TEMPE, Ariz. — November 15, 2021 — VirTra, Inc. (NASDAQ: VTSI) (“VirTra”), a global provider of judgmental use of force training simulators, firearms training simulators and driving simulators for the law enforcement and military markets, reported results for the third quarter and nine months ended September 30, 2021. The financial statements are available on VirTra’s website and here.
Third Quarter 2021 and Recent Operational Highlights:
- Awarded $24.5 million DHS IDIQ contract for U.S. Customs and Border Protection with $1.4 million initial order
- Received $1.37 million order from a country in the Middle East for use-of-force simulators, recoil kits and various training tools, software, and accessories
- Secured $1.3 million order from a federal law enforcement agency in a European country for use-of-force simulators, weapon recoil kits and other training accessories
- Scaling manufacturing capabilities to support anticipated growth in training simulator development and production with purchase of industrial building in Chandler, AZ
Third Quarter 2021 Financial Summary:
- Total revenue was $6.1 million
- Gross profit was $2.9 million, or 47% of total revenue
- Net income totaled $1.3 million
- Adjusted EBITDA totaled $520,000
- Backlog increased 28% sequentially and 51% year-over-year to record $21.7 million
- Cash and cash equivalents totaled $21.5 million
Nine Month 2021 Financial Summary:
- Total revenue was $15.8 million
- Gross profit was $8.6 million, or 54% of total revenue
- Net income totaled $2.5 million, or $0.25 per diluted share
- Adjusted EBITDA totaled $2.3 million
Third Quarter and Nine Month 2021 Financial Highlights:
Management Commentary
“We continue to be encouraged with the accelerating market adoption of VirTra’s world-class training solutions, which is evidenced by our record quarterly bookings along with a 16% sequential increase in revenue and 28% sequential increase in backlog to a new record,” said Bob Ferris, chairman and chief executive officer of VirTra. “Q3 was also highlighted by several noteworthy contract wins, including a $24.5 million IDIQ contract with the U.S. Department of Homeland Security for U.S. Customs and Border Protection and two international contract wins totaling $2.7 million, which give us optimism regarding our international prospects. Our military opportunity set remains robust with recent contracts wins, and while predicting timing of a major inflection point for more substantial revenue contribution from this market can be challenging, we nonetheless have confidence that the military market will be an important contributor to VirTra in the future.
“We continue to execute on our strategic initiatives designed to scale our business for even greater success. Our enhanced capabilities, expanded team, and strong balance sheet, give us confidence in our ability to capitalize on our pipeline of opportunities and the growing need for effective and realistic training solutions globally.”
Third Quarter 2021 Financial Results
Total revenue was $6.1 million, compared to $6.4 million in the third quarter of 2020. The decrease in revenue resulted from the product mix of sales and delivery schedules to accommodate our customers’ needs.
Gross profit was $2.9 million, compared to $4.0 million in the third quarter of 2020. Gross profit margin, defined as total revenue less cost of sales, was 47.2%, which was lower than the 61.9% in the third quarter of 2020. The decrease in gross profit and gross profit margin were due to an increase in reserve for inventory as operations scale.
Net operating expense was $2.6 million, compared to $2.7 million in the third quarter of 2020. The decrease was primarily due the impairment write down in 2020 offset by the transition to a Company-wide ERP system in 2021 which included software fees, consulting, and time invested by Company staff.
Income from operations totaled $266,000, compared to $1.2 million in the third quarter of 2020.
Net income totaled $1.3 million, or $0.12 per diluted share (based on 11.0 million weighted average diluted shares outstanding), compared to net income of $868,000, or $0.11 per diluted share (based on 7.8 million weighted average diluted shares outstanding), in the third quarter of 2020. Net income in the third quarter of 2021 benefited from a non-recurring $1.3 million gain on forgiveness of the company’s Paycheck Protection Program loan.
Adjusted EBITDA, a non-GAAP metric, totaled $520,000, compared to $1.6 million in the third quarter of 2020.
Backlog increased 51% to a record $21.7 million, compared to $14.4 million at the end of the third quarter of 2020.
Nine Months Ended September 30, 2021 Financial Results
Total revenue was $15.8 million, compared to $12.5 million for the first nine months of 2020. The increase in revenue for the nine months ended September 30, 2021 resulted from an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2020.
Gross profit was $8.6 million, compared to $7.1 million for the first nine months of 2020. Gross profit margin, defined as total revenue less cost of sales, was 54.3%, compared to 57.0% for the first nine months of 2020. The decrease in gross profit margin was due to a one-time impact from an increase in reserve for inventory as our operations scale.
Net operating expense was $6.9 million, compared to $7.3 million for the first nine months of 2020. The decrease was primarily due to the impairment write down in 2020 offset by an increase in software licenses in 2021.
Operating income was $1.7 million, an improvement compared to an operating loss of $115,000 for the first nine months of 2020.
Net income totaled $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 weighted average diluted shares outstanding), an improvement compared to a net loss of $123,000, or $(0.02) per basic and diluted share (based on 7.8 million weighted average basic and diluted shares outstanding), for the first nine months of 2020.
Adjusted EBITDA, a non-GAAP metric, totaled $2.3 million, compared to $615,000 for the first nine months of 2020.
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 and military markets. The company’s patented technologies, realistic drop-in recoil kits, software, and immersive science-based 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.
