TASER International Beats Q2 Earnings Estimates, Sales Jump

TASER International Inc. TASR reported earnings of 7 cents per share during the second quarter 2014, beating the Zacks Consensus Estimate by 2 cents. The beat was driven by higher law enforcement weapon handle sales.

However, the quarterly figure was lower than the year-ago profit by a penny.

Highlights of the Quarter

In the second quarter, the company booked revenues of $37.2 million, beating the Zacks Consensus Estimate by $0.2 million. The reported number also increased 15.5% from $32.2 million in the second quarter 2013. The solid results were attributable to higher sales from numerous law enforcement agencies. AXON cameras, EVIDENCE.com and TASER CAM HD recorders also contributed to it. During the quarter, TASER's international revenues clocked $5.0 million, essentially flat year over year.

The company's gross margin expanded 100 basis points year over year to 62.4% in the quarter, driven by higher sales leveraging better overhead expenses. The company also benefited from increased sales prices and lower depreciation cost for EVIDENCE.COM.

Sales, general and administrative expenses increased 23.9% year over year to $13.5 million in the second quarter of 2014.

Quarterly Segmental Details

TASER Weapons revenues jumped 7.9% year over year to $32.7 million in the second quarter of 2014.

EVIDENCE.com & Video revenues saw a 136.5% improvement to $4.5 million in the second quarter of 2014. Segment bookings shot up 465% year over year to $11.3 million in the quarter.

Financials

The company had $59.8 million of cash and cash equivalents as of Jun 30, 2014 versus $63.4 million at 2013 end. The company generated $1.7 million in cash from operating activities during the quarter under review.

Our Take

With over $5 million in EVIDENCE.com and AXON bookings, TASER's order book continues to impress.

The company revealed several new orders for its conducted electrical weapons (CEWs) and next generation Smart Weapons. The company is seeing increasing uptake on the back of its new Smart Weapons platforms, as customers are eager to follow the market transition. The majority of these orders were for its next-generation electroshock Smart Weapons, which totaled over 5,000 from local, state and federal agencies. The company's new Smart Weapon platforms offer significant improvements in safety, effectiveness and accountability.

Apart from drawing significant revenues from domestic orders, the company is also focused on international sales. TASER invests considerably in upgrading existing and producing new products that make life safer in public places. During the second quarter 2014, research and development expenses were $3.5 million, up $1.5 million year over year due to additional personnel expense associated with EVIDENCE.com & Video segment product development initiatives.

TASER International currently has a Zacks Rank #4 (Sell). Some better-ranked stocks in the sector include Alliant Techsystems Inc. ATK, Brady Corp. BRC and Net 1 Ueps Technologies Inc. UEPS. Alliant Techsystems carries a Zacks Rank #1 (Strong Buy), while Brady and Net 1 Ueps Technologies hold a Zacks Rank #2 (Buy).