IROBOT CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - IROBOT CORP	b87390e8vk.htm

Exhibit 99.1


Contacts:
Elise Caffrey		Charlie Vaida
Investor Relations		Media Relations
iRobot Corp.		iRobot Corp.
(781) 430-3003		(781) 430-3182
ecaffrey@irobot.com		cvaida@irobot.com

iRobot Reports Second-Quarter Financial Results
Exceeds Expectations; Increases 2011 Outlook

BEDFORD, Mass., July 26, 2011 — iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the second quarter ended July 2, 2011.

	•		Revenue for the second quarter of 2011 increased 11 percent to $108.1 million, compared with $97.8 million for the same quarter one year ago. Revenue for the first half of 2011 also increased 11 percent to $214.4 million from $192.7 million last year.

	•		Net income in the second quarter of 2011 was $8.0 million, compared with $5.3 million in the second quarter of 2010. For the first half, net income was $15.5 million, up from $11.5 million a year ago.

	•		Quarterly earnings per share grew by 45 percent to $0.29, compared with $0.20 in the second quarter last year. First-half earnings per share were $0.56, up from $0.44 in 2010, an increase of 27 percent.

	•		Adjusted EBITDA for the second quarter of 2011 was $16.2 million, compared with $12.4 million in the second quarter of 2010. Adjusted EBITDA for the first half of 2011 was $31.3 million, compared with $26.1 million a year ago.

“Our performance in the second quarter and first half was outstanding, particularly given very challenging 2010 comps,” said Colin Angle, chairman and chief executive officer of iRobot. “Our second-quarter results exceeded our expectations for both divisions and reflect a positive trend in domestic consumer spending for our home robot products. Following strong performance by both divisions and our expectations for continuing profitable growth, we are increasing our full-year expectations.”

Business Highlights

•		Strong demand in both domestic and overseas markets drove a 21 percent year-over-year increase in second-quarter home robot revenue. In Q2, domestic home robot revenue grew 30 percent while international home robot revenue grew 16 percent and comprised 65 percent of total home robot revenue.

•		During the second quarter, the Government and Industrial Robots division received delivery orders totaling $41 million, primarily for delivery of PackBot and SUGV robots.

•		Cash and investments totaled $123 million at the end of the second quarter, up $24 million from Q2 2010. The company increased its revolving credit facility to $75 million, providing additional financial capacity.

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

Financial Expectations

Management provides the following expectations with respect to the third quarter ending October 1, 2011.


Q3 2011:
Revenue		$115 — $120 million
Earnings Per Share		$0.22 — $0.26
Adjusted EBITDA		$14 — $16 million

Management raises its expectations for the full year ending December 31, 2011.


Fiscal Year 2011:	Current	Prior
Revenue	$460 — $470 million	$450 — $465 million
Earnings Per Share	$1.04 — $1.10	$0.90 — $1.00
Adjusted EBITDA	$62 — $64 million	$58 — $62 million

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 and outlook for the third quarter and full year 2011 financial performance. Pertinent details include:


Date:		Wednesday, July 27, 2011
Time:		8:30 a.m. ET
Call-In Number:		617-786-2964
Passcode:		20572285

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-irhome. 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 3, and can be accessed by dialing 617-801-6888, passcode 35680683.

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 government and industrial 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 and growth, anticipated revenue, Adjusted EBITDA and earnings per share for fiscal year 2011 and the third quarter of 2011. 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

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

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, 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 release includes Adjusted EBITDA, 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, and non-cash stock compensation. A reconciliation between net income and Adjusted EBITDA is provided in the financial tables at the end of this press release.

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

iRobot Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)


	For the three months ended				For the six months ended
	July 2,		July 3,		July 2,		July 3,
	2011		2010		2011		2010

Revenue
Product revenue	$	97,396	$	85,945	$	194,107	$	172,056
Contract revenue		10,686		11,859		20,252		20,678

Total		108,082		97,804		214,359		192,734

Cost of Revenue
Product revenue		57,835		55,825		114,025		111,425
Contract revenue		7,711		8,009		14,344		14,622

Total		65,546		63,834		128,369		126,047

Gross Margin		42,536		33,970		85,990		66,687
Operating Expense
Research & development		8,146		5,691		16,875		10,190
Selling & marketing		12,767		10,581		25,748		20,225
General & administrative		10,097		9,313		20,697		17,789

Total		31,010		25,585		63,320		48,204

Operating income		11,526		8,385		22,670		18,483
Other income, net		112		40		350		69

Pre-tax income		11,638		8,425		23,020		18,552
Income tax expense		3,614		3,111		7,519		7,070

Net income	$	8,024	$	5,314	$	15,501	$	11,482


Net income per common share:
Basic	$	0.30	$	0.21	$	0.59	$	0.46
Diluted	$	0.29	$	0.20	$	0.56	$	0.44

Shares used in per common share calculations:
Basic		26,667		25,294		26,388		25,217
Diluted		27,911		26,375		27,733		26,226

Stock-based compensation included in above figures:
Cost of product revenue	$	320	$	355	$	571	$	687
Cost of contract revenue		156		110		250		236
Research & development		239		245		320		277
Selling & marketing		158		289		339		645
General & administrative		1,538		1,202		2,710		2,246

Total	$	2,411	$	2,201	$	4,190	$	4,091

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)


	July 2,		January 1,
	2011		2011
Assets

Cash and equivalents	$	108,725	$	108,383
Short term investments		13,816		13,928
Accounts receivable, net		34,529		34,056
Unbilled revenues		8,034		4,012
Inventory		34,202		27,160
Deferred tax assets		13,223		12,917
Other current assets		10,910		6,137

Total current assets		223,439		206,593
Property, plant and equipment, net		28,128		25,620
Deferred tax assets		8,733		8,338
Other assets		13,563		13,780

Total assets	$	273,863	$	254,331


Liabilities and stockholders’ equity

Accounts payable	$	33,273	$	38,689
Accrued expenses		13,854		15,790
Accrued compensation		13,094		17,827
Deferred revenue and customer advances		2,040		3,534

Total current liabilities		62,261		75,840

Long term liabilities		3,850		3,584

Stockholders’ equity		207,752		174,907

Total liabilities and stockholders’ equity	$	273,863	$	254,331

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)


	For the three months ended						For the six months ended
	July 2,			July 3,			July 2,			July 3,
	2011			2010			2011			2010

Cash flows from operating activities:
Net income	$	8,024		$	5,314		$	15,501		$	11,482
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		2,457			1,917			4,640			3,755
Loss on disposal of property and equipment		3			2			473			47
Stock-based compensation		2,411			2,201			4,190			4,091
Benefit from deferred tax assets		(1,167	)		—			(1,167	)		—
Non-cash director deferred compensation		44			33			82			66
Changes in operating assets and liabilities — (use) source
Accounts receivable		(6,920	)		(1,054	)		(473	)		8,038
Unbilled revenue		(100	)		978			(4,022	)		(482	)
Inventory		869			(816	)		(7,042	)		1,722
Other assets		(2,880	)		44			(4,809	)		797
Accounts payable		(10,971	)		2,277			(5,416	)		1,209
Accrued expenses		(974	)		(990	)		(1,889	)		(1,031	)
Accrued compensation		4,945			4,850			(4,733	)		(2,372	)
Deferred revenue		(1,608	)		(7	)		(1,494	)		(1,939	)
Change in long term liabilities		(123	)		(107	)		266			(215	)

Net cash provided by (used in) operating activities		(5,990	)		14,642			(5,893	)		25,168


Cash flows from investing activities:
Purchase of property and equipment		(2,654	)		(3,629	)		(7,208	)		(5,668	)
Purchases of investments		—			(7,831	)		(5,000	)		(25,411	)
Sales of investments		2,500			7,500			5,000			7,500

Net cash used in investing activities		(154	)		(3,960	)		(7,208	)		(23,579	)


Cash flows from financing activities:
Proceeds from stock option exercises		4,013			1,823			8,597			1,927
Income tax withholding payment associated with restricted stock vesting		(356	)		(120	)		(809	)		(279	)
Tax benefit of excess stock based compensation deductions		3,213			568			5,655			717

Net cash provided by financing activities		6,870			2,271			13,443			2,365


Net increase in cash and cash equivalents		726			12,953			342			3,954
Cash and cash equivalents, at beginning of period		107,999			62,857			108,383			71,856

Cash and cash equivalents, at end of period	$	108,725		$	75,810		$	108,725		$	75,810

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

iRobot Corporation
Supplemental Information
(unaudited)


	For the three months ended						For the six months ended
	July 2,			July 3,			July 2,			July 3,
	2011			2010			2011			2010

Revenue: *

Home Robots	$	63,892		$	52,904		$	131,774		$	105,450

Domestic	$	22,395		$	17,162		$	40,453		$	33,258
International	$	41,497		$	35,742		$	91,321		$	72,192

Government & Industrial	$	44,190		$	44,900		$	82,585		$	87,283

Domestic	$	43,378		$	41,365		$	73,580		$	76,605
International	$	812		$	3,535		$	9,005		$	10,678

Product	$	33,504		$	33,041		$	62,333		$	66,605
Contract	$	10,686		$	11,859		$	20,252		$	20,678

Product Life Cycle	$	6,617		$	9,582		$	19,320		$	17,561

Gross Margin Percent:
Home Robots		44.1	%		39.2	%		44.8	%		38.6	%
Government & Industrial		32.5	%		29.5	%		32.6	%		29.8	%
Total Company		39.4	%		34.7	%		40.1	%		34.6	%

Units shipped:
Home Robots *		328			294			677			581
Government & Industrial		192			250			306			516

Average gross selling prices for robot units:
Home Robots	$	195		$	188		$	194		$	189
Government & Industrial *	$	140		$	94		$	141		$	95

Government & Industrial Funded Product Backlog *	$	15,118		$	12,164		$	15,118		$	12,164

Days sales outstanding		36			27			36			27

Days in inventory		54			50			54			50

Headcount		687			613			687			613

* in thousands

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)


	For the three months ended						For the six months ended
	July 2,			July 3,			July 2,			July 3,
	2011			2010			2011			2010

Net income	$	8,024		$	5,314		$	15,501		$	11,482

Interest income, net		(331	)		(197	)		(541	)		(367	)
Income tax expense		3,614			3,111			7,519			7,070
Depreciation		2,169			1,778			4,227			3,477
Amortization		288			139			413			278


EBITDA		13,764			10,145			27,119			21,940

Stock-based compensation expense		2,411			2,201			4,190			4,091
Merger and acquisition expense		—			61			—			71

Adjusted EBITDA	$	16,175		$	12,407		$	31,309		$	26,102

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, 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
8 Crosby Drive, Bedford, MA 01730-1402 Ÿ 781.430.3000 Ÿ Fax 781.430.3001 Ÿ www.irobot.com

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