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iRobot Reports Strong Second-Quarter Financial Results
Increases Full-Year 2017 Financial Expectations; U.S. Q2 Revenue Up More Than 45%

BEDFORD, Mass., July 25, 2017 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the second quarter ended July 1, 2017.

iRobot logo. (PRNewsFoto/iRobot Corp.)

"Our outstanding second-quarter results exceeded our expectations. Based on our Q2 results, and our outlook for the rest of 2017, fueled by positive momentum in the United States and EMEA, we are increasing our full-year 2017 financial expectations. We now expect 2017 revenue of $815 to $825 million, a 24 – 26% increase over 2016 consumer revenue, operating income of between $67 and $75 million, and EPS of between $1.80 and $2.00, none of which reflects any impact of our announced acquisition of our largest European distributor," said Colin Angle, chairman and chief executive officer of iRobot.

"Our increased expectations reflect our increased confidence that U.S. and EMEA momentum will continue and that full-year revenue in those regions will grow roughly 30% and high-teens percent respectively.

"With our increased expectations for full-year revenue, we plan to reinvest a portion of the incremental profitability to capitalize on the strong U.S. and EMEA momentum and ensure our continued product leadership in a rapidly growing, competitive marketplace. We will make incremental S&M investments to further promote our Braava family of robots, building on the momentum we have seen over the past couple of quarters. In addition, we will make additional investments in R&D to accelerate our product roadmap in anticipation of new product launches in 2018." 

Financial Results

  • Note: 2016 first-half results include Defense & Security revenue of $3 million versus $0 in the first half of 2017. Divestiture of the Defense & Security business negatively impacted first-half 2016 operating income by $5.6 million and EPS by ($0.11).
  • Revenue for the second quarter of 2017 was $183.1 million, compared with $148.7 million for the second quarter of 2016. Revenue for the first half of 2017 was $351.6 million, compared with $279.5 million last year.
  • Operating income in the second quarter of 2017 was $4.1 million, compared with $5.9 million in the second quarter of 2016. For the first half of 2017, operating income was $25.7 million, compared with $11.4 million a year ago.
  • Quarterly earnings per share were $0.27 for the second quarter of 2017, compared with $0.17 in the second quarter of 2016. First-half earnings per share were $0.85, compared with $0.30 in the first half of 2016. Second-quarter and first-half 2017 EPS included discrete tax benefits of $0.15 and $0.21, respectively, due to the new accounting standard related to stock compensation expense that we adopted in Q1 2017.

Business Highlights

  • In the U.S., consumer revenue grew more than 45% year over year. On July 11, 2017, Amazon Prime Day and the biggest selling day in Amazon's history, we sold more than twice the volume sold on Prime Day in 2016, which was twice what the volume sold in 2015. The Roomba 652 was ranked #1 in robotic vacuum cleaners, #1 in all floor care and #2 in all home & kitchen for 2017 Prime Day.
  • We introduced the Roomba 890 and Roomba 690 Wi-Fi connected vacuuming robots in the U.S., EMEA and China, extending the benefits of cloud-connected cleaning at lower price points. In addition, we launched the Roomba 900 series robots in China.
  • In a separate release, we announced our planned acquisition of Robopolis, our largest European distributor, which is expected to close at the beginning of Q4 2017.

Financial Expectations

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

(In $millions except Earnings Per Share)

Fiscal Year 2017:

Previous

Updated (excl effect
of acquisition)

Anticipated effect
of acquisition*

Updated (incl effect
of acquisition)

Revenue

$780 - $790

$815 - $825

$25 - $35

$840 - $860

Operating Income

$60 - $70

$67 - $75

($18) – ($12)

$50 - $60

Earnings Per Share

$1.45 - $1.70

$1.80 - $2.00

($0.45) – ($0.30)

$1.35 - $1.70

*See detailed schedule at end of earnings release

Second-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the second fiscal quarter 2017 and outlook for fiscal year 2017 financial performance.
Pertinent details include:

Date:

Wednesday, July 26

Time:

8:30 a.m. ET

Call-In Number:

213-358-0894

Passcode:

15405594

A live, audio broadcast of the conference call also will be available at:
http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-eventDetails&EventId=5242676.
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 August 2, and can be accessed by dialing 404-537-3406, passcode 15405594.

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; revenue growth; demand for our robots; the timing, and the impact on financial results, of the announced acquisition of our European distributor; the intent to make, and the impact on financial results of, strategic investments, including incremental investments in sales and marketing and additional investments in research and development; the introduction of new products, including the timing thereof; and anticipated revenue, operating income and earnings per share 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 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 (income) 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 six months ended 


July 1,

July 2,


July 1,

 July 2, 


2017

2016


2017

2016







Revenue

$       183,148

$       148,696


$       351,615

$       279,500

Cost of revenue

93,257

79,044


174,381

147,887







Gross margin

89,891

69,652


177,234

131,613







Operating expenses:






  Research and development

26,167

18,544


51,675

38,272

  Selling and marketing

40,123

29,107


62,698

49,047

  General and administrative

19,513

16,143


37,135

32,907

      Total operating expenses

85,803

63,794


151,508

120,226







Operating income

4,088

5,858


25,726

11,387







Other income, net

1,686

1,419


1,689

1,619







Income before income taxes

5,774

7,277


27,415

13,006

Income tax (benefit) expense

(2,129)

2,463


3,153

4,260

Net income

$           7,903

$           4,814


$         24,262

$           8,746







Net income per share






   Basic

$            0.29

$            0.18


$            0.89

$            0.31

   Diluted

$            0.27

$            0.17


$            0.85

$            0.30







Number of shares used in per share calculations






   Basic

27,516

27,360


27,410

28,198

   Diluted

28,778

27,836


28,581

28,717













Stock-based compensation included in above figures:






        Cost of revenue

$             251

$             150


$             477

$             371

        Research and development

1,147

741


2,246

1,570

        Selling and marketing

571

387


1,141

872

        General and administrative

2,735

2,708


5,171

5,065

            Total

$           4,704

$           3,986


$           9,035

$           7,878

 

 

 iRobot Corporation 

 Condensed Consolidated Balance Sheets 

 (unaudited, in thousands) 






July 1,


 December 31, 


2017


2016





 Assets 








 Cash and cash equivalents 

$          220,173


$        214,523

 Short term investments 

39,939


39,930

 Accounts receivable, net 

37,510


72,909

 Unbilled revenue 

4,162


139

 Inventory 

83,247


50,578

 Other current assets 

14,211


5,591

   Total current assets 

399,242


383,670

 Property and equipment, net 

37,108


27,532

 Deferred tax assets 

35,853


30,585

 Goodwill 

41,332


41,041

 Intangible assets, net 

17,645


12,207

 Other assets 

13,611


12,877

 Total assets 

$          544,791


$        507,912





 Liabilities and stockholders' equity 








 Accounts payable 

$           66,167


$          67,281

 Accrued expenses 

28,167


19,854

 Accrued compensation 

15,309


21,015

 Deferred revenue and customer advances 

3,069


4,486

   Total current liabilities 

112,712


112,636

 Long term liabilities 

6,282


6,320

 Stockholders' equity 

425,797


388,956

 Total liabilities and stockholders' equity 

$          544,791


$        507,912

 

 

 iRobot Corporation 

  Consolidated Statements of Cash Flows 

 (unaudited, in thousands) 








 For the six months ended 


July 1,

 July 2, 


2017

2016

Cash flows from operating activities:



Net income

$          24,262

$            8,746

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



Depreciation and amortization 

8,815

6,729

Loss on disposal of property and equipment

42

182

Loss on equity method investment

21

-

Impairment on cost method investment

155

-

Gain on sale of business unit

-

(433)

Gain on sale of cost method investment

(1,056)

(634)

Stock-based compensation 

9,035

7,878

Deferred income taxes, net

(2,656)

1,602

Tax benefit of excess stock-based compensation deductions

-

(776)

Non-cash director deferred compensation 

32

50

Changes in operating assets and liabilities — (use) source



Accounts receivable 

22,513

39,202

Unbilled revenue 

(4,024)

198

Inventory 

(10,820)

2,698

Other assets 

(7,478)

(7,432)

Accounts payable 

(1,953)

(16,496)

Accrued expenses 

5,661

(3,126)

Accrued compensation 

(7,606)

(2,717)

Deferred revenue and customer advances

(1,875)

(211)

Long term liabilities

(278)

164

Net cash provided by operating activities 

32,790

35,624




Cash flows from investing activities:



Additions of property and equipment 

(13,272)

(4,881)

Change in other assets

(911)

(428)

Proceeds from sale of business unit

-

23,520

Cash paid for business acquisition, net of cash acquired

(16,524)

-

Purchase of investments 

(7,034)

(9,552)

Sales and maturities of investments 

7,000

8,000

Proceeds from sale of cost method investment

1,056

634

Net cash provided by (used in) investing activities 

(29,685)

17,293




Cash flows from financing activities:



Proceeds from stock option exercises 

5,365

3,143

Income tax withholding payment associated with restricted stock vesting

(2,974)

(1,264)

Stock repurchases

-

(97,021)

Tax benefit of excess stock-based compensation deductions

-

776

Net cash provided by (used in) financing activities 

2,391

(94,366)




Effect of exchange rate changes on cash and cash equivalents

154

-

Net increase (decrease) in cash and cash equivalents 

5,650

(41,449)

Cash and cash equivalents, at beginning of period 

214,523

179,915

Cash and cash equivalents, at end of period 

$        220,173

$        138,466

 

 

iRobot Corporation 

Supplemental Information

(unaudited)














 For the three months ended 


 For the six months ended 


July 1,

July 2,


July 1,

July 2,


2017

2016


2017

2016







Revenue: *












Consumer

$

183,148

$

148,104


$

351,397

$

275,792







    Domestic

$

97,315

$

66,483


$

182,104

$

129,643

    International

$

85,833

$

81,621


$

169,293

$

146,149













Defense & Security

$

-

$

-


$

-

$

3,075













Gross Margin Percent


49.1%


46.8%



50.4%


47.1%













Consumer units shipped*


749


674



1,453


1,224

      Vacuum


638


599



1,220


1,077

      Mopping


110


70



231


137













Consumer revenue**


183


148



351


276

      Vacuum***


167


139



318


258

      Mopping***


18


10



34


19













Average gross selling prices for robot units - Consumer

$

275

$

240


$

267

$

248







Days sales outstanding


21


36



21


36







Days in inventory


81


54



81


54







Headcount


760


554



760


554













* in thousands






** in millions






*** includes accessory revenue






 

 

 iRobot Corporation  

 Adjusted EBITDA Reconciliation to GAAP 

 (unaudited, in thousands) 














 For the three months ended 


 For the six months ended 


July 1,

July 2,


July 1,

July 2,


2017

2016


2017

2016







 Net income 

$            7,903

$            4,814


$          24,262

$            8,746







 Interest income, net 

(482)

(198)


(865)

(470)

 Income tax (benefit) expense 

(2,129)

2,463


3,153

4,260

 Depreciation 

2,958

2,446


5,538

4,913

 Amortization 

2,280

908


3,186

1,816







 EBITDA 

10,530

10,433


35,274

19,265













 Stock-based compensation expense 

4,704

3,986


9,035

7,878

 Net merger, acquisition and divestiture (income) expense 

931

(505)


1,771

853

 Net intellectual property litigation expense 

382

305


644

361

 Restructuring expense 

-

1,702


-

1,702







 Adjusted EBITDA 

$          16,547

$          15,921


$          46,724

$          30,059































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 (income) 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 Robopolis Acquisition 

 (in millions, except per share amounts) 

 (unaudited) 
































 Fiscal Year 2017 


 Actual 


 Actual 


 Expected 


 Expected 


 Expected 


 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 

-


-


-


 $25 - $35 


 $25 - $35 































 Net income (loss) per share 

($0.01)


($0.02)


 ($0.07 - 0.04) 


 ($0.35 - 0.23) 


 ($0.45 - 0.30) 

 

 

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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