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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of report (Date of earliest event reported): October 24, 2017


 iROBOT CORPORATION 

(Exact Name of Registrant as Specified in its Charter)

 
Delaware
 
 
(State or other jurisdiction of
incorporation or organization)
 
001-36414
 
77-0259 335
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
8 Crosby Drive, Bedford, MA
 
01730
(Address of principal executive offices)
 
(Zip Code)


Registrant's telephone number, including area code: (781) 430-3000


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 




Item 2.02 Results of Operations and Financial Condition.

On October 24, 2017, iRobot Corporation announced its financial results for the fiscal quarter ended September 30, 2017. A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:

Exhibit No.
 
Description
 
 
 
99.1
 
Press Release issued by the registrant on October 24, 2017, furnished herewith.


































SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: October 24, 2017
 
iRobot Corporation
 
 
 
 
 
 
 
 
By: /s/ Glen D. Weinstein
 
 
Name: Glen D. Weinstein
 
 
Title: Chief Legal Officer and Secretary








































EXHIBIT INDEX

Exhibit No.
 
Description
 
 
 
 
Press Release issued by the registrant on October 24, 2017, furnished herewith.



Exhibit


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 Strong Third-Quarter Financial Results
Increases Full-Year 2017 Financial Expectations; U.S. Q3 Revenue Up 34%

BEDFORD, Mass., October 24, 2017 - iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 30, 2017.

“We delivered another outstanding quarter in which total revenue grew 22% over Q3 last year. Based on our Q3 results, and on our Q4 outlook fueled by continued positive momentum in the United States and in EMEA, where growth is accelerating, we are increasing our full-year 2017 financial expectations. The U.S. and EMEA are now expected to grow 40% and 45% respectively for the full year.

“And, we expect 2017 revenue of $870 to $880 million, a 33 - 34% increase over 2016 consumer revenue, operating income of between $55 and $65 million, and EPS of between $1.65 and $2.00, including the impact of our recent European distributor acquisition,” said Colin Angle, chairman and chief executive officer of iRobot.

“U.S. household penetration of robotic vacuum cleaners is still less than 10%, so there is plenty of runway domestically and even more overseas. With the leading global segment share, at a time when adoption is accelerating, we are in an excellent position to capitalize on the momentum to drive future growth.”

Financial Results

•
Revenue for the third quarter of 2017 was $205.4 million, compared with $168.6 million for the third quarter of 2016.
•
Operating income in the third quarter of 2017 was $23.9 million, compared with $27.5 million in the third quarter of 2016.
•
Quarterly earnings per share were $0.76 for the third quarter of 2017, compared with $0.70 in the third quarter of 2016. Third-quarter 2017 EPS included a discrete tax benefit of $0.16 relating to the new 2017 stock compensation accounting standard and $0.08 from an adjustment to the original purchase price allocation for Japan.

Business Highlights

•
In the third quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q3 revenue growth of 22%. Third-quarter consumer revenue grew 34% in the United States, 31% in EMEA, and 65% in Japan over Q3 2016.
•
We successfully completed the acquisition of our largest European distributor, which we expect will enable us to capitalize on the current market momentum and drive robotic floor care adoption in EMEA.
•
We announced an agreement with Micro-Star International Co. representing an early 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 30, 2017.

(Dollars in millions except Earnings Per Share)

Fiscal Year 2017
Previous
Current
Revenue
$840 - $860
$870 - $880
Operating Income
$50 - $60
$55 - $65
Earnings Per Share
$1.35 - $1.70
$1.65 - $2.00

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 of 2017 and outlook for the fourth fiscal quarter of 2017 and fiscal year 2017 financial performance.
 
Pertinent details include:

Date:
Wednesday, October 25
Time:
8:30 a.m. ET
Call-In Number:
213-358-0894
Passcode:
15414375

A live, audio broadcast of the conference call also will be available at:
http://investor.irobot.com/events/event-details/q3-2017-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 November 1, and can be accessed by dialing 404-537-3406, passcode 15414375.

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 our robots; 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, merger, acquisition and divestiture expense, gain on business acquisition, restructuring expense, net intellectual property litigation expense, and non-cash stock compensation 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 30,
2017
 
October 1,
2016
 
September 30,
2017
 
October 1,
2016
Revenue
$
205,399

 
$
168,610

 
$
557,014

 
$
448,110

Cost of revenue
103,016

 
87,550

 
277,397

 
235,437

Gross margin
102,383

 
81,060

 
279,617

 
212,673

Operating expenses:
 
 
 
 
 
 
 
  Research and development
28,843

 
19,672

 
80,518

 
57,944

  Selling and marketing
28,646

 
17,925

 
91,344

 
66,972

  General and administrative
21,002

 
16,012

 
58,137

 
48,919

      Total operating expenses
78,491

 
53,609

 
229,999

 
173,835

Operating income
23,892

 
27,451

 
49,618

 
38,838

Other income, net
2,601

 
523

 
4,290

 
2,142

Income before income taxes
26,493

 
27,974

 
53,908

 
40,980

Income tax expense
4,411

 
8,462

 
7,565

 
12,722

Net income
$
22,082

 
$
19,512

 
$
46,343

 
$
28,258

 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
   Basic
$
0.80

 
$
0.72

 
$
1.68

 
$
1.01

   Diluted
$
0.76

 
$
0.70

 
$
1.61

 
$
0.99

 
 
 
 
 
 
 
 
Number of shares used in per share calculations
 
 
 
 
 
 
 
   Basic
27,739

 
27,237

 
27,520

 
27,878

   Diluted
28,916

 
27,778

 
28,719

 
28,423

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
 
 
 
 
        Cost of revenue
$
274

 
$
184

 
$
751

 
$
555

        Research and development
1,261

 
1,028

 
3,508

 
2,598

        Selling and marketing
728

 
444

 
1,869

 
1,316

        General and administrative
2,771

 
2,247

 
7,941

 
7,312

            Total
$
5,034

 
$
3,903

 
$
14,069

 
$
11,781

 
 
 
 
 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
September 30,
2017
 
December 31,
2016
 
 
 
 
 Assets
 
 
 
 Cash and cash equivalents
$
241,786

 
$
214,523

 Short term investments
36,442

 
39,930

 Accounts receivable, net
76,956

 
72,909

 Unbilled revenue
1,668

 
139

 Inventory
92,813

 
50,578

 Other current assets
18,395

 
5,591

   Total current assets
468,060

 
383,670

 Property and equipment, net
37,093

 
27,532

 Deferred tax assets
35,088

 
30,585

 Goodwill
41,041

 
41,041

 Intangible assets, net
15,315

 
12,207

 Other assets
14,064

 
12,877

 Total assets
$
610,661

 
$
507,912

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
88,798

 
$
67,281

 Accrued expenses
28,949

 
19,854

 Accrued compensation
23,773

 
21,015

 Deferred revenue and customer advances
4,607

 
4,486

   Total current liabilities
146,127

 
112,636

 Long term liabilities
8,042

 
6,320

 Stockholders' equity
456,492

 
388,956

 Total liabilities and stockholders' equity
$
610,661

 
$
507,912

 
 
 
 





 iRobot Corporation
Condensed Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
For the nine months ended
 
September 30,
2017
 
October 1,
2016
Cash flows from operating activities:
 
 
 
Net income
$
46,343

 
$
28,258

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
14,569

 
10,376

Loss on equity method investment
32

 
—

Impairment on cost method investment
155

 
—

Gain on sale of business unit and cost method investment
(1,056
)
 
(1,067
)
Gain on business acquisition
(2,243
)
 
—

Stock-based compensation
14,069

 
11,781

Deferred income taxes, net
(3,226
)
 
6,314

Tax benefit of excess stock-based compensation deductions
—

 
(1,115
)
Non-cash director deferred compensation
49

 
66

Changes in operating assets and liabilities — (use) source
 
 
 
Accounts receivable and unbilled revenue
(10,957
)
 
30,979

Inventory
(23,944
)
 
(11,472
)
Other assets
(11,099
)
 
(1,579
)
Accounts payable
20,824

 
(2,261
)
Accrued liabilities
7,034

 
(56
)
Deferred revenue and customer advances
(965
)
 
(193
)
Long term liabilities
1,513

 
(2,997
)
Net cash provided by operating activities
51,098

 
67,034

 
 
 
 
Cash flows from investing activities:
 
 
 
Additions of property and equipment
(16,630
)
 
(8,352
)
Change in other assets
(1,374
)
 
(435
)
Proceeds from sale of business unit and cost method investment
1,056

 
24,154

Cash paid for business acquisition, net of cash acquired
(16,524
)
 
—

Purchase of investments
(7,034
)
 
(16,556
)
Sales and maturities of investments
10,500

 
11,502

Net cash provided by (used in) investing activities
(30,006
)
 
10,313

 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from stock option exercises
8,990

 
4,496

Income tax withholding payment associated with restricted stock vesting
(2,974
)
 
(1,300
)
Stock repurchases
—

 
(97,021
)
Tax benefit of excess stock-based compensation deductions
—

 
1,115

Net cash provided by (used in) financing activities
6,016

 
(92,710
)
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
155

 
—

Net increase (decrease) in cash and cash equivalents
27,263

 
(15,363
)
Cash and cash equivalents, at beginning of period
214,523

 
179,915

Cash and cash equivalents, at end of period
$
241,786

 
$
164,552

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
For the nine months ended
 
September 30,
2017
 
October 1,
2016
 
September 30,
2017
 
October 1,
2016
 
 
 
 
 
 
 
 
Revenue: *
 
 
 
 
 
 
 
Consumer
$
205,360

 
$
167,962

 
$
556,757

 
$
443,754

    Domestic
$
87,626

 
$
65,466

 
$
269,998

 
$
195,109

    International
$
117,734

 
$
102,496

 
$
286,758

 
$
248,645

 
 
 
 
 
 
 
 
Defense & Security
$
—

 
$
—

 
$
—

 
$
3,075

 
 
 
 
 
 
 
 
Gross Margin Percent
49.8
%
 
48.1
%
 
50.2
%
 
47.5
%
 
 
 
 
 
 
 
 
Consumer units shipped*
906

 
779

 
2,358

 
2,002

Vacuum
774

 
602

 
1,994

 
1,678

Mopping
131

 
170

 
362

 
308

 
 
 
 
 
 
 
 
Consumer revenue**
$
205

 
$
168

 
$
557

 
$
444

Vacuum***
$
186

 
$
144

 
$
504

 
$
402

Mopping***
$
21

 
$
23

 
$
55

 
$
42

 
 
 
 
 
 
 
 
Average gross selling prices for robot units - Consumer
$
249

 
$
229

 
$
260

 
$
240

 
 
 
 
 
 
 
 
Days sales outstanding
35

 
37

 
35

 
37

 
 
 
 
 
 
 
 
Days in inventory
82

 
64

 
82

 
64

 
 
 
 
 
 
 
 
Headcount
798

 
572

 
798

 
572

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




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
For the nine months ended
 
September 30,
2017
 
October 1,
2016
 
September 30,
2017
 
October 1,
2016
 
 
 
 
 
 
 
 
 Net income
$
22,082

 
$
19,512

 
$
46,343

 
$
28,258

 
 
 
 
 
 
 
 
 Interest income, net
(558
)
 
(217
)
 
(1,423
)
 
(687
)
 Income tax expense
4,411

 
8,462

 
7,564

 
12,722

 Depreciation
3,350

 
2,533

 
8,888

 
7,446

 Amortization
2,419

 
909

 
5,605

 
2,725

 
 
 
 
 
 
 
 
 EBITDA
31,704

 
31,199

 
66,977

 
50,464

 
 
 
 
 
 
 
 
 Stock-based compensation expense
5,034

 
3,903

 
14,069

 
11,781

 Net merger, acquisition and divestiture expense
681

 
376

 
2,452

 
1,229

 Gain on business acquisition
(2,243
)
 
—

 
(2,243
)
 
—

 Net intellectual property litigation expense
1,266

 
103

 
1,910

 
464

 Restructuring (income) expense
—

 
(37
)
 
—

 
1,665

 
 
 
 
 
 
 
 
 Adjusted EBITDA
$
36,442

 
$
35,544

 
$
83,165

 
$
65,603

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 (income) 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
 
Actual
 
 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)
 
($0.03)
 
($0.39 - 0.24)
 
($0.45 - 0.30)