iRobot Reports Strong Third-Quarter Financial Results
BEDFORD, Mass., Oct. 24, 2017 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 30, 2017.
"We delivered another outstanding quarter in which total revenue grew 22% over Q3 last year. Based on our Q3 results, and on our Q4 outlook fueled by continued positive momentum in the United States and in EMEA, where growth is accelerating, we are increasing our full-year 2017 financial expectations. The U.S. and EMEA are now expected to grow 40% and 45% respectively for the full year.
"And, we expect 2017 revenue of $870 to $880 million, a 33 – 34% increase over 2016 consumer revenue, operating income of between $55 and $65 million, and EPS of between $1.65 and $2.00, including the impact of our recent European distributor acquisition," said Colin Angle, chairman and chief executive officer of iRobot.
"U.S. household penetration of robotic vacuum cleaners is still less than 10%, so there is plenty of runway domestically and even more overseas. With the leading global segment share, at a time when adoption is accelerating, we are in an excellent position to capitalize on the momentum to drive future growth."
Financial Results
- Revenue for the third quarter of 2017 was $205.4 million, compared with $168.6 million for the third quarter of 2016.
- Operating income in the third quarter of 2017 was $23.9 million, compared with $27.5 million in the third quarter of 2016.
- Quarterly earnings per share were $0.76 for the third quarter of 2017, compared with $0.70 in the third quarter of 2016. Third-quarter 2017 EPS included a discrete tax benefit of $0.16 relating to the new 2017 stock compensation accounting standard and $0.08 from an adjustment to the original purchase price allocation for Japan.
Business Highlights
- In the third quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q3 revenue growth of 22%. Third-quarter consumer revenue grew 34% in the United States, 31% in EMEA, and 65% in Japan over Q3 2016.
- We successfully completed the acquisition of our largest European distributor, which we expect will enable us to capitalize on the current market momentum and drive robotic floor care adoption in EMEA.
- We announced an agreement with Micro-Star International Co. representing an early win in an ongoing effort by iRobot to defend and protect its valuable intellectual property.
Financial Expectations
Management provides the following expectations with respect to the fiscal year ending December 30, 2017.
(Dollars in millions except Earnings Per Share)
|
Fiscal Year 2017 |
Previous |
Current |
|
Revenue |
$840 - $860 |
$870 - $880 |
|
Operating Income |
$50 - $60 |
$55 - $65 |
|
Earnings Per Share |
$1.35 - $1.70 |
$1.65 - $2.00 |
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 of 2017 and outlook for the fourth fiscal quarter of 2017 and fiscal year 2017 financial performance.
Pertinent details include:
|
Date: |
Wednesday, October 25 |
|
Time: |
8:30 a.m. ET |
|
Call-In Number: |
213-358-0894 |
|
Passcode: |
15414375 |
A live, audio broadcast of the conference call also will be available at: http://investor.irobot.com/events/event-details/q3-2017-irobot-corp-earnings-conference-call.
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 1, and can be accessed by dialing 404-537-3406, passcode 15414375.
About iRobot Corp.iRobot, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba® Vacuuming Robot in 2002. Today, iRobot is a global enterprise that has sold more than 20 million robots worldwide. iRobot's product line, including the Roomba and the Braava™ family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot's engineers are building an ecosystem of robots and data to enable the smart home. For more information about iRobot, please visit www.irobot.com.
For iRobot InvestorsCertain 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; revenue growth; demand for our robots; and anticipated revenue, operating income and earnings per share for the fiscal year ended December 30, 2017. 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 and adoption 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, merger, acquisition and divestiture expense, gain on business acquisition, restructuring expense, net intellectual property litigation expense, and non-cash stock compensation 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 | ||||
|
September 30, |
October 1, |
September 30, |
October 1, | ||
|
2017 |
2016 |
2017 |
2016 | ||
|
Revenue |
$ 205,399 |
$ 168,610 |
$ 557,014 |
$ 448,110 | |
|
Cost of revenue |
103,016 |
87,550 |
277,397 |
235,437 | |
|
Gross margin |
102,383 |
81,060 |
279,617 |
212,673 | |
|
Operating expenses: |
|||||
|
Research and development |
28,843 |
19,672 |
80,518 |
57,944 | |
|
Selling and marketing |
28,646 |
17,925 |
91,344 |
66,972 | |
|
General and administrative |
21,002 |
16,012 |
58,137 |
48,919 | |
|
Total operating expenses |
78,491 |
53,609 |
229,999 |
173,835 | |
|
Operating income |
23,892 |
27,451 |
49,618 |
38,838 | |
|
Other income, net |
2,601 |
523 |
4,290 |
2,142 | |
|
Income before income taxes |
26,493 |
27,974 |
53,908 |
40,980 | |
|
Income tax expense |
4,411 |
8,462 |
7,565 |
12,722 | |
|
Net income |
$ 22,082 |
$ 19,512 |
$ 46,343 |
$ 28,258 | |
|
Net income per share |
|||||
|
Basic |
$ 0.80 |
$ 0.72 |
$ 1.68 |
$ 1.01 | |
|
Diluted |
$ 0.76 |
$ 0.70 |
$ 1.61 |
$ 0.99 | |
|
Number of shares used in per share calculations |
|||||
|
Basic |
27,739 |
27,237 |
27,520 |
27,878 | |
|
Diluted |
28,916 |
27,778 |
28,719 |
28,423 | |
|
Stock-based compensation included in above figures: |
|||||
|
Cost of revenue |
$ 274 |
$ 184 |
$ 751 |
$ 555 | |
|
Research and development |
1,261 |
1,028 |
3,508 |
2,598 | |
|
Selling and marketing |
728 |
444 |
1,869 |
1,316 | |
|
General and administrative |
2,771 |
2,247 |
7,941 |
7,312 | |
|
Total |
$ 5,034 |
$ 3,903 |
$ 14,069 |
$ 11,781 | |
|
iRobot Corporation | |||
|
Condensed Consolidated Balance Sheets | |||
|
(unaudited, in thousands) | |||
|
September 30, |
December 31, | ||
|
2017 |
2016 | ||
|
Assets |
|||
|
Cash and cash equivalents |
$ 241,786 |
$ 214,523 | |
|
Short term investments |
36,442 |
39,930 | |
|
Accounts receivable, net |
76,956 |
72,909 | |
|
Unbilled revenue |
1,668 |
139 | |
|
Inventory |
92,813 |
50,578 | |
|
Other current assets |
18,395 |
5,591 | |
|
Total current assets |
468,060 |
383,670 | |
|
Property and equipment, net |
37,093 |
27,532 | |
|
Deferred tax assets |
35,088 |
30,585 | |
|
Goodwill |
41,041 |
41,041 | |
|
Intangible assets, net |
15,315 |
12,207 | |
|
Other assets |
14,064 |
12,877 | |
|
Total assets |
$ 610,661 |
$ 507,912 | |
|
Liabilities and stockholders' equity |
|||
|
Accounts payable |
$ 88,798 |
$ 67,281 | |
|
Accrued expenses |
28,949 |
19,854 | |
|
Accrued compensation |
23,773 |
21,015 | |
|
Deferred revenue and customer advances |
4,607 |
4,486 | |
|
Total current liabilities |
146,127 |
112,636 | |
|
Long term liabilities |
8,042 |
6,320 | |
|
Stockholders' equity |
456,492 |
388,956 | |
|
Total liabilities and stockholders' equity |
$ 610,661 |
$ 507,912 | |
|
iRobot Corporation | ||
|
Condensed Consolidated Statements of Cash Flows | ||
|
(unaudited, in thousands) | ||
|
For the nine months ended | ||
|
September 30, |
October 1, | |
|
2017 |
2016 | |
|
Cash flows from operating activities: |
||
|
Net income |
$ 46,343 |
$ 28,258 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||
|
Depreciation and amortization |
14,569 |
10,376 |
|
Loss on equity method investment |
32 |
- |
|
Impairment on cost method investment |
155 |
- |
|
Gain on sale of business unit and cost method investment |
(1,056) |
(1,067) |
|
Gain on business acquisition |
(2,243) |
- |
|
Stock-based compensation |
14,069 |
11,781 |
|
Deferred income taxes, net |
(3,226) |
6,314 |
|
Tax benefit of excess stock-based compensation deductions |
- |
(1,115) |
|
Non-cash director deferred compensation |
49 |
66 |
|
Changes in operating assets and liabilities — (use) source |
||
|
Accounts receivable and unbilled revenue |
(10,957) |
30,979 |
|
Inventory |
(23,944) |
(11,472) |
|
Other assets |
(11,099) |
(1,579) |
|
Accounts payable |
20,824 |
(2,261) |
|
Accrued liabilities |
7,034 |
(56) |
|
Deferred revenue and customer advances |
(965) |
(193) |
|
Long term liabilities |
1,513 |
(2,997) |
|
Net cash provided by operating activities |
51,098 |
67,034 |
|
Cash flows from investing activities: |
||
|
Additions of property and equipment |
(16,630) |
(8,352) |
|
Change in other assets |
(1,374) |
(435) |
|
Proceeds from sale of business unit and cost method investment |
1,056 |
24,154 |
|
Cash paid for business acquisition, net of cash acquired |
(16,524) |
- |
|
Purchase of investments |
(7,034) |
(16,556) |
|
Sales and maturities of investments |
10,500 |
11,502 |
|
Net cash provided by (used in) investing activities |
(30,006) |
10,313 |
|
Cash flows from financing activities: |
||
|
Proceeds from stock option exercises |
8,990 |
4,496 |
|
Income tax withholding payment associated with restricted stock vesting |
(2,974) |
(1,300) |
|
Stock repurchases |
- |
(97,021) |
|
Tax benefit of excess stock-based compensation deductions |
- |
1,115 |
|
Net cash provided by (used in) financing activities |
6,016 |
(92,710) |
|
Effect of exchange rate changes on cash and cash equivalents |
155 |
- |
|
Net increase (decrease) in cash and cash equivalents |
27,263 |
(15,363) |
|
Cash and cash equivalents, at beginning of period |
214,523 |
179,915 |
|
Cash and cash equivalents, at end of period |
$ 241,786 |
$ 164,552 |
|
iRobot Corporation | |||||
|
Supplemental Information | |||||
|
(unaudited) | |||||
|
For the three months ended |
For the nine months ended | ||||
|
September 30, |
October 1, |
September 30, |
October 1, | ||
|
2017 |
2016 |
2017 |
2016 | ||
|
Revenue: * |
|||||
|
Consumer |
$ 205,360 |
$ 167,962 |
$ 556,757 |
$ 443,754 | |
|
Domestic |
$ 87,626 |
$ 65,466 |
$ 269,998 |
$ 195,109 | |
|
International |
$ 117,734 |
$ 102,496 |
$ 286,758 |
$ 248,645 | |
|
Defense & Security |
$ - |
$ - |
$ - |
$ 3,075 | |
|
Gross Margin Percent |
49.8% |
48.1% |
50.2% |
47.5% | |
|
Consumer units shipped* |
906 |
779 |
2,358 |
2,002 | |
|
Vacuum |
774 |
602 |
1,994 |
1,678 | |
|
Mopping |
131 |
170 |
362 |
308 | |
|
Consumer revenue** |
$ 205 |
$ 168 |
$ 557 |
$ 444 | |
|
Vacuum*** |
$ 186 |
$ 144 |
$ 504 |
$ 402 | |
|
Mopping*** |
$ 21 |
$ 23 |
$ 55 |
$ 42 | |
|
Average gross selling prices for robot units - Consumer |
$ 249 |
$ 229 |
$ 260 |
$ 240 | |
|
Days sales outstanding |
35 |
37 |
35 |
37 | |
|
Days in inventory |
82 |
64 |
82 |
64 | |
|
Headcount |
798 |
572 |
798 |
572 | |
|
* in thousands |
|||||
|
** in millions |
|||||
|
*** includes accessory revenue |
|||||
|
iRobot Corporation | |||||
|
Adjusted EBITDA Reconciliation to GAAP | |||||
|
(unaudited, in thousands) | |||||
|
For the three months ended |
For the nine months ended | ||||
|
September 30, |
October 1, |
September 30, |
October 1, | ||
|
2017 |
2016 |
2017 |
2016 | ||
|
Net income |
$ 22,082 |
$ 19,512 |
$ 46,343 |
$ 28,258 | |
|
Interest income, net |
(558) |
(217) |
(1,423) |
(687) | |
|
Income tax expense |
4,411 |
8,462 |
7,564 |
12,722 | |
|
Depreciation |
3,350 |
2,533 |
8,888 |
7,446 | |
|
Amortization |
2,419 |
909 |
5,605 |
2,725 | |
|
EBITDA |
31,704 |
31,199 |
66,977 |
50,464 | |
|
Stock-based compensation expense |
5,034 |
3,903 |
14,069 |
11,781 | |
|
Net merger, acquisition and divestiture expense |
681 |
376 |
2,452 |
1,229 | |
|
Gain on business acquisition |
(2,243) |
- |
(2,243) |
- | |
|
Net intellectual property litigation expense |
1,266 |
103 |
1,910 |
464 | |
|
Restructuring (income) expense |
- |
(37) |
- |
1,665 | |
|
Adjusted EBITDA |
$ 36,442 |
$ 35,544 |
$ 83,165 |
$ 65,603 | |
|
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, gain on business acquisition, net intellectual property litigation 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 | |||||||||
|
Expected Incremental Impact of Robopolis Acquisition | |||||||||
|
(in millions, except per share amounts) | |||||||||
|
(unaudited) | |||||||||
|
Fiscal Year 2017 | |||||||||
|
Actual |
Actual |
Actual |
Expected |
Expected | |||||
|
Three |
Three |
Three |
Three |
Twelve | |||||
|
Months Ending |
Months Ending |
Months Ending |
Months Ending |
Months Ending | |||||
|
April 1 |
July 1 |
September 30 |
December 30 |
December 30 | |||||
|
Revenue |
- |
- |
- |
$25 - $35 |
$25 - $35 | ||||
|
Net income (loss) per share |
($0.01) |
($0.02) |
($0.03) |
($0.39 - 0.24) |
($0.45 - 0.30) | ||||
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SOURCE iRobot Corp.