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July 21, 2015 4:26 PM EDT


 
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): July 21, 2015


 iROBOT CORPORATION 

(Exact Name of Registrant as Specified in its Charter)

 
Delaware
 
 
(State or other jurisdiction of
incorporation or organization)
 
001-36414
 
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 July 21, 2015, iRobot Corporation announced its financial results for the fiscal quarter ended June 27, 2015. 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 July 21, 2015, 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
 
 
 
 
 
 
July 21, 2015
 
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 July 21, 2015, furnished herewith.






EX-99.1
Contacts:
 
 
 
 
Elise Caffrey
 
Matthew Lloyd
 
 
Investor Relations
 
Media Relations
 
 
iRobot Corp.
 
iRobot Corp.
 
 
(781) 430-3003
 
(781) 430-3720
 
 
 
 
 
 
 
 
 
 

iRobot Second-Quarter Financial Results Exceed Expectations
Reaffirms Full-Year 2015 Financial Expectations

BEDFORD, Mass., July 21, 2015 - iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended June 27, 2015.

“Our second quarter results exceeded our expectations. Home Robot revenue was up slightly over last year while Defense & Security revenue more than doubled. Incremental marketing investments we made in the United States and overseas have successfully driven sell-through that we expect to result in second half replenishment orders,” said Colin Angle, chairman and chief executive officer of iRobot.

“Based on our Q2 results and our outlook for the rest of 2015, we are reaffirming our full year expectations. Although Q2 was above expectations, this was primarily due to timing. Predicting individual quarterly results is challenging, but our over performance in Q2 alleviates some pressure on the second-half ramp. We continue to expect 2015 revenue of $625 to $635 million, driven by Home Robot growth, EPS of between $1.25 and $1.35 and Adjusted EBITDA of $85 to $90 million, or roughly 14% of revenue. These expectations continue to reflect our confidence that Home Robot revenue will grow 11-13% for the full year. We expect all three regions to grow year over year, driven by strong performance in the United States and China.

“It is always difficult to predict the revenue split between Q3 and Q4 due to the timing and shipment of Home Robot products for the holiday season and the inherent lumpiness in our D&S business. This year we expect second-half revenue to be lower in Q3 and higher in Q4, consistent with last year.”

Financial Results

•
Revenue for the second quarter of 2015 was $148.8 million, compared with $139.8 million for the same quarter one year ago. Revenue for the first half of 2015 was $266.7 million, compared with $254.0 million last year.
•
Net income in the second quarter of 2015 was $7.3 million, compared with $8.5 million in the second quarter of 2014. For the first half of 2015, net income was $12.0 million, compared with $13.8 million a year ago.
•
Quarterly earnings per share were $0.24 for the second quarter of 2015, compared with $0.28 in the second quarter last year. First-half earnings per share were $0.40, compared with $0.46 in 2014. Q2 2014 EPS and first-half 2014 EPS included a $0.07 benefit resulting from the release of a valuation allowance relating to certain tax attributes associated with our acquisition of Evolution Robotics.
•
Adjusted EBITDA for the second quarter of 2015 was $17.8 million, compared with $16.2 million in the second quarter of 2014. For the first half of 2015, Adjusted EBITDA was $30.9 million, compared with $30.4 million a year ago.






Business Highlights

•
In the U.S., Home Robot revenue grew 24% year over year driven by sales of Roomba 800, which were slightly higher than expected.
•
Internationally, Home Robot revenue in China was up 60% in Q2 2015 over Q2 2014, partially offsetting the expected quarter-on-quarter declines in Japan and EMEA.
•
Defense & Security revenues grew more than 100% over last year, due to the delivery of robots and spares under the Canadian contract awarded in Q3 2014.
•
iRobot recently announced that Tim Saeger will join iRobot as SVP, Engineering. Formerly VP and GM of Home Entertainment at Bose, he was responsible for all aspects of product and technology development. Tim’s expertise will help the company continue to build upon its world-class consumer technology Home Robot organization as well as the design and development of technology and products across the company.
    
Financial Expectations

Management provides the following expectations with respect to the third quarter ending September 26, 2015 and fiscal year ending January 2, 2016.

Q3 2015:
 
 
Revenue
$143 - $146 million
 
Earnings Per Share
$0.20 - $0.24
 
Adjusted EBITDA
$17 - $19 million
 
 
 
 
Fiscal Year 2015:
 
 
Revenue
$625 - $635 million
 
Earnings Per Share
$1.25 - $1.35
 
Adjusted EBITDA
$85 - $90 million
 

Second-Quarter Conference Call

iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the second fiscal quarter 2015, business outlook, and outlook for third-quarter and fiscal year 2015 financial performance. Pertinent details include:
 
Date:
Wednesday, July 22, 2015
Time:
8:30 a.m. ET
Call-In Number:
847-619-6396
Passcode:
38036260

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=5168627.

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 July 29, and can be accessed by dialing 630-652-3042, passcode 38036260#.





 
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, 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 proprietary technologies 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, outlook for and future performance of our businesses, the impact of our marketing investments, the timing of orders for our robots, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2015 and the third quarter ending September 26, 2015. 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, amortization, stock-based compensation expense, merger and acquisition 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
 
 For the six months ended
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
Revenue
$
148,788

 
$
139,803

 
266,749

 
254,007

Cost of revenue
78,755

 
77,682

 
143,008

 
140,176

Gross margin
70,033

 
62,121

 
123,741

 
113,831

Operating expenses:
 
 
 
 
 
 
 
  Research and development
18,732

 
17,245

 
37,764

 
34,179

  Selling and marketing
27,329

 
23,535

 
41,517

 
38,067

  General and administrative
12,905

 
11,666

 
25,494

 
23,930

      Total operating expenses
58,966

 
52,446

 
104,775

 
96,176

Operating income
11,067

 
9,675

 
18,966

 
17,655

Other income (expense), net
(61
)
 
92

 
(855
)
 
(95
)
Income before income taxes
11,006

 
9,767

 
18,111

 
17,560

Income tax expense
3,754

 
1,237

 
6,105

 
3,750

Net income
$
7,252

 
$
8,530

 
$
12,006

 
$
13,810

 
 
 
 
 
 
 
 
Net income per share
 
 
 
 
 
 
 
   Basic
$
0.24

 
$
0.29

 
$
0.40

 
$
0.47

   Diluted
$
0.24

 
$
0.28

 
$
0.40

 
$
0.46

 
 
 
 
 
 
 
 
Number of shares used in calculations per share
 
 
 
 
 
 
 
   Basic
29,785

 
29,533

 
29,719

 
29,361

   Diluted
30,268

 
30,129

 
30,283

 
30,122

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation included in above figures:
 
 
 
 
 
 
 
        Cost of revenue
$
177

 
$
166

 
$
392

 
$
335

        Research and development
942

 
828

 
1,774

 
1,559

        Selling and marketing
306

 
203

 
615

 
541

        General and administrative
2,030

 
1,950

 
3,781

 
3,790

            Total
$
3,455

 
$
3,147

 
$
6,562

 
$
6,225

 
 
 
 
 
 
 
 








 iRobot Corporation
 Condensed Consolidated Balance Sheets
 (unaudited, in thousands)
 
 
 
 
 
June 27, 2015
 
December 27, 2014
 
 
 
 
 Assets
 
 
 
 Cash and equivalents
$
186,616

 
$
185,957

 Short term investments
37,227

 
36,166

 Accounts receivable, net
65,593

 
71,056

 Unbilled revenues
885

 
2,614

 Inventory
45,977

 
47,857

 Deferred tax assets
21,284

 
21,505

 Other current assets
10,491

 
9,704

   Total current assets
368,073

 
374,859

 Property, plant and equipment, net
29,826

 
31,297

 Deferred tax assets
8,314

 
8,409

 Goodwill
48,751

 
48,751

 Intangible assets, net
17,401

 
19,146

 Other assets
11,766

 
10,751

 Total assets
$
484,131

 
$
493,213

 
 
 
 
 Liabilities and stockholders' equity
 
 
 
 Accounts payable
$
46,167

 
$
60,256

 Accrued expenses
15,604

 
18,701

 Accrued compensation
11,419

 
16,235

 Deferred revenue and customer advances
2,115

 
3,849

   Total current liabilities
75,305

 
99,041

 Long term liabilities
3,370

 
3,736

 Stockholders' equity
405,456

 
390,436

 Total liabilities and stockholders' equity
$
484,131

 
$
493,213

 
 
 
 





 iRobot Corporation
Consolidated Statements of Cash Flows
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 For the six months ended
 
June 27, 2015
 
June 28, 2014
Cash flows from operating activities:
 
 
 
Net income
$
12,006

 
$
13,810

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
   Depreciation and amortization
7,011

 
6,320

   (Gain)/Loss on disposal of property and equipment
24

 
(10
)
   Stock-based compensation
6,562

 
6,225

   Deferred income taxes, net
825

 
464

   Tax benefit of excess stock based compensation deductions
(725
)
 
(2,692
)
   Non-cash director deferred compensation
75

 
22

Changes in operating assets and liabilities — (use) source
 
 
 
   Accounts receivable
5,463

 
(14,532
)
   Unbilled revenue
1,729

 
(6
)
   Inventory
1,723

 
(5,326
)
   Other assets
(787
)
 
(9,853
)
   Accounts payable
(12,096
)
 
6,966

   Accrued expenses
(3,136
)
 
2,133

   Accrued compensation
(4,816
)
 
(8,900
)
   Deferred revenue and customer advances
(1,734
)
 
(2,034
)
   Change in long term liabilities
(366
)
 
(384
)
Net cash provided by (used in) operating activities
11,758

 
(7,797
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(5,539
)
 
(5,524
)
Change in other assets
(1,015
)
 
—

Purchases of investments
(14,180
)
 
(20,714
)
Sales of investments
13,000

 
7,500

Net cash used in investing activities
(7,734
)
 
(18,738
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from stock option exercises
2,102

 
7,651

Income tax withholding payment associated with restricted stock vesting
(1,268
)
 
(1,494
)
Stock repurchases
(4,924
)
 
—

Tax benefit of excess stock based compensation deductions
725

 
2,692

Net cash provided by (used in) financing activities
(3,365
)
 
8,849

 
 
 
 
Net increase (decrease) in cash and cash equivalents
659

 
(17,686
)
Cash and cash equivalents, at beginning of period
185,957

 
165,404

Cash and cash equivalents, at end of period
$
186,616

 
$
147,718

 
 
 
 




 iRobot Corporation
Supplemental Information
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the six months ended
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
 
 
 
 
 
 
 
 
Revenue: *
 
 
 
 
 
 
 
Home Robots
$
136,824

 
$
133,235

 
$
247,909

 
$
241,270

    Domestic
$
52,178

 
$
42,023

 
$
92,805

 
$
83,054

    International
$
84,646

 
$
91,212

 
$
155,104

 
$
158,216

 
 
 
 
 
 
 
 
Defense & Security
$
11,790

 
$
5,100

 
$
18,316

 
$
10,701

    Domestic
$
2,408

 
$
2,357

 
$
6,261

 
$
5,491

    International
$
9,382

 
$
2,743

 
$
12,055

 
$
5,210

 
 
 
 
 
 
 
 
    Product
$
11,463

 
$
5,097

 
$
17,835

 
$
10,688

    Contract
$
327

 
$
3

 
$
481

 
$
13

 
 
 
 
 
 
 
 
    Product Life Cycle
$
3,380

 
$
1,873

 
$
8,108

 
$
5,406

 
 
 
 
 
 
 
 
Gross Margin Percent:
 
 
 
 
 
 
 
    Home Robots
51.1
%
 
48.8
%
 
51.1
%
 
49.5
%
    Defense & Security
42.2
%
 
36.7
%
 
39.0
%
 
36.9
%
    Total Company
47.1
%
 
44.4
%
 
46.4
%
 
44.8
%
 
 
 
 
 
 
 
 
Units shipped:
 
 
 
 
 
 
 
    Home Robots *
592

 
565

 
1,083

 
1,030

    Defense & Security
41

 
40

 
69

 
78

 
 
 
 
 
 
 
 
Average gross selling prices for robot units:
 
 
 
 
 
 
 
    Home Robots
$
246

 
$
238

 
$
243

 
$
240

    Defense & Security *
$
197

 
$
80

 
$
141

 
$
67

 
 
 
 
 
 
 
 
Defense & Security Funded Product Backlog *
$
6,628

 
$
20,882

 
$
6,628

 
$
20,882

 
 
 
 
 
 
 
 
Days sales outstanding
41

 
36

 
41

 
36

 
 
 
 
 
 
 
 
Days in inventory
53

 
60

 
53

 
60

 
 
 
 
 
 
 
 
Headcount
606

 
548

 
606

 
548

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* in thousands
 
 
 
 
 
 
 




 iRobot Corporation
 Adjusted EBITDA Reconciliation to GAAP
 (unaudited, in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 For the three months ended
 
 For the six months ended
 
June 27, 2015
 
June 28, 2014
 
June 27, 2015
 
June 28, 2014
 
 
 
 
 
 
 
 
 Net income
$
7,252

 
$
8,530

 
$
12,006

 
$
13,810

 
 
 
 
 
 
 
 
 Interest income, net
(176
)
 
(170
)
 
(330
)
 
(315
)
 Income tax expense
3,754

 
1,237

 
6,105

 
3,750

 Depreciation
2,529

 
2,215

 
5,150

 
4,382

 Amortization
921

 
963

 
1,861

 
1,938

 
 
 
 
 
 
 
 
 EBITDA
14,280

 
12,775

 
24,792

 
23,565

 
 
 
 
 
 
 
 
 Stock-based compensation expense
3,455

 
3,147

 
6,562

 
6,225

 Merger and acquisition expense
—

 
—

 
—

 
—

 Net intellectual property litigation expense
30

 
276

 
(480
)
 
645

 Restructuring expense
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 Adjusted EBITDA
$
17,765

 
$
16,198

 
$
30,874

 
$
30,435

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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, merger and acquisition 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
8 Crosby Drive, Bedford, MA 01730-1402 Ù 781.430.3000 Ù Fax 781.430.3001 Ù www.irobot.com



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