BEDFORD, Mass., Oct. 25, 2016 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended October 1, 2016.

'Our third-quarter performance was outstanding. We delivered revenue and profitability exceeding our expectations. Based on our Q3 results and the excellent momentum we have going into the holiday season, created by our successful marketing programs, we are increasing our full-year financial expectations for the second quarter in a row. We now expect fiscal 2016 revenue of $650 to $655 million, Net Income of between $38 and $41 million, EPS of between $1.36 and $1.44, and Adjusted EBITDA of $88 to $92 million. These expectations reflect our increased confidence that 2016 growth in the United States, of more than 25%, will drive total consumer revenue growth of approximately 15% for the full year,' said Colin Angle, chairman and chief executive officer of iRobot.

'As we have said previously, the revenue split between Q3 and Q4 is always difficult to predict due to the timing and shipment of consumer products for the holiday season. This year, our new partner in China requested Q3 delivery of some Braava jet and Roomba orders that we were expecting to ship in Q4. This resulted in higher than anticipated consumer revenue and profitability in Q3.

'We are very excited about our results year-to-date and the outlook for the fourth quarter as our successful marketing programs continue to drive demand generation in the U.S. and overseas. It is very satisfying that, in this transformative year, our current full-year expectations are well above those we provided in February.'

Financial Results

  • Note: Financial results for the third quarter of 2015 include the Defense & Security business which was sold on April 4, 2016. There are no results for the Defense & Security business included in our financial results for the third quarter of 2016, other than support services provided by iRobot, recorded as other income.
  • Revenue for the third quarter of 2016 was $168.6 million, compared with $143.6 million for the third quarter of 2015.
  • Net income in the third quarter of 2016 was $19.5 million, compared with $12.8 million in the third quarter of 2015.
  • Quarterly earnings per share were $0.70 for the third quarter of 2016, compared with $0.42 in the third quarter of 2015.
  • Adjusted EBITDA for the third quarter of 2016 was $35.5 million, compared with $25.9 million in the third quarter of 2015.

Business Highlights

  • Year-over-year consumer quarterly revenue growth of 23% was driven by APAC following a very successful launch of Braava jet in that region.
  • Domestic revenue grew 13% over Q3 last year, and orders-in-hand plus anticipated Q4 orders support our expectation of substantial year-over-year quarterly growth in Q4.
  • We introduced the Roomba 960 and connectivity for Braava jet, expanding our suite of connected products for the home.

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and fiscal year ending December 31, 2016.

Q4 2016:

Revenue

$202 - $207 million

Net Income

$10 - $13 million

Earnings Per Share

$0.36 - $0.44

Adjusted EBITDA

$22 - $26 million

Fiscal Year 2016:

Revenue

$650 - $655 million

Net Income

$38 - $41 million

Earnings Per Share

$1.36 - $1.44

Adjusted EBITDA

$88 - $92 million

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 2016, business outlook, and outlook for fourth-quarter and fiscal year 2016 financial performance. Pertinent details include:

Date:

Wednesday, October 26, 2016

Time:

8:30 a.m. ET

Call-In Number:

847-619-6396

Passcode:

40924300

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=5206143.

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 3, and can be accessed by dialing 630-652-3042, passcode 40924300#.

About iRobot Corp.

iRobot designs and builds robots that empower people to do more. The company's home robots help people find smarter ways to clean and accomplish more in their daily lives. iRobot's portfolio of solutions features proprietary technologies for the connected home and advanced concepts in navigation, mobility 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, the impact of our marketing programs, demand for our robots, revenue growth, and anticipated revenue, net income, earnings per share and Adjusted EBITDA for fiscal year 2016 and the fourth quarter ending December 31, 2016. 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 (income) expense, and restructuring (income) 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

October 1,

September 26,

October 1,

September 26,

2016

2015

2016

2015

Revenue

$ 168,610

$ 143,609

$ 448,110

$ 410,358

Cost of revenue

87,550

73,751

235,437

216,759

Gross margin

81,060

69,858

212,673

193,599

Operating expenses:

Research and development

19,672

18,122

57,944

55,886

Selling and marketing

17,925

19,379

66,972

60,896

General and administrative

16,012

13,701

48,919

39,195

Total operating expenses

53,609

51,202

173,835

155,977

Operating income

27,451

18,656

38,838

37,622

Other income (expense), net

523

(93)

2,142

(948)

Income before income taxes

27,974

18,563

40,980

36,674

Income tax expense

8,462

5,770

12,722

11,875

Net income

$ 19,512

$ 12,793

$ 28,258

$ 24,799

Net income per share

Basic

$ 0.72

$ 0.43

$ 1.01

$ 0.84

Diluted

$ 0.70

$ 0.42

$ 0.99

$ 0.82

Number of shares used in per share calculations

Basic

27,237

29,654

27,878

29,697

Diluted

27,778

30,117

28,423

30,253

Stock-based compensation included in above figures:

Cost of revenue

$ 184

$ 270

$ 555

$ 662

Research and development

1,028

963

2,598

2,737

Selling and marketing

444

474

1,316

1,089

General and administrative

2,247

2,193

7,312

5,974

Total

$ 3,903

$ 3,900

$ 11,781

$ 10,462

iRobot Corporation

Condensed Consolidated Balance Sheets

(unaudited, in thousands)

October 1,

January 2,

2016

2016

Assets

Cash and cash equivalents

$ 164,552

$ 179,915

Short term investments

38,179

33,124

Accounts receivable, net

67,612

104,679

Unbilled revenue

139

452

Inventory

61,069

61,678

Other current assets

10,357

9,501

Total current assets

341,908

389,349

Property and equipment, net

26,745

26,850

Deferred tax assets

26,018

31,721

Goodwill

41,041

48,751

Intangible assets, net

13,071

15,664

Other assets

9,843

9,408

Total assets

$ 458,626

$ 521,743

Liabilities and stockholders' equity

Accounts payable

$ 57,662

$ 61,655

Accrued expenses

13,662

15,954

Accrued compensation

17,257

15,752

Deferred revenue and customer advances

1,297

3,265

Total current liabilities

89,878

96,626

Long term liabilities

4,231

7,706

Stockholders' equity

364,517

417,411

Total liabilities and stockholders' equity

$ 458,626

$ 521,743

iRobot Corporation

Consolidated Statements of Cash Flows

(unaudited, in thousands)

For the nine months ended

October 1,

September 26,

2016

2015

Cash flows from operating activities:

Net income

$ 28,258

$ 24,799

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

Depreciation and amortization

10,171

10,569

Loss on disposal of property and equipment

205

201

Gain on sale of business unit

(433)

-

Gain on sale of cost method investment

(634)

-

Stock-based compensation

11,781

10,462

Deferred income taxes, net

6,314

2,289

Tax benefit of excess stock-based compensation deductions

(1,115)

(795)

Non-cash director deferred compensation

66

112

Changes in operating assets and liabilities - (use) source

Accounts receivable

30,781

(5,258)

Unbilled revenue

198

2,034

Inventory

(11,472)

(10,965)

Other assets

(1,579)

1,296

Accounts payable

(2,261)

(1,285)

Accrued expenses

(2,046)

(6,127)

Accrued compensation

1,990

(5,082)

Deferred revenue and customer advances

(193)

(1,570)

Long term liabilities

(2,997)

(703)

Net cash provided by operating activities

67,034

19,977

Cash flows from investing activities:

Additions of property and equipment

(8,352)

(7,557)

Change in other assets

(435)

(1,015)

Proceeds from sale of business unit

23,520

-

Purchase of investments

(16,556)

(17,755)

Sales of investments

11,502

18,000

Proceeds from sale of cost method investment

634

-

Net cash provided by (used in) investing activities

10,313

(8,327)

Cash flows from financing activities:

Proceeds from stock option exercises

4,496

3,385

Income tax withholding payment associated with restricted stock vesting

(1,300)

(1,295)

Stock repurchases

(97,021)

(24,062)

Tax benefit of excess stock-based compensation deductions

1,115

795

Net cash used in financing activities

(92,710)

(21,177)

Net decrease in cash and cash equivalents

(15,363)

(9,527)

Cash and cash equivalents, at beginning of period

179,915

185,957

Cash and cash equivalents, at end of period

$ 164,552

$ 176,430

iRobot Corporation

Supplemental Information

(unaudited)

For the three months ended

For the nine months ended

October 1,

September 26,

October 1,

September 26,

2016

2015

2016

2015

Revenue: *

Consumer

$ 167,962

$ 136,513

$ 443,754

$ 384,422

Domestic

$ 65,466

$ 57,782

$ 195,109

$ 150,587

International

$ 102,496

$ 78,731

$ 248,645

$ 233,835

Defense & Security

$ -

$ 6,184

$ 3,075

$ 24,500

Gross Margin Percent:

Consumer

51.3%

52.7%

51.6%

51.7%

Defense & Security

0.0%

42.9%

16.6%

40.0%

Total Company

48.1%

48.6%

47.5%

47.2%

Units shipped - Consumer *

779

582

2,002

1,665

Average gross selling prices for robot units - Consumer

$ 229

$ 252

$ 240

$ 246

Days sales outstanding

37

49

37

49

Days in inventory

64

73

64

73

Headcount

572

606

572

606

* in thousands

iRobot Corporation

Adjusted EBITDA Reconciliation to GAAP

(unaudited, in thousands)

For the three months ended

For the nine months ended

October 1,

September 26,

October 1,

September 26,

2016

2015

2016

2015

Net income

$ 19,512

$ 12,793

$ 28,258

$ 24,799

Interest income, net

(217)

(152)

(687)

(482)

Income tax expense

8,462

5,770

12,722

11,875

Depreciation

2,533

2,626

7,446

7,776

Amortization

909

932

2,725

2,793

EBITDA

31,199

21,969

50,464

46,761

Stock-based compensation expense

3,903

3,900

11,781

10,462

Net merger, acquisition and divestiture expense

376

-

1,229

-

Net intellectual property litigation (income) expense

103

(13)

464

(493)

Restructuring (income) expense

(37)

-

1,665

-

Adjusted EBITDA

$ 35,544

$ 25,856

$ 65,603

$ 56,730

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 (income) 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

Reconciliation of GAAP to Non-GAAP Expectations

(unaudited, in millions)

Fourth Quarter Ending

Full Year Ending

December 31, 2016

December 31, 2016

Net income

$10.0 - $13.0

$38.0 - $41.0

Interest income, net

($0.2)

($0.9)

Income tax expense

$4.7 - $5.8

$17.4 - $18.6

Depreciation

$2.3 - $2.4

$9.7 - $9.8

Amortization

$0.9

$3.6

EBITDA

$17.8 - $21.8

$68.0 - $72.0

Stock-based compensation expense

$3.6 - $3.8

$15.4 - $15.6

Net merger, acquisition and divestiture (income) expense

$0.4 - $0.5

$1.7 - $1.8

Net intellectual property litigation (income) expense

$0.0 - $0.1

$0.5 - $0.6

Restructuring expense

$0

$1.8

Adjusted EBITDA

$22.0 - $26.0

$88.0 - $92.0

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 (income) 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.

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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

iRobot Corporation published this content on 25 October 2016 and is solely responsible for the information contained herein.
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