TASER Q3 Revenues Up 18% to $28.8 Million
$9.9 Million Cash From Operations & $5.3 million Operating Income
SCOTTSDALE, Ariz., October 26, 2012 — TASER International, Inc. (NASDAQ: TASR), today announced financial results for the third quarter of 2012 ended September 30, 2012.
Financial Summary:
• Net sales were $28.8 million in the quarter, an increase of $4.4 million or 18.0% compared to third quarter 2011 sales of $24.4 million. The increase in sales versus the prior year was primarily driven by the extended upgrade program for the TASER® X2™ Electronic Control Device (ECD).
• Revenues in the ECD business segment sequentially remained flat with the current quarter at $27.1 million in the third quarter of 2012. In comparison to the third quarter of 2011, revenues grew 15.9% in the third quarter of 2012.
• Revenues in the video business segment increased 30.8% sequentially, from $1.3 million in the second quarter of 2012 to $1.7 million in the third quarter of 2012. In comparison to the third quarter of 2011, revenues grew 65.2% in the third quarter of 2012. AXON Flex™ on-officer cameras and EVIDENCE.com bookings continued to grow with bookings doubling sequentially from the second quarter of 2012 to the third quarter of 2012.
• Gross margin in the third quarter of 2012 was 58.4%, compared to 53.7% in the same period last year. The improvement in gross margin was driven by the increase in sales and the realization of ongoing operational improvements and manufacturing efficiencies.
• Operating income of $5.3 million benefited from the increased gross margins as well as lower R&D expenses versus the prior year. This was a significant increase from operating income in the third quarter of 2011 of $1.2 million.
• Sales, general and administrative (SG&A) expenses of $9.5 million in the third quarter of 2012 increased 13.1% sequentially, from $8.4 million the second quarter of 2012. This increase was partially a result of higher variable selling expenses, including distributor overages, which resulted from increased direct sales and internet marketing initiatives.
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The third quarter results also included discrete one-time expenses of $190,000 for additional stock compensation, severance and the costs associated with closing a remote facility. Personnel costs also increased sequentially as a result of annual salary merit increases and the payroll for additional strategic hires.
• Research and development (R&D) expenses decreased $0.4 million to $2.0 million in the third quarter of 2012 when compared to the third quarter of 2011. The decrease was primarily attributable to the continued reduction in professional and consulting fees.
• Adjusted operating income, which excludes the impact of stock-based compensation charges, depreciation and amortization and one-time litigation judgment expenses, was $7.8 million for the third quarter of 2012, a significant increase from an adjusted operating income of $4.0 million in the third quarter of 2011. GAAP income from operations was $5.3 million for the quarter, compared to income from operations of approximately $1.2 million for the third quarter of 2011.
• Income taxes for the third quarter of 2012 were $1.6 million. The Company benefited from non-recurring adjustments relating to a return to provision adjustment and a rate differential true-up totaling approximately $0.5 million. The Company expects its annual effective tax rate to be approximately 40% for 2012.
• Net income for the third quarter of 2012 was $3.7 million, or $0.07 per share on a basic and diluted basis.
• In the third quarter of 2012, the Company generated $9.9 million in cash from operating activities. The Company generated $23.3 million in cash from operating activities in the first nine months of 2012.
• Cash, cash equivalents and investments were $29.1 million at the end of the third quarter of 2012, after executing $3.9 million of stock repurchases during the quarter. The Company has no debt recorded on its balance sheet.
“We are encouraged by the growing momentum in our business as the X2 ECD continues to gain market traction and the installed based continues to transition to the X2,” commented Rick Smith, CEO of TASER International, Inc. “The Company also saw growth in the number of agencies embracing on-officer recording systems through sales of AXON Flex on-officer cameras and EVIDENCE.com service. Sequential bookings doubled this quarter and there is growing awareness in the marketplace about the value-add of these products. As a whole, these initiatives drove an 18% year-over-year growth in our top-line results.”
“Therefore, we have started to prudently reinvest into the business to fund future growth as evidenced by the uptick in SG&A expenses. We will look to tie this reinvestment directly with the sales and booking trends that we see in the future. We also continue to focus on creating a culture of operational excellence which has helped the Company deliver a third consecutive quarter of strong operational results, including significant cash generations of $9.9 million in the third quarter. We remain well positioned to deliver on the execution of our strategy to continue to generate significant operating cash flows, and to drive profitable growth and value for all of our stakeholders,” concluded Smith.
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Other Significant Events:
• In the third quarter, the Company continued to see adoption of the new X2 ECD platform by agencies through its extended upgrade program. The Company announced a number of significant orders that occurred during the third quarter, which included:
• The Pima County Sheriff’s Office (AZ) purchased 600 X2 ECDs.
• The Colorado Springs Police (CO) purchased 525 X2 ECDs.
• The Indian River County Sheriff’s Department (FL) purchased 249 X2 ECDs.
• The Orange County Sheriff’s Office (FL) purchased 400 X2 ECDs.
• The Miami-Dade Police Department (FL) purchased 200 X2 ECDs.
• The Company continued to see new agencies adopting the new TASER AXON Flex on-officer camera and EVIDENCE.com management service during the third quarter including:
• The Pittsburgh Bureau of Police (PA) ordered 50 AXON Flex cameras with three full years of EVIDENCE.com.
• The Chesapeake Police Department (MD) deployed 125 AXON Flex cameras with five years of EVIDENCE.COM.
• The Hartford Police Department (CT) deployed 42 AXON Flex systems with one year of EVIDENCE.com.
• The Topeka Police Department (KS) deployed 30 AXON Flex systems with three years of EVIDENCE.com.
• The Wentzville Police Department (MO) deployed 30 AXON Flex systems with one year of EVIDENCE.com.
• As previously announced, on April 25, 2012, the Board of Directors of TASER authorized a new share repurchase program for up to $20.0 million of its common stock, reflecting the Company’s strong balance sheet and operating cash flow generation. As of September 30, 2012, the Company completed the program through the aggregate repurchase of 6.8% of shares outstanding totaling 3,807,606 shares of stock costing approximately $20.0 million. This was done at an average price of roughly $5.22 per share. In the past twenty-one months, the Company has repurchased a total of 11,272,189 shares or 18.7% of the total shares outstanding at the start of the buyback programs. At September 30, 2012, the Company had 52,331,988 shares outstanding.
The Company will host its third quarter 2012 earnings conference call on Friday, October 26, 2012 at 11:00 a.m. ET
https://www.sec.gov/Archives/edgar/data/1069183/000119312512436545/d430272dex991.htm
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