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Track Group, Inc. (TRCK) SEC Filing 8-K Material Event for the period ending Thursday, December 16, 2021

Track Group, Inc.

CIK: 1045942 Ticker: TRCK

 

Exhibit 99.1

 

Track Group Reports Fiscal 2021 Financial Results

Total Revenue up 17%, Record Operating Income Improves 70.8%, Adjusted EBITDA Increases 25.7%, 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 fiscal year ended September 30, 2021 (“FY21”). In FY21, the Company posted (i) record total revenue of $39.7M, an increase of approximately 17% over total revenue of $33.9M for the year ended September 30, 2020 (“FY20”); (ii) FY21 operating income of $4.7M, representing an increase of 70.8% compared to FY20 operating income of $2.8M; (iii) adjusted EBITDA of $10.3M in FY21, up approximately 26% compared to $8.2M for FY20; and (iv) net income attributable to common shareholders of $3.4M in FY21 compared to a net loss of $0.1M in FY20.

 

“Our employees worked closely with both our customers and service partners to meet increased demand during extremely difficult circumstances in FY21. Our ability to adapt resulted in record financial results including revenue, operating income and net income for common shareholders.” said Derek Cassell, Track Group’s CEO.

 

FINANCIAL HIGHLIGHTS

 

 

Total FY21 record revenue of $39.7M was up 17% compared to FY20 revenue of $33.9M.

 

 

Gross profit of $21.1M in FY21 was up over 13% compared to FY20 gross profit of $18.6M due to the growth in revenue offset primarily by the increase in amortization expense associated with implementation of the new software platform.

 

 

Operating income in FY21 of $4.7M compared to operating income of $2.8M for FY20, representing an improvement of over 70% despite the global pandemic.

 

 

Adjusted EBITDA for FY21 of $10.3M, up nearly 26%, compared to $8.2M for FY20. Adjusted EBITDA in FY21 as a percentage of revenue also increased to 25.9%, compared to 24.2% for FY20.

 

 

Cash balance of $8.4M for FY21, up nearly 25% compared to $6.8M for FY20.

 

 

Net income attributable to shareholders in FY21 was $3.4M compared to a net loss of $0.1M in FY20, a change principally attributable to the Company’s strong operating performance.

 

Business Outlook

As of December 16, 2021, the Coronavirus pandemic has adversely impacted certain aspects of the Company’s operations including delays within the supply chain. The extent to which the Coronavirus pandemic, tight labor market and global semiconductor shortage impact our operations and financial results from this point forward will depend on numerous evolving factors that we cannot accurately predict. Despite these challenges to technology companies worldwide, Track Group remains confident that our adjustments to this new normal have not only evidenced success in FY21 but will afford us the ability to remain agile in FY22.

 

 

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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, 2021, 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.

 

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TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2021 AND 2020

 

   

September 30,

   

September 30,

 

Assets

 

2021

   

2020

 

Current assets:

               

Cash

  $ 8,421,162     $ 6,762,099  

Accounts receivable, net of allowance for doubtful accounts of $91,262 and $148,215, respectively

    7,163,615       5,546,213  

Prepaid expense and deposits

    998,589       866,389  

Inventory, net of reserves of $0 and $6,483, respectively

    305,210       124,606  

Total current assets

    16,888,576       13,299,307  

Property and equipment, net of accumulated depreciation of $2,615,967 and $2,531,631, respectively

    202,226       378,764  

Monitoring equipment, net of accumulated depreciation of $5,977,093 and $6,639,883, respectively

    3,068,100       2,065,947  

Intangible assets, net of accumulated amortization of $17,607,456 and $16,390,721, respectively

    20,434,143       21,171,045  

Goodwill

    8,519,998       8,220,380  

Deferred tax asset

    101,159       432,721  

Other assets

    4,309,040       2,166,743  

Total assets

  $ 53,523,242     $ 47,734,907  
                 

Liabilities and Stockholders Equity (Deficit)

               

Current liabilities:

               

Accounts payable

  $ 2,821,982     $ 2,199,215  

Accrued liabilities

    4,350,030       14,958,628  

Current portion of long-term debt

    526,134       30,914,625  

Total current liabilities

    7,698,146       48,072,468  

Long-term debt, net of current portion

    43,452,216       418,575  

Long-term liabilities

    3,650       164,487  

Total liabilities

    51,154,012       48,655,530  
                 

Commitments and contingencies

               
                 

Stockholders equity (deficit):

               

Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,524,978 and 11,414,150 shares outstanding, respectively

    1,152       1,141  

Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding

    -       -  

Paid in capital

    302,250,954       302,270,242  

Accumulated deficit

    (298,828,527

)

    (302,270,933

)

Accumulated other comprehensive loss

    (1,054,349 )     (921,073

)

Total equity (deficit)

    2,369,230       (920,623

)

Total liabilities and stockholders’ equity (deficit)

  $ 53,523,242     $ 47,734,907  

 

 

-3-

 

TRACK GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2021 AND 2020

 

   

2021

   

2020

 

Revenue:

               

Monitoring and other related services

  $ 39,179,699     $ 33,217,661  

Product sales and other

    481,626       657,506  

Total revenue

    39,661,325       33,875,167  
                 

Cost of revenue:

               

Monitoring, products and other related services

    16,151,644       13,306,108  

Depreciation and amortization

    2,402,367       1,923,356  

Total cost of revenue

    18,554,011       15,229,464  
                 

Gross profit

    21,107,314       18,645,703  
                 

Operating expense:

               

General & administrative

    10,232,116       10,381,859  

Selling & marketing

    2,716,283       2,257,667  

Research & development

    1,548,527       1,182,542  

Depreciation & amortization

    1,896,481       2,064,097  

Total operating expense

    16,393,407       15,886,165  
                 

Operating income

    4,713,907       2,759,538  
                 

Other income (expense):

               

Interest income

    21,573       39,592  

Interest expense

    (2,192,108

)

    (2,503,542

)

Currency exchange rate gain (loss)

    615,361       (316,330

)

Other income/expense, net

    1,000,782       695,298  

Total other income (expense)

    (554,392

)

    (2,084,982

)

Net income before income taxes

    4,159,515       674,556  

Income tax expense

    717,109       793,197  

Net income (loss) attributable to common stockholders

    3,442,406       (118,641

)

Foreign currency translation adjustments

    (133,276

)

    80,529  

Comprehensive income (loss)

  $ 3,309,130     $ (38,112

)

Net income (loss) per share basic

               

Net income (loss) per common share

  $ 0.30     $ (0.01

)

Weighted average common shares outstanding

    11,450,269       11,413,535  

Net income (loss) per common share

  $ 0.29     $ (0.01

)

Weighted average common shares outstanding

    12,036,577       11,413,535  

 

 

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Three Months Ended

September 30,

   

Twelve Months Ended

September 30,

 
   

2021

   

2020

   

2021

   

2020

 
                                 

Non-GAAP Adjusted EBITDA

                               

Net income (loss) attributable to common shareholders

  $ (1,264 )   $ 1,421     $ 3,442     $ (119 )

Interest expense, net

    497       642       2,171       2,464  

Depreciation and amortization

    1,288       992       4,299       3,987  

Income taxes (1)

    581       181       717       793  

Board compensation and stock-based compensation

    75       75       300       320  

Foreign exchange expense

    519       (340 )     (615 )     316  

Gain on settlement of note payable

    -       (700 )     (1,001 )     (700 )

Other charges, net (2)

    263       246       972       1,122  

Non GAAP Adjusted EBITDA

  $ 1,959     $ 2,517     $ 10,285     $ 8,183  

Non GAAP Adjusted EBITDA, percent of revenue

    19.4 %     28.5 %     25.9 %     24.2 %
                                 

Non-GAAP earnings per share - Basic

                               

Weighted average common shares outstanding

    11,490,804       11,414,150       11,450,269       11,413,535  

Non-GAAP earnings per share

  $ 0.17     $ 0.22     $ 0.90     $ 0.72  
                                 

Non-GAAP earnings per share - Diluted

                               

Weighted average common shares outstanding

    11,991,766       11,414,150       12,036,577       11,413,535  

Non-GAAP earnings per share

  $ 0.16     $ 0.22     $ 0.85     $ 0.72  

 

 

(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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Ticker: TRCK
CIK: 1045942
Form Type: 8-K Corporate News
Accession Number: 0001851734-21-000152
Submitted to the SEC: Wed Dec 15 2021 9:44:31 PM EST
Accepted by the SEC: Thu Dec 16 2021
Period: Thursday, December 16, 2021
Industry: Communications Equipment
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Other Events

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