Attached files
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| 8-K - FORM 8-K - Track Group, Inc. | trck8k_may122017.htm |
Exhibit
99.1
PRESS
RELEASE
MAY 12,
2017
Track Group Reports
Second Quarter 2017 Results
Consolidation
and focus on core judicial business positions the company for
improved efficiencies, growth and financial
performance
ROMEOVILLE,
Illinois — May 12, 2017 — Track Group today announced
financial results for its fiscal 2017 second-quarter ended March
31, 2017.
Second Quarter Highlights
●
Net cash provided
by operating activities is up 144% from a year ago
●
Revenue from core
judicial customers is up 9.5%
●
Extended maturity
of Sapinda Asia loan agreement from 9/2017 to 9/2020
●
Generated net
proceeds of $510,000 from sale of non-core, hardware
asset
●
Global headquarters
consolidated to the Chicago area from Salt Lake City, Utah
including monitoring center
“Q2
was a strong quarter demonstrated by our growth in revenue, gross
profit and cash flow,” said Guy Dubois, Chairman and CEO of
Track Group. “I’m pleased with our progress and the
improving strength and stability of our business heading into the
second half of the year.”
Key Financial Results
●
Revenue increased 9.5% - For the three
months ended March 31, 2017, the Company recognized revenue from
operations of $7,220,043 compared to $6,592,039 for the three
months ended March 31, 2016, an increase of $628,004 or
9.5%. The increase in revenue was principally the result of
(i) expansion and growth of offender monitoring in Chile, and (ii)
growth of our North American monitoring operations driven
by Marion County Community Corrections, and by the Virginia
Department of Corrections.
●
Gross profit increased 7.3% - For the
three months ended March 31, 2017, gross profit totaled $4,050,164
compared to $3,773,967 for the three months ended March 31, 2016,
an increase of $276,197 or 7.3%.
●
Loss from operations decreased $234,394 or
18.8% - For the three
months ended March 31, 2017, the loss from operations was
($1,011,814) compared to ($1,246,208) for the three months ended
March 31, 2016.
●
Net loss of $1,585,497 – The
Company had a net loss of $1,585,497 for the three months ended
March 31, 2017, compared to a net loss of $1,920,689 for the three
months ended March 31, 2016, a narrowing
of $335,192.
●
Cash from operations increased 144%
– Net cash provided by operations improved to $1,996,957 for
the six months ended March 31, 2017 compared to $817,077 for the
same period in 2016 largely due to gains in working
capital.
●
Adjusted EBITDA increased
11% –
Adjusted EBITDA for the second quarter of 2017 increased
approximately 11% to $643,000 up from $580,000 in the same period
in 2016.
The
Company is also adjusting its outlook from its December 22, 2016
news release indicating FY2017 revenue of $33-35 million and
adjusted EBITDA margin of 15-20% to Revenue of $30-33 million and
adjusted EBITDA margin of 12-15%.
About Track Group, Inc.
Track
Group designs, manufactures, and markets location tracking devices
and develops and sells a variety of related software, services,
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.
Contacts:
Peter
Poli –
Chief Financial Officer
peter.poli@trackgrp.com
877-260-2010
Steve
Hamilton - Chief Marketing Officer
steve.hamilton@trackgrp.com
877-260-2010
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.
& 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, 2016, 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
|
|
March 31,
|
September 30,
|
|
Assets
|
2017
|
2016
|
|
Current assets:
|
(Unaudited)
|
|
|
Cash
|
$2,218,699
|
$1,769,921
|
|
Accounts
receivable, net of allowance for doubtful accounts of $2,929,975
and $2,335,508, respectively
|
5,481,495
|
6,894,095
|
|
Note
receivable, current
|
334,733
|
334,733
|
|
Prepaid
expenses and other
|
461,989
|
816,708
|
|
Inventory,
net of reserves of $26,934 and $98,150, respectively
|
150,710
|
521,851
|
|
Total
current assets
|
8,647,626
|
10,337,308
|
|
Property
and equipment, net of accumulated depreciation of $1,602,824 and
$1,421,389, respectively
|
1,008,347
|
1,226,461
|
|
Monitoring
equipment, net of accumulated amortization of $3,853,696 and
$3,438,074, respectively
|
3,842,859
|
4,358,117
|
|
Intangible
assets, net of accumulated amortization of $8,800,030 and
$8,233,659, respectively
|
24,494,973
|
25,540,650
|
|
Goodwill
|
8,044,429
|
7,955,876
|
|
Other
assets
|
3,341,884
|
2,900,911
|
|
Total
assets
|
$49,380,118
|
$52,319,323
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable
|
3,396,084
|
2,771,101
|
|
Accrued
liabilities
|
4,632,549
|
3,976,192
|
|
Current
portion of long-term debt, net of discount of $0 and $222,973,
respectively
|
68,593
|
3,245,732
|
|
Total
current liabilities
|
8,097,226
|
9,993,025
|
|
Stock
payable - related party
|
3,000,000
|
3,289,879
|
|
Long-term
debt, net of current portion and discount of $297,297 and $185,811,
respectively
|
33,597,443
|
30,345,803
|
|
Total
Liabilities
|
44,694,669
|
43,628,707
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Common
stock, $0.0001 par value: 30,000,000 shares authorized;
10,443,784 outstanding at March 31, 2017 and 10,333,516 at
September 30, 2016
|
1,044
|
1,034
|
|
Additional
paid-in capital
|
299,579,665
|
298,876,399
|
|
Accumulated
deficit
|
(293,540,759)
|
(289,341,503)
|
|
Accumulated
other comprehensive income
|
(1,354,501)
|
(845,314)
|
|
Total
equity
|
4,685,449
|
8,690,616
|
|
Total
liabilities and stockholders’ equity
|
$49,380,118
|
$52,319,323
|
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,
|
|
|
2017
|
2016
|
2017
|
2016
|
|
Revenue:
|
|
|
|
|
|
Monitoring
services
|
$7,154,876
|
$6,392,198
|
$14,419,889
|
$12,349,624
|
|
Other
|
65,167
|
199,841
|
471,644
|
560,019
|
|
Total
revenues
|
7,220,043
|
6,592,039
|
14,891,533
|
12,909,643
|
|
|
|
|
|
|
|
Cost
of revenues:
|
|
|
|
|
|
Monitoring,
products & other related services
|
2,594,305
|
2,177,287
|
6,201,581
|
4,597,755
|
|
Depreciation &
amortization included in cost of revenues
|
515,574
|
580,785
|
961,067
|
1,009,752
|
|
Impairment of
monitoring equipment and parts
|
60,000
|
60,000
|
134,787
|
120,000
|
|
Total cost of
revenue
|
3,169,879
|
2,818,072
|
7,297,435
|
5,727,507
|
|
|
|
|
|
|
|
Gross profit
|
4,050,164
|
3,773,967
|
7,594,098
|
7,182,136
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
General &
administrative
|
2,355,156
|
3,068,618
|
5,530,210
|
5,976,984
|
|
Loss on sale of
assets
|
766,031
|
-
|
766,031
|
-
|
|
Restructuring
costs
|
4,070
|
-
|
570,400
|
-
|
|
Selling &
marketing
|
624,210
|
586,707
|
1,213,978
|
1,276,301
|
|
Research &
development
|
679,238
|
630,281
|
1,167,416
|
1,130,887
|
|
Depreciation &
amortization
|
633,273
|
734,569
|
1,208,384
|
1,434,604
|
|
Total operating
expenses
|
5,061,978
|
5,020,175
|
10,456,419
|
9,818,776
|
|
Loss
from operations
|
(1,011,814)
|
(1,246,208)
|
(2,862,321)
|
(2,636,640)
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
Interest expense,
net
|
(797,333)
|
(631,409)
|
(1,444,436)
|
(1,325,917)
|
|
Currency exchange
rate gain (loss)
|
10,335
|
(66,408)
|
(106,107)
|
(84,557)
|
|
Other income,
net
|
222,414
|
23,336
|
222,707
|
(804)
|
|
Loss
before income taxes
|
(1,576,398)
|
(1,920,689)
|
(4,190,157)
|
(4,047,918)
|
|
Income
tax expense
|
9,099
|
-
|
9,099
|
-
|
|
Net
loss attributable to common shareholders
|
(1,585,497)
|
(1,920,689)
|
(4,199,256)
|
(4,047,918)
|
|
Foreign currency
translation adjustments
|
(15,615)
|
755,160
|
(509,187)
|
970,255
|
|
Comprehensive
loss
|
$(1,601,112)
|
$(1,165,529)
|
$(4,708,443)
|
$(3,077,663)
|
|
Basic and diluted
loss per common share
|
$(0.15)
|
$(0.19)
|
$(0.41)
|
$(0.39)
|
|
Weighted average
common shares outstanding, basic and diluted
|
10,352,485
|
10,270,680
|
10,342,948
|
10,265,958
|
TRACK
GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP AND NON-GAAP
FINANCIAL MEASURES
(Unaudited)
|
|
Three Months ended
March 31,
|
Six Months ended
March 31,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
Net loss attributable to common shareholders
|
(1,585)
|
(1,921)
|
(4,199)
|
(4,048)
|
|
Interest expense, net
|
798
|
631
|
1,445
|
1,326
|
|
Income taxes (1)
|
9
|
8
|
9
|
13
|
|
Depreciation, amortization and impairment
|
1,209
|
1,316
|
2,304
|
2,565
|
|
Stock based compensation
|
(348)
|
273
|
(123)
|
629
|
|
Restructuring charges (2)
|
4
|
-
|
570
|
-
|
|
Loss on sale of assets
|
766
|
-
|
766
|
-
|
|
Other charges, net (3)
|
(210)
|
273
|
277
|
432
|
|
Non GAAP Adjusted EBITDA
|
643
|
580
|
1,049
|
917
|
|
Non GAAP Adjusted EBITDA, percent of revenue
|
8.9%
|
8.8%
|
7.0%
|
7.1%
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
Six Months ended
March 31,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
Non-GAAP EPS (In $000's, except share data)
|
|
|
|
|
|
Net loss attributable to common shareholders
|
(1,585)
|
(1,921)
|
(4,199)
|
(4,048)
|
|
Interest expense, net
|
798
|
631
|
1,445
|
1,326
|
|
Income taxes (1)
|
9
|
8
|
9
|
13
|
|
Depreciation, amortization and impairment
|
1,209
|
1,316
|
2,304
|
2,565
|
|
Stock based compensation
|
(348)
|
273
|
(123)
|
629
|
|
Restructuring charges (2)
|
4
|
-
|
568
|
-
|
|
Loss on sale of assets
|
766
|
-
|
766
|
-
|
|
Other charges, net (3)
|
(210)
|
273
|
277
|
432
|
|
Non GAAP net income to common shareholders
|
643
|
580
|
1,047
|
917
|
|
Weighed average common shares outstanding
|
10,352,486
|
10,270,680
|
10,342,949
|
10,265,958
|
|
Non-GAAP earnings per share
|
$0.06
|
$0.06
|
$0.10
|
$0.09
|
(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.