BEDFORD,
Mass., Aug. 5, 2022 /PRNewswire/ -- iRobot Corp.
(NASDAQ: IRBT), a leader in consumer robots, today announced its
financial results for the second quarter ended July 2, 2022. Additionally, in a separate
release, iRobot announced it has entered into a definitive
agreement to be acquired by Amazon.com, Inc. (NASDAQ: AMZN). Under
the terms of the agreement, Amazon will acquire all the outstanding
shares of iRobot common stock for $61.00 per share in cash for a transaction value
of approximately $1.7 billion,
including iRobot's net debt.
Financial Performance Highlights
- Revenue for the second quarter of 2022 was $255.4 million, compared with $365.6 million in the second quarter of 2021.
Revenue for the first half of 2022 was $547.3 million versus $668.9 million in the first half of 2021.
-
- The company's second-quarter 2022 revenue performance was
primarily impacted by unanticipated order reductions, delays and
cancellations from retailers in North
America and EMEA, and, to a much lesser extent,
lower-than-anticipated direct-to-consumer (DTC) sales and the
impact of changes in foreign exchange rates. Geographically,
second-quarter 2022 revenue declined 39% in EMEA, 29% in the U.S.
and 18% in Japan over the prior
period last year.
- Revenue from mid-tier robots (with an MSRP between $300 and $499) and
premium robots (with an MSRP of $500
or more) represented 83% of total robot sales in the second quarter
of 2022 versus 82% in the same quarter one year ago.
- Aeris air purifier revenue was approximately $3 million in the second quarter of 2022.
- We estimate that iRobot's second-quarter 2022 revenue to
support e-commerce, which spans the company's own website and app,
dedicated e-commerce websites and the online arms of traditional
retailers, declined by 35% from the second quarter of 2021 and
represented 62% of second-quarter 2022 revenue. iRobot's
direct-to-consumer (DTC) revenue of $40
million declined 12% from the prior year's second
quarter.
- The company's second-quarter 2022 GAAP operating loss was
$63.9 million, compared with a GAAP
operating loss of $3.0 million in the
second quarter of 2021. iRobot's second-quarter 2022 non-GAAP
operating loss was $53.3 million,
compared with non-GAAP operating income of $9.0 million in the same period one year ago. The
company's GAAP operating loss for the first six months of 2022 was
$87.2 million, compared with GAAP
operating income of $3.3 million in
the first half of 2021. iRobot's first-half 2022 non-GAAP operating
loss was $71.8 million versus
non-GAAP operating income of $23.9
million in the same period one year ago. The company's
operating loss reflects the impact of lower-than-expected revenue,
partially offset by the benefits of certain cost management
activities.
- iRobot's GAAP net loss per share was $1.60 for the second quarter of 2022, compared
with GAAP net loss per share of $0.10
in the second quarter of 2021. Non-GAAP net loss per share was
$0.35 for the second quarter of 2022
versus non-GAAP net income per share of $0.27 in the second quarter of 2021. First-half
2022 GAAP net loss per share was $2.72, compared with GAAP net income per share of
$0.16 in the first half of 2021.
First-half 2022 non-GAAP net loss per share was $1.01, compared with non-GAAP net income per
share of $0.68 in the same period of
2021.
- As of July 2, 2022, the company's
cash, cash equivalents and short-term investments were $63.4 million, compared with $113.5 million as of April
2, 2022, and $234.5 million at
the end of 2021. During the quarter, the company drew down
$35 million from its unsecured
revolving line of credit of $150
million.
- The company's inventory balance was $397.0 million, or 210 days, as of July 2, 2022, versus $276.5 million, or 112 days, at the end of the
second quarter one year ago. The inventory increase reflects
increased on-hand inventory levels entering the quarter, higher
in-transit inventory levels and the impact of lower-than-expected
orders during the quarter. iRobot plans to use its on-hand
inventory to help fulfill anticipated orders over the coming
quarters.
Cost-Reduction Actions
- To better align its cost structure with near-term revenue,
iRobot is in the process of initiating a restructuring of its
operations, which is expected to deliver net savings in the range
of approximately $5 million to
$10 million in 2022 and approximately
$30 million to $40 million in 2023. As part of the
restructuring, the company is accelerating actions to shift certain
non-core engineering functions to lower-cost regions and
increasingly leverage its joint design manufacturing (JDM)
partners; better balancing global and regional commercial and
marketing resources to support go-to-market plans while driving
efficiencies and achieving economies of scale; realigning other
operational areas to best support current needs of the business;
and reducing its global facilities footprint. The actions are
expected to result in a net reduction of approximately 140
employees, which represents 10% of the company's workforce as of
July 2, 2022.
-
- In conjunction with the workforce reduction, iRobot expects to
record restructuring charges totaling between $5 million and $6
million over the next two quarters with the majority of the
restructuring charges anticipated in the third quarter of 2022.
iRobot plans to complete activities in support of the
rationalization of its global facilities during the third quarter
of 2022 and expects to record additional restructuring charges in
conjunction with this action.
- These actions help support the company's near-term priorities
to drive innovation by executing on its product roadmaps, optimize
inventory levels across all major channels, expand DTC sales and
position the business for profitable growth in 2023. They also
augment other cost-reduction actions that include recalibrating
near-term promotional and advertising plans, carefully managing
hiring activities, adjusting short-term incentive compensation to
align with projected performance and reducing other discretionary
spending.
Second-Quarter and Recent Business Highlights
- For the 8th consecutive year, Roomba® was a featured
product in Amazon's Prime Day event, which was held on July 12-13, 2022.
- The company's community of engaged, connected customers who
have opted-in to its digital communications grew to 15.7 million,
an increase of 35% from the second quarter of 2021.
- In May 2022, the company
introduced iRobot OS, an evolution of the company's Genius Home
Intelligence platform that delivers a new level of customer
experience for a cleaner, healthier and smarter home.
- iRobot's j7+ continues to generate favorable reviews and awards
with recent accolades in the U.S. from ZDNet and Android Headlines,
in the UK from Good Housekeeping, and in Japan from Lee and ASCII.
In light of the transaction with Amazon.com, Inc. announced
separately today, iRobot will not hold its second-quarter 2022
financial results conference call, which was originally scheduled
for August 10 at 8:30 am ET. In addition, iRobot has withdrawn its
prior 2022 financial expectations issued in early May 2022, as well as its long-term financial
targets provided in December 2021.
Given the ongoing disruptions and uncertainty that could impact the
company's outlook, iRobot is suspending its practice of providing
financial guidance.
About iRobot Corp.
iRobot is a global consumer robot company that designs and builds
thoughtful robots and intelligent home innovations that make life
better. iRobot introduced the first Roomba robot vacuum in 2002.
Today, iRobot is a global enterprise that has sold millions of
robots worldwide. iRobot's product portfolio features technologies
and advanced concepts in cleaning, mapping and navigation. Working
from this portfolio, iRobot engineers are building robots and smart
home devices to help consumers make their homes easier to maintain
and healthier places to live. For more information about iRobot,
please visit www.irobot.com.
Important Information and Where to Find It
In
connection with the proposed transaction between iRobot Corporation
(the "Company") and Amazon.com, Inc. ("Amazon"), the Company will
file with the Securities and Exchange Commission ("SEC") a Proxy
Statement, the definitive version of which will be sent or provided
to Company stockholders. The Company may also file other documents
with the SEC regarding the proposed transaction. This document is
not a substitute for the Proxy Statement or any other document
which the Company may file with the SEC. INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND
DOCUMENTS INCORPORATED BY REFERENCE THEREIN, CAREFULLY AND IN THEIR
ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
security holders may obtain free copies of the Proxy Statement
(when it is available) and other documents that are filed or will
be filed with the SEC by the Company through the website maintained
by the SEC at www.sec.gov, the Company's investor relations website
at investor.irobot.com or by contacting the Company's investor
relations department at the following:
Andrew Kramer
akramer@irobot.com
(781) 430-3003
Participants in the Solicitation
The Company and
certain of its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the Company's
stockholders in respect of the proposed transaction and any other
matters to be voted on at the special meeting. Information
regarding the Company's directors and executive officers, including
a description of their direct interests, by security holdings or
otherwise, is contained in the Company's proxy statement for its
2022 annual meeting of stockholders, which was filed with the SEC
on April 11, 2022, and will be
included in the Proxy Statement (when available). Company
stockholders may obtain additional information regarding the direct
and indirect interests of the participants in the solicitation of
proxies in connection with the proposed transaction, including the
interests of Company directors and executive officers in the
transaction, which may be different than those of Company
stockholders generally, by reading the Proxy Statement and any
other relevant documents that are filed or will be filed with the
SEC relating to the transaction. You may obtain free copies of
these documents using the sources indicated above.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains "forward-looking
statements" within the meaning of the federal securities laws,
including Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are based on the Company's current
expectations, estimates and projections about the expected date of
closing of the proposed transaction and the potential benefits
thereof, its business and industry, management's beliefs and
certain assumptions made by the Company and Amazon, all of which
are subject to change. In this context, forward-looking statements
often address expected future business and financial performance
and financial condition, and often contain words such as "expect,"
"anticipate," "intend," "plan," "believe," "could," "seek," "see,"
"will," "may," "would," "might," "potentially," "estimate,"
"continue," "expect," "target," similar expressions or the
negatives of these words or other comparable terminology that
convey uncertainty of future events or outcomes. All
forward-looking statements by their nature address matters that
involve risks and uncertainties, many of which are beyond our
control, and are not guarantees of future results, such as
statements about the consummation of the proposed transaction and
the anticipated benefits thereof. These and other forward-looking
statements, including the Company's expectations regarding
financial performance; anticipated orders; reductions in inventory;
the restructuring of operations and the financial impacts thereof;
management's plans to recalibrate near-term promotional and
advertising plans; and the profitability and growth of our business
in 2023; the failure to consummate the proposed transaction or to
make or take any filing or other action required to consummate the
transaction on a timely matter or at all, are not guarantees of
future results and are subject to risks, uncertainties and
assumptions that could cause actual results to differ materially
from those expressed in any forward-looking statements.
Accordingly, there are or will be important factors that could
cause actual results to differ materially from those indicated in
such statements and, therefore, you should not place undue reliance
on any such statements and caution must be exercised in relying on
forward-looking statements. Important risk factors that may cause
such a difference include, but are not limited to: (i) the ability
of the parties to consummate the proposed transaction in a timely
manner or at all; (ii) the satisfaction (or waiver) of closing
conditions to the consummation of the proposed transaction,
including with respect to the approval of the Company's
stockholders; (iii) potential delays in consummating the proposed
transaction; (iv) the ability of the Company to timely and
successfully achieve the anticipated benefits of the proposed
transaction; (v) the occurrence of any event, change or other
circumstance or condition that could give rise to the termination
of the merger agreement; (vi) the impact of the COVID-19 pandemic
and the current conflict between the Russian Federation and Ukraine on the Company's business and general
economic conditions; (vii) the Company's ability to implement its
business strategy; (viii) significant transaction costs associated
with the proposed transaction; (ix) potential litigation relating
to the proposed transaction; (x) the risk that disruptions from the
proposed transaction will harm the Company's business, including
current plans and operations; (xi) the ability of the Company to
retain and hire key personnel; (xii) potential adverse reactions or
changes to business relationships resulting from the announcement
or completion of the proposed transaction; (xiii) legislative,
regulatory and economic developments affecting the Company's
business; (xiv) general economic and market developments and
conditions; (xv) the evolving legal, regulatory and tax regimes
under which the Company operates; (xvi) potential business
uncertainty, including changes to existing business relationships,
during the pendency of the merger that could affect the Company's
financial performance; (xvii) restrictions during the pendency of
the proposed transaction that may impact the Company's ability to
pursue certain business opportunities or strategic transactions;
(xviii) unpredictability and severity of catastrophic events,
including, but not limited to, acts of terrorism or outbreak of war
or hostilities, (xviv) current supply chain challenges including
current constraints in the availability of certain semiconductor
components used in our products; (xx) the financial strength of our
customers and retailers; (xxi) the impact of tariffs on goods
imported into the United States;
and (xxii) competition, as well as the Company's response to any of
the aforementioned factors. These risks, as well as other risks
associated with the proposed transaction, will be fully discussed
in the Proxy Statement to be filed with the SEC in connection with
the proposed transaction. Additional risks and uncertainties that
could cause actual outcomes and results to differ materially from
those contemplated by the forward-looking statements are included
under the caption "Risk Factors" in the Company's most recent
annual and quarterly reports filed with the SEC and any subsequent
reports on Form 10-K, Form 10-Q or Form 8-K filed from time to time
and available at www.sec.gov. While the list of factors presented
here is, and the list of factors presented in the Proxy Statement
will be, considered representative, no such list should be
considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements.
Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include,
among other things, business disruption, operational problems,
financial loss, legal liability and similar risks, any of which
could have a material adverse effect on the Company's financial
condition, results of operations, or liquidity. The forward-looking
statements included herein are made only as of the date hereof. The
Company does not assume any obligation to publicly provide
revisions or updates to any forward-looking statements, whether as
a result of new information, future developments or otherwise,
should circumstances change, except as otherwise required by
securities and other applicable laws.
iRobot
Corporation
|
Consolidated
Statements of Operations
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
|
|
|
|
|
|
|
|
Revenue
|
$
255,351
|
|
$
$ 365,596
|
|
$
547,320
|
|
$
$ 668,857
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Cost of product
revenue
|
173,531
|
|
226,395
|
|
357,164
|
|
406,487
|
Amortization of
acquired intangible assets
|
875
|
|
225
|
|
1,696
|
|
450
|
Total cost of
revenue
|
174,406
|
|
226,620
|
|
358,860
|
|
406,937
|
|
|
|
|
|
|
|
|
Gross profit
|
80,945
|
|
138,976
|
|
188,460
|
|
261,920
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
41,937
|
|
38,677
|
|
84,466
|
|
80,597
|
Selling and
marketing
|
76,017
|
|
76,677
|
|
137,082
|
|
127,668
|
General and
administrative
|
26,380
|
|
26,459
|
|
53,078
|
|
49,899
|
Amortization of
acquired intangible assets
|
525
|
|
205
|
|
1,035
|
|
409
|
Total operating
expenses
|
144,859
|
|
142,018
|
|
275,661
|
|
258,573
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
(63,914)
|
|
(3,042)
|
|
(87,201)
|
|
3,347
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(2,182)
|
|
(286)
|
|
(18,928)
|
|
(446)
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes
|
(66,096)
|
|
(3,328)
|
|
(106,129)
|
|
2,901
|
Income tax
benefit
|
(22,675)
|
|
(570)
|
|
(32,302)
|
|
(1,784)
|
Net (loss)
income
|
$
(43,421)
|
|
$
(2,758)
|
|
$
(73,827)
|
|
$
4,685
|
|
|
|
|
|
|
|
|
Net (loss) income per
share:
|
|
|
|
|
|
|
|
Basic
|
$
(1.60)
|
|
$
(0.10)
|
|
$
(2.72)
|
|
$
0.17
|
Diluted
|
$
(1.60)
|
|
$
(0.10)
|
|
$
(2.72)
|
|
$
0.16
|
|
|
|
|
|
|
|
|
Number of shares used
in per share calculations:
|
|
|
|
|
|
|
Basic
|
27,161
|
|
28,100
|
|
27,106
|
|
28,178
|
Diluted
|
27,161
|
|
28,100
|
|
27,106
|
|
28,908
|
|
|
|
|
|
|
|
|
Stock-based
compensation included in above figures:
|
|
|
|
|
Cost of
revenue
|
$
585
|
|
$
283
|
|
$
1,026
|
|
$
646
|
Research and
development
|
2,178
|
|
2,386
|
|
4,860
|
|
4,534
|
Selling and
marketing
|
1,692
|
|
1,128
|
|
3,142
|
|
2,087
|
General and
administrative
|
3,568
|
|
3,543
|
|
6,203
|
|
6,855
|
Total
|
$
8,023
|
|
$
7,340
|
|
$
15,231
|
|
$
14,122
|
iRobot
Corporation
|
Condensed
Consolidated Balance Sheets
|
(unaudited, in
thousands)
|
|
|
July 2, 2022
|
|
January 1,
2022
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
63,409
|
|
$
201,457
|
Short term
investments
|
-
|
|
33,044
|
Accounts
receivable, net
|
87,766
|
|
160,642
|
Inventory
|
397,012
|
|
333,296
|
Other current
assets
|
111,654
|
|
61,094
|
Total current
assets
|
659,841
|
|
789,533
|
Property and
equipment, net
|
69,294
|
|
78,887
|
Operating lease
right-of-use assets
|
29,875
|
|
37,609
|
Deferred tax
assets
|
62,698
|
|
37,945
|
Goodwill
|
164,869
|
|
173,292
|
Intangible
assets, net
|
24,072
|
|
28,410
|
Other
assets
|
59,312
|
|
38,753
|
Total assets
|
$
1,069,961
|
|
$
1,184,429
|
|
|
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
Accounts
payable
|
$
192,388
|
|
$
251,298
|
Accrued
expenses
|
91,084
|
|
132,618
|
Deferred revenue
and customer advances
|
13,645
|
|
11,767
|
Short-term notes
payable
|
35,000
|
|
-
|
Total current
liabilities
|
332,117
|
|
395,683
|
Operating lease
liabilities
|
35,066
|
|
43,462
|
Deferred tax
liabilities
|
2,904
|
|
3,250
|
Other long-term
liabilities
|
23,098
|
|
25,311
|
Total long-term
liabilities
|
61,068
|
|
72,023
|
Total
liabilities
|
393,185
|
|
467,706
|
Stockholders'
equity
|
676,776
|
|
716,723
|
Total liabilities and
stockholders' equity
|
$
1,069,961
|
|
$
1,184,429
|
iRobot
Corporation
|
Consolidated
Statements of Cash Flows
|
(unaudited, in
thousands)
|
|
|
For the six months
ended
|
|
July 2, 2022
|
|
July 3, 2021
|
Cash flows from
operating activities:
|
|
|
|
Net (loss)
income
|
$
(73,827)
|
|
$
4,685
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities,
net of the effects of acquisition:
|
|
|
|
Depreciation and
amortization
|
19,715
|
|
15,635
|
Loss on equity
investment
|
18,814
|
|
-
|
Stock-based
compensation
|
15,231
|
|
14,122
|
Deferred income taxes,
net
|
(35,467)
|
|
210
|
Other
|
2,844
|
|
3,286
|
Changes in operating
assets and liabilities — (use) source
|
|
|
|
Accounts
receivable
|
70,372
|
|
94,477
|
Inventory
|
(70,400)
|
|
(94,918)
|
Other assets
|
(31,657)
|
|
(7,554)
|
Accounts
payable
|
(58,520)
|
|
2,071
|
Accrued expenses and
other liabilities
|
(43,617)
|
|
(30,215)
|
Net cash (used in)
provided by operating activities
|
(186,512)
|
|
1,799
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(4,894)
|
|
(21,924)
|
Purchase of
investments
|
(3,090)
|
|
(9,606)
|
Sales and maturities of
investments
|
17,383
|
|
63,644
|
Net cash provided by
investing activities
|
9,399
|
|
32,114
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from employee
stock plans
|
3,088
|
|
5,131
|
Income tax withholding
payment associated with restricted stock vesting
|
(1,601)
|
|
(4,799)
|
Stock
repurchases
|
-
|
|
(50,000)
|
Proceeds from
borrowings
|
35,000
|
|
-
|
Net cash provided by
(used in) financing activities
|
36,487
|
|
(49,668)
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
2,578
|
|
(1,039)
|
Net decrease in cash
and cash equivalents
|
(138,048)
|
|
(16,794)
|
Cash and cash
equivalents, at beginning of period
|
201,457
|
|
432,635
|
Cash and cash
equivalents, at end of period
|
$
63,409
|
|
$
415,841
|
|
|
|
|
iRobot
Corporation
|
Supplemental
Information
|
(unaudited)
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
Revenue by Geography:
*
|
|
|
|
|
|
|
|
Domestic
|
$
139,377
|
|
$
196,824
|
|
$
292,551
|
|
$
311,596
|
International
|
115,974
|
|
168,772
|
|
254,769
|
|
357,261
|
Total
|
$
255,351
|
|
$
365,596
|
|
$
547,320
|
|
$
668,857
|
|
|
|
|
|
|
|
|
Robot Units Shipped
*
|
|
|
|
|
|
|
|
Vacuum
|
766
|
|
1,146
|
|
1,631
|
|
2,117
|
Mopping
|
99
|
|
168
|
|
208
|
|
285
|
Total
|
865
|
|
1,314
|
|
1,839
|
|
2,402
|
|
|
|
|
|
|
|
|
Revenue by Product
Category **
|
|
|
|
|
|
|
|
Vacuum***
|
$
225
|
|
$
323
|
|
$
484
|
|
$
593
|
Mopping and
other****
|
30
|
|
43
|
|
63
|
|
76
|
Total
|
$
255
|
|
$
366
|
|
$
547
|
|
$
669
|
|
|
|
|
|
|
|
|
Average gross selling
prices for robot units
|
$
331
|
|
$
325
|
|
$
332
|
|
$
322
|
|
|
|
|
|
|
|
|
Headcount
|
1,438
|
|
1,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* in
thousands
|
|
|
|
|
|
|
|
** in
millions
|
|
|
|
|
|
|
|
*** Includes Roomba
robot vacuum-related accessory revenue
|
**** Includes Braava
robot mop-related accessory revenue and air purifier, handheld
vacuum and Root
|
|
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. 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.
Tariff Refunds: iRobot's Section 301 List 3 Tariff
Exclusion was reinstated in March
2022, which temporarily eliminates tariffs on our products
imported from China until
December 31, 2022 and entitles us to
a refund of all related tariffs previously paid since October 12, 2021. We exclude the refunds for
tariffs paid in 2021 from our 2022 first-quarter non-GAAP measures
because those tariff refunds associated with tariff costs incurred
in the past have no impact to our current period earnings.
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.
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 costs, certain professional fees, costs
associated with consolidation of warehouses, and other
non-recurring costs directly associated with resource realignments
tied to strategic initiatives or changes in business conditions. We
exclude this item 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.
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, including 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
|
|
For the six months
ended
|
|
July 2, 2022
|
July 3, 2021
|
|
July 2, 2022
|
July 3, 2021
|
GAAP
Revenue
|
$
255,351
|
$
365,596
|
|
$
547,320
|
$
668,857
|
|
|
|
|
|
|
GAAP Gross
Profit
|
$
80,945
|
$
138,976
|
|
$
188,460
|
$
261,920
|
Amortization of
acquired intangible assets
|
875
|
225
|
|
1,696
|
450
|
Stock-based
compensation
|
585
|
283
|
|
1,026
|
646
|
Tariff
refunds
|
-
|
-
|
|
(11,727)
|
-
|
Restructuring and
other
|
483
|
-
|
|
4,021
|
-
|
Non-GAAP Gross
Profit
|
$
82,888
|
$
139,484
|
|
$
183,476
|
$
263,016
|
Non-GAAP Gross
Margin
|
32.5 %
|
38.2 %
|
|
33.5 %
|
39.3 %
|
|
|
|
|
|
|
GAAP Operating
Expenses
|
$
144,859
|
$
142,018
|
|
$
275,661
|
$
258,573
|
Amortization of
acquired intangible assets
|
(525)
|
(205)
|
|
(1,035)
|
(409)
|
Stock-based
compensation
|
(7,438)
|
(7,057)
|
|
(14,205)
|
(13,476)
|
Net merger, acquisition
and divestiture expense
|
(171)
|
(640)
|
|
(280)
|
(640)
|
IP litigation expense,
net
|
(435)
|
(3,583)
|
|
(3,922)
|
(4,724)
|
Restructuring and
other
|
(102)
|
-
|
|
(927)
|
(213)
|
Non-GAAP
Operating Expenses
|
$
136,188
|
$
130,533
|
|
$
255,292
|
$
239,111
|
Non-GAAP
Operating Expenses as a % of Non-GAAP Revenue
|
53.3 %
|
35.7 %
|
|
46.6 %
|
35.7 %
|
|
|
|
|
|
|
GAAP Operating
(Loss) Income
|
$
(63,914)
|
$
(3,042)
|
|
$
(87,201)
|
$
3,347
|
Amortization of
acquired intangible assets
|
1,400
|
430
|
|
2,731
|
859
|
Stock-based
compensation
|
8,023
|
7,340
|
|
15,231
|
14,122
|
Tariff
refunds
|
-
|
-
|
|
(11,727)
|
-
|
Net merger, acquisition
and divestiture expense
|
171
|
640
|
|
280
|
640
|
IP litigation expense,
net
|
435
|
3,583
|
|
3,922
|
4,724
|
Restructuring and
other
|
585
|
-
|
|
4,948
|
213
|
Non-GAAP
Operating (Loss) Income
|
$
(53,300)
|
$
8,951
|
|
$
(71,816)
|
$
23,905
|
Non-GAAP
Operating Margin
|
-20.9 %
|
2.4 %
|
|
-13.1 %
|
3.6 %
|
iRobot
Corporation
|
Supplemental
Reconciliation of GAAP Actuals to Non-GAAP Actuals
continued
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
July 2, 2022
|
July 3, 2021
|
|
July 2, 2022
|
July 3, 2021
|
GAAP Income Tax
Benefit
|
$
(22,675)
|
$
(570)
|
|
$
(32,302)
|
$
(1,784)
|
Tax effect of non-GAAP
adjustments
|
(21,255)
|
1,512
|
|
(11,365)
|
2,910
|
Other tax
adjustments
|
(95)
|
120
|
|
(800)
|
2,773
|
Non-GAAP Income
Tax (Benefit) Expense
|
$
(44,025)
|
$
1,062
|
|
$
(44,467)
|
$
3,899
|
|
|
|
|
|
|
GAAP Net (Loss)
Income
|
$
(43,421)
|
$
(2,758)
|
|
$
(73,827)
|
$
4,685
|
Amortization of
acquired intangible assets
|
1,400
|
430
|
|
2,731
|
859
|
Stock-based
compensation
|
8,023
|
7,340
|
|
15,231
|
14,122
|
Tariff
refunds
|
-
|
-
|
|
(11,727)
|
-
|
Net merger, acquisition
and divestiture expense
|
171
|
640
|
|
280
|
640
|
IP litigation expense,
net
|
435
|
3,583
|
|
3,922
|
4,724
|
Restructuring and
other
|
585
|
-
|
|
4,948
|
213
|
Loss on strategic
investments
|
1,979
|
250
|
|
18,814
|
212
|
Income tax
effect
|
21,350
|
(1,632)
|
|
12,165
|
(5,683)
|
Non-GAAP Net
(Loss) Income
|
$
(9,478)
|
$
7,853
|
|
$
(27,463)
|
$
19,772
|
|
|
|
|
|
|
GAAP Net
(Loss) Income Per Diluted Share
|
$
(1.60)
|
$
(0.10)
|
|
$
(2.72)
|
$
0.16
|
Amortization of
acquired intangible assets
|
0.05
|
0.01
|
|
0.10
|
0.03
|
Stock-based
compensation
|
0.30
|
0.26
|
|
0.56
|
0.49
|
Tariff
refunds
|
-
|
-
|
|
(0.43)
|
-
|
Net merger, acquisition
and divestiture expense
|
0.01
|
0.02
|
|
0.01
|
0.02
|
IP litigation expense,
net
|
0.01
|
0.13
|
|
0.15
|
0.16
|
Restructuring and
other
|
0.02
|
-
|
|
0.18
|
0.01
|
Loss on strategic
investments
|
0.07
|
0.01
|
|
0.69
|
0.01
|
Income tax
effect
|
0.79
|
(0.06)
|
|
0.45
|
(0.20)
|
Non-GAAP Net
(Loss) Income Per Diluted Share
|
$
(0.35)
|
$
0.27
|
|
$
(1.01)
|
$
0.68
|
|
|
|
|
|
|
Number of shares used
in diluted per share calculation
|
27,161
|
28,700
|
|
27,106
|
28,908
|
|
|
|
|
|
|
Supplemental
Information
|
|
|
|
|
|
Days sales
outstanding
|
31
|
19
|
|
|
|
GAAP Days in
inventory
|
208
|
111
|
|
|
|
Non-GAAP Days in
inventory
|
210
|
112
|
|
|
|
iRobot
Corporation
|
Supplemental Data –
Impact of Section 301 Tariffs
|
(in thousands,
except per share amounts)
|
(unaudited)
|
|
|
For the three months
ended
|
|
For the six months
ended
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
Section 301 Tariff
Costs
|
$
525
|
|
$
11,622
|
|
$
1,523
|
|
$
15,005
|
Impact of Section 301
tariff costs to gross and operating margin (GAAP
& non-GAAP)
|
(0.2) %
|
|
(3.2) %
|
|
(0.3) %
|
|
(2.2) %
|
Tax effected impact of
Section 301 tariff costs to net income per diluted
share (GAAP)
|
$
(0.01)
|
|
$
(0.36)
|
|
$
(0.04)
|
|
$
(0.34)
|
Tax effected impact of
Section 301 tariff costs to net income per diluted
share (non-GAAP)
|
$
0.00
|
|
$
(0.36)
|
|
$
(0.02)
|
|
$
(0.43)
|
|
|
|
|
|
|
|
|
Certain numbers may not total due to
rounding
|
|
|
|
|
|
|
|
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SOURCE iRobot Corporation