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Track Group Reports 2nd Quarter Fiscal 2018 Financial Results

By News, Quarterly Reports

NAPERVILLE, ILLINOIS, May 11, 2018 – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its second quarter ended March 31, 2018 (the “Second Quarter”). The Company posted gross profit of $4.0M, on total revenue of $7.3M, for a gross margin of 55%. In addition, the Second Quarter adjusted EBITDA came in at $1.3M, up 96% compared to the Second Quarter of FY2017 and total Operating Expenses were $4.7M, down 6%, both of which contributed to the second lowest operating loss ($0.7M) in over three years.

“We’re delighted to follow our fiscal year 2018 record First Quarter results with another strong Quarter” said Derek Cassell, Track Group’s CEO. “We have begun implementing a number of new customer opportunities from our pipeline and expect to see the results of our hard work in our upcoming Third and Fourth Quarters.”

Business and Financial Highlights

  • Revenue for the Second Quarter ($7.3M) is up nominally compared to the same period last year.
  • Gross Profit for the Second Quarter remained flat as compared to last year ($4.0M vs. $4.1M) which led to Gross Profit in the first half of FY2018 being up 12% compared to the prior year ($8.5M vs $7.6M).
  • Total operating expenses for the Second Quarter ($4.7M) are down 6% vs. last year ($5.1M) and has led to a 9% reduction in the first half of FY2018 Operating Expenses compared to the prior year ($9.5M vs $10.5M).
  • The quarterly operating loss of ($0.7M) is the second lowest loss in over three years and allowed the company to improve the first half FY2018 operating loss of ($1.0M) by 64% compared to the same period last year ($2.9M), due to a combination of a strong Gross Profit results and lower Operating Expenses.
  • Adjusted EBITDA in the Second Quarter finished up 96% ($1.3M) compared to last year ($0.6M) and represented the third highest Adjusted EBITDA in over 3 years. The Adjusted EBITDA for the first half of FY2018 is up 170% ($2.8M) compared to the first half of FY2017 ($1.0M).
  • Net loss, attributable to shareholders, for the Second Quarter was ($1.7M) compared to a loss of ($1.6M) for the same quarter last year due to foreign exchange movement.
  • Net Cash Provided by Operating Activities remained strong in the first half of FY2018 ($1.8M) compared to the first half of FY2017 ($2.0M) and ($0.8M) two years ago.
  • Discussions are ongoing regarding the proposed extension of the maturity of the Amended and Restated Unsecured Facility Agreement dated June 30, 2015 between the Company and Conrent Invest S.A.

FULL ARTICLE >

Track Group Reports 1st Quarter Fiscal 2018 Financial Results

By News, Quarterly Reports

NAPERVILLE, ILLINOIS, February 8, 2018 – Track Group, Inc. (OTCQX: TRCK), a global leader in offender tracking and monitoring services, today announced financial results for its first quarter ended December 31, 2017 (the “First Quarter”). The Company posted gross profit of $4.5M, an increase of 26% over last year on total revenue of $7.5M, a quarterly record Adjusted EBITDA of $1.6M up 286% compared to FY2016 and total operating expenses of $4.8M, a decrease of 11% which reduced the First Quarter operating loss to its lowest level in over three years to ($0.3M).

“We’re delighted to start our fiscal year 2018 off strongly with another quarterly record for Adjusted EBITDA and the fifth consecutive quarter of growth in Adjusted EBITDA,” said Derek Cassell, Track Group’s CEO. “We are looking forward to capitalizing on a number of new customer opportunities in our pipeline so we can continue the top-line growth we have generated over the last three years.”

Business and Financial Highlights

  • The Company announced signing two large contracts totaling in excess of $30M with Marion County Community Corrections and Gendarmeria de Chile, the Republic of Chile’s prison service, shortly after the conclusion of the First Quarter;
  • Gross profit for the First Quarter $4.5M which is the best gross profit in the past five quarters and up 26% over last year ($4.5M vs. $3.5M) on quarterly revenue that was nominally down from the same period last year;
  • Total operating expenses for First Quarter ($4.8M) are down 11% vs. last year ($5.4M) and the 2nd lowest quarterly operating expenses in the last two fiscal years;
  • The lowest quarterly operating loss ($0.3M) in over three years and a 82% improvement over the quarterly operating loss of ($1.9M) in the same period last year due to a combination of a strong gross profit result and lower operating expenses;
  • Adjusted EBITDA in the First Quarter finished at a quarterly record of $1.6M up 286% compared to $0.4M last year and represented the fifth consecutive quarter that Adjusted EBITDA has increased;
  • Net loss attributable to shareholders in the First Quarter ended December 31, 2017 improved to ($1.0M) or 60% compared to ($2.6M) for the same quarter last year;
  • Net cash provided by operating activities remained positive at $0.3M in the First Quarter compared to $2.1M for last year principally due to the timing of working capital expenditures; and
  • The new CEO, Derek Cassell, appointed January 1, 2018, has realigned the management team to execute the Company’s strategy including the appointment of an industry veteran, Matt Swando, as the new Vice President of Sales and Marketing.

FULL ARTICLE >

Gendarmeria de Chile Signs New Electronic Monitoring Contract with Track Group

By News

NAPERVILLE, IL – Track Group, Inc. (OTCQX: TRCK), a global leader in providing criminal justice agencies with offender tracking and monitoring services, today announced that Gendarmeria de Chile, the Republic of Chile’s uniformed prison service, signed a new agreement with the Company to provide electronic monitoring products and services commencing on October 18, 2017 for a period of 365 days totaling up to approximately $10.6 million.

The previous multi-year agreement signed between Gendarmeria de Chile and the Company’s Chilean subsidiary in 2013, ended in October of 2017 although services have continued uninterrupted.

“The commitment we made to Gendarmeria de Chile and Ministerio de Justica in 2013 remains the same today,” said Derek Cassell, Track Group’s CEO. “Which is to provide the best and most effective technology combined with extraordinary service with the ultimate goal of helping to alleviate prison overcrowding, while ensuring compliance among domestic violence, pre-trial and early release offenders.”

Services provided by Track Group as part of the contract include the provision of monitoring software, supply, installation, replacement and withdrawal of surveillance devices, training for Gendarmería de Chile’s personnel, and maintenance of the Surveillance Center and the Regional Surveillance Support Center.

“I’m very proud to say that together with Gendarmeria de Chile and Ministerio de Justica, we built what has become known as one of the most successful offender monitoring programs in the world,” said Francisco Javier Toro Lyng, General Manager of Track Group’s Chilean Office. “We are thrilled this relationship will now have an opportunity to continue.”

For more information about this contract award or any monitoring products and services offered by Track Group, contact Matt Swando at 877-260-2010.

About Track Group (trackgrp.com)
Track Group designs, manufactures, and markets location tracking devices and develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications for the criminal justice market. 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.

Media Contact:
Matt Swando, Track Group
877-260-2010
matthew.swando@trackgrp.com

Track Group Awarded Marion County Community Corrections Monitoring Contract

By News

NAPERVILLE, IL – Track Group, Inc. (OTCQX: TRCK), a global leader in providing community corrections agencies with offender tracking and monitoring services, today announced that Marion County’s Advisory Board has approved and signed a multi-year contract for the Company to continue providing the Agency with products and services for offenders valued at approximately $20 Million across the full range of sentences under the Agency’s oversight.

“This is a major accomplishment for Track Group and especially our dedicated team in Indianapolis, Indiana that underscores the great work we’ve done together with this important customer,” said Derek Cassell, Track Group’s CEO. “We are very proud of our thriving relationship with Marion County and the State of Indiana that’s entering its tenth year in 2018.”

Track Group has worked with Marion County Community Corrections since 2008. The electronic monitoring program is one of several cost-effective options the County uses to provide additional intervention, sanctions and structure for offenders so they are more likely to succeed upon release.

For more information about this contract award or any monitoring products and services offered by Track Group, contact Matt Swando at 877-260-2010.

About Track Group (trackgrp.com)
Track Group designs, manufactures, and markets location tracking devices and develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications for the criminal justice market. 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.

Media Contact:
Matt Swando, Track Group
877-260-2010
matthew.swando@trackgrp.com

Track Group Board Names Derek Cassell As Next CEO – Guy Dubois To Remain Chairman, Effective January 1, 2018

By News

NAPERVILLE, IL — January 4, 2018 —Track Group, Inc. (OTCQX: TRCK), Track Group today announced that its Board of Directors has appointed Derek Cassell as Chief Executive Officer effective January 1, 2018. Guy Dubois will remain Track Group’s Chairman.

“This is the perfect time for Derek Cassell to become Track Group’s next Chief Executive Officer. We’ve selected a very strong leader at a time when Track Group is in a very strong position,” said Track Group’s Chairman and CEO Guy Dubois. “Derek is unique in his ability to translate vision and strategy into world-class execution, bringing together teams and ecosystems to drive results. He is a champion of the Track Group culture and has an incredible ability to inspire, energize, and connect with employees, partners, and customers. Derek’s vision, strategy and execution track record is exactly what Track Group needs as we enter our next chapter, which I am confident will be even more impactful and exciting than our last.”

Cassell joined Track Group in 2014 through the acquisition of Emerge Monitoring and has moved quickly through the company’s ranks. He most recently served as Track Group’s President, leading the company to consistent revenue and margin growth. Prior to Track Group, he was Executive Vice President of Emerge Monitoring, which was part of the Bankers Surety Team. Cassell has over 20 years experience providing correctional solutions to the criminal justice industry including ADT Correctional Services, G4S Justice Services and ElmoTech Inc.

“I joined Track Group 3 years ago because I wanted to be a part of a company where I believed the possibilities were limitless. Today, I am even more convinced that Track Group is that company,” said Derek Cassell. “Guy Dubois’ vision and leadership have built Track Group into one of the most important companies in the industry; a company fiercely committed to delivering for its customers, shareholders, partners, and employees. The opportunity that lies ahead for Track Group is enormous, and the ability to lead this next chapter is deeply humbling and incredibly exhilarating. I am focused on accelerating the innovation and execution that our customers need from us. Their success will continue to drive us. At a time when our industry is on the cusp of more disruption than we’ve ever encountered, I couldn’t be more confident in our ability to win, or more honored to lead this great company.”

Track Group also announced that Guy Dubois, currently CEO and Chairman of Track Group’s Board of Directors, would remain Chairman. He will devote his time to supporting Cassell and Track Group’s senior leadership team and continue to drive the Company’s strategic vision.

About Track Group (trackgrp.com)
Track Group, Inc. (OTCQX: TRCK), designs, manufactures, and markets location tracking devices and develops and sells a variety of related software, services, accessories, networking solutions, and monitoring applications for the criminal justice market. 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.

Track Group Reports Fiscal 2017 Financial Results

By News, Quarterly Reports

NAPERVILLE, ILLINOIS, December 20, 2017 – 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.

  • Revenue Up 9%
  • Adjusted EBITDA Up 82%
  • Net Cash From Operating Activities Up 357%

“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

FULL ARTICLE >

Track Group, Inc. Reports Q2-FY2016 Quarterly Results

By News, Quarterly Reports

SALT LAKE CITY, May 9, 2016 – Track Group Inc. (OTCQX: TRCK), a cloud-based, tracking solutions provider in the global offender management market that combines proprietary tracking devices, real-time monitoring services and advanced data analytics to form an end to end platform-as-a-service solution (PaaS), today announced results for the second quarter ended March 31, 2016 and year to date.

  • Revenue increases 37%
  • Loss from operations decreases 44%
  • Adjusted EBITDA margin improves to 8.8%, up from (9.1%)
  • Cash from operations increases 22%
  • Company applies for Nasdaq listing

Company Highlights:

  • Marion County Agreement – On May 5, 2016, the Company executed an agreement with Marion County Community Corrections, the largest county in the state of Indiana, to provide electronic monitoring services across the full range of sentences under the Agency’s oversight. Under the terms of the Agreement, the Company will provide solutions based on GPS and alcohol monitoring technology to monitor over 2,300 offenders and defendants. This includes the Company’s newest tracking device, Shadow, which is the smallest, lightest and most advanced device. The term of the Agreement is eighteen months, and is expected to contribute over $4.0 million in revenue.
  • Loan Agreement – On May 1, 2016 we entered into an unsecured Loan Agreement with Conrent Invest S.A., acting with respect to its Compartment Safety III. Under the Loan Agreement, we may borrow $5.0 million for working capital, repayment of debt, and operating purposes, at an interest rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued unpaid interest due on July 31, 2018.

Financial Highlights:

  • Revenue increased 37% – Revenues increased 37% in the second quarter of fiscal 2016 when compared to the same period in 2015. Increases in revenue for the quarter were the result of growth of monitoring services both domestically and internationally, specifically in Chile, North America, and to a lesser extent analytics services. “We are pleased that investments in our platform and other strategic initiatives continue to yield double digit topline recurring revenue growth which aligns with our 2016 and 2017 outlook,” said Guy Dubois, Track Group’s Chairman.
  • Gross profit margin increased to 62% – Gross profit margin increased from 58% in the second quarter of 2015 to 62% in the same period in 2016. “Increased demand for our platform both domestically and internationally yields better pricing with our providers and supply channels which continues to reflect in our margins.” said John Merrill, Chief Financial Officer.
  • Operating expense increased 7% – The 7% increase in operating expense in the second quarter of fiscal 2016 when compared to the same period in 2015 were largely the result of higher research and development costs to improve the efficiency of software, firmware, and user interface. Higher variable costs associated with an increase in revenue included sales commissions, depreciation associated with an increase in deployed devices, bad debt expense, and sales and marketing efforts to address domestic and international growth initiatives.
  • Loss from operations decreases 44% – Loss from operations for the quarter ended March 31, 2016 was $1.25M compared to a loss of $2.23M in the same period in 2015, a decrease of 44%. Increases in topline revenue and lower incremental cost of revenue contributed to the decrease in loss from operations, offset by an increase in spending on R&D and higher sales and marketing costs.
  • Net loss of $1.9M – We had a net loss for the quarter ended March 31, 2016 of $1.9M compared to net income of $1.4M in the same period in 2015. In the second quarter of 2015, the Company received a non-recurring payment of $4.7M resulting from disgorged profits from a shareholder. Increases in total revenue and gross margins contributed to the reduction in net operating loss when excluding the disgorged profits which are not indicative of operations.
  • Cash from operations improves 22% – Net cash provided by operations improved 22% from $0.67M in the six months ended 2015 to $0.82M in the same period in 2016. Total cash improved from a burn of $4.4M in 2015, to a burn of $2.7M in the same period in 2016, a 61% decrease in burn rate. “While we will continue to innovate, our services platform has been received favorably in the marketplace. This provides us with clear line of sight into our recurring revenue stream which ultimately yields an improvement in our long term cash position.” said Mr. Dubois.
  • Adjusted EBITDA increases to $0.58M – The Company’s adjusted EBITDA for the second quarter of 2016 increased to $0.580M, or 8.8% of revenue from ($0.436M) compared to (9.1%) from the same period in 2015. “We will continue to monetize both our acquisitions and incremental revenue in 2016 and beyond. As previously stated, we believe that adjusted EBITDA is a more complete picture of performance, used in conjunction with GAAP, and its impacts on cash,” said Mr. Merrill.

Fiscal Q2-2016 vs Fiscal Q2-2015 Results: For the quarter ended March 31, 2016, the Company reported revenue of $6.6M compared to revenue of $4.8M for the same period in 2015, an increase of 37%. During the quarter ended March 31, 2016, gross profit totaled $4.1M, resulting in a 62% gross margin, compared to $2.8M, or a 58% gross margin during the same period in 2015. Total operating expense for the second quarter of fiscal 2016 was $5.4M compared to $5.0M in the same period in 2015, a 7% increase. Net loss for the second quarter of 2016 was $1.9M or $(0.19) per share compared to a net profit of $1.4M or $0.14 per share in the same period in 2015, which included a non-recurring payment in 2015 of $4.7M resulting from disgorged profits. On an adjusted basis, the Company reported EBITDA of $0.580M or 8.8% net margin for the second quarter of 2016, compared to ($0.436M) or (9.1%) for the same period in 2015.

Company Outlook:

Actual Outlook
Q2-FY16 Q2-FY15 YTD-FY16 YTD-FY15 FY2016 FY2017
Net Revenue (USD$) $6.59M $4.82M $12.91M $9.44M $28-31M $42-47M
Adjusted EBITDA Margin (%) 8.8% (9.1%) 7.1% (8.8%) 15-20% 25-30%

Non-GAAP Financial Measures
This press 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, 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 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 quarterly report on Form 10-Q for the quarter ended March 31, 2016, 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-Q and other reports, including the risk factors contained in the Company’s annual report on Form 10-K for the year ended September 30, 2015.

Forward-Looking Statement
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. & 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.

FULL ARTICLE >

Track Group Appoints Karen Macleod to Its Board of Directors

By News

SALT LAKE CITY, January 5, 2016

Track Group, Inc. (OTCQX: TRCK), a global tracking solutions company, today announced the appointment of Karen Macleod, former President of Tatum LLC, a New York-based professional services firm owned by global talent leader, Randstad, to the company’s Board of Directors effective immediately.

“We are pleased to welcome Ms. Macleod to our Board and look forward to benefiting from her extensive knowledge and experience,” said Guy Dubois, Chairman and CEO of Track Group. ” Ms. Macleod’s background and insight will prove invaluable to Track Group as we continue to position the company for future growth and success.”

“This is a very exciting time for Track Group,” said Macleod. “I am honored to join the Board and look forward to working with the other directors to build on Track Group’s positive momentum.”

Prior to her time with Tatum, Ms. Macleod was a co-founder of RGP, a publicly traded, multinational professional services firm founded as a division of Deloitte in June 1996. Ms. Macleod served in several positions for RGP, including as a director from 1999-2009 and President, North America from 2004-2009. Prior to RGP, Ms. Macleod held several positions in the audit department of Deloitte between 1985-1994.

For more information, please contact:

Steve Hamilton, Chief Marketing Officer
877-260-2010
steve.hamilton@trackgrp.com

John Merrill, Chief Financial Officer
866-451-6141
john.merrill@trackgrp.com

Track Group, Inc. Reports Fiscal 2015 Results

By Annual Reports, News

SALT LAKE CITY, Dec. 14, 2015

Track Group, Inc. (OTCQX: TRCK), a cloud-based end-to-end B2B and B2G tracking solutions company that combines real-time proprietary tracking devices, monitoring services in combination with advanced data analytics for the global offender management market, announces results for its fiscal year ended September 30, 2015, and provides Management’s plans, goals and outlook for 2016 and beyond.

Financial Highlights:

  • Total net revenues grew 70% for fiscal 2015 – “Given our expansion in Chile, organic growth in our legacy operations in the Americas including those of our recently acquired companies, we achieved record revenue growth in fiscal 2015,” said Guy Dubois, Track Group’s Chairman and acting CEO.
  • Gross profit grew to 60% in fiscal 2015 – “Led by higher overall sales activities in the Americas, outsourcing of our supply chain operation, lower device costs, and software automation, we are confident that gross profit will continue to accelerate in 2016 and beyond,” stated Mr. Dubois.
  • Tag subscriptions grew from 6,400 units in 2014 to over 10,000 in 2015 – “Our 56% growth in tag subscriptions is strong evidence that combined with a suite of competitive services and a superior sales staff, we can provide an effective alternative to incarceration solution at an affordable price,” said Mr. Cassell, Divisional President Americas. He continued “For 2016 we see a continued acceleration of our tag subscription numbers.”
  • EPS loss of (0.56) for 2015 compared to (0.88) for 2014, a 36% improvement. “In 2014 and 2015 we heavily invested in our global business to transform from a device centric distinct basket of products to a cloud based Platform-As-A-Service solution (“PaaS”) that combines a device agnostic real-time GPS collection appliance (“Tag”), 24/7/365 monitoring, mobile applications, and exceptional predictive data analytics,” said Mr. Dubois.
  • Adjusted EBITDA of $1.23M in 2015 compared to ($2.05M) loss in 2014. “Given our significant investments in 2014 and 2015, we experienced a large amount of non-cash and one-time charges in connection with integrating those companies we acquired,” said John Merrill, Chief Financial Officer. On a GAAP basis, we had a net loss of $5.569M for 2015 compared to a net loss of $8.762M for the same period in 2014. Mr. Merrill continued, “We believe that Adjusted EBITDA is a better reflection of our performance such that it gives the investor a more complete picture of performance through the eyes of management and the relevant impacts on cash as a PaaS business.”

Fiscal 2015 GAAP Results: For the fiscal year ended September 30, 2015, the company reported net revenues of $20.793M compared to net revenues of $12.262M for the same period in 2014, an increase of 70%. During the fiscal year ended September 30, 2015, gross profit totaled $12.511M, resulting in a 60% gross margin, compared to $6.763M, or a 55% gross margin during the same period in 2014, an increase of $5.748M. The increase in gross profit and margin was due to (i) higher overall revenues due to sales activity in Chile; (ii) growth of revenues generated by legacy operations and acquired subsidiaries; and (iii) lower incremental cost due to more efficient supply channels, outsourcing, and software automation. Total operating expenses for 2015 were $20.736M, a 43% increase from $14.511M in 2014. The increase in operating expense was the result of increased activity generated by our Chilean operation, higher non-cash costs of depreciation, amortization, stock compensation expense, and activities generated by company’s we acquired during 2014 and 2015. Net loss for 2015 totaled $5.669M or ($0.56) per common share, compared to a net loss of $8.762M or ($0.88) per common share for the same period in 2014. On an adjusted basis, the company reported EBITDA of $1.225M for 2015 compared to a loss of ($2.045M) for the same period in 2014 thus generating an Adjusted EBITDA margin of 5.9% versus a loss of 16.7% the previous year.

Strategy and Outlook:

Over the last 12 months, the company has transformed itself into a service business. Although the company still manufactures monitoring devices, we see the physical goods as a smaller part of the “integrated justice solutions” going forward. We believe our ability to offer analytics under a PaaS model gives us a unique selling proposition and competitive advantage. Rather than receiving a steady stream of ongoing revenue, just for a piece of manufactured equipment, more of our ongoing revenue will be derived from device agnostic subscription contracts that should help make the administration of justice better, faster, and less expensive for taxpayers. This not only may accelerate our continued revenue growth, it will be done at a lower cost per revenue dollar; resulting in higher margins and improved operating cash flows.

Furthermore, the company will explore and may execute selected M&A transactions in the future to accelerate growth opportunities globally. As we have shown over the past 24 months, the company was able to attract funding at favorable terms and we remain optimistic that this will continue going forward. In addition, the company is pursuing up listing of its stock to a regulated exchange. Once completed, it should provide additional sources of funding, and focused IR activities should over time bring more liquidity to our shares. Our senior management is well incentivized to deliver on these goals through a long term equity incentive plan which aligns the creation of shareholder value.

Based on our current organic performance, our outlook for 2016 and 2017 is as follows:

Actual Outlook
2014 2015 2016 2017
Net Revenue (USD$) $ 12.3 M $ 20.8 M $ 28 – 31 M $ 42 – 47 M
Adjusted EBITDA Margin (%) -16.70% 5.90% 15-20% 25-30%

Non-GAAP Financial Measures

This press release includes financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission including non-GAAP EBITDA and non-GAAP EPS. 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, on an annual basis, are provided utilizing audited financial figures for the respective periods.

Non-GAAP Adjusted EBITDA excludes items included but not limited to taxes, dividends, depreciation, amortization, impairment charges, charges to consolidate, integrate or consider recently acquired businesses, costs of closing facilities, non-cash stock based compensation and other stated one-time cash and non-cash charges (“the Adjustments”). Non-GAAP EPS excludes the Adjustments when considering net income or loss attributable to common shareholders.

The company believes the non-GAAP measures provide useful information to both management and investors by excluding certain cash and non-cash expenses, gains and losses, one time charges or benefits, and acquisition charges which may not be indicative of its core operation results and business outlook. Specific disclosure relating to acquisitions 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 year ended September 30 2015 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.

About Track Group, Inc.

Track Group develops, manufactures, and provides tracking solutions that combine real-time GPS tracking devices and 24/7/365 monitoring services with advanced data analytics for the global offender management market which includes corrections, military and law enforcement. For more information, visit www.trackgrp.com.

Forward-Looking Statement

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. & 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.