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iRobot Reports Record Fourth-Quarter and Full-Year Financial Results

2/8/2012
BEDFORD, Mass., Feb. 8, 2012 – 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 December 31, 2011.
  • Revenue for the fourth quarter of 2011 increased 15 percent to $130.8 million, compared with $114.0 million for the same quarter one year ago. Revenue for the full year 2011 increased 16 percent to $465.5 million from $401.0 million for the full year 2010.

  • Net income in the fourth quarter of 2011 was $10.6 million, compared with $7.0 million in the fourth quarter of 2010. Net income for the full year 2011 was $40.2 million, compared with $25.5 million for the same period in 2010.

  • Quarterly earnings per share were $0.38, compared with $0.26 in the fourth quarter last year. Full-year earnings per share were $1.44, compared with $0.96 last year. The full-year results include the impact of a $3.5 million, or $0.12 per share, tax benefit in Q3 2011 and a $2.3 million, or $0.08 per share, tax benefit in Q3 2010. Excluding the impact of these tax benefits, earnings per share for the full year 2011 would have been $1.32, compared with $0.88 for the full year 2010.

  • Adjusted EBITDA for the fourth quarter of 2011 was $21.3 million, or 16 percent of revenue, compared with $11.7 million, or 10 percent of revenue, in the fourth quarter of 2010. Adjusted EBITDA for the full year 2011 was $73.0 million, compared with $49.3 million for the same period a year ago.

  • Raising Adjusted EBITDA margin target to high-teens by 2014.

“Our record financial results in 2011 were exceptional on all fronts, driven by especially strong performance in our Home Robots division. Revenue increased 16 percent to $465 million for the full year, while Adjusted EBITDA increased nearly 50 percent to $73 million or 16 percent of revenue,” said Colin Angle, chairman and chief executive officer of iRobot. “EPS of $1.44 for the year was up 50 percent from 2010.

“As we look at 2012, we feel very good about the growth opportunity for our home robot business in 2012 and beyond. However, we expect a decline in top and bottom line in our G&I division this year due to our current limited visibility in our defense business. We anticipate continued demand from the warfighters and support from military leadership for our products will drive higher revenue in the second half of 2012.

“To capitalize on our growing home robot business, intermediate and longer term opportunities in the defense business and exciting emerging opportunities, we will continue to make investments in marketing and iR&D that extend our leadership position.

"Given the underlying strength of our business model, I am confident that we will achieve our updated 3-year targets of:
  • Mid-to-high-teen revenue CAGR
  • High-teen Adjusted EBITDA margin and
  • High single digit OCF margin."

Business Highlights

  • Surpassed each of our 3 key long-term financial goals, including achievement of mid-teen Adjusted EBITDA margin target, a year ahead of schedule.
  • Strong demand in overseas markets drove a 21 percent year-over-year increase in full-year home robot revenue. International home robot revenue of $196 million comprised 70 percent of total home robot 2011 revenue.
  • Government & industrial robot revenue grew 9 percent in 2011, driven by shipments of Small Unmanned Ground Vehicles and spares.
  • In 2011, operating cash flow was $55.7 million, compared with $49.2 million in 2010. As a result of improved net income, our year-end cash and investment position was $184 million.

Financial Expectations

Management provides the following expectations with respect to the year ending December 29, 2012 and first quarter ending March 31, 2012.

Fiscal Year 2012:  
Revenue $465 - $485 million
Earnings Per Share
$0.75 - $0.95
Adjusted EBITDA
$56 - $63 million

 

Q1 2012:  
Revenue $90 - $100 million
Earnings Per Share
($0.08) - $0.00
Adjusted EBITDA
$2 - $5 million

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 2011, business outlook, and outlook for 2012 financial performance. Pertinent details include:
 
Date:  Thursday, February 9, 2012
Time:  8:30 a.m. ET
Call-In Number:  847-413-3362
Passcode:  31615791

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-irhome. 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 16, and can be accessed by dialing 630-652-3042, passcode 31615791#.

About iRobot Corp.
iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, and its government and industrial robots protect those in harm’s way. iRobot’s consumer and military robots feature iRobot Aware® robot intelligence systems, proprietary technology 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 and growth, demand for our robots, longer-term profitability and operating performance, and anticipated revenue, earnings per share and Adjusted EBITDA for the full year ending December 29, 2012 and the first quarter ending March 31, 2012. 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, market acceptance of our products, 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 release includes Adjusted EBITDA, a non-GAAP financial measure as defined by SEC Regulation G. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, merger and acquisition expenses, net intellectual property litigation related activity, restructuring related expense, and non-cash stock compensation. A reconciliation between net income and Adjusted EBITDA are provided in the financial tables at the end of this press release.

 

iRobot Corporation
Consolidated Statement of Income
(in thousands, except per share amounts)
(unaudited)
               
 
For the three months ended
 
For the twelve months ended
 
December 31, 2011
January 1,
2011
 
December 31,
2011
January 1,
2011
Revenue  
   
  Product revenue
$122,425
$103,287
 
$426,525
$360,394
  Contract revenue
8,343
10,708
 
38,975
40,558
      Total
130,768
113,995
 
465,500
400,952
 
 
Cost of Revenue
 
  Product revenue
69,210
62,506
 
246,905
228,403
  Contract revenue
5,473
6,001
 
26,477
27,117
      Total
74,683
68,507
 
273,382
255,520
 
 
Gross Margin
56,085
45,488
 
192,118
145,432
 
 
Operating Expense
 
  Research & development
10,675
8,434
 
36,498
24,809
  Selling & marketing
18,243
19,576
 
58,544
50,535
  General & administrative
12,094
9,925
 
43,753
36,618
      Total
41,012
37,935
 
138,795
111,962
 
 
Operating income
15,073
7,553
 
53,323
33,470
 
 
Other income (expense), net
(40)
136
 
218
504
 
 
Pre-tax income
15,033
7,689
 
53,541
33,974
Income tax expense
4,395
689
 
13,350
8,460
Net income
$ 10,638
$ 7,000
 
$ 40,191
$ 25,514
 
 
 
 
 
 
Net income per common share:
 
  Basic
$ 0.39
$ 0.27
 
$ 1.50
$ 1.00
  Diluted
$ 0.38
$ 0.26
 
$ 1.44
$ 0.96
 
 
 
Shares used in per common share calculations:
 
  Basic
27,119
25,604
 
26,712
25,394
  Diluted
28,147
26,798
 
27,924
26,468
 
 
 
 
Stock-based compensation included in above figures:
 
      Cost of product revenue
$ 281
$ 314
 
$ 1,197
$ 1,311
      Cost of contract revenue
113
109
 
478
446
      Research & development
262
237
 
743
725
      Selling & marketing
211
276
 
724
1,161
      General & administrative
1,531
1,197
 
5,642
4,522
         Total
$ 2,398
$ 2,133
 
$ 8,784
$ 8,165
 
 
 
 
 
 
           
           

 

iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)
           
 
December 31,
2011
 
January 1,
2011
Assets      
       
Cash and equivalents
$ 166,308
 
$ 108,383
Short term investments
17,811
 
13,928
Accounts receivable, net
43,338
 
34,056
Unbilled revenues
2,362
 
4,012
Inventory
31,089
 
27,160
Deferred tax assets
15,344
 
12,917
Other current assets
7,928
 
6,137
  Total current assets
284,180
 
206,593
Property, plant and equipment, net
29,029
 
25,620
Deferred tax assets
6,127
 
8,338
Other assets
12,877
 
13,780
Total assets
$ 332,213
 
$ 254,331
 
 
 
Liabilities and stockholders' equity
 
 
 
Accounts payable
$ 48,406
 
$ 38,689
Accrued expenses
17,188
 
15,790
Accrued compensation
17,879
 
17,827
Deferred revenue and customer advances
1,527
 
3,534
  Total current liabilities
85,000
 
75,840
Long term liabilities
4,255
 
3,584
Stockholders' equity
242,958
 
174,907
Total liabilities and stockholders' equity
$ 332,213
 
$ 254,331
   

 

 

iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)
           
 
For the three months ended
 
For the twelve months ended
 
December 31,
2011
January 1,
2011
 
December 31,
2011
January 1,
2011
   
     
Cash flows from operating activities:  
     
Net income
$ 10,638
$ 7,000
 
$ 40,191
$ 25,514
Adjustments to reconcile net income to net cash provided by operating activities:
     
     Depreciation and amortization
3,075
1,868
 
10,312
7,541
     Loss on disposal of property and equipment
123
87
 
599
204
     Stock-based compensation
2,398
2,133
 
8,784
8,165
     Deferred income taxes, net
(295)
(1,986)
 
6,154
(4,998)
     Tax benefit of excess stock based compensation      deductions
(915)
(1,767)
 
(6,917)
(2,622)
     Non-cash director deferred compensation
36
33
 
162
132
Changes in operating assets and liabilities - (use) source
     
     Accounts receivable
(1,938)
(6,262)
 
(9,282)
1,115
     Unbilled revenue
5,537
(1,478)
 
1,650
(2,181)
     Inventory
900
6,809
 
(3,929)
5,246
     Other assets
4,729
(3,092)
 
(1,843)
(2,082)
     Accounts payable
7,884
3,012
 
9,717
8,130
     Accrued expenses
1,951
1,810
 
1,421
1,495
     Accrued compensation
2,834
4,710
 
52
4,302
     Deferred revenue
(831)
1,511
 
(2,007)
(374)
     Change in long term liabilities
528
(108)
 
671
(430)
Net cash provided by operating activities
36,654
14,280
 
55,735
49,157
 
     
Cash flows from investing activities:
     
Purchase of property and equipment
(2,654)
(5,060)
 
(13,011)
(12,597)
Purchases of investments
(4,189)
-
 
(9,189)
(30,461)
Sales of investments
-
2,500
 
5,000
21,500
Net cash used in investing activities
(6,843)
(2,560)
 
(17,200)
(21,558)
 
     
Cash flows from financing activities:
     
Proceeds from stock option exercises
4,003
4,293
 
13,401
6,590
Income tax withholding payment associated with restricted stock vesting
(83)
-
 
(928)
(284)
Tax benefit of excess stock based compensation deductions
915
1,767
 
6,917
2,622
Net cash provided by financing activities
4,835
6,060
 
19,390
8,928
 
     
Net increase in cash and cash equivalents
34,646
17,780
 
57,925
36,527
Cash and cash equivalents, at beginning of period
131,662
90,603
 
108,383
71,856
Cash and cash equivalents, at end of period
$ 166,308
$ 108,383
 
$ 166,308
$ 108,383
 
 
 
 
 
 

 

 

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iRobot Corporation
Supplemental Information
(unaudited)
           
 
For the three months ended
 
For the twelve months ended
 
December 31,
2011
January 1,
2011
 
December 31,
2011
January 1,
2011
         
Revenue: *          
 
Home Robots
$ 74,435
$ 69,247
 
$ 278,551
$ 229,348
  Domestic
$ 24,371
$ 24,841
 
$ 82,787
$ 77,918
  International
$ 50,064
$ 44,406
 
$ 195,764
$ 151,430
 
Government & Industrial
$ 56,333
$ 44,748
 
$ 186,949
$ 171,604
  Domestic
$ 51,458
$ 41,779
 
$ 170,968
$ 154,404
  International
$ 4,875
$ 2,969
 
$ 15,981
$ 17,200
  Product
$ 47,990
$ 34,040
 
$ 147,974
$ 131,046
  Contract
$ 8,343
$ 10,708
 
$ 38,975
$ 40,558
 
  Product Life Cycle
$ 10,974
$ 11,490
 
$ 42,579
$ 38,101
 
 
 
 
 
 
 
Gross Margin Percent:
  Home Robots
45.8%
42.4%
45.2%
40.0%
  Government & Industrial
39.0%
36.0%
35.5%
31.3%
     Total Company
42.9%
39.9%
41.3%
36.3%
 
Units shipped:
  Home Robots *
358
380
1,371
1,269
  Government & Industrial
273
169
773
871
 
Average gross selling prices for robot units:
  Home Robots
$ 218
$ 194
$ 207
$ 189
  Government & Industrial *
$ 132
$ 133
 
$ 136
$ 107
 
 
Government & Industrial Funded Product Backlog *
$ 7,600
$ 23,869
 
$ 7,600
$ 23,869
 
 
Days sales outstanding
32
30
 
32
30
Days in inventory
41
40
 
41
40
Headcount
619
657
 
619
657
 
 
* in thousands
 

 

iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
           
 
For the three months ended
 
For the twelve months ended
 
December 31,
2011
January 1,
2011
 
December 31,
2011
January 1,
2011
           
Net income
$ 10,638
$ 7,000
 
$ 40,191
$ 25,514
       
Interest income, net
(212)
(193)
 
(967)
(765)
Income tax expense
4,395
689
 
13,350
8,460
Depreciation
2,387
1,741
 
9,002
7,002
Amortization
688
127
 
1,310
539
       
EBITDA
17,896
9,364
 
62,886
40,750
       
Stock-based compensation expense
2,398
2,133
 
8,784
8,165
Merger & acquisition expense
11
73
 
41
205
Net intellectual property litigation expense
116
110
 
287
181
Restructuring expense
914
-
 
1,015
-
       
Adjusted EBITDA
$ 21,335
$ 11,680
 
$ 73,013
$ 49,301
           



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 and amortization, merger and acquisition expenses, net intellectual property litigation expenses, restructuring expenses and non-cash stock compensation. 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
Non-GAAP Net Income and Earnings Per Share Reconciliations to GAAP
(in thousands, except per share amounts)
(unaudited)
           
 
For the three months ended
 
For the twelve months ended
 
December 31,
2011
January 1,
2011
 
December 31,
2011
January 1,
2011
           
GAAP net income
$ 10,638
$ 7,000
 
$ 40,191
$ 25,514
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance
-
-
 
-
(2,259)
Less one-time net income tax benefit associated with Section 199 deductions and R&D tax credit true-ups
-
-
 
(3,455)
-
Non-GAAP net income
$ 10,638
$ 7,000
 
$ 36,736
$ 23,255
           
GAAP net income per common share:
 
     Basic
$ 0.39
$ 0.27
 
$ 1.50
$ 1.00
     Diluted
$ 0.38
$ 0.26
 
$ 1.44
$ 0.96
       
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance
 
     Basic
$ -
$ -
 
$ -
$ (0.08)
     Diluted
$ -
$ -
 
$ -
$ (0.08)
       
Less one-time net income tax benefit associated with Section 199 deductions and R&D tax credit true-ups
 
     Basic
$ -
$ -
 
$ (0.12)
$ -
     Diluted
$ -
$ -
 
$ (0.12)
$ -
       
Non-GAAP net income per common share:          
     Basic
$ 0.39
$ 0.27
 
$ 1.38
$ 0.92
     Diluted
$ 0.38
$ 0.26
 
$ 1.32
$ 0.88
           
Shares used in per common share calculations:          
     Basic
27,119
25,604
 
26,712
25,394
     Diluted
28,147
26,798
 
27,924
26,468
           
<><><>

About iRobot Corp.
iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, and its government and industrial robots protect those in harm’s way. iRobot’s consumer and military robots feature iRobot Aware® robot intelligence systems, proprietary technology 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 concerning management's plans, objectives and strategies. 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. 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 including, without limitation, our most recent Annual Report on Form 10-K.

Contact:

Elise Caffrey
Investor Relations
iRobot Corp.
(781) 430-3003
ecaffrey@irobot.com
Matt Lloyd
Media Relations
iRobot Corp.
(781) 430-3720
mlloyd@irobot.com