iRobot Reports Third-Quarter 2012 Financial Results

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iRobot Reports Third-Quarter 2012 Financial Results

Restructures to invest in high growth business

BEDFORD, Mass.--(BUSINESS WIRE)-- iRobot Corp. (NAS: IRBT) , a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended September 29, 2012.

  • Revenue for the third quarter of 2012 was $126.3 million, compared with $120.4 million for the same quarter one year ago. Revenue for the first nine months of 2012 was $335.6 million compared with $334.7 million last year.
  • Net income in the third quarter of 2012 was $15.2 million, compared with $14.1 million in the third quarter of 2011. For the first nine months, net income was $23.2 million, compared with $29.6 million a year ago. Net income included a one-time tax benefit of $3.5 million in the third-quarter and nine-month periods in 2011.
  • Quarterly earnings per share were $0.54, compared with $0.50 in the third quarter last year. Nine-month earnings per share were $0.82 in 2012, compared with $1.06 in 2011. EPS included a one-time tax benefit of $0.12 in the third-quarter and nine-month periods in 2011.
  • Adjusted EBITDA for the third quarter of 2012 was $29.2 million, compared with $20.2 million in the third quarter of 2011. For the first nine months of 2012 Adjusted EBITDA was $51.5 million, compared with $51.7 million for the same period a year ago.
  • During the third quarter of 2012, there were a number of items recorded, one of which resulted in a $7.7 million revenue increase. The positive net impact of these items was $0.10 in earnings per share and $5.2 million in Adjusted EBITDA.

"During the third-quarter we made several strategic decisions to strengthen the company. We announced our acquisition of Evolution Robotics (ER), hired key senior leaders and began to implement significant actions in our D&S business. Our Home Robot unit has had an outstanding year and we expect continued growth in that business. The 2012 outlook for D&S has deteriorated and we expect further declines in 2013. To right-size the business we have restructured D&S and taken costs out. These moves will result in a fourth quarter 2012 restructuring charge of $4-5 million," said Colin Angle, chairman and chief executive officer of iRobot. "We are taking these actions in order to invest in our high growth Home Robot business as well as our emerging high potential remote presence business, while meeting our commitment to profitable growth," he added.

Business Highlights

  • Home Robot revenue increased 33 percent in the third quarter 2012 fueled by strong growth in both U.S. and international markets.
  • Our Home Robot product return experience has improved as the result of our sustained investment in product quality. In the third quarter we adjusted our accrual rates for Home Robot product returns, resulting in a benefit to revenue and earnings.
  • We hired three seasoned executives, Frank Wilson, Senior Vice President & General Manager of D&S, Youssef Saleh, Vice President of Remote Presence, and Paolo Pirjanian, formerly CEO of Evolution Robotics, as CTO.
  • In Q4 2012, the total negative impact on earnings per share of acquiring Evolution Robotics and restructuring D&S is expected to be between ($0.28) - ($0.32). The negative impact on Adjusted EBITDA is expected to be ($5) - ($6) million. These are reflected in our Q4 and full year 2012 expectations.

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and full year ending December 29, 2012.

Q4 2012*:

  
Revenue$98 - $102 million
Loss Per Share($0.39) - ($0.33)
Adjusted EBITDA loss($4) - ($2) million
 

Fiscal Year 2012:

Current*

Prior

Revenue$434 - $438 million$465 - $485 million
Earnings Per Share$0.44 - $0.50$0.90 - $1.00
Adjusted EBITDA$47 - $49 million$59 - $63 million
 

Full-Year 2012 BU Revenue:

Current

Prior

Home Robots$355 - $360 million*$365 - $375 million
Defense & Security Robots$75 - $80 million$100 - $110 million
 

Preliminary 2013 Revenue Expectations

Home Robots$425 - $435 million*
Defense & Security Robots$45 - $55 million
 
*Including Evolution Robotics

Fourth-Quarter Conference Call

iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its results for the third fiscal quarter 2012, business outlook, and outlook for 2012 financial performance. Pertinent details include:

  Date: Wednesday, October 24, 2012
Time:8:30 a.m. ET
Call-In Number:847-413-3362
Passcode:33524566

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=4249338. 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 October 31, and can be accessed by dialing 630-652-3042, passcode 33524566#.

About iRobot Corp.

iRobot designs and builds robots that make a difference. The company's home robots help people find smarter ways to clean, and its defense & security robots protect those in harm's way. 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 and growth, demand for our robots, operating performance, restructuring charges to be incurred during the fourth quarter ending December 29, 2012, the impact on earnings per share and Adjusted EBITDA for the fourth quarter ending December 29, 2012 of the acquisition of Evolution Robotics, Inc., and Defense & Security restructuring, anticipated mix of revenue for the fourth quarter ending December 29, 2012 and fiscal year 2013, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2012 and the fourth quarter ending December 29, 2012, anticipated business unit revenue for the fiscal year 2012 and fiscal year 2013. 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, market acceptance of our products, 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, Adjusted net income and Adjusted net income per share, each of 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. We define Adjusted net income and Adjusted net income per share as net income and net income per share, respectively, excluding the impact of a one-time tax benefit. Reconciliations between net income and Adjusted EBITDA, net income and Adjusted net income, and net income per share and Adjusted net income per share are provided in the financial tables at the end of this press release.

iRobot Corporation
Consolidated Statement of Income
(in thousands, except per share amounts)
(unaudited)
    
 
For the three months endedFor the nine months ended
September 29,October 1,September 29,October 1,
20122011 20122011
Revenue
Product revenue$121,174$109,993$320,676$304,100
Contract revenue 5,124 10,380  14,874 30,632
Total 126,298 120,373  335,550 334,732
 
Cost of Revenue
Product revenue67,00863,670184,078177,695
Contract revenue 4,388 6,660  13,110 21,004
Total 71,396 70,330  197,188 198,699
 
Gross Margin54,90250,043138,362136,033
 
Operating Expense
Research & development8,4068,94826,79725,823
Selling & marketing12,43614,55345,12840,301
General & administrative 11,326 10,962  32,390 31,659
Total 32,168 34,463  104,315 97,783
 
Operating income22,73415,58034,04738,250
 
Other income (expense), net 197 (92) 477 258
 
Pre-tax income22,93115,48834,52438,508
Income tax expense 7,724 1,436  11,289 8,955
Net income$15,207$14,052 $23,235$29,553
 
Net income per common share:
Basic$0.55$0.52$0.84$1.11
Diluted$0.54$0.50$0.82$1.06
 
Shares used in per common share calculations:
Basic27,65026,90227,52026,568
Diluted

28,321

27,94028,32327,823
 
 
Stock-based compensation included in above figures:
Cost of product revenue$306$344$892$915
Cost of contract revenue129115320365
Research & development219162773481
Selling & marketing158174574513
General & administrative 1,796 1,401  5,464 4,112
Total$2,608$2,196 $8,023$6,386
iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)
  
September 29,December 31,
20122011
 
Assets
 
Cash and equivalents$169,658$166,308
Short term investments20,06117,811
Accounts receivable, net53,37943,338
Unbilled revenues1,6932,362
Inventory32,59231,089
Deferred tax assets14,88215,344
Other current assets 4,608 7,928
Total current assets296,873284,180
Property, plant and equipment, net24,83829,029
Deferred tax assets10,4246,127
Other assets 18,599 12,877
Total assets$350,734$332,213
 
Liabilities and stockholders' equity
 
Accounts payable$38,317$48,406
Accrued expenses18,71317,188
Accrued compensation9,03717,879
Deferred revenue and customer advances 2,118 1,527
Total current liabilities 68,185 85,000
Long term liabilities 3,940 4,255
Stockholders' equity 278,609 242,958
Total liabilities and stockholders' equity$350,734$332,213
iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)
    
 
For the three months endedFor the nine months ended
September 29,October 1,September 29,October 1,
2012 2011 2012 2011 
Cash flows from operating activities:
Net income$15,207$14,052$23,235$29,553
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization2,8682,5978,1817,237
Loss on disposal of property and equipment6123778476
Stock-based compensation2,6082,1968,0236,386
Deferred income taxes, net1,3751,961(2,855)6,449
Tax benefit of excess stock based compensation deductions(426)(347)(1,461)(6,002)
Non-cash director deferred compensation224464126
Changes in operating assets and liabilities — (use) source
Accounts receivable(13,852)(6,871)(10,041)(7,344)
Unbilled revenue380 Read Full Story

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