Track Group Reports 3rd Quarter Fiscal 2020 Financial Results
NAPERVILLE, Ill., Aug. 6, 2020 /PRNewswire/ -- Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its third quarter ended June 30, 2020 (the "Q3 FY20"). In Q3 FY20, the Company posted (i) total revenue of $8.5M, down 5% from $9.0M in the third quarter last year due to device sales used to establish a large Latin American reseller in 2019; however, monitoring revenue which comprises the substantial majority of total revenue was $8.3M in Q3 FY20, an increase of approximately 5% over the same period last year , (ii) operating income of $1.0M representing an increase of 59% compared to operating income of $0.6M for the quarter ended June 30, 2019 ("Q3 FY19"), (ii) adjusted EBITDA of $2.3M, up 17% compared to $1.9M for Q3 FY19, and (iv) a net income attributable to common shareholders of $0.4M compared to a net loss of $0.1M for the same period last year.
FINANCIAL HIGHLIGHTS
-- Total revenue of $8.5M for the Q3 FY20 and $25.0M for the nine months
ended June 30, 2020 ("9M FY20"), are down 5% and 1%, respectively,
compared to Q3 FY19 and the nine months ended June 30, 2019 ("9M FY19")
due to a decline in device sales. Quarterly monitoring revenue which
comprises the substantial majority of total revenue was $8.33M in Q3
FY20, up 5% over Q3 FY19 monitoring revenue of $7.90M. Monitoring
revenue for the 9M FY20 was $24.6M, up approximately 3% compared to
monitoring revenue of $23.8M for the 9M FY19.
-- Quarterly gross profit of $4.6M in Q3 FY20 was down 4% vs. Q3 FY19 gross
profit of $4.8M but up 4% over Q2 FY20 gross profit of $4.4M. Gross
profit for the 9M FY20 was $13.7 million, or down 1% compared to gross
profit of $13.9 million for the 9M FY19.
-- Total operating expense for Q3 FY20 of $3.6M is down 13% versus Q3
FY19's $4.2M of total operating expense. The reduction in quarterly
operating expense when combined with Q3 FY20 gross profit of $4.6M led
to Q3 FY20 quarterly operating income of $1.0M, which is an improvement
of 59% compared to the $0.6M operating profit for Q3 FY19. For the 9M
FY20, operating income was $1.6M compared to operating income of $0.3M
for the nine-month period in FY19, representing an improvement of over
400%.
-- Adjusted EBITDA for the Q3 FY20 finished at $2.3M, up 17%, compared to
$1.9M for Q3 FY19. Adjusted EBITDA for the 9M FY20 was $5.7M, up
approximately 7% vs $5.3M for the nine-month period in FY19.
-- Cash balance of $9.0M for Q3 FY20, up 31% compared to $6.9M for Q3 FY19
and up 17% over the March 31, 2020 cash balance of $7.7M.
-- Net income attributable to shareholders in Q3 FY20 was $0.4M compared to
a net loss of $0.1M in Q3 FY19, a change principally attributable to the
Company's strong operating performance and exchange rate gains as the US
dollar strengthened against the Chilean peso. The net loss attributable
to shareholders for the 9M FY20 was $1.5 million compared to a net loss
of $2.1 million in the nine-month period in FY19.
BUSINESS OUTLOOK
As of August 6, 2020, the adverse impact by the coronavirus pandemic (COVID-19) on the Company has been significant on the Chile operation and also has caused some delays with both the supply chain and certain requests for proposal administered by potential new clients. In addition, we are 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 we 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.
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
BALANCE SHEETS
June 30, September 30,
Assets 2020 2019
Current assets: (Unaudited)
Cash $
9,030,645 $
6,896,711
Accounts receivable, net of allowance
for doubtful accounts of $2,617,996 and
$2,454,281, respectively 4,811,533 6,763,236
Prepaid expense and deposits 989,094 1,339,465
Inventory, net of reserves of $7,225 and
$26,934, respectively 87,322 274,501
Total current assets 14,918,594 15,273,913
Property and equipment, net of
accumulated depreciation of $2,399,271
and $2,248,913, respectively 466,892 675,037
Monitoring equipment, net of accumulated
amortization of $6,566,293 and
$6,322,768, respectively 2,051,128 2,624,900
Intangible assets, net of accumulated
amortization of $15,801,787 and
$14,157,090, respectively 21,149,358 21,955,679
Goodwill 8,169,117 8,187,911
Deferred tax asset 451,127 540,563
Other assets 545,130 124,187
Total assets $
47,751,346 $
49,382,190
Liabilities and Stockholders' Equity
(Deficit)
Current liabilities:
Accounts payable 574,519 2,628,003
Accrued liabilities 14,571,805 13,828,696
Current portion of long-term debt 3,758,031 33,827,689
Total current liabilities 18,904,355 50,284,388
Long-term debt, net of current portion 30,974,813
Long-term liabilities 217,324
Total liabilities 50,096,492 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 (303,691,914) (302,152,292)
Accumulated other comprehensive loss (924,615) (1,001,602)
Total equity (deficit) (2,345,146) (902,198)
Total liabilities and stockholders'
equity (deficit) $
47,751,346 $
49,382,190
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2020 2019 2020 2019
Revenue:
Monitoring and other related services $
8,325,697 $
7,904,015 $
24,587,212 $
23,841,746
Product sales and other 158,213 1,051,449 449,255 1,416,495
Total revenue 8,483,910 8,955,464 25,036,467 25,258,241
Cost of revenue:
Monitoring, products and other related
services 3,379,934 3,661,470 9,848,520 9,827,373
Depreciation and amortization 482,797 500,704 1,464,396 1,512,583
Total cost of revenue 3,862,731 4,162,174 11,312,916 11,339,956
Gross profit 4,621,179 4,793,290 13,723,551 13,918,285
Operating expense:
General & administrative 2,329,520 2,725,991 8,064,593 9,464,332
Selling & marketing 487,786 556,122 1,671,767 1,637,026
Research & development 281,820 350,532 901,712 954,276
Depreciation & amortization 505,585 521,013 1,530,811 1,556,378
Total operating expense 3,604,711 4,153,658 12,168,883 13,612,012
Operating income 1,016,468 639,632 1,554,668 306,273
Other income (expense):
Interest expense, net (622,869) (597,623) (1,821,726) (1,783,210)
Currency exchange rate gain (loss) 535,141 201,972 (655,791) (134,795)
Other income, net (4,347) 143
Total other income (expense) (87,728) (395,651) (2,481,864) (1,917,862)
Income (loss) before income taxes 928,740 243,981 (927,196) (1,611,589)
Income tax expense 514,678 313,328 612,426 457,335
Net income (loss) attributable to
common shareholders 414,062 (69,347) (1,539,622) (2,068,924)
Foreign currency translation
adjustments 8,497 15,255 76,987 (144,053)
Comprehensive income (loss) $
422,559 $
(54,092) $
(1,462,635) $
(2,212,977)
Net income (loss) per common share,
basic and diluted $
0.04 $
(0.01) $
(0.14) $
(0.18)
Weighted average common shares
outstanding, basic and diluted 11,414,150 11,251,650 11,362,416 11,200,551
Three Months Ended Nine Months Ended
June 30, June 30,
2020 2019 2020 2019
Non-GAAP Adjusted EBITDA
Net income (loss) attributable to
common shareholders $
414 $
(69) $
(1,540) $
(2,069)
Interest expense, net 623 597 1,822 1,783
Depreciation and amortization 988 1,022 2,995 3,069
Income taxes (1) 514 313 612 457
Board compensation and stock-based
compensation 75 95 245 353
Foreign exchange expense (535) (202) 656 135
Other charges, net (2) 196 185 876 1,549
Non-GAAP Adjusted EBITDA $
2,275 $
1,941 $
5,666 $
5,277
Non-GAAP Adjusted EBITDA, percent of 26.8 21.7 22.6 20.9
revenue % % % %
Weighted average common shares
outstanding 11,414,150 11,251,650 11,362,416 11,200,551
Non-GAAP earnings per share $
0.20 $
0.17 $
0.50 $
0.47
(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.
