Track Group Reports 1st Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Track Group, Inc. (TRCK) reported strong financial performance for Q1 FY21, with total revenue reaching $9.4 million, a 12% increase from Q1 FY20. Operating income soared by 373% to $1.4 million, while adjusted EBITDA rose 50% to $2.7 million. Despite a 13% decline in cash balance to $5.9 million, the company achieved a net income of $1.3 million compared to a net loss of $0.2 million in the previous year. However, challenges from the Coronavirus pandemic affected operations in Chile, leading to delays in proposals and increased uncertainties.

Positive

• Total revenue increased by 12% to $9.4 million.
• Operating income improved by 373% to $1.4 million.
• Adjusted EBITDA increased by 50% to $2.7 million.
• Net income turned positive at $1.3 million, up from a loss of $0.2 million.

Negative

• Cash balance decreased by 13% to $5.9 million.
• Operational disruptions in Chile due to the Coronavirus pandemic.
• Delayed RFP processes impacting sales opportunities.

NAPERVILLE, Ill., Feb. 10, 2021 /PRNewswire/ -- 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

 

TRACK GROUP, INC. AND SUBSIDIARIES
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 for 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.

 

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SOURCE Track Group, Inc.

FAQ

What were Track Group's revenues for Q1 FY21?

Track Group reported total revenues of $9.4 million for Q1 FY21.

How did Track Group's operating income change in Q1 FY21?

Operating income surged by 373% to $1.4 million in Q1 FY21.

What was Track Group's adjusted EBITDA for Q1 FY21?

Adjusted EBITDA for Q1 FY21 was $2.7 million, a 50% increase compared to Q1 FY20.

Did Track Group make a profit in Q1 FY21?

Yes, Track Group reported a net income of $1.3 million for Q1 FY21.

How did the Coronavirus pandemic impact Track Group's operations?

The pandemic disrupted operations in Chile, leading to delays in proposals and affecting revenue.