Multiple benefits of the divestiture include:
- Eliminates debt payments of $3.9 million on an annualized basis.
- Reduces fully diluted common shares by 16%.
- Enables greater focus on faster-growing, higher-margin managed cybersecurity and technology enablement business with backlog and sales pipeline at record levels.
- Puts company on track for revenue from continuing operations of $43 million - $47 million in 2023, representing growth of 59% - 74% and driving positive operating income, cash flow and adjusted EBITDA.
BATAVIA, Ill., March 08, 2023 (GLOBE NEWSWIRE) -- High Wire Networks, Inc. (OTCQB: HWNI), a leading global provider of managed cybersecurity and technology enablement services, has sold its legacy staffing business in a $11.5 million transaction comprised primarily of the elimination of debt and cancellation of certain shares of its Series D preferred equity.
The transaction also eliminates approximately $325,000 in monthly debt payments or $3.9 million on an annualized basis. This frees up substantial capital that High Wire will use to support its faster-growing, higher-margin managed cybersecurity and technology business that is generating recurring revenue from long-term contracts.
The transaction also reduces High Wire’s fully diluted common shares by more than 16% through the elimination of conversion provisions associated with the debt and preferred equity.
“While our staffing subsidiary had been growing steadily, this was a strategic sale at a significant multiple to our original acquisition price in 2021,” stated company CEO Mark Porter. “Moreover, its divestiture allows us to focus our attention and financial resources on our core cybersecurity and technology enablement business. These areas have been generating our strongest growth and providing the most attractive market opportunities with our unique channel partner program.”
The company’s continuing operations comprised of cybersecurity and technology enablement services generated on a pro forma basis an estimated $27.0 million in revenues in 2022, an increase of 27% from $21.3 million in 2021. The pro forma revenue outlook for continuing operations in 2023 is $43 million to $47 million, representing growth of 59% to 74%, with this driving positive operating income, cash flow and adjusted EBITDA.
More than half of High Wire’s revenue in 2022 was recurring based on long-term contracts, and the company expects this to continue to expand in 2023 with the anticipated growth of its managed service offerings.
“Our growth outlook for 2023 is supported by both the many benefits of this divestiture and our backlog of contracted deployments currently remaining at a historical high,” noted company COO, Stephen LaMarche. “Our sales pipeline is also the strongest it has ever been in terms of both the number and size of prospective deals, particularly for managed security. Our recurring revenue from our managed cybersecurity offering, Overwatch by High Wire Networks™, has also grown by more than 420% over the past year.”
In addition to driving higher quality revenue streams and profitability, the sale of the staffing business is part of a larger initiative by the company over the last several months to strengthen its capitalization and organizational structure, eliminate high interest debt, secure more favorable financing, and prepare for an uplisting to a major U.S. stock exchange.
The company’s growth in managed services has been driven by a growing number of channel partners who have expanded their managed cybersecurity service offerings using High Wire’s Overwatch cybersecurity solution. In partnership with High Wire, they can provide their business customers award-winning 24/7 managed security protection with best-in-breed threat prevention, detection and response that is enhanced by the company’s proprietary Overwatch Security Orchestration Automation and Response™ (SOAR™) technology.
Membership of the company’s channel partner program now totals more than 600 worldwide, including industry leading organizations that cater to the Fortune 500. It is comprised of leading MSPs, IT firms, Telcos, hardware and software manufacturers, global system integrators, value added resellers and distributors, and strategic consulting firms. These partners have turned to High Wire to better address their customers’ growing demand for more scalable, manageable, and effective IT and cybersecurity solutions.
Through these channel partners, High Wire’s highly flexible and adaptable managed services have earned the trust of tens of thousands of SMBs and enterprise end-customers worldwide, including hundreds of the Fortune 500, many of the Fortune 50, and multiple top federal government agencies.
High Wire’s technology enablement offering, comprised of professional and managed IT services, addresses a global IT service market that is expected to grow at a 5.8% CAGR to reach $2.6 trillion by 2030. Its Overwatch cybersecurity offering addresses a global cybersecurity market that is projected to grow at a 13.4% CAGR to reach $376 billion by 2029.
For additional details about the sale of the staffing business, see High Wire Networks’ Form 8-K filed with the U.S. Securities and Exchange Commission at www.sec.gov. The filing is also available from the Investors section at highwirenetworks.com.
To learn more about High Wire and its award-winning managed cybersecurity and IT enablement services, visit HighWireNetworks.com or view the company’s free video series on YouTube.
About High Wire Networks
High Wire Networks, Inc. (OTCWB: HWNI) is a fast-growing, award-winning global provider of managed cybersecurity and IT enablement services. Through more than 600 channel partners, it delivers trusted managed services for nearly 1,000 managed security customers and tens of thousands of technology customers. Its end-customers include hundreds of Fortune 500 companies and the nation’s largest government agencies.
The company’s Overwatch by High Wire Networks™ platform offers a range of subscription services for threat prevention, detection and response to meet the security and compliance requirements of organizations large and small. The company’s IT enablement services provide the foundation for growing its higher-margin Overwatch business.
High Wire has 350 employees worldwide and seven U.S. offices, including a U.S. based 24/7 Network Operations Center and Security Operations Center in Chicago, with additional regional offices in Toronto, Puerto Rico and UK.
High Wire was recently ranked by Frost & Sullivan as a Top 12 Managed Security Service Provider in the Americas. It was also recently named to CRN’s MSP 500 and Elite 150 lists of the nation’s top IT managed service providers.
Learn more at HighWireNetworks.com. Follow the company on Twitter, view its extensive video series on YouTube or connect on LinkedIn.
Forward-Looking Statements
The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based except as required by applicable law and regulations.
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