iRobot Reports Fourth-Quarter and Full-Year Financial Results
Q4 and Full-Year Revenue and EPS Exceed Expectations; Record 4th Quarter Revenue
Plans Incremental 2016 Investment to Drive Longer-Term Growth
Q4 and Full-Year Revenue and EPS Exceed Expectations; Record 4th Quarter Revenue
Plans Incremental 2016 Investment to Drive Longer-Term Growth
BEDFORD, Mass., Feb. 10, 2016 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the fourth quarter and full year ended January 2, 2016.
"2015 was another great year for iRobot. Throughout the year, we made strategic investments in our business that drove record quarterly revenue and resulted in revenue and EPS that exceeded our expectations," said Colin Angle, chairman and chief executive officer of iRobot. "The divestiture of the Defense & Security business announced on February 4, 2016 will allow us to focus on the home and deliver accelerated revenue growth in 2016 and beyond.
"Revenue, excluding D&S, is expected to grow 11 - 13% in 2016 as we expand worldwide distribution of Roomba 980, tap further into a large and growing market in China and build our wet floor care business. Our Roomba marketing programs were highly successful in the United States, where Q4 sell through at our top 5 retailers was up more than 70% year-on-year, resulting in a significant return on our investment. We are highly confident that we have the right marketing mix to export overseas to accelerate growth in those markets, and we expect revenue in all three geographic regions to grow in the low to mid-teens in 2016.
"Looking over a 3-year horizon, it is critical that we make strategic investments today to drive diversification of Home revenue for the future. This will include product diversification through more significant contributions from wet floor care as well as future revenue opportunities from connected, mapping products. This will also include more significant regional diversification as China continues to ramp and Japan returns to growth. The capital allocation and investment decisions we are making today will pave the road for higher revenue acceleration in 2017 and 2018.
"For 2016, we expect revenue of $630 to $642 million, EPS of between $1.20 and $1.40, and Adjusted EBITDA of $80 to $90 million. Expectations include a stub period of one quarter of Defense & Security results as well as the impact of one-time divestiture costs, most of which we expect to incur during Q1 2016."
Financial Results
Business Highlights
Financial Expectations
Management provides the following expectations with respect to the year ending December 31, 2016 and first quarter ending April 2, 2016. The expectations assume the divestiture is closed during the first quarter, but the exact timing is uncertain, resulting in the following ranges for guidance:
| Fiscal Year 2016: |
|
| Revenue |
$630 - $642 million |
| Earnings Per Share* |
$1.20 - $1.40 |
| Adjusted EBITDA |
$80 - $90 million |
| Full-Year 2016 BU Revenue: |
|
| Home |
$625 - $635 million |
| Other |
$2 - $7 million |
| Q1 2016: |
|
| Revenue |
$125 - $135 million |
| (Loss)/Earnings Per Share* |
($0.03) – $0.04 |
| Adjusted EBITDA |
$8 - $11 million |
| * Includes approximately $0.05 of one-time divestiture costs as well as $0.05-$0.07 of D&S stub period loss for Q1. |
Fourth-Quarter and Full-Year Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the fourth fiscal quarter and full year 2015, and outlook for the first fiscal quarter and full year 2016 financial performance. Pertinent details include:
Date: Thursday, February 11, 2016
Time: 8:30 a.m. ET
Call-In Number: 847-619-6397
Passcode: 40924296
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=5206137. 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 February 18, and can be accessed by dialing 630-652-3042, passcode 40924296#.
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. Its remote presence robots enable virtual presence from anywhere in the world. iRobot's portfolio of solutions feature proprietary technologies for the connected home and 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, the rate of revenue growth, demand for our robots, strategic investments to diversify Home revenue, the impact of the divestiture of our Defense & Security business, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2016 and the first quarter ending April 2, 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 and revenue and net income per share excluding Defense & Security revenue, which are non-GAAP financial measures as defined by SEC Regulation G. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense, merger, acquisition and divestiture expense, net intellectual property litigation expense, and restructuring expense. Reconciliations between net income and Adjusted EBITDA, between revenue and revenue excluding Defense & Security revenue, and between net income per share and net income per share excluding Defense & Security net income per share, are 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 twelve months ended |
||||
| January 2, |
December 27, |
January 2, |
December 27, |
||
| 2016 |
2014 |
2016 |
2014 |
||
| Revenue |
206,420 |
159,342 |
616,778 |
556,846 |
|
| Cost of revenue |
111,093 |
83,007 |
327,852 |
298,791 |
|
| Gross margin |
95,327 |
76,335 |
288,926 |
258,055 |
|
| Operating expenses: |
|||||
| Research and development |
20,185 |
17,886 |
76,071 |
69,408 |
|
| Selling and marketing |
36,876 |
32,180 |
97,772 |
86,091 |
|
| General and administrative |
15,270 |
13,501 |
54,465 |
49,439 |
|
| Total operating expenses |
72,331 |
63,567 |
228,308 |
204,938 |
|
| Operating income |
22,996 |
12,768 |
60,618 |
53,117 |
|
| Other income (expense), net |
3,301 |
(239) |
2,353 |
(708) |
|
| Income before income taxes |
26,297 |
12,529 |
62,971 |
52,409 |
|
| Income tax expense |
6,966 |
3,143 |
18,841 |
14,606 |
|
| Net income |
$ 19,331 |
$ 9,386 |
$ 44,130 |
$ 37,803 |
|
| Net income per share |
|||||
| Basic |
$ 0.66 |
$ 0.32 |
$ 1.49 |
$ 1.28 |
|
| Diluted |
$ 0.65 |
$ 0.31 |
$ 1.47 |
$ 1.25 |
|
| Number of shares used in per share calculations |
|||||
| Basic |
29,140 |
29,626 |
29,550 |
29,485 |
|
| Diluted |
29,602 |
30,240 |
30,107 |
30,210 |
|
| Stock-based compensation included in above figures: |
|||||
| Cost of revenue |
$ 414 |
$ 239 |
$ 1,076 |
$ 865 |
|
| Research and development |
519 |
934 |
3,256 |
3,359 |
|
| Selling and marketing |
368 |
436 |
1,457 |
1,296 |
|
| General and administrative |
2,420 |
2,153 |
8,394 |
8,258 |
|
| Total |
$ 3,721 |
$ 3,762 |
$ 14,183 |
$ 13,778 |
|
| iRobot Corporation |
|||
| Condensed Consolidated Balance Sheets |
|||
| (unaudited, in thousands) |
|||
| January 2, |
December 27, |
||
| 2016 |
2014 |
||
| Assets |
|||
| Cash and cash equivalents |
$ 179,915 |
$ 185,957 |
|
| Short term investments |
33,124 |
36,166 |
|
| Accounts receivable, net |
104,679 |
71,056 |
|
| Unbilled revenue |
452 |
2,614 |
|
| Inventory |
61,678 |
47,857 |
|
| Deferred tax assets |
- |
21,505 |
|
| Other current assets |
9,501 |
9,704 |
|
| Total current assets |
389,349 |
374,859 |
|
| Property and equipment, net |
26,850 |
31,297 |
|
| Deferred tax assets |
31,721 |
8,409 |
|
| Goodwill |
48,751 |
48,751 |
|
| Intangible assets, net |
15,664 |
19,146 |
|
| Other assets |
9,408 |
10,751 |
|
| Total assets |
$ 521,743 |
$ 493,213 |
|
| Liabilities and stockholders' equity |
|||
| Accounts payable |
$ 61,655 |
$ 60,256 |
|
| Accrued expenses |
15,954 |
18,701 |
|
| Accrued compensation |
15,752 |
16,235 |
|
| Deferred revenue and customer advances |
3,265 |
3,849 |
|
| Total current liabilities |
96,626 |
99,041 |
|
| Long term liabilities |
7,706 |
3,736 |
|
| Stockholders' equity |
417,411 |
390,436 |
|
| Total liabilities and stockholders' equity |
$ 521,743 |
$ 493,213 |
|
| iRobot Corporation |
||
| Consolidated Statements of Cash Flows |
||
| (unaudited, in thousands) |
||
| For the twelve months ended |
||
| January 2, |
December 27, |
|
| 2016 |
2014 |
|
| Cash flows from operating activities: |
||
| Net income |
$ 44,130 |
$ 37,803 |
| Adjustments to reconcile net income to net cash provided by operating activities: |
||
| Depreciation and amortization |
15,090 |
13,049 |
| Loss on disposal of property and equipment |
214 |
246 |
| Gain on sale of investment |
(3,287) |
- |
| Stock-based compensation |
14,183 |
13,778 |
| Deferred income taxes, net |
(985) |
3,101 |
| Tax benefit of excess stock-based compensation deductions |
(1,467) |
(3,051) |
| Non-cash director deferred compensation |
149 |
49 |
| Changes in operating assets and liabilities — (use) source |
||
| Accounts receivable |
(33,623) |
(31,708) |
| Unbilled revenue |
2,162 |
(1,758) |
| Inventory |
(13,978) |
(2,387) |
| Other assets |
203 |
(2,856) |
| Accounts payable |
3,786 |
16,249 |
| Accrued expenses |
(2,768) |
3,695 |
| Accrued compensation |
(483) |
(3,371) |
| Deferred revenue and customer advances |
(584) |
(1,236) |
| Long term liabilities |
3,970 |
(997) |
| Net cash provided by operating activities |
26,712 |
40,606 |
| Cash flows from investing activities: |
||
| Additions of property and equipment |
(9,372) |
(13,774) |
| Change in other assets |
(1,015) |
(250) |
| Proceeds from sale of cost method investment |
5,645 |
- |
| Purchase of investments |
(17,755) |
(31,219) |
| Sales of investments |
20,500 |
16,500 |
| Net cash used in investing activities |
(1,997) |
(28,743) |
| Cash flows from financing activities: |
||
| Income tax withholding payment associated with restricted stock vesting |
(1,295) |
(1,626) |
| Proceeds from stock option exercises |
6,464 |
8,943 |
| Stock repurchases |
(37,393) |
(1,678) |
| Tax benefit of excess stock-based compensation deductions |
1,467 |
3,051 |
| Net cash provided by (used in) financing activities |
(30,757) |
8,690 |
| Net increase (decrease) in cash and cash equivalents |
(6,042) |
20,553 |
| Cash and cash equivalents, at beginning of period |
185,957 |
165,404 |
| Cash and cash equivalents, at end of period |
$ 179,915 |
$ 185,957 |
| iRobot Corporation |
|||||
| Supplemental Information |
|||||
| (unaudited) |
|||||
| For the three months ended |
For the twelve months ended |
||||
| January 2, |
December 27, |
January 2, |
December 27, |
||
| 2016 |
2014 |
2016 |
2014 |
||
| Revenue: * |
|||||
| Home Robots |
$ 175,197 |
$ 134,131 |
$ 559,619 |
$ 507,414 |
|
| Domestic |
$ 84,317 |
$ 57,759 |
$ 234,904 |
$ 187,643 |
|
| International |
$ 90,880 |
$ 76,372 |
$ 324,715 |
$ 319,771 |
|
| Defense & Security |
$ 30,504 |
$ 24,133 |
$ 55,004 |
$ 45,502 |
|
| Domestic |
$ 23,437 |
$ 16,483 |
$ 34,304 |
$ 26,825 |
|
| International |
$ 7,067 |
$ 7,650 |
$ 20,700 |
$ 18,677 |
|
| Product |
$ 30,184 |
$ 21,367 |
$ 54,080 |
$ 42,314 |
|
| Contract |
$ 320 |
$ 2,766 |
$ 924 |
$ 3,188 |
|
| Product Life Cycle |
$ 20,097 |
$ 16,290 |
$ 31,561 |
$ 27,493 |
|
| Gross Margin Percent: |
|||||
| Home Robots |
49.2% |
52.2% |
50.9% |
50.5% |
|
| Defense & Security |
50.7% |
47.4% |
45.9% |
46.4% |
|
| Total Company |
46.2% |
47.9% |
46.8% |
46.3% |
|
| Units shipped: |
|||||
| Home Robots * |
771 |
571 |
2,436 |
2,174 |
|
| Defense & Security |
102 |
135 |
294 |
265 |
|
| Average gross selling prices for robot units: |
|||||
| Home Robots |
$ 262 |
$ 255 |
$ 251 |
$ 245 |
|
| Defense & Security * |
$ 99 |
$ 37 |
$ 77 |
$ 56 |
|
| Defense & Security Funded Product Backlog * |
$ 10,464 |
$ 18,188 |
$ 10,464 |
$ 18,188 |
|
| Days sales outstanding |
46 |
42 |
46 |
42 |
|
| Days in inventory |
51 |
53 |
51 |
53 |
|
| Headcount |
622 |
572 |
622 |
572 |
|
| * in thousands |
|||||
| iRobot Corporation |
|||||
| Adjusted EBITDA Reconciliation to GAAP |
|||||
| (unaudited, in thousands) |
|||||
| For the three months ended |
For the twelve months ended |
||||
| January 2, |
December 27, |
January 2, |
December 27, |
||
| 2016 |
2014 |
2016 |
2014 |
||
| Net income |
$ 19,331 |
$ 9,386 |
$ 44,130 |
$ 37,803 |
|
| Interest income, net |
(196) |
(174) |
(678) |
(673) |
|
| Income tax expense |
6,966 |
3,143 |
18,841 |
14,606 |
|
| Depreciation |
3,599 |
2,516 |
11,375 |
9,192 |
|
| Amortization |
922 |
955 |
3,715 |
3,857 |
|
| EBITDA |
30,622 |
15,826 |
77,383 |
64,785 |
|
| Stock-based compensation expense |
3,721 |
3,762 |
14,183 |
13,778 |
|
| Merger, acquisition and divestiture expense* |
567 |
- |
822 |
- |
|
| Net intellectual property litigation (income) expense |
99 |
73 |
(394) |
1,214 |
|
| Restructuring expense |
- |
- |
- |
- |
|
| Adjusted EBITDA |
$ 35,009 |
$ 19,661 |
$ 91,994 |
$ 79,777 |
|
| * This definition was modified in the fourth quarter of fiscal 2015 to incorporate divestiture related costs. The $822,000 for the twelve month period ended January 2, 2016 includes $255,000 of costs not previously reported that were incurred in fiscal 2015 prior to the fourth quarter of 2015. |
|||||||
| 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, acquisition and divestiture 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 |
||||||||||||
| Impact of Anticipated Defense and Security (D&S) Divestiture |
||||||||||||
| (in millions, except per share amounts) |
||||||||||||
| (unaudited) |
||||||||||||
| For the fiscal year ended January 2, 2016 |
||||||||||||
| Gross margin |
Operating expenses |
Operating income |
Net income |
|||||||||
| Revenue |
$ |
% |
$ |
% |
$ |
% |
per share |
|||||
| As reported (GAAP) * |
$ 617 |
$ 289 |
46.8% |
$ 228 |
37.0% |
$ 61 |
9.9% |
$1.47 |
||||
| D&S related ** |
55 |
24 |
43.6% |
20 |
36.4% |
4 |
7.3% |
$0.10 |
||||
| Excluding D&S (Non-GAAP) * |
$ 562 |
$ 265 |
47.2% |
$ 208 |
37.0% |
$ 57 |
10.1% |
$1.37 |
||||
| Financial expectations for the fiscal year ending December 31, 2016 |
||||||||||||
| Net income |
||||||||||||
| Revenue |
Gross margin % |
Operating expense % |
Operating income % |
per share |
||||||||
| Expected (GAAP) * |
$630 - $642 |
47% - 48% |
38% - 39% |
8% - 9% |
$1.20 - $1.40 |
|||||||
| D&S related ** |
$2 - $7 |
37% - 38% |
120% - 150% |
(100% - 110%) |
($0.10 - $0.12) |
|||||||
| Excluding D&S (Non-GAAP) * |
$625 - $635 |
47% - 48% |
38% - 39% |
9% - 10% |
$1.30 - $1.50 |
|||||||
| * GAAP refers to U.S. generally accepted accounting principles. |
||||||||||||
| ** Includes divestiture related costs. |
||||||||||||
| iRobot Corporation |
|||
| Impact of Anticipated Defense and Security (D&S) Divestiture on Revenue |
|||
| (unaudited, in millions) |
|||
| Fiscal year ended |
Fiscal year ending |
||
| Consolidated revenue including D&S |
$617 |
$630 - $642 |
|
| Year-over-year growth % |
11% |
2% - 4% |
|
| Full year D&S revenue |
$55 |
$2 -$7 * |
|
| Consolidated revenue excluding D&S |
$562 |
$625 - $635 |
|
| Year-over-year growth % |
10% |
11% - 13% |
|
| * Assumes the D&S divestiture is closed during the first quarter. |
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SOURCE iRobot Corp.
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