Track Group Reports First Quarter 2017 Results

ROMEOVILLE, Ill., Feb. 14, 2017 /PRNewswire/ -- Track Group today announced financial results for its fiscal 2017 first quarter ended December 31, 2016.

First Quarter Highlights

• Growth in core business remains strong – Revenue from Track Group's core judicial customers increased 21%, principally the result of growth from Gendarmerie de Chile, Marion County Community Corrections, and Virginia Department of Corrections. 
• Restructuring – The Company recently approved a plan to restructure its business in order to streamline operations by consolidating its headquarters from Salt Lake City, Utah into its existing Chicagoland office. This decision will enable the Company to reduce fixed costs and improve scalability as it continues to execute on its outsourcing strategy. 
• Peter Poli Joins Track Group as CFO – Seasoned financial executive, Peter Poli, leads the Company's financial operations, finance team, sourcing and investor relations.

"I'm very pleased with the progress we've made on our restructuring commitments as part of the ongoing transformation process to accelerate future growth," said Guy Dubois, Chairman and CEO of Track Group. "Through the restructuring, Track Group will reduce expenses, streamline the organization, and reallocate resources to drive shareholder value and align more closely with customer needs going forward."

Financial Results

• Revenue increased 21% - For the three months ended December 31, 2016, the Company recognized revenue from operations of $7,671,490 compared to $6,317,604 for the three months ended December 31, 2015, an increase of $1,353,886 or 21%. The increase in revenue was principally the result of (i) expansion and growth of offender monitoring in Chile, and (ii) growth of our North American monitoring operations driven by Marion County Community Corrections, and by Virginia Department of Corrections. 
• Gross Profit Margin decreased 7% - This decrease is the result of one-time restructuring expenses and a short-term change in product focus resulting from a higher proportion of revenue growth coming from US customers. 
• Operating expenses increased approximately 15% - This increase is largely due to a one-time restructuring expense of $566,330 and the remainder is due to an increase in revenue. 
• Loss from operations increased by $460,066 - This increase in net loss is largely due to the one-time restructuring expense indicated above. Cost of revenue and general and administrative increases were offset by reductions in depreciation and amortization and R&D. 
• Net Loss of $2.6M – The Company had a net loss of $2,613,759 for the three months ended December 31, 2016, compared to a net loss of $2,127,238 for the three months ended December 31, 2015, an increase of $486,521 largely resulting from the items indicated above. 
• Cash from operations remains positive – Net cash provided by operations improved to $2,136,796 from a loss or $458,130 compared to the same period in 2016. 
• Adjusted EBITDA Increased 20% – Adjusted EBITDA for the first quarter of 2017 increased approximately 20% to $406,000, up from $337,000 in the same period in 2016.

The Company reaffirms Outlook from its December 22, 2016 news release indicating FY2017 Revenue of $33-35 million and Adjusted EBITDA Margin of 15-20%. 

About Track Group, Inc.

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. 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 OTCQX 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. & 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, 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-K and other reports, including the risk factors contained in such Form 10-K.

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SOURCE Track Group, Inc.