News Release

iRobot Reports First-Quarter Financial Results
Strength in All Regions Drives 32% Year-Over-Year Consumer Revenue Growth and Higher Full-Year Expectations

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

"Our first quarter results were outstanding. Building off the strong momentum we experienced during the year-end holidays, iRobot delivered first quarter 2017 consumer revenue growth of 32% due to growth across all regions," said Colin Angle, chairman and chief executive officer of iRobot.

"We also achieved an important strategic initiative with the completion of the purchase of our Japanese distributor shortly after the close of the first quarter. Based on our Q1 results and our outlook for the rest of 2017, we are increasing our full-year financial expectations. We now expect 2017 revenue of $780 to $790 million, EPS of between $1.45 and $1.70 and operating income of $60 to $70 million.   

"These expectations reflect our confidence that the momentum we built during the 2016 holiday season, particularly in the United States and EMEA, will continue throughout 2017. In addition, greater control over marketing in China and Japan will enable us to accelerate growth in those regions.

"We are off to a great start in 2017 and tracking well to our near and longer term plans."

Financial Results

  • Revenue for the first quarter of 2017 was $168.5 million, compared with $130.8 million for the first quarter of 2016. Q1 2016 included $3.0 million of revenue from the Defense & Security business divested at the beginning of Q2 2016.
  • Net income for the first quarter of 2017 was $16.4 million, compared with net income of $3.9 million for the first quarter of 2016.
  • Quarterly earnings per share were $0.58, compared with earnings per share of $0.13 in the first quarter of 2016. The divestiture of the Defense & Security business negatively impacted Q1 2016 earnings per share by ($0.12). In addition, in Q1 2017, we adopted the new accounting standard related to stock compensation expense. As a result, we recorded a $0.06 discrete tax benefit.
  • Adjusted EBITDA for the first quarter of 2017 was $30.2 million, compared with $14.1 million in the first quarter of 2016.

Business Highlights

  • We delivered year-over-year Q1 quarterly revenue growth in the United States of 34% over record growth in Q1 last year.
  • International revenue grew 29% in the first quarter, driven by growth in all overseas regions. China was up 23%; Japan was up 21%; and EMEA was up 36% in Q1 2017 from a year ago.
  • Shortly after the end of the quarter, we closed the previously announced acquisition of our Japanese distributor, enabling us to extend our leadership position and accelerate the growth of our business in Japan.
  • We recently filed a legal action against several well-known appliance brands and Chinese manufacturers in the United States District Court and with the International Trade Commission after determining that each had infringed on numerous iRobot patents.

Financial Expectations

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

Fiscal Year 2017:             

Current           

Previous                                

Revenue                     

$780 - $790 million      

$770 - $785 million                

Earnings Per Share           

$1.45 - $1.70         

$1.35 - $1.65  

Operating Income           

$60 - $70 million   

$57 - $70 million                    

 

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 2017, business outlook, and outlook for fiscal year 2017 financial performance. Pertinent details include:

Date:            

Wednesday, April 26, 2017  

Time:            

8:30 a.m. ET

Call-In Number:  

213-358-0894

Passcode:        

15400565

 

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=5242675. 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 3, and can be accessed by dialing 404-537-3406, passcode 15400565.

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 and growth, revenue growth, demand for our robots, the impact of our marketing efforts including, without limitation, in China and Japan, and anticipated revenue, earnings per share and operating income 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 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, 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



April 1,

April 2,



2017

2016






Revenue

$       168,467

$       130,804


Cost of revenue

81,124

68,843






Gross margin

87,343

61,961






Operating expenses:




  Research and development

25,508

19,728


  Selling and marketing

22,575

19,940


  General and administrative

17,622

16,764


      Total operating expenses

65,705

56,432






Operating income

21,638

5,529






Other income, net

3

200






Income before income taxes

21,641

5,729


Income tax expense

5,282

1,797


Net income

$         16,359

$           3,932






Net income per share




   Basic

$            0.60

$            0.14


   Diluted

$            0.58

$            0.13






Number of shares used in per share calculations




   Basic

27,304

29,004


   Diluted

28,295

29,474










Stock-based compensation included in above figures:




        Cost of revenue

$             226

$             221


        Research and development

1,099

829


        Selling and marketing

570

485


        General and administrative

2,436

2,357


            Total

$           4,331

$           3,892






 

 

iRobot Corporation

 Condensed Consolidated Balance Sheets

 (unaudited, in thousands)






April 1,


 December 31,


2017


2016





 Assets








 Cash and cash equivalents

$          235,728


$        214,523

 Short term investments

39,942


39,930

 Accounts receivable, net

47,780


72,909

 Unbilled revenue

112


139

 Inventory

57,125


50,578

 Other current assets

7,317


5,591

   Total current assets

388,004


383,670

 Property and equipment, net

29,250


27,532

 Deferred tax assets

31,429


30,585

 Goodwill

41,041


41,041

 Intangible assets, net

11,343


12,207

 Other assets

13,214


12,877

 Total assets

$          514,281


$        507,912





 Liabilities and stockholders' equity








 Accounts payable

$           63,177


$          67,281

 Accrued expenses

21,343


19,854

 Accrued compensation

11,348


21,015

 Deferred revenue and customer advances

4,202


4,486

   Total current liabilities

100,070


112,636

 Long term liabilities

5,764


6,320

 Stockholders' equity

408,447


388,956

 Total liabilities and stockholders' equity

$          514,281


$        507,912





 

 

iRobot Corporation

  Consolidated Statements of Cash Flows

 (unaudited, in thousands)








 For the three months ended


April 1,

 April 2,


2017

2016

Cash flows from operating activities:



Net income

$       16,359

$         3,932

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



Depreciation and amortization

3,486

3,375

Loss on disposal of property and equipment

42

-

Loss on equity method investment

11

-

Impairment on cost method investment

155

-

Stock-based compensation

4,331

3,892

Deferred income taxes, net

17

(47)

Tax benefit of excess stock-based compensation deductions

-

(267)

Non-cash director deferred compensation

16

33

Changes in operating assets and liabilities — (use) source



Accounts receivable

25,128

69,879

Unbilled revenue

27

185

Inventory

(6,546)

(3,167)

Other assets

(1,745)

(2,985)

Accounts payable

(5,026)

(20,626)

Accrued expenses

1,016

(2,673)

Accrued compensation

(9,670)

(4,055)

Deferred revenue and customer advances

(284)

1,144

Long term liabilities

(558)

3

Net cash provided by operating activities

26,759

48,623




Cash flows from investing activities:



Additions of property and equipment

(3,008)

(2,390)

Change in other assets

(504)

(523)

Purchase of investments

(3,498)

-

Sales and maturities of investments

3,500

2,500

Net cash used in investing activities

(3,510)

(413)




Cash flows from financing activities:



Proceeds from stock option exercises

722

837

Income tax withholding payment associated with restricted stock vesting

(2,778)

(1,218)

Stock repurchases

-

(12,021)

Tax benefit of excess stock-based compensation deductions

-

267

Net cash used in financing activities

(2,056)

(12,135)




Effect of exchange rate changes on cash and cash equivalents

12

-

Net increase in cash and cash equivalents

21,205

36,075

Cash and cash equivalents, at beginning of period

214,523

179,915

Cash and cash equivalents, at end of period

$     235,728

$     215,990




 

 

iRobot Corporation

Supplemental Information

(unaudited)










 For the three months ended



April 1,

April 2,



2017

2016






Revenue: *








Consumer

$        168,248

$        127,687






    Domestic

$          84,789

$          63,158


    International

$          83,459

$          64,529










Defense & Security

$                 -

$            3,075










Gross Margin Percent

51.8%

47.4%










Consumer units shipped*

704

550


      Vacuum

582

478


      Mopping

121

67


      Other

1

5






Consumer revenue**

168

128


      Vacuum***

151

118


      Mopping***

17

9


      Other

-

1














Days sales outstanding

26

24






Days in inventory

64

86






Headcount

636

633










* in thousands




** in millions




*** includes accessory revenue




 

 

iRobot Corporation 

 Adjusted EBITDA Reconciliation to GAAP

 (unaudited, in thousands)










 For the three months ended



April 1,

April 2,



2017

2016






 Net income

$          16,359

$            3,932






 Interest income, net

(383)

(272)


 Income tax expense

5,282

1,797


 Depreciation

2,580

2,467


 Amortization

906

908






 EBITDA

24,744

8,832










 Stock-based compensation expense

4,331

3,892


 Net merger, acquisition and divestiture expense

840

1,358


 Net intellectual property litigation expense

262

56


 Restructuring expense

-

-






 Adjusted EBITDA

$          30,177

$          14,138







 

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, 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 Japan Acquisition*

 (in millions, except per share amounts)

 (unaudited)
































 Fiscal year 2017


 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

-


 ($12) - ($10)


 $10 - $15


 $5 - $10


 $10 - $12































 Net income (loss) per share

($0.02)


 ($0.60 - $0.55)


 ($0.05) - $0.00


 $0.05 - $0.10


 ($0.60 - 0.50)





















 * Closed 4/3/17; 45 days to finalize purchase price

















 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/irobot-reports-first-quarter-financial-results-300445480.html

SOURCE iRobot Corp.

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