Telos(TLS) - 2024 Q4 - Annual Report

Revenue Performance - Revenue for the year ended December 31, 2024, was $108,272,000, a decrease of$37,106,000 compared to $145,378,000 in 2023, representing a decline of approximately 25.5$76.76 million, while gross profit decreased by 30% to $27.68 million, resulting in a gross margin decline from 51.2$31.51 million, with gross profit decreasing by 49% to $6.75 million, although gross margin improved from 19.6$94,951,000 in 2024, making up 88% of total revenue, compared to $131,143,000 and 90$13,321,000 in 2024, representing 12% of total revenue, compared to $14,235,000 and 10$34,429,000, down from $52,942,000 in 2023, resulting in a gross margin of 31.8$55,873,000, compared to a loss of $40,315,000 in 2023, indicating increased operational challenges[205] - The net loss for 2024 was$52.52 million, with a net loss margin of 48.5%, compared to a net loss of $34.42 million and a margin of 23.7$22.16 million, with an adjusted earnings per share of $(0.31), compared to an adjusted net loss of$15.61 million and an adjusted earnings per share of $(0.23) in 2023[221] - The company’s EBITDA for 2024 was$(44.01) million, representing an EBITDA margin of (40.6)%, compared to $(30.89) million and (21.3)$3.3 million and selling, general and administrative expenses down by $5.5 million[206] - Selling, general and administrative expenses were$75.5 million in 2024, slightly down from $81.0 million in 2023[276] Cash Flow and Liquidity - Net cash used in operating activities for 2024 was$(25.9) million, a decrease of $27.5 million compared to a net cash provided of$1.6 million in 2023[231] - Free cash flow for 2024 was $(39.7) million, compared to$(13.9) million in 2023[227] - As of December 31, 2024, the company had cash and cash equivalents of $54.6 million and working capital of$69.3 million[229] - Cash and cash equivalents dropped from $99,260,000 in 2023 to$54,578,000 in 2024, a decrease of about 45%[282] Backlog and Future Business - The company's backlog as of December 31, 2024, totaled $76,489,000, a decrease from$118,102,000 in 2023, with funded backlog at $51,197,000 and unfunded backlog at$25,292,000[203] - The company continues to face competitive bidding pressures for government contracts, with a majority of future business expected to be awarded through competitive processes[183] Restructuring and Impairments - The company incurred a restructuring charge of $1.3 million and a non-cash impairment of software development costs totaling$11.7 million in 2024[207] - An impairment loss of $6.4 million was recorded due to the abandonment of selected solutions, reported under operating expenses[353] - Total restructuring expenses and impairment loss for the year ended December 31, 2024, amounted to$7.643 million, compared to $1.132 million in 2023[354] Budget and Government Contracts - The proposed FY2025 budget includes$850 billion for the Department of Defense (DoD) base budget, with a focus on cyber investments and modernization of legacy technology[186] - The proposed FY2025 budget allocates $455 million for advancements in artificial intelligence, which aligns with the company's focus on cybersecurity and technology solutions[198] Accounting and Financial Reporting - The Company follows ASC Topic 606 for revenue recognition, utilizing a five-step model to determine performance obligations and transaction prices[361] - The company evaluates goodwill for impairment at least annually, with no significant adverse changes reported that would affect the fair value[319] - The company follows ASC 740 for income tax accounting, recognizing deferred tax assets and liabilities based on enacted statutory tax rates[334]