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iRobot Reports First-Quarter Financial Results
Strong Global Demand for New Roomba i7/i7+ Robots Continues

BEDFORD, Mass., April 23, 2019 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the first quarter ended March 30, 2019.

iRobot logo. (PRNewsfoto/iRobot Corp.)

"We are off to the strong start we expected in 2019. First-quarter revenue grew 9% over Q1 2018. Domestic sell-through was strong, and demand for i7/i7+ exceeded our expectations despite the price increase we implemented on January 1st in the United States. Overseas, the launches of Roomba i7/i7+ in EMEA, Japan and China were very successful. Strong global demand for these products, coupled with the launch of two new products in the second quarter, are expected to drive Q2 revenue growth in the high teens year-over-year," said Colin Angle, chairman and chief executive officer of iRobot.

"Given our Q1 results and our outlook for the rest of the year, we are reaffirming our 2019 full-year revenue and operating income expectations. We are increasing our full-year expectations for earnings per share to reflect the $0.14 favorable tax impact we recorded in Q1 that was previously un-forecasted. We anticipate full-year 2019 revenue of $1.28 to $1.31 billion, which is year-over-year growth of 17-20%, operating income of $108 to $118 million, and EPS of $3.15 to $3.40.

"I am very excited about the year ahead. We expect our global business to deliver strong financial performance that will fund our ability to reinforce our core product leadership in the RVC category, expand and diversify our product portfolio, widen our competitive moat through technological differentiation protected by our IP portfolio, and broaden our manufacturing and supply chain outside China."

Financial Results

  • Revenue for the first quarter of 2019 was $237.7 million, compared with $217.1 million for the first quarter of 2018.
  • GAAP operating income in the first quarter of 2019 was $22.3 million, compared with $25.4 million in the first quarter of 2018. Non-GAAP operating income in the first quarter of 2019 was $33.1 million, compared with $38.8 million in the first quarter of 2018.
  • Quarterly GAAP earnings per share were $0.78, compared with earnings per share of $0.71 in the first quarter of 2018. In Q1 2019, earnings per share included $0.14 of tax benefit relating primarily to stock compensation accounting, compared with a $0.05 tax benefit in Q1 2018. Quarterly non-GAAP earnings per share were $0.96 in 2019, compared with $1.04 in the first quarter of 2018.

Business Highlights

  • We delivered year-over-year Q1 quarterly revenue growth across all major regions. 
  • First-quarter revenue grew 7% in the U.S. and 12% internationally over Q1 2018.
  • Our investments in R&D continue as planned, and our two new product introductions are on schedule for launch in the second quarter.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 28, 2019.

Fiscal Year 2019:

Current

Previous




Revenue

$1.28 - $1.31 billion

$1.28 - $1.31 billion

Operating Income

$108 - $118 million

$108 - $118 million

Earnings Per Share (before discrete items)

$3.15 - $3.40

$3.00 - $3.25

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 of 2019, business outlook, and outlook for fiscal year 2019 financial performance. Pertinent details include: 

           Date:

Wednesday, April 24, 2019

           Time:

8:30 a.m. ET

           Call-In Number:

213-358-0894

           Passcode:

9766025

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/events/event-details/q1-2019-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 May 1, and can be accessed by dialing 404-537-3406, passcode 9766025.

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® Robot Vacuum in 2002. Today, iRobot is a global enterprise that has sold more than 25 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 engineers are building an ecosystem of robots and technologies 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; growth and investment strategy; demand for robots; new product introductions; broadening manufacturing and supply chain capabilities; and anticipated revenue, operating income and earnings per share for the fiscal year ending December 28, 2019. 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.

iRobot Corporation

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)










For the three months ended


March 30, 2019


March 31, 2018





Revenue

$           237,661


$           217,068

Cost of revenue:




Cost of product revenue

115,038


96,501

Amortization of acquired intangible assets

3,077


4,782

Total cost of revenue

118,115


101,283





Gross profit

119,546


115,785





Operating expenses:




Research and development

35,269


32,945

Selling and marketing

38,836


31,329

General and administrative

22,907


25,833

Amortization of acquired intangible assets

271


273

Total operating expenses

97,283


90,380





Operating income

22,263


25,405





Other income, net

1,280


519





Income before income taxes

23,543


25,924

Income tax expense

1,023


5,523

Net income

$             22,520


$             20,401





Net income per share:




Basic

$                 0.81


$                 0.73

Diluted

$                 0.78


$                 0.71





Number of shares used in per share calculations:



Basic

27,863


27,988

Diluted

28,763


28,923









Stock-based compensation included in above figures:

Cost of revenue

$                  378


$                  341

Research and development

2,379


1,689

Selling and marketing

802


738

General and administrative

3,305


3,178

Total

$               6,864


$               5,946

 

 

iRobot Corporation

Condensed Consolidated Balance Sheets

(unaudited, in thousands)






March 30, 2019


December 29, 2018





Assets








Cash and cash equivalents

$           173,094


$                  130,373

Short term investments

27,363


31,605

Accounts receivable, net

54,496


162,166

Inventory

181,128


164,633

Other current assets

30,526


25,660

Total current assets

466,607


514,437

Property and equipment, net

66,616


57,026

Operating lease right-of-use assets

51,418


-

Deferred tax assets

32,921


36,979

Goodwill

117,546


118,896

Intangible assets, net

20,689


24,273

Other assets

23,305


15,350

Total assets

$           779,102


$                  766,961





Liabilities and stockholders' equity








Accounts payable

$             84,690


$                  136,742

Accrued expenses

54,869


71,259

Deferred revenue and customer advances

5,267


5,756

Total current liabilities

144,826


213,757

Operating lease liabilities

59,805


-

Deferred tax liabilities

3,296


4,005

Other long-term liabilities

8,552


13,877

Total long-term liabilities

71,653


17,882

Total liabilities

216,479


231,639

Stockholders' equity

562,623


535,322

Total liabilities and stockholders' equity

$           779,102


$                  766,961

 

iRobot Corporation

Consolidated Statements of Cash Flows

(unaudited, in thousands)










For the three months ended


March 30, 2019


March 31, 2018

Cash flows from operating activities:




Net income

$             22,520


$             20,401

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




Depreciation and amortization

8,724


8,716

Stock-based compensation

6,864


5,946

Deferred income taxes, net

1,739


(3,061)

Other

1,542


1,514

Changes in operating assets and liabilities — (use) source




Accounts receivable

106,561


73,642

Inventory

(16,863)


(4,223)

Prepaid and other current assets

(2,913)


(6,114)

Accounts payable

(52,744)


(46,461)

Accrued expenses and other liabilities

(22,727)


(20,570)

Net cash provided by operating activities

52,703


29,790





Cash flows from investing activities:




Additions of property and equipment

(6,004)


(8,717)

Change in other assets

(1,977)


379

Purchases of investments


(6,438)

Sales and maturities of investments

2,380


3,500

Net cash used in investing activities

(5,601)


(11,276)





Cash flows from financing activities:




Proceeds from employee stock plans

2,563


399

Income tax withholding payment associated with restricted stock vesting

(7,212)


(3,478)

Net cash used in financing activities

(4,649)


(3,079)





Effect of exchange rate changes on cash and cash equivalents

268


431

Net increase in cash and cash equivalents

42,721


15,866

Cash and cash equivalents, at beginning of period

130,373


128,635

Cash and cash equivalents, at end of period

$           173,094


$           144,501

 

iRobot Corporation

Supplemental Information

(unaudited)










For the three months ended


March 30, 2019


March 31, 2018

Revenue: *








Consumer

$           237,661


$           217,068





Domestic

$           114,065


$           106,862

International

$           123,596


$           110,206





Gross margin

50.3 %


53.3 %





Consumer units shipped*

876


815

Vacuum

764


712

Mopping

112


103





Consumer revenue**

$                  238


$                  217

Vacuum***

$                  221


$                  201

Mopping***

$                    17


$                    16





Average gross selling prices for robot units - Consumer

$                  321


$                  309





Days sales outstanding

21


29





Days in inventory

140


101





Headcount

1,072


954









* in thousands




** in millions




*** includes accessory revenue




iRobot Corporation
Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this earnings release contains references to the non-GAAP financial measures described below. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items. We also provide a non-GAAP financial measure of Adjusted EBITDA, as described below. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Amortization of acquired intangible assets: Amortization of acquired intangible assets consists of amortization of intangible assets including completed technology, customer relationships, and reacquired distribution rights acquired in connection with business combinations.  Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions.  We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Net Merger, Acquisition and Divestiture (Income) Expense: Net merger, acquisition and divestiture (income) expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures. The occurrence and amount of these costs will vary depending on the timing and size of these transactions.  We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Stock-Based Compensation: Stock-based compensation is a non-cash charge relating to stock-based awards. We exclude this expense as it is a non-cash expense, and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies.

IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising infringements, or to oppose or defend against interparty actions related to intellectual property. Any settlement payment or proceeds resulting from these infringements are included or netted against the costs. We exclude these costs from our non-GAAP measures as we do not believe these costs have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigations and settlements.

Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes fair value adjustments, realized gains and losses on the sales of these investments and losses on the impairment of these investments. We exclude these items from our non-GAAP measures because we do not believe they correlate to the performance of our core business and may vary in size based on market conditions and events. We believe that the exclusion of these gains or losses provides investors with a supplemental view of our operational performance.

Income tax adjustments: Income tax adjustments include the tax effect of the non-GAAP adjustments, calculated using the appropriate statutory tax rate for each adjustment. We also exclude certain tax items that are not reflective of income tax expense incurred as a result of current period earnings.  These certain tax items include, among other non-recurring tax items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based compensation windfall benefits. We believe disclosure of the income tax provision before the effect of such tax items is important to permit investors' consistent earnings comparison between periods.

Adjusted EBITDA:  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.  Management believes this non-GAAP measure is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

 

iRobot Corporation

Supplemental Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited, in thousands)










For the three months ended


March 30, 2019


March 31, 2018

GAAP Net Income

$             22,520


$             20,401





Interest income, net

(848)


(299)

Income tax expense

1,023


5,523

Depreciation

5,376


3,661

Amortization of acquired intangible assets

3,348


5,055





EBITDA

31,419


34,341









Stock-based compensation

6,864


5,946

Net merger, acquisition and divestiture (income) expense

152


(141)

IP litigation expense, net

469


2,571





Adjusted EBITDA

$             38,904


$             42,717

Adjusted EBITDA as a % of revenue

16.4 %


19.7 %

 

iRobot Corporation

Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals

(in thousands, except per share amounts)

(unaudited)










For the three months ended


March 30, 2019


March 31, 2018

GAAP Revenue

$                     237,661


$                          217,068





GAAP Gross Profit

119,546


115,785

Amortization of acquired intangible assets

3,077


4,782

Stock-based compensation

378


341

Non-GAAP Gross Profit

$                     123,001


$                          120,908





GAAP Operating Income

$                       22,263


$                            25,405

Amortization of acquired intangible assets

3,348


5,055

Stock-based compensation

6,864


5,946

Net merger, acquisition and divestiture (income) expense

152


(141)

IP litigation expense, net

469


2,571

Non-GAAP Operating Income

$                       33,096


$                            38,836





GAAP Income Tax Expense

$                         1,023


$                              5,523

Tax effect of non-GAAP adjustments

1,824


3,340

Other tax adjustments

4,067


712

Non-GAAP Income Tax Expense

$                         6,914


$                              9,575





GAAP Net Income

$                       22,520


$                            20,401

Amortization of acquired intangible assets

3,348


5,055

Stock-based compensation

6,864


5,946

Net merger, acquisition and divestiture (income) expense

152


(141)

IP litigation expense, net

469


2,571

(Gain)/loss on strategic investments

57


281

Income tax effect

(5,891)


(4,052)

Non-GAAP Net Income

$                       27,519


$                            30,061





GAAP Net Income Per Diluted Share

$                           0.78


$                                0.71

Amortization of acquired intangible assets

0.12


0.17

Stock-based compensation

0.24


0.20

Net merger, acquisition and divestiture (income) expense


IP litigation expense, net

0.02


0.09

(Gain)/loss on strategic investments


0.01

Income tax effect

(0.20)


(0.14)

Non-GAAP Net Income Per Diluted Share

$                           0.96


$                                1.04

 

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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