WYY 8-K
Widepoint Corp (WYY)
8-K
2020-03-30
For: 2020-03-24
View Original
Added on
April 06, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24,
2020
_________________
WIDEPOINT CORPORATION
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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001-33035
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52-2040275
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File Number)
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(I.R.S.
EmployerIdentification No.)
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11250 Waples Mill Road, South Tower 210, Fairfax,
Virginia
(Address
of Principal Executive Office)
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22030
(Zip
Code)
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Registrant’s
telephone number, including area code: (703) 349-2577
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[__]
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[__]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[__]
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[__]
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of
1934 (§240.12b-2 of this chapter). Emerging growth company
☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Securities Registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Trading Symbol
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Name of Exchange on Which Registered
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Common Stock, $0.001 par value per share
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WYY
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NYSE
American
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Item
2.02 Results of Operations and Financial
Condition.
On
March 24, 2020, WidePoint Corporation (the “Company”)
conducted a conference call to discuss its financial results
reported results for the fourth quarter and full year ended
December 31, 2019. A copy of the transcript of such conference call
is furnished herewith as Exhibit 99.1 to this Current Report on
Form 8-K. In addition, on March 24, 2020, the Company issued a
press release announcing its financial results for the fourth
quarter and full year ended December 31, 2019. A copy of the
Company’s press release is furnished herewith as Exhibit 99.2
to this Current Report on Form 8-K.
The
information in this item shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934
(the “Exchange Act”), or otherwise subject to the
liabilities of Section 18, nor shall it be deemed incorporated by
reference in any of the Company’s filings under the
Securities Act of 1933, as amended, or the Exchange Act, except to
the extent, if any, expressly set forth by specific reference in
such filing.
Item
9.01(d) Financial Statements and Exhibits.
Exhibit 99.1
Transcript of Conference Call
Exhibit 99.2
Earnings Press Release dated March 24,
2020
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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WIDEPOINT
CORPORATION
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Date: March 26,
2020
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By:
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/s/ Jin
Kang
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Jin
Kang
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Chief Executive
Officer
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Exhibit 99.1
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Transcript of
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
Participants
Jin
Kang - President & Chief Executive Officer
Jason
Holloway - Chief Sales & Marketing Officer
Kellie
Kim - Executive Vice President & CFO
Analysts
Mike
Crawford - B. Riley FBR, Inc.
Barry
Sine - Spartan Capital Securities LLC
Presentation
Operator
Good
afternoon. Welcome to WidePoint's Fourth Quarter and Full-Year 2019
Earnings Conference Call. My name is Jess and I will be your
operator for today's call. Joining us for today's presentation is
WidePoint's President and CEO, Jin Kang; Chief Sales and Marketing
Officer, Jason Holloway; and Executive Vice President and CFO,
Kellie Kim.
Following their
remarks we will open up the call for questions from WidePoint's
publishing analysts and major institutional investors. If your
questions are not taken today or you would like additional
information, please contact WidePoint's Investor Relations team at
[email protected].
Before
we begin the call, I would like to provide WidePoint's Safe Harbor
statement that includes cautions regarding forward-looking
statements made during this call. The matters discussed in this
conference call may include forward-looking statements regarding
future events and the future performance of WidePoint Corporation
that involve risks and uncertainties that could cause actual
results to differ materially from those anticipated. These risks
and uncertainties are described in the company's Form 10-K filed
with the Securities and Exchange Commission. Finally, I would like
to remind everyone that this call will be available for replay via
a link in the Investor Relations section of the company's website
at www.widepoint.com.
I would
now like to turn the call over to WidePoint's President and CEO,
Mr. Jin Kang. Sir, please proceed.
Jin Kang - President & Chief Executive Officer
Thank
you, operator and good afternoon to everyone. Thank you for joining
us today to review our financial results for the fourth quarter and
full-year 2019. The fourth quarter of 2019 was a strong finish to
what has been a pivotal year for our business. From a financial
perspective, the quarter was highlighted by a 13% increase in
revenues with $28.1 million and adjusted EBITDA of $1 million,
which is in line with the same quarter 2018.
Additionally, Q4
2019 marked our 10th consecutive quarter
of positive adjusted EBITDA and the highest fourth quarter revenue
in company history. The positive financial results of the fourth
quarter along with our success throughout the year, ensure that we
not only matched, but in some instances exceeded our financial
targets for the year.
For the
full-year 2019, revenue increased 22% to $101.7 million, well above
our original guidance and above the $95 million in revenue we were
targeting in December. Our adjusted EBITDA came in at $3.6 million
which is right at the top end of our guidance range and 98% higher
than our adjusted EBITDA in 2018.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Additionally, we
recognized net income in 2019, which is a substantial improvement
from the $1.5 million net loss we recognized a year-ago. We're
obviously pleased to be exceeding the expectations of our revenue,
which we updated at the end of last year. But it's worth noting
that much of the revenue increases in both the fourth quarter and
the full-year were driven by carrier services. This trend is
similar to what we witnessed in the third quarter and which we
discussed during our last call.
As a
reminder, carrier services is low margin business that is a
necessary component of mobility management services. So while these
revenues may artificially suppress our margin profile, taking on
this type of work, does allow us to procure material contracts like
the ones we have with DHS and CDW and for reasons which should be
apparent, these contracts are beneficial to our business. They help
us secure important contracts which serve as excellent proof points
and allow us to market more effectively to prospective
clients.
So
while we're not actively working to grow this section of our
business, we don't shy away from it on principle, as the benefit
can frequently outweigh the cost. In 2019, carrier services
increased due to our work with the U.S. Coast Guard and the work
we're doing alongside the U.S. Department of Commerce to support
the 2020 census, which I'll speak more about in a
moment.
Now let
me cover the substantial improvements we made to the bottom line.
We've had two priorities for WidePoint over the past few years, to
grow the top line and to drive profitability. When you consider the
level of uncertainty that exists in the market today, driving $3.6
million in adjusted EBITDA and achieving our first full-year of
positive net income in seven years, could not be more
timely.
And
when you couple this profitability with the fact that we generated
$5.9 million in cash from operations during 2019, it becomes
apparent that we've accomplished one of our primary goals of
establishing a stable business, a business with opportunities for
continued growth and one that is well-positioned to handle the
present and potential obstacles created by the current macro
environment.
Much of
the world may be on unsure footing, but due to the stability we've
created at WidePoint, we believe there is good reason to remain
optimistic in our future. So with that in mind, let's take a look
at some of the major developments that occurred in the past few
months.
Subsequent to our
most recent conference call in November of last year, DHS released
the RFP for the Cellular Wireless Managed Services Contract, or
CWMS. This is the RFP we have all been waiting for since the end of
2018, when the contract was originally scheduled to come up for
recompete and which we’ve discussed at length on each of our
recent calls.
Now, as
you all know, the timing of this contract award has been malleable
and the multiple extensions have understandably made all of us
eager to know the final results. Those of you who saw the press
release, which we issued at the beginning of March, will already be
aware that we’ve received some clarity on this contract.
However, it was not exactly packaged the way we originally
anticipated.
On
March 2, 2020 after the RFP had already been issued, DHS opted to
cancel the recompete. We can discuss the rationale in more detail
during the Q&A for those who are curious, but suffice it to say
that there were contractual clauses which the department felt
needed to be altered. As a result of these changes, DHS has chosen
to conduct an open market solicitation and will not adhere to the
original schedule announced in the previous RFP releases. Instead,
DHS will be issuing the new recompete as a small business set
aside.
For
those of you unfamiliar with this concept, the government
occasionally limits competition for certain contracts to small
businesses in an effort to provide them with a more level playing
field. These contracts, known as small business set asides, help
small businesses compete for and win federal contracts. That's now
the route that DHS opted to take with the CWMS
contract.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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The
good news for us is that WidePoint currently meets all the
solicitation requirements for this new process. And for all the
reasons we have discussed on prior calls, including our excellent
past performance and deeply integrated solutions, we stand
extremely well-positioned to re-win this contract. In the meantime,
DHS issued a notice of intent to solicit an award, an interim sole
source, indefinite delivery, indefinite quantity or IDIQ contract
to WidePoint for the procurement of cellular wireless managed
services.
The
notice confirmed that the anticipated period of performance for the
sole source award will be 12 months from the award date. This IDIQ
will serve as an interim contract to provide uninterrupted CWMS
support for DHS, while the department conducts the acquisition of
the replacement contract. While this is not exactly the results we
anticipated. The uncertainty regarding this contract has been
eliminated for the time being.
We
should have a 12-month contract in place by the end of April, and
we remain just as prepared as ever to leverage our strong
relationship, our high quality, deeply integrated solutions and our
seasoned staff members to ensure that we have the best chance
possible of resecuring this business for a longer contract term.
The anticipated award date for the replacement contract is October
10th of
this year. However, this is a tentative date and it may
change.
Now
that we're well into 2020, I'd like to take this opportunity to
share some updates on our biggest project of the year, the 2020
U.S. Census. As I mentioned, in November, we’ve partnered
with CDW-G to assist the U.S. Census Bureau in its decennial survey
of the American population. Our role in this project is to manage
roughly half a million mobile devices being used to conduct this
survey. So far, we have customized, configured and tested our
Intelligent Telecommunication Management System, or ITMS to be used
for providing device as a service solution to the Census
Bureau.
We
utilized our system to successfully support the address canvassing
project where we help activate, deploy, track and decommission over
60,000 devices during the third quarter of 2019. Additionally, our
staff provided training and help desk support throughout the
address canvassing project to over 60,000 enumerators. We are
currently ramping up our help desk to support the full decennial
census project.
It's
worth noting that the U.S. Census is the largest
device-as-a-service project in the U.S. It would be difficult for
any organization, regardless of size and expertise, to adapt their
infrastructure to undertake such a large project. For us, it serves
as an ideal proof point for one of our core competencies, and that
is our ability to scale quickly and effectively.
Our
organization's flexibility and our ability to deliver high quality
service to all of our clients, regardless of size of contract is a
key differentiator that is often overlooked by those who aren't
directly involved in our industry. However, this is something our
customers are intimately familiar with, and it's one of the reasons
we're able to consistently beat our competition and expand their
capabilities while ensuring our organizations continue to operate
efficiently.
As the
year progresses, we'll continue to share updates as they
materialize. But for now, I'd like to turn our attention back to
some of the other changes we made at WidePoint during the latter
part of 2019. In December of last year, we announced that our CFO
search had concluded as we found an excellent addition to our team
in Kellie Kim, who is with us on the call today. Kellie has only
been with our organization for a few months, but she's done a
fantastic job so far. Her addition has allowed Ian Sparling to
return to focusing his full attention on his responsibility at
Soft-ex. As a result, our Executive leadership has been
strengthened and our organization is functioning even more
efficiently. I want to take a moment to thank Ian for stepping up
during a time of transition. Thank you very much, Ian, for a job
well done.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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In a
few moments, Kellie will come on to take us through the financials.
But first, I'm going to turn the call over to Jason to give us an
overview of our major sales initiatives in 2019 and some of our
prospects for 2020. Jason?
Jason Holloway - Chief Sales & Marketing Officer
Thank
you, Jin. As Jin mentioned, our revenue growth in 2019 was driven
predominantly by two factors: the Census address canvassing support
occurring in the second half of the year and the successful
execution of our sales strategy throughout the entire year. In each
quarter of 2019, we announced material contracts which speak to our
ability to expand deployments with current customers by
cross-selling and up-selling our services, and our capacity to
leverage the power of our systems integrator partners to expand our
footprint in new markets.
During
the first quarter, we received a $1.6 million expansion order from
the U.S. Customs and Border Protection or CBP. With this contract,
CBP, which was already a customer, expanded their wireless
footprint and increased their work with us by approximately 50%.
Shortly afterwards, we announced that we had partnered with Leidos
and was part of their winning bid on the NASA NEST contract. This
is a major example in 2019 of our ability to successfully leverage
the well-capitalized sales teams of a systems integrator partner to
win new business for WidePoint and expand our brand
awareness.
During
Q1, we were also able to expand our service offerings with CNA, a
longtime identity management customer, to include wireless and
wireline telecommunications management. In the second quarter, our
subsidiary, Soft-ex, renewed its contract with a global
communications service provider. This contract is adding $6 million
to our top line over a three-year period as we work in tandem with
the CSP to deliver cloud and onsite telecom and analytics solutions
for the CSP's client base.
And
later in July, we announced that we had secured several contract
renewals and modifications from current federal government
customers, which added $5.3 million to the top line. In Q3, we
received an aggregate of $14.7 million in contract awards, which
included expansions and extensions with current customers as well
as contracts with new clients. More recently, we've expanded our
work with CSG International.
Toward
the end of 2018, we launched a partnership with Soft-ex and CSG to
deliver a joint customer communications management platform for
both existing and new CSG clients. The goal of this project has
been to help traditional service providers evolve into digital
service providers and improve their customer loyalty and customer
retention.
One of
the ways we've done that is by working alongside CSG to convert
their customer’s bill into a marketing tool. The bill is one
of the few documents a customer is almost guaranteed to read, so
it's the perfect item to convert into a lead generation tool with
targeted advertising. Since successfully implementing that program,
we've been expanding our work with CSG clients to tackle several
new and exciting digital billing opportunities.
Traditionally,
sales lead times in the CSP space tend to be quite long and we
remain optimistic with the growing pipeline of opportunities. In
Q4, we finished very strong in the federal market with $7 million
and $1.3 million in commercial deals, totaling $8.3 million. This
is a mix of new awards, up-selling and extensions of contracts.
Throughout 2019, our TM2 strategy was very well received by both
the federal market and the commercial market.
Regarding the
Identity Management Group, we continued to set company records with
respect to the issuance of our ECA credentials. We have seen
material increases of both our credentials as well as our PKI certs
[ph] year-over-year since the current executive management team
took over in 2017. Obviously, given the volume and the increase in
revenues, 2019 was a successful year from a sales
perspective.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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However, there are
two particular things among all of these contracts that are worth
highlighting. Many of the large contracts we announced were
expansions with current customers and many of these contracts are
long-term. They typically last for three to five years, depending
on whether the customer is a commercial or a federal
client.
Expansions and
contract lengths are critical for two reasons: first, they are a
testament to how sticky we are as a business. WidePoint's customer
retention is over 95% and that's because we provide a necessary
service that simplifies our client's operations and saves them
money in the process. And because we're very good at this, clients
don't just stay with WidePoint, but they frequently expand their
work with us.
Second,
these contracts are nearly all long-term. That means the majority
of our revenues are essentially recurring. We've built a sticky
business with predictable revenues. Those are great qualities for
any company, but they’re especially pertinent now. Going
forward, we have every intention of continuing these trends. Our
goals in 2020 are to continue to drive organic growth and to do so
by utilizing the strategy that has continued to be effective for
us.
We've
had great success expanding through strategic partnerships, as
evidenced by our work with Leidos on the NASA NEST Contract and our
current work with CDW-G on the Census Project and leveraging the
well-capitalized sales teams as well-established relationships of
our systems integrators partners will remain a critical channel for
us as it allows WidePoint to remain flexible and dynamic by
minimizing our overhead.
Also,
let's not forget about our renewed relationship with Gartner, in
which our Director of Commercial Sales and our Marketing Director
have been working very closely with several Gartner analysts. To
that end, we've already seen this strategy generating traction for
us in the first few months of 2020. Stay tuned for the next
conference call in which we will be discussing a brand new
partnership with a major American multinational corporation that
provides B2B services.
While
no one knows exactly how contracts and sales channels will be
affected by the changing landscape brought on by recent macro
events, we believe there is a reason to remain optimistic about
WidePoint's prospects in 2020 and beyond, given the nature of our
contracts and our client base, coupled with the momentum we've been
building over the past few months.
Additionally, as
much of the world has suddenly shifted to remote working, large
enterprises are looking for well-vetted, quickly scalable solutions
that can help them make the transition, and we're ready to help.
The core of TM2 is helping large enterprises navigate the
complexity of the mobile landscape. We help organizations
understand where their mobile assets are and how they are being
used, and we help ensure these assets are secure and only
accessible by the properly authorized people.
As the
world relies more on working remotely and thereby more mobile, the
number of devices may increase, and it stands to reason that the
need to secure these devices with end-to-end encryption could also
increase. So, if anything, we believe there may be additional
opportunities for us to help large enterprises throughout these
trying times. Overall, it's been an excellent year for our business
and we look forward to continuing our sales initiatives throughout
the year.
With
that, I will hand the call over to Kellie.
Kellie Kim - Executive Vice President & CFO
Thank
you, Jason. As noted in our earnings release, we finished the year
with record revenues, produced positive adjusted EBITDA for the
10th
consecutive quarter and the full-year and earned a positive net
income for the full-year 2019.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Turning
to our results for the fourth quarter and full-year of 2019, fourth
quarter revenue was $28.1 million, up 13% from the $24.8 million
reported last year. Year-over-year growth was primarily driven by
increase in revenue from carrier services.
Our
gross profit for the fourth quarter increased 6% to $4.8 million
from $4.5 million in the fourth quarter of 2018. Gross margin was
16.9% in the fourth quarter, compared to 18.1% in the fourth
quarter of 2018. The decrease in gross margin was driven by the
increase in carrier services revenues previously
discussed.
In the
fourth quarter 2019, operating expenses increased by 19% to $4.5
million from $3.7 million in the fourth quarter of last year. As a
percentage of revenue, operating expenses amounted to 15.9% of
revenue, slightly up as compared to 15.1% in the fourth quarter of
2018.
For the
fourth quarter 2019, GAAP net loss was $34,000, an improvement from
a loss of $412,000 in the fourth quarter of 2018. On a non-GAAP
basis, adjusted EBITDA for the fourth quarter 2019 of $1 million
was in line with last year.
Now
let's give you a more detailed overview of the full-year 2019
financial performance. We had record revenue of $101.7 million, up
22% from $83.7 million a year-ago. This performance was driven by
37% growth in carrier services, which was slightly offset by 2%
decline in managed services. The increase in carrier services was
primarily due to the U.S. Census Project. The decrease in managed
services was primarily due to a decline in product resale revenue,
which was partially offset by increases in billable services
fees.
For the
full-year 2019, gross profit increased 14% to $17.4 million from
$15.3 million in 2018. Gross margin was 17.1% in 2019, compared to
18.2% in 2018. The drop in gross margin reflects higher mix of
carrier services revenue in 2019. We consider revenue from carrier
services to be very low margin revenue, and in 2019 accounted for
68% of revenue compared to 60% in 2018.
Operating expenses
increased 7% to $16.5 million from $15.5 million in 2018. As a
percentage of revenue, operating expenses amounted to 16.2% of
revenue compared to 18.5% in 2018. The increase in operating
expense for full-year 2019 relative to 2018 was mainly due to
increases in general and administrative expense and depreciation
and amortization expense.
For the
full-year 2019, net income was $226,000, which compares to a net
loss of $1.5 million in the prior year. Our non-GAAP adjusted
EBITDA was $3.6 million or 3.5% of revenue compared to $1.8 million
or 2.2% of revenue in 2018.
Shifting to the
balance sheet, we exited the year with $6.9 million in cash, net
working capital of $5 million and approximately $5 million
available to draw down on our credit facility. In addition,
adoption of the new accounting policy on leases has led to the
generation of a material asset and associated liability within the
balance sheet, the details of which may be found in our
10-K.
Due to
our strong cash position, we saw the opportunity to use our excess
cash to implement a stock repurchase program. In 2019, we
repurchased, in the open market, approximately 864,000 shares for a
total cash outlay of $366,000. We have purchased an additional
24,000 shares for approximately $10,000 since December 31, 2019.
However, on March 9, we opted to suspend the stock repurchase
program to preserve our cash balance due to the uncertainty caused
by the coronavirus pandemic.
This
completes my financial summary. For a more detailed analysis of our
financial results, please reference our Form 10-K, which was filed
prior to this call. So with that, I would like to turn it back to
Jin.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Jin Kang - President & Chief Executive Officer
Thank
you, Kellie, and thank you, Jason. Before we open the call to
questions, I will address a few more important points about which I
know many of our shareholders are curious. The first is our
progress on receiving a FedRAMP certification. The FedRAMP
certification is currently tied to our CWMS recompete. Once the
full award is announced and assuming that we win, we anticipate DHS
will provide the required sponsorship to begin the FedRAMP
certification.
We are
also seeking a FedRAMP sponsorship through our customer and the
Department of Defense. While we wait for our sponsorship, we are
preparing our system and the necessary documentation and work
products for the eventual FedRAMP certification process. We have
engaged with one of our partners who is a subject matter expert in
FedRAMP certification to help us prepare these documents and work
products to get ahead on the process, one sponsorship has
received.
The
good news is that we still maintain our authorization to operate,
or ATO, from DHS, which is a testament to the quality of the
security posture of our delivery system ITMS, and our ability to
meet the requirements of FedRAMP certification. We have ATOs from
both DHS and the Department of Commerce. So overall, 2019 was
another successful year for WidePoint, and we enter 2020 with a
great deal of momentum, in large part due to the Census and the
NASA NEST projects, which are now running at full
speed.
However, there's
obviously a great deal of uncertainty in the world at this time.
COVID-19, has had a material impact on all of us, and the second
order effects on the global economy have been unprecedented. For
those reasons, the management team and the Board of Directors have
concluded that it will be prudent to suspend issuing guidance for
the full-year until we have more insight into the broader
situation.
We
understand that investors are eager to learn about our expectations
for 2020, and it is our intention to provide as much clarity into
the situation as we can, when we can. But due to the extraordinary
circumstances, we do not believe providing a financial outlook for
the full-year 2020 to be constructive. However, we do currently
have more insight into how the first quarter has progressed, so we
will be providing guidance for the first quarter of
2020.
For the
first quarter, we anticipate revenue to range between $26 million
and $31 million, and we expect adjusted EBITDA to be between $0.8
million and $0.9 million. Going forward, it is our intention to
reinstitute annual guidance as soon as we have enough clarity to do
so. While we cannot predict what the coming year will look like, we
believe there is good reason to suspect that our business has been
relatively insulated from the broader effects so far.
From a
logistical perspective, we run a global organization that is
already designed for flexible working conditions. We're used to
working off site from different locations at different times. So
there are no major pain points for us as we shift to a more remote
work environment. And as Jason alluded to in his remarks, there may
actually be opportunities for us to help those enterprises that are
experiencing complications from the rapid transition to working
remotely.
We're
fortunate to have a stable business, which was profitable in 2019,
and that is continuing to generate cash as well as an incredibly
robust customer base that should be able to weather the dynamic
market conditions relatively well. While no industry is immune to
the effects of COVID-19, we serve predominantly large federal and
commercial enterprises. That means there's a lower risk of
insolvency. And in theory, the demand for our solutions should be
impacted less than other industries. That is at least how we see
things based on the information we have today.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Obviously, the
state of the world is evolving almost daily. So all of this is
subject to change. We could see demand for certain products
increase, but it is also possible that a long protracted downturn
in the economy and interruption to the supply chain could affect
our performance. We'll continue to monitor the situation closely
and adjust accordingly. But all in all, we believe we are well
prepared to continue executing on our strategy for the betterment
of our customers and our shareholders in 2020.
With
that covered, we are ready to take questions from our major
shareholders and analysts. Operator, will you please open the call
for questions?
Operator
Certainly.
[Operator instructions]. We'll go first to Mike Crawford with B.
Riley FBR.
Q: Thank you. To the extent in the last
few weeks are any guide, can you just comment on how your
operations have changed in our coronavirus infested
world?
Jin Kang - President & Chief Executive Officer
Yes.
Hi, Mike. Thank you. Thank you for that question. And, you know, we
have been working diligently to make sure that we cover the bases
in terms of making our organization more resilient and more remote.
A lot of our folks, most of our folks are working off-site, and
luckily we're able to do that. We are taking advantage of various
technology where we are able to take our computers home, take our
handsets home and to be able to field all of the
questions.
And I
think we're relatively well-placed and well insulated. As I said,
our customers are large federal agencies and commercial customers.
And we count among some of our customers, customers like NIAID, for
example, National Institute of Allergy and Infectious Disease; CDC,
Centers for Disease Control and Prevention; Health and Human
Services; USACE Army Corps of Engineers, who is now building some
emergency hospital shelters; DHS and CBP, Border Crossings, etc.
And so I think we are well placed, but because they may be
receiving some additional missions, I think that there's little
risk in the agency shutting down and on the contrary, there may be
some additional reliance on these mobile devices. And that's what
we're doing as well, we're relying on our mobile devices or
smartphones.
And so
I think we're relatively well-insulated, but we have noticed that
over the last week or two we’ve seen our help desk call
volumes go up for some of these customers. However, we have also
seen commercial customers call volume go down. I think that that's
because a lot of the folks are either working remotely or perhaps
they're taking a leave. And also we have seen our order volumes for
accessories go down a little bit and we are getting a lot of mixed
signals because the call volumes are going up, orders are going
down. So things are changing, almost hourly. So we are keeping a
very close eye on the situation. So stay tuned, but in terms of our
ability to manage our mobile workforce to be able to work off-site,
so far it's been very smooth, and we thank our IT department for
making sure that all of our infrastructure is in place for
that.
Q: Okay. Thank you.
Jin Kang - President & Chief Executive Officer
Does
that answer your question?
Q: Yes, yes. Thank you. So getting back
to the DHS. So I would imagine the more penetrated you are with
credentialing and other identity management solutions as opposed to
just pure phone life cycle management, that you would -- that would
embed you more with the customer. And so are there any metrics you
can place around that aspect of the work that you're doing for DHS
now that you believe will continue to be included in this awaited
RFP?
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
|
Jin Kang - President & Chief Executive Officer
Right.
So, I think we have, I wouldn't say a mortar [ph] lock, but I think
we’ve got a pretty good, hammerlock on the DHS, telecom
lifecycle management scope of work. What we have been making a
little bit of progress is, is that we have been working with a
contractor that is handling the issuance of all of the digital
certificates for DHS. And we are acting as their certificate
authority. And what that means is, is that when they issue these
certificates, they use our certificate authority and they pay us a
fee in order to use that service. So we are making progress, we're
working with the credential issuer. I won't name the name here
today, but suffice it to say, we are making progress on that
front.
Q: Okay. Thank you. And just a last
question. When you talked about this the $6 million, three-year
SaaS analytics win, is that incremental business with the carrier
or is that the run rate that you're already doing with the
customer?
Jin Kang - President & Chief Executive Officer
I think
you're talking about the software-as-a-service the part that Jason
was talking about is, much of it is the rewin and reupping of our
contract with DHS into task orders. Jason, did you want to add to
that?
Jason Holloway - Chief Sales & Marketing Officer
Yes,
Jin, what it is, it's with Soft-ex and that's where it's renewed
with the contract with that CSP provider.
Jin Kang - President & Chief Executive Officer
Okay.
Jason Holloway - Chief Sales & Marketing Officer
So
that—yes, sorry go ahead, Jin.
Jin Kang - President & Chief Executive Officer
Okay.
Sorry about that, Mike. That one is our work with British Telecom.
And that's for providing our software-as-a-service. And it's
actually not software-as-a-service, but more of a licensing model
for that one. And so that's a renewal of the contract and actually
it's a small expansion of that work. And so we just recently
resigned British Telecom for that and that's a three-year
contract.
Q: Okay, great. Thank you very
much.
Jin Kang - President & Chief Executive Officer
Okay.
There is one other thing that I would like to mention on the
coronavirus, and you probably all saw the released news pieces on
the Census being delayed. I believe the Census responses have now
been delayed for two weeks, but I'd like to give you a little more
status on that. And essentially, what's happened there is that the
Census response forms then have to be returned, they gave two weeks
extension for now. We are business as usual based upon the latest
guidance from Census. We are hiring and we're providing training to
all of our customer support staff and we are staging
devices.
For
now, we are being asked to prepare to roll out on schedule.
However, the situation is changing daily, so stay tuned. We think
that a lot of the schedule will be delayed, but the enumerators
will still go out to do the enumeration and collecting of the data.
I think the schedule will be squeezed down during the data analysis
portion of the census. So we feel that the revenue stream should
not be interrupted at this point as far as we know. But it could
be, so we will provide you any updates on that as they
come.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Operator
[Operator
instructions]. We will move next to Barry Sine at Spartan Capital
Management.
Q: Hi, good afternoon, Jin, and welcome
aboard, Kellie.
Kellie Kim - Executive Vice President & CFO
Well,
thank you very much, Barry. Appreciate that.
Q: And congratulations for getting the
10-K out so timely in your first quarter, a lot of companies are
not going to manage that feat.
Jin Kang - President & Chief Executive Officer
Thank
you.
Kellie Kim - Executive Vice President & CFO
Thank
you again. It was a pleasure. The process was
fantastic.
Q: I want to delve a little bit into the
revenue that you just reported for the quarter. The breakdown on
page 35 in the 10-K, you have the breakdown between carrier and
managed, and as you called out carrier, very low margin, managed is
really the reason why you're in business. We did see a decline for
the year and a more significant decline for the quarter in managed.
And if I look at the 10-K, you do break managed out into three
categories and reselling was down. Could you talk about that break
down, and why managed services revenue declined for the quarter and
for the year?
Kellie Kim - Executive Vice President & CFO
Certainly. Barry, I
appreciate the questions. In terms of managed services, we spell
out in page 35 in the 10-K in three categories: managed services
fees, billable service fees and reselling and other services.
Included in managed services fees is also sale of accessories to
primarily our existing customers who have managed services with us.
So when there is a fluctuation in accessories that does vary from
quarter-to-quarter and year-to-year. And so, although there was a
growth in managed services it’s sort of muted by the timing
in the accessory sale. So in 2018 we had a pretty good increase in
accessory sales to several agency of DHS and that's in repeat in
2019. So that's primarily the reason with the 10-K. In the fourth
quarter ending December, I'm not able to give out that breakout at
this time. That is something we're considering to break out in the
10-Q. And so stay tuned for that.
Q: Okay. That's helpful. Jin, I really
appreciate obviously everybody is struggling how to communicate in
this period of uncertainty. I really appreciate your candor. Couple
follow-up questions on your comments, if you don't mind. I was
going to ask you about some of the government agencies that you
serve that might benefit what you've already done. So if you can
give us a reminder, typically on your contracts, if an agency, say,
let's say CDC, increases the number of devices they're using. Does
that increase your revenue, or is your revenue fixed regardless the
number of devices or does it vary by agency?
Jin Kang - President & Chief Executive Officer
It does
increase our revenue because our business model, our cost model is
that we charge them per device per month. So as the number of
devices go up, that will increase our revenue respectively,
corresponding increases.
Q: Okay. And then on the flip side,
potential challenges as a result of the current situation, I'm
particularly interested in commercial enterprises. And again, on
page 36 in the K, you did already have a down year in 2019. I know
you've called out American Airlines as an example of commercial. So
could you give us a little more sense of what you're looking at, in
terms of commercial and what drove that decline in 2019 in
commercial revenue?
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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Kellie Kim - Executive Vice President & CFO
Barry,
I will take that question. This goes back to even before 2018. When
the current management took over in 2017, they evaluated the
businesses, lines of businesses and where the business was low
margin and did not make sense to continue, those contracts were not
pursued for continuation. So in 2018 there was still revenue tail
left and in 2019 a lot of the low margin commercial consulting
business was discontinued. So we didn't pursue the renewal. And so
that's really the drop in the commercial business in
2019.
Q: And then looking forward, the
prospect for losing additional business to a [ph] customer like
American Airlines, I think you've called out what you do with them,
if you can refresh our memory.
Jin Kang - President & Chief Executive Officer
In
terms of the commercial, what we did for the American Airlines was
we provided them all of the infrastructure for their digital
certificate issuance and maintenance. And so that one went away
because the American Airlines decided to bring that work in-house.
And so it wasn't like we lost it to a competitor, but I believe
because of the security environment at the time with all of the
Boeing 727s having issues, they believed that this they could keep
it more secure by bringing it on to their side. We still maintain
the certificate authority business, but they took the O&M
piece, which is the hardware and the software piece. They will be
moving that to their facilities this year.
Q: Okay. And then, Jin, your comment on
your Census contract. There's already talk, for example, about
doing the election on an all-by-mail basis. So it sounded like in
tenure [ph] of your comments that if they went to a virtual Census
and they eliminated sending census takers out in the field to
eliminate the risk of exposure, there would be a revenue hit to you
if that happened?
Jin Kang - President & Chief Executive Officer
That
would definitely be a revenue hit. But the reason why they send out
the enumerators is because the folks, when they get these Census
forms and now all of the Census actually is sort of conducted
online. You do have the option of sending in your paper forms or
there's a website that you can go to, to provide that same
information. So the Census is, I think what they're thinking is
they're going to get a similar response, so they will have to send
the enumerators door-to-door because for several
reasons.
One is,
is that not everyone has connection to the Internet and not
everybody takes it so seriously to respond to the Census. And so
it's the Census’ estimate that they're going to be training
up—I think, at the last count, they've already trained up
some 600,000 enumerators because they feel that some of these folks
are going to fall by the wayside because of the virus pandemic. But
they're still on track to rolling out half a million plus devices.
So, we believe that they're going to roll these devices out. But
you're right, if they decide that we're going to only go and use
the online portal to accept the Census data, that could be a huge
hit to our managed services fees.
Q: Okay. And then you also talked about
in terms of an opportunity, there's a lot of folks that are either
working at home or students, in school, at home. So that's a
potential opportunity for you. One challenge that I want to ask
about, however, let's say a major school district came to you and
said, we want to send iPads out to all of our students. You guys
will be well positioned to take a contract like that on. But I'm
wondering, I'm already hearing shortages of—Apple had
shortages producing phones and BestBuy is out of stock on laptops.
Is there an issue getting devices that you're seeing? Is that your
responsibility, or is that the customer's
responsibility?
Jin Kang - President & Chief Executive Officer
Well,
as I said in my remarks is that if there is a protracted downturn
in terms of the supply chain where they cannot get these mobile
devices from China or other developing countries where they're
developed, but they're producing manufacturing these devices, that
could be a negative impact. And I don't know what the supply is out
there. We have not experienced any issues of getting devices and
accessories and equipment yet, but that doesn't mean that there
won't be.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
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So the
answer is, if there is a long, protracted downturn and there's a
disruption to the supply chain, it could definitely impact us. But
as you said in your first part of your question is, could that
represent an opportunity for us? Absolutely. We are geared towards
putting out the mobile devices and devices that allow our workforce
to work remotely, study remotely, and also helping them secure
those devices. And so that's right in our wheelhouse.
Q: Okay. And one more question, if
you'll indulge me.
Jin Kang - President & Chief Executive Officer
Of
course.
Q: Just in terms of the guidance you
issued, fully understandable you're not going to throw out
full-year guidance. But on the 1Q guidance, revenue of $26 million
to $31 million 92% of the way into the quarter in terms of business
days, and that's a very wide range. Why the wide range when you're
going to be closing up quarter next week?
Kellie Kim - Executive Vice President & CFO
Well,
we have one more month, March and with the ramping up of Census
projects, there is a huge uptake in carrier services. And the
carrier services volume, we know what it is. We know estimations,
but we don't know the airtime involved in them. And so that will
continue in terms of the huge variance or gap in our revenue
projection will vary because of that. But it will, yes
just—
Jin Kang - President & Chief Executive Officer
Yes, I
mean, the timing of the activations of these devices and when
they're going to start using them, we don't have all of those
numbers yet. And so it could be a huge number where—and it
all has to do with the carrier services portion of the revenue. We
have a pretty good handle on where the managed services piece is
going to be. But it's difficult to measure where that carrier
service is going to be.
Q: So you have to wait to get the data
back from the carriers to see what kind of usage your customers
had, whether it was heavy or light?
Jin Kang - President & Chief Executive Officer
Correct. You hit
the nail on the head right there, yes, exactly.
Q: Okay. Understood. Thank you for
taking all those questions.
Jin Kang - President & Chief Executive Officer
You're
welcome. I did get some additional information. It looks like so
far for the Census, there's roughly 11 million people have
completed it electronically. So there's still plenty to go, and
they did extend the due dates for the Census for a couple of weeks,
so let's see how that goes. But my guess is that there's going to
be a big requirement for the enumerators to go out there and
collect this information.
Operator
At this
time, there are no other questions holding. That will conclude our
question-and-answer session. If your question was not taken, please
contact WidePoint's IR team at [email protected].
I’d now like
to turn the call back to Mr. Kang for any closing
remarks.
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Transcript:
WidePoint Corp
Fourth Quarter and Fiscal Year 2019 Earnings Call
March 24, 2020
|
Jin Kang - President & Chief Executive Officer
Thank
you, Jess. There is one other item that I like to cover, and this
was a last minute entry here. There was a contract that we are
currently bidding on. We are a team with a company called General
Dynamics. It was for the Navy, Marine Corp NGEN-R contract, also
known as NGEN II. And if you are following the award for that
contract was is that, that contract was announced to be awarded to
a company called Leidos. That contract award is currently under
protest and we are teamed with a company, as I said, General
Dynamics, and so we still are hopeful that we may get a part of
that award.
However, we are
working and we are utilizing our relationship with Leidos because
we have relationships with them on the NASA NEST contract and that
contract is going very well. And so we are trying to get on that
team as well. And so regardless of how this protest goes, we may
have an opportunity to provide enterprise mobility management
services on the NGEN II contract. So let me finish with
that.
And so,
again, thank you, operator, and we appreciate everyone taking the
time to join us today. As the operator mentioned, that if there
were any questions we did not address today, please contact our IR
team. You can find their full contact information at the bottom of
today's earnings release. Thank you again and have a great evening.
And please be careful and practice your social distancing and hope
to see you all at the next quarterly earnings call. Thank you very
much.
Operator
Ladies
and gentlemen, we thank you for joining us today for WidePoint's
fourth quarter and full-year 2019 conference call. You may now
disconnect.
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13
Exhibit 99.2
WidePoint Reports Fourth
Quarter and Full Year 2019 Financial Results
Fairfax, VA – March 24, 2020 – 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 fourth quarter and full year ended
December 31, 2019.
Fourth Quarter 2019 and Recent Operational Highlights:
●
Received
a notice of intent from the Department of Homeland Security (DHS)
to solicit and award a sole source IDIQ contract to WidePoint for
Cellular Wireless Managed Services (CWMS)
●
Supported the address canvassing
program, the
first major field operation of the 2020 Census, by activating,
deploying, tracking, and decommissioning over 60,000 devices and
providing training and help desk support to over 60,000
enumerators
●
Appointed Kellie
Kim, a finance and accounting professional with over 30 years of
experience in telecom, technology, and professional services as the
new chief financial officer
●
Partnered with
KoolSpan to provide end-to-end encryption for phone calls and text
messages
●
Repurchased 864,000
shares of common stock, equivalent to $366,000, as of December 31,
2019
Fourth Quarter 2019
Financial Highlights (results compared to the same
year-ago period):
●
Revenues increased
13% to $28.1 million
●
Gross profit
increased 6% to $4.8 million
●
Net loss totaled
$34,000
●
Adjusted EBITDA, a
non-GAAP financial measure, was $972,000, marking the
company’s tenth consecutive quarter of positive adjusted
EBITDA, and in line with forecast
Full Year 2019 Financial Highlights (results compared to the same
year-ago period):
●
Revenues
increased 22% to a record $101.7 million
●
Gross profit
increased 14% to a record $17.4 million
●
Net income totaled
$226,000
●
Adjusted EBITDA
totaled $3.6 million
Fourth Quarter 2019 Financial Summary
|
(In millions, except per share amounts)
|
December
31,
2019
|
December
31,
2018
|
|
|
(Unaudited)
|
|
|
Revenue
|
$28.1
|
$24.8
|
|
Gross
Profit
|
$4.8
|
$4.5
|
|
Gross
Profit Margin
|
16.9%
|
18.1%
|
|
Operating
Expenses
|
$4.5
|
$3.7
|
|
Income
from Operations
|
$0.3
|
$0.7
|
|
Net
Loss
|
$(0.0)
|
$(0.4)
|
|
Basic
and Diluted Earnings per Share (EPS)
|
$(0.0)
|
$(0.00)
|
|
Adjusted
Ebita
|
$1.0
|
$1.0
|
Full Year 2019 Financial Summary
|
(In millions, except per share amounts)
|
December
31,
2019
|
December
31,
2018
|
|
|
(Unaudited)
|
|
|
Revenue
|
$101.7
|
$83.7
|
|
Gross
Profit
|
$17.4
|
$15.3
|
|
Gross
Profit Margin
|
17.1%
|
18.2%
|
|
Operating
Expenses
|
$16.5
|
$15.5
|
|
Income
from Operations
|
$0.9
|
$(0.2)
|
|
Net
Loss
|
$0.2
|
$(1.5)
|
|
Basic
and Diluted Earnings per Share (EPS)
|
$0.0
|
$(0.02)
|
|
Adjusted
Ebita
|
$3.6
|
$1.8
|
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 Outlook
For the
first quarter ending March 31, 2020, the company currently expects
revenues of $26.0 million to $31.0 million, representing
year-over-year growth of 19% to 42%. The company also expects
adjusted EBITDA of $0.8 million to $0.9 million. The
company’s financial outlook is based on current
expectations.
Management Commentary
“2019
concluded with a strong performance in the fourth quarter in large
part due to the successful execution of our sales strategy and our
ability to effectively scale along with the growing needs of our
customers while maintaining an efficient and effectively operated
organization,” said WidePoint’s CEO, Jin Kang.
“From a financial perspective, the quarter was highlighted by
a 13% increase in revenues to $28.1 million and positive adjusted
EBITDA of $1.0 million, which marks our tenth consecutive quarter
of positive adjusted EBITDA. Operationally, we continued to ramp up
our work on the U.S. Census project, strengthened our relationships
with our system integrator partners, and received an intent to
award notice for a sole source interim contract from the U.S.
Department of Homeland Security.
“For
the full year, we either met or exceeded our financial expectations
as we recognized record revenues of $101.7 million, while driving
record adjusted EBITDA of $3.6 million, and GAAP net income
profitability. These results, coupled with the fact that we
generated $5.9 million in cash from operations, indicate that we
continue to successfully achieve our primary goal of simultaneously
improving the top and bottom lines as we help large enterprises
navigate the complexities of the mobile landscape.
“Overall,
2019 was another successful year for WidePoint that gave us solid
momentum going into 2020, in large part, due to the census and NASA
NEST projects, which are now running at full speed. We’re
fortunate to have a stable and profitable business, as well as a
resilient customer base that should be able to weather the current
dynamic market conditions relatively well. While no industry is
immune to the effects of COVID-19, we serve predominantly large
federal and commercial enterprises, for whom our solutions are a
critical component to manage their mobile workforces. These
characteristics coupled with our ongoing projects give us good
visibility in the near-term and confidence in our ability to drive
profitable growth over the long term.”
Conference Call
WidePoint
management will hold a conference call today (March 24, 2020) 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 Executive Vice President and CFO Kellie Kim will host
the conference call, followed by a question and answer
period.
U.S.
dial-in number: 844-369-8770
International
number: 862-298-0840
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 7, 2020.
Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay
ID: 33479
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 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.
|
|
FISCAL
YEAR ENDED
|
THREE
MONTHS ENDED
|
||
|
|
DECEMBER
31,
|
DECEMBER
31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
$226,300
|
$(1,456,500)
|
$(33,800)
|
$(412,100)
|
|
Adjustments
to reconcile net (loss) income to EBITDA:
|
|
|
|
|
|
Depreciation
and amortization
|
1,910,600
|
1,307,900
|
481,500
|
192,800
|
|
Amortization
of deferred financing costs
|
5,000
|
17,000
|
1,200
|
1,200
|
|
Income
tax provision (benefit)
|
392,700
|
1,193,300
|
265,900
|
1,147,600
|
|
Interest
income
|
(5,400)
|
(6,800)
|
(600)
|
(500)
|
|
Interest
expense
|
305,600
|
62,300
|
78,400
|
5,600
|
|
|
|
|
|
|
|
EBITDA
|
$2,834,800
|
$1,117,200
|
$792,600
|
$934,600
|
|
Other
adjustments to reconcile net (loss) income to Adjusted
EBITDA:
|
|
|
|
|
|
Provision
for doubtful accounts
|
22,000
|
4,800
|
(1,500)
|
10,900
|
|
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
|
718,000
|
683,400
|
181,200
|
90,300
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$3,574,800
|
$1,805,400
|
$972,300
|
$1,035,800
|
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
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
DECEMBER 31,
|
DECEMBER
31,
|
|
|
2019
|
2018
|
|
|
|
|
|
ASSETS
|
||
|
CURRENT
ASSETS
|
|
|
|
Cash
and cash equivalents
|
$6,879,627
|
$2,431,892
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
|
|
of
$126,235 and $106,733 in 2019 and 2018, respectively
|
14,580,928
|
11,089,315
|
|
Unbilled
accounts receivable
|
13,976,958
|
9,566,170
|
|
Other
current assets
|
1,094,847
|
1,086,686
|
|
|
|
|
|
Total
current assets
|
36,532,360
|
24,174,063
|
|
|
|
|
|
NONCURRENT
ASSETS
|
|
|
|
Property
and equipment, net
|
681,575
|
1,012,684
|
|
Operating
lease right of use asset, net
|
5,932,769
|
-
|
|
Intangibles,
net
|
2,450,770
|
3,103,753
|
|
Goodwill
|
18,555,578
|
18,555,578
|
|
Other
long-term assets
|
140,403
|
209,099
|
|
|
|
|
|
Total
assets
|
$64,293,455
|
$47,055,177
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Accounts
payable
|
$13,581,822
|
$7,363,621
|
|
Accrued
expenses
|
14,947,981
|
10,716,438
|
|
Deferred
revenue
|
2,265,067
|
2,072,344
|
|
Current
portion of operating lease liabilities
|
599,619
|
107,325
|
|
Current
portion of other term obligations
|
133,777
|
192,263
|
|
|
|
|
|
Total
current liabilities
|
31,528,266
|
20,451,991
|
|
|
|
|
|
NONCURRENT
LIABILITIES
|
|
|
|
Operating
lease liabilities, net of current portion
|
5,593,649
|
122,040
|
|
Other
term obligations, net of current portion
|
-
|
73,952
|
|
Deferred
revenue, net of current portion
|
363,560
|
466,714
|
|
Deferred
tax liability
|
1,868,562
|
1,523,510
|
|
|
|
|
|
Total
liabilities
|
39,354,037
|
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;
83,861,453 and 84,112,446 shares
|
|
|
|
issued
and oustanding, respectively
|
83,861
|
84,113
|
|
Additional
paid-in capital
|
95,279,114
|
94,926,560
|
|
Accumulated
other comprehensive loss
|
(242,594)
|
(186,485)
|
|
Accumulated
deficit
|
(70,180,963)
|
(70,407,218)
|
|
|
|
|
|
Total
stockholders’ equity
|
24,939,418
|
24,416,970
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
$64,293,455
|
$47,055,177
|
WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
YEARS
ENDED
|
THREE
MONTHS ENDED
|
||
|
|
DECEMBER
31,
|
DECEMBER
31,
|
||
|
|
2019
|
2018
|
2019
|
2018
|
|
|
|
|
|
|
|
REVENUES
|
$101,720,247
|
$83,678,896
|
$28,093,252
|
$24,760,579
|
|
COST OF REVENUES
(including amortization and depreciation of
|
|
|
|
|
|
$922,455 and
$892,314, respectively)
|
84,342,282
|
68,409,219
|
23,339,895
|
20,275,135
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
17,377,965
|
15,269,677
|
4,753,357
|
4,485,444
|
|
|
17%
|
18%
|
17%
|
18%
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
Sales and
marketing
|
1,659,875
|
1,743,693
|
444,319
|
376,704
|
|
General and
administrative expenses (including share-based
|
|
|
|
|
|
compensation of
$717,987 and $683,404, respectively)
|
13,844,689
|
13,301,052
|
3,774,306
|
3,263,148
|
|
Depreciation and
amortization
|
988,146
|
415,337
|
257,241
|
102,574
|
|
|
|
|
|
|
|
Total operating
expenses
|
16,492,710
|
15,460,082
|
4,475,866
|
3,742,426
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM
OPERATIONS
|
885,255
|
(190,405)
|
277,491
|
743,018
|
|
|
|
|
|
|
|
OTHER (EXPENSE)
INCOME
|
|
|
|
|
|
Interest
income
|
5,355
|
6,797
|
594
|
458
|
|
Interest
expense
|
(310,582)
|
(79,540)
|
(79,599)
|
(8,009)
|
|
Other
income
|
38,877
|
(2)
|
33,553
|
(5)
|
|
|
|
|
|
|
|
Total other
expense
|
(266,350)
|
(72,745)
|
(45,452)
|
(7,556)
|
|
|
|
|
|
|
|
INCOME (LOSS)
BEFORE INCOME TAX PROVISION
|
618,905
|
(263,150)
|
232,039
|
735,462
|
|
INCOME TAX
PROVISION
|
392,650
|
1,193,326
|
265,834
|
1,147,583
|
|
|
|
|
|
|
|
NET INCOME
(LOSS)
|
$226,255
|
$(1,456,476)
|
$(33,795)
|
$(412,121)
|
|
|
|
|
|
|
|
BASIC EARNINGS
(LOSS) PER SHARE
|
$0.003
|
$(0.017)
|
$(0.000)
|
$(0.005)
|
|
|
|
|
|
|
|
BASIC
WEIGHTED-AVERAGE SHARES OUTSTANDING
|
83,974,536
|
83,274,171
|
83,940,968
|
83,788,535
|
|
|
|
|
|
|
|
DILUTED EARNINGS
(LOSS) PER SHARE
|
$0.003
|
$(0.017)
|
$(0.000)
|
$(0.005)
|
|
|
|
|
|
|
|
DILUTED
WEIGHTED-AVERAGE SHARES OUTSTANDING
|
84,010,285
|
83,274,171
|
83,976,717
|
83,788,535
|