iRobot Logo

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

 
   

 

 

SOURCE iRobot Corp.

For further information: 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