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WidePoint Reports Third Quarter 2019 Financial Results

November 14, 2019 GMT

FAIRFAX, Va., Nov. 14, 2019 (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 third quarter ended September 30, 2019.

Third Quarter 2019 and Recent Operational Highlights:

-- Received $14.7 million in recent contract awards for Telecom Expense Management (TEM) and Mobility Managed Services (MMS) -- Successfully completed an address canvassing project with CDW-G for 2020 U.S. Census project -- Announced $2.5 million share repurchase program

Third Quarter 2019 Financial Highlights (results compared to the same year-ago period):

-- Revenues increased 39% to $­­29.6 million -- Gross profit increased 17% to $4.3 million -- Net income totaled $184,000 -- Adjusted EBITDA, a non-GAAP financial measure, increased to $949,000, marking the company’s ninth consecutive quarter of positive adjusted EBITDA, and in line with forecast

Nine Month 2019 Financial Highlights (results compared to the same year-ago period):

-- Revenues increased 25% to $73.6 million -- Gross profit increased 17% to $12.6 million -- Net income totaled $260,000 -- Adjusted EBITDA totaled $2.6 million

Third Quarter 2019 Financial Summary

Septemb Septemb (in millions, except per share amounts) er 30, er 30, 2019 2018 ------ - ------ - (Unaudited) Revenues $ 29.6 $ 21.3 Gross Profit $ 4.3 $ 3.7 Gross Profit Margin 15 % 17 % Operating Expenses $ 4.0 $ 3.7 Income (Loss) from Operations $ 0.3 $ (0.1 ) Net Income (Loss) $ 0.2 $ (0.1 ) Basic and Diluted Earnings per Share (EPS) $ 0.00 $ 0.00 Adjusted EBITDA $ 0.9 $ 0.6 ------------------------------------------ - ---- - - ---- -

Nine Month 2019 Financial Summary

(in millions, except per share amounts) September September 30, 2019 30, 2018 -------- --------- (Unaudited) Revenues $ 73.6 $ 58.9 Gross Profit $ 12.6 $ 10.8 Gross Profit Margin 17 % 18 % Operating Expenses $ 12.0 $ 11.7 Income (Loss) from Operations $ 0.6 $ (0.9 ) Net Income (Loss) $ 0.3 $ (1.0 ) Basic and Diluted Earnings per Share (EPS) $ 0.00 $ (0.01 ) Adjusted EBITDA $ 2.6 $ 0.8 ------------------------------------------ - ---- - - ----- -

The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under the “Safe Harbor Statement” below.

Financial OutlookFor the fiscal year ending December 31, 2019, the company is reiterating its revenue guidance of $90.0 million to $93.0 million, representing growth of 8% to 12%. The company is also reiterating its adjusted EBITDA guidance of $2.75 million to $3.5 million, which represents an improvement compared to fiscal 2018. The increase in adjusted EBITDA reflects the company’s strategic investments in sales and marketing and product development to accelerate growth, as well as a $400,000 increase due to new Financial Accounting Standards Board (FASB) guidance regarding the treatment of capital lease. The company’s financial outlook is based on current expectations.

Management Commentary“In the third quarter of 2019, we continued building on the momentum we generated in the first half of the year by growing the topline to drive towards consistent bottom-line profitability,” said WidePoint’s CEO, Jin Kang. “From a financial perspective, the quarter was highlighted by a 39% increase in revenues, positive net income, and our ninth consecutive quarter of positive Adjusted EBITDA.

“Operationally, we secured $14.7 million in recent awards during the third quarter, which include contract expansions and renewals with current customers as well as new contract wins. The expansions indicate that our cross-selling and upselling initiatives continue to be effective; the new wins demonstrate our ability to expand our solutions into new markets with new partners; and the renewals prove that we continue to benefit from high-retention rates with our satisfied customers. We also successfully completed an address canvassing project with CDW-G for the 2020 U.S. Census, and we stand well positioned to effectively execute this program when it fully ramps up at the start of the new year.

“Overall, due to our ability to successfully execute on our strategic initiatives and the financial success we have reaped as a result, we believe that we are well positioned to finish the year in a position of strength and to continue accelerating growth and driving towards sustainable profitability over the long-run.”

Conference CallWidePoint management will hold a conference call today (November 14, 2019) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

WidePoint President and CEO Jin Kang, Chief Sales and Marketing Officer Jason Holloway, and President and CEO of Soft-ex Communications and WidePoint Interim CFO Ian Sparling will host the conference call, followed by a question and answer period.

U.S. dial-in number: 844-407-9500International number: 862-298-0850

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 21, 2019.

Toll-free replay number: 877-481-4010International replay number: 919-882-2331Replay ID: 56430

About WidePointWidePoint Corporation (NYSE American: WYY) is a leading provider of trusted mobility management (TM2) solutions, including telecom management, mobile management, identity management, and digital billing and analytics. For more information, visit widepoint.com.

Non-GAAP Financial MeasuresWidePoint uses a variety of operational and financial metrics, including non-GAAP financial measures such as Adjusted EBITDA, to enable it to analyze its performance and financial condition. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. A reconciliation of GAAP Net loss to Adjusted EBITDA is included on the schedules attached hereto.

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------- ----------------------------- 2019 2018 2019 2018 ----------- ------------ ------------- -------------- (Unaudited) (Unaudited) NET INCOME (LOSS) $ 183,700 $ (110,000 ) $ 260,100 $ (1,044,400 ) Adjustments to reconcile net (loss) income to EBITDA: Depreciation and amortization 479,300 353,100 1,429,100 1,114,900 Amortization of deferred financing costs 1,300 - 3,800 14,800 Income tax provision (benefit) 32,300 24,800 126,800 45,700 Interest income (100 ) (900 ) (4,800 ) (6,300 ) Interest expense 76,800 21,600 227,200 56,700 --------- - ---------- - ----------- - ------------ - EBITDA $ 773,300 $ 288,600 $ 2,042,200 $ 181,400 - ------- - - -------- - - --------- - - ---------- - Other adjustments to reconcile net (loss) income to Adjusted EBITDA: Provision for doubtful accounts 12,300 (300 ) 23,500 (6,100 ) Gain on sale of assets held for sale - - - Loss on disposal of leasehold improvements - - - Severance and exit costs - - - Lease account impact on EBITDA - - Stock-based compensation expense 163,400 272,800 536,800 593,100 --------- - ---------- - ----------- - ------------ - Adjusted EBITDA $ 949,000 $ 561,100 $ 2,602,500 $ 768,400 - ------- - - -------- - - --------- - - ---------- -

Safe Harbor StatementThe information contained in any materials that may be accessed above was, to the best of WidePoint Corporations’ knowledge, timely and accurate as of the date and/or dates indicated in such materials. However, the passage of time can render information stale, and you should not rely on the continued accuracy of any such materials. WidePoint Corporation has no responsibility to update any information contained in any such materials. In addition, you should refer to periodic reports filed by WidePoint Corporation with the Securities and Exchange Commission for information regarding the risks and uncertainties to which forward-looking statements made in such materials are subject. Such risks and uncertainties may cause WidePoint Corporation’s actual results to differ materially from those described in the forward-looking statements.

Investor Relations:Gateway Investor RelationsMatt Glover or Charlie Schumacher949-574-3860 WYY@gatewayir.com

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER DECEMBER 31, 30, 2019 2018 ------------ - ------------ - (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,099,617 $ 2,431,892 Accounts receivable, net of allowance for doubtful accounts of $125,496 and $106,733 in 2019 and 2018, respectively 6,952,068 11,089,315 Unbilled accounts receivable 13,265,684 9,566,170 Other current assets 856,274 1,086,686 Total current assets 28,173,643 24,174,063 NONCURRENT ASSETS Property and equipment, net 581,667 1,012,684 Operating lease right of use asset, net 5,690,692 - Intangibles, net 2,640,164 3,103,753 Goodwill 18,555,578 18,555,578 Other long-term assets 141,702 209,099 Total assets $ 55,783,446 $ 47,055,177 - ---------- - - ---------- - LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 6,108,178 $ 7,363,621 Accrued expenses 14,465,322 10,716,438 Deferred revenue 2,185,581 2,072,344 Current portion of operating lease liabilities 499,739 107,325 Current portion of other term obligations 62,402 192,263 Total current liabilities 23,321,222 20,451,991 NONCURRENT LIABILITIES Operating lease liabilities, net of current portion 5,339,380 122,040 Other term obligations, net of current portion - 73,952 Deferred revenue, net of current portion 367,065 466,714 Deferred tax liability 1,607,629 1,523,510 Total liabilities 30,635,296 22,638,207 STOCKHOLDERS’ EQUITY Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding - - Common stock, $0.001 par value; 110,000,000 shares authorized; 84,775,186 and 84,112,446 shares issued and outstanding, respectively 84,776 84,113 Additional paid-in capital 95,462,725 94,926,560 Accumulated other comprehensive loss (252,183 ) (186,485 ) Accumulated deficit (70,147,168 ) (70,407,218 ) ------------ - ------------ - Total stockholders’ equity 25,148,150 24,416,970 Total liabilities and stockholders’ equity $ 55,783,446 $ 47,055,177 - ---------- - - ---------- -

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ---------------------------- - ---------------------------- - 2019 2018 2019 2018 ------------ - ------------ - ------------ - ------------ - (Unaudited) REVENUES $ 29,616,940 $ 21,294,360 $ 73,626,995 $ 58,918,317 COST OF REVENUES (including amortization and depreciation of 25,302,919 17,609,287 61,002,387 48,134,084 $233,033, $248,009, $698,192, and $802,174, respectively) ------------ - ------------ - ------------ - ------------ - GROSS PROFIT 4,314,021 3,685,073 12,624,608 10,784,233 ------------ - ------------ - ------------ - ------------ - OPERATING EXPENSES Sales and marketing 406,683 387,407 1,215,556 1,366,989 General and administrative expenses (including share-based 3,372,269 3,257,262 10,070,383 10,037,904 compensation of $163,451, $272,737, $536,828 and $593,075, respectively) Depreciation and amortization 246,293 104,914 730,905 312,763 ------------ - ------------ - ------------ - ------------ - Total operating expenses 4,025,245 3,749,583 12,016,844 11,717,656 ------------ - ------------ - ------------ - ------------ - INCOME (LOSS) FROM OPERATIONS 288,776 (64,510 ) 607,764 (933,423 ) OTHER (EXPENSE) INCOME Interest income 40 936 4,761 6,339 Interest expense (78,066 ) (21,644 ) (230,983 ) (71,531 ) Other income 5,324 2 5,324 3 ------------ - ------------ - ------------ - ------------ - Total other expense (72,702 ) (20,706 ) (220,898 ) (65,189 ) ------------ - ------------ - ------------ - ------------ - INCOME BEFORE INCOME TAX PROVISION 216,074 (85,216 ) 386,866 (998,612 ) INCOME TAX PROVISION 32,364 24,795 126,816 45,743 ------------ - ------------ - ------------ - ------------ - NET INCOME (LOSS) $ 183,710 $ (110,011 ) $ 260,050 $ (1,044,355 ) - ---------- - - ---------- - - ---------- - - ---------- - BASIC EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.00 ) $ 0.00 $ (0.01 ) - ---------- - - ---------- - - ---------- - - ---------- - BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING 84,234,354 83,177,804 84,014,053 83,100,832 ------------ - ------------ - ------------ - ------------ - DILUTED EARNINGS (LOSS) PER SHARE $ 0.00 $ (0.00 ) $ 0.00 $ (0.01 ) - ---------- - - ---------- - - ---------- - - ---------- - DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING 84,271,825 83,177,804 84,051,524 83,100,832 ------------ - ------------ - ------------ - ------------ -