COLORADO SPRINGS, Colo.,
Nov. 7, 2017 /PRNewswire/
-- Vectrus, Inc. (NYSE:VEC) announced third quarter 2017
financial results. For the third quarter, revenue was $269.6 million, operating income was $10.1 million, and diluted earnings per share
were $0.51. As of September 29, 2017, year-to-date net cash
provided by operating activities was $22.4
million.
"We reported solid third quarter results, which were driven by
progression on our strategic imperatives and strong program
execution. Additionally, I'm pleased to announce that during the
quarter, Vectrus was awarded a significant long-term subcontract in
support of the Air Force Range Support Services II program," said
Chuck Prow, president and chief
executive officer of Vectrus. "The new contract, worth
approximately $400 million, extends
through the first quarter of 2034 and is expected to increase our
U.S. based facilities and logistics work with the Air Force. This
was a notable win for our team and is the largest new business
contract awarded to Vectrus this year. We are proud to be a part of
the RSS II team and look forward to delivering exceptional results
on this long-term program."
"We remain focused on future growth and our efforts so far in
2017 have resulted in over $1.3
billion of contract bookings," explained Prow. "Our
contract awards have driven our total backlog to $3.1 billion, which now represents almost three
times our updated 2017 revenue guidance mid-point."
Third Quarter 2017 Results
- Revenue $269.6 million
- Operating income $10.1
million
- Operating margin 3.7%
- Diluted earnings per share $0.51
Third quarter 2017 revenue of $269.6
million decreased $14.2
million, or 5.0 percent, compared to the third quarter of
2016. The decrease in revenue was attributable to lower activity
from our Middle East programs of
$14.1 million and our U.S programs of
$2.9 million, partially offset by
increases from our European programs of $2.3
million and from our Afghanistan programs of $0.5 million.
Operating income was $10.1 million
or 3.7 percent operating margin in the third quarter of 2017,
compared to $11.2 million or 3.9
percent operating margin in the third quarter of 2016.
Third quarter 2017 diluted earnings per share were $0.51 compared to $0.60 in the third quarter 2016.
Year-to-date September 29, 2017,
net cash provided by operating activities was $22.4 million, a decrease of $11.1 million compared to the 2016 period.
Days sales outstanding was 57 days in the third quarter of 2017
compared to 55 days in the third quarter of 2016.
"We remain focused on cash generation and our team continues to
evolve our processes to enhance cash collections," said
Matt Klein, chief financial officer
of Vectrus.
The Company ended the third quarter of 2017 with a total debt
balance of $74.5 million, which was
down from $85.0 million at
December 31, 2016. As of
September 29, 2017, the Company had a
total consolidated indebtedness to consolidated EBITDA (total
leverage ratio) of 1.58 to 1.00x.
"With approximately $11 million in
net debt1, our balance sheet remains in excellent
shape," said Klein. "Our increased visibility and strong financial
position has allowed us to negotiate commitment letters and a term
sheet for a new and expanded credit facility. Our planned new
credit facility, which we expect to close in the fourth quarter,
will allow for even greater financial flexibility to support our
business growth objectives and capital allocation strategy."
The Company ended the third quarter 2017 with total backlog of
$3.1 billion and funded backlog of
$0.8 billion.
2017 Guidance
"We are increasing our 2017 guidance for revenue, operating
margin, net income, diluted EPS, and net cash provided by operating
activities," said Klein.
2017 guidance details include:
$ millions, except
for operating margin and per share amounts
|
(Prior)
2017 Guidance
|
(Updated)
2017 Guidance 2
|
Revenue
|
$990
|
to
|
$1,090
|
|
$1,080
|
to
|
$1,100
|
Operating
Margin
|
3.40%
|
to
|
3.60%
|
|
3.50%
|
to
|
3.70%
|
Net Income
|
$18.7
|
to
|
$22.3
|
|
$21.1
|
to
|
$23.0
|
Diluted
EPS
|
$1.68
|
to
|
$2.00
|
|
$1.87
|
to
|
$2.03
|
Net Cash Provided by
Operating Activities
|
$22.0
|
to
|
$28.0
|
|
$24.0
|
to
|
$30.0
|
The Company notes that forward-looking statements of future
performance made in this release, including 2017 guidance, are
based upon current expectations and are subject to factors that
could cause actual results to differ materially from those
suggested here, including those factors set forth in the Safe
Harbor Statement below.
Investor Call
Management representatives will conduct an investor briefing and
conference call at 4:30 p.m. EST on
Tuesday, November 7,
2017.
U.S.-based participants may dial into the conference call at
855-327-6837, while international participants may dial
631-891-4304. For all other listeners, a live webcast of the
briefing and conference call will be available on the Vectrus
Investor Relations website at http://investors.vectrus.com.
A replay of the briefing will be posted on the Vectrus website
shortly after completion of the call, and will remain available for
one year. A telephonic replay will also be available through
November 21, 2017, at 844-512-2921
(domestic) or 412-317-6671 (international).
About Vectrus
Vectrus is a leading, global government services company with a
history in the services market that dates back more than 70 years.
The company provides facility and logistics services and
information technology and network communication services to U.S.
government customers around the world. Vectrus is differentiated by
operational excellence, superior program performance, a history of
long-term customer relationships, and a strong commitment to their
mission success. Vectrus is headquartered in Colorado Springs, Colo., and includes about
5,600 employees spanning 143 locations in 18 countries. In 2016,
Vectrus generated sales of $1.2
billion. For more information, visit our website at
www.vectrus.com or connect with us on Facebook, Twitter, LinkedIn,
and YouTube.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 (the "Act"): Certain material presented herein
includes forward-looking statements intended to qualify for the
safe harbor from liability established by the Act. These
forward-looking statements include, but are not limited to,
statements in 2017 Guidance above about our revenue, operating
margin, net income, EPS and net cash provided by operating
activities for 2017 and other assumptions contained therein for
purposes of such guidance, our new credit facility, cash and cash
collections, debt payments, expense savings, contract
opportunities, bids and awards, collections, business strategy,
outlook, objectives, plans, intentions or goals, and any discussion
of future operating or financial performance. Whenever used, words
such as "may," "are considering," "will," "likely," "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe,"
"target," "could," "potential," "continue," or similar terminology
are forward-looking statements. These statements are based on the
beliefs and assumptions of our management based on information
currently available to management. Forward-looking statements are
not guarantees of future performance and are subject to risks and
uncertainties that could cause actual results to differ materially
from the results contemplated by the forward-looking statements,
our historical experience and our present expectations or
projections. These risks and uncertainties include, but are not
limited to: our dependence on a few large contracts for a
significant portion of our revenue; competition in our industry;
our ability to submit proposals for and/or win potential
opportunities in our pipeline; our ability to retain and renew our
existing contracts; protests of new awards; our international
operations, including the economic, political and social conditions
in the countries in which we conduct our businesses; changes in
U.S. government military operations, including its operations in
Afghanistan; changes in, or delays
in the completion of, U.S. or international government budgets;
government regulations and compliance therewith, including changes
to the Department of Defense procurement process; changes in
technology; intellectual property matters; governmental
investigations, reviews, audits and cost adjustments; contingencies
related to actual or alleged environmental contamination, claims
and concerns; our success in expanding our geographic footprint or
broadening our customer base, markets and capabilities; our ability
to realize the full amounts reflected in our backlog; our
maintaining our good relationship with the U.S. government;
impairment of goodwill; our performance of our contracts and our
ability to control costs; our level of indebtedness; our compliance
with the terms of our credit agreement; subcontractor and employee
performance and conduct; our teaming arrangements with other
contractors; economic and capital markets conditions; any future
acquisitions, investments or joint ventures; our ability to retain
and recruit qualified personnel; our maintenance of safe work sites
and equipment; our compliance with applicable environmental health
and safety regulations; our ability to maintain required security
clearances; any disputes with labor unions; costs of outcome of any
legal proceedings; security breaches and other disruptions to our
information technology and operations; changes in our tax
provisions or exposure to additional income tax liabilities;
changes in U.S. generally accepted accounting principles;
accounting estimates made in connection with our contracts; our
exposure to interest rate risk; our compliance with public company
accounting and financial reporting requirements; timing of payments
by the U.S. government; risks and uncertainties relating to the
spin-off from our former parent; and other factors set forth in
Part I, Item 1A, – "Risk Factors," and elsewhere in our 2016 Annual
Report on Form 10-K and described from time to time in our future
reports filed with the Securities and Exchange Commission. We
undertake no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
Footnotes:
|
1
|
Net debt defined as
total debt less cash.
|
2
|
2017 guidance
assumptions. Capital expenditures approximately $2.0 million.
Depreciation and amortization approximately $2.3 million. 2017
mandatory debt payments $11.5 million. Interest expense $5.1
million. Estimated tax rate 35.5%. 2017 diluted EPS assumes 11.3
million weighted average diluted shares outstanding at December 31,
2017.
|
VECTRUS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
29,
|
|
September
30,
|
|
September
29,
|
|
September
30,
|
(In thousands,
except per share data)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Revenue
|
|
$
|
269,625
|
|
|
$
|
283,782
|
|
|
$
|
819,005
|
|
|
$
|
902,359
|
|
Cost of
revenue
|
|
245,219
|
|
|
257,687
|
|
|
743,502
|
|
|
822,042
|
|
Selling, general and
administrative expenses
|
|
14,316
|
|
|
14,933
|
|
|
44,560
|
|
|
46,046
|
|
Operating
income
|
|
10,090
|
|
|
11,162
|
|
|
30,943
|
|
|
34,271
|
|
Interest (expense)
income, net
|
|
(1,058)
|
|
|
(1,348)
|
|
|
(3,262)
|
|
|
(4,396)
|
|
Income from
operations before income taxes
|
|
9,032
|
|
|
9,814
|
|
|
27,681
|
|
|
29,875
|
|
Income tax
expense
|
|
3,232
|
|
|
3,207
|
|
|
9,751
|
|
|
10,629
|
|
Net income
|
|
$
|
5,800
|
|
|
$
|
6,607
|
|
|
$
|
17,930
|
|
|
$
|
19,246
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.52
|
|
|
$0.62
|
|
|
$1.63
|
|
|
$1.80
|
|
Diluted
|
|
$0.51
|
|
|
$0.60
|
|
|
$1.61
|
|
|
$1.76
|
|
Weighted average
common shares outstanding - basic
|
|
11,075
|
|
|
10,733
|
|
|
10,991
|
|
|
10,688
|
|
Weighted average
common shares outstanding - diluted
|
|
11,272
|
|
|
11,061
|
|
|
11,168
|
|
|
10,966
|
|
VECTRUS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
September
29,
|
|
December
31,
|
(In thousands,
except share information)
|
|
2017
|
|
2016
|
Assets
|
|
(unaudited)
|
|
|
Current
assets
|
|
|
|
|
Cash
|
|
$
|
63,446
|
|
|
$
|
47,651
|
|
Receivables
|
|
174,943
|
|
|
172,072
|
|
Costs incurred
in excess of billings
|
|
11,751
|
|
|
11,002
|
|
Other current
assets
|
|
8,509
|
|
|
13,412
|
|
Total current
assets
|
|
258,649
|
|
|
244,137
|
|
Property,
plant, and equipment, net
|
|
3,259
|
|
|
3,061
|
|
Goodwill
|
|
216,930
|
|
|
216,930
|
|
Other
non-current assets
|
|
2,413
|
|
|
1,177
|
|
Total non-current
assets
|
|
222,602
|
|
|
221,168
|
|
Total
Assets
|
|
$
|
481,251
|
|
|
$
|
465,305
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
109,100
|
|
|
118,055
|
|
Billings in
excess of costs
|
|
3,070
|
|
|
1,421
|
|
Compensation
and other employee benefits
|
|
42,770
|
|
|
34,917
|
|
Short-term
debt
|
|
21,000
|
|
|
15,750
|
|
Other accrued
liabilities
|
|
18,996
|
|
|
17,693
|
|
Total current
liabilities
|
|
194,936
|
|
|
187,836
|
|
Long-term
debt, net
|
|
52,653
|
|
|
67,842
|
|
Deferred tax
liability
|
|
89,710
|
|
|
89,667
|
|
Other non-current
liabilities
|
|
2,322
|
|
|
2,559
|
|
Total non-current
liabilities
|
|
144,685
|
|
|
160,068
|
|
Total
liabilities
|
|
339,621
|
|
|
347,904
|
|
Commitments
and contingencies
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Preferred
stock; $0.01 par value; 10,000,000 shares authorized; No shares
issued and outstanding
|
|
—
|
|
|
—
|
|
Common stock;
$0.01 par value; 100,000,000 shares authorized; 11,075,220 and
10,894,924 shares issued and outstanding
|
|
111
|
|
|
109
|
|
Additional
paid in capital
|
|
67,464
|
|
|
63,910
|
|
Retained
earnings
|
|
75,847
|
|
|
57,959
|
|
Accumulated other
comprehensive loss
|
|
(1,792)
|
|
|
(4,577)
|
|
Total shareholders'
equity
|
|
141,630
|
|
|
117,401
|
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
481,251
|
|
|
$
|
465,305
|
|
VECTRUS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
Nine Months
Ended
|
|
|
September
29,
|
|
September
30,
|
(In
thousands)
|
|
2017
|
|
2016
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
|
17,930
|
|
|
$
|
19,246
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
and amortization expense
|
|
1,141
|
|
|
1,453
|
|
Loss on
disposal of property, plant, and equipment
|
|
—
|
|
|
402
|
|
Stock-based
compensation
|
|
3,341
|
|
|
3,542
|
|
Amortization
of debt issuance costs
|
|
561
|
|
|
915
|
|
Changes in assets and
liabilities:
|
|
|
|
|
Receivables
|
|
(96)
|
|
|
47,501
|
|
Other
assets
|
|
3,196
|
|
|
(2,954)
|
|
Accounts
payable
|
|
(11,470)
|
|
|
(31,593)
|
|
Billings in
excess of costs
|
|
1,649
|
|
|
(2,828)
|
|
Deferred
taxes
|
|
(1,007)
|
|
|
(7,138)
|
|
Compensation
and other employee benefits
|
|
6,817
|
|
|
9,252
|
|
Other
liabilities
|
|
336
|
|
|
(4,314)
|
|
Net cash
provided by operating activities
|
|
$
|
22,398
|
|
|
$
|
33,484
|
|
Investing
activities
|
|
|
|
|
Purchases of capital
assets
|
|
(901)
|
|
|
(400)
|
|
Proceeds from the
disposition of assets
|
|
—
|
|
|
116
|
|
Distributions from
equity investment
|
|
—
|
|
|
346
|
|
Net cash (used in)
investing activities
|
|
$
|
(901)
|
|
|
$
|
62
|
|
Financing
activities
|
|
|
|
|
Repayments of
long-term debt
|
|
(10,500)
|
|
|
(20,500)
|
|
Proceeds from
revolver
|
|
27,500
|
|
|
74,000
|
|
Repayments of
revolver
|
|
(27,500)
|
|
|
(74,000)
|
|
Proceeds from
exercise of stock options
|
|
1,886
|
|
|
568
|
|
Payment of debt
issuance costs
|
|
—
|
|
|
(221)
|
|
Payments of employee
withholding taxes on share-based compensation
|
|
(612)
|
|
|
(651)
|
|
Net cash
(used in) financing activities
|
|
$
|
(9,226)
|
|
|
$
|
(20,804)
|
|
Exchange rate
effect on cash
|
|
3,524
|
|
|
614
|
|
Net change in
cash
|
|
15,795
|
|
|
13,356
|
|
Cash-beginning of
year
|
|
47,651
|
|
|
39,995
|
|
Cash-end of
period
|
|
$
|
63,446
|
|
|
$
|
53,351
|
|
Supplemental
Disclosure of Cash Flow Information:
|
|
|
|
|
Interest
paid
|
|
$
|
3,014
|
|
|
$
|
4,224
|
|
Income taxes
paid
|
|
$
|
3,801
|
|
|
$
|
20,598
|
|
Non-cash investing
activities:
|
|
|
|
|
Purchase of capital
assets on account
|
|
$
|
438
|
|
|
$
|
—
|
|
SUPPLEMENTAL
INFORMATION
|
Revenue by military
branch for the periods presented below was as follows:
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
29,
|
|
September
30,
|
|
September
29,
|
|
September
30,
|
(In
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Military
branch
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
Army
|
|
$
|
214,152
|
|
80
|
%
|
|
$
|
241,601
|
|
85
|
%
|
|
$
|
682,891
|
|
83
|
%
|
|
$
|
762,818
|
|
85
|
%
|
Navy
|
|
6,038
|
|
2
|
%
|
|
5,482
|
|
2
|
%
|
|
16,218
|
|
2
|
%
|
|
14,975
|
|
2
|
%
|
Air Force
|
|
49,435
|
|
18
|
%
|
|
36,699
|
|
13
|
%
|
|
119,896
|
|
15
|
%
|
|
124,566
|
|
14
|
%
|
Total
Revenue
|
|
$
|
269,625
|
|
|
|
$
|
283,782
|
|
|
|
$
|
819,005
|
|
|
|
$
|
902,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
29,
|
|
September
30,
|
|
September
29,
|
|
September
30,
|
(in
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Contract
type
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
Firm-Fixed-Price
|
|
$
|
74,643
|
|
28
|
%
|
|
$
|
72,978
|
|
26
|
%
|
|
$
|
209,682
|
|
26
|
%
|
|
$
|
230,604
|
|
26
|
%
|
Cost-Plus and
Cost-Reimbursable ¹
|
|
194,982
|
|
72
|
%
|
|
210,804
|
|
74
|
%
|
|
609,323
|
|
74
|
%
|
|
671,755
|
|
74
|
%
|
Total
Revenue
|
|
$
|
269,625
|
|
|
|
$
|
283,782
|
|
|
|
$
|
819,005
|
|
|
|
$
|
902,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¹ Includes time and
material contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
29,
|
|
September
30,
|
|
September
29,
|
|
September
30,
|
(In
thousands)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Contract
Relationship
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
|
Revenue
|
|
% of
Total
|
Prime
Contractor
|
|
$
|
262,372
|
|
97
|
%
|
|
$
|
277,787
|
|
98
|
%
|
|
$
|
799,439
|
|
98
|
%
|
|
$
|
848,582
|
|
94
|
%
|
Sub
Contractor
|
|
7,253
|
|
3
|
%
|
|
5,995
|
|
2
|
%
|
|
19,566
|
|
2
|
%
|
|
53,777
|
|
6
|
%
|
Total
Revenue
|
|
$
|
269,625
|
|
|
|
$
|
283,782
|
|
|
|
$
|
819,005
|
|
|
|
$
|
902,359
|
|
|
CONTACT:
Mike Smith, CFA
719-637-5773
michael.smith@vectrus.com
View original content with
multimedia:http://www.prnewswire.com/news-releases/vectrus-announces-third-quarter-2017-results-300551090.html
SOURCE Vectrus, Inc.