.
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)
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | ||||
( | ||
| (Registrant’s telephone number, including area code) | ||
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
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. ☐
.
.
Item 2.02. Results of Operations and Financial Condition.
On Monday, November 15, 2021, Telos Corporation (the “Company”) issued a press release reporting certain financial results of the Company for the three and nine months ended September 30, 2021 and 2020. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
The Company’s press release contains non-GAAP financial measures. Pursuant to the requirements of Regulation G, the Company has provided reconciliations within the press release of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Disclosure regarding definitions of these measures used by the Company and why the Company’s management believes the measures provide useful information to investors is also included in the press release.
The Company will conduct a conference call to discuss its financial results on Monday, November 15, 2021, at 8:00 a.m., Eastern Time.
The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is furnished pursuant to Item 2.02 of this Current Report on Form 8-K. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 11, 2021, Mr. Edward Williams, Executive Vice President, Chief Operating Officer, informed the Company that he is retiring.
Mr. Williams joined the Company in 1993 and has served as Executive Vice President, Chief Operating Officer since 2003.
Mr. Williams will step down immediately from his role as Chief Operating Officer but will assist with the transition of his responsibilities through January 31, 2022. Mr. Mark Griffin, who has served as President of Telos ID since 2007, will lead Security Solutions, and Mr. Brendan Malloy, the current Senior Vice President of Cyber Operations & Defense, will lead Secure Networks, effective immediately. Mr. Griffin and Mr. Malloy will report directly to Mr. John Wood, Chief Executive Officer.
Item 9.01. Financial Statements and Exhibits.
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document contained in Exhibit 101) | |||||||
.
.
S I G N A T U R E S
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.
Date: November 15, 2021
| TELOS CORPORATION | |||||||||||
| By: | /s/ Mark Bendza | ||||||||||
| Mark Bendza | |||||||||||
| Chief Financial Officer | |||||||||||
.
d
Exhibit 99.1
Telos Corporation Announces Third Quarter Results: Delivers 48% Reported Sales Growth, 80% Adjusted Sales Growth, Record Gross Profit and $12.5 Million of Cash Flow
–Delivers Revenues of $70.1 Million; Up 48% Reported; Up 80% Excluding Contract with U.S. Census Bureau; Driven by Xacta Solutions, Telos ID and Secure Networks
–Increases Gross Profit 57% to a Record $26.1 Million; Expands Gross Margin 229 Basis Points to 37%, Driven by Every Line of Business
–Generates $12.5 Million of Cash Flow from Operations and $9.4 Million of Free Cash Flow
–Updates Guidance with Sales of $240 Million - $245 Million and Adjusted EBITDA of $18 Million - $19 Million
Ashburn, Va. – November 15, 2021 – Telos® Corporation (NASDAQ: TLS), a leading provider of cyber, cloud and enterprise security solutions for the world’s most security-conscious organizations, today announced financial results for the third quarter 2021.
“We saw strong third-quarter results, as we delivered 48% reported sales growth, 80% adjusted sales growth, and increased gross profit 57% to a record $26.1 million,” said John B. Wood, CEO and chairman, Telos. “Additionally, we expanded gross margin 229 basis points to 37%, generated $12.5 million of positive cash flow from operations and continued to win and retain meaningful contracts. I am pleased with our performance this quarter.”
d
Third Quarter 2021 Financial Highlights (in millions, except per share data)
| 3Q 2021 | 3Q 2020 | ||||||||||
Revenue 1 | $70.1 | $47.4 | |||||||||
| Gross Profit | $26.1 | $16.6 | |||||||||
| Gross Margin | 37.2% | 34.9% | |||||||||
| GAAP Net Income (Loss) | $(5.4) | $2.5 | |||||||||
Adjusted Net Income (Loss) 2, 3 | $6.8 | $(0.2) | |||||||||
Enterprise EBITDA2 | $(3.8) | $5.8 | |||||||||
Adjusted EBITDA2, 3 | $8.4 | $5.8 | |||||||||
| GAAP Net Loss per Share Attributable to Telos Corporation, Diluted | $(0.08) | $(0.01) | |||||||||
Adjusted EPS 2, 3 | $0.10 | $(0.01) | |||||||||
| Weighted-average Shares of Common Stock Outstanding, Diluted | 66.8 | 39.0 | |||||||||
| Cash Flow from Operations | $12.5 | $11.1 | |||||||||
Free Cash Flow 2 | $9.4 | $8.5 | |||||||||
1 Includes $1.6 million of revenue from the contract with the U.S. Census Bureau in Q3 2021 and $9.4 million in Q3 2020. Excluding this contract, year-over-year growth is 80%.
2 Adjusted EBITDA, Enterprise EBITDA, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow are non-GAAP financial measures. Refer to "Non-GAAP Financial Measures" below.
3 After adjustment for stock compensation expense of $12.2 million in the third quarter 2021 and de minimis in the third quarter 2020.
Selected Third Quarter and Recent 2021 Business Highlights:
New Business Activities
•Telos continued to bring on new airlines within the Designated Aviation Channeling business, adding three additional airlines in the third quarter and receiving option-year extensions from current airport customers. The most notable expansion within the practice is United Parcel Service (UPS) announcing its full use of Telos services for cargo security-threat assessments and criminal history record checks later this year.
•The Federal government requested expanded services from Telos’ Security Solutions and Secure Networks groups in support of a confidential healthcare program.
•A customer since 1995, the Defense Manpower Data Center (DMDC), awarded Telos option-year three through mid-September 2022. The IDTrust360® solution supports the U.S. Department of Defense (DoD) within its security and common access card programs; as part of the DMDC award, Telos received over $22 million in orders in the third quarter.
•A special customer utilizing Telos Ghost® for an intelligence support solution executed an option year.
•Xacta® continued to provide considerable value to customers navigating FedRAMP. For instance, VMware selected Xacta to support its FedRAMP compliance efforts, and Salesforce renewed an annual license of Xacta in support of its FedRAMP requirements.
d
•The company had a solid quarter of Xacta renewals with existing government customers, including the National Security Agency, the National Geospatial-Intelligence Agency, the Federal Bureau of Investigation, the U.S. Social Security Administration and others.
•In the third quarter, Telos successfully added the Xacta and Telos Ghost solutions to 11 state and local government, and education market (SLED) purchasing contracts, both regional and state-specific.
Partner Enhancements
•The Telos CyberProtect Partner Program continued to progress. The dedicated channel team grew to 10 members, supported by other strategic hires within the sales and marketing organization. They have a total of 20 partners in the Telos CyberProtect Partner Program ecosystem – most of which have both a government and a commercial enterprise practice, with the ability to help Telos penetrate new markets.
•Telos announced a partnership with AWS, Splunk, and stackArmor around an initiative called FASTTR, which benefits independent software providers and regulated defense contractors that are required to comply with complex federal, state, and local government security regulations. Red Hat, Inc. and Wickr were the first customers of the FASTTR program. This partnership is an example of how Telos can embed its technology into a partner-driven solution.
Financial Outlook
| Previous Guidance | Current Guidance | ||||||||||
| Revenue | $283 - $295 Million | $240 - $245 Million | |||||||||
| YoY Organic Growth | 57% - 64% | 33% - 36% | |||||||||
Adjusted EBITDA1 | $33 - $36 Million | $18 - $19 Million | |||||||||
| YoY Adjusted EBITDA Growth | 190% - 216% | 58% - 67% | |||||||||
1 Adjusted EBITDA is a non-GAAP financial measure. Refer to "Non-GAAP Financial Measures" below.
This guidance consists of forward-looking statements and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause the Company’s actual results to differ materially from these forward-looking statements. Adjusted EBITDA is a non-GAAP financial measure. The Company has not provided the most directly comparable GAAP measure to this forward-looking non-GAAP financial measure because certain items are out of the Company’s control or cannot be reasonably predicted. Accordingly, a reconciliation for forward-looking Adjusted EBITDA is not available without unreasonable effort.
Conference Call Information
Telos will host a live webcast to discuss its third quarter 2021 financial results at 8:00 a.m. Eastern Time today, November 15, 2021. To access the webcast, visit https://edge.media-server.com/mmc/p/adau5ywx. Related presentation materials will be made available on the Investors section of the Company’s website at https://investors.telos.com. In addition, an archived webcast will be available approximately two hours after the conclusion of the live event on the Investors section of the Company’s website.
d
Forward-Looking Statements
This press release contains forward-looking statements which are made under the safe harbor provisions of the federal securities laws. These statements are based on the Company’s management’s current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to them. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company believes that these risks and uncertainties include, but are not limited to, those described under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth from time to time in the Company’s filings and reports with the U.S. Securities and Exchange Commission (SEC), including their Annual Report on Form 10-K for the year ended December 31, 2020 and their Quarterly Reports on Form 10-Q, as well as future filings and reports by the Company, copies of which are available at https://investors.telos.com and on the SEC’s website at www.sec.gov.
Although the Company bases these forward-looking statements on assumptions that they believe are reasonable when made, they caution the reader that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this release. Given these risks, uncertainties and other factors, many of which are beyond their control, the Company cautions the reader not to place undue reliance on these forward-looking statements. Any forward-looking statement speaks only as of the date of such statement and, except as required by law, the Company undertakes no obligation to update any forward-looking statement publicly, or to revise any forward-looking statement to reflect events or developments occurring after the date of the statement, even if new information becomes available in the future. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.
Non-GAAP Financial Measures
In addition to its results determined in accordance with GAAP, the Company believes the non-GAAP financial measures of Adjusted Sales Growth, Enterprise EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow are useful in evaluating its operating performance. The Company believes that this non-GAAP financial information, when taken collectively with the Company’s GAAP results, may be helpful to readers of its financial statements because that information provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. A reconciliation is
d
provided below for each of these non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP.
The Company uses these non-GAAP financial measures to understand and evaluate its core operating performance and trends, to prepare and approve its annual budget, to develop short-term and long-term operating plans, and to evaluate the performance of certain management personnel when determining incentive compensation. The Company believes these non-GAAP financial measures facilitate comparison of its operating performance on a consistent basis between periods by excluding certain items that may, or could, have a disproportionate positive or negative impact on its results of operations in any particular period. When viewed in combination with the Company’s results prepared in accordance with GAAP, these non-GAAP financial measures help provide a broader picture of factors and trends affecting the Company’s results of operations.
Enterprise EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow are supplemental measures of operating performance that are not made under GAAP and do not represent, and should not be considered as an alternative to net income (loss), earnings per share or net cash flows provided by operating activities, as determined by GAAP. The Company defines Enterprise EBITDA as net income (loss) attributable to Telos Corporation, adjusted for net income attributable to non-controlling interest, non-operating (expense) income, interest expense, (benefit) provision for income taxes, and depreciation and amortization. The Company defines Adjusted EBITDA as Enterprise EBITDA, adjusted for stock-based compensation expense, the gain realized on redemption of the public preferred stock upon the closing of the initial public offering, the losses realized on the extinguishment of senior term loan and subordinated debt upon the closing of the initial public offering, bonuses paid as a result of the closing of the initial public offering, and other expenses related to the initial public offering. The Company defines Adjusted Net Income (Loss) as net income (loss) attributable to Telos Corporation, adjusted for non-operating expense (income) and stock-based compensation expense. The Company defines Adjusted EPS as Adjusted Net Income (Loss) divided by the weighted-average number of common shares outstanding for the period. Free cash flow is defined by the Company as net cash provided by or used in operating activities less capital expenditure.
d
Each of Enterprise EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow has limitations as an analytical tool, and the reader should not consider it in isolation, or as a substitute for analysis of the Company’s results as reported under GAAP. Among other limitations, each of Enterprise EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and Free Cash Flow does not reflect the Company’s cash expenditures, or future requirements for capital expenditures, or contractual commitments, does not reflect the impact of certain cash charges resulting from matters the Company considers not to be indicative of its ongoing operations, and does not reflect income tax expense or benefit. Other companies in the Company’s industry may calculate Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and Free Cash Flow differently than the Company does, which limits its usefulness as a comparative measure. Because of these limitations, each of Enterprise EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, and Free Cash Flow should not be considered as a replacement for net income (loss), earnings per share or net cash flows provided by operating activities, as determined by GAAP, or as a measure of the Company’s profitability. The Company compensates for these limitations by relying primarily on its GAAP results and using non-GAAP measures only for supplemental purposes.
About Telos Corporation
Telos Corporation (NASDAQ: TLS) empowers and protects the world’s most security-conscious organizations with solutions for continuous security assurance of individuals, systems, and information. Telos’ offerings include cybersecurity solutions for IT risk management and information security; cloud security solutions to protect cloud-based assets and enable continuous compliance with industry and government security standards; and enterprise security solutions for identity and access management, secure mobility, organizational messaging, and network management and defense. The company serves commercial enterprises, regulated industries and government customers around the world.
###
Media:
Mia Wilcox
media@telos.com
(610) 564-6773
Investors:
Christina Mouzavires
InvestorRelations@telos.com
(703) 724-4777
d
TELOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(amounts in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Services | $ | 63,690 | $ | 44,166 | $ | 163,366 | $ | 124,210 | |||||||||||||||
| Products | 6,376 | 3,274 | 15,017 | 10,819 | |||||||||||||||||||
| 70,066 | 47,440 | 178,383 | 135,029 | ||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| Cost of sales - Services | 40,031 | 28,619 | 109,134 | 82,862 | |||||||||||||||||||
| Cost of sales - Products | 3,967 | 2,259 | 8,266 | 5,790 | |||||||||||||||||||
| 43,998 | 30,878 | 117,400 | 88,652 | ||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Sales and marketing | 5,363 | 1,491 | 14,233 | 4,556 | |||||||||||||||||||
| Research and development | 5,396 | 3,598 | 14,783 | 11,070 | |||||||||||||||||||
| General and administrative | 20,562 | 6,960 | 69,271 | 20,769 | |||||||||||||||||||
| 31,321 | 12,049 | 98,287 | 36,395 | ||||||||||||||||||||
| Operating (loss) income | (5,253) | 4,513 | (37,304) | 9,982 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Other income (expense) | 20 | 2 | (1,001) | 14 | |||||||||||||||||||
| Interest expense | (195) | (2,013) | (583) | (6,026) | |||||||||||||||||||
| (Loss) income before income taxes | (5,428) | 2,502 | (38,888) | 3,970 | |||||||||||||||||||
| Benefit from (provision for) income taxes | 41 | (8) | (6) | 136 | |||||||||||||||||||
| Net (loss) income | (5,387) | 2,494 | (38,894) | 4,106 | |||||||||||||||||||
| Less: Net income attributable to non-controlling interest | — | (2,694) | — | (6,284) | |||||||||||||||||||
| Net loss attributable to Telos Corporation | $ | (5,387) | $ | (200) | $ | (38,894) | $ | (2,178) | |||||||||||||||
| Net loss per share attributable to Telos Corporation, basic | $ | (0.08) | $ | (0.01) | $ | (0.59) | $ | (0.06) | |||||||||||||||
| Net loss per share attributable to Telos Corporation, diluted | $ | (0.08) | $ | (0.01) | $ | (0.59) | $ | (0.06) | |||||||||||||||
| Weighted-average shares of common stock outstanding, basic | 66,755 | 39,002 | 65,999 | 38,554 | |||||||||||||||||||
| Weighted-average shares of common stock outstanding, diluted | 66,755 | 39,002 | 65,999 | 38,554 | |||||||||||||||||||
d
TELOS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except shares and par value data)
| September 30, 2021 | December 31, 2020 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 134,135 | $ | 106,045 | |||||||
Accounts receivable, net of reserve of $116 and $308, respectively | 49,759 | 30,913 | |||||||||
Inventories, net of obsolescence reserve of $849 and $851, respectively | 2,025 | 3,311 | |||||||||
| Prepaid expenses | 5,440 | 3,059 | |||||||||
| Other current assets | 941 | 786 | |||||||||
| Total current assets | 192,300 | 144,114 | |||||||||
Property and equipment, net of accumulated depreciation and amortization of $33,805 and $32,057, respectively | 14,363 | 14,977 | |||||||||
| Operating lease right-of-use assets | 1,004 | 1,464 | |||||||||
| Goodwill | 16,642 | 14,916 | |||||||||
| Intangible assets, net | 17,102 | 7,420 | |||||||||
| Other assets | 1,256 | 926 | |||||||||
| Total assets | $ | 242,667 | $ | 183,817 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable and other accrued liabilities | $ | 35,102 | $ | 20,899 | |||||||
| Accrued compensation and benefits | 7,955 | 8,474 | |||||||||
| Contract liabilities | 7,232 | 5,654 | |||||||||
| Finance lease obligations – short-term | 1,430 | 1,339 | |||||||||
| Operating lease obligations – short-term | 602 | 677 | |||||||||
| Other current liabilities | 2,089 | 1,903 | |||||||||
| Total current liabilities | 54,410 | 38,946 | |||||||||
| Finance lease obligations – long-term | 13,218 | 14,301 | |||||||||
| Operating lease obligations – long-term | 516 | 941 | |||||||||
| Deferred income taxes | 680 | 652 | |||||||||
| Other liabilities | 2,352 | 1,873 | |||||||||
| Total liabilities | 71,176 | 56,713 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
Common stock, $0.001 par value, 250,000,000 shares authorized, 66,755,230 shares and 64,625,071 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 105 | 103 | |||||||||
| Additional paid-in capital | 354,119 | 270,800 | |||||||||
| Accumulated other comprehensive income | 4 | 44 | |||||||||
| Accumulated deficit | (182,737) | (143,843) | |||||||||
| Total stockholders’ equity | 171,491 | 127,104 | |||||||||
| Total liabilities and stockholders’ equity | $ | 242,667 | $ | 183,817 | |||||||
d
TELOS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(amounts in thousands)
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating activities: | |||||||||||
| Net (loss) income | $ | (38,894) | $ | 4,106 | |||||||
| Adjustments to reconcile net (loss) income to cash provided by operating activities: | |||||||||||
| Stock-based compensation | 47,197 | 4 | |||||||||
| Dividends from preferred stock recorded as interest expense | — | 2,867 | |||||||||
| Depreciation and amortization | 4,223 | 4,018 | |||||||||
| Amortization of debt issuance costs | — | 684 | |||||||||
| Deferred income tax provision | 28 | 28 | |||||||||
| Other noncash items | 14 | (25) | |||||||||
| Changes in other operating assets and liabilities | (5,900) | 275 | |||||||||
| Cash provided by operating activities | 6,668 | 11,957 | |||||||||
| Investing activities: | |||||||||||
| Cash paid for acquisition | (5,925) | — | |||||||||
| Capitalized software development costs | (6,139) | (5,459) | |||||||||
| Purchases of property and equipment | (1,645) | (624) | |||||||||
| Cash used in investing activities | (13,709) | (6,083) | |||||||||
| Financing activities: | |||||||||||
| Proceeds from issuance of common stock, net of issuance costs | 64,269 | — | |||||||||
| Repurchase of outstanding warrants | (26,894) | — | |||||||||
| Repurchase of common stock | (1,251) | — | |||||||||
| Payments under finance lease obligations | (993) | (907) | |||||||||
| Amendment fee paid to lender | — | (100) | |||||||||
| Distributions to Telos ID Class B member - non-controlling interest | — | (1,292) | |||||||||
| Cash provided by (used in) financing activities | 35,131 | (2,299) | |||||||||
| Increase in cash and cash equivalents | 28,090 | 3,575 | |||||||||
| Cash and cash equivalents, beginning of period | 106,045 | 6,751 | |||||||||
| Cash and cash equivalents, end of period | $ | 134,135 | $ | 10,326 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
| Interest | $ | 583 | $ | 2,211 | |||||||
| Income taxes | $ | 54 | $ | 50 | |||||||
| Noncash: | |||||||||||
| Dividends from preferred stock recorded as interest expense | $ | — | $ | 2,867 | |||||||
| Supplemental disclosure of non-cash investing activity | |||||||||||
| Acquisition holdback | $ | 506 | $ | — | |||||||
d
Enterprise EBITDA and Adjusted EBITDA (Unaudited, amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net loss attributable to Telos Corporation | $ | (5,387) | $ | (200) | $ | (38,894) | $ | (2,178) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Net income attributable to non-controlling interest | — | 2,694 | — | 6,284 | |||||||||||||||||||
| Non-operating (income) expense | (20) | (2) | 1,001 | (14) | |||||||||||||||||||
| Interest expense | 195 | 2,013 | 583 | 6,026 | |||||||||||||||||||
| (Benefit from) provision for income taxes | (41) | 8 | 6 | (136) | |||||||||||||||||||
| Depreciation and amortization | 1,459 | 1,284 | 4,223 | 4,018 | |||||||||||||||||||
| Enterprise EBITDA | (3,794) | 5,797 | (33,081) | 14,000 | |||||||||||||||||||
| Stock-based compensation expense | 12,191 | 4 | 47,197 | 4 | |||||||||||||||||||
| Adjusted EBITDA | $ | 8,397 | $ | 5,801 | $ | 14,116 | $ | 14,004 | |||||||||||||||
Adjusted Net Income (Loss) and Adjusted EPS (Unaudited)
| Three Months Ended September 30, | 2021 | 2020 | |||||||||||||||||||||
| Adjusted Net Income (Loss) | Adjusted Earnings Per Share | Adjusted Net Income (Loss) | Adjusted Earnings Per Share | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Reported GAAP measure | $ | (5,387) | $ | (0.08) | $ | (200) | $ | (0.01) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Non-operating income | (20) | — | (2) | — | |||||||||||||||||||
| Stock-based compensation expense | 12,191 | 0.18 | 4 | — | |||||||||||||||||||
| Adjusted non-GAAP measure | $ | 6,784 | $ | 0.10 | $ | (198) | $ | (0.01) | |||||||||||||||
| Weighted-average shares of common stock outstanding | 66,755 | 39,002 | |||||||||||||||||||||
| Nine Months Ended September 30, | 2021 | 2020 | |||||||||||||||||||||
| Adjusted Net Income (Loss) | Adjusted Earnings Per Share | Adjusted Net Income (Loss) | Adjusted Earnings Per Share | ||||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| Reported GAAP measure | $ | (38,894) | $ | (0.59) | $ | (2,178) | $ | (0.06) | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Non-operating expense (income) | 1,001 | 0.01 | (14) | — | |||||||||||||||||||
| Stock-based compensation expense | 47,197 | 0.72 | 4 | — | |||||||||||||||||||
| Adjusted non-GAAP measure | $ | 9,304 | $ | 0.14 | $ | (2,188) | $ | (0.06) | |||||||||||||||
| Weighted-average shares of common stock outstanding | 65,999 | 38,554 | |||||||||||||||||||||
d
Free Cash Flow (Unaudited)
| Nine Months Ended September 30, | 2021 | 2020 | |||||||||
| (in thousands) | (in thousands) | ||||||||||
| Net cash flows provided by operating activities | $ | 6,668 | $ | 11,957 | |||||||
| Adjustments: | |||||||||||
| Capital expenditure | (7,784) | (6,083) | |||||||||
| Final distribution to Telos ID Class B member - included in cash from operating activities | 2,436 | — | |||||||||
| Free cash flow | $ | 1,320 | $ | 5,874 | |||||||