WidePoint Reports Third Quarter 2019 Financial Results
November 14 2019 - 4:05PM
WidePoint Corporation (NYSE American: WYY), the
leading provider of Trusted Mobility Management (TM2) specializing
in Telecommunications Lifecycle Management, Identity Management and
Digital Billing & Analytics solutions, today reported results
for the third quarter ended September 30, 2019.
Third Quarter 2019 and Recent Operational
Highlights:
- Received $14.7 million in recent contract awards for Telecom
Expense Management (TEM) and Mobility Managed Services (MMS)
- Successfully completed an address canvassing project with CDW-G
for 2020 U.S. Census project
- Announced $2.5 million share repurchase program
Third Quarter 2019 Financial Highlights
(results compared to the same year-ago
period):
- Revenues increased 39% to $29.6 million
- Gross profit increased 17% to $4.3 million
- Net income totaled $184,000
- Adjusted EBITDA, a non-GAAP financial measure, increased to
$949,000, marking the company’s ninth consecutive quarter of
positive adjusted EBITDA, and in line with forecast
Nine Month 2019 Financial Highlights (results compared
to the same year-ago period):
- Revenues increased 25% to $73.6 million
- Gross profit increased 17% to $12.6 million
- Net income totaled $260,000
- Adjusted EBITDA totaled $2.6 million
Third Quarter 2019 Financial Summary
|
|
|
|
|
|
|
| (in
millions, except per share amounts) |
September 30, 2019 |
|
|
September 30, 2018 |
|
|
|
|
|
|
|
|
(Unaudited) |
|
Revenues |
$ |
29.6 |
|
|
$ |
21.3 |
|
|
Gross Profit |
$ |
4.3 |
|
|
$ |
3.7 |
|
|
Gross Profit Margin |
15 |
% |
|
17 |
% |
|
Operating Expenses |
$ |
4.0 |
|
|
$ |
3.7 |
|
|
Income (Loss) from Operations |
$ |
0.3 |
|
|
$ |
(0.1 |
) |
|
Net Income (Loss) |
$ |
0.2 |
|
|
$ |
(0.1 |
) |
|
Basic and Diluted Earnings per Share (EPS) |
$ |
0.00 |
|
|
$ |
0.00 |
|
|
Adjusted EBITDA |
$ |
0.9 |
|
|
$ |
0.6 |
|
Nine Month 2019 Financial Summary
|
|
|
|
|
|
|
| (in
millions, except per share amounts) |
September 30, 2019 |
|
September 30, 2018 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
Revenues |
$ |
73.6 |
|
|
$ |
58.9 |
|
|
Gross Profit |
$ |
12.6 |
|
|
$ |
10.8 |
|
|
Gross Profit Margin |
17 |
% |
|
18 |
% |
|
Operating Expenses |
$ |
12.0 |
|
|
$ |
11.7 |
|
|
Income (Loss) from Operations |
$ |
0.6 |
|
|
$ |
(0.9 |
) |
|
Net Income (Loss) |
$ |
0.3 |
|
|
$ |
(1.0 |
) |
|
Basic and Diluted Earnings per Share (EPS) |
$ |
0.00 |
|
|
$ |
(0.01 |
) |
|
Adjusted EBITDA |
$ |
2.6 |
|
|
$ |
0.8 |
|
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 OutlookFor the fiscal year ending
December 31, 2019, the company is reiterating its revenue guidance
of $90.0 million to $93.0 million, representing growth of 8% to
12%. The company is also reiterating its adjusted EBITDA guidance
of $2.75 million to $3.5 million, which represents an improvement
compared to fiscal 2018. The increase in adjusted EBITDA reflects
the company’s strategic investments in sales and marketing and
product development to accelerate growth, as well as a $400,000
increase due to new Financial Accounting Standards Board (FASB)
guidance regarding the treatment of capital lease. The company’s
financial outlook is based on current expectations.
Management Commentary“In the third quarter of
2019, we continued building on the momentum we generated in the
first half of the year by growing the topline to drive towards
consistent bottom-line profitability,” said WidePoint’s CEO, Jin
Kang. “From a financial perspective, the quarter was highlighted by
a 39% increase in revenues, positive net income, and our ninth
consecutive quarter of positive Adjusted EBITDA.
“Operationally, we secured $14.7 million in recent awards during
the third quarter, which include contract expansions and renewals
with current customers as well as new contract wins. The expansions
indicate that our cross-selling and upselling initiatives continue
to be effective; the new wins demonstrate our ability to expand our
solutions into new markets with new partners; and the renewals
prove that we continue to benefit from high-retention rates with
our satisfied customers. We also successfully completed an address
canvassing project with CDW-G for the 2020 U.S. Census, and we
stand well positioned to effectively execute this program when it
fully ramps up at the start of the new year.
“Overall, due to our ability to successfully execute on our
strategic initiatives and the financial success we have reaped as a
result, we believe that we are well positioned to finish the year
in a position of strength and to continue accelerating growth and
driving towards sustainable profitability over the long-run.”
Conference CallWidePoint management will hold a
conference call today (November 14, 2019) at 4:30 p.m. Eastern time
(1:30 p.m. Pacific time) to discuss these results.
WidePoint President and CEO Jin Kang, Chief Sales and Marketing
Officer Jason Holloway, and President and CEO of Soft-ex
Communications and WidePoint Interim CFO Ian Sparling 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 21, 2019.
Toll-free replay number: 877-481-4010International replay
number: 919-882-2331Replay ID: 56430
About WidePointWidePoint 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 MeasuresWidePoint uses a
variety of operational and financial metrics, including non-GAAP
financial measures such as Adjusted 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 loss to Adjusted EBITDA is included on
the schedules attached hereto.
| |
|
THREE MONTHS ENDED |
|
NINE MONTHS ENDED |
| |
|
SEPTEMBER 30, |
|
SEPTEMBER 30, |
| |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(Unaudited) |
|
(Unaudited) |
|
NET INCOME (LOSS) |
$ |
183,700 |
|
|
$ |
(110,000 |
) |
|
$ |
260,100 |
|
|
$ |
(1,044,400 |
) |
| Adjustments to
reconcile net (loss) income to EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
| |
Depreciation and
amortization |
479,300 |
|
|
353,100 |
|
|
1,429,100 |
|
|
1,114,900 |
|
| |
Amortization of deferred
financing costs |
1,300 |
|
|
- |
|
|
3,800 |
|
|
14,800 |
|
| |
Income tax provision
(benefit) |
32,300 |
|
|
24,800 |
|
|
126,800 |
|
|
45,700 |
|
| |
Interest income |
(100 |
) |
|
(900 |
) |
|
(4,800 |
) |
|
(6,300 |
) |
| |
Interest expense |
76,800 |
|
|
21,600 |
|
|
227,200 |
|
|
56,700 |
|
| EBITDA |
$ |
773,300 |
|
|
$ |
288,600 |
|
|
$ |
2,042,200 |
|
|
$ |
181,400 |
|
| Other adjustments
to reconcile net (loss) income to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
| |
Provision for doubtful
accounts |
12,300 |
|
|
(300 |
) |
|
23,500 |
|
|
(6,100 |
) |
| |
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 |
163,400 |
|
|
272,800 |
|
|
536,800 |
|
|
593,100 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted
EBITDA |
$ |
949,000 |
|
|
$ |
561,100 |
|
|
$ |
2,602,500 |
|
|
$ |
768,400 |
|
Safe Harbor StatementThe 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, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
ASSETS |
|
|
|
|
|
|
| CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
7,099,617 |
|
|
$ |
2,431,892 |
|
|
Accounts receivable, net of allowance for doubtful
accounts |
|
|
|
|
|
of $125,496 and $106,733 in 2019 and 2018, respectively |
6,952,068 |
|
|
11,089,315 |
|
|
Unbilled accounts receivable |
13,265,684 |
|
|
9,566,170 |
|
|
Other current assets |
856,274 |
|
|
1,086,686 |
|
| |
|
|
|
|
|
| Total current assets |
28,173,643 |
|
|
24,174,063 |
|
| |
|
|
|
|
|
| NONCURRENT ASSETS |
|
|
|
|
|
|
Property and equipment, net |
581,667 |
|
|
1,012,684 |
|
|
Operating lease right of use asset, net |
5,690,692 |
|
|
- |
|
|
Intangibles, net |
2,640,164 |
|
|
3,103,753 |
|
|
Goodwill |
18,555,578 |
|
|
18,555,578 |
|
|
Other long-term assets |
141,702 |
|
|
209,099 |
|
| |
|
|
|
|
|
| Total assets |
$ |
55,783,446 |
|
|
$ |
47,055,177 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
| CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable |
$ |
6,108,178 |
|
|
$ |
7,363,621 |
|
|
Accrued expenses |
14,465,322 |
|
|
10,716,438 |
|
|
Deferred revenue |
2,185,581 |
|
|
2,072,344 |
|
|
Current portion of operating lease liabilities |
499,739 |
|
|
107,325 |
|
|
Current portion of other term obligations |
62,402 |
|
|
192,263 |
|
| |
|
|
|
|
|
| Total current liabilities |
23,321,222 |
|
|
20,451,991 |
|
| |
|
|
|
|
|
| NONCURRENT LIABILITIES |
|
|
|
|
|
|
Operating lease liabilities, net of current portion |
5,339,380 |
|
|
122,040 |
|
|
Other term obligations, net of current portion |
- |
|
|
73,952 |
|
|
Deferred revenue, net of current portion |
367,065 |
|
|
466,714 |
|
|
Deferred tax liability |
1,607,629 |
|
|
1,523,510 |
|
| |
|
|
|
|
|
| Total liabilities |
30,635,296 |
|
|
22,638,207 |
|
| |
|
|
|
|
|
| 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; 110,000,000 shares |
|
|
|
|
|
authorized; 84,775,186 and 84,112,446 shares |
|
|
|
|
|
|
issued and outstanding, respectively |
84,776 |
|
|
84,113 |
|
|
Additional paid-in capital |
95,462,725 |
|
|
94,926,560 |
|
|
Accumulated other comprehensive loss |
(252,183 |
) |
|
(186,485 |
) |
|
Accumulated deficit |
(70,147,168 |
) |
|
(70,407,218 |
) |
| |
|
|
|
|
|
| Total stockholders’
equity |
25,148,150 |
|
|
24,416,970 |
|
| |
|
|
|
|
|
| Total liabilities and
stockholders’ equity |
$ |
55,783,446 |
|
|
$ |
47,055,177 |
|
WIDEPOINT CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
| |
THREE MONTHS ENDED |
|
|
NINE MONTHS ENDED |
|
| |
SEPTEMBER 30, |
|
|
SEPTEMBER 30, |
|
| |
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
(Unaudited) |
|
REVENUES |
$ |
29,616,940 |
|
|
$ |
21,294,360 |
|
|
$ |
73,626,995 |
|
|
$ |
58,918,317 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| COST OF REVENUES (including
amortization and depreciation of $233,033,
$248,009, $698,192, and $802,174, respectively) |
25,302,919 |
|
|
17,609,287 |
|
|
61,002,387 |
|
|
48,134,084 |
|
| GROSS PROFIT |
4,314,021 |
|
|
3,685,073 |
|
|
12,624,608 |
|
|
10,784,233 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
406,683 |
|
|
387,407 |
|
|
1,215,556 |
|
|
1,366,989 |
|
|
General and administrative expenses (including
share-based compensation of $163,451,
$272,737, $536,828 and $593,075, respectively) |
3,372,269 |
|
|
3,257,262 |
|
|
10,070,383 |
|
|
10,037,904 |
|
|
Depreciation and amortization |
246,293 |
|
|
104,914 |
|
|
730,905 |
|
|
312,763 |
|
|
Total operating expenses |
4,025,245 |
|
|
3,749,583 |
|
|
12,016,844 |
|
|
11,717,656 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| INCOME (LOSS) FROM
OPERATIONS |
288,776 |
|
|
(64,510 |
) |
|
607,764 |
|
|
(933,423 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| OTHER (EXPENSE) INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
40 |
|
|
936 |
|
|
4,761 |
|
|
6,339 |
|
|
Interest expense |
(78,066 |
) |
|
(21,644 |
) |
|
(230,983 |
) |
|
(71,531 |
) |
|
Other income |
5,324 |
|
|
2 |
|
|
5,324 |
|
|
3 |
|
|
Total other expense |
(72,702 |
) |
|
(20,706 |
) |
|
(220,898 |
) |
|
(65,189 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| INCOME BEFORE INCOME TAX
PROVISION |
216,074 |
|
|
(85,216 |
) |
|
386,866 |
|
|
(998,612 |
) |
| INCOME TAX PROVISION |
32,364 |
|
|
24,795 |
|
|
126,816 |
|
|
45,743 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| NET INCOME (LOSS) |
$ |
183,710 |
|
|
$ |
(110,011 |
) |
|
$ |
260,050 |
|
|
$ |
(1,044,355 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| BASIC EARNINGS (LOSS) PER
SHARE |
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
| BASIC WEIGHTED-AVERAGE SHARES
OUTSTANDING |
84,234,354 |
|
|
83,177,804 |
|
|
84,014,053 |
|
|
83,100,832 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| DILUTED EARNINGS (LOSS) PER
SHARE |
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
$ |
0.00 |
|
|
$ |
(0.01 |
) |
| DILUTED WEIGHTED-AVERAGE
SHARES OUTSTANDING |
84,271,825 |
|
|
83,177,804 |
|
|
84,051,524 |
|
|
83,100,832 |
|
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