iRobot Reports Fourth-Quarter and Full-Year Financial Results

        iRobot Reports Fourth-Quarter and Full-Year Financial Results  Home Robot Business Grew 20 Percent in 2013, Expected to Drive Continued Growth in 2014  PR Newswire  BEDFORD, Mass., Feb. 5, 2014  BEDFORD, Mass., Feb. 5, 2014 /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 December 28, 2013.  (Logo: http://photos.prnewswire.com/prnh/20131104/NE10106LOGO )  "2013 was a great year for iRobot. Our Home Robot business increased 20 percent over 2012, driven by growth in both domestic and overseas markets," said Colin Angle, chairman and chief executive officer of iRobot. "All three of our businesses met our expectations and made significant progress against their strategic plans, setting us up well for 2014.  "In 2014, our financial performance will continue to be driven by our Home Robot business. Home Robot revenue is expected to grow in the mid-to-high teens in 2014 and comprise 90 percent of total company revenue. Our Defense & Security business is expected to perform at 2013 levels, and our Remote Presence business will be shipping product into two markets.  "For 2014, we expect revenue of $560  to  $570 million, EPS of between $1.00 and $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 of:    oMid-high teen revenue CAGR,   oHigh teen Adjusted EBITDA margin and,   oHigh single digit Operating Cash Flow margin"  Financial Results    oRevenue for the fourth quarter of 2013 was $126.3 million, compared with     $100.7 million for the fourth quarter of 2012. Revenue for the full year     2013 was $487.4 million, compared with $436.2 million for the full year     2012.   oNet income for the fourth quarter of 2013 was $3.2 million, compared with     a net loss of ($5.9) million for the fourth quarter of 2012. Net income     for the full year 2013 was $27.6 million, compared with $17.3 million for     full-year 2012.   oQuarterly earnings per share were $0.11, compared with a quarterly loss     per share of ($0.21) in the fourth quarter last year. Full-year earnings     per share were $0.94, compared with $0.61 last year.   oAdjusted EBITDA for the fourth quarter of 2013 was $12.8 million, compared     with $1.0 million in the fourth quarter of 2012. Adjusted EBITDA for the     full year 2013 was $62.2 million, compared with $52.5 million for     full-year 2012.  Business Highlights    oFull-year domestic Home Robot revenue growth of more than 30 percent,     coupled with international Home Robot revenue growth of 14 percent, drove     a 20 percent year-over-year increase in full-year Home Robot revenue. We     continued to increase our investment in marketing programs in our Home     Robot business, which resulted in greater brand awareness and revenue     growth in that business.   oWe introduced and began shipping the Roomba 800 Series in late 2013. This     next-generation floor vacuuming robot incorporates new dirt extractor     technology which amplifies suction for superior performance over     traditional bristle brushes. The Scooba 450, our newest wet floor     scrubbing robot, was introduced and began shipping in January 2014.   oOur Defense & Security business delivered results consistent with our     expectations while continuing to reduce reliance on the U.S. Department of     Defense.   oWe began shipping RP-VITA through InTouch Health into the healthcare     market and announced the Ava 500 Video Collaboration Robot which blends     together our autonomous navigation capabilities with Cisco's TelePresence.     The Ava 500 is targeted for availability from certified Cisco partners in     the first half of 2014.  Financial Expectations  Management provides the following expectations with respect to the year ending December 27, 2014 and first quarter ending March 29, 2014.  Fiscal Year 2014: Revenue      $560 - $570 million Earnings Per Share           $1.00 - $1.15 Adjusted EBITDA              $74 - $78 million Full-Year 2014 BU Revenue: Home                                         $500 - $515  million Defense & Security   $50 million Remote Presence    $5 million Q1 2014: Revenue         $110 - $113 million Earnings Per Share               $0.13 -                                                $0.17 Adjusted EBITDA                     $13 - $15 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 2013, business outlook, and outlook for 2014 financial performance. Pertinent details include:  Date:  Thursday, February 6, 2014 Time:  8:30 a.m. ET Call-In Number:         847-619-6396 Passcode:     35939059  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=5041606. 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 13, and can be accessed by dialing 630-652-3042, passcode 35939059#.  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, future operating performance and growth, anticipated growth and performance of our businesses, demand for our robots, Home Robot revenue for fiscal year 2014, the timing of new product introductions, the timing of entry into new product markets, the availability of new products, and anticipated revenue, earnings per share and Adjusted EBITDA for fiscal year 2014 and the first quarter ending March 29, 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 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        For the twelve months                         ended                       ended                         December     December      December     December                         28,          29,           28,          29,                         2013          2012           2013          2012  Product revenue       $          $          $          $                            125,426       97,874         477,444       418,550  Contract revenue      917           2,820          9,957         17,694 Revenue                 126,343       100,694        487,401       436,244  Product revenue       66,939        54,928         262,224       234,102  Contract revenue      474           1,262          4,023         7,794 Cost of Revenue         67,413        56,190         266,247       241,896 Gross Margin            58,930        44,504         221,154       194,348 Operating Expense  Research &            18,008        15,344         63,649        57,066 development  Selling & marketing   22,199        24,727         71,529        66,412  General &             14,010        13,308         53,358        45,698 administrative  Total             54,217        53,379         188,536       169,176 Operating income (loss) 4,713         (8,875)        32,618        25,172 Other income (expense), (154)         (42)           (203)         435 net Income (loss) before    4,559         (8,917)        32,415        25,607 income taxes Income tax expense      1,371         (2,979)        4,774         8,310 (benefit) Net income (loss)       $        $          $         $                             3,188         (5,938)       27,641        17,297 Net income (loss) per common share:  Basic                $        $         $        $                              0.11         (0.21)         0.97         0.63  Diluted              $        $         $        $                              0.11         (0.21)         0.94         0.61 Shares used in per common share calculations:  Basic                28,902        27,802         28,495        27,577  Diluted              29,712        27,802         29,354        28,301 Stock-based compensation included in above figures:  Cost of product $       $        $       $      revenue                 204           174            700            889  Research &      737           633            2,700         1,904 development  Selling &       414           234            1,246         808 marketing  General &       2,385         1,919          8,763         7,382 administrative  Total       $        $         $         $                             3,740         2,960          13,409        10,983  iRobot Corporation Condensed Consolidated Balance Sheets (unaudited, in thousands)                                          December 28,      December 29,                                          2013                2012 Assets Cash and equivalents                   $     165,404  $    126,770 Short term investments                 21,954              12,430 Accounts receivable, net               39,348              29,413 Unbilled revenues                      856                 1,196 Inventory                              46,107              36,965 Deferred tax assets                    20,144              19,266 Other current assets                   6,848               8,853  Total current assets                 300,661             234,893 Property, plant and equipment, net     23,661              24,953 Deferred tax assets                    10,095              8,792 Goodwill                               48,751              48,951 Intangible assets, net                 22,668              28,224 Other assets                           10,501              8,500 Total assets                           $     416,337  $    354,313 Liabilities and stockholders' equity Accounts payable                       $      41,344  $     42,515 Accrued expenses                       14,880              13,642 Accrued compensation                   19,606              11,864 Deferred revenue and customer advances 5,085               6,257  Total current liabilities            80,915              74,278 Long term liabilities                  4,733               4,218 Stockholders' equity                   330,689             275,817 Total liabilities and stockholders'     $     416,337  $    354,313 equity  iRobot Corporation  Consolidated Statements of Cash Flows (unaudited, in thousands)                           For the three months      For the twelve months                           ended                     ended                           December    December     December    December                           28,         29,          28,         29,                           2013         2012          2013         2012 Cash flows from operating activities: Net income (loss)         $         $          $   27,641 $   17,297                           3,188       (5,938) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and          3,140        3,491         12,169       11,672 amortization Loss on disposal of       540          554           189          1,332 assets Goodwill and intangible   -            -             1,988        - assets impairment Stock-based compensation 3,740        2,960         13,409       10,983 Deferred income taxes,    (106)        (908)         (768)        (3,763) net Tax benefit of excess stock based compensation  (168)        16            (2,406)      (1,445) deductions Non-cash director         11           23            44           87 deferred compensation Changes in operating assets and liabilities — (use) source Accounts receivable      14,679       25,601        (9,935)      15,560 Unbilled revenue         700          497           340          1,166 Inventory                2,708        696           (9,365)      (807) Other assets             (717)        (6,158)       1,980        (2,892) Accounts payable         (5,872)      1,405         (1,743)      (8,684) Accrued expenses         1,471        (2,252)       1,255        (656) Accrued compensation     4,747        2,736         7,751        (6,106) Deferred revenue and      3,059        4,139         (1,172)      4,730 customer advances Change in long term       177          (298)         515          (613) liabilities Net cash provided by      31,297       26,564        41,892       37,861 operating activities Cash flows from investing activities: Purchase of property and  (1,705)      (2,703)       (6,829)      (6,770) equipment Change in other assets    -            -             (2,000)      (6,000) Purchase of Evolution net -            (74,530)      -            (74,530) of cash received Purchases of investments (5,049)      -             (17,946)     (5,086) Sales of investments     -            7,500         8,044        10,000 Proceeds from sale of     -            -             650          - assets Net cash used in          (6,754)      (69,733)      (18,081)     (82,386) investing activities Cash flows from financing activities: Proceeds from stock       1,265        304           13,629       4,326 option exercises Income tax withholding payment associated with   (303)        (7)           (1,212)      (784) restricted stock vesting Tax benefit of excess stock based compensation  168          (16)          2,406        1,445 deductions Net cash provided by      1,130        281           14,823       4,987 financing activities Net increase (decrease) in cash and cash          25,673       (42,888)      38,634       (39,538) equivalents Cash and cash equivalents, at beginning 139,731      169,658       126,770      166,308 of period Cash and cash equivalents, at end of    $  165,404 $  126,770  $  165,404  $  126,770 period    iRobot Corporation Supplemental Information (unaudited)                       For the three months        For the twelve months                       ended                       ended                       December     December      December     December                       28,          29,           28,          29,                       2013          2012           2013          2012 Revenue: * Home Robots           $  108,263   $   82,918  $  427,853  $  356,805  Domestic          $   47,843  $   31,821  $  154,112  $  117,690  International     $   60,420  $   51,097  $  273,741  $  239,115 Defense & Security    $   16,339  $   15,731  $   50,003 $   70,948  Domestic          $   10,035  $   14,389  $   34,193 $   64,346  International     $    6,304 $           $   15,810 $                                        1,342                       6,602  Product           $   16,321  $   13,773  $   45,612 $   57,092  Contract          $        $           $          $   13,856                       18           1,958         4,391  Product Life      $   11,625  $   12,254  $   26,097 $   36,272 Cycle Gross Margin Percent:  Home Robots       49.6%         51.2%          49.3%         51.0%  Defense &         59.4%         45.3%          50.1%         43.0% Security  Total Company     46.6%         44.2%          45.4%         44.6% Units shipped:  Home Robots *     494           387            1,933         1,621  Defense &         49            29             534           274 Security Average gross selling prices for robot units:  Home Robots       $         $         $        $                            233          227            231           222  Defense &         $        $        $       $       Security *            96           52             36            76 Defense & Security                                 $    Funded Product        $    8,765 $   11,356  8,765        $   11,356 Backlog * Days sales            29            28             29            28 outstanding Days in inventory     63            61             63            61 Headcount             528           534            528           534 * in thousands    iRobot Corporation Adjusted EBITDA Reconciliation to GAAP (unaudited, in thousands)                             For the three months    For the twelve months                             ended                   ended                             December     December  December    December                             28,          29,       28,         29,                             2013          2012       2013         2012 Net income (loss)         $    3,188 $        $   27,641 $   17,297                                           (5,938) Interest income, net      (131)         (201)      (660)        (1,016) Income tax expense         1,371         (2,979)    4,774        8,310 (benefit) Depreciation              2,153         2,418      8,077        9,898 Amortization              987           1,073      4,092        1,774 EBITDA                    7,568         (5,627)    43,924       36,263 Stock-based compensation   3,740         2,960      13,409       10,983 expense Merger and acquisition     7             717        400          1,404 expense Net intellectual property  758           26         1,202        155 litigation expense Restructuring expense     721           2,905      3,296        3,679 Adjusted EBITDA           $   12,794  $      $   62,231 $   52,484                                           981  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.  SOURCE iRobot Corp.  Website: http://www.irobot.com Contact: Elise Caffrey, Investor Relations, iRobot Corp., (781) 430-3003, ecaffrey@irobot.com, or Matthew Lloyd, Media Relations, iRobot Corp., (781) 430-3720, mlloyd@irobot.com