Announces Leadership Transition
Provides Preliminary Fourth Quarter Results; Schedules
Conference Call for February 27,
2024
BEDFORD, Mass., Jan. 29, 2024 /PRNewswire/ -- Today, iRobot
Corporation (NASDAQ: IRBT), a leader in consumer robots, announced
that it will implement an operational restructuring plan designed
to position the Company for stabilization in the current
environment, while focusing on profitability and advancing key
growth initiatives to extend its market share in the mid-tier and
premium segments. This plan was approved following iRobot's and
Amazon's mutual decision to terminate their previously announced
merger agreement. That announcement can be found here.
Concurrent with the implementation of its operational
restructuring plan, the Company today also announced a leadership
transition whereby Colin Angle,
Chairman of the Board of Directors and CEO, has stepped down as
Chairman and CEO. Glen Weinstein,
iRobot's Executive Vice President and Chief Legal Officer, has been
appointed Interim CEO, and Andrew
Miller, lead independent director of the Board, has been
appointed Chairman of the Board.
iRobot's immediate priority in undertaking the operational
restructuring plan is to more closely align its cost structure with
near-term revenue expectations and drive profitability, including
through the following financial and strategic initiatives:
- Achieving margin improvements and generating approximately
$80-$100
million in savings on equivalent volumes through the
execution of agreements with joint design and contract
manufacturing partners on more attractive terms that provide
significant reductions in cost of goods sold;
- Reducing R&D expense by approximately $20 million year-over-year through increased
offshoring of non-core engineering functions to lower-cost
regions;
- Centralizing global marketing activities and consolidating
agency expenditures to reduce sales and marketing expenses by
approximately $30 million
year-over-year while seeking efficiencies in demand generation
activities to drive sales more cost effectively;
- Rightsizing the Company's global real estate footprint through
additional subleasing at its corporate headquarters and the
elimination of offices and facilities in smaller, underperforming
geographies; and
- Focusing iRobot's product roadmap on core value drivers and
pausing all work related to non-floorcare innovations, including
air purification, robotic lawn mowing and education.
These actions will also result in a reduction of approximately
350 employees, which represents 31 percent of the Company's
workforce as of December 30, 2023,
with the majority of notifications taking place by March 30, 2024. As part of this workforce
reduction, iRobot expects to record restructuring charges totaling
between $12 million and $13
million, primarily for severance and related costs, over the
first two quarters of 2024, with the majority of the restructuring
charges anticipated in the first quarter of 2024.
Jeff Engel, a highly regarded
turnaround expert, has been appointed Chief Restructuring Officer
to oversee these initiatives and lead the implementation of the
operational restructuring plan and will report directly to the
Board and Mr. Weinstein.
The Company will continue executing key strategic activities to
support iRobot's return to profitability, including increasing its
brand recognition, driving product innovation and redesigning its
go-to-market strategy. Enhancements to the Company's go-to-market
playbook will focus the business on iRobot's most profitable
customers, geographies and channels, including its growing
direct-to-consumer channel, while rebalancing the Company's
spending mix between price, promotion and demand generation to
optimize returns.
Andrew Miller, Chairman of the
Board, said, "iRobot is a pioneer of the consumer robot field and
beloved by its customers around the world. With a legacy of
innovation and a foundation of creativity, the Board and I believe
that iRobot can – and will – grow its presence and continue to
build a cutting-edge suite of robotic floorcare solutions that help
consumers make their homes easier to maintain and healthier places
to live. To do this successfully, however, we must rapidly align
our operating model and cost structure to our future as a
standalone company. Though decisions that impact our people are
difficult, we must move forward with a more sustainable business
model, and a renewed focus on profitability. We are confident that
the actions we are announcing today will enable us to chart a new
strategic path for sustainable value creation."
Leadership Transition
Concurrent with the implementation of its operational
restructuring plan, the Company today also announced the following
leadership changes:
- Colin Angle has stepped down as
Chairman of the Board and CEO. Mr. Angle will continue to serve on
the iRobot Board of Directors until his current term expires in
May 2024, and has agreed to remain
with the Company as a senior advisor for up to 12 months, to ensure
a smooth transition.
- Glen Weinstein, iRobot's
Executive Vice President and Chief Legal Officer, has been
appointed Interim CEO, and the Board has initiated a search process
for a permanent CEO supported by a leading executive search firm.
Mr. Weinstein originally joined iRobot in 2000 as General Counsel
and was promoted to General Counsel and Senior Vice President in
2005, prior to being appointed Executive Vice President and Chief
Legal Officer in 2012.
- Tonya Drake has been promoted to
Executive Vice President and General Counsel.
- The Board has appointed Andrew
Miller, lead independent director of the Board, as Chairman
of the Board. Mr. Miller has served on the iRobot Board since 2016.
From 2015 until 2019, Mr. Miller was the Executive Vice President
and Chief Financial Officer of PTC, a computer software and
services company focused on accelerating transformation through
digital technology. From 2008 to 2015, Mr. Miller was the Executive
Vice President and Chief Financial Officer of Cepheid, a global
leader in molecular diagnostics. Prior to Cepheid, Mr. Miller held
a variety of financial leadership roles at Autodesk, MarketFirst
Software and Silicon Graphics.
"On behalf of the Board, I would like to extend my sincerest
gratitude to Colin for more than 33 years of leadership in building
a company that has changed the world," continued Mr. Miller.
"Simply put, Colin revolutionized the robotics industry and under
his tenure, iRobot has pioneered the intersection of robotic
technology and consumer needs. We are grateful for his visionary
leadership, relentless focus on R&D and commitment to our
global team. I particularly appreciate Colin's support of this
transition. We are also grateful to Glen for stepping up to guide
our Company through this important period. As the search for our
next CEO progresses, I know we will benefit from Glen's deep
knowledge of our business, having been an integral member of
iRobot's leadership team for over 20 years."
Mr. Angle said, "When I founded iRobot more than three decades
ago, having more than 50 million of our products in homes worldwide
was beyond my wildest imagination. I am incredibly proud of what
our team has accomplished over the years. From the development of
the first Roomba in 2002 to our latest generation, they have been
relentless in building and delivering new and iconic ways for
consumers to clean and live. At the same time, I know there is a
lot of work to do to map iRobot's next chapter. Given the nature of
the challenges facing the Company, the Board and I have mutually
decided that iRobot will be better served by a new leader with
turnaround experience. I would like to sincerely thank our team
members around the world for their commitment to our mission of
helping people do more. I know iRobot has the talent and passion to
succeed in continuing to build the world's most thoughtful and
intelligent home innovations for years to come."
Financial Update
The Company today also announced certain preliminary
fourth-quarter results. iRobot anticipates reporting full-year 2023
revenue of $891 million, a 25%
reduction as compared to the same period last year, a GAAP
operating loss of between $265 and
$285 million, and a non-GAAP
operating loss of approximately $200
million. The Company ended fiscal year 2023 with
$185 million in cash and cash
equivalents, funded primarily from its previously announced
three-year $200 million credit
agreement with The Carlyle Group, which matures on July 24, 2026.
Under the terms of the merger agreement, Amazon will pay iRobot
a $94 million termination fee. After
payment of financial advisor fees of approximately 20% of the
termination fee, the Company shall apply $35
million dollars of the termination fee immediately to repay
the term loan, and the remainder of the termination fee will be set
aside to be used for future repayments of the term loan subject to
limited rights of the Company to utilize such amounts for the
purchase of inventory.
"We are disappointed with the Company's 2023 performance – but
our focus turns now to the future," said Mr. Miller. "Along with
the restructuring actions announced today, and with a refreshed
turnaround-focused leadership team, we see a clear path to
reinvigorating our outstanding brand, product performance and
underlying technology. In addition to rightsizing our cost
structure, innovation remains our most exciting growth opportunity.
We look forward to reigniting growth of the brand with future
launches of both new entry and premium floorcare solutions that
will provide even smarter and more powerful ways for our customers
to clean."
The Company will provide additional information on the Company's
restructuring efforts and go-forward business plans at its
fourth-quarter 2023 earnings call, scheduled for February 27, 2024.
About iRobot
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 more than 50 million 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.
Cautionary Statement Regarding Forward-Looking
Statements
This press release 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,
including statements regarding the Company's implementation of its
operational restructuring plan and related restructuring charges
(including the timing thereof), the Company's business plans,
strategies, priorities and initiatives and the expected business
and financial impacts thereof (including anticipated cost savings),
expected product launches and the impact thereof, and anticipated
business enhancements and expected benefits to the Company's
products and business therefrom. These forward-looking statements
are based on the Company's current expectations, estimates and
projections about its business and industry, 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. These and other
forward-looking statements 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: the Company's ability to implement its
business plans and strategies; the Company's ability to achieve the
anticipated benefits of its operational restructuring plan; the
Company's ability to successfully navigate its leadership
transition; the ability of the Company to retain and hire key
personnel; legislative, regulatory and economic developments
affecting the Company's business; general economic and market
developments and conditions; the impact of various global conflicts
on the Company's business and general economic conditions; the
evolving legal, regulatory and tax regimes under which the Company
operates; unpredictability and severity of catastrophic events,
including, but not limited to, acts of terrorism or outbreak of war
or hostilities; supply chain challenges including constraints in
the availability of certain semiconductor components used in the
Company's products; the financial strength of the Company's
customers and retailers; the impact of tariffs on goods imported
into the United States; and
competition. 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. 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
|
Supplemental
Reconciliation of Preliminary Fiscal Year 2023 GAAP to Non-GAAP
Operating Loss
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
FY
2023
|
|
Preliminary
Results
|
|
Low
|
|
High
|
|
(in
millions)
|
GAAP Operating
Loss
|
$
(285)
|
|
$
(265)
|
Amortization of
acquired intangible assets
|
6
|
|
6
|
Stock-based
compensation
|
36
|
|
36
|
Net merger, acquisition
and divestiture expense
|
15
|
|
15
|
Restructuring and
other
|
28
|
|
8
|
Total adjustments
|
85
|
|
65
|
Non-GAAP Operating
Loss
|
$
(200)
|
|
$
(200)
|
|
|
|
|
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SOURCE iRobot Corporation