iRobot Corporation (IRBT)

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iRobot Corporation (IRBT)

Q4 2009 Earnings Call

February 18, 2010 8:30 am ET


Colin Angle - Chairman & Chief Executive Officer

John Leahy - Chief Financial Officer

Elise Caffrey - Investor Relations


Jim Ricchiuti - Needham & Co.



Good day, everyone and welcome to the iRobot fourth quarter and full year 2009 financial results conference call. This call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Elise Caffrey of iRobot Investor Relations; please go ahead.

Elise Caffrey

Thank you, and good morning. Before I introduce the iRobot management team, I’d like to note that statements made on today’s call that are not based on historical information are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

This conference call may contain express or implied forward-looking statements relating to the company’s financial results, operations and tax rate for fiscal 2009, the first quarter ending April 3, 2010 and the second quarter ending July 2, 2010, our financial position at the end of fiscal 2009, demand for the company’s products and services, the timing of funding and contact awards under the FCS Program now refer to as the Brigade Combat Team Modernization program, our plans for expansion and new product development, backlog and demand for our Government and Industrial Robots, mix of product revenue and business conditions.

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 the forward-looking statements.

In particular, the risks and uncertainties include those contained in our public filings with the Securities and Exchange Commission. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or circumstances, or otherwise.

During this conference call, we will also disclose various non-GAAP financial measures as defined by SEC Regulation G, including adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, merger and acquisition expenses and non-cash stock compensation expense.

A reconciliation between net income, the GAAP measure most directly comparable to adjusted EBITDA, and adjusted EBITDA is provided in the financial tables at the end of the Q4, 2009 earnings press release issued last evening, which is available on our website

A live audio broadcast of this conference call is available on the Investor Relations page of our website and an archived version of the broadcast will be available on the same page, shortly. In addition, a replay of this conference call will be available through February 25, 2010 and can be accessed by dialing 617-801-6888, access code 316-785-47.

On today’s call, iRobot’s Chairman and CEO, Colin Angle will provide a review of the company’s operations and achievements for the fourth quarter and full year 2009, as well as our financial expectations and outlook for the business for 2010; and John Leahy, Chief Financial Officer, who will review our financial results for the fourth quarter and full year of 2009 and provide additional detail on our 2010 financial expectations. Then we’ll open the call for questions.

At this point, I’ll turn the call over to Colin Angle.

Colin Angle

Good morning, and thank you for joining us. I’m pleased to report that we delivered record quarterly revenue of more than $100 million and full year revenue of nearly $300 million. Earnings per share and adjusted EBITDA significantly exceeded expectations for the fourth quarter and the full year.

Lifetime sales of our home robots surpassed 5 million units and as we recently announced deliveries of PackBot robots have exceeded 3,000, both are significant milestones for the company and validation that demand continues to be strong for our products. Our continued focus on strengthening the balance sheet resulted in year-end cash and investments position of $77 million, up significantly from $41 million a year ago.

A critical component of improving our financial position over the past has been driving adjusted EBITDA in operating cash flow. Adjusted EBITDA was $21 million, up 61% from 2008 and we generated $41 million of operating cash flow in 2009, compared with $19 million in 2008.

2009 marked an important step to achieving our three year strategic goals, maintaining our industry leading position of delivering robotic technology-based solutions that leverage common platforms and common software, and a financial goal that underpin our strategic plan, which are mid-to-high teen revenue [CAGR], mid-teen adjusted EBITDA margins and high single digit operating cash flow margins.

We recently added Paul Sagan, Chief Executive Officer of Akamai Technologies to our Board of Directors. Paul brings extensive technology, consumer and global business expertise to iRobot at a critical time in our developed given our projected global growth, and we are very pleased to have him join our team.

We began 2010 with $42 million in backlog in our G&I business, the highest level in our company’s history. This positions us well to deliver another year of solid financial performance, with increased top and bottom line growth while continuing to invest in the future of our business, as we keep making progress on delivering against our strategic plan.

In home robots, strong demand for our Roomba 500 robots in international markets continued to fuel home robot growth overseas. International home robot revenue was up 35% from the prior year and represented more than half of 2009 home robot revenue. We expect to see significant overseas growth in 2010 within existing markets.

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