VTSI - Earnings call transcript Q2 2024

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Operator

Good afternoon, and welcome to VirTra's Second Quarter 2024 Earnings Conference Call. My name is Paul, and I will be your operator for today's call.

Joining us for today's presentation are the company's CEO, John Givens; and CFO, Alanna Boudreau.

Following their remarks, we will open the call for questions.

Before we begin the call, I would like to provide VirTra's safe harbor statement that includes cautions regarding forward-looking statements made during this call.

which may products projections, or risks and statements made. the management about or otherwise and presentation, subject materially about company's and from cause the services future, to uncertainties this that discuss number actual information financial expectations make to could During a forward-looking results of differ are or statements markets the required any by not company undertake obligation to them does law. as The update

for www.virtra.com. available via Finally, of call to will in I'd Investor a remind this the made like link that the everyone be company's replay Relations section website at

Now call Mr. CEO, to I'd John like turn over to you. the Givens. Thank VirTra's

sir. may proceed, You

John Givens

including Paul, engagements concluding and our it second financial highlighted business After provided moving our market XX, military a release some that, for us you, achievements, second review. that with Thank closed quarter everyone, Q&A to on XXXX, V-XR financial before along performance our a detailed thank this the After the I'll quarter for results discussing ended press before to for our launch afternoon. by Alanna provide June the and joining today, of remarks strategic and accomplishments. Today, over you, markets we portion. handing begin platform I'll issued

results ramp quarter the up second reflect transitional we a Our our continuation initiatives. period as of new sales

second entered the hoped, full progress. responsibility take into we in for to I performance And our had While results. we not strong have as was a these reboot half position

go-to-market uncontrollables delayed budgeting the year. are factors. of controllables controllable first uncontrollable delayed in came The the resolutions due The at being our to being half revenue $X.X both from during the results Our million. decision-making are and efforts,

uncontrollable the finding controllable making areas, areas are the and We I'll detail which shortly. to progress workarounds on

improved will positive last support strong of efficiencies yielding Notably, robust, and exceptionally the XX%, million strengthened gain year this capitalize top approach. increased sales as highlighting still sales and market initiatives put conditions place by forward. are that remains our since QX, our in efficiencies margins moving challenges, are it we maintained momentum. of $X our line to results, results. the positioned solution and recent demonstrating year the bookings our we on our operational gross demand for These quarter-over-quarter, doubling we Despite growth beginning Despite

the delayed We the primarily budget have head headwinds federal are of that faced tackling are local These to realities external levels. half year in decisions the on. at due excuses, and but we not first

secure increasing compressing, maintain While local opportunities. budgets and growth to grants, which strengthened approach funding our on helps ability for enforcement law will are capitalize pipeline are and provide our federal This our essential us we have customers.

us prioritize While using these sales grant relationships. our customer it important and ultimately long-term grow the are cycle slightly, money as extends we helps efforts base,

seize budgets open, military with Additionally, to positioned we growth beginning are opportunities the new there in to quarters. coming

in long-term beginning VirTra efforts. may our data the week, integration, to customer a of last with lead Technology plan you Cox on and build product instrumental we addition sales. large to relationships accelerating career, contracts, VirTra our Brandon and wealth announced that to me my in there's I do military seen, whole With the analytics opportunity for will what effort significant Having Brandon and have experience Chief I've team team. our done our which will free budgets drive -- new open As sales to Officer. up a innovation win Brandon leading to in system as and and be development brings of up, to

enhance we our In are internal operations. continuing changes made parallel our in process, the we've with to sales

errors and help ERP we've our to operations us several as reduce our well improve times. to others year, past Over the are ultimately rebuilt production This book-to-ship as continuing system. our improve completely increase change throughput,

As we we grow equipped sales, well effectively. are scale to our

We our to content. having the in addition right to operations scale, position. In continue competitive we invest strengthened to

by our active include experts. expanded developed and have industry scenario We library to our like crisis more situations responses shooter real-world intervention

we've responding. content proper Since train to newer X security additional to than Hospital, that the response is potential. that we've we staff content the for of market safety solutions V-XXX more One create demand additional increase John's health to initial staff reception institutions. in care hospital these our patient begun seen significant our St. an for for untapped the for of scenario areas ensure common Ascension's shows scenarios deployment when training The created The on early and the field. allows

We content continuing markets. grow expect to sales also to V-XR our create these and are for applications these in

we excited the are our creating, the content V-XR. new we of launch upcoming about are With

extended health reality training is disrupt new professional designed environments. improve other skill applications solution education law enforcement, care, training and set to in soft related sectors. It's Our to across enhance and

constraints We diverse accommodate training and are specific customizing requirements. V-XR budget the agency sizes, to

scenario-based and strong a positions shoot, critical professionals shoot development V-XR beyond training, pillar in strategy. It's diffuse the array build wide enabling navigate long-term conflicts extending don't of potential relationships. V-XR better growth key on skills, our situations, By traditional as sensitive community interpersonal to focuses application of

the we've Since our last scenarios product additional added is that call, was X launched. when also shipped

prepared shipping. ready this with growth. we take With sustained complete, and then substantial once We and to temporarily market margins moderate launch, strong are conditions is currently begin finalizing Meta. to be we'll are profit to more this share secure our ensure terms And and orders

decreased million federal our budget year. I'll expected contracts rundown in with decisions difference the the the our Before attributed is impacted million to frame. give prior government close ability time In Alanna, our in which delay markets QX. $X.X turning -- end how call This over of second to performed in from the to you to $X.X revenue a within the quarter,

are earlier the mentioned on now federal the cuts I funding continuous grant law in heavily budgets call, As rely and enforcement facing from government.

and federal funding. the Our between customer grant program help will gap bridge watch this

in slight million, lead revenue which pipeline, million execution the is international long from the in was international decrease our to $X.X primarily due our Internationally, $X.X times of XXXX. slowed a opportunities. revenue in have decrease The

grow, in continuing as we higher expect the several the pipeline to With our are budgets approved. rates close next quarters international

of our future sales. a streams to more a restructuring, international these are we stabilize we And our pipeline. part dedicated forecast changes and build sales now this ability segment international out As within enhancing revenue to team have continue as predictable

progress our to Turning in military. the

System, Visual We Army's progress are Augmentation U.S. continuing to IVAS program. with make Integrated or

industry-leading reaffirms million $X.X As air contract this contractor. with all a as collaboration in fill our secured stations reminder, hardware kits, of of our U.S. the a and stringent highlights innovate performance Included training. and our a to also in is This Microsoft to partnership high-pressure the engineered are magazines, adapt our through reliability the requirements. recoil and Army's needs order military this prime and prototype meet demanding response technology to capability

by our marketing into Defense strategic We U.S. Department channels through are further targeted focused and also expanding these campaigns and reach federal of pursuing opportunities on initiatives.

We have significant larger securing complex unit areas. Federal deployed channels. The is key defense team in a and opportunities in strategically Department with contracts specialized drive sales tasked these and equipped growth dedicated U.S. to navigate

for conducted reliably, emphasizes them done by research further accurately verified This over funding and known virtuous qualifying shooting This of by an approved State we've confirms thereby also and can we're performance Defense as time projects. quarter, consistent was simulators and study a Ohio record research what independent potential. our for individual research University This Department track approval progress tool.

I'll over results our Alanna in now to to further turn Alanna? the call discuss detail. financial

Alanna Boudreau

and John, you, Thank good everyone. afternoon,

in to due million XXXX. was let's compared period. June revenue first primarily caused year. to results ended for bookings half hold. to our of the XX, unaudited on Now federal numerous to Total the U.S. was delays review financial the funding This the in government's the $XX.X decrease continuing $X.X prior be resolution, attributed contracts in year placed quarter challenge second million The impacted temporary which

XX% of profit to totaled in was revenue year. total in gross total prior decrease change the million, XX% The the $X.X X% profit of revenue primarily Our in sales. due gross compared to million, $X.X

sales the the service million in year prior contracts. adding requirements as revenue by improved the projects increased revenue. Net mainly to offsetting strategic expense $X costs expenses our as for sales our cost hiring million, the IT driving increased step margin compliance by well XX% period. increase marking This operational of our in development investments and of total to increase with a operating was lower due initiatives. -- to our $X.X for Also future cost was driven and have enhancement, and limited current related marketing which associated the that of from labor from growth and and future sales related structure XX% support driven contracts, to Gross operating to

XX.X $X.X per outstanding $X.XX million XXXX. million or the a prior on million million Operating per compared the was million XX.X $X.X period. $X.X share diluted diluted million $X XX% the $X.X based metric, year income period. diluted weighted average on share from the in $X.X shares income to based net in shares million Net in of non-GAAP Adjusted a diluted was compared income prior $X.XX EBITDA, million increase or was outstanding, second quarter weighted of to year average

define received Now defined to backlog. of We a purchase turning in and newly our as bookings bookings contracts period. orders and signed the total

quarter second XXXX, bookings of million. the received For we $X.X totaling

be in define future are which purchase at started a until recognized revenue or bookings the not period. accumulation that signed we from yet backlog, delivered as and cannot orders and Looking contracts our of incomplete as

totaled backlog As The in million $XX.X of and million of and in million $X.X XXXX, million. breakout warranties backlog $X.X our $X includes contracts. service June in XX, this capital, step

on a service warranties years. As revenue coming is basis will straight-line backlog step and the be over recognized that reminder, a

are that backlog, next In X renewable additional revenue there for would represent stuff the the addition $X to in years. million contracts

of our base subcontracts a as we development. highlights pipeline to either in success a their agreements, purchase. This retention ending as customers focus year, XX% on building rate original customer a we loyal capital new are first This their seeing our moving renewing are or step

to our balance Finally, sheet.

primarily compared unrestricted we XXXX, $XX.X XX, to of XXXX. cash tax our corporate million at XX, payment. June in of March decrease cash equivalents the million $XX.X This and had reflects As

the of capital, up the had million slightly in From $XX.X at standpoint, from capital working at million XXXX. a of quarter, we end QX end second working the in $XX.X

prepared For was That concludes our results, reference financial which please additional of details remarks. our earlier filed my XX-Q, today.

And for it remarks. John to over now back closing turn his I'll

John Givens

Thank you, Alanna.

some our it's temporary are initiatives future the our through we review past growth. improvements challenges, incredible strategic the clear stage the and for while half, we are operational navigating quarter setting that first As and

of are and XXXX. key important response, components this our engagements into Our of strategic for growth the be our rest will to success and they upcoming the military platform launch V-XR to

have funding open. to becomes are optimistic half of Looking procedures right as second ahead, year contracts clear the the place begin the military for we in grant and and

are which capitalize to while relationships, ahead as in of our healthy particularly the positioned continuing new our most months and pipeline important are single to business, extend the of We we on global our products. enhance this reach in rollout opportunities customer

training at In the VirTra does innovation of to conclusion, commitment despite a remain the temporary by and driven industry, excellent training hurdles, outcomes. helm

We interest. continued support to your are progress, holds the XXXX and optimistic what end back of and sharing we our look appreciate forward we about and

Now this with where an want instructions. Chandler, before for in please will that we our look presentation and Meeting made open with open of held provide know a engaging call October. events. And forward the Annual up Arizona Investor the our I forthcoming be the Day everyone appropriate we for a tour these be offer details Operator, let we'll follow to call release, available shareholders in during with a we'll the will and facility. questions, More Shareholder in and that, your press investor questions. We'll to

Operator

first Markets. Lake [Operator Capital is from Street with Schmidt Our question Instructions] Jaeson

Jaeson Schmidt

Obviously, QX. a on a bit Just in more constraints bookings want budget nice in impacting Understanding little activity. of QX. sort rebound dig to the the

in if you've Just curious here accelerate continue QX? to seen bookings

John Givens

quarter. We month to see what's forward-looking. first happening are with We're in the it make seeing pleased the -- not of

Jaeson Schmidt

of more those Okay. helpful. traction of you do POs? pivot kind programs then could firm -- pilot noted And maybe looking some additional you at care in from market, sorry, No, adding think the health X continued that's to kind When institutions.

John Givens

start not training, move and that has care underserved there's in, think were of right come the at market going and of it's Well, the the now reported is are several that in and VirTra require that we're there seeing but now. and Connecticut that an those rules to in right bookings. It's it health workers middle some I to have type numbers those of California specific towards certified, --

some So of have care needs the seeing we're we VirTra driving -- they is the customers getting out and that's the meeting seeing, their see that and now word's of is that should it's forward. that growth and their policies taking they're going

health that's plays market, just to they to it's has large to out is a -- force going a see bit deal training, that of have had -- usually industry but be because we're the So stuff. this with how to very with unpredictable had dealing going with a never security care just

And it laws that need it apparent need more different. is much adapt workers, to And it out care of their and require health how it's training about more the we training these to patients what do, some handle as becoming industry. come slightly to becomes protect aid. doesn't they type within that environment because it -- It's they in that they

Jaeson Schmidt

queue. in really last one helpful. in the And That's Okay. was I'll back gross for just and quarter. jump the strong then extremely me, Obviously, margin

assume about gross down to I it's here noted bit a and You QX efficiency least come level. the some half? But from improvements. going think other we at second margin in should mix how

Alanna Boudreau

expect... Yes, we

John Givens

We go don't ahead Alanna. yes, --

Alanna Boudreau

we No, hit us those that all and come in that quarter development set of have down. the happened in -- best we were get pull that number, start projects start to expenses talking it about things those There to all a this to do the the high as sort we sort of Yes. was expect could out. of such level

unique So we where be expect us anticipated XXs outlier. the was in in this I just quarter still low an to

John Givens

as willing And V-XR the can. to I'll market I'm when the sacrifice gross add, releasing little Jaeson. gain start bit we as of much gain share to margin to a I

bit is probably to -- to I'm the high little that. go willing So target lowest I'll that XXs mid- a but is to, for XXs sacrifice high

Operator

Our is Capital with Baldry next ROTH Richard question from Partners.

Richard Baldry

You've new have want the you revenues been as the on I efficiencies since very items in opportunities? to I'm of maybe business need curious more we aware a in high level set focused harder seat. bit the something near-term the of? sort to be you're that that to soft. took or sort -- inventory CEO are indicate Or been to quarter Does stance a seeing there defensive in procure on taken be something of

Alanna Boudreau

One of the -- I that. can take

of million that those the talking that $X costs until to those accordingly. seeing you're that to increase work-in-progress fruition moved inventory one So is come we're projects match the got labor things about in a the in revenue to account

So that a is big work-in-progress. chunk it, of

Richard Baldry

it. Got And...

John Givens

our part other prototyping purchases well. the IVAS is And for Richard, as and the

those out putting phases. in we're So product each of

still our have been buying are we we customer in years. base for So for that that we're for production while

Richard Baldry

That Can don't but is sideways The I it. is a a line? was technical fell random otherwise have of you cash such line. of It's to expenses too that Got I be the other. down like to sort want accrued look in went missing in $X level bogged wouldn't kind cash essentially accounting, positive. what's through basically been it Why dramatically amount million. you and were low from why is would walk falling it about ask. same and EBITDA

Alanna Boudreau

and tax our in calculations all our it's Yes, tax provisions.

prepaid the in as And accounts movement state we where were not cash both federal a balance the as on hold for sitting on attempting quarter went. taxes, much which are and is payable to well. We then sheet end tax

Richard Baldry

Got it.

degree of rate And sort this book new gives you going to activity a reenergized then maybe a clients, with to some pipelines, of whether the of higher you and improved, the once activity a pipelines continuing So hope engaged about soft you sales budget for if that's is off sales gauge of budgets, levels hampering perspective, like either the a growth think or outside are or can step level way forward? a the that sort from clients. product back there's people resolution that existing talk about I'm which situation asking backlog

John Givens

the back very, a a are military I very in only dealing you're difference And law XX a both and because crystal that or military, stated one, is understand do contracts and The But or that of us as them they ball in people start I is big so wish police sites Richard, the they the opening well. big start it's sales very handful that for just before. similar. XX not The for people very buy they differences chunk I indicators. One up I've large process enforcement for with had understand there's competition. while the many putting of volume.

one the you and one agencies grants. determine contracting putting and have each that different funds around. enforcement, with city processes is all officer The of local, out of releasing deal and that. state, And So federal easy Those person. one have in harder to purchasing you those are come part of law different that ways are when all municipalities, federal, there's

So good works because go very level, some up it's accounting to to the when when that of state it's military how We cities, in you're indication and different understand -- a I different states. all people very markets not in but just that can open, is different give you commissioners. have local talking through clear opens

federal for -- is them that, are And funding municipalities we departments. there small police contracts a matching because and the the lot are what biggest indicator funds. of the they'll with sometimes So us of be some

when -- to the tell and is. the know So starting specifically, are we start answer I to the I your starting can you move, to some that now. of POs. wish see answer release And but was to that start getting we'll it what really we're is that funds question those easy

Operator

this to turn Mr. time, question-and-answer call session. concludes this to like over now our the At back I'd

his Givens closing for remarks.

John Givens

missions their ever as is strong it you, dedicated to Paul. VirTra as Thank been. and customers has is our crucial

to our in top ability of innovating and Our difference. success, and customers our are to I'm cornerstone priority. industry team provide the of meaningful a dedication the hard our That's continue the work leadership making that and confident and our passion, at our of

you and to see in to you I thank over in want Chandler. you. October our your To continued for hope shareholders, Paul, support to

Operator

Thank Call. you XXXX joining us for Quarter VirTra's Second today for Conference

now disconnect. You may

VirTra (VTSI) 12 Aug 242024 Q2 Earnings call transcript