Attached files
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| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_jan132020.htm |
Exhibit 99.1
FOR
IMMEDIATE RELEASE
January
13, 2020
Peter
Poli
Chief
Financial Officer 877-260-2010 peter.poli@trackgrp.com
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,
ILLINOIS – 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%.
-1-
BUSINESS
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.
-2-
TRACK
GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
AS
OF SEPTEMBER 30, 2019 AND 2018
Assets
Current assets
|
|
2019
|
2018
|
|
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
|
-3-
TRACK
GROUP, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS SEPTEMBER 30, 2019 and 2018
|
|
(Unaudited)
3
months ended
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)
|
-4-
TRACK
GROUP, INC.
NON-GAAP
ADJUSTED EBITDA SEPTEMBER 30, 2019 (UNAUDITED)
|
|
Three Months Ended September
30,
|
Twelve
Months Ended
September
30,
|
||
|
|
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
September
30,
|
Twelve
Months Ended
September
30,
|
||
|
|
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.
-5-