Exhibit 99.1
 
Track Group Reports 2nd Quarter Fiscal 2021 Financial Results
 
Total Revenue up 21%, Record Quarterly Operating Income, Adjusted EBITDA up 77%, Continued Net Loss Turnaround
 
NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its second quarter ended March 31, 2021 (“Q2 FY21”). In Q2 FY21, the Company posted (i) total revenue of $9.9 million, an increase of approximately 21% over total revenue for the same period last year (“Q2 FY20”); (ii) operating income of $1.7 million, representing an increase of 601% compared to Q2 FY20 operating income of $0.2M; (iii) adjusted EBITDA of $2.9 million in Q2 FY21, up 77% compared to $1.6 million for Q2 FY20; and (iv) net income attributable to common shareholders of $2.2M in Q2 FY21 compared to a net loss of $1.7 million in Q2 FY20.
 
“Again, we were able to continue the Company’s strong performance over the past twelve months with a record performance for the quarter ended March 31, 2021. So far, we have managed to successfully navigate the challenges brought on by the Coronavirus by working closely with our customers and partners. We are excited about the future and the continued evolution of our technologies to support our customers’ programs in the years ahead.” said Derek Cassell, Track Group’s CEO.
 
FINANCIAL HIGHLIGHTS
 
Strong quarterly total revenue of $9.9 million in Q2 FY21, up 21% compared to Q2 FY20 total revenue of $8.1 million as the significant increase in monitoring revenue of approximately 22% was offset by a nominal decline in product sales. Revenue for the 6 months ended March 31, 2021 (“6M FY21”) of $19.3 million was up approximately 16% compared to revenue of $16.6 million for the 6 months ended March 31, 2020 (“6M FY20”).
 
Gross profit of $5.4 million in Q2 FY21 was up 23% compared to Q2 FY20 gross profit of $4.4 million. Gross profit for the 6M FY21 was $10.6 million, or up 17% compared to gross profit of $9.1 million for 6M FY20.
 
Total operating expense for Q2 FY21 of $3.8 million was down 10% versus Q2 FY20’s total operating expense of $4.2 million. The decline in quarterly operating expense when combined with the favorable increase in gross profit led to operating income in Q2 FY21 of $1.7 million compared to operating income of $0.2 million for Q2 FY20, representing an improvement of 601%. Similarly, for 6M FY21, operating income was $3.1 million compared to operating income of $0.5 million, representing an increase of 473%.
 
Adjusted EBITDA for the Q2 FY21 was $2.9 million, an increase of nearly 77%, compared to $1.6 million for Q2 FY20. Adjusted EBITDA in Q2 FY21 as a percentage of revenue also increased to 29.1%, compared to 19.9% for Q2 FY20. Adjusted EBITDA for 6M FY21 was $5.5 million compared to the Adjusted EBITDA for 6M FY20 of $3.4 million, representing an improvement of approximately 63%. Similarly, Adjusted EBITDA for the 6M FY21 as a percentage of revenue also increased to 28.7%, compared to 20.5% for the 6M FY20.
 
The cash balance of $6.7 million at March 31, 2021 was down only 1% compared to $6.8 million at September 30, 2020 reflecting significant capital investments made by the Company of approximately $2.7 million in the 6M FY21 to build additional monitoring devices and software to accommodate increased customer demand. Capital investments for the 6M FY21 were up 78% compared to the same period last year.
 
Net income attributable to common shareholders in Q2 FY21 was $2.2 million compared to a net loss of $1.7 million in Q2 FY20, a change principally attributable to the Company’s strong operating performance and the increase in other Income. Net income attributable to common shareholders for the 6M FY21 was $3.5 million, up significantly compared to the net loss of nearly $2.0 million for the 6M FY20.
 
200 E 5th Ave., Suite 100 Naperville, IL 60563
1-877-260-2010 info@trackgrp.com trackgrp.com
 
 
 
Business Outlook
 
As of May 11, 2021, the Coronavirus pandemic has adversely impacted both the Company’s revenue and costs by disrupting its operations in Chile, causing delays within the supply chain and postponing sales opportunities as some government agencies have delayed new RFP (Request for Proposal) processes. We continue to operate and manage around a global semiconductor shortage though adaptive supply chain management strategies. The extent to which the Coronavirus pandemic and semiconductor shortage impact our operations and financial results from this point forward will depend on numerous evolving factors that we cannot accurately predict. Given these uncertainties, the Company has elected not to provide specific guidance regarding fiscal 2021 operating results; however, we are comfortable that the remainder of fiscal 2021 will continue to exceed last year’s 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 OTCQX exchange. For more information, visi
 
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.
 
200 E 5th Ave., Suite 100 Naperville, IL 60563
1-877-260-2010 info@trackgrp.com trackgrp.com

 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
(Unaudited)
March 31,
 
 
September 30,
 
Assets
 
2021
 
 
2020
 
Current assets:
 
 
 
 
 
 
Cash
 $6,679,527 
 $6,762,099 
Accounts receivable, net of allowance for doubtful accounts of $2,616,716 and $2,654,173, respectively
  6,720,965 
  5,546,213 
Prepaid expense and deposits
  1,120,543 
  866,389 
Inventory, net of reserves of $0 and $6,483, respectively
  - 
  124,606 
Total current assets
  14,521,035 
  13,299,307 
Property and equipment, net of accumulated depreciation of $2,822,516 and $2,531,631, respectively
  258,243 
  378,764 
Monitoring equipment, net of accumulated depreciation of $5,780,731 and $6,639,883, respectively
  2,920,544 
  2,065,947 
Intangible assets, net of accumulated amortization of $17,584,880 and $16,390,721, respectively
  21,478,335 
  21,171,045 
Goodwill
  8,408,174 
  8,220,380 
Deferred tax asset
  401,108 
  432,721 
Other assets
  4,393,915 
  2,166,743 
Total assets
 $52,381,354 
 $47,734,907 
 
    
    
Liabilities and Stockholders’ Equity (Deficit)
    
    
Current liabilities:
    
    
Accounts payable
 $1,705,807 
 $2,199,215 
Accrued liabilities
  3,657,480 
  14,958,628 
Current portion of long-term debt
  516,256 
  30,914,625 
Total current liabilities
  5,879,543 
  48,072,468 
Long-term debt, net
  43,791,682 
  418,575 
Long-term liabilities
  70,539 
  164,487 
Total liabilities
  49,741,764 
  48,655,530 
 
    
    
  Commitments and contingencies
    
    
 
    
    
Stockholders’ equity (deficit):
    
    
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,453,790 and 11,414,150 shares outstanding, respectively
  1,145 
  1,141 
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding
    
  - 
Paid in capital
  302,270,238 
  302,270,242 
Accumulated deficit
  (298,763,208)
  (302,270,933)
Accumulated other comprehensive loss
  (868,585)
  (921,073)
Total equity (deficit)
  2,639,590 
  (920,623)
Total liabilities and stockholders’ equity (deficit)
 $52,381,354 
 $47,734,907 
  
 
200 E 5th Ave., Suite 100 Naperville, IL 60563
1-877-260-2010 info@trackgrp.com trackgrp.com
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
March 31,
 
 
March 31,
 
 
March 31,
 
 
March 31,
 
 
 
2021
 
 
2020
 
 
2021
 
 
2020
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
Monitoring and other related services
 $9,742,290 
 $7,993,092 
 $19,014,019 
 $16,261,515 
Product sales and other
  119,540 
  138,634 
  249,716 
  291,042 
Total revenue
  9,861,830 
  8,131,726 
  19,263,735 
  16,552,557 
 
    
    
    
    
Cost of revenue:
    
    
    
    
Monitoring, products and other related services
  3,901,824 
  3,201,677 
  7,602,250 
  6,468,586 
Depreciation and amortization included in cost of revenue
  525,022 
  494,157 
  1,013,697 
  981,599 
Total cost of revenue
  4,426,846 
  3,695,834 
  8,615,947 
  7,450,185 
 
    
    
    
    
Gross profit
  5,434,984 
  4,435,892 
  10,647,788 
  9,102,372 
 
    
    
    
    
Operating expense:
    
    
    
    
General & administrative
  2,313,836 
  2,723,219 
  4,714,571 
  5,735,073 
Selling & marketing
  614,409 
  642,432 
  1,164,866 
  1,183,981 
Research & development
  334,569 
  323,737 
  641,863 
  619,892 
Depreciation & amortization
  510,067 
  509,287 
  1,041,830 
  1,025,226 
Total operating expense
  3,772,881 
  4,198,675 
  7,563,130 
  8,564,172 
 
    
    
    
    
Operating income
  1,662,103 
  237,217 
  3,084,658 
  538,200 
 
    
    
    
    
Other income (expense):
    
    
    
    
Interest expense, net
  (565,522)
  (596,324)
  (1,205,544)
  (1,198,857)
Currency exchange rate gain (loss)
  124,216 
  (1,334,240)
  942,842 
  (1,190,932)
Other income (loss), net
  1,000,756 
  (4,347)
  1,000,782 
  (4,347)
Total other income (expense)
  559,450 
  (1,934,911)
  738,080 
  (2,394,136)
Income (loss) before income tax
  2,221,553 
  (1,697,694)
  3,822,738 
  (1,855,936)
Income tax expense
  37,322 
  23,365 
  315,013 
  97,748 
Net income (loss) attributable to common shareholders
  2,184,231 
  (1,721,059)
  3,507,725 
  (1,953,684)
Foreign currency translation adjustments
  (265,347)
  132,588 
  52,489 
  68,490 
Comprehensive income (loss)
 $1,918,884 
 $(1,588,471)
 $3,560,214 
 $(1,885,194)
 
    
    
    
    
Net income/(loss) per share – basic:
    
    
    
    
Net income/(loss) per share
 $0.19 
 $(0.15)
 $0.31 
 $(0.17)
Weighted average shares outstanding
  11,435,291 
  11,414,150  
  11,424,605 
  11,336,690  
 
    
    
    
    
Net income/(loss) per share – diluted:
    
    
    
    
Net income/(loss) per share
 $0.18 
 $(0.15)
 $0.29 
 $(0.17)
Weighted average shares outstanding
  12,056,918  
  11,414,150  
  12,072,079  
  11,336,690  
 
 
 
 
 
TRACK GROUP, INC. AND SUBSIDIARIES
NON-GAAP ADJUSTED EBITDA MARCH 31, 2021 (UNAUDITED)
 
 
 
Three Months Ended
March 31,
 
 
Six Months Ended
March 31,
 
 
 
2021
 
 
2020
 
 
2021
 
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to common shareholders
 $2,185 
 $(1,721)
 $3,508 
 $(1,954)
Interest expense, net
  566 
  596 
  1,206 
  1,199 
Depreciation and amortization
  1,036 
  1,004 
  2,056 
  2,007 
Income taxes (1)
  37 
  24 
  315 
  98 
Board compensation and stock-based compensation
  75 
  75 
  150 
  170 
Loan forgiveness
  (1,001)
  - 
  (1,001)
  - 
Foreign exchange (gain)/loss
  (125)
  1,334 
  (943)
  1,191 
Other charges, net (2)
  97 
  306 
  233 
  680 
Non GAAP Adjusted EBITDA
 $2,870 
 $1,618 
 $5,524 
 $3,391 
Non GAAP Adjusted EBITDA, percent of revenue
  29.1%
  19.9%
  28.7%
  20.5%
 
    
    
    
    
Non-GAAP Basic earnings per share
    
    
    
    
Weighted average common shares outstanding
  11,435,291 
  11,414,150 
  11,424,605 
  11,336,690 
Non-GAAP Basic earnings per share
 $0.25 
 $0.14 
 $0.48 
 $0.30 
 
    
    
    
    
Non-GAAP Diluted earnings per share
    
    
    
    
Weighted average common shares outstanding
  12,056,918 
  11,414,150 
  12,072,079 
  11,336,690 
Non-GAAP Diluted earnings per share
 $0.24 
 $0.14 
 $0.46 
 $0.30 
 
(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.
 
 
   
 
200 E 5th Ave., Suite 100 Naperville, IL 60563
1-877-260-2010 info@trackgrp.com trackgrp.com
 

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