TASER International Inc. (TASR)
Q1 2011 Earnings Call Transcript
April 21, 2011 11:00 am ET
Rick Smith – CEO
Dan Behrendt – CFO
Eric Wold – Merriman Curhan Ford & Co.
Peter Mahon – Dougherty
Steve Dyer – Craig Hallum
Previous Statements by TASR
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I would now like to turn the conference over to your host for today, Mr. Rick Smith, Chief Executive Officer. Please proceed.
Thank you very much. Welcome everybody. Before we get started here, I’ll have Dan read our Safe Harbor statement. We’ll get started.
Yeah. Thank you. Certain statements contained in this presentation maybe deemed to be forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. And TASER International intends that such forward-looking statements be subject to the Safe Harbor created thereby.
Such forward-looking statements relate to expected revenue and earnings growth, estimations regarding the size of our target markets, successful penetration in the law enforcement market, expansion of product sales to the private security, military and consumer self-defense markets, growth expectations for new and existing profit accounts, expansion of production capability, new product introductions, product safety and our business model.
We caution these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements herein. Such factors include but are not limited to market acceptance of our products, establishment and expansion of our direct and indirect distribution channels, attracting or retaining the endorsement of key opinion leaders in the law enforcement community, the level of product technology and price competition for our products, the degree and rate of growth of the markets in which we compete and accompanying demand for our products, potential delays in international and domestic orders, implementation risks of manufacturing automation, risks associated with rapid technological change, execution and implementation risks of new technology, new product introduction risks, ramping manufacturing production to meet demand, litigation resulting from alleged product-related injuries and deaths, media publicity concerning product uses and allegations of injury and death and a negative impact this could have on sales, product quality risks, potential fluctuations in the quarterly operating results, competition, negative reports concerning TASER device uses, financial and budgetary constraints of prospects and customers, dependence upon sole and limited source suppliers, fluctuations in component pricing, risk of government, governmental investigations and regulations, TASER product tests and reports, dependence upon key employees, employee retention risks and other factors detailed in the company’s filings with the Securities and Exchange Commission.
With that, I’ll turn back over to Rick Smith.
Great. Thanks Dan. So everybody has no doubt seen in our press release as we came in at a little over $23 million in revenue in the first quarter and generated over $4 million in cash of that revenue base, something we’re proud of and though we have to continue to see the core business generating cash on a quarterly basis. So we’re able to execute the stock buyback for a little over $5 million in the international [ph] cash change not too significant from the end of the year due to cash generation.
Similarly, in this quarter we saw product gross margins improve by a little over 1% of revenue, compared to last year that’s as a product only gross margin. The net gross margin did decrease because we are now selling in the dot-com and what used to be over the R&D line it’s now cost of goods sold for operating our data center.
SG&A also dropped over last year by about $1 million and yet, I think, we are accomplishing more with that, you may have noticed, if you got to taser.com we’ve launched brand new website, it’s been redesigned to ground up optimize for search engine that search engine results and we believe is giving helped to make our website into the best sales person for the company and valued resources for our distributors.
A couple other things to talk about, probably the big one happened just this week and that was the announcement of the new TASER X2. The X2 is basically our middle option now in ECDs. We’ve got entry level of the X26, which has been our workforce since 2003, at the high end, we have the X3.
The X2, we believe is the optimal balance of features, price and size. It’s almost as small as the X26, has a second shot, has a second laser, so you don’t worry about dot’s are going to go. That indicated fire-control system, so they should be partly device for warning purposes while it’s still loaded. We’ve improved the weatherproofing and the battery system that can now support over 500 discharges and we’re offering the set of price under a $1,000.
Our market research indicates that at least based on the survey results we believe the X2 has the option of providing very compelling upgraded opportunity for our installed base. If you look at this, there is around 250,000 lethal [ph] that are over five years old that have surpassed the typically used to light for electronic devices. It’s been somewhat challenging to have a compelling message to our customers to upgrade the device to get the same fundamental lethal [ph] just a newer ones.