Wednesday, October 26, 2011

IRobot reports strong growth, but plans workforce cut

By James M. Connolly

Home and government robot maker iRobot Corp. (Nasdaq: IRBT) last night reported quarterly financial results that “far exceeded” expectations, and raised its projections for full-year results for the second time in 2011.

However, while the company’s home robot business is booming, projected federal government cutbacks in military R&D spending mean iRobot will conduct a reduction in force within the government robots business unit. In a conference call with analysts this morning, CEO Colin Angle said the workforce reduction – which impacts 55 full-time employees, about 8 percent of staff, in company offices in Bedford, North Carolina and California – will result in a $1 million charge. He emphasized that the cutback won’t impact the home robots business unit.

Third quarter revenue grew 28 percent over the third quarter of 2010 to $120.4 million. For the first nine months of 2011, iRobot reported that revenue is up 17 percent to $334.7 million. Net income for the quarter was $14.1 million, double the number for the same quarter in 2010, while income for the first nine months was $29.6 million, up from $18.5 million in 2010.

Raising its expectations for the full year. iRobot set a revenue goal of $465 million to $470 million, up $5 million from its previous expectations. Full-year earnings per share are now expected to be $1.32 to $1.36, up from $1.04 to $1.10.

The home robot business grew 32 percent in the quarter — with 56 percent growth outside the U.S. — which exceeded expectations, according to Angle. He said government business grew 12 percent, which was inline with expectations.

Angle said he expects a strong fourth quarter, partially due to the recent retail store availability of the new Model 700 Roomba home robot.

Angle cited recent multi-year government awards for military robots, and addressed the loss of a government subcontract with The Boeing Co. for SUGV robots. He said iRobot has been encouraging the U.S. Department of Defense to reinstate that deal.

He said the fact that the government is still budgeted under the continuing resolution and that all government spending is under review by the congressional supercommittee led to plans to cut back on external R&D in the military business.