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VirTra (VTSI)

Participants
Bob Ferris Chairman and Chief Executive Officer
Judy Henry Chief Financial Officer \
Jaeson Schmidt Lake Street
Richard Baldry ROTH Capital
Allen Klee National Securities Corp
Call transcript
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Operator

Good afternoon. Welcome to VirTra’s Second Quarter 2020 Earnings Conference Call. My name is Jess, and I will be your operator for today’s call.

Joining us for today’s presentation are the company’s Chairman and CEO, Bob Ferris; and CFO, Judy Henry.

Following their remarks, we will open the call for questions from VirTra’s institutional analysts and investors.

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

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

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

to Chairman turn to Sir, like Bob Ferris. over call and proceed. Mr. would VirTra’s please the I CEO, Now

Bob Ferris

Thank I for and questions will XXXX joined you questions report CFO, our answers. also Henry, everyone, Meeting, joining second remind after after and call. shortly with that our Annual us we like today chance I you, thank quarter good answering your VirTra’s also me in am Judy earnings the earnings for would our operator, afternoon, by call, join another today progress. for prepared you the will first, General to to But have remarks. am I excited Virtual and who

VirTra unusual and one environment quarter operating company presented an are this to least. with impacted of macro two addressing but not that XXXX level There industry today. the The was second events quarter our worth our say that

during I’ll a of QX length at started which of discuss a end those the moment. and major tail is impacts be first The impact the COVID-XX, continued continued QX. to influence in at

situation. they any police endowed questions extent, what series if how focus been do touch authority to concentrated law are to society, history, country’s at the use those of by To a officers a the polarizing in community. is time have very force they should on officers at Floyd and liberties uniquely George how death be protect the specific protect in on in to what are with a are second nature the force, sworn used the do. exist very from with More there that our of to attention enforce the need and than our has Minneapolis citizens extremely other arise. domestic enforcement our decide, to so, should that ignited law individual police of In events These they the officers complex and threats. interact The of

As a knee-jerk have reaction, the police suggested of some defunding agencies.

when a an but incredible part VirTra, preparation, requires have tremendous that products extent do Fortunately, practice the if, and many improve tremendous is to and we have Deciding logic the where answers, responsibility improvement investing the prevailed what training of VirTra at bestow we upon is the that’s of force We, have responsibility all them. comes don’t cooler in to in. of is proven is necessary such solution. the involves see that the and training. police, heads policing line what And of and

and fact, training needs. selected solution their wide support In to has their for major to agency we federal orders simulating of for enforcement follow-on every VirTra variety nearly a receive situations, law continue

need use available been and arguably for has simulation improve However, and either provide the training and solutions abroad the personnel. training far no older detriment of agencies inferior best our product too police and U.S. public. an the efficacy of military to to greater. law never or the use many simulation both trainees We the enforcement in the The

to honored receive national to been national increased news has is regional VirTra and these topical VirTra coverage. how Given discussions,

There XX% record highlighting dollars how materials new that have police approximately increased installed and the year the into new has VirTra, forward-thinking provide that and a of our a we simulators value both last departments digital mentions about understand of who year. media been value and the We agencies segments products. in clearly time translates saving fact saving educate In number from have this uniquely lives rolled to the better long marketing effective thousands and website run. of VirTra’s same out

of Clearly, about the improve communities. training their respective could their us to help important opportunities it’s larger for departments create past However, of events be with few and a relationships the realistic current their months environment. number to the and

is our translate Although marketing our directly that there media record sales term. up the backlog attention sales new and levels, pushed or in XXXX into have guarantee to in our will no increased substantially short enhancements

generating we believe sales, events process. drive macro momentum there additional while installation VirTra, help may complicated are others our for have which certainly So

You to recognizing must delay revenue. also customer, see if the delay we the of our delivery must equipment we a

theme sales major During remains A our our to were the result was And had but that theme decline as this States, demand the last our in of as call, issue the taking revenue call United yet COVID-XX. we year impacted been since that deliver a COVID-XX second in material market install. had of quarter seen major strong, that in continues mentioned not and as well. longer orders to last persisted of be throughout a incredibly a we

lost we As far COVID-XX. to as not have any know from business date, we

strong. strong products be has has However, for our been, revenue ability has affected. had before been Minneapolis, even events how the of install systems been impacted. to we quarter Therefore, results second our ability the recognize expected demand our in to Because our extremely to financial

installations, modest with because the ended continued we of in revenues to QX, towards However, started with up complications end which see QX. of we

and backlog million, record from were small decrease from ago but Our the a quarter $X.X last second a million. quarter $XX.X to revenues our year period, increased

our XXXX, underscore were XX, environment was results, the backlog, the a our June the last will greater first two financial the $X.X identical revenue year, were our pandemic. theme XXXX. Judy at second million and backlog months with – Our X it in to discuss in the moment, products which VirTra for robust almost that was to than due X-month sales same a also at point of These quarter, challenging metrics, in coupled installation except

For all we whom second where could were could and restricted install. we quarter, with of we on travel the

travel still on case-by-case only able are We basis. to a

to As Arizona you as to or many trends of them while to COVID-XX last prioritizing either of know, headwinds. X. accelerated actually result, personnel without impacted, are states other as And possible state a encouraging, teams operations working But we installations sales volume are incredibly our our year in compared though have remains Recent products our requiring and remain install hard safety. Phase quarantine. in and are home several customer not wherever accepting staff our Arizona

a new or just example, Department the contract indefinite of quarter, we second As from quantity, during for the State Mexico. IDIQ, the received delivery/indefinite Republic one of

the expect remain a tenacity this Because operations prospects we team, As install with at quarter. confident to deliver even pandemic to the half the in the fully going financial therefore, the theme for to results the restrictions, I’ll our of But second you in XXXX. momentum, through I to of over this revenues moments. second and year. order, turn and to Judy? a Judy walk of our we first, the testament add recognize call this few for am to those

Judy Henry

Bob, you, Thank good and afternoon, everyone.

from quarter we of a X% of was Our $X.X million. $X.X XXXX This last in the recognized the was quarter total decrease of revenue for million revenue year. X second

simulators X in the decrease X accessories June the of X revenue with compared and was of revenues a to last delivered $X.X result consistent number especially and installed The months the $X.X period ending XXXX, months same due of year. in for to XX recorded the June in in was XXXX, first ended travel restrictions. total the COVID-XX reduction million For XX, months million, the our we the the

or Our the second XX.X% profit revenue million quarter to gross costs. in from XX% XXXX profit in reduced second primarily to the $X.X quarter of of gross of XXXX. increased increase revenue or of warranty due for The X% was $X.X million

million XX.X% For revenue. the $X.X in of to our XX.X% systems, of our was year, profit product in sold. accessories decrease of total differences months decreased and quantity total mix of The gross the due the X% profit from to X or million primarily services first revenue $X.X gross or and

second for million of quarter QX with year. expense last we of XXXX was the $X.X reported $X.X million, consistent in operating Our

the from $X.X selling, service For a million year ago. months of expense shows first in administrative for million ending $X.X COVID-XX and travel, general trade X result of to operating again expense same professional reduced XXXX, to restrictions. X% decreased the months the was costs June a in due decrease period operating and XX, XXXX, for X our The

last to XXXX year. a loss Turning operations from to quarter $XXX,XXX in QX $XXX,XXX our of operations for measures, was from of loss compared of the profitability second

For operations $X.X months in a consistent of of $X.X XXXX, the XXXX. million, first of to from X loss first the was of million loss X months operations

for XXXX loss QX share. second the net share of diluted last $XXX,XXX or $X.XX per in This year. to of or of net a Our $X.XX loss compares per totaled quarter diluted $XXX,XXX

in year ended net $X.XX to the or a our XXXX, share period a ago. share totaled June months $X.XX X per the comparable diluted diluted XX, loss For or net per $XXX,XXX loss compared $XXX,XXX of

Our $XXX,XXX adjusted year. compared loss, XXXX in second in adjusted of a last the measure, EBITDA QX EBITDA $XXX,XXX non-GAAP improved loss to of financial to quarter

first adjusted $XXX,XXX EBITDA adjusted of months $X loss For XXXX. of X XXXX, in EBITDA compared the of our first million X the months was to loss

Turning time we bookings contracts period. define received to purchase our in and signed and orders as the a newly of bookings backlog, total

signed recognized that June purchase extended in not We as in For a of orders are warranty respective XXXX, agreement. includes straight-line delivered over uncompleted the bookings objectives and the life future performance the agreements also step from or totaling $X.X X revenue deferred basis that bookings period. backlog define and be cannot months agreements ended and until we each on contracts Backlog received our are million. recognized the started revenue of accumulation XX,

backlog $XX.X XXXX. March XXXX, is XX, ago, million, which and June of at the million million $XX.X was from from $XX.X reported our we year up XX, a up As

the sheet, of to $X.X note Protection intends amount certificates used X, described $X.X Economic equivalents PPP Accounts with amount loan company be PPP at expenses compared approximately of standpoint, promissory the had from no Coronavirus the in Act, in will to loan, $X.X end apply of in revenue $X,XXX,XXX given the $X.X in extent for company a and a loan of terms working end compared million December and terms, and PPP Aid, use or with accordance $X to the working Act. qualifying of XXXX. CARES but working the December the end, under PPP the Finally, note up ended capital forgiveness and XXXX. entire total are for to expenses at second entire XX, forgiven may XXXX, part XXXX Security deposit, up its as proceeds as designated obtain million capital in the our at million Paycheck whole unbilled cash or can in quarter Under we be in of received quarter amount combined May million the capital PPP, quarter in PPP December Relief, qualifying principal part. of assurance Act. the to From the $X.X accrued ended interest approximately Program, for note receivable the that to CARES million The the we forgiveness to XX, established VirTra period from On balance was XXXX. at and XX, to cash which million and

details additional my prepared financial earlier XX-Q, results, to remarks. it That concludes Bob. today. which reference back now our filed turn For I’ll was our please of

Bob Ferris

Thanks, Judy.

to As XXXX, we our landed rest strength sales our of shift the pipeline of and encouraging. is the attention

national nation, the the around are specifically, and made training enforcement and headlines. discussions has of the positive majority very idea vast the police of training very the increased extreme law VirTra de-escalation While for defunding

due not sale have defunding. to we today, of As lost a

funding we towards what many a so have budgets any real year changes As their like budgets are of help in seen, in the protect officers stay done that But departments have allocating they’ve question effective, see allocated less, we made decisions effectively to as resources sworn resources mind, in those may more in and year, it’s and end the into how they look towards who what being already funds years. not allocate of will the From that evaluating safe. police have departments for bear is the these major are ensure that make most XXXX? this frequently will can The unlikely previous reminder, near-term. spirit

seen. Phoenix reported have in year. that or those reports VirTra’s Diego, and have agencies San increased largest budgets. spent of U.S. recently the there Whether is For decision-making that have contend simulation be money increase themselves. reasons, XX,XXX well ultimately, Houston money all that for or been for some on the their the decide norm But that in cities critical the was country certified police It budgets spent. so training increased actually the this their enforcement not becomes to We law remains must

most it occur, appear in equipment those recently achieving subscription possible phase, a we the While have a we who as evaluation it STEP, elected be that ideal increases customer departments expense that the has place with is share. to rate. already who low more second from it desirable cities shifts growing every viable to that for may our our in payment year program so far The rent expense. in and a subscription, training still and revenue Should shareholders some our budget program. fortunate to capital recurring payment it alternative simulation of is constrained. operating for market become want and base, renew, an customers are Because program VirTra’s its partnership the started a entered renewal while program to XXX% the is This essentially certainly

the what seen on so buy are based far, interested are in majority training have systems of agencies who we VirTra’s believe our Now continuing outright. we to

know some number mutually constrained comforting work beneficial that the Recent seamlessly of well. However, greatest And to and training mission available, military have clearly allows fact for marksmanship of to for continue have STEP enforcement. push us the training light extend we for that trainees. that the that continuing critical enforcement in technology budgets remains to effective to place events brought use-of-force law is agencies more is become law it to our we while simulation hedge as and pursuing does already a have personnel that directly VirTra’s to are training these best market indispensable ensure decision-making, needs the should

our suit now, kit. been the military last VirTra positioning market. to For made better to important recoil we’ve drop-in well of In the an over of February year we a year, enhancement needs

and makers. and we desirable And In here, fact, Much year Associates from bear they position recoil Those & yet O’Connell favors we JL we to detail. function fit comparison engaged our of available in when drop-in us clearly fruit. There over comes we others, acquired and portfolio have only developments, to with among given relationships believe patented last some Tiberius of patent-pending military to advantage been just decision progress tangible in anything the of that leaders in VirTra form, any a help in technologies traction not ago, VirTra’s some head-to-head and capabilities VirTra’s investments, Technologies. products. patent kit advise from the sensitivity broker gaining are including and of but to are discuss a is these beginning July,

than the pipeline been military is stronger it However, we and did never been there quarter, over the last want the progress to with has market, has share that particularly today.

updates share quarters, tuned. in the have We some so please will coming stay hopefully to

any only than with half curriculum simulation lead software, positions are to to the the the the we looking certified quality trained better dedication to the law of to continue with perhaps in enforcement about expanding ever, properly effective more to for. world’s is second pandemic, during of that world VirTra from some as leverage faced for time products to the of what more work for training decades’ willingness optimistic most having our training effort. military to and our are and our more all is that the training as to to Thanks provide market leader extremely simulation at team’s VirTra year, responders even now the it’s look we affordable uniquely time. of complications more and success fortunate positioned and harder the remain a reliable reputation to supply effects realistic the for that we first worth ability other we our world As hardware temporary than COVID-XX, the ripple expertise Despite and same. the apparent they products strive

assuming doing to please questions. second provide And we’re ready up believe U.S. the open my that, does the And Operator, are are I wrap a prepared remarks, and call of most shutdown not again, with the year. installs. we going the strong for the to part, half expecting For appropriate instructions. we I’m your

Operator

Thank you. Our Jaeson Instructions] Please come Lake [Operator first Schmidt from question will Street. at proceed.

Jaeson Schmidt

your seen in about Hi, some of going products how on, taking your guys. curious for increase Thanks talked unrest civil mosaic, an of – you into actually coming you kind I fit inbound everything way? the and Bob, just if questions. have trading if know with the interest my

Bob Ferris

Yes, question. thank the for you

an than seen is It blip. a very have cycle increase. sales a sales We longer short-term

general impact use if can or long-term rioting if occur, if even negative and to is over better So avoid, is one an decision and if sales of for bad that’s and occur true, time. decision-making worth even potentially the focus in we there realize obviously a does that of are can agencies buy period force on impulse has training a result it even and increase, not effort

a So an sales. sales also that increase an an little of in we that, year we bit We as will yes, in second in overall quarter have seen hope seen now increase inquiries. XXXX have ago. for in a And increase compared result to

So there in are be a increase metrics bit could of an that that have temporary. are sales that indicating some we

long-term sales. trend of is focus increased Our that to make a

Jaeson Schmidt

you have that’s macro? given know customers the from just seen Okay, STEP on have I the you but program, pricing helpful. pushback And any

Bob Ferris

a training. I life is is that There actionable that. getting of so simulators simulator is I there getting an agencies, the that training there a no for buy in lot training SME, is sure do no inversion the kick departments simulator, on value, much say, focus kind in given think of do line a for on and macro there’s check-the-box that more of making product the of danger best and going does the right likely the is comparison a and for – now is kind death minimums decision-making. subject and there there involved many in bit and that there’s that expert, done, would the there there risk being think selecting is matter bare no a tires, I that cheap

does cost more So, I market to spend course, might to are that and are have that little rule. that has product reward the attitude. the for who think I pushed if that in But a products direction effective There simulation of might from to money have not. those of even that there it’s the level, effective may amount the if do them believe and least looking away money effective pushed might and training, exceptions be lot say whether of macro inclined they the have agencies or anything, a that

Jaeson Schmidt

a guys. Thanks perfect. lot Okay,

Bob Ferris

Thank you.

Operator

Please next at move Richard Baldry will We to ROTH proceed. Capital.

Richard Baldry

I what that really it your or everything it of own assuming curious be sort Thanks. Again, of of would resources grown backlog easing, sort because re-close on customer of what by Is that sort up is to the don’t bottleneck are backlog clearing the is? gated curious side? much rapidly? down that or the pulling restrictions we so sort am has more if

Bob Ferris

Yes.

reopen our for There customers move even phases, great own might don’t obviously, or installers. if there through states some travel. is internal their some have a policy of It’s to we question. infinite will a an of have number combination. that start their allowing and that is a is clients, – potential So, installation delay and chance a There

our capacity. is a there So installation limitation on physical

make staff that and Our we team we in to some great try been avoid does have of have to sure adequate job area. to bottleneck a hiring that, a operations scheduling

a obviously, to So do been that there customers number occur past, work staff we at with and same time, tremendous there are cross-trained. bottleneck. a all though, of delivery have, of able is if a have lot who clients, in then the does we the want naturally

would but all sometimes, is teams. hasn’t to a and otherwise priority We possibly, would the safety would horrible operations mean be potential be bottleneck. a are as used help our bit situation. the phase one that able but skills yes, do there But to move installations, further that watching But the travel. have they and has been assuming a anticipating are nation. so, they for to member has a some been. a while, it We definitely around would still there that we do for installation don’t could want of revenue that been We they have team our we transitions it think than okay possibly think quarter just off a that this use to – out, So staff would with who

level And but as that have so to we staffing had us not overstaff. unwind we very allow to have quickly possible, VirTra tradition to the been a backlog not also a layoffs. as to has mass proud had

notice. try at we we on been And moment’s to be careful around very with a looking have to add when be are to a to be staff, we So that fortunate able that. plan not we very let-go staff

Sometimes we – harder. a staff little that works means

many We the VirTra not years have many, But and at through staff upside now. work had in to that a longer the we have hours. been work layoff large has had weekends have

is bit reopen who of So starts the have on in place are there clients bottleneck infrastructure we the the – same have think we But to equipment a there to do have service – a and to needed. yes, do bit if trips installs quite we if at potential and eager depending a the time but same quite for of at everything is accommodate time. some

Richard Baldry

we about of sort another uncertainties there of variable, above spending you but balance how think that what PPP QX’s to fixed revenues And good level get sort maybe to the more the is modeling some popped then of more of an and out some we assuming some should started clear out the bit, with of And though, between like the would ability can the much offset about COGS backlog? of – so clear an at sort sort and quarter versus of line, as loan? a the look upside near-term as a above backlog idea the the way given look spending OpEx side to – of

Judy Henry

uptick, And we Well, believe of to of very majority are see the will uptick see in heavy a – in pretty We course, in I trade cost. variable sales marketing remain the on Richard, QX, going be reopening vast a that our but fixed show will, dependent sites. course, opening and same similar some events actually, of level. then in and of the do various

Some virtual. of them them to are moving

Some other opportunities coming of continue with and them are with up them. ways to

So the that a in in anticipate mostly of staying I overall. pretty to little position. there bit of be consistent upside terms would unknown But OpEx in

Richard Baldry

take the Okay. could own availability the to possibly given you of into finance you the of of a be table. talking and having hardware little If revenue be time. And budgets there that of a on about we bit municipal the side because shift that installations assumptions of then then made to over a of amortize the would STEP our more talk big value a tight, sort was about can model, lot sort

it ability address to that So actually emerged? flexibility or if your

Bob Ferris

commitment couple is situation we in in where but of there we STEP, to was increase require considerable keep that’s area. things there – So and have a a XX-month you a of that that for have a STEPs. in quite Obviously, in cash One do described, – mind. bit reserves, flexibility were like we a

a including So and to a the far internally, That into imagine lot first capital product internal well are we gone expense and content have just lot you if obviously that the developing that other comfortable to with materials. place. of not as we in can and out that our of numbers might costs as we commitment. software equipment worked get correspond XX-month have That’s – amortizing of the the sort

like be is approach groups we thing The say, program, to list your have ever we with and had need near if tremendous STEP business. the funding top for would for to your you second compete us resources that of

plenty able to to if So of it needed, obtain financing attractive and at we have being do on and depth go was rates. go

past, we production, wildly STEP in became a increase tremendous tremendous And might short very a period successful tenacity have together. for in even there have that we time. on if on if of issue, being bit So our – be had financial well the wouldn’t time integrate a in absorbed that of production, increase feel have side bottleneck success was how period the we that a based we products the in we we when on and a clever short

be yes, should do a where but feel financial – of becomes there we becomes So bind successful like that not kind. there an issue STEP a so any

Richard Baldry

product like name it address looting, near-term takes Thanks. training if is – that But with me to I wasn’t for like a I be specific, this off your proud maybe last rioting, very So content? like simulators. long like someone put react don’t of something that How that on? describe And issue, quickly Thanks. sort can something to turn what if know and it to would quality your would sort you would to custom be you in a topic. I am wanted of how curious,

Bob Ferris

chance I most problem. that No our love more me question it because Yes. products. a to allows innovative a one explain little of

computer-generated that quickest to this creating shortcut a and actually they our photorealistic, meaning to technology, use is images. a in that CGI, take there method also some scenarios for some of that folks try method is is So try

by how human. properly. those. in costs real get you of of affordable? Normally, fact people, the if using the often look get being very it the library using problem fast are high-definition puts a quite using all high-definition don’t them They computer-generated feel green high human human it’s it it quickly just interesting, high-quality that of of do people or you it’s and do zombie over quality, they time. But able very and screen. it And video, – most of has which using does the emote not they at humans, that level it and a of green people described V-Author, eye, a screen money, the do as how people, can’t incredibly produce technology, attempts Normally, lot that’s of of don’t don’t very you incredibly level in So to the kind takes soulless a photorealistic look normal. together how built get lot the a V-Author training, clever content capability do how highest do solve up, interesting that to how scenario is you we natural-looking and you the of are get now realistic

try a and officers be and involve be they as methods, are the the to that situation they So the taser for use that or properly, – situations. to difficult time animation we to compared – a heard matter human more those as if incredibly get Use the in background we to and the person of read look officer a models ability that very behind can and a them life emotions. adding more drop and logic deescalate able traditional There If fired, images read a to simple done shot involved – to using and they to and try XD – some and at is panoramic which them can get emotions and a if then be we if the police panoramics want hours. was as where in to death smartphones. a those assets, But going smartphone, computer-generated a the of right be training in system a situation quickly are in have can to if would if see so proper reactions done people can or actually respond right? shoot they shot or to

using by system, And our so using is many – V-Author actors VirTra which years unique refined and that V-Author to invented ago and – has years product. VirTra

can sure the it’s be subject matter We policies for congruent that the new that and agency used, it be the review with training themselves appropriate like quickly there are being can then their policies. sure more to almost made. make subject their to can able what is training that Otherwise, be new will of matter is experts experts agencies with have components modifications to scenarios presented LEGOs respond and make or

don’t have fast. training show And But it the moment. we the show. we shows. respond, entryway using trade entryway we a And system. we took a situation of of that picture at actual using the the quickly We had that the day, took when believe any since it’s physical trade actual scenario don’t had show. so trade have and done have we the the has and able the a trade back attacking show, the entryway knew so create on to front, We, picture are ever many created and – people the of first assets, first morning show, fact, today. because is of in trade day the I having a days scenario first in day scenario as where of So of a in the first running it’s terrorists show one that company very of the we the trade trade of everyone we of we responders – first the scenario to been the that walked must flexible

actually – event company scenario the to that is is show. occurring VirTra an the think of trade at the a only the of trade I create at photorealistic able show start

Richard Baldry

build. the impressive lot. congrats pretty conditions Alright. given the a Thanks, It’s and there. Thanks and out backlog on

Bob Ferris

very you for questions. Thank much your

Operator

to We Corp. Allen Klee at will National go Securities next

Allen Klee

were this gross talk be in that Good might sustainable? reason you factor think margins if said And about there’s why you was And why Could expected. warranty costs. than in any you lower we you this the is? that higher quarter your that afternoon. The behind release, earnings had

Bob Ferris

for Allen, question. the Thanks, Yes.

countries year, So substantial had some that installations I international had in last we believe higher costs.

that so the we is situation. of did lower that And year, not ago. this the have margins had headwinds reason And a we year

to margins, I would, go. that’s comes recommend better way really So gross though, what at when level it annual at that an is happened. looking to a it

some quarter fluctuations. We – quarterly will have

sold takes example, with our sales that, So overhead history. margins, bite we do overall of could could goods based do after other back our working lower a of our restrict And But a overall, are or there our contract large on achieve tend, gross that. cost look need cost. that for COVID – things in we such right we chances XX% margins bigger go quarters factors, be our if through around you to to in

of I – mean So our gross margin. overall

a based with order. an end up cost somewhat situation where so last like we quarter having And the on COVID. Or we international extra year, had

year, and – this have we so didn’t costs. those And

– overall, level. gross to XX% stay margin over of we So on around – try annual an more yes, a but

Allen Klee

have to of buckets Thank you. that if question remind is, you could last major the of money federal might any being there money budgets police at us extent and additional what My if be allocated, all. the

Bob Ferris

they expense buckets capital have police Yes, grants. using groups some go There’s dedicated have a is police so operation charity like had that ability few expense get often for – then our have other the also buckets, to to simulator Sure. are advancing issues. a purchased the and that there’s or we

actually But money that to other and purchased equipment using buy a federal of few one Simulation forfeiture. also they is is the asset grants money. There’s had our are items so simulator. be to And grants donated, money forfeiture allowed they sometimes used that and used.

have track down assets, some when There’s those – used are that we available. top past. simulation are in various able that head, off But police the be the they buckets can of if buy then just equipment are a the those apprehend seen of so for criminal, than are equipment probably that. those simulation and the So to some the more my used to

Allen Klee

Okay. so Thank much. you

Bob Ferris

Thank you.

Operator

like Ferris question-and-answer back time, would to remarks. this At Mr. over closing call I turn now for to session. our the concludes his that

Bob Ferris

join us believe and Thank you to are staff, excitement I ahead you taking our have. time I by you the extraordinary able you. sense hope today. firmly enabled and shareholders, We to customers, I appreciate days the are us all. thank of vendors, optimism all VirTra the for best

is time, X:XX local at about XXXX p.m. is Stockholders, to begin our reminder, Eastern which held Time. of virtually, being a Annual As Meeting which is p.m. X:XX

call. those continuing next join, For safe, God shortly. be meantime, bless. you forward conversation you for care to our And take to the we and In to else, look you of everyone forward the able look on updating we with

Operator

for call. for today VirTra’s second Thank us quarter conference joining you XXXX

disconnect. may You now