WYY WidePoint Corporation

 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: 844-407-9500International 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: 877-481-4010International replay number: 919-882-2331Replay 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 RelationsMatt Glover or Charlie Schumacher949-574-3860WYY@gatewayir.com

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED 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 SUBSIDIARIESCONDENSED 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