VirTra Reports Fourth Quarter and Full Year 2023 Financial Results
- Record annual revenue growth of $38.0 million, marking a 34% increase.
- Net income increased to $8.4 million in 2023.
- Total revenue for the fourth quarter increased by 17% to $10.1 million.
- Gross profit increased by 58% year-over-year to $8.4 million.
- Adjusted EBITDA totaled $11.6 million for the full year, reflecting strong financial performance and operational enhancements.
- None.
Insights
The reported financial performance of VirTra, Inc. demonstrates a significant uptick in both revenue and net income, which are key indicators of a company's financial health and operational efficiency. The 34% increase in annual revenue and a substantial rise in net income by $6.4 million reflect strong market demand and effective cost management. The gross profit margin improvement from 57% to 70% suggests streamlined operations and possibly better pricing strategies.
Investors should note the impact of an unusual event—a $3 million kickoff milestone payment—which may not be a recurring factor in future earnings. This one-time event could inflate the perceived profitability for the period. The adjusted EBITDA, although a non-GAAP metric, provides insight into the company's operating performance by excluding non-cash expenses and its increase is indicative of a solid operational year.
Considering the company's expansion into new markets and operational enhancements, such as the implementation of a new ERP system, there appears to be a strategic focus on scalability and efficiency. However, it is important to monitor how the operational expenditures, such as the costs of the new Orlando facility and increased staffing, will balance against the revenue growth in the long-term.
The strategic changes highlighted by VirTra's CEO, including the overhaul of internal operations and sales team restructuring, are poised to potentially increase market share and enhance customer satisfaction. The introduction of V-XR, an extended reality training platform, taps into the growing demand for high-tech training solutions. The positive market reception to this new product could be a catalyst for revenue streams in the near future.
VirTra's penetration into the military sector, facilitated by the integration of VBS software, is a strategic move that diversifies its client base beyond law enforcement. While longer sales cycles in the military market are typical, early expansion ahead of schedule is a positive signal. Stakeholders should consider the potential for these new product lines to contribute to sustained growth, albeit with the caution that new ventures carry inherent risks and uncertainties.
The reduction of the backlog from previous years and the focus on a quick book-to-ship ratio may lead to better customer service and repeat business. However, the ability to maintain high gross margins in the face of increased competition and potential market saturation will be an important aspect to watch.
The financial results of VirTra are indicative of a favorable economic environment for the defense training and simulation industry. The 34% increase in annual revenue suggests that the sector is experiencing robust growth, likely fueled by increased global security concerns and a heightened focus on law enforcement training. The company's ability to significantly grow its net income while managing to keep its cost of sales in line with previous levels is a testament to the effectiveness of its cost-control measures.
Investors might consider the broader economic implications of VirTra's growth, including the potential for job creation through new hires and the economic impact of the new Orlando facility. Additionally, the company's investment in technology and R&D indicates a forward-looking approach that could be beneficial in maintaining a competitive edge in a rapidly evolving industry.
However, it is important to remain cautious about the sustainability of the growth rates reported, especially in the context of the one-time milestone payment. The ability of VirTra to replicate such performance organically in subsequent years will be important for long-term valuation.
Annual Revenue Grows to a Record
Net Income Increases to
CHANDLER, Ariz., April 01, 2024 (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, 2023. The financial statements are available on VirTra’s website and here.
Fourth Quarter 2023 Financial Summary:
- Total revenue increased
17% year-over-year to$10.1 million - Gross profit increased
58% year-over-year to$8.4 million , or83% of total revenue - Net income increased by
$1.4 million year-over-year to$2.8 million - Adjusted EBITDA totaled
$1.7 million - Cash and cash equivalents of
$18.9 million at December 31, 2023
Full Year 2023 Financial Summary:
- Total revenue increased
34% to$38.0 million - Gross profit increased
64% to$26.7 million , or70% of total revenue - Net income increased by
$6.4 million to$8.4 million - Adjusted EBITDA totaled
$11.6 million
Fourth Quarter and Full Year 2023 Financial Highlights:
| For the Three Months Ended | For the Twelve Months Ended | ||||||
| All figures in millions, except per share data | December 31, 2023 | December 31, 2022 | % Δ | December 31, 2023 | December 31, 2022 | % Δ | |
| Total Revenue | $10.1 | 17% | $38.0 | 34% | |||
| Gross Profit | $8.4 | 58% | $26.7 | 64% | |||
| Gross Margin | 83% | N/A | 70% | N/A | |||
| Net Income (Loss) | $2.8 | N/A | $8.4 | N/A | |||
| Diluted EPS | $0.25 | N/A | $0.77 | N/A | |||
| Adjusted EBITDA | $1.7 | N/A | $11.6 | N/A | |||
Management Commentary
“2023 was a year of substantial transformation, which culminated in a strong fourth quarter with revenue of
“This strategic overhaul was instrumental in effectively working through the substantial backlog we faced entering 2023. With that backlog down to
“As our newly implemented sales strategies begin to take root, we expect that the technological innovations we made in 2023 will drive further interest from the core law enforcement market and the military sector. The introduction of V-XR®, our extended reality training platform, has been met with great interest, with a very positive market reception setting us up for strong delivery volume starting in the next few months. V-XR’s emphasis on training soft skills, such as managing mental health crises, is set to broaden our reach within our core target markets but also in wider settings, such as in hospitals and educational institutions. Additionally, to better serve military customers, we integrated VBS, a premier military software that facilitates the creation of real-time, geo-specific training into our simulators. Despite the typically longer sales cycles in the military market, our foothold is expanding ahead of schedule.
“Building on our operating momentum, we are moving into the second quarter with high confidence in our trajectory for continued growth for 2024.”
Fourth Quarter 2023 Financial Results
Total revenue increased
Gross profit increased
Net operating expense was
Operating income increased by
Net income was
Adjusted EBITDA, a non-GAAP metric, was
Full Year 2023 Financial Results
Total revenue increased
Gross profit increased
Net operating expense was
Operating income jumped to
Net income was
Adjusted EBITDA, a non-GAAP metric, increased to
Financial Commentary
“In the fourth quarter we continued to grow our revenue while making improvements to our profitability metrics,” said VirTra CFO Alanna Boudreau. “The changes we’ve made internally to our operations have also had a significant effect on the margin growth we had in the fourth quarter and throughout the year. Based on our recent performance, we are expecting that our backlog will remain lower than past levels historically as we focus on continuing to improve our book-to-ship ratio moving forward. We anticipate continued revenue and profitability expansion as we move into additional markets outside of law enforcement in 2024.”
Conference Call
VirTra’s management will hold a conference call today (April 1, 2024) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. VirTra’s Chief Executive Officer 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: 13743893
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 live and available for replay here and via the investor relations section of the Company’s website.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through November 28, 2023.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13743893
About VirTra, Inc.
VirTra (Nasdaq: VTSI) is a global provider of judgmental use of force training simulators, 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 Years Ended | ||||||||||||||
| December 31, | December 31, | Increase | % | |||||||||||
| 2023 | 2022 | (Decrease) | Change | |||||||||||
| Net Income | $ | 8,402,858 | $ | 1,955,898 | $ | 6,446,960 | 330 | % | ||||||
| Adjustments: | ||||||||||||||
| Provision for income taxes | 1,818,812 | 571,642 | 1,247,170 | 218 | % | |||||||||
| Depreciation and amortization | 928,545 | 887,118 | 41,427 | 5 | % | |||||||||
| Interest (net) | (20,440 | ) | 190,772 | (211,212 | ) | (111 | )% | |||||||
| EBITDA | $ | 11,129,775 | $ | 3,605,430 | $ | 7,524,345 | 209 | % | ||||||
| Right of use amortization | 496,127 | 412,335 | 83,792 | 20 | % | |||||||||
| Adjusted EBITDA | $ | 11,625,902 | $ | 4,017,765 | $ | 7,608,137 | 189 | % | ||||||
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 risks 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 Alec Wilson
Gateway Group, Inc.
VTSI@gateway-grp.com
949-574-3860
| - Financial Tables to Follow - | |||||||
| VIRTRA, INC. | |||||||
| CONDENSED BALANCE SHEETS | |||||||
| December 31, | December 31, | ||||||
| 2023 | 2022 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 18,849,842 | $ | 13,483,597 | |||
| Accounts receivable, net | 15,724,147 | 3,002,887 | |||||
| Inventory, net | 12,404,880 | 9,592,328 | |||||
| Unbilled revenue | 1,109,616 | 7,485,990 | |||||
| Prepaid expenses and other current assets | 906,803 | 531,051 | |||||
| Total current assets | 48,995,288 | 34,095,853 | |||||
| Long-term assets: | |||||||
| Property and equipment, net | 15,487,012 | 15,267,133 | |||||
| Operating lease right-of-use asset, net | 716,687 | 1,212,814 | |||||
| Intangible assets, net | 567,540 | 587,777 | |||||
| Security deposits, long-term | 35,691 | 35,691 | |||||
| Other assets, long-term | 201,670 | 376,461 | |||||
| Deferred tax asset, net | 3,630,154 | 2,238,762 | |||||
| Total long-term assets | 20,638,754 | 19,718,638 | |||||
| Total assets | $ | 69,634,042 | $ | 53,814,491 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,282,427 | $ | 1,251,240 | |||
| Accrued compensation and related costs | 2,221,416 | 1,494,890 | |||||
| Accrued expenses and other current liabilities | 3,970,559 | 1,917,922 | |||||
| Note payable, current | 226,355 | 232,537 | |||||
| Operating lease liability, short-term | 317,840 | 557,683 | |||||
| Deferred revenue, short-term | 6,736,175 | 4,302,492 | |||||
| Total current liabilities | 15,754,772 | 9,756,764 | |||||
| Long-term liabilities: | |||||||
| Deferred revenue, long-term | 3,012,206 | 1,605,969 | |||||
| Note payable, long-term | 7,813,021 | 8,050,116 | |||||
| Operating lease liability, long-term | 432,176 | 720,023 | |||||
| Total long-term liabilities | 11,257,403 | 10,376,108 | |||||
| Total liabilities | 27,012,175 | 20,132,872 | |||||
| Commitments and contingencies (See Note 11) | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock | |||||||
| Common stock | 1,109 | 1,089 | |||||
| Class A common stock | |||||||
| Class B common stock | |||||||
| Additional paid-in capital | 31,957,765 | 31,420,395 | |||||
| Retained earnings | 10,662,993 | 2,260,135 | |||||
| Total stockholders’ equity | 42,621,867 | 33,681,619 | |||||
| Total liabilities and stockholders’ equity | $ | 69,634,042 | $ | 53,814,491 | |||
| VIRTRA, INC. | |||||||
| CONDENSED STATEMENTS OF OPERATIONS | |||||||
| (UNAUDITED) | |||||||
| For the years ended | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| Revenues: | |||||||
| Net sales | $ | 38,043,360 | $ | 28,302,244 | |||
| Total revenue | 38,043,360 | 28,302,244 | |||||
| Cost of sales | 11,378,264 | 12,047,366 | |||||
| Gross profit | 26,665,096 | 16,254,878 | |||||
| Operating expenses: | |||||||
| General and administrative | 14,235,194 | 11,054,333 | |||||
| Research and development | 2,794,314 | 2,606,840 | |||||
| Net operating expense | 17,029,508 | 13,661,173 | |||||
| Income from operations | 9,635,588 | 2,593,705 | |||||
| Other income (expense): | |||||||
| Other income | 888,464 | 194,523 | |||||
| Other (expense) income | (302,382 | ) | (260,688 | ) | |||
| Net other income (expense) | 586,082 | (66,165 | ) | ||||
| Income before provision for income taxes | 10,221,670 | 2,527,540 | |||||
| Provision (Benefit) for income taxes | 1,818,812 | 571,642 | |||||
| Net income | $ | 8,402,858 | $ | 1,955,898 | |||
| Net income per common share: | |||||||
| Basic | $ | 0.77 | $ | 0.18 | |||
| Diluted | $ | 0.77 | $ | 0.18 | |||
| Weighted average shares outstanding: | |||||||
| Basic | 10,958,448 | 10,863,680 | |||||
| Diluted | 10,963,477 | 10,873,606 | |||||
| VIRTRA, INC. | |||||||
| CONDENSED STATEMENTS OF CASH FLOWS | |||||||
| (Unaudited) | |||||||
| For the Years Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 8,402,858 | $ | 1,955,898 | |||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||
| Depreciation and amortization | 928,545 | 887,118 | |||||
| Right of use amortization | 496,127 | 412,335 | |||||
| Bad debt expense | 308,657 | - | |||||
| Employee stock compensation | 482,490 | 456,167 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | (13,029,917 | ) | 893,852 | ||||
| Inventory, net | (2,812,552 | ) | (4,577,404 | ) | |||
| Deferred taxes | (1,391,392 | ) | (564,528 | ) | |||
| Unbilled revenue | 6,376,374 | (3,539,544 | ) | ||||
| Prepaid expenses and other current assets | (375,752 | ) | 409,836 | ||||
| Other assets | 174,791 | (186,727 | ) | ||||
| Operating lease right of use liability | (527,690 | ) | (416,292 | ) | |||
| Security deposits, long-term | - | (15,979 | ) | ||||
| Accounts payable and other accrued expenses | 3,810,157 | 1,811,646 | |||||
| Payments on operating lease liability | - | - | |||||
| Deferred revenue | 3,839,920 | (219,729 | ) | ||||
| Net cash provided by (used in) operating activities | 6,682,616 | (2,693,351 | ) | ||||
| Cash flows from investing activities: | |||||||
| Purchase of intangible assets | - | (120,016 | ) | ||||
| Purchase of property and equipment | (1,128,187 | ) | (3,221,182 | ) | |||
| Net cash (used in) investing activities | (1,128,187 | ) | (3,341,198 | ) | |||
| Cash flows from financing activities: | |||||||
| Principal payments of debt | (243,084 | ) | (231,264 | ) | |||
| Stock issued for options exercised | 54,900 | 40,845 | |||||
| Net cash (used in) financing activities | (188,184 | ) | (190,419 | ) | |||
| Net increase (decrease) in cash and restricted cash | 5,366,245 | (6,224,968 | ) | ||||
| Cash and restricted cash, beginning of period | 13,483,597 | 19,708,565 | |||||
| Cash and restricted cash, end of period | $ | 18,849,842 | $ | 13,483,597 | |||
| Supplemental disclosure of cash flow information: | |||||||
| Cash (refunded) paid: | |||||||
| Income taxes paid (refunded) | $ | - | $ | 108,777 | |||
| Interest paid | $ | 248,653 | 128,507 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||
| Addition of new lease and corresponding ROU asset and lease liability | $ | - | $ | 294,016 | |||
| Conversion of inventory to property and equipment | $ | - | $ | 840,843 | |||
FAQ
What was VirTra's annual revenue for 2023?
How much did the net income increase in 2023?
What was the total revenue for the fourth quarter of 2023?
What was the percentage increase in gross profit year-over-year?
What was the total Adjusted EBITDA for the full year?
