Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Track Group, Inc. | trck8k_02012021.htm |
Exhibit
99.1
Track
Group Reports 1st
Quarter Fiscal 2021 Financial Results
Monitoring Revenue and Total Revenue up 12%, Record Quarterly
Operating Income, Adjusted EBITDA up 50%, Net Loss
Turnaround
NAPERVILLE,
ILLINOIS –
Track Group, Inc. (OTC Pink Market: TRCK), a global leader in
offender tracking and monitoring services, today announced
financial results for its first quarter ended December 31, 2020
(“Q1 FY21”). The Company posted (i) total revenue of
$9.4 million, an increase of approximately 12% over total revenue
for the same period last year (“Q1 FY20”); (ii)
operating income of $1.4 million, representing an increase of 373%
compared to Q1 FY20 operating income of $0.3M; (iii) adjusted
EBITDA of $2.7 million in Q1 FY21, up 50% compared to $1.8 million
for Q1 FY20; and (iv) net income attributable to common
shareholders of $1.3M in Q1 FY21 compared to a net loss of $0.2
million in Q1 FY20.
“The strong
performance of the Company during the second half of the prior
fiscal year (April to September 2020) carried over into the first
quarter of fiscal year 2021 (October – December 2020). As our
employees continue to work closely with customers and supply
partners alike, we collectively work through the challenges brought
on by the Coronavirus,” said Derek Cassell, Track
Group’s CEO.
FINANCIAL
HIGHLIGHTS
●
Strong quarterly
total revenue of $9.4 million in Q1 FY21, up 12% compared to Q1
FY20 total revenue of $8.4 million as the increase in monitoring
revenue of approximately 12% was offset by a nominal decline in
product sales.
●
Gross profit of
$5.2 million in Q1 FY21 was up 12% compared to Q1 FY20 gross profit
of $4.7 million.
●
Total operating
expense for Q1 FY21 of $3.8 million was down 13% versus Q1
FY20’s operating expense of $4.4 million. The decline in
quarterly operating expense when combined with the favorable
increase in gross profit led to operating income in Q1 FY21 of $1.4
million compared to operating income of $0.3 million for Q1 FY20,
representing an improvement of 373%.
●
Adjusted EBITDA in
the Q1 FY21 was $2.7 million, an increase of nearly 50%, compared
to $1.8 million for Q1 FY20. Adjusted EBITDA in Q1 FY21 as a
percentage of revenue also increased to 28.2%, compared to 21.1%
for Q1 FY20.
●
The cash balance of
$5.9 million at December 31, 2020 was down 13% compared to $6.8
million at September 30, 2020 as the Company made significant
investments in additional monitoring devices and software to
accommodate increased customer demand.
●
Net income
attributable to common shareholders in Q1 FY21 was $1.3 million
compared to a net loss of $0.2M in Q1 FY20, a change principally
attributable to the Company’s strong operating performance
and the increase in other Income associated with a foreign currency
exchange gain.
Business Outlook
As of
February 10, 2021, the Coronavirus pandemic has adversely impacted
both the Company’s revenue and costs by disrupting its
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 operating 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 OTC
Pink Market 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. 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.
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
December
31,
|
September
30,
|
|
Assets
|
2020
|
2020
|
|
Current assets:
|
|
|
|
Cash
|
$5,862,442
|
$6,762,099
|
|
Accounts
receivable, net of allowance for doubtful accounts of $2,624,536
and $2,654,173, respectively
|
6,420,253
|
5,546,213
|
|
Prepaid
expense and deposits
|
817,774
|
866,389
|
|
Inventory, net of
reserves of $6,392 and $6,483, respectively
|
118,510
|
124,606
|
|
Total current
assets
|
13,218,979
|
13,299,307
|
|
Property and
equipment, net of accumulated depreciation of $2,746,715 and
$2,531,631, respectively
|
359,317
|
378,764
|
|
Monitoring
equipment, net of accumulated depreciation of $5,589,903 and
$6,639,883, respectively
|
2,755,331
|
2,065,947
|
|
Intangible assets,
net of accumulated amortization of $17,019,421 and $16,390,721,
respectively
|
21,412,818
|
21,171,045
|
|
Goodwill
|
8,527,257
|
8,220,380
|
|
Deferred tax
asset
|
425,666
|
432,721
|
|
Other
assets
|
2,577,659
|
2,166,743
|
|
Total
assets
|
$49,277,027
|
$47,734,907
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity (Deficit)
|
|
|
|
Current liabilities:
|
|
|
|
Accounts
payable
|
$1,830,099
|
$2,199,215
|
|
Accrued
liabilities
|
15,372,602
|
14,958,628
|
|
Current portion of
long-term debt
|
671,266
|
30,914,625
|
|
Total current
liabilities
|
17,873,967
|
48,072,468
|
|
Long-term debt,
net
|
30,572,648
|
418,575
|
|
Long-term
liabilities
|
109,706
|
164,487
|
|
Total
liabilities
|
48,556,321
|
48,655,530
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
Common
stock, $0.0001 par value: 30,000,000 shares authorized;
11,414,150 shares outstanding, respectively
|
1,141
|
1,141
|
|
Series A
Convertible Preferred stock, $0.0001 par value: 1,200,000 shares
authorized; 0 shares outstanding
|
-
|
-
|
|
Paid in
capital
|
302,270,242
|
302,270,242
|
|
Accumulated
deficit
|
(300,947,439)
|
(302,270,933)
|
|
Accumulated other
comprehensive loss
|
(603,238)
|
(921,073)
|
|
Total equity
(deficit)
|
720,706
|
(920,623)
|
|
Total liabilities
and stockholders’ equity (deficit)
|
$49,277,027
|
$47,734,907
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
|
|
Three
Months Ended
December
31,
|
|
|
|
2020
|
2019
|
|
Revenue:
|
|
|
|
Monitoring and
other related services
|
$9,271,729
|
$8,268,423
|
|
Product sales and
other
|
130,176
|
152,408
|
|
Total
revenue
|
9,401,905
|
8,420,831
|
|
|
|
|
|
Cost
of revenue:
|
|
|
|
Monitoring,
products and other related services
|
3,700,426
|
3,266,909
|
|
Depreciation &
amortization included in cost of revenue
|
488,675
|
487,442
|
|
Total cost of
revenue
|
4,189,101
|
3,754,351
|
|
|
|
|
|
Gross
profit
|
5,212,804
|
4,666,480
|
|
|
|
|
|
Operating
expense:
|
|
|
|
General &
administrative
|
2,400,735
|
3,011,854
|
|
Selling &
marketing
|
550,457
|
541,549
|
|
Research &
development
|
307,294
|
296,155
|
|
Depreciation &
amortization
|
531,763
|
515,939
|
|
Total operating
expense
|
3,790,249
|
4,365,497
|
|
|
|
|
|
Operating
income
|
1,422,555
|
300,983
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
Interest expense,
net
|
(640,022)
|
(602,533)
|
|
Currency exchange
gain
|
818,626
|
143,308
|
|
Other
income/expense, net
|
26
|
-
|
|
Total
other income (expense)
|
178,630
|
(459,225)
|
|
Income
(loss) before income taxes
|
1,601,185
|
(158,242)
|
|
Income
tax expense
|
277,691
|
74,383
|
|
Net
income (loss) attributable to common stockholders
|
1,323,494
|
(232,625)
|
|
Foreign currency
translation adjustments
|
317,835
|
(64,098)
|
|
Comprehensive
income (loss)
|
$1,641,329
|
$(296,723)
|
|
Net income (loss)
per common share, basic and diluted
|
$0.12
|
$(0.02)
|
|
Weighted average
common shares outstanding, basic and diluted
|
11,414,150
|
11,411,704
|
|
|
Three
Months Ended
December
31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
Non-GAAP
Adjusted EBITDA (in 000's, except share data)
|
|
|
|
Net
Income (loss) attributable to common shareholders
|
$1,323
|
$(233)
|
|
Interest expense,
net
|
640
|
603
|
|
Depreciation and
amortization
|
1,020
|
1,003
|
|
Income taxes
(1)
|
278
|
74
|
|
Board compensation
and stock-based compensation
|
75
|
95
|
|
Foreign exchange
gain
|
(818)
|
(143)
|
|
Other charges, net
(2)
|
136
|
374
|
|
Non-GAAP
Adjusted EBITDA
|
$2,654
|
$1,773
|
|
Non-GAAP
Adjusted EBITDA, percent of revenue
|
28.2%
|
21.1%
|
|
|
|
|
|
Weighted average
common shares outstanding
|
11,414,150
|
11,411,704
|
|
Non-GAAP
earnings per share
|
$0.23
|
$0.16
|
|
|
|
|
(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.
|