iRobot Reports Strong Third-Quarter 2009 Results
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Company Increases Full-Year Profit Expectations
BEDFORD, Mass.--(BUSINESS WIRE)-- iRobot Corp. (NASDAQ: IRBT) today announced its financial results for the fiscal quarter ended September 26, 2009.
"We delivered third-quarter revenue near the top end of our expectations, and earnings per share and Adjusted EBITDA that significantly exceeded our expectations," said Colin Angle, chairman and chief executive officer of iRobot. "Operating cash flow improved by more than $13 million in the third quarter from a year ago. Year-to-date, we have generated $25 million in operating cash flow and improved our cash position year-over-year by $36 million to nearly $63 million at the end of the third quarter.
"Based on our performance through the first nine months, we are reaffirming our expectations for full-year revenue and increasing our expectations for earnings per share and Adjusted EBITDA," Angle concluded.
Revenue for the third quarter of 2009 decreased 14.9 percent to $78.6 million, compared with $92.4 million for the same quarter one year ago. Revenue for the first nine months of 2009 decreased 9.2 percent to $196.9 million from $216.9 million for the first nine months of 2008.
Gross margin for the third quarter decreased to 30.8 percent of revenue, compared with 31.3 percent of revenue in the third quarter of 2008. In the first nine months of 2009, gross margin increased to 28.9 percent of revenue, up from 28.0 percent of revenue in the first nine months of 2008.
Earnings per share for the third quarter of 2009 were $0.10, compared with $0.15 for the same period a year ago. For the first nine months of 2009, loss per share improved to $0.07, compared with $0.19 for the same period in 2008.
Adjusted EBITDA was $8.4 million for the third quarter of 2009, compared with $9.5 million in the third quarter of 2008. For the first nine months of 2009, Adjusted EBITDA improved to $8.2 million from a loss of $0.7 million in the first nine months of 2008.
Business Highlights
-- International home robot revenue in the third quarter of 2009 increased
55 percent from the third quarter of 2008 and comprised half of total
home robot revenue in the quarter.
-- Government & Industrial Robots division received more than $55 million
in orders from the U.S. Government during the quarter and has 100
percent visibility on its full-year revenue expectations.
-- In the first nine months of 2009, operating cash flow was $24.6 million,
compared with cash used in operations of $0.3 million in the first nine
months of 2008, as continued aggressive management led to a $17.9
million reduction of inventory at quarter end versus last year.
Financial Expectations
Management provides the following expectations with respect to the fiscal year and fourth quarter ending January 2, 2010.
Fiscal Year 2009: Revenue $295 - $305 million Adjusted EBITDA $15 - $18 million Earnings Per Share $0.02 - $0.06 Q4 2009: Revenue $98 - $108 million Adjusted EBITDA $7 - $10 million Earnings Per Share $0.09 - $0.13
Third-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fiscal quarter ended September 26, 2009, business outlook, and outlook for future financial performance. Pertinent details include:
Date: Thursday, October 22, 2009 Time: 8:30 a.m. ET Call-In Number: 719-325-4776
A live, audio broadcast of the conference call also will be available at http://investors.irobot.com/events.cfm. An archived version of the broadcast will be available on the same Web site shortly after the conclusion of the live event. A replay of the telephone conference call will be available and can be accessed by dialing 719-457-0820, access code 7344142.
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 government and industrial robots protect those in harm's way. iRobot's consumer and military robots feature iRobot Aware(R) 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 anticipated revenue, Adjusted EBITDA and earnings per share for fiscal year 2009, operations for the fourth quarter of 2009, and demand for and market acceptance of its products. 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, 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 release includes Adjusted EBITDA, 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, 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 Statement of Operations
(in thousands, except per share amounts)
(unaudited)
For the three months ended For the nine months ended
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
Revenue
Product revenue $ 69,080 $ 87,224 $ 171,380 $ 198,475
Contract 9,539 5,191 25,515 18,444
revenue
Total 78,619 92,415 196,895 216,919
Cost of Revenue
Product revenue 46,415 58,371 116,952 138,948
Contract 8,009 5,114 23,133 17,213
revenue
Total 54,424 63,485 140,085 156,161
Gross Margin 24,195 28,930 56,810 60,758
Operating
Expense
Research & 3,159 4,940 10,633 13,631
development
Selling & 9,514 10,522 27,420 35,451
marketing
General & 7,420 7,578 21,915 21,696
administrative
Total 20,093 23,040 59,968 70,778
Operating 4,102 5,890 (3,158 ) (10,020 )
income (loss)
Other income 112 180 (96 ) 917
(expense), net
Pre-tax income 4,214 6,070 (3,254 ) (9,103 )
(loss)
Income tax
expense 1,620 2,218 (1,452 ) (4,437 )
(benefit)
Net income $ 2,594 $ 3,852 $ (1,802 ) $ (4,666 )
(loss)
Net income
(loss) per
common share:
Basic $ 0.10 $ 0.16 $ (0.07 ) $ (0.19 )
Diluted $ 0.10 $ 0.15 $ (0.07 ) $ (0.19 )
Shares used in
Per Common
Share
Calculations:
Basic 25,025 24,712 24,974 24,614
Diluted 25,670 25,536 24,974 24,614
Stock-based
compensation
included in
above figures:
Cost of product $ 267 $ 184 $ 758 $ 554
revenue
Cost of
contract 139 127 464 300
revenue
Research & 89 131 187 226
development
Selling & 351 305 1,006 733
marketing
General & 1,016 1,090 2,944 2,495
administrative
Total $ 1,862 $ 1,837 $ 5,359 $ 4,308
iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)
September 26, December 27,
2009 2008
Assets
Cash and equivalents $ 62,747 $ 40,852
Accounts receivable, net 43,934 35,930
Unbilled revenues 2,537 2,014
Inventory 24,653 34,560
Deferred tax assets 7,295 7,299
Other current assets 4,430 3,340
Total current assets 145,596 123,995
Property, plant and equipment, net 20,401 22,929
Deferred tax assets 4,508 4,508
Other assets 11,877 12,246
Total assets $ 182,382 $ 163,678
Liabilities and stockholders' equity
Accounts payable $ 27,787 $ 19,544
Accrued expenses 11,672 10,989
Accrued compensation 10,846 6,393
Deferred revenue and customer advances 4,244 2,632
Total current liabilities 54,549 39,558
Long term liabilities 4,122 4,444
Stockholders' equity 123,711 119,676
Total liabilities and stockholders' equity $ 182,382 $ 163,678
iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)
For the three months ended For the nine months ended
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
Cash flows from
operating
activities:
Net income $ 2,594 $ 3,852 $ (1,802 ) $ (4,666 )
(loss)
Adjustments to
reconcile net
income (loss)
to net cash
provided by
(used in)
operating
activities:
Depreciation
and 2,289 1,844 6,153 5,135
amortization
Loss on
disposal of 74 12 176 80
property and
equipment
Stock-based 1,862 1,837 5,359 4,308
compensation
In-process
research and
development
relating to - 200 - 200
acquisition of
Nekton Research
LLC
Benefit from
deferred tax 164 - (347 ) -
assets
Non-cash
director 33 24 99 71
deferred
compensation
Changes in
operating
assets and
liabilities --
(use) source
Accounts (12,643 ) (21,598 ) (8,004 ) 1,830
receivable
Unbilled 922 (82 ) (523 ) (28 )
revenue
Inventory 3,985 692 9,907 2,626
Other assets 1,052 1,186 (1,111 ) (6,930 )
Accounts 6,679 7,192 8,243 (13,540 )
payable
Accrued 706 1,226 673 1,405
expenses
Accrued 3,819 1,481 4,453 3,503
compensation
Deferred 1,270 1,755 1,612 1,127
revenue
Change in long
term (107 ) (107 ) (322 ) 4,552
liabilities
Net cash
provided by
(used in) 12,699 (486 ) 24,566 (327 )
operating
activities
Cash flows from
investing
activities:
Purchase of
property and (953 ) (1,312 ) (3,401 ) (13,589 )
equipment
Purchase of
Nekton Research - (9,745 ) - (9,745 )
LLC, net of
cash received
Purchases of - - - (29,997 )
investments
Sales of - 1,300 - 30,350
investments
Net cash used
in investing (953 ) (9,757 ) (3,401 ) (22,981 )
activities
Cash flows from
financing
activities:
Proceeds from
stock option 36 176 495 908
exercises
Income tax
withholding
payment (67 ) - (76 ) -
associated with
restricted
stock vesting
Borrowings
under revolving - 5,500 - 5,500
line of credit
Tax benefit of
excess stock
based 43 322 311 680
compensation
deductions
Net cash
provided by 12 5,998 730 7,088
financing
activities
Net increase
(decrease) in 11,758 (4,245 ) 21,895 (16,220 )
cash and cash
equivalents
Cash and cash
equivalents, at 50,989 14,760 40,852 26,735
beginning of
period
Cash and cash
equivalents, at $ 62,747 $ 10,515 $ 62,747 $ 10,515
end of period
iRobot Corporation
Supplemental Information
(unaudited)
For the three months ended For the nine months ended
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
Revenue by
business unit
(in thousands):
Home Robots
Product $ 44,331 $ 53,626 $ 111,253 $ 125,424
Contract - - - 55
Government &
Industrial
Product 24,749 33,598 60,127 73,051
Contract 9,539 5,191 25,515 18,389
$ 78,619 $ 92,415 $ 196,895 $ 216,919
Direct Revenue
- Home Robots $ 5,489 $ 6,777 $ 17,178 $ 22,514
(in thousands)
Product
Lifecycle
Revenue - $ 5,368 $ 5,977 $ 14,299 $ 11,351
Government &
Industrial (in
thousands)
International
Revenue (in
thousands):
Home Robots $ 22,017 $ 14,203 $ 59,296 $ 42,784
Government & $ 4,435 $ 4,360 $ 8,907 $ 5,570
Industrial
Average selling
prices for
robot units:
Home Robots $ 143 $ 138 $ 153 $ 150
Government &
Industrial (in $ 122 $ 87 $ 100 $ 96
thousands)
Gross Margin by
business unit
(in thousands):
Home Robots $ 13,450 $ 14,867 $ 33,711 $ 33,695
Government & 10,745 14,063 23,099 27,063
Industrial
$ 24,195 $ 28,930 $ 56,810 $ 60,758
Units shipped
by business
unit:
Home Robots (in 289 355 664 761
thousands)
Government & 159 319 460 645
Industrial
Government &
Industrial $ 71,038 $ 36,621 $ 71,038 $ 36,621
Funded Backlog
(in thousands)
Days sales 54 48 54 48
outstanding
Inventory 7.5 5.5 7.5 5.5
turnover
Net cash
provided by
(used in) $ 12,699 $ (486 ) $ 24,566 $ (327 )
operating
activities (in
thousands)
Headcount 514 505 514 505
iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
For the three months ended For the nine months ended
September 26, September 27, September 26, September 27,
2009 2008 2009 2008
Net income $ 2,594 $ 3,852 $ (1,802 ) $ (4,666 )
(loss)
Interest (5 ) (205 ) (41 ) (1,034 )
income, net
Income tax
expense 1,620 2,218 (1,452 ) (4,437 )
(benefit)
Depreciation 2,150 1,803 5,763 5,094
Amortization 139 41 390 41
EBITDA 6,498 7,709 2,858 (5,002 )
Stock-based
compensation 1,862 1,837 5,359 4,308
expense
Adjusted EBITDA $ 8,360 $ 9,546 $ 8,217 $ (694 )
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, 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.
Source: iRobot Corporation
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