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| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_jan132020.htm |
Exhibit 99.1
FOR
IMMEDIATE RELEASE
December
23, 2020
Peter
Poli
Chief
Financial Officer
peter.poli@trackgrp.com
Track
Group Reports Fiscal 2020 Financial Results
Monitoring Revenue
up 3%, Total Revenue down nominally, Record Operating Income
improves 137%, Adjusted EBITDA up 10%, Net loss
improved
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, 2020
(“FY20”). In FY20, the Company posted (i) monitoring
revenue of $33.2M, an increase of approximately 3% over monitoring
revenue of $32.1M for the year ended September 30, 2019
(“FY19”); (ii) FY20 operating income of $2.8M
representing an increase of 137% compared to FY19 operating income
of $1.2M; (iii) adjusted EBITDA of $8.2M in FY20, up 10% compared
to $7.4M for FY19; and (iv) net loss attributable to common
shareholders of $0.1M in FY20 compared to a net loss of $2.6M in
FY19.
“Our employees, our customers, and our
supply partners came together and worked extremely hard to drive
the major financial metrics of our business to higher levels in the
2nd
half of our fiscal year as compared to
the 1st
half (October – March period)
despite challenges brought on by the Coronavirus,” said Derek
Cassell, Track Group’s CEO.
FINANCIAL
HIGHLIGHTS
●
Total FY20 revenue
of $33.9M was down less than 0.5% compared to FY19 revenue of
$34.0M as the increase in monitoring revenue of approximately 3%
was offset by a decline in product sales.
●
Gross profit of
$18.6M in FY20 was down 2% compared to FY19 gross profit of $19.0M
principally due to the adverse impact of COVID-19 but up over 8%
compared to FY18 gross profit of $17.2M.
●
Operating income in
FY20 of $2.8M compared to operating income of $1.2M for FY19,
representing an improvement of 137% despite the global
pandemic.
●
Adjusted EBITDA for
FY20 of $8.2M, up nearly 10%, compared to $7.4M for FY19. Adjusted
EBITDA in FY20 as a percentage of revenue also increased to 24.2%,
compared to 21.9% for FY19.
●
Cash balance of
$6.8M for FY20, down 2% compared to $6.9M for FY19 and down 25%
compared to the June 30, 2020 cash balance of $9.0M due to the
repayment of $2.7 million to settle certain indebtedness at a
discount on September 30, 2020.
●
Net loss
attributable to shareholders in FY20 was $0.1M compared to a net
loss of $2.6M in FY19, a change principally attributable to the
Company’s strong operating performance and the increase in
Other Income associated with the gain on settling the repayment of
certain indebtedness at a discount.
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Business Outlook
As of
December 23, 2020, the coronavirus pandemic has adversely impacted
both the Company’s revenue and costs by disrupting the
operations in Chile, causing shortages within the supply chain and
postponing sales opportunities as some government agencies have
delayed new RFP (Request for Proposal) processes. In addition, we
continue to operate 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 elected not to provide specific
guidance regarding fiscal 2021 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.
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, 2020, 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.
|
200 E 5th Ave., Suite 100 | Naperville, IL 60563
1-877-260-2010 | info@trackgrp.com | trackgrp.com
|
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2020 AND 2019
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September
30,
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September
30,
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Assets
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2020
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2019
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Current assets:
|
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Cash
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$6,762,099
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$6,896,711
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Accounts
receivable, net of allowance for doubtful accounts of $2,654,173
and $2,454,281, respectively
|
5,546,213
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6,763,236
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Prepaid
expense and deposits
|
866,389
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1,339,465
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Inventory,
net of reserves of $6,483 and $26,934, respectively
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124,606
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274,501
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Total
current assets
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13,299,307
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15,273,913
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Property
and equipment, net of accumulated depreciation of $2,531,631 and
$2,248,913, respectively
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378,764
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675,037
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Monitoring
equipment, net of accumulated depreciation of $6,639,883 and
$6,322,768, respectively
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2,065,947
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2,624,900
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Intangible
assets, net of accumulated amortization of $16,390,721 and
$14,157,090, respectively
|
21,171,045
|
21,955,679
|
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Goodwill
|
8,220,380
|
8,187,911
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Deferred
tax asset
|
432,721
|
540,563
|
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Other
assets
|
2,166,743
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124,187
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Total
assets
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$47,734,907
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$49,382,190
|
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Liabilities and Stockholders’ Deficit
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Current liabilities:
|
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Accounts
payable
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$2,199,215
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$2,628,003
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Accrued
liabilities
|
14,958,628
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13,828,696
|
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Current
portion of long-term debt
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30,914,625
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33,827,689
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Total
current liabilities
|
48,072,468
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50,284,388
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Long-term
debt, net of current portion
|
418,575
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-
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Long-term
liabilities
|
164,487
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-
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Total
liabilities
|
48,655,530
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50,284,388
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Commitments and contingencies (Note 12)
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Stockholders’ deficit:
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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
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Series
A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares
authorized; 0 shares outstanding
|
-
|
-
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Paid
in capital
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302,270,242
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302,250,556
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Accumulated
deficit
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(302,270,933)
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(302,152,292)
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Accumulated
other comprehensive loss
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(921,073)
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(1,001,602)
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Total
deficit
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(920,623)
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(902,198)
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Total
liabilities and stockholders’ deficit
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$47,734,907
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$49,382,190
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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2020 AND 2019
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2020
|
2019
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Revenue:
|
|
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Monitoring
and other related services
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$33,217,661
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$32,100,370
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Product
sales and other
|
657,506
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1,918,782
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Total
revenue
|
33,875,167
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34,019,152
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Cost of revenue:
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Monitoring,
products and other related services
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13,306,108
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12,989,186
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Depreciation
and amortization
|
1,923,356
|
2,012,975
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Total
cost of revenue
|
15,229,464
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15,002,161
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Gross profit
|
18,645,703
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19,016,991
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Operating expense:
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General
& administrative
|
10,381,859
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12,243,459
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Gain
on sale of asset
|
-
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(10,563)
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Selling
& marketing
|
2,257,667
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2,257,101
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Research
& development
|
1,182,542
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1,313,499
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Depreciation
& amortization
|
2,064,097
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2,047,980
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Total operating
expense
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15,886,165
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17,851,476
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Operating income
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2,759,538
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1,165,515
|
|
|
|
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Other income (expense):
|
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Interest
income
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39,592
|
23,929
|
|
Interest
expense
|
(2,503,542)
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(2,403,047)
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Currency
exchange rate loss
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(316,330)
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(466,140)
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Other
income/expense, net
|
695,298
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143
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Total other income (expense)
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(2,084,982)
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(2,845,115)
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Net income (loss) before income taxes
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674,556
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(1,679,600)
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Income
tax expense
|
793,197
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884,353
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Net loss attributable to common stockholders
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(118,641)
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(2,563,953)
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Foreign
currency translation adjustments
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80,529
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(31,332)
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Comprehensive loss
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$(38,112)
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$(2,595,285)
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Net
loss per common share, basic and diluted
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$(0.01)
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$(0.23)
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Weighted
average common shares outstanding, basic and diluted
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11,413,535
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11,213,431
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Three
Months Ended
September
30,
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Twelve
Months Ended
September
30,
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2020
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2019
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2020
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2019
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Non-GAAP Adjusted EBITDA
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Net income (loss) attributable to common shareholders
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$1,421
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$(495)
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$(119)
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$(2,564)
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Interest
expense, net
|
642
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596
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2,464
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2,379
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Depreciation
and amortization
|
992
|
992
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3,987
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4,061
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Income taxes (1)
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181
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427
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793
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884
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Board
compensation and stock-based compensation
|
75
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(32)
|
320
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321
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Foreign
exchange expense
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(340)
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331
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316
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466
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Gain
on settlement of note payable
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(700)
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-
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(700)
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-
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Other charges, net (2)
|
246
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353
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1,122
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1,902
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Non-GAAP Adjusted EBITDA
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$2,517
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$2,172
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$8,183
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$7,449
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Non-GAAP Adjusted EBITDA, percent of revenue
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28.5%
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24.8%
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24.2%
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21.9%
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Weighted
average common shares outstanding
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11,414,150
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11,251,650
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11,413,535
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11,213,431
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Non-GAAP earnings per share
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$0.22
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$0.19
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$0.72
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$0.66
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(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.
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(2) Other charges may include
gains or losses and non-recurring accrual
adjustments.
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