TASER International, Inc. :TASR-US: Earnings Analysis: Q4, 2016 By the Numbers : March 3, 2017

TASER International, Inc. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of TASER International, Inc. – National Presto Industries, Inc., TriMas Corporation and Sturm, Ruger & Company, Inc. (NPK-US, TRS-US and RGR-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 82.08 million, Net Earnings of USD 6.34 million.
  • Gross margins narrowed from 66.00% to 60.64% compared to the same period last year, operating (EBITDA) margins now 12.58% from 16.94%.
  • Earnings rose compared to same period last year, despite decline in operating and pretax margins.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 82.08 71.88 58.76 55.53 56.04
Revenue Growth (%YOY) 46.46 42.69 25.78 24.06 19.7
Earnings (mil) 6.34 3.84 3.65 3.46 5.1
Earnings Growth (%YOY) 24.24 152.66 -40.19 -51.94 0.35
Net Margin (%) 7.73 5.35 6.21 6.24 9.11
EPS 0.12 0.07 0.07 0.06 0.09
Return on Equity (%) 17.36 11.15 10.15 8.93 13.32
Return on Assets (%) 9.56 6.39 6.27 5.93 9.21

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Market Share Versus Profits

Revenues History
Earnings History

TASR-US‘s change in revenue this period compared to the same period last year of 46.46% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TASR-US is holding onto its market share. Also, for comparison purposes, revenues changed by 14.18% and earnings by 65.00% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s earnings rose year-on-year. But this growth has not come as a result of improvement in gross margins or any cost control activities in its operations. Gross margins went from 60.64% to 66.00% for the same period last year, while operating margins (EBITDA margins) went from 12.58% to 16.94% over the same time frame.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

TASR-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 110.80 days from 195.20 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Margins

Despite a decline in operating (EBIT) margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

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Company Profile

TASER International, Inc. engages in the development, manufacture, and sale of conducted electrical weapons for the law enforcement, federal, military, corrections, private security, and personal defense markets. It operates through the TASER Weapons and Axon segments. The TASER Weapons segment produces and sells conducted electrical weapons, accessories, and other related products and services. The Axon segment involves in the video business such as TASER Cam, Axon products, Evidence.com, and MediaSolv. The company was founded by Patrick W. Smith and Thomas W. Smith on September 7, 1993 and is headquartered in Scottsdale, AZ.

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