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Q42013EarningsRelease


 
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): February 5, 2014


 iROBOT CORPORATION 

(Exact Name of Registrant as Specified in its Charter)

 
Delaware
 
 
(State or other jurisdiction of
incorporation or organization)
 
000-51598
 
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))
 





Item 2.02 Results of Operations and Financial Condition.

On February 5, 2014, iRobot Corporation announced its financial results for the fiscal quarter and year ended December 28, 2013. 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:
99.1     Press Release issued by the registrant on February 5, 2014, 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.


iRobot Corporation

 
 
iRobot Corporation
 
 
 
 
 
 
February 5, 2014
 
By: /s/ Glen D. Weinstein
 
 
Name: Glen D. Weinstein
 
 
Title: Chief Legal Officer and Secretary






EXHIBIT INDEX


Exhibit
Number    Description
99.1         Press Release issued by the registrant on February 5, 2014, furnished herewith.




Q42013PressRelease


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 Fourth-Quarter and Full-Year Financial Results
Home Robot Business Grew 20 Percent in 2013, Expected to Drive Continued Growth in 2014

BEDFORD, Mass., Feb. 5, 2014 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the fourth quarter and full year ended December 28, 2013.

“2013 was a great year for iRobot. Our Home Robot business increased 20 percent over 2012, driven by growth in both domestic and overseas markets,” said Colin Angle, chairman and chief executive officer of iRobot. “All three of our businesses met our expectations and made significant progress against their strategic plans, setting us up well for 2014.

“In 2014, our financial performance will continue to be driven by our Home Robot business. Home Robot revenue is expected to grow in the mid-to-high teens in 2014 and comprise 90 percent of total company revenue. Our Defense & Security business is expected to perform at 2013 levels, and our Remote Presence business will be shipping product into two markets.

“For 2014, we expect revenue of $560 to $570 million, EPS of between $1.00 and $1.15 and Adjusted EBITDA of $74 to $78 million, or roughly 14 percent of revenue. These expectations are a strong next step in progressing towards our three-year targets of:
•
Mid-high teen revenue CAGR,
•
High teen Adjusted EBITDA margin and,
•
High single digit Operating Cash Flow margin”

Financial Results

•
Revenue for the fourth quarter of 2013 was $126.3 million, compared with $100.7 million for the fourth quarter of 2012. Revenue for the full year 2013 was $487.4 million, compared with $436.2 million for the full year 2012.
•
Net income for the fourth quarter of 2013 was $3.2 million, compared with a net loss of ($5.9) million for the fourth quarter of 2012. Net income for the full year 2013 was $27.6 million, compared with $17.3 million for full-year 2012.
•
Quarterly earnings per share were $0.11, compared with a quarterly loss per share of ($0.21) in the fourth quarter last year. Full-year earnings per share were $0.94, compared with $0.61 last year.
•
Adjusted EBITDA for the fourth quarter of 2013 was $12.8 million, compared with $1.0 million in the fourth quarter of 2012. Adjusted EBITDA for the full year 2013 was $62.2 million, compared with $52.5 million for full-year 2012.







Business Highlights

•
Full-year domestic Home Robot revenue growth of more than 30 percent, coupled with international Home Robot revenue growth of 14 percent, drove a 20 percent year-over-year increase in full-year Home Robot revenue. We continued to increase our investment in marketing programs in our Home Robot business, which resulted in greater brand awareness and revenue growth in that business.
•
We introduced and began shipping the Roomba 800 Series in late 2013. This next-generation floor vacuuming robot incorporates new dirt extractor technology which amplifies suction for superior performance over traditional bristle brushes. The Scooba 450, our newest wet floor scrubbing robot, was introduced and began shipping in January 2014.
•
Our Defense & Security business delivered results consistent with our expectations while continuing to reduce reliance on the U.S. Department of Defense.
•
We began shipping RP-VITA through InTouch Health into the healthcare market and announced the Ava 500 Video Collaboration Robot which blends together our autonomous navigation capabilities with Cisco’s TelePresence. The Ava 500 is targeted for availability from certified Cisco partners in the first half of 2014.
  
Financial Expectations

Management provides the following expectations with respect to the year ending December 27, 2014 and first quarter ending March 29, 2014.

Fiscal Year 2014:
 
 
Revenue
$560 - $570 million
 
Earnings Per Share
$1.00 - $1.15
 
Adjusted EBITDA
$74 - $78 million
 
 
 
 
Full-Year 2014 BU Revenue:
 
 
Home
$500 - $515 million
 
Defense & Security
$50 million
 
Remote Presence
$5 million
 
 
 
 
Q1 2014:
 
 
Revenue
$110 - $113 million
 
Earnings Per Share
$0.13 - $0.17
 
Adjusted EBITDA
$13 - $15 million
 
 
 
 

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 2013, business outlook, and outlook for 2014 financial performance. Pertinent details include:
 
Date:
Thursday, February 6, 2014
Time:
8:30 a.m. ET
Call-In Number:
847-619-6396
Passcode:
35939059




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=5041606. 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 13, and can be accessed by dialing 630-652-3042, passcode 35939059#.
 
About iRobot Corp.
iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, its defense & security robots protect those in harm’s way, and its remote presence robots enable virtual presence from anywhere in the world. iRobot’s consumer and military robots feature iRobot Aware® robot intelligence systems, proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence. 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, anticipated growth and performance of our businesses, demand for our robots, Home Robot revenue for fiscal year 2014, the timing of new product introductions, the timing of entry into new product markets, the availability of new products, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2014 and the first quarter ending March 29, 2014. 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, changes in government policies or spending priorities, 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 and amortization, merger and acquisition expenses, net intellectual property litigation expenses, restructuring expenses, and non-cash stock compensation. A reconciliation between net income (loss) 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 28, 2013
 
December 29, 2012
 
December 28, 2013
 
December 29, 2012
Revenue
 
 
 
 
 
 
 
  Product revenue
$
125,426

 
$
97,874

 
$
477,444

 
$
418,550

  Contract revenue
917

 
2,820

 
9,957

 
17,694

      Total
126,343

 
100,694

 
487,401

 
436,244

Cost of Revenue
 
 
 
 
 
 
 
  Product revenue
66,939

 
54,928

 
262,224

 
234,102

  Contract revenue
474

 
1,262

 
4,023

 
7,794

      Total
67,413

 
56,190

 
266,247

 
241,896

Gross Margin
58,930

 
44,504

 
221,154

 
194,348

Operating Expense
 
 
 
 
 
 
 
  Research & development
18,008

 
15,344

 
63,649

 
57,066

  Selling & marketing
22,199

 
24,727

 
71,529

 
66,412

  General & administrative
14,010

 
13,308

 
53,358

 
45,698

      Total
54,217

 
53,379

 
188,536

 
169,176

Operating income (loss)
4,713

 
(8,875
)
 
32,618

 
25,172

Other income (expense), net
(154
)
 
(42
)
 
(203
)
 
435

Income (loss) before income taxes
4,559

 
(8,917
)
 
32,415

 
25,607

Income tax expense (benefit)
1,371

 
(2,979
)
 
4,774

 
8,310

Net income (loss)
$
3,188

 
$
(5,938
)
 
$
27,641

 
$
17,297

 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
   Basic
$
0.11

 
$
(0.21
)
 
$
0.97

 
$
0.63

   Diluted
$
0.11

 
$
(0.21
)
 
$
0.94

 
$
0.61

 
 
 
 
 
 
 
 
Shares used in per common share calculations:
 
 
 
 
 
 
 
   Basic
28,902

 
27,802

 
28,495

 
27,577

   Diluted
29,712

 
27,802

 
29,354

 
28,301

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
 
 
 
 
        Cost of product revenue
$
204

 
$
174

 
$
700

 
$
889

        Research & development
737

 
633

 
2,700

 
1,904

        Selling & marketing
414

 
234

 
1,246

 
808

        General & administrative
2,385

 
1,919

 
8,763

 
7,382

            Total
$
3,740

 
$
2,960

 
$
13,409

 
$
10,983

 
 
 
 
 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
December 28, 2013
 
December 29, 2012
 
 
 
 
 Assets
 
 
 
 Cash and equivalents
$
165,404

 
$
126,770

 Short term investments
21,954

 
12,430

 Accounts receivable, net
39,348

 
29,413

 Unbilled revenues
856

 
1,196

 Inventory
46,107

 
36,965

 Deferred tax assets
20,144

 
19,266

 Other current assets
6,848

 
8,853

   Total current assets
300,661

 
234,893

 Property, plant and equipment, net
23,661

 
24,953

 Deferred tax assets
10,095

 
8,792

 Goodwill
48,751

 
48,951

 Intangible assets, net
22,668

 
28,224

 Other assets
10,501

 
8,500

 Total assets
$
416,337

 
$
354,313

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
41,344

 
$
42,515

 Accrued expenses
14,880

 
13,642

 Accrued compensation
19,606

 
11,864

 Deferred revenue and customer advances
5,085

 
6,257

   Total current liabilities
80,915

 
74,278

 Long term liabilities
4,733

 
4,218

 Stockholders' equity
330,689

 
275,817

 Total liabilities and stockholders' equity
$
416,337

 
$
354,313

 
 
 
 





 iRobot Corporation
  Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the twelve months ended
 
December 28, 2013
 
December 29, 2012
 
December 28, 2013
 
December 29, 2012
Cash flows from operating activities:
 
 
 
 
 
 
 
Net income (loss)
$
3,188

 
$
(5,938
)
 
$
27,641

 
$
17,297

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization
3,140

 
3,491

 
12,169

 
11,672

Loss on disposal of assets
540

 
554

 
189

 
1,332

Goodwill and intangible assets impairment
—

 
—

 
1,988

 
—

Stock-based compensation
3,740

 
2,960

 
13,409

 
10,983

Deferred income taxes, net
(106
)
 
(908
)
 
(768
)
 
(3,763
)
Tax benefit of excess stock based compensation deductions
(168
)
 
16

 
(2,406
)
 
(1,445
)
Non-cash director deferred compensation
11

 
23

 
44

 
87

Changes in operating assets and liabilities — (use) source
 
 
 
 
 
 
 
Accounts receivable
14,679

 
25,601

 
(9,935
)
 
15,560

Unbilled revenue
700

 
497

 
340

 
1,166

Inventory
2,708

 
696

 
(9,365
)
 
(807
)
Other assets
(717
)
 
(6,158
)
 
1,980

 
(2,892
)
Accounts payable
(5,872
)
 
1,405

 
(1,743
)
 
(8,684
)
Accrued expenses
1,471

 
(2,252
)
 
1,255

 
(656
)
Accrued compensation
4,747

 
2,736

 
7,751

 
(6,106
)
Deferred revenue and customer advances
3,059

 
4,139

 
(1,172
)
 
4,730

Change in long term liabilities
177

 
(298
)
 
515

 
(613
)
Net cash provided by operating activities
31,297

 
26,564

 
41,892

 
37,861

 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
Purchase of property and equipment
(1,705
)
 
(2,703
)
 
(6,829
)
 
(6,770
)
Change in other assets
—

 
—

 
(2,000
)
 
(6,000
)
Purchase of Evolution net of cash received
—

 
(74,530
)
 
—

 
(74,530
)
Purchases of investments
(5,049
)
 
—

 
(17,946
)
 
(5,086
)
Sales of investments
—

 
7,500

 
8,044

 
10,000

Proceeds from sale of assets
—

 
—

 
650

 
—

Net cash used in investing activities
(6,754
)
 
(69,733
)
 
(18,081
)
 
(82,386
)
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from stock option exercises
1,265

 
304

 
13,629

 
4,326

Income tax withholding payment associated with restricted stock vesting
(303
)
 
(7
)
 
(1,212
)
 
(784
)
Tax benefit of excess stock based compensation deductions
168

 
(16
)
 
2,406

 
1,445

Net cash provided by financing activities
1,130

 
281

 
14,823

 
4,987

 
 
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
25,673

 
(42,888
)
 
38,634

 
(39,538
)
Cash and cash equivalents, at beginning of period
139,731

 
169,658

 
126,770

 
166,308

Cash and cash equivalents, at end of period
$
165,404

 
$
126,770

 
$
165,404

 
$
126,770

 
 
 
 
 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the twelve months ended
 
December 28, 2013
 
December 29, 2012
 
December 28, 2013
 
December 29, 2012
 
 
 
 
 
 
 
 
Revenue: *
 
 
 
 
 
 
 
Home Robots
$
108,263

 
$
82,918

 
$
427,853

 
$
356,805

    Domestic
$
47,843

 
$
31,821

 
$
154,112

 
$
117,690

    International
$
60,420

 
$
51,097

 
$
273,741

 
$
239,115

 
 
 
 
 
 
 
 
Defense & Security
$
16,339

 
$
15,731

 
$
50,003

 
$
70,948

    Domestic
$
10,035

 
$
14,389

 
$
34,193

 
$
64,346

    International
$
6,304

 
$
1,342

 
$
15,810

 
$
6,602

    Product
$
16,321

 
$
13,773

 
$
45,612

 
$
57,092

    Contract
$
18

 
$
1,958

 
$
4,391

 
$
13,856

    Product Life Cycle
$
11,625

 
$
12,254

 
$
26,097

 
$
36,272

 
 
 
 
 
 
 
 
Gross Margin Percent:
 
 
 
 
 
 
 
    Home Robots
49.6
%
 
51.2
%
 
49.3
%
 
51.0
%
    Defense & Security
59.4
%
 
45.3
%
 
50.1
%
 
43.0
%
    Total Company
46.6
%
 
44.2
%
 
45.4
%
 
44.6
%
 
 
 
 
 
 
 
 
Units shipped:
 
 
 
 
 
 
 
    Home Robots *
494

 
387

 
1,933

 
1,621

    Defense & Security
49

 
29

 
534

 
274

 
 
 
 
 
 
 
 
Average gross selling prices for robot units:
 
 
 
 
 
 
 
    Home Robots
$
233

 
$
227

 
$
231

 
$
222

    Defense & Security *
$
96

 
$
52

 
$
36

 
$
76

 
 
 
 
 
 
 
 
Defense & Security Funded Product Backlog *
$
8,765

 
$
11,356

 
$
8,765

 
$
11,356

 
 
 
 
 
 
 
 
Days sales outstanding
29

 
28

 
29

 
28

 
 
 
 
 
 
 
 
Days in inventory
63

 
61

 
63

 
61

 
 
 
 
 
 
 
 
Headcount
528

 
534

 
528

 
534

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* in thousands
 
 
 
 
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the twelve months ended
 
December 28, 2013
 
December 29, 2012
 
December 28, 2013
 
December 29, 2012
 
 
 
 
 
 
 
 
 Net income (loss)
$
3,188

 
$
(5,938
)
 
$
27,641

 
$
17,297

 
 
 
 
 
 
 
 
 Interest income, net
(131
)
 
(201
)
 
(660
)
 
(1,016
)
 Income tax expense (benefit)
1,371

 
(2,979
)
 
4,774

 
8,310

 Depreciation
2,153

 
2,418

 
8,077

 
9,898

 Amortization
987

 
1,073

 
4,092

 
1,774

 
 
 
 
 
 
 
 
 EBITDA
7,568

 
(5,627
)
 
43,924

 
36,263

 
 
 
 
 
 
 
 
 Stock-based compensation expense
3,740

 
2,960

 
13,409

 
10,983

 Merger and acquisition expense
7

 
717

 
400

 
1,404

 Net intellectual property litigation expense
758

 
26

 
1,202

 
155

 Restructuring expense
721

 
2,905

 
3,296

 
3,679

 
 
 
 
 
 
 
 
 Adjusted EBITDA
$
12,794

 
$
981

 
$
62,231

 
$
52,484

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 and amortization, merger and acquisition expenses, net intellectual property litigation expenses, restructuring expenses and non-cash stock compensation. 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
8 Crosby Drive, Bedford, MA 01730-1402 Ù 781.430.3000 Ù Fax 781.430.3001 Ù www.irobot.com