NAPERVILLE, ILLINOIS – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its fiscal quarter ended March 31, 2023 (“Q2 FY23”). In Q2 FY23, the Company posted (i) total revenue of $8.3 Million (“M”), a decrease of approximately 12% over total revenue of $9.5M for the quarter ended March 31, 2022 (“Q2 FY22”); (ii)Q2 FY23 operating loss of ($0.9M) compared to Q2 FY22 operating income of $0.0M; and (iii) net loss attributable to commonshareholders of ($1.5M) in Q2 FY23 compared to a net income attributable to common shareholders of $0.5M in Q2 FY22. “While we celebrated a number of new contracts in Q2, the quarter ended March 31, 2023, was challenging as some of our larger programs, which increased use during the pandemic, have returned to pre-covid utilization rates. In addition to being re-awarded two (2)key long-term incumbent accounts, we were awarded eight (8) new contracts in Q2, among them a new statewide program estimatedat $1.6M in annual revenue. We anticipate that the Company will grow both revenue and operating income for the remainder of FY23and are seeing such growth so far in the month of April 2023. Lastly, the Company worked closely with its largest debtholder torenegotiate the terms of an amended facility agreement on April 26, 2023, extending the maturation date to July 2027, amidst a difficultbanking environment,” said Derek Cassell, Track Group’s CEO.
Financial Highlights
- Total Q2 FY23 revenue of $8.3M was down 12% compared to Q2 FY22 revenue of $9.5M. Revenue for the six months ended March 31, 2023 (“6M FY23”) of $17.2M was also down approximately 10% compared to revenue of $19.1M for the six months ended March 31, 2022 (“6M FY22”). The drop in revenue was caused by less activity at customers in Illinois, California, Bahamas, Canada and decreases in revenue for customers in Saudi Arabia, partially offset by increases in monitoring revenue for customers in Nevada and Panama.
- Gross profit of $3.7M in Q2 FY23 was down approximately 18% compared to Q2 FY22 gross profit of $4.5M. Gross profit for the 6M FY23 was $7.9M compared to gross profit of $9.3M for 6M FY22, due to a decline in revenue of approximately $1.9M and higher device repair and server costs partially offset by lower depreciation and amortization expense and reduced monitoring center costs.
- An operating loss in Q2 FY23 of ($0.9M) compared to operating income of $0.0M in Q2 FY22. An operating loss for the 6M FY23 of ($1.0M) compared to operating income of $0.6M in 6M FY22. The decline of approximately $1.6M in operating income for 6M FY23 is attributable to the decline in gross profit and an increase of approximately 2% in operating expenses.
- Adjusted EBITDA for Q2 FY23 was $0.5M, compared to $1.7M for Q2 FY22. Adjusted EBITDA for 6M FY23 was $1.7M compared to the Adjusted EBITDA for 6M FY22 of $3.9M, a decrease of $2.2M due to the drop in revenue, gross profit and the increase in certain operating expenses. Adjusted EBITDA in for 6M FY23 as a percentage of revenue declined to 10.1%, compared to 20.6% for 6M FY22 for the same reasons.
- Cash balance was $4.0M for Q2 FY23, compared to $5.3M at September 30, 2022. The decrease in cash was due to an increase in net cash provided by operating activities of approximately $2.1M offset by purchases of monitoring equipment and the repayment of debts.
- Net loss attributable to common shareholders in Q2 FY23 was ($1.5M) compared to net income attributable to shareholders of $0.5M in Q2 FY22. Net loss attributable to common shareholders for the 6M FY23 was ($1.4M), compared to net income of $0.1M for the 6M FY22 a change principally attributable to a decline in operating income, offset by higher currency exchange gains, lower net interest expense and a reduction in tax expense.
