Track Group Reports Fiscal 2019 Financial Results
NAPERVILLE, Ill., Jan. 13, 2020 /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, 2019 (the "FY19"). In FY19, the Company posted (i) record revenue of $34.0M, an increase of 11% over the fiscal year ended September 30, 2018 (the "FY18"), (ii) record operating income of $1.2M compared to an operating loss of $1.7M for FY18, (iii) adjusted EBITDA of $7.4M, up 27% compared to FY18, and (iv) a cash balance at September 30, 2019 of $6.9M, representing an increase of 27% over September 30, 2018 as well as the highest balance since September 2014.
"It was an outstanding year for Track Group, our employees and our customers," said Derek Cassell, Track Group's CEO. "I look forward to the next year with a tremendous amount of momentum and enthusiasm."
FINANCIAL HIGHLIGHTS
-- Revenue for FY19 was $34.0M, up approximately 11% compared to revenue of
$30.6M for FY18. Quarterly revenue of $8.8M in Q4 FY19, up 8% over Q4
FY18 of $8.1M.
-- Gross Profit for FY19 was $19.0 million, up 11% compared to Gross Profit
of $17.2 million for FY18. Quarterly gross profit of $5.1M in Q4 FY19,
up 13% over Q4 FY18 of $4.5M.
-- Total operating expense for FY19 of $17.9M is down 5% versus FY18's
$18.9M of operating expenses. The drop in operating expense when
combined with FY19 gross profit of $19.0M led to the highest annual
operating income in the Company's history of $1.2M, which is a dramatic
turnaround of 171% compared to the $1.7M operating loss for FY18.
-- Adjusted EBITDA for FY19 finished at $7.4M, up 27% compared to $5.9M for
FY18.
-- The cash balance of $6.9M at September 30, 2019 is up 27% compared to a
balance of $5.4M at September 30, 2018 and up less than 1% over the June
30, 2019 cash balance of $6.9M and the highest level in nearly five
years.
-- The Net loss attributable to common shareholders for FY19 was $2.6M
compared to a net loss of $5.4M in FY18, an improvement of approximately
53%.
BUSINESS OUTLOOK
Actual Outlook
---
FY 2018 FY 2019 FY 2019 (a) FY 2020
---
Revenue:
$ 30.6M
$ 34.0M
$ 33-37M
$ 36-40M
Adjusted
EBITDA
Margin: 19.2% 21.9% 18-23% 21-26%
(a) The FY 2019 outlook
as released on August
9, 2019.
About Track Group, Inc.
Track Group designs, manufactures, and markets location tracking devices; as well as develops and sells a variety of related software, services, and accessories, networking solutions, and monitoring applications. The Company's products and services are designed to empower professionals in security, law enforcement, corrections and rehabilitation organizations worldwide with single-sourced offender management solutions that integrate reliable intervention technologies to support re-socialization and monitoring initiatives.
The company currently trades under the ticker symbol "TRCK" on the OTCQX exchange. For more information, visit www.trackgrp.com.
Forward-Looking Statements
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "if", "should" and "will" and similar expressions as they relate to Track Group, Inc. and subsidiaries ("Track Group") are intended to identify such forward-looking statements. These statements are only predictions and reflect Track Group's current beliefs and expectations with respect to future events and are based on assumptions and subject to risks and uncertainties and subject to change at any time. Track Group may from time to time update these publicly announced projections, but it is not obligated to do so. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. These projections are subject to change and could differ materially from final reported results. For a discussion of such risks and uncertainties, see "Risk Factors" in Track Group's annual report on Form 10-K, its quarterly report on Form 10-Q, and its other reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. New risks emerge from time to time. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the dates on which they are made.
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, 2019, 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, 2019 AND 2018
Assets 2019 2018
---
Current assets:
Cash $6,896,711 $5,446,557
Accounts receivable,
net of allowance for
doubtful accounts of
$2,454,281 and
$3,152,966,
respectively 6,763,236 5,978,896
Note receivable, net
of allowances for
doubtful accounts of
$234,733, at
September 30, 2018 -
Prepaid expense and
other 1,339,465 1,270,043
Inventory, net of
reserves of $26,934,
respectively 274,501 277,119
---
Total current assets 15,273,913 12,972,615
Property and
equipment, net of
accumulated
depreciation of
$2,248,913 and
$1,999,222,
respectively 675,037 745,475
Monitoring equipment,
net of accumulated
amortization of
$6,322,768 and
$5,325,654,
respectively 2,624,900 3,162,542
Intangible assets,
net of accumulated
amortization of
$14,157,090 and
$12,016,512,
respectively 21,955,679 23,253,054
Goodwill 8,187,911 8,076,759
Deferred tax assets 540,563
Other assets 124,187 145,839
---
Total assets $49,382,190 $48,356,284
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable 2,628,003 2,518,030
Accrued liabilities 12,969,489 10,333,103
Current portion of
long-term debt 33,827,689 30,437,810
---
Total current
liabilities 50,284,388 43,288,943
Long-term debt, net
of current portion 3,428,975
Total liabilities 50,284,388 46,717,918
---
Commitments and
contingencies -
Stockholders' equity (deficit):
Common stock, $0.0001
par value:
30,000,000 shares
authorized;
11,401,650
shares outstanding,
respectively 1,140 1,140
Series A Convertible
Preferred stock,
$0.0001 par value:
1,200,000 shares
authorized; 0 shares
outstanding -
Paid in capital 302,250,556 302,102,866
Accumulated deficit (302,152,292) (299,495,370)
Accumulated other
comprehensive loss (1,001,602) (970,270)
---
Total equity
(deficit) (902,198) 1,638,366
---
Total liabilities and
stockholders' equity
(deficit) $49,382,190 $48,356,284
TRACK GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
SEPTEMBER 30, 2019 and 2018
(Unaudited) 12 months ended
3 months ended
September 30,
September 30,
---
2019 2018 2019 2018
---
Revenue:
Monitoring and other related
services 8,258,624 7,880,774 32,100,370 29,943,563
Product sales and other 502,287 203,600 1,918,782 626,656
---
Total revenue 8,760,911 8,084,374 34,019,152 30,570,219
Cost of revenue:
Monitoring, products and other
related services 3,161,813 3,101,737 12,989,186 11,511,341
Depreciation and amortization 500,392 478,974 2,012,975 1,856,734
---
Total cost of revenue 3,662,205 3,580,711 15,002,161 13,368,075
Gross profit 5,098,706 4,503,663 19,016,991 17,202,144
58% 56% 56% 56%
Operating expense:
General and administrative 2,779,127 3,126,974 12,243,459 13,983,924
(Gain) /loss on sale of assets (10,563) (8,500) (10,563) (8,500)
Selling and Marketing 620,075 500,674 2,257,101 1,895,452
Research & development 359,223 261,328 1,313,499 862,142
Depreciation and amortization 491,602 495,830 2,047,980 2,120,746
---
Total operating expense 4,239,464 4,376,306 17,851,476 18,853,764
---
Operating Income (loss) 859,242 127,357 1,165,515 (1,651,620)
Other income (expense)
Interest income 6,638 23,929 242,973
Interest expense (602,546) (687,735) (2,403,047) (3,004,983)
Currency exchange rate gain
(loss) (331,345) (2,720) (466,140) (445,426)
Other income/expense, net 2,541 143 23,740
Total other income (expense) (927,253) (687,914) (2,845,115) (3,183,696)
---
Net loss before income taxes (68,011) (560,557) (1,679,600) (4,835,316)
---
Income tax expense 427,018 231,918 884,353 592,725
Net loss attributable to
stockholders (495,029) (792,475) (2,563,953) (5,428,041)
---
TRACK GROUP, INC.
NON-GAAP ADJUSTED EBITDA
SEPTEMBER 30, 2019
(UNAUDITED)
Three Months Ended Twelve Months Ended
September 30, September 30,
2019 2018 2019 2018
---
Non-GAAP Adjusted EBITDA
Net loss attributable to
common shareholders $(495) $(792) $(2,564) $(5,428)
Interest expense, net 596 688 2,379 2,762
Depreciation and
amortization 992 974 4,061 3,977
Income taxes (1) 427 232 884 593
Board compensation and
stock-based
compensation (32) 269 321 1,970
Foreign exchange expense 331 2 466 445
Other charges, net (2) 353 494 1,902 1,539
---
Non GAAP Adjusted EBITDA $2,172 $1,867 $7,449 $5,858
Non GAAP Adjusted EBITDA,
percent of revenue 24.8% 23.1% 21.9% 19.2%
Three Months Ended Twelve Months Ended
September 30, September 30,
---
2019 2018 2019 2018
---
Non-GAAP EPS (in $000's, except share data)
Net loss attributable to
common shareholders $(495) $(792) $(2,564) $(5,428)
Interest expense, net 596 688 2,379 2,762
Depreciation and
amortization 992 974 4,061 3,977
Income taxes (1) 427 232 884 593
Board compensation and
stock-based
compensation (32) 269 321 1,970
Foreign exchange expense 331 2 466 445
Other charges, net (2) 353 494 1,902 1,539
---
Non GAAP net income to
common shareholders $2,172 $1,867 $7,449 $5,858
Weighted average common
shares outstanding 11,251,650 11,101,650 11,213,431 10,702,523
---
Non-GAAP earnings per
share $0.19 $0.17 $0.66 $0.55
===
(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) Other charges may include gains or
losses and non-recurring accrual
adjustments.
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SOURCE Track Group, Inc.
