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WidePoint Reports Third Consecutive Quarter of Net Income Driven by Revenue Growth and Margin Improvement
Business Wire
Aug 17, 2009
WidePoint Corporation (NYSE AMEX:WYY), a leading provider of advanced information technology, identity assurance and protection and mobile telecom expense management services, announced today the financial results for the second quarter ended June 30, 2009.
Second Quarter 2009 Financial Highlights:
- Net income was approximately $251,000, an improvement of $468,000 over the loss of $178,000 in Q2 ’08. This was the third consecutive quarter of positive net income.
- Income from operations was $319,000 vs. Q2 ’08 loss of $146,000.
- Income from operations (excluding amortization, depreciation and stock compensation expense) was $679,000 vs. $224,000 in Q2’ 08.
- Revenue increased approximately 12% to $10.4 million vs. $9.3 million in Q2 ‘08.
First Six Months 2009 Financial Highlights:
- Net income was approximately $380,000, an improvement of $1,499,000 over the loss of $1,041,000 in the first half of ’08.
- Income from operations was $553,000 vs. first half ’08 loss of $925,000.
- Income from operations (excluding amortization, depreciation and stock compensation expense) was $1,230,000 vs. $68,000 in the first six months ’08.
- Revenue increased approximately 25% to $20.5 million vs. $16.4 million in first half of ‘08.
- Working capital increased by $797,000 to $3.5 million in the 1st half of 2009.
- Debt was reduced by $2.3 M to $1.4 M in the 1st half of 2009.
Management Comment
WidePoint CEO Steve Komar said, “We are quite pleased to report our third consecutive quarter of bottom line net income, which exceeded $250,000. We outperformed last year’s second quarter by $429,000 and almost doubled our first quarter profit performance. This result featured net profit from operations at each of our business segments. In our Managed Telecom and PKI Credentialing strategic growth segments, we realized 48% and 30% revenue gains, respectively, over last year’s second quarter. Our overall revenue result was constrained by a decrease at our Consulting Services business segment tied primarily to deferred spending in software/development programs. Nevertheless, net operating margins continued to improve and speak well for our internal forecasts of revenue growth and increased profitability for the second half of 2009. We continue to aggressively market our capabilities to our target markets, and to our existing customer base. During the second quarter, we added new clients and expanded existing relationships in each of our segments. We continue to expand our distribution channels to ensure our ability to effectively respond as the demand for our products and services continues to expand.”
WidePoint CFO Jim McCubbin said, “We were pleased to see continued revenue, margin and income growth in our second quarter and first half of 2009 as compared to the same period last year. Looking at the comparisons of our second quarter 2009 to our first quarter 2009 performance we were also pleased to witness our revenue growth and economies of scale within our two managed service segments drive margin improvements in our gross margins. These improvements predominantly found their way into our net income and bode well for our financial model in the future as revenue growth and new contract wins should continue to expand margins and bottom line performance.”
WidePoint will hold a conference call with CEO Steve Komar, CFO Jim McCubbin and Jin Kang, president of the company’s Mobile Telecom Expense Management subsidiary iSYS, today, August 17, at 4:30 p.m. EDT. The call will cover the company’s quarterly results. To participate, call 1-877-941-2332 any time after 4:20 p.m. ET on August 17, 2009. International callers should dial 1-480-629-9723. At any time during the conference, if callers should experience any difficulty or require operator assistance, they can press the star followed by the zero button. This will call an operator to the line. One hour after the call an MP3 file of the call will be available at http://hawkassociates.com for approximately 90 days after the call.
About WidePoint
WidePoint is a leading provider of advanced information technology products and services including identity assurance and information management and protection services, forensic informatics and wireless technology services. WidePoint has several wholly owned subsidiaries holding major contracts, Operational Research Consultants, Inc. (ORC), iSYS, LLC, Protexx, and WidePoint IL. WidePoint enables organizations to deploy fully compliant IT services in accordance with government-mandated regulations and advanced system requirements. For more information, visit http://www.widepoint.com.
An investment profile about WidePoint may be found at http://www.hawkassociates.com/profile/wyy.cfm.
For investor relations information regarding WidePoint, visit http://www.hawkassociates.com and http://www.americanmicrocaps.com, or contact Frank Hawkins, Hawk Associates, at 305-451-1888, e-mail: widepoint@hawkassociates.com. To receive notification of future releases via e-mail, subscribe at http://www.hawkassociates.com/about/alert/.
Safe-Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; (iv) the declaration and payment of dividends; and (v) the risk factors disclosed in the Company's periodic reports filed with the SEC. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk factors disclosed in the company’s Forms 10-K and 10-Q filed with the SEC.
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WIDEPOINT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
| June 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Assets | (unaudited) | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,953,411 | $ | 4,375,426 | ||||
| Accounts receivable | 6,038,489 | 5,282,192 | ||||||
| Unbilled accounts receivable | 1,413,811 | 2,301,893 | ||||||
| Prepaid expenses and other assets | 277,546 | 267,666 | ||||||
| Total current assets | 10,683,257 | 12,227,177 | ||||||
| Property and equipment, net | 396,754 | 431,189 | ||||||
| Goodwill | 8,579,363 | 8,575,881 | ||||||
| Intangibles, net | 1,791,245 | 2,236,563 | ||||||
| Other assets | 103,573 | 110,808 | ||||||
| Total assets | $ | 21,554,192 | $ | 23,581,618 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Related party note payable | $ | — | $ | 2,140,000 | ||||
| Short term note payable | 64,791 | 97,158 | ||||||
| Accounts payable | 4,037,832 | 2,465,394 | ||||||
| Accrued expenses | 1,229,610 | 2,548,106 | ||||||
| Deferred revenue | 1,241,018 | 1,667,969 | ||||||
| Short-term portion of long-term debt | 503,462 | 486,707 | ||||||
| Short-term portion of capital lease obligation | 94,192 | 107,141 | ||||||
| Total current liabilities | 7,170,905 | 9,512,475 | ||||||
| Deferred income tax liability | 235,336 | 156,891 | ||||||
| Long-term debt, net of current portion | 865,025 | 1,117,230 | ||||||
| Deferred rent, net of current portion | 41,751 | — | ||||||
| Capital lease obligation, net of current portion | 51,487 | 95,248 | ||||||
| Total liabilities | $ | 8,364,504 | $ | 10,881,844 | ||||
| Stockholders’ equity: | ||||||||
| Common stock, $0.001 par value; 110,000,000 shares authorized; 58,305,514 and 58,275,514 shares issued and outstanding, respectively | 58,306 | 58,276 | ||||||
| Stock warrants | 38,666 | 38,666 | ||||||
| Additional paid-in capital | 67,305,095 | 67,194,788 | ||||||
| Accumulated deficit | (54,212,379 | ) | (54,591,956 | ) | ||||
| Total stockholders’ equity | 13,189,688 | 12,699,774 | ||||||
| Total liabilities and stockholders’ equity | $ | 21,554,192 | $ | 23,581,618 | ||||
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WIDEPOINT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenues, net | $ | 10,392,282 | $ | 9,264,073 | $ | 20,527,664 | $ | 16,414,638 | ||||||||
| Cost of sales (including amortization and depreciation of $242,755, $226,699, $485,891, and $440,605, respectively) |
8,190,224 |
7,647,258 |
16,282,504 |
13,693,560 |
||||||||||||
| Gross profit | 2,202,058 | 1,616,815 | 4,245,160 | 2,721,078 | ||||||||||||
| Sales and marketing | 265,317 | 246,828 | 494,783 | 412,531 | ||||||||||||
| General & administrative (including stock compensation expense 123 (r) of $75,857, $104,378, $106,587, and $476,080, respectively) |
1,576,711 |
1,477,374 |
3,112,982 |
3,157,648 |
||||||||||||
| Depreciation expense | 41,105 | 38,718 | 84,112 | 76,033 | ||||||||||||
| Income (Loss) from operations | 318,925 | (146,105 | ) | 553,283 | (925,134 | ) | ||||||||||
| Interest income | 4,651 | 56,118 | 18,739 | 72,060 | ||||||||||||
| Interest expense | (33,701 | ) | (86,554 | ) | (114,000 | ) | (186,127 | ) | ||||||||
| Other expense | - | (1,698 | ) | - | (1,698 | ) | ||||||||||
| Net income (loss) before income tax | $ | 289,875 | $ | (178,239 | ) | $ | 458,022 | $ | (1,040,899 | ) | ||||||
| Deferred income tax expense | 39,223 | - | 78,445 | - | ||||||||||||
| Net income (loss) | $ | 250,652 | $ | (178,239 | ) | $ | 379,577 | $ | (1,040,899 | ) | ||||||
| Basic earnings (loss) per share | $ | 0.004 | $ | (0.003 | ) | $ | 0.007 | $ | (0.019 | ) | ||||||
| Basic weighted average shares outstanding | 58,305,514 | 56,447,841 | 58,300,044 | 55,240,764 | ||||||||||||
| Diluted earnings (loss) per share | $ | 0.004 | $ | (0.003 | ) | $ | 0.006 | $ | (0.019 | ) | ||||||
| Diluted weighted average shares outstanding | 61,562,251 | 56,447,841 | 60,788,081 | 55,240,764 | ||||||||||||
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WIDEPOINT CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||||||||||
|
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 250,652 | $ | (178,239 | ) | $ | 379,577 | $ | (1,040,899 | ) | ||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
| Deferred income tax expense | 39,223 | - | 78,445 | - | ||||||||||||
| Depreciation expense | 54,975 | 52,550 | 112,233 | 102,664 | ||||||||||||
| Amortization | 228,885 | 212,868 | 457,770 | 413,975 | ||||||||||||
| Amortization of deferred financing costs | 2,911 | 2,143 | 3,753 | 4,286 | ||||||||||||
| Stock options expense | 75,857 | 104,378 | 106,587 | 476,080 | ||||||||||||
| Loss (Gain) on disposal of equipment | - | (2,378 | ) | - | (2,378 | ) | ||||||||||
| Changes in assets and liabilities (net of business combinations): | ||||||||||||||||
| Accounts receivable and unbilled accounts receivable | (76,279 | ) | 509,938 | 131,785 | 2,064,059 | |||||||||||
| Prepaid expenses and other current assets | (62,913 | ) | (75,558 | ) | (9,880 | ) | (185,103 | ) | ||||||||
| Other assets | 475 | (75,147 | ) | 15,482 | (50,723 | ) | ||||||||||
| Accounts payable and accrued expenses | (1,394,661 | ) | (199,507 | ) | 198,442 | 548,229 | ||||||||||
| Deferred revenue | (259,221 | ) | (300,505 | ) | (426,951 | ) | (26,115 | ) | ||||||||
| Net cash (used in) provided by operating activities | $ | (1,140,096 | ) | $ | 50,543 | $ | 1,047,243 | $ | 2,304,075 | |||||||
| Cashflows from investing activities: | ||||||||||||||||
| Purchase of subsidiary, net of cash acquired | (3,482 | ) | - | (3,482 | ) | (4,901,745 | ) | |||||||||
| Purchase of property and equipment | (70,072 | ) | (36,063 | ) | (77,798 | ) | (63,586 | ) | ||||||||
| Software development costs | (770 | ) | - | (12,452 | ) | - | ||||||||||
| Net cash used in investing activities | $ | (74,324 | ) | $ | (36,063 | ) | $ | (93,732 | ) | $ | (4,965,331 | ) | ||||
| Cashflows from financing activities: | ||||||||||||||||
| Borrowings on notes payable | 400,737 | - | 400,737 | 3,800,000 | ||||||||||||
| Principal payments on notes payable | (551,098 | ) | (1,435,469 | ) | (2,711,303 | ) | (2,044,940 | ) | ||||||||
|
Principal payments under capital lease obligation |
(26,552 |
) |
(29,270 |
) |
(56,710 |
) |
(57,981 |
) |
||||||||
| Proceeds from exercise of stock options | - | - | 3,750 | 14,400 | ||||||||||||
| Proceeds from issuance of stock | - | 4,080,000 | - | 4,080,000 | ||||||||||||
| Costs related to issuance of stock | - | (140,298 | ) | - | (140,298 | ) | ||||||||||
| Costs related to renewal fee for line of credit | - | - | (12,000 | ) | - | |||||||||||
|
Costs related to financing purchase of subsidiary |
- |
- |
- |
(13,713 |
) |
|||||||||||
|
Net cash (used in) provided by financing activities |
$ |
(176,913 |
) |
$ |
2,474,963 |
$ |
(2,375,526 |
) |
$ |
5,637,468 |
||||||
| Net (decrease) increase in cash | $ | (1,391,333 | ) | $ | 2,489,443 | $ | (1,422,015 | ) | $ | 2,976,212 | ||||||
| Cash and cash equivalents, beginning of period | $ | 4,344,744 | $ | 2,318,760 | $ | 4,375,426 | $ | 1,831,991 | ||||||||
| Cash and cash equivalents, end of period | $ | 2,953,411 | $ | 4,808,203 | $ | 2,953,411 | $ | 4,808,203 | ||||||||
| Supplementary Information: | ||||||||||||||||
| Promissory Note issued for iSYS acquisition |
- |
- |
$ |
- |
$ |
2,000,000 |
||||||||||
| Liabilities incurred but not yet paid relating to stock issuance |
$ |
- |
$ |
41,949 |
$ |
- |
$ |
41,949 |
||||||||
| Value of 1.5 million common shares issued as consideration in the acquisition of iSYS |
- |
- |
- |
1,800,000 |
||||||||||||
| Cash paid for interest | $ | 31,842 | $ | 38,393 | $ | 263,975 | $ | 81,793 | ||||||||
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