Financial Data and Key Metrics Changes - First quarter revenue was $193 million, a decline of 19% from the prior year [10][24] - Operating loss for Q1 was $14.4 million, with a net loss per share of $0.32 [10][26] - Gross margin was 41%, down 10.9 percentage points from the previous year, primarily due to lower pricing and higher promotional expenses [25][24] - Cash and investments at the end of Q1 totaled $264 million, with healthy cash flow from operations of $41 million [27][33] Business Line Data and Key Metrics Changes - Roomba accounted for approximately 88% of revenue, with most revenue generated from robots priced at $500 and above [24] - Revenue declined by 28% in the U.S., 11% in EMEA, and 14% in Japan [11][24] Market Data and Key Metrics Changes - U.S. sell-through accelerated in February but was disrupted in March due to COVID-19 [10][11] - The pandemic has led to increased consumer interest in cleaning products, although economic uncertainty may affect purchasing behavior [12][20] Company Strategy and Development Direction - The company is focusing on differentiating its offerings, building direct relationships with customers, and nurturing customer lifetime value [13][15][16] - Cost-reduction actions are being implemented, including a targeted headcount reduction of approximately 5% and a $30 million reduction in spending for 2020 [17][32] - The launch of the Terra robot mower has been suspended due to COVID-19 uncertainties, while other product developments remain on track [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for revenue recovery in the second half of the year, despite anticipating a soft second quarter [20][23] - The uncertainty surrounding COVID-19 has impaired visibility into order activity and financial targets for the year [20][28] Other Important Information - The company received a tariff exclusion that will eliminate a 25% tariff on Roomba imports and provide refunds on previously paid tariffs [19][30] - The company ended Q1 with a healthy inventory level and is managing its supply chain to adapt to changing market conditions [27][71] Q&A Session Summary Question: What are the sales through your direct-to-consumer website? - Direct-to-consumer sales grew 45% year-over-year in 2019, with strong performance in leasing-style purchasing [41][42] Question: Are you anticipating using some of the gross margin benefit from tariff exclusion to be more competitive? - The company will assess how to deploy the tariff exclusion benefits against initiatives versus improving the bottom line [45][46] Question: What allows for R&D changes and cuts? - The focus has shifted towards software differentiation, reducing the need for hardware engineering resources [49][50] Question: How has the current inventory in the channel evolved? - The inventory levels are good, with progress made against sell-through in Q1 [71] Question: What is the rationale for shelving the Terra robot mower? - The decision was based on prioritizing resources and investments in strategic areas amid COVID-19 uncertainties [58][60]

Part I [Business](index=4&type=section&id=Item%201.%20Business) iRobot is a global consumer robot company, primarily known for Roomba RVCs and Braava mops, which achieved over $1.2 billion in 2019 revenue while focusing on global penetration, product diversification, and profitability - The company has sold over **30 million consumer robots worldwide** since the first Roomba launch in 2002[7](index=7&type=chunk) - Strategic priorities for 2020 include expanding Roomba's global penetration, diversifying with Braava and Terra products, and improving long-term profitability by mitigating tariff impacts and optimizing costs[8](index=8&type=chunk) - To mitigate exposure to China tariffs, the company commenced production at a new manufacturing facility in Malaysia in 2019 and plans to ramp up volumes there in 2020[8](index=8&type=chunk)[23](index=23&type=chunk) 2019 Financial Highlights | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,214.0 million | $1,092.6 million | 11.1% | | Domestic Revenue Growth | - | - | 7.6% | | International Revenue Growth | - | - | 14.8% | [Products](index=6&type=section&id=Products) iRobot's product portfolio centers on home cleaning robots, including Roomba vacuums and Braava mops, with ongoing development in robotic lawn mowers and STEM education robots - The Roomba product family ranges in price from approximately **$250 to $1,099**, with the s9 Series offering **40 times more suction power** than the 600 Series[12](index=12&type=chunk) - The Braava jet m Series can automatically clean in sequence with Roomba 900, i7, and s9 robots, vacuuming first and then mopping[15](index=15&type=chunk) - The company is developing the Terra t7 robotic lawn mower, which uses advanced mapping and navigation instead of boundary wires, and acquired Root Robotics in April 2019 to enter the STEM education market[16](index=16&type=chunk)[17](index=17&type=chunk) [Sales, Marketing, and Manufacturing](index=7&type=section&id=Sales,%20Marketing,%20and%20Manufacturing) iRobot utilizes a global sales network, including significant online retail partnerships like Amazon, with manufacturing outsourced primarily to China and Malaysia to support international sales and mitigate tariff risks - Sales to non-U.S. customers accounted for **50.3% of total revenue in 2019**[19](index=19&type=chunk) - Amazon is a key retailer, representing **21.3% of total revenue in 2019**, up from 17.3% in 2018 and 13.5% in 2017[19](index=19&type=chunk) - Manufacturing is outsourced to four contract manufacturers in Southern China, with additional capacity added in Malaysia in late 2019[23](index=23&type=chunk) Sales & Marketing Expense as a Percentage of Revenue | Year | % of Revenue | | :--- | :--- | | 2019 | 19.1% | | 2018 | 19.3% | | 2017 | 18.3% | [Research and Development](index=9&type=section&id=Research%20and%20Development) Ongoing R&D is crucial for iRobot's future success, with $141.6 million invested in 2019, representing 11.7% of revenue, to develop new products and enhance existing ones R&D Expenses | Year | Amount | % of Revenue | | :--- | :--- | :--- | | 2019 | $141.6 million | 11.7% | | 2018 | $140.6 million | 12.9% | | 2017 | $113.1 million | 12.8% | [Intellectual Property](index=9&type=section&id=Intellectual%20Property) iRobot heavily relies on its intellectual property, holding over 1,500 patents globally and actively defending its rights through litigation, despite upcoming U.S. patent expirations - As of December 28, 2019, the company held **501 U.S. patents**, over **1,000 foreign patents**, and had more than **1,500 patent applications pending worldwide**[26](index=26&type=chunk) - In October 2019, iRobot initiated a patent infringement lawsuit against SharkNinja Operating LLC for infringement of 5 patents related to robotic vacuum cleaners[27](index=27&type=chunk) [Risk Factors](index=11&type=page&id=Item%201A.%20Risk%20Factors) The company faces significant risks including market dependence on consumer robots, intense competition, reliance on limited manufacturers in China, adverse impacts from tariffs, cybersecurity threats, data privacy regulations, and intellectual property protection challenges - The business depends solely on consumer robots, and its success hinges on enhancing current products and developing new ones in a competitive market[37](index=37&type=chunk) - The company faces intense competition from diversified technology providers (e.g., Samsung, LG), floor care brands (e.g., Dyson, Shark), and robotics-focused firms (e.g., Ecovacs, Roborock)[38](index=38&type=chunk) - Reliance on a limited number of manufacturers, with a majority of production in China, exposes the company to risks of disruption, quality control issues, and political/economic instability[41](index=41&type=chunk) - U.S. trade policies, particularly tariffs on goods from China (which increased to **25% in May 2019**), have had and are expected to continue to have a material adverse effect on business, financial condition, and results of operations[59](index=59&type=chunk) - The company is subject to complex data privacy laws like GDPR and the California Consumer Privacy Act (CCPA), and any failure to comply could result in significant expense and harm to the business[49](index=49&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - No unresolved staff comments were reported[82](index=82&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) The company's corporate headquarters are in a leased 270,000 square foot facility in Bedford, Massachusetts, with additional global leased facilities deemed adequate for future needs - Corporate headquarters are in a leased facility of approximately **270,000 square feet** in Bedford, Massachusetts[83](index=83&type=chunk) [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company faces multiple class action and shareholder lawsuits alleging violations of the Securities Exchange Act and breaches of fiduciary duty related to past acquisitions and financial performance - Multiple shareholder lawsuits were filed against the company and certain directors and officers in late 2019 and early 2020[84](index=84&type=chunk)[86](index=86&type=chunk) - The allegations primarily concern allegedly false and misleading statements regarding the acquisitions of SODC and Robopolis and the company's subsequent financial performance[84](index=84&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable to the company[87](index=87&type=chunk) Part II [Selected Financial Data](index=27&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of consolidated financial data, highlighting consistent revenue growth from $616.8 million in 2016 to $1,214.0 million in 2019, alongside increases in operating income, net income, and total assets Selected Consolidated Financial Data (In thousands, except per share data) | | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Total revenue** | $1,214,010 | $1,092,584 | $883,911 | | **Gross profit** | $543,927 | $555,428 | $433,159 | | **Operating income** | $86,618 | $105,822 | $72,690 | | **Net income** | $85,300 | $87,992 | $50,964 | | **Diluted Net Income Per Share** | $2.97 | $3.07 | $1.77 | | **Total assets** | $920,753 | $766,961 | $691,522 | | **Total stockholders' equity** | $652,069 | $535,322 | $470,327 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2019 revenue grew 11.1% to $1.21 billion, driven by new products, though gross margin declined to 44.8% due to tariffs and promotions, resulting in lower operating income, while liquidity remains strong with $239.4 million in cash [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Fiscal 2019 revenue increased 11.1% to $1.214 billion, driven by new products and international growth, despite a significant gross margin decline to 44.8% due to tariffs and promotions, leading to a decrease in operating income - The decrease in gross margin was primarily due to increased promotional activity, pricing reductions, and the impact of increased tariffs on Roomba products imported to the U.S. from China[120](index=120&type=chunk) - General and administrative expenses decreased by **$14.4 million (14.8%)** in 2019, mainly due to lower incentive compensation costs and a decrease in legal costs after a favorable litigation outcome in late 2018[131](index=131&type=chunk) Revenue Comparison (2019 vs. 2018) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,214.0M | $1,092.6M | +11.1% | | Gross Profit | $543.9M | $555.4M | -2.1% | | Gross Margin | 44.8% | 50.8% | -6.0 p.p. | | Operating Income | $86.6M | $105.8M | -18.1% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 28, 2019, iRobot maintained strong liquidity with $239.4 million in cash and a $150.0 million revolving credit line, supported by $130.1 million in operating cash flow, sufficient for future needs - The company has a **$150.0 million unsecured revolving line of credit**, with no outstanding borrowings as of year-end 2019[144](index=144&type=chunk) Key Liquidity and Cash Flow Data (FY 2019) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents (End of Period) | $239.4 million | | Working Capital (End of Period) | $391.7 million | | Net cash provided by operating activities | $130.1 million | | Net cash used in investing activities | $20.9 million | | Capital Expenditures | $35.3 million | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages market risks, primarily foreign currency fluctuations through derivative instruments like forward exchange contracts with a notional value of $424.6 million, while interest rate risk is considered minimal - The company uses foreign currency forward contracts to hedge against fluctuations in currencies like the Euro and Japanese Yen[151](index=151&type=chunk) - At year-end 2019, the company had outstanding cash flow hedges with a total notional value of **$424.6 million** and economic hedges with a notional value of **$58.4 million**[151](index=151&type=chunk) - A hypothetical **10% change** in the U.S. Dollar exchange rate would change the fair market value of the company's foreign currency contracts by approximately **$48.4 million**[151](index=151&type=chunk) [Financial Statements and Supplementary Data](index=41&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year 2019, including balance sheets, income statements, and cash flow statements, along with detailed notes on accounting policies and financial details - The independent auditor's report, issued by PricewaterhouseCoopers LLP, provides an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[156](index=156&type=chunk) - A critical audit matter identified was the allowance for product returns, which involved significant management judgment regarding historical experience and future expectations[165](index=165&type=chunk)[166](index=166&type=chunk) [Notes to Consolidated Financial Statements](index=49&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial figures, covering revenue recognition for connected robots, adoption of ASC 842 for leases, purchase price allocation for acquisitions, goodwill, stock-based compensation, legal contingencies, and income taxes - Revenue from connected robots launched since Q3 2018 (e.g., Roomba i7) is allocated between the physical robot (recognized at transfer) and 'Cloud Services' (deferred and recognized over the service period)[213](index=213&type=chunk) - The company adopted the new lease accounting standard ASC 842 in 2019, resulting in the recognition of **$52.8 million** in right-of-use assets and **$67.3 million** in lease liabilities on the balance sheet[209](index=209&type=chunk)[224](index=224&type=chunk) - As of year-end 2019, total unrecognized tax benefits were **$7.1 million** The company is currently under IRS examination for the 2014 and 2015 tax years[286](index=286&type=chunk) [Controls and Procedures](index=78&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of December 28, 2019, with no material changes reported - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the fiscal year[293](index=293&type=chunk) - Management concluded that the company maintained effective internal control over financial reporting as of December 28, 2019[294](index=294&type=chunk) [Other Information](index=79&type=section&id=Item%209B.%20Other%20Information) This section discloses that certain officers and directors, including the CEO, have entered into Rule 10b5-1 trading plans for company stock sales - Certain officers and directors have entered into trading plans compliant with Rule 10b5-1 of the Exchange Act[297](index=297&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, and Other Matters](index=79&type=section&id=Items%2010-14) Information for Items 10 through 14, covering directors, executive officers, corporate governance, executive compensation, and related matters, is incorporated by reference from the company's definitive proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the company's definitive proxy statement, which will be filed at a later date[298](index=298&type=chunk)[299](index=299&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk)[302](index=302&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=80&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including key corporate documents and required certifications - This section lists all exhibits filed with the 10-K, including governance documents, material agreements, and required certifications[303](index=303&type=chunk)[304](index=304&type=chunk) [Form 10-K Summary](index=83&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - This item is not applicable[307](index=307&type=chunk)

Financial Data and Key Metrics Changes - Fourth quarter revenue reached $427 million, an 11% increase year-over-year, driven by strong performance in the U.S. and EMEA [8][9] - Full year 2019 revenue grew 11% to over $1.2 billion, with an operating profit margin of 7% and EPS of $2.97 [9][28] - The operating profit margin would have been 3 percentage points higher without nearly $38 million in Section 301 tariffs [9][10] - Q4 gross margin dropped 9 percentage points to 40%, primarily due to pricing changes and tariff costs of nearly $22 million [25][27] - Full year 2019 gross margin was 45%, a decline of 6 percentage points from the previous year [28] Business Line Data and Key Metrics Changes - International revenue grew 15% in 2019, with Japan showing a 21% increase and EMEA also increasing by 15% [11][28] - U.S. revenue grew 8% for the full year, with a notable 15% growth in Q4 [11][27] - Sales from new products, including the Roomba s9 and Braava jet m6, contributed 17% to total revenue in 2019 [11][12] Market Data and Key Metrics Changes - The U.S. segment maintained its market share despite aggressive competition, while Japan gained meaningful share [12] - EMEA market share declined due to growth at the low end of the category [12] - The company expects competition to remain intense in major markets, with tariffs continuing to impact profitability [15][19] Company Strategy and Development Direction - The company aims to mitigate tariff impacts by increasing production in Malaysia, expecting this to represent up to one-third of U.S. units sold in 2020 [16] - Continued innovation and diversification of the product portfolio are top priorities, with plans to introduce a new Roomba model in 2020 [17] - The company is focused on building a direct-to-consumer sales pipeline and establishing new recurring revenue streams [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing strategic priorities to drive revenue growth and improve profitability despite challenges in 2020 [10][21] - The company anticipates revenue growth of 9% to 11% for 2020, with international growth expected to outpace the U.S. [20][30] - Management acknowledged that high tariffs and aggressive price competition would pressure gross margins and EPS in 2020 [20][31] Other Important Information - A CFO transition was announced, with Julie Zeiler set to succeed Alison Dean in May [22] - The company ended Q4 with $256 million in cash, a year-over-year increase of $94 million [29] Q&A Session Summary Question: Impact of coronavirus on manufacturing and supply chain - Management reported no current impact from the coronavirus, with production ahead of the Chinese New Year [39] Question: Clarification on tariff impact exclusion - Management clarified that tariffs are called out as an item but not excluded from financials [41] Question: Gross margin benefit from moving production to Malaysia - Management indicated that while moving to Malaysia offsets U.S. tariffs, it incurs higher production costs [42] Question: Direct-to-consumer sales strategy - Management noted that direct-to-consumer sales generated over $20 million in Q4, indicating a growing strategy [47] Question: Cash balance and share repurchase plans - Management is assessing share repurchase options and considers M&A as part of future plans [49] Question: U.S. market dynamics and pricing strategy - Management observed strong performance in premium products while facing competition in lower price segments [70]

Financial Data and Key Metrics Changes - Revenue for Q3 2019 was $289 million, representing a 9% increase year-over-year, driven by strong international growth and a large shipment to Amazon [7][24] - Gross margin for Q3 was 47%, down 400 basis points year-over-year due to pricing and promotional activities, as well as tariff impacts [25][26] - Operating income for Q3 was $43 million, with an operating margin of 15%, up from 14% in the same quarter last year [26] - EPS for Q3 was $1.24, compared to $1.12 in the same quarter last year [26] Business Line Data and Key Metrics Changes - International revenue grew by 25%, with EMEA increasing by 27% and Japan by 40%, while U.S. revenue declined by 7% [9][24] - The Braava category is expected to surpass $100 million in annual revenue with at least 20% year-over-year growth [12] - The launch of the Roomba s9/s9+ and Braava jet m6 in EMEA contributed to the company's differentiation in the premium segment [10] Market Data and Key Metrics Changes - U.S. category growth has been subdued, with a 7% decline attributed to rising tariffs on Chinese imports [9][16] - The Asia-Pacific region, particularly Japan, experienced low double-digit revenue growth, driven by strong sell-through activity [11] - The company anticipates high single-digit growth in the U.S. and internationally for Q4 2019 [28] Company Strategy and Development Direction - The company is focusing on maintaining prices at pre-tariff levels to drive U.S. segment growth and protect market share [33] - iRobot is investing in software to differentiate its products and enhance user experience, aiming to make robots integral to smart home ecosystems [15][33] - The company is diversifying manufacturing outside of China, with plans to produce entry-level products in Malaysia starting in 2020 [19][35] Management's Comments on Operating Environment and Future Outlook - Management noted that U.S. market conditions remain challenging due to tariffs, but international growth dynamics are robust [22][32] - The company expects to deliver revenue and operating income at the lower end of revised 2019 financial targets, with EPS near the midpoint [22] - Management expressed optimism about future growth, citing strong demand and effective marketing strategies [58] Other Important Information - iRobot is actively pursuing an exemption from List 3 tariffs and has submitted an application for review [18] - The company has taken legal action against competitors for patent infringement to protect its innovations [20][21] - iRobot's inventory levels are expected to decline significantly by year-end, following a build-up in anticipation of the holiday season [27] Q&A Session Summary Question: Thoughts on producing more products outside of China and impact of tariffs - Management has a multilayer plan to mitigate tariff impacts, including pursuing exemptions and diversifying manufacturing to Malaysia [40][41] Question: U.S. market growth and inventory comfort - U.S. segment growth is expected to be in the low teens for the second half of the year, with inventory levels anticipated to normalize by year-end [45][46] Question: Consumer expectations and competitive positioning - Management believes there is significant opportunity to improve robot functionality and enhance consumer experience through reliable technology [47] Question: Resistance to higher prices and market share gains - iRobot gained market share in North America despite higher prices due to continued innovation and marketing efforts [50][51] Question: International growth expectations and macroeconomic concerns - Management remains confident in international growth, with EMEA conditions solid despite Brexit-related anxieties [54] Question: Update on Amazon seasonality and litigation impact - The company expects a similar sales pattern to previous years, with 70% of business done in Q3 [68][70]

iRobot Corporation (NASDAQ:IRBT) Q2 2019 Earnings Conference Call July 24, 2019 8:30 AM ET Company Participants Elise Caffrey - Investor Relations Andy Kramer - Investor Relations Colin Angle - Chairman & Chief Executive Officer Alison Dean - Chief Financial Officer Conference Call Participants Frank Camma - Sidoti Mike Cikos - Needham & Company Troy Jensen - Piper Jaffray Jed Dorsheimer - Canaccord Genuity Charlie Anderson - Dougherty & Company Ben Rose - Battle Road Research Asiya Merchant - Citigroup Mar ...

Financial Data and Key Metrics Changes - First quarter revenue grew 9% year-over-year, reaching $238 million, with operating income of $22 million compared to $25 million in Q1 2018 [12][14] - Full year 2019 revenue is expected to be between $1.28 billion and $1.31 billion, representing a year-over-year growth of 17% to 20% [7][16] - EPS for Q1 was $0.78, up from $0.71 in Q1 2018, with a net discrete tax benefit of $0.14 compared to $0.05 in the prior year [12][13] Performance by Business Line - The Roomba i7/i7+ was successfully launched in EMEA, Japan, and China, contributing to strong customer engagement and brand loyalty [8][9] - The Braava line is expected to maintain about 10% of revenue, with plans for increased investment in its development [46] Performance by Market - U.S. revenue grew 7%, while international revenue increased by 12%, with Japan showing a significant growth of 26% [9][14] - EMEA revenue also grew by 7%, driven by preparations for the Roomba i7/i7+ launch [10] Company Strategy and Industry Competition - The company aims to reinforce its core product leadership in the RVC category, expand its product portfolio, and diversify manufacturing outside of China [21] - The competitive landscape is shifting, with smaller players struggling, leading to consolidation in the market [53][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full year expectations, with a strong Q2 anticipated due to traditional promotional activities [32][67] - The company is focused on maintaining a gross margin of approximately 48% for the year, despite challenges from new product introductions and tariffs [14][72] Other Important Information - The company ended Q1 with $200 million in cash, up from $162 million at year-end, and inventory levels were elevated due to product transitions [15] - The launch of the autonomous lawnmower Terra is planned for later in the year, with a controlled rollout strategy [76] Q&A Session Summary Question: Impact of average gross selling prices - The increase in average selling prices was influenced by the mix of premium products like the i7 and tariffs [23][24] Question: Performance of Terra during soft launch - The soft launch of Terra has not yet begun but is on track for later in the year, starting in Germany [25][26] Question: Inventory stockpiling related to tariffs - Retailers had higher inventory levels as they exited 2018, which continued into Q1 [29][30] Question: Contribution from new products in Q2 - The impact from new products in Q2 is expected to be small, with more significant contributions anticipated in the second half of the year [34] Question: General and administrative expenses - There are no unusual expectations for general and administrative expenses for the rest of the year [36] Question: Manufacturing locations for new products - New products will primarily be manufactured in China, with some production moving outside of China for easier-to-build products [38][39] Question: Revenue from new products - Approximately 15% of revenue is expected to come from new products [40][41] Question: Gross margin expectations for new products - New products are expected to have lower margins initially, with improvements anticipated over time [79][80] Question: Timing for Terra's market rollout - The rollout is strategic to ensure proper customer feedback and performance tuning before scaling up distribution [76][77]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 29, 2018 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file no. 001-36414 | --- | --- | |--------------------------------------------------------------------------------|------------------------------------------| | | | ...