Slide 1: Second Quarter 2022 Earnings
Second Quarter 2022 Earnings August 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: Financial Performance Summary
FINANCIAL PERFORMANCE SUMMARY 2Q 2022 Summary 2Q 2022 2Q 2022 Actual Guidance • Delivered revenue above high end of guidance range • Security Solutions down 4% YoY (vs. guidance of down low to high teens); Up 15% sequentially. Revenue $55.8M $50M to $54M • Outperformed guidance due to favorable timi
Slide 4: Recent Business Highlights
RECENT BUSINESS HIGHLIGHTS IBM PARTNERSHIP NOTABLE SUCCESSES • Telos is the launch partner for the new Active Governance • Security Solutions Services (AGS) offering from IBM Security®. • Received Xacta® renewals with several key customers • Teaming to provide capabilities to address organizations’
Slide 5: 2Q and 1H 2022 Year Over Year Comparison
2Q AND 1H 2022 YEAR OVER YEAR COMPARISON Revenue Gross Profit Adjusted EBITDA(1) Free Cash Flow(1) 2Q Pull forward of a large delivery on a lower margin Secure Networks program from 2Q21 to Up 4% Down 7% Down $0.7M Up $4.0M 1Q21 skews 2Q22 revenue and gross margin YoY comparisons. (Up 11% Sequential
Slide 6: 3Q 2022 Guidance
3Q 2022 GUIDANCE 3Q 2022 3Q 2022 Assumptions Low End High End • Security Solutions (SS) revenue and growth assumptions: $58M $62M • Down mid to high teens YoY Revenue -16% YoY -10% YoY • Completion of U.S. Census program, lower revenues on some preexisting +4% Sequentially +11% Sequentially programs
Slide 7: Full Year 2022 Guidance
FULL YEAR 2022 GUIDANCE Updated Guidance Updated Guidance Assumptions FY 2022 FY 2022 • Security Solutions (SS) growth assumptions: Low End High End • +/- MSD YoY • Secure Networks (SN) growth assumptions: Revenue $226M $242M -7% YoY 0% YoY • Down MSD to DD YoY due to ongoing wind-down of two large
Slide 8: Summary
SUMMARY Delivered a solid 2Q and outperformed on key financial metrics Strong first half gross margin expansion and free cash flow generation Formed a new strategic partnership with IBM Security® Returning free cash flow to shareholders through share repurchases Core business expected to continue pe
Slide 9: Appendix
Appendix Telos
Slide 10: 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 11: 2022 Additional Modeling Inputs
2022 ADDITIONAL MODELING INPUTS 2021 2022E 2022E Full Year Full Year 3Q 2022E Full Year YoY Commentary • Slightly up to down gross margins primarily due to lower SN Gross Margin 35.5% 34% to 36% 31% to 32.5% margins $63M to $16M to Stock Comp $60.2M • ~$4M included in COS for FY, Up to ~$1M in COS f
Slide 12: 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 34,559 - - 34
Slide 13: 2021 and 2022 GAAP and Adjusted First Half Results
2021 and 2022 GAAP AND ADJUSTED FIRST HALF RESULTS (Amounts in thousands) 2021 2022 Q1 Q2 1H Q1 Q2 1H 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 Solutions 22,
Slide 14: Reconciliations: Enterprise EBITDA and Adjusted EBITDA
RECONCILIATIONS Enterprise EBITDA and Adjusted EBITDA (Unaudited) For the Three Months Ended For the Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Net loss $ (12,289) $ (17,644) $ (27,272) $ (32,422) Adjustments: Non-operating (income)/expense (118) (32) (13
Slide 15: Reconciliations: Adjusted Net Income (Loss) and Adjusted EPS
RECONCILIATIONS Adjusted Net Income (Loss) and Adjusted EPS (Unaudited) For the Three Months Ended For the Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Adjusted Net Adjusted Adjusted Net Adjusted Adjusted Net Adjusted Adjusted Net Adjusted Income /(Loss) Per Share Income/
Slide 16: Reconciliations: Free Cash Flow
RECONCILIATIONS Free Cash Flow (Unaudited) For the Three Months Ended For the Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 (in thousands) Net cash flows provided by/ (used in) operating activities $ 7,883 $ 3,528 $ 8,132 $ (3,354) Adjustments: Purchase of property and equ