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iRobot (IRBT) Q2 Loss Narrower Than Expected, Revenues Lag

iRobot Corporation IRBT reported disappointing second-quarter 2022 results.

IRBT’s adjusted loss in the reported quarter was 65 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.87. However, the quarterly loss came against earnings of 4 cents per share recorded a year ago.

Revenue Details

iRobot generated revenues of $255 million in the reported quarter, lagging the Zacks Consensus Estimate of $305 million by 16.3%. On a year-over-year basis, revenues decreased 30.1% as the metric declined in the United States, Japan and the EMEA region from the prior-year quarter’s reading.

Sales derived from premium and mid-tier robots accounted for 83% of IRBT’s total robot revenues, higher than 82% in the year-ago quarter.

Sales generated from the e-commerce platform (representing 62% of the reported quarter’s revenues) decreased 35% year over year. The e-commerce platform includes online sources of retailers, IRBT’s app and website, and e-commerce websites. Direct sales to consumers were up 12% year over year to $40 million.

Total product units of 864 thousand shipped in the quarter reflected a year-over-year decrease of 34.2%, while average selling prices grew 1.8%. For vacuum products, revenues of $225 million reflected a decline of 30.3% from the year-ago quarter’s figure. Units shipped were 766 thousand, down 33.2% from the year-ago quarter’s level. Revenues from mopping products decreased 30.2% to $30 million. Units shipped were 99 thousand, down from 168 thousand recorded in the year-ago quarter.

On a regional basis, iRobot sourced 54.6% of revenues from domestic operations and the rest came from the international arena. Domestic revenues totaled $139.4 million, reflecting a 29.2% decline from the year-ago quarter’s level. International revenues declined 31.2% to $116 million.

Margin Profile

In the quarter under review, iRobot’s cost of revenues increased 23% to $174.4 million, representing 68.3% of revenues compared with 62% in the year-ago quarter. Non-GAAP gross profit was $82.9 million, down 40.6% year over year, while the adjusted gross margin decreased 570 basis points to 32.5%.

Research and development expenses were $41.9 million, up 8.3% year over year. This accounted for 16.4% of revenues compared with 10.6% in the year-ago quarter. Selling and marketing expenses increased 0.9% to $76 million. As a percentage of revenues, it was 29.8% for the reported quarter compared with 21% in the prior-year period. General and administrative expenses were $26.4 million, up 0.4% year over year. The figure mirrored 10.3% of the total revenue base compared with 7.2% in the year-earlier quarter.

In the second quarter, iRobot recorded an adjusted operating loss of $63.9 million compared with the operating loss of $3 million in the year-ago period. Adjusted operating margin was (25%) versus (0.8%) in the year-ago quarter.

Balance Sheet and Cash Flow

While exiting second-quarter 2022, iRobot had cash and cash equivalents of $63.4 million, decreasing 68.5% from $201.5 million recorded at the end of fourth-quarter 2021. Total long-term liabilities were $61.1 million, down 15% from the figure recorded at the end of fourth-quarter 2021.

In the first six months of 2022, iRobot used net cash of $186.5 million for operating activities against net cash of $1.8 million generated in the previous-year’s period. Capital used for purchasing property and equipment totaled $4.9 million, decreasing 77.6%.

Zacks Rank & Stocks to Consider

IRBT currently has a Zacks Rank #3 (Hold). Some better-ranked companies from the industrial products sector are discussed below:

Greif, Inc. GEF presently sports a Zacks Rank #1. GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

GEF’s earnings estimates have increased 8.2% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 25.2% in the past six months.

Titan International, Inc. TWI presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 47%, on average.

In the past 60 days, TWI’s earnings estimates have increased 39.5% for 2022. The stock has surged 37.4% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank #2 (Buy). VMI’s earnings surprise in the last four quarters was 13.7%, on average.

In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 26.1% in the past six months.

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