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iRobot Reports Record Fourth-Quarter and Full-Year Revenue
[February 06, 2019]

iRobot Reports Record Fourth-Quarter and Full-Year Revenue


BEDFORD, Mass., Feb. 6, 2019 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the fourth quarter and full year ended December 29, 2018.

iRobot logo. (PRNewsfoto/iRobot Corp.)

"We had a phenomenal finish to 2018, exceeding both our fourth-quarter and full-year expectations for revenue growth and profitability after raising our expectations twice during the year. Revenue grew 24% in an increasingly competitive market, and we delivered an operating margin of nearly 10% after absorbing the impact of tariffs in the fourth quarter. Substantial demand for our game-changing Roomba i7 and i7+ robots drove strong holiday performance domestically. Overseas, overperformance in Japan was driven by robust fourth-quarter demand supported by our sales and marketing programs in that region.

"In 2019, we expect revenue of $1.28 to $1.31 billion, which is year-over-year growth of 17% to 20%, operating income of $108 to $118 million, and EPS of $3.00 to $3.25, excluding discrete items. 

"This year we will continue on a growth diversification journey, focusing on driving growth of non-Roomba products, as well as supply chain and manufacturing diversification for longer term production stability.

"We will introduce a new category of robot, the iRobot Terra™, our revolutionary autonomous lawn mower, and engage a contract manufacturer outside of China to produce several Roomba robots, beginning in 2019. We will do so while continuing our investment in innovation to extend our technology and product leadership, drive further adoption of both Roomba and Braava robots, and introduce several additional new products mid-year.

"We are very excited about our 2018 performance and the opportunities that lie ahead. While we are navigating uncharted waters with the current tariff uncertainty, we expect our global business to deliver strong financial performance in 2019 that will in turn fund critical investments in future technologies and marketing, to further solidify our position as the unambiguous leader in robotic floor care. In 2019, we will also definitively establish a diversified revenue stream, introduce a new robotic category with lawn mowing and demonstrate our increasing importance as a strategic player in the smart home to drive enhanced long-term shareholder value," said Colin Angle, chairman and chief executive officer of iRobot.  

Financial Results

  • Revenue for the fourth quarter of 2018 was $384.7 million, compared with $326.9 million for the fourth quarter of 2017. Revenue for the full year 2018 was $1,092.6 million, compared with $883.9 million for the full year 2017.
  • Operating income in the fourth quarter of 2018 was $29.8 million, compared with $23.1 million in the fourth quarter of 2017. Operating income for the full year 2018 was $105.8 million, compared with $72.7 million for the full year 2017.
  • Quarterly earnings per share were $0.88 for the fourth quarter of 2018, compared with $0.16 in the fourth quarter of 2017. Fourth-quarter 2017 earnings per share included a negative ($0.41) impact from the tax reform law for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.03 relating to stock compensation. Fourth-quarter 2018 earnings per share included a discrete tax benefit of $0.04. Full-year 2018 EPS was $3.07, compared with $1.77 for full-year 2017. Full-year 2017 earnings per share included a negative ($0.41) impact from the new tax reform act for the remeasurement of our net deferred tax assets and a provisional repatriation toll charge, as well as a discrete tax benefit of $0.41 relating to stock compensation. Full-year 2018 earnings per share included a $0.23 discrete tax benefit relating to stock compensation.

Business Highlights

  • We received a final positive ruling from the U.S. International Trade Commission regarding our patent infringement suit, further solidifying the strength of our patent portfolio.
  • We launched a Braava national television program in Japan, which helped drive Q4 2018 Braava family revenue growth of 25% year-over-year in Japan.
  • We recently announced the 2019 launch of our robotic lawnmower, Terra, which we think will reinvent the way people cut their lawns.

Financial Expectations
Management provides the following expectations with respect to the fiscal year ending December 28, 2019.

 





(Dollars in millions except Earnings Per Share)



Fiscal Year 2019                     

Revenue     

$1,280 - $1,310                      

Operating Income    

$108 - $118                

Tax Rate (before discrete items)   

19 - 21%

Earnings Per Share (before discrete items)    

$3.00 - $3.25  



Updated Financial Targets – 2020 including tariff impact

Revenue Growth    

Mid-high teen; 3-year CAGR of approximately 19%

Gross Margin    

Approximately 48%

Operating Margin    

Increasing to 10%


 

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 2018, the outlook for full-year 2019 financial performance, and the company's updated financial targets, including tariff impact, for 2018 through 2020.

Pertinent details include:

Date: 

Thursday, February 7

Time:  

8:30 a.m. ET

Call-In Number:  

213-358-0894

Passcode: 

6399788

A live, audio broadcast of the conference call also will be available at http://investor.irobot.com/events/event-details/q4-2018-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 February 14, and can be accessed by dialing 404-537-3406, passcode 6399788.

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® Robot Vacuum in 2002. Today, iRobot is a global enterprise that has sold more than 25 million robots worldwide. iRobot's product line, including the Roomba and the Braava® family of mopping robots, feature proprietary technologies and advanced concepts in cleaning, mapping and navigation. iRobot engineers are building an ecosystem of robots and technologies 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; growth and investment strategy; demand for robots; new product introductions; the impact on our financial results of the imposition of tariffs on goods imported into the United States; anticipated revenue, operating income, tax rate and earnings per share for the fiscal year ending December 28, 2019; and anticipated revenue growth, gross margin and operating margin for 2018-2020. 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.

 

 

iRobot Corporation

Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)


















 For the three months ended


For the twelve months ended


December 29,
2018


December 30,
2017


December 29,
2018


December 30,
2017

Revenue

$

384,665



$

326,897



$

1,092,584



$

883,911


Cost of revenue:








  Cost of product revenue

193,645



166,046



518,612



438,114


  Amortization of acquired intangible assets

4,509



7,309



18,544



12,638


Total cost of revenue

198,154



173,355



537,156



450,752


Gross profit

186,511



153,542



555,428



433,159


Operating expenses:








  Research and development

37,451



32,631



140,629



113,149


  Selling and marketing

94,142



70,766



210,411



162,110


  General and administrative

24,871



26,806



97,501



84,771


  Amortization of acquired intangible assets

260



267



1,065



439


      Total operating expenses

156,724



130,470



449,606



360,469


Operating income

29,787



23,072



105,822



72,690


Other income (expense), net

437



(614)



2,800



3,676


Income before income taxes

30,224



22,458



108,622



76,366


Income tax expense

5,033



17,838



20,630



25,402


Net income

$

25,191



$

4,620



$

87,992



$

50,964










Net income per share:








   Basic

$

0.91



$

0.17



$

3.18



$

1.85


   Diluted

$

0.88



$

0.16



$

3.07



$

1.77










Number of shares used in per share calculations:








   Basic

27,714



27,885



27,692



27,611


   Diluted

28,579



28,792



28,640



28,753


















Stock-based compensation included in above figures:








        Cost of revenue

$

372



$

331



$

1,407



$

1,082


        Research and development

2,101



1,501



7,494



5,009


        Selling and marketing

810



702



2,842



2,571


        General and administrative

3,552



3,148



14,061



11,089


            Total

$

6,835



$

5,682



$

25,804



$

19,751










 

 

 iRobot Corporation

 Condensed Consolidated Balance Sheets

 (unaudited, in thousands)










December 29,
 2018


December 30,
 2017

 Assets




 Cash and cash equivalents

$

130,373



$

128,635


 Short term investments

31,605



37,225


 Accounts receivable, net

162,166



142,829


 Inventory

164,633



106,932


 Other current assets

25,660



19,105


   Total current assets

514,437



434,726


 Property and equipment, net

57,026



44,579


 Deferred tax assets

36,979



31,531


 Goodwill

118,896



121,440


 Intangible assets, net

24,273



44,712


 Other assets

15,350



14,534


 Total assets

$

766,961



$

691,522






 Liabilities and stockholders' equity




 Accounts payable

$

136,742



$

116,316


 Accrued expenses

71,259



73,647


 Deferred revenue and customer advances

5,756



7,761


   Total current liabilities

213,757



197,724


 Deferred tax liabilities

4,005



9,539


 Other long-term liabilities

13,877



13,932


 Total long-term liabilities

17,882



23,471


 Total liabilities

231,639



221,195


 Stockholders' equity

535,322



470,327


 Total liabilities and stockholders' equity

$

766,961



$

691,522






 

 

iRobot Corporation

Consolidated Statements of Cash Flows

(unaudited, in thousands)










For the twelve months ended


December 29,
 2018


December 30,
 2017

Cash flows from operating activities:




Net income

$

87,992



$

50,964


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

36,574



25,499


Gain on business acquisition



(2,243)


Stock-based compensation

25,804



19,751


Deferred income taxes, net

(10,848)



(999)


Deferred rent

1,374




Other

463



864


Changes in operating assets and liabilities — (use) source




Accounts receivable

(23,920)



(53,251)


Inventory

(58,546)



(1,470)


Other assets

(8,533)



(10,562)


Accounts payable

22,470



17,457


Accrued expenses

(3,618)



23,447


Deferred revenue and customer advances

2,392



2,149


Long-term liabilities

81



4,709


Net cash provided by operating activities

71,685



76,315






Cash flows from investing activities:




Additions of property and equipment

(32,422)



(23,371)


Change in other assets

(2,363)



(1,542)


Proceeds from sale of equity investment

856



1,267


Cash paid for business acquisitions, net of cash acquired



(148,765)


Purchases of investments

(6,438)



(10,578)


Sales and maturities of investments

14,000



13,066


Net cash used in investing activities

(26,367)



(169,923)






Cash flows from financing activities:




Proceeds from employee stock plans

10,366



10,573


Income tax withholding payment associated with restricted stock vesting

(3,532)



(2,983)


Stock repurchases

(50,000)




Net cash (used in) provided by financing activities

(43,166)



7,590






Effect of exchange rate changes on cash and cash equivalents

(414)



130


Net increase (decrease) in cash and cash equivalents

1,738



(85,888)


Cash and cash equivalents, at beginning of period

128,635



214,523


Cash and cash equivalents, at end of period

$

130,373



$

128,635






 

 

iRobot Corporation

Supplemental Information

(unaudited)


















For the three months ended


For the twelve months ended


December 29,
 2018


December 30,
 2017


December 29,
 2018


December 30,
 2017

Revenue: *








Consumer

$

384,665



$

326,897



$

1,092,584



$

883,655










    Domestic

$

215,368



$

182,509



$

560,995



$

452,307


    International

$

169,297



$

144,388



$

531,589



$

431,348










Gross margin

48.5

%


47.0

%


50.8

%


49.0

%









Consumer units shipped*

1,682



1,340



4,537



3,698


      Vacuum

1,520



1,199



3,993



3,193


      Mopping

162



141



544



503










Consumer revenue**

$

385



$

327



$

1,093



$

884


      Vacuum***

$

361



$

305



$

1,008



$

807


      Mopping***

$

24



$

24



$

85



$

78










Average gross selling prices for robot units -
Consumer

$

304



$

305



$

294



$

276










Days sales outstanding

38



40



38



40










Days in inventory

76



56



76



56










Headcount

1,032



920



1,032



920


















* in thousands








** in millions








*** includes accessory revenue
















 

 

iRobot Corporation
Explanation of Non-GAAP Measures

In addition to disclosing financial results in accordance with U.S. GAAP, this earnings release contains references to the non-GAAP financial measures described below. We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

Our non-GAAP financial measures reflect adjustments based on the following items. We also provide a non-GAAP financial measure of Adjusted EBITDA, as described below. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Amortization of acquired intangible assets: Amortization of acquired intangible assets consists of amortization of intangible assets including completed technology, customer relationships, and reacquired distribution rights acquired in connection with business combinations.  Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions.  We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Net Merger, Acquisition and Divestiture Expense: Net merger, acquisition and divestiture expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures. The occurrence and amount of these costs will vary depending on the timing and size of these transactions.  We exclude these charges from our non-GAAP measures to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Stock-Based Compensation: Stock-based compensation is a non-cash charge relating to stock-based awards. We exclude this expense as it is a non-cash expense, and we assess our internal operations excluding this expense and believe it facilitates comparisons to the performance of other companies.

IP Litigation Expense, Net: IP litigation expense, net relates to legal costs incurred to litigate patent, trademark, copyright and false advertising infringements, or to oppose or defend against interparty actions related to intellectual property. Any settlement payment or proceeds resulting from these infringements are included or netted against the costs. We exclude these costs from our non-GAAP measures as we do not believe these costs have a direct correlation to the operations of our business and may vary in size depending on the timing and results of such litigations and settlements.

Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes fair value adjustments, realized gains and losses on the sales of these investments and losses on the impairment of these investments. We exclude these items from our non-GAAP measures because we do not believe they correlate to the performance of our core business and may vary in size based on market conditions and events. We believe that the exclusion of these gains or losses provides investors with a supplemental view of our operational performance.

Income tax adjustments: Income tax adjustments include the tax effect of the non-GAAP adjustments, calculated using the appropriate statutory tax rate for each adjustment. We also exclude certain tax items that are not reflective of income tax expense incurred as a result of current period earnings.  These certain tax items include, among other non-recurring tax items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based compensation windfall benefits. We believe disclosure of the income tax provision before the effect of such tax items is important to permit investors' consistent earnings comparison between periods.

Adjusted EBITDA:  We define 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 expense.  Management believes this non-GAAP measure is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

 

 

 iRobot Corporation

Supplemental Reconciliation of GAAP Net Income to Adjusted EBITDA

(unaudited, in thousands)


















For the three months ended


For the twelve months ended


December 29,
 2018


December 30,
 2017


December 29,
 2018


December 30,
 2017

 GAAP Net Income

$

25,191



$

4,620



$

87,992



$

50,964










 Interest income, net

(248)



(226)



(944)



(1,649)


 Income tax expense

5,033



17,838



20,630



25,402


 Depreciation

4,805



3,396



16,965



12,284


 Amortization of acquired intangible assets

4,769



7,610



19,609



13,215










 EBITDA

39,550



33,238



144,252



100,216










 Stock-based compensation

6,835



5,682



25,804



19,751


 Net merger, acquisition and divestiture expense

115



657



138



3,109


 Gain on business acquisition







(2,243)


 IP litigation expense, net

39



3,158



3,556



5,068










 Adjusted EBITDA

$

46,539



$

42,735



$

173,750



$

125,901


 Adjusted EBITDA as a % of revenue

12.1

%


13.1

%


15.9

%


14.2

%









 

 

iRobot Corporation

Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals

(in thousands, except per share amounts)

(unaudited)






For the twelve months ended


December 29, 2018

 GAAP Revenue

$

1,092,584




 GAAP Gross Profit

555,428


Amortization of acquired intangible assets

18,544


Stock-based compensation

1,407


 Non-GAAP Gross Profit

$

575,379




 GAAP Income before Income Taxes

$

108,622


Amortization of acquired intangible assets

19,609


Stock-based compensation

25,804


Net merger, acquisition and divestiture expense

138


IP litigation expense, net

3,556


(Gain)/loss on strategic investments

(436)


 Non-GAAP Income before Income Taxes

$

157,293




 GAAP Income Tax Expense

$

20,630


Tax effect of non-GAAP adjustments

11,854


Other tax adjustments

2,109


 Non-GAAP Income Tax Expense

$

34,593




 GAAP Net Income

$

87,992


Amortization of acquired intangible assets

19,609


Stock-based compensation

25,804


Net merger, acquisition and divestiture expense

138


IP litigation expense, net

3,556


(Gain)/loss on strategic investments

(436)


Income tax effect

13,963


 Non-GAAP Net Income

$

150,626




 GAAP Net Income Per Diluted Share

$

3.07


Amortization of acquired intangible assets

0.69


Stock-based compensation

0.90


Net merger, acquisition and divestiture expense


IP litigation expense, net

0.13


(Gain)/loss on strategic investments

(0.02)


Income tax effect

0.49


 Non-GAAP Net Income Per Diluted Share

$

5.26




 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/irobot-reports-record-fourth-quarter-and-full-year-revenue-300791080.html

SOURCE iRobot Corp.


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