WidePoint Reports Third Quarter 2020 Financial Results
11/16/2020 - 04:01 PM
FAIRFAX, Va., Nov. 16, 2020 (GLOBE NEWSWIRE) -- WidePoint Corporation (NYSE American: WYY ) , the leading provider of Trusted Mobility Management (TM2) specializing in Telecommunications Lifecycle Management, Identity Management (IdM) and Digital Billing & Analytics solutions, today reported results for the third quarter September 30, 2020.
Third Quarter 2020 and Recent Operational Highlights:
Secured more than $11 million in contract wins, exercised option periods, and contract extensions during the third quarter of 2020, approximately $10 million of which is comprised of new business and new extensions Successfully onboarded Virginia Alcoholic Beverage Control Authority (Virginia ABC) after being awarded a new contract for TEM services Number of U.S. Department of Defense digital certificates issued increased 14% sequentially from the second quarter of 2020 and 15% year-over-year from the third quarter of 2019, leading to an increase in high margin Identity Management revenue Responded to the request for proposal and provided oral presentation to the U.S. Department of Homeland Security regarding the Cellular Wireless Managed Services (CWMS) II contract re-compete Effectuated 1-for-10 reverse stock split on November 6, 2020 to better position the Company for long-term success Third Quarter 2020 Financial Highlights ( results compared to the same year-ago period) :
Revenues increased 94% to $57.5 million Managed Services revenue increased 38% to $12.5 million Gross profit increased 30% to $5.6 million Net income totaled $1.1 million EBITDA, a non-GAAP financial measure, increased 102% to $1.6 million Adjusted EBITDA, a non-GAAP financial measure, increased 82% to $1.7 million Nine Month 2020 Financial Highlights (results compared to the same year-ago period):
Revenues increased 106% to $152.0 million Managed Services revenue increased 37% to $33.8 million Gross profit increased 24% to $15.6 million Net income totaled $2.0 million EBITDA, a non-GAAP financial measure, increased 84% to $3.8 million Adjusted EBITDA, a non-GAAP financial measure, increased 69% to $4.4 million
Third Quarter 2020 Financial Summary (in millions, except per share amounts) September 30, 2020 September 30, 2019 (Unaudited) Revenues $ 57.5 $ 29.6 Gross Profit $ 5.6 $ 4.3 Gross Profit Margin 9.8 % 14.6 % Operating Expenses $ 4.5 $ 4.0 Income (Loss) from Operations $ 1.1 $ 0.3 Net Income (Loss) $ 1.1 $ 0.2 Basic and Diluted Earnings per Share (EPS) $ 0.13 $ 0.02 EBITDA $ 1.6 $ 0.8 Nine Month 2020 Financial Summary (in millions, except per share amounts) September 30, 2020 September 30, 2019 (Unaudited) Revenues $ 152.0 $ 73.6 Gross Profit $ 15.6 $ 12.6 Gross Profit Margin 10.3 % 17.1 % Operating Expenses $ 13.1 $ 12.0 Income from Operations $ 2.5 $ 0.6 Net Income $ 2.0 $ 0.3 Basic and Diluted Earnings per Share (EPS) $ 0.24 $ 0.03 EBITDA $ 3.8 $ 2.0
The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under the “Safe Harbor Statement” below.
Financial Outlook
For the fiscal year ending December 31, 2020, the Company is reiterating its revenue guidance of $185 million to $195 million, which at the midpoint of the range, would represent 87% growth year-over-year. The Company is also reiterating the EBITDA guidance it updated on October 26, 2020 of $4.7 million to $4.9 million, which at the midpoint, is 50% above the Company’s previously issued EBITDA guidance and represents a 69% year-over-year increase compared to fiscal 2019. For fiscal 2020, the Company also anticipates adjusted EBITDA, which excludes stock-based compensation expense, to range between $5.5 million to $5.7 million, which, at the midpoint, represents a 57% year-over-year increase compared to fiscal 2019. The EBITDA forecast takes into consideration the Company’s planned strategic investments in sales and marketing and product development. The Company’s financial outlook is based on current expectations.
Management Commentary
“Thanks to the work of our dedicated personnel and the flexibility we built into our organization, we continued to build on the momentum established in the first half of the year and produced record financial results for the third quarter of 2020,” said WidePoint’s CEO, Jin Kang. “For the third quarter, our total revenues increased to $57.5 million, largely driven by our increased work on the U.S. Census 2020 as well as expansions with other federal government customers, and perhaps more importantly, our high margin managed services revenues increased 38% year-over-year. That increase helped drive $1.1 million in net income for the third quarter, which is almost five times greater than our net income in all of fiscal 2019, and our adjusted EBITDA for the quarter increased 82% to $1.7 million. We also strengthened our balance sheet by increasing our cash position by $3.9 million sequentially to $11.4 million.
“The financial success of the quarter is a clear indication of the value WidePoint can generate because of our excellent staff, our flexible organizational structure, and the market’s growing demand for our products that function as a solution for many of the problems faced by large government and commercial enterprises in today’s environment. With 2020 lining up to be a banner year for WidePoint, we believe our company has never been better positioned than it is today, and we look forward to capitalizing on this momentum as we close out the year and move into 2021.”
Conference Call
WidePoint management will hold a conference call today (November 16, 2020) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.
WidePoint’s President and CEO Jin Kang, Executive Vice President and Chief Sales and Marketing Officer Jason Holloway, and Executive Vice President and CFO Kellie Kim will host the conference call, followed by a question and answer period.
U.S. dial-in number: 844-407-9500 International number: 862-298-0850
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.
The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website .
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 30, 2020.
Toll-free replay number: 877-481-4010 International replay number: 919-882-2331 Replay ID: 38150
About WidePoint
WidePoint Corporation (NYSE American: WYY) is a leading provider of trusted mobility management (TM2) solutions, including telecom management, mobile management, identity management, and digital billing and analytics. For more information, visit widepoint.com .
Non-GAAP Financial Measures
WidePoint uses a variety of operational and financial metrics, including non-GAAP financial measures such as EBITDA, to enable it to analyze its performance and financial condition. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. A reconciliation of GAAP Net income to EBITDA is included on the schedules attached hereto.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) NET INCOME $ 1,067,000 $ 183,700 $ 2,039,500 $ 260,100 Adjustments to reconcile net (loss) income to EBITDA: Depreciation and amortization 415,700 479,300 1,247,100 1,429,100 Amortization of deferred financing costs - 1,300 1,700 3,800 Income tax provision (benefit) 12,500 32,300 242,800 126,800 Interest income (100 ) (100 ) (3,100 ) (4,800 ) Interest expense 69,600 76,800 226,200 227,200 EBITDA $ 1,564,700 $ 773,300 $ 3,754,200 $ 2,042,200 Other adjustments to reconcile net (loss) income to Adjusted EBITDA: (Recovery) Provision for doubtful accounts 12,300 600 23,500 Gain on sale of assets held for sale - - - - Loss on disposal of leasehold improvements - - - - Lease account impact on EBITDA - - - Stock-based compensation expense 160,000 163,400 650,900 536,800 Adjusted EBITDA $ 1,724,700 $ 949,000 $ 4,405,700 $ 2,602,500
Safe Harbor Statement
The information contained in any materials that may be accessed above was, to the best of WidePoint Corporations’ knowledge, timely and accurate as of the date and/or dates indicated in such materials. However, the passage of time can render information stale, and you should not rely on the continued accuracy of any such materials. WidePoint Corporation has no responsibility to update any information contained in any such materials. In addition, you should refer to periodic reports filed by WidePoint Corporation with the Securities and Exchange Commission for information regarding the risks and uncertainties to which forward-looking statements made in such materials are subject. Such risks and uncertainties may cause WidePoint Corporation’s actual results to differ materially from those described in the forward-looking statements.
Investor Relations:
Gateway Investor Relations Matt Glover or Charlie Schumacher 949-574-3860WYY@gatewayir.com
WIDEPOINT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 2020 2019 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,372,902 $ 6,879,627 Accounts receivable, net of allowance for doubtful accounts of $119,248 and $126,235 in 2020 and 2019, respectively 31,469,534 14,580,928 Unbilled accounts receivable 15,041,634 13,976,958 Other current assets 1,099,773 1,094,847 Total current assets 58,983,843 36,532,360 NONCURRENT ASSETS Property and equipment, net 619,773 681,575 Operating lease right of use asset, net 6,299,131 5,932,769 Intangibles, net 2,076,320 2,450,770 Goodwill 18,555,578 18,555,578 Other long-term assets 874,906 140,403 Total assets $ 87,409,551 $ 64,293,455 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 30,954,163 $ 13,581,822 Accrued expenses 17,348,047 14,947,981 Deferred revenue 2,270,783 2,265,067 Current portion of operating lease liabilities 580,483 599,619 Current portion of other term obligations - 133,777 Total current liabilities 51,153,476 31,528,266 NONCURRENT LIABILITIES Operating lease liabilities, net of current portion 6,097,949 5,593,649 Deferred revenue, net of current portion 382,814 363,560 Deferred tax liability 2,100,446 1,868,562 Total liabilities 59,734,685 39,354,037 Commitments and contingencies - - STOCKHOLDERS' EQUITY Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding - - Common stock, $0.001 par value; 30,000,000 shares authorized; 8,458,734 and 8,386,145 shares issued and outstanding, respectively 84,587 83,861 Additional paid-in capital 95,919,199 95,279,114 Accumulated other comprehensive loss (187,435 ) (242,594 ) Accumulated deficit (68,141,485 ) (70,180,963 ) Total stockholders’ equity 27,674,866 24,939,418 Total liabilities and stockholders’ equity $ 87,409,551 $ 64,293,455
WIDEPOINT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) REVENUES $ 57,506,561 $ 29,616,940 $ 151,955,707 $ 73,626,995 COST OF REVENUES (including amortization and depreciation of $130,559, $233,033, $432,327, and $698,192, respectively) 51,888,205 25,302,919 136,314,439 61,002,387 GROSS PROFIT 5,618,356 4,314,021 15,641,268 12,624,608 OPERATING EXPENSES Sales and marketing 500,015 406,683 1,431,930 1,215,556 General and administrative expenses (including share-based compensation of $160,056, $163,451, $650,924 and $536,828, respectively) 3,684,344 3,372,269 10,887,952 10,070,383 Depreciation and amortization 285,181 246,293 814,813 730,905 Total operating expenses 4,469,540 4,025,245 13,134,695 12,016,844 INCOME FROM OPERATIONS 1,148,816 288,776 2,506,573 607,764 OTHER (EXPENSE) INCOME Interest income 94 40 3,119 4,761 Interest expense (69,582 ) (78,066 ) (227,889 ) (230,983 ) Other income 118 5,324 458 5,324 Total other expense (69,370 ) (72,702 ) (224,312 ) (220,898 ) INCOME BEFORE INCOME TAX PROVISION 1,079,446 216,074 2,282,261 386,866 INCOME TAX PROVISION 12,483 32,364 242,783 126,816 NET INCOME $ 1,066,963 $ 183,710 $ 2,039,478 $ 260,050 BASIC EARNINGS PER SHARE $ 0.13 $ 0.02 $ 0.24 $ 0.03 BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING 8,450,843 8,423,435 8,409,114 8,401,405 DILUTED EARNINGS PER SHARE $ 0.13 $ 0.02 $ 0.24 $ 0.03 DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING 8,527,309 8,427,183 8,463,561 8,405,152 THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2020 2019 2020 2019 (Unaudited) (Unaudited) NET INCOME $ 1,067,000 $ 183,700 $ 2,039,500 $ 260,100 Adjustments to reconcile net (loss) income to EBITDA: Depreciation and amortization 415,700 479,300 1,247,100 1,429,100 Amortization of deferred financing costs - 1,300 1,700 3,800 Income tax provision (benefit) 12,500 32,300 242,800 126,800 Interest income (100 ) (100 ) (3,100 ) (4,800 ) Interest expense 69,600 76,800 226,200 227,200 EBITDA $ 1,564,700 $ 773,300 $ 3,754,200 $ 2,042,200 Other adjustments to reconcile net (loss) income to Adjusted EBITDA: (Recovery) Provision for doubtful accounts 12,300 600 23,500 Gain on sale of assets held for sale - - - - Loss on disposal of leasehold improvements - - - - Severance and exit costs - - - - Lease account impact on EBITDA - - - Stock-based compensation expense 160,000 163,400 650,900 536,800 Adjusted EBITDA $ 1,724,700 $ 949,000 $ 4,405,700 $ 2,602,500