UPDATED: iRobot pre-announced earnings and revenue today, announcing that the company will have $98 million to $100 million in 4th Quarter revenue and $248 million to $250 million for the year, at the high end of its revised guidance. Earnings will be significantly better than expected due entirely to an $8 million one-time income tax adjustment (MORE below on the adjustment and what that means for 2008 profits!). Without the adjustment, earnings will be a bit worse than expected due to litigation costs and slimmer than expected gross margins. More importantly, the company talked optimistically about a more profitable 2008, although no details were released and are not anticipated until the fourth quarter earnings conference call in February. (That seems awfully late, so I wonder if their accountants have to rework all the books because of this income tax adjustment)...
At first blush, I'm very happy with these results. Surging revenue despite a downturn in retailing overall is a very good sign for the long-term; we'll have to see what caused the weakness in gross margins (perhaps the issue with breaking Roomba 500 side brushes?) and what they forecast for the all-important 2008 guidance. Note that 2007 earnings will now be in the range of $.35 due to the income tax adjustment, and Colin spoke of "improved" earnings in 2008, so I hope he was taking that into consideration. The bar just got raised. I'd like to see them post at least $10 million in expected earnings for 2008 when they issue guidance.
UPDATE: It looks like in order for them to book the income tax gain, they have to anticipate earnings of at least $8 million in 2008 (thanks, Acklyn), so we should expect $8 million as the MINIMUM iRobot will project for its 2008 full-year guidance.
Here is the press release:
iRobot Announces Preliminary Unaudited Fourth Quarter and Full Year 2007 Results
Revenue in line with expectations; Significant income tax benefits partially offset by costs associated with lawsuit settlement result in increased EPS compared to prior year
BURLINGTON, Mass.--(BUSINESS WIRE)--iRobot Corp. (Nasdaq: IRBT) today announced that it anticipates revenue for the fourth quarter of 2007 in the range of $98 million to $100 million and revenue for the full year 2007 in the range of $248 million to $250 million.
“I am extremely pleased to report that we anticipate fourth quarter and full year revenue to be in line with our expectations following a successful holiday season for our new iRobot® Roomba® 500 Series robot, despite widely reported weakness in general retail. The company’s Government & Industrial Robots business also made a strong contribution to the quarter,” said Colin Angle, chief executive officer of iRobot. “There also were two one-time events in the fourth quarter that impact fourth quarter and full year profitability: an anticipated income tax valuation reversal of at least $8 million and estimated litigation and settlement costs of approximately $1.6 million associated with the resolution of a lawsuit against Robotics FX that we announced last month,” he added.
“On a GAAP basis, we are expecting pre-tax profit between $12.1 million and $12.6 million for the fourth quarter and a pre-tax profit for the full year between $500,000 and $1 million. These results reflect the litigation settlement costs and lower than expected gross margins. Excluding the full year litigation and settlement costs of approximately $2.3 million, 2007 pro forma pre-tax profit is expected to be approximately $3 million. GAAP earnings per share are expected to be between $0.79 and $0.81 in the fourth quarter and between $0.33 and $0.35 for the full year, including the anticipated income tax valuation reversal,” Angle said.
“Based upon the company's profits since December 31, 2004, and its expected annual profitability in 2008 and future years, at least $8 million of the deferred tax asset valuation allowance will be reversed effective December 29, 2007,” said Geoff Clear, chief financial officer of iRobot. “Reversal of the valuation allowance will be a discrete event and will result in a significant non-cash income tax benefit in the fourth quarter of 2007,” Clear added.
Angle continued, “Our results demonstrate the strength of our business, and we exited the year with excellent momentum and visibility. We are optimistic about strong revenue growth and improved profitability across the company in 2008. The details of our expectations will be provided during our fourth quarter earnings call in February,” he said.
Fourth Quarter Earnings Release and Conference Call
iRobot will announce its fourth quarter and full year 2007 financial results after close of market on Feb. 19, at which time additional details will be provided. Management will host a conference call, open to all interested investors, to discuss fourth quarter and full year 2007 financial results and expectations for 2008 financial performance on Wednesday, Feb. 20. Pertinent details include:
Date: Wednesday, Feb. 20, 2008
Time: 8:30 a.m. EST
Call-In Number: 719-325-4855
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