iRobot Corporation (IRBT) reported strong fourth-quarter 2014 results, with healthy growth in year-over-year earnings and revenues. Quarterly earnings came in at 31 cents per share, which surpassed the Zacks Consensus Estimate by a penny and comfortably exceeded the year-ago quarter's tally of 11 cents per share.
For 2014, adjusted earnings rocketed 33% year over year to $1.25 per share from 94 cents.
Inside the Headlines
Revenues improved approximately 26.1% year over year to $159.3 million, but missed the Zacks Consensus Estimate of $165 million by 3.5%. Total revenue for 2014 came in at $556.8 million, climbing 14.2% from the year-ago tally.
Both quarterly and yearly revenues were driven by improved demand in the company’s Home Robot division that recorded significant revenues growth.
iRobot’s total gross margin rose a nominal 2.8% year over year for the fourth quarter, due to significant fall in Defense & Security segment’s gross margin. On the other hand, at the end of twelve months of 2014, the company’s gross margin stood at 46.3%, up 90 bps from the year-ago tally.
The company’s fourth-quarter 2014 operating expenses grew 17.2% year over year to $63.6 million. Operating expenses for full year 2014 stood at $204.9 million versus $188.5 million accrued in 2013.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter came in at $19.7 million, compared with $12.8 million in the prior-year quarter. For full year 2014, the same was $79.8 million, up 28.3% year over year.
Q4 Segment Details
The Home Robots segment generated revenues of $134.1 million, up 23.9% year over year, on the back of healthy performance in domestic as well as overseas markets. While domestic revenues experienced a rise of 20.7%, international revenues grew 26.4%. The segment’s gross margin increased 260 basis points (bps) year over year to 52.2%. Units shipped in the quarter increased 15.6% year over year to 571,000.
The Defense & Security segment’s revenues were $24.1 million, compared with $16.3 million in the year-ago quarter. The segment’s gross margin plummeted 1,200 bps year over year to 47.4% from 59.4%. Units shipped totaled 135,000 compared to 49,000 shipped in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting the year, iRobot had cash and cash equivalents of $186.0 million, up from $165.4 million in the prior-year quarter. Long-term liabilities stood at $3.7 million, down from $4.7 million in the year-ago quarter.
In 2014, iRobot generated net cash worth $40.6 million from operating activities, versus $41.9 million in the year-ago comparable period. Capital expenditure was recorded at $13.8 million versus $6.8 million at the end of 2013.
Outlook
In 2015, iRobot expects to earn earnings per share in the band of $1.25–$1.45 and revenues in the range of $625–$635 million . Further, in order to enhance its non-imitable robotic technological know-how, the company has planned to make certain strategic investments for research and development purposes.
iRobot expects to improve its financial strength significantly in 2015, on the back of its Home Robot segment. However, the company anticipates currency devaluations headwinds to bother its financials in the upcoming quarters.
Other Stocks to Consider
With a market capitalization of $944.67 million, iRobot carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Adept Technology Inc. (ADEP), HollySys Automation Technologies, Ltd. (HOLI) and Bona Film Group Limited (BONA). All the three stocks hold a Zacks Rank #2 (Buy).
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