VirTra Reports First Quarter 2024 Financial Results
VirTra (Nasdaq: VTSI) announced its Q1 2024 financial results, showing a 19% drop in revenue to $8.1 million compared to $10 million in Q1 2023. Net income also fell to $1.2 million from $2.9 million, while gross profit decreased by 21% to $5.5 million. The gross margin slightly declined to 67% from 69% due to increased costs from a Microsoft contract. Operational highlights included preparations for the V-XR platform launch, expanded content delivery capabilities, and improved production efficiencies. The company maintained a strong working capital of $33.2 million and continued to enhance its operational processes and ERP systems.
- Maintained robust working capital at $33.2 million.
- Enhanced operational efficiencies through production optimization and ERP upgrades.
- Expanded content library, improving training effectiveness.
- Launch preparations for the V-XR platform, targeting new sectors like healthcare and education.
- Recurring revenue streams, including STEP program, reached 23% of total revenue.
- Revenue decreased by 19% to $8.1 million compared to $10 million in Q1 2023.
- Net income fell to $1.2 million from $2.9 million.
- Gross profit decreased by 21% to $5.5 million.
- Gross margin declined to 67% from 69%.
- Higher operating expenses, up 17% due to increased payroll, IT spending, and expanded travel.
- Adjusted EBITDA dropped to $1.9 million from $4.0 million.
Insights
VirTra's Q1 2024 financial results present a mixed picture for investors. The company reported a
Investors should pay close attention to the
Operating expenses rose
Investors should note the strong working capital of
Looking ahead, investors should weigh the potential for improved bookings and backlog stabilization against the ongoing revenue challenges and rising operational costs. The company's strategic initiatives, including V-XR, could pave the way for long-term growth, but short-term volatility remains a key risk.
The impending launch of VirTra's V-XR platform marks a significant step forward for the company. This extended reality (XR) training platform, which aims to enhance soft skills development, expands VirTra’s capabilities beyond its traditional law enforcement market into healthcare and education sectors. This diversification is strategically sound, as it opens new revenue streams and reduces the company's reliance on government contracts, which can be unpredictable.
The integration of more comprehensive and diverse scenarios into their content library is another important development. By improving the range and quality of training scenarios, VirTra enhances the effectiveness of its training solutions, making them more attractive to a broader range of clients. This can potentially lead to higher customer satisfaction and retention, key drivers of recurring revenue.
Operationally, VirTra's consolidation into a single production facility and the implementation of an upgraded ERP system are noteworthy. These enhancements should improve production efficiency, quality and delivery times, directly impacting customer satisfaction and operational scalability. Such improvements are essential for handling increased demand as the company penetrates new markets.
However, investors should be aware of the risks associated with the adoption of new technologies like XR. While the potential market is vast, the competition is fierce and the success of V-XR will depend on its ability to meet or exceed market expectations. Additionally, the initial costs and learning curve associated with adopting and integrating new technologies can temporarily strain resources and finances.
Overall, VirTra's technological advancements and strategic diversification appear promising for long-term growth, though short-term execution risks should be closely monitored.
VirTra Advances Preparations for V-XR Deliveries
Strategic Military Training Initiatives Position Company for Continued Market Penetration
CHANDLER, Ariz., May 14, 2024 (GLOBE NEWSWIRE) -- VirTra, Inc. (Nasdaq: VTSI) (“VirTra” or the “Company”), a global provider of judgmental use of force training simulators, firearms training simulators for the law enforcement and military markets, reported results for the first quarter ended March 31, 2024. The financial statements are available on VirTra’s website and here.
First Quarter 2024 and Recent Operational Highlights:
- Progressed V-XR launch preparations. VirTra readied its extended reality training platform focused on soft skills development, for market introduction in the coming months. This strategic launch is expected to broaden VirTra’s reach within core law enforcement markets and expand the company’s presence in new sectors such as healthcare and education.
- Continued enhancing content delivery capabilities. VirTra expanded its content library across its multiple training platforms, integrating more comprehensive and diverse scenarios that address a wider range of real-world situations, thus improving training effectiveness across various use cases.
- Continued improving operational efficiencies through production optimization processes and ERP enhancements, supporting faster order fulfillment and scalable growth.
- Maintained robust working capital at
$33.2 million , positioning the Company for sustained growth and operational agility.
First Quarter 2024 Financial Highlights:
For the Three Months Ended | ||||
All figures in millions, except per share data | March 31, 2024 | March 31, 2023 | % Δ | |
Total Revenue | $8.1 | -19% | ||
Gross Profit | $5.5 | -21% | ||
Gross Margin | 67% | -2% | ||
Net Income | $1.2 | N/A | ||
Diluted EPS | $0.11 | N/A | ||
Adjusted EBITDA | $1.9 | N/A | ||
Management Commentary
CEO John Givens stated, “The first quarter of 2024, while showing a dip in revenue, marked another period of strategic execution as we continue to build on the transformative groundwork laid over the past two years. The anticipated revenue fluctuation was primarily due to the cyclical nature of budget allocations, often skewed towards year-end, coupled with the impact of the U.S. government’s continuing resolution, and the completion of a large portion of our capital backlog in 2023. We remain optimistic that the integration of new sales strategies and team members will begin to influence our financial results as the year progresses, especially as these initiatives mature and the U.S. government budget resolutions advance, catalyzing purchasing decisions.
“The forthcoming launch of V-XR is set to broaden the scope of our training solutions, tailored to all agency sizes and budgets. This new platform will also expand our market reach into sectors such as healthcare and education. With V-XR, we are cultivating a frontier for continued growth and reinforcing our position as a leader in producing effective training outcomes.
“Our operational enhancements, including our consolidation into a single state-of-the-art production facility and the implementation of an upgraded ERP system, have been pivotal in elevating our operational excellence. These improvements have enabled more efficient production, higher quality outputs, and quicker delivery times, thereby enhancing customer satisfaction. Additionally, the Microsoft IVAS contract has propelled our research and development efforts in the military market, advancing our technology and providing insights that aid in deeper market penetration both domestically and abroad. As our strategic initiatives continue to take root throughout 2024, we are well-positioned to capitalize on the opportunities presented by our upcoming technology introductions and growing content library.”
First Quarter 2024 Financial Results
Total revenue was
Gross profit totaled
Net operating expense was
Operating income was
Net income was
Adjusted EBITDA, a non-GAAP metric, was
Cash and cash equivalents were
Financial Commentary
CFO Alanna Boudreau remarked, “The first quarter demonstrated the effectiveness of our operational enhancements in maintaining a strong gross margin. Despite a challenging revenue environment, we implemented rigorous cost management strategies, focusing on optimizing our production processes and strategic procurement to mitigate the impacts of increased costs from key contracts and operational expansions. Our recurring revenue streams, including the STEP program, services, and warranties, continued to grow in Q1, reaching
Conference Call
VirTra’s management will hold a conference call today (May 14, 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: 13746016
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 May 28, 2024.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13746016
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 Three Months Ended | ||||||||||||||||
March 31, | March 31, | Increase | % | |||||||||||||
2024 | 2023 | (Decrease) | Change | |||||||||||||
Net Income | $ | 1,216,173 | $ | 2,946,373 | $ | (1,730,200 | ) | -59 | % | |||||||
Adjustments: | ||||||||||||||||
Provision for income taxes | 511,437 | 641,345 | (129,908 | ) | -20 | % | ||||||||||
Depreciation and amortization | 236,547 | 227,570 | 8,977 | 4 | % | |||||||||||
Interest (net) | (177,898 | ) | 48,183 | (226,081 | ) | -469 | % | |||||||||
EBITDA | 1,786,259 | 3,863,471 | (2,077,212 | ) | -54 | % | ||||||||||
Right of use amortization | 127,893 | 121,774 | 6,119 | 5 | % | |||||||||||
Adjusted EBITDA | $ | 1,914,152 | $ | 3,985,245 | $ | (2,071,093 | ) | -52 | % | |||||||
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 (Unaudited) | ||||||||
March 31, 2024 | December 31, 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,415,177 | $ | 18,849,842 | ||||
Accounts receivable, net | 10,300,165 | 15,724,147 | ||||||
Inventory, net | 12,292,460 | 12,404,880 | ||||||
Unbilled revenue | 1,681,375 | 1,109,616 | ||||||
Prepaid expenses and other current assets | 832,712 | 906,803 | ||||||
Total current assets | 47,521,889 | 48,995,288 | ||||||
Long-term assets: | ||||||||
Property and equipment, net | 16,799,459 | 15,487,012 | ||||||
Operating lease right-of-use asset, net | 588,794 | 716,687 | ||||||
Intangible assets, net | 565,318 | 567,540 | ||||||
Security deposits, long-term | 35,691 | 35,691 | ||||||
Other assets, long-term | 201,670 | 201,670 | ||||||
Deferred tax asset, net | 3,663,357 | 3,630,154 | ||||||
Total long-term assets | 21,854,289 | 20,638,754 | ||||||
Total assets | $ | 69,376,178 | $ | 69,634,042 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,695,042 | $ | 2,282,427 | ||||
Accrued compensation and related costs | 2,176,078 | 2,221,416 | ||||||
Accrued expenses and other current liabilities | 4,382,361 | 3,970,559 | ||||||
Note payable, current | 226,655 | 226,355 | ||||||
Operating lease liability, short-term | 323,038 | 317,840 | ||||||
Deferred revenue, short-term | 5,538,525 | 6,736,175 | ||||||
Total current liabilities | 14,341,699 | 15,754,772 | ||||||
Long-term liabilities: | ||||||||
Deferred revenue, long-term | 3,004,418 | 3,012,206 | ||||||
Note payable, long-term | 7,751,585 | 7,813,021 | ||||||
Operating lease liability, long-term | 289,687 | 432,176 | ||||||
Total long-term liabilities | 11,045,690 | 11,257,403 | ||||||
Total liabilities | 25,387,389 | 27,012,175 | ||||||
Commitments and contingencies (See Note 11) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock | - | - | ||||||
Common stock | 1,110 | 1,109 | ||||||
Class A common stock | - | - | ||||||
Class B common stock | - | - | ||||||
Additional paid-in capital | 32,108,513 | 31,957,765 | ||||||
Retained earnings | 11,879,166 | 10,662,993 | ||||||
Total stockholders’ equity | 43,988,789 | 42,621,867 | ||||||
Total liabilities and stockholders’ equity | $ | 69,376,178 | $ | 69,634,042 |
VIRTRA, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, 2024 | March 31, 2023 | |||||||
Revenues: | ||||||||
Net sales | $ | 8,094,398 | $ | 10,026,935 | ||||
Total revenue | 8,094,398 | 10,026,935 | ||||||
Cost of sales | 2,632,257 | 3,077,997 | ||||||
Gross profit | 5,462,141 | 6,948,938 | ||||||
Operating expenses: | ||||||||
General and administrative | 3,370,422 | 2,711,337 | ||||||
Research and development | 693,380 | 766,296 | ||||||
Net operating expense | 4,063,802 | 3,477,633 | ||||||
Income from operations | 1,398,339 | 3,471,305 | ||||||
Other income: | ||||||||
Other income | 329,271 | 183,642 | ||||||
Gain on forgiveness of note payable | - | (67,229 | ) | |||||
Other income | ||||||||
Net other income | 329,271 | 116,413 | ||||||
Income before provision for income taxes | 1,727,610 | 3,587,718 | ||||||
Provision for income taxes | 511,437 | 641,345 | ||||||
Net income | $ | 1,216,173 | $ | 2,946,373 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.11 | $ | 0.27 | ||||
Diluted | $ | 0.11 | $ | 0.27 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 10,959,298 | 10,917,311 | ||||||
Diluted | 10,961,188 | 10,919,391 |
VIRTRA, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
Three Months Ended March 31 | ||||||||
2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 1,216,173 | $ | 2,946,373 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 236,547 | 227,570 | ||||||
Right of use amortization | 127,893 | 121,774 | ||||||
Employee stock compensation | 139,999 | 24,063 | ||||||
Bad Debt Expense | 245,089 | - | ||||||
Stock issued for service | - | 75,000 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 5,178,893 | (1,686,838 | ) | |||||
Inventory, net | 112,420 | (1,155,466 | ) | |||||
Deferred taxes | (33,203 | ) | (865,745 | ) | ||||
Unbilled revenue | (571,759 | ) | (430,488 | ) | ||||
Prepaid expenses and other current assets | 74,091 | (1,675 | ) | |||||
Other assets | - | (792 | ) | |||||
Accounts payable and other accrued expenses | (246,905 | ) | 1,610,884 | |||||
Operating lease right of use | (137,291 | ) | (126,592 | ) | ||||
Deferred revenue | (1,205,438 | ) | 240,535 | |||||
Net cash provided by operating activities | 5,136,509 | 978,603 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (1,546,772 | ) | (163,441 | ) | ||||
Net cash (used in) investing activities | (1,546,772 | ) | (163,441 | ) | ||||
Cash flows from financing activities: | ||||||||
Principal payments of debt | (35,152 | ) | (57,750 | ) | ||||
Proceeds from Stock based options | 10,750 | 16,726 | ||||||
Net cash (used in) financing activities: | (24,402 | ) | (41,024 | ) | ||||
Net increase in cash | 3,565,335 | 774,138 | ||||||
Cash and restricted cash, beginning of period | 18,849,842 | 13,483,597 | ||||||
Cash and restricted cash, end of period | $ | 22,415,177 | $ | 14,257,735 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid: | ||||||||
Income taxes paid | $ | 24,002 | $ | 108,777 | ||||
Interest paid | $ | 61,552 | $ | 3,345 |
FAQ
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