IRBT
$71.45
Irobot
$.74
1.05%
Earnings Details
3rd Quarter September 2017
Tuesday, October 24, 2017 4:01:00 PM
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Summary

Irobot Beats

Irobot (IRBT) reported 3rd Quarter September 2017 earnings of $0.60 per share on revenue of $205.4 million. The consensus earnings estimate was $0.44 per share on revenue of $207.4 million. The Earnings Whisper number was $0.51 per share. Revenue grew 21.8% on a year-over-year basis.

The company said it expects 2017 earnings of $1.65 to $2.00 per share on revenue of $870.0 million to $880.0 million. The company's previous guidance was earnings of $1.35 to $1.70 per share on revenue of $840.0 million to $860.0 million and the current consensus earnings estimate is $1.53 per share on revenue of $840.3 million for the year ending December 31, 2017.

iRobot Corp develops robotics and artificial intelligence technologies and applies these technologies in producing and marketing robots. The Company' segments include Home Robots and Defense and Security Robots.

Results
Reported Earnings
$0.60
Earnings Whisper
$0.51
Consensus Estimate
$0.44
Reported Revenue
$205.4 Mil
Revenue Estimate
$207.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

iRobot Reports Strong Third-Quarter Financial Results

iRobot Corp. (IRBT), a leader in consumer robots, today announced its financial results for the third quarter ended September 30, 2017.

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"We delivered another outstanding quarter in which total revenue grew 22% over Q3 last year. Based on our Q3 results, and on our Q4 outlook fueled by continued positive momentum in the United States and in EMEA, where growth is accelerating, we are increasing our full-year 2017 financial expectations. The U.S. and EMEA are now expected to grow 40% and 45% respectively for the full year.

"And, we expect 2017 revenue of $870 to $880 million, a 33 - 34% increase over 2016 consumer revenue, operating income of between $55 and $65 million, and EPS of between $1.65 and $2.00, including the impact of our recent European distributor acquisition," said Colin Angle, chairman and chief executive officer of iRobot.

"U.S. household penetration of robotic vacuum cleaners is still less than 10%, so there is plenty of runway domestically and even more overseas. With the leading global segment share, at a time when adoption is accelerating, we are in an excellent position to capitalize on the momentum to drive future growth."

Financial Results

Revenue for the third quarter of 2017 was $205.4 million, compared with $168.6 million for the third quarter of 2016.

Operating income in the third quarter of 2017 was $23.9 million, compared with $27.5 million in the third quarter of 2016.

Quarterly earnings per share were $0.76 for the third quarter of 2017, compared with $0.70 in the third quarter of 2016. Third-quarter 2017 EPS included a discrete tax benefit of $0.16 relating to the new 2017 stock compensation accounting standard and $0.08 from an adjustment to the original purchase price allocation for Japan.

Business Highlights

In the third quarter, the positive impact of our targeted marketing programs in the U.S., EMEA and Japan drove year-over-year Q3 revenue growth of 22%. Third-quarter consumer revenue grew 34% in the United States, 31% in EMEA, and 65% in Japan over Q3 2016.

We successfully completed the acquisition of our largest European distributor, which we expect will enable us to capitalize on the current market momentum and drive robotic floor care adoption in EMEA.

We announced an agreement with Micro-Star International Co. representing an early win in an ongoing effort by iRobot to defend and protect its valuable intellectual property.

Financial Expectations

Management provides the following expectations with respect to the fiscal year ending December 30, 2017.

(Dollars in millions except Earnings Per Share)

Fiscal Year 2017
Previous
Current
Revenue
$840 - $860
$870 - $880
Operating Income
$50 - $60
$55 - $65
Earnings Per Share $1.35 - $1.70 $1.65 - $2.00

Third-Quarter Conference Call iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the third fiscal quarter of 2017 and outlook for the fourth fiscal quarter of 2017 and fiscal year 2017 financial performance.

Pertinent details include:

Date:
Wednesday, October 25
Time:
8:30 a.m. ET
Call-In Number: 213-358-0894
Passcode:
15414375

A live, audio broadcast of the conference call also will be available at: http://investor.irobot.com/events/event-details/q3-2017-irobot-corp-earnings-conference-call.

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 November 1, and can be accessed by dialing 404-537-3406, passcode 15414375.

About iRobot Corp. iRobot, the leading global consumer robot company, designs and builds robots that empower people to do more both inside and outside of the home. iRobot created the home robot cleaning category with the introduction of its Roomba? Vacuuming Robot in 2002. Today, iRobot is a global enterprise that has sold more than 20 million robots worldwide. iRobot’s product line, including the Roomba and the Braava(TM) family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot’s engineers are building an ecosystem of robots and data to enable the smart home. 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; revenue growth; demand for our robots; and anticipated revenue, operating income and earnings per share for the fiscal year ended December 30, 2017. 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 and adoption of our products; 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, amortization, merger, acquisition and divestiture expense, gain on business acquisition, restructuring expense, net intellectual property litigation expense, and non-cash stock 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 Statements of Income
(in thousands, except per share amounts)
(unaudited)
For the three months ended
For the nine months ended
September 30,
October 1,
September 30,
October 1,
2017
2016
2017
2016
Revenue
$
205,399
$
168,610
$
557,014
$
448,110
Cost of revenue
103,016
87,550
277,397
235,437
Gross margin
102,383
81,060
279,617
212,673
Operating expenses:
Research and development
28,843
19,672
80,518
57,944
Selling and marketing
28,646
17,925
91,344
66,972
General and administrative
21,002
16,012
58,137
48,919
Total operating expenses
78,491
53,609
229,999
173,835
Operating income
23,892
27,451
49,618
38,838
Other income, net
2,601
523
4,290
2,142
Income before income taxes
26,493
27,974
53,908
40,980
Income tax expense
4,411
8,462
7,565
12,722
Net income
$
22,082
$
19,512
$
46,343
$
28,258
Net income per share
Basic
$
0.80 $
0.72
$
1.68 $
1.01
Diluted
$
0.76 $
0.70
$
1.61 $
0.99
Number of shares used in per share calculations
Basic
27,739
27,237
27,520
27,878
Diluted
28,916
27,778
28,719
28,423
Stock-based compensation included in above figures:
Cost of revenue
$
274 $
184
$
751 $
555
Research and development
1,261
1,028
3,508
2,598
Selling and marketing
728
444
1,869
1,316
General and administrative
2,771
2,247
7,941
7,312
Total
$
5,034 $
3,903
$
14,069
$
11,781
iRobot Corporation
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
September 30,
December 31,
2017
2016
Assets
Cash and cash equivalents
$
241,786
$
214,523
Short term investments
36,442
39,930
Accounts receivable, net
76,956
72,909
Unbilled revenue
1,668
139
Inventory
92,813
50,578
Other current assets
18,395
5,591
Total current assets
468,060
383,670
Property and equipment, net
37,093
27,532
Deferred tax assets
35,088
30,585
Goodwill
41,041
41,041
Intangible assets, net
15,315
12,207
Other assets
14,064
12,877
Total assets
$
610,661
$
507,912
Liabilities and stockholders’ equity
Accounts payable
$
88,798
$
67,281
Accrued expenses
28,949
19,854
Accrued compensation
23,773
21,015
Deferred revenue and customer advances
4,607
4,486
Total current liabilities
146,127
112,636
Long term liabilities
8,042
6,320
Stockholders’ equity
456,492
388,956
Total liabilities and stockholders’ equity $
610,661
$
507,912
iRobot Corporation
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
For the nine months ended
September 30,
October 1,
2017
2016
Cash flows from operating activities:
Net income
$
46,343 $
28,258
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
14,569
10,376
Loss on equity method investment
32
-
Impairment on cost method investment
155
-
Gain on sale of business unit and cost method investment
(1,056)
(1,067)
Gain on business acquisition
(2,243)
-
Stock-based compensation
14,069
11,781
Deferred income taxes, net
(3,226)
6,314
Tax benefit of excess stock-based compensation deductions
-
(1,115)
Non-cash director deferred compensation
49
66
Changes in operating assets and liabilities -- (use) source
Accounts receivable and unbilled revenue
(10,957)
30,979
Inventory
(23,944)
(11,472)
Other assets
(11,099)
(1,579)
Accounts payable
20,824
(2,261)
Accrued liabilities
7,034
(56)
Deferred revenue and customer advances
(965)
(193)
Long term liabilities
1,513
(2,997)
Net cash provided by operating activities
51,098
67,034
Cash flows from investing activities:
Additions of property and equipment
(16,630)
(8,352)
Change in other assets
(1,374)
(435)
Proceeds from sale of business unit and cost method investment
1,056
24,154
Cash paid for business acquisition, net of cash acquired
(16,524)
-
Purchase of investments
(7,034)
(16,556)
Sales and maturities of investments
10,500
11,502
Net cash provided by (used in) investing activities
(30,006)
10,313
Cash flows from financing activities:
Proceeds from stock option exercises
8,990
4,496
Income tax withholding payment associated with restricted stock vesting
(2,974)
(1,300)
Stock repurchases
-
(97,021)
Tax benefit of excess stock-based compensation deductions
-
1,115
Net cash provided by (used in) financing activities
6,016
(92,710)
Effect of exchange rate changes on cash and cash equivalents
155
-
Net increase (decrease) in cash and cash equivalents
27,263
(15,363)
Cash and cash equivalents, at beginning of period
214,523
179,915
Cash and cash equivalents, at end of period
$
241,786
$
164,552
iRobot Corporation
Supplemental Information
(unaudited)
For the three months ended
For the nine months ended
September 30,
October 1,
September 30,
October 1,
2017
2016
2017
2016
Revenue: *
Consumer
$
205,360
$
167,962
$
556,757
$
443,754
Domestic
$
87,626
$
65,466
$
269,998
$
195,109
International
$
117,734
$
102,496
$
286,758
$
248,645
Defense & Security
$
- $
-
$
- $
3,075
Gross Margin Percent
49.8%
48.1%
50.2%
47.5%
Consumer units shipped*
906
779
2,358
2,002
Vacuum
774
602
1,994
1,678
Mopping
131
170
362
308
Consumer revenue**
$
205
$
168
$
557
$
444
Vacuum***
$
186
$
144
$
504
$
402
Mopping***
$
21
$
23
$
55
$
42
Average gross selling prices for robot units - Consumer $
249
$
229
$
260
$
240
Days sales outstanding
35
37
35
37
Days in inventory
82
64
82
64
Headcount
798
572
798
572
* in thousands
** in millions
*** includes accessory revenue
iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
For the three months ended
For the nine months ended
September 30,
October 1,
September 30,
October 1,
2017
2016
2017
2016
Net income
$
22,082
$
19,512
$
46,343
$
28,258
Interest income, net
(558)
(217)
(1,423)
(687)
Income tax expense
4,411
8,462
7,564
12,722
Depreciation
3,350
2,533
8,888
7,446
Amortization
2,419
909
5,605
2,725
EBITDA
31,704
31,199
66,977
50,464
Stock-based compensation expense
5,034
3,903
14,069
11,781
Net merger, acquisition and divestiture expense
681
376
2,452
1,229
Gain on business acquisition
(2,243)
-
(2,243)
-
Net intellectual property litigation expense
1,266
103
1,910
464
Restructuring (income) expense
-
(37)
-
1,665
Adjusted EBITDA
$
36,442
$
35,544
$
83,165
$
65,603
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, amortization, stock-based compensation expense, net merger, acquisition and divestiture expense, gain on business acquisition, net intellectual property litigation expense, and restructuring (income) expense. 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
Expected Incremental Impact of Robopolis Acquisition
(in millions, except per share amounts)
(unaudited)
Fiscal Year 2017
Actual
Actual
Actual
Expected
Expected
Three
Three
Three
Three
Twelve
Months Ending
Months Ending
Months Ending
Months Ending
Months Ending
April 1
July 1
September 30
December 30
December 30
Revenue
-
-
-
$25 - $35
$25 - $35
Net income (loss) per share ($0.01)
($0.02)
($0.03)
($0.39 - 0.24)
($0.45 - 0.30)

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SOURCE iRobot Corp.

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