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Press release from Business Wire

iRobot Reports Fourth-Quarter and Full-Year Financial Results

<p class='bwalignc'> <i>Home Robot Business Expected to Grow More Than 20 Percent in 2013</i> </p>

Wednesday, February 06, 2013

iRobot Reports Fourth-Quarter and Full-Year Financial Results16:01 EST Wednesday, February 06, 2013 BEDFORD, Mass. (Business Wire) -- 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 29, 2012. “Our Home Robot business had a phenomenal year with revenue increasing 28 percent over 2011, but as expected, the decline in Defense & Security revenue resulted in lower total company revenue and profit for the year,” said Colin Angle, chairman and chief executive officer of iRobot. “2012 was a transformational year for our business, and as we enter 2013, we are a different company than we were a year ago. Our business performance over the next few years will be driven by our rapidly growing home technology business. Home Robots is expected to grow roughly 20 percent this year and comprise 90 percent of total company revenue. In addition, we have an emerging remote presence business and have stabilized our defense business.” Revenue for the fourth quarter of 2012 was $100.7 million, compared with $130.8 million for the same quarter one year ago. Revenue for the full year 2012 was $436.2 million, compared with $465.5 million for the full year 2011. Net loss in the fourth quarter of 2012 was $5.9 million, compared with net income of $10.6 million in the fourth quarter of 2011. Net income for the full year 2012 was $17.3 million, compared with $40.2 million for the same period in 2011. Quarterly loss per share was ($0.21), compared with earnings per share of $0.38 in the fourth quarter last year. Full-year earnings per share were $0.61, compared with $1.44 last year. The Q4 and full year results include the negative impact of $0.22 and $0.27, respectively, from restructuring the Defense & Security business and the inclusion of Evolution Robotics, acquired on October 1, 2012. Adjusted EBITDA for the fourth quarter of 2012 was $1.0 million, compared with $21.3 million in the fourth quarter of 2011. Adjusted EBITDA for the full year 2012 was $52.5 million, compared with $73.0 million for the same period a year ago. Business Highlights Full-year domestic Home Robot revenue growth of more than 40 percent, coupled with international revenue growth of 22 percent, drovea28 percent year-over-year increase in full-year Home Robot revenue. International Home Robot revenue of $239 million comprised 67 percent of total Home Robot 2012 revenue. Closed the acquisition of Evolution Robotics (ER) on October 1, 2012. We are on schedule with our integration and ahead of schedule on our planned rollout of ER's Mint® floor sweeping robot to our international distributors. Received a $7 million order from a foreign government for PackBot® systems. International sales are expected to contribute roughly one-third of 2013 product revenue in our Defense & Security business unit. Received FDA approval for RP-VITA, the first self-navigating communications robot for use in hospitals. Our 2013 Home Robot expectations reflect continued strong growth domestically and continuing economic uncertainties in Europe. Financial Expectations Management provides the following expectations with respect to the year ending December 28, 2013 and first quarter ending March 30, 2013. Fiscal Year 2013:     Revenue $480 - $490 million Earnings Per Share $0.57 - $0.72 Adjusted EBITDA $46 - $52 million   Full-Year 2013 BU Revenue: Home Robots $430 - $435 million Defense & Security Robots $45 - $55 million   Q1 2013: Revenue $98 - $102 million Earnings Per Share $0.00 - $0.07 Adjusted EBITDA $4 - $6 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 2012, business outlook, and outlook for 2013 financial performance. Pertinent details include: Date:     Thursday, February 7, 2013 Time: 8:30 a.m. ET Call-In Number: 847-619-6818 Passcode: 34160560 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=4897481. 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 14, and can be accessed by dialing 630-652-3000, passcode 34160560#. 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 defense & security 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, operating performance and growth, demand for our robots, anticipated growth of our Home Robots business and anticipated increase of Home Robots revenue as a percentage of total revenue, anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2013 and the first quarter ending March 30, 2013, and anticipated business unit revenue for the fiscal year 2013. 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 press release includes Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, each of 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 expenses, net intellectual property litigation expenses, restructuring expenses, and non-cash stock compensation. We define Adjusted net income (loss) and Adjusted net income (loss) per share as net income (loss) and net income (loss) per share, respectively, excluding the impact of a one-time tax benefit. Reconciliations between net income (loss) and Adjusted EBITDA, net income (loss) and Adjusted net income (loss), and net income (loss) per share and Adjusted net income (loss) per share 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 29, December 31, December 29, December 31, 2012     2011 2012     2011 Revenue Product revenue $ 97,874 $ 122,425 $ 418,550 $ 426,525 Contract revenue   2,820         8,343     17,694       38,975 Total   100,694         130,768     436,244       465,500   Cost of Revenue Product revenue 55,667 69,210 239,745 246,905 Contract revenue   3,673         5,473     16,783       26,477 Total   59,340         74,683     256,528       273,382   Gross Margin 41,354 56,085 179,716 192,118   Operating Expense Research & development 10,418 10,675 37,215 36,498 Selling & marketing 26,503 18,243 71,631 58,544 General & administrative   13,308         12,094     45,698       43,753 Total   50,229         41,012     154,544       138,795   Operating income (loss) (8,875 ) 15,073 25,172 53,323   Other income (expense), net   (42 )       (40 )   435       218   Pre-tax income (loss) (8,917 ) 15,033 25,607 53,541 Income tax expense (benefit)   (2,979 )       4,395     8,310       13,350 Net income (loss) $ (5,938 )     $ 10,638   $ 17,297     $ 40,191   Net income (loss) per common share: Basic $ (0.21 ) $ 0.39 $ 0.63 $ 1.50 Diluted $ (0.21 ) $ 0.38 $ 0.61 $ 1.44   Shares used in per common share calculations: Basic 27,802 27,119 27,577 26,712 Diluted 27,802 28,147 28,301 27,924     Stock-based compensation included in above figures: Cost of product revenue $ 295 $ 281 $ 1,187 $ 1,197 Cost of contract revenue 90 113 410 478 Research & development 422 262 1,195 743 Selling & marketing 234 211 808 724 General & administrative   1,919         1,531       7,383       5,642 Total $ 2,960       $ 2,398     $ 10,983     $ 8,784   iRobot Corporation Condensed Consolidated Balance Sheet (unaudited, in thousands)         December 29, December 31, 2012 2011   Assets   Cash and equivalents $ 126,770 $ 166,308 Short term investments 12,430 17,811 Accounts receivable, net 29,413 43,338 Unbilled revenues 1,196 2,362 Inventory 36,965 31,089 Deferred tax assets 19,266 15,344 Other current assets   11,518   7,928 Total current assets 237,558 284,180 Property, plant and equipment, net 24,953 29,029 Deferred tax assets 8,610 6,127 Goodwill 48,951 7,910 Intangible assets, net 28,224 2,467 Other assets   8,500   2,500 Total assets $ 356,796 $ 332,213   Liabilities and stockholders' equity   Accounts payable $ 42,515 $ 48,406 Accrued expenses 16,527 17,188 Accrued compensation 11,864 17,879 Deferred revenue and customer advances   6,257   1,527 Total current liabilities   77,163   85,000 Long term liabilities   3,816   4,255 Stockholders' equity   275,817   242,958 Total liabilities and stockholders' equity $ 356,796 $ 332,213   iRobot Corporation Consolidated Statement of Cash Flows (unaudited, in thousands)                       For the three months ended For the twelve months ended December 29, December 31, December 29, December 31, 2012     2011 2012     2011 Cash flows from operating activities: Net income (loss) $ (5,938 ) $ 10,638 $ 17,297 $ 40,191 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 3,491 3,075 11,672 10,312 Loss on disposal of property and equipment 554 123 1,332 599 Stock-based compensation 2,960 2,398 10,983 8,784 Deferred income taxes, net (908 ) (295 ) (3,763 ) 6,154 Tax benefit of excess stock based compensation deductions 16 (915 ) (1,445 ) (6,917 ) Non-cash director deferred compensation 23 36 87 162 Changes in operating assets and liabilities — (use) source Accounts receivable 25,601 (1,938 ) 15,560 (9,282 ) Unbilled revenue 497 5,537 1,166 1,650 Inventory 696 900 (807 ) (3,929 ) Other assets (6,158 ) 4,729 (2,892 ) (1,843 ) Accounts payable 1,405 7,884 (8,684 ) 9,717 Accrued expenses (2,252 ) 1,951 (656 ) 1,421 Accrued compensation 2,736 2,834 (6,106 ) 52 Deferred revenue 4,139 (831 ) 4,730 (2,007 ) Change in long term liabilities   (298 )       528             (613 )       671   Net cash provided by operating activities   26,564         36,654             37,861         55,735     Cash flows from investing activities: Purchase of property and equipment (2,703 ) (2,654 ) (6,770 ) (13,011 ) Change in other assets - - (6,000 ) - Purchase of Evolution net of cash received (74,530 ) - (74,530 ) - Purchases of investments - (4,189 ) (5,086 ) (9,189 ) Sales of investments   7,500         -             10,000         5,000   Net cash used in investing activities   (69,733 )       (6,843 )           (82,386 )       (17,200 )   Cash flows from financing activities: Proceeds from stock option exercises 304 4,003 4,326 13,401 Income tax withholding payment associated with restricted stock vesting (7 ) (83 ) (784 ) (928 ) Tax benefit of excess stock based compensation deductions   (16 )       915             1,445         6,917   Net cash provided by financing activities   281         4,835             4,987         19,390     Net increase (decrease) in cash and cash equivalents (42,888 ) 34,646 (39,538 ) 57,925 Cash and cash equivalents, at beginning of period   169,658         131,662             166,308         108,383   Cash and cash equivalents, at end of period $ 126,770       $ 166,308           $ 126,770       $ 166,308     iRobot Corporation Supplemental Information (unaudited)               For the three months ended For the twelve months ended December 29,     December 31, December 29,     December 31, 2012     2011 2012     2011   Revenue: *   Home Robots $ 82,918       $ 74,435   $ 356,805       $ 278,551     Domestic $ 31,820 $ 24,371 $ 117,689 $ 82,787 International $ 51,098 $ 50,064 $ 239,116 $ 195,764     Defense & Security $ 17,776       $ 56,333   $ 79,439       $ 186,949     Domestic $ 15,364 $ 51,458 $ 68,635 $ 170,968 International $ 2,412 $ 4,875 $ 10,804 $ 15,981   Product $ 14,956 $ 47,990 $ 61,745 $ 147,974 Contract $ 2,820 $ 8,343 $ 17,694 $ 38,975   Product Life Cycle $ 12,648 $ 10,974 $ 37,433 $ 42,579     Gross Margin Percent: Home Robots 49.6 % 45.8 % 49.5 % 45.2 % Defense & Security 1.1 % 39.0 % 4.0 % 35.5 % Total Company 41.1 % 42.9 % 41.2 % 41.3 %     Units shipped: Home Robots * 387 358 1,621 1,371 Defense & Security 34 273 289 773     Average gross selling prices for robot units: Home Robots $ 227 $ 218 $ 222 $ 207 Defense & Security * $ 68 $ 132 $ 84 $ 136     Defense & Security Funded Product Backlog * $ 11,356 $ 7,600 $ 11,356 $ 7,600     Days sales outstanding 28 32 28 32   Days in inventory 61 41 61 41   Headcount 534 619 534 619   * in thousands   iRobot Corporation Adjusted EBITDA Reconciliation to GAAP (unaudited, in thousands)                       For the three months ended For the twelve months ended December 29, December 31, December 29, December 31, 2012     2011 2012     2011   Net income (loss) $ (5,938 ) $ 10,638 $ 17,297 $ 40,191   Interest income, net (201 ) (212 ) (1,016 ) (967 ) Income tax expense (benefit) (2,979 ) 4,395 8,310 13,350 Depreciation 2,418 2,387 9,898 9,002 Amortization   1,073         688     1,774         1,310     EBITDA (5,627 ) 17,896 36,263 62,886     Stock-based compensation expense 2,960 2,398 10,983 8,784 Merger and acquisition expense 717 11 1,404 41 Net intellectual property litigation expense 26 116 155 287 Restructuring expense   2,905         914     3,679         1,015     Adjusted EBITDA $ 981       $ 21,335   $ 52,484       $ 73,013     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 Adjusted 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 29, December 31, December 29, December 31, 2012     2011 2012     2011   GAAP net income (loss) $ (5,938 ) $ 10,638 $ 17,297 $ 40,191   Less one-time net income tax benefitassociated with Section 199 deductionsand R&D tax credit true-ups   -         -   -       (3,455 )   Adjusted net income (loss) $ (5,938 )     $ 10,638 $ 17,297     $ 36,736       GAAP net income (loss) per common share: Basic $ (0.21 ) $ 0.39 $ 0.63 $ 1.50 Diluted $ (0.21 ) $ 0.38 $ 0.61 $ 1.44   Less one-time net income tax benefitassociated with Section 199 deductionsand R&D tax credit true-ups: Basic $ - $ - $ - $ (0.12 ) Diluted $ - $ - $ - $ (0.12 )   Adjusted net income (loss) per common share: Basic $ (0.21 ) $ 0.39 $ 0.63 $ 1.38 Diluted $ (0.21 ) $ 0.38 $ 0.61 $ 1.32     Shares used in Per Common Share Calculations: Basic 27,802 27,119 27,577 26,712 Diluted 27,802 28,147 28,301 27,924   In evaluating its business, iRobot also considers and uses Adjusted net income and Adjusted net income per common share as supplemental measures of its operating performance. The Company defines Adjusted net income and Adjusted net income per share as net income and net income per share, respectively, excluding the impact of a one-time tax benefit. The terms Adjusted net income and Adjusted net income per common share are 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. When assessing the Company's operating performance, investors should not consider Adjusted net income, Adjusted net income per common share or both in isolation, or as a substitute for net income, net income per common share or other consolidated income statement data prepared in accordance with U.S. GAAP. iRobot Corp.Elise Caffrey, 781-430-3003Investor Relationsecaffrey@irobot.comoriRobot Corp.Matthew Lloyd, 781-430-3720Media Relationsmlloyd@irobot.com