VTSI - VirTra Reports Third Quarter and Nine Month 2022 Financial Results
CHANDLER, Ariz., Nov. 14, 2022 (GLOBE NEWSWIRE) -- VirTra, Inc . (NASDAQ: VTSI) (“VirTra”), a global provider of judgmental use of force training simulators and firearms training simulators for the law enforcement and military markets, reported results for the third quarter and nine months ended September 30, 2022. The financial statements are available on VirTra’s website and here .
Third Quarter 2022 Highlights:
- Record third quarter 2022 bookings of $16.7 million, 52% year-over-year growth
- Record backlog of $28.3 million at September 30, 2022
- Received orders worth $9.0 million from two U.S. Federal agencies under existing contract with U.S. Customs and Border Protection (CBP)
- Received CAD $1.2 million (approximately USD $0.9 million) follow on order in Canada under exclusive standing offer
- Working capital surplus of $25.7 million, including unrestricted cash and cash equivalents of $15.7 million
Third Quarter 2022 Financial Summary:
- Total revenue of $4.9 million
- Gross profit of $2.5 million, or 51% of total revenue
- Net loss of ($803,000)
- Adjusted EBITDA loss of ($214,000)
Nine Month 2022 Financial Highlights:
- Total revenue increased 24% to $19.7 million
- Gross profit increased 28% to $10.9 million, or 56% of total revenue
- Net income of $562,000
- Adjusted EBITDA of $1.7 million
Third quarter and Nine Month 2022 Financial Highlights:
| For the Three Months Ended |
| For the Nine Months Ended |
| All figures in millions, except per share data |
| September 30, 2022 |
| September 30, 2021 |
| % ? |
| September 30, 2022 |
| September 30, 2021 |
| % ? |
| Total Revenue |
| $ |
| 4.9 |
| $ |
| 6.1 |
| -20 |
| % |
| $ |
| 19.7 |
| $ |
| 15.8 |
| 24 |
| % |
| Gross Profit |
| $ |
| 2.5 |
| $ |
| 2.9 |
| -12 |
| % |
| $ |
| 10.9 |
| $ |
| 8.6 |
| 28 |
| % |
| Gross Margin |
| 51 |
| % |
| 47 |
| % |
| 9 |
| % |
| 56 |
| % |
| 54 |
| % |
| 3 |
| % |
| Net Income |
| $ |
| (0.8 |
| ) |
| $ |
| 1.3 |
| N/A |
| $ |
| 0.6 |
| $ |
| 2.5 |
| N/A |
| Diluted EPS |
| $ |
| (0.07 |
| ) |
| $ |
| 0.12 |
| N/A |
| $ |
| 0.05 |
| $ |
| 0.25 |
| N/A |
| Adjusted EBITDA |
| $ |
| (0.21 |
| ) |
| $ |
| 0.52 |
| N/A |
| $ |
| 1.66 |
| $ |
| 2.27 |
| N/A |
Management Commentary
“Our third quarter was one of the strongest in our history as far as new sales orders secured as we continue to work on numerous initiatives to scale up and streamline our operations while leading innovation in our market,” said Bob Ferris, chairman and co-CEO of VirTra. “We had a record quarter for bookings at $16.7 million, representing 52% year-over-year growth, driving our backlog to a record level of $28.3 million, largely due to some of our largest orders in our history with federal clients. While shipments were somewhat slower in the quarter, contributing to the lower revenue, we view the high level of bookings as positive indicators for future business.”
John Givens, co-CEO of VirTra commented, “Since the end of the third quarter, we announced the official opening of our Orlando, Florida facility that provides us with a critical presence in the epicenter of the military simulation market, a market we have high aspirations for more significantly penetrating. Additionally, to continue our track record of innovating with world-class training solutions, we introduced the ‘VirTra Volumetric Video’, or ‘V3™’. V3 combines the best of high-definition video capture and computer-generated imagery to provide a novel, industry-first training solution. We believe V3 will become the standard for effective de-escalation training in the future, giving VirTra another competitive advantage, and industry veterans and customers tell us it is a ‘game changer’. With a strong capitalization position that includes $15.7 million of cash, VirTra remains well-position for continued growth within the law enforcement and military markets.”
Third Quarter 2022 Financial Results
Total revenue decreased 20% to $4.9 million from $6.1 million in the third quarter of 2022. The decrease in revenues for the three months ended September 30, 2022 as compared to the same period in the prior year is due to unbilled sales not yet being recognized.
Gross profit decreased 12% to $2.5 million from $2.9 million in the third quarter of 2021. The decrease in gross profit was due primarily to lower revenue. Gross profit margin was 51%, an increase compared to 47% in the third quarter of 2021.
Net operating expense was $3.6 million, compared to $2.6 million in the third quarter of 2021. The increase was primarily due to expenses related to the move into the new building, Orlando location, and increased payroll costs.
Loss from operations totaled ($1.1 million) compared to income from operations of $266,000 in the third quarter of 2021.
Net loss totaled ($803,000), or ($0.07) per diluted share (based on 10.9 million weighted average diluted shares outstanding), a decrease compared to a net income of $1.3 million, or $0.12 per diluted share (based on 11.0 million weighted average diluted shares outstanding), in the third quarter of 2021.
Adjusted EBITDA, a non-GAAP metric, totaled a loss of ($214,000), compared to $520,000 in the third quarter of 2021.
Backlog at the end of the third quarter totaled $28.3 million, compared to $21.7 million at the end of the third quarter of 2021.
Nine months Ended September 30, 2022 Financial Results
Total revenue increased 24% to $19.7 million from $15.8 million for the first nine months of 2021. The increase in sales for the nine months ended September 30, 2022 resulted from an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same periods in 2021.
Gross profit increased 28% to $10.9 million from $8.6 million for the first nine months of 2021. The increase in gross profit was due to the product mix of systems, accessories and services sold. Gross profit margin was 56%, an increase compared to 54% for the first nine months of 2021.
Net operating expense was $10.3 million, compared to $6.9 million for the first nine months of 2021. The increase was primarily due to expenses related to the move into the new building, Orlando location, and increased payroll costs.
Operating income was $681,000, a decrease compared to an operating income of $1.7 million for the first nine months of 2021.
Net income totaled $562,000, or $0.05 per diluted share (based on 10.9 million weighted average diluted shares outstanding), a decline compared to a net income of $2.5 million, or $0.25 per diluted share (based on 10.1 million weighted average diluted shares outstanding), for the first nine months of 2021.
Adjusted EBITDA, a non-GAAP metric, totaled $1.7 million, a decline from $2.3 million for the first nine months of 2021.
Conference Call
VirTra’s management will hold a conference call today (November 14, 2022) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these results. VirTra’s chairman and co-CEO, Bob Ferris and co-CEO John Givens will host the call, followed by a question-and-answer period.
U.S. dial-in number: 1-844-825-9789
International number: 1-412-317-5180
Conference Code: 10172500
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact VirTra’s IR team at 949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website .
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 28, 2022.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10172500
About VirTra
VirTra (NASDAQ: VTSI) is a global provider of judgmental use of force training simulators and firearms training simulators for the law enforcement, military, educational and commercial markets. The company’s patented technologies, software, and scenarios provide intense training for de-escalation, judgmental use-of-force, marksmanship, and related training that mimics real-world situations. VirTra’s mission is to save and improve lives worldwide through practical and highly effective virtual reality and simulator technology. Learn more about the company at www.VirTra.com .
About the Presentation of Adjusted EBITDA
Adjusted earnings before interest, income taxes, depreciation, and amortization and before other non-operating costs and income (“Adjusted EBITDA”) is a non-GAAP financial measure. Adjusted EBITDA also includes non-cash stock option expense and other than temporary impairment loss on investments. Other companies may calculate Adjusted EBITDA differently. VirTra calculates its Adjusted EBITDA to eliminate the impact of certain items it does not consider to be indicative of its performance and its ongoing operations. Adjusted EBITDA is presented herein because management believes the presentation of Adjusted EBITDA provides useful information to VirTra’s investors regarding VirTra’s financial condition and results of operations and because Adjusted EBITDA is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in VirTra’s industry, several of which present a form of Adjusted EBITDA when reporting their results. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of VirTra’s results as reported under accounting principles generally accepted in the United States of America (“GAAP”). Adjusted EBITDA should not be considered as an alternative for net income, cash flows from operating activities and other consolidated income or cash flows statement data prepared in accordance with GAAP or as a measure of profitability or liquidity. A reconciliation of net income to Adjusted EBITDA is provided in the following tables:
| For the Three Months Ended |
| For the Nine Months Ended |
| September 30, |
| September 30, |
| Increase |
| % |
| September 30, |
| September 30, |
| Increase |
| % |
| 2022 |
| 2021 |
| (Decrease) |
| Change |
| 2022 |
| 2021 |
| (Decrease) |
| Change |
| Net Income (Loss) |
| $ |
| (802,881 |
| ) |
| $ |
| 1,342,972 |
| $ |
| (2,145,853 |
| ) |
| -160 |
| % |
| $ |
| 561,567 |
| $ |
| 2,527,494 |
| $ |
| (1,965,927 |
| ) |
| 78 |
| % |
| Adjustments: |
| Provision for income taxes |
| (222,683 |
| ) |
| 253,289 |
| (475,972 |
| ) |
| -188 |
| % |
| 148,001 |
| 469,306 |
| (321,305 |
| ) |
| -68 |
| % |
| Depreciation and amortization |
| 423,069 |
| 166,098 |
| 256,971 |
| 155 |
| % |
| 659,775 |
| 367,253 |
| 292,522 |
| 80 |
| % |
| EBITDA |
| $ |
| (602,495 |
| ) |
| $ |
| 1,762,359 |
| $ |
| (2,364,854 |
| ) |
| -134 |
| % |
| $ |
| 1,369,343 |
| $ |
| 3,364,053 |
| $ |
| (1,994,710 |
| ) |
| -59 |
| % |
| Right of use amortization |
| 388,306 |
| 78,001 |
| 310,305 |
| 398 |
| % |
| 291,879 |
| 231,300 |
| 60,579 |
| Gain on forgiveness of note |
| - |
| (1,320,714 |
| ) |
| 1,320,714 |
| -100 |
| % |
| - |
| (1,320,714 |
| ) |
| 1,320,714 |
| -100 |
| % |
| Adjusted EBITDA |
| $ |
| (214,189 |
| ) |
| $ |
| 519,646 |
| $ |
| (733,835 |
| ) |
| -141 |
| % |
| $ |
| 1,661,222 |
| $ |
| 2,274,639 |
| $ |
| (613,417 |
| ) |
| -27 |
| % |
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this document are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in the reports we file with or furnish to the Securities and Exchange Commission (the “SEC”). You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.
Investor Relations Contact:
Matt Glover and Jeff Grampp, CFA
Gateway Group, Inc.
VTSI@gatewayir.com
949-574-3860
VirTra, Inc.
Condensed Balance Sheets
| September 30, 2022 |
| December 31, 2021 |
| (Unaudited) |
| ASSETS |
| Current assets: |
| Cash and cash equivalents |
| $ |
| 15,673,154 |
| $ |
| 19,708,565 |
| Accounts receivable, net |
| 2,318,534 |
| 3,896,739 |
| Inventory, net |
| 9,770,050 |
| 5,014,924 |
| Unbilled revenue |
| 4,105,351 |
| 3,946,446 |
| Prepaid expenses and other current assets |
| 705,063 |
| 940,887 |
| Total current assets |
| 32,572,152 |
| 33,507,561 |
| Long-term assets: |
| Property and equipment, net |
| 14,591,480 |
| 12,864,766 |
| Operating lease right-of-use asset, net |
| 1,333,270 |
| 784,306 |
| Intangible assets, net |
| 593,403 |
| 535,079 |
| Security deposits, long-term |
| 35,691 |
| 19,712 |
| Other assets, long-term |
| 376,461 |
| 189,734 |
| Deferred tax asset, net |
| 1,561,857 |
| 1,674,234 |
| Total long-term assets |
| 18,492,162 |
| 16,067,831 |
| Total assets |
| $ |
| 51,064,314 |
| $ |
| 49,575,392 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities: |
| Accounts payable |
| $ |
| 697,862 |
| $ |
| 789,394 |
| Accrued compensation and related costs |
| 1,165,094 |
| 1,062,078 |
| Accrued expenses and other current liabilities |
| 1,127,161 |
| 991,744 |
| Note payable, current |
| 232,588 |
| 236,291 |
| Operating lease liability, short-term |
| 548,376 |
| 347,772 |
| Deferred revenue, short-term |
| 3,074,815 |
| 4,135,565 |
| Total current liabilities |
| 6,845,896 |
| 7,562,844 |
| Long-term liabilities: |
| Deferred revenue, long-term |
| 2,987,138 |
| 1,992,625 |
| Note payable, long-term |
| 8,108,545 |
| 8,280,395 |
| Operating lease liability, long-term |
| 854,583 |
| 505,383 |
| Other long term liabilities |
| - |
| 5,436 |
| Total long-term liabilities |
| 11,950,266 |
| 10,783,839 |
| Total liabilities |
| 18,796,162 |
| 18,346,683 |
| Commitments and contingencies (See Note 9) |
| Stockholders' equity: |
| Preferred stock $0.0001 par value; 2,500,000 authorized; no shares issued or outstanding |
| - |
| - |
| Common stock $ 0.0001 par value; 50,000,000 shares authorized; 10,898,259 shares issued and outstanding as of September 30, 2022 and 10,807,130 shares issued and outstanding as of December 31, 2021 |
| 1,089 |
| 1,081 |
| Class A common stock $0.0001 par value; 2,500,000 shares authorized; no shares issued or outstanding |
| - |
| - |
| Class B common stock $0.0001 par value; 7,500,000 shares authorized; no shares issued or outstanding |
| - |
| - |
| Additional paid-in capital |
| 31,401,259 |
| 30,923,391 |
| Retained earnings (Accumulated deficit) |
| 865,804 |
| 304,237 |
| Total stockholders' equity |
| 32,268,152 |
| 31,228,709 |
| Total liabilities and stockholders' equity |
| $ |
| 51,064,314 |
| $ |
| 49,575,392 |
VirTra, Inc.
Condensed Statements of Operations
(Unaudited)
| Three Months Ended |
| Nine Months Ended |
| September 30, 2022 |
| September 30, 2021 |
| September 30, 2022 |
| September 30, 2021 |
| Revenues: |
| Net sales |
| $ |
| 4,903,397 |
| $ |
| 6,093,263 |
| $ |
| 19,654,008 |
| $ |
| 15,790,364 |
| Total revenue |
| 4,903,397 |
| 6,093,263 |
| 19,654,008 |
| 15,790,364 |
| Cost of sales |
| 2,387,307 |
| 3,217,911 |
| 8,707,096 |
| 7,211,807 |
| Gross profit |
| 2,516,090 |
| 2,875,352 |
| 10,946,912 |
| 8,578,557 |
| Operating expenses: |
| General and administrative |
| 2,900,100 |
| 1,958,038 |
| 8,281,543 |
| 5,670,883 |
| Research and development |
| 687,890 |
| 651,734 |
| 1,984,343 |
| 1,257,271 |
| Net operating expense |
| 3,587,990 |
| 2,609,772 |
| 10,265,886 |
| 6,928,154 |
| Income (loss) from operations |
| (1,071,900 |
| ) |
| 265,580 |
| 681,026 |
| 1,650,403 |
| Other income (expense): |
| Other income |
| 112,571 |
| (11,981 |
| ) |
| 223,950 |
| 38,777 |
| Gain on forgiveness of note payable |
| - |
| 1,320,714 |
| - |
| 1,320,714 |
| Other (expense) income |
| (66,235 |
| ) |
| 21,948 |
| (195,408 |
| ) |
| (13,094 |
| ) |
| Net other income (expense) |
| 46,336 |
| 1,330,681 |
| 28,542 |
| 1,346,397 |
| Income (Loss) before provision for income taxes |
| (1,025,564 |
| ) |
| 1,596,261 |
| 709,568 |
| 2,996,800 |
| Provision (Benefit) for income taxes |
| (222,683 |
| ) |
| 253,289 |
| 148,001 |
| 469,306 |
| Net income (loss) |
| $ |
| (802,881 |
| ) |
| $ |
| 1,342,972 |
| $ |
| 561,567 |
| $ |
| 2,527,494 |
| Net income (loss) per common share: |
| Basic |
| $ |
| (0.07 |
| ) |
| $ |
| 0.12 |
| $ |
| 0.05 |
| $ |
| 0.26 |
| Diluted |
| $ |
| (0.07 |
| ) |
| $ |
| 0.12 |
| $ |
| 0.05 |
| $ |
| 0.25 |
| Weighted average shares outstanding: |
| Basic |
| 10,867,745 |
| 10,792,520 |
| 10,850,912 |
| 9,745,091 |
| Diluted |
| 10,867,745 |
| 11,031,922 |
| 10,870,842 |
| 10,111,458 |
VirTra, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Nine Months Ended September 30, |
| 2022 |
| 2021 |
| Cash flows from operating activities: |
| Net income |
| $ |
| 561,567 |
| $ |
| 2,527,494 |
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
| Depreciation and amortization |
| 659,775 |
| 367,253 |
| Right of use amortization |
| 291,879 |
| 231,300 |
| Gain on forgiveness of note payable |
| - |
| (1,329,280 |
| ) |
| Employee stock compensation |
| - |
| 171,216 |
| Stock issued for service |
| 444,025 |
| - |
| Changes in operating assets and liabilities: |
| Accounts receivable, net |
| 1,578,205 |
| (3,512,154 |
| ) |
| Inventory, net |
| (4,755,126 |
| ) |
| (2,417,589 |
| ) |
| Deferred taxes |
| 112,377 |
| 409,893 |
| Unbilled revenue |
| (158,905 |
| ) |
| 1,062,316 |
| Prepaid expenses and other current assets |
| 235,824 |
| (242,322 |
| ) |
| Other assets |
| (186,727 |
| ) |
| (33,150 |
| ) |
| Security deposits, long-term |
| (15,979 |
| ) |
| 66,788 |
| Accounts payable and other accrued expenses |
| 137,762 |
| 912,318 |
| Payments on operating lease liability |
| (291,039 |
| ) |
| (239,259 |
| ) |
| Deferred revenue |
| (66,237 |
| ) |
| 3,387,802 |
| Net cash provided by (used in) operating activities |
| $ |
| (1,452,599 |
| ) |
| 1,362,626 |
| Cash flows from investing activities: |
| Purchase of certificates of deposit |
| - |
| - |
| Redemption of certificates of deposit |
| - |
| - |
| Purchase of intangible assets |
| (120,016 |
| ) |
| (627,765 |
| ) |
| Purchase of property and equipment |
| (2,324,058 |
| ) |
| (11,407,278 |
| ) |
| Net cash (used in) investing activities |
| (2,444,074 |
| ) |
| (12,035,043 |
| ) |
| Cash flows from financing activities: |
| Repurchase of stock options |
| - |
| - |
| Principal payments of debt |
| (172,589 |
| ) |
| (20,195 |
| ) |
| Net proceeds from long term debt |
| - |
| 8,590,151 |
| Stock issued for cash in offering, net |
| - |
| 16,795,000 |
| Stock options exercised |
| 33,851 |
| 11,320 |
| Purchase of treasury stock |
| - |
| - |
| Note payable-PPP Loan |
| - |
| - |
| Net cash provided by (used in) financing activities |
| (138,738 |
| ) |
| 25,376,276 |
| Net increase (decrease) in cash and restricted cash |
| (4,035,411 |
| ) |
| 14,703,859 |
| Cash and restricted cash, beginning of period |
| 19,708,565 |
| 6,841,984 |
| Cash and restricted cash, end of period |
| $ |
| 15,673,155 |
| $ |
| 21,545,843 |