"What price glory?"
In his recent Q&A session with Wall Street analysts, iRobot
iRobot announced a pair of contracts with the U.S. Army on Thursday. The first award, for $6.3 million, is part of a $64 million indefinite delivery, indefinite quantity (IDIQ) contract to supply PackBots. From the press release, it appears that iRobot will have completed $52 million of the planned work, and management predicts it will deliver on the remaining $12 million before October (i.e., in the third quarter).
The xBot cometh
But it's the other contract that I want to talk about today -- the second installment on iRobot's 3,000-unit, $286 million, IDIQ contract to provide "xBots" to the U.S. Army. (xBot, by the way, does not refer to a new kind of robot. Rather, it is a generic name for the PackBot 510 with FasTac kit.) With 101 xBots already trundling around the Mideast, de-boom-izing things that go boom, the military is now ready to hit the start button on another batch of 200. iRobot's take on this installment: $16 million.
Fifth-grade math will suffice to tell you that this contract pegs the price of each xBot at just $80,000. And yet, according to iRobot, it has already delivered 101 xBots and booked $11 million in revenue thereon -- meaning those xBots fetched nearly $109,000 each. Talk about a "price break"!
But here's the good news. The entire xBot deal is worth $286 million. Subtract out the $27 million already booked, and divide the result by the 2,699 xBots still to be delivered, and we're back up to an average price of nearly $96,000 per unit going forward.
For reasons unexplained, iRobot's second batch of 200 robots sells for a significant discount to the first batch. These robots are due for delivery by Oct. 31, which is one month into iRobot's fiscal fourth quarter. All other things being equal -- or, in other words, ignoring the effect of other military sales such as the iRobot-Boeing
Farther out, though, future xBot deliveries promise to fetch higher prices (again, for reasons unexplained), and accordingly, better margins.
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