iRobot Reports Record Fourth-Quarter and Full-Year Revenue

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

"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.

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:

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
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.

SOURCE iRobot Corp.