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iRobot Reports Record Fourth-Quarter and Full-Year Revenue
20 Percent Target Revenue CAGR through 2020

BEDFORD, Mass., Feb. 7, 2018 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the fourth quarter and full year ended December 30, 2017.

iRobot logo. (PRNewsfoto/iRobot Corp.)

"In our first full year as a solely consumer-focused business, we delivered fantastic quarterly and full-year revenue growth of 54% and 34% respectively, over Q4 and full-year 2016. Record Q4 revenue was driven by very strong sales in the United States, and in EMEA, as the overall category continued to grow at an accelerating rate. We achieved record growth while maintaining unambiguous global product and brand leadership in the robotic vacuum cleaner (RVC) category.

"In 2018, we expect to cross the billion-dollar revenue threshold and deliver $1.05 to $1.08 billion in revenue, which is year-over-year growth of 19% to 22%, operating income of $86 to $96 million and EPS of $2.10 to $2.35.

"The opportunity ahead of us is tremendous. Global household penetration of robotic vacuum cleaners remains extremely low, in the single digits. Strong economic conditions worldwide are fueling overall global growth and positive consumer sentiment. We have demonstrated that in regions where we have run marketing programs to educate prospective customers about Roomba, we have increased our market share, and our recent distributor acquisitions enable us to extend our strategic marketing programs to Japan and Europe.

"Further, the global RVC category grew more than 25% in 2017, and we expect category growth to continue as we and competitors invest to drive awareness. And, we have seen retailers in the United States increasingly embracing and promoting the category through national advertising programs featuring RVCs, as well as allocating increased shelf space and investing in high-visibility displays.

"These are the growth drivers we see for Roomba, but we believe there is also a great opportunity to drive adoption of our Braava products through campaigns targeted at our millions of Roomba customers.

"There is a lot to be excited about. 2017 was a critical year for iRobot as the first full year focused solely on developing and delivering products for the home. We delivered outstanding financial results for the year while successfully executing the acquisition of two major distributors in key markets and extending our control over 75% of our global revenue. 

"In 2018, we plan to capitalize on the incremental investments we made in 2017 with the introduction of new products in the second half of the year. We expect double-digit revenue growth in all regions as we continue to evolve and extend our proven sales and marketing initiatives in overseas markets. In the U.S., we expect continued strong sales following our 40+% growth in 2017," said Colin Angle, chairman and chief executive officer of iRobot.  

Financial Results

  • Revenue for the fourth quarter of 2017 was $326.9 million, compared with $212.5 million for the fourth quarter of 2016. Revenue for the full year 2017 was $883.9 million, compared with $660.6 million for the full year 2016. Full-year 2017 and 2016 revenue included $0.3 million and $4.8 million respectively, of D&S and other revenue.
  • Operating income in the fourth quarter of 2017 was $23.1 million, compared with $18.7 million in the fourth quarter of 2016. Operating income for the full year 2017 was $72.7 million, compared with $57.6 million for the full year 2016.
  • Quarterly earnings per share were $0.16 for the fourth quarter of 2017, compared with $0.49 in the fourth quarter of 2016. Fourth-quarter 2017 earnings per share included a negative ($0.41) impact from the new tax reform law for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.03 relating to the new 2017 stock compensation accounting standard. Full-year 2017 EPS was $1.77, compared with $1.48 for full-year 2016. Full-year 2017 earnings per share included a negative ($0.41) impact from the new tax reform law for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.41 relating to the new 2017 stock compensation accounting standard. Fourth-quarter 2016 earnings per share included a $0.03 benefit associated with a change in accounting treatment of an equity investment and a $0.01 contribution from transition services provided to our former D&S business. Full-year 2016 earnings per share included a negative ($0.10) impact from the divestiture of the D&S business and a $0.03 contribution from the sale of an investment.

Business Highlights

  • In the fourth quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q4 revenue growth of 54%. Fourth-quarter consumer revenue grew 47% in the United States, 34% in Japan and more than doubled in EMEA, in each case over Q4 2016.
  • In Q4, we launched our first ever Braava national television program in the U.S., which drove Braava family revenue growth of 65% in the U.S. over full-year 2016.
  • We announced an agreement with Black & Decker in which Black & Decker agreed to discontinue sales of all home robotic vacuums for a certain period of time after selling through its existing inventory. This represents another win in an ongoing effort by iRobot to defend and protect its valuable intellectual property.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 29, 2018.

(Dollars in millions except Earnings Per Share)

Fiscal Year 2018                                           
Revenue                                              $1,050 - $1,080                      
Operating Income                                $86 - $96                    
Tax Rate (before discrete items)         25 - 27%
Earnings Per Share                             $2.10 - $2.35  

Three-Year Financial Targets 2018 - 2020 
Revenue Growth                                             Approximately 20% 
Gross Margin                                                  50 – 51% 
Operating Margin                                            Increasing to 10%

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 2017, the outlook for full-year 2018 financial performance, and the company's three-year financial targets for 2018 through 2020.

Pertinent details include:

Date:                           Thursday, February 8 
Time:                           8:30 a.m. ET  
Call-In Number:          213-358-0894 
Passcode:                    4995868

A live, audio broadcast of the conference call also will be available at http://investor.irobot.com/events/event-details/q4-2017-irobot-corp-earnings-conference-call. 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 15, and can be accessed by dialing 404-537-3406, passcode 4995868.

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 20 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; revenue growth; demand for robotic vacuum cleaners, and for our Roomba® and Braava® robots; the impact of sales and marketing initiatives; the impact of investments in research and development, technology and innovation; the introduction of new products and the timing and impact thereof; the impact of our acquisition of our largest European distributor; anticipated revenue, revenue growth, operating income and earnings per share for the fiscal year ended December 29, 2018; and anticipated revenue growth, gross margin and operating income as a percent of revenue for the next three fiscal years. 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 and adoption 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, gain on business acquisition, 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 30,

December 31,


December 30,

 December 31, 


2017

2016


2017

2016







Revenue

$       326,897

$       212,494


$       883,911

$       660,604

Cost of revenue:






  Cost of product revenue

166,046

104,988


438,114

337,832

  Amortization of intangible assets

7,309

864


12,638

3,457

Total cost of revenue

173,355

105,852


450,752

341,289

Gross margin

153,542

106,642


433,159

319,315

Operating expenses:






  Research and development

32,631

21,861


113,149

79,805

  Selling and marketing

70,766

48,153


162,110

115,125

  General and administrative

26,806

17,909


84,771

66,828

  Amortization of intangible assets

267

-


439

-

      Total operating expenses

130,470

87,923


360,469

261,758

Operating income

23,072

18,719


72,690

57,557

Other income (expense), net

(614)

1,662


3,676

3,804

Income before income taxes

22,458

20,381


76,366

61,361

Income tax expense

17,838

6,700


25,402

19,422

Net income

$           4,620

$         13,681


$         50,964

$         41,939







Net income per share






   Basic

$            0.17

$            0.50


$            1.85

$            1.51

   Diluted

$            0.16

$            0.49


$            1.77

$            1.48







Number of shares used in per share calculations






   Basic

27,885

27,159


27,611

27,698

   Diluted

28,792

27,823


28,753

28,292













Stock-based compensation included in above figures:






        Cost of revenue

$             331

$             205


$           1,082

$             760

        Research and development

1,501

1,048


5,009

3,646

        Selling and marketing

702

692


2,571

2,008

        General and administrative

3,148

2,269


11,089

9,581

            Total

$           5,682

$           4,214


$         19,751

$         15,995

 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 






December 30,


 December 31, 


2017


2016





 Assets 








 Cash and cash equivalents 

$          128,635


$        214,523

 Short term investments 

37,225


39,930

 Accounts receivable, net 

142,829


73,048

 Inventory 

106,932


50,578

 Other current assets 

19,105


5,591

   Total current assets 

434,726


383,670

 Property and equipment, net 

44,579


27,532

 Deferred tax assets 

31,531


30,585

 Goodwill 

121,440


41,041

 Intangible assets, net 

44,712


12,207

 Other assets 

14,534


12,877

 Total assets 

$          691,522


$        507,912





 Liabilities and stockholders' equity 








 Accounts payable 

$          116,316


$          67,281

 Accrued expenses 

73,647


40,869

 Deferred revenue and customer advances 

7,761


4,486

   Total current liabilities 

197,724


112,636

 Deferred tax liabilities 

9,539


-

 Other long term liabilities 

13,932


6,320

   Total long term liabilities 

23,471


6,320

 Stockholders' equity 

470,327


388,956

 Total liabilities and stockholders' equity 

$          691,522


$        507,912

 

 iRobot Corporation 

  Condensed Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 








 For the twelve months ended 


December 30,

December 31,


2017

2016

Cash flows from operating activities:



Net income

$          50,964

$          41,939

Adjustments to reconcile net income to net cash provided by operating activities:



Depreciation and amortization 

25,499

13,606

Gain on sale of business unit and cost method investment

(1,267)

(1,067)

(Income) loss on equity method investment

65

(1,376)

Impairment on cost method investment

155

-

Gain on business acquisition

(2,243)

-

Stock-based compensation 

19,751

15,995

Deferred income taxes, net

(999)

3,557




Tax benefit of excess stock-based compensation deductions

-

(2,971)

Non-cash director deferred compensation 

65

82

Other

1,846

-

Changes in operating assets and liabilities — (use) source



Accounts receivable

(53,251)

25,682

Inventory 

(1,470)

(981)

Other assets 

(10,562)

3,187

Accounts payable 

17,457

6,502

Accrued liabilities

23,447

10,181

Deferred revenue and customer advances

2,149

2,996

Long term liabilities

4,709

(908)

Net cash provided by operating activities 

76,315

116,424




Cash flows from investing activities:



Additions of property and equipment 

(23,371)

(10,817)

Change in other assets

(1,542)

(2,093)

Proceeds from sale of business unit and cost method investment

1,267

24,154

Cash paid for business acquisitions, net of cash acquired

(148,765)

-

Purchases of investments 

(10,578)

(16,554)

Sales and maturities of investments 

13,066

9,500

Net cash provided by (used in) investing activities 

(169,923)

4,190




Cash flows from financing activities:



Proceeds from stock option exercises 

10,573

9,344

Income tax withholding payment associated with restricted stock vesting

(2,983)

(1,300)

Stock repurchases

-

(97,021)

Tax benefit of excess stock-based compensation deductions

-

2,971

Net cash provided by (used in) financing activities 

7,590

(86,006)




Effect of exchange rate changes on cash and cash equivalents

130

-

Net increase (decrease) in cash and cash equivalents 

(85,888)

34,608

Cash and cash equivalents, at beginning of period 

214,523

179,915

Cash and cash equivalents, at end of period 

$        128,635

$        214,523

 

 iRobot Corporation 

Supplemental Information

(unaudited)














 For the three months ended 


 For the twelve months ended 


December 30,

December 31,


December 30,

 December 31, 


2017

2016


2017

2016







Revenue: *












Consumer

$        326,897

$        212,096


$           883,655

$             655,850







    Domestic

$        182,509

$        123,969


$           452,307

$             319,078

    International

$        144,388

$          88,127


$           431,348

$             336,772













Other revenue

$                 -

$               398


$                 256

$                 4,754













Gross Margin Percent

47.0%

50.2%


49.0%

48.3%













Consumer units shipped*

1,340

940


3,698

2,943

      Vacuum

1,199

786


3,193

2,465

      Mopping

141

149


503

457







Consumer revenue**

$               327

$               212


$                 884

$                   656

      Vacuum***

$               305

$               192


$                 807

$                   591

      Mopping***

$                 24

$                 20


$                   78

$                     64







Average gross selling prices for robot units - Consumer

$               305

$               268


$                 276

$                   249







Days sales outstanding

40

31


40

31







Days in inventory

56

42


56

42







Headcount

920

607


920

607













* in thousands






** in millions






*** includes accessory revenue






 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 














 For the three months ended 


 For the twelve months ended 


December 30,

December 31,


December 30,

December 31,


2017

2016


2017

2016







 Net income 

$            4,620

$          13,681


$          50,964

$          41,939







 Interest income, net 

(226)

(247)


(1,649)

(934)

 Income tax expense 

17,838

6,700


25,402

19,422

 Depreciation 

3,396

2,528


12,284

9,974

 Amortization 

7,610

907


13,215

3,632







 EBITDA 

33,238

23,569


100,216

74,033













 Stock-based compensation expense 

5,682

4,214


19,751

15,995

 Net merger, acquisition and divestiture expense 

657

619


3,109

1,848

 Gain on business acquisition 

-

-


(2,243)

-

 Net intellectual property litigation expense 

3,158

201


5,068

665

 Restructuring expense 

-

-


-

1,857







 Adjusted EBITDA 

$          42,735

$          28,603


$        125,901

$          94,398

 Adjusted EBITDA as a % of revenue 

13.1%

13.5%


14.2%

14.3%

























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, gain on business acquisition, 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.


 

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SOURCE iRobot Corp.

Elise Caffrey, Investor Relations, iRobot Corp., (781) 430-3003, ecaffrey@irobot.com; Matthew Lloyd, Media Relations, iRobot Corp., (781) 430-3720, mlloyd@irobot.com