PAE Incorporated (“PAE” or the “Company”) (NASDAQ: PAE, PAEWW),
today announced fourth-quarter and full year 2019 financial and
operating results.
CEO Commentary
"We had a strong fourth quarter as we delivered
revenue and adjusted EBITDA that exceeded our expectations," said
PAE’s President and Chief Executive Officer John Heller. "We are
successfully executing our strategy to drive top line revenue
growth, generate free cash flow and deliver exceptional performance
to our customers. We entered 2020 with strong fundamentals in
place – a robust federal spending environment, a high-quality sales
pipeline and a talented team positioned to drive growth and
increase shareholder value."
Fourth-Quarter 2019 Results
Revenues for the quarter of $697.1 million
increased $25.0 million, or 3.7%, compared to the prior year
quarter. The improvement was primarily attributable to new service
awards within both our Global Mission Services (“GMS”) and National
Security Solutions (“NSS”) segments.
Operating loss for the quarter was $3.2 million,
compared with operating income of $12.1 million in the prior year
quarter. The decrease in operating income resulted primarily from
set-up costs on new business awards and one-time impacts from
increased operating costs.
Net loss attributed to Shay Holding Corporation
for the quarter was $14.6 million compared to a $13.1 million loss
in the prior year quarter due to the factors impacting operating
income.
Adjusted EBITDA for the quarter was $37.5
million, or 5.4% of revenue, compared to $37.1 million, or 5.5% of
revenue, in the prior year quarter. The modest variance was
driven by the increase in revenue.
Global Mission ServicesGMS revenues for the
quarter of $533.6 million increased $11.2 million, or 2.1%,
compared to the prior year quarter. The improvement was primarily
attributable to new service awards.
GMS operating income for the quarter was $15.4
million, compared to $21.2 million, in the prior-year
quarter. The decrease in operating income year-over-year was
driven by higher non-recurring operating expenses.
GMS adjusted operating income2 for the quarter
was $33.5 million, or 6.3% of revenue, compared to $28.6 million,
or 5.5% of revenue, in the prior year quarter. Adjusted
operating income increased year-over-year primarily due to higher
revenue and improved performance on international programs as well
as normalizing for certain one-time, non-recurring operating
expenses.
National Security SolutionsNSS revenues for the
quarter of $163.5 million increased $13.8 million, or 9.2%,
compared to the prior year quarter. The improvement was primarily
attributable to new service awards.
NSS operating loss for the quarter was $13.7
million, compared to a loss of $5.2 million in the prior year
quarter. The increase in operating loss year-over-year was
driven primarily by set-up costs on new business awarded in the
third quarter of 2019, new business delays and one-time impacts
from increased operating costs.
NSS adjusted operating income3 for the quarter
was $3.9 million, or 2.4% of revenue, compared to $8.5 million, or
5.7% of revenue, in the prior year quarter. The decrease in
adjusted operating income year-over-year was primarily due to
set-up costs on new business awarded in the third quarter of 2019,
new business delays and one-time impacts from increased operating
costs.
Full-Year 2019 Results
Revenues of approximately $2.8 billion for the
fiscal year ended December 31, 2019 increased by $155.3 million, or
6.0%, from the comparable period in 2018. The increase in revenues
was primarily attributable to contract growth across current
programs and new program awards. Revenue for the GMS and NSS
segments increased $130.9 million and $24.4 million,
respectively.
Operating income for the year was $26.8 million,
compared with operating income of $50.1 million in the prior year.
The decrease in operating income resulted primarily from an
increase in cost of revenues driven by the sale of substantially
all the assets of one of PAE’s subsidiaries, PAE ISR LLC (“ISR”).
The sale of the ISR assets resulted in the recognition of a loss of
$32.8 million. The increase in cost of revenues was partially
offset by a reduction in selling, general and administrative
expenses.
The net loss attributed to Shay Holding
Corporation for 2019 was $49.8 million, compared with a net loss of
$34.5 million in 2018. The increase in net loss for the
fiscal year ended December 31, 2019 as compared to the fiscal year
ended December 31, 2018 was driven primarily by the factors
impacting operating income.
Adjusted EBITDA for 2019 was $166.7 million, or
6.0% of revenue, compared with $157.4 million, or 6.0% of revenue,
in 2018. The improvement was primarily attributable to the
increase in revenue.
Global Mission ServicesGMS revenues of $2.1
billion for fiscal year 2019 increased $130.9 million, or 6.6%,
compared to the prior year. The increase was driven equally
by new business awards and on-contract growth across the GMS
business areas.
GMS operating income of $92.4 million for fiscal
year 2019 increased by $3.2 million, or 3.6%, from the comparable
period in 2018. The variance was driven by the increase in revenue,
which was partially offset by higher cost of revenues.
GMS adjusted operating income for fiscal year
2019 was $126.1 million, or 6.0% of revenue, compared to $113.8
million, or 5.8% of revenue, in the prior year. Adjusted
operating income increased over the prior year primarily from the
increase in revenue and margin expansion from on-contract growth,
partially offset by new business set-up costs.
National Security SolutionsNSS revenues of
$664.2 million for fiscal year 2019 increased by $24.4 million, or
3.8%, from the comparable period in 2018. This increase was
primarily driven by new business awards.
NSS operating loss of $36.9 million for the
fiscal year ended December 31, 2019 increased by $24.4 million from
the comparable period in 2018. The higher loss was primarily due to
pretax losses relating to the ISR operations, partially offset by
the factors impacting NSS revenues.
NSS adjusted operating income for fiscal year
2019 was $40.6 million, or 6.1% of revenue, compared to $43.6
million, or 6.8% of revenue, in the prior year. Adjusted
operating income decreased over the prior year primarily because of
set-up costs on new business, new business delays and one-time
impacts from increased operating costs.
Cash Flow Summary
Total cash flows used in operating activities
for the fourth quarter were $12.2 million. The $28.0 million
improvement in cash used in operating activities compared to the
prior year period was primarily due to improved cash
collections.
Total cash flows provided by operating
activities for the year were $116.6 million, a $173.5 million
increase from the prior year, also due to improved cash collections
and higher adjusted EBITDA.
As of December 31, 2019, PAE had cash and cash
equivalents totaling $68.0 million and $121.8 million of
availability under its asset-based revolving loan credit
facility. In addition, PAE made $99.9 million in net
repayments on long-term debt during 2019.
Business Development Highlights and
Contract Awards
Net bookings totaled $3.1 billion in fiscal year
2019, representing a book-to-bill ratio of 1.1x for the year.
The net bookings were primarily on-contract growth and new business
awards.
Notable recent awards received included:
- Army Contracting Command (ACC) Orlando: PAE’s
NSS segment was awarded the Afghan National Army Special Operations
Command, Afghanistan Special Security Forces (ASSF) task order on
the Enterprise Training Support MAC ID/IQ Contract (ETSC), with a
value of more than $150 million over three years. The
customer, PEO STI, selected PAE to provide all personnel,
equipment, supplies, transportation, tools, materials and
supervision necessary to train, advise, assist, and mentor and
implement POI-based training methodologies to increase Afghan
Special Security Forces (ASSF) capacity and capability. The
ASSF task order is a new business prime task order award for PAE.
This award along with 4 previous awards on this contract vehicle
places NSS as the top awardee on the ETSC IDIQ vehicle.
- Department of Justice: PAE’s GMS segment
was awarded a $330 million, 7-year worldwide training and support
services contract to support the International Criminal
Investigative Training Assistance Program (ICITAP).
- National Oceanic and Atmospheric
Administration: PAE’s GMS segment was awarded a $81
million, 4-year National Data Buoy Contract (NDBC) to provide
operations and maintenance of the Marine Observation Network.
Located at the Stennis Space Center (SSC), NDBC’s mission is to
provide a real-time, end-to-end capability from the collection of
marine atmospheric and oceanographic data to its transmission,
quality control and distribution.
The Company’s backlog at the end of the quarter
was $6.4 billion, of which $1.5 billion was
funded.
Transaction
On February 10, 2020 Gores Holdings III, Inc., a
Special Purpose Acquisition Company (“SPAC”), completed the
acquisition of Shay Holding Corporation, as described in more
detail in the Basis of Presentation section. In connection
with the acquisition, the name of “Gores Holdings III, Inc.” was
changed to “PAE Incorporated” at closing, and as a result of the
acquisition, PAE became a publicly listed company. PAE’s
common stock and warrants are now listed on NASDAQ under the
symbols “PAE” and “PAEWW”, respectively.
2020 Financial Outlook
The table below summarizes the Company’s fiscal
year 2020 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.
Conference Call Information
As previously announced, PAE will host a conference call and
webcast today, March 11, 2020, at 8:00 a.m. ET. Management
will review the company's fourth-quarter and full-year 2019
financial results, followed by a question-and-answer session.
Listeners will be able to access a presentation summarizing the
fourth-quarter and full-year 2019 results on the company’s website
- https://investors.pae.com.
Interested parties will be able to connect to the webcast on the
investor relations page of the website, https://investors.pae.com/,
on March 11, 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 2863159.
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,
https://investors.pae.com.
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, 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.
____________1 Adjusted EBITDA is a non-GAAP
financial measure. A reconciliation of adjusted EBITDA to its
most directly comparable GAAP financial measure, net income (loss),
and a discussion of adjusted EBITDA and other non-GAAP financial
measures, is contained in the “Non-GAAP Measures” section of this
release.2 GMS adjusted operating income is a non-GAAP financial
measure. A reconciliation of GMS adjusted operating income to
its most directly comparable GAAP financial measure, GMS operating
income (loss), is contained in the “Non-GAAP Measures” section of
this release.3 NSS adjusted operating income is a non-GAAP
financial measure. A reconciliation of NSS adjusted operating
income to its most directly comparable GAAP financial measure, NSS
operating income (loss), is contained in the “Non-GAAP Measures”
section of this release.
About PAEFor more than 60 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 more than 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, please
contact:
Mark ZindlerVice President Investor
RelationsPAE703-717-6017Mark.Zindler@pae.com
For media inquiries regarding PAE, please
contact:
Sean LambertMarketing & Communications
PAE703-656-7827Sean.Lambert@pae.com
Basis of Presentation
All references to the consolidated financial
statements of PAE (including the financial condition and results of
operations of PAE) refer to such consolidated financial statements
of Shay Holding Corporation.
Shay Holding Corporation (“Shay”) was
incorporated in the state of Delaware on January 8, 2016 by an
affiliate of Platinum Equity (“Platinum”). On March 14, 2016, Shay
Merger Corporation, a wholly owned subsidiary of Shay, merged with
and into PAE Holding Corporation (“PAE Holding”) with the latter
surviving (the “Platinum Merger”). Shay had no operations prior to
the Platinum Merger other than the issuance of debt and equity.
On February 10, 2020 (the “Closing”), Shay
completed the previously announced business combination (the “PAE
Business Combination”) in which Shay was acquired by Gores Holdings
III, Inc. (“Gores III”). The transaction was completed in a
multi-step process pursuant to which Shay ultimately merged with a
wholly owned subsidiary of Gores III, with the Gores III subsidiary
continuing as the surviving company. As a result of the PAE
Business Combination, each share of common stock of Shay was
cancelled and converted into the right to receive a portion of the
consideration payable in connection with the transaction and Gores
III acquired Shay and its subsidiaries. Additionally, the
stockholders of Shay as of immediately prior to the transaction
hold a portion of the common stock of Gores III.
For accounting purposes, the PAE Business
Combination will be accounted for as a reverse acquisition and
recapitalization in which Shay is considered the accounting
acquirer (legal acquiree) and Gores III is considered the
accounting acquiree (and legal acquirer).
The PAE Business Combination is a subsequent
event which occurred after the periods for which the financial
information included in this release are presented. The
Company’s financial statement presentation to be included in
quarterly and annual filings with the SEC on Forms 10-Q and 10-K
with respect to periods subsequent to the PAE Business Combination
will include the financial statements of Shay and its subsidiaries
for periods prior to the completion of the PAE Business Combination
and of PAE Incorporated for periods from and after the Closing.
SHAY HOLDING CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands)
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
697,085 |
|
|
$ |
672,134 |
|
|
$ |
2,763,893 |
|
|
$ |
2,608,562 |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
559,940 |
|
|
|
524,239 |
|
|
|
2,183,574 |
|
|
|
1,991,622 |
|
|
Selling, general and
administrative expenses |
|
135,391 |
|
|
|
130,378 |
|
|
|
530,080 |
|
|
|
536,019 |
|
|
Amortization of intangible
assets |
|
8,176 |
|
|
|
8,961 |
|
|
|
33,205 |
|
|
|
35,780 |
|
|
Total operating expenses |
|
703,507 |
|
|
|
663,578 |
|
|
|
2,746,859 |
|
|
|
2,563,421 |
|
|
|
|
|
|
|
|
|
|
|
Program (loss) profit |
|
(6,422 |
) |
|
|
8,556 |
|
|
|
17,034 |
|
|
|
45,141 |
|
|
Other income, net |
|
3,255 |
|
|
|
3,505 |
|
|
|
9,785 |
|
|
|
4,980 |
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
(3,167 |
) |
|
|
12,061 |
|
|
|
26,819 |
|
|
|
50,121 |
|
|
Interest expense, net |
|
(20,751 |
) |
|
|
(22,145 |
) |
|
|
(86,011 |
) |
|
|
(84,360 |
) |
|
Loss before income taxes |
|
(23,918 |
) |
|
|
(10,084 |
) |
|
|
(59,192 |
) |
|
|
(34,239 |
) |
|
Provision for income
taxes |
|
(7,254 |
) |
|
|
2,249 |
|
|
|
(9,131 |
) |
|
|
(2,661 |
) |
|
Net loss |
|
(16,664 |
) |
|
|
(12,333 |
) |
|
|
(50,061 |
) |
|
|
(31,578 |
) |
|
Noncontrolling interest in
earnings of ventures |
|
(2,071 |
) |
|
|
780 |
|
|
|
(252 |
) |
|
|
2,881 |
|
|
Net loss attributed to Shay
Holding Corporation |
$ |
(14,593 |
) |
|
$ |
(13,113 |
) |
|
$ |
(49,809 |
) |
|
$ |
(34,459 |
) |
|
|
|
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(Amounts in thousands except par value of
shares)
|
|
December 31, |
|
December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
68,035 |
|
|
$ |
51,097 |
|
|
Accounts receivable,
net |
|
|
442,180 |
|
|
|
516,168 |
|
|
Prepaid expenses and
other current assets |
|
|
43,549 |
|
|
|
76,477 |
|
|
Total current assets |
|
|
553,764 |
|
|
|
643,742 |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
30,404 |
|
|
|
41,463 |
|
|
Deferred income taxes,
net |
|
|
3,212 |
|
|
|
- |
|
|
Investments |
|
|
17,925 |
|
|
|
18,870 |
|
|
Goodwill |
|
|
409,588 |
|
|
|
408,025 |
|
|
Purchased intangibles,
net |
|
|
180,464 |
|
|
|
218,105 |
|
|
Operating lease right-of-use
assets, net |
|
|
162,184 |
|
|
|
- |
|
|
Other noncurrent assets |
|
|
13,758 |
|
|
|
17,676 |
|
|
Total assets |
|
$ |
1,371,299 |
|
|
$ |
1,347,881 |
|
|
|
|
|
|
|
|
Liabilities and
equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
124,661 |
|
|
$ |
124,032 |
|
|
Accrued expenses |
|
|
102,315 |
|
|
|
107,079 |
|
|
Customer advances and
billings in excess of costs |
|
|
51,439 |
|
|
|
28,307 |
|
|
Salaries, benefits and
payroll taxes |
|
|
130,633 |
|
|
|
113,037 |
|
|
Accrued taxes |
|
|
18,488 |
|
|
|
18,898 |
|
|
Current portion of
long-term debt |
|
|
22,007 |
|
|
|
21,718 |
|
|
Operating lease
liabilities, current portion |
|
|
36,997 |
|
|
|
- |
|
|
Other current
liabilities |
|
|
30,893 |
|
|
|
52,207 |
|
|
Total current liabilities |
|
|
517,433 |
|
|
|
465,278 |
|
|
|
|
|
|
|
|
Deferred income taxes,
net |
|
|
- |
|
|
|
14,038 |
|
|
Long-term debt, net |
|
|
727,930 |
|
|
|
820,034 |
|
|
Long-term operating lease
liabilities |
|
|
129,244 |
|
|
|
- |
|
|
Other long-term
liabilities |
|
|
8,601 |
|
|
|
17,046 |
|
|
Total liabilities |
|
|
1,383,208 |
|
|
|
1,316,396 |
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
Common
stock, $0.01 par value per share: 500,000 shares authorized
(Class A 400,000 and Class B 100,000); 282,047 issued and
outstanding (Class A 280,771 and Class B 1,276) |
|
3 |
|
|
|
3 |
|
|
Additional paid-in
capital |
|
|
101,742 |
|
|
|
101,742 |
|
|
Accumulated
deficit |
|
|
(145,371 |
) |
|
|
(95,562 |
) |
|
Accumulated other
comprehensive loss |
|
|
(134 |
) |
|
|
(2,138 |
) |
|
Total Shay Holding Corporation stockholders' equity |
|
|
(43,760 |
) |
|
|
4,045 |
|
|
Noncontrolling
interests |
|
|
31,851 |
|
|
|
27,440 |
|
|
Total liabilities and equity |
|
$ |
1,371,299 |
|
|
$ |
1,347,881 |
|
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Amounts in thousands)
|
|
|
|
|
|
Three Months Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2019 |
|
|
|
2018 |
|
|
Operating
activities |
|
|
|
|
Net loss |
$ |
(16,664 |
) |
|
$ |
(12,333 |
) |
|
Adjustments to reconcile net
loss to net cash provided by (used in) operating |
|
|
|
|
activities: |
|
|
|
|
Depreciation and
amortization of property and equipment |
|
3,407 |
|
|
|
3,221 |
|
|
Amortization of
intangible assets |
|
8,176 |
|
|
|
7,905 |
|
|
Amortization of debt
issuance cost |
|
1,996 |
|
|
|
2,069 |
|
|
Net undistributed
income from unconsolidated ventures |
|
(427 |
) |
|
|
(166 |
) |
|
Deferred income taxes,
net |
|
(15,375 |
) |
|
|
8,538 |
|
|
Loss on sale of
assets |
|
798 |
|
|
|
- |
|
|
Other non-cash
activities, net |
|
546 |
|
|
|
1,681 |
|
|
Changes in operating
assets and liabilities, net of effect of business |
|
|
|
|
Combinations: |
|
|
|
|
Accounts receivable,
net |
|
15,718 |
|
|
|
(49,374 |
) |
|
Accounts payable |
|
(692 |
) |
|
|
402 |
|
|
Accrued expenses |
|
(17,846 |
) |
|
|
12,727 |
|
|
Customer advances and
billings in excess of costs |
|
(17,664 |
) |
|
|
(2,762 |
) |
|
Salaries, benefits and
payroll taxes |
|
15,842 |
|
|
|
8,777 |
|
|
Prepaid expenses and
other current assets |
|
4,347 |
|
|
|
(11,618 |
) |
|
Other current and
noncurrent liabilities |
|
(8,048 |
) |
|
|
(1,852 |
) |
|
Investments |
|
2,788 |
|
|
|
4,342 |
|
|
Other noncurrent
assets |
|
7,739 |
|
|
|
(132 |
) |
|
Accrued taxes |
|
3,130 |
|
|
|
(11,677 |
) |
|
Net cash used in operating activities |
|
(12,229 |
) |
|
|
(40,252 |
) |
|
Investing activities |
|
|
|
|
Expenditures for property and
equipment |
|
(1,015 |
) |
|
|
(2,842 |
) |
|
Other investing activities,
net |
|
4,526 |
|
|
|
(1 |
) |
|
Net cash provided by (used in) investing
activities |
|
3,511 |
|
|
|
(2,843 |
) |
|
Financing activities |
|
|
|
|
Net contributions from
noncontrolling interests |
|
- |
|
|
|
- |
|
|
Distributions to venture
partners |
|
- |
|
|
|
(443 |
) |
|
Repayments on short-term
debt |
|
- |
|
|
|
- |
|
|
Borrowings on long-term
debt |
|
105,968 |
|
|
|
65,097 |
|
|
Repayments on long-term
debt |
|
(120,898 |
) |
|
|
(12,452 |
) |
|
Net cash (used
in) provided by financing activities |
|
(14,930 |
) |
|
|
52,202 |
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
(261 |
) |
|
|
(1,528 |
) |
|
Net (decrease)
increase in cash and cash equivalents |
|
(23,909 |
) |
|
|
7,579 |
|
|
Cash and cash equivalents at
beginning of period |
|
91,944 |
|
|
|
43,518 |
|
|
Cash and cash equivalents at
end of period |
$ |
68,035 |
|
|
$ |
51,097 |
|
|
|
|
|
|
|
Supplemental cash flow
information |
|
|
|
|
Cash paid for interest |
|
37,403 |
|
|
|
19,898 |
|
|
Cash paid for taxes |
|
2,616 |
|
|
|
6,055 |
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Amounts in thousands)
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Operating
activities |
|
|
|
|
|
Net loss |
|
$ |
(50,061 |
) |
|
$ |
(31,578 |
) |
|
Adjustments to reconcile net
loss to net cash provided by (used in) operating |
|
|
|
|
|
activities: |
|
|
|
|
|
Depreciation and
amortization of property and equipment |
|
|
12,875 |
|
|
|
14,459 |
|
|
Amortization of
intangible assets |
|
|
33,205 |
|
|
|
33,817 |
|
|
Amortization of debt
issuance cost |
|
|
8,092 |
|
|
|
8,382 |
|
|
Net undistributed
(income) loss from unconsolidated ventures |
|
|
(2,680 |
) |
|
|
180 |
|
|
Deferred income taxes,
net |
|
|
(17,247 |
) |
|
|
(14,801 |
) |
|
Loss on sale of
assets |
|
|
32,814 |
|
|
|
- |
|
|
Other non-cash
activities, net |
|
|
4,128 |
|
|
|
380 |
|
|
Changes in
operating assets and liabilities, net of effect of business |
|
|
|
|
|
combinations: |
|
|
|
|
|
Accounts receivable,
net |
|
|
74,416 |
|
|
|
(101,178 |
) |
|
Accounts payable |
|
|
618 |
|
|
|
35,404 |
|
|
Accrued expenses |
|
|
(5,629 |
) |
|
|
12,058 |
|
|
Customer advances and
billings in excess of costs |
|
|
23,569 |
|
|
|
(15,004 |
) |
|
Salaries, benefits and
payroll taxes |
|
|
17,411 |
|
|
|
7,510 |
|
|
Prepaid expenses and
other current assets |
|
|
3,202 |
|
|
|
355 |
|
|
Other current and
noncurrent liabilities |
|
|
(25,220 |
) |
|
|
(8,628 |
) |
|
Investments |
|
|
6,102 |
|
|
|
12,973 |
|
|
Other noncurrent
assets |
|
|
1,450 |
|
|
|
(688 |
) |
|
Accrued taxes |
|
|
(397 |
) |
|
|
(10,482 |
) |
|
Net cash provided by (used in) operating
activities |
|
|
116,648 |
|
|
|
(56,841 |
) |
|
Investing
activities |
|
|
|
|
|
Expenditures for property and
equipment |
|
|
(9,436 |
) |
|
|
(5,702 |
) |
|
Other investing activities,
net |
|
|
6,747 |
|
|
|
(10,849 |
) |
|
Net cash used in investing activities |
|
|
(2,689 |
) |
|
|
(16,551 |
) |
|
Financing
activities |
|
|
|
|
|
Net contributions from
noncontrolling interests |
|
|
5,405 |
|
|
|
- |
|
|
Distributions to venture
partners |
|
|
(742 |
) |
|
|
(2,806 |
) |
|
Repayments on short-term
debt |
|
|
- |
|
|
|
(1,966 |
) |
|
Borrowings on long-term
debt |
|
|
267,375 |
|
|
|
107,099 |
|
|
Repayments on long-term
debt |
|
|
(367,312 |
) |
|
|
(69,480 |
) |
|
Net cash (used
in) provided by financing activities |
|
|
(95,274 |
) |
|
|
32,847 |
|
|
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(1,747 |
) |
|
|
(1,940 |
) |
|
Net increase
(decrease) in cash and cash equivalents |
|
|
16,938 |
|
|
|
(42,485 |
) |
|
Cash and cash equivalents at
beginning of period |
|
|
51,097 |
|
|
|
93,582 |
|
|
Cash and cash
equivalents at end of period |
|
$ |
68,035 |
|
|
$ |
51,097 |
|
|
|
|
|
|
|
|
Supplemental cash flow
information |
|
|
|
|
|
Cash paid for interest |
|
|
78,019 |
|
|
|
74,579 |
|
|
Cash paid for taxes |
|
|
9,552 |
|
|
|
19,093 |
|
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESSEGMENT DATA(Amounts in
thousands)
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Revenues |
|
|
|
|
|
GMS |
|
$ |
533,600 |
|
|
$ |
522,402 |
|
|
NSS |
|
|
163,485 |
|
|
|
149,732 |
|
|
Consolidated revenues |
|
$ |
697,085 |
|
|
$ |
672,134 |
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
GMS |
|
$ |
15,407 |
|
|
$ |
21,167 |
|
|
NSS |
|
|
(13,729 |
) |
|
|
(5,221 |
) |
|
Corporate |
|
|
(4,845 |
) |
|
|
(3,885 |
) |
|
Consolidated operating (loss)
income |
|
$ |
(3,167 |
) |
|
$ |
12,061 |
|
|
|
|
|
|
|
|
Amortization of
intangible assets |
|
|
|
|
|
GMS |
|
$ |
4,140 |
|
|
$ |
4,639 |
|
|
NSS |
|
|
4,036 |
|
|
|
4,322 |
|
|
Consolidated
amortization of intangible assets |
$ |
8,176 |
|
|
$ |
8,961 |
|
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESSEGMENT DATA(Amounts in
thousands)
|
|
|
|
|
|
|
|
Twelve Months Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Revenues |
|
|
|
|
|
GMS |
|
$ |
2,099,737 |
|
|
$ |
1,968,843 |
|
|
NSS |
|
|
664,156 |
|
|
|
639,719 |
|
|
Consolidated revenues |
|
$ |
2,763,893 |
|
|
$ |
2,608,562 |
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
GMS |
|
$ |
92,386 |
|
|
$ |
89,141 |
|
|
NSS |
|
|
(36,940 |
) |
|
|
(12,556 |
) |
|
Corporate |
|
|
(28,627 |
) |
|
|
(26,464 |
) |
|
Consolidated operating
income |
|
$ |
26,819 |
|
|
$ |
50,121 |
|
|
|
|
|
|
|
|
Amortization of
intangible assets |
|
|
|
|
|
GMS |
|
$ |
16,679 |
|
|
$ |
18,492 |
|
|
NSS |
|
|
16,526 |
|
|
|
17,288 |
|
|
Consolidated
amortization of intangible assets |
$ |
33,205 |
|
|
$ |
35,780 |
|
|
|
|
|
|
|
|
SHAY HOLDING CORPORATION AND
SUBSIDIARIESBACKLOG(Amounts in
thousands)
|
|
|
Year
Ended |
|
Year
Ended |
|
|
|
|
December 31, 2019 |
|
December 31, 2018 |
|
|
Global
Mission Services: |
|
|
|
|
|
Funded
backlog |
$ |
1,173,196 |
|
$ |
1,288,554 |
|
|
Unfunded
backlog |
|
3,393,081 |
|
|
3,317,054 |
|
|
Total GMS
backlog |
$ |
4,566,277 |
|
$ |
4,605,608 |
|
|
National Security
Solutions: |
|
|
|
|
|
Funded
backlog |
$ |
311,214 |
|
$ |
501,515 |
|
|
Unfunded
backlog |
|
1,474,309 |
|
|
950,818 |
|
|
Total NSS
backlog |
$ |
1,785,523 |
|
$ |
1,452,333 |
|
|
Total: |
|
|
|
|
|
|
Funded
backlog |
$ |
1,484,410 |
|
$ |
1,790,069 |
|
|
Unfunded
backlog |
|
4,867,390 |
|
|
4,267,872 |
|
|
Total backlog |
$ |
6,351,800 |
|
$ |
6,057,941 |
|
|
|
|
|
|
|
|
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 2019 and 2018, 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 revenue performance of PAE’s underlying business based
on excluding ISR’s operations during the year. To calculate
the loss without ISR, the Company removed ISR from its revenue and
loss metrics for both presented years in calculating the adjusted
EBITDA.
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 |
|
|
|
Twelve Months Ended |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
December 31, |
December 31, |
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributed to Shay
Holding Corp. |
|
$ |
(14,593 |
) |
|
$ |
(13,113 |
) |
|
$ |
(1,480 |
) |
|
$ |
(49,809 |
) |
|
$ |
(34,459 |
) |
|
$ |
(15,350 |
) |
|
Interest expense, net |
|
|
20,752 |
|
|
|
22,144 |
|
|
|
(1,392 |
) |
|
|
86,011 |
|
|
|
84,360 |
|
|
|
1,651 |
|
|
Provision for taxes |
|
|
(7,254 |
) |
|
|
2,249 |
|
|
|
(9,503 |
) |
|
|
(9,131 |
) |
|
|
(2,661 |
) |
|
|
(6,470 |
) |
|
Depreciation and
amortization |
|
|
11,584 |
|
|
|
12,181 |
|
|
|
(597 |
) |
|
|
46,081 |
|
|
|
50,239 |
|
|
|
(4,158 |
) |
|
M&A costs |
|
|
5,209 |
|
|
|
403 |
|
|
|
4,806 |
|
|
|
13,172 |
|
|
|
4,456 |
|
|
|
8,716 |
|
|
Disposal of ISR |
|
|
1,774 |
|
|
|
5,454 |
|
|
|
(3,680 |
) |
|
|
44,436 |
|
|
|
31,675 |
|
|
|
12,761 |
|
|
Non-core expenses (1) |
|
|
2,086 |
|
|
|
1,233 |
|
|
|
853 |
|
|
|
10,963 |
|
|
|
7,325 |
|
|
|
3,638 |
|
|
Non-cash items (2) |
|
|
6,649 |
|
|
|
(977 |
) |
|
|
7,626 |
|
|
|
4,437 |
|
|
|
7,866 |
|
|
|
(3,429 |
) |
|
Forward loss accruals (3) |
|
|
9,615 |
|
|
|
6,776 |
|
|
|
2,839 |
|
|
|
13,069 |
|
|
|
8,169 |
|
|
|
4,900 |
|
|
Sponsor fees (4) |
|
|
1,315 |
|
|
|
1,250 |
|
|
|
65 |
|
|
|
5,077 |
|
|
|
5,029 |
|
|
|
48 |
|
|
Other (5) |
|
|
327 |
|
|
|
(530 |
) |
|
|
857 |
|
|
|
2,425 |
|
|
|
(4,606 |
) |
|
|
7,031 |
|
|
Adjusted EBITDA |
|
$ |
37,464 |
|
|
$ |
37,070 |
|
|
$ |
394 |
|
|
$ |
166,731 |
|
|
$ |
157,393 |
|
|
$ |
9,338 |
|
|
Adjusted EBITDA margin |
|
|
5.4 |
% |
|
|
5.5 |
% |
|
|
|
|
6.0 |
% |
|
|
6.0 |
% |
|
|
|
Reconciliation of GAAP operating incometo
Adjusted operating income a non-GAAP Measure –
GMS |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
December 31, |
December 31, |
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
15,407 |
|
|
$ |
21,167 |
|
|
$ |
(5,760 |
) |
|
$ |
92,386 |
|
|
$ |
89,141 |
|
|
$ |
3,245 |
|
Corp operating loss
allocation |
|
|
(3,709 |
) |
|
|
(3,020 |
) |
|
|
(689 |
) |
|
|
(21,746 |
) |
|
|
(19,636 |
) |
|
|
(2,110 |
) |
Corporate NCI allocation |
|
|
1,973 |
|
|
|
(821 |
) |
|
|
2,794 |
|
|
|
(51 |
) |
|
|
(3,030 |
) |
|
|
2,979 |
|
Depreciation and
amortization |
|
|
6,847 |
|
|
|
7,286 |
|
|
|
(439 |
) |
|
|
26,934 |
|
|
|
30,408 |
|
|
|
(3,474 |
) |
M&A costs |
|
|
3,987 |
|
|
|
331 |
|
|
|
3,656 |
|
|
|
10,004 |
|
|
|
2,353 |
|
|
|
7,651 |
|
Disposal of ISR |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Non-core expenses (1) |
|
|
108 |
|
|
|
2,371 |
|
|
|
(2,263 |
) |
|
|
5,371 |
|
|
|
7,227 |
|
|
|
(1,856 |
) |
Non-cash items (2) |
|
|
2,262 |
|
|
|
(759 |
) |
|
|
3,021 |
|
|
|
3,153 |
|
|
|
5,994 |
|
|
|
(2,841 |
) |
Forward loss accruals (3) |
|
|
5,384 |
|
|
|
1,492 |
|
|
|
3,892 |
|
|
|
4,349 |
|
|
|
1,272 |
|
|
|
3,077 |
|
Sponsor fees (4) |
|
|
1,007 |
|
|
|
971 |
|
|
|
36 |
|
|
|
3,857 |
|
|
|
3,787 |
|
|
|
70 |
|
Other (5) |
|
|
250 |
|
|
|
(413 |
) |
|
|
663 |
|
|
|
1,842 |
|
|
|
(3,687 |
) |
|
|
5,529 |
|
Adjusted operating income |
|
$ |
33,516 |
|
|
$ |
28,605 |
|
|
$ |
4,911 |
|
|
$ |
126,099 |
|
|
$ |
113,829 |
|
|
$ |
12,270 |
|
Adjusted operating income
margin |
|
|
6.3 |
% |
|
|
5.5 |
% |
|
|
|
|
6.0 |
% |
|
|
5.8 |
% |
|
|
Reconciliation of GAAP operating incometo
Adjusted operating income a non-GAAP Measure –
NSS |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
December 31, |
December 31, |
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
$ |
(13,729 |
) |
|
$ |
(5,221 |
) |
|
$ |
(8,508 |
) |
|
$ |
(36,940 |
) |
|
$ |
(12,556 |
) |
|
$ |
(24,384 |
) |
Corp operating loss
allocation |
|
|
(1,136 |
) |
|
|
(866 |
) |
|
|
(270 |
) |
|
|
(6,879 |
) |
|
|
(6,827 |
) |
|
|
(52 |
) |
Corporate NCI allocation |
|
|
94 |
|
|
|
40 |
|
|
|
54 |
|
|
|
304 |
|
|
|
148 |
|
|
|
156 |
|
Depreciation and
amortization |
|
|
4,738 |
|
|
|
4,895 |
|
|
|
(157 |
) |
|
|
19,146 |
|
|
|
19,830 |
|
|
|
(684 |
) |
M&A costs |
|
|
1,222 |
|
|
|
72 |
|
|
|
1,150 |
|
|
|
3,164 |
|
|
|
2,103 |
|
|
|
1,061 |
|
Disposal of ISR |
|
|
1,774 |
|
|
|
5,454 |
|
|
|
(3,680 |
) |
|
|
44,436 |
|
|
|
31,675 |
|
|
|
12,761 |
|
Non-core expenses (1) |
|
|
1,978 |
|
|
|
(1,137 |
) |
|
|
3,115 |
|
|
|
5,592 |
|
|
|
98 |
|
|
|
5,494 |
|
Non-cash items (2) |
|
|
4,389 |
|
|
|
(218 |
) |
|
|
4,607 |
|
|
|
1,283 |
|
|
|
1,872 |
|
|
|
(589 |
) |
Forward loss accruals (3) |
|
|
4,232 |
|
|
|
5,284 |
|
|
|
(1,052 |
) |
|
|
8,721 |
|
|
|
6,898 |
|
|
|
1,823 |
|
Sponsor fees (4) |
|
|
308 |
|
|
|
278 |
|
|
|
30 |
|
|
|
1,220 |
|
|
|
1,242 |
|
|
|
(22 |
) |
Other (5) |
|
|
77 |
|
|
|
(117 |
) |
|
|
194 |
|
|
|
583 |
|
|
|
(919 |
) |
|
|
1,502 |
|
Adjusted operating income |
|
$ |
3,947 |
|
|
$ |
8,464 |
|
|
$ |
(4,517 |
) |
|
$ |
40,630 |
|
|
$ |
43,564 |
|
|
$ |
(2,934 |
) |
Adjusted operating income
margin |
|
|
2.4 |
% |
|
|
5.7 |
% |
|
|
|
|
6.1 |
% |
|
|
6.8 |
% |
|
|
- Non-core expenses include certain professional fees, gain/loss
on disposal of fixed assets, settlements and certain severance
costs
- Non-cash items include idle facilities charges for facilities
the Company no longer occupies, pension curtailment costs and
unrealized FX gains/losses
- Forward loss accruals include adjustments related to future
expected losses recognized in the current period
- 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
- 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
PAE (NASDAQ:PAE)
Historical Stock Chart
From Jun 2024 to Jul 2024
PAE (NASDAQ:PAE)
Historical Stock Chart
From Jul 2023 to Jul 2024