Track Group Reports Fiscal 2017 Financial Results
NAPERVILLE, Ill., Dec. 20, 2017 /PRNewswire/ -- Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal year ended September 30, 2017. The Company posted revenue of $29.7M, an increase of 9.3% over last year, adjusted EBITDA of $3.6M up 82.1% compared to FY2016 and Net Cash provided by Operating Activities of $4.1M an increase of 357%. The Company's reorganization and consolidation initiatives had a predictable impact on these results.
"We're happy to report a very strong finish to a great fiscal 2017, with year-over-year growth in key financial categories including our best quarter ever for Adjusted EBITDA," said Guy Dubois, Track Group's Chairman and CEO. "With our fantastic new line-up of smartphone-based monitoring applications including BACtrack for criminal justice, we're looking forward to a great 2018, and with the launch of our new device-agnostic operating platform getting underway right now, we couldn't be more excited as we begin to deliver our vision for the future."
FINANCIAL HIGHLIGHTS
-- Total revenue in FY2017 up 9.3% over last year ($29.7M vs. $27.2M)
-- Total operating expenses for the year ended 30 Sept 2017 are flat
($20.5M) vs. last year ($20.4M) despite the fact that the Company
incurred restructuring costs, an impairment of intangible assets, and a
loss on the sale of assets which, in aggregate, totaled approximately
$1.8M for the year just ended
-- Adjusted EBITDA in FY2017 finished at $3.6M up 82.1% compared to $2.0M
for FY2016
-- Adjusted EBITDA for the quarters of fiscal 2017 improved sequentially
each quarter
-- Q1 or 31 Dec 2016 Adj EBITDA = $0.41M
-- Q2 or 31 March 2017 Adj EBITDA = $0.64M
-- Q3 or 30 June 2017 Adj EBITDA = $1.24M
-- Q4 or 30 Sept 2017 Adj EBITDA = $1.35M
-- Net Cash Provided by Operating Activities
-- For year ended 30 Sept 2017 = $4.1M
-- For year ended 30 Sept 2016 = $0.9M
-- Up 357% or nearly five-fold
-- Net loss attributable to shareholders in FY2017 improved to ($4.7M) up
44% compared to ($8.5M) for FY2016
BUSINESS HIGHLIGHTS
-- The Company completed a major operational restructuring in 2017, which
included the consolidation of key operational functions into its new
Chicagoland Headquarters
-- Launch of the Company's next generation operating platform is underway
-- Major smartphone application development initiatives were completed in
2017 and launches are currently underway including remote alcohol
monitoring and domestic violence solutions
-- Key customer accounts are stable and growing
BUSINESS OUTLOOK
Actual Outlook
------ -------
FY 2016 FY 2017 FY 2018
------- ------- -------
Revenue: $27.2M $29.7M $35-40M
Adjusted EBITDA Margin: 7.3% 12.2% 15-20%
----------------------- --- ---- -----
Non-GAAP Financial Measures
This release includes financial measures defined as "non-GAAP financial measures" by the Securities and Exchange Commission including non-GAAP EBITDA. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. Reconciliations of these non-GAAP financial measures are based on the financial figures for the respective period.
Non-GAAP Adjusted EBITDA excludes items included but not limited to interest, taxes, depreciation, amortization, impairment charges, gains and losses, currency effects, one time charges or benefits that are not indicative of operations, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, stock based or other non-cash compensation or other stated cash and non-cash charges (the "Adjustments").
The Company believes the non-GAAP measures provide useful information to both management and investors when factoring in the Adjustments. Specific disclosure regarding the Company's financial results, including management's analysis of results from operations and financial condition, are contained in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2017, and other reports filed with the Securities and Exchange Commission. Investors are encouraged to carefully read and consider such disclosure and analysis contained in the Company's Form 10-K and other reports, including the risk factors contained in such Form 10-K.
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2017 AND 2016
Assets 2017 2016
---- ----
Current assets:
Cash $2,027,321 $1,769,921
Accounts receivable, net of
allowance for doubtful
accounts of $3,268,095 and
$2,335,508, respectively 5,438,564 6,894,095
Note receivable, current
portion 234,733 334,733
Prepaid expenses and other 854,122 816,708
Inventory, net of reserves of
$26,934 and $98,150,
respectively 261,810 521,851
------- -------
Total current assets 8,816,550 10,337,308
Property and equipment, net of
accumulated depreciation of
$1,778,634 and $1,421,389,
respectively 903,100 1,226,461
Monitoring equipment, net of
accumulated amortization of
$4,906,925 and $3,438,074,
respectively 3,493,012 4,358,117
Intangible assets, net of
accumulated amortization of
$9,839,032 and $8,233,659,
respectively 24,718,655 25,540,650
Goodwill 8,226,714 7,955,876
Other assets 2,989,101 2,900,911
--------- ---------
Total assets $49,147,132 $52,319,323
=========== ===========
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable 2,769,835 2,771,101
Accrued liabilities 6,650,291 3,976,192
Current portion of long-term
debt, net of discount of
$185,811 and $222,973,
respectively 30,270,531 3,245,732
---------- ---------
Total current liabilities 39,690,657 9,993,025
Stock payable - related party - 3,289,879
Long-term debt, net of
current portion and discount
of $0 and $185,811,
respectively 3,480,717 30,345,803
--------- ----------
Total liabilities 43,171,374 43,628,707
Stockholders' equity:
Common stock, $0.0001 par
value: 30,000,000 shares
authorized; 10,480,984 and
10,333,516 shares
outstanding, respectively 1,048 1,034
Additional paid-in capital 300,717,861 298,876,399
Accumulated deficit (294,067,329) (289,341,503)
Accumulated other
comprehensive loss (675,822) (845,314)
-------- --------
Total equity 5,975,758 8,690,616
--------- ---------
Total liabilities and
stockholders' equity $49,147,132 $52,319,323
=========== ===========
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
2017 2016
---- ----
Revenues:
Monitoring services $28,887,460 $26,343,783
Other 839,558 850,024
------- -------
Total revenues 29,727,018 27,193,807
Cost of revenues:
Monitoring, products and other
related services 11,997,031 10,327,486
Depreciation and amortization
included in cost of revenues 2,128,668 2,009,437
Impairment of monitoring
equipment and parts - 80,000
--- ------
Total cost of revenue 14,125,699 12,416,923
Gross profit 15,601,319 14,776,884
Operating expenses:
General & administrative 12,216,041 13,038,760
Loss on sale of assets 763,531 -
Restructuring costs 558,833 -
Impairment of intangible assets 506,413 -
Selling & marketing 2,311,725 2,270,733
Research & development 1,784,867 2,415,924
Depreciation & amortization 2,332,217 2,709,918
--------- ---------
Total operating expense 20,473,627 20,435,335
Loss from operations (4,872,308) (5,658,451)
Other income (expense):
Interest income 20,086 114,235
Interest expense (2,820,924) (2,829,003)
Currency exchange rate gain
(loss) 223,475 (151,258)
Gain on settlement of milestone
payments 3,213,940 -
Other income/expense, net 11,556 28,856
------ ------
Total other income (expense) 648,133 (2,837,170)
------- ----------
Net loss before income taxes (4,224,175) (8,495,621)
---------- ----------
Income tax expense 501,651 -
------- ---
Net loss attributable to common
shareholders (4,725,826) (8,495,621)
---------- ----------
Foreign currency translation
adjustments 169,492 1,532,751
------- ---------
Comprehensive loss $(4,556,334) $(6,962,870)
----------- -----------
Net loss per common share, basic
and diluted $(0.45) $(0.83)
------ ------
Weighted average common shares
outstanding, basic and diluted 10,408,870 10,285,947
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
2017 2016
---- ----
Cash flows from operating
activities:
Net loss $(4,725,826) $(8,495,621)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 4,460,885 4,719,355
Impairment of monitoring equipment
and parts - 80,000
Impairment of intangible assets 506,413 -
Bad debt expense 1,048,737 1,996,348
Accretion of debt discount 222,973 222,973
Stock based compensation 1,140,520 1,353,295
Loss on disposal of property and
equipment 763,531 39,290
Gain on settlement of milestone
payments (3,213,940) -
Loss on monitoring equipment
included on cost of sales 569,371 90,838
Change in assets and liabilities:
Accounts receivable, net 583,694 (2,718,115)
Notes receivable - (28,299)
Inventories 260,041 258,519
Prepaid expenses and other (433,978) 190,951
Accounts payable, accrued expenses
and other 2,965,365 3,198,029
--------- ---------
Net cash provided by operating
activities 4,147,786 907,563
--------- -------
Cash flow from investing
activities:
Purchase of property and equipment (84,749) (105,121)
Capitalized software (2,416,804) (2,090,962)
Purchase of monitoring equipment
and parts (1,838,779) (2,861,100)
Proceeds from sale of assets 512,500 -
------- ---
Net cash used in investing
activities (3,827,832) (5,057,183)
---------- ----------
Cash flow from financing
activities:
Proceeds from notes payable - 2,000,000
Principal payments on notes payable (67,775) (1,021,832)
------- ----------
Net cash provided by (used in)
financing activities (67,775) 978,168
------- -------
Effect of exchange rate changes on
cash 5,221 38,328
Net increase (decrease) in cash 257,400 (3,133,124)
------- ----------
Cash, beginning of year 1,769,921 4,903,045
--------- ---------
Cash, end of year $2,027,321 $1,769,921
========== ==========
TRACK GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
Three Months ended Twelve Months ended
September 30 September 30,
2017 2016 2017 2016
---- ---- ---- ----
Non-GAAP Adjusted EBITDA (In
$000s, except share data)
Net loss attributable to common
shareholders (1,273) (2,664) (4,726) (8,496)
Interest expense, net 684 705 2,801 2,715
Income taxes (1) - (28) 502 -
Depreciation, amortization and
impairment 1,244 998 4,967 4,799
Stock based compensation 236 69 1,141 1,353
Restructuring charges (2) (10) - 559 -
Gain on contingent share liability - - (3,214) -
Loss on sale of assets - - 764 -
Other charges, net (3) 471 986 842 1,626
--- --- ---
Non GAAP Adjusted EBITDA 1,352 66 3,636 1,997
Non GAAP Adjusted EBITDA, percent
of revenue 18.1% 0.9% 12.2% 7.3%
Three Months ended Twelve Months ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
Non-GAAP EPS (In $000's,
except share data)
Net loss attributable to common
shareholders (1,273) (2,664) (4,726) (8,496)
Interest expense, net 684 705 2,801 2,715
Income taxes (1) - (28) 502 -
Depreciation, amortization and
impairment 1,244 998 4,967 4,799
Stock based compensation 236 69 1,141 1,353
Restructuring charges (2) (10) - 559 -
Gain on contingent share liability - - (3,214) -
Loss on sale of assets - - 764 -
Other charges, net (3) 471 986 842 1,626
--- --- ---
Non GAAP net income to common
shareholders 1,352 66 3,636 1,997
Weighed average common shares
outstanding 10,480,984 10,333,516 10,408,870 10,285,947
Non-GAAP earnings per share $0.13 $0.01 $0.35 $0.19
===== ===== =====
(1) Currently, the Company has
significant U.S. tax loss
carryforwards that may be used to
offset future taxable income, subject
to IRS limitations. However, the
Company is still subject to certain
state, commonwealth, and other
foreign based taxes.
(2) Includes restructuring charges
associated with outsourcing one of
our monitoring centers and moving our
headquarters to the Chicagoland area.
(3) Other charges may include gains or
losses, non-cash currency impacts,
non-recurring accrual adjustments,
legal settlements and reserves
associated with contracts in Mexico.
View original content:http://www.prnewswire.com/news-releases/track-group-reports-fiscal-2017-financial-results-300573731.html
SOURCE Track Group, Inc.
