iRobot has reported fourth quarter earnings at the level they pre-announced, with full-year earnings of just $500,000 not counting a one-time $8.6 million income tax benefit. But the company announced much-improved 2008 expectations of $8-10 million pre-tax profit, despite a stock compensation expense of up to $7 million.
The growth of 32 percent for the year significantly exceeded the guidance from a year ago, although profits suffered as nickel prices rose and the company fought a costly legal battle with Robotic FX (about $8 million combined for those two items).
The company anticipates 2008 revenue to top $300 million (range up to $310), up 20-25% from 2007's $249 million. That's healthy growth and will put the stock at a very conservative price-to-sales multiple. Earnings are still a bit on the light side, and I'd like to hear more on the conference call about why there won't be $10 million in AFTER-tax profits, which is the target I personally had for the company.
Also of note, the quarter's results showed that home robot sales were robust with the launch of the new Roomba 500 Series (full year home robot units up 24% to 899,000), but PackBot deliveries oddly slowed in the fourth quarter from 120 to 108.
The conference call is tomorrow morning. I'll have detailed notes by tomorrow night.
All in all, there is nothing particularly exciting or disappointing about the earnings call. I'd say they did what they had to do, but there is no real "wow" factor. Particularly when you are bragging about a mere 10% increase in Roomba sales at the retail level in the 4th Quarter and using the gloomy retail environment to look good in comparison. Tomorrow may be a good time to take a profit if you have one, unless the CC includes some really great info on SUGV sales possibilities, LADAR or plans for new products in the pipeline.
-Thorn
Press Release Source: iRobot Corp.
iRobot Reports Record Fourth-Quarter and Full-Year 2007 Results
Tuesday February 19, 4:30 pm ET
Revenue Up 62 Percent for the Quarter, 32 Percent for the Year
BURLINGTON, Mass.--(BUSINESS WIRE)--iRobot Corp. (NASDAQ:IRBT - News) today announced its financial results for the fourth fiscal quarter and fiscal year ended Dec. 29, 2007.
“I am pleased to report another record quarter of top and bottom line growth for the company,” said Colin Angle, chief executive officer of iRobot. “We delivered our fourteenth consecutive quarter of year-over-year revenue growth and the highest quarterly and annual revenue in the company’s history. The top line results were driven by a very successful holiday season for our new iRobot® Roomba® 500 Series robot and a very strong contribution from our Government & Industrial Robots division.
“In 2007, we demonstrated our ability to sustain growth in both divisions and laid the foundation for continued growth in 2008 and beyond. We exited the year with excellent momentum and good visibility, and we are better positioned than any other year in our history. We have an achievable plan for another year of top line growth, gross margin expansion, operating scalability and improved profitability.”
Financial Highlights:
* Revenues for the fourth quarter of 2007 grew to $98.7 million, compared with $61.1 million for the same quarter one year ago. Revenues for the fiscal year ended Dec. 29, 2007, increased to $249.1 million, compared with $189.0 million for fiscal 2006.
* Gross profit for the fourth quarter was $36.1 million (36.6 percent of sales), compared with $22.8 million (37.3 percent of sales) in the fourth quarter of 2006. Gross profit for the fiscal year ended Dec. 29, 2007, was $82.6 million (33.2 percent of sales), compared with $69.7 million (36.9 percent of sales) for the same period a year ago.
* Net profit in the fourth quarter of 2007 was $20.7 million compared with net loss in the fourth quarter of 2006 of $1.8 million. Net income for the fiscal year ended Dec. 29, 2007, increased to $9.1 million, compared with $3.6 million for fiscal 2006. The 2007 quarterly and annual results include an $8.6 million tax benefit, largely associated with the release of federal deferred tax allowances.
Business Highlights & Developments:
* iRobot was awarded the xBot contract, a $286 million Indefinite-Delivery/Indefinite-Quantity (IDIQ) contract from the U.S. Army Program Executive Office for Simulation, Training, and Instrumentation (PEO STRI), on behalf of the Robotic Systems Joint Project Office at Redstone Arsenal, Ala. Under the terms of the contract, the Army could order up to 3,000 military robots, spare parts, training and repair services over the next five years.
* iRobot announced that federal courts in Massachusetts and Alabama entered judgments in favor of iRobot and all disputes with former employee Jameel Ahed and his company, Robotic FX, Inc., have been settled. In August, iRobot filed two lawsuits against Ahed and Robotic FX: the Alabama action was for patent infringement, and the Massachusetts action was for trade secret misappropriation.
* iRobot announced that the U.S. Army accelerated its testing schedules for iRobot’s Future Combat Systems (FCS) Small Unmanned Ground Vehicle (SUGV) robot development program. The updated plan calls for iRobot to deliver a total of 25 FCS SUGV robots by April 2008. The Army Evaluation Task Force (AETF) will begin evaluation and testing of the robots in May 2008. This effort is intended to provide an early capability of SUGV to soldiers in the field. The SUGV Systems Development and Demonstration program will continue to mature the SUGV with its full network capability.
* In addition to generating record revenue for the quarter, sell through of Roomba vacuuming robots was up more than 10 percent over the same period a year ago despite widely reported weakness in general retail. Inventory in retail stores is at a good post-holiday level, and momentum is continuing in 2008.
Financial Expectations
“For 2008 we are expecting revenue growth of 20 percent to 25 percent over our record 2007 and pre-tax net income in the range of $8 million to $10 million,” Angle said. “We will review the guidance in more detail and provide additional metrics on our earnings conference call.”
(In Millions)
Revenue $300 - $310
Gross Margin 36%-37%
Stock Comp Expense $6.5 - $7
Pre-tax net income $8 - $10
This outlook represents management’s view as of Feb. 19, 2008. Investors are reminded that actual results may differ from these estimates for the reasons described below and in our filings with the Securities and Exchange Commission.
Fourth-Quarter and Full Year Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. EST to discuss its financial results for the fourth fiscal quarter and full year 2007, business outlook, and outlook for future financial performance. Pertinent details include:
Date: Wednesday, Feb. 20, 2008
Time: 8:30 a.m. EST
Call-In Number: 719-325-4855
A live, audio broadcast of the conference call also will be available at http://investors.irobot.com/events.cfm. An archived version of the broadcast will be available on the same Web site shortly after the conclusion of the live event. A replay of the telephone conference call will be available and can be accessed by dialing 719-457-0820, access code 8088134.
About iRobot Corp.
iRobot is a provider of robots that perform dull, dirty or dangerous missions in a better way. The company's proprietary technology, iRobot AWARE™ Robot Intelligence Systems, incorporates advanced concepts in navigation, mobility, manipulation and artificial intelligence. This proprietary system enables iRobot to build behavior-based robots, including its family of consumer and military robots. For additional information about iRobot, please visit www.irobot.com.
iRobot Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
For the three months ended For the twelve months ended
December 29, December 30, December 29,
December 30,
2007 2006 2007 2006
(unaudited) (audited)
Revenue
Product revenue $ 93,308 $ 56,378 $ 227,457 $ 167,687
Contract revenue 5,432 4,760 21,624 21,268
Total 98,740 61,138 249,081 188,955
Cost of Revenue
Product revenue 57,779 33,953 147,689 103,651
Contract revenue 4,827 4,403 18,805 15,569
Total 62,606 38,356 166,494 119,220
Gross Profit 36,134 22,782 82,587 69,735
Operating Expense
Research & development 4,008 6,079 17,082 17,025
Selling & marketing 14,786 14,772 44,894 33,969
General & administrative 4,045 4,629 20,919 18,703
Litigation & related expenses 1,677 - 2,341 -
Total 24,516 25,480 85,236 69,697
Operating income (loss) 11,618 (2,698 ) (2,649 ) 38
Other income, net 488 984 3,151 3,831
Pre-tax income (loss) 12,106 (1,714 ) 502 3,869
Income tax expense (benefit) (8,609 ) 69 (8,558 ) 304
Net income (loss) $ 20,715 $ (1,783 ) $ 9,060 $ 3,565
Net income (loss) per common share:
Basic $ 0.85 $ (0.08 ) $ 0.37 $ 0.15
Diluted $ 0.81 $ (0.08 ) $ 0.36 $ 0.14
Shares used in Per Common Share Calculations:
Basic 24,448 23,697 24,229 23,516
Diluted 25,519 23,697 25,501 25,601
Stock-based compensation included in above figures:
Cost of product revenue $ 171 $ 111 $ 692 $ 326
Cost of contract revenue 94 84 386 267
Research & development 125 105 377 376
Selling & marketing 241 150 1,074 389
General & administrative 665 357 2,182 1,211
Total $ 1,296 $ 807 $ 4,711 $ 2,569
iRobot Corporation
Condensed Consolidated Balance Sheet
(audited, in thousands)
December 29, December 30,
2007 2006
Assets
Cash and equivalents $ 26,735 $ 5,583
Short term investments 16,550 64,800
Accounts receivable, net 47,681 28,510
Unbilled revenues 2,244 1,961
Inventory, net 45,222 20,890
Deferred tax assets 5,905 -
Other current assets 2,268 2,863
Total current assets 146,605 124,607
Property, plant and equipment, net 15,694 10,701
Deferred tax assets 4,293 -
Other assets 2,500 -
Total assets $ 169,092 $ 135,308
Liabilities and stockholders' equity
Accounts payable $ 44,697 $ 27,685
Accrued expenses 7,987 7,020
Accrued compensation 4,603 5,227
Deferred revenue 1,578 457
Total current liabilities 58,865 40,389
Stockholders' equity 110,227 94,919
Total liabilities and stockholders' equity $ 169,092 $ 135,308
iRobot Corporation
Supplemental Information
(unaudited)
For the three months ended For the twelve months ended
December 29, December 30, December 29,
December 30,
2007 2006 2007 2006
Revenues by business unit (in thousands):
Home Robots $ 73,526 $ 41,887 $ 144,483 $ 112,430
Government & Industrial 25,214 19,251 104,598 76,525
$ 98,740 $ 61,138 $ 249,081 $ 188,955
Units shipped by business unit:
Home Robots (in thousands) 442 267 899 725
Government & Industrial 108 120 471 385
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