16% Revenue Growth for Full Year 2022; Ended the Year with Record Backlog of $27.7 Million
CHANDLER, Ariz. — March 31, 2023 — 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, 2022. The financial statements are available on VirTra’s website and here.
“Our strong performance in 2022 was the result of continued execution against our business strategy as we generated record revenue and bookings and delivered another period of solid profitability,” said Bob Ferris, chairman and co-CEO of VirTra. “During the year, we made aggressive investments to expand the breadth and effectiveness of our training offerings, including launching VirTra Volumetric Video, a breakthrough technology that has the potential to provide a step-function change in training content. Operationally, we successfully centralized and expanded our Arizona headquarters, opened a new facility in Orlando to support our military growth opportunities, as well as implemented a new ERP system to prepare for greater scale with an eye to improve efficiencies.”
John Givens, co-CEO of VirTra added: “Looking ahead, our operational and technological advancements in 2022 have bolstered our competitive positioning and placed us on a solid growth trajectory for the years ahead. The growing demand and constructive funding environment for VirTra’s innovative trainings solutions gives us confidence in our ability to capitalize on the robust pipeline of opportunities in both the law enforcement and military markets.”
Total revenue was $8.7 million, compared to $8.6 million in the fourth quarter of 2021. The slight increase in revenue was the result of increases in STEP sales, simulator sales, accessories, curriculum and training, and recurring extended warranty revenue, driven by the law enforcement market.
Gross profit was $5.3 million, an improvement compared to $2.8 million in the fourth quarter of 2021. Gross profit margin, defined as total revenue less cost of sales, was 61.4%, an improvement compared to 32.7% in the fourth quarter of 2021. The increase in gross profit was primarily due to lower cost of goods sold and the favorable product mix of systems, accessories and services sold in the quarter.
Net operating expense was $3.4 million, compared to $3.0 million in the fourth quarter of 2021. The increase in net operating expenses was due to increased sales and marketing spend from increased participation in industry trade shows, as well as increases in R&D expenses and an increase in one-time costs related to facility moves.
Operating income (loss) totaled $1.9 million, compared to $(0.2) million in operating income the fourth quarter of 2021.
Net income totaled $1.4 million, or $0.13 per diluted share (based on 10.9 million weighted average diluted shares outstanding), compared to net income of $13,000, or $0.00 per diluted share (based on 10.1 million weighted average diluted shares outstanding), in the fourth quarter of 2021.
Adjusted EBITDA, a non-GAAP metric, totaled $1.7 million, compared to $0.5 million in the fourth quarter of 2021.
Total revenue increased 16% to $28.3 million from $24.4 million in 2021. The increase in revenue was the result of increases in STEP sales, simulator sales, accessories, curriculum and training, and recurring extended warranty revenue in 2022.
Gross profit was $16.3 million, compared to $11.4 million in 2021, representing an increase of 43%. Gross profit margin, defined as total revenue less cost of sales, was 57.4%, compared to 46.7% for the fiscal year of 2021. The increase in gross profit was primarily due to the increase in simulator system sales and recurring STEP revenue that helped to increase revenue while decreasing cost of goods sold.
Net operating expense was $13.7 million, compared to $10.0 million for the fiscal year of 2021. The increase was the result of increases research and development expenses and general and administrative expenses. General and administrative expense increases were driven by an increase in marketing expenses associated with attendance at tradeshows, which began to open back up in 2022 as well as costs related to the moving of facilities and opening the new facility in Orlando.
Operating income increased 78% to $2.6 million, compared to $1.5 million in 2021.
Net income totaled $2.0 million, or $0.18 per basic and diluted share (based on 10.9 million weighted average basic shares and 10.9 million weighted average diluted shares outstanding), compared to net income of $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 diluted shares outstanding) in 2021. The decrease in net income includes a $1.3 million impact from PPP loan forgiveness in 2021. Without the PPP forgiveness in 2021, net income in 2022 would have increased 60% year-over-year from 2021.
Adjusted EBITDA, a non-GAAP metric, totaled $3.6 million, compared to $2.1 million in 2021.
“In 2022, VirTra grew revenue for the 17th consecutive year on its way to expanding gross profit margins over 57% and improving operating income by over $1 million,” added CFO Alanna Boudreau “The Company’s ability to grow profitability amidst operational transformations accentuates the strength of our business model and VirTra’s growing role in the law enforcement and military simulator markets. We rounded out the year with a solid bottom line performance, recording operating income of $1.9 million and net income of $1.4 million in the fourth quarter. Entering 2023, we have a meaningful set of opportunities, as we exited 2022 with record bookings of $33.0 million and a record backlog of $27.7 million.”
VirTra’s management will hold a conference call today (March 31, 2023) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. VirTra’s chairman and co-CEO, Bob Ferris, co-CEO 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: 13736693
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 simultaneously and is available for replay here and via the investor relations section of the company’s website.
A replay of the call will be available after 8:30 p.m. Eastern time on the same through April 14, 2023.
U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13736693
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.
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:
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Matt Glover and Tom Colton
Gateway Group, Inc.