Gary Cohen, Former Gillette, Timex and Energizer Executive, Named as Company's New CEO
Company Updates Outlook for Full Year 2024
BEDFORD, Mass., May 7, 2024 /PRNewswire/ -- iRobot Corp. (NASDAQ: IRBT), a leader in consumer robots, today announced its financial results for the first quarter ended March 30, 2024.
First-Quarter Financial Highlights
- Revenue of $150.0 million, compared with $160.3 million in Q1 of 2023.
- GAAP net income per share was $0.30 compared with GAAP net loss per share of ($2.95) in Q1 of 2023.
- Non-GAAP net loss per share was ($1.53) compared with non-GAAP net loss per share of ($1.67) in Q1 of 2023.
- Positive cash flow from operations of $1.4 million benefited from one-time net proceeds of $75 million from transaction termination fee paid to the Company by Amazon.com.
Recent Developments
- Named Gary Cohen, former Gillette, Timex and Energizer executive, as iRobot's new CEO.
- Launched Roomba Combo Essential robot and Roomba Vac Essential robot as first products to benefit from iRobot's new product development paradigm with its contract manufacturers.
- Substantially completed previously announced reduction-in-force initiative, decreasing Company's total workforce by 30%.
"We exceeded our financial expectations for the first quarter as our team executed on our restructuring plan to significantly improve iRobot's near-term operations," said Glen Weinstein, who served as iRobot's interim CEO until Mr. Cohen's appointment. "Our plan is designed to stabilize the business in the current market environment without sacrificing longer-term growth initiatives. In the first quarter, we took aggressive actions to simplify our cost structure, implement a more sustainable business model and focus on our core value drivers.
"With the appointment of Gary Cohen as our new CEO, the board and management team are all the more confident in iRobot's ability to build on its legacy of innovation. The Company is fortunate to have an incredible team of builders and innovators who are passionate about the robots we create, with customers who truly value our products."
New Chief Executive Officer
press release today, the Company has named Gary Cohen as its new chief executive officer. Mr. Cohen previously served as the CEO of Qualitor Automotive and Timex, and held senior leadership roles at Gillette and Energizer, among other companies. In all, he has more than 25 years of executive leadership experience and a track record of managing successful corporate turnarounds. He will lead the Company's transformational strategy, overseeing all aspects of the Company's business, including innovation, product and commercial strategies, operational excellence and talent, and will work across the organization to build a sustainable competitive advantage and consumer-centric brand.
Operational Restructuring Plan
As announced on January 29, 2024, iRobot has initiated an operational restructuring plan to align its cost structure with near-term revenue expectations and drive bottom-line improvement. The plan includes implementing margin-improvement initiatives, reducing R&D expenses by relocating certain non-core engineering functions, pausing work unrelated to the Company's core floorcare business, centralizing global marketing activities, and streamlining the Company's legal entity and real estate footprint to fit its current business needs and near-term revenue expectations.
In the first quarter, the Company reduced its workforce by approximately 330 employees, representing 30 percent of the Company's total workforce as of December 30, 2023, resulting in a significant decrease in operating expenses. The Company's first quarter 2024 GAAP results include a $14 million charge related to the restructuring plan, primarily for severance and related costs. The Company expects an additional restructuring charge of approximately $9 million across the remainder of 2024.
Also in the first quarter, iRobot launched the Roomba Combo Essential and Roomba Vac Essential robots, the first products to benefit from the new product development paradigm with the Company's contract manufacturers, taking advantage of their mature supply chains, expertise in design-for-manufacturing, and flexibility in component selection, to reduce the cost of goods sold.
Additional Operational and Marketing Highlights
- Geographically in the first quarter of 2024, revenue declined 3% in EMEA, 16% in Japan and 4% in the U.S. over the prior year period. Excluding the unfavorable foreign currency impact, Japan revenue decreased 6% over the prior year period.
- Revenue from mid-tier robots (with an MSRP between $300 and $499) and premium robots (with an MSRP of $500 or more) represented 81% of total robot sales in the first quarter of 2024 versus 88% from the same period last year, reflecting the introduction of the Roomba Combo Essential, providing the iRobot 2-in-1 cleaning experience at a lower price point.
- iRobot introduced the Roomba Combo Essential robot, an affordable ($275) and easy-to-use 2-in-1 robot vacuum and mop that delivers the same cleaning essentials of the best-selling Roomba 600 Series, but with better performance and a larger feature set. The Company also introduced the Roomba Vac Essential robot, which offers the same intelligence and features as the Roomba Combo Essential but in a vacuum-only package.
- iRobot Roomba robots held the top five spots for robotic vacuums in Consumer Reports.
- iRobot's product lineup received numerous positive reviews and international media coverage, including in PCMag, Reviewed, ZDNet, Engadget, BGR, Tom's Guide, CNN Underscored, U.S. News & World Report, TechHive, Frandroid, La Vanguardia and Europa Press.
- The Roomba Combo j9+ was named a Better Homes & Gardens Clean House Award winner in the category of 'Best Wet-Dry Robot Vacuum.'
Second Quarter and Full Year 2024 Outlook
iRobot is providing GAAP and non-GAAP financial expectations for the second quarter ending June 29, 2024. Given persistent weakness in the Japanese yen and the timing of new product introductions, the Company is updating the full-year outlook it provided on February 27, 2024. A detailed reconciliation between the Company's GAAP and non-GAAP expectations is included in the financial tables that appear at the end of this press release.
Second Quarter 2024:
Metric | GAAP | Adjustments | Non-GAAP | ||
Revenue | $167 - $172 million | - | $167 - $172 million | ||
Gross Margin | 23% to 24% | ~1% | 24% to 25% | ||
Operating Loss | ($57) - ($54) million | ~$14 million | ($43) - ($40) million | ||
Net Loss Per Share | ($2.30) - ($2.23) | ~$0.49 | ($1.81) - ($1.74) |
- Q2 revenue is expected to be the weakest quarter of 2024 when compared to the prior year as the Company expects a shifting of a large order from Q2 last year to Q3 this year.
- Q2 revenue is expected to be impacted by unfavorable currency due to continued weakness of the Japanese yen against the U.S. dollar.
Fiscal Year 2024:
Metric | GAAP | Adjustments | Non-GAAP | ||
Revenue | $815 - $860 million | - | $815 - $860 million | ||
Gross Margin | 30% to 32% | ~1% | 31% to 33% | ||
Operating Loss | ($44) - ($32) million | ~($14) million | ($58) - ($46) million | ||
Net Loss Per Share | ($2.65) - ($2.23) | ~($0.48) | ($3.13) - ($2.71) |
- The Company revised its full-year 2024 expectations regarding revenue and gross margin due to an unfavorable currency impact of the Japanese yen and timing of new product introductions.
- For the second half of the year, the Company anticipates a mid-single-digit percentage improvement in revenue compared with the second half of 2023.
- iRobot anticipates that the majority of the anticipated gross margin improvement will occur in the second half of the year as the Company progresses with a number of key initiatives.
First-Quarter 2024 Results Conference Call
On May 8, the Company will host a live conference call and webcast to review its financial results and discuss its outlook. The conference call details are as follows:
Date: Wednesday, May 8, 2024
Time: 8:30 a.m. ET
Call-In Number: 1-800-343-5172 (Alternate: 1-203-518-9856)
Conference ID: IRBTQ124
A live webcast of the conference call will be accessible on the event section of the Company's website at https://investor.irobot.com/financial-information/quarterly-results. An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event.
About iRobot Corp.
www.irobot.com.
Cautionary Statement Regarding Forward-Looking Statements iRobot Corporation Consolidated Statements of Operations (in thousands, except per share amounts) (unaudited) For the three months ended March 30, 2024 April 1, 2023 Revenue $ 150,014 $ $ 160,292 Cost of revenue: Cost of product revenue 113,913 123,269 Amortization of acquired intangible assets - 282 Total cost of revenue 113,913 123,551 Gross profit 36,101 36,741 Operating expenses: Research and development 33,878 41,269 Selling and marketing 29,716 42,476 General and administrative (53,711) 30,310 Restructuring and other 14,146 3,805 Amortization of acquired intangible assets 172 178 Total operating expenses 24,201 118,038 Operating income (loss) 11,900 (81,297) Other expense, net (3,185) (1,077) Income (loss) before income taxes 8,715 (82,374) Income tax expense (benefit) 108 (1,262) Net income (loss) $ 8,607 $ (81,112) Net income (loss) per share: Basic $ 0.31 $ (2.95) Diluted $ 0.30 $ (2.95) Number of shares used in per share calculations: Basic 28,171 27,467 Diluted 28,266 27,467 Stock-based compensation included in above figures: Cost of revenue $ 828 $ 586 Research and development 2,897 2,646 Selling and marketing 1,338 1,466 General and administrative 2,885 3,234 Total $ 7,948 $ 7,932 iRobot Corporation Condensed Consolidated Balance Sheets (unaudited, in thousands) March 30, 2024 December 30, 2023 Assets Cash and cash equivalents $ 118,356 $ 185,121 Restricted cash 40,012 - Accounts receivable, net 39,318 79,387 Inventory 133,318 152,469 Other current assets 40,860 48,513 Total current assets 371,864 465,490 Property and equipment, net 34,330 40,395 Operating lease right-of-use assets 18,712 19,642 Deferred tax assets 8,153 8,512 Goodwill 169,740 175,105 Intangible assets, net 4,682 5,044 Other assets 18,642 19,510 Total assets $ 626,123 $ 733,698 Liabilities and stockholders' equity Accounts payable $ 103,194 $ 178,318 Accrued expenses 93,837 97,999 Deferred revenue and customer advances 10,330 10,830 Total current liabilities 207,361 287,147 Term loan 168,636 201,501 Operating lease liabilities 26,255 27,609 Other long-term liabilities 19,802 20,954 Total long-term liabilities 214,693 250,064 Total liabilities 422,054 537,211 Stockholders' equity 204,069 196,487 Total liabilities and stockholders' equity $ 626,123 $ 733,698 iRobot Corporation Consolidated Statements of Cash Flows (unaudited, in thousands) For the three months ended March 30, 2024 April 1, 2023 Cash flows from operating activities: Net income (loss) $ 8,607 $ (81,112) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,812 7,542 Loss on equity investment 375 - Stock-based compensation 7,948 7,932 Change in fair value of term loan (1,008) - Debt issuance costs expensed under fair value option 239 - Deferred income taxes, net (127) 647 Other (3,452) (3,562) Changes in operating assets and liabilities - (use) source Accounts receivable 38,565 37,147 Inventory 16,266 52,947 Other assets 6,045 53 Accounts payable (74,601) (109,930) Accrued expenses and other liabilities (3,232) (6,171) Net cash provided by (used in) operating activities 1,437 (94,507) Cash flows from investing activities: Additions of property and equipment (118) (1,456) Purchase of investments - (73) Net cash used in investing activities (118) (1,529) Cash flows from financing activities: Proceeds from employee stock plans - 9 Income tax withholding payment associated with restricted stock vesting (390) (1,600) Proceeds from issuance of common stock, net of issuance costs 5,632 - Proceeds from credit facility - 27,000 Repayment of term loan (34,947) - Payment of debt issuance costs (239) - Net cash (used in) provided by financing activities (29,944) 25,409 Effect of exchange rate changes on cash, cash equivalents and restricted cash 882 593 Net decrease in cash, cash equivalents and restricted cash (27,743) (70,034) Cash, cash equivalents and restricted cash, at beginning of period 187,887 117,949 Cash, cash equivalents and restricted cash, at end of period $ 160,144 $ 47,915 Cash, cash equivalents and restricted cash, at end of period: Cash and cash equivalents $ 118,356 $ 47,915 Restricted cash 40,012 - Restricted cash, non-current (included in other assets) 1,776 - Cash, cash equivalents and restricted cash, at end of period $ 160,144 $ 47,915 iRobot Corporation Supplemental Information (unaudited) For the three months ended March 30, 2024 April 1, 2023 Revenue by Geography: * Domestic $ 68,896 $ 71,986 International 81,118 88,306 Total $ 150,014 $ 160,292 Robot Units Shipped * Solo and other 267 373 2-in-1 189 63 Total 456 436 Revenue by Product Category ** Solo and other $ 94 $ 135 2-in-1 56 25 Total $ 150 $ 160 Average gross selling prices for robot units $ 346 $ 402 Headcount 1,058 1,156 * in thousands ** in millions 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. 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 as well as any non-cash impairment charges associated with intangible assets in connection with our past acquisitions. 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, including with respect to the iRobot-Amazon Merger. It also includes business combination adjustments including adjustments after the measurement period has ended. During the first fiscal quarter of 2024, the adjustment includes the one-time net termination fee received as a result of the termination of the iRobot-Amazon Merger. 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.
Restructuring and Other: Restructuring charges are related to one-time actions associated with realigning resources, enhancing operational productivity and efficiency, or improving our cost structure in support of our strategy. Such actions are not reflective of ongoing operations and include costs primarily associated with severance and related costs, charges related to paused work unrelated to our core business, costs associated with the Chief Executive Officer transition and other non-recurring costs directly associated with resource realignments tied to strategic initiatives or changes in business conditions. We exclude these items from our non-GAAP measures when evaluating our recent and prospective business performance as such items vary significantly based on the magnitude of the action and do not reflect anticipated future operating costs. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or past operations of our business.
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.
Debt issuance costs: Debt issuance costs include various incremental fees and commissions paid to third parties in connection with the issuance of debt.
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 regularly assess the need to record valuation allowance based on the non-GAAP profitability and other factors. We also exclude certain tax items, including the impact from stock-based compensation windfalls/shortfalls, that are not reflective of income tax expense incurred as a result of current period earnings. 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.
iRobot Corporation | |||
Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals | |||
(in thousands, except per share amounts) | |||
(unaudited) | |||
For the three months ended | |||
March 30, 2024 | April 1, 2023 | ||
GAAP Revenue | $ 150,014 | $ 160,292 | |
GAAP Gross Profit | $ 36,101 | $ 36,741 | |
Amortization of acquired intangible assets | - | 282 | |
Stock-based compensation | 828 | 586 | |
Net merger, acquisition and divestiture expense | - | 321 | |
Non-GAAP Gross Profit | $ 36,929 | $ 37,930 | |
GAAP Gross Margin | 24.1 % | 22.9 % | |
Non-GAAP Gross Margin | 24.6 % | 23.7 % | |
GAAP Operating Expenses | $ 24,201 | $ 118,038 | |
Amortization of acquired intangible assets | (172) | (178) | |
Stock-based compensation | (7,120) | (7,346) | |
Net merger, acquisition and divestiture income (expense) | 74,117 | (6,463) | |
Restructuring and other | (14,146) | (3,805) | |
Non-GAAP Operating Expenses* | $ 76,880 | $ 100,246 | |
GAAP Operating Expenses as a % of GAAP Revenue | 16.1 % | 73.6 % | |
Non-GAAP Operating Expenses as a % of Non-GAAP Revenue* | 51.2 % | 62.5 % | |
GAAP Operating Income (Loss) | $ 11,900 | $ (81,297) | |
Amortization of acquired intangible assets | 172 | 460 | |
Stock-based compensation | 7,948 | 7,932 | |
Net merger, acquisition and divestiture (income) expense | (74,117) | 6,784 | |
Restructuring and other | 14,146 | 3,805 | |
Non-GAAP Operating Loss* | $ (39,951) | $ (62,316) | |
GAAP Operating Margin | 7.9 % | (50.7) % | |
Non-GAAP Operating Margin* | (26.6) % | (38.9) % | |
iRobot Corporation | |||
Supplemental Reconciliation of GAAP Actuals to Non-GAAP Actuals continued | |||
(in thousands, except per share amounts) | |||
(unaudited) | |||
For the three months ended | |||
March 30, 2024 | April 1, 2023 | ||
GAAP Income Tax Expense (Benefit) | $ 108 | $ (1,262) | |
Tax effect of non-GAAP adjustments | 601 | (16,266) | |
Other tax adjustments | (192) | 18 | |
Non-GAAP Income Tax Expense (Benefit) | $ 517 | $ (17,510) | |
GAAP Net Income (Loss) | $ 8,607 | $ (81,112) | |
Amortization of acquired intangible assets | 172 | 460 | |
Stock-based compensation | 7,948 | 7,932 | |
Net merger, acquisition and divestiture (income) expense | (74,117) | 6,784 | |
Restructuring and other | 14,146 | 3,805 | |
Loss on strategic investments | 375 | - | |
Debt issuance costs | 239 | - | |
Income tax effect | (409) | 16,248 | |
Non-GAAP Net Loss* | $ (43,039) | $ (45,883) | |
GAAP Net Income (Loss) Per Diluted Share | $ 0.30 | $ (2.95) | |
Amortization of acquired intangible assets | 0.01 | 0.02 | |
Stock-based compensation | 0.28 | 0.29 | |
Net merger, acquisition and divestiture (income) expense | (2.63) | 0.24 | |
Restructuring and other | 0.50 | 0.14 | |
Loss on strategic investments | 0.01 | - | |
Debt issuance costs | 0.01 | - | |
Income tax effect | (0.01) | 0.59 | |
Non-GAAP Net Loss Per Diluted Share* | $ (1.53) | $ (1.67) | |
Number of shares used in diluted per share calculation | 28,171 | 27,467 | |
Supplemental Information | |||
Days sales outstanding | 24 | 17 | |
GAAP Days in inventory | 107 | 170 | |
Non-GAAP Days in inventory(1) | 108 | 171 | |
|
(1) Non-GAAP Days in inventory is calculated as inventory divided by (Revenue minus Non-GAAP Gross Profit), multiplied by 91 days. |
iRobot Corporation | |||
Supplemental Reconciliation of Second Quarter and Full Year 2024 GAAP to Non-GAAP Guidance | |||
(unaudited) | |||
Q2-24 | FY-24 | ||
GAAP Gross Profit | $39 - $42 million | $247 - $277 million | |
Stock-based compensation | ~$1 million | ~$3 million | |
Total adjustments | ~$1 million | ~$3 million | |
Non-GAAP Gross Profit | $40 - $43 million | $250 - $280 million | |
Q2-24 | FY-24 | ||
GAAP Gross Margin | 23% - 24% | 30% - 32% | |
Stock-based compensation | ~1% | ~1% | |
Total adjustments | ~1% | ~1% | |
Non-GAAP Gross Margin | 24% - 25% | 31% - 33% | |
Q2-24 | FY-24 | ||
GAAP Operating Expenses | $95 - $96 million | $291 - $309 million | |
Amortization of acquired intangible assets | ~($0) million | ~($1) million | |
Stock-based compensation | ~($8) million | ~($33) million | |
Net merger, acquisition and divestiture expense (income) | - | ~$74 million | |
Restructuring and other | ~($5) million | ~($23) million | |
Total adjustments | ~($13) million | ~$17 million | |
Non-GAAP Operating Expenses | $82 - $83 million | $308 - $326 million | |
Q2-24 | FY-24 | ||
GAAP Operating Loss | ($57) - ($54) million | ($44) - ($32) million | |
Amortization of acquired intangible assets | ~$0 million | ~$1 million | |
Stock-based compensation | ~$9 million | ~$36 million | |
Net merger, acquisition and divestiture expense (income) | - | ~($74) million | |
Restructuring and other | ~$5 million | ~$23 million | |
Total adjustments | ~$14 million | ~($14) million | |
Non-GAAP Operating Loss | ($43) - ($40) million | ($58) - ($46) million | |
Q2-24 | FY-24 | ||
GAAP Net Loss Per Diluted Share | ($2.30) - ($2.23) | ($2.65) - ($2.23) | |
Amortization of acquired intangible assets | ~$0.01 | ~$0.02 | |
Stock-based compensation | ~$0.30 | ~$1.27 | |
Net merger, acquisition and divestiture expense (income) | - | ~($2.57) | |
Restructuring and other | ~$0.18 | ~$0.79 | |
Loss on strategic investments | - | ~$0.01 | |
Income tax effect | ~$0 | ~$0 | |
Total adjustments | ~$0.49 | ~($0.48) | |
Non-GAAP Net Loss Per Diluted Share | ($1.81) - ($1.74) | ($3.13) - ($2.71) | |
Number of shares used in diluted per share calculations* | ~28.8 million | ~28.8 million | |
* Number of shares does not include any additional issuances under our ATM |
Certain numbers may not total due to rounding |
SOURCE iRobot Corporation
