iRobot Corporation ( IRBT ) reported in-line earnings and improved year over year revenues for the second quarter of 2014. Adjusted earnings came in at 21 cents per share, in-line with the year-ago quarter and the Zacks Consensus Estimate.
In second-quarter 2014, including the 7 cents benefit resulting from the release of valuation allowance, earnings were 28 cents per share, in-line with the year-ago earnings.
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Revenues improved roughly 7.2% year over year to $139.8 million, a tad lower than the Zacks Consensus Estimate of $143.0 million. The year-over-year increase was driven by improved demand in the Home Robots segment.
Gross margin was 44.4%, down 290 basis points (bps) compared with 47.3% in the year-ago quarter. Operating expenses decreased 2.3% year over year to $52.4 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $16.2 million, compared with $17.0 million in the prior-year quarter.
The Home Robots segment generated revenues of $133.2 million, up 15.3% year over year on the back of healthy performances in domestic as well as overseas markets. The segment's gross margin declined 270 bps year over year to 48.8%. Units shipped in the quarter increased 14.8% year over year to 565,000.
The Defense & Security segment's revenues were recorded at $5.1 million, compared with $12.5 million in the year-ago quarter. The segment's gross margin dropped to 36.7% from 47.5% in the year-ago quarter.
Balance Sheet/Cash Flow
Exiting the second quarter, iRobot had cash and cash equivalents of $147.7 million, compared with $154.8 million in the preceding quarter. Long-term debts stood at $4.3 million, down from $4.4 million in the previous quarter.
In the six months ended Jun 28, iRobot used cash of $7.8 million for operating activities, against a cash generation of $8.2 million in the year-ago comparable period. Capital expenditure was recorded at $5.5 million versus $2.8 million in the first half of 2013.
Management expects Home Robots segment to continue generating higher revenues. In third-quarter 2014, revenues are expected in the range of $133.0-$136.0 million, with earnings per share in the 32-35 cents range. Adjusted EBITDA is expected in the range of $21.0 to $23.0 million.
iRobot has reduced its guidance for 2014, with revenues presently expected within $555.0- $565.0 million, from the previous projection of $560.0 to $570.0 million. Management anticipates earnings per share in the range of $1.10???$1.20, revised from the prior range of $1.00-$1.15. The company also reiterated adjusted EBITDA in the range of $74.0-$78.0 million.
For 2014, expected revenue generation from the Home Robots segment is increased to a range of $505.0- $515.0 million from the previous range of $500.0- $515.0 million. However, revenue from Defense & Security Robots segment is lowered to $45.0 million from previously expected $50.0 million.
Other Stocks to Consider
With a market capitalization of $1.1 billion, iRobot holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include HollySys Automation Technologies, Ltd. ( HOLI ), Rockwell Automation Inc. ( ROK ) and Dover Corporation ( DOV ). While HollySys Automation Technologies sports a Zacks Rank #1 (Strong Buy), Rockwell Automation and Dover Corp. hold a Zacks Rank #2 (Buy).
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