Track Group Reports Fiscal 2017 Financial Results
Mittwoch, 20.12.2017 14:05 von PR Newswire
PR Newswire
NAPERVILLE, Ill., Dec. 20, 2017
NAPERVILLE, Ill., Dec. 20, 2017 /PRNewswire/ -- 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, 2017. The Company posted revenue of $29.7M, an increase of 9.3% over last year, adjusted EBITDA of $3.6M up 82.1% compared to FY2016 and Net Cash provided by Operating Activities of $4.1M an increase of 357%. The Company's reorganization and consolidation initiatives had a predictable impact on these results.
"We're happy to report a very strong finish to a great fiscal 2017, with year-over-year growth in key financial categories including our best quarter ever for Adjusted EBITDA," said Guy Dubois, Track Group's Chairman and CEO. "With our fantastic new line-up of smartphone-based monitoring applications including BACtrack for criminal justice, we're looking forward to a great 2018, and with the launch of our new device-agnostic operating platform getting underway right now, we couldn't be more excited as we begin to deliver our vision for the future."
FINANCIAL HIGHLIGHTS
- Total revenue in FY2017 up 9.3% over last year ($29.7M vs. $27.2M)
- Total operating expenses for the year ended 30 Sept 2017 are flat ($20.5M) vs. last year ($20.4M) despite the fact that the Company incurred restructuring costs, an impairment of intangible assets, and a loss on the sale of assets which, in aggregate, totaled approximately $1.8M for the year just ended
- Adjusted EBITDA in FY2017 finished at $3.6M up 82.1% compared to $2.0M for FY2016
- Adjusted EBITDA for the quarters of fiscal 2017 improved sequentially each quarter
- Q1 or 31 Dec 2016 Adj EBITDA = $0.41M
- Q2 or 31 March 2017 Adj EBITDA = $0.64M
- Q3 or 30 June 2017 Adj EBITDA = $1.24M
- Q4 or 30 Sept 2017 Adj EBITDA = $1.35M
- Net Cash Provided by Operating Activities
- For year ended 30 Sept 2017 = $4.1M
- For year ended 30 Sept 2016 = $0.9M
- Up 357% or nearly five-fold
- Net loss attributable to shareholders in FY2017 improved to ($4.7M) up 44% compared to ($8.5M) for FY2016
BUSINESS HIGHLIGHTS
- The Company completed a major operational restructuring in 2017, which included the consolidation of key operational functions into its new Chicagoland Headquarters
- Launch of the Company's next generation operating platform is underway
- Major smartphone application development initiatives were completed in 2017 and launches are currently underway including remote alcohol monitoring and domestic violence solutions
- Key customer accounts are stable and growing
BUSINESS OUTLOOK
|
Actual |
Outlook | ||
|
FY 2016 |
FY 2017 |
FY 2018 | |
|
Revenue: |
$27.2M |
$29.7M |
$35-40M |
|
Adjusted EBITDA Margin: |
7.3% |
12.2% |
15-20% |
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
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2017 AND 2016
|
Assets |
2017 |
2016 |
||||||
|
Current assets: |
||||||||
|
Cash |
$ |
2,027,321 |
$ |
1,769,921 |
||||
|
Accounts receivable, net of allowance for doubtful accounts of $3,268,095 and $2,335,508, respectively |
5,438,564 |
6,894,095 |
||||||
|
Note receivable, current portion |
234,733 |
334,733 |
||||||
|
Prepaid expenses and other |
854,122 |
816,708 |
||||||
|
Inventory, net of reserves of $26,934 and $98,150, respectively |
261,810 |
521,851 |
||||||
|
Total current assets |
8,816,550 |
10,337,308 |
||||||
|
Property and equipment, net of accumulated depreciation of $1,778,634 and $1,421,389, respectively |
903,100 |
1,226,461 |
||||||
|
Monitoring equipment, net of accumulated amortization of $4,906,925 and $3,438,074, respectively |
3,493,012 |
4,358,117 |
||||||
|
Intangible assets, net of accumulated amortization of $9,839,032 and $8,233,659, respectively |
24,718,655 |
25,540,650 |
||||||
|
Goodwill |
8,226,714 |
7,955,876 |
||||||
|
Other assets |
2,989,101 |
2,900,911 |
||||||
|
Total assets |
$ |
49,147,132 |
$ |
52,319,323 |
||||
|
Liabilities and Stockholders' Equity |
||||||||
|
Current liabilities: |
||||||||
|
Accounts payable |
2,769,835 |
2,771,101 |
||||||
|
Accrued liabilities |
6,650,291 |
3,976,192 |
||||||
|
Current portion of long-term debt, net of discount of $185,811 and $222,973, respectively |
30,270,531 |
3,245,732 |
||||||
|
Total current liabilities |
39,690,657 |
9,993,025 |
||||||
|
Stock payable - related party |
- |
3,289,879 |
||||||
|
Long-term debt, net of current portion and discount of $0 and $185,811, respectively |
3,480,717 |
30,345,803 |
||||||
|
Total liabilities |
43,171,374 |
43,628,707 |
||||||
|
Stockholders' equity: |
||||||||
|
Common stock, $0.0001 par value: 30,000,000 shares authorized; 10,480,984 and 10,333,516 shares outstanding, respectively |
1,048 |
1,034 |
||||||
|
Additional paid-in capital |
300,717,861 |
298,876,399 |
||||||
|
Accumulated deficit |
(294,067,329) |
(289,341,503) |
||||||
|
Accumulated other comprehensive loss |
(675,822) |
(845,314) |
||||||
|
Total equity |
5,975,758 |
8,690,616 |
||||||
|
Total liabilities and stockholders' equity |
$ |
49,147,132 |
$ |
52,319,323 |
||||
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
|
2017 |
2016 |
|||||||
|
Revenues: |
||||||||
|
Monitoring services |
$ |
28,887,460 |
$ |
26,343,783 |
||||
|
Other |
839,558 |
850,024 |
||||||
|
Total revenues |
29,727,018 |
27,193,807 |
||||||
|
Cost of revenues: |
||||||||
|
Monitoring, products and other related services |
11,997,031 |
10,327,486 |
||||||
|
Depreciation and amortization included in cost of revenues |
2,128,668 |
2,009,437 |
||||||
|
Impairment of monitoring equipment and parts |
- |
80,000 |
||||||
|
Total cost of revenue |
14,125,699 |
12,416,923 |
||||||
|
Gross profit |
15,601,319 |
14,776,884 |
||||||
|
Operating expenses: |
||||||||
|
General & administrative |
12,216,041 |
13,038,760 |
||||||
|
Loss on sale of assets |
763,531 |
- |
||||||
|
Restructuring costs |
558,833 |
- |
||||||
|
Impairment of intangible assets |
506,413 |
- |
||||||
|
Selling & marketing |
2,311,725 |
2,270,733 |
||||||
|
Research & development |
1,784,867 |
2,415,924 |
||||||
|
Depreciation & amortization |
2,332,217 |
2,709,918 |
||||||
|
Total operating expense |
20,473,627 |
20,435,335 |
||||||
|
Loss from operations |
(4,872,308) |
(5,658,451) |
||||||
|
Other income (expense): |
||||||||
|
Interest income |
20,086 |
114,235 |
||||||
|
Interest expense |
(2,820,924) |
(2,829,003) |
||||||
|
Currency exchange rate gain (loss) |
223,475 |
(151,258) |
||||||
|
Gain on settlement of milestone payments |
3,213,940 |
- |
||||||
|
Other income/expense, net |
11,556 |
28,856 |
||||||
|
Total other income (expense) |
648,133 |
(2,837,170) |
||||||
|
Net loss before income taxes |
(4,224,175) |
(8,495,621) |
||||||
|
Income tax expense |
501,651 |
- |
||||||
|
Net loss attributable to common shareholders |
(4,725,826) |
(8,495,621) |
||||||
|
Foreign currency translation adjustments |
169,492 |
1,532,751 |
||||||
|
Comprehensive loss |
$ |
(4,556,334) |
$ |
(6,962,870) |
||||
|
Net loss per common share, basic and diluted |
$ |
(0.45) |
$ |
(0.83) |
||||
|
Weighted average common shares outstanding, basic and diluted |
10,408,870 |
10,285,947 |
||||||
TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
|
2017 |
2016 |
|||||||
|
Cash flows from operating activities: |
||||||||
|
Net loss |
$ |
(4,725,826) |
$ |
(8,495,621) |
||||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
|
Depreciation and amortization |
4,460,885 |
4,719,355 |
||||||
|
Impairment of monitoring equipment and parts |
- |
80,000 |
||||||
|
Impairment of intangible assets |
506,413 |
- |
||||||
|
Bad debt expense |
1,048,737 |
1,996,348 |
||||||
|
Accretion of debt discount |
222,973 |
222,973 |
||||||
|
Stock based compensation |
1,140,520 |
1,353,295 |
||||||
|
Loss on disposal of property and equipment |
763,531 |
39,290 |
||||||
|
Gain on settlement of milestone payments |
(3,213,940) |
- |
||||||
|
Loss on monitoring equipment included on cost of sales |
569,371 |
90,838 |
||||||
|
Change in assets and liabilities: |
||||||||
|
Accounts receivable, net |
583,694 |
(2,718,115) |
||||||
|
Notes receivable |
- |
(28,299) |
||||||
|
Inventories |
260,041 |
258,519 |
||||||
|
Prepaid expenses and other |
(433,978) |
190,951 |
||||||
|
Accounts payable, accrued expenses and other |
2,965,365 |
3,198,029 |
||||||
|
Net cash provided by operating activities |
4,147,786 |
907,563 |
||||||
|
Cash flow from investing activities: |
||||||||
|
Purchase of property and equipment |
(84,749) |
(105,121) |
||||||
|
Capitalized software |
(2,416,804) |
(2,090,962) |
||||||
|
Purchase of monitoring equipment and parts |
(1,838,779) |
(2,861,100) |
||||||
|
Proceeds from sale of assets |
512,500 |
- |
||||||
|
Net cash used in investing activities |
(3,827,832) |
(5,057,183) |
||||||
|
Cash flow from financing activities: |
||||||||
|
Proceeds from notes payable |
- |
2,000,000 |
||||||
|
Principal payments on notes payable |
(67,775) |
(1,021,832) |
||||||
|
Net cash provided by (used in) financing activities |
(67,775) |
978,168 |
||||||
|
Effect of exchange rate changes on cash |
5,221 |
38,328 |
||||||
|
Net increase (decrease) in cash |
257,400 |
(3,133,124) |
||||||
|
Cash, beginning of year |
1,769,921 |
4,903,045 |
||||||
|
Cash, end of year |
$ |
2,027,321 |
$ |
1,769,921 |
||||
TRACK GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2017 AND 2016
|
Three Months ended September 30
|
Twelve Months ended September 30, | |||||
|
2017 |
2016 |
2017 |
2016 | |||
|
Non-GAAP Adjusted EBITDA (In $000s, except share data) |
||||||
|
Net loss attributable to common shareholders |
(1,273) |
(2,664) |
(4,726) |
(8,496) | ||
|
Interest expense, net |
684 |
705 |
2,801 |
2,715 | ||
|
Income taxes (1) |
- |
(28) |
502 |
- | ||
|
Depreciation, amortization and impairment |
1,244 |
998 |
4,967 |
4,799 | ||
|
Stock based compensation |
236 |
69 |
1,141 |
1,353 | ||
|
Restructuring charges (2) |
(10) |
- |
559 |
- | ||
|
Gain on contingent share liability |
- |
- |
(3,214) |
- | ||
|
Loss on sale of assets |
- |
- |
764 |
- | ||
|
Other charges, net (3) |
471 |
986 |
842 |
1,626 | ||
|
Non GAAP Adjusted EBITDA |
1,352 |
66 |
3,636 |
1,997 | ||
|
Non GAAP Adjusted EBITDA, percent of revenue |
18.1% |
0.9% |
12.2% |
7.3% | ||
|
Three Months ended September 30, |
Twelve Months ended September 30, | |||||
|
2017 |
2016 |
2017 |
2016 | |||
|
Non-GAAP EPS (In $000's, except share data) |
||||||
|
Net loss attributable to common shareholders |
(1,273) |
(2,664) |
(4,726) |
(8,496) | ||
|
Interest expense, net |
684 |
705 |
2,801 |
2,715 | ||
|
Income taxes (1) |
- |
(28) |
502 |
- | ||
|
Depreciation, amortization and impairment |
1,244 |
998 |
4,967 |
4,799 | ||
|
Stock based compensation |
236 |
69 |
1,141 |
1,353 | ||
|
Restructuring charges (2) |
(10) |
- |
559 |
- | ||
|
Gain on contingent share liability |
- |
- |
(3,214) |
- | ||
|
Loss on sale of assets |
- |
- |
764 |
- | ||
|
Other charges, net (3) |
471 |
986 |
842 |
1,626 | ||
|
Non GAAP net income to common shareholders |
1,352 |
66 |
3,636 |
1,997 | ||
|
Weighed average common shares outstanding |
10,480,984 |
10,333,516 |
10,408,870 |
10,285,947 | ||
|
Non-GAAP earnings per share |
$0.13 |
$0.01 |
$0.35 |
$0.19 | ||
|
(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, non-recurring accrual adjustments, legal settlements and reserves associated with contracts in Mexico. |
SOURCE Track Group, Inc.