Call Start: 08:30 January 1, 0000 9:15 AM ET Telos Corporation's (NASDAQ:TLS) Q3 2022 Earnings Conference Call November 9, 2022 08:30 ET Company Participants Christina Mouzavires - Investor Relations John Wood - Chairman & Chief Executive Officer Mark Bendza - Executive Vice President & Chief Financial Officer Mark Griffin - Executive Vice President, Security Solutions Conference Call Participants Dan Ives - Wedbush Zach Cummins - B. Riley Rudy Kessinger - D.A. Davidson Alex Henderson - Needham Nehal Choksh ...

Defense Spending - The final FY 2022 appropriations bill provided $728.5 billion for the Department of Defense (DoD), which is $32.5 billion more than the FY 2021 enacted level[103]. - The proposed FY 2023 budget calls for approximately 4% more in defense spending than was provided for FY 2022, with significant congressional support for boosting defense spending further[106]. - The proposed FY 2023 budget includes an increase in federal civilian agency cybersecurity funding of nearly 10.7%[107]. Cybersecurity Solutions - Xacta is the de facto commercial cyber risk and compliance management solution across the U.S. federal government, delivering automated cyber risk and compliance management solutions[99]. - Telos Ghost provides a virtual obfuscation network-as-a-service, enhancing security by masking user identity and location, and hiding network resources[101]. - The Cyber Incident Reporting for Critical Infrastructure Act of 2022 requires significant cyber incidents to be reported within 72 hours, increasing sensitivity to cybersecurity posture[112]. - The company’s cybersecurity solutions address ransomware threats, with offerings like Telos ACA providing real-time intelligence on known and unknown threats[109]. - The company maintains government certifications for its identity services, including TSA PreCheck enrollment provider and FBI-approved Channeler[104]. - The company’s secure mobility solutions enable remote work while minimizing operational and security concerns across enterprises[105]. Financial Performance - Revenue for the second quarter of 2022 increased by 4.0% to $55.8 million compared to $53.6 million in the same period of 2021[120]. - Services revenue increased by $1.3 million, or 2.6%, while product revenue increased by $0.9 million, or 19.0% in the second quarter of 2022[120]. - Cost of sales increased by 12.1% to $34.9 million for the second quarter of 2022, driven by increased revenue[121]. - Gross profit decreased by 7.1% to $20.9 million for the second quarter of 2022, with a gross margin of 37.5%[122]. - Selling, general, and administrative (SG&A) expenses decreased by 17.3% to $33.1 million for the second quarter of 2022[123]. - Operating loss was $12.2 million for the second quarter of 2022, an improvement from a loss of $17.5 million in the same period of 2021[124]. - Net loss was $12.3 million for the second quarter of 2022, compared to a net loss of $17.6 million in the same period of 2021[126]. - Revenue for the six months ended June 30, 2022 decreased by 3.2% to $106.0 million from $109.4 million in the same period of 2021[127]. - Gross profit for the six months ended June 30, 2022 increased by 7.6% to $39.8 million, with a gross margin of 37.6%[129]. - Secure Networks' revenue for the second quarter of 2022 increased by approximately 17% compared to the same period in 2021[139]. - For the three months ended June 30, 2022, the company reported a net loss of $12.3 million, an improvement from a net loss of $17.6 million for the same period in 2021[146]. - Adjusted EBITDA for the three months ended June 30, 2022, was $4.5 million, compared to $5.3 million for the same period in 2021, reflecting a decrease of approximately 13.7%[146]. - Free cash flow for the three months ended June 30, 2022, was $5.4 million, significantly up from $1.4 million for the same period in 2021[152]. - Cash provided by operating activities was $8.1 million for the six months ended June 30, 2022, compared to cash used of $3.4 million for the same period in 2021[157]. - As of June 30, 2022, the company had a cash and cash equivalent balance of $122.6 million, a slight decrease from $126.6 million at December 31, 2021[156]. - The company’s working capital was $130.4 million as of June 30, 2022, down from $140.8 million as of December 31, 2021[155]. - Stock-based compensation expense for the three months ended June 30, 2022, was $15.2 million, compared to $21.3 million for the same period in 2021[150]. - The company expects that funds generated from operations will be sufficient to meet its liquidity requirements for the next 12 months[155]. - Cash used in investing activities was approximately $5.8 million for the six months ended June 30, 2022, primarily due to software development costs[158]. - Cash used in financing activities was $6.2 million for the six months ended June 30, 2022, compared to cash provided of $33.0 million for the same period in 2021[159]. Internal Control and Remediation - Management identified material weaknesses in internal control over financial reporting, including insufficient qualified resources and ineffective controls[164]. - The company did not maintain appropriately designed controls over revenue recording, software development costs, and stock-based compensation[164]. - Employee turnover contributed to a temporary shortage of qualified personnel for internal controls[165]. - Remediation efforts include hiring additional accounting personnel and enhancing training on control procedures[168]. - The company is enhancing processes around revenue recognition and financial close reporting[168]. - As of June 30, 2022, the identified material weaknesses have not been fully remediated[166]. - There have been no material changes in internal control over financial reporting during the quarter ended June 30, 2022[167]. - The company is monitoring the effectiveness of remediation measures and will make necessary adjustments[166]. - Enhancements to user access provisioning and monitoring controls are being implemented[168]. - The material weaknesses will be considered remediated once effective controls are designed and implemented[165].

Telos Corporation (NASDAQ:TLS) Q2 2022 Earnings Conference Call August 9, 2022 8:30 AM ET Company Participants Christina Mouzavires - Investor Relations John Wood - Chairman and Chief Executive Officer Mark Bendza - Executive Vice President and CFO Mark Griffin - Executive Vice President, Security Solutions Conference Call Participants Zach Cummins - B. Riley Rudy Kessinger - D.A. Davidson Alex Henderson - Needham & Company Nehal Chokski - Northland Capital Markets Brad Clark - BMO Operator Good day and tha ...

Financial Performance Summary - Revenue for Q2 2022 was $55.8 million, exceeding the guidance of $50 million to $54 million[19] - Revenue growth was +4% year-over-year and +11% sequentially[19] - Gross profit was $20.9 million with a 37.5% margin, which is -449 bps year-over-year, also above the guidance of 33% to 35% margin (-900 to -700 bps)[19] - Adjusted EBITDA was $4.5 million, above the high end of the guidance range[18, 19] - Adjusted EPS was $0.04[19] Segment Performance - Security Solutions revenue decreased by 4% year-over-year but increased by 15% sequentially[9] - Secure Networks revenue increased by 17% year-over-year and 7% sequentially[11] - Security Solutions weighted 55% of total revenues, contributing to higher gross margins[14] Guidance and Assumptions - Q3 2022 revenue is projected to be between $58 million and $62 million, with adjusted EBITDA between $3.5 million and $5 million[26] - Full year 2022 revenue guidance is updated to $226 million to $242 million, with adjusted EBITDA of $18 million to $24 million[31] - Gross margin for Q3 2022 is expected to be down 350-500 basis points year-over-year[28] Additional Information - Below the line expenses excluding stock based compensation ~$1M higher YoY due to ramp of R&D and G&A investments during 2021[29]

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Telos Corporation's Q1 2022 financial statements show decreased revenue, increased net loss, and a slight decline in assets and equity, with improved operating cash flow [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2022 saw Telos Corporation's total revenue decrease to $50.16 million, with operating and net losses widening to $14.73 million and $14.98 million respectively Q1 2022 vs Q1 2021 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | **Total Revenue** | **$50,160** | **$55,757** | | Services Revenue | $48,108 | $52,058 | | Products Revenue | $2,052 | $3,699 | | **Gross Profit** | **$18,871** | **$14,469** | | Operating Loss | $(14,734) | $(13,494) | | **Net Loss** | **$(14,983)** | **$(14,778)** | | Net Loss Per Share, Diluted | $(0.22) | $(0.23) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, Telos Corporation reported total assets of $244.0 million, a slight decrease from year-end 2021, with cash and equity also declining Balance Sheet Highlights (in thousands) | Metric | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $120,233 | $126,562 | | Total current assets | $187,735 | $191,714 | | **Total assets** | **$244,021** | **$246,081** | | Total current liabilities | $55,053 | $50,941 | | **Total liabilities** | **$68,960** | **$65,827** | | **Total stockholders' equity** | **$175,061** | **$180,254** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 saw cash from operations turn positive at $0.25 million, a significant improvement, despite an overall $6.33 million decrease in cash and equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Cash provided by (used in) operating activities | $249 | $(6,882) | | Cash used in investing activities | $(3,341) | $(2,645) | | Cash used in financing activities | $(3,237) | $(2,757) | | **Decrease in cash and cash equivalents** | **$(6,329)** | **$(12,284)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, Q4 2021 segment reorganization, U.S. government revenue concentration, and a pending securities lawsuit - In Q4 2021, the company reorganized its internal management reporting structure, resulting in two new reportable segments: Security Solutions and Secure Networks. Prior period information has been recast to reflect this change[29](index=29&type=chunk)[30](index=30&type=chunk) Revenue by Segment (in thousands) | Segment | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Security Solutions | $26,919 | $22,829 | | Secure Networks | $23,241 | $32,928 | | **Total Revenue** | **$50,160** | **$55,757** | - Revenue from U.S. government contracts and subcontracts accounted for **95% of total revenue** in Q1 2022, down slightly from 96% in Q1 2021. The U.S. Department of Defense represented **71.4% of revenue** in the quarter[70](index=70&type=chunk)[71](index=71&type=chunk) - As of March 31, 2022, the company had **$120.0 million in remaining performance obligations** (funded backlog), of which **84% is expected to be recognized as revenue in 2022**[76](index=76&type=chunk) - A securities class action lawsuit was filed against Telos and certain officers on February 7, 2022, alleging failure to disclose delays related to certain government contracts. The company intends to defend the lawsuit vigorously[112](index=112&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights a 10% revenue decrease to $50.2 million in Q1 2022, improved gross margin to 37.6%, increased SG&A, and a $14.7 million operating loss, while maintaining strong liquidity [Business Overview and Segments](index=26&type=section&id=Business%20Overview%20and%20Segments) Telos provides software-based security solutions through Security Solutions and Secure Networks segments, with performance heavily influenced by U.S. government spending - The company's offerings are divided into two main segments: - **Security Solutions**: Includes Information Assurance/Xacta, Secure Communications (Telos Ghost, AMHS), and Telos ID - **Secure Networks**: Focuses on secure mobility solutions and network management/defense services[120](index=120&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Business performance is heavily affected by U.S. government spending. The final FY 2022 appropriations bill provided a **$32.5 billion increase for the DoD** over FY 2021, and the proposed FY 2023 budget calls for further increases in defense and civilian cybersecurity funding[127](index=127&type=chunk)[128](index=128&type=chunk)[131](index=131&type=chunk) [Consolidated Results of Operations](index=29&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2022 consolidated results show a 10% revenue decrease to $50.2 million, a 30.4% gross profit increase to $18.9 million, and a net loss of $15.0 million Q1 2022 vs Q1 2021 Performance Summary (in millions) | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $50.2 | $55.8 | (10.0)% | | Cost of Sales | $31.3 | $41.3 | (24.2)% | | Gross Profit | $18.9 | $14.5 | 30.4% | | SG&A Expense | $33.6 | $28.0 | 20.2% | | Net Loss | $(15.0) | $(14.8) | 1.4% | - The decrease in revenue was attributed to certain projects winding down in the Secure Networks segment[147](index=147&type=chunk) - Gross margin increased to **37.6% from 26.0%** due to a change in the mix of contracts and the relative weighting of revenue between the higher-margin Security Solutions and lower-margin Secure Networks segments[149](index=149&type=chunk) [Segment Results](index=30&type=section&id=Segment%20Results) Security Solutions revenue grew 17.9% with margin expansion to 55.9%, while Secure Networks revenue declined 29.4% as projects wound down Security Solutions Segment Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $26,919 | $22,829 | | Gross Profit | $15,051 | $9,326 | | **Gross Margin** | **55.9%** | **40.9%** | Secure Networks Segment Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenue | $23,241 | $32,928 | | Gross Profit | $3,820 | $5,143 | | **Gross Margin** | **16.4%** | **15.6%** | [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) Q1 2022 Adjusted EBITDA was $1.0 million, Adjusted Net Loss was $0.7 million, and free cash flow improved significantly to a $3.1 million outflow Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net loss | $(14,983) | $(14,778) | | Enterprise EBITDA | $(13,329) | $(12,134) | | Stock-based compensation expense | $14,298 | $13,670 | | **Adjusted EBITDA** | **$969** | **$1,536** | Reconciliation to Adjusted Net Loss (in thousands, except EPS) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Loss (GAAP) | $(14,983) | $(14,778) | | **Adjusted Net Loss (Non-GAAP)** | **$(697)** | **$(54)** | | Adjusted EPS (Non-GAAP) | $(0.01) | $0.00 | Free Cash Flow (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash flows from operating activities | $249 | $(6,882) | | Less: Purchases of property and equipment | $(546) | $(480) | | Less: Capitalized software development costs | $(2,795) | $(2,165) | | **Free cash flow** | **$(3,092)** | **$(9,527)** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Telos maintains strong liquidity with $120.2 million in cash and $132.7 million in working capital, with positive operating cash flow in Q1 2022 - The company's cash and cash equivalent balance was **$120.2 million** as of March 31, 2022[171](index=171&type=chunk) - Working capital was **$132.7 million** as of March 31, 2022, compared to $140.8 million at the end of 2021[170](index=170&type=chunk) - Cash provided by operating activities was **$0.2 million** for Q1 2022, compared to cash used of $6.9 million in Q1 2021[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No quantitative or qualitative disclosures regarding market risk were reported for the period - No disclosures were made regarding market risk[178](index=178&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2022, due to un-remediated material weaknesses in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of March 31, 2022[180](index=180&type=chunk) - The ineffectiveness is due to ongoing material weaknesses identified as of December 31, 2021, which include deficiencies in: - Entity-level controls and monitoring activities - IT general controls (user access, change management, segregation of duties) - Controls over revenue recognition, software development costs, stock-based compensation, and the financial statement close process[181](index=181&type=chunk)[183](index=183&type=chunk) - The company is actively working on remediation efforts, including hiring additional accounting personnel and enhancing processes and controls, but the weaknesses were not fully remediated as of the quarter's end[183](index=183&type=chunk)[184](index=184&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information, including a February 2022 securities class action lawsuit, is detailed in Note 14 of the financial statements - Details on legal proceedings can be found in Note 14 – Commitments and Contingencies[187](index=187&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported for the quarter ended March 31, 2022 - No material changes to risk factors were reported for the period[188](index=188&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[189](index=189&type=chunk)

First Quarter 2022 Earnings May 10, 2022 2 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 in which such offer, solicitation or sale would be unlawful. Telos Corporation (the "Company") will only make such an offer or sale pursuant to an effective registratio ...

Telos Corporation (NASDAQ:TLS) Q1 2022 Earnings Conference Call May 10, 2022 8:30 AM ET Company Participants Christina Mouzavires – Investor Relations John Wood – Chairman and Chief Executive Officer Mark Bendza – Executive Vice President and Chief Financial Officer Mark Griffin – Executive Vice President of Security Solutions Conference Call Participants Alex Henderson – Needham Zach Cummins – B. Riley Securities Brad Clark – BMO Nehal Chokshi – Northland Capital Markets Rudy Kessinger – D.A. Davidson Oper ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-08443 TELOS CORPORATION (Exact name of registrant as specified in its charter) Maryland 52-0880974 (State or other jurisdiction of incorporation or organization) (I ...

Financial Data and Key Metrics Changes - The company reported a 43% revenue growth in Q4 2021 and a 35% growth for the full year, or 59% for the year adjusted for the wind down of the 2020 Census program [8][9] - Gross profit increased by 38% for the year, totaling $86 million, with adjusted EBITDA of $8.8 million and a 13.8% adjusted EBITDA margin for Q4 [9][34] - Adjusted EPS for the year was $0.27, an increase of $0.42 year-over-year [9] Business Line Data and Key Metrics Changes - The Security Solutions segment generated $123.5 million in revenue for fiscal 2021, representing 51% of total revenues, with a compounded annual growth rate of approximately 13% over the last three years [13] - The Secure Networks segment generated approximately $118.9 million in revenue for fiscal 2021, or 49% of total revenues, with a remarkable 90% growth in 2021 alone [14] Market Data and Key Metrics Changes - The company ended 2021 with a cash balance of approximately $127 million and repaid all its debt, indicating strong financial flexibility [16] - The company has seen increased federal, state, and commercial market interest for secure, fully integrated, enterprise-class, hybrid, and multi-cloud environments [27] Company Strategy and Development Direction - The company has restructured its reporting business segments into Security Solutions and Secure Networks to better align with its strategic priorities [12] - The company is focused on expanding its sales channel and cloud partnerships, with significant investments in sales and marketing functions [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over customer delays on large programs but remains optimistic about future growth opportunities, particularly in cybersecurity funding from federal agencies [25][68] - The company anticipates a strong finish to 2022, with a focus on balancing investments in growth while managing costs and cash flows [68] Other Important Information - The company has made two inorganic investments, acquiring the remaining equity interest in Telos ID and Diamond Fortress Technologies [18][19] - The company is undergoing a technical accounting review related to the TSA PreCheck program, which has implications for revenue recognition [54][56] Q&A Session Summary Question: Update on Security Solutions growth outlook - Management indicated that the growth outlook for Security Solutions has been adjusted due to ongoing delays in TSA PreCheck, affecting the expected growth rate [72][74] Question: Insights on Secure Networks guidance - The decline in Secure Networks revenue is primarily due to the wind down of two large programs, with new business expected to partially offset this in the second half of the year [78] Question: Free cash flow generation expectations - Management suggested that free cash flow could improve this year, potentially reaching positive levels, based on adjusted EBITDA guidance and capital expenditures [80] Question: Update on CMS contract - Management remains optimistic about the CMS contract's potential for expansion, despite it not being included in the 2022 plan [86] Question: Sales force expansion and market investment - The sales force has been rounded out, and the focus is now on execution and building a sales pipeline, with results expected in the second half of 2022 [90] Question: TSA PreCheck ATO timeline - Management expressed frustration over the delays in receiving the ATO for TSA PreCheck but remains optimistic about obtaining it in 2022 [95][96]

3Q 2021 Earnings Release Solutions that empower and protect the enterprise.TM November 15, 2021 2 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 in which such offer, solicitation or sale would be unlawful. Telos Corporation (the "Company") will only make suc ...