Exhibit 99.1
VirTra Reports Fourth Quarter and Full Year 2021 Financial Results
28% Revenue Growth for Full Year 2021; Ended the Year with Record Backlog of $23.1 Million
CHANDLER, Ariz. — August 2, 2022 — 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.
Fourth Quarter 2021 and Full Year 2021 Highlights:
| ● | Bookings of $8.4 million in the fourth quarter of 2021 and $32.9 million in full year 2021, representing growth of 53% and 44% from the prior year comparable periods, respectively | |
| ● | Record backlog at December 31, 2021 of $23.1 million, 58% higher than December 31, 2020 | |
| ● | Purchased industrial building in Chandler, Arizona on August 25, 2021, for new VirTra headquarters to scale manufacturing capabilities and improve operational efficiencies | |
| ● | Cash and cash equivalents as of December 31, 2021 totaled $19.7 million |
Fourth Quarter 2021 Financial Summary:
| ● | Total revenue increased 32% to $8.6 million | |
| ● | Gross profit was $2.8 million, or 33% of total revenue | |
| ● | Net income was $13,000 | |
| ● | Adjusted EBITDA loss totaled $(220,000) |
Full Year 2021 Financial Summary:
| ● | Total revenue increased 28% to $24.4 million | |
| ● | Gross profit was $11.4 million, or 47% of total revenue | |
| ● | Net income was $2.5 million | |
| ● | Adjusted EBITDA totaled $2.1 million |
Fourth Quarter and Full Year 2021 Financial Highlights:
| For the Three Months Ended | For the Full Year Ended | |||||||||||||||||||||||
| All figures in millions, except per share data | December 31, 2021 | December 31, 2020 | % Δ | December 31, 2021 | December 31, 2020 | % Δ | ||||||||||||||||||
| Total Revenue | $ | 8.6 | $ | 6.6 | 32 | % | $ | 24.4 | $ | 19.1 | 28 | % | ||||||||||||
| Gross Profit | $ | 2.8 | $ | 4.8 | -41 | % | $ | 11.4 | $ | 11.9 | -4 | % | ||||||||||||
| Gross Margin | 32.7 | % | 72.5 | % | -55 | % | 46.7 | % | 62.3 | % | -25 | % | ||||||||||||
| Net Income (Loss) | $ | 0.0 | $ | 1.6 | N/A | $ | 2.5 | $ | 1.5 | N/A | ||||||||||||||
| Diluted EPS | $ | 0.00 | $ | 0.21 | N/A | $ | 0.25 | $ | 0.19 | N/A | ||||||||||||||
| Adjusted EBITDA | $ | (0.22 | ) | $ | 2.18 | N/A | $ | 2.05 | $ | 2.79 | N/A | |||||||||||||
Management Commentary
“Our 2021 results demonstrate the strength of our business and growth opportunities we are executing upon as we generated record revenue and bookings of $24.4 million and $32.9 million, respectively, while ending the year with record backlog of $23.1 million,” said Bob Ferris, chairman and co-CEO of VirTra. “We continue to successfully compete in the law enforcement market and saw impressive international and military market revenue growth during 2021 as we delivered on contracts and COVID restrictions eased internationally. We expect continued healthy growth from these sectors and are particularly excited about the commercial market, which includes military opportunities through a prime contractor. Keep in mind our new co-CEO, John Givens, has significant military experience and relationships that we expect to greatly benefit VirTra shareholders as we execute on our growth plans.
“Gross margins in 2021 and the fourth quarter in particular, were negatively impacted by materials and labor cost inflation, product mix and a strategically important military contract with initial work done at a materially lower margin than our historical results. The revenue from this military contract was heavily weighted to the fourth quarter and the lower margin was justified as it funded new VirTra product capabilities needed for military training. Further, we expect this experience will position us to be highly competitive for future military opportunities with margins more akin to our historical results.
“Looking ahead, our sales pipeline remains robust with tailwinds from a return to normalized business practices globally, allowing us to get more active with business development activities such as exhibiting at tradeshows and expanding demos for prospective customers. Additionally, our move-in to our new headquarters in Chandler, Arizona is progressing well and expected to be completed by the end of 2022. The operational efficiencies from this move, our industry-leading capabilities, and a strong balance sheet position us well to successfully compete in our targeted law enforcement and military growth markets in the years to come.
“While we are disappointed in the length of time it took to file our audited financial results for 2021, we are committed to getting our financial filings up to date this month as our ERP system is sufficiently integrated and we are operating with a more efficient process in tandem with our new independent auditors. Going forward, we expect to report our financial results in-line with our traditional cadence.”
Fourth Quarter 2021 Financial Results
Total revenue increased 32% to $8.6 million from $6.6 million in the fourth quarter of 2020. The increase in revenue was the result of increases in sales of simulators, STEP (Subscription Training and Equipment Partnership) subscriptions, accessories, curriculum and training sales, and recurring extended warranty revenue.
Gross profit was $2.8 million, compared to $4.8 million in the fourth quarter of 2020. Gross profit margin, defined as total revenue less cost of sales, was 32.7%, which was lower than the 72.5% in the fourth quarter of 2020. The decrease in gross profit was primarily due to a specific military contract with a lower margin profile, differences in the quantity and type of simulator systems, type of accessories and variety of services sold, combined with an increase in cost of sales.
Net operating expense was $3.0 million, compared to $3.4 million in the fourth quarter of 2020. The decrease in net operating expenses was due to a $434,000 impairment charge and $327,000 in bad debt expense in the fourth quarter of 2020, partially offset by increased depreciation associated with the new Chandler, Arizona headquarters and related moving expenses to the new office.
Operating loss totaled $196,000, compared to $1.3 million in operating income the fourth quarter of 2020.
Net income totaled $13,000, or $0.00 per diluted share (based on 10.0 million weighted average diluted shares outstanding), compared to net income of $1.6 million, or $0.21 per diluted share (based on 7.8 million weighted average diluted shares outstanding), in the fourth quarter of 2020.
Adjusted EBITDA, a non-GAAP metric, totaled $(220,000), compared to $2.2 million in the fourth quarter of 2020.
Full Year 2021 Financial Results
Total revenue increased 28% to $24.4 million from $19.1 million in 2020. The increase in revenue was due to an increase in the number of simulators and accessories completed, delivered and revenue recognized compared to the same period in 2020.
Gross profit was $11.4 million, compared to $11.9 million in 2020. Gross profit margin, defined as total revenue less cost of sales, was 46.7%, compared to 62.3% for the fiscal year of 2020. The decrease in gross profit margin was primarily due to a specific military project with a lower margin profile, differences in the quantity and type of simulator systems, type of accessories and variety of services sold, combined with an increase in cost of sales.
Net operating expense was $10.0 million, compared to $10.7 million for the fiscal year of 2020. The decrease was, primarily due to a $346,000 allowance for bad debt on accounts and note receivable and a one-time $840,000 impairment charge both incurred in 2020.
Operating income was $1.5 million, compared to $1.2 million in 2020.
Net income totaled $2.5 million, or $0.25 per basic and diluted share (based on 10.0 million weighted average basic shares and 10.1 million weighted average diluted shares outstanding), compared to net income of $1.5 million, or $0.19 per basic and diluted share (based on 7.8 million weighted average basic and diluted shares outstanding) in 2020.
Adjusted EBITDA, a non-GAAP metric, totaled $2.1 million, compared to $2.8 million in 2020.
Upcoming Earnings Release Timing
VirTra expects to release its first quarter 2022 results ended March 31, 2022 on August 11, 2022 after market close. The Company also expects to release its second quarter 2022 results ended June 30, 2022 on August 19, 2022 before market open. VirTra plans to host a conference call August 19, 2022 to discuss its first quarter 2022 and second quarter 2022 results. The Company expects these announcements and associated filings to meet the requirements for continued listing of its common stock on Nasdaq.
Conference Call
VirTra’s management will hold a conference call today (August 2, 2022,) 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 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 ID: 13731787
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
The conference call will be broadcast simultaneously and is available for replay here.
A replay of the call will be available through Tuesday, August 16, 2022.
U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 13731787
About VirTra, Inc.
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 Years Ended | ||||||||||||||||
| December 31, | December 31, | Increase | % | |||||||||||||
| 2021 | 2020 | (Decrease) | Change | |||||||||||||
| Net Income | $ | 2,540,089 | $ | 1,478,403 | $ | 1,061,686 | 72% | |||||||||
| Adjustments: | ||||||||||||||||
| Provision (Benefit) for income taxes | 246,050 | (218,800 | ) | 464,850 | -212% | |||||||||||
| Depreciation and amortization | 589,059 | 380,154 | 208,905 | 55% | ||||||||||||
| EBITDA | $ | 3,375,198 | $ | 1,639,757 | $ | 1,735,441 | 106% | |||||||||
| Impairment loss on That’s Eatertainment, former related party | - | 840,000 | (840,000 | ) | -100% | |||||||||||
| Reserve for note receivable | - | 311,367 | (311,367 | ) | -100% | |||||||||||
| Gain on forgiveness of note | (1,320,714 | ) | - | (1,320,714 | ) | 100% | ||||||||||
Adjusted EBITDA | $ | 2,054,484 | $ | 2,791,124 | $ | (736,640 | ) | -26% | ||||||||
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
| December 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 19,708,565 | $ | 6,841,984 | ||||
| Accounts receivable, net | 3,896,739 | 1,378,270 | ||||||
| Inventory, net | 5,014,924 | 3,515,997 | ||||||
| Unbilled revenue | 3,946,446 | 5,408,598 | ||||||
| Prepaid expenses and other current assets | 940,887 | 382,445 | ||||||
| Total current assets | 33,507,561 | 17,527,294 | ||||||
| Long-term assets: | ||||||||
| Property and equipment, net | 12,864,766 | 1,381,744 | ||||||
| Operating lease right-of-use asset, net | 784,306 | 1,094,527 | ||||||
| Intangible assets, net | 535,079 | 271,048 | ||||||
| Security deposits, long-term | 19,712 | 86,500 | ||||||
| Other assets, long-term | 189,734 | 500,114 | ||||||
| Deferred tax asset, net | 1,674,234 | 1,892,000 | ||||||
| Total long-term assets | 16,067,831 | 5,225,933 | ||||||
| Total assets | $ | 49,575,392 | $ | 22,753,227 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 789,394 | $ | 345,573 | ||||
| Accrued compensation and related costs | 1,062,078 | 843,101 | ||||||
| Accrued expenses and other current liabilities | 991,744 | 772,884 | ||||||
| Note payable, current | 236,291 | 266,037 | ||||||
| Operating lease liability, short-term | 347,772 | 321,727 | ||||||
| Deferred revenue, short-term | 4,135,565 | 4,708,575 | ||||||
| Total current liabilities | 7,562,844 | 7,257,897 | ||||||
| Long-term liabilities: | ||||||||
| Deferred revenue, long-term | 1,992,625 | 1,920,346 | ||||||
| Note payable, long-term | 8,280,395 | 1,063,243 | ||||||
| Operating lease liability, long-term | 505,383 | 853,155 | ||||||
| Other long term liabilities | 5,436 | - | ||||||
| Total long-term liabilities | 10,783,839 | 3,836,744 | ||||||
| Total liabilities | 18,346,683 | 11,094,641 | ||||||
| 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; 10,807,130 shares issued and outstanding as of December 31, 2021 and 7,775,030 shares issued and outstanding as of December 31, 2020 | 1,081 | 778 | ||||||
| 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 | 30,923,391 | 13,893,660 | ||||||
| Retained earnings (Accumulated deficit) | 304,237 | (2,235,852 | ) | |||||
| Total stockholders’ equity | 31,228,709 | 11,658,586 | ||||||
| Total liabilities and stockholders’ equity | $ | 49,575,392 | $ | 22,753,227 | ||||
VirTra, Inc.
Condensed Statements of Operations
(Unaudited)
| For the Years ended | ||||||||
| December 31, 2021 | December 31, 2020 | |||||||
| Revenues: | ||||||||
| Net sales | $ | 24,434,056 | $ | 19,038,074 | ||||
| That’s Eatertainment royalties/licensing fees, former related party | - | 45,247 | ||||||
| Other royalties/licensing fees | - | 4,310 | ||||||
| Total revenue | 24,434,056 | 19,087,631 | ||||||
| Cost of sales | 13,028,844 | 7,187,210 | ||||||
| Gross profit | 11,405,212 | 11,900,421 | ||||||
| Operating expenses: | ||||||||
| General and administrative | 8,085,295 | 9,070,730 | ||||||
| Research and development | 1,865,880 | 1,603,379 | ||||||
| Net operating expense | 9,951,175 | 10,674,109 | ||||||
| Income from operations | 1,454,037 | 1,226,312 | ||||||
| Other income (expense): | ||||||||
| Other income | 97,100 | 49,539 | ||||||
| Gain on forgiveness of note payable | 1,320,714 | - | ||||||
| Other expense | (85,712 | ) | (16,248 | ) | ||||
| Net other income | 1,332,102 | 33,291 | ||||||
| Income before provision for income taxes | 2,786,139 | 1,259,603 | ||||||
| Provision (Benefit) for income taxes | 246,050 | (218,800 | ) | |||||
| Net income | $ | 2,540,089 | $ | 1,478,403 | ||||
| Net income per common share: | ||||||||
| Basic | $ | 0.25 | $ | 0.19 | ||||
| Diluted | $ | 0.25 | $ | 0.19 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 10,007,386 | 7,757,037 | ||||||
| Diluted | 10,060,748 | 7,835,830 | ||||||
VirTra, Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Year Ended December 31, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 2,540,089 | $ | 1,478,403 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation and amortization | 589,059 | 380,154 | ||||||
| Right of use amortization | 310,221 | 296,346 | ||||||
| Reserve for note receivable | - | 291,110 | ||||||
| Deferred taxes | 217,766 | (100,000 | ) | |||||
| Impairment of investment in That’s Eatertainment, former related party | - | 840,000 | ||||||
| Gain on forgiveness of note payable | (1,329,280 | ) | - | |||||
| Employee stock compensation | 223,716 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable, net | (2,518,469 | ) | 929,702 | |||||
| Interest receivable | - | 7,340 | ||||||
| Inventory, net | (1,498,927 | ) | (2,291,394 | ) | ||||
| Unbilled revenue | 1,462,152 | (1,828,656 | ) | |||||
| Prepaid expenses and other current assets | (558,442 | ) | (28,470 | ) | ||||
| Other assets | 310,380 | (148,878 | ) | |||||
| Security deposits, long-term | 66,788 | (66,788 | ) | |||||
| Accounts payable and other accrued expenses | 881,662 | 394,193 | ||||||
| Payments on operating lease liability | (321,727 | ) | (297,244 | ) | ||||
| Deferred revenue | (500,731 | ) | 2,389,819 | |||||
| Net cash provided by (used in) operating activities | (125,743 | ) | 2,245,637 | |||||
| Cash flows from investing activities: | ||||||||
| Redemption of certificates of deposit | - | 1,915,000 | ||||||
| Purchase of intangible assets | (287,106 | ) | (62,007 | ) | ||||
| Purchase of property and equipment | (3,448,678 | ) | - | |||||
| Net cash provided by (used in) investing activities | (3,735,784 | ) | 1,852,993 | |||||
| Cash flows from financing activities: | ||||||||
| Repurchase of stock options | - | (31,183 | ) | |||||
| Principal payments of debt | (78,212 | ) | - | |||||
| Stock issued for cash in offering, net | 16,795,000 | - | ||||||
| Stock options exercised | 11,320 | 30,166 | ||||||
| Note payable-PPP Loan | - | 1,329,280 | ||||||
| Net cash provided by financing activities | 16,728,108 | 1,328,263 | ||||||
| Net increase (decrease) in cash and restricted cash | 12,866,581 | 5,426,893 | ||||||
| Cash and restricted cash, beginning of period | 6,841,984 | 1,415,091 | ||||||
| Cash and restricted cash, end of period | $ | 19,708,565 | $ | 6,841,984 | ||||