WidePoint Reports Full Year and Fourth Quarter 2020 Financial Results
Record 2020 Financial Results Highlighted by 29% Increase in Managed Services Revenue, $10.3 Million in Net Income, and 59% Increase in Adjusted EBITDA
FAIRFAX, VA / ACCESSWIRE / March 23, 2021 / 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 full year and fourth quarter ended December 31, 2020.
Fourth Quarter 2020 and Recent Operational Highlights:
Secured the U.S. Department of Homeland Security's (DHS's) Cellular Wireless Managed Services (CWMS) 2.0 contract, valued at up to $500 million
Awarded two new Identity Management contracts, expanding WidePoint's commercial footprint as well as the Company's secure digital certificates into a new U.S. federal agency
Number of U.S. Department of Defense secure digital certificates issued increased 17% year-over-year from the fourth quarter of 2020, leading to an increase in high margin Identity Management revenue
Soft-Ex, WidePoint's subsidiary, awarded multi-year digital billing and analytics contracts with multiple European enterprises, including Cancom, Zetacom, and Three Ireland
Secured more than $10.4 million in contract wins, exercised option periods, and contract extensions during the fourth quarter of 2020, excluding the new contract from DHS
Successfully effectuated 1-for-10 reverse stock split on November 6, 2020
Management Commentary
"2020 was the most successful year in WidePoint's history as we set records in each of our financial performance metrics, during a pandemic, while seamlessly managing the largest mobility managed service project in the country," said WidePoint's CEO, Jin Kang. "In 2020, our total revenues increased to $180 million, while our managed services revenues increased 29% year-over-year. The increase in our higher margin managed services business coupled with a minimal increase in our operating expenses demonstrates the leverage we have in our business model. Our ability to efficiently scale drove $2.1 million in net income, excluding our non-cash tax benefit, which is an 830% increase in net income from 2019, as well as a 59% increase in adjusted EBITDA to $5.7 million, which was right at the top end of our expected range.
"At the end of the year, we were awarded the much-anticipated CWMS 2.0 contract from the U.S. Department of Homeland Security, securing our position with one of our most prominent customers. That momentum has carried into 2021 with several wins for both our Identity Management and Digital Billing and Analytics businesses, both of which remain in high demand as we offer effective solutions to many of the challenges large government and commercial enterprises face in the modern, mobile world.
"Our primary objective for 2021 is to profitably grow WidePoint by focusing on our core competencies, by strengthening our technical capabilities, and by enhancing our organization with an accretive acquisition. With a robust client base and over 90% customer retention, demand for our solutions increasing, and a balance sheet with $16 million in cash and no debt, we are confident that we will be able to execute on our strategy in 2021 and continue driving value for our shareholders."
Full Year 2020 Financial Highlights (results compared to the same year-ago period):
Revenues increased 77% to $180.3 million
Managed Services revenue increased 29% to $42.7 million
Gross profit increased 18% to $20.5 million
Net income totaled $10.3 million, or $1.20 per diluted share, including an $8.2 million, or $0.95 per diluted share, one-time tax allowance reversal
EBITDA, a non-GAAP financial measure, increased 71% to $4.9 million
Adjusted EBITDA, a non-GAAP financial measure, increased 59% to $5.7 million
Fourth Quarter 2020 Financial Highlights (results compared to the same year-ago period):
Revenues increased 1% to $28.4 million
Managed Services revenue increased 7% to $8.9 million
Gross profit increased 1% to $4.8 million
Net income totaled $8.3 million, or $0.94 per diluted share, including an $8.2 million, or $0.93 per diluted share, one-time tax allowance reversal
EBITDA, a non-GAAP financial measure, increased 39% to $1.1 million
Adjusted EBITDA, a non-GAAP financial measure, increased 30% to $1.3 million
Full Year 2020 Financial Summary
(in millions, except per share amounts) | December 31, 2020 | December 31, 2019 | ||||||
(Unaudited) | ||||||||
Revenues | $ | 180.3 | $ | 101.7 | ||||
Gross Profit | $ | 20.5 | $ | 17.4 | ||||
Gross Profit Margin | 11.3 | % | 17.1 | % | ||||
Operating Expenses | $ | 17.2 | $ | 16.5 | ||||
Income from Operations | $ | 3.2 | $ | 0.9 | ||||
Net Income | $ | 10.3 | $ | 0.2 | ||||
Basic Earnings per Share (EPS) | $ | 1.22 | $ | 0.03 | ||||
Diluted Earnings per Share (EPS) | $ | 1.20 | $ | 0.03 | ||||
EBITDA | $ | 4.9 | $ | 2.8 | ||||
Adjusted EBITDA | $ | 5.7 | $ | 3.6 | ||||
Fourth Quarter 2020 Financial Summary
(in millions, except per share amounts) | December 31, 2020 | December 31, 2019 | ||||||
(Unaudited) | ||||||||
Revenues | $ | 28.4 | $ | 28.1 | ||||
Gross Profit | $ | 4.8 | $ | 4.8 | ||||
Gross Profit Margin | 17.0 | % | 16.9 | % | ||||
Operating Expenses | $ | 4.1 | $ | 4.5 | ||||
Income (Loss) from Operations | $ | 0.7 | $ | 0.3 | ||||
Net Income (Loss) | $ | 8.3 | $ | (0.0 | ) | |||
Basic Earnings per Share (EPS) | $ | 0.96 | $ | (0.00 | ) | |||
Diluted Earnings per Share (EPS) | $ | 0.94 | $ | (0.00 | ) | |||
EBITDA | $ | 1.1 | $ | 0.8 | ||||
Adjusted EBITDA | $ | 1.3 | $ | 1.0 | ||||
Conference Call
WidePoint management will hold a conference call today (March 23, 2021) 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: 888-506-0062
International number: 973-528-0011
Passcode: 502619
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 April 6, 2021.
Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 40212
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.
FISCAL YEAR ENDED | THREE MONTHS ENDED | |||||||||||||||
DECEMBER 31, | DECEMBER 31, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
NET INCOME (LOSS) | $ | 10,323,700 | $ | 226,300 | $ | 8,284,200 | $ | (33,800 | ) | |||||||
Adjustments to reconcile net (loss) income to EBITDA: | ||||||||||||||||
Depreciation and amortization | 1,632,700 | 1,910,600 | 385,600 | 481,500 | ||||||||||||
Amortization of deferred financing costs | 1,700 | 5,000 | - | 1,200 | ||||||||||||
Income tax provision (benefit) | (7,400,000) | 392,700 | (7,642,800) | 265,900 | ||||||||||||
Interest income | (3,900) | (5,400 | ) | (800) | (600 | ) | ||||||||||
Interest expense | 301,200 | 305,600 | 75,000 | 78,400 | ||||||||||||
EBITDA | $ | 4,855,400 | $ | 2,834,800 | $ | 1,101,200 | $ | 792,600 | ||||||||
Other adjustments to reconcile net (loss) income to Adjusted EBITDA: | ||||||||||||||||
Provision for doubtful accounts | 600 | 22,000 | - | (1,500 | ) | |||||||||||
Stock-based compensation expense | 810,300 | 718,000 | 159,400 | 181,200 | ||||||||||||
Adjusted EBITDA | $ | 5,666,300 | $ | 3,574,800 | $ | 1,260,600 | $ | 972,300 | ||||||||
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
949-574-3860
WYY@gatewayir.com
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, | DECEMBER 31, | |||||||||
2020 | 2019 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS | ||||||||||
Cash and cash equivalents | $ | 15,996,749 | $ | 6,879,627 | ||||||
Accounts receivable, net of allowance for doubtful accounts | ||||||||||
of $114,169 and $126,235 in 2020 and 2019, respectively | 35,882,661 | 14,580,928 | ||||||||
Unbilled accounts receivable | 13,848,726 | 13,976,958 | ||||||||
Other current assets | 1,763,633 | 1,094,847 | ||||||||
Total current assets | 67,491,769 | 36,532,360 | ||||||||
NONCURRENT ASSETS | ||||||||||
Property and equipment, net | 573,039 | 681,575 | ||||||||
Operating lease right of use asset, net | 6,095,376 | 5,932,769 | ||||||||
Intangibles, net | 2,187,503 | 2,450,770 | ||||||||
Goodwill | 18,555,578 | 18,555,578 | ||||||||
Deferred tax asset | 5,606,079 | - | ||||||||
Other long-term assets | 815,007 | 140,403 | ||||||||
Total assets | $ | 101,324,351 | $ | 64,293,455 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES | ||||||||||
Accounts payable | $ | 36,221,981 | $ | 13,581,822 | ||||||
Accrued expenses | 15,626,313 | 14,947,981 | ||||||||
Deferred revenue | 2,016,282 | 2,265,067 | ||||||||
Current portion of operating lease liabilities | 577,855 | 599,619 | ||||||||
Current portion of other term obligations | - | 133,777 | ||||||||
Total current liabilities | 54,442,431 | 31,528,266 | ||||||||
NONCURRENT LIABILITIES | ||||||||||
Operating lease liabilities, net of current portion | 5,931,788 | 5,593,649 | ||||||||
Deferred revenue, net of current portion | 398,409 | 363,560 | ||||||||
Deferred tax liability | - | 1,868,562 | ||||||||
Total liabilities | 60,772,628 | 39,354,037 | ||||||||
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; 9,050,262,and 8,386,146 shares | ||||||||||
issued and outstanding, respectively | 8,876 | 83,861 | ||||||||
Additional paid-in capital | 100,504,741 | 95,279,114 | ||||||||
Accumulated other comprehensive loss | (104,615) | (242,594 | ) | |||||||
Accumulated deficit | (59,857,279) | (70,180,963 | ) | |||||||
Total stockholders' equity | 40,551,723 | 24,939,418 | ||||||||
Total liabilities and stockholders' equity | $ | 101,324,351 | $ | 64,293,455 | ||||||
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED | THREE MONTHS ENDED | |||||||||||||||
DECEMBER 31, | DECEMBER 31, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
REVENUES | $ | 180,343,015 | $ | 101,720,247 | $ | 28,387,308 | $ | 28,093,252 | ||||||||
COST OF REVENUES (including amortization and depreciation of | ||||||||||||||||
$541,842 and $922,455, respectively) | 159,887,807 | 84,342,282 | 23,573,368 | 23,339,895 | ||||||||||||
GROSS PROFIT | 20,455,208 | 17,377,965 | 4,813,940 | 4,753,357 | ||||||||||||
11.3 | % | 17.1 | % | 17.0 | % | 16.9 | % | |||||||||
OPERATING EXPENSES | ||||||||||||||||
Sales and marketing | 1,871,146 | 1,659,875 | 439,216 | 444,319 | ||||||||||||
General and administrative expenses (including share-based | ||||||||||||||||
compensation of $810,281 and $717,987, respectively) | 14,270,342 | 13,844,689 | 3,382,390 | 3,774,306 | ||||||||||||
Depreciation and amortization | 1,091,463 | 988,146 | 276,650 | 257,241 | ||||||||||||
Total operating expenses | 17,232,951 | 16,492,710 | 4,098,256 | 4,475,866 | ||||||||||||
INCOME (LOSS) FROM OPERATIONS | 3,222,257 | 885,255 | 715,684 | 277,491 | ||||||||||||
OTHER (EXPENSE) INCOME | ||||||||||||||||
Interest income | 3,944 | 5,355 | 825 | 594 | ||||||||||||
Interest expense | (302,924) | (310,582 | ) | (75,035) | (79,599 | ) | ||||||||||
Other income | 456 | 38,877 | (2) | 33,553 | ||||||||||||
Total other expense | (298,524) | (266,350 | ) | (74,212) | (45,452 | ) | ||||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION | 2,923,733 | 618,905 | 641,472 | 232,039 | ||||||||||||
INCOME TAX PROVISION | (7,399,951) | 392,650 | (7,642,734) | 265,834 | ||||||||||||
NET INCOME (LOSS) | $ | 10,323,684 | $ | 226,255 | $ | 8,284,206 | $ | (33,795 | ) | |||||||
BASIC EARNINGS (LOSS) PER SHARE | $ | 1.22 | $ | 0.03 | $ | 0.96 | $ | (0.00 | ) | |||||||
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING | 8,460,558 | 8,397,454 | 8,613,772 | 8,394,097 | ||||||||||||
DILUTED EARNINGS (LOSS) PER SHARE | $ | 1.20 | $ | 0.03 | $ | 0.94 | $ | (0.00 | ) | |||||||
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING | 8,603,170 | 8,401,029 | 8,783,242 | 8,397,672 | ||||||||||||
SOURCE: WidePoint Corporation
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