CHANTILLY, Va., Aug. 6, 2020 /PRNewswire/ -- Perspecta Inc.
(NYSE:PRSP), a leading U.S. government services provider, today
announced financial results for the first quarter of fiscal year
2021, which ended July 3, 2020.
"We are off to a solid start this fiscal year and our first
quarter results continue to demonstrate solid execution across the
enterprise, delivering on our revenue, adjusted diluted earnings
per share and free cash flow conversion expectations," said
Mac Curtis, chairman and chief
executive officer of Perspecta. "I am pleased with both our
operational performance and business development efforts during
these challenging market conditions. Additionally, our new business
wins build on the positive momentum in both of our segments and we
remain dedicated to meeting our customers' needs and generating
value for all our stakeholders."
Summary operating results (unaudited)
|
|
Fiscal Quarters
Ended
|
(in millions, except
margin and per share amounts)
|
|
July 3,
2020
|
|
June 30,
2019
|
Revenue
|
|
$
|
1,108
|
|
|
$
|
1,107
|
|
Income before
taxes
|
|
$
|
3
|
|
|
$
|
42
|
|
Operating
margin
|
|
0.3
|
%
|
|
3.8
|
%
|
Net (loss)
income
|
|
$
|
(3)
|
|
|
$
|
31
|
|
Diluted (loss)
earnings per share (EPS)
|
|
$
|
(0.02)
|
|
|
$
|
0.19
|
|
|
|
|
|
|
Non-GAAP
Measures*:
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
76
|
|
|
$
|
85
|
|
Adjusted
EBITDA
|
|
$
|
167
|
|
|
$
|
204
|
|
Adjusted EBITDA
Margin
|
|
15.1
|
%
|
|
18.4
|
%
|
Adjusted Diluted
EPS
|
|
$
|
0.47
|
|
|
$
|
0.52
|
|
|
|
|
|
|
* 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.
|
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 $1.11
billion, up slightly compared to the first quarter of fiscal
year 2020, and up 1% compared to the fourth quarter of fiscal year
2020. The sequential increase in revenue was primarily driven by
contract growth and the in-quarter acquisition of DHPC
Technologies, Inc., and was partially offset by the COVID-19 impact
of approximately $23 million.
Income before taxes for the first quarter of fiscal year 2021
was $3 million, which was down 93%
compared to the first quarter of fiscal year 2020. Operating margin
decreased from 3.8% to 0.3% year-over-year. Net loss was
$3 million, or a loss of $0.02 per diluted share.
Adjusted net income was $76
million for the first quarter of fiscal year 2021, down 11%
year-over-year. Adjusted EBITDA was $167
million for the first quarter of fiscal year 2021, down 18%
compared to adjusted EBITDA for the first quarter of fiscal year
2020; adjusted EBITDA margin decreased from 18.4% to 15.1% over the
same period. The year-over-year decrease in profitability was
primarily due to lower asset intensity, an increased mix of
cost-reimbursable programs and an $8
million COVID-19 impact. Adjusted diluted EPS for the first
quarter of fiscal year 2021 was $0.47, down 10% compared to adjusted diluted EPS
for the first quarter of fiscal year 2020.
Segment operating results (unaudited)
For the fiscal quarter ended July 3, 2020, Defense and
Intelligence segment revenue of $776 million increased by
3% compared to the first quarter of fiscal year 2020, primarily due
to new business wins and growth on existing programs. Civilian and
Health Care segment revenue of $332
million decreased by 6% compared to the segment's revenue from
the comparable period of the prior year due to NASA Agency
Consolidated End-User Services and other program wind downs.
Defense and Intelligence adjusted segment profit margin for the
first quarter of fiscal year 2021 decreased to 12.6% from 15.7% in
the first quarter of fiscal year 2020. Civilian and Health Care
adjusted segment profit margin for the first quarter of fiscal year
2021 improved to 10.2% from 9.3% in the first quarter of fiscal
year 2020. Total adjusted segment profit for the first quarter of
fiscal year 2021 decreased to $132
million from $151 million in
the first quarter of fiscal year 2020.
Cash management and capital deployment
Perspecta generated $132 million
of net cash provided by operating activities in the first quarter
of fiscal year 2021. Quarterly adjusted free cash flow was
$102 million, or 134% of adjusted net
income. During the first quarter of fiscal year 2021, Perspecta
used $26 million to make permanent
debt repayments, used $50 million to
repay revolver borrowings and returned $10
million to shareholders in the form of its regular quarterly
cash dividend program.
At quarter end, Perspecta had $122 million in cash and
cash equivalents, $750 million of
undrawn capacity in its revolving credit facility, and $2.5 billion in total debt, including
$229 million in finance lease
obligations. On August 5, 2020, the Perspecta Board of
Directors declared that Perspecta will pay a cash dividend of
$0.07 per share on October 15,
2020 to Perspecta shareholders of record at the close of business
on August 26, 2020.
Contract awards
Contract awards (bookings) totaled $1.2
billion in the first quarter of fiscal year 2021,
representing a book-to-bill ratio of 1.1x. Included in the
quarterly bookings were several particularly important single-award
prime contracts:
- U.S. Army Training and Doctrine Command Army Training
Information System (ATIS) contract: Perspecta was awarded an
Other Transaction Agreement from the U.S. Army Training and
Doctrine Command to deliver Phase II of the ATIS program including
the development, integration, delivery, operation and maintenance
of an enterprise capability for Army training and education
information. The Perspecta solution will consolidate 28 legacy
systems, implement proven processes and migrate data into a
single-entry, integrated, cloud-based system. This will provide the
Army with a real-time understanding of combat readiness with
reduced cost and complexity. The four-year fixed-price program,
which represents new work for Perspecta, has a ceiling value of
$237 million.
- Received multiple awards on classified systems engineering
and integration programs in our Defense and Intelligence
segment: Perspecta will provide support to various U.S.
government customers. The total potential contract value of these
awards is $370 million with a period
of performance of up to eight years.
- U.S. Department of Homeland Security (DHS) new Data Center
Two (DC2) Support Services contract: Perspecta will provide DHS
headquarters and all authorized components with full scope managed
services including baseline data center hosting and engineering
services, as well as application and system migration, planning and
execution support. The indefinite delivery / indefinite quantity
fixed-price contract has a two-year base with two six-month option
periods and a ceiling value of $112
million.
- Defense Advanced Research Projects Agency (DARPA) Fast
Network Interface Cards (FastNICs) program: DARPA awarded
Perspecta Labs a contract on the FastNICs program, with an
objective of speeding up complex computing applications, such as
the distributed training of machine learning classifiers and video
analysis applications, by 100x through the development,
implementation, integration and validation of innovative networking
approaches. Perspecta Labs will research, design, develop and
demonstrate new network interface hardware that operates at a
10-terabits-per-second speed, and the associated system and
programming software to manage and utilize the new hardware. The
award, which represents new work for the company, has a total
ceiling value of $37 million and a
four-year period of performance if all options are exercised.
Perspecta's backlog of signed business orders at the end of the
first quarter of fiscal year 2021 was $13.5 billion; funded backlog at the end of
the first quarter was $1.9
billion.
Forward guidance
The table below provides fiscal year 2021 guidance ranges for
revenue, adjusted EBITDA margin, adjusted diluted EPS, and adjusted
free cash flow conversion (as a percentage of adjusted net income).
The table below provides information about the estimated financial
impact of the network component of the existing U.S. Navy Next
Generation Enterprise Network contract (NGEN SMIT), for which we are under contract
through December 31, 2020. 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
|
Fiscal Year
2021
|
NGEN SMIT
Information
|
|
Guidance
|
Estimated NGEN
SMIT
Impact
|
Perspecta excluding
Estimated
NGEN SMIT Impact
|
Revenue
(millions)
|
$4,260 -
$4,410
|
~ $600
|
~ $3,660 -
$3,810
|
Adjusted EBITDA
Margin
|
15.0% -
16.0%
|
~ 0.5%
|
~ 15.5% -
16.5%
|
Adjusted Diluted
EPS
|
$1.90 -
$2.03
|
~ $0.30
|
~ $1.60 -
$1.73
|
Adjusted Free
Cash
Flow Conversion
|
100+%
|
~ 100%
|
~ 100+%
|
John Kavanaugh, chief financial
officer of Perspecta, commented, "We are pleased to begin FY21 with
strong results. We remain dedicated to delivering a consistent
track record of execution. Our first quarter performance reinforces
our efforts of continuing to deliver on our commitments."
The fourth quarter of fiscal year 2020 marked the beginning of
the COVID-19 pandemic in the United
States, and the pandemic has continued through the first
quarter of fiscal year 2021. Due to the mission-critical nature of
the majority of our business, substantially all of the services we
provide to our government customers have been considered essential
services, which has allowed them to continue, and the company has
maintained its workforce at near full capacity. For the fiscal
quarter ended July 3, 2020, the
overall impact of the COVID-19 pandemic on our results of
operations was approximately $23
million lower revenue, $8
million lower adjusted EBITDA and a liquidity benefit due to
a $20 million deferral of payroll tax
payments afforded by the Coronavirus Aid, Relief and Economic
Security Act. We continue to assess further possible implications
to our business, supply chain and customers, and to take actions in
an effort to mitigate adverse consequences. Our fiscal year 2021
guidance above accounts for a potential impact of the COVID-19
pandemic of approximately $75 million
in revenue and $20 million in
adjusted EBITDA.
Conference call
Perspecta executive management will hold a conference call on
August 6, 2020, 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, 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 280+ 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 nearly 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, share
repurchases, dividend payments, 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) various risks
related to health epidemics, pandemics and similar outbreaks, such
as the COVID-19 pandemic, which may have material adverse effects
on our business, financial position, results of operations and/or
cash flows; (ii) any issue that compromises our relationships with
the U.S. federal government, or any state or local governments, or
damages our professional reputation; (iii) 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; (iv) any delay in completion of the U.S. federal
government's budget process; (v) failure to comply with numerous
laws, regulations and rules, including regarding procurement,
anti-bribery and organizational conflicts of interest; (vi) failure
by us or our employees to obtain and maintain necessary security
clearances or certifications; (vii) 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; (viii) our ability to
accurately estimate or otherwise recover expenses, time and
resources for our contracts; (ix) 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; (x)
failure of third parties to deliver on commitments under contracts
with us; (xi) misconduct or other improper activities from our
employees or subcontractors; (xii) delays, terminations, or
cancellations of our major contract awards, including as a result
of our competitors protesting such awards; (xiii) failure of our
internal control over financial reporting to detect fraud or other
issues; (xiv) failure or disruptions to our systems, due to
cyber-attack, service interruptions or other security threats; (xv)
failure to be awarded task orders under our indefinite
delivery/indefinite quantity contracts; (xvi) 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 (xvii) uncertainty from the expected discontinuance of
the London Interbank Offered Rate 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 fiscal year ended March 31,
2020, 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)
|
|
|
|
Fiscal Quarters
Ended
|
(in millions, except
per share amounts)
|
|
July 3,
2020
|
|
June 30,
2019
|
Revenue
|
|
$
|
1,108
|
|
|
$
|
1,107
|
|
|
|
|
|
|
Costs of
services
|
|
899
|
|
|
836
|
|
Selling, general and
administrative
|
|
62
|
|
|
72
|
|
Depreciation and
amortization
|
|
96
|
|
|
101
|
|
Restructuring
costs
|
|
18
|
|
|
2
|
|
Separation,
transaction and integration-related costs
|
|
15
|
|
|
19
|
|
Interest expense,
net
|
|
30
|
|
|
35
|
|
Other (income)
expense, net
|
|
(15)
|
|
|
—
|
|
Total costs and
expenses
|
|
1,105
|
|
|
1,065
|
|
|
|
|
|
|
Income before
taxes
|
|
3
|
|
|
42
|
|
Income tax
expense
|
|
6
|
|
|
11
|
|
Net (loss)
income
|
|
$
|
(3)
|
|
|
$
|
31
|
|
|
|
|
|
|
(Loss) earnings per
common share:
|
|
|
|
|
Basic
|
|
$
|
(0.02)
|
|
|
$
|
0.19
|
|
Diluted
|
|
$
|
(0.02)
|
|
|
$
|
0.19
|
|
Selected Condensed
Consolidated Balance Sheet Data
|
(preliminary and
unaudited)
|
|
(in
millions)
|
|
July 3,
2020
|
|
March 31,
2020
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
122
|
|
|
$
|
147
|
|
Receivables, net of
allowance for doubtful accounts of $1 and $1
|
|
566
|
|
|
513
|
|
Other
receivables
|
|
33
|
|
|
45
|
|
Prepaid
expenses
|
|
62
|
|
|
81
|
|
Other current
assets
|
|
78
|
|
|
101
|
|
Total current
assets
|
|
861
|
|
|
887
|
|
Property and
equipment, net of accumulated depreciation of $220 and
$193
|
|
299
|
|
|
307
|
|
Goodwill
|
|
2,701
|
|
|
2,671
|
|
Intangible assets, net
of accumulated amortization of $566 and $515
|
|
1,149
|
|
|
1,193
|
|
Other
assets
|
|
320
|
|
|
347
|
|
Total
assets
|
|
$
|
5,330
|
|
|
$
|
5,405
|
|
|
|
|
|
|
LIABILITIES and
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
89
|
|
|
$
|
89
|
|
Current finance lease
obligations
|
|
106
|
|
|
111
|
|
Current operating
lease obligations
|
|
38
|
|
|
39
|
|
Accounts
payable
|
|
158
|
|
|
218
|
|
Accrued payroll and
related costs
|
|
174
|
|
|
142
|
|
Accrued
expenses
|
|
459
|
|
|
385
|
|
Other current
liabilities
|
|
85
|
|
|
73
|
|
Total current
liabilities
|
|
1,109
|
|
|
1,057
|
|
Long-term debt, net of
current maturities
|
|
2,213
|
|
|
2,283
|
|
Non-current finance
lease obligations
|
|
123
|
|
|
136
|
|
Non-current operating
lease obligations
|
|
126
|
|
|
129
|
|
Deferred tax
liabilities
|
|
99
|
|
|
114
|
|
Other long-term
liabilities
|
|
312
|
|
|
329
|
|
Total
liabilities
|
|
3,982
|
|
|
4,048
|
|
Commitments and
contingencies
|
|
|
|
|
Total shareholders'
equity
|
|
1,348
|
|
|
1,357
|
|
Total liabilities and
shareholders' equity
|
|
$
|
5,330
|
|
|
$
|
5,405
|
|
Condensed
Consolidated Statements of Cash Flows
|
(preliminary and
unaudited)
|
|
|
|
Fiscal Quarters
Ended
|
(in
millions)
|
|
July 3,
2020
|
|
June 30,
2019
|
Cash flows from
operating activities:
|
|
|
|
|
Net (loss)
income
|
|
$
|
(3)
|
|
|
$
|
31
|
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
96
|
|
|
101
|
|
Share-based
compensation
|
|
7
|
|
|
5
|
|
Deferred income
taxes
|
|
(16)
|
|
|
(8)
|
|
Loss on sale or
disposal of assets, net
|
|
7
|
|
|
8
|
|
Other non-cash
charges, net
|
|
4
|
|
|
1
|
|
Changes in assets and
liabilities, net of effects of acquisitions:
|
|
|
|
|
Receivables,
net
|
|
(18)
|
|
|
55
|
|
Prepaid expenses and
other current assets
|
|
24
|
|
|
31
|
|
Accounts payable,
accrued expenses and other current liabilities
|
|
38
|
|
|
(26)
|
|
Deferred revenue and
advanced contract payments
|
|
1
|
|
|
(13)
|
|
Income taxes payable
and liability
|
|
(1)
|
|
|
—
|
|
Other assets and
liabilities, net
|
|
(7)
|
|
|
—
|
|
Net cash provided by
operating activities
|
|
132
|
|
|
185
|
|
Cash flows from
investing activities:
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
(53)
|
|
|
—
|
|
Proceeds from sale of
assets
|
|
9
|
|
|
—
|
|
Purchases of property,
equipment and software
|
|
(15)
|
|
|
(1)
|
|
Payments for
outsourcing contract costs
|
|
—
|
|
|
(1)
|
|
Net cash used in
investing activities
|
|
(59)
|
|
|
(2)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Principal payments on
long-term debt
|
|
(26)
|
|
|
(22)
|
|
Payments on revolving
credit facility
|
|
(50)
|
|
|
—
|
|
Payments on finance
lease obligations
|
|
(28)
|
|
|
(35)
|
|
Repurchases of common
stock
|
|
—
|
|
|
(15)
|
|
Repurchases of common
stock to satisfy tax withholding obligations
|
|
(2)
|
|
|
—
|
|
Dividends
paid
|
|
(10)
|
|
|
(8)
|
|
Net cash used in
financing activities
|
|
(116)
|
|
|
(80)
|
|
Net change in cash and
cash equivalents, including restricted
|
|
(43)
|
|
|
103
|
|
Cash and cash
equivalents, including restricted, at beginning of
period
|
|
221
|
|
|
99
|
|
Cash and cash
equivalents, including restricted, at end of period
|
|
178
|
|
|
202
|
|
Less restricted cash
and cash equivalents included in other current assets
|
|
56
|
|
|
23
|
|
Cash and cash
equivalents at end of period
|
|
$
|
122
|
|
|
$
|
179
|
|
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.
Revenue Excluding NGEN SMIT (Unaudited)
|
|
Fiscal Quarters
Ended
|
(in
millions)
|
|
July 3,
2020
|
|
June 30,
2019
|
Revenue
|
|
$
|
1,108
|
|
|
$
|
1,107
|
|
Less NGEN SMIT
impact
|
|
214
|
|
|
197
|
|
Revenue excluding
NGEN SMIT impact
|
|
$
|
894
|
|
|
$
|
910
|
|
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 costs, 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.
|
|
|
Fiscal Quarters
Ended
|
(in millions, except
margin and per share amounts)
|
|
July 3,
2020
|
|
June 30,
2019
|
Net (loss)
income
|
|
$
|
(3)
|
|
|
$
|
31
|
|
Income tax
expense
|
|
6
|
|
|
11
|
|
Interest expense,
net
|
|
30
|
|
|
35
|
|
Depreciation and
amortization
|
|
96
|
|
|
101
|
|
EBITDA
|
|
129
|
|
|
178
|
|
Restructuring
costs
|
|
18
|
|
|
2
|
|
Separation,
transaction and integration-related costs
|
|
15
|
|
|
19
|
|
Share-based
compensation
|
|
7
|
|
|
5
|
|
Other
|
|
(2)
|
|
|
—
|
|
Adjusted
EBITDA
|
|
167
|
|
|
204
|
|
Adjusted EBITDA
margin (a)
|
|
15.1
|
%
|
|
18.4
|
%
|
Adjusted EBITDA,
excluding NGEN SMIT (b)
|
|
144
|
|
|
180
|
|
Adjusted EBITDA
margin, excluding NGEN SMIT (b)
|
|
16.1
|
%
|
|
19.8
|
%
|
Depreciation and
amortization
|
|
(96)
|
|
|
(101)
|
|
Amortization of
acquired intangibles
|
|
61
|
|
|
48
|
|
Interest expense,
net
|
|
(30)
|
|
|
(35)
|
|
Adjusted earnings
before taxes
|
|
102
|
|
|
116
|
|
Income tax expense
(c)
|
|
26
|
|
|
31
|
|
Adjusted net
income
|
|
$
|
76
|
|
|
$
|
85
|
|
Adjusted diluted
EPS (d)
|
|
$
|
0.47
|
|
|
$
|
0.52
|
|
Adjusted net
income, excluding NGEN SMIT (e)
|
|
$
|
60
|
|
|
$
|
68
|
|
Adjusted diluted
EPS, excluding NGEN SMIT (e)
|
|
$
|
0.37
|
|
|
$
|
0.42
|
|
|
Notes:
|
(a)
|
Adjusted EBITDA
margin is calculated as the ratio of adjusted EBITDA to revenue for
the fiscal quarters ended July 3, 2020 and June 30,
2019.
|
(b)
|
Excludes the impact
of NGEN SMIT. Adjusted EBITDA, excluding NGEN SMIT is defined as
revenue less cost of services, selling, general and administrative
and excludes certain operating expenses managed at the corporate
level. These unallocated costs include certain corporate function
costs, share-based compensation expense, amortization of acquired
intangible assets, impairment charges, certain nonrecoverable
restructuring costs, separation, transaction and integration-relate
costs, net periodic benefit cost and gain or loss on sale of
assets. Adjusted EBITDA margin, excluding NGEN SMIT is calculated
as the ratio of adjusted EBITDA, excluding NGEN SMIT to revenue
excluding NGEN SMIT for the fiscal quarters ended July 3, 2020 and
June 30, 2019.
|
(c)
|
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 were 25% for the fiscal
quarter ended July 3, 2020, and 27% for the fiscal quarter ended
June 30, 2019.
|
(d)
|
Represents adjusted
net income divided by the weighted average common shares on a
diluted basis of 161.70 million and 163.29 million for the fiscal
quarters ended July 3, 2020 and June 30, 2019,
respectively.
|
(e)
|
Excludes the impact
of NGEN SMIT. Adjusted net income excluding NGEN SMIT is adjusted
EBITDA, excluding NGEN SMIT less NGEN SMIT depreciation and imputed
income tax at 25%. Adjusted diluted EPS, excluding NGEN SMIT is
adjusted net income, excluding NGEN SMIT divided by the
weighted-average common shares on a diluted basis of 161.70 million
and 163.29 million for the fiscal quarters ended July 3, 2020 and
June 30, 2019, 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.
|
|
|
Fiscal Quarters
Ended
|
(in
millions)
|
|
July 3,
2020
|
|
June 30,
2019
|
Net cash provided by
operating activities
|
|
$
|
132
|
|
|
$
|
185
|
|
Purchases of
property, equipment and software
|
|
(15)
|
|
|
(1)
|
|
Payments on finance
lease obligations
|
|
(28)
|
|
|
(35)
|
|
Payments on
restructuring, separation, transaction and integration-related
costs
|
|
13
|
|
|
12
|
|
Adjusted free cash
flow
|
|
$
|
102
|
|
|
$
|
161
|
|
Segment Operating Results (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
U.S. Department of Defense (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 and
reconciliation of reportable segment profit to income before
taxes:
Selected Segment
Measures (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarters
Ended
|
|
|
July 3,
2020
|
|
June 30,
2019
|
(in millions, except
profit margin)
|
|
Defense and
Intelligence
|
|
Civilian and
Health Care
|
|
Total
|
|
Defense and
Intelligence
|
|
Civilian and
Health Care
|
|
Total
|
Revenue
|
|
$
|
776
|
|
|
$
|
332
|
|
|
$
|
1,108
|
|
|
$
|
752
|
|
|
$
|
355
|
|
|
$
|
1,107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
profit
|
|
$
|
88
|
|
|
$
|
31
|
|
|
$
|
119
|
|
|
$
|
118
|
|
|
$
|
33
|
|
|
$
|
151
|
|
Non-GAAP adjustments
(a)
|
|
10
|
|
|
3
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Adjusted segment profit
(b)
|
|
$
|
98
|
|
|
$
|
34
|
|
|
$
|
132
|
|
|
$
|
118
|
|
|
$
|
33
|
|
|
$
|
151
|
|
Segment profit
margin
|
|
11.3
|
%
|
|
9.3
|
%
|
|
10.7
|
%
|
|
15.7
|
%
|
|
9.3
|
%
|
|
13.6
|
%
|
Adjusted segment profit
margin (b)
|
|
12.6
|
%
|
|
10.2
|
%
|
|
11.9
|
%
|
|
15.7
|
%
|
|
9.3
|
%
|
|
13.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Non-GAAP adjustments
include non-operating net periodic pension benefit, and certain
separation-related and other costs.
|
(b)
|
Adjusted results
represent non-GAAP financial measures, and it should be considered
in addition to, but not as substitute for, the information provided
in accordance with GAAP.
|
Reconciliation of
Reportable Segment Profit to Income Before Taxes
(Unaudited)
|
|
|
|
|
|
|
|
Fiscal Quarters
Ended
|
(in
millions)
|
|
July 3,
2020
|
|
June 30,
2019
|
Total profit for
reportable segments
|
|
$
|
119
|
|
|
$
|
151
|
|
Not allocated to
segments:
|
|
|
|
|
Share-based
compensation
|
|
(7)
|
|
|
(5)
|
|
Amortization of
acquired intangible assets
|
|
(61)
|
|
|
(48)
|
|
Restructuring
costs
|
|
(18)
|
|
|
(2)
|
|
Separation, transaction
and integration-related costs
|
|
(15)
|
|
|
(19)
|
|
Interest expense,
net
|
|
(30)
|
|
|
(35)
|
|
Other income and
expense, net
|
|
15
|
|
|
—
|
|
Income before
taxes
|
|
$
|
3
|
|
|
$
|
42
|
|
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SOURCE Perspecta Inc.