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TASER Reports $32.2 Million Revenue and $0.08 EPS

TASER International, Inc. headquarters in Scottsdale, AZ. The use of TASER CEWs and Smart Weapons have saved more than 110,000 lives from potential death or serious injury. Photo courtesy of TASER International, Scottsdale, Arizona USA. Click here for high-resolution version

SCOTTSDALE, AZ--(Marketwired - Jul 31, 2013) - TASER International, Inc. ( NASDAQ : TASR ), today announced financial results for the second quarter of 2013 ended June 30, 2013.

Financial Summary:

  • Net sales were $32.2 million in the quarter, an increase of $4.0 million, or 14.0%, compared to second quarter 2012 sales of $28.2 million. Driving the increase in sales was the upgrade by numerous law enforcement agencies to the new TASER® X26P™ Smart Weapon. These upgrades, as well as restocking orders from distributors, also resulted in higher cartridge sales in comparison to the second quarter of 2012.

  • Conducted Electrical Weapon (CEW) segment revenues grew $3.3 million, or 12.4%, to $30.3 million in the second quarter of 2013, compared to second quarter 2012 revenues of $26.9 million.

  • Video segment revenues increased by $0.6 million year-over-year, or 47.4%, to $1.9 million in the second quarter of 2013. Loss from operations in the Video segment increased from $2.5 million in the second quarter of 2012 to $2.7 million in the second quarter of 2013. Reduced cost of services delivered in the 2013 quarter, primarily due to the migration to third-party cloud storage, were more than offset by higher personnel and support to grow the Video segment in the current-year quarter, as compared to the second quarter of 2012.

  • Gross margin in the second quarter of 2013 was 61.4%, compared to 58.5% in the same period last year. The improvement in gross margin in the second quarter of 2013 was primarily driven by the 14.0% increase in sales which resulted in leverage of overhead expense. Gross margin also continues to benefit from the Company's decision to utilize third party cloud services in its Video segment.

  • Sales, general and administrative (SG&A) expenses of $10.9 million in the second quarter of 2013 increased 30.2%, from $8.4 million in the second quarter of 2012. As a percentage of revenue, SG&A was 34.0% in the second quarter 2013 compared to 29.8% in the prior year. Personnel expenses increased $1.3 million year-over-year due to the Company's strategic effort to enhance its front-end, customer facing capabilities in roles such as account management and telesales, in addition to some incremental administrative functions. Expenses related to the defense of product and commercial litigation increased $0.7 million compared to the second quarter of 2012. To support our initiatives internationally and in the video market, there were higher selling and marketing expenses of approximately $0.4 million that contributed to the increase in SG&A.

  • Research and development (R&D) expenses of $2.0 million for the second quarter of 2013 are consistent with the prior-year and previous quarters.

  • Income from operations increased $0.8 million, or 12.4%, to $6.8 million in the second quarter of 2013 compared to the second quarter of 2012.

  • Adjusted EBITDA was $9.5 million for the second quarter of 2013, an increase from Adjusted EBITDA of $8.5 million in the second quarter of 2012. The increase is due to increased sales and margins. 

  • Net income for the second quarter of 2013 was $4.5 million, or $0.09 per basic share and $0.08 per diluted share. 

  • In the second quarter of 2013, the Company generated $7.7 million in cash from operating activities. Cash, cash equivalents and investments were $31.7 million at the end of the second quarter of 2013, down from $37.8 million at December 31, 2012. The Company completed $19.6 million of stock repurchases during the quarter, and received $3.7 million in cash related to the exercise of stock options.

  • The Company has no debt, other than a capital lease, recorded on its balance sheet.

"Our second quarter represents TASER's highest revenue in the past two and a half years, and the second highest quarterly revenue in TASER's history," said Rick Smith, CEO of TASER International, Inc. "The new X26P Smart Weapon continues to be well received by our customers, accounting for 28.6% of law enforcement CEW unit sales in its first full quarter of availability. We see this, coupled with the increasing number of customers upgrading their aging weapons fleet, as evidence of the strength of the CEW platform that we have built over the last two years. We expect to continue to see growth across our new SMART CEW products going forward as we've still only upgraded a small fraction of the legacy product at this stage."

"Sales bookings for the AXON flex™ on-officer cameras and the EVIDENCE.com service more than tripled during the second quarter of 2013 compared to the same quarter in the prior year and grew by over 47% compared to the first quarter of 2013. We continue to work towards expanding our customer base in the Video segment. Given the product's growing momentum, we will continue to prudently invest in the business to strengthen our sales force and infrastructure to execute our strategy and drive profitable growth and value for our stakeholders," concluded Smith. 

Other Significant Events:

  • The Company announced a number of significant orders for its Smart Weapons, the new TASER X26P and the TASER X2 that occurred during the second quarter, including:
    • Charles County Sheriff's Office (MD) purchased 166 X2s
    • Columbus Police Department (OH) purchased 62 X26Ps and 8 X2s
    • Durham Police Department (NC) purchased 55 X2s
    • El Dorado County Sheriff's Office (CA) purchased 78 X2s with 50 TASER CAM HD recorders
    • Grand Junction Police Department (CO) purchased 69 X26Ps
    • Kansas Highway Patrol (KS) purchased 386 X26Ps
    • Kern County Sheriff's Office (CA) purchased 210 X26Ps and 60 X2s
    • Louisiana State Police (LA) purchased 943 X2s
    • Major U.S. law enforcement agency purchased 100  X26Ps
    • Major U.S. law enforcement agency purchased 700 X26Es
    • Manatee County Sheriff's Office (FL) purchased 200 X26Ps
    • Metropolitan Nashville Police Department (TN) purchased 400 X26Ps
    • Oakland Police Department (CA) purchased 170 X26Ps
    • Oregon Department of Corrections (OR) purchased 40 X26Ps with 40 TASER CAM HD recorders
    • Oregon State Police (OR) purchased 38 X2s
    • San Diego County Sheriff's Department (CA) purchased 1,200 X2s
    • Sarasota Police Department (FL) purchased 100 X2s
    • Toledo Police Department (OH) purchased 100 X2s
    • Washington State Patrol (WA) purchased 218 X26Ps
    • West Palm Beach Police (FL) purchased 150 X2s

  • The Company continued to see new agencies adopt the new AXON Flex on-officer camera and EVIDENCE.com management service during the second quarter. AXON Flex and EVIDENCE.com deployments included significant orders from:
    • Chesapeake Police Department
    • Oglala Sioux Tribe Department of Public Safety
    • LaPlata County Sheriff's Office
    • Truckee Police Department

  • The Company also announced plans to take questions relating to the second quarter results via social media. For the first time, TASER management will entertain questions during the call asked via Twitter, in addition to questions from those logged into the webcast. Individuals may submit questions via Twitter using hashtag #TASR_Earnings to the @TASER_IR handle. TASER management regrets that due to time considerations, not all questions may be answered during the call.

The Company will host its second quarter 2013 earnings conference call on Wednesday, July 31, 2013 at 11:00 am ET. To join the live audio presentation, please dial toll free at (877) 303-9126, or for international callers, please dial (253) 237-1156. The pass code is 14532186.

Non-GAAP Measures

To supplement the Company's financial results presented in accordance with GAAP, we are presenting the non-GAAP financial measures of EBITDA and Adjusted EBITDA. Our management uses these non-GAAP financial measures in evaluating the Company's performance in comparison to prior periods and as a measure of liquidity. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented at the end of the release.

EBITDA is defined as consolidated net income (loss) before interest expense, income taxes and depreciation and amortization. Adjusted EBITDA as presented herein is defined as EBITDA before certain other items, including: stock-based compensation; loss on write-down/disposal of property, equipment and intangibles, net; provision for obsolete and excess inventory; litigation judgment (reversal) expense; loss on impairment; and interest income and other (income) expense.

Caution on Use of Non-GAAP Measures

These non-GAAP financial measures are not consistent with GAAP, and management believes investors will benefit by referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

  • these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company's GAAP financial measures;

  • these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company's GAAP financial measures;

  • these non-GAAP financial measures should not be considered to be superior to the Company's GAAP financial measures; and

  • these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

Further, these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure or measures appears within this press release.

About TASER International, Inc.

TASER International, Inc. ( NASDAQ : TASR ) is a global provider of safety technologies that protect life and prevent conflict. More than 16,000 public safety agencies in 100 countries rely on TASER® conducted electrical weapons and AXON on-officer camera systems to help protect and serve. Today, the use of TASER CEWs has saved more than 110,000 lives from potential death or serious injury while TASER innovations benefit individuals and families too, providing personal protection and accountability while maintaining regard for life. Since 1994, more than 251,000 individuals have relied on TASER technology as a means for effective personal safety. Learn more about TASER International and its solutions at www.TASER.com and www.EVIDENCE.com or by calling (800) 978-2737. Be a part of the TASER community by joining us on Facebook, LinkedIn, Twitter, and YouTube.

TASER® is a registered trademark of TASER International, Inc., registered in the U.S. All rights reserved. TASER logo, AXON, AXON Flex, TASER CAM HD, X26, X26P and X2 are trademarks of TASER International, Inc.

Note to Investors

To review the TASER International Safe Harbor Statement, please visit: investor.taser.com/safeHarbor.cfm.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, beliefs, intentions or strategies regarding the future; that we expect to see upgrades to our CEW platform going forward; that we will expand our customer base in the Video segment; and that we are well positioned to execute our strategy. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. The forward-looking information is based upon current information and expectations regarding TASER International, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements herein.

TASER International assumes no obligation to update the information contained in this press release. These statements are qualified by important factors that could cause our actual results to differ materially from those reflected by the forward-looking statements. Such factors include, but are not limited to: market acceptance of our products; our dependence on sales of our TASER X26, X26P and X2 CEWs; the acceptance of our EVIDENCE.com software model; our ability to design, introduce and sell new products; delays in development schedules; rapid technological change and competition; product defects; breach of our security measures resulting in unauthorized access to customer data; outages and disruptions relating to our EVIDENCE.com service; budgetary and political constraints of prospects and customers; the length of our sales cycle and our ability to realize benefits from our marketing and selling efforts; litigation risks resulting from alleged product-related injuries and media publicity concerning allegations of deaths occurring after use of the TASER device and the negative impact this publicity could have on sales; the outcome of pending or future litigation; our ability to protect our intellectual property; intellectual property infringement claims and relating litigation costs; competition in foreign countries relating to foreign patents; our successful identification of existing intellectual property rights that might infringe on our developments; risks of governmental regulations, including regulations of our products by the United States Consumer Product Safety Commission, regulation of our products as a "crime control" product by the Federal government, state and local government regulation and foreign regulation; the adverse effects that could result from our products being classified as firearms by the United States Bureau of Alcohol and Firearms; our compliance with regulations governing the environment, including but not limited to, regulations within the European Union; new regulations relating to conflict minerals; our dependence on third party suppliers for key components of our products; component shortages, including our dependence on foreign suppliers for key components; rising costs of raw materials and transportation relating to petroleum prices; our ability to manage our growth; our ability to increase manufacturing production to meet demand; establishment and expansion of our direct and indirect distribution channels; our ability to pursue sales directly with customers; risks relating to acquisitions and joint ventures; catastrophic events; fluctuations in quarterly operating results; foreign currency fluctuations; counterparty risks relating to cash balances held in excess of FDIC insurance limits; employee retention risks and other factors identified in documents filed by us with the Securities and Exchange Commission, including those set forth in our Form 10-K.

Please visit http://investor.taser.com, http://blog.taser.com, www.twitter.com/taser_ir, www.twitter.com/officialtaser and www.facebook.com/taser where TASER discloses information from time to time about the company, its financial information, and its business.

For investor relations information please contact Erin Curtis by phone at (480) 515-6330 or via email at IR@TASER.com, or Dan Behrendt, Chief Financial Officer of TASER International, Inc., (480) 905-2002.

                     
TASER International, Inc.  
Consolidated Statements of Operations  
(Unaudited)  
                     
             
    Three Months Ended June 30,   Six Months Ended June 30,  
    2013   2012   2013     2012  
                             
Net sales   $ 32,175,797   $ 28,222,443   $ 62,609,449     $ 53,863,835  
Cost of products sold and services delivered     12,433,434     11,720,070     24,416,082       22,120,203  
Gross margin     19,742,363     16,502,373     38,193,367       31,743,632  
                             
Sales, general and administrative expenses     10,940,085     8,404,611     22,122,025       17,258,633  
Research and development expenses     1,992,064     2,038,830     4,004,620       4,171,050  
Litigation judgment recovery     -     -     -       (2,200,000 )
                             
Income from operations     6,810,214     6,058,932     12,066,722       12,513,949  
                             
Interest and other income (expense), net     18,677     7,133     (4,084 )     14,127  
                             
Income before provision for income taxes     6,828,891     6,066,065     12,062,638       12,528,076  
                             
Provision for income taxes     2,371,357     2,623,818     4,307,283       5,282,011  
                             
Net income   $ 4,457,534   $ 3,442,247   $ 7,755,355     $ 7,246,065  
                             
                             
Income per common and common equivalent shares                            
                             
Basic   $ 0.09   $ 0.06   $ 0.15     $ 0.12  
Diluted     0.08     0.06     0.14       0.12  
                             
Weighted average number of common and common equivalent shares outstanding                            
                             
Basic     51,109,060     54,520,889     51,923,097       58,849,010  
Diluted     52,853,166     55,166,644     53,698,787       59,482,674  
                             
                             
                             
TASER International, Inc.  
Segment Reporting  
(Unaudited)  
   
                                   
    Three Months Ended June 30, 2013   Three Months Ended June 30, 2012  
    CEW     Video     Total   CEW     Video     Total  
                                               
Product sales   $ 30,272,853     $ 1,569,551     $ 31,842,404   $ 26,931,727     $ 1,164,128     $ 28,095,855  
Service revenue     -       333,393       333,393     -       126,588       126,588  
Net sales     30,272,853       1,902,944       32,175,797     26,931,727       1,290,716       28,222,443  
                                               
Cost of products sold     10,410,910       1,355,699       11,766,609     9,783,886       736,924       10,520,810  
Cost of services delivered     -       666,825       666,825     -       1,199,260       1,199,260  
Gross margin     19,861,943       (119,580 )     19,742,363     17,147,841       (645,468 )     16,502,373  
                                               
Sales, general & administrative     9,417,473       1,522,612       10,940,085     7,668,654       735,957       8,404,611  
Research & development     977,508       1,014,556       1,992,064     922,084       1,116,746       2,038,830  
                                               
Income (loss) from operations   $ 9,466,962     $ (2,656,748 )   $ 6,810,214   $ 8,557,103     $ (2,498,171 )   $ 6,058,932  
                                               
Operating margin %     31 %     -140 %     21 %   32 %     -194 %     21 %
                                               
                               
                               
    Six Months Ended June 30, 2013   Six Months Ended June 30, 2012  
    CEW     Video     Total   CEW   Video   Total  
                                           
Product sales   $ 58,275,475     $ 3,749,607     $ 62,025,082   $ 51,689,401   $ 1,936,259   $ 53,625,660  
Service revenue     -       584,367       584,367     -     238,175     238,175  
Net sales     58,275,475       4,333,974       62,609,449     51,689,401     2,174,434     53,863,835  
                                           
Cost of products sold     20,627,577       2,543,545       23,171,122     18,395,306     1,530,772     19,926,078  
Cost of services delivered     -       1,244,960       1,244,960     -     2,194,125     2,194,125  
Gross margin     37,647,898       545,469       38,193,367     33,294,095     (1,550,463 )   31,743,632  
                                           
Sales, general & administrative     19,491,138       2,630,887       22,122,025     15,755,151     1,503,482     17,258,633  
Research & development     1,966,189       2,038,431       4,004,620     1,762,436     2,408,614     4,171,050  
Litigation judgment recovery     -       -       -     (2,200,000 )   -     (2,200,000 )
                                           
Income (loss) from operations   $ 16,190,571     $ (4,123,849 )   $ 12,066,722   $ 17,976,508   $ (5,462,559 ) $ 12,513,949  
                                           
Income (loss) from operations, normalized (a)   $ 16,190,571     $ (4,123,849 )   $ 12,066,722   $ 15,776,508   $ (5,462,559 ) $ 10,313,949  
                                           
Operating margin %     28 %     -95 %     19 %   35 %   -251 %   23 %
                                           
(a) Income from operations excluding litigation judgment recovery                                                               
                   
TASER International, Inc.
AXONFlex and EVIDENCE.COM Bookings by Quarter
(Unaudited)
                   
                   
  For the Quarter ended,
  June 30,
2013
  March 31,
2013
  Dec. 31,
2012
  Sept. 30,
2012
  June 30,
2012
                             
                             
Bookings $ 2,045,938   $ 1,387,199   $ 1,670,813   $ 1,318,107   $ 451,183
                             
                             
                             
AXON Flex and EVIDENCE.com Bookings is a statistical measure defined as the sales price of orders placed in the relevant time period. Bookings are an indication of the activity the Company is seeing relative to AXON Flex and EVIDENCE.com. The Company has deliverables to meet prior to recognizing revenue related to many of the orders. These statistics represent orders and not invoiced sales. Once invoiced, the revenue related to EVIDENCE.com is recognized over the requisite service period of one to five years. For more information relative to our revenue recognition policies, please reference our SEC filings.
               
TASER International, Inc.
Unit Sales by Product
(Unaudited)
               
  Three Months Ended June 30,   Six Months Ended June 30,
  2013   2012   2013   2012
               
X26 8,047   10,224   17,101   23,639
X26P 6,021   -   10,336   -
X2 7,016   8,338   11,962   12,116
M26 508   767   1,136   1,641
X3 71   19   271   33
C2 2,030   2,708   4,325   5,762
TASER Cam 2,693   1,858   5,006   3,489
Cartridges 412,132   368,560   778,462   733,086
AXON Flex 1,081   755   2,363   755
               
               
               
                         
TASER International, Inc.  
Reconciliation of GAAP to Non-GAAP Financial Measures  
(Unaudited)  
                         
    For the Three Months Ended     For the Six Months Ended  
    June 30,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 
                                 
Net income   $ 4,457,534     $ 3,442,247     $ 7,755,355     $ 7,246,065  
  Depreciation and amortization     1,529,507       1,728,933       2,948,266       3,395,443  
  Interest expense     3,134       (2,399 )     5,531       4,074  
  Provision for income taxes     2,371,357       2,623,818       4,307,283       5,282,011  
EBITDA   $ 8,361,532     $ 7,792,599     $ 15,016,435     $ 15,927,593  
                                 
Adjustments:                                
  Stock-based compensation expense     1,019,300       589,608       1,942,641       1,347,662  
  Loss on write down/disposal of property, equipment and intangibles, net     15,493       104,949       82,033       178,175  
  Provision for excess and obsolete inventory     122,496       58,059       168,973       197,468  
  Litigation judgment recovery     -       -       -       (2,200,000 )
  Interest income and other (income) expense     (21,811 )     (4,734 )     (1,447 )     (18,201 )
Adjusted EBITDA   $ 9,497,010     $ 8,540,481     $ 17,208,635     $ 15,432,697  
Adjusted EBITDA as a percentage of net sales     29.5 %     30.3 %     27.5 %     28.7 %
                                 
                                 
                                 
Composition of stock-based compensation:                                
    For the Three Months Ended     For the Six Months Ended  
    June 30,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 
                                 
Cost of products sold   $ 49,436     $ 28,748     $ 83,868     $ 95,892  
Sales, general and administrative expenses     826,735       426,231       1,557,239       973,364  
Research and development expenses     143,129       134,629       301,534       278,406  
    $ 1,019,300     $ 589,608     $ 1,942,641     $ 1,347,662  
                                 
                                 
                                 
             
TASER International, Inc.  
Consolidated Balance Sheets  
(Unaudited)  
             
    June 30,
2013
    December 31,
2012
 
ASSETS                
                 
Current Assets:                
  Cash and cash equivalents   $ 19,079,341     $ 36,126,791  
  Short-term investments     10,733,249       1,680,958  
  Accounts and notes receivable, net     16,889,785       18,101,240  
  Inventory     13,200,436       10,993,209  
  Prepaid expenses and other current assets     6,579,742       2,754,331  
  Deferred income tax assets, net     9,395,987       9,395,987  
    Total current assets     75,878,540       79,052,516  
                   
  Property and equipment, net     20,032,085       21,952,201  
  Deferred income tax assets, net     11,686,195       11,605,812  
  Intangible assets, net     3,332,521       3,317,169  
  Long-term investments     1,875,723       -  
  Other assets     203,122       308,553  
                 
Total assets   $ 113,008,186     $ 116,236,251  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current Liabilities:                
  Accounts payable   $ 5,897,846     $ 6,222,904  
  Accrued liabilities     7,425,604       7,065,085  
  Current portion of deferred revenue     5,371,520       4,287,305  
  Customer deposits     1,235,186       500,018  
  Current portion of capital lease payable     35,004       33,947  
    Total current liabilities     19,965,160       18,109,259  
                   
  Deferred revenue, net of current portion     10,219,802       7,835,767  
  Liability for unrecognized tax benefits     3,072,863       2,902,896  
  Long-term portion of capital lease payable     85,515       103,283  
                 
Total liabilities     33,343,340       28,951,205  
                 
                 
                 
Stockholders' Equity:                
  Preferred stock     -       -  
  Common stock     672       661  
  Additional paid-in capital     121,349,015       111,661,393  
  Treasury stock     (92,202,810 )     (67,203,043 )
  Retained earnings     50,638,422       42,883,067  
  Accumulated other comprehensive loss     (120,453 )     (57,032 )
                 
Total stockholders' equity     79,664,846       87,285,046  
                 
Total liabilities and stockholders' equity   $ 113,008,186     $ 116,236,251  
                 
                 
                 
TASER International, Inc.  
Selected Consolidated Statement of Cash Flows Information  
(Unaudited)  
                         
    For the Three Months Ended     For the Six Months Ended  
    June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012  
                                 
Net income   $ 4,457,534     $ 3,442,247     $ 7,755,355     $ 7,246,065  
Depreciation and amortization     1,529,507       1,728,933       2,948,266       3,395,443  
Stock-based compensation expense     1,019,300       589,608       1,942,641       1,347,662  
Net cash provided by operating activities     7,703,685       9,721,831       12,223,269       13,384,506  
Net cash used in investing activities     (13,231,366 )     (324,072 )     (12,004,259 )     (968,175 )
Net cash used in financing activities     (13,951,585 )     (15,756,295 )     (17,271,486 )     (15,741,666 )
Cash and cash equivalents, end of period     19,079,341       17,970,019       19,079,341       17,970,019