Virtra ER and frantic trading

Posted on March 30, 2021 by Florian Buschek

Virtra VTSI (disclosure: long but I am trading actively today) had its full year earnings results and call yesterday. No doubt, excellent results as the snippets from the transcript below illustrate.

And in the fourth quarter alone, we generated $5.5 million in new bookings.

In the military market, specifically, we secured a $1.9 million contract to support the Air Force Research Laboratory ADMIRE program, which is intended to develop technology that improves our military warfighters’ decision-making and marksmanship skills.

 But as we mature in the market, it’s going to become more important that we look at where we expand beyond just law enforcement. And we still believe there’s tremendous room to grow in law enforcement.

As of December 31, 2020, our backlog was $14.6 million, which is up 52% from the $9.6 million we reported a year ago and up from the $14.4 million at September 30, 2020.

That sales strategy of supplying a critical missing piece to help a large player better perform on a contract is one that we believe will continue to be an effective way for VirTra to expand further into the military market. And indeed, we’ve already seen evidence of it in 2021. Due to the sensitive nature of some of our current work, we’re constrained in what we can disclose at this time, but we hope to provide more details on the strategy and our progress later in the year. So please stay tuned.

We’ve had margins push down some. But if you look historically, we’re usually right around 60% gross margin, and we try to stay in that range, but things — there are situations where that can vary somewhat

So the police market that we have not tapped is still massive. And then there are certainly like the military market and others that we have not fully tapped as well. So I think if we were fully, pretty much fully deployed in police and in military, then it would be very hard for anyone to expect double-digit growth out of the company, but that’s not the case.

That last paragraph is the CEO telling us that the business will grow 20% per year or more until they have penetrated both police and military. He couldn’t be more clear. However, if this justifies after hours trading beyond $14 and today’s volume of more than ten times the outstanding shares is questionable. Shares are currently trading around $9 per share or 90% up from yesterday.

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