
$
168,467

 
$
130,804

Cost of revenue
81,124

 
68,843

Gross margin
87,343

 
61,961

Operating expenses:
 
 
 
  Research and development
25,508

 
19,728

  Selling and marketing
22,575

 
19,940

  General and administrative
17,622

 
16,764

      Total operating expenses
65,705

 
56,432

Operating income
21,638

 
5,529

Other income, net
3

 
200

Income before income taxes
21,641

 
5,729

Income tax expense
5,282

 
1,797

Net income
$
16,359

 
$
3,932

 
 
 
 
Net income per share
 
 
 
   Basic
$
0.60

 
$
0.14

   Diluted
$
0.58

 
$
0.13

 
 
 
 
Number of shares used in per share calculations
 
 
 
   Basic
27,304

 
29,004

   Diluted
28,295

 
29,474

 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
        Cost of revenue
$
226

 
$
221

        Research and development
1,099

 
829

        Selling and marketing
570

 
485

        General and administrative
2,436

 
2,357

            Total
$
4,331

 
$
3,892

 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
April 1,
2017
 
December 31,
2016
 
 
 
 
 Assets
 
 
 
 Cash and cash equivalents
$
235,728

 
$
214,523

 Short term investments
39,942

 
39,930

 Accounts receivable, net
47,780

 
72,909

 Unbilled revenue
112

 
139

 Inventory
57,125

 
50,578

 Other current assets
7,317

 
5,591

   Total current assets
388,004

 
383,670

 Property and equipment, net
29,250

 
27,532

 Deferred tax assets
31,429

 
30,585

 Goodwill
41,041

 
41,041

 Intangible assets, net
11,343

 
12,207

 Other assets
13,214

 
12,877

 Total assets
$
514,281

 
$
507,912

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
63,177

 
$
67,281

 Accrued expenses
21,343

 
19,854

 Accrued compensation
11,348

 
21,015

 Deferred revenue and customer advances
4,202

 
4,486

   Total current liabilities
100,070

 
112,636

 Long term liabilities
5,764

 
6,320

 Stockholders' equity
408,447

 
388,956

 Total liabilities and stockholders' equity
$
514,281

 
$
507,912

 
 
 
 





 iRobot Corporation
Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
For the three months ended
 
April 1,
2017
 
April 2,
2016
Cash flows from operating activities:
 
 
 
Net income
$
16,359

 
$
3,932

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
   Depreciation and amortization
3,486

 
3,375

   Loss on disposal of property and equipment
42

 
—

   Loss on equity method investment
11

 
—

   Impairment on cost method investment
155

 
—

   Stock-based compensation
4,331

 
3,892

   Deferred income taxes, net
17

 
(47
)
   Tax benefit of excess stock-based compensation deductions
—

 
(267
)
   Non-cash director deferred compensation
16

 
33

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
25,128

 
69,879

   Unbilled revenue
27

 
185

   Inventory
(6,546
)
 
(3,167
)
   Other assets
(1,745
)
 
(2,985
)
   Accounts payable
(5,026
)
 
(20,626
)
   Accrued expenses
1,016

 
(2,673
)
   Accrued compensation
(9,670
)
 
(4,055
)
   Deferred revenue and customer advances
(284
)
 
1,144

   Long term liabilities
(558
)
 
3

Net cash provided by operating activities
26,759

 
48,623

 
 
 
 
Cash flows from investing activities:
 
 
 
Additions of property and equipment
(3,008
)
 
(2,390
)
Change in other assets
(504
)
 
(523
)
Purchase of investments
(3,498
)
 
—

Sales and maturities of investments
3,500

 
2,500

Net cash used in investing activities
(3,510
)
 
(413
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from stock option exercises
722

 
837

Income tax withholding payment associated with restricted stock vesting
(2,778
)
 
(1,218
)
Stock repurchases
—

 
(12,021
)
Tax benefit of excess stock-based compensation deductions
—

 
267

Net cash used in financing activities
(2,056
)
 
(12,135
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
12

 
—

Net increase in cash and cash equivalents
21,205

 
36,075

Cash and cash equivalents, at beginning of period
214,523

 
179,915

Cash and cash equivalents, at end of period
$
235,728

 
$
215,990

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
April 1,
2017
 
April 2,
2016
 
 
 
 
Revenue: *
 
 
 
Consumer
$
168,248

 
$
127,687

    Domestic
$
84,789

 
$
63,158

    International
$
83,459

 
$
64,529

 
 
 
 
Defense & Security
$
—

 
$
3,075

 
 
 
 
Gross Margin Percent
51.8
%
 
47.4
%
 
 
 
 
Consumer units shipped*
704

 
550

Vacuum
582

 
478

Mopping
121

 
67

Other
1

 
5

 
 
 
 
Consumer revenue**
168

 
128

Vacuum***
151

 
118

Mopping***
17

 
9

Other
—

 
1

 
 
 
 
Days sales outstanding
26

 
24

 
 
 
 
Days in inventory
64

 
86

 
 
 
 
Headcount
636

 
633

 
 
 
 
 
 
 
 
* in thousands
 
 
 
** in millions
 
 
 
*** includes accessory revenue
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the three months ended
 
April 1,
2017
 
April 2,
2016
 
 
 
 
 Net income
$
16,359

 
$
3,932

 
 
 
 
 Interest income, net
(383
)
 
(272
)
 Income tax expense
5,282

 
1,797

 Depreciation
2,580

 
2,467

 Amortization
906

 
908

 
 
 
 
 EBITDA
24,744

 
8,832

 
 
 
 
 Stock-based compensation expense
4,331

 
3,892

 Net merger, acquisition and divestiture expense
840

 
1,358

 Net intellectual property litigation expense
262

 
56

 Restructuring expense
—

 
—

 
 
 
 
 Adjusted EBITDA
$
30,177

 
$
14,138

 
 
 
 
 
 
 
 
 
 
 
 
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, net merger, acquisition and divestiture 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
Expected Incremental Impact of Japan Acquisition *
(in millions, except per share amounts)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal year 2017
 
Three
 
Three
 
Three
 
Three
 
Twelve
 
Months Ending
 
Months Ending
 
Months Ending
 
Months Ending
 
Months Ending
 
April 1
 
July 1
 
September 30
 
December 30
 
December 30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
—
 
($12) - ($10)
 
$10 - $15
 
$5 - $10
 
$10 - $12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share
($0.02)
 
($0.60 - $0.55)
 
($0.05) - $0.00
 
$0.05 - $0.10
 
($0.60 - 0.50)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Closed 4/3/17; 45 days to finalize purchase price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 









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