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iRobot First-Quarter Financial Results Exceed Expectations

4/22/2014
Home Robot Revenue Grew in All Three Regions; Up 17% in the First Quarter Over Last Year

BEDFORD, Mass., April 22, 2014 -- iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the first quarter ended March 29, 2014.

"We kicked off 2014 with an excellent quarter. The results and outlook for our Home Robot business are excellent. We were very excited to announce the availability of our Ava 500 video collaboration robot, and our Defense & Security business performed as expected," said Colin Angle, chairman and chief executive officer of iRobot.

"Based on our Q1 results and our outlook for the rest of 2014, we are reaffirming our full-year financial expectations of revenue between $560 and $570 million, EPS of $1.00 to $1.15 and Adjusted EBITDA of $74 to $78 million, or roughly 14 percent of revenue. These expectations are a strong next step in progressing towards our three-year targets."

Financial Results

  • Revenue for the first quarter of 2014 was $114.2 million, compared with $106.2 million for the first quarter of 2013.
  • Net income in the first quarter of 2014 was $5.3 million, compared with net income of $8.4 million in the first quarter of 2013.
  • Quarterly earnings per share were $0.18, compared with earnings per share of $0.29 in the first quarter of 2013. Q1 2013 EPS included an $0.08 benefit from investment tax credits.
  • Adjusted EBITDA for the first quarter of 2014 was $14.2 million, compared with $15.2 million in the first quarter of 2013.

Business Highlights

  • Home Robot business delivered excellent growth on an ever-increasing base. Home robot revenue growth in all three geographic regions contributed to year-over-year growth of 17 percent for the first quarter over last year.
  • Launched the revolutionary new Roomba 880 in limited domestic retailers and select European and Asian markets; Scooba 450 floor scrubbing robot was launched on our website in January.
  • In April, received the first orders for Ava 500 video collaboration robot, launched in March in the United States, Canada and limited European markets through select certified Cisco resellers.

Financial Expectations

Management provides the following expectations with respect to the second quarter ending June 28, 2014 and fiscal year ending December 27, 2014.

Q2 2014:


Revenue

$138 - $145 million

Earnings Per Share

$0.15 - $0.25

Adjusted EBITDA

$13 - $17 million



Fiscal Year 2014:


Revenue

$560 - $570 million

Earnings Per Share

$1.00 - $1.15

Adjusted EBITDA

$74 - $78 million

First-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the first fiscal quarter 2014, business outlook, and outlook for second-quarter and fiscal year 2014 financial performance. Pertinent details include:


Date:

Wednesday, April 23, 2014


Time:

8:30 a.m. ET


Call-In Number:

847-619-6396


Passcode:

35939102

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=5041607. 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 April 30, and can be accessed by dialing 630-652-3042, passcode 35939102#.

About iRobot Corp.
iRobot designs and builds robots that make a difference. The company's home robots help people find smarter ways to clean, its defense & security robots protect those in harm's way, and its remote presence robots enable virtual presence from anywhere in the world. iRobot's consumer and military robots feature proprietary technologies 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, future operating performance and growth, outlook for our businesses, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2014 and the second quarter ending June 28, 2014. 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, our dependence on the U.S. federal government and government contracts, the timing of government contracts and orders, 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 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 and amortization, merger and acquisition expense, net intellectual property litigation expense, restructuring expense, and stock-based 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 Statement of Income

(in thousands, except per share amounts)

(unaudited)








For the three months ended


March 29,

March 30,


2014

2013




Revenue

$ 114,204

$ 106,195

Cost of Revenue

62,494

59,668




Gross Margin

51,710

46,527




Operating Expense



Research & development

16,934

14,408

Selling & marketing

14,532

10,697

General & administrative

12,264

12,458

Total

43,730

37,563




Operating income

7,980

8,964




Other income (expense), net

(187)

(96)




Income before income taxes

7,793

8,868

Income tax expense

2,513

513

Net income

$ 5,280

$ 8,355




Net income per common share:



Basic

$ 0.18

$ 0.30

Diluted

$ 0.18

$ 0.29




Shares used in per common share calculations:



Basic

29,189

27,930

Diluted

30,033

28,558







Stock-based compensation included in above figures:



Cost of revenue

$ 169

$ 118

Research & development

731

501

Selling & marketing

338

366

General & administrative

1,840

1,944

Total

$ 3,078

$ 2,929




iRobot Corporation

Condensed Consolidated Balance Sheet

(unaudited, in thousands)






March 29,


December 28,


2014


2013





Assets








Cash and equivalents

$ 154,824


$ 165,404

Short term investments

30,540


21,954

Accounts receivable, net

36,540


39,348

Unbilled revenues

931


856

Inventory

41,390


46,107

Deferred tax assets

19,950


20,144

Other current assets

10,436


6,848

Total current assets

294,611


300,661

Property, plant and equipment, net

25,119


23,661

Deferred tax assets

10,433


10,095

Goodwill

48,751


48,751

Intangible assets, net

21,764


22,668

Other assets

10,501


10,501

Total assets

$ 411,179


$ 416,337





Liabilities and stockholders' equity








Accounts payable

$ 34,221


$ 41,344

Accrued expenses

13,563


14,880

Accrued compensation

7,744


19,606

Deferred revenue and customer advances

4,420


5,085

Total current liabilities

59,948


80,915

Long term liabilities

4,414


4,733

Stockholders' equity

346,817


330,689

Total liabilities and stockholders' equity

$ 411,179


$ 416,337





iRobot Corporation

Consolidated Statement of Cash Flows

(unaudited, in thousands)








For the three months ended


March 29,

March 30,


2014

2013

Cash flows from operating activities:



Net income

$ 5,280

$ 8,355

Adjustments to reconcile net income to net cash provided by (used in) operating activities:



Depreciation and amortization

3,142

3,284

Loss on disposal of property and equipment

(10)

182

Stock-based compensation

3,078

2,929

Deferred income taxes, net

1,912

(449)

Tax benefit of excess stock based compensation deductions

(2,231)

(43)

Non-cash director deferred compensation

11

11

Changes in operating assets and liabilities — (use) source



Accounts receivable

2,808

2,133

Unbilled revenue

(75)

(1,056)

Inventory

4,080

4,805

Other assets

(3,588)

(983)

Accounts payable

(7,924)

(12,711)

Accrued expenses

(1,399)

379

Accrued compensation

(11,862)

(4,867)

Deferred revenue and customer advances

(665)

(2,628)

Change in long term liabilities

(319)

815

Net cash provided by (used in) operating activities

(7,762)

156




Cash flows from investing activities:



Purchase of property and equipment

(2,177)

(1,077)

Change in other assets

-

(2,000)

Purchases of investments

(11,211)

(2,547)

Sales of investments

2,500

1,000

Net cash used in investing activities

(10,888)

(4,624)




Cash flows from financing activities:



Proceeds from stock option exercises

6,957

1,744

Income tax withholding payment associated with restricted stock vesting

(1,118)

(513)

Tax benefit of excess stock based compensation deductions

2,231

43

Net cash provided by financing activities

8,070

1,274




Net decrease in cash and cash equivalents

(10,580)

(3,194)

Cash and cash equivalents, at beginning of period

165,404

126,770

Cash and cash equivalents, at end of period

$ 154,824

$ 123,576




iRobot Corporation

Supplemental Information

(unaudited)








For the three months ended


March 29,

March 30,


2014

2013




Revenue: *






Home Robots

$ 108,035

$ 92,699




Domestic

$ 41,030

$ 31,391

International

$ 67,005

$ 61,308







Defense & Security

$ 5,602

$ 11,100




Domestic

$ 3,191

$ 9,112

International

$ 2,411

$ 1,988




Product

$ 5,592

$ 8,035

Contract

$ 10

$ 3,065




Product Life Cycle

$ 3,533

$ 6,083







Gross Margin Percent:



Home Robots

50.4%

48.2%

Defense & Security

37.2%

47.5%

Total Company

45.3%

43.8%







Units shipped:



Home Robots *

465

421

Defense & Security

38

18







Average gross selling prices for robot units:



Home Robots

$ 243

$ 230

Defense & Security *

$ 54

$ 108







Defense & Security Funded Product Backlog *

$ 12,444

$ 30,110







Days sales outstanding

30

25




Days in inventory

61

51




Headcount

539

531







* in thousands







iRobot Corporation

Adjusted EBITDA Reconciliation to GAAP

(unaudited, in thousands)








For the three months ended


March 29,

March 30,


2014

2013




Net income

$ 5,280

$ 8,355




Interest income, net

(145)

(164)

Income tax expense

2,513

513

Depreciation

2,167

2,219

Amortization

975

1,065




EBITDA

10,790

11,988







Stock-based compensation expense

3,078

2,929

Merger and acquisition expense

-

280

Net intellectual property litigation expense

369

33

Restructuring expense

-

-




Adjusted EBITDA

$ 14,237

$ 15,230










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.



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