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October 25, 2016 4:19 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): October 25, 2016


 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 October 25, 2016, iRobot Corporation announced its financial results for the fiscal quarter ended October 1, 2016. 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 October 25, 2016, 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
 
 
 
 
 
 
October 25, 2016
 
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 October 25, 2016, 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 Reports Strong Third-Quarter Financial Results
Exceeds Third-Quarter and Increases Full-Year 2016 Financial Expectations

BEDFORD, Mass., October 25, 2016 - 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,
2016
 
September 26,
2015
 
October 1,
2016
 
September 26,
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,
2016
 
January 2,
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, 2016
 
September 26, 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, 2016
 
September 26, 2015
 
October 1, 2016
 
September 26, 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, 2016
 
September 26, 2015
 
October 1, 2016
 
September 26, 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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