GlobeNewswire Inc | Nov 16, 2020 04:01PM EST

November 16, 2020

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, September 30, 2020 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 $ 0.13 $ 0.02 (EPS)EBITDA $ 1.6 $ 0.8 Nine Month 2020 Financial Summary (in millions, except per share amounts) September 30, September 30, 2020 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 $ 0.24 $ 0.03 (EPS)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 Companys 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 Companys planned strategic investments in sales and marketing and product development. The Companys 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 WidePoints 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 markets growing demand for our products that function as a solution for many of the problems faced by large government and commercial enterprises in todays 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.

WidePoints 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 Companys 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, visitwidepoint.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 toreconcile net (loss) income toEBITDA: Depreciation and 415,700 479,300 1,247,100 1,429,100 amortization Amortization of deferred - 1,300 1,700 3,800 financing costs Income tax provision 12,500 32,300 242,800 126,800 (benefit) Interest (100 ) (100 ) (3,100 ) (4,800 ) income Interest 69,600 76,800 226,200 227,200 expense EBITDA $ 1,564,700 $ 773,300 $ 3,754,200 $ 2,042,200 Other adjustmentsto reconcile net (loss) income toAdjusted EBITDA: (Recovery) Provision for 12,300 600 23,500 doubtful accounts Gain on sale of assets held - - - - for sale Loss on disposal of - - - - leasehold improvements Lease account impact on - - - EBITDA Stock-based compensation 160,000 163,400 650,900 536,800 expense 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 Corporations 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 accountsof $119,248 and $126,235 in 2020 and 2019, 31,469,534 14,580,928 respectivelyUnbilled 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 580,483 599,619 liabilitiesCurrent portion of other term obligations - 133,777 Total current liabilities 51,153,476 31,528,266 NONCURRENT LIABILITIES Operating lease liabilities, net of current 6,097,949 5,593,649 portionDeferred 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 sharesauthorized; 2,045,714 shares issued and none - - outstandingCommon stock, $0.001 par value; 30,000,000 sharesauthorized; 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 anddepreciation of $130,559, $233,033, $432,327, and 51,888,205 25,302,919 136,314,439 61,002,387 $698,192, respectively) 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, 3,684,344 3,372,269 10,887,952 10,070,383 $650,924 and $536,828, respectively) Depreciation and 285,181 246,293 814,813 730,905 amortization Total operating 4,469,540 4,025,245 13,134,695 12,016,844 expenses 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 (69,370 ) (72,702 ) (224,312 ) (220,898 ) expense INCOME BEFORE INCOME 1,079,446 216,074 2,282,261 386,866 TAX PROVISIONINCOME 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 $ 0.13 $ 0.02 $ 0.24 $ 0.03 SHARE BASIC WEIGHTED-AVERAGE 8,450,843 8,423,435 8,409,114 8,401,405 SHARES OUTSTANDING DILUTED EARNINGS PER $ 0.13 $ 0.02 $ 0.24 $ 0.03 SHARE DILUTEDWEIGHTED-AVERAGE 8,527,309 8,427,183 8,463,561 8,405,152 SHARES OUTSTANDING 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 toreconcile net (loss) income to EBITDA: Depreciation and 415,700 479,300 1,247,100 1,429,100 amortization Amortization of deferred financing - 1,300 1,700 3,800 costs Income tax 12,500 32,300 242,800 126,800 provision (benefit) 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 toreconcile net (loss) income to AdjustedEBITDA: (Recovery) Provision for 12,300 600 23,500 doubtful accounts 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 160,000 163,400 650,900 536,800 expense Adjusted EBITDA $ 1,724,700 $ 949,000 $ 4,405,700 $ 2,602,500