Track Group Reports Fiscal 2022 Financial Results

NAPERVILLE, Ill., Dec. 16, 2022 /PRNewswire/ -- 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, 2022 ("FY22"). In FY22, the Company posted (i) total revenue of $37.0 Million ("M"), a decrease of approximately 7% over total revenue of $39.7M for the year ended September 30, 2021 ("FY21"); (ii) FY22 operating loss of ($2.1M) compared to FY21 operating income of $4.7M; and (iii) net loss attributable to common shareholders of ($7.4M) in FY22 compared to net income attributable to common shareholders of $3.4M in FY21.

"The fiscal year ended September 30, 2022 was challenging given supply chain constraints and reinvestment in our infrastructure caused by the phase out of 3G networks in the U.S. and our results reflect both. However, due to the adaptive strategies deployed early in the fiscal year, by early September 2022, we were able to resume manufacturing new devices toward targeted, pre-pandemic volumes. As a result, we have commenced implementation of new programs and are confident in our ability to support the expected growth from our customers in FY23. Consequently, we look forward to much improved results in the coming year," said Derek Cassell, Track Group's CEO.

FINANCIAL HIGHLIGHTS

• Total FY22 revenue of $37.0M was down 7% compared to FY21 revenue of $39.7M. The drop in revenue was caused by the limitations on manufacturing new devices, less activity at customers in the U.S. and Bahamas offset by increases in revenue for customers in Chile and Saudi Arabia.
• Gross profit of $17.4M in FY22 was down approximately 18% compared to FY21 gross profit of $21.1M due to over $0.8M increase in depreciation and amortization costs associated with implementation of the new software platform as well as higher server costs and communication costs offset by lower lost, stolen and damaged device expenses.
• Operating loss in FY22 of ($2.1M) compared to operating income of $4.7M in FY21. Approximately 80% of the total change to the loss in FY22 is attributable to the decline in gross profit and the impairment charge of $1.7M associated with the discontinuance of two product lines.
• Adjusted EBITDA for FY22 of $6.6M, compared to $10.3M for FY21 due to the drop in revenue, gross profit and the increase in certain operating expenses. Adjusted EBITDA in FY22 as a percentage of revenue declined to 18.0%, compared to 25.9% for FY21 for the same reasons.
• Cash balance of $5.3M for FY22, compared to $8.4M for FY21. The change in cash position was due to a drop in net cash provided by operating activities and the absence of new loans in FY22 offset by a decline in capital expenditures or the cash used in investing activities.
• Net loss attributable to shareholders in FY22 was ($7.4M) compared to net income of $3.4M in FY21, a change principally attributable to the changes in the Company's operating performance.

Despite the short-term challenges created by supply chain delays, the Coronavirus and the phase out of 3G communication networks in the U.S., Track Group remains confident that our continued focus on strategic adaptation, and growth, which evidenced success in FY21, will allow us to be well-positioned for a return to growth in FY23. As a result, the Company's preliminary outlook for FY23 is as follows:

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 OTCQX exchange. For more information, visit www.trackgrp.com.

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.

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, 2022, 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.