iRobot Corporation (NASDAQ:IRBT) reported sound second-quarter 2016 results. According to management, improved Home Robotics business drove the impressive quarterly performance.
The company’s quarterly diluted earnings of 17 cents per share comfortably surpassed the Zacks Consensus Estimate of 11 cents.
However, the bottom line plunged 29.2% from the year-ago level.
Inside the Headlines
During the quarter, revenues dipped 0.1% year over year to $148.7 million. However, the top line was slightly above the Zacks Consensus Estimate of $148 million.
iRobot’s gross margin for the quarter was 46.8%, down 30 basis points (bps) year over year.
The company’s second-quarter operating expenses increased 8.2% year over year to $63.8 million.
Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the quarter came in at $15.9 million compared with $17.8 million in the prior-year quarter.
Quarter in Detail
Consumer segment’s revenues during the quarter came in at $148.1 million, up 8.2% year over year.
Gross margin remained flat year over year at 51.1%. Units shipped totaled 674,000, up from 592,000 in the year-ago quarter.
On Apr 4, 2016, iRobot successfully completed the divestiture of its Defense & Security business to focus solely on its Home Robotics business.
Balance Sheet and Cash Flow
iRobot exited the second quarter with cash and cash equivalents of $138.5 million, down 23% year over year. Long-term liabilities were $7.4 million compared with $7.7 million at the end of 2015.
At the end of the quarter, iRobot generated net cash of $35.6 million from operating activities as against $11.6 million generated in the year-ago comparable period. Capital expenditure was $4.9 million compared with $5.5 million in the year-ago period.
Closing stock price of iRobot was $36.89 per share as of Jul 26, 2016. We expect the company’s quarterly results to boost investors’ confidence on the company, thereby leading to further stock price movement.
Outlook
iRobot anticipates earnings in the range of 40–45 cents and revenues in $155–$160 million band for the third quarter. The company has raised its full-year 2016 earnings and revenue guidance. Full-year earnings are now expected in the range of $1.26–$1.40 per share as against the previously estimated range of $1.20–$1.40 per share. Revenues for 2016 are expected in the range of $640-$645 million as against the previous projection of $630–$642 million.
The outlook has been revised upward after considering an approximate 14% revenue growth in Consumer segments’ business and increasing demand for Roomba 980 & 600 series robots as well as wet floor care robots of the Brava category. Also, the company’s strategic marketing programs and product portfolio diversification are expected to boost results in the upcoming quarters.
Zacks Rank and Stocks to Consider
iRobot currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Allegion Plc (NYSE:ALLE) , Illinois Tool Works Inc. (NYSE:ITW) and Luxfer Holdings PLC (NYSE:LXFR) . All the three stocks currently hold a Zacks Rank #2 (Buy).
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IROBOT CORP (IRBT): Free Stock Analysis Report
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