Exhibit 99.1
 
 
 
 
FOR IMMEDIATE RELEASE
January 13, 2020
 
Peter Poli
Chief Financial Officer 877-260-2010 peter.poli@trackgrp.com
 
 
 
Track Group Reports Fiscal 2019 Financial Results
 
Record Annual Revenue Up 11%, Operating Income Rebounds 171% to Historical High, and Adjusted EBITDA Up 27%
 
NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal year ended September 30, 2019 (the "FY19”). In FY19, the Company posted (i) record revenue of $34.0M, an increase of 11% over the fiscal year ended September 30, 2018 (the "FY18"), (ii) record operating income of $1.2M compared to an operating loss of $1.7M for FY18, (iii) adjusted EBITDA of $7.4M, up 27% compared to FY18, and (iv) a cash balance at September 30, 2019 of $6.9M, representing an increase of 27% over September 30, 2018 as well as the highest balance since September 2014.
 
“It was an outstanding year for Track Group, our employees and our customers.” said Derek Cassell, Track Group’s CEO. “I look forward to the next year with a tremendous amount of momentum and enthusiasm.”
 
FINANCIAL HIGHLIGHTS
 
Revenue for FY19 was $34.0M, up approximately 11% compared to revenue of $30.6M for FY18. Quarterly revenue of $8.8M in Q4 FY19, up 8% over Q4 FY18 of $8.1M.
 
Gross Profit for FY19 was $19.0 million, up 11% compared to Gross Profit of $17.2 million for FY18. Quarterly gross profit of $5.1M in Q4 FY19, up 13% over Q4 FY18 of $4.5M.
 
Total operating expense for FY19 of $17.9M is down 5% versus FY18’s $18.9M of operating expenses. The drop in operating expense when combined with FY19 gross profit of $19.0M led to the highest annual operating income in the Company's history of $1.2M, which is a dramatic turnaround of 171% compared to the $1.7M operating loss for FY18.
 
Adjusted EBITDA for FY19 finished at $7.4M, up 27% compared to $5.9M for FY18.
 
The cash balance of $6.9M at September 30, 2019 is up 27% compared to a balance of $5.4M at September 30, 2018 and up less than 1% over the
June 30, 2019 cash balance of $6.9M and the highest level in nearly five years.
 
The Net loss attributable to common shareholders for FY19 was $2.6M compared to a net loss of $5.4M in FY18, an improvement of approximately
53%.
 
 
 
 

 
-1-
 
 
BUSINESS OUTLOOK
 
 
 
FY 2018
 
 
FY 2019
 
 
FY 2019 (a)
 
 
FY 2020
 
Revenue:
 $30.6M 
 $34.0M 
 $33-37M 
 $36-40M 
 
    
    
    
    
Adjusted EBITDA Margin:
  19.2%
  21.9%
  18-23%
  21-26%
 
(a) The FY 2019 outlook as released on August 9, 2019.
 
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, 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, 2019, 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.
 
 
 
-2-
 
 

TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2019 AND 2018
Assets
Current assets 
 
 
2019 
 
 
2018 
 
Cash
 $6,896,711 
 $5,446,557 
Accounts receivable, net of allowance for doubtful accounts of $2,454,281 and
$3,152,966, respectively
  6,763,236 
  5,978,896 
Note receivable, net of allowances for doubtful accounts of $234,733, at September 30, 2018
  - 
  - 
Prepaid expense and other
  1,339,465 
  1,270,043 
Inventory, net of reserves of $26,934, respectively
  274,501 
  277,119 
Total current assets
  15,273,913 
  12,972,615 
Property and equipment, net of accumulated depreciation of $2,248,913 and$1,999,222, respectively
  675,037 
  745,475 
Monitoring equipment, net of accumulated amortization of $6,322,768 and $5,325,654, respectively
  2,624,900 
  3,162,542 
Intangible assets, net of accumulated amortization of $14,157,090 and $12,016,512, respectively
  21,955,679 
  23,253,054 
Goodwill
  8,187,911 
  8,076,759 
Deferred tax assets
  540,563 
  - 
Other assets
  124,187 
  145,839 
Total assets
 $49,382,190 
 $48,356,284 
 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable
  2,628,003 
  2,518,030 
Accrued liabilities
  12,969,489 
  10,333,103 
Current portion of long-term debt
  33,827,689 
  30,437,810 
Total current liabilities
  50,284,388 
  43,288,943 
Long-term debt, net of current portion
  - 
  3,428,975 
Total liabilities
  50,284,388 
  46,717,918 
Commitments and contingencies
  - 
  - 
 
    
    
Stockholders’ equity (deficit):
    
    
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,401,650 shares outstanding, respectively
  1,140 
  1,140 
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding
  - 
  - 
Paid in capital
  302,250,556 
  302,102,866 
Accumulated deficit
  (302,152,292)
  (299,495,370)
Accumulated other comprehensive loss
  (1,001,602)
  (970,270)
Total equity (deficit)
  (902,198)
  1,638,366 
Total liabilities and stockholders’ equity (deficit)
 $49,382,190 
 $48,356,284 
 
 
 
-3-
 
 
 
TRACK GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS SEPTEMBER 30, 2019 and 2018
 
 
 
(Unaudited)
3 months ended
September 30,
 
 
12 months ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Monitoring and other related services
  8,258,624 
  7,880,774 
  32,100,370 
  29,943,563 
Product sales and other
  502,287 
  203,600 
  1,918,782 
  626,656 
Total revenue
  8,760,911 
  8,084,374 
  34,019,152 
  30,570,219 
 
    
    
    
    
Cost of revenue:
    
    
    
    
Monitoring, products and other related services
  3,161,813 
  3,101,737 
  12,989,186 
  11,511,341 
Depreciation and amortization
  500,392 
  478,974 
  2,012,975 
  1,856,734 
Total cost of revenue
  3,662,205 
  3,580,711 
  15,002,161 
  13,368,075 
 
    
    
    
    
Gross profit
  5,098,706 
  4,503,663 
  19,016,991 
  17,202,144 
 
  58%
  56%
  56%
  56%
Operating expense:
    
    
    
    
General and administrative
  2,779,127 
  3,126,974 
  12,243,459 
  13,983,924 
(Gain) / loss on sale of assets
  (10,563)
  (8,500)
  (10,563)
  (8,500)
Selling and Marketing
  620,075 
  500,674 
  2,257,101 
  1,895,452 
Research & development
  359,223 
  261,328 
  1,313,499 
  862,142 
Depreciation and amortization
  491,602 
  495,830 
  2,047,980 
  2,120,746 
Total operating expense
  4,239,464 
  4,376,306 
  17,851,476 
  18,853,764 
Operating Income (loss)
  859,242 
  127,357 
  1,165,515 
  (1,651,620)
 
    
    
    
    
Other income (expense)
    
    
    
    
Interest income
  6,638 
  - 
  23,929 
  242,973 
Interest expense
  (602,546)
  (687,735)
  (2,403,047)
  (3,004,983)
Currency exchange rate gain (loss)
  (331,345)
  (2,720)
  (466,140)
  (445,426)
Other income/expense, net
  - 
  2,541 
  143 
  23,740 
Total other income (expense)
  (927,253)
  (687,914)
  (2,845,115)
  (3,183,696)
Net loss before income taxes
  (68,011)
  (560,557)
  (1,679,600)
  (4,835,316)
Income tax expense
  427,018 
  231,918 
  884,353 
  592,725 
Net loss attributable to stockholders
  (495,029)
  (792,475)
  (2,563,953)
  (5,428,041)
 
 
 
 
 
-4-
 
 
 
TRACK GROUP, INC. 
NON-GAAP ADJUSTED EBITDA SEPTEMBER 30, 2019 (UNAUDITED)
   
 
 
    Three Months Ended
September 30, 
 
 
Twelve Months Ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Non-GAAP Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders
 $(495)
 $(792)
 $(2,564)
 $(5,428)
Interest expense, net
  596 
  688 
  2,379 
  2,762 
Depreciation and amortization
  992 
  974 
  4,061 
  3,977 
Income taxes (1)
  427 
  232 
  884 
  593 
Board compensation and stock-based compensation
  (32)
  269 
  321 
  1,970 
Foreign exchange expense
  331 
  2 
  466 
  445 
Other charges, net (2)
  353 
  494 
  1,902 
  1,539 
Non GAAP Adjusted EBITDA
 $2,172 
 $1,867 
 $7,449 
 $5,858 
Non GAAP Adjusted EBITDA, percent of revenue
  24.8%
  23.1%
  21.9%
  19.2%
 
 
 
Three Months Ended
September 30,
 
 
Twelve Months Ended
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
Non-GAAP EPS (in $000’s, except share data)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss attributable to common shareholders
 $(495)
 $(792)
 $(2,564)
 $(5,428)
Interest expense, net
  596 
  688 
  2,379 
  2,762 
Depreciation and amortization
  992 
  974 
  4,061 
  3,977 
Income taxes (1)
  427 
  232 
  884 
  593 
Board compensation and stock-based compensation
  (32)
  269 
  321 
  1,970 
Foreign exchange expense
  331 
  2 
  466 
  445 
Other charges, net (2)
  353 
  494 
  1,902 
  1,539 
Non GAAP net income to common shareholders
 $2,172 
 $1,867 
 $7,449 
 $5,858 
Weighted average common shares outstanding
  11,251,650 
  11,101,650 
  11,213,431 
  10,702,523 
Non-GAAP earnings per share
 $0.19 
 $0.17 
 $0.66 
 $0.55 
 
(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.
 
 
 
-5-

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