UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 3, 2020
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | ||
(Commission File Number) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (781 ) 430-3000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and Financial Condition.
On February 5, 2020, iRobot Corporation (the “Company”) announced its financial results for the fiscal quarter and year ended December 28, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8‑K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 3, 2020, Alison Dean resigned as Executive Vice President, Chief Financial Officer and Treasurer of the Company, effective May 4, 2020.
On February 5, 2020, the Company announced that Julie Zeiler, the Company’s current Vice President of Finance, is being appointed as the Company’s Executive Vice President and Chief Financial Officer, effective May 4, 2020. Since joining the Company in 2017 as Vice President of Finance, Ms. Zeiler, 54, has overseen the Company’s financial planning and analysis, and treasury functions. Working with the Company’s senior management team, she has played an important role in further scaling the Company’s global business by evolving key financial management processes, supporting the integration of two international acquisitions, and adding local capability to optimize performance in key international markets. Prior to the Company, Mr. Zeiler served in a number of senior financial leadership positions over a 20-year tenure at Boston Scientific Corporation, including as Director of Finance, Global Operations from 2014 to 2017, as well as in financial management roles at Digital Equipment Corporation. She holds a B.A. in Economics and English from Albion College.
In connection with her employment with the Company as Executive Vice President and Chief Financial Officer, effective May 4, 2020, Ms. Zeiler will receive an annual base salary of $425,000. Ms. Zeiler will also be eligible for an annual cash bonus with a target of 75% of her then current annual base salary, subject to the achievement of performance goals established and determined by the Compensation and Talent Committee. In connection with her appointment, Ms. Zeiler and the Company will enter into an executive agreement and an indemnification agreement, each consistent with the forms thereof entered into with the other executive officers of the Company and filed as exhibits to the Company’s Annual Report on Form 10-K.
Item 7.01 Regulation FD Disclosure.
On February 5, 2020, the Company issued a press release relating to its upcoming CFO transition. A copy of this press release is furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K and Exhibits 99.1 and 99.2 attached hereto, other than the information in Item 5.02, is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 5, 2020 | iRobot Corporation | |
By: /s/ Glen D. Weinstein | ||
Name: Glen D. Weinstein | ||
Title: Chief Legal Officer and Secretary | ||
EX-99.1
Contacts: | ||||
Andrew Kramer | Charlie Vaida | |||
Investor Relations | Media Relations | |||
iRobot Corp. | iRobot Corp. | |||
(781) 430-3003 | (781) 430-3182 | |||
akramer@irobot.com | cvaida@irobot.com | |||
iRobot Reports Fourth-Quarter and Full-Year 2019 Financial Results
15% U.S. Revenue Growth and Prudent Cost Management Drive
Better-than-Expected Operating Income and EPS
BEDFORD, Mass., February 5, 2020 - iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the fourth quarter and full year ended December 28, 2019.
“We closed 2019 on a positive note by delivering fourth-quarter revenue, operating income and EPS that exceeded our October plans,” said Colin Angle, chairman and chief executive officer of iRobot. “Our financial performance this quarter benefited from the combination of strong revenue growth in the United States and disciplined spending. Throughout 2019, we executed well on all major elements of our strategy while navigating increasingly challenging market conditions in the U.S. and intense price competition in EMEA. As a result, we maintained our Roomba leadership, took important steps to further broaden our product portfolio within and beyond RVCs, advanced our efforts to build out our Smart Home ecosystem, and made tangible progress diversifying our supply chain activities.”
“Our newest pricing and promotional tactics played an important role in enabling us to defend our category leadership and hold share in the U.S. despite aggressive price competition,” Angle continued. “We believe that consumer demand for RVCs remains fundamentally healthy, although we expect challenging U.S. market conditions to persist into 2020. As we move forward, we are focused on executing against our 2020 strategic priorities in ways that will enable us to drive near-term growth, fortify our leadership and set us up to capitalize on a broad range of exciting longer-term opportunities.”
Commenting specifically on the company’s 2020 financial outlook, Angle added, “2020 is shaping up to be a year of transition for iRobot. We anticipate 2020 revenue growth in the range of 9% to 11%, although our operating profitability and EPS are expected to be constrained primarily by pricing and promotional activity and tariff costs. While we plan to continue carefully managing our spending this year, it is imperative that we continue funding the investments that we believe will enable us to rebound in 2021 and beyond with accelerated revenue growth, meaningful improvements in operating income and robust operating cash flow generation.”
Financial Performance Highlights
• | Revenue for the fourth quarter of 2019 grew 11% to $426.8 million over $384.7 million for the fourth quarter of 2018. Full-year 2019 revenue was $1,214.0 million, an increase of 11% over $1,092.6 million in 2018. |
• | Q4 revenue growth of 11% reflected 15% growth in the U.S. and 6% international growth. Growth outside of the U.S. was led by 9% growth in EMEA, which was partially offset by a slight decline in Japan, as expected, and other smaller regions. Full-year 2019 international revenue grew |
15% driven primarily by Japan at 21% and EMEA at 15%. Full-year 2019 revenue growth in the U.S. was 8%.
• | Q4 and full-year 2019 revenue growth was primarily driven by adoption of new products introduced since September 2018. The Roomba s9 Series, the Braava jet m6 Series and international sales of the Roomba i7 Series, generated 17% of 2019 total revenue. The company achieved its goal of surpassing $100 million in revenue for 2019 for the Braava family of robot mops. |
• | Fourth-quarter 2019 operating income was $16.6 million, compared with $29.8 million in the fourth quarter of 2018. For 2019, operating income was $86.6 million versus $105.8 million for the full year 2018. Section 301 tariff costs significantly lowered fourth-quarter and full-year 2019 operating income by $21.9 million and $37.9 million, respectively. |
• | Quarterly earnings per share were $0.70 for the fourth quarter of 2019, compared with $0.88 in the fourth quarter of 2018. Full-year 2019 earnings per share were $2.97, compared with $3.07 for full-year 2018. Full-year 2019 earnings per share included a $0.23 discrete tax benefit related to stock compensation versus a $0.23 discrete tax benefit related to stock compensation in 2018. |
• | As of December 28, 2019, the company’s cash, cash equivalents and short-term investments were $256.4 million, up from $91.1 million as of September 28, 2019, and $162.0 million as of December 29, 2018. |
Q419 and Recent Business Highlights
• | In a separate announcement today, the company has appointed Julie Zeiler, vice president of finance, as its next executive vice president and chief financial officer, effective May 4, 2020. She will succeed Alison Dean, the company's CFO since 2013, who will be stepping down to spend more time with her family before pursuing other personal and professional interests. |
• | Surpassed the 30 million robots sold milestone, which includes over nine million connected robots. |
• | Delivered innovative, new digital features, such as Keep Out Zones and Smart Charge and Resume, for the Roomba s9 Series and i7 Series and the Braava jet m6 Series that leverage the spatial awareness of these robots to deliver more effective, efficient performance. In addition, ImprintTM Link compatibility was extended to the Roomba 900 Series, which enables these robots to pair with the Braava jet m6 robot and automatically trigger a mopping session to commence immediately after a 900 series Roomba robot completes its vacuuming mission. |
• | Commenced Roomba production in Malaysia in late November, ahead of schedule. |
• | Announced a partnership with IFTTT that is aimed at eventually enabling customers to more easily integrate devices and services, like smart thermostats, lighting and home security, directly within the iRobot HOME App. |
• | Roomba s9+ was a 2020 CES Innovation Award honoree in the robotics category for its suite of groundbreaking technology built into a brand-new design. This award caps a highly productive year of award-winning innovation at iRobot. |
Financial Expectations
Consistent with ongoing efforts to provide additional clarity into iRobot’s operating performance and potential, iRobot is providing both GAAP and non-GAAP financial expectations for the fiscal year ending January 2, 2021. A detailed reconciliation between the company’s GAAP and non-GAAP expectations is included in the attached financial tables.
Fiscal Year 2020:
Metric | GAAP | Adjustments | Non-GAAP | |||
Revenue | $1.32 - $1.35 billion | — | $1.32 - $1.35 billion | |||
Gross Profit | $507 - $520 million | ~$3 million | $510 - $523 million | |||
Operating Income | $15 - $35 million | ~$40 million | $55 - $75 million | |||
Earnings Per Share | $0.55 - $1.15 | ~$1.15 | $1.70 - $2.30 | |||
Fourth-Quarter and Full-Year 2019 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 2019, major business developments and its outlook for fiscal year 2020 financial performance. Pertinent conference call details include:
Date: | Thursday, February 6 |
Time: | 8:30 a.m. ET |
Call-In Number: | 213-358-0894 |
Conference ID: | 1873658 |
A live webcast of the conference call, along with the conference call prepared remarks, will be accessible on the event section of the company’s website at https://investor.irobot.com/events/event-details/q4-2019-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 13, and can be accessed by dialing 404-537-3406, passcode 1873658.
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 30 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; future expenditures; future market conditions; and anticipated revenue, gross profit, operating income, earnings per share and Section 301 tariff costs (and the financial impact thereof) for the fiscal year ending January 2, 2021. 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; the impact of tariffs on goods imported into the United States; 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 28, 2019 | December 29, 2018 | December 28, 2019 | December 29, 2018 | ||||||||||||
Revenue | $ | 426,778 | $ | 384,665 | $ | 1,214,010 | $ | 1,092,584 | |||||||
Cost of revenue: | |||||||||||||||
Cost of product revenue | 254,970 | 193,645 | 658,362 | 518,612 | |||||||||||
Amortization of acquired intangible assets | 2,438 | 4,509 | 11,721 | 18,544 | |||||||||||
Total cost of revenue | 257,408 | 198,154 | 670,083 | 537,156 | |||||||||||
Gross profit | 169,370 | 186,511 | 543,927 | 555,428 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development | 37,287 | 37,451 | 141,607 | 140,629 | |||||||||||
Selling and marketing | 94,046 | 94,142 | 231,548 | 210,411 | |||||||||||
General and administrative | 21,232 | 24,871 | 83,103 | 97,501 | |||||||||||
Amortization of acquired intangible assets | 255 | 260 | 1,051 | 1,065 | |||||||||||
Total operating expenses | 152,820 | 156,724 | 457,309 | 449,606 | |||||||||||
Operating income | 16,550 | 29,787 | 86,618 | 105,822 | |||||||||||
Other income, net | 8,502 | 437 | 12,215 | 2,800 | |||||||||||
Income before income taxes | 25,052 | 30,224 | 98,833 | 108,622 | |||||||||||
Income tax expense | 5,011 | 5,033 | 13,533 | 20,630 | |||||||||||
Net income | $ | 20,041 | $ | 25,191 | $ | 85,300 | $ | 87,992 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.71 | $ | 0.91 | $ | 3.04 | $ | 3.18 | |||||||
Diluted | $ | 0.70 | $ | 0.88 | $ | 2.97 | $ | 3.07 | |||||||
Number of shares used in per share calculations: | |||||||||||||||
Basic | 28,300 | 27,714 | 28,097 | 27,692 | |||||||||||
Diluted | 28,563 | 28,579 | 28,735 | 28,640 | |||||||||||
Stock-based compensation included in above figures: | |||||||||||||||
Cost of revenue | $ | 366 | $ | 372 | $ | 1,486 | $ | 1,407 | |||||||
Research and development | 2,557 | 2,101 | 9,186 | 7,494 | |||||||||||
Selling and marketing | 857 | 810 | 3,323 | 2,842 | |||||||||||
General and administrative | 1,221 | 3,552 | 9,749 | 14,061 | |||||||||||
Total | $ | 5,001 | $ | 6,835 | $ | 23,744 | $ | 25,804 | |||||||
iRobot Corporation | |||||||
Condensed Consolidated Balance Sheets | |||||||
(unaudited, in thousands) | |||||||
December 28, 2019 | December 29, 2018 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 239,392 | $ | 130,373 | |||
Short term investments | 17,032 | 31,605 | |||||
Accounts receivable, net | 146,161 | 162,166 | |||||
Inventory | 157,347 | 164,633 | |||||
Other current assets | 34,285 | 25,660 | |||||
Total current assets | 594,217 | 514,437 | |||||
Property and equipment, net | 75,988 | 57,026 | |||||
Operating lease right-of-use assets | 47,478 | — | |||||
Deferred tax assets | 41,791 | 36,979 | |||||
Goodwill | 118,732 | 118,896 | |||||
Intangible assets, net | 12,352 | 24,273 | |||||
Other assets | 30,195 | 15,350 | |||||
Total assets | $ | 920,753 | $ | 766,961 | |||
Liabilities and stockholders' equity | |||||||
Accounts payable | $ | 116,185 | $ | 136,742 | |||
Accrued expenses | 81,768 | 71,259 | |||||
Deferred revenue and customer advances | 4,549 | 5,756 | |||||
Total current liabilities | 202,502 | 213,757 | |||||
Operating lease liabilities | 54,928 | — | |||||
Deferred tax liabilities | 912 | 4,005 | |||||
Other long-term liabilities | 10,342 | 13,877 | |||||
Total long-term liabilities | 66,182 | 17,882 | |||||
Total liabilities | 268,684 | 231,639 | |||||
Stockholders' equity | 652,069 | 535,322 | |||||
Total liabilities and stockholders' equity | $ | 920,753 | $ | 766,961 | |||
iRobot Corporation | |||||||
Consolidated Statements of Cash Flows | |||||||
(unaudited, in thousands) | |||||||
For the twelve months ended | |||||||
December 28, 2019 | December 29, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 85,300 | $ | 87,992 | |||
Adjustments to reconcile net income to net cash provided by operating activities, net of the effects of acquisition: | |||||||
Depreciation and amortization | 37,159 | 36,574 | |||||
Gain on sale of equity investment | (8,439 | ) | — | ||||
Stock-based compensation | 23,744 | 25,804 | |||||
Deferred income taxes, net | (11,118 | ) | (10,848 | ) | |||
Other | 7,267 | 1,837 | |||||
Changes in operating assets and liabilities — (use) source | |||||||
Accounts receivable | 13,064 | (23,920 | ) | ||||
Inventory | 7,307 | (58,546 | ) | ||||
Other current assets | (3,310 | ) | (8,533 | ) | |||
Accounts payable | (20,536 | ) | 22,470 | ||||
Accrued expenses and other liabilities | (386 | ) | (1,145 | ) | |||
Net cash provided by operating activities | 130,052 | 71,685 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (35,337 | ) | (32,422 | ) | |||
Change in other assets | (5,436 | ) | (2,363 | ) | |||
Proceeds from sale of equity investment | 9,787 | 856 | |||||
Cash paid for business acquisition, net of cash acquired | (2,817 | ) | — | ||||
Purchases of investments | — | (6,438 | ) | ||||
Sales and maturities of investments | 12,880 | 14,000 | |||||
Net cash used in investing activities | (20,923 | ) | (26,367 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from employee stock plans | 7,147 | 10,366 | |||||
Income tax withholding payment associated with restricted stock vesting | (7,277 | ) | (3,532 | ) | |||
Stock repurchases | — | (50,000 | ) | ||||
Net cash used in financing activities | (130 | ) | (43,166 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 20 | (414 | ) | ||||
Net increase in cash and cash equivalents | 109,019 | 1,738 | |||||
Cash and cash equivalents, at beginning of period | 130,373 | 128,635 | |||||
Cash and cash equivalents, at end of period | $ | 239,392 | $ | 130,373 | |||
iRobot Corporation | |||||||||||||||||||
Supplemental Information | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 30, 2019 | June 29, 2019 | September 28, 2019 | December 28, 2019 | December 28, 2019 | |||||||||||||||
Revenue by Geography * | |||||||||||||||||||
Domestic | $ | 114,065 | $ | 124,472 | $ | 117,929 | $ | 247,152 | $ | 603,618 | |||||||||
International | 123,596 | 135,700 | 171,470 | 179,626 | 610,392 | ||||||||||||||
Total | $ | 237,661 | $ | 260,172 | $ | 289,399 | $ | 426,778 | $ | 1,214,010 | |||||||||
Units shipped* | |||||||||||||||||||
Vacuum | 764 | 935 | 975 | 1,730 | 4,403 | ||||||||||||||
Mopping | 112 | 139 | 156 | 179 | 586 | ||||||||||||||
Total | 876 | 1,074 | 1,131 | 1,909 | 4,989 | ||||||||||||||
Revenue by Product Category** | |||||||||||||||||||
Vacuum*** | $ | 221 | $ | 237 | $ | 257 | $ | 388 | $ | 1,103 | |||||||||
Mopping*** | 17 | 23 | 32 | 39 | 111 | ||||||||||||||
Total | $ | 238 | $ | 260 | $ | 289 | $ | 427 | $ | 1,214 | |||||||||
Average gross selling prices for robot units | $ | 321 | $ | 296 | $ | 305 | $ | 317 | $ | 310 | |||||||||
Section 301 tariff costs * | $ | 3,518 | $ | 4,982 | $ | 7,466 | $ | 21,896 | $ | 37,862 | |||||||||
Section 301 tariff impact on gross and operating margin | (1.5 | )% | (1.9 | )% | (2.6 | )% | (5.1 | )% | (3.1 | )% | |||||||||
Days sales outstanding | 21 | 32 | 53 | 31 | |||||||||||||||
Days in inventory | 140 | 123 | 149 | 56 | |||||||||||||||
Headcount | 1,072 | 1,120 | 1,132 | 1,128 | |||||||||||||||
* in thousands | |||||||||||||||||||
** in millions | |||||||||||||||||||
*** includes accessory revenue | |||||||||||||||||||
Certain numbers may not total due to rounding | |||||||||||||||||||
iRobot Corporation | |||||||||||||||||||
Supplemental Information | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 31, 2018 | June 30, 2018 | September 29, 2018 | December 29, 2018 | December 29, 2018 | |||||||||||||||
Revenue by Geography * | |||||||||||||||||||
Domestic | $ | 106,862 | $ | 111,526 | $ | 127,240 | $ | 215,368 | $ | 560,995 | |||||||||
International | 110,206 | 114,791 | 137,294 | 169,297 | 531,589 | ||||||||||||||
Total | $ | 217,068 | $ | 226,317 | $ | 264,534 | $ | 384,665 | $ | 1,092,584 | |||||||||
Units shipped* | |||||||||||||||||||
Vacuum | 712 | 819 | 942 | 1,520 | 3,993 | ||||||||||||||
Mopping | 103 | 134 | 145 | 162 | 544 | ||||||||||||||
Total | 815 | 953 | 1,087 | 1,682 | 4,537 | ||||||||||||||
Revenue by Product Category** | |||||||||||||||||||
Vacuum*** | $ | 201 | $ | 204 | $ | 242 | $ | 361 | $ | 1,008 | |||||||||
Mopping*** | 16 | 22 | 23 | 24 | 85 | ||||||||||||||
Total | $ | 217 | $ | 226 | $ | 265 | $ | 385 | $ | 1,093 | |||||||||
Average gross selling prices for robot units | $ | 309 | $ | 285 | $ | 276 | $ | 304 | $ | 294 | |||||||||
Section 301 tariff costs * | $ | — | $ | — | $ | — | $ | 2,155 | 2,155 | ||||||||||
Section 301 tariff impact on gross and operating margin | — | % | — | % | — | % | (0.6 | )% | (0.2 | )% | |||||||||
Days sales outstanding | 29 | 30 | 38 | 38 | |||||||||||||||
Days in inventory | 101 | 97 | 113 | 76 | |||||||||||||||
Headcount | 954 | 982 | 1,003 | 1,032 | |||||||||||||||
* in thousands | |||||||||||||||||||
** in millions | |||||||||||||||||||
*** includes accessory revenue | |||||||||||||||||||
Certain numbers may not total due to rounding | |||||||||||||||||||
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 (Income) Expense: Net merger, acquisition and divestiture (income) expense primarily consists of transaction fees, professional fees, and transition and integration costs directly associated with mergers, acquisitions and divestitures. It also includes business combination adjustments including adjustments after the measurement period has ended. 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 reassess the need for any valuation allowance recorded based on the non-GAAP profitability and have eliminated the effect of the valuation allowance recorded in the U.S. jurisdiction. 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 windfalls/shortfalls. 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 28, 2019 | December 29, 2018 | December 28, 2019 | December 29, 2018 | ||||||||||||
GAAP Net Income | $ | 20,041 | $ | 25,191 | $ | 85,300 | $ | 87,992 | |||||||
Interest income, net | (459 | ) | (248 | ) | (2,546 | ) | (944 | ) | |||||||
Income tax expense | 5,011 | 5,033 | 13,533 | 20,630 | |||||||||||
Depreciation | 6,722 | 4,805 | 24,387 | 16,965 | |||||||||||
Amortization of acquired intangible assets | 2,693 | 4,769 | 12,772 | 19,609 | |||||||||||
EBITDA | 34,008 | 39,550 | 133,446 | 144,252 | |||||||||||
Stock-based compensation | 5,001 | 6,835 | 23,744 | 25,804 | |||||||||||
Net merger, acquisition and divestiture (income) expense | 138 | 115 | 466 | 138 | |||||||||||
IP litigation expense, net | 2,582 | 39 | 2,218 | 3,556 | |||||||||||
Adjusted EBITDA | $ | 41,729 | $ | 46,539 | $ | 159,874 | $ | 173,750 | |||||||
Adjusted EBITDA as a % of revenue | 9.8 | % | 12.1 | % | 13.2 | % | 15.9 | % | |||||||
iRobot Corporation | |||||||||||||||||||
Supplemental Reconciliation of 2019 GAAP Actuals to 2019 Non-GAAP Actuals | |||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 30, 2019 | June 29, 2019 | September 28, 2019 | December 28, 2019 | December 28, 2019 | |||||||||||||||
GAAP Revenue | $ | 237,661 | $ | 260,172 | $ | 289,399 | $ | 426,778 | $ | 1,214,010 | |||||||||
GAAP Gross Profit | $ | 119,546 | $ | 118,170 | $ | 136,841 | $ | 169,370 | $ | 543,927 | |||||||||
Amortization of acquired intangible assets | 3,077 | 3,111 | 3,095 | 2,438 | 11,721 | ||||||||||||||
Stock-based compensation | 378 | 405 | 337 | 366 | 1,486 | ||||||||||||||
Non-GAAP Gross Profit | $ | 123,001 | $ | 121,686 | $ | 140,273 | $ | 172,174 | $ | 557,134 | |||||||||
Non-GAAP Gross Margin | 51.8 | % | 46.8 | % | 48.5 | % | 40.3 | % | 45.9 | % | |||||||||
GAAP Operating Income | $ | 22,263 | $ | 5,250 | $ | 42,555 | $ | 16,550 | $ | 86,618 | |||||||||
Amortization of acquired intangible assets | 3,348 | 3,380 | 3,351 | 2,693 | 12,772 | ||||||||||||||
Stock-based compensation | 6,864 | 7,594 | 4,284 | 5,001 | 23,744 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | 152 | 143 | 32 | 138 | 466 | ||||||||||||||
IP litigation expense, net | 469 | (676 | ) | (157 | ) | 2,582 | 2,218 | ||||||||||||
Non-GAAP Operating Income | $ | 33,096 | $ | 15,691 | $ | 50,065 | $ | 26,964 | $ | 125,818 | |||||||||
Non-GAAP Operating Income Margin | 13.9 | % | 6.0 | % | 17.3 | % | 6.3 | % | 10.4 | % | |||||||||
GAAP Income Tax (Benefit) Expense | $ | 1,023 | $ | (424 | ) | $ | 7,923 | $ | 5,011 | $ | 13,533 | ||||||||
Tax effect of non-GAAP adjustments | 1,824 | 1,797 | (132 | ) | 1,159 | 4,648 | |||||||||||||
Other tax adjustments | 4,067 | 1,461 | 133 | 1,267 | 6,928 | ||||||||||||||
Non-GAAP Income Tax Expense | $ | 6,914 | $ | 2,834 | $ | 7,924 | $ | 7,437 | $ | 25,109 | |||||||||
GAAP Net Income | $ | 22,520 | $ | 7,207 | $ | 35,532 | $ | 20,041 | $ | 85,300 | |||||||||
Amortization of acquired intangible assets | 3,348 | 3,380 | 3,351 | 2,693 | 12,772 | ||||||||||||||
Stock-based compensation | 6,864 | 7,594 | 4,284 | 5,001 | 23,744 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | 152 | 143 | 32 | 138 | 466 | ||||||||||||||
IP litigation expense, net | 469 | (676 | ) | (157 | ) | 2,582 | 2,218 | ||||||||||||
(Gain)/loss on strategic investments | 57 | (629 | ) | — | (8,332 | ) | (8,904 | ) | |||||||||||
Income tax effect | (5,891 | ) | (3,258 | ) | (1 | ) | (2,426 | ) | (11,576 | ) | |||||||||
Non-GAAP Net Income | $ | 27,519 | $ | 13,761 | $ | 43,041 | $ | 19,697 | $ | 104,020 | |||||||||
iRobot Corporation | |||||||||||||||||||
Supplemental Reconciliation of 2019 GAAP Actuals to 2019 Non-GAAP Actuals continued | |||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 30, 2019 | June 29, 2019 | September 28, 2019 | December 28, 2019 | December 28, 2019 | |||||||||||||||
GAAP Net Income Per Diluted Share | $ | 0.78 | $ | 0.25 | $ | 1.24 | $ | 0.70 | $ | 2.97 | |||||||||
Amortization of acquired intangible assets | 0.12 | 0.12 | 0.12 | 0.09 | 0.44 | ||||||||||||||
Stock-based compensation | 0.24 | 0.26 | 0.15 | 0.18 | 0.83 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | — | — | — | — | 0.01 | ||||||||||||||
IP litigation expense, net | 0.02 | (0.02 | ) | (0.01 | ) | 0.09 | 0.08 | ||||||||||||
(Gain)/loss on strategic investments | — | (0.02 | ) | — | (0.29 | ) | (0.31 | ) | |||||||||||
Income tax effect | (0.20 | ) | (0.11 | ) | — | (0.08 | ) | (0.40 | ) | ||||||||||
Non-GAAP Net Income Per Diluted Share | $ | 0.96 | $ | 0.48 | $ | 1.50 | $ | 0.69 | $ | 3.62 | |||||||||
Number of shares used in diluted per share calculation | 28,763 | 28,763 | 28,650 | 28,563 | 28,735 | ||||||||||||||
Section 301 Tariff Costs | |||||||||||||||||||
Section 301 tariff costs | $ | 3,518 | $ | 4,982 | $ | 7,466 | $ | 21,896 | $ | 37,862 | |||||||||
Impact of Section 301 tariff costs to gross and operating margin (GAAP & non-GAAP) | (1.5 | )% | (1.9 | )% | (2.6 | )% | (5.1 | )% | (3.1 | )% | |||||||||
Impact of Section 301 tariff costs to net income per diluted share (GAAP & non-GAAP) | $ | (0.12 | ) | $ | (0.17 | ) | $ | (0.26 | ) | $ | (0.77 | ) | $ | (1.32 | ) | ||||
Certain numbers may not total due to rounding | |||||||||||||||||||
Net merger, acquisition and divestiture (income) expense and IP litigation, net are classified in General and Administrative | |||||||||||||||||||
iRobot Corporation | |||||||||||||||||||
Supplemental Reconciliation of 2018 GAAP Actuals to 2018 Non-GAAP Actuals | |||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 31, 2018 | June 30, 2018 | September 29, 2018 | December 29, 2018 | December 29, 2018 | |||||||||||||||
GAAP Revenue | $ | 217,068 | $ | 226,317 | $ | 264,534 | $ | 384,665 | $ | 1,092,584 | |||||||||
GAAP Gross Profit | $ | 115,785 | $ | 117,926 | $ | 135,206 | $ | 186,511 | $ | 555,428 | |||||||||
Amortization of acquired intangible assets | 4,782 | 4,679 | 4,574 | 4,509 | 18,544 | ||||||||||||||
Stock-based compensation | 341 | 347 | 347 | 372 | 1,407 | ||||||||||||||
Non-GAAP Gross Profit | $ | 120,908 | $ | 122,952 | $ | 140,127 | $ | 191,392 | $ | 575,379 | |||||||||
Non-GAAP Gross Margin | 55.7 | % | 54.3 | % | 53.0 | % | 49.8 | % | 52.7 | % | |||||||||
GAAP Operating Income | $ | 25,405 | $ | 13,355 | $ | 37,275 | $ | 29,787 | $ | 105,822 | |||||||||
Amortization of acquired intangible assets | 5,055 | 4,948 | 4,837 | 4,769 | 19,609 | ||||||||||||||
Stock-based compensation | 5,946 | 6,431 | 6,592 | 6,835 | 25,804 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | (141 | ) | 164 | — | 115 | 138 | |||||||||||||
IP litigation expense, net | 2,571 | 759 | 187 | 39 | 3,556 | ||||||||||||||
Non-GAAP Operating Income | $ | 38,836 | $ | 25,657 | $ | 48,891 | $ | 41,545 | $ | 154,929 | |||||||||
Non-GAAP Operating Income Margin | 17.9 | % | 11.3 | % | 18.5 | % | 10.8 | % | 14.2 | % | |||||||||
GAAP Income Tax (Benefit) Expense | $ | 5,523 | $ | 4,391 | $ | 5,683 | $ | 5,033 | $ | 20,630 | |||||||||
Tax effect of non-GAAP adjustments | 3,340 | 2,830 | 2,835 | 2,849 | 11,854 | ||||||||||||||
Other tax adjustments | 712 | (2,440 | ) | 2,667 | 1,170 | 2,109 | |||||||||||||
Non-GAAP Income Tax Expense | $ | 9,575 | $ | 4,781 | $ | 11,185 | $ | 9,052 | $ | 34,593 | |||||||||
GAAP Net Income | $ | 20,401 | $ | 10,471 | $ | 31,929 | $ | 25,191 | $ | 87,992 | |||||||||
Amortization of acquired intangible assets | 5,055 | 4,948 | 4,837 | 4,769 | 19,609 | ||||||||||||||
Stock-based compensation | 5,946 | 6,431 | 6,592 | 6,835 | 25,804 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | (141 | ) | 164 | — | 115 | 138 | |||||||||||||
IP litigation expense, net | 2,571 | 759 | 187 | 39 | 3,556 | ||||||||||||||
(Gain)/loss on strategic investments | 281 | (682 | ) | 26 | (61 | ) | (436 | ) | |||||||||||
Income tax effect | (4,052 | ) | (390 | ) | (5,502 | ) | (4,019 | ) | (13,963 | ) | |||||||||
Non-GAAP Net Income | $ | 30,061 | $ | 21,701 | $ | 38,069 | $ | 32,869 | $ | 122,700 | |||||||||
iRobot Corporation | |||||||||||||||||||
Supplemental Reconciliation of 2018 GAAP Actuals to 2018 Non-GAAP Actuals continued | |||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
For the three months ended | For the twelve months ended | ||||||||||||||||||
March 31, 2018 | June 30, 2018 | September 29, 2018 | December 29, 2018 | December 29, 2018 | |||||||||||||||
GAAP Net Income Per Diluted Share | $ | 0.71 | $ | 0.37 | $ | 1.12 | $ | 0.88 | $ | 3.07 | |||||||||
Amortization of acquired intangible assets | 0.17 | 0.17 | 0.17 | 0.17 | 0.69 | ||||||||||||||
Stock-based compensation | 0.20 | 0.23 | 0.23 | 0.24 | 0.90 | ||||||||||||||
Net merger, acquisition and divestiture (income) expense | — | — | — | — | — | ||||||||||||||
IP litigation expense, net | 0.09 | 0.03 | 0.01 | — | 0.13 | ||||||||||||||
(Gain)/loss on strategic investments | 0.01 | (0.02 | ) | — | — | (0.02 | ) | ||||||||||||
Income tax effect | (0.14 | ) | (0.01 | ) | (0.19 | ) | (0.14 | ) | (0.49 | ) | |||||||||
Non-GAAP Net Income Per Diluted Share | $ | 1.04 | $ | 0.77 | $ | 1.34 | $ | 1.15 | $ | 4.28 | |||||||||
Number of shares used in diluted per share calculation | 28,923 | 28,337 | 28,506 | 28,579 | 28,640 | ||||||||||||||
Section 301 Tariff Costs | |||||||||||||||||||
Section 301 tariff costs | $ | — | $ | — | $ | — | $ | 2,155 | $ | 2,155 | |||||||||
Impact of Section 301 tariff costs to gross and operating margin (GAAP & non-GAAP) | — | % | — | % | — | % | (0.6 | )% | (0.2 | )% | |||||||||
Impact of Section 301 tariff costs to net income per diluted share (GAAP & non-GAAP) | $ | — | $ | — | $ | — | $ | (0.08 | ) | $ | (0.08 | ) | |||||||
Certain numbers may not total due to rounding | |||||||||||||||||||
Net merger, acquisition and divestiture (income) expense and IP litigation, net are classified in General and Administrative | |||||||||||||||||||
iRobot Corporation | |
Supplemental Reconciliation of Fiscal Year 2020 GAAP to Non-GAAP Guidance | |
(unaudited) | |
FY-20 | |
GAAP Gross Profit | $507 - $520 million |
Amortization of acquired intangible assets | ~$2 million |
Stock-based compensation | ~$1 million |
Total adjustments | ~$3 million |
Non-GAAP Gross Profit | $510 - $523 million |
FY-20 | |
GAAP Operating Income | $15 - $35 million |
Amortization of acquired intangible assets | ~$2 million |
Stock-based compensation | ~$31 million |
IP litigation expense, net | ~$7 million |
Total adjustments | ~$40 million |
Non-GAAP Operating Income | $55 - $75 million |
Section 301 tariff costs | ~$47 - ~$50 million |
Impact of Section 301 tariff costs to gross and operating income margin | (~4%) |
FY-20 | |
GAAP Net Income Per Diluted Share | $0.55 - $1.15 |
Amortization of acquired intangible assets | ~$0.07 |
Stock-based compensation | ~$1.08 |
IP litigation expense, net | ~$0.24 |
Income tax effect | ~($0.24) |
Total adjustments | ~$1.15 |
Non-GAAP Net Income Per Diluted Share | $1.70 - $2.30 |
Number of shares used in diluted per share calculations | ~28.8 million |
EX-99.2
Contacts: | ||||
Andrew Kramer | Charlie Vaida | |||
Investor Relations | Media Relations | |||
iRobot Corp. | iRobot Corp. | |||
(781) 430-3003 | (781) 430-3182 | |||
akramer@irobot.com | cvaida@irobot.com | |||
iRobot Announces CFO Transition
Julie Zeiler, VP of Finance, to Succeed Alison Dean this Spring
BEDFORD, Mass., February 5, 2020 - iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced that the company is appointing current vice president of finance Julie Zeiler as its next executive vice president and chief financial officer, effective May 4, 2020. She will succeed Alison Dean, the company’s CFO since 2013, who will be stepping down to spend more time with her family before pursuing other personal and professional interests. Alison will remain with iRobot as an advisor for an undetermined amount of time to ensure a smooth transition of responsibilities to Julie.
Julie Zeiler brings with her more than 30 years of senior financial leadership experience. Since joining iRobot in 2017 as vice president of finance, Julie has overseen the company’s financial planning and analysis, and treasury functions. Working with the company’s senior management team, she has played an important role in scaling the company’s global business by evolving key financial management processes, supporting the integration of two international acquisitions and adding local capability to optimize performance in key international markets. Prior to iRobot, Julie served in a number of senior financial leadership positions over a 20-year-tenure at Boston Scientific Corporation as well as financial management roles at Digital Equipment Corporation.
“First, on behalf of the board and everyone at iRobot, I want to thank Alison for her many contributions to the company since joining 15 years ago, including the past seven as CFO,” said Colin Angle, chairman and chief executive officer of iRobot. “Her dedication and business acumen have been driving forces behind iRobot’s financial growth, global expansion and transformation into a consumer-focused organization. Throughout her tenure, she has been an incredible leader, guiding her team and the company through significant evolution, growth and change, and we appreciate her commitment to ensuring a smooth, orderly transition of responsibilities. We wish her the very best as she explores new opportunities, both personally and professionally.
“I am also pleased that Julie will succeed Alison as the company’s next CFO,” continued Angle. “During the past three years, she has demonstrated an ability to work collaboratively across the organization to help drive scale, deliver profitable growth and manage through a wide range of challenges. We look forward to having Julie step into the CFO role to help propel our business forward and ensure that we capitalize on the many exciting opportunities we see to drive long-term value creation.”
About iRobot Corporation
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 30 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 iRobot Corporation's expectations concerning financial leadership transition. 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. 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 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, see the disclosure contained in our public filings with the Securities and Exchange Commission including, without limitation, our most recent Annual Report on Form 10-K.