Release Date: March 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: With the change in administration, how is Telos adapting to the impact on single award programs? A: John Wood, CEO, explained that while the new administration is generally positive for Telos, there are delays in single awards as the administration reviews opportunities. Telos is focusing on task orders from existing contract vehicles to mitigate this impact.
Q: Can you elaborate on the revenue recognition for the DMDC and DHS programs in 2025? A: Mark Bendza, CFO, clarified that the revenue recognition is influenced by the mix of third-party content, which is more software-heavy than hardware. Software revenue may be recognized over a period, affecting first-year revenue recognition. However, cash flow benefits are expected at the time orders are filled, supporting positive cash flow projections for 2025.
Q: How should we think about the current TSA PreCheck revenue given the rollout progress? A: Mark Bendza confirmed that the framework for TSA PreCheck revenue is based on the number of enrollment locations. With 218 locations, Telos is progressing towards capturing a significant share of the $200 million market, though full potential will be realized as more locations open.
Q: What are the expectations for cash flow in Q1 and the full year 2025? A: Mark Bendza stated that Q1 will benefit from working capital liquidation. For the full year, even at a break-even adjusted EBITDA, Telos expects positive free cash flow due to favorable changes in working capital, with revenue breakeven for free cash flow being lower than for adjusted EBITDA.
Q: Can you provide more detail on the cash flow dynamics for 2025? A: Mark Bendza explained that at a break-even adjusted EBITDA, Telos anticipates negative free cash flow of about $8 million before working capital changes. However, working capital improvements should offset this, leading to positive free cash flow for the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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