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iRobot Tops Q1 Earnings on Impressive Home Robots Sales - Analyst Blog

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iRobot Corporation IRBT reported better-than-expected results for first-quarter 2015, with year-over-year growth in revenues. Quarterly earnings came in at 16 cents per share, surpassing the Zacks Consensus Estimate of 11 cents by 45.5%. However, the bottom-line missed the year-ago tally of 18 cents by 11.11%.


Irobot Corporation - Earnings Surprise | FindTheCompany

 

Inside the Headlines

Revenues improved approximately 3.3% year over year to $118.0 million and also exceeded the Zacks Consensus Estimate of $166 million by 1.7%. The improvement was driven by higher demand experienced by the company’s Home Robot division, which recorded significant revenue growth in the Chinese and EMEA (Europe, the Middle East and Africa) markets.

iRobot’s total gross margin for the quarter stood at 45.5%, up 20 basis points year over year, driven by margin expansion at Home Robots’ segment.

The company’s first-quarter 2015 operating expenses rose 4.8% year over year to $45.8 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter came in at $13.1 million, compared with $14.2 million in the prior-year quarter.

Q1 Segment Details

The Home Robots segment generated revenues of $111.1 million, up 2.8% year over year, on the back of healthy international trade. Although domestic sales fell nearly 1% year over year, international revenues grew 5.2%.

Increased sales of the popular Roomba 800 robots in Chinese and EMEA markets drove the year-over-year improvement in the segment’s foreign sales. Gross margin increased 70 basis points (bps) year over year to 51.1%. Units shipped in the quarter increased 5.6% year over year to 491,000.

Defense & Security revenues totaled $6.5 million, compared with $5.6 million in the year-ago quarter. Almost 70% of the segmental revenues were accrued from sales of spares and support. However, the segment’s gross margin declined 400 bps year over year to 33.2% from 37.2%. Units shipped totaled 28,000 as against 38,000 shipped in the year-ago quarter.

Balance Sheet and Cash Flow

Exiting the first-quarter, iRobot had cash and cash equivalents of $183.7 million, down 1.2% from the value recorded on Dec 27, 2014. Long-term liabilities stood at $3.8 million, up from $3.7 million in the prior-year quarter.

In the first three months of 2015, iRobot generated net cash worth $7.7 million from operating activities, versus $7.8 million cash used in the year-ago comparable period. Capital expenditure stood at $4.4 million versus $2.2 million recorded in the year-ago period.

Outlook

Concurrent with impressive first-quarter results, iRobot also announced the launch of its Ava 500 robots in the Boston Fidelity Investments FCAT center.

iRobot claimed to experience steady growth in business since the beginning of 2015, backed by macroeconomic tailwinds. The company expects economic growth in U.S. and China to augment its Home Robots segment’s revenues by 11–13% at the end of 2015. In order to reap greater benefits, iRobot has also planned certain new investments for the segment. The company aims to generate better margins in the upcoming quarters, aided by effective marketing programs and support from international partners.

For second-quarter 2015, iRobot expects revenues within $143–$146 million and earnings in the range of 2–6 cents per share. Also, the company’s adjusted EBITDA for the second quarter is projected to come within $8–$10 million.
    
For full-year 2015, iRobot expects earnings per share in the range of $1.25–$1.35, instead of the previous projection of $1.25–$1.45. However, the company maintained its revenue guidance within $625–$635 million (on the strength on Home Robot growth), while predicting adjusted EBITDA in a band of $85–$90 million.   

Stocks to Consider

With a market capitalization of $985.41 million, iRobot currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Amira Nature Foods Ltd. ANFI, HollySys Automation Technologies, Ltd. HOLI and Adecoagro S.A. AGRO. While Amira Nature Foods Ltd. sports a Zacks Rank #1 (Strong Buy), both HollySys Automation Technologies, Ltd. and Adecoagro S.A. carry a Zacks Rank #2 (Buy).


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