Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_feb72018.htm |
Exhibit 99.1
FOR
IMMEDIATE RELEASE
February
8, 2018
Peter
Poli
Chief
Financial Officer
877-260-2010
peter.poli@trackgrp.com
Track
Group Reports 1st Quarter Fiscal 2018
Financial Results
Gross Profit Up 26%, Adjusted EBITDA Up 286% and Operating Expenses
Shrink 11%
NAPERVILLE,
ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader
in offender tracking and monitoring services, today announced
financial results for its first quarter ended December 31, 2017
(the “First Quarter”). The Company posted gross profit
of $4.5M, an increase of 26% over last year on total revenue of
$7.5M, a quarterly record Adjusted EBITDA of $1.6M up 286% compared
to FY2016 and total operating expenses of $4.8M, a decrease of 11%
which reduced the First Quarter operating loss to its lowest level
in over three years to ($0.3M).
“We’re
delighted to start our fiscal year 2018 off strongly with another
quarterly record for Adjusted EBITDA and the fifth consecutive
quarter of growth in Adjusted EBITDA,” said Derek Cassell,
Track Group’s CEO. “We are looking forward to
capitalizing on a number of new customer opportunities in our
pipeline so we can continue the top-line growth we have generated
over the last three years.”
BUSINESS AND FINANCIAL HIGHLIGHTS
●
The Company
announced signing two large contracts totaling in excess of $30M
with Marion County Community Corrections and Gendarmeria de Chile,
the Republic of Chile’s prison service, shortly after the
conclusion of the First Quarter;
●
Gross profit for
the First Quarter $4.5M which is the best gross profit in the past
five quarters and up 26% over last year ($4.5M vs. $3.5M) on
quarterly revenue that was nominally down from the same period last
year;
●
Total operating
expenses for First Quarter ($4.8M) are down 11% vs. last year
($5.4M) and the 2nd lowest quarterly
operating expenses in the last two fiscal years;
●
The lowest
quarterly operating loss ($0.3M) in over three years and a 82%
improvement over the quarterly operating loss of ($1.9M) in the
same period last year due to a combination of a strong gross profit
result and lower operating expenses;
●
Adjusted EBITDA in
the First Quarter finished at a quarterly record of $1.6M up 286%
compared to $0.4M last year and represented the fifth consecutive
quarter that Adjusted EBITDA has increased;
5th Avenue Station
877.260.2010
200 E.
5th
Avenue, Suite 100 trackgrp.com
Naperville, IL
60563
●
Net loss
attributable to shareholders in the First Quarter ended December
31, 2017 improved to ($1.0M) or 60% compared to ($2.6M) for the
same quarter last year;
●
Net cash provided
by operating activities remained positive at $0.3M in the
First Quarter compared to $2.1M for last year principally due to
the timing of working capital expenditures; and
●
The new CEO, Derek
Cassell, appointed January 1, 2018, has realigned the management
team to execute the Company’s strategy including the
appointment of an industry veteran, Matt Swando, as the new Vice
President of Sales and Marketing.
BUSINESS
OUTLOOK REITERATED
|
|
Actual
|
Outlook
|
|
|
|
FY 2016
|
FY 2017
|
FY 2018
|
|
|
|
|
|
|
Revenue:
|
$27.2M
|
$29.7M
|
$35-40M
|
|
|
|
|
|
|
Adjusted EBITDA Margin:
|
7.3%
|
12.2%
|
15-20%
|
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.
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, 2017, 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.
[The
rest of this page is intentionally blank]
TRACK GROUP, INC. AND SUBSIDIARIES
|
Assets
|
December 31,
2017
(unaudited)
|
September 30,
2017
|
|
Current assets:
|
|
|
|
Cash
|
$1,755,437
|
$2,027,321
|
|
Accounts
receivable, net of allowance for doubtful accounts of $3,432,985
and $3,268,095, respectively
|
5,526,000
|
5,438,564
|
|
Note
receivable, current portion
|
234,733
|
234,733
|
|
Prepaid
expenses and other
|
4,219,135
|
854,122
|
|
Inventory,
net of reserves of $26,934, respectively
|
172,347
|
261,810
|
|
Total
current assets
|
11,907,652
|
8,816,550
|
|
Property
and equipment, net of accumulated depreciation of $1,862,347 and
$1,778,634, respectively
|
883,039
|
903,100
|
|
Monitoring
equipment, net of accumulated amortization of $4,767,061 and
$4,906,925, respectively
|
3,460,685
|
3,493,012
|
|
Intangible
assets, net of accumulated amortization of $10,444,569 and
$9,839,032, respectively
|
24,410,468
|
24,718,655
|
|
Goodwill
|
8,275,308
|
8,226,714
|
|
Other
assets
|
785,195
|
2,989,101
|
|
Total
assets
|
$49,722,347
|
$49,147,132
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable
|
2,529,632
|
2,769,835
|
|
Accrued
liabilities
|
8,021,419
|
6,650,291
|
|
Current
portion of long-term debt, net of discount of $130,067 and
$185,811, respectively
|
30,322,191
|
30,270,531
|
|
Total
current liabilities
|
40,873,242
|
39,690,657
|
|
Long-term
debt, net of current portion
|
3,466,468
|
3,480,717
|
|
Total
liabilities
|
44,339,710
|
43,171,374
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Common
stock, $0.0001 par value: 30,000,000 shares authorized;
10,462,433 and 10,480,984 shares outstanding,
respectively
|
1,046
|
1,048
|
|
Additional
paid-in capital
|
300,978,608
|
300,717,861
|
|
Accumulated
deficit
|
(295,109,920)
|
(294,067,329)
|
|
Accumulated
other comprehensive loss
|
(487,097)
|
(675,822)
|
|
Total
equity
|
5,382,637
|
5,975,758
|
|
Total
liabilities and stockholders’ equity
|
$49,722,347
|
$49,147,132
|
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(Unaudited)
|
|
Three
Months EndedDecember 31,
|
|
|
|
2017
|
2016
|
|
Revenues:
|
|
|
|
Monitoring
services
|
$7,350,805
|
$7,265,013
|
|
Other
|
139,889
|
406,477
|
|
Total
revenues
|
7,490,694
|
7,671,490
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
Monitoring,
products and other related services
|
2,542,007
|
3,607,276
|
|
Depreciation
& amortization included in cost of revenues
|
477,142
|
445,493
|
|
Impairment
of monitoring equipment and parts
|
-
|
74,787
|
|
Total
cost of revenues
|
3,019,149
|
4,127,556
|
|
|
|
|
|
Gross profit
|
4,471,545
|
3,543,934
|
|
|
|
|
|
Operating expenses:
|
|
|
|
General
& administrative
|
3,657,738
|
3,175,054
|
|
Restructuring
costs
|
-
|
566,330
|
|
Selling
& marketing
|
409,737
|
589,768
|
|
Research
& development
|
163,946
|
488,178
|
|
Depreciation
& amortization
|
564,740
|
575,111
|
|
Total
operating expenses
|
4,796,161
|
5,394,441
|
|
Loss from operations
|
(324,616)
|
(1,850,507)
|
|
|
|
|
|
Other income (expense):
|
|
|
|
Interest
expense, net
|
(673,827)
|
(647,103)
|
|
Currency
exchange rate loss
|
(55,072)
|
(116,442)
|
|
Other
income/expense, net
|
10,924
|
293
|
|
Total other income (expense)
|
(717,975)
|
(763,252)
|
|
Net loss attributable to common shareholders
|
(1,042,591)
|
(2,613,759)
|
|
Foreign
currency translation adjustments
|
188,725
|
(493,572)
|
|
Comprehensive loss
|
$(853,866)
|
$(3,107,331)
|
|
Net
loss per common share, basic and diluted
|
$(0.10)
|
$(0.25)
|
|
Weighted
average common shares outstanding, basic and diluted
|
10,476,346
|
10,333,516
|
|
|
Three
Months ended
|
|
|
|
December
31,
|
|
|
|
2017
|
2016
|
|
Non-GAAP
Adjusted EBITDA
|
|
|
|
Net
loss attributable to common shareholders
|
$(1,043)
|
$(2,614)
|
|
Interest expense,
net
|
674
|
647
|
|
Depreciation,
amortization and impairment
|
1,042
|
1,095
|
|
Stock-based
compensation
|
788
|
225
|
|
Restructuring
charges (1)
|
-
|
566
|
|
Other non-cash
charges (2)
|
106
|
487
|
|
Non-GAAP
Adjusted EBITDA
|
$1,567
|
$406
|
|
Non-GAAP
Adjusted EBITDA, % of revenue
|
20.9%
|
5.3%
|
|
|
Three
Months Ended
December
31,
|
|
|
|
2017
|
2016
|
|
Non-GAAP
EPS (In $000’s, except share data)
|
|
|
|
Net
loss attributable to common shareholders
|
$(1,043)
|
$(2,614)
|
|
Interest expense,
net
|
674
|
647
|
|
Depreciation,
amortization and impairment
|
1,042
|
1,095
|
|
Stock-based
compensation
|
788
|
225
|
|
Restructuring
charges (1)
|
-
|
566
|
|
Other non-cash
charges (2)
|
106
|
487
|
|
Non-GAAP
net income to common shareholders
|
$1,567
|
$406
|
|
Weighted average
common shares outstanding
|
10,476
|
10,334
|
|
Non-GAAP
earnings per share
|
$0.15
|
$0.04
|
|
|
|
|
(1)
Includes
restructuring charges associated with outsourcing one of our
monitoring centers and moving our headquarters to the Chicagoland
area.
(2)
Other
non-cash charges may include gains or losses, non-cash currency
impacts and non-recurring accrual adjustments.