Categories: Wire Stories

Track Group Reports 3rd Quarter Fiscal 2024 Financial Results

NAPERVILLE, Ill., Aug. 09, 2024 (GLOBE NEWSWIRE) — Track Group, Inc. (OTCQB: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal quarter ended June 30, 2024 (“Q3 FY24”). In Q3 FY24, the Company posted (i) total revenue of $9.2 Million (“M”), an increase of approximately 6% over total revenue of $8.7M for the quarter ended June 30, 2023 (“Q3 FY23”); (ii) Q3 FY24 gross profit of $4.3M representing an increase of approximately 17% over Q3 FY23 of $3.7M; (iii) Q3 FY24 operating loss of ($0.5M) compared to Q3 FY23 operating loss of ($0.3M); (iv) Q3 FY24 Adjusted EBITDA of $1.6M, representing a 44% increase, and; (v) net loss attributable to common shareholders of ($0.9M) in Q3 FY24 compared to ($0.7M) in Q3 FY23.

FINANCIAL HIGHLIGHTS

  • Total Q3 FY24 revenue of $9.2M was up 6% compared to Q3 FY23 revenue of $8.7M. Revenue for the nine months ended June 30, 2024 (“9M FY24”) of $27.1M was up approximately 5% compared to revenue of $25.9M for the nine months ended June 30, 2023 (“9M FY23”). This positive performance can be attributed to increased activity among customers in Illinois, Puerto Rico, and Brazil, partially offset by decreases in revenue from customers in Indiana, Virginia and Chile.
  • Gross Profit of $4.3M rose by 17% ($0.6M) in Q3 FY24 compared to Q3 FY23. Gross profit for 9M FY24 was $12.4M compared to gross profit of $11.6M for 9M FY23. This improvement stems from factors like increased revenue, reduced communication costs and lower lost, stolen or damaged costs. However, it was partly offset by higher server costs.
  • Operating loss in Q3 FY24 of ($0.5M) rose compared to ($0.3M) in Q3 FY23. Operating loss for 9M FY24 of ($1.7M) was up approximately 30% compared to ($1.3M) for 9M FY23. This rise in operating loss is primarily due to higher operating expenses. Operating expenses were up $1.2M in 9M FY24 compared to 9M FY23, primarily due to a non-recurring settlement related to a contract dispute of approximately $1.0M.
  • Adjusted EBITDA for Q3 FY24 was $1.6M, up 44% compared to $1.1M for Q3 FY23. Adjusted EBITDA for 9M FY24 was $3.4M, up 21% compared to Adjusted EBITDA for 9M FY23 of $2.8M primarily due to negative currency exchange rate movements of $0.6M in Q3 FY24 compared to Q3 FY23. Adjusted EBITDA in 9M FY24 as a percentage of revenue increased to 13%, compared to 11% in 9M FY23.
  • Cash balance of $1.9M for Q3 FY24 declined 53% compared to $4.1M at September 30, 2023. The decrease in cash position was due to a decrease in net cash provided by operating activities of approximately $1.4M.
  • Net loss attributable to shareholders in Q3 FY24 was ($0.9M) compared to ($0.7M) in Q3 FY23, an increase of $0.2M. Net loss attributable to shareholders in 9M FY24 was ($2.8M), compared to ($2.1M) for 9M FY23, a change principally attributable to negative currency exchange rate movements and a non-recurring settlement related to a contract dispute of approximately $1.0M.

“In the quarter ending June 30, 2024, we demonstrated continued growth in revenue and gross profit, surpassing Q3 FY23. Notably, revenues grew by 6% ($9.2M vs. $8.7M in Q3 FY23), while gross profit experienced a 17% increase ($4.3M vs $3.7M in Q3 FY23). Adjusted EBITDA increased to $1.6M in Q3 FY24 compared to $1.1M in Q3 FY23. We are optimistic about maintaining and building upon these positive trends throughout the year, expecting continued improvements compared to the same quarter last year. This momentum reflects our dedication to growth and sets a promising tone for the ongoing fiscal year.” said Derek Cassell, Track Group’s CEO. 

Business Outlook

Despite previous challenges from supply chain delays, the impact of the Coronavirus, and the phase-out of our 3G-based cellular devices in the U.S., Track Group stands resilient. The demonstrated financial growth continued in Q3 FY24 which reinforces our confidence in the strategic reinvestment in technology and the implementation of new programs initiated in late FY23. These endeavors position us well for a sustained return to growth throughout FY24. Our outlook for FY24 is as follows: 

    Actual     Outlook
    FY 2022     FY 2023     FY 2024
Revenue (in millions):   $ 37.0     $ 34.5     $ 37-38  
                       
Adjusted EBITDA Margin:     18.0 %     11.1 %     11-15 %
                             

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 OTCQB 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, 2023, 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
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    (Unaudited)          
    June 30,     September 30,  
    2024     2023  
Assets                
Current assets:                
Cash   $ 1,924,394     $ 4,057,195  
Accounts receivable, net of allowance for credit losses of $494,409 and $178,095, respectively     4,682,297       4,536,916  
Prepaid expense and deposits     822,764       610,440  
Inventory, net of reserves of $0 and $3,772, respectively     599,899       1,286,194  
Other current assets     1,393,008        
Total current assets     9,422,362       10,490,745  
Property and equipment, net of accumulated depreciation of $1,759,697 and $1,920,850, respectively     65,033       115,808  
Monitoring equipment, net of accumulated depreciation of $7,541,385 and $6,348,695, respectively     5,030,046       5,187,092  
Intangible assets, net of accumulated amortization of $19,137,820 and $17,430,846, respectively     14,181,072       14,157,294  
Goodwill     7,876,014       7,851,466  
Other assets, net     832,087       2,442,154  
Total assets   $ 37,406,614     $ 40,244,559  
                 
Liabilities and Stockholders Equity (Deficit)                
Current liabilities:                
Accounts payable   $ 3,287,784     $ 2,796,712  
Accrued liabilities     2,301,967       2,571,839  
Current portion of long-term debt     87,457       308,417  
Total current liabilities     5,677,208       5,676,968  
Long-term debt, net of current portion     42,781,510       42,801,165  
Long-term liabilities     208,446       259,359  
Total liabilities     48,667,164       48,737,492  
                 
Commitments and contingencies                
                 
Stockholders equity (deficit):                
Common stock, $0.0001 par value: 30,000,000 shares authorized; 11,863,758 and 11,863,758 shares outstanding, respectively     1,186       1,186  
Preferred stock, $0.0001 par value: 20,000,000 shares authorized; 0 shares outstanding            
Series A Convertible Preferred stock, $0.0001 par value: 1,200,000 shares authorized; 0 shares outstanding            
Paid in capital     302,600,546       302,597,115  
Accumulated deficit     (312,383,090 )     (309,610,397 )
Accumulated other comprehensive loss     (1,479,192 )     (1,480,837 )
Total equity (deficit)     (11,260,550 )     (8,492,933 )
Total liabilities and stockholders’ equity (deficit)   $ 37,406,614     $ 40,244,559  

TRACK GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(Unaudited)
 
    Three Months Ended     Nine Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2024     2023     2024     2023  
Revenue:                                
Monitoring and other related services   $ 9,064,447     $ 8,539,023     $ 26,497,582     $ 25,007,830  
Product sales and other     120,583       158,555       645,640       853,485  
Total revenue     9,185,030       8,697,578       27,143,222       25,861,315  
                                 
Cost of revenue:                                
Monitoring, products and other related services     4,182,692       4,211,807       12,387,179       11,835,327  
Depreciation & amortization included in cost of revenue     732,749       821,915       2,316,100       2,438,649  
Total cost of revenue     4,915,441       5,033,722       14,703,279       14,273,976  
                                 
Gross profit     4,269,589       3,663,856       12,439,943       11,587,339  
                                 
Operating expense:                                
General & administrative     3,091,210       2,228,545       9,022,963       7,852,864  
Selling & marketing     761,890       717,246       2,278,861       2,215,588  
Research & development     700,168       750,124       2,083,813       2,046,701  
Depreciation & amortization     234,813       247,083       711,097       742,366  
Total operating expense     4,788,081       3,942,998       14,096,734       12,857,519  
                                 
Operating income (loss)     (518,492 )     (279,142 )     (1,656,791 )     (1,270,180 )
                                 
Other income (expense):                                
Interest expense, net     (439,515 )     (430,824 )     (1,306,307 )     (1,251,349 )
Currency exchange rate gain (loss)     (179,041 )     418,011       (160,028 )     972,953  
Other income (expense), net                 (3,443 )      
Total other income (expense)     (618,556 )     (12,813 )     (1,469,778 )     (278,396 )
Income (loss) before income tax     (1,137,048 )     (291,955 )     (3,126,569 )     (1,548,576 )
Income tax expense (benefit)     (266,969 )     405,229       (353,876 )     597,482  
Net income (loss) attributable to common shareholders     (870,079 )     (697,184 )     (2,772,693 )     (2,146,058 )
Foreign currency translation adjustments     145,101       (402,454 )     1,645       (156,622 )
Comprehensive income (loss)   $ (724,978 )   $ (1,099,638 )   $ (2,771,048 )   $ (2,302,680 )
                                 
Net income (loss) per share basic                                
Net income (loss) per share   $ (0.07 )   $ (0.06 )   $ (0.23 )   $ (0.18 )
Weighted average shares outstanding     11,863,758       11,863,758       11,863,758       11,863,758  
Net income per share diluted                                
Net income (loss)per share   $ (0.07 )   $ (0.06 )   $ (0.23 )   $ (0.18 )
Weighted average shares outstanding     11,863,758       11,863,758       11,863,758       11,863,758  

TRACK GROUP, INC. AND SUBSIDIARIES
NON-GAAP ADJUSTED EBITDA JUNE 30 (Unaudited)
(amounts in thousands, except share and per share data)
 
    Three Months Ended
June 30,
    Nine Months Ended
June,
 
    2024     2023     2024     2023  
Non-GAAP Adjusted EBITDA                                
Net Income (loss) attributable to common shareholders   $ (870 )   $ (697 )   $ (2,773 )   $ (2,146 )
Interest expense, net     440       431       1,310       1,251  
Depreciation and amortization     968       1,069       3,027       3,181  
Income taxes (1)     (267 )     405       (354 )     598  
Board compensation     75       76       178       314  
Foreign exchange (gain)/loss     179       (418 )     160       (973 )
Other charges, net (2)     1,051       229       1,877       598  
Non-GAAP Adjusted EBITDA   $ 1,576     $ 1,095     $ 3,425     $ 2,823  
Non-GAAP Adjusted EBITDA, percent of revenue     17.1 %     12.6 %     12.6 %     10.9 %
Weighted average common shares outstanding – basic     11,863,758       11,863,758       11,863,758       11,863,758  
Non-GAAP earnings per share   $ 0.13     $ 0.09     $ 0.29     $ 0.24  
Weighted average common shares outstanding – diluted     11,863,758       11,863,758       11,863,758       11,863,758  
Non-GAAP earnings per share   $ 0.13     $ 0.09     $ 0.29     $ 0.24  

(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 include a non-recurring expense related to a settled contract dispute of approximately $0.5M for Q3 FY24 and approximately $1.0M for 9M FY24 and may include gains or losses and other non-recurring expenses and accrual adjustments.
     

Contact:
James Berg
Chief Financial Officer
jim.berg@trackgrp.com

Alex

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