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VirTra Reports Second Quarter 2022 Financial Results

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VirTra, Inc. (NASDAQ: VTSI) reported robust financial results for Q2 and the first half of 2022, with total revenue increasing 52% to $8.0 million and $14.8 million, respectively. Gross profit also surged 51% to $4.7 million, reflecting a 59% gross margin. Net income rose to $787,000 in Q2 and $1.4 million for six months. Adjusted EBITDA reached $1.3 million and $2.3 million for the respective periods. Backlog remains strong at $16.5 million. Management remains optimistic about future growth opportunities amidst strong market demand.

Positive
  • Total revenue increased 52% to $8.0 million in Q2 and $14.8 million for six months.
  • Gross profit increased 51% to $4.7 million with a gross margin of 59%.
  • Net income rose to $787,000 in Q2 and $1.4 million for six months.
  • Adjusted EBITDA improved to $1.3 million in Q2 and $2.3 million for six months.
  • Backlog stands at $16.5 million, showing strong demand.
Negative
  • Gross profit margin decreased to 59% in Q2 and 57% for six months, down from previous year levels.
  • Net operating expenses rose to $3.7 million in Q2 and $6.7 million for six months, primarily due to increased payroll and relocation costs.

Total Revenue up 52%, Driving 51% Increase in Gross Profit and 34% Increase in Adjusted EBITDA

CHANDLER, Ariz., Aug. 19, 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 second quarter and six months ended June 30, 2022. The financial statements are available on VirTra’s website and here.

Second Quarter 2022 Financial Highlights:

  • Total revenue increased 52% to $8.0 million
  • Gross profit increased 51% to $4.7 million, or 59% of total revenue
  • Net income increased to $787,000
  • Adjusted EBITDA increased to $1.3 million
  • Backlog at June 30, 2022 of $16.5 million
  • Working capital surplus totaled $27.0 million, including unrestricted cash and cash equivalents of $15.0 million

Six Month 2022 Financial Highlights:

  • Total revenue increased 52% to $14.8 million
  • Gross profit increased 48% to $8.4 million, or 57% of total revenue
  • Net income increased to $1.4 million
  • Adjusted EBITDA increased to $2.3 million

Second Quarter and Six Month 2022 Financial Highlights:

 All figures in millions, except per share data

June 30,
2022
June 30,
2021
% Δ June 30,
2022
June 30,
2021
% Δ
 Total Revenue$8.0 $5.3 52% $14.8 $9.7 52%
         
 Gross Profit$4.7 $3.1 51% $8.4 $5.7 48%
 Gross Margin 59%  60% -1%  57%  59% -3%
         
 Net Income$0.8 $0.5 N/A $1.4 $1.2 N/A
 Diluted EPS$0.07 $0.05 N/A $0.13 $0.13 N/A
 Adjusted EBITDA$1.35 $1.00 N/A $2.34 $1.75 N/A
         

Management Commentary

“We reported another strong quarter of growth in the second quarter of 2022 as we continue to deliver higher volumes of our world-class training solutions domestically and internationally,” said Bob Ferris, chairman and co-CEO of VirTra. “Total revenue and adjusted EBITDA increased 52% and 34% year-over-year, respectively, while gross profit margin expanded from the first quarter 2022 to 59%,. Further, market demand was noticeably strong in the commercial market, which includes the military market, as we recorded $3.6 million in commercial revenue in Q2, eclipsing the $3.2 million of commercial revenue we recorded for all of 2021.

“Our deliveries are accelerating, allowing us to convert backlog into revenue and resulting in backlog decreasing from the first quarter 2022 to $16.5 million. Additionally, our core law enforcement market tends to be seasonally stronger in the second half of the year so we remain optimistic regarding our sales pipeline and commercial opportunities, which provide us with significant growth opportunities. Complemented with a strong balance sheet that includes a $27.0 million working capital surplus, VirTra remains well-positioned for continued success. Additionally, I would like to thank the entire VirTra team and our advisors for their dedication and hard work in getting our financial filing status back up-to-date.”

Management Change

Effective August 16, 2022, VirTra Chief Operating Officer, Vice President, and Director, Matt Burlend, departed the Company. Mr. Burlend’s departure was not the result of any disagreement with VirTra on any matters relating to its operations, policies, or practices. VirTra will not seek an immediate replacement for Mr. Burlend at the company-level but plans to fill the Board vacancy resulting from his departure. The Company thanks Mr. Burlend for his many years of service and all his contributions to VirTra.

Second Quarter 2022 Financial Results

Total revenue increased 52% to $8.0 million from $5.3 million in the second quarter of 2021. The increase in revenues resulted from an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2021.

Gross profit increased 51% to $4.7 million from $3.1 million in the second quarter of 2021. The increase in gross profit was driven by an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2021. Gross profit margin was 59%, a decrease compared to 60% in the second quarter of 2021.

Net operating expense was $3.7 million, compared to $2.3 million in the second quarter of 2021. The increase was primarily due to expenses related to the move into the new building and increased payroll costs.

Income from operations totaled $1.0 million compared to $823,000 in the second quarter of 2021.

Net income totaled $787,000, or $0.07 per diluted share (based on 10.9 million weighted average diluted shares outstanding), an improvement compared to a net income of $529,000, or $0.05 per diluted share (based on 10.7 million weighted average diluted shares outstanding), in the second quarter of 2021.

Adjusted EBITDA, a non-GAAP metric, totaled $1.3 million, an improvement from $1.0 million in the second quarter of 2021.

Backlog at the end of the second quarter totaled $16.5 million, compared to $17.0 million at the end of the second quarter of 2021.

Six Months Ended June 30, 2022 Financial Results

Total revenue increased 52% to $14.8 million from $9.7 million for the first six months of 2021. The increase in revenues resulted from an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2021.

Gross profit increased 48% to $8.4 million from $5.7 million for the first six months of 2021. The increase in gross profit was driven by an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2021. Gross profit margin was 57%, a decrease compared to 59% for the first six months of 2021.

Net operating expense was $6.7 million, compared to $4.3 million for the first six months of 2021. The increase was primarily due to expenses related to the move into the new building and increased payroll costs.

Operating income was $1.8 million, an improvement compared to an operating income of $1.4 million for the first six months of 2021.

Net income totaled $1.4 million, or $0.13 per diluted share (based on 10.9 million weighted average diluted shares outstanding), an improvement compared to a net income of $1.2 million, or $0.13 per diluted share (based on 9.2 million weighted average diluted shares outstanding), for the first six months of 2021.

Adjusted EBITDA, a non-GAAP metric, totaled $2.3 million, an improvement from $1.8 million for the first six months of 2021.

Conference Call

VirTra’s management will hold a conference call today (August 19, 2022) at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time) to discuss these results. VirTra’s chairman and co-CEO, Bob Ferris, co-CEO John Givens and chief accounting officer, Marsha Foxx, 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 Code: 13732200

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 call will be available on the same day after 1:00 p.m. ET through September 2, 2022.

U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13732200

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 Six Months Ended
    June 30, June 30, Increase %  June 30, June 30, Increase %
    2022 2021 (Decrease) Change  2022 2021 (Decrease) Change
                    
 Net Income $787,374 $529,359 $258,015  49%  $1,364,448 $1,184,522 $179,926 -15%
  Adjustments:                 
  Provision for income taxes  246,684  293,180  (46,496) -16%   370,684  216,017  154,667 72%
  Depreciation and amortization 230,942  103,865  127,077  122%   446,688  201,155  245,533 122%
 EBITDA $1,265,000 $926,404 $338,596  37%  $2,181,820 $1,601,694 $580,126 36%
  Right of use amortization  80,805  77,090  3,715  5%   160,658  153,299  -  
                    
 Adjusted EBITDA $1,345,805 $1,003,494 $342,311  34%  $2,342,478 $1,754,993 $580,126 33%
                    

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

    June 30, 2022December 31, 2021 
    (Unaudited)  
ASSETS 
       
Current assets:    
 Cash and cash equivalents $15,016,233$19,708,565 
 Accounts receivable, net  6,388,087 3,896,739 
 Inventory, net  8,831,786 5,014,924 
 Unbilled revenue  4,820,051 3,946,446 
 Prepaid expenses and other current assets  848,759 940,887 
       
 Total current assets  35,904,916 33,507,561 
       
Long-term assets:    
 Property and equipment, net  14,185,424 12,864,766 
 Operating lease right-of-use asset, net  623,648 784,306 
 Intangible assets, net  579,963 535,079 
 Security deposits, long-term  35,691 19,712 
 Other assets, long-term  376,461 189,734 
 Deferred tax asset, net  1,418,723 1,674,234 
       
 Total long-term assets  17,219,910 16,067,831 
       
Total assets  $53,124,826$49,575,392 
       
LIABILITIES AND STOCKHOLDERS' EQUITY 
       
Current liabilities:    
 Accounts payable $1,458,968$789,394 
 Accrued compensation and related costs  1,229,404 1,062,078 
 Accrued expenses and other current liabilities  1,270,086 991,744 
 Note payable, current  233,673 236,291 
 Operating lease liability, short-term  361,403 347,772 
 Deferred revenue, short-term  4,373,173 4,135,565 
       
 Total current liabilities  8,926,707 7,562,844 
       
Long-term liabilities:    
 Deferred revenue, long-term  2,679,248 1,992,625 
 Note payable, long-term  8,165,838 8,280,395 
 Operating lease liability, long-term  321,217 505,383 
 Other long-term liabilities  5,436 5,436 
       
 Total long-term liabilities  11,171,739 10,783,839 
       
Total liabilities  20,098,446 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; 10,876,945 shares    
 issued and outstanding as of June 30, 2022 and 10,807,130 shares issued    
 and outstanding as of December 31, 2021  1,087 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  31,356,608 30,923,391 
Retained earnings  1,668,685 304,237 
       
Total stockholders' equity  33,026,380 31,228,709 
       
Total liabilities and stockholders' equity $53,124,826$49,575,392 
       

VirTra, Inc.
Condensed Statements of Operations
(Unaudited)

  Three Months Ended Six Months Ended
  June 30, 2022  June 30, 2021  June 30, 2022  June 30, 2021 
         
Revenues:       
 Net sales$7,997,383  $5,255,192  $14,750,611  $9,697,101 
 Total revenue 7,997,383   5,255,192   14,750,611   9,697,101 
         
 Cost of sales 3,253,651   2,120,492   6,319,789   3,993,896 
         
 Gross profit 4,743,732   3,134,700   8,430,822   5,703,205 
         
Operating expenses:       
 General and administrative 3,085,051   2,002,612   5,381,443   3,712,845 
 Research and development 617,058   311,320   1,296,453   605,537 
         
 Net operating expense 3,702,109   2,313,932   6,677,896   4,318,382 
         
 Income from operations 1,041,623   820,768   1,752,926   1,384,823 
         
Other income (expense):       
 Other income 57,056   34,379   111,379   50,758 
 Other expense (64,621)  (32,608)  (129,173)  (35,042)
         
 Net other income (expense) (7,565)  1,771   (17,794)  15,716 
         
 Income before provision for income taxes 1,034,058   822,539   1,735,132   1,400,539 
         
 Provision for income taxes 246,684   293,180   370,684   216,017 
         
Net income$787,374  $529,359  $1,364,448  $1,184,522 
         
Net income per common share:       
 Basic$0.07  $0.05  $0.13  $0.13 
 Diluted$0.07  $0.05  $0.13  $0.13 
         
Weighted average shares outstanding:       
 Basic 10,866,775   10,644,363   10,837,186   9,209,808 
 Diluted 10,892,302   10,693,238   10,867,667   9,209,509 
         

VirTra, Inc.
Condensed Statements of Cash Flows
(Unaudited)

         
     Six Months Ended June 30,  
      2022   2021  
         
 Cash flows from operating activities:     
  Net income $1,364,448  $1,184,522  
  Adjustments to reconcile net income to net cash (used in) provided by operating activities:     
   Depreciation and amortization  446,688   201,156  
   Right of use amortization  160,658   153,299  
   Employee stock compensation  70,497   -  
   Stock issued for service  350,001   -  
  Changes in operating assets and liabilities:     
   Accounts receivable, net  (2,491,348)  (4,136,335) 
   Inventory, net  (3,816,862)  (1,693,598) 
   Deferred taxes  255,511   294,113  
   Unbilled revenue  (873,605)  1,374,667  
   Prepaid expenses and other current assets  92,128   (353,765) 
   Other assets  (186,727)  21,148  
   Security deposits, long-term  (15,979)  66,788  
   Accounts payable and other accrued expenses  1,115,242   933,840  
   Payments on operating lease liability  (170,535)  (157,713) 
   Deferred revenue  921,613   3,049,784  
         
 Net cash provided by (used in) operating activities  (2,778,270)  937,906  
         
 Cash flows from investing activities:     
  Purchase of intangible assets  (86,012)  (92,886) 
  Purchase of property and equipment  (1,725,726)  (602,009) 
 Net cash used in investing activities  (1,811,738)  (694,895) 
         
 Cash flows from financing activities:     
  Principal payments of debt  (115,049)  -  
  Stock issued for cash in offering, net  -   16,795,000  
  Stock options exercised  12,725   6,070  
 Net cash provided by (used in) financing activities  (102,324)  16,801,070  
         
 Net increase (decrease) in cash and restricted cash  (4,692,332)  17,044,081  
 Cash and cash equivalents, beginning of period  19,708,565   6,841,984  
 Cash and cash equivalents, end of period $15,016,233  $23,886,065  
         

FAQ

What were VirTra's total revenues for Q2 2022?

VirTra's total revenues for Q2 2022 were $8.0 million, a 52% increase from the previous year.

How much did VirTra's net income rise in the first half of 2022?

VirTra's net income rose to $1.4 million for the first half of 2022.

What is VirTra's adjusted EBITDA for Q2 2022?

VirTra's adjusted EBITDA for Q2 2022 was $1.3 million.

What is the current backlog for VirTra as of June 30, 2022?

As of June 30, 2022, VirTra's backlog was $16.5 million.

What is the outlook for VirTra's sales pipeline?

VirTra is optimistic about its sales pipeline and commercial opportunities, especially in the second half of the year.

VirTra, Inc.

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