Attached files
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| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_aug9122017.htm |
Exhibit
99.1
PRESS
RELEASE
AUGUST
10, 2017
Track Group Reports Third Quarter 2017
Results
Revenue
up 9%, Net Cash from Operations up 50%,
Adjusted EBITDA up 22%
ROMEOVILLE,
Illinois — August 10, 2017 — Track Group today
announced financial results for its fiscal 2017 third-quarter ended
June 30, 2017.
Third Quarter Highlights
●
Revenue is up 9%
from one year ago and 13% year to date
●
Net cash provided
by operating activities is up 50% year to date
●
Adjusted EBITDA is
up 22% from one year ago and 18% year to date
●
Net income up $2.5
million from one year ago
●
Progress
continues on restructuring
“With
revenue up 9 percent year-over-year, we’re happy to report
twelve consecutive quarters of accelerating growth,”
said Guy Dubois, Chairman and CEO of Track Group.
“We’re very
excited about the advances in our device-agnostic platform,
smartphone applications and analytics software coming this
fall.”
Key Financial Results
●
Revenue increased 9% - For the three months ended June 30, 2017, the
Company recognized revenue from operations of $7,351,354 compared
to $6,754,411 for the three
months ended June 30, 2016, an increase of $596,943 or 9%. The
increase in revenue was principally the result of (i) increases in
total growth of our North American monitoring operations
driven by clients in Indiana and Virginia, and (ii) growth of
offender monitoring in Chile.
●
Cash from operations increased 50%
– The Company provided
$2,937,513 of cash from operating activities during the nine months
ended June 30, 2017, compared to $1,964,863 in the nine months
ended June 30, 2016, representing an increase of $972,650 or
50%.
●
Adjusted EBITDA increased
22% –
Adjusted EBITDA for the third quarter of 2017 increased
approximately 22% to $1,235,000 up from $1,015,000 in the same
period in 2016.
●
Net income increased $2.5M -
The Company had net income of
$746,549 for the three months
ended June 30, 2017, compared to a net loss of $1,783,946
for the three months ended June 30,
2016, an increase of $2,530,495. This increase in net
income is largely due a gain on settlement of milestone payments,
offset by an increase in income tax expense.
●
Progress continues on restructuring -
The Company continues to make progress in its Restructuring Plan
approved in the quarter ended December 31, 2016, which is intended
to reduce certain expenses, and reduce the Company's dependence on
external sources of financing.
“I remain optimistic about the Company’s ability to
restructure its long-term debt,” said Peter Poli, Track
Group’s Chief Financial Officer. “We are working
closely with our board, our debt holders and our other stakeholders
to come to the right solution.”
The
Company reaffirms Outlook from its May 12, 2017 news release
indicating FY2017 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
|
|
June 30,
|
September 30,
|
|
Assets
|
2017
|
2016
|
|
Current assets:
|
(Unaudited)
|
|
|
Cash
|
$1,893,966
|
$1,769,921
|
|
Accounts
receivable, net of allowance for doubtful accounts of $3,166,215
and $2,335,508, respectively
|
5,847,987
|
6,894,095
|
|
Note
receivable, current
|
234,733
|
334,733
|
|
Prepaid
expenses and other
|
567,933
|
816,708
|
|
Inventory,
net of reserves of $26,934 and $98,150, respectively
|
210,574
|
521,851
|
|
Total
current assets
|
8,755,193
|
10,337,308
|
|
Property
and equipment, net of accumulated depreciation of $1,674,800 and
$1,421,389, respectively
|
936,637
|
1,226,461
|
|
Monitoring
equipment, net of accumulated amortization of $4,279,008 and
$3,438,074, respectively
|
3,758,926
|
4,358,117
|
|
Intangible
assets, net of accumulated amortization of $9,454,908 and
$8,233,659, respectively
|
25,064,504
|
25,540,650
|
|
Goodwill
|
8,195,103
|
7,955,876
|
|
Other
assets
|
3,099,301
|
2,900,911
|
|
Total
assets
|
$49,809,664
|
$52,319,323
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable
|
$2,676,087
|
$2,771,101
|
|
Accrued
liabilities
|
6,220,197
|
3,976,192
|
|
Current
portion of long-term debt, net of discount of $0 and $222,973,
respectively
|
62,463
|
3,245,732
|
|
Total
current liabilities
|
8,958,747
|
9,993,025
|
|
Stock
payable - related party
|
-
|
3,289,879
|
|
Long-term
debt, net of current portion and discount of $241,554 and $185,811,
respectively
|
33,645,419
|
30,345,803
|
|
Total
liabilities
|
42,604,166
|
43,628,707
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Common
stock, $0.0001 par value: 30,000,000 shares authorized;
10,480,984 outstanding at June 30, 2017 and 10,333,516 at September
30, 2016
|
1,048
|
1,034
|
|
Additional
paid-in capital
|
300,607,005
|
298,876,399
|
|
Accumulated
deficit
|
(292,794,210)
|
(289,341,503)
|
|
Accumulated
other comprehensive income (loss)
|
(608,345)
|
(845,314)
|
|
Total
equity
|
7,205,498
|
8,690,616
|
|
Total
liabilities and stockholders’ equity
|
$49,809,664
|
$52,319,323
|
TRACK GROUP, INC. AND SUBSIDIARIES
INCOME
(LOSS)
(Unaudited)
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|
|
2017
|
2016
|
2017
|
2016
|
|
Revenues:
|
|
|
|
|
|
Monitoring
services
|
$7,157,424
|
$6,598,128
|
$21,577,313
|
$18,947,752
|
|
Other
|
193,930
|
156,283
|
665,574
|
716,302
|
|
Total
revenues
|
7,351,354
|
6,754,411
|
22,242,887
|
19,664,054
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
Monitoring,
products & other related services
|
2,734,920
|
2,462,281
|
8,936,501
|
7,060,036
|
|
Depreciation
& amortization included in cost of revenues
|
672,562
|
488,655
|
1,633,629
|
1,498,407
|
|
Impairment
of monitoring equipment and parts
|
210,000
|
60,000
|
344,787
|
180,000
|
|
Total
cost of revenue
|
3,617,482
|
3,010,936
|
10,914,917
|
8,738,443
|
|
|
|
|
|
|
|
Gross profit
|
3,733,872
|
3,743,475
|
11,327,970
|
10,925,611
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
General
& administrative
|
3,611,903
|
3,263,951
|
9,142,113
|
9,240,935
|
|
(Gain) loss on sale
of assets
|
(2,500)
|
-
|
763,531
|
-
|
|
Restructuring
costs
|
(1,265)
|
-
|
569,135
|
-
|
|
Selling
& marketing
|
572,334
|
407,829
|
1,786,312
|
1,684,130
|
|
Research
& development
|
292,938
|
610,398
|
1,460,354
|
1,741,285
|
|
Depreciation
& amortization
|
535,892
|
621,311
|
1,744,276
|
2,055,915
|
|
Total operating
expenses
|
5,009,302
|
4,903,489
|
15,465,721
|
14,722,265
|
|
|
|
|
|
|
|
Loss from operations
|
(1,275,430)
|
(1,160,014)
|
(4,137,751)
|
(3,796,654)
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
Interest
expense, net
|
(672,369)
|
(683,482)
|
(2,116,805)
|
(2,009,399)
|
|
Currency
exchange rate gain (loss)
|
181,966
|
18,438
|
75,859
|
(66,119)
|
|
Gain
on settlement of milestone payments
|
3,000,000
|
-
|
3,213,940
|
-
|
|
Other
income, net
|
4,934
|
41,112
|
13,701
|
40,393
|
|
Income (loss) before income taxes
|
1,239,101
|
(1,783,946)
|
(2,951,056)
|
(5,831,779)
|
|
Income
tax expense
|
492,552
|
-
|
501,651
|
-
|
|
Net income (loss) attributable to common shareholders
|
746,549
|
(1,783,946)
|
(3,452,707)
|
(5,831,779)
|
|
Foreign
currency translation adjustments
|
746,156
|
(280,319)
|
236,969
|
689,936
|
|
Comprehensive income (loss)
|
$1,492,705
|
$(2,064,265)
|
$(3,215,738)
|
$(5,141,843)
|
|
Basic
and diluted income (loss) per common share
|
$0.07
|
$(0.17)
|
$(0.33)
|
$(0.57)
|
|
Weighted
average common shares outstanding, basic and diluted
|
10,486,665
|
10,302,136
|
10,384,566
|
10,277,973
|
TRACK GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP AND
NON-GAAP FINANCIAL MEASURES
In $000’s except share data (Unaudited)
|
|
Three
Months Ended
June
30,
|
Nine
Months Ended
June
30,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
Non-GAAP Adjusted EBITDA
|
|
|
|
|
|
Net income (loss) attributable to common shareholders
|
$746
|
$(1,784)
|
$(3,453)
|
$(5,832)
|
|
Interest
expense, net
|
672
|
684
|
2,117
|
2,010
|
|
Income
taxes (1)
|
493
|
15
|
502
|
28
|
|
Depreciation,
amortization and impairment
|
1,419
|
1,176
|
3,723
|
3,801
|
|
Stock
based compensation
|
1,028
|
655
|
905
|
1,284
|
|
Restructuring
charges (2)
|
(1)
|
-
|
569
|
-
|
|
Gain
on contingent share liability
|
(3,000)
|
-
|
(3,214)
|
-
|
|
Loss
on sale of assets
|
(2)
|
-
|
764
|
-
|
|
Other
charges, net (3)
|
(120)
|
269
|
371
|
640
|
|
Non GAAP Adjusted EBITDA
|
$1,235
|
$1,015
|
$2,284
|
$1,931
|
|
Non GAAP Adjusted EBITDA, percent of revenue
|
16.8%
|
15.0%
|
10.3%
|
9.8%
|
|
|
|
|
|
|
|
|
Three
Months Ended
June
30,
|
Nine
Months Ended
June
30,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
Non-GAAP EPS
|
|
|
|
|
|
Net (income) loss attributable to common shareholders
|
$746
|
$(1,784)
|
$(3,453)
|
$(5,832)
|
|
Interest
expense, net
|
672
|
684
|
2,117
|
2,010
|
|
Income
taxes (1)
|
493
|
15
|
502
|
28
|
|
Depreciation,
amortization and impairment
|
1,419
|
1,176
|
3,723
|
3,801
|
|
Stock
based compensation
|
1,028
|
655
|
905
|
1,284
|
|
Restructuring
charges (2)
|
(1)
|
-
|
569
|
-
|
|
Gain
on contingent share liability
|
(3,000)
|
-
|
(3,214)
|
-
|
|
Loss
on sale of assets
|
(2)
|
-
|
764
|
-
|
|
Other
charges, net (3)
|
(120)
|
269
|
371
|
640
|
|
Non GAAP net income to common shareholders
|
$1,235
|
$1,015
|
$2,284
|
$1,931
|
|
Weighted
average common shares outstanding
|
10,486,665
|
10,302,136
|
10,384,566
|
10,277,973
|
|
Non-GAAP earnings per share
|
$0.12
|
$0.10
|
$0.22
|
$0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|