Company News: Page (1) of 1 - 08/09/18

Track Group Reports 3rd Quarter Fiscal 2018 Financial Results

Revenue up 4%, Gross Profit up 13% and Operating Loss Improves 42%

August 09, 2018 -- !-- AddToAny BEGIN -->

NAPERVILLE, Ill., Aug. 9, 2018 /PRNewswire/ -- Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its third quarter ended June 30, 2018 (the "Third Quarter"). The Company posted gross profit of $4.2M, on total revenue of $7.7M, for a gross margin of 55%. In addition, the Third Quarter adjusted EBITDA came in at $1.16M.

"We're thrilled to report record levels of active devices during our Third Quarter," said Derek Cassell, Track Group's CEO. "The implementation of a number of new customer opportunities combined with the record device levels positions us well for the remainder of the calendar year."

BUSINESS AND FINANCIAL HIGHLIGHTS



  • Revenue for the Third Quarter ($7.7M) is up approximately 4% compared to the same period last year.
  • Gross Profit for the Third Quarter increased approximately 13% from last year ($4.2M vs. $3.7M) which led to Gross Profit for the 9 months ended June 30, 2018 being up 12% compared to the prior year ($12.7M vs $11.3M). As a result, gross margin for the Third Quarter and the 9 months ended June 30, 2018 was 55% and 56%, respectively, up considerably from the gross margin of 51% for both periods last year.
  • The quarterly operating loss of ($0.7M) is among the lowest in over three years, and allowed the Company to improve the 9 months ended June 30, 2018 operating loss to ($1.8M) down by 57% compared to the same period last year ($4.1M), due to a combination of a strong Gross Profit results and lower Operating Expenses.
  • Adjusted EBITDA in the Third Quarter finished at ($1.16M), which led to Adjusted EBITDA for the 9 months ended June 30, 2018 increasing 75% ($4.0M) compared to the same period last year ($2.3M).
  • Net loss, attributable to shareholders, for the 9 months ended June 30, 2018 was ($4.6M) compared to a loss of ($3.5M) for the same period last year due to a gain on settlement of a contingent liability of $3.2M in the same period last year. Without the gain on settlement of the contingent liability in 2017, loss attributable to shareholders would have been $6.7M for the 9 months ended June 30, 2017, compared to $4.6M in 2018.
  • Net Cash Provided by Operating Activities remained strong for the 9 months ended June 30, 2018 ($5.3M) compared to the same period of fiscal year 2017 ($2.9M), or up 81%.
  • On July 19, 2018, the Company and Conrent Invest S.A. ("Conrent") agreed to extend the maturity date to the earlier of April 1, 2019 or the date upon which the principal and interest is repaid for the Amended and Restated Unsecured Facility Agreement dated June 30, 2015 between the Company and Conrent.
  • On July 23, 2018, the Company announced the introduction of BACtrack, a mobile alcohol monitoring system that integrates a smartphone app and a law enforcement-grade, handheld breathalyzer to provide breath alcohol content.

BUSINESS OUTLOOK


Actual

Outlook


FY 2016

FY 2017

FY 2018





Revenue:

$27.2M

$29.7M

$32-33M





Adjusted EBITDA Margin:

7.3%

12.2%

18-22%

The Revenue outlook for fiscal year 2018 has been narrowed to $32-$33 million. There is no modification to the Adjusted EBITDA Margin, which remains at 18-22%.

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.

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, 2017, 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


Assets

June 30,
2018
(unaudited)


September
30,
2017

    Current assets:








Cash

$       5,210,145


$      2,027,321

Accounts receivable, net of allowance for doubtful accounts of $3,588,084 and $3,268,095, respectively

5,071,783


5,438,564

Note receivable, current portion

234,733


234,733

Prepaid expense and other

1,231,318


854,122

Inventory, net of reserves of $26,934 and $26,934, respectively

420,114


261,810

Total current assets

12,168,093


8,816,550

Property and equipment, net of accumulated depreciation of $1,965,061 and $1,778,634, respectively

812,651


903,100

Monitoring equipment, net of accumulated depreciation of $5,361,281 and $4,906,925, respectively

3,168,377


3,493,012

Intangible assets, net of accumulated amortization of $11,442,820 and $9,839,032, respectively

23,366,983


24,718,655

Goodwill

8,027,882


8,226,714

Other assets

149,461


2,989,101

Total assets

$       47,693,447


$ 49,147,132





Liabilities and Stockholders' Equity




   Current liabilities:




Accounts payable

2,192,246


2,769,835

Accrued liabilities

9,425,116


6,650,291

Current portion of long-term debt, net of discount of $18,581 and $185,811, respectively

30,426,686


30,270,531

Total current liabilities

42,044,048


39,690,657

Long-term debt, net of current portion

3,438,484


3,480,717

Total liabilities

45,482,532


43,171,374





Stockholders' equity:




Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,401,650 and 10,480,984 shares outstanding, respectively

1,140


1,048

Additional paid-in capital

302,019,648


300,717,861

Accumulated deficit

(298,702,865)


(294,067,329)

Accumulated other comprehensive loss

(1,107,008)


(675,822)

Total equity

2,210,915


5,975,758

Total liabilities and stockholders' equity

$     47,693,447


$ 49,147,132

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)




Three Months Ended 

Nine Months Ended



June 30,
2018

June 30,
2017

June 30,
2018


June 30,
2017

Monitoring services


$ 7,549,779

$        7,157,424

$ 22,062,789


$ $21,577,313

Other


129,196

193,930

423,056


665,574

Total revenue


7,678,975

7,351,354

22,485,845


22,242,887

Cost of revenue:







Monitoring, products & other related services

3,039,755

2,944,920

8,409,604

9,281,288

Depreciation & amortization


432,952

672,562

1,377,760


1,633,629

Total cost of revenue


3,472,707

3,617,482

9,787,364


10,914,917

Gross profit


4,206,268

3,733,872

12,698,481


11,327,970

Operating expenses:







General & administrative


3,703,869

3,611,903

10,856,950


9,142,113

(Gain) loss on sale of asset


-

(2,500)

-


763,531

Restructuring costs


-

(1,265)

-


569,135

Selling & marketing


466,048

572,334

1,394,778


1,786,312

Research & development


254,060

292,938

600,814


1,460,354

Depreciation & amortization


520,639

535,892

1,624,916


1,744,276

Total operating expenses


4,944,616

5,009,302

14,477,458


15,465,721

Loss from operations


(738,348)

(1,275,430)

(1,778,977)


(4,137,751)

Other income (expense):

Interest expense, net


(594,452)

(672,369)

(2,074,245)


(2,116,805)

Currency exchange rate gain (loss)


(166,586)

181,966

(442,706)


75,859

Gain on settlement of milestone payments


-

3,000,000

-


3,213,940

Other income, net


3,733

4,934

21,199


13,701

Total other income (expense)


(757,305)

2,514,531

(2,495,752)


1,186,695

Income (loss) before income taxes


(1,495,653)

1,239,101

(4,274,729)


(2,951,056)

Income tax expense


360,807

492,552

360,807


501,651

Net income (loss) attributable to common shareholders


(1,856,460)

746,549

(4,635,536)


(3,452,707)

Foreign currency translation adjustments


(861,637)

746,156

(431,186)


236,969

Comprehensive income (loss)


$(2,718,097)

$1,492,705

$(5,066,722)


$(3,215,738)

Basic and diluted income (loss) per common share


$            (0.17)

$                 $0.07

$            (0.44)


$(0.33)

Weighted average common shares outstanding, basic and diluted


10,885,444

10,486,665

10,608,127


10,384,566

 


Three Months Ended
June 30,

Nine Months Ended
June 30,


2018

2017

2018

2017

Non-GAAP Adjusted EBITDA
Net gain (loss) attributable to common shareholders

$(1,857)

$746

$(4,636)

$(3,453)

Interest expense, net

594

672

2,074

2,117

Income taxes (1)

361

493

361

502

Depreciation, amortization and impairment

953

1,419

3,003

3,723

Board compensation and stock based compensation

356

1,028

1,701

905

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)

756

(120)

1,488

371

Non GAAP Adjusted EBITDA

$1,163

$1,235

$3,991

$2,284

Non GAAP Adjusted EBITDA, percent of revenue

15.1%

16.8%

17.7%

10.3%

 


Three Months Ended
June 30,

Nine Months Ended
June 30,


2018

2017

2018

2017

Non-GAAP EPS (in $000's, except share data)





Net gain (loss) attributable to common shareholders

$(1,857)

$746

$(4,636)

$(3,453)

Interest expense, net

594

672

2,074

2,117

Income taxes (1)

361

493

361

502

Depreciation, amortization and impairment

953

1,419

3,003

3,723

Board compensation and stock based compensation

356

1,028

1,701

905

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)

756

(120)

1,488

371

Non GAAP net income to common shareholders

$1,163

$1,235

$3,991

$2,284

Weighted average common shares outstanding

10,885,444

10,486,665

10,608,127

10,384,566

Non-GAAP earnings per share

$0.11

$0.12

$0.38

$0.22



(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 and non-recurring accrual adjustments.

 

Cision View original content:http://www.prnewswire.com/news-releases/track-group-reports-3rd-quarter-fiscal-2018-financial-results-300695250.html

SOURCE Track Group, Inc.

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