It's Halloween season, folks, so forgive me if I take liberties with today's column title. Fact is, the "Seaglider" underwater robot program is alive and well at iRobot
It wasn't all that long ago, if you recall, that iRobot really was a company numbered among the walking-dead. Its cash was dwindling, inventories of unsold goods soaring, and free cash flow numbers accordingly abysmal. And then, "a miracle happened." Simultaneously, iRobot discovered a growth area in the field of robotic submarines, snapping up tiny pond-probe pioneer Nekton Research for a song -- and got serious about improving the rest of its business as well.
New CFO John Leahy promised to "improve working capital management," to reduce operating costs, and improve quality so as to waste less money on needless warranty repairs. Then he actually began delivering on his promises. Inventories shrank. Sales soared. Free cash flow came a-gusher.
See Jack run, sea iRobot glide
And speaking of cash, iRobot is making more of it this week. On Monday, the Naval Oceanographic Office (NAVOCEANO) announced it's buying $920,000 worth of Seagliders from iRobot, and paying an additional $900,000 to upgrade and service the existing Seaglider fleet over the next three years.
While the exact size of this fleet is not known, we do know NAVOCEANO has at least four units in stock -- suggesting annual revenues for their upkeep could be as high as $75,000 apiece. With orders for 30 of its Seagliders worldwide, therefore, total annual revenue from this kind of work could reach as high as $2.25 million annually (if iRobot were to win all contracts to service all Seagliders it sells, and if they all paid this rate.) A lot of "ifs," I admit. But this gives us at least an idea of the "ceiling" on this particular revenue stream.
Meanwhile, there's still an underwater oil "plume" that needs tracking from this summer's Gulf oil spill. No telling how long BP