Track Group Inc EBITDA Margin increased on 9.0 pp from -1.4% to 7.6% in 2018 and Revenue increased on 2.8%
12/19/2018 • About Track Group Inc (
$TRCK) • By InTwits
Track Group Inc reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 7.6% in FY2018 vs. -1.4% in FY2017 vs. -40.0% in FY2014
- Track Group Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 0.0% while average EBITDA Margin was -6.4% for the sames years
- Track Group Inc has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.7%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $1m in FY2018, $2m in FY2017, $3m in FY2016, $1m in FY2015, $1m in FY2014
- The company has unprofitable business model: ROIC is -4.0%
- It operates with high leverage: Net Debt/EBITDA is 12.2x while industry average is -0.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Track Group Inc's Revenue increased on 2.8%. Revenue growth showed acceleration in FY18Q4 - it increased 8.0% YoY. During FY2014-FY2018 Revenue growth topped in FY2015 at 69.6% and was decelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.0 pp from -35.1% to -31.0% in 2018. EBITDA Margin stuck to a growing trend at 11.2 pp per annum in the last 5 years.
Gross Margin increased on 3.8 pp from 52.5% to 56.3% in FY2018. SG&A as a % of Revenue increased on 3.1 pp from 48.9% to 51.9% in FY2018. SG&A as a % of Revenue followed a declining trend at -13.6 pp per annum in the last 5 years.
Net Income margin decreased slightly on 1.9 pp from -15.9% to -17.8% in FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 4.8%. Track Group Inc's CAPEX/Revenue decreased on 2.3 pp from 7.1% in FY2015 to 4.8% in FY2018. Average CAPEX/Revenue for the last three years was 7.4%. The company maintained rich investment policy and has spent a big chunk of EBITDA (62.8%) to CAPEX. During the last 5 years CAPEX as a % of Revenue topped in FY2016 at 10.9% and was declining since that time.
Return on investment
The company operates at negative ROIC (-4.0%) and ROE (-142.6%). ROIC increased on 7.1 pp from -11.1% to -4.0% in FY2018. ROE dropped on 78.1 pp from -64.4% to -143% in FY2018. ROIC grew at 3.3 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is 12.2x and Debt / EBITDA is 14.6x. Net Debt / EBITDA surged12.2x from to 12.2x in FY2018. Debt showed almost no change in FY2018 while cash surged on 169%.
Track Group Inc has short term refinancing risk: cash is only 17.9% of short term debt.
Financial and operational results
FY ended 09/30/2018
Track Group Inc ($TRCK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 12.262 | 20.793 | 27.194 | 29.727 | 30.570 | 2.8% |
| Gross Profit | 7.137 | 12.511 | 16.661 | 15.601 | 17.202 | 10.3% |
| SG&A | 12.891 | 16.241 | 16.982 | 14.528 | 15.879 | 9.3% |
| EBITDA | -4.902 | -3.826 | -0.939 | -0.411 | 2.326 | |
| Net Income | -8.748 | -5.669 | -8.496 | -4.726 | -5.428 | |
Balance Sheet
|
|---|
| Cash | 11.102 | 4.903 | 1.770 | 2.027 | 5.447 | 168.7% |
| Short Term Debt | 25.868 | 0.796 | 3.246 | 30.271 | 30.438 | 0.6% |
| Long Term Debt | 2.700 | 30.189 | 30.346 | 3.481 | 3.429 | -1.5% |
Cash flow
|
|---|
| Capex | 0.544 | 1.466 | 2.966 | 1.924 | 1.460 | -24.1% |
Ratios
|
|---|
| Revenue growth | -21.6% | 69.6% | 30.8% | 9.3% | 2.8% | |
| EBITDA growth | -411.9% | -21.9% | -75.5% | -56.2% | -665.3% | |
|
|---|
| Gross Margin | 58.2% | 60.2% | 61.3% | 52.5% | 56.3% | 3.8% |
| EBITDA Margin | -40.0% | -18.4% | -3.5% | -1.4% | 7.6% | 9.0% |
| SG&A, % of revenue | 105.1% | 78.1% | 62.4% | 48.9% | 51.9% | 3.1% |
| Net Income Margin | -71.3% | -27.3% | -31.2% | -15.9% | -17.8% | -1.9% |
| CAPEX, % of revenue | 4.4% | 7.1% | 10.9% | 6.5% | 4.8% | -1.7% |
|
|---|
| ROIC | -18.2% | -16.1% | -12.0% | -11.1% | -4.0% | 7.1% |
| ROE | -39.9% | -33.1% | -73.7% | -64.4% | -142.6% | -78.1% |
| Net Debt/EBITDA | | | | | 12.2x |
Track Group Inc ($TRCK) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 7 | 7 | 8 | 8 | | -2.4% | 1.3% | 4.5% | 8.0% |
| EBITDA | 1 | 0 | 0 | 1 | | | 112.5% | | 216.3% |
| Net Income | -1 | -2 | -2 | -1 | | | | -348.7% | |
Balance Sheet
|
|---|
| Cash | 2 | 3 | 5 | 5 | | -29.4% | 20.0% | 175.1% | |
| Short Term Debt | 30 | 30 | 30 | 30 | | 834.2% | 44,177.0% | 48,611.5% | |
| Long Term Debt | 3 | 3 | 3 | 3 | | -88.6% | -89.7% | -89.8% | |
Ratios
|
|---|
| Gross Margin | 59.7% | 55.0% | 54.8% | 55.7% | | 13.5% | -1.1% | 4.0% | 7.6% |
| EBITDA Margin | 9.6% | 4.0% | 2.8% | 13.6% | | 20.4% | 2.1% | 3.7% | 9.0% |
| Net Income Margin | -13.9% | -23.7% | -24.2% | -9.8% | | 20.2% | -1.8% | -34.3% | 7.2% |
Peers in Electronic Equipment & Instrum
Below you can find Track Group Inc benchmarking vs. other companies in Electronic Equipment & Instrum industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 0.3% | 3.6% | 10.4% |
|---|
| Track Group Inc ($TRCK) | | 69.6% | 30.8% | 9.3% | 2.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| Track Group Inc ($TRCK) | 58.2% | 60.2% | 61.3% | 52.5% | 56.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| |
|---|
| Median (60 companies) | 5.5% | 5.2% | 3.4% | 5.1% | 3.3% |
|---|
| Track Group Inc ($TRCK) | -40.0% | -18.4% | -3.5% | -1.4% | 7.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Track Group Inc ($TRCK) | 4.4% | 7.1% | 10.9% | 6.5% | 4.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
| |
|---|
| Median (72 companies) | 3.3% | 2.3% | 2.2% | 3.3% | 1.3% |
|---|
| Track Group Inc ($TRCK) | -18.2% | -16.1% | -12.0% | -11.1% | -4.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| OSI Systems, Inc. ($OSIS) | -0.0x | -0.2x | 0.3x | 1.7x | 2.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.8x | -0.7x | -0.9x |
|---|
| Track Group Inc ($TRCK) | | | | | 12.2x |
