iRobot Reports Second-Quarter Financial Results
BEDFORD, Mass., July 24, 2018 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the second quarter ended June 30, 2018.
"We delivered strong second-quarter revenue growth of 24% in Q2 2018 over Q2 2017, driven by growth across all major regions. EMEA and Japan saw significant year-over-year growth of 51% and 31%, respectively. EMEA growth was driven in part by the revenue uplift from our acquisition of our largest European distributor, which was closed at the beginning of Q4 2017. Shipments to support Q2 holidays in the United States drove domestic revenue growth of 15% over last year," said Colin Angle, chairman and chief executive officer of iRobot.
"Given our Q2 results and our outlook for the rest of the year, including our anticipated product launches in the second half of the year, we are updating our 2018 full-year expectations. We now anticipate full-year 2018 revenue of 1.06 to 1.08 billion dollars, which is year-over-year growth of 20 – 22%, full-year 2018 operating income of 90 to 96 million dollars, and full-year 2018 EPS of $2.30 to $2.50.
"We are continuing to execute against the strategy underlying our 2018 expectations and three-year financial targets which we believe is the most effective way to drive sustainable growth and shareholder value."
Financial Results
- Revenue for the second quarter of 2018 was $226.3 million, compared with $183.1 million for the second quarter of 2017. Revenue for the first half of 2018 was $443.4 million, compared with $351.6 million last year.
- Operating income in the second quarter of 2018 was $13.4 million, compared with $4.1 million in the second quarter of 2017. For the first half of 2018, operating income was $38.8 million, compared with $25.7 million a year ago.
- Quarterly earnings per share were $0.37 for the second quarter of 2018, compared with $0.27 in the second quarter of 2017. First-half earnings per share were $1.08, compared with $0.85 in the first half of 2017.
Business Highlights
- Roomba® was selected for the fourth straight year as a featured product for U.S. Amazon Prime Day. Our robots sold out, doubling the Prime Day sales volume as they have each year since the event began in 2015. Roomba® was also featured on Prime Day in EMEA and Japan this year for the first time, and the results in those regions were great.
- We announced a favorable initial determination from the International Trade Commission (ITC) regarding our patent infringement claims recommending an exclusion order barring the importation, into the United States, of certain robotic vacuum cleaners.
- We completed the previously announced stock repurchase program authorizing the purchase of up to $50 million of our common stock.
- We announced an increase in our revolving credit facility to $150 million and an extension of the term to 2023, giving the company additional flexibility to execute on the growth strategy.
- We implemented a U.K. principal company to optimize our global operating structure.
Financial Expectations
Management provides the following expectations with respect to the fiscal year ending December 29, 2018.
|
Fiscal Year 2018: |
Current |
Previous |
|
Revenue |
$1.06 - $1.08 billion |
$1.05 - $1.08 billion |
|
Operating Income |
$90 - $96 million |
$86 - $96 million |
|
Earnings Per Share |
$2.30 - $2.50 |
$2.15 - $2.40 |
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 2018, business outlook, and outlook for fiscal year 2018 financial performance. Pertinent details include:
|
Date: |
Wednesday, July 25, 2018 |
|
Time: |
8:30 a.m. ET |
|
Call-In Number: |
213-358-0894 |
|
Passcode: |
8376338 |
A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/events/event-details/q2-2018-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 August 1, and can be accessed by dialing 404-537-3406, passcode 8376338.
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 technologies to enable the smart home. For more information about iRobot, please visit www.irobot.com.
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; revenue growth; demand for robotic vacuum cleaners; the introduction of new products and the timing and impact thereof; the impact on our financial results of our U.K. principal company; and anticipated revenue, operating income and earnings per share for the fiscal year ended December 29, 2018. 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; the imposition of tariffs on goods imported into the United States; 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, gain on business acquisition, 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 30, |
July 1, |
June 30, |
July 1, | ||
|
2018 |
2017 |
2018 |
2017 | ||
|
Revenue |
$ 226,317 |
$ 183,148 |
$ 443,385 |
$ 351,615 | |
|
Cost of revenue: |
|||||
|
Cost of product revenue |
103,712 |
91,009 |
200,213 |
171,269 | |
|
Amortization of intangible assets |
4,679 |
2,248 |
9,461 |
3,112 | |
|
Total cost of revenue |
108,391 |
93,257 |
209,674 |
174,381 | |
|
Gross margin |
117,926 |
89,891 |
233,711 |
177,234 | |
|
Operating expenses: |
|||||
|
Research and development |
34,924 |
26,167 |
67,869 |
51,675 | |
|
Selling and marketing |
45,910 |
40,123 |
77,239 |
62,698 | |
|
General and administrative |
23,468 |
19,513 |
49,301 |
37,135 | |
|
Amortization of intangible assets |
269 |
- |
542 |
- | |
|
Total operating expenses |
104,571 |
85,803 |
194,951 |
151,508 | |
|
Operating income |
13,355 |
4,088 |
38,760 |
25,726 | |
|
Other income, net |
1,507 |
1,686 |
2,026 |
1,689 | |
|
Income before income taxes |
14,862 |
5,774 |
40,786 |
27,415 | |
|
Income tax expense (benefit) |
4,391 |
(2,129) |
9,914 |
3,153 | |
|
Net income |
$ 10,471 |
$ 7,903 |
$ 30,872 |
$ 24,262 | |
|
Net income per share |
|||||
|
Basic |
$ 0.38 |
$ 0.29 |
$ 1.11 |
$ 0.89 | |
|
Diluted |
$ 0.37 |
$ 0.27 |
$ 1.08 |
$ 0.85 | |
|
Number of shares used in per share calculations |
|||||
|
Basic |
27,615 |
27,516 |
27,802 |
27,410 | |
|
Diluted |
28,337 |
28,778 |
28,658 |
28,581 | |
|
Stock-based compensation included in above figures: |
|||||
|
Cost of revenue |
$ 347 |
$ 251 |
$ 688 |
$ 477 | |
|
Research and development |
1,794 |
1,147 |
3,483 |
2,246 | |
|
Selling and marketing |
750 |
571 |
1,488 |
1,141 | |
|
General and administrative |
3,540 |
2,735 |
6,718 |
5,171 | |
|
Total |
$ 6,431 |
$ 4,704 |
$ 12,377 |
$ 9,035 | |
|
iRobot Corporation | |||
|
Condensed Consolidated Balance Sheets | |||
|
(unaudited, in thousands) | |||
|
June 30, |
December 30, | ||
|
2018 |
2017 | ||
|
Assets |
|||
|
Cash and cash equivalents |
$ 88,783 |
$ 128,635 | |
|
Short term investments |
38,551 |
37,225 | |
|
Accounts receivable, net |
75,127 |
142,829 | |
|
Inventory |
115,377 |
106,932 | |
|
Other current assets |
30,608 |
19,105 | |
|
Total current assets |
348,446 |
434,726 | |
|
Property and equipment, net |
47,252 |
44,579 | |
|
Deferred tax assets |
33,154 |
31,531 | |
|
Goodwill |
118,319 |
121,440 | |
|
Intangible assets, net |
34,079 |
44,712 | |
|
Other assets |
15,531 |
14,534 | |
|
Total assets |
$ 596,781 |
$ 691,522 | |
|
Liabilities and stockholders' equity |
|||
|
Accounts payable |
$ 66,926 |
$ 116,316 | |
|
Accrued expenses |
51,574 |
73,647 | |
|
Deferred revenue and customer advances |
2,223 |
7,761 | |
|
Total current liabilities |
120,723 |
197,724 | |
|
Deferred tax liabilities |
7,190 |
9,539 | |
|
Other long-term liabilities |
10,827 |
13,932 | |
|
Total long-term liabilities |
18,017 |
23,471 | |
|
Total liabilities |
138,740 |
221,195 | |
|
Stockholders' equity |
458,041 |
470,327 | |
|
Total liabilities and stockholders' equity |
$ 596,781 |
$ 691,522 | |
|
iRobot Corporation | ||
|
Consolidated Statements of Cash Flows | ||
|
(unaudited, in thousands) | ||
|
For the six months ended | ||
|
June 30, |
July 1, | |
|
2018 |
2017 | |
|
Cash flows from operating activities: |
||
|
Net income |
$ 30,872 |
$ 24,262 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||
|
Depreciation and amortization |
17,662 |
8,815 |
|
Stock-based compensation |
12,377 |
9,035 |
|
Deferred income taxes, net |
(4,208) |
(2,656) |
|
Deferred rent |
586 |
- |
|
Other |
(258) |
(806) |
|
Changes in operating assets and liabilities — (use) source |
||
|
Accounts receivable |
66,085 |
18,489 |
|
Inventory |
(10,303) |
(10,820) |
|
Other assets |
(12,764) |
(7,478) |
|
Accounts payable |
(46,519) |
(1,953) |
|
Accrued expenses |
(20,266) |
(1,945) |
|
Deferred revenue and customer advances |
(3,970) |
(1,875) |
|
Long term liabilities |
(2,975) |
(278) |
|
Net cash provided by operating activities |
26,319 |
32,790 |
|
Cash flows from investing activities: |
||
|
Additions of property and equipment |
(14,284) |
(13,272) |
|
Change in other assets |
(1,837) |
(911) |
|
Cash paid for business acquisitions, net of cash acquired |
- |
(16,524) |
|
Purchases of investments |
(6,438) |
(7,034) |
|
Sales and maturities of investments |
7,000 |
7,000 |
|
Proceeds from sale of business unit and cost method investment |
629 |
1,056 |
|
Net cash used in investing activities |
(14,930) |
(29,685) |
|
Cash flows from financing activities: |
||
|
Proceeds from stock option exercises |
2,605 |
5,365 |
|
Income tax withholding payment associated with restricted stock vesting |
(3,532) |
(2,974) |
|
Stock repurchases |
(50,000) |
- |
|
Net cash (used in) provided by financing activities |
(50,927) |
2,391 |
|
Effect of exchange rate changes on cash and cash equivalents |
(314) |
154 |
|
Net (decrease) increase in cash and cash equivalents |
(39,852) |
5,650 |
|
Cash and cash equivalents, at beginning of period |
128,635 |
214,523 |
|
Cash and cash equivalents, at end of period |
$ 88,783 |
$ 220,173 |
|
iRobot Corporation | |||||
|
Supplemental Information | |||||
|
(unaudited) | |||||
|
For the three months ended |
For the six months ended | ||||
|
June 30, |
July 1, |
June 30, |
July 1, | ||
|
2018 |
2017 |
2018 |
2017 | ||
|
Revenue: * |
|||||
|
Consumer |
$ 226,317 |
$ 183,148 |
$ 443,385 |
$ 351,397 | |
|
Domestic |
$ 111,526 |
$ 97,315 |
$ 218,388 |
$ 182,104 | |
|
International |
$ 114,791 |
$ 85,833 |
$ 224,997 |
$ 169,293 | |
|
Gross Margin Percent |
52.1% |
49.1% |
52.7% |
50.4% | |
|
Consumer units shipped* |
953 |
749 |
1,768 |
1,453 | |
|
Vacuum |
819 |
639 |
1,530 |
1,222 | |
|
Mopping |
134 |
110 |
237 |
231 | |
|
Consumer revenue** |
$ 226 |
$ 183 |
$ 443 |
$ 351 | |
|
Vacuum*** |
$ 204 |
$ 165 |
$ 405 |
$ 317 | |
|
Mopping*** |
$ 22 |
$ 18 |
$ 38 |
$ 34 | |
|
Average gross selling prices for robot units - Consumer |
$ 285 |
$ 275 |
$ 296 |
$ 267 | |
|
Days sales outstanding |
30 |
21 |
30 |
21 | |
|
Days in inventory |
97 |
81 |
97 |
81 | |
|
Headcount |
982 |
760 |
982 |
760 | |
|
* in thousands | |||||
|
** in millions | |||||
|
*** includes accessory revenue | |||||
|
iRobot Corporation | |||||
|
Adjusted EBITDA Reconciliation to GAAP | |||||
|
(unaudited, in thousands) | |||||
|
For the three months ended |
For the six months ended | ||||
|
June 30, |
July 1, |
June 30, |
July 1, | ||
|
2018 |
2017 |
2018 |
2017 | ||
|
Net income |
$ 10,471 |
$ 7,903 |
$ 30,872 |
$ 24,262 | |
|
Interest income, net |
(221) |
(482) |
(551) |
(865) | |
|
Income tax expense |
4,391 |
(2,129) |
9,914 |
3,153 | |
|
Depreciation |
3,942 |
2,958 |
7,603 |
5,538 | |
|
Amortization |
4,973 |
2,280 |
10,059 |
3,186 | |
|
EBITDA |
23,556 |
10,530 |
57,897 |
35,274 | |
|
Stock-based compensation expense |
6,431 |
4,704 |
12,377 |
9,035 | |
|
Net merger, acquisition and divestiture expense |
164 |
931 |
23 |
1,771 | |
|
Net intellectual property litigation expense |
759 |
382 |
3,330 |
644 | |
|
Adjusted EBITDA |
$ 30,910 |
$ 16,547 |
$ 73,627 |
$ 46,724 | |
|
Adjusted EBITDA as a % of revenue |
13.7% |
9.0% |
16.6% |
13.3% | |
|
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, gain on business acquisition, 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 | |||||||||||
|
Effective Tax Rate | |||||||||||
|
(unaudited) | |||||||||||
|
Fiscal Year 2018 |
Fiscal Year 2017 | ||||||||||
|
Three Months Ended |
|||||||||||
|
March 31 |
June 30 |
September 29 |
December 29 |
FY18 |
FY17 | ||||||
|
Actual |
Actual |
Expected |
Expected |
Expected |
Actual | ||||||
|
Effective Tax Rate, before discrete items |
27% |
16% |
24-26% |
24-26% |
24-26% |
34% | |||||
|
Discrete Items |
-6% |
14% |
Not Forecasted |
-1% | |||||||
|
Effective Tax Rate, including discrete items |
21% |
30% |
Not Forecasted |
33% | |||||||
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SOURCE iRobot Corp.