GlobeNewswire Inc | Aug 13, 2020 04:05PM EDT

August 13, 2020

FAIRFAX, Va., Aug. 13, 2020 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2020.

Second Quarter 2020 and Recent Operational Highlights:

-- Secured $42 million in federal contract wins, exercised option periods, and contract extensions during the second quarter of 2020 -- Awarded a new contract from the Virginia Alcoholic Beverage Control Authority (Virginia ABC) for telecom expense management (TEM) services -- Secured $1.5 million in commercial TM2 contracts during the second quarter of 2020 -- Increased the number of devices managed for the United States Census 2020 by over 50% to approximately 680,000 devices -- Announced a strategic vendor agreement with SYNNEX Corporation (NYSE: SNX), potentially expanding channels for reselling credentials

Second Quarter 2020 Financial Highlights (results compared to the same year-ago period):

-- Revenues increased 148% to $54.8 million -- Managed Services revenue increased 22% to $9.8 million -- Gross profit increased 25% to $5.1 million -- Net income totaled $489,000 -- EBITDA, a non-GAAP financial measure, increased 230% to $1.0 million -- Adjusted EBITDA, a non-GAAP financial measure, increased 107% to $1.2 million

Six Month 2020 Financial Highlights (results compared to the same year-ago period):

-- Revenues increased 115% to $94.4 million -- Managed Services revenue increased 37% to $21.4 million -- Gross profit increased 21% to $10.0 million -- Net income totaled $973,000 -- EBITDA, a non-GAAP financial measure, increased 73% to $2.2 million -- Adjusted EBITDA, a non-GAAP financial measure, increased 62% to $2.7 million

Second Quarter 2020 Financial Summary

(in millions, except per share amounts) June 30, 2020 June 30, 2019 (Unaudited)Revenues $ 54.8 $ 22.1 Gross Profit $ 5.1 $ 4.1 Gross Profit Margin 9.2 % 18.4 %Operating Expenses $ 4.4 $ 4.2 Income (Loss) from Operations $ 0.6 $ (0.2 )Net Income (Loss) $ 0.5 $ (0.3 )Basic and Diluted Earnings per Share (EPS) $ 0.01 $ 0.00 EBITDA $ 1.0 $ 0.3 Adjusted EBITDA $ 1.2 $ 0.6 Six Month 2020 Financial Summary (in millions, except per share amounts) June 30, 2020 June 30, 2019 (Unaudited)Revenues $ 94.4 $ 44.0 Gross Profit $ 10.0 $ 8.3 Gross Profit Margin 10.6 % 18.9 %Operating Expenses $ 8.7 $ 8.0 Income from Operations $ 1.4 $ 0.3 Net Income $ 1.0 $ 0.1 Basic and Diluted Earnings per Share (EPS) $ 0.01 $ 0.00 EBITDA $ 2.2 $ 1.3 Adjusted EBITDA $ 2.7 $ 1.7

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. The company is also reiterating its EBITDA guidance of $3.0 million to $3.4 million, which at the midpoint, represents a 13% increase relative to fiscal 2019.The EBITDA forecast takes into consideration the companys planned strategic investments in sales and marketing and product development in the second half of 2020. The companys financial outlook is based on current expectations.

Management Commentary

Despite the challenging operating environment that persisted through the second quarter of 2020, we continued to build on the positive trends we established at the start of the year and produced one of the most successful quarters in our companys history, said WidePoints CEO, Jin Kang. Our revenues increased considerably to $54.8 million, largely driven by our increased work on the U.S. Census 2020 as well as expansions with other federal government customers who rely on our services to help them navigate the increasing complexities of the mobile landscape. Although the Census project contains a large amount of Carrier Services revenues, which negatively impact our margin profile, we still earned $489,000 in net income and approximately $1.0 million in EBITDA as our high margin Managed Services revenues increased 22% to $9.8 million in the second quarter.

As the number of mobile and IoT devices continues to expand, the need for effective management and top-tier security, which simplifies complexity and generates cost savings, is only increasing. Given those trends and our strong financial position, we remain optimistic about our prospects for the second half of the year and our ability to continue profitably growing the business over the long term.

Conference Call

WidePoint management will hold a conference call today (August 13, 2020) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

WidePoint 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 August 27, 2020.

Toll-free replay number: 877-481-4010International replay number: 919-882-2331Replay ID: 36035

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 SIX MONTHS ENDED JUNE 30, JUNE 30, 2020 2019 2020 2019 (Unaudited) (Unaudited)NET INCOME (LOSS) $ 488,600 $ (307,800 ) $ 972,500 $ 76,300 Adjustments to reconcile net (loss) income to EBITDA: Depreciation and 408,600 477,100 831,400 949,800 amortization Amortization of deferred 400 1,200 1,700 2,500 financing costs Income tax provision 53,100 66,500 230,300 94,500 (benefit) Interest income 100 (200 ) (3,000 ) (4,700 ) Interest expense 75,800 74,200 156,600 150,400 EBITDA $ 1,026,600 $ 311,000 $ 2,189,500 $ 1,268,800 Other adjustments to reconcile net (loss) income to Adjusted EBITDA: (Recovery) Provision 3,600 3,600 600 11,200 for doubtful accounts Stock-based compensation 209,500 284,100 490,900 373,400 expense Adjusted EBITDA $ 1,239,700 $ 598,700 $ 2,681,000 $ 1,653,400

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

JUNE 30, DECEMBER 31, 2020 2019 (Unaudited)ASSETSCURRENT ASSETS Cash and cash equivalents $ 7,520,725 $ 6,879,627 Accounts receivable, net of allowance for doubtful accounts of $116,898 and $126,235 in 2020 and 2019, 22,092,308 14,580,928 respectivelyUnbilled accounts receivable 26,698,793 13,976,958 Other current assets 1,397,958 1,094,847 Total current assets 57,709,784 36,532,360 NONCURRENT ASSETS Property and equipment, net 589,664 681,575 Operating lease right of use asset, net 5,606,082 5,932,769 Intangibles, net 2,196,878 2,450,770 Goodwill 18,555,578 18,555,578 Other long-term assets 641,381 140,403 Total assets $ 85,299,367 $ 64,293,455 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 20,107,933 $ 13,581,822 Accrued expenses 28,534,306 14,947,981 Deferred revenue 1,892,243 2,265,067 Current portion of operating lease liabilities 566,881 599,619 Current portion of other term obligations 31,887 133,777 Total current liabilities 51,133,250 31,528,266 NONCURRENT LIABILITIES Operating lease liabilities, net of current 5,332,139 5,593,649 portionOther term obligations, net of current portion - - Deferred revenue, net of current portion 354,385 363,560 Deferred tax liability 2,096,636 1,868,562 Total liabilities 58,916,410 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; 110,000,000 shares authorized; 84,418,523 and 83,861,453 shares issued and outstanding, respectively 84,418 83,861 Additional paid-in capital 95,759,312 95,279,114 Accumulated other comprehensive loss (252,325 ) (242,594 )Accumulated deficit (69,208,448 ) (70,180,963 ) Total stockholders? equity 26,382,957 24,939,418 Total liabilities and stockholders? equity $ 85,299,367 $ 64,293,455

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2020 2019 2020 2019 (Unaudited) (Unaudited)REVENUES $ $ 22,093,153 $ $ 44,010,055 54,783,790 94,449,146COST OF REVENUES(includingamortization anddepreciation of $142,150, 49,726,210 18,036,409 84,426,234 35,699,468 $232,968,$301,768, and$465,159,respectively) GROSS PROFIT 4,056,744 8,310,587 5,057,580 10,022,912 OPERATING EXPENSESSales and 439,684 415,462 931,915 808,873 marketingGeneral andadministrativeexpenses(includingshare-based compensation of 3,733,516 3,563,405 7,203,608 6,698,114 $209,427,$284,111,$490,868 and$373,377,respectively)Product - - - - developmentDepreciation and 266,404 244,064 529,632 484,612 amortization Total operating 4,222,931 7,991,599 expenses 4,439,604 8,665,155 INCOME (LOSS) 617,976 (166,187 ) 318,988 FROM OPERATIONS 1,357,757 OTHER (EXPENSE) INCOMEInterest income (68 ) 259 3,025 4,721 Interest expense (76,190 ) (75,372 ) ) (152,917 ) (158,307Other income 9 (9 ) 340 - Total other (76,249 ) (75,122 ) ) (148,196 )expense (154,942 INCOME (LOSS) BEFORE INCOME 541,727 (241,309 ) 1,202,815 170,792 TAX PROVISIONINCOME TAX 53,100 66,452 230,300 94,452 PROVISION NET INCOME $ 488,627 $ (307,761 ) $ 972,515 $ 76,340 (LOSS) BASIC EARNINGS $ 0.01 $ 0.00 $ 0.01 $ 0.00 PER SHARE BASICWEIGHTED-AVERAGE 83,990,722 83,902,077 SHARES 83,920,314 83,880,197OUTSTANDING DILUTED EARNINGS $ 0.01 $ 0.00 $ 0.01 $ 0.00 PER SHARE DILUTEDWEIGHTED-AVERAGE 83,990,722 83,965,994 SHARES 84,964,261 84,664,395OUTSTANDING