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Press Release: Perspecta announces financial results for third quarter of fiscal year 2021

· 02/05/2021 17:05
-- Space Development Agency (SDA) systems engineering and integration program work: Perspecta will deliver systems engineering and integration support for SDA's initial satellite constellation known as Tranche 0, a system designed to demonstrate the initial capabilities of the National Defense Space Architecture (NDSA). Under the terms of the agreement, Perspecta engineers and architects will develop infrastructure to ensure the NDSA Transport Layer, Tracking Layer and ground segment operate in unison to support warfighter mission scenarios and experiments. The single award, indefinite delivery/indefinite quantity (ID/IQ) contract, which represents new work for the company, has a ceiling of $112 million and an ordering period of five years. -- Next Generation Enterprise Services Contract Extension from the U.S. Navy: Perspecta was awarded an extension of the Next Generation Enterprise Network (NGEN) contract from the U.S. Department of the Navy with a maximum ceiling value of $797 million, if all options are exercised, for continued delivery of enterprise IT services. The ID/IQ contract includes an extension for six months of support, from January 1, 2021 to June 30, 2021, and three one-month options beyond that timeframe.Fiscal Quarter Ended (in millions, except margin and per share amounts) January 1, 2021 December 31, 2019 Revenue $ 1,134 $ 1,126 Income before taxes $ 45 $ 75 Operating margin 4.0 % 6.7 % Net income $ 31 $ 53 Diluted earnings per share (EPS) $ 0.19 $ 0.33 Non-GAAP Measures*: Adjusted Net Income $ 90 $ 90 Adjusted EBITDA $ 181 $ 195 Adjusted EBITDA Margin 16.0 % 17.3 % Adjusted Diluted EPS $ 0.56 $ 0.55 * 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.

Perspecta announces financial results for third quarter of fiscal year 2021

- Revenue of $1.13 billion

- Diluted earnings per share of $0.19; adjusted diluted earnings per share of $0.56

- Operating cash flow of $117 million

- Bookings of $0.9 billion (Q3 book-to-bill ratio of 0.8x; trailing-twelve-month book-to-bill ratio excluding NGEN SMIT impact of 1.2x)

PR Newswire

CHANTILLY, Va., Feb. 5, 2021

CHANTILLY, Va., Feb. 5, 2021 /PRNewswire/ -- Perspecta Inc. (NYSE:PRSP), a leading U.S. government services provider, today announced financial results for the third quarter of fiscal year 2021, which ended January 1, 2021.

As previously announced on January 27, 2021, Perspecta entered into a definitive merger agreement to be acquired by Peraton, a portfolio company of Veritas Capital Fund Management, L.L.C. Under the terms of the merger agreement, Perspecta stockholders will receive $29.35 per share in cash. The merger is subject to customary conditions, including approval by Perspecta stockholders as well as the receipt of regulatory approvals and other customary closing conditions. The transaction is expected to close in the first half of calendar year 2021.

Summary operating results (unaudited)

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 $1.13 billion, up 1% compared to the third quarter of fiscal year 2020, and down 1% compared to the second quarter of fiscal year 2021. The year-over-year increase in revenue was due to growth on existing programs partially offset by the COVID-19 impact of approximately $19 million in the third quarter of fiscal year 2021. Excluding the impact of the COVID-19 pandemic, revenue for the quarter grew 2% year-over-year.

Income before taxes for the third quarter of fiscal year 2021 was $45 million, which was down 40% compared to the third quarter of fiscal year 2020. Operating margin decreased from 6.7% to 4.0% year-over-year. Net income was $31 million, or $0.19 per diluted share.

Adjusted net income was $90 million for the third quarter of fiscal year 2021, which was flat year-over-year. Adjusted EBITDA was $181 million for the third quarter of fiscal year 2021, down 7% compared to adjusted EBITDA for the third quarter of fiscal year 2020. The as-expected year-over-year decrease in profitability was primarily due to lower asset intensity, an increased mix of cost-reimbursable programs and a $3 million COVID-19 impact. Adjusted diluted EPS for the third quarter of fiscal year 2021 was $0.56, up 2% compared to adjusted diluted EPS for the third quarter of fiscal year 2020.

Segment operating results (unaudited)

For the fiscal quarter ended January 1, 2021, Defense and Intelligence segment revenue of $795 million decreased by 2% compared to the segment's revenue from the third quarter of fiscal year 2020, primarily due to lower volume, including revenue lost as a result of COVID-19. Civilian and Health Care segment revenue of $339 million increased by 8% compared to the segment's revenue from the comparable period of the prior year due to the continued ramp up of key new programs.

Defense and Intelligence adjusted segment profit margin for the third quarter of fiscal year 2021 decreased to 13.2% from 14.4% in the third quarter of fiscal year 2020. Civilian and Health Care adjusted segment profit margin for the third quarter of fiscal year 2021 decreased to 12.7% from 12.8% in the third quarter of fiscal year 2020.

Cash management and capital deployment

Perspecta generated $117 million of net cash provided by operating activities, used $5 million in investing activities, and used $101 million in financing activities in the third quarter of fiscal year 2021. Quarterly free cash flow was $93 million, or 103% of adjusted net income, and was reduced by $15 million (or approximately 17% of adjusted net income) of restructuring, separation, transaction, and integration-related costs. During the third quarter of fiscal year 2021, Perspecta used $72 million to make debt repayments and returned $11 million to shareholders in the form of its regular quarterly cash dividend program.

At quarter end, Perspecta had $224 million in cash and cash equivalents, $750 million of undrawn capacity in its revolving credit facility, and $2.4 billion in total debt, including $191 million in finance lease obligations. On February 3, 2021, the Perspecta Board of Directors declared that Perspecta will pay a cash dividend of $0.07 per share on April 15, 2021 to Perspecta shareholders of record at the close of business on March 3, 2021.

Contract awards

Contract awards (bookings) totaled $0.9 billion in the third quarter of fiscal year 2021, representing a book-to-bill ratio of 0.8x. Included in the quarterly bookings were the following single-award prime contracts:

Perspecta's backlog of signed business orders at the end of the third quarter of fiscal year 2021 was $13.6 billion; funded backlog at the end of the third quarter was $1.7 billion.

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 third 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 January 1, 2021, the overall impact of the COVID-19 pandemic on our results of operations was approximately $19 million lower revenue, $3 million lower adjusted EBITDA and a year-to-date liquidity benefit of $57 million due to a 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.

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

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February 05, 2021 17:05 ET (22:05 GMT)