Attached files
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| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_05112021.htm |
Exhibit
99.1
Track Group Reports 2nd Quarter Fiscal 2021
Financial Results
Total
Revenue up 21%, Record Quarterly Operating Income, Adjusted EBITDA
up 77%, Continued Net Loss Turnaround
NAPERVILLE,
ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader
in offender tracking and monitoring services, today announced
financial results for its second quarter ended March 31, 2021
(“Q2 FY21”). In Q2 FY21, the Company posted (i) total
revenue of $9.9 million, an increase of approximately 21% over
total revenue for the same period last year (“Q2
FY20”); (ii) operating income of $1.7 million, representing
an increase of 601% compared to Q2 FY20 operating income of $0.2M;
(iii) adjusted EBITDA of $2.9 million in Q2 FY21, up 77% compared
to $1.6 million for Q2 FY20; and (iv) net income attributable to
common shareholders of $2.2M in Q2 FY21 compared to a net loss of
$1.7 million in Q2 FY20.
“Again, we
were able to continue the Company’s strong performance over
the past twelve months with a record performance for the quarter
ended March 31, 2021. So far, we have managed to successfully
navigate the challenges brought on by the Coronavirus by working
closely with our customers and partners. We are excited about the
future and the continued evolution of our technologies to support
our customers’ programs in the years ahead.” said Derek
Cassell, Track Group’s CEO.
FINANCIAL
HIGHLIGHTS
●
Strong quarterly
total revenue of $9.9 million in Q2 FY21, up 21% compared to Q2
FY20 total revenue of $8.1 million as the significant increase in
monitoring revenue of approximately 22% was offset by a nominal
decline in product sales. Revenue for the 6 months ended March 31,
2021 (“6M FY21”) of $19.3 million was up approximately
16% compared to revenue of $16.6 million for the 6 months ended
March 31, 2020 (“6M FY20”).
●
Gross profit of
$5.4 million in Q2 FY21 was up 23% compared to Q2 FY20 gross profit
of $4.4 million. Gross profit for the 6M FY21 was $10.6 million, or
up 17% compared to gross profit of $9.1 million for 6M
FY20.
●
Total operating
expense for Q2 FY21 of $3.8 million was down 10% versus Q2
FY20’s total operating expense of $4.2 million. The decline
in quarterly operating expense when combined with the favorable
increase in gross profit led to operating income in Q2 FY21 of $1.7
million compared to operating income of $0.2 million for Q2 FY20,
representing an improvement of 601%. Similarly, for 6M FY21,
operating income was $3.1 million compared to operating income of
$0.5 million, representing an increase of 473%.
●
Adjusted EBITDA for
the Q2 FY21 was $2.9 million, an increase of nearly 77%, compared
to $1.6 million for Q2 FY20. Adjusted EBITDA in Q2 FY21 as a
percentage of revenue also increased to 29.1%, compared to 19.9%
for Q2 FY20. Adjusted EBITDA for 6M FY21 was $5.5 million compared
to the Adjusted EBITDA for 6M FY20 of $3.4 million, representing an
improvement of approximately 63%. Similarly, Adjusted EBITDA for
the 6M FY21 as a percentage of revenue also increased to 28.7%,
compared to 20.5% for the 6M FY20.
●
The cash balance of
$6.7 million at March 31, 2021 was down only 1% compared to $6.8
million at September 30, 2020 reflecting significant capital
investments made by the Company of approximately $2.7 million in
the 6M FY21 to build additional monitoring devices and software to
accommodate increased customer demand. Capital investments for the
6M FY21 were up 78% compared to the same period last
year.
●
Net income
attributable to common shareholders in Q2 FY21 was $2.2 million
compared to a net loss of $1.7 million in Q2 FY20, a change
principally attributable to the Company’s strong operating
performance and the increase in other Income. Net income
attributable to common shareholders for the 6M FY21 was $3.5
million, up significantly compared to the net loss of nearly $2.0
million for the 6M FY20.
200 E
5th Ave., Suite 100 | Naperville, IL
60563
1-877-260-2010 | info@trackgrp.com | trackgrp.com
Business Outlook
As of
May 11, 2021, the Coronavirus pandemic has adversely impacted both
the Company’s revenue and costs by disrupting its operations
in Chile, causing delays within the supply chain and postponing
sales opportunities as some government agencies have delayed new
RFP (Request for Proposal) processes. We continue to operate and
manage around a global semiconductor shortage though adaptive
supply chain management strategies. The extent to which the
Coronavirus pandemic and semiconductor shortage impact our
operations and financial results from this point forward will
depend on numerous evolving factors that we cannot accurately
predict. Given these uncertainties, the Company has elected not to
provide specific guidance regarding fiscal 2021 operating results;
however, we are comfortable that the remainder of fiscal 2021 will
continue to exceed last year’s 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, visi
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. 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 including 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
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
March
31,
|
September
30,
|
|
Assets
|
2021
|
2020
|
|
Current assets:
|
|
|
|
Cash
|
$6,679,527
|
$6,762,099
|
|
Accounts
receivable, net of allowance for doubtful accounts of $2,616,716
and $2,654,173, respectively
|
6,720,965
|
5,546,213
|
|
Prepaid
expense and deposits
|
1,120,543
|
866,389
|
|
Inventory, net of
reserves of $0 and $6,483, respectively
|
-
|
124,606
|
|
Total current
assets
|
14,521,035
|
13,299,307
|
|
Property and
equipment, net of accumulated depreciation of $2,822,516 and
$2,531,631, respectively
|
258,243
|
378,764
|
|
Monitoring
equipment, net of accumulated depreciation of $5,780,731 and
$6,639,883, respectively
|
2,920,544
|
2,065,947
|
|
Intangible assets,
net of accumulated amortization of $17,584,880 and $16,390,721,
respectively
|
21,478,335
|
21,171,045
|
|
Goodwill
|
8,408,174
|
8,220,380
|
|
Deferred tax
asset
|
401,108
|
432,721
|
|
Other
assets
|
4,393,915
|
2,166,743
|
|
Total
assets
|
$52,381,354
|
$47,734,907
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity (Deficit)
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable
|
$1,705,807
|
$2,199,215
|
|
Accrued
liabilities
|
3,657,480
|
14,958,628
|
|
Current portion of
long-term debt
|
516,256
|
30,914,625
|
|
Total current
liabilities
|
5,879,543
|
48,072,468
|
|
Long-term debt,
net
|
43,791,682
|
418,575
|
|
Long-term
liabilities
|
70,539
|
164,487
|
|
Total
liabilities
|
49,741,764
|
48,655,530
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
Common
stock, $0.0001 par value: 30,000,000 shares authorized;
11,453,790 and 11,414,150 shares outstanding,
respectively
|
1,145
|
1,141
|
|
Series A
Convertible Preferred stock, $0.0001 par value: 1,200,000 shares
authorized; 0 shares outstanding
|
|
-
|
|
Paid in
capital
|
302,270,238
|
302,270,242
|
|
Accumulated
deficit
|
(298,763,208)
|
(302,270,933)
|
|
Accumulated other
comprehensive loss
|
(868,585)
|
(921,073)
|
|
Total equity
(deficit)
|
2,639,590
|
(920,623)
|
|
Total liabilities
and stockholders’ equity (deficit)
|
$52,381,354
|
$47,734,907
|
|
200 E
5th Ave., Suite 100 | Naperville, IL
60563
1-877-260-2010 | info@trackgrp.com | trackgrp.com
|
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
|
|
Three
Months Ended
|
Six
Months Ended
|
||
|
|
March
31,
|
March
31,
|
March
31,
|
March
31,
|
|
|
2021
|
2020
|
2021
|
2020
|
|
Revenue:
|
|
|
|
|
|
Monitoring and
other related services
|
$9,742,290
|
$7,993,092
|
$19,014,019
|
$16,261,515
|
|
Product sales and
other
|
119,540
|
138,634
|
249,716
|
291,042
|
|
Total
revenue
|
9,861,830
|
8,131,726
|
19,263,735
|
16,552,557
|
|
|
|
|
|
|
|
Cost
of revenue:
|
|
|
|
|
|
Monitoring,
products and other related services
|
3,901,824
|
3,201,677
|
7,602,250
|
6,468,586
|
|
Depreciation and
amortization included in cost of revenue
|
525,022
|
494,157
|
1,013,697
|
981,599
|
|
Total cost of
revenue
|
4,426,846
|
3,695,834
|
8,615,947
|
7,450,185
|
|
|
|
|
|
|
|
Gross
profit
|
5,434,984
|
4,435,892
|
10,647,788
|
9,102,372
|
|
|
|
|
|
|
|
Operating
expense:
|
|
|
|
|
|
General &
administrative
|
2,313,836
|
2,723,219
|
4,714,571
|
5,735,073
|
|
Selling &
marketing
|
614,409
|
642,432
|
1,164,866
|
1,183,981
|
|
Research &
development
|
334,569
|
323,737
|
641,863
|
619,892
|
|
Depreciation &
amortization
|
510,067
|
509,287
|
1,041,830
|
1,025,226
|
|
Total operating
expense
|
3,772,881
|
4,198,675
|
7,563,130
|
8,564,172
|
|
|
|
|
|
|
|
Operating
income
|
1,662,103
|
237,217
|
3,084,658
|
538,200
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
Interest expense,
net
|
(565,522)
|
(596,324)
|
(1,205,544)
|
(1,198,857)
|
|
Currency exchange
rate gain (loss)
|
124,216
|
(1,334,240)
|
942,842
|
(1,190,932)
|
|
Other income
(loss), net
|
1,000,756
|
(4,347)
|
1,000,782
|
(4,347)
|
|
Total
other income (expense)
|
559,450
|
(1,934,911)
|
738,080
|
(2,394,136)
|
|
Income
(loss) before income tax
|
2,221,553
|
(1,697,694)
|
3,822,738
|
(1,855,936)
|
|
Income
tax expense
|
37,322
|
23,365
|
315,013
|
97,748
|
|
Net
income (loss) attributable to common shareholders
|
2,184,231
|
(1,721,059)
|
3,507,725
|
(1,953,684)
|
|
Foreign currency
translation adjustments
|
(265,347)
|
132,588
|
52,489
|
68,490
|
|
Comprehensive
income (loss)
|
$1,918,884
|
$(1,588,471)
|
$3,560,214
|
$(1,885,194)
|
|
|
|
|
|
|
|
Net
income/(loss) per share – basic:
|
|
|
|
|
|
Net income/(loss)
per share
|
$0.19
|
$(0.15)
|
$0.31
|
$(0.17)
|
|
Weighted average
shares outstanding
|
11,435,291
|
11,414,150
|
11,424,605
|
11,336,690
|
|
|
|
|
|
|
|
Net
income/(loss) per share – diluted:
|
|
|
|
|
|
Net income/(loss)
per share
|
$0.18
|
$(0.15)
|
$0.29
|
$(0.17)
|
|
Weighted average
shares outstanding
|
12,056,918
|
11,414,150
|
12,072,079
|
11,336,690
|
TRACK GROUP, INC. AND
SUBSIDIARIES
NON-GAAP ADJUSTED EBITDA MARCH 31, 2021 (UNAUDITED)
|
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
||
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
Net income (loss) attributable to common shareholders
|
$2,185
|
$(1,721)
|
$3,508
|
$(1,954)
|
|
Interest
expense, net
|
566
|
596
|
1,206
|
1,199
|
|
Depreciation
and amortization
|
1,036
|
1,004
|
2,056
|
2,007
|
|
Income taxes (1)
|
37
|
24
|
315
|
98
|
|
Board
compensation and stock-based compensation
|
75
|
75
|
150
|
170
|
|
Loan
forgiveness
|
(1,001)
|
-
|
(1,001)
|
-
|
|
Foreign
exchange (gain)/loss
|
(125)
|
1,334
|
(943)
|
1,191
|
|
Other charges, net (2)
|
97
|
306
|
233
|
680
|
|
Non GAAP Adjusted EBITDA
|
$2,870
|
$1,618
|
$5,524
|
$3,391
|
|
Non GAAP Adjusted EBITDA, percent of revenue
|
29.1%
|
19.9%
|
28.7%
|
20.5%
|
|
|
|
|
|
|
|
Non-GAAP
Basic earnings per share
|
|
|
|
|
|
Weighted
average common shares outstanding
|
11,435,291
|
11,414,150
|
11,424,605
|
11,336,690
|
|
Non-GAAP Basic earnings per share
|
$0.25
|
$0.14
|
$0.48
|
$0.30
|
|
|
|
|
|
|
|
Non-GAAP Diluted earnings per share
|
|
|
|
|
|
Weighted
average common shares outstanding
|
12,056,918
|
11,414,150
|
12,072,079
|
11,336,690
|
|
Non-GAAP Diluted earnings per share
|
$0.24
|
$0.14
|
$0.46
|
$0.30
|
(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.
|
200 E
5th Ave., Suite 100 | Naperville, IL
60563
1-877-260-2010 | info@trackgrp.com | trackgrp.com
|