PAE Incorporated (“PAE” or the “Company”) (NASDAQ: PAE, PAEWW)
today announced first-quarter 2020 financial and operating results.
CEO Commentary
"Amidst a challenging environment, PAE delivered
solid financial and operating results,” said PAE’s President and
Chief Executive Officer John Heller. "First, I want to thank our
dedicated global workforce of 20,000 strong who selflessly drove
our business results during this time of global turmoil. I also
want to thank our customers who have taken great efforts to ensure
continuity in supporting our mission-critical programs. While
first quarter revenue came in below our expectations, it is largely
driven by timing-related factors and as a result, we are
reiterating our 2020 financial guidance. Our core goals remain the
same – to drive revenue growth, expand margins and increase
shareholder value.”
First-Quarter 2020 Results
Revenues for the quarter of $617.3 million
decreased $56.2 million, or 8.3%, compared to the prior year
period. The decrease was attributable to timing-related impacts on
billable materials and task orders for incremental labor, the
recompete loss of certain contracts, and an approximate $14.0
million impact from COVID-19, which decrease was partially offset
by an increase in on-contract growth and new business programs. The
Global Mission Services (“GMS”) and National Security Solutions
(“NSS”) segments revenue decreased by approximately $47.0 million
and $9.2 million, respectively.
Operating income for the quarter was $7.5
million, compared with operating income of $14.4 million in the
prior year period. The decrease resulted from lower revenue volume
partially offset by a corresponding reduction in cost of revenues
and increased transaction-related selling, general and
administrative expenses.
The net loss attributed to PAE Incorporated for
the quarter was $4.9 million, or $(0.08) per diluted share,
compared with a net loss of approximately $5.7 million, or $(0.27)
per diluted share in the prior year period. The decrease in net
loss for the first quarter of 2020, was primarily driven by factors
impacting operating income.
Adjusted EBITDA for the quarter was $41.6
million, or 6.7% of revenue, compared to $39.9 million, or 5.9% of
revenue, in the prior year period. The modest variance was
driven by factors impacting operating income. Adjusted EBITDA
margins benefited from increased profitability on new business
programs and higher non-labor revenue in the prior year period.
Global Mission ServicesGMS revenues for the
quarter of $457.4 million decreased $47.0 million, or 9.3%,
compared to the prior year period. The decrease was partially
attributable to timing-related impacts on billable materials and
task orders for incremental labor and partially as a result of an
approximate $12 million impact from COVID-19. This decrease
was partially offset by an increase in on-contract growth and new
programs.
GMS operating income for the quarter was $12.6
million, compared to $25.8 million, in the prior-year period.
The decrease resulted primarily from lower revenue and increases in
selling, general and administrative expenses.
GMS adjusted operating income2 for the quarter
was $27.3 million, or 6.0% of revenue, compared to $29.0 million,
or 5.8% of revenue, in the prior year period. Adjusted
operating income decreased year-over-year primarily due to lower
revenue and increases in selling, general and administrative
expenses. GMS adjusted operating income margins2 improved
year-over-year due to higher non-labor revenue in the prior year
period.
National Security SolutionsNSS revenues for the
quarter of $159.8 million decreased $9.2 million, or 5.4%, compared
to the prior year period. The decrease was partially driven by the
recompete loss of certain contracts and partially as a result of an
approximate $2.0 million impact from COVID-19. This decrease
was partially offset by an increase in on-contract growth and new
programs.
NSS operating income for the quarter was $4.4
million, compared to an operating loss of $0.8 million in the prior
year period. The increase was primarily due to losses
incurred by PAE ISR LLC in the first quarter of 2019. PAE
sold substantially all the assets of PAE ISR LLC in the fourth
quarter of 2019. The positive effect of this action on the
first quarter 2020’s operating income was partially offset by
increased cost of revenues.
NSS adjusted operating income3 for the quarter
was $14.3 million, or 9.0% of revenue, compared to $10.8 million,
or 6.4% of revenue, in the prior year period. The increase in
adjusted operating income and adjusted operating income margins3
year-over-year was primarily due to improved performance on
existing contracts and increased profitability on new business
programs.
Cash Flow Summary
Net cash provided by operating activities for
the quarter of $10.9 million, decreased by $28.4 million primarily
as the result of an increase in accounts payable and accrued
salaries, offset by reduced accounts receivable.
As of March 29, 2020, PAE had cash and cash
equivalents totaling $99.8 million and had not drawn on its
asset-based revolving loan credit facility.
Business Development Highlights and
Contract Awards
Net bookings totaled $654 million in the first
quarter and $2.54 billion over the trailing twelve months,
representing a book to bill ratio of 1.1x and 0.9x for the first
quarter and trailing twelve months, respectively. The net
bookings were primarily contract extensions and on-contract growth
awards.
Notable first quarter awards received
include:
Notable New Business Award:
- Department of
Justice: PAE’s GMS segment was notified of a successful
resolution of a protest of a $400 million, 7-year training
contract.
Notable IDIQ Awards:
- National Oceanic and
Atmospheric Administration: PAE’s GMS segment was
awarded a position on the $3 billion National Oceanic and
Atmospheric Administration ProTech Weather Domain IDIQ contract for
professional and technical services.
- U.S. Army:
PAE’s NSS segment was awarded the Global Tactical Advanced
Communications Systems and Services or, GTACS II, IDIQ
contract. The U.S. Army awarded seats to 16 large companies
on the 10-year, $5.1 billion contract vehicle, to supply technology
services and hardware support to develop new tactical communication
networks for soldiers. This award strategically places PAE inside
of a key C4ISR contract vehicle enabling the Company to expand its’
C4ISR capabilities.
Notable Contract Extension Awards:
- Baghdad Operations and
Maintenance Support Services (OMSS): PAE’s GMS
segment was awarded a $48 million, 6-month contract
extension. Under this contract, PAE supports the Department
of State performing Operations and Maintenance Support Services
(OMSS) at the U.S. Embassy in Baghdad, Baghdad Diplomatic Support
Center, and the Department of Defense Union III Compound in
Iraq.
- Naval Air Warfare Center
Aircraft Division: PAE’s GMS segment was awarded a
$33 million, 6-month contract extension to support the operation of
the US Navy’s Atlantic Undersea Test and Evaluation Center
(AUTEC).
The Company’s backlog at the end of the quarter
was $6.4 billion, of which $1.2 billion was
funded.
2020 Financial Outlook
PAE is reiterating the fiscal 2020 guidance it
issued on March 11, 2020, based on the Company's financial results
for the first quarter of 2020 and its current outlook for the
remainder of the year. The table below summarizes the
Company's 2020 financial guidance:
|
|
2020 Financial Guidance |
Revenue |
|
$2,750 million - $2,850 million |
Adjusted EBITDA |
|
$170 million - $178 million |
|
|
|
Adjusted EBITDA is a non-GAAP financial measure.
The Company is not providing a quantitative reconciliation of
adjusted EBITDA in its 2020 financial guidance in reliance on the
“unreasonable efforts” exception for forward-looking non-GAAP
measures set forth in SEC rules because certain financial
information, the probable significance of which cannot be
determined, is not available and cannot be reasonably estimated
without unreasonable effort and expense. In this regard, the
Company does not provide a reconciliation of forward-looking
adjusted EBITDA (non-GAAP) to GAAP net income, due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliation. Because certain deductions for
non-GAAP exclusions used to calculate projected net income may vary
significantly based on actual events, the Company is not able to
forecast on a GAAP basis with reasonable certainty all deductions
needed in order to provide a GAAP calculation of projected net
income at this time. The amounts of these deductions may be
material and, therefore, could result in projected GAAP net income
being materially less than is indicated by estimated adjusted
EBITDA (non-GAAP). In addition, the Company does not provide
a reconciliation of forward-looking free cash flow (non-GAAP) to
GAAP cash flows provided by operating activities and GAAP cash used
in investing activities, due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliation. Because certain line items used to calculate
projected cash flows provided by operating activities and cash used
in investing activities may vary significantly based on actual
events, the Company is not able to forecast on a GAAP basis with
reasonable certainty all line items needed in order to provide a
GAAP calculation of projected free cash flow at this time.
COVID-19We continue to work
with our stakeholders (including customers, employees, suppliers
and local communities) to address this global pandemic.
Specifically, we are working closely with our customers, including
those within the U.S. government, to permit continued contract
performance and to mitigate the impact of the current COVID-19
pandemic on our operations and personnel. We continue to review our
contractual provisions, hold discussions with customers regarding
the pandemic’s potential impact on contract operations, and take
actions to reduce the impact of COVID-19 on our business,
workforce, logistics, revenues, and results of operations. We are
continuing to monitor the impact of the pandemic and other related
uncertainties on financial markets, which has caused us to delay
undertaking certain actions in support of our strategic plans.
Due to the nature of our business, and although
our operations have been disrupted by the COVID-19 pandemic, the
impact has not been material to date. We have developed contingency
and business continuity plans should the disruptions increase. In
particular, our U.S. government customers have taken steps to
ensure the continuance of many of the services provided by us and
other contractors, including, but not limited to, designating
certain PAE contracts as essential for continued performance and
authorizing remote work for contractor personnel that cannot access
worksites. In addition, the impact may be further mitigated by
recently passed legislation allowing U.S. government agencies to
reimburse contractors such as us for paid leave for employees who
cannot access work sites or telework. However, some U.S. Government
customers have suspended or reduced work under certain of our
contracts.
The outbreak of COVID-19 did not have a material
impact on the corporation's operating results or business in the
first quarter of 2020. In addition, following a review of our
operations, and notwithstanding the fact that the Company is
beginning to experience some issues in its business segments
related to COVID-19, primarily in access to some locations and
logistics disruptions, the Company has concluded that no revisions
are necessary for its 2020 financial guidance.
Conference Call Information
As previously announced, PAE will host a conference call and
webcast today, May 7, 2020, at 8:00 a.m. ET. Management will
review the Company's first-quarter 2020 financial results, followed
by a question-and-answer session. Listeners will be able to access
a presentation summarizing the first-quarter 2020 results on the
PAE Investor Relations website.
Interested parties will be able to connect to the webcast from
the PAE Investor Relations website on May 7, 2020.
Prospective attendees may register for an email reminder about the
webcast on the events and presentations tab, also found on the
investor relations page. The conference call dial-in number is
1-855-982-6676 and the conference ID is 5628649. The international
dial-in number is 1-614-999-9188.
The Company will post an archive of the webcast following the
call on the PAE Investor Relations website.
Forward-Looking StatementsThis press release
may contain a number of “forward-looking statements” as defined in
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to,
statements about PAE’s possible or assumed future results of
operations, financial results, business strategies, debt levels,
competitive position, industry environment, potential growth
opportunities, potential impact of COVID-19, effects of regulation,
backlog, estimation of resources for contracts, risks related to
IDIQ contracts, strategy for and management of growth, needs for
additional capital, risks related to U.S. government contracting
generally, including congressional approval of appropriations, and
bid protests. These forward-looking statements are based on PAE’s
management’s current expectations, estimates, projections and
beliefs, as well as a number of assumptions concerning future
events. When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside PAE’s management’s control, that
could cause actual results to differ materially from the results
discussed in the forward-looking statements.
Forward-looking statements included in this release speak only
as of the date of this release. PAE does not undertake any
obligation to update its forward-looking statements to reflect
events or circumstances after the date of this release except as
may be required by the federal securities laws.
About PAEFor 65 years, PAE has tackled the
world’s toughest challenges to deliver agile and steadfast
solutions to the U.S. government and its allies. With a global
workforce of approximately 20,000 on all seven continents and in
approximately 60 countries, PAE delivers a broad range of
operational support services to meet the critical needs of our
clients. Our headquarters is in Falls Church, Virginia. Find us
online at pae.com, on Facebook, Twitter and LinkedIn.
For investor inquiries regarding PAE:
Mark ZindlerVice President Investor
RelationsPAE703-717-6017mark.zindler@pae.com
For media inquiries regarding PAE:
Terrence NowlinSenior Communications
ManagerPAE703-656-7423terrence.nowlin@pae.com
PAE IncorporatedCondensed Consolidated Statement
of Operations (Unaudited)(In thousands, except per share data)
|
Three Months Ended |
|
March 29, |
|
March 31, |
|
2020 |
|
2019 |
Revenues |
$ |
617,253 |
|
|
$ |
673,484 |
|
Cost of revenues |
465,208 |
|
|
517,159 |
|
Selling, general and
administrative expenses |
137,326 |
|
|
135,035 |
|
Amortization of intangible
assets |
8,047 |
|
|
8,657 |
|
Total operating expenses |
610,581 |
|
|
660,851 |
|
Program profit |
6,672 |
|
|
12,633 |
|
Other income, net |
785 |
|
|
1,720 |
|
Operating income |
7,457 |
|
|
14,353 |
|
Interest expense, net |
(20,948 |
) |
|
(22,660 |
) |
Loss before income taxes |
(13,491 |
) |
|
(8,307 |
) |
Benefit from income taxes |
(8,714 |
) |
|
(3,147 |
) |
Net loss |
(4,777 |
) |
|
(5,160 |
) |
Noncontrolling interest in
earnings of ventures |
166 |
|
|
559 |
|
Net loss attributed to PAE
Incorporated |
$ |
(4,943 |
) |
|
$ |
(5,719 |
) |
|
|
|
|
Net loss per share attributed to PAE Incorporated: |
|
|
|
Basic and diluted |
$ |
(0.08 |
) |
|
$ |
(0.27 |
) |
|
|
|
|
Weighted average shares outstanding |
59,807,549 |
|
|
21,127,823 |
|
|
|
|
|
|
|
PAE IncorporatedCondensed Consolidated Balance
Sheets (Unaudited)(In thousands, except share and par value
amounts)
|
March 29, |
|
December 31, |
|
2020 |
|
2019 |
|
|
|
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
99,790 |
|
|
$ |
68,035 |
|
Accounts receivable, net |
420,765 |
|
|
442,180 |
|
Prepaid expenses and other current assets |
46,760 |
|
|
43,549 |
|
Total current assets |
567,315 |
|
|
553,764 |
|
Property and equipment,
net |
28,079 |
|
|
30,404 |
|
Deferred Income taxes,
net |
16,597 |
|
|
3,212 |
|
Investments |
17,747 |
|
|
17,925 |
|
Goodwill |
409,588 |
|
|
409,588 |
|
Purchased intangibles,
net |
172,417 |
|
|
180,464 |
|
Operating lease right-of-use
assets, net |
161,731 |
|
|
162,184 |
|
Other noncurrent assets |
9,484 |
|
|
13,758 |
|
Total assets |
$ |
1,382,958 |
|
|
$ |
1,371,299 |
|
Liabilities and
equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
122,126 |
|
|
$ |
124,661 |
|
Accrued expenses |
100,456 |
|
|
102,315 |
|
Customer advances and billings in excess of costs |
69,662 |
|
|
51,439 |
|
Salaries, benefits and payroll taxes |
106,995 |
|
|
130,633 |
|
Accrued taxes |
16,058 |
|
|
18,488 |
|
Current portion of long-term debt |
22,894 |
|
|
22,007 |
|
Operating lease liabilities, current portion |
35,324 |
|
|
36,997 |
|
Other current liabilities |
32,703 |
|
|
30,893 |
|
Total current liabilities |
506,218 |
|
|
517,433 |
|
Long-term debt, net |
595,598 |
|
|
727,930 |
|
Long-term operating lease
liabilities |
130,426 |
|
|
129,244 |
|
Other long-term
liabilities |
7,397 |
|
|
8,601 |
|
Total liabilities |
1,239,639 |
|
|
1,383,208 |
|
Stockholders'
equity: |
|
|
|
Preferred stock, $0.0001 par
value per share, 1,000,000 shares authorized; no shares issued
and outstanding |
— |
|
|
— |
|
Common stock, $0.0001 par
value per share: 210,000,000 shares authorized; 92,040,654 and
21,127,823 shares issued and outstanding as of March 29, 2020 and
December 31, 2019, respectively |
9 |
|
|
2 |
|
Additional paid-in capital |
262,284 |
|
|
101,743 |
|
Accumulated deficit |
(150,314 |
) |
|
(145,371 |
) |
Accumulated other comprehensive loss |
(829 |
) |
|
(134 |
) |
Total PAE Incorporated stockholders' equity |
111,150 |
|
|
(43,760 |
) |
Noncontrolling interests |
32,169 |
|
|
31,851 |
|
Total liabilities and equity |
$ |
1,382,958 |
|
|
$ |
1,371,299 |
|
|
|
|
|
|
|
|
|
PAE IncorporatedCondensed Consolidated Statements
of Cash Flows (Unaudited)(In thousands)
|
Three Months Ended |
|
March 29, |
|
March 31, |
|
2020 |
|
2019 |
Operating
activities |
|
|
|
Net loss |
$ |
(4,777 |
) |
|
$ |
(5,160 |
) |
Adjustments to reconcile net
loss to net cash provided by operating activities: |
|
|
|
Depreciation of property and equipment |
2,583 |
|
|
3,010 |
|
Amortization of intangible assets |
8,047 |
|
|
8,657 |
|
Amortization of debt issuance cost |
6,063 |
|
|
2,050 |
|
Net undistributed income from unconsolidated ventures |
(663 |
) |
|
(1,300 |
) |
Deferred income taxes, net |
(9,081 |
) |
|
440 |
|
Other non-cash activities, net |
270 |
|
|
419 |
|
Changes in operating assets and liabilities, net: |
|
|
|
Accounts receivable, net |
20,869 |
|
|
(21,368 |
) |
Accounts payable |
(2,417 |
) |
|
53,784 |
|
Accrued expenses |
(3,779 |
) |
|
(7,412 |
) |
Customer advances and billings in excess of costs |
18,223 |
|
|
23,390 |
|
Salaries, benefits and payroll taxes |
(21,307 |
) |
|
(6,701 |
) |
Inventories, net |
1,342 |
|
|
(2,001 |
) |
Prepaid expenses and other current assets |
(2,921 |
) |
|
(5,754 |
) |
Other current and noncurrent liabilities |
(4,545 |
) |
|
(2,307 |
) |
Investments |
750 |
|
|
836 |
|
Other noncurrent assets |
4,729 |
|
|
780 |
|
Accrued taxes |
(2,473 |
) |
|
(2,000 |
) |
Net cash provided by operating activities |
10,913 |
|
|
39,363 |
|
Investing
activities |
|
|
|
Expenditures for property and
equipment |
(404 |
) |
|
(3,614 |
) |
Net cash used in investing activities |
(404 |
) |
|
(3,614 |
) |
Financing
activities |
|
|
|
Net contributions from
noncontrolling interests |
150 |
|
|
1,350 |
|
Borrowings on long-term
debt |
60,000 |
|
|
17,888 |
|
Repayments on long-term
debt |
(196,544 |
) |
|
(62,938 |
) |
Payments of debt issuance
costs |
(964 |
) |
|
— |
|
Recapitalization from merger
with Gores III |
605,708 |
|
|
— |
|
Payment of underwriting and
transaction costs |
(27,268 |
) |
|
— |
|
Distribution to selling
stockholders |
(419,548 |
) |
|
— |
|
Net cash provided by (used in) financing activities |
21,534 |
|
|
(43,700 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
(288 |
) |
|
(458 |
) |
Net increase
(decrease) in cash and cash equivalents |
31,755 |
|
|
(8,409 |
) |
Cash and cash equivalents at
beginning of period |
68,035 |
|
|
51,097 |
|
Cash and cash
equivalents at end of period |
$ |
99,790 |
|
|
$ |
42,688 |
|
|
|
|
|
Supplemental cash flow
information |
|
|
|
Cash paid for interest |
$ |
10,900 |
|
|
$ |
19,411 |
|
Cash paid for taxes |
$ |
1,523 |
|
|
$ |
2,608 |
|
|
|
|
|
|
|
|
|
PAE INCORPORATEDSEGMENT DATA(Amounts in
thousands)
|
Three Months Ended |
|
March 29, |
|
March 31, |
|
2020 |
|
2019 |
Revenues |
|
|
|
GMS |
$ |
457,444 |
|
|
$ |
504,480 |
|
NSS |
159,809 |
|
|
169,004 |
|
Consolidated revenues |
$ |
617,253 |
|
|
$ |
673,484 |
|
|
|
|
|
Operating income
(loss) |
|
|
|
GMS |
$ |
12,603 |
|
|
$ |
25,792 |
|
NSS |
4,367 |
|
|
(786 |
) |
Corporate |
(9,513 |
) |
|
(10,653 |
) |
Consolidated operating
income |
$ |
7,457 |
|
|
$ |
14,353 |
|
|
|
|
|
Amortization of
intangible assets |
|
|
|
GMS |
$ |
4,115 |
|
|
$ |
4,258 |
|
NSS |
3,932 |
|
|
4,399 |
|
Consolidated amortization of
intangible assets |
$ |
8,047 |
|
|
$ |
8,657 |
|
|
|
|
|
|
|
|
|
PAE INCORPORATEDBACKLOG(Amounts in thousands)
|
As of |
|
As of |
|
March 29, |
|
December 31, |
|
2020 |
|
2019 |
Global Mission
Services: |
|
|
|
Funded backlog |
$ |
904,871 |
|
|
$ |
1,173,196 |
|
Unfunded backlog |
3,850,641 |
|
|
3,393,081 |
|
Total GMS backlog |
$ |
4,755,512 |
|
|
$ |
4,566,277 |
|
|
|
|
|
National Security
Solutions: |
|
|
|
Funded backlog |
$ |
258,828 |
|
|
$ |
311,214 |
|
Unfunded backlog |
1,373,985 |
|
|
1,474,309 |
|
Total NSS backlog |
$ |
1,632,813 |
|
|
$ |
1,785,523 |
|
|
|
|
|
Total: |
|
|
|
Funded backlog |
$ |
1,163,699 |
|
|
$ |
1,484,410 |
|
Unfunded backlog |
5,224,626 |
|
|
4,867,390 |
|
Total backlog |
$ |
6,388,325 |
|
|
$ |
6,351,800 |
|
|
|
|
|
|
|
|
|
Backlog represents the estimated amount of
future revenues to be recognized under negotiated contracts and
task orders as work is performed and excludes contract awards which
have been protested by competitors until the protest is resolved in
our favor. PAE segregates backlog into two categories, funded
backlog and negotiated unfunded backlog.
Funded backlog refers to the value on contracts
for which funding is appropriated less revenues previously
recognized on these contracts.
Negotiated unfunded backlog represents the
estimated future revenues to be earned from negotiated contracts
for which funding has not been appropriated or authorized, and
unexercised priced contract options. Negotiated unfunded backlog
does not include any estimate of future potential task orders
expected to be awarded under indefinite delivery, indefinite
quantity (IDIQ), U.S. General Services Administration (GSA)
schedules or other master agreement contract vehicles.
Non-GAAP Financial Measures
The Company uses EBITDA, adjusted EBITDA,
adjusted EBITDA margin, adjusted operating income per segment and
adjusted operating income margin per segment as supplemental
non-GAAP measures of performance. PAE defines EBITDA as net
income excluding (i) interest expense, (ii) provision for or
benefit from income taxes and (iii) depreciation and
amortization. Adjusted EBITDA and adjusted operating income
per segment exclude certain amounts included in EBITDA as provided
in the reconciliations provided herein. Adjusted EBITDA is
equal to the sum of adjusted operating income for each
segment. Adjusted EBITDA margin is calculated as adjusted
EBITDA divided by revenues expressed as a percentage and adjusted
operating income margin is calculated as adjusted operating income
divided by revenues expressed as a percentage.
For 2020 and 2019, the Company’s net income was
impacted by certain events that do not reflect the cost of our
operations and which may affect the period-over-period assessment
of operating results. The non-GAAP financial measures
demonstrate the impact of these events.
During 2019 substantially all the assets of ISR
were sold. The Company believes that it is helpful for
investors to be able to evaluate the performance of PAE’s
underlying business based on excluding ISR’s operations during the
year. To calculate the loss, adjusted EBITDA and adjusted
operating income without ISR, the Company removed ISR from its
revenue and loss metrics for the first quarter of 2019.
These non-GAAP measures of performance are used
by management to conduct and evaluate its business during its
regular review of operating results for the periods
presented. Management and the Company’s Board utilize these
non-GAAP measures to make decisions about the use of the Company’s
resources, analyze performance between periods, develop internal
projections and measure management performance. PAE believes
these non-GAAP measures are useful to investors in evaluating the
Company’s ongoing operating and financial results and understanding
how such results compare with the Company’s historical
performance.
In addition to the above non-GAAP financial
measures, the Company has included backlog, net bookings, and
book-to-bill ratio in this release. Backlog is an operational
measure representing the estimated amount of future revenues to be
recognized under negotiated contracts and task orders as work is
performed and excludes contract awards which have been protested by
competitors until the protest is resolved in our favor. Net
bookings are an operational measure representing the change in
backlog between reporting periods plus reported revenue for the
period and book-to-bill ratio is an operational measure
representing net bookings divided by reported revenues for the same
period. We believe backlog, net bookings and book-to-bill
ratio are useful metrics for investors because they are an
important measure of business development performance and revenue
growth. These metrics are used by management to conduct and
evaluate its business during its regular review of operating
results for the periods presented.
Reconciliation of GAAP
net income to Adjusted EBITDA, a non-GAAP Measure -
Company |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 29, |
|
March 31, |
|
|
|
2020 |
|
2019 |
|
Change |
Net loss attributed to PAE Incorporated |
$ |
(4,943 |
) |
|
$ |
(5,719 |
) |
|
$ |
776 |
|
Interest expense, net |
20,948 |
|
|
22,660 |
|
|
(1,712 |
) |
Provision for taxes |
(8,714 |
) |
|
(3,147 |
) |
|
(5,567 |
) |
Depreciation and
amortization |
10,630 |
|
|
11,667 |
|
|
(1,037 |
) |
M&A costs |
23,980 |
|
|
114 |
|
|
23,866 |
|
Disposal of assets |
— |
|
|
5,643 |
|
|
(5,643 |
) |
Non-core expenses (1) |
258 |
|
|
5,508 |
|
|
(5,250 |
) |
Non-cash items (2) |
— |
|
|
826 |
|
|
(826 |
) |
Forward loss accruals (3) |
— |
|
|
1,954 |
|
|
(1,954 |
) |
Sponsor fees (4) |
— |
|
|
1,262 |
|
|
(1,262 |
) |
Other (5) |
(514 |
) |
|
(914 |
) |
|
400 |
|
Adjusted EBITDA |
$ |
41,645 |
|
|
$ |
39,854 |
|
|
$ |
1,791 |
|
Adjusted EBITDA margin |
6.7 |
% |
|
5.9 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP
operating income to Adjusted operating income, a
non-GAAP Measure - GMS |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 29, |
|
March 31, |
|
|
|
2020 |
|
2019 |
|
Change |
Operating income |
$ |
12,603 |
|
|
$ |
25,792 |
|
|
$ |
(13,189 |
) |
Corp operating loss allocation
(6) |
(7,050 |
) |
|
(7,980 |
) |
|
930 |
|
Corporate NCI allocation |
(222 |
) |
|
(603 |
) |
|
381 |
|
Depreciation and
amortization |
6,151 |
|
|
6,612 |
|
|
(461 |
) |
M&A costs |
15,912 |
|
|
85 |
|
|
15,827 |
|
Disposal of assets |
— |
|
|
— |
|
|
— |
|
Non-core expenses (1) |
191 |
|
|
3,869 |
|
|
(3,678 |
) |
Non-cash items (2) |
— |
|
|
619 |
|
|
(619 |
) |
Forward loss accruals (3) |
— |
|
|
385 |
|
|
(385 |
) |
Sponsor fees (4) |
— |
|
|
945 |
|
|
(945 |
) |
Other (5) |
(272 |
) |
|
(685 |
) |
|
413 |
|
Adjusted operating income |
$ |
27,313 |
|
|
$ |
29,039 |
|
|
$ |
(1,726 |
) |
Adjusted operating income
margin |
6.0 |
% |
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP
operating income to Adjusted operating income, a non-GAAP Measure -
NSS |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 29, |
|
March 31, |
|
|
|
2020 |
|
2019 |
|
Change |
Operating loss |
$ |
4,367 |
|
|
$ |
(786 |
) |
|
$ |
5,153 |
|
Corp operating loss allocation
(6) |
(2,463 |
) |
|
(2,673 |
) |
|
210 |
|
Corporate NCI allocation |
56 |
|
|
43 |
|
|
13 |
|
Depreciation and
amortization |
4,479 |
|
|
5,055 |
|
|
(576 |
) |
M&A costs |
8,068 |
|
|
28 |
|
|
8,040 |
|
Disposal of assets |
— |
|
|
5,643 |
|
|
(5,643 |
) |
Non-core expenses (1) |
67 |
|
|
1,639 |
|
|
(1,572 |
) |
Non-cash items (2) |
— |
|
|
207 |
|
|
(207 |
) |
Forward loss accruals (3) |
— |
|
|
1,569 |
|
|
(1,569 |
) |
Sponsor fees (4) |
— |
|
|
317 |
|
|
(317 |
) |
Other (5) |
(242 |
) |
|
(229 |
) |
|
(13 |
) |
Adjusted operating income |
$ |
14,332 |
|
|
$ |
10,813 |
|
|
$ |
3,519 |
|
Adjusted operating income
margin |
9.0 |
% |
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
|
(1) Non-core expenses include certain
professional fees, gain/loss on disposal of fixed assets,
settlements and certain severance costs.(2) Non-cash items include
idle facilities charges for facilities the Company no longer
occupies, pension curtailment costs and unrealized FX
gains/losses.(3) Forward loss accruals include adjustments related
to future expected losses recognized in the current period.(4)
Sponsor fees include management fees and out of pocket expenses
paid to the Company’s private equity sponsor for general
management, transactional, financial and other corporate advisory
services.(5) Other costs include adjustments related to adjustments
to offset capitalized internal labor and state income taxes that
were not captured in reported income tax expense.(6) Corporate
operating loss allocation includes certain selling, general and
administrative, depreciation and amortization costs that cannot be
assigned to a specific segment; this cost is allocated based on
proportionate segment revenues for the period in which the cost is
incurred.
_______________1 Adjusted EBITDA and Adjusted
EBITDA margin are non-GAAP financial measures. A
reconciliation of adjusted EBITDA and adjusted EBITDA margin to
their most directly comparable GAAP financial measure, net income
(loss), and a discussion of Adjusted EBITDA, Adjusted EBITDA
margins and other non-GAAP financial measures, is contained in the
“Non-GAAP Financial Measures” section of this release.2 GMS
adjusted operating income and adjusted operating income margin are
non-GAAP financial measures. A reconciliation of GMS adjusted
operating income and adjusted operating income margin to their most
directly comparable GAAP financial measure, GMS operating income
(loss), is contained in the “Non-GAAP Financial Measures” section
of this release.3 NSS adjusted operating income and adjusted
operating income margin are non-GAAP financial measures. A
reconciliation of NSS adjusted operating income and adjusted
operating income margin to their most directly comparable GAAP
financial measure, NSS operating income (loss), is contained in the
“Non-GAAP Financial Measures” section of this release.
PAE (NASDAQ:PAE)
Historical Stock Chart
From Jun 2024 to Jul 2024
PAE (NASDAQ:PAE)
Historical Stock Chart
From Jul 2023 to Jul 2024