VTSI
$2.18
Virtra Systems
($.07)
(3.11%)
Earnings Details
Quarter December 2019
Monday, March 23, 2020 4:05:00 PM
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Summary

Virtra Systems (VTSI) Recent Earnings

Virtra Systems (VTSI) reported a Quarter December 2019 loss of $0.01 per share on revenue of $5.9 million. on revenue of $3.7 million. Revenue grew 132.6% on a year-over-year basis.

Results
Reported Earnings
($0.01)
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$5.9 Mil
Revenue Estimate
$3.7 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

VirTra Reports Fourth Quarter and Full Year 2019 Financial Results

TEMPE, Ariz., March 23, 2020 (GLOBE NEWSWIRE) -- VirTra, Inc. (NASDAQ: VTSI) (“VirTra”), a global provider of training simulators for the law enforcement, military, educational and commercial markets, reported results for the fourth quarter and full year ended December 31, 2019. The financial statements are available on VirTra’s website and here.

Fourth Quarter 2019 and Recent Highlights:

  • Received $2.3 million follow-on order from Arizona Department of Safety for judgmental use-of-force training and firearms simulators, including virtual firing ranges
  • Received $1.1 million order through new distributor in Europe to provide European law enforcement and military personnel with industry-leading technology and training methods
  • Launched the world’s first 4K 300-degree simulators and received inaugural orders from Federal Law Enforcement Training Center (FLETC)
  • Expanded intellectual property in two critical areas: converting real firearms and TASERs® for simulation training
  • Launched driving simulators, V-DTS™, for U.S. and international law enforcement

Fourth Quarter and Full Year 2019 Financial Highlights:

 All figures in millions, except per share dataQ4 2019Q4 2018% ? FY 2019FY 2018% ? 
Total Revenue$5.9 $2.5 133%$18.7 $18.1 3% 
         
Gross Profit$2.6 $1.0 176%$9.7 $11.0 -12% 
Gross Margin44.8%37.8%19%51.9%61.1%-15% 
         
Net Income (Loss)($0.1)($1.3)N/A ($0.1)$0.8 N/A 
Diluted EPS($0.01)($0.16)N/A ($0.01)$0.10 N/A 

Management Commentary

“In the fourth quarter of 2019, we continued to capitalize on the momentum we’ve generated throughout the year by successfully executing against the strategic priorities we outlined last year,” said Bob Ferris, Chairman and Chief Executive Officer of VirTra. “Financially, the fourth quarter was highlighted by $5.9 million in revenue and $729,000 in adjusted EBITDA. These financial improvements were in large part due to VirTra’s growing reputation as the most trusted name for effective simulation training and our team’s ability to effectively deliver orders from the robust pipeline of business we’ve built. 

“Due to our positive financial results in the latter half of the year, we were able to grow revenues for the 14th consecutive year. Our ability to consistently drive growth on an annual basis is a direct result of continuously introducing innovative solutions to the market, like our driving simulators, 4-K 300-degree simulators, and new drop-in recoil kit capabilities, while expanding the depth and breadth of our certified training curriculum. These products and programs enable us to better serve our customers and improve our industry position for the future.  

“We’ve entered 2020 with a $9.6 million backlog along with the most expansive customer and product portfolio in our company’s history. While we cannot predict the full impact of COVID-19 on our industry, effectively training law enforcement and military personnel will remain integral to ensuring the safety of our communities, especially during this time. We are honored to play our part to ensure first responders have the best training possible.”

Fourth Quarter 2019 Financial Results

Total revenue increased 133% to $5.9 million from $2.5 million in the fourth quarter of 2018. The increase in total revenue was due to increases in sales of simulators, accessories, curriculum and training.

Gross profit increased 176% to $2.6 million (44.8% of total revenue) from $957,000 (37.8% of total revenue) in the fourth quarter of 2018. The increase in gross profit was primarily due to differences in the quantity and type of simulator systems, type of accessories and variety of services sold.

Net operating expense decreased 19% to $2.3 million from $2.8 million in the fourth quarter of 2018. The decrease in net operating expense was due to decreases in general and administrative expense as well as research and development expense due to custom training content development projects for clients.

Income from operations was $356,000 compared to a loss of $1.9 million in the fourth quarter of 2018.

Net loss totaled $66,000 or $(0.01) per diluted share, compared to net loss of $1.3 million or $(0.16) per diluted share in the fourth quarter of 2018.

Adjusted EBITDA was $729,000 compared to a loss of $246,000 in the fourth quarter of 2018.

At December 31, 2019, backlog totaled approximately $9.6 million. At December 31, 2019, accounts receivable and unbilled revenues totaled approximately $5.9 million compared to $2.0 million at December 31, 2018, an increase of $3.9 million. Cash and cash equivalents and certificates of deposit totaled $3.3 million at quarter end.

Full Year 2019 Financial Results

Total revenue increased 3% to a record $18.7 million from $18.1 million in 2018. The increase in total revenue was driven by increases in sales of simulators, accessories, curriculum and training, and recurring extended warranty revenue in 2019.

Gross profit decreased 12% to $9.7 million (51.9% of total revenue) from $11.0 million (61.1% of total revenue) in the 2018. The decrease in gross profit was primarily due to differences in the quantity and type of simulator systems, type of accessories and variety of services sold.

Net operating expense decreased 6% to $9.5 million from $10.0 million in 2018. The decrease in net operating expense was due to a decrease in stock option compensation and redemptions and a decrease in professional services and public company expenses, which were partially offset by an increase in salaries and benefits, an increase in sales and marketing, and an increase in facilities costs.

Income from operations was $262,000 compared to $1.0 million in 2018.

Net loss totaled $75,000, or $(0.01) per diluted share, compared to net income of $818,000, or $0.10 per diluted share, in the comparable period a year ago.

Adjusted EBITDA was $1.1 million compared to $1.9 million in 2018.

Conference Call

VirTra management will hold a conference call today (March 23, 2020) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. VirTra’s Chairman and CEO, Bob Ferris, and CFO, Judy Henry, will host the call, followed by a question and answer period.

U.S. dial-in number: 844-369-8770
International number: 862-298-0840

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 VirTra’s website.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through April 6, 2020.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 33519

About VirTra
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 table:

   Three Months Ended  For the Years Ended
   December 31, December 31, Increase  December 31, December 31, Increase
Reconciliation of net (loss) income to adjusted EBITDA 2019  2018 (Decrease)   2019  2018 (Decrease)
               
 Net (loss) income$(65,752) $(1,270,057) $1,204,305   $(75,277) $818,092 $(893,369)
  Adjustments:            
  Provision for income taxes 423,186   561,749   (138,563)   446,725   309,998  136,727 
  Depreciation and amortization 85,482   73,903   11,579    307,952   291,855  16,097 
 EBITDA$442,916  $(634,405) $1,077,321   $679,400  $1,419,945 $(740,545)
  Impairment loss on That's Eatertainment, related party 280,000   120,793   159,207    280,000   254,933  25,067 
  Non-cash stock option compensation -   468   (468)   -   7,124  (7,124)
  Reserve for note receivable 5,701   266,813   (261,112)   108,174   266,813  (158,639)
               
 Adjusted EBITDA$728,617  $(246,331) $974,948   $1,067,574  $1,948,815 $(881,241)

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 SEC. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the Securities and Exchange Commission 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 or Charlie Schumacher
VTSI@gatewayir.com
949-574-3860

 
VIRTRA, INC.
BALANCE SHEETS
     
  December 31, 2019 December 31, 2018
     
ASSETS   
Current assets:   
 Cash and cash equivalents$1,415,091  $2,500,381 
 Certificates of deposit 1,915,000   3,490,000 
 Accounts receivable, net 2,307,972   1,302,010 
 Interest receivable 7,340   21,385 
 That's Eatertainment interest and note receivable, net, related party -   292,138 
 Trade note receivable, net -   96,282 
 Inventory, net 1,949,414   1,612,002 
 Unbilled revenue 3,579,942   689,153 
 Prepaid expenses and other current assets 353,975   377,520 
     
 Total current assets 11,528,734   10,380,871 
     
Long-term assets:   
 Property and equipment, net 1,028,198   678,245 
 Operating lease right-of-use asset, net 1,390,873   - 
 Intangible assets, net 217,930   - 
 That's Eatertainment note receivable, long term, net, related party 291,110   - 
 Trade note receivable, long term -   6,843 
 Security deposits, long-term 19,712   339,756 
 Other assets, long-term 351,236   292,298 
 Deferred tax asset, net 1,792,000   2,400,000 
 Investment in That's Eatertainment, related party 840,000   1,120,000 
     
 Total long-term assets 5,931,059   4,837,142 
     
Total assets$17,459,793  $15,218,013 
     
LIABILITIES AND STOCKHOLDERS' EQUITY
   
     
Current liabilities:   
 Accounts payable$621,127  $429,949 
 Accrued compensation and related costs 611,487   613,691 
 Accrued expenses and other current liabilities 334,751   632,606 
 Note payable, current -   11,250 
 Operating lease liability, short-term 297,244   - 
 Deferred revenue, short-term 2,490,845   1,924,307 
     
 Total current liabilities 4,355,454   3,611,803 
     
Long-term liabilities:   
 Deferred revenue, long-term 1,748,257   962,356 
 Deferred rent liability -   46,523 
 Operating lease liability, long-term 1,174,882   - 
     
 Total long-term liabilities 2,923,139   1,008,879 
     
Total liabilities 7,278,593   4,620,682 
     
Commitments and contingencies (See Note 10)   
     
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; 7,745,030 shares   
 issued and outstanding as of December 31, 2019 and 7,827,651 shares issued 775   783 
 and 7,816,944 shares outstanding as of December 31, 2018   
  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 -   - 
Treasury stock at cost; nil shares outstanding as of December 31, 2019 and -   (37,308)
 10,707 shares outstanding as of December 31, 2018.   
Additional paid-in capital 13,894,680   14,272,834 
Accumulated deficit (3,714,255)  (3,638,978)
     
Total stockholders' equity 10,181,200   10,597,331 
     
Total liabilities and stockholders' equity$17,459,793  $15,218,013 
     
See accompanying notes to unaudited condensed financial statements.
     



VIRTRA, INC.
STATEMENTS OF OPERATIONS
         
         
  For the Three Months Ended For the Years Ended
  December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Revenues:       
 Net sales$5,861,931  $2,495,333  $18,558,741  $17,522,913 
 That's Eatertainment royalties/licensing fees, related party 29,632   37,023   130,625   549,568 
 Other royalties/licensing fees 1,300   1,890   22,557   7,645 
 Total revenue 5,892,863   2,534,246   18,711,923   18,080,126 
         
 Cost of sales 3,250,231   1,577,380   8,998,232   7,030,286 
         
 Gross profit 2,642,632   956,866   9,713,691   11,049,840 
         
Operating expenses:       
 General and administrative 2,031,647   2,473,822   8,105,860   8,691,957 
 Research and development 254,553   361,074   1,345,513   1,357,982 
         
 Net operating expense 2,286,200   2,834,896   9,451,373   10,049,939 
         
 Income (loss) from operations 356,432   (1,878,030)  262,318   999,901 
         
Other income (expense):       
 Other income 1,577   46,250   115,736   132,757 
 Other expense (576)  (26)  (6,606)  (4,568)
         
 Net other income 1,002   46,224   109,130   128,189 
         
 Income (loss) before provision for income taxes 357,434   (1,831,807)  371,448   1,128,090 
         
         
 Provision for income taxes 423,186   (561,749)  446,725   309,998 
         
Net (loss) income$(65,752) $(1,270,057) $(75,277) $818,092 
         
Earnings (loss) per common share:       
 Basic$(0.01) $(0.16) $(0.01) $0.10 
 Diluted$(0.01) $(0.16) $(0.01) $0.10 
         
 Weighted average shares outstanding:       
 Basic 7,745,030   7,891,570   7,747,655   7,903,801 
 Diluted 7,745,030   7,891,570   7,747,655   8,254,376 
         
See accompanying notes to unaudited condensed financial statements.
         



VIRTRA, INC.
STATEMENTS OF CASH FLOWS
 
    For Years Ended
   December 31, 2019 December 31, 2018
      
Cash flows from operating activities:   
 Net (loss) income$(75,277) $818,092 
 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:   
  Depreciation and amortization 307,952   291,855 
  Right of use amortization 283,984   - 
  Deferred taxes 608,000   310,182 
  Impairment of investment in That's Eatertainment, related party 280,000   254,933 
  Stock compensation -   7,124 
  Reserve for note receivable 108,174   266,813 
 Changes in operating assets and liabilities:   
  Accounts receivable, net (1,005,962)  176,125 
  That's Eatertainment note receivable, net, related party (4,673)  (292,138)
  Trade note receivable, net 652   (369,938)
  Interest receivable 14,045   (21,385)
  Inventory, net (337,412)  108,436 
  Unbilled revenue (2,890,789)  532,894 
  Prepaid expenses and other current assets 23,545   208,919 
  Other assets (58,938)  (292,298)
  Security deposits, long-term 320,044   (339,756)
  Accounts payable and other accrued expenses (108,881)  303,387 
  Payments on operating lease liability (249,254)  - 
  Deferred revenue 1,352,439   (135,170)
      
Net cash (used in) provided by operating activities (1,432,351)  1,828,075 
      
Cash flows from investing activities:   
 Purchase of certificates of deposit (3,560,000)  (3,960,000)
 Redemption of certificates of deposit 5,135,000   470,000 
 Purchase of intangible assets (226,078)  - 
 Purchase of property and equipment (653,397)  (292,827)
 Proceeds from sale of property and equipment 3,640   - 
      
Net cash provided by (used in) investing activities 699,165   (3,782,827)
      
Cash flows from financing activities:   
 Repurchase of stock options (34,076)  (242,625)
 Repayment of debt (11,250)  (11,250)
 Stock options exercised 11,426   10,500 
 Purchase of treasury stock (318,204)  (381,937)
      
Net cash used in financing activities (352,104)  (625,312)
      
Net decrease in cash (1,085,290)  (2,580,064)
Cash, beginning of period 2,500,381   5,080,445 
      
Cash, end of period$1,415,091  $2,500,381 
      
Supplemental disclosure of cash flow information:   
 Cash paid:   
 Taxes (refunded) paid$(161,275) $10,074 
      
Supplemental disclosure of non-cash investing and financing activities:   
 Conversion of accounts to note receivable -   693,044 
         
 Conversion of That's Eatertainment note receivable to long term, related party 292,138   - 
 Treasury stock cancelled 355,512   456,738 
 Operating lease right of use asset and liabilities, net of deferred rent 1,674,857   - 
      
See accompanying notes to unaudited condensed financial statements.


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Source: VirTra, Inc.