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VirTra Reports Fourth Quarter and Full Year 2022 Financial Results

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VirTra, Inc. (Nasdaq: VTSI) reported a strong performance for the full year 2022 with a 16% revenue growth, totaling $28.3 million. The company ended the year with a record backlog of $27.7 million and bookings of $33.0 million. Fourth quarter performance showed total revenue of $8.7 million and net income of $1.4 million, or $0.13 per diluted share. Gross profit for the full year reached $16.3 million, with a gross margin of 57.4%. Management attributes this success to strategic investments and a favorable demand environment in the law enforcement and military markets.

Positive
  • 16% revenue growth to $28.3 million in 2022
  • Record backlog of $27.7 million at year-end
  • Net income of $2.0 million despite previous PPP loan impact
  • Improved gross profit margin at 57.4% for the year
  • Adjusted EBITDA increased 70% to $3.6 million
Negative
  • Net income decreased 23% to $2.0 million compared to $2.5 million in 2021
  • Operating expenses rose 37% to $13.7 million due to increased R&D and marketing costs

16% Revenue Growth for Full Year 2022; Ended the Year with Record Backlog of $27.7 Million

CHANDLER, Ariz., March 31, 2023 (GLOBE NEWSWIRE) -- VirTra, Inc. (Nasdaq: VTSI) (“VirTra”), a global provider of judgmental use of force training simulators, firearms training simulators for the law enforcement and military markets, reported results for the fourth quarter and full year ended December 31, 2022. The financial statements are available on VirTra’s website and here.

Fourth Quarter 2022 and Full Year 2022 Highlights:

  • Bookings of $6.4 million in the fourth quarter of 2022 and $33.0 million for 2022.
  • Record backlog at December 31, 2022 of $27.7 million, 20% higher than prior year comparable period.
  • Launched operations at a new facility in Orlando, Florida to support strategic growth in military end-market.
  • Maintained a strong balance sheet with cash and cash equivalents of $13.5 million at year end.

Fourth Quarter 2022 Financial Summary:

  • Total revenue was $8.7 million
  • Gross profit was $5.3 million, or 61% of total revenue
  • Net income was $1.4 million
  • Adjusted EBITDA totaled $1.7 million

Full Year 2022 Financial Summary:

  • Total revenue increased 16% to $28.3 million
  • Gross profit was $16.3 million, or 57% of total revenue
  • Net income was $2.0 million
  • Adjusted EBITDA totaled $3.6 million

Fourth Quarter and Full Year 2022 Financial Highlights:

 For the Three Months Ended For the Full Year Ended
All figures in millions, except per share dataDecember 31,
2022
December 31,
2021
% Δ December 31,
2022
December 31,
2021
% Δ
Total Revenue$8.7$8.6>1% $28.3$24.416%
        
Gross Profit$5.3$2.888% $16.3$11.443%
Gross Margin61.4%32.7%88% 57.4%46.7%23%
        
Net Income (Loss)$1.4$0.0N/A $2.0$2.5-23%
Diluted EPS$0.13$0.00N/A $0.18$0.25N/A
Adjusted EBITDA$1.70($0.48)N/A $3.62$1.79102%
        

Management Commentary
“Our strong performance in 2022 was the result of continued execution against our business strategy as we generated record revenue and bookings and delivered another period of solid profitability,” said Bob Ferris, chairman and co-CEO of VirTra. “During the year, we made aggressive investments to expand the breadth and effectiveness of our training offerings, including launching VirTra Volumetric Video, a breakthrough technology that has the potential to provide a step-function change in training content. Operationally, we successfully centralized and expanded our Arizona headquarters, opened a new facility in Orlando to support our military growth opportunities, as well as implemented a new ERP system to prepare for greater scale with an eye to improve efficiencies.”

John Givens, co-CEO of VirTra added: “Looking ahead, our operational and technological advancements in 2022 have bolstered our competitive positioning and placed us on a solid growth trajectory for the years ahead. The growing demand and constructive funding environment for VirTra’s innovative trainings solutions gives us confidence in our ability to capitalize on the robust pipeline of opportunities in both the law enforcement and military markets.”

Fourth Quarter 2022 Financial Results
Total revenue was $8.7 million, compared to $8.6 million in the fourth quarter of 2021. The slight increase in revenue was the result of increases in STEP sales, simulator sales, accessories, curriculum and training, and recurring extended warranty revenue, driven by the law enforcement market.

Gross profit was $5.3 million, an improvement compared to $2.8 million in the fourth quarter of 2021. Gross profit margin, defined as total revenue less cost of sales, was 61.4%, an improvement compared to 32.7% in the fourth quarter of 2021. The increase in gross profit was primarily due to lower cost of goods sold and the favorable product mix of systems, accessories and services sold in the quarter.

Net operating expense was $3.4 million, compared to $3.0 million in the fourth quarter of 2021. The increase in net operating expenses was due to increased sales and marketing spend from increased participation in industry trade shows, as well as increases in R&D expenses and an increase in one-time costs related to facility moves.

Operating income (loss) totaled $1.9 million, compared to $(0.2) million in operating income the fourth quarter of 2021.

Net income totaled $1.4 million, or $0.13 per diluted share (based on 10.9 million weighted average diluted shares outstanding), compared to net income of $13,000, or $0.00 per diluted share (based on 10.1 million weighted average diluted shares outstanding), in the fourth quarter of 2021.

Adjusted EBITDA, a non-GAAP metric, totaled $1.7 million, compared to $0.5 million in the fourth quarter of 2021.

Full Year 2022 Financial Results
Total revenue increased 16% to $28.3 million from $24.4 million in 2021. The increase in revenue was the result of increases in STEP sales, simulator sales, accessories, curriculum and training, and recurring extended warranty revenue in 2022.

Gross profit was $16.3 million, compared to $11.4 million in 2021, representing an increase of 43%. Gross profit margin, defined as total revenue less cost of sales, was 57.4%, compared to 46.7% for the fiscal year of 2021. The increase in gross profit was primarily due to the increase in simulator system sales and recurring STEP revenue that helped to increase revenue while decreasing cost of goods sold.

Net operating expense was $13.7 million, compared to $10.0 million for the fiscal year of 2021. The increase was the result of increases research and development expenses and general and administrative expenses. General and administrative expense increases were driven by an increase in marketing expenses associated with attendance at tradeshows, which began to open back up in 2022 as well as costs related to the moving of facilities and opening the new facility in Orlando.

Operating income increased 78% to $2.6 million, compared to $1.5 million in 2021.

Net income totaled $2.0 million, or $0.18 per basic and diluted share (based on 10.9 million weighted average basic shares and 10.9 million weighted average diluted shares outstanding), compared to net income of $2.5 million, or $0.26 per basic and $0.25 per diluted share (based on 9.7 million weighted average basic and $10.1 million diluted shares outstanding) in 2021. The decrease in net income includes a $1.3 million impact from PPP loan forgiveness in 2021. Without the PPP forgiveness in 2021, net income in 2022 would have increased 60% year-over-year from 2021.

Adjusted EBITDA, a non-GAAP metric, totaled $3.6 million, compared to $2.1 million in 2021.

Financial Commentary
“In 2022, VirTra grew revenue for the 17th consecutive year on its way to expanding gross profit margins over 57% and improving operating income by over $1 million,” added CFO Alanna Boudreau “The Company’s ability to grow profitability amidst operational transformations accentuates the strength of our business model and VirTra’s growing role in the law enforcement and military simulator markets. We rounded out the year with a solid bottom line performance, recording operating income of $1.9 million and net income of $1.4 million in the fourth quarter. Entering 2023, we have a meaningful set of opportunities, as we exited 2022 with record bookings of $33.0 million and a record backlog of $27.7 million.”

Conference Call
VirTra’s management will hold a conference call today (March 31, 2023) 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, co-CEO John Givens and Chief Financial Officer Alanna Boudreau, will host the call, followed by a question-and-answer period.

U.S. dial-in number: 1-877-407-9208
International number: 1-201-493-6784
Conference ID: 13736693  

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 Gateway Investor Relations at 949-574-3860.

The conference call will be broadcast simultaneously and is available for replay here and via the investor relations section of the company’s website.

A replay of the call will be available after 8:30 p.m. Eastern time on the same through April 14, 2023.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13736693

About VirTra, Inc.
VirTra (Nasdaq: VTSI) is a global provider of judgmental use of force training simulators, firearms training simulators and driving 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 Years Ended 
 December 31,  December 31,  Increase  % 
 2022  2021  (Decrease)  Change 
            
Net Income (Loss)$1,955,898  $2,540,089  $(584,191) -23%
Adjustments:              
(Provision) Benefit for income taxes 571,642   246,050   325,592  132%
Depreciation and amortization 887,118   589,059   298,059  51%
Interest (net) 190,772   35,673   155,099  435%
EBITDA$3,605,430  $3,410,871  $194,559  6%
Impairment loss on That’s Eatertainment, former related party -   -   -    
Right of use amortization         -    
Reserve for note receivable -   -   -    
Gain on forgiveness of note -   (1,320,714)  1,320,714  -100%
               
Adjusted EBITDA$3,605,430  $2,090,157  $1,515,273  72%
               

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 Tom Colton
Gateway Group, Inc.
VTSI@gatewayir.com
949-574-3860

-Financial Tables to Follow-


VirTra, Inc.

Condensed Balance Sheets

   
 December 31, 2022December 31, 2021
   
ASSETS     
   
Current assets:  
Cash and cash equivalents$13,483,597 $19,708,565
Accounts receivable, net 3,002,887  3,896,739
Inventory, net 9,592,328  5,014,924
Unbilled revenue 7,485,990  3,946,446
Prepaid expenses and other current assets 531,051  940,887
   
Total current assets 34,095,853  33,507,561
   
Long-term assets:  
Property and equipment, net 15,267,133  12,864,766
Operating lease right-of-use asset, net 1,212,814  784,306
Intangible assets, net 587,777  535,079
Security deposits, long-term 35,691  19,712
Other assets, long-term 376,461  189,734
Deferred tax asset, net 2,238,762  1,674,234
   
Total long-term assets 19,718,638  16,067,831
   
Total assets$53,814,491 $49,575,392
   
LIABILITIES AND STOCKHOLDERS' EQUITY     
   
Current liabilities:  
Accounts payable$1,251,240 $789,394
Accrued compensation and related costs 1,494,890  1,062,078
Accrued expenses and other current liabilities 1,917,922  991,744
Note payable, current 232,537  236,291
Operating lease liability, short-term 557,683  347,772
Deferred revenue, short-term 4,302,492  4,135,565
   
Total current liabilities 9,756,764  7,562,844
   
Long-term liabilities:  
Deferred revenue, long-term 1,605,969  1,992,625
Note payable, long-term 8,050,116  8,280,395
Operating lease liability, long-term 720,023  505,383
Other long term liabilities -  5,436
   
Total long-term liabilities 10,376,108  10,783,839
   
Total liabilities 20,132,872  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; 10,924,724 shares  
issued and outstanding as of December 31, 2022 and 10,898,259 shares issued  
and outstanding as of September 30, 2022 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 31,420,395  30,923,391
Retained earnings (Accumulated deficit) 2,260,135  304,237
   
Total stockholders' equity 33,681,619  31,228,709
   
Total liabilities and stockholders' equity$53,814,491 $49,575,392
      

VirTra, Inc.
Condensed Statements of Operations

    
 For the Years ended
 December 31, 2022 December 31, 2021
    
Revenues:   
Net sales$28,302,244  $24,434,056 
Total revenue 28,302,244   24,434,056 
    
Cost of sales 12,047,366   13,028,844 
    
Gross profit 16,254,878   11,405,212 
    
Operating expenses:   
General and administrative 11,054,333   8,085,295 
Research and development 2,606,840   1,865,880 
    
Net operating expense 13,661,173   9,951,175 
    
Income (loss) from operations 2,593,705   1,454,037 
    
Other income (expense):   
Other income 194,523   97,100 
Gain on forgiveness of note payable -   1,320,714 
Other (expense) income (260,688)  (85,712)
    
Net other income (expense) (66,165)  1,332,102 
    
Income (Loss) before provision for income taxes 2,527,540   2,786,139 
    
Provision (Benefit) for income taxes 571,642   246,050 
    
Net income (loss)$1,955,898  $2,540,089 
    
Net income (loss) per common share:   
Basic$0.18  $0.25 
Diluted$0.18  $0.25 
    
Weighted average shares outstanding:   
Basic 10,863,680   
Diluted 10,873,606   
      

VirTra, Inc.
Condensed Statements of Cash Flows

    
 Twelve Months Ended Dec 31,
 2022 2021
    
Cash flows from operating activities:   
Net income$1,955,898  $2,540,089 
Adjustments to reconcile net income (loss) to net cash (used in) provided   
by operating activities:   
Depreciation and amortization 887,118   589,059 
Right of use amortization 412,335   310,221 
Deferred taxes (564,528)  217,766 
Gain on forgiveness of note payable -   (1,329,280)
Employee stock compensation 456,167   223,716 
Changes in operating assets and liabilities:   
Accounts receivable, net 893,852   (2,518,469)
Inventory, net (4,577,404)  (1,498,927)
Unbilled revenue (3,539,544)  1,462,152 
Prepaid expenses and other current assets 409,836   (558,442)
Other assets (186,727)  310,380 
Security deposits, long-term (15,979)  66,788 
Accounts payable and other accrued expenses 1,811,646   881,662 
Operating lease liability (416,292)  (321,727)
Deferred revenue (219,729)  (500,731)
    
Net cash provided by (used in) operating activities (2,693,351)  (125,743)
    
Cash flows from investing activities:   
    
Purchase of intangible assets (120,016)  (287,106)
Purchase of property and equipment (3,221,182)  (3,448,678)
Net cash provided by (used in) investing activities (3,341,198)  (3,735,784)
    
Cash flows from financing activities:   
Repurchase of stock options -   - 
Principal payments of debt (231,264)  (78,212)
Stock issued for cash in offering, net -   16,795,000 
Stock options exercised 40,845   11,320 
Net cash provided by (used in) financing activities (190,419)  16,728,108 
    
Net increase (decrease) in cash and restricted cash (6,224,968)  12,866,581 
Cash and restricted cash, beginning of period 19,708,565   6,841,984 
Cash and restricted cash, end of period$13,483,597  $19,708,565 

FAQ

What were the 2022 earnings results for VTSI?

VirTra, Inc. reported a total revenue of $28.3 million in 2022, with a net income of $2.0 million.

What is the record backlog reported by VTSI?

As of December 31, 2022, VirTra reported a record backlog of $27.7 million.

How much did VTSI's revenue grow in 2022?

VirTra's revenue grew by 16% compared to 2021.

What was VTSI's fourth quarter revenue?

For the fourth quarter of 2022, VirTra reported a total revenue of $8.7 million.

What is the future outlook for VTSI after their 2022 performance?

Management expressed confidence in VTSI's growth trajectory, supported by a robust pipeline of opportunities in the law enforcement and military markets.

VirTra, Inc.

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