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TASER International's CEO Discusses Q1 2012 Results - Earnings Call Transcript

There were two particularly bright spots, I’d like to highlight in first quarter revenues, and then I will hand you over to Dan to go through the details. Gross margin across the business grew from 52.8% from a year ago period to 59.4%. Even more impressive, if you look at gross margin in our core ECD business, they were at 65.2%.

Operating income of $6.4 million, $6.456 million, I guess round up to $6.5 million, came in over 25% of revenues, driven by a combination of strong operating results and a partial reversal of the Turner verdict, which caused us to reduce our litigation reserve by $2.2 million.

And with that, I will hand over to Dan to go into more detail through the results.

Daniel Marc Behrendt

Thanks, Rick. So as Rick said, revenue for Q1 was $25.6 million, which is up approximately $2.5 million or 10.9% from the prior year first quarter amount. The increase in sales versus prior year were driven by the continued adoption of the X2 electronic control device as well as a significant order from the United States Army for 3500 X26 ECDs, following the DOD's Type Classification of the X26.

Gross margin for the first quarter was $15.2 million or 59.4% of revenue which is 6.6% as a percent of sales better than the 52.8% in the prior year. The improvements in margins were mostly driven by the increased leverage of indirect manufacturing cost due to the higher sales and a favorable product mix.

When we look at the ECD segment gross margin, it was 65.2% in Q1 of 2012 versus 59.3% in Q1 of 2011. We’re encouraged by the gross margin performance. We’ll likely see a slight degradation in gross margin as we increase the sale of video products, as these carry lower gross margin than the ECD products. But that should be partially offset over time with profitable recurring revenue from as the video business scales up.

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