VirTra Inc (VTSI) 2022 Q4 法說會逐字稿

Good afternoon. Welcome to VirTra's Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Doug, and I will be your operator for today's call. Joining us for today's presentation are the company's Chairman and Co-CEO, Bob Ferris; Co-CEO, John Givens; and Chief Financial Officer, Alanna Boudreau. Following their remarks, we will open the call for questions from VirTra's institutional analysts and investors.

下午好。歡迎來到 VirTra 的第四季度和 2022 年全年收益電話會議。我叫道格，我將擔任今天電話的接線員。與我們一起參加今天的演講的有公司董事長兼聯席首席執行官 Bob Ferris；聯合首席執行官約翰·吉文斯；和首席財務官 Alanna Boudreau。在他們發表評論之後，我們將開始向 VirTra 的機構分析師和投資者提問。

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. During this presentation, management may discuss financial projections, information or expectations about the company's products and services or markets or otherwise make statements about the future, which are forward-looking and subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made.

在我們開始通話之前，我想提供 VirTra 的安全港聲明，其中包括有關本次通話期間所做的前瞻性陳述的警告。在此演示過程中，管理層可能會討論有關公司產品和服務或市場的財務預測、信息或預期，或以其他方式對未來做出陳述，這些陳述是前瞻性的，並受許多可能導致實際結果不同的風險和不確定性的影響實質上來自所做的陳述。

The company does not undertake any obligation to update them as required by law. Finally, I'd like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at www.virtra.com. Now I'd like to turn the call over to VirTra's Chairman and Co-CEO, Mr. Bob Ferris. Sir, please proceed.

本公司不承擔根據法律要求更新它們的任何義務。最後，我想提醒大家，可以通過公司網站 www.virtra.com 投資者關係部分的鏈接重播此次電話會議。現在我想把電話轉給 VirTra 的董事長兼聯席首席執行官 Bob Ferris 先生。先生，請繼續。

Thank you, Doug, and thank you, everyone, for joining us this afternoon. After the market closed today, we issued a press release that provided our audited financial results for the full year ended December 31, 2022, along with highlighted business accomplishments. We also filed our 10-K with the SEC today, which is available for review at your discretion.

謝謝道格，也謝謝大家今天下午加入我們。今天收市後，我們發布了一份新聞稿，提供了截至 2022 年 12 月 31 日的全年經審計的財務業績，以及突出的業務成就。我們今天還向 SEC 提交了 10-K，您可以自行決定是否對其進行審查。

As a brief overview for today's call, I'll begin by providing highlights for the fourth quarter and full year 2022 and I'll summarize some of our recent business developments before passing the call over to John to discuss operations and provide an update on our military market progress. After that, Alanna will discuss our financial results in more detail. I'll then come back on to discuss how 2023 has been going so far before moving to Q&A. And with that, let's get started.

作為今天電話會議的簡要概述，我將首先提供第四季度和 2022 年全年的亮點，然後我將總結我們最近的一些業務發展，然後將電話轉給約翰討論運營並提供我們的最新情況軍品市場進步。之後，Alanna 將更詳細地討論我們的財務業績。然後，在進入問答環節之前，我將繼續討論 2023 年到目前為止的進展情況。有了這個，讓我們開始吧。

2022 is a successful year for VirTra on many fronts. Our strong performance was a result of executing on our business strategy to drive profitable growth in the police and military markets for our industry-leading products. We generated record bookings and grew revenue for the 17th consecutive year increasing the top line 16% to a record $28.3 million.

2022 年是 VirTra 在許多方面取得成功的一年。我們的強勁表現是執行我們的業務戰略以推動我們行業領先產品在警察和軍事市場的盈利增長的結果。我們連續第 17 年創造了創紀錄的預訂量和收入增長，使收入增長 16% 至創紀錄的 2830 萬美元。

On top of this, we delivered another year of solid profitability, generating $3.6 million of adjusted EBITDA and $2 million of net income.

除此之外，我們又實現了穩健的盈利能力，產生了 360 萬美元的調整後 EBITDA 和 200 萬美元的淨收入。

In addition to the strong financial performance we delivered last year, we achieved several significant operational milestones that have positioned us for long-term success. We made judicious investments in our technology that from a competitive standpoint, further differentiated our products in the market. We have meaningfully increased the breadth and effectiveness of our training offerings and bolstered our competitive edge in the industry. These efforts included refinements to our software and upgrades to certain accessories like our V-Threat-Fire device and drop in recoil capabilities which make our solutions more indispensable and effective.

除了我們去年實現的強勁財務業績外，我們還實現了幾個重要的運營里程碑，這些里程碑使我們能夠取得長期成功。我們對我們的技術進行了明智的投資，從競爭的角度來看，進一步使我們的產品在市場上脫穎而出。我們有意義地增加了培訓產品的廣度和有效性，並增強了我們在行業中的競爭優勢。這些努力包括改進我們的軟件和升級某些配件，例如我們的 V-Threat-Fire 設備和降低後坐力，這使我們的解決方案更加不可或缺和有效。

In November, we showcased our latest technology at the ITSEC trade show in Orlando, where we received strong feedback and interest. In fact, I'd even state that anyone who attended ITSEC and tried out all small arms training options at the show would walk away realizing that VirTra is the gold standard. An accomplishment that is the result of an enormous investment in both time and resources. Much of the financial investment is in the rearview mirror like our VirTra volumetric video or V3 enabling technology but we will continue to prioritize cost-effective enhancements to ensure exceptional value for our customers.

11 月，我們在奧蘭多的 ITSEC 貿易展上展示了我們的最新技術，在那裡我們收到了強烈的反饋和興趣。事實上，我什至會說任何參加過 ITSEC 並在展會上嘗試過所有輕武器訓練選項的人都會意識到 VirTra 是黃金標準。一項成就是對時間和資源進行大量投資的結果。大部分財務投資都在後視鏡上，例如我們的 VirTra 體積視頻或 V3 啟用技術，但我們將繼續優先考慮具有成本效益的增強功能，以確保為我們的客戶提供卓越的價值。

I'd like to highlight important investments in our content department during 2022. In Q4, we introduced our breakthrough technology V3, which has the potential to provide a step function advancement in training content for our customers. V3 combines the advantages of high-definition video and 3D characters and empowers us to affordably build a comprehensive library of training content suitable for screen-based or headset based platforms, high-quality realistic content is a key differentiator for attracting and retaining customers in our market and V3 helps us to continue building upon our advantage in this essential area.

我想強調 2022 年對我們內容部門的重要投資。在第四季度，我們推出了突破性技術 V3，它有可能為我們的客戶提供培訓內容的階梯式功能改進。 V3 結合了高清視頻和 3D 角色的優勢，使我們能夠以經濟實惠的方式構建適用於基於屏幕或基於耳機的平台的綜合培訓內容庫，高質量的逼真內容是我們吸引和留住客戶的關鍵差異化因素市場和 V3 幫助我們繼續在這個重要領域建立我們的優勢。

In fact, around VirTra, we often say content is king. Our investments have strengthened our position in every major aspect of training simulation, making us more competitive for 2023 and beyond. Another highlight in 2022 was our substantial efforts centered around scaling our business. The move in our channel or Arizona headquarters is near complete, and we are looking forward to having the core of our operations centralized under one roof.

事實上，圍繞 VirTra，我們常說內容為王。我們的投資加強了我們在訓練模擬各個主要方面的地位，使我們在 2023 年及以後更具競爭力。 2022 年的另一個亮點是我們圍繞擴展業務所做的大量努力。我們的渠道或亞利桑那州總部的搬遷已接近完成，我們期待著將我們的核心業務集中在一個屋簷下。

In addition to driving efficiencies, the 83,000 square foot facility houses the most advanced development and production facilities in the industry an attractive selling point for customers and partners alike. In the fourth quarter, we also officially opened our facility in Orlando, Florida. We hosted an open house event in October where we showcased our products and provided immersive training demonstrations to military, law enforcement, industry contractors and government officials.

除了提高效率外，這座佔地 83,000 平方英尺的工廠還擁有業內最先進的開發和生產設施，這對客戶和合作夥伴來說是一個極具吸引力的賣點。第四季度，我們還在佛羅里達州奧蘭多正式開設了工廠。我們在 10 月舉辦了一次開放日活動，展示了我們的產品，並為軍隊、執法部門、行業承包商和政府官員提供了身臨其境的培訓演示。

The reception has been great thus far, and we believe the new facility will be instrumental in growing our military business. John will give further updates in this area shortly. In recent months, we have made key additions to our leadership team and Board of Directors that will be instrumental for our growth going forward. In December, we appointed Alanna Boudreau, who you will hear from shortly as our new CFO. Alanna brings with her over 20 years of experience in managerial, financial and operating functions.

到目前為止，反響很好，我們相信新設施將有助於發展我們的軍事業務。 John 將很快提供這方面的進一步更新。最近幾個月，我們對領導團隊和董事會進行了重要補充，這將有助於我們未來的發展。 12 月，我們任命 Alanna Boudreau 為我們的新首席財務官，您很快就會聽到她的消息。 Alanna 帶來了她在管理、財務和運營職能方面超過 20 年的經驗。

She has extensive experience overseeing accounting activities for public companies and most recently led accounting activities for a publicly listed global and industrial laser company. Her experience with public company reporting and her strong management skill set make her a great fit for VirTra, and she has already begun to make meaningful contributions to our financial operations.

她在監督上市公司的會計活動方面擁有豐富的經驗，最近領導了一家上市的全球和工業激光公司的會計活動。她在上市公司報告方面的經驗和強大的管理技能使她非常適合 VirTra，而且她已經開始為我們的財務運營做出有意義的貢獻。

In the fourth quarter last year, we added Gregg Johnson to our Board. Gregg is one of the top experts in the country in Legal Corporate Compliance and senior management of high-growth entrepreneurial companies of the size of VirTra and larger. As background, Gregg was the primary adviser to our Board on our successful effort to list our stock on NASDAQ, and he was a member of VirTra's Advisory Board. In January of this year, we appointed Jim McDonald to the Board. Jim is a recognized public safety executive and law enforcement leader, having served the public for 4 decades in roles such as the Sheriff of Los Angeles County and Chief of Police in Long Beach, California. He is one of the most accomplished, thoughtful and well-connected leaders in the law enforcement industry, and he brings a tremendous level of expertise in public safety, tactical training, operational growth and command accountability to our team.

去年第四季度，我們將 Gregg Johnson 添加到我們的董事會。 Gregg 是美國法律公司合規方面的頂級專家之一，也是 VirTra 及以上規模的高增長創業公司的高級管理人員。作為背景，Gregg 是我們董事會在納斯達克成功上市的主要顧問，他也是 VirTra 顧問委員會的成員。今年 1 月，我們任命 Jim McDonald 為董事會成員。 Jim 是一位公認的公共安全執行官和執法領導者，他為公眾服務了 4 年，擔任過洛杉磯縣治安官和加利福尼亞州長灘警察局長等職務。他是執法行業中最有成就、最有思想且人脈最廣的領導者之一，他為我們的團隊帶來了公共安全、戰術培訓、業務增長和指揮問責制方面的高水平專業知識。

And now I'd like to provide some updates in each of our markets. Our government revenue increased by 33% from the prior year from $16.8 million to $22.4 million due to improved success in the law enforcement market as well as an increase in federal government lease contracts. Internationally, we saw a 6% decrease in our revenue to $4.2 million from $4.4 million, which was a result of contract timing. We also continued to generate strong growth from our subscription training equipmen00t partnership or STEP for short.

現在我想提供我們每個市場的一些更新。由於執法市場的成功以及聯邦政府租賃合同的增加，我們的政府收入比上一年增長了 33%，從 1680 萬美元增加到 2240 萬美元。在國際上，我們的收入從 440 萬美元下降 6% 至 420 萬美元，這是合同時間安排的結果。我們還繼續通過我們的訂閱培訓設備合作夥伴關係或簡稱 STEP 實現強勁增長。

As a reminder, the STEP program provides recurring revenue for VirTra that also offers an easier on-ramp for smaller agencies interested in our solution but are perhaps budget constrained for an outright purchase. In 2002, STEP revenue was $2.9 million, representing 10% of total sales and growing 48% from the prior year. We continue to focus on expanding this valuable recurring revenue stream going forward.

提醒一下，STEP 計劃為 VirTra 提供了經常性收入，這也為對我們的解決方案感興趣但預算有限而無法直接購買的小型機構提供了更容易的入口。 2002 年，STEP 收入為 290 萬美元，佔總銷售額的 10%，比上一年增長 48%。我們繼續專注於擴大這一寶貴的經常性收入來源。

In summary, our financial and operational performance in 2022 was strong and left us well positioned to continue our profitable growth path into 2023 and beyond. We are focused on generating ever higher levels of shareholder value as our business continues to expand. I will now turn the call over to John to give an update on VirTra's activity in the military market and overall company operations. John?

總之，我們在 2022 年的財務和運營表現強勁，使我們處於有利地位，可以在 2023 年及以後繼續實現盈利增長。隨著我們的業務不斷擴大，我們專注於創造更高水平的股東價值。我現在將電話轉給約翰，以提供有關 VirTra 在軍事市場和公司整體運營活動的最新信息。約翰？

Thank you, Bob, and good afternoon, everyone. 2022 as an important operational year for VirTra. The processes we implemented in the fourth quarter of 2022 and continue to improve daily are finally beginning to bear fruit. As Bob alluded to earlier in the call, the finalization of our move into our Chandler, Arizona headquarters. And additionally, our facilities in Orlando have helped in many ways, but especially as it pertains to product manufacturing, sales, order fulfillment and customer success.

謝謝鮑勃，大家下午好。 2022 年是 VirTra 重要的運營年。我們在 2022 年第四季度實施並每天不斷改進的流程終於開始見效。正如鮑勃早些時候在電話中提到的那樣，我們搬進亞利桑那州錢德勒總部的工作已經完成。此外，我們在奧蘭多的工廠在很多方面都提供了幫助，尤其是在產品製造、銷售、訂單履行和客戶成功方面。

First, with product manufacturing, our new facility allowed us to implement more streamlined production processes. These capabilities have already begun to show meaningful improvements in efficiency, product quality, which allows us to fulfill orders quicker and reduce our backlog at a much higher rate.

首先，在產品製造方面，我們的新設施使我們能夠實施更精簡的生產流程。這些功能已經開始在效率和產品質量方面顯示出有意義的改進，這使我們能夠更快地完成訂單並以更高的速度減少積壓。

Secondly, these new centralized hubs will greatly help strengthen our relationships with current prospective customers. As I talked about in the third quarter call, the Orlando facility is an extension of our military sales effort and serves as the East Coast hub for customer service, live demonstrations and meeting site for prospective customers.

其次，這些新的集中式樞紐將極大地幫助加強我們與現有潛在客戶的關係。正如我在第三季度電話會議中談到的那樣，奧蘭多工廠是我們軍事銷售工作的延伸，並作為東海岸的客戶服務中心、現場演示和潛在客戶的會議場所。

With Orlando being the acquisition epicenter of the military simulation market, we are in a strategic position to provide our expertise to the industry that is seeking cutting-edge solutions. We have already begun to see benefits from the new space. The convenience factor is huge for major customers and prime contractors alike. And the live demonstration capabilities just down the street, now that's a business developer's dream. The external competitive environment has really relaxed in 2022 and is affording VirTra great opportunities to become the Tier 1 preferred vendor for small arm simulation to the military market.

由於奧蘭多是軍事模擬市場的收購中心，我們處於戰略地位，可以向尋求尖端解決方案的行業提供我們的專業知識。我們已經開始看到新空間的好處。對於主要客戶和主要承包商而言，便利因素是巨大的。現場演示功能就在街對面，現在這是業務開發人員的夢想。外部競爭環境在 2022 年真正放鬆，並為 VirTra 提供了成為軍事市場小型武器仿真 Tier 1 首選供應商的絕佳機會。

In fact, it's my opinion that as of today, for the military market, VirTra has more staff, more expertise, more technology, more investments to benefit the customers and more relevant capacity than any other company in the industry.

事實上，我認為，截至今天，對於軍事市場，VirTra 擁有比業內任何其他公司更多的員工、更多的專業知識、更多的技術、更多的投資以使客戶受益以及更多的相關能力。

Regarding staff and operations. We work diligently throughout 2022 to improve our ERP system, and we are in a much better position to realize operating efficiencies going forward. Our forecasting capabilities are better, allowing for our purchasing and production activities to become more optimized. This makes our operations more automated, and it is to refine these and it improves our order fulfillment time, increasing customer satisfaction. We will continue to refine these systems, but we are already seeing vast improvements across the organization.

關於人員和操作。我們在整個 2022 年都在努力工作，以改進我們的 ERP 系統，並且我們能夠更好地實現未來的運營效率。我們的預測能力更好，使我們的採購和生產活動更加優化。這使我們的操作更加自動化，並且可以改進這些操作並縮短我們的訂單履行時間，從而提高客戶滿意度。我們將繼續完善這些系統，但我們已經看到整個組織的巨大改進。

Additionally, we are beginning to build out our teams to further support our customers in a scalable fashion. We introduced a dedicated quality team to ensure that we are putting out the best product possible, and we have vastly improved our customer support function, including field service representatives that are not only meant to increase customer satisfaction, but increase our ability to install more systems reducing the backlog.

此外，我們開始組建我們的團隊，以可擴展的方式進一步支持我們的客戶。我們引入了一支專門的質量團隊，以確保我們推出盡可能最好的產品，並且我們極大地改進了我們的客戶支持功能，包括現場服務代表，他們不僅可以提高客戶滿意度，還可以提高我們安裝更多系統的能力減少積壓。

The additional field service representatives also raised the number of touch points with our customers to improve our product feedback loop. Moving specifically to military operations. We are seeing strong interest and have been hard at working to build the pipeline. I want to remind everyone of the 3 ingredients of success in the military market I mentioned in the Q3 call. First is having a physical presence. Our new facility conveniently located Orlando site provides us with an invaluable access to the industry and its key decision-makers.

額外的現場服務代表還增加了與客戶的接觸點數量，以改善我們的產品反饋迴路。專門針對軍事行動。我們看到了濃厚的興趣，並一直在努力建設管道。我想提醒大家我在 Q3 電話會議中提到的軍事市場成功的 3 個要素。首先是有實體存在。我們位於奧蘭多交通便利的新設施為我們提供了接觸行業及其關鍵決策者的寶貴機會。

Second is having a strong relationships. In tandem with being able to build relationships in person with military and government officials, Mike's extensive experience in military simulation market and time served in the U.S. Army have brought me many strong connections that will be critical to our growth in this market. We also have added military veterans to the Orlando office with relationships as strong as my own. And finally, having a strong product offering. It's critical to the success of this market as is true in any industry. And as Bob and I have alluded to, we have been laser-focused on enhancing our technology and processes to ensure that our solutions are the gold standard and remain world-class.

其次是擁有牢固的關係。除了能夠親自與軍方和政府官員建立關係之外，邁克在軍事模擬市場的豐富經驗和在美國陸軍服役的時間為我帶來了許多牢固的聯繫，這對我們在這個市場的發展至關重要。我們還在奧蘭多辦公室增加了退伍軍人，他們的關係和我一樣牢固。最後，擁有強大的產品供應。這對這個市場的成功至關重要，這在任何行業都是如此。正如鮑勃和我提到的那樣，我們一直專注於提升我們的技術和流程，以確保我們的解決方案是黃金標準並保持世界一流水平。

Our October open house event was a great success and sparked new promising leads while introducing and more importantly, a mature leading product from the law enforcement industry to our military community and existing customer contacts. Over the last few months, we have been very busy at Orlando office with tours, demos and meetings with key industry stakeholders and prospects. As I spoke about on our Q3 call, we are optimistic about the Department of Defense fiscal year '24, which begins in October of '23.

我們 10 月的開放日活動取得了巨大成功，並激發了新的有前途的線索，同時更重要的是，將執法行業的成熟領先產品介紹給我們的軍事社區和現有客戶聯繫。在過去的幾個月裡，我們在奧蘭多辦公室忙於與主要行業利益相關者和潛在客戶進行參觀、演示和會面。正如我在第三季度電話會議上所說，我們對國防部從 23 年 10 月開始的 24 財年持樂觀態度。

That is the time line we continue to target for demonstrating strong and meaningful traction. Looking ahead, our operational and technological advancements in 2022 have bolstered our competitive position and placed us on solid growth trajectory for the years ahead. The growing demand and constructive funding environments for VirTra's innovative training solution gives us confidence in our ability to capitalize on the robust pipeline of opportunities in law enforcement, military and international markets. I look forward to -- I look forward to keeping you all up to date and developments of our business in the future.

這是我們繼續為展示強大而有意義的吸引力而設定的時間線。展望未來，我們在 2022 年的運營和技術進步鞏固了我們的競爭地位，並使我們在未來幾年走上穩健的增長軌道。 VirTra 的創新培訓解決方案不斷增長的需求和建設性的資金環境使我們相信我們有能力利用執法、軍事和國際市場中大量的機會。我期待著——我期待著讓大家了解我們未來業務的最新進展。

Sorry, Bob, I'm going to kind of go up script here. I don't want to read this anymore. So now that I'm approaching a year at the company, I'd like to reflect on my findings and our corrective actions regarding the company's performance expectations and the focus that we brought to the table. The company has made some huge mistakes, including the ERP implementation. I don't know, but that was so harmful to the company at all levels. It was quite daunting. Inexperienced staff in key leadership positions, lack of processes, lack of timely financial reporting, this all added to problems.

抱歉，鮑勃，我要在這裡講講腳本。我不想再讀這個了。所以現在我在公司快要一年了，我想反思一下我的發現和我們對公司績效預期的糾正措施以及我們提出的重點。公司犯了一些大錯，包括ERP的實施。我不知道，但這對公司的各個層面都非常有害。這是相當令人生畏的。關鍵領導職位上缺乏經驗的員工、缺乏流程、缺乏及時的財務報告，這些都加劇了問題。

But despite the major business setbacks, the company has managed to show some modest growth -- there are 2 reasons for that modest success, in my opinion, a superior product that's second to none and a line staff dedicated to those they serve. There's quite comradery between the company and those individuals that we're serving. Unfortunately, for me, change doesn't happen quickly enough and as often as I wanted it to. Keep in mind, we weren't able to really start working on significant change until our filings were completed, we removed the red flags. And after the reorganization in August of 2022, and we still have a lot of work to improve sales, supply line, inventory management and finalizing our capital improvements.

但是，儘管遇到了重大的業務挫折，該公司還是取得了一些適度的增長——在我看來，取得這種適度成功有兩個原因，一個是首屈一指的卓越產品，另一個是全心全意為他們所服務的人服務的一線員工。公司與我們所服務的個人之間存在相當的同志情誼。不幸的是，對我來說，變化並沒有像我希望的那樣迅速和頻繁地發生。請記住，在我們的文件完成之前，我們無法真正開始進行重大更改，我們刪除了危險信號。在 2022 年 8 月重組之後，我們還有很多工作要做，以改善銷售、供應線、庫存管理和完成我們的資本改善。

And Bob said we are almost done. The last item that we need to move over is our machine shop. It's a little bit more coordination to do that and timing so that we don't interrupt our production and our delivery. We've been hard working to re-implement the ERP, and we've replaced those key leader positions with strong proven talent. We've implemented processes to contain cost, and we've provided real-time matrix to improve our communication and finally filed a timely Q3 -- 2022 Q3 and a 10-K report.

鮑勃說我們快完成了。我們需要移動的最後一項是我們的機械車間。這樣做需要更多的協調和時間安排，這樣我們就不會中斷我們的生產和交付。我們一直在努力重新實施 ERP，並且我們已經用久經考驗的優秀人才取代了那些關鍵的領導職位。我們已經實施了控製成本的流程，我們提供了實時矩陣來改善我們的溝通，並最終及時提交了第三季度——2022 年第三季度和 10-K 報告。

This company has incredible potential, and we intend to build a market share and expand our offering which you'll hear about later. But for the record, we're not happy with our performance yet. And we will continue to build that pipeline, close more deals, drive cost down and deliver products faster, make sure we provide superior customer experience and protect shareholder value. So thank you for your patience and your investment in VirTra. I'll now go back on script. And Alanna, I'll turn the call over to you to provide a financial update.

這家公司具有不可思議的潛力，我們打算建立市場份額並擴大我們的產品範圍，您稍後會聽到。但鄭重聲明，我們對自己的表現還不滿意。我們將繼續建設該管道，完成更多交易，降低成本並更快地交付產品，確保我們提供卓越的客戶體驗並保護股東價值。因此，感謝您的耐心和對 VirTra 的投資。我現在回到腳本上。 Alanna，我會把電話轉給你提供財務更新。

Thank you, John. Good afternoon, everyone. It's a pleasure to be speaking to you today and to review our audited financial results for the fourth quarter and the full year ended December 31, 2022. In my first few months at VirTra, I've already seen our team's remarkable dedication to our customers and equally strong commitment to our mission, and I'm looking forward to keeping you updated on our progress for many years to come.

謝謝你，約翰。大家下午好。很高興今天能與您交談並回顧我們截至 2022 年 12 月 31 日的第四季度和全年的經審計財務業績。在我在 VirTra 的頭幾個月裡，我已經看到我們團隊對客戶的非凡奉獻以及對我們使命的同樣堅定的承諾，我期待著讓您了解我們在未來許多年的最新進展。

With that, I'll get started on the Q4 and full 2022 financial update. Our total revenue for the fourth quarter of 2022 was $8.7 million, which was up slightly from the $8.6 million of revenue we recognized in the fourth quarter of last year. For 2022, total revenue increased 16% to a record $28.3 million from $24.4 million in 2021.

有了這個，我將開始第四季度和 2022 年完整的財務更新。我們 2022 年第四季度的總收入為 870 萬美元，略高於我們去年第四季度確認的 860 萬美元收入。到 2022 年，總收入從 2021 年的 2440 萬美元增長 16% 至創紀錄的 2830 萬美元。

The increase in revenue resulted from a 48% increase in our STEP revenue and a 54% increase in our simulator sales driven by the law enforcement market. As a result of our operational streamlining, we were able to deliver the first 16 systems of a large federal contract within 90 days of purchase order receipt.

收入的增長是由於我們的 STEP 收入增長了 48%，而我們的模擬器銷售額在執法市場的推動下增長了 54%。由於我們的運營精簡，我們能夠在收到採購訂單後 90 天內交付大型聯邦合同的前 16 個系統。

Our gross profit for the fourth quarter of 2022 increased to $5.3 million from $2.8 million in the fourth quarter of last year. Gross profit margin for the fourth quarter of 2022 was 61.4%, an improvement from 32.7% in the fourth quarter of last year. And for 2022, gross profit increased to $16.3 million from $11.4 million in 2021. Gross profit margin for 2022 was 57.4%, an increase from 46.7% for 2021 -- the increase in gross profit was due to a 7% decrease in our cost of goods sold, combined with our 16% increase in revenue. Our net operating expense for fourth quarter of 2022 was $3.4 million compared to $3 million in the fourth quarter last year.

我們 2022 年第四季度的毛利潤從去年第四季度的 280 萬美元增加到 530 萬美元。 2022年第四季度毛利率為61.4%，較去年第四季度的32.7%有所改善。 2022 年，毛利潤從 2021 年的 1140 萬美元增加到 1630 萬美元。2022 年的毛利率為 57.4%，高於 2021 年的 46.7%——毛利潤的增長是由於我們的成本下降了 7%售出的商品，加上我們 16% 的收入增長。我們 2022 年第四季度的淨運營費用為 340 萬美元，而去年第四季度為 300 萬美元。

For 2022, net operating expense was $13.7 million compared to $10 million in 2021. The increase was primarily due to a 74% increase in our sales and marketing spend from our increased participation in industry trade shows and the associated travel as well as a 39% increase in R&D expenses and an increase in onetime costs related to the facility move and relaunching our ERP system.

2022 年的淨運營費用為 1370 萬美元，而 2021 年為 1000 萬美元。增加的主要原因是我們的銷售和營銷支出增加了 74%，原因是我們增加了對行業貿易展覽和相關差旅的參與，以及 39%研發費用的增加以及與設施搬遷和重新啟動我們的 ERP 系統相關的一次性成本的增加。

Now turning to profitability measures. For the fourth quarter of 2022, we recorded operating income of $1.9 million compared to a loss of $0.2 million in the fourth quarter of 2021. For 2022, our income from operations was $2.6 million, an improvement from the $1.5 million of 2021. Net income for the fourth quarter of 2022 totaled $1.4 million or $0.13 per diluted share. This was an increase of the net income of $13,000 or less than $0.01 per diluted share. in the fourth quarter of 2021. For 2022, net income totaled $2 million or $0.18 per basic and diluted share, which compares to a net income of $2.5 million or $0.25 per basic and diluted share for 2021. Our adjusted EBITDA, a non-GAAP metric, for the fourth quarter of 2022 was $1.7 million compared to $0.5 million in the fourth quarter of 2021. For 2022, adjusted EBITDA totaled $3.6 million, an increase of $1.2 million in 2021. The increase in adjusted EBITDA was significantly impacted by the onetime event of the official forgiveness of the PPP loan.

現在轉向盈利能力指標。 2022 年第四季度，我們的營業收入為 190 萬美元，而 2021 年第四季度為虧損 20 萬美元。2022 年，我們的營業收入為 260 萬美元，比 2021 年的 150 萬美元有所改善。淨收入2022 年第四季度總計 140 萬美元或攤薄後每股 0.13 美元。這增加了 13,000 美元的淨收入或每股攤薄後不到 0.01 美元。 2021 年第四季度。2022 年的淨收入總計為 200 萬美元或每股基本股和稀釋股 0.18 美元，而 2021 年的淨收入為 250 萬美元或每股基本股和稀釋股 0.25 美元。我們調整後的 EBITDA，非公認會計原則指標，2022 年第四季度為 170 萬美元，而 2021 年第四季度為 50 萬美元。2022 年調整後的 EBITDA 總計 360 萬美元，比 2021 年增加 120 萬美元。調整後的 EBITDA 的增長受到一次性的顯著影響PPP 貸款的官方寬恕事件。

Turning to our bookings and backlog. We define bookings as the total of newly signed contracts and purchase orders received in a defined period. For fourth quarter and full year 2022, we received booking totals of $6.4 million and $33 million, respectively. Furthermore, we define backlog as the accumulation of bookings from signed contracts and purchase orders that are not started or uncompleted and cannot be recognized as revenue until delivered in a future period.

轉向我們的預訂和積壓。我們將預訂量定義為在規定時期內收到的新簽合同和採購訂單的總數。對於 2022 年第四季度和全年，我們分別收到了 640 萬美元和 3300 萬美元的預訂總額。此外，我們將積壓定義為尚未開始或未完成且在未來期間交付之前無法確認為收入的已簽署合同和採購訂單的預訂累積。

Backlog also includes our extended warranty agreements and step agreements that are deferred revenue recognized on a straight-line basis over the life of each respective agreement. As of December 31, 2022, our backlog totaled $27.7 million, which was up 20% from December 31, 2021.

積壓還包括我們的延長保修協議和步驟協議，它們是在每個協議的有效期內以直線法確認的遞延收入。截至 2022 年 12 月 31 日，我們的積壓訂單總額為 2770 萬美元，比 2021 年 12 月 31 日增加了 20%。

And finally, to our balance sheet. As of December 31, 2022, we had unrestricted cash and cash equivalents of $13.5 million compared to $15.7 million at the end of third quarter. From the working capital standpoint, at the end of fourth quarter, we had $24.3 million in working capital, a decrease from the $25.7 million at the end of Q3. VirTra's cash balance decreased as we continued the construction of the new building, which has increased our property, plant and equipment balance and we saw an increase in our accounts receivable and unbilled revenue as items shipped to our customers at the end of the quarter.

最後，到我們的資產負債表。截至 2022 年 12 月 31 日，我們擁有不受限制的現金和現金等價物 1350 萬美元，而第三季度末為 1570 萬美元。從營運資金的角度來看，第四季度末，我們的營運資金為 2430 萬美元，低於第三季度末的 2570 萬美元。 VirTra 的現金餘額隨著我們繼續建造新大樓而減少，這增加了我們的財產、廠房和設備餘額，我們看到我們的應收賬款和未開票收入增加，因為在本季度末向我們的客戶運送了物品。

We expect to see the cash increase as we exit Q1. And for additional details of our financial results, please reference our 10-K, which was filed earlier today. And that concludes my prepared remarks, and I'll turn it back to Bob.

我們預計在退出第一季度時現金會增加。有關我們財務業績的更多詳細信息，請參考我們今天早些時候提交的 10-K。我準備好的發言到此結束，我將把它轉回給鮑勃。

Thanks, Alanna. It is great to have you on the VirTra team. We've been doing a great job. In closing, 2022 is a successful year for onboarding tremendous new talent and implementing the right processes for VirTra to win and service larger volumes of business. We did so well also achieving improved profitability and continuing our streak of annual revenue growth.

謝謝，阿蘭娜。很高興你加入 VirTra 團隊。我們一直做得很好。最後，2022 年是成功招募大量新人才和實施正確流程的一年，VirTra 贏得併服務於更大量的業務。我們做得很好，還實現了盈利能力的提高，並繼續保持年收入增長勢頭。

With new operational systems in place, we expect to build out our business pipeline in both our law enforcement markets, international markets and military markets in 2023. There are immense opportunities in front of VirTra to serve industries that need the gold standard of training solutions, and this year's focus will be on increasing momentum in our target markets.

隨著新的操作系統到位，我們預計將在 2023 年在我們的執法市場、國際市場和軍事市場建立我們的業務管道。VirTra 面前有巨大的機會來服務需要黃金標準培訓解決方案的行業，今年的重點將是增加我們目標市場的發展勢頭。

In fact, we are off to a strong start already in 2023. Our sales pipeline remains robust, and we are determined to do better as we see many areas where we can improve and must improve, as John indicated. And with that, I'm going to wrap up my prepared remarks, and we'll open the call up for your questions. Operator, please provide the appropriate instructions.

事實上，我們在 2023 年已經有了一個良好的開端。我們的銷售渠道依然強勁，我們決心做得更好，因為我們看到許多我們可以改進和必須改進的領域，正如約翰所指出的那樣。至此，我將結束我準備好的發言，我們將開始徵集大家的問題。操作員，請提供適當的說明。

(Operator Instructions) Our first question comes from the line of Jaeson Schmidt with Lake Street.

（操作員說明）我們的第一個問題來自 Jaeson Schmidt 與 Lake Street 的對話。

Just want to start, Bob, with sort of your last comment on the sales pipeline. Obviously, backlog remains pretty robust here. But just curious if you could comment on you're seeing from an order pattern perspective year-to-date, just given all the macro challenges out there.

鮑勃，只想開始您對銷售渠道的最後評論。顯然，積壓在這裡仍然非常強勁。但只是好奇您是否可以評論您從年初至今的訂單模式角度所看到的，只是考慮到那裡的所有宏觀挑戰。

Well, thanks for the question. We're still seeing a robust sales pipeline. We are working a lot of deals, international, military and there are issues with timing on that. But -- and then we have our standard domestic federal and international law enforcement pipeline. So but overall, we're still seeing people willing to spend money on effective training solutions and so with that, it seems like there's a continued emphasis on how do we properly train people for lethal force and that's an ever increasing reality on the military side as international threats increase, and it's an ever-present pressure on state, local, federal government in America with policing.

好吧，謝謝你的提問。我們仍然看到強勁的銷售渠道。我們正在處理很多交易，國際的，軍事的，並且在時間上存在問題。但是——然後我們有了標準的國內聯邦和國際執法渠道。所以但總的來說，我們仍然看到人們願意花錢購買有效的培訓解決方案，因此，似乎人們繼續強調我們如何正確地培訓人員以獲得致命武力，這在軍事方面日益成為現實隨著國際威脅的增加，美國的州、地方、聯邦政府在警務方面一直面臨壓力。

Obviously, policing reform has been in the headlines with Washington working on it. And I think that underscores the presence and ubiquitousness of trying to get the very best training into those that are entrusted with lethal force.

顯然，警務改革一直是華盛頓的頭條新聞。而且我認為這強調了對那些被賦予致命武力的人進行最好的培訓的存在和無處不在。

Okay. And then are you seeing any continued impact from the supply chain? Or what are you seeing in sort of the supply chain backdrop?

好的。然後您是否看到供應鏈的任何持續影響？或者您在某種供應鏈背景下看到了什麼？

We have -- so far, we've had good inventories of parts that were the ones that we were most concerned about. Once in a while, we get surprised by an item that we didn't know we needed to have extra stock of, such as if they do a design change and don't notify us. John given [his led] an effort recently to overcome that. And it was an all hands-on deck state till it's done type of effort that was successful, but was unplanned. So supply chain still is a danger. So far, VirTra has had a great track record of navigating it well. We plan to continue that, but it's a constant effort, much more than we had to do 3 or 4 years ago on doing that. But as of right now, we're in good shape.

我們 - 到目前為止，我們擁有我們最關心的零件的良好庫存。偶爾，我們會對我們不知道需要額外庫存的物品感到驚訝，例如，如果他們進行了設計更改但沒有通知我們。約翰最近給予 [他的領導] 努力來克服這個問題。這是一個全員動手的甲板狀態，直到它完成了成功的類型的努力，但沒有計劃。所以供應鏈仍然是一個危險。到目前為止，VirTra 在駕馭它方面有著良好的記錄。我們計劃繼續這樣做，但這是一項持續的努力，比我們三四年前所做的要多得多。但截至目前，我們的狀態良好。

I'd like to add to that, too, is that what we're finding is we're setting our MIN and MAX's in our inventory. And with the ERP reimplementation, we're able to manage our vendor pipeline much better. The only thing that we see remnants of the supply chain issues is that when the vendor makes a mistake on a larger order, it does take a little bit longer because they don't have stock and supply. And that's what Bob was alluding to. We just recently had a small problem with a vendor, and we had to modify to try to use what they gave us, even though it was a mistake. We modified our software to be able to utilize it. So those things will deal with one-offs, but I don't think those were any different than it was prior to the COVID. But yes, a little bit.

我還想補充一點，我們發現我們正在我們的庫存中設置 MIN 和 MAX。通過重新實施 ERP，我們能夠更好地管理我們的供應商管道。我們唯一看到的供應鏈問題殘餘是，當供應商在更大的訂單上犯了錯誤時，確實需要更長的時間，因為他們沒有庫存和供應。這就是 Bob 所暗示的。我們最近剛剛遇到一個供應商的小問題，我們不得不修改以嘗試使用他們給我們的東西，即使這是一個錯誤。我們修改了我們的軟件以便能夠使用它。所以這些事情將一次性處理，但我認為這些與 COVID 之前沒有任何不同。但是，是的，有一點。

It's getting a lot better.

它變得好多了。

And I would add to that, one thing that differentiates VirTra in our market is we have teams of engineers on staff, many of whom have worked in VirTra for years and other companies we compete with many times, they hire a [1099] staffer or they hire a firm to do a project and then it goes dormant and then years later to modify it or change it. It's a big problem.

我還要補充一點，VirTra 在我們市場上與眾不同的一件事是我們擁有工程師團隊，其中許多人在 VirTra 工作多年，而我們與其他公司多次競爭，他們僱用了 [1099] 名員工或他們聘請一家公司來做一個項目，然後它就休眠了，然後在幾年後對其進行修改或更改。這是個大問題。

So by VirTra having teams of engineers and having enough scale in our industry to afford to do that. When things like that happen, we are -- we have a much easier time in accommodating it because we have that kind of trained staff on site versus trying to track down what company did it or what 1099 employee did it for us. And so it's just -- it's one advantage of the investments that over so many years, our shareholders have made in VirTra to have that kind of robust infrastructure. So that comes in very handy.

因此，通過 VirTra 擁有工程師團隊並在我們的行業中擁有足夠的規模來負擔得起這樣做。當這樣的事情發生時，我們——我們有更容易的時間來適應它，因為我們在現場有那種訓練有素的員工，而不是試圖追踪是哪家公司做的，或者是什麼 1099 名員工為我們做的。因此，這只是——多年來，我們的股東在 VirTra 進行的投資的一個優勢是擁有這種強大的基礎設施。所以這非常方便。

Okay. That's helpful color. And then just the last one for me, and I'll jump back in the queue. Just curious if you guys could expand on sort of John's comments on some of the challenges in the past. I mean I can understand how the ERP system can cause some friction. But was this a case of a sales strategy not being well thought out or not going after the right customers? Any additional color would be helpful.

好的。這是有用的顏色。然後是我的最後一個，我會跳回到隊列中。只是想知道你們是否可以擴展 John 對過去一些挑戰的評論。我的意思是我可以理解 ERP 系統是如何造成一些摩擦的。但這是銷售策略沒有經過深思熟慮或沒有找到合適的客戶嗎？任何額外的顏色都會有所幫助。

Well, there are so many ways I can go with that. No, the ERP implementation was just no one knew what they were doing. -- and classic mistake if you took every business case from Harvard that talks about implementation of large systems, I think someone used it as a road map to make all the mistakes every single one that people have made. And so unraveling that, the problem with that is so systemic because if that's the heartbeat of the organization, it messes up all your processes. Everybody was trying to manage things separately with spreadsheets and all of that is part of the reasons why financials weren't complete.

好吧，我有很多方法可以做到這一點。不，ERP 實施只是沒有人知道他們在做什麼。 ——如果你從哈佛拿下每一個關於大型系統實施的商業案例，我認為有人用它作為路線圖來犯人們犯過的每一個錯誤，這是一個典型的錯誤。如此揭開這個問題，這個問題是如此系統性，因為如果這是組織的心跳，它就會搞亂你所有的流程。每個人都試圖用電子表格單獨管理事物，所有這些都是財務不完整的部分原因。

But now that, that's all been corrected, and we're continuing to take advantage of the ERP, I mean, there were things that weren't taken advantage of that makes the business much more streamlined and the effort of the folks that are here now really have jumped in. And we're seeing where we're building reports where we're catching things way ahead of time, and we're not sending things out incorrectly. There's a myriad of things so it had nothing to do with the sales or anything. It was just an operational mishap.

但現在，這一切都已得到糾正，我們將繼續利用 ERP，我的意思是，有些事情沒有被利用，這使得業務更加精簡，這裡的人們的努力現在真的已經投入了。而且我們看到我們正在構建報告的地方我們提前捕捉到了事情，並且我們沒有錯誤地發送事情。有很多事情，所以它與銷售或任何事情都無關。這只是一次操作失誤。

Our next question comes from the line of Richard Baldry with ROTH Capital.

我們的下一個問題來自 ROTH Capital 的 Richard Baldry。

Maybe sort of building off of that last part. Can you talk about the prospects you think to be able to cut the backlog down over the year ahead now that systems are running more smoothly? Maybe another way to think about is like what -- you've got almost a year of revenue in backlog depending on someone's outlook, what would a normal or healthy level of backlog on quarters, months, year tend to be long term, do you think?

也許是在最後一部分的基礎上建立起來的。您能否談談您認為在系統運行更加平穩的情況下能夠在未來一年減少積壓的前景？也許另一種思考方式是——根據某人的展望，你有近一年的積壓收入，季度、月、年的正常或健康水平的積壓往往是長期的，你呢？思考？

Yes, that's a really good question. having a backlog that large is, in my opinion, not -- I mean not good. In the operation piece, we've changed how we're now building systems in separate job groups. And if you look at the numbers, we grew the backlog by 20%. So my goal would be is that the backlog is less than half. And if you look at the components that make up the backlog, I don't know that we could get down any further than that. The only way I would build the backlog to what it is hired today and it would be good is in our step program with reoccurring revenue. And our goal is to raise that reoccurring revenue through our STEP programs. Those contracts will go 3 years and then they come up for renewal. And keeping those customers and keep dripping them so that they'll spend additional revenue with us, that's kind of the model.

是的，這是一個非常好的問題。在我看來，有這麼大的積壓不是——我的意思是不好。在操作部分，我們改變了我們現在在不同的工作組中構建系統的方式。如果你看一下這些數字，我們的積壓工作增加了 20%。所以我的目標是積壓少於一半。而且，如果您查看構成積壓的組件，我不知道我們是否可以進一步減少。我將積壓工作建立到今天僱用的唯一方法，這將是很好的方法是在我們的步驟計劃中獲得經常性收入。我們的目標是通過我們的 STEP 計劃提高經常性收入。這些合同將持續 3 年，然後需要續簽。留住這些客戶並不斷吸引他們，這樣他們就會在我們這里花費額外的收入，這就是一種模式。

So you'll see it start to go down, but then the idea would be build back up, and it doesn't have anything to do with getting the systems out the door. Our internal goal and our stretch goal is that once we get a PO, we want the systems going out the door in 30 days. but the staff themselves have challenged themselves to once we get an order, it will be out the door in 7 days. And I continue to support that.

所以你會看到它開始下降，但隨後這個想法會重新建立起來，這與讓系統走出大門沒有任何關係。我們的內部目標和擴展目標是，一旦我們獲得 PO，我們希望系統在 30 天內投入使用。但工作人員自己挑戰自己，一旦我們接到訂單，它就會在 7 天內發貨。我繼續支持這一點。

I would just add that if VirTra was able to achieve [six 30] days, that would probably break all records in our industry if we hit 7 days there's not a company that's been able to sustain that speed of delivery. So that would be a remarkable accomplishment. I believe we can be successful with either of those but 7-day turnaround on product would be an incredibly efficient, very streamlined process and operational system, which would be a bit of a miracle in our industry, but I do believe it is possible.

我只想補充一點，如果 VirTra 能夠實現 [6 個 30] 天，如果我們達到 7 天，那可能會打破我們行業的所有記錄，沒有一家公司能夠維持這種交付速度。所以這將是一項了不起的成就。我相信我們可以在其中任何一個方面取得成功，但 7 天的產品周轉時間將是一個非常高效、非常精簡的流程和操作系統，這在我們的行業中將是一個奇蹟，但我確實相信這是可能的。

And the gross margins in the quarter were very strong. Again, it is sort of building up the same theme we are all talking about. Given the efficiencies and things that you've had, can you talk about how you think those gross margins should trend? Is it the efficiencies are helping you turn things faster, match up product better those should be sustainable? Or how do you view that long-term trend.

該季度的毛利率非常強勁。同樣，它有點建立我們都在談論的相同主題。考慮到您所擁有的效率和東西，您能談談您認為這些毛利率應該如何發展嗎？效率是否正在幫助您更快地轉變事物，更好地匹配產品，這些應該是可持續的？或者您如何看待這種長期趨勢。

Am I happy with my those margins, I'm never happy with those margins. I think the trend will go -- I think the trend will continue to go up. And there's a couple of ways of that. One, we haven't raised the price as much. And so a lot of the price increases on some of the products, we just had a modest price increase but now getting to the point where we have all of our costs accounted for both labor, our COGS are fully laid out, we're able to stay competitive by raising those margins. So that's always a tricky item. They'll go up a little bit. They'll go up some more because we have some more efficiencies in areas that we're cleaning up and finalizing those processes and making it much more robust.

我對我的利潤率滿意嗎？我從不滿意這些利潤率。我認為趨勢會繼續——我認為趨勢會繼續上升。有幾種方法。第一，我們沒有把價格提高那麼多。因此，某些產品的價格上漲了很多，我們的價格上漲幅度很小，但現在已經到了我們所有成本都計入勞動力的地步，我們的 COGS 已經完全列出，我們能夠通過提高這些利潤來保持競爭力。所以這總是一個棘手的項目。他們會上升一點點。他們會更高一些，因為我們在清理和完成這些流程並使其更加穩健的領域提高了效率。

Some of that might be some G&A improvements.

其中一些可能是一些 G&A 改進。

Yes, G&A improvement right still. But I would say that they -- I would say maybe 10% higher. It was kind of where it would be a fair target over the next 18 months because we might improve some quality. We might have a little increase in cost to improve some quality.

是的，G&A 改進仍在進行中。但我會說他們 - 我會說可能高出 10%。在接下來的 18 個月裡，這將是一個公平的目標，因為我們可能會提高一些質量。我們可能會增加一些成本來提高一些質量。

And the technology changes, too. I think we'd also be able to take advantage and make the margins higher by technologies, reducing some of the equipment that's kind of what we're looking at.

技術也在發生變化。我認為我們也可以利用技術提高利潤率，減少我們正在尋找的一些設備。

All right. And then...

好的。進而...

I'd also like to note that in the history of military simulation training when companies have been able to win larger military contracts, they get a lot more economies of scale on those. Whereas police contracts are often smaller and a more diverse equipment, which makes it a bit tougher to have larger margins on great point.

我還想指出，在軍事模擬訓練的歷史上，當公司能夠贏得更大的軍事合同時，他們會在這些合同上獲得更多的規模經濟。而警察合同通常規模較小，裝備也更多樣化，這使得在重要方面獲得更大利潤變得更加困難。

And last for me would be, you started to touch on it actually answer my last question. So what the efficiencies you've done and are able to achieve with the system now more streamlined, your G&A has actually gone down 2 quarters in a row. So how do we think about absolute spending there trending there?

最後對我來說是，你開始觸及它實際上回答了我的最後一個問題。因此，您已經完成並能夠通過現在更加精簡的系統實現的效率，您的 G&A 實際上已經連續兩個季度下降。那麼我們如何看待那裡的絕對支出趨勢呢？

How efficient do you feel you're at now sort of from a capacity? When would you need to be adding to that just as a natural course of growing the overall business.

你覺得你現在的能力有多高？您什麼時候需要添加到它作為整體業務增長的自然過程。

I think a lot of that has to do with the kind of growth that we have. Right now, the way we're building the scalability of the company would be to handle growth without having a lot of expense. John and I are both very conservative. And I mean, even to the point where John doesn't rent a car, he borrowed a car that I have and then he paid for tires to go on the car. So to -- just to avoid a rent-a-car fee for the company when John was here.

我認為這在很大程度上與我們的增長方式有關。現在，我們建立公司可擴展性的方式是在不花費大量費用的情況下應對增長。約翰和我都非常保守。我的意思是，即使到了 John 不租車的地步，他也藉了我的車，然後他付了車子的輪胎費。所以 - 只是為了避免約翰在這裡時為公司支付租車費。

So we're very careful with the cash of the company and how it's spent and we feel like we've spent a lot of company money to build the scalability. We invested in the ERP system and are reinvesting in it to get it improved and much more effective than the first implementation where we had a lot of problems, as John mentioned. So we would like to see it slow down, but only when we don't see a good return.

所以我們對公司的現金及其使用方式非常謹慎，我們覺得我們已經花了很多公司的錢來建立可擴展性。我們對 ERP 系統進行了投資，並且正在對其進行再投資，以使其得到改進，並且比我們遇到很多問題的第一個實施更有效，正如 John 提到的那樣。所以我們希望看到它放緩，但前提是我們看不到好的回報。

If we see a good return on investment, then John and I, we want to be the most competitive company in the industry and sometimes that takes some investment. But I think generally, we're thinking some of that spend is going to slow down. Our plan is to -- it would be to see it slow down unless there is an obvious need for it. We would prefer to move into the mode of higher efficiencies on SG&A, a reduction of capital spend. Now that V3 is set up, a lot of our construction is done. I think that's the -- Yes, the bulk of what we thought was needed for perhaps VirTra to be the Tier 1 supplier for both military and law enforcement.

如果我們看到良好的投資回報，那麼約翰和我，我們希望成為業內最具競爭力的公司，有時這需要一些投資。但我認為總的來說，我們認為其中一些支出將會放緩。我們的計劃是——除非有明顯的需要，否則會看到它放慢速度。我們更願意進入更高效率的 SG&A 模式，減少資本支出。現在 V3 已經設置好了，我們的很多構建工作都完成了。我認為那是——是的，我們認為 VirTra 可能成為軍事和執法部門的一級供應商所需要的大部分內容。

I think it's going to -- even as we increase business, I don't think we'll reach an equilibrium. I think it's going to go down and stay there for several quarters anyways.

我認為它會 - 即使我們增加業務，我也不認為我們會達到平衡。我認為它會下降並在那裡停留幾個季度。

That's all the time we have for questions. I'd like to hand the call back to Bob Ferris for closing remarks.

這就是我們提問的全部時間。我想將電話轉回 Bob Ferris 以作結束語。

Thank you, Doug. And thank you, everyone. We appreciate your continued interest in our company. And to our investors, thank you for your continued support. Please note that we are dedicated more than ever before to building shareholder value in building the world's most effective simulation training products so that the war fighter and the law officer can serve their country, accomplish their mission and make it home safely. With 2023 off to a strong start, I firmly believe the best days for VirTra are ahead of us. As always, be safe, take care and God bless.

謝謝你，道格。謝謝大家。感謝您對我們公司的持續關注。對於我們的投資者，感謝您一直以來的支持。請注意，我們比以往任何時候都更加致力於通過構建世界上最有效的模擬培訓產品來為股東創造價值，以便戰士和執法人員能夠為他們的國家服務，完成他們的使命並安全回家。 2023 年開局良好，我堅信 VirTra 最好的日子就在眼前。一如既往，注意安全，保重，上帝保佑。

Ladies and gentlemen, that does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.

女士們，先生們，今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路，度過美好的一天。