Slide 1: Third Quarter 2022 Earnings
Third Quarter 2022 Earnings November 9, 2022
Slide 2: Disclaimers
DISCLAIMERS The information contained in this presentation does not constitute or form part of, and should not be construed as, any offer, sale or subscription of, or any invitation to offer, buy or subscribe for, any securities, nor shall there be any offer, solicitation or sale in any jurisdiction
Slide 3: Delivered $63.6 Million of Revenue, 32.9% Gross Margin, and $8.6M of Adjusted EBITDA
FINANCIAL SUMMARY DELIVERED $63.6 MILLION OF REVENUE, 32.9% GROSS MARGIN, AND $8.6M OF ADJUSTED EBITDA 3Q 2022 Summary 3Q 2022 3Q 2022 Actual Guidance • Delivered revenue above high end of guidance range • Security Solutions (“SS”) down 6% YoY (vs. guidance of down mid to high teens); Up 5% sequenti
Slide 4: Receives Authority to Operate for TSA PreCheck
BUSINESS HIGHLIGHTS RECEIVES AUTHORITY TO OPERATE FOR TSA PRECHECK® Transportation Security Administration (TSA) issued authority to operate (ATO) for Telos’ PreCheck® System Telos can now provide TSA PreCheck® enrollment services for a trial period to a limited population of applicants in order to
Slide 5: Additional Third Quarter Business Highlights
BUSINESS HIGHLIGHTS ADDITIONAL THIRD QUARTER BUSINESS HIGHLIGHTS • Xacta®: received renewals with several prominent customers including the National Security Agency, Central Intelligence Agency, Defense Intelligence SECURITY Agency, Federal Bureau of Investigation, Office of Naval Intelligence, Nati
Slide 6: 3Q 2022 Year Over Year Comparison
FINANCIAL SUMMARY 3Q 2022 YEAR OVER YEAR COMPARISON Revenue Gross Profit Adjusted EBITDA(1) Free Cash Flow (FCF)(1) 9M FCF (1) $69.0M $24.9M $8.7M $8.6M $9.4M $10.7M $63.6M $8.4M $20.9M 36.1% 32.9% 12.7% 13.5% Margin Margin Margin Margin $1.3M 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 3Q21 3Q22 9M21 9M22 • TLS
Slide 7: 4Q 2022 Assumptions Sequentially Lower Revenues Primarily Due to Secure Networks
GUIDANCE 4Q 2022 4Q 2022 4Q 2022 Assumptions Low End High End • SS revenue and growth assumptions: • Down HSD to high teens YoY Revenue $43M $47M -33% YoY -27% YoY • Lower revenue on large programs; completion of U.S. Census program • TSA PreCheck ATO received; revenues expected to be de minimis dur
Slide 8: Full Year 2022 Guidance
GUIDANCE FULL YEAR 2022 Updated Guidance Updated Guidance Assumptions FY 2022 FY 2022 • SS growth assumptions: Low End High End • Down MSD YoY (versus prior guidance of +/- MSD) • Guidance revision primarily driven by lower revenues from large programs, Revenue $213M $217M -12% YoY -10% YoY software
Slide 9: Summary
SUMMARY Exceeded quarterly expectations for a fourth consecutive reporting period; Delivered results above the high end of the guidance range on all financial metrics Lower expenses and favorable working capital performance have driven strong FCF YTD; Returning FCF to shareholders through share repu
Slide 10: Appendix
Appendix Telos
Slide 11: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES In addition to its results determined in accordance with GAAP, the Company believes the non-GAAP financial measures of Enterprise EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income (Loss), Adjusted EPS and Free Cash Flow are useful in evaluating its oper
Slide 12: 2022 Additional Modeling Inputs
2022 ADDITIONAL MODELING INPUTS 2021 2022E 2022E Full Year Full Year 4Q 2022E Full Year YoY Commentary • SS and SN both lower Gross Margin 35.5% 35% to 35.5% 33% to 34.5% • Higher revenue contribution from SS Stock Based $61M to $17M to $60.2M • Including ~$4M in COS for FY and ~$1M in COS for 4Q Co
Slide 13: 2023 Telos' PreCheck System Modeling Inputs
2023 TELOS’ PRECHECK® SYSTEM MODELING INPUTS New Enrollments Renewals Additional Inputs (Per Transaction) (Per Transaction) • Currently estimated market size Gross Applicant Fee(1) 85.00 70.00 • New enrollments: ~1.7M • Renewals: ~1.3M • Currently estimated other cost of sales - TSA Fee(1) (42.75) (
Slide 14: 2021 GAAP and Adjusted Full Year Results
2021 GAAP AND ADJUSTED FULL YEAR RESULTS (Amounts in thousands) 2021 Q1 Q2 Q3 Q4 FY GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted Revenue Security Solutions 22,830 - - 22,830 32,236 - - 32,236 34,558 - - 34
Slide 15: 2021 and 2022 GAAP and Adjusted First 9M Results
2021 and 2022 GAAP AND ADJUSTED FIRST 9M RESULTS (Amounts in thousands) 2021 2022 Q3 2021 9M Q1 Q2 Q3 2022 9M GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted GAAP SBC Other Inc Adjusted Revenue Security Solut
Slide 16: Reconciliations: Enterprise EBITDA and Adjusted EBITDA
RECONCILIATIONS Enterprise EBITDA and Adjusted EBITDA (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Amount Margin Amount Margin Amount Margin Amount Margin (in thousands) Net loss $ (7,340) (11.5)% $ (5,22
Slide 17: Reconciliations: Adjusted Net Income and Adjusted EPS
RECONCILIATIONS Adjusted Net Income (Loss) and Adjusted EPS (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Adjusted Net Adjusted Adjusted Net Adjusted Adjusted Net Adjusted Adjusted Net Adjusted Income /(Lo
Slide 18: Reconciliations: Free Cash Flow
RECONCILIATIONS Free Cash Flow (Unaudited) For the Three Months Ended For the Nine Months Ended September 30, September 30, September 30, September 30, 2022 2021 2022 2021 (in thousands) Net cash flows provided by/ (used in) operating activities $ 11,986 $ 12,991 $ 20,118 $ 9,637 Adjustments: Purcha