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Telos Shares Rise 22% on FY20 Earnings and Strong 2021 Outlook

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Telos Corp. reported FY/20 financial results that included a 13% increase in YoY revenue and expects revenues to increase ~60% in 2021 after lining up two 10-year contracts valued at more than $1 billion each.

Cyber, cloud and enterprise security solutions company Telos Corp. (TLS:NASDAQ) yesterday announced financial results for the fourth quarter and fiscal year 2020 ended December 31, 2020.

The company's CEO and Chairman John B. Wood stated, "2020 was a momentous year for the Company – we delivered strong revenue growth, continued to expand our customer relationships, and closed our public offering in November...We are a leading cybersecurity company with a 25-year history of providing innovative security solutions to the most security-conscious customers, and we have accelerated our efforts since the pandemic started."

CEO Wood advised that so far 2021 is off to a strong start and noted that the company just recently announced its partnership with leading cloud security provider Zscaler who will integrate Telos' enterprise risk management solution called Xacta® into its product offering. Wood stated that the firm also entered into two other significant partnerships for deployment of its Telos Ghost® virtual obfuscation solution.

"We have also been successful in securing over $75 million of orders from new and existing customers so far in 2021...We also launched a Supply Chain Risk Management (SCRM) offering to help organizations thwart future SolarWinds-like attacks," Wood added.

The company reported that in Q4/20 it recorded Total revenue of $44.9 million, compared to $46.5 million in Q4/19. The firm noted that the decrease in year-over-year revenue was anticipated and is attributed to the ramping down of the U.S. Census contract in the quarter. The firm added that during Q4/20 it had gross profit of $16.0 million, versus $17.0 million in Q4/19.

Telos reported net income of $3.9 million in Q4/20, compared to a net loss of $3.5 million in Q4/19. The company additionally indicated that adjusted EBITDA was $(2.6) million in Q4/20, compared to $2.5 million in Q4/19.

The firm further advised that for Q4/20 it had net diluted earnings per share attributable to Telos Corp. of $0.08, based a upon a weighted-average of 51.3 million outstanding shares.

For FY/20, the company reported that total revenue rose by 13% to $179.9 million, compared to $159.2 million in FY/19. The firm noted that gross profit was also up, sharply increasing by 19% to $62.4 million, versus $52.3 million in the prior year.

Telos indicated that for FY/20 it earned net income of $1.7 million, compared to net loss of $6.4 million during FY/19 and that adjusted EBITDA came in at $11.4 million for FY/20, compared to $10.0 million for FY/19.

The firm stated that for FY/20 it posted net earnings per diluted share attributable to Telos Corp. of $0.04, based upon a weighted-average of 42.9 million shares outstanding, which the company noted reflects adjustments for a reverse stock split and the IPO.

The company presented numerous business highlights from 2020 and advised that it received a contract for enterprise-wide risk management valued at $13.5 million from the Federal Bureau of Investigation.

The firm additionally worked together with Office Depot to help the U.S. Census Bureau vet 2020 Census enumerators. Telos stated that it setup a network of 1,100 processing centers using its IDTrust360® solution to meet the needs and requirements of the Census Bureau.

The company also pointed out that the Transportation Security Administration (TSA) selected it to provide TSA PreCheck™ enrollment services under a 10-year contract that is expected to produce revenue in aggregate of greater than $1.5 billion. Telos indicated that the program will be designed and implemented to "collect application materials, biometric data, and fees from each applicant, and will provide all necessary information to TSA for adjudication."

The firm also entered into another 10-year, $2 billion contract with the Centers for Medicare and Medicaid Services for IDTrust360, which will be used to vet approximately 1.5 million healthcare providers annually.

The company's CFO Michele Nakazawa remarked, "In the fourth quarter, we completed an initial public offering of our common stock, raising $292.6 million of gross proceeds, which allowed us to acquire the remaining 50% minority interest in our Telos ID subsidiary...In the process, we significantly simplified and strengthened our balance sheet and eliminated our debt."

The company provided some forward guidance and stated that for Q1/21 it expects that revenue will come in between $49 and $52 million, with adjusted EBITDA estimated to be in the range of $(1.7) million to $(1.9) million.

The firm added for FY/21 it expects revenue in the range of $283-295 million, which if achieved would represent a 57-64% increase over FY/20 revenue. The company advised that in FY/21 it estimates adjusted EBITDA of $33-36 million, which if realized would be a 190-216% increase, compared to FY/20.

Telos Corp, is an information technology (IT) company based in Ashburn, Va., that provides cybersecurity service to many of the world's most security-conscious organizations and government agencies. The firm helps these entities with cybersecurity solutions for IT risk management, information security, cloud security, intrusion defense, compliance and a range of other fixed and mobile network management services. The company serves U.S. federal civil, military and intelligence agencies as well as many allied nations and global commercial organizations.

Telos started the day with a market cap of around $1.8 billion with approximately 59.89 million shares outstanding. TLS shares opened almost 17% higher today at $35.90 (+$5.15, +16.75%) over yesterday's $30.75 closing price. The stock has traded today between $34.68 to $39.45 per share and closed for trading at $37.71 (+6.96, +22.63%).


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