CHANTILLY, Va., Nov. 13,
2019 /PRNewswire/ -- Perspecta Inc. (NYSE: PRSP), a leading
U.S. government services provider, today announced financial
results for the second quarter of fiscal year 2020, which ended
September 30, 2019.
"I'm pleased to report that our second quarter results reflect
continued strong execution across the entire business, highlighted
by robust growth in revenue and profit," said Mac Curtis, president and chief executive
officer, Perspecta. "We are operating well as One Perspecta and
competing successfully in the market. Our recent new business wins
point to growth momentum in both of our segments. Each of our
employees has a reason to be proud of the progress that we've made
as a company and the positive impact that we've had on our
customers' vital missions."
Summary operating results (unaudited)
|
|
Three Months
Ended
|
(in millions, except
margin and per share amounts)
|
|
September 30,
2019
|
|
September 30,
2018
|
Revenue
|
|
$
|
1,172
|
|
$
|
1,068
|
Income before
taxes
|
|
37
|
|
36
|
Operating
Margin
|
|
3.2%
|
|
3.4%
|
Net income
|
|
29
|
|
24
|
Diluted earnings per
share (EPS)
|
|
0.18
|
|
0.14
|
|
|
|
|
|
|
Non-GAAP
Measures*:
|
|
|
|
|
Adjusted Net
Income
|
|
88
|
|
74
|
Adjusted
EBITDA
|
|
197
|
|
177
|
Adjusted EBITDA
Margin
|
|
16.8%
|
|
16.5%
|
Adjusted Diluted
EPS
|
|
0.54
|
|
0.45
|
|
|
|
|
|
* Adjusted Net
Income, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted
Diluted EPS are non-GAAP financial measures. Non-GAAP financial
measures should be considered in addition to, but not as a
substitute for, the information provided in accordance with GAAP.
See Selected Financial Data and Reconciliation of
Non-GAAP Financial Measures at the end of this press release
for more information.
|
On May 31, 2018, Perspecta became
an independent company through consummation of the spin-off by DXC
Technology Company (DXC) of its U.S. Public Sector Business (USPS)
and merger of USPS with Vencore Holding Corp. and KGS Holding Corp.
Perspecta provides adjusted results that exclude costs directly
associated with the spin-off and mergers and the ongoing
integration process. The tables in Selected Financial Data and
Reconciliation of Non-GAAP Financial Measures at the end of
this press release provide all appropriate reconciliations from
adjusted results to GAAP.
Revenue for the quarter was $1.17
billion, up 10% compared to the second quarter of fiscal
year 2019, and up 6% compared to the first quarter of fiscal year
2020. Revenue in the quarter included approximately $60 million from transition services and the sale
of IT assets to conclude the National Aeronautics and
Space Administration (NASA) Agency Consolidated End-user
Services contract.
Income before taxes for the second quarter of fiscal year 2020
was $37 million, which was up 3% from
the second quarter of fiscal year 2019. Operating margin decreased
from 3.4% to 3.2% year-over-year. Net income was $29 million, or $0.18 per diluted share. Net income was up 21%
and diluted EPS was up 29% from the second quarter of fiscal year
2019.
Adjusted net income was $88
million for the second quarter, which was up 19%
year-over-year. Adjusted EBITDA was $197
million for the second quarter, up 11% compared to adjusted
EBITDA for the second quarter of fiscal year 2019; adjusted EBITDA
margin increased from 16.5% to 16.8% over the same period. The
year-over-year increase in profitability primarily reflects strong
program execution on fixed price programs as well as cost synergies
associated with the mergers. Adjusted diluted EPS for the second
quarter was $0.54, up 20% compared to
adjusted diluted EPS for the second quarter of fiscal year
2019.
Segment operating results (unaudited)
For the three months ended September 30, 2019, Defense and
Intelligence segment revenue of $777 million increased by 11%,
primarily due to new business wins and growth on existing programs.
Civilian and Health Care segment revenue of $395 million increased by 8% compared to revenue
from the same period of the prior year, driven by the $60 million NASA transition services and asset
sale.
Defense and Intelligence adjusted segment margin for the second
quarter of fiscal year 2020 improved to 14.9% from 13.1% in the
second quarter of fiscal year 2019. Civilian and Health Care
adjusted segment margin for the second quarter of fiscal year 2020
decreased to 10.4% from 12.8% in the second quarter of fiscal year
2019. Total adjusted segment profit for the second quarter of
fiscal year 2020 increased to $157
million from $139 million in
the second quarter of fiscal year 2019.
Cash management and capital deployment
Perspecta generated $135 million
of net cash provided by operating activities in the second quarter
of fiscal year 2020. Quarterly adjusted free cash flow was
$104 million, or 118% of adjusted net
income. During the second quarter of fiscal year 2020, Perspecta
paid down $23 million of debt and
returned $27 million to shareholders,
including $10 million as part of its
regular quarterly cash dividend program and $17 million in share repurchases.
In addition, Perspecta paid $250
million plus customary purchase price adjustments, totaling
an estimated purchase price of $265
million, to acquire Knight Point Systems, LLC (Knight
Point), an end-to-end managed services and solutions provider
focused on modernizing IT systems, protecting critical networks and
driving digital transformation. Perspecta also entered into the
Second Amendment to its Credit Agreement to provide greater
operational and financial flexibility. The Second Amendment
provides for, among other things: a $46
million increase in the Term Loan A Tranche 2, the proceeds
of which were used to reduce Term Loan A Tranche 1; an extension of
both tranches of Term Loan A by 15 months; and a $150 million increase in the revolving credit
facility to $750 million and an
extension of its maturity to August 31,
2024.
At quarter end, Perspecta had $122 million in cash and
cash equivalents, $575 million of
undrawn capacity in its revolving credit facility, and $2.8 billion in total debt, including
$283 million in finance lease
obligations. On November 12, 2019, the Perspecta Board of
Directors declared that Perspecta will pay a cash dividend of
$0.06 per share on January 14,
2020 to Perspecta stockholders of record at the close of business
on December 4, 2019.
Contract awards
Contract awards (bookings) totaled $2.3
billion in the second quarter of fiscal year 2020,
representing a book-to-bill ratio of 2.0x. Included in the
quarterly bookings were several particularly important single-award
prime contracts:
- National Geospatial-Intelligence Agency (NGA) Enterprise
Engineering (NEE) Contract. The NGA awarded Perspecta the NEE
contract to perform full life cycle systems engineering and
integration work. The contract has a five-year ordering period with
a maximum ceiling value of $824
million. Perspecta also received its first NEE task order,
valued at $223 million.
- Next Generation Enterprise Services (NGEN) Contract
Extension. Perspecta received a $657
million extension of its NGEN contract with the U.S.
Department of the Navy for delivery of IT services from
June 1, 2020 to September 30, 2020, with three one-month options
available. Under NGEN, Perspecta operates the Navy Marine Corps
Intranet, the world's largest intranet, with approximately 400,000
seats representing 700,000 Navy and Marine Corps uniformed and
civilian users.
- U.S. Senate Information Technology Support Contract IV.
Under a potential six-year, $166
million contract, Perspecta will provide the Senate with
acquisition and IT support services for workstation and server
hardware, operating system software and application system
software. Perspecta will also provide innovative help desk services
and on-site maintenance and support in Washington, D.C., and more than 400 state
offices for Senate members, committees, leadership and
officers—improving the end-user experience while improving cost
optimization and productivity.
In addition, Perspecta won a large multiple-award indefinite
delivery/indefinite quantity (ID/IQ) contract that is not included
in bookings but supports future growth:
- Defense Intelligence Agency (DIA) Solutions for Intelligence
Analysis 3 (SIA 3). Perspecta was awarded a position on the DIA
SIA 3 contract, which has a potential 10-year period of performance
and a total maximum value of $17.1
billion. On the program, Perspecta will compete for task
orders to deliver analytic support to multiple Department of
Defense (DoD) and Intelligence Community customers.
Perspecta's backlog of signed business orders at the end of
second quarter of fiscal year 2020 was $12.7 billion; funded backlog at the end of
the second quarter was $2.0
billion.
Forward guidance
Perspecta is raising its previously announced fiscal year 2020
guidance to reflect strong second quarter results. The table below
provides the current and previous guidance ranges for revenue,
adjusted EBITDA margin, adjusted diluted EPS, and adjusted free
cash flow conversion (as a percentage of adjusted net income). All
forward-looking non-GAAP measures exclude estimates for
amortization of intangible assets; stock-based compensation
expenses; restructuring, separation, transaction and
integration-related costs; mark-to-market changes associated with
pension and other post-retirement benefit plans; and other
non-recurring items. Perspecta is unable to provide a
reconciliation of non-GAAP guidance measures to corresponding GAAP
measures on a forward-looking basis without unreasonable effort due
to the overall high variability and low visibility of most of the
excluded items. Material changes to any one of these items could
have a significant effect on future GAAP results.
Measure
|
Current FY20
Guidance
|
Prior FY20
Guidance
|
Revenue
(millions)
|
$4,425 -
$4,500
|
$4,400 -
$4,500
|
Adjusted EBITDA
Margin
|
17.0% -
18.0%
|
17.0% -
18.0%
|
Adjusted Diluted
EPS
|
$2.10 -
$2.18
|
$2.08 -
$2.18
|
Adjusted Free Cash
Flow Conversion
|
105%+
|
95%+
|
John Kavanaugh, senior vice
president and chief financial officer of Perspecta, commented, "Our
strong financial and business development results enabled us to
again raise our guidance for the fiscal year. We are already seeing
the benefits of the Knight Point acquisition and believe that our
balanced capital allocation model is driving value for our
long-term shareholders."
Conference call
Perspecta executive management will hold a conference call on
November 13, 2019, at 5 p.m.
Eastern to discuss the financial results and outlook and answer
questions. Analysts and investors may participate on the conference
call by dialing 888-348-3873 (domestic), 855-669-9657 (Canada), or 412-902-4234 (international). The
conference call will be webcast simultaneously through a link on
the investor relations section of the Perspecta website. A replay
of the conference call will be available on the investor relations
section of the Perspecta website approximately two hours after the
conclusion of the call.
About Perspecta Inc.
At Perspecta (NYSE:PRSP), we question, we seek and we solve.
Perspecta brings a diverse set of capabilities to our U.S.
government customers in defense, intelligence, civilian, health
care and state and local markets. Our 270+ issued, licensed and
pending patents are more than just pieces of paper, they tell the
story of our innovation. With offerings in mission services,
digital transformation and enterprise operations, our team of more
than 14,000 engineers, analysts, investigators and architects work
tirelessly to not only execute the mission, but build and support
the backbone that enables it. Perspecta was formed to take on big
challenges. We are an engine for growth and success and we enable
our customers to build a better nation. For more information about
Perspecta, visit perspecta.com.
Forward-looking statements
All statements and assumptions in this press release that do not
directly and exclusively relate to historical facts could be deemed
"forward-looking statements." Forward-looking statements are often
identified by the use of words such as "anticipates," "believes,"
"estimates," "expects," "may," "could," "should," "forecast,"
"goal," "intends," "objective," "plans," "projects," "strategy,"
"target" and "will" and similar words and terms or variations of
such. These statements represent current intentions, expectations,
beliefs or projections, and no assurance can be given that the
results described in such statements will be achieved.
Forward-looking statements include, among other things, statements
with respect to our financial condition, results of operations,
cash flows, business strategies, prospects, guidance, contract
value, revenue acceleration, profitability and revenue generation.
Such statements are subject to numerous assumptions, risks,
uncertainties and other factors that could cause actual results to
differ materially from those described in such statements, many of
which are outside of our control. Important factors that could
cause actual results to differ materially from those described in
forward-looking statements include, but are not limited to, (i) any
issue that compromises our relationships with the U.S. federal
government, or any state or local governments, or damages our
professional reputation; (ii) changes in the U.S. federal,
state and local governments' spending and mission priorities that
shift expenditures away from agencies or programs that we support;
(iii) any delay in completion of the U.S. federal government's
budget process; (iv) failure to comply with numerous laws,
regulations and rules, including regarding procurement,
anti-bribery and organizational conflicts of interest; (v) failure
by us or our employees to obtain and maintain necessary security
clearances or certifications; (vi) our ability to compete
effectively in the competitive bidding process and delays, contract
terminations or cancellations caused by competitors' protests of
major contract awards received by us; (vii) our ability to
accurately estimate or otherwise recover expenses, time and
resources for our contracts; (viii) problems or delays in the
development, delivery and transition of new products and services
or the enhancement of existing products and services to meet
customer needs and respond to emerging technological trends; (ix)
failure of third parties to deliver on commitments under contracts
with us; (x) misconduct or other improper activities from our
employees or subcontractors; (xi) delays, terminations, or
cancellations of our major contract awards, including as a result
of our competitors protesting such awards; (xii) failure of our
internal control over financial reporting to detect fraud or other
issues; (xiii) failure or disruptions to our systems, due to
cyber-attack, service interruptions or other security threats;
(xiv) failure to be awarded task orders under our indefinite
delivery/indefinite quantity contracts; (xv) changes in government
procurement, contract or other practices or the adoption by the
government of new laws, rules and regulations in a manner adverse
to us; and (xvi) uncertainty from the expected discontinuance of
LIBOR and transition to any other interest rate benchmark; as well
as the matters described in the "Cautionary Statement Regarding
Forward-Looking Statements" and "Risk Factors" sections of
Perspecta's Annual Report on Form 10-K for the year ended
March 31, 2019, as may be updated or
supplemented in our Quarterly Reports on Form 10-Q and our other
filings with the Securities and Exchange Commission, which discuss
these and other factors that could adversely affect our results.
Readers are cautioned not to place undue reliance on such
statements which speak only as of the date they are made. We do not
undertake any obligation to update or release any revisions to any
forward-looking statement or to report any events or circumstances
after the date of this press release or to reflect the occurrence
of unanticipated events except as required by law.
Condensed
Consolidated Statements of Operations
(preliminary and
unaudited)
|
|
|
|
|
Three Months
Ended
|
(in millions, except
per share amounts)
|
|
September 30,
2019
|
|
September 30,
2018
|
Revenue
|
|
$
|
1,172
|
|
|
$
|
1,068
|
|
|
|
|
|
|
Costs of
services
|
|
908
|
|
|
813
|
|
Selling, general and
administrative
|
|
81
|
|
|
89
|
|
Depreciation and
amortization
|
|
90
|
|
|
74
|
|
Restructuring
costs
|
|
2
|
|
|
2
|
|
Separation,
transaction and integration-related costs
|
|
20
|
|
|
21
|
|
Interest expense,
net
|
|
36
|
|
|
37
|
|
Other income,
net
|
|
(2)
|
|
|
(4)
|
|
Total costs and
expenses
|
|
1,135
|
|
|
1,032
|
|
|
|
|
|
|
Income before
taxes
|
|
37
|
|
|
36
|
|
Income tax
expense
|
|
8
|
|
|
12
|
|
Net income
|
|
$
|
29
|
|
|
$
|
24
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
Basic
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
Diluted
|
|
$
|
0.18
|
|
|
$
|
0.14
|
|
Selected Condensed
Consolidated Balance Sheet Data
(preliminary and
unaudited)
|
|
|
(in
millions)
|
|
September 30,
2019
|
|
March 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
122
|
|
|
$
|
88
|
|
Receivables, net of
allowance for doubtful accounts of $1 and $0
|
|
570
|
|
|
484
|
|
Other
receivables
|
|
33
|
|
|
92
|
|
Prepaid
expenses
|
|
102
|
|
|
141
|
|
Assets held for
sale
|
|
49
|
|
|
23
|
|
Other current
assets
|
|
58
|
|
|
50
|
|
Total current
assets
|
|
934
|
|
|
878
|
|
Property and
equipment, net of accumulated depreciation of $141 and
$148
|
|
333
|
|
|
368
|
|
Goodwill
|
|
3,295
|
|
|
3,179
|
|
Intangible assets,
net of accumulated amortization of $414 and $299
|
|
1,478
|
|
|
1,466
|
|
Other
assets
|
|
279
|
|
|
192
|
|
Total
assets
|
|
$
|
6,319
|
|
|
$
|
6,083
|
|
|
|
|
|
|
LIABILITIES and
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
87
|
|
|
$
|
80
|
|
Current finance lease
obligations
|
|
119
|
|
|
137
|
|
Current operating
lease obligations
|
|
40
|
|
|
—
|
|
Accounts
payable
|
|
285
|
|
|
246
|
|
Accrued payroll and
related costs
|
|
131
|
|
|
91
|
|
Accrued
expenses
|
|
344
|
|
|
396
|
|
Other current
liabilities
|
|
72
|
|
|
64
|
|
Total current
liabilities
|
|
1,078
|
|
|
1,014
|
|
Long-term debt, net
of current maturities
|
|
2,435
|
|
|
2,297
|
|
Non-current finance
lease obligations
|
|
164
|
|
|
168
|
|
Deferred tax
liabilities
|
|
143
|
|
|
171
|
|
Other long-term
liabilities
|
|
336
|
|
|
271
|
|
Total
liabilities
|
|
4,156
|
|
|
3,921
|
|
Commitments and
contingencies
|
|
|
|
|
Total stockholders'
equity
|
|
2,163
|
|
|
2,162
|
|
Total liabilities and
stockholders' equity
|
|
$
|
6,319
|
|
|
$
|
6,083
|
|
Condensed
Consolidated Combined Statements of Cash Flows
(preliminary and
unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(in
millions)
|
|
September 30,
2019
|
|
September 30,
2018
|
|
September 30,
2019
|
|
September 30,
2018
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
60
|
|
|
$
|
53
|
|
Adjustments to
reconcile net income to net cash
provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
90
|
|
|
74
|
|
|
191
|
|
|
138
|
|
Stock-based
compensation
|
|
10
|
|
|
1
|
|
|
15
|
|
|
3
|
|
Deferred income
taxes
|
|
(12)
|
|
|
(11)
|
|
|
(20)
|
|
|
(11)
|
|
Loss (gain) on sale
or disposal of assets
|
|
2
|
|
|
(1)
|
|
|
10
|
|
|
(25)
|
|
Other non-cash
charges, net
|
|
3
|
|
|
—
|
|
|
4
|
|
|
(14)
|
|
Changes in assets and
liabilities, net of effects of
acquisitions:
|
|
|
|
|
|
|
|
|
Receivables,
net
|
|
(5)
|
|
|
(28)
|
|
|
50
|
|
|
(4)
|
|
Prepaid expenses and
other current assets
|
|
15
|
|
|
(13)
|
|
|
46
|
|
|
(18)
|
|
Accounts payable,
accrued expenses and other
current liabilities
|
|
10
|
|
|
20
|
|
|
(16)
|
|
|
92
|
|
Deferred revenue and
advanced contract payments
|
|
(3)
|
|
|
—
|
|
|
(16)
|
|
|
13
|
|
Income taxes payable
and income tax liability
|
|
(3)
|
|
|
6
|
|
|
(2)
|
|
|
6
|
|
Other assets and
liabilities, net
|
|
(1)
|
|
|
4
|
|
|
(2)
|
|
|
3
|
|
Net cash provided by
operating activities
|
|
135
|
|
|
76
|
|
|
320
|
|
|
236
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
(265)
|
|
|
—
|
|
|
(265)
|
|
|
(312)
|
|
Extinguishment of
acquired debt and related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(994)
|
|
Proceeds from sale of
assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
Purchases of
property, equipment and software
|
|
(3)
|
|
|
(5)
|
|
|
(4)
|
|
|
(11)
|
|
Payments for
outsourcing contract costs
|
|
(2)
|
|
|
(4)
|
|
|
(3)
|
|
|
(6)
|
|
Net cash used in
investing activities
|
|
(270)
|
|
|
(9)
|
|
|
(272)
|
|
|
(1,299)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Principal payments on
long-term debt
|
|
(23)
|
|
|
(50)
|
|
|
(45)
|
|
|
(50)
|
|
Proceeds from debt
issuance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
Payments of debt
issuance costs
|
|
(3)
|
|
|
—
|
|
|
(3)
|
|
|
(43)
|
|
Proceeds from
revolving credit facility
|
|
175
|
|
|
—
|
|
|
175
|
|
|
50
|
|
Payments on revolving
credit facility
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50)
|
|
Payments on finance
lease obligations
|
|
(42)
|
|
|
(41)
|
|
|
(77)
|
|
|
(82)
|
|
Repurchases of common
stock
|
|
(17)
|
|
|
(21)
|
|
|
(32)
|
|
|
(21)
|
|
Dividend to
DXC
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(984)
|
|
Dividends paid to
Perspecta stockholders
|
|
(10)
|
|
|
(8)
|
|
|
(18)
|
|
|
(8)
|
|
Net transfers to
Parent
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88)
|
|
Net cash provided by
(used in) financing activities
|
|
80
|
|
|
(120)
|
|
|
—
|
|
|
1,224
|
|
Net change in cash
and cash equivalents, including
restricted
|
|
(55)
|
|
|
(53)
|
|
|
48
|
|
|
161
|
|
Cash and cash
equivalents, including restricted, at
beginning of period
|
|
179
|
|
|
201
|
|
|
99
|
|
|
—
|
|
Cash and cash
equivalents, including restricted, at
end of period
|
|
124
|
|
|
148
|
|
|
147
|
|
|
161
|
|
Less restricted cash
and cash equivalents included
in other current assets
|
|
2
|
|
|
22
|
|
|
25
|
|
|
35
|
|
Cash and cash
equivalents at end of period
|
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
122
|
|
|
$
|
126
|
|
Selected Financial Data and Reconciliation of Non-GAAP
Financial Measures
The following tables present selected financial data, including
the reconciliation of non-GAAP financial measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP. Perspecta management believes that these
non-GAAP financial measures provide useful additional information
to investors regarding Perspecta's results of operations as they
provide another measure of Perspecta's profitability and ability to
service its debt and are considered important to financial analysts
covering Perspecta's industry.
These non-GAAP financial measures have limitations as an
analytical tool and should not be considered in isolation or as a
substitute for income from operations, net income, diluted EPS or
any other measure of financial performance reported in accordance
with GAAP. Perspecta's non-GAAP measures may be calculated
differently than similarly named measures reported by other
companies. In addition, using non-GAAP measures may have limited
value as they exclude certain items that may have a material impact
on reported financial results and cash flows. When analyzing
Perspecta's performance, it is important to evaluate each
adjustment in the reconciliation tables and use adjusted measures
in addition to, and not as an alternative to, GAAP measures.
Adjusted EBITDA, Net Income, and Diluted EPS
(Unaudited)
Adjusted EBITDA excludes the following items: interest, income
taxes, depreciation and amortization, restructuring, separation,
transaction and integration-related cost, mark-to-market
adjustments to the pension and other post-employment benefit
programs, stock-based compensation, and other non-recurring items.
There were no mark-to-market changes in either the current or
year-ago quarterly periods. Adjusted net income and adjusted
diluted EPS also exclude acquisition-related intangible
amortization.
|
|
|
Three Months
Ended
|
(in
millions)
|
|
September 30,
2019
|
|
September 30,
2018
|
Net
income
|
|
$
|
29
|
|
$
|
24
|
Income tax
expense
|
|
8
|
|
12
|
Interest expense,
net
|
|
36
|
|
37
|
Depreciation and
amortization
|
|
90
|
|
74
|
EBITDA
|
|
163
|
|
147
|
Effects of Spin-Off
and Mergers
|
|
—
|
|
5
|
Restructuring
costs
|
|
2
|
|
—
|
Separation,
transaction and integration-related costs
|
|
20
|
|
21
|
Stock-based
compensation
|
|
10
|
|
1
|
Separation related
cost
|
|
2
|
|
3
|
Adjusted
EBITDA
|
|
197
|
|
177
|
Adjusted EBITDA
margin (a)
|
|
16.8%
|
|
16.5%
|
Depreciation and
amortization
|
|
(90)
|
|
(74)
|
Amortization of
acquired intangibles
|
|
50
|
|
36
|
Interest expense,
net
|
|
(36)
|
|
(37)
|
Adjusted earnings
before taxes
|
|
121
|
|
102
|
Income tax expense
(b)
|
|
33
|
|
28
|
Adjusted net
income
|
|
$
|
88
|
|
$
|
74
|
Adjusted diluted
EPS (c)
|
|
$
|
0.54
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
Notes:
|
(a)
|
Adjusted EBITDA
margin is calculated as the ratio of adjusted EBITDA to revenue for
both quarters ended
September 30, 2019 and 2018.
|
(b)
|
Represents income tax
expense utilizing an adjusted effective tax rate that adjusts for
non-GAAP measures
including: transaction costs, integration costs, and tax add backs
for non-deductible prior-merger goodwill
amortization. Adjusted effective tax rates are 27% for both
quarters ended September 30, 2019 and 2018.
|
(c)
|
Represents adjusted
net income divided by the weighted average common shares on a
diluted basis of
162.90 million and 165.79 million for the quarters ended September
30, 2019 and 2018, respectively.
|
Adjusted Free Cash Flow (Unaudited)
Perspecta defines adjusted free cash flow as net cash provided
by operating activities less purchases of property, equipment and
software, and adjusted for certain items, such as (i) payments on
finance lease obligations, (ii) business acquisitions,
dispositions, and investments, (iii) restructuring payments, (iv)
payments on separation, transaction and integration-related costs,
(v) the impact arising from the initial sale of accounts
receivables under the Master Accounts Receivable Purchase
Agreement, and (vi) other non-recurring payments.
|
|
|
Three Months
Ended
|
(in
millions)
|
|
September 30,
2019
|
|
September 30,
2018
|
Net cash provided by
operating activities
|
|
$
|
135
|
|
|
$
|
76
|
|
Purchases of
property, equipment and software
|
|
(3)
|
|
|
(5)
|
|
Payments on finance
lease obligations
|
|
(42)
|
|
|
(41)
|
|
Payments on
restructuring, separation, transaction and
integration-related costs
|
|
14
|
|
|
75
|
|
Adjusted free cash
flow
|
|
$
|
104
|
|
|
$
|
105
|
|
Segment Revenue and Profit (Unaudited)
Perspecta delivers IT, mission, and operations-related services
across the U.S. federal government through two reportable
segments—Defense and Intelligence, which provides services to the
DoD, intelligence community, branches of the U.S. Armed Forces, and
other DoD agencies; and Civilian and Health Care, which provides
services to the Departments of Homeland Security, Justice, and
Health and Human Services, as well as other federal civilian and
state and local government agencies. The following tables summarize
reportable segment profit:
RECONCILIATION OF
REPORTABLE SEGMENT PROFIT TO INCOME BEFORE TAXES
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
September 30,
2019
|
|
September 30,
2018
|
Total segment
profit
|
|
$
|
153
|
|
|
$
|
128
|
|
Not allocated to
segments:
|
|
|
|
|
Stock-based
compensation
|
|
(10)
|
|
|
(1)
|
|
Amortization of
acquired intangible assets
|
|
(50)
|
|
|
(36)
|
|
Restructuring
costs
|
|
(2)
|
|
|
—
|
|
Separation,
transaction and integration-related costs
|
|
(20)
|
|
|
(21)
|
|
Interest expense,
net
|
|
(36)
|
|
|
(37)
|
|
Other unallocated,
net
|
|
2
|
|
|
3
|
|
Income before
taxes
|
|
$
|
37
|
|
|
$
|
36
|
|
REVENUE AND
ADJUSTED SEGMENT PROFIT (Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
September 30,
2019
|
|
September 30,
2018
|
Revenue
|
|
|
|
|
Defense and
Intelligence
|
|
$
|
777
|
|
|
$
|
702
|
|
Civilian and Health
Care
|
|
395
|
|
|
366
|
|
Total
revenue
|
|
$
|
1,172
|
|
|
$
|
1,068
|
|
|
|
|
|
|
Segment
profit
|
|
|
|
|
Defense and
Intelligence
|
|
$
|
113
|
|
|
$
|
87
|
|
Non-GAAP adjustments
for the period (a)
|
|
3
|
|
|
5
|
|
Adjusted segment
profit
|
|
$
|
116
|
|
|
$
|
92
|
|
|
|
|
|
|
Civilian and Health
Care
|
|
$
|
40
|
|
|
$
|
41
|
|
Non-GAAP adjustments
for the period (a)
|
|
1
|
|
|
6
|
|
Adjusted segment
profit
|
|
$
|
41
|
|
|
$
|
47
|
|
|
|
|
|
|
Total segment
profit
|
|
$
|
153
|
|
|
$
|
128
|
|
Total adjusted
segment profit
|
|
$
|
157
|
|
|
$
|
139
|
|
|
|
|
|
|
|
Notes:
|
(a)
|
Includes adjustments
for certain separation-related and other costs, which are included
in the
segment results of operations.
|
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SOURCE Perspecta Inc.