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VirTra (VTSI)

Participants
Jeff Stanlis Managing Partner, Hayden Investor Relations
Bob Ferris Chairman and Chief Executive Officer
Judy Henry Chief Financial Officer
Call transcript
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Operator

Greetings and welcome to the VirTra First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jeff Stanlis of Hayden IR.

Jeff Stanlis

Jeremy. you, Thank to earnings like to first VirTra's I welcome XXXX call. quarter would everyone call Ferris, Hosting Executive are today the Bob Judy Chief Officer Chairman Henry, Financial Officer. and Chief and of should received you release. now, By a copy today's have press website If www.virtra.com. website the at at not, on it's available company's

available financial website This you able be under company's days and reports later today. quarter the is XX addition, the being corporate will the company's to this company replay In on access section webcast on recorded starting will website, first afternoon. be for report for of the tab the later

Before I notice a regarding over management, company's moment statements. please turn take the call forward-looking the to read to

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

prepared Ferris remarks call to answer to permits. yours. him. the webcasts, the like management to would similar questions the as Following the time to your I over call is call turn and now and turn Bob previous will Bob, over

Bob Ferris

first company. for the Good year for afternoon in strong VirTra us. joining announced XXXX you giving XXXX quarter new will a conference Thank orders that Jeff. Thanks, level a call. and welcome first management to the earnings be record of increased VirTra's quarter

based can as to revenue with a quarter contingent period delivery customers quarter, in which deliver quarter. same outside first in of in control. in and This is ago. conversion record quarter bookings time report resulted factors of the compared coordinated which for year a the XX% bookings the have our while new the is since came products variety timing on the revenue on the However, the many late didn't same of mind vary keep the are a lower Please in volume a direct in we of bookings of our to we

after from $X.XX of Just Department quarter was States. receive contract million and first also close, another U.S. to honored recently, VirTra

the the As of exited only the order an as first booked a with small so I backlog shows in the $X.X the quarter, revenue with the Combined million quarter of we report which was million the the fraction $X.XX State quarter first just $X.X $X.X Department during million not in include did has million recognized mentioned. is to bookings have have we quarter, reported in pleased we past our not XXXX. This our a that the publicly investments reputation, first year. to testament is reached and reported progress announce the of product, VirTra halfway in I'm organization revenue in the and $XX.XX over yet made point and million revenue

from key We positive benefiting presence maintaining the coverage media and larger highly tradeshows are around world. a in

Institute, in partnerships We with and expanding the market. addressable our Haley new our and industry bolstering Science strategic with Force have forged reputation Group the

of pipeline identified new solid We a business continue to build opportunities.

This United indefinite $X.X subsequent our for at order in mentioned, simulators I $X.XX contract with new and international the million our included relationship training with As our Department end presence under to a Department. States valued million of quarter IDIQ not expands and previously the received State our first we indefinite the bookings, quarter announced quantity contract in delivery, State.

increased assistance require simulator related training we execution while basic in marksmanship, those close situations. of are enforcement difficult of duties. of understanding we and plans donating exercises, of use seeing with are adoption demand revenue over many Meanwhile, on deliver force third our benefits State force governments in the improved to increased entrusted U.S. and programs. in summary, the of that stressful in Mexico it technology is increased like and is translating Ukraine and simulators for be of for other on personnel Department will Judy? use financial expect simulators products recognition regimental In the quarter predict, quarters our the training developing as it in are decisions We recognizing remains of and CFO skills, seeing to our Judy to revenues. training results. overall which now order for to the backlog, support in The increasingly this turn advanced foreign Henry, used the review I their weapons XXXX and the ultimately to to call proficiency bookings, would law to training

Judy Henry

in favorable materials revenue or use warranties. was $X.X revenue were due Thank orders quarter year. million which of were the a to compared system mission a for our of Gross period staff Revenues for components. of partially resulting million you, The $X.X Bob. $X.X and XXXX. million million corresponding to as in The quarter profit was lower of compared last costs simulator XX.X% due down pricing percentage or of gross of first $X.X first scenarios XXXX for increase delivery by corresponding to accessory of optimal and to material XXXX the [ph] of the was decrease of in period from profit and XX% of sales for increase in and raw the reduction more XX.X% offset revenue

included products larger of In and addition, for services. a mix higher the proportion quarter margin the sales

for in was higher drove our XXXX March ended the an increase operating million we customer same period in There $X.X mix mix. compared from several for can period were impact XX%. million operating and this As of from XXXX to period $X which months expenses. XX, benefited to three quarter Net we stated favorable the factors margin expense the the

the services increase expense costs; the the first per because this levels from VirTra increases last related qualification and approximately related The legal benefit quarter the professional Again, professional had in recognized the we the the included The nonrecurring accounting in we million of in and expanded year in fees to payroll and of included expenses. XXXX in which were staffing share increased had effects $XXX,XXX fees. equivalents company's of conclusion our for decreased total directly per stock service XX, of at and be public $XXX,XXX XXX,XXX. consisting its First, net loss shares and audit, negative of to excludes share of company Net diluted quarter and excluded registration, legal second, and March for three per stock XX, this to ended costs of Diluted point. shares net These SEC share net stock for net XXXX a of quarter outstanding common diluted $X.XX or approximately year-over-year basic us from share for options the weighted diluted of offering, compared in calculation numbers first or regulation quarter A+ $XXX,XXX year X.X XXXX XXXX. per for $X.XX NASDAQ average options completion million this income March the of basic $XX,XXX The loss consideration of approximately to listing. and first loss are was X.X first behind diluted anti-dilutive. of the quarter. nonrecurring recurring to loss months

at had $X.X XXXX of the Turning December in equivalents XXXX. XX, company cash to million balance the March XX, approximately sheet, $X.X cash compared and as million to

March over the no Additionally, XX, XXXX. the essentially outstanding back call now Bob comments. for at I debt company will turn to had closing

Bob Ferris

Judy. note a are listed we evaluating as acquisitions. like NASDAQ would also Thanks more I to company that potential now

for place. agreement any until in is for capital. course we Of Please keep Board the a the have M&A our we possible several definitive determining will options potential best M&A of that when not activity in mind discuss location one

value the this appropriate Week. closing, of goal our XX and National I in mind. capital like remind through with that shareholders our Our will May goal is carefully to is create contemplate Police would to use for XX everyone most we In

Memorial year. In our XXX honor now that, that over the May who where we Peace brief operator memory I and canines ask in country. silence With we would now addition, died will the I of XX tomorrow a to communities of heroes turn questions. the Officers our observe of and died moment fallen women for last in the and is that men service have the Day call

Operator

the comes Thank with of you. your first question [Operator Please Charles proceed question. [ph]. line Landis from Instructions] Our

Unidentified Analyst

Hi new my have how an does profit any it is with how about, training read the companies to regarding or we've question VirTra's association get VirTra does that line? bottom

Bob Ferris

and to that essentially them their follow familiar quite own line we've Institute. affects So are folks who of Force we circles that are two couple are that brands VirTra that VirTra's groups a their and folks with reputable ways. VirTra that are is familiar them. Strategic recently have and brands the with and One engaged different groups bottom they so The in introducing have those with; both Haley way Science is

with recognized get were at Strategic we see people amazing or was to SHOT they We when and that to see in same introduction. would that so Haley Haley. came to booth came And Haley and noticed many see we how just they then see the us Show. the It us they

getting in brand. part that's So industry more of it mindshare is the VirTra's on

Haley of and their be Science in top are strategic, their in thought of revenue and they addition, and have Haley with extremely thing so course Force then to considered own associating they go at tier we are see they do space Another part And is with good training that's that revenue. brands, VirTra leaders through do does a programs arrangement beneficial. share as what so

Unidentified Analyst

employees full time VirTra? and there All how many right, currently, at are employees

Bob Ferris

employees. are time currently XX There full

Unidentified Analyst

looking stable forward? Does that be increasing number appear or to

Bob Ferris

this It is during year. – could that we increase anticipate number

with facility then out line down in right But can long we have We our current quite bit we as produced, also of growing but path of that now we production to expect be in have numbers do increases busy as continue handling flexibility staff. are increase. the revenue the our I quite that our a with of that orders in

Unidentified Analyst

one-off last right quarters has of up the All been finished? couple of are up, a expenses, or lot those are about used used not and

Bob Ferris

and expect the be those related first I do year Fourth A+, expenses SEC. listing also to absorbed expenses that the fourth year quarter that for the would true. last quarter of this with for say of year registering quarter included year. very us bulk forward. last I the positioning expenses will abated that much those quarter Regulation of in first Yes, were both NASDAQ one-time some and this and mainly to going

Unidentified Analyst

for where you All over or is to products, going is news. And right, and last good shows your displaying growing? consistent that stay relatively looking that's certainly that ahead are your year

Bob Ferris

the it's on the we do us. but feedback really carefully we've show trade make of our out we of it appropriate done return expanded year-after-year shows, presence our many coming out monitor show – shows years, coming to have and sure We so generally for for depends those that expected

I lot tradeshow us think the we overall, fluctuate. simulators we a at this but it because somebody also then year of that busy in pretty expecting sometimes booths of of and quality does tradeshow opportunities draw their And a get tradeshow unique the attend season wants training we're and any our provide. kind we attention large crowd we that to

sometimes partner opportunities some with we those as now. do for another company we're year things But essentially have extra we right where a the season for well. and So strong throughout tradeshow XXXX can tradeshow expecting occur a

Unidentified Analyst

off All the right, sales? expansion which current the or paying of see services you as expectation far best product as or lines do

Bob Ferris

our training, of most Force product top Use then us. a capabilities. and overall of but We to product that's accurate I both VXXX, have going continue large order those the be think of very Pakistan And our simulator line lot think I for capability two world's so for robust, the is quite a simulation to going now and being products relate we of during does also strong to XXXX. in the potential I realistic both our to police strong Judgmental have strong think our for us a simulator, did very marksmanship that overall

customer. schedule we're I be delivery the but think the of dependent that to is final is on course order going that that of large a for, rather – was on

Unidentified Analyst

people anticipating And actually by or interested coverage promoting right. that to or or companies? a are analyst are even awareness to currently better now right better get in finally, analyst or working All among you with VirTra house an sponsorship

Bob Ferris

Yes coverage Chuck, the for be analyst VirTra. fantastic would

very some to and We coverage analyst this I analyst coverage like year. would much pursuing occur see are

towards that that could valuable agree, working but certainly VirTra. are I very We be for end,

Unidentified Analyst

that is But nothing solid or anything immediate or endeavor? plan that for

Bob Ferris

change. today of there no do but and of VirTra might is not a give you of like I date would As change analyst I that have to to coverage when that,

Unidentified Analyst

coming sales well just keep much Bob, you right, thank though. and Thank hopefully Bob. we bottom more more you, in, some the All into very could line

Bob Ferris

over and the Well, all for support your years, too. thank thanks you

Operator

Haugen Private comes Investor. Instructions] your from line next with Please [ph] George the of proceed [Operator Our question question. a

Unidentified Analyst

Hi Bob, it's George.

Bob Ferris

George? My goodness, are you how

Unidentified Analyst

a orders coming, good, a of so I been time. couple kind long, able deals orders I'm to be long current his Sure of had, with questions in or the going new be wondering lot, just it's you'll I'm some Chuck answered what backlog are to to these wondering if fulfill you're timely pushing going XXXX? these and to be a XXXX these of

Bob Ferris

great Yes, question.

it's that. are good doing the her that now in real production on and exceptional right surprisingly testament job with I VirTra We the to of an working service a XX and doing on job top mean a are dealing they we staying of at people backlog. have

end up revenue the a lot to up We XXXX. are during revenue showing have we recognized currently as expecting of

Now those fulfilled expect what situations now. our where the the do our barring client maybe to in product produced a be a kind back and client that have a push go and so expect have and has not us ready once right right any do happen, while of sometimes have is room they delivery we that’s those to do we is we of situations, ready now and now so situation, later the hope right and plan we a to at then date, to in XXXX to the

Unidentified Analyst

still is question buying are more if the could, one you Okay, shares? back I company guys,

Bob Ferris

capital to about on XXX,XXX with potential buy the our as also opportunities has shares, back we however authorization available of other currently potential have such company acquisition. deployment The

is want Board decide the of lines. how to to Directors So going have to along they proceed those

mindful very buyback that are are we shares. available of to we but yes, and So our

have like that. We offering no open or anything

Unidentified Analyst

activity with was to Yes, happen. we expecting I don’t are, to, hoping the than you see I make need NASDAQ that a think really sales listing was no more I ultimately but but little will

Bob Ferris

term can we I value agree. the the best agree, I of long think mean, I can business very more the I business be all and the our so better. that’s fundamental if underlies that improve the to of shareholders the valuable stock accretive hopes, for

Unidentified Analyst

your Bob. time All for right, well thanks

Bob Ferris

Thank you.

Operator

line [Operator of Instructions] [ph] next Our question the CWP comes Troy Parcells proceed. Please from Incorporated. from

Unidentified Analyst

Bob, Hey you? How Troy. it’s are

Bob Ferris

are Good, how Troy? you

Unidentified Analyst

Okay, not too bad.

questions. but So I do some just of been my already have questions answered, have some

out, products, about only that additional other going a simulation. year, that it's Taser, services, have I sure had about release we were time really mean the idea we're those? developed to last enter markets the hearing you some that wise for the talk what's when been Over there's new you and to think on design, thing might start while you conference been I mean, calls be? those ready I new the is Taser heard long about might hear any been and I'm new coming so When product date do a and a think the we've

Bob Ferris

new like some are until be to really testing been, are coming has and but that it's through careful we out, make announcements and do right, we do product but about will before gotten underway you to have look products it XXXX, has there an announcing any exceptional think that it forward work we I the want out as product becomes sure available. I goes in

Unidentified Analyst

questions Okay, Bob. have Thanks other answered. well my great. been All

Bob Ferris

you. All thank right,

Unidentified Analyst

Bye-bye. right. all Okay,

Operator

to At to would this questions. conference further like no are return management. There time, the over I

Bob Ferris

training countries States. thank in highest thank success military, today's civilians around VirTra possible in law right, like at world the and to our All to you the I'd part a very end of who the level XX United with stakeholders are enforcement, call much. very you all sincere in

well I is beyond are positioned and XXXX firmly our company you succeed ahead of to believe us. in Thank days bye. Good and and best bless. Our God

Operator

today's time. your disconnect includes at you participation. teleconference; you this This may your lines for Thank