Track Group Reports 2nd Quarter Fiscal 2020 Financial Results
NAPERVILLE, Ill., May 7, 2020 /PRNewswire/ -- Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its second quarter ended March 31, 2020 (the "Q2 FY20"). In Q2 FY20, the Company posted (i) revenue of $8.1 million ("M"), an increase of approximately 1% over the same period last year, (ii) operating income of $0.2M representing an increase of 186% compared to an operating loss of $0.3M for the quarter ended March 31, 2019 ("Q2 FY19"), which also led to a cash balance of $7.7M, up 36% compared to $5.7M for the same period one year ago, (iii) adjusted EBITDA of $1.6M, flat to Q2 FY19, and (iv) a net loss attributable to common shareholders of $1.7M compared to a net loss of $0.3M for the same period last year, largely due to non-cash foreign exchange fluctuations.
"Our Company, our customers, our supply partners and our employees have all performed extremely well despite facing unprecedented challenges over the past 2 ½ months brought on by the coronavirus," said Derek Cassell, Track Group's CEO. "I am proud to work with all of these people and remain confident that together, if we continue to work hard and communicate effectively, we have the opportunity to record even stronger results in the second half of our fiscal year."
FINANCIAL HIGHLIGHTS
-- Quarterly revenue of $8.13M in Q2 FY20, up 1% over Q2 FY19 revenue of
$8.09M. Revenue for the 6 months ended March 31, 2020 ("6M FY20") of
$16.6M was up approximately 2% compared to revenue of $16.3M for the 6
months ended March 31, 2019 ("6M FY19"). Revenue in Q2 FY20 and 6M FY20
was $0.4M and $0.6M lower than the same periods in FY19 due to the
strengthening of the U.S. dollar against the Chilean peso.
-- Quarterly gross profit of $4.4M in Q2 FY20, down 1% over Q2 FY19 gross
profit of $4.5M. Gross Profit for 6M FY20 was $9.1 million, or flat
compared to gross profit of $9.1 million for 6M FY19.
-- Total operating expense for Q2 FY20 of $4.2M is down 12% versus Q2
FY19's $4.8M of operating expense. The reduction in quarterly operating
expense when combined with Q2 FY20 gross profit of $4.4M led to a
quarterly operating income of $237K, which is an improvement of 186%
compared to the $276K operating loss for Q2 FY19. For 6M FY20, operating
income was $38K compared to the operating loss for 6M FY19 of $333K,
representing an improvement of approximately 261%.
-- Adjusted EBITDA for the Q2 FY20 finished at $1.6M, flat compared to
$1.6M for Q2 FY19. Adjusted EBITDA for 6M FY20 of $3.4M, up
approximately 2% vs $3.3M for 6M FY19.
-- Cash balance of $7.7M for Q2 FY20, up 36% compared to $5.7M for Q2 FY19
and down 10% over the December 31, 2019 cash balance of $8.5M.
-- Net loss attributable to shareholders in the Q2 FY20 was $1.7M compared
to a net loss of $0.3M in Q2 FY19, a change principally attributable to
the non-cash impact of the volatility of the US dollar as compared to
the Chilean peso. The net loss attributable to shareholders for the 6M
FY20 was $2.0 million compared to a net loss of $2.0 million in 6M FY19.
BUSINESS OUTLOOK
As of May 7, 2020, the Company has not been materially adversely impacted by the coronavirus disease ("COVID-19"); however, the Company is operating in a rapidly changing environment so the extent to which the coronavirus pandemic impacts our business, operations and financial results from this point forward will depend on numerous evolving factors that the Company cannot accurately predict. Given this uncertainty, the Company has removed specific guidance regarding fiscal 2020 results.
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 including 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
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30,
March 31,
Assets 2020 2019
Current assets:
Cash $
7,686,042 $
6,896,711
Accounts receivable, net of allowance
for doubtful accounts of $2,580,537 and
$2,454,281, respectively 4,960,428 6,763,236
Prepaid expense and deposits 1,218,843 1,339,465
Inventory, net of reserves of $62,147
and $26,934, respectively 60,132 274,501
Total current assets 13,925,445 15,273,913
Property and equipment, net of
accumulated depreciation of $2,290,429
and $2,248,913, respectively 532,343 675,037
Monitoring equipment, net of accumulated
amortization of $6,387,123 and
$6,322,768, respectively 2,591,391 2,624,900
Intangible assets, net of accumulated
amortization of $15,209,788 and
$14,157,090, respectively 21,052,972 21,955,679
Goodwill 8,012,536 8,187,911
Deferred tax asset 580,058 540,563
Other assets 594,719 124,187
Total assets $
47,289,464 $
49,382,190
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Accounts payable 1,560,395 2,628,003
Accrued liabilities 14,420,182 13,828,696
Current portion of long-term debt 3,408,413 33,827,689
Total current liabilities 19,388,990 50,284,388
Long-term debt, net of current portion 30,400,000
Long-term liabilities 268,179
Total liabilities 50,057,169 50,284,388
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.0001 par value:
30,000,000 shares authorized;
11,414,150 and 11,401,650 shares
outstanding, respectively 1,141 1,140
Series A Convertible Preferred stock,
$0.0001 par value: 1,200,000 shares
authorized; 0 shares outstanding
Paid in capital 302,270,242 302,250,556
Accumulated deficit (304,105,976) (302,152,292)
Accumulated other comprehensive loss (933,112) (1,001,602)
Total equity (deficit) (2,767,705) (902,198)
Total liabilities and stockholders'
equity (deficit) $
47,289,464 $
49,382,190
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
2020 2019 2020 2019
Revenue:
Monitoring and other related services $
7,993,092 $
7,877,403 $
16,261,515 $
15,937,731
Product sales and other 138,634 213,839 291,042 365,046
Total revenue 8,131,726 8,091,242 16,552,557 16,302,777
Cost of revenue:
Monitoring, products and other related
services 3,201,677 3,065,710 6,468,586 6,165,903
Depreciation and amortization included
in cost of revenue 494,157 533,590 981,599 1,011,879
Total cost of revenue 3,695,834 3,599,300 7,450,185 7,177,782
Gross profit 4,435,892 4,491,942 9,102,372 9,124,995
Operating expense:
General & administrative 2,723,219 3,316,069 5,735,073 6,738,341
Selling & marketing 642,432 576,974 1,183,981 1,080,904
Research & development 323,737 354,879 619,892 603,744
Depreciation & amortization 509,287 520,384 1,025,226 1,035,365
Total operating expense 4,198,675 4,768,306 8,564,172 9,458,354
Income (loss) from operations 237,217 (276,364) 538,200 (333,359)
Other income (expense):
Interest expense, net (596,324) (584,348) (1,198,857) (1,185,587)
Currency exchange rate gain (loss) (1,334,240) 595,910 (1,190,932) (336,767)
Other income (loss), net (4,347) 143 (4,347) 143
Total other income (expense) (1,934,911) 11,705 (2,394,136) (1,522,211)
Loss before income taxes (1,697,694) (264,659) (1,855,936) (1,855,570)
Income tax expense 23,365 97,748 144,007
Net loss attributable to common
shareholders (1,721,059) (264,659) (1,953,684) (1,999,577)
Foreign currency translation
adjustments 132,588 (255,981) 68,490 (159,308)
Comprehensive loss $
(1,588,471) $
(520,640) $
(1,885,194) $
(2,158,885)
Net loss per common share, basic and
diluted $
(0.15) $
(0.02) $
(0.17) $
(0.18)
Weighted average common shares
outstanding, basic and diluted 11,414,150 11,251,650 11,336,690 11,175,002
Three Months Ended
Six Months Ended
March 31, March 31,
2020 2019 2020 2019
Non-GAAP Adjusted
EBITDA
Net income (loss)
attributable to
common shareholders $
(1,721) $
(265) $
(1,954) $
(2,000)
Interest expense,
net 596 585 1,199 1,186
Depreciation and
amortization 1,004 1,054 2,007 2,047
Income taxes (1) 24 98 144
Board compensation
and stock-based
compensation 75 100 170 258
Foreign exchange
expense 1,334 (596) 1,191 337
Other charges, net
(2) 303 740 680 1,364
Non GAAP Adjusted
EBITDA $
1,618 $
1,618 $
3,391 $
3,336
Non GAAP Adjusted
EBITDA, percent of % % % %
revenue 19.9 20.0 20.5 20.5
Weighted average
common shares
outstanding 11,414,150 11,251,650 11,336,690 11,175,002
Non-GAAP earnings
per share $
0.14 $
0.14 $
0.30 $
0.30
(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.
