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That is true but not necessarily a bad thing. They shed sunlight on a companies problems. They often buy out the company for a relatively high share price. Sure, they are opportunistic and hope to make more with a future IPO or private sale but that is ok. They risked their capital or were smart enough to leverage the company itself.
I would be thrilled with an $8 or $9 buyout today. The CEOs and directors refuse to step up and make open market buys of the stock. They are also the reason the stock is now in the 4s. None of them in my opinion care about either the company or it’s shareholders. I base that statement on their actions, not their words.
That is likely the smart way to look at it and I suspect you are correct on your overall take. I had never run across a company with two CEOs before and it still disturbs me.
The other thing I don't like is why it is taking so long to publish Q4 and Q1 results. I was with Honeywell when they implemented Oracle and with Greenheck when they implemented SAP and so I know it is a painful, cumbersome, difficult transition that ALWAYS takes longer than expected for any company, especially if resources are a bit limited. But I also know that for Q4 the audit could have been separated from the ERP implementation. Even for Q1, it could have and should have been separated. VirTra ships a very limited number of "SKUs" and limited volumes and small number of customers. They also have very few physical sites and likely only 1 or 2 main "money in", "money out" accounts. So in terms of scope and difficulty it seems to me that an audit of VirTras numbers should be relatively easy and quick. 2022 is now half over, no real excuses remain.
One silver lining (for me) is that I have been able to buy back in in a significant way at what I believe to be a decent price, another silver lining is that this snafu has elevated VirTra and put the on the radar of several activist firms.
Teeroy….You are one of the smartest investors that posts here. You do your homework, buy smart, and remain patient. What are your thoughts about the current state of VirTra, co-CEOs, and VTSI? Thanks.
Market Cap TODAY same as 6 years ago! Share price TODAY 30% lower than 6 years ago! Think about that.
Is the company better today than then? debatable (certainly bigger but maybe not better since we have no idea about the last 9 months of performance)
Is the forward outlook better today than then? yes
Is the CEO position better today than then? worse (same guy keeps screwing up and now there are two chefs in the kitchen)
Is the balance sheet better today than then? yes (but only thanks to opportunistic/sleezy dilution)
Is the stock more liquid/investable today than then? yes (although recent volume has hit the skids, I wonder why?)
I keep buying shares but can only nibble due to volume. My faith is in the new (future) CEO.
My guess is Ferris AND GIVENS will be OUT as CEOs within 17 months. Just a pure guess. And I do not think it will be necessarily driven by activist shareholders. Over the last 3 months, their actions have exposed each of the Directors to possible legal jeopardy. There are very few CEOs that can survive this sort of unforced error (and I am being incorrectly kind with that characterization).
And right now in my view, Ferris AND Givens are making their own legal situations far worse by being way too cute with trying to "time" the release of the audit results.
I am also a foreign shareholder as I live in Northern Wisconsin. There are many reasons for optimism right now with respect to VirTra and VTSI. The first is that there continues to be a rising tide in the USA for increasing/improving/requiring better training for police. Another is that competition has forced VirTra to lower their prices and become more efficient and more ingenious. STEP program was/is smart and a V300 at $200,000 puts it in the same universe as the purchase of a fully outfitted squad car. Another is that the Ferris family is no longer a significant shareholder in the company as they are now way below 10%. And lets not forget the current valuation, an EV of $33million means that the company is likely undervalued right now. Activists are circling. I own shares and keep buying more each week even though I rip endlessly on the stupid things the company and Ferris do....such as "co-CEO", such as failing to build a top performing sales org, the recent accounting/audit/reporting snafu, etc.
VirTra's problems are EASILY identified and more EASILY fixed. A new slate of directors would be step 1.
Ferris makes the same mistake over and over again. Why a “Director”? Why not just hire a great competent IT young aggressive smart person and give them a manager title? If VirTra had $500mil in sales then maybe an IT Director makes sense. Ferris continually tries to structure the company as if it has $1billion in sales, and even worse is he hires sub par people because he has never experienced great employee performance since the only company he knows is VirTra.
And Enterprise Value is only about $33million. So since we touched $12, the value of the company has dropped from $110million to $33million. Great job by the BOD and CEO. And now they have gone mute. No PRs, no update on Audit status, no FY2022 guidance, no accountability from anyone associated with VirTra.
And maybe I can walk on water, have a Victoria Secret wife, a SportsIllustrated bikini model girlfriend, and shoot 200inch deer, and pheasants with 30inch tails.
Survey…Just curious….Is there anyone on this message board that would vote AGAINST a new slate of directors?
(Assume the new slate has the background, track record, credentials, and already own shares of VTSI. Assume they spelled out their objectives and reasoning well in advance. I guess what I’m saying is assume the “activist” went at it in the right way for the right reasons.)
One bright silver lining in this SEC reporting debacle…that being the increased likelihood of the BOD being replaced and the company problems being fixed by a new management team. The extra 3mil shares from the 18mil cap raise also make VirTra a much easier and more attractive target for activists since it diluted the Ferris family shares and because the three buyers of the 3mil shares all bailed out to a new myriad of now underwater shareholders.
Think about CEO Givens. Exactly what has he done to deserve any money he is being paid? Has the company revenue or eps changed since his hire? Any new products released with his name on them? Why on Earth was he promoted to CEO? Ferris called him a force of nature, why? There has not been even one noteworthy accomplishment.
In my opinion, yet another example of Ferris surrounding himself with second or third tier talent.
If Givens was great, by now VirTra would be at a $60mil per year run rate with $100mil just ahead in 2023.
Clownshow
With a stone tablet, chisel, fingers-n-toes, and bullhorn I could complete AND release the audit results faster than the current clowns.
The CEO and the CEO (how stupid is that) both need to be fired. The BOD is ripe for replacement.
Someone needs to start filing lawsuits against each CEO and each BOD member.
Just think what would happen if a credible activist investor came out tomorrow with an alternative slate of directors. It would be a freaking slam dunk, passage ensured. The light at the end of the tunnel….the gold at end of the rainbow…..a chicken in every pot……
I know I’m dreaming.
I’m starting to think that at this point the Q4 and Q1 results do not matter. If the numbers were great, who cares? since it is ancient history. If the numbers stunk, who cares? since ancient history and the stock is already down 60%.
Will the forward outlook matter? Nope, VirTra is too chicken ship to provide one.
Perhaps Q2 on Aug 15th will matter.
It is really depressing to own a stock with so much potential that keeps getting squandered by the mis-steps of an incompetent CEO and do-nothing BOD. What would move the stock is the CEO being replaced by a proven experienced CEO who understands the art of selling product.
This sales talk reminds me of a funny story from 30 years ago:
I went up to Roseau, MN to fish Buffalo Bay. Had a good friend living there working for Polaris. It was supper time and there were two Chinese buffet restaurants in town. I said, "which one should we go to?" He said "everyone goes to King Buffet". I say, "oh, they must have the best food." He said,"no, their food is the worst, but their owner is smart. Every year he hires the best looking girls from high school to work there."
Sometimes increasing sales is easy and obvious.
Exactly! There are many easy, obvious, inexpensive, 100% certain, ways to profitably accelerate sales. The thing Ferris has never understood is that selling a $200,000 system requires hands on demo, hand holding for maybe up to a year before an order happens, relentless support from corporate for your sales team in the field.
Mobile Product demos are one easy obvious way. Maybe $1mil up front to own and outfit the truck. Staff with two people. Support with logistics from corporate. Relentless follow up from your local sales people. Likely about $500,000 in annual operating costs.
There are also stellar independent manufacturer's rep firms throughout this country. Not all are great, but some are. Hire the best firms, maybe 1 or 2 per State to sell your product. If VirTra treats those reps like gold, those reps will be worth platinum (I hope platinum is worth more than gold). This does require support, lots of support, from the parent (VirTra) but it is doable and VirTra in house staff can still control pricing on every quote. And this sales model has been proven and polished by other companies selling similar priced products in other industries. Easy to replicate.
All Ferris has to do is hire the best sales leader out there and close his eyes, get out of the way, and let the guy operate and make money. Ferris does not understand that the most important person in any company is the sales guy (and I'm an engineer) and he should be paid appropriately and that means ALOT OF MONEY. Ferris can't stand the thought of a sales guy making 1million or 2 million per year based on his production. And that is a fundamental problem.
BOD....wake up.
Think about the level of incompetence on display at VirTra. It is breathtaking. They sell 50 systems in a quarter and they can’t add up the revenue and costs to the satisfaction of a third party CPA? They have a CEO who refuses, against the advice of IR and shareholders, to issue a PR with preliminary unaudited results? They have two CEOs cuz one cannot do the job? They have a BOD that does not hold anyone accountable, is there any other public company CEO who is not measured against annual performance objectives?
Every one of us here need to make phone calls and send emails to the activist firms that are out there. This would be the lowest hanging fruit ever for an activist firm. Mill Road? Starboard? Apollo? …….help us!
Sharpchicity…..I am invested in VirTra because they sell systems and training to police depts. I wish they would focus 100% of their efforts on doing this. For me, Military and Fed gov is a money pit, a distraction, and keeps the company from growing fast. Even every tiny tiny PD in this country can afford a $200,000 purchase every 5 years. My town is in middle of no where in central WI, population 1600, we have 3 full time officers and an annual PD budget of over $1mil. New F150s, new Harleys, new crossover Squadcars every couple years. No big deal, it’s only money.
If they had stopped pursuing these Military opportunities 10 years ago and had a decent sales Org focused on selling to Police depts they would (easily) already have $300million in revenue and a 1billion market cap.
Having said that, I would like to think VirTra could do both, and they should be able to, however the CEOs are incompetent as CEOs and refuse to build a sales Org cuz they refuse to hire and pay a good sales leader. As the leader of Sales, Mulcahy has proven by his revenue results that he is incompetent as well. Yet he remains as does Ferris.
This company needs an activist to gain control of the BOD, clean house, bring in a big time proven leader. The fixes are obvious and easy and the turnaround would take about one year.
It would be nice to have a meaningful discussion but until VirTra announces Q4 and Q1 it ain’t gonna happen. Sigh
And all I did was make a reasonable suggestion to profit from your own convictions by shorting VTSI. It seemed reasonable based on your views of the future of the company.
Your viewpoints on VirTra do add value to this message board as they make each of us think through the reasons we own the stock. Also, no one here dislikes you, you are likely a great guy, smart, successful, interesting. But many here do disagree with your views on VTSI and investing in general. But so what.....you and I are from the same generation where sticks and stones may break our bones but words can never harm us. So, no harm, no foul.
So, in that spirit I say...."2Mil,,,, huh, I paid more than that in income taxes last year"
With your strong conviction and certainty of outcome you should short as many shares as possible. Sounds like an easy +80% investment for you.
June 7th, 2022….Q2 almost finished…and we still don’t know the Q4 or Q1 results! This is now at the point of insanity.
This entire episode could have been easily avoided with a simple PR announcing preliminary unaudited results. Another of my stocks did it yesterday, RELL. Another, RFP, always does it.
Ferris could have issued the PR on January 1st, yet here we are 6 months later still in the dark.
Bill, please reread my post. I am very careful and precise with what I wrote. There are not any contradictions in my post.
But I really don’t understand why you will not buy any VTSI shares. Even though I am the worlds biggest whiner/complainer when it comes to Ferris, there is still clearly value here along with a bright future. The macro environment continues to be excellent for what VirTra is selling….police training. Value….PS is likely about 1 using EV and 2022 numbers. PE is 10, less than growth rates.
I sure wouldn’t put all my marbles into it, but a few makes sense.
And in the short term think about all the possible catalysts:
1. Ferris being removed by the BOD.
2. Q4 and Q1 numbers.
3. Big Military contract.
4. Axon buyout.
Are there other stocks that are better right now? Yes. But when one considers reward verses risk and probabilities and history then VTSI deserves a place in a microcap portfolio. Will VTSI trade at some price between $10 and $25 in 2023? I believe with 99% certainty the answer is yes.
Had these officers been properly trained, they would have assessed the situation within 90 seconds upon arrival at the scene, agreed on a course of action, and acted. All in less than 2 minutes. Because they were not properly trained they awaited direction from their remote-site leader.
Your little barb thrown toward Ted Cruz and the NRA is poorly conceived. If someone is willing to die in order to kill someone else (anyone else) then there is very little (perhaps nothing) that can be done to stop him/her. In the case of a school or grocery store or mall or restaurant or Christmas parade there are only things that can be done to minimize liklihood and severity. The other thing that is finally getting some coverage is that from a functional and definitional standpoint there is NO DIFFERENCE between the gun (semi auto 30-06) I use to hunt deer in Wisconsin and the typical weapon of choice for a criminal shooter/murderer.
Bill, you should buy yourself a few VTSI shares (maybe you already have?), it makes it more fun to follow along! Good to see you posting again. I was down in your neck of the woods in late March, beautiful area.
Good line! The worst part is I still feel ok about having bought back in and think it will all play out ok too. Must mean I’m a sucker!
Actually though, one reason I feel good about it is how the stock is performing relative to many other micros and the valuation it continues to command. Simply tells me there are enough eyes on it for a heck of a rally when/if we get some good news. The other thing is that VirTra’s boat is sailing in a rising tide, strong national and worldwide momentum for increased training.
The Ferris trainwreck of unforced errors still drives me nuts(Snickers nuts) and the BOD inaction makes my booze bottles drain quickly.
Interesting posts today. What continues to strike me as a little weird is how strong VTSI continues to trade in light of the overall stock market swoon and the timing of their Q4 delay relative to that swoon. Had you told me back in early March this delay would happen I would have guessed that by now the stock would be between 1.50 and 2.00.
It seems crazy to me it is holding up this well. But I am now in pretty deep again so I hope we get some good news very soon.
Well done! Pushed soda right thru my nose!
Remarkable!….Are we really going to exit May, the 5th month of 2022, without knowing revenue and eps for 2021? It is like we are in a parallel universe of make believe. It is so crazy and outlandish that it does not seem real.
And then consider all the checks and balances in place to ensure this sort of thing cannot happen. It all boils down to a BOD unwilling to hold the CEO(s) accountable. And why hasn’t Jim Richardson stepped in and gotten it done? He too is not living up to his commitments.
Surreal
Anyone know……How did yesterday’s shooter get from his crashed truck to the inside of the school? Reports said he was being shot at while fleeing his Grandmas shooting. Photos show the crashed truck at least 70 yards from the school. Were pursuing officers afraid to shoot toward the school? How physically close were officers when the shooter dumped his pickup?
You should call Ferris and/or Givens and find out when they will release the Q4 and Q1 numbers. You still have enough shares that they will take your call. Ferris has the numbers.
I called Haylie and asked. Really.
I called the number, they have the Save Aspen Group number mixed up with the Save VirTra number. Must be a real hi end outfit.
They would get far more response if they changed from savevirtra to fireferris…..catchier too.
And guess what, I believe the Q4 audit was formally completed on May 16th and Q1 on May 20th.
So now the question is…..why isn’t Ferris filing the SEC reports? What is the BOD being told? Why is the co-CEO acting like a shy little kid and not grabbing the bull by the horns the way a real leader would?
And now the buyout! Fabulous
It is now 50 Days past the deadline for Q4 results! Truly unbelievable. And (for Bill’s sake) 3 days past the deadline for Q1 results.
The number of demos they do is tiny. Insignificant in my opinion. They should have full time rigs criss crossing the country at all times like Axon is doing. Publish a schedule, pull into a city, set up the system, host (wine/dine/demo) the important customers, open to everyone, follow up. and repeat repeat repeat.
VirTra does very little of this.
Even worse, they should be flying in customers to their HQ at least twice a week for the same treatment, wine/dine/demo/demo. They do this several times a year but certainly not every day or even every week.
It is SO OBVIOUS what needs to be done.
Of course SEC reports are also obvious.
Ferris and his children own about 6.5%.
One poster on this message board owns about 3.5%.
Another couple are about 2 to 3% each.
At my peak I was 4%, now about 0.5%.
I would guess there are between 1000 and 2000shareholders.
I would also guess the top ten retail shareholders own maybe 11 to 14%.
I do think the right activist investment firm could get enough support to install their own slate of directors IF they thought there was enough money to be made. That is the problem with several activists I contacted, they all saw the potential but each also thought VirTra was simply too tiny to be worth the effort.
The VirTra "Sales Organization" is mostly a "Phone Answering" department. Nothing more, nothing less. Ferris has no idea how to best sell VirTra products and he has no desire to set up a Sales Organization to sell product. If he wanted to do it, it would have already happened a decade ago. Yes, VirTra has some Regional Sales Managers but they are not empowered in any way, they are barely incentivized in any way. My guess is that if a RSM sells $10mil of product in 6 months his/her compensation is no different than if he sold $2mil. And the key to understanding all of this is this: THIS IS HOW FERRIS WANTS IT.
Ferris believes "if we build it, they will come." He believes if our product is better than competition then all buyers will come to us. He places zero value on a good salesperson. He cannot understand that the MOST VALUABLE ASSET any company has is a great salesperson. He will never ever let any sales person earn more money than an average engineer. He believes it is unfair for the rank and file employees to make 10x less than an exceptional salesperson. He does not understand that at MANY companies, the top sales people earn more than the CEO. So, guess what, VirTra will never have a great salesperson with Ferris as CEO.
How do I know all the above?
1. Look at the CEO contentment with YOY 10% growth.
2. Look at the major efforts Ferris did make over the last decade to improve sales. All were focused on establishing a work-free way to generate sales. First was the Gander Mtn disaster, Second was the Modern Round disaster, Third is in progress right now that I refer to as the Military disaster. Ferris wants orders to flow in without any effort from salespeople. A noble goal I admit, but it will never happen with products and systems costing $200,000.
3. Several years ago when I sat at a conf rm table in Tempe with Ferris and Mulcahy, Ferris made it clear what he thought of sales people earning alot of money. He looked at me like I was a moron as I explained to him the sort of hand holding buddy buddy stuff a good salesperson does over months to years to lay the groundwork for an order of $300,000 to $1,000,000+. He more or less told me that the way other companies sell $300,000 systems does not apply to VirTra. I proposed a variety of things he could have easily done to "test" what I was telling him. Seems to me it fell on deaf ears.
And all of the above pales in comparison to the current problem. What were the Q4 numbers? What were the Q1 numbers? How is Q2 progressing? Silence.
Yet the BOD sits idly by......
At this point any and all speculation on Ferris’ motives are in play.
Think about the mechanics of what is involved to fully audit a tiny company like VirTra with $20mil in sales from a very limited product line and literally a hand full of orders each month. It is SIMPLE! One single person could EASILY complete this in 80 hours of work along with the cooperation of the company finance/accounting personnel.
So it is fair to speculate on the game Ferris is playing. I used to think he was smart and just a little “mad scientist disorganized.” But I do not think that is the case. His actions as CEO suggest an inability to recognize and focus on what is important. An inability and lack of desire to grow the company aggressively. And because he installed a BOD filled with spineless jellyfish no one holds him accountable.
He must be removed as CEO.