VirTra(US:VTSI)2021-08-13 02:41Financial Data and Key Metrics Changes - Total revenue for Q2 2021 was $5.3 million, a 90% increase from $2.8 million in Q2 2020 [12] - Gross profit for Q2 2021 increased 99% to $3.1 million from $1.6 million in Q2 2020, with a gross profit margin of 59.7% [13] - Net income for Q2 2021 was $529,400 or $0.05 per diluted share, compared to a net loss of $601,300 or a loss of $0.08 per diluted share in Q2 2020 [17] - Adjusted EBITDA for Q2 2021 was $1 million, improving from a loss of $579,200 in Q2 2020 [18] - As of June 30, 2021, unrestricted cash and cash equivalents were $23.8 million, up from $5 million at the end of the prior quarter [21] Business Line Data and Key Metrics Changes - The increase in total revenue was attributed to a higher number of simulators and accessories completed and delivered [12] - Backlog totaled $17 million, reflecting a 6% sequential increase and a 19% year-over-year increase [20] Market Data and Key Metrics Changes - The demand for VirTra's training solutions continues to grow, with a 19% year-over-year increase in backlog [9] - The company has received bookings totaling $13.5 million for the six-month period ending June 30, 2021 [19] Company Strategy and Development Direction - The company aims to drive greater business scale through financial, organizational, and operational improvements [27] - An $18 million equity capital raise in April has strengthened the balance sheet, providing resources to capitalize on larger opportunities in police and military markets [28] - The upgrade of the ERP system is expected to improve business processes and internal controls, positioning the company for higher growth [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the robust sales pipeline but acknowledged challenges in converting pipeline to orders due to COVID-19 limitations [45] - The company is monitoring customer budgets closely, noting that some customers are not facing budget issues while others are [47] - Management highlighted the importance of demonstrating product effectiveness to customers as a key factor in winning sales [48] Other Important Information - The company has received an $800,000 delivery order under a five-year contract with the US Department of Homeland Security [35] - The military training simulation product lineup includes advanced features that enhance training effectiveness [41] Q&A Session Summary Question: Can you discuss the order patterns seen this quarter? - Management noted a robust sales pipeline but emphasized the difficulty in predicting when pipeline will convert to orders due to ongoing COVID-19 limitations [45] Question: What are customers saying about their budgets? - Feedback varies, with some customers having no budget issues, while others require convincing of the need for training products [47] Question: Are there any supply constraints affecting operations? - Management indicated that proactive inventory management has mitigated supply constraints, and no shipments have been delayed due to component shortages [50] Question: Can you elaborate on the inventory build? - Most of the inventory increase is attributed to scaling the business rather than solely derisking component shortages [52] Question: How do bookings growth and revenue recognition relate? - Management explained that bookings include recurring revenue components, which complicate the relationship between bookings and recognized revenue [56] Question: Can you discuss the step offering and its growth? - The subscription model has been well-received, with all clients who started the step program renewing their service [64]