iRobot Reports Second-Quarter Financial Results

  iRobot Reports Second-Quarter Financial Results

         Home Robot business drives 17 percent year-over-year growth

Business Wire

BEDFORD, Mass. -- July 23, 2013

iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based
solutions, today announced its financial results for the second quarter ended
June 29, 2013.

“I am very excited to report that we had an excellent quarter following an
outstanding Q1. Our Home Robot business delivered strong results both
domestically and overseas, and the outlook continues to be good. We announced
our second remote presence market initiative, Enterprise Telepresence, in
partnership with Cisco, and our Defense & Security business performed as
expected,” said Colin Angle, chairman and chief executive officer of iRobot.

“Based on our view of the rest of the year, our expectations for revenue and
Adjusted EBITDA remain unchanged, but we are increasing the low end of our EPS
range due to a one-time tax benefit received in Q2. We expect to deliver
fiscal 2013 revenue of $485 to $495 million, EPS between $0.88 and $1.00 and
Adjusted EBITDA of $55 to $61 million. Our strong second-quarter results,
driven by our Home Robot business, give us confidence that we will achieve our
full-year expectations.”

  *Revenue for the second quarter of 2013 was $130.4 million, compared with
    $111.4 million for the same quarter one year ago. Revenue for the first
    half of 2013 was $236.6 million, compared with $209.3 million last year.
  *Net income in the second quarter of 2013 was $8.3 million, compared with
    $7.4 million in the second quarter of 2012. For the first half, net income
    was $16.6 million, compared with $8.0 million a year ago.
  *Quarterly earnings per share were $0.28, compared with $0.26 in the second
    quarter last year. First-half earnings per share were $0.57, compared with
    $0.28 in 2012. EPS in Q2 and first-half 2013 included a $0.07 one-time tax
    benefit associated with the prior period sale of government robots to the
    U.S. military, which were used outside of the U.S.
  *Adjusted EBITDA for the second quarter of 2013 was $17.0 million, compared
    with $16.2 million in the second quarter of 2012. For the first half,
    Adjusted EBITDA was $32.3 million, compared with $22.3 million a year ago.

Business Highlights

  *Domestic revenue growth of 26 percent, coupled with international growth
    of 18 percent, fueled a 20 percent year-over-year increase in Home Robot
    revenue.
  *Announced contracts from Brazil totaling $7.2 million and a $3.0 million
    order under a $30.0 million IDIQ from the U.S. Army during the quarter,
    which gives us confidence that we will achieve our full-year Defense &
    Security expectations.
  *Announced ajoint marketing agreement with Cisco to bring the
    enterprise-grade Ava 500 video collaboration robot to market, the second
    initiative of our Remote Presence business.

Financial Expectations

Management provides the following expectations with respect to the third
quarter ending September 28, 2013 and fiscal year ending December 28, 2013.

Q3 2013:                                          
Revenue                          $124 - $128
                                 million
Earnings Per Share               $0.20 - $0.25
Adjusted EBITDA                  $14 - $17 million
                                                             
Fiscal Year 2013:                Current                     Prior
Revenue                          $485 - $495                 $485 - $495
                                 million                     million
Earnings Per Share               $0.88 - $1.00               $0.80 - $1.00
Adjusted EBITDA                  $55 - $61 million           $55 - $61 million
                                                             
Full-Year 2013 BU
Revenue:
Home Robots                      $435 - $440
                                 million
Defense & Security               $45 - $55 million
Robots
                                                             

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 2013, business outlook, and
outlook for third-quarter and fiscal year 2013 financial performance.
Pertinent details include:

Date:                Wednesday, July 24, 2013
Time:                     8:30 a.m. ET
Call-In Number:           847-619-6818
Passcode:                 34160570
                          

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=4897483.
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 630-652-3000, passcode 34160570#.

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 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 and performance of our Home Robots business,
anticipated performance of our Defense & Security business, anticipated
revenue, earnings per share and Adjusted EBITDA for fiscal year 2013 and the
third quarter ending September 28, 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, 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
expenses, net intellectual property litigation expenses, restructuring
expenses, and non-cash stock compensation. Areconciliation between net income
(loss) 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 29,         June 30,      June 29,       June 30,
                         2013         2012          2013       2012
Revenue
Product revenue        $  127,966       $ 107,760     $  229,371     $ 199,502
Contract revenue         2,396        3,685         7,186      9,750
Total                    130,362      111,445       236,557    209,252
                                                                     
Cost of Revenue
Product revenue           67,873          57,089         125,688       113,322
Contract revenue         884          1,540         2,737      4,562
Total                    68,757       58,629        128,425    117,884
                                                                     
Gross Margin              61,605          52,816         108,132       91,368
                                                                     
Operating Expense
Research &                15,997          14,182         30,405        28,682
development
Selling & marketing       22,309          17,976         33,006        30,309
General &                15,395       10,022        27,853     21,064
administrative
Total                    53,701       42,180        91,264     80,055
                                                                     
Operating income          7,904           10,636         16,868        11,313
                                                                     
Other income             (105     )    60            (201    )   280
(expense), net
                                                                     
Income before income      7,799           10,696         16,667        11,593
taxes
Income tax expense       (495     )    3,321         18         3,565
(benefit)
Net income             $  8,294       $ 7,375       $  16,649    $ 8,028
                                                                     
Net income per
common share:
Basic                  $  0.29          $ 0.27        $  0.59        $ 0.29
Diluted                $  0.28          $ 0.26        $  0.57        $ 0.28
                                                                     
Shares used in per
common share
calculations:
Basic                     28,416          27,522         28,173        27,441
Diluted                   29,226          28,182         28,972        28,259
                                                                     
                                                                     
Stock-based
compensation
included in above
figures:
Cost of product        $  128           $ 218         $  246         $ 426
revenue
Cost of contract          -               -              -             -
revenue
Research &                793             446            1,294         906
development
Selling & marketing       118             179            484           416
General &                2,224        2,059         4,168      3,667
administrative
Total                  $  3,263       $ 2,902       $  6,192     $ 5,415
                                                                       


iRobot Corporation
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
                                                       
                                             June 29,      December 29,
                                              2013           2012
                                                           
Assets
                                                           
Cash and equivalents                         $ 133,857     $   126,770
Short term investments                         19,014          12,430
Accounts receivable, net                       51,104          29,413
Unbilled revenues                              1,051           1,196
Inventory                                      41,560          36,965
Deferred tax assets                            19,245          19,266
Other current assets                          13,598         8,853
Total current assets                           279,429         234,893
Property, plant and equipment, net             23,060          24,953
Deferred tax assets                            10,438          8,792
Goodwill                                       48,751          48,951
Intangible assets, net                         24,506          28,224
Other assets                                  10,501         8,500
Total assets                                 $ 396,685     $   354,313
                                                           
Liabilities and stockholders' equity
                                                           
Accounts payable                             $ 53,905      $   42,515
Accrued expenses                               14,045          13,642
Accrued compensation                           13,113          11,864
Deferred revenue and customer advances        3,274          6,257
Total current liabilities                     84,337         74,278
Long term liabilities                         4,138          4,218
Stockholders' equity                          308,210        275,817
Total liabilities and stockholders' equity   $ 396,685     $   354,313
                                                           


iRobot Corporation
Consolidated Statements of Cash Flows
(unaudited, in thousands)
                                                             
                                                                   
                      For the three months ended     For the six months ended
                      June 29,       June 30,        June 29,      June 30,
                        2013       2012          2013       2012    
Cash flows from
operating
activities:
Net income            $  8,294       $ 7,375         $ 16,649      $ 8,028
Adjustments to
reconcile net
income to net cash
(used in) provided
by operating
activities:
Depreciation and         3,265         2,711           6,549         5,313
amortization
Loss on disposal of
property and             99            97              281           166
equipment
Goodwill and
intangible assets        1,988         -               1,988         -
impairment
Stock-based              3,263         2,902           6,192         5,415
compensation
Deferred income          (464    )     2,464           (913    )     (4,230  )
taxes, net
Tax benefit of
excess stock based       (1,593  )     (330    )       (1,636  )     (1,035  )
compensation
deductions
Non-cash director
deferred                 11            20              22            42
compensation
Changes in
operating assets
and liabilities —
(use) source
Accounts receivable      (23,824 )     (9,620  )       (21,691 )     3,811
Unbilled revenue         1,201         (833    )       145           289
Inventory                (9,400  )     (2,916  )       (4,595  )     (3,508  )
Other assets             (3,787  )     (3,210  )       (4,770  )     (378    )
Accounts payable         24,101        910             11,390        (3,194  )
Accrued expenses         21            (5,255  )       400           (3,252  )
Accrued                  6,116         2,008           1,249         (8,141  )
compensation
Deferred revenue
and customer             (355    )     (540    )       (2,983  )     355
advances
Change in long term     (895    )   (120    )      (80     )   (186    )
liabilities
Net cash (used in)
provided by             8,041      (4,337  )      8,197      (505    )
operating
activities
                                                                   
Cash flows from
investing
activities:
Purchase of
property and             (1,751  )     (1,313  )       (2,828  )     (2,956  )
equipment
Change in other          -             -               (2,000  )     (6,000  )
assets
Purchases of             (7,850  )     (5,086  )       (10,397 )     (5,086  )
investments
Sales of                2,500      -             3,500      2,500   
investments
Net cash used in
investing               (7,101  )   (6,399  )      (11,725 )   (11,542 )
activities
                                                                   
Cash flows from
financing
activities:
Proceeds from stock      8,099         699             9,843         2,022
option exercises
Income tax
withholding payment
associated with          (351    )     (548    )       (864    )     (775    )
restricted stock
vesting
Tax benefit of
excess stock based      1,593      330           1,636      1,035   
compensation
deductions
Net cash provided
by financing            9,341      481           10,615     2,282   
activities
                                                                   
Net increase
(decrease) in cash       10,281        (10,255 )       7,087         (9,765  )
and cash
equivalents
Cash and cash
equivalents, at         123,576    166,798       126,770    166,308 
beginning of period
Cash and cash
equivalents, at end   $  133,857   $ 156,543      $ 133,857   $ 156,543 
of period
                                                                             


iRobot Corporation
Supplemental Information
(unaudited)
                                                             
                                                                   
                      For the three months ended     For the six months ended
                      June 29,        June 30,       June 29,      June 30,
                        2013        2012         2013       2012    
                                                                   
Revenue: *
                                                                   
Home Robots           $  115,528    $ 96,013      $ 208,227   $ 177,596 
                                                                   
Domestic              $  39,178       $ 31,126       $ 70,569      $ 52,944
International         $  76,350       $ 64,887       $ 137,658     $ 124,652
                                                                   
                                                                   
Defense & Security    $  12,470     $ 13,223      $ 23,570    $ 27,385  
                                                                   
Domestic              $  11,579       $ 11,013       $ 20,713      $ 21,128
International         $  891          $ 2,210        $ 2,857       $ 6,257
                                                                   
Product               $  11,502       $ 10,403       $ 19,537      $ 19,407
Contract              $  968          $ 2,820        $ 4,033       $ 7,978
                                                                   
Product Life Cycle    $  3,041        $ 4,524        $ 9,121       $ 9,108
                                                                   
                                                                   
Gross Margin
Percent:
Home Robots              51.5     %     53.0   %       50.0    %     50.3    %
Defense & Security       47.5     %     45.9   %       47.5    %     37.7    %
Total Company            47.3     %     47.4   %       45.7    %     43.7    %
                                                                   
                                                                   
Units shipped:
Home Robots *            492            426            913           818
Defense & Security       424            42             442           174
                                                                   
                                                                   
Average gross
selling prices for
robot units:
Home Robots           $  225          $ 225          $ 233         $ 220
Defense & Security    $  20           $ 140          $ 24          $ 59
*
                                                                   
                                                                   
Defense & Security
Funded Product        $  19,972       $ 18,300       $ 19,972      $ 18,300
Backlog *
                                                                   
                                                                   
Days sales               37             34             37            34
outstanding
                                                                   
Days in inventory        58             54             58            54
                                                                   
Headcount                517            604            517           604
                                                                   
                                                                   
* in thousands
                                                                   


iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
                                                              
                                                                    
                       For the three months ended     For the six months ended
                       June 29,        June 30,       June 29,      June 30,
                         2013        2012          2013      2012   
                                                                    
Net income             $  8,294        $ 7,375        $  16,649     $ 8,028
                                                                    
Interest income, net      (153    )      (264   )        (317   )     (526   )
Income tax expense        (495    )      3,321           18           3,565
(benefit)
Depreciation              2,221          2,485           4,440        4,879
Amortization             1,044       226           2,109     434    
                                                                    
EBITDA                    10,911         13,143          22,899       16,380
                                                                    
                                                                    
Stock-based               3,263          2,902           6,192        5,415
compensation expense
Merger and                113            14              393          26
acquisition expense
Net intellectual
property litigation       170            34              203          71
expense
Restructuring            2,575       129           2,575     407    
expense
                                                                    
Adjusted EBITDA        $  17,032     $ 16,222      $  32,262   $ 22,299 
                                                                    
                                                                    
                                                                    
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:

iRobot Corp.
Elise Caffrey, 781-430-3003
Investor Relations
ecaffrey@irobot.com
or
Matthew Lloyd, 781-430-3720
Media Relations
mlloyd@irobot.com