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August 2022

Track Group Reports 3rd Quarter Fiscal 2022 Financial Results

By News, Quarterly Reports

NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its third quarter ended June 30, 2022 (“Q3 FY22”). In Q3 FY22, the Company posted (i) total revenue of $9.0 million, compared to total revenue for the third quarter ended June 30, 2022 (“Q3 FY21”) of $10.3 million; (ii) operating loss of ($0.53 million) compared to Q3 FY21 operating income of $1.3M; and (iii) net loss attributable to common shareholders of ($3.6 million) in Q3 FY22 compared to net income of $1.2 million in Q3 FY21.

“Although a reinvestment in our technology and infrastructure, coupled with supply chain constraints brought on by the pandemic continued to put a damper on our financial results for the third quarter ended June 30, 2022, we anticipate the realization of several preempted strategies in the next sixty to one hundred twenty days which would enable us to increase the manufacturing of new devices, commence implementation of recently awarded programs and support customer growth and demands into FY23,” said Derek Cassell, Track Group’s CEO.

 

Financial Highlights

  • Total revenue of $9.0 million in Q3 FY22 was down compared to Q3 FY21 total revenue of $10.3 million. Revenue for the 9 months ended June 30, 2022 (“9M FY22”) of $28.1 million was also down approximately 5% compared to revenue of $29.6 million for the 9 months ended June 30, 2021 (“9M FY21”) as declines in North America monitoring revenue was offset by increases in both monitoring and product sales among international customers. Revenues are expected to rebound as fulfilled orders from strategic supply chain deliveries resume over the next two quarters.
  • Gross profit in Q3 FY22 was $4.0 million compared to Q3 FY21 gross profit of $5.6 million. Gross profit for the 9M FY22 was $13.3 million compared to gross profit of $16.3 million for 9M FY21, principally due to the decline in revenue, and an increase in certain expenses including higher depreciation and amortization, server, device repair and telecommunication expenses.
  • Adjusted EBITDA for the Q3 FY22 was $1.3 million, compared to $2.8 million for Q3 FY21. Adjusted EBITDA for 9M FY22 was $5.3 million compared to the Adjusted EBITDA for 9M FY21 of $8.3 million. As a percentage of revenue, adjusted EBITDA continues to remain strong at 18.8%, for the 9M FY22 compared to 28.2% for the 9M FY21.
  • As of June 30, 2022, the cash balance was down to $4.9 million compared to $8.4 million on September 30, 2021. The reduction in cash from September 30, 2021, reflects continued significant capital investments made by the Company of approximately $3.0 million in the 9M FY22 to build additional monitoring devices, update software, and develop next-generation tracking technology.
  • Total operating expense for Q3 FY22 of $4.5 million was up 4% versus Q3 FY21’s total operating expense of $4.3 million, principally due to an increase in travel, tradeshow, payroll and insurance expenses offset by a reduction in bad debt expense. When combined with the reduction in gross profit, the increase in quarterly operating expense led to an operating loss in Q3 FY22 of $0.5 million compared to operating income of $1.3 million for Q3 FY21. Similarly, for the 9M FY22, operating income was less than $0.1 million compared to operating income of $4.4 million for the 9M FY21 due to the reduction in gross profit and the increase in operating expense.
  • The Net loss attributable to common shareholders in Q3 FY22 was $3.6 million compared to Net income attributable to common shareholders of $1.2 million in Q3 FY21. Similarly, the Net loss attributable to common shareholders for the 9M FY22 was $3.5 million, compared to net income of $4.7 million for the 9M FY21, a change principally attributable to the reduction in Other Income to a loss position caused by the drop in operating income, a currency exchange loss and the swing from the forgiveness of the PPP loan one year ago to a legal settlement during the period.

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