Track Group Reports Fiscal 2019 Financial Results
Record Annual Revenue Up 11%, Operating Income Rebounds 171% to Historical High, and Adjusted EBITDA Up 27%
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) September 30, |
12 months ended 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 |
|||
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 |
|||
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. |
SOURCE Track Group, Inc.
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