Vectrus Reports Q1 Financial Results; Chuck Prow Quoted

Chuck Prow
Chuck Prow

Vectrus, Inc. has announced first quarter 2020 financial results for the quarter ended April 3, 2020, the company reported on Wednesday

"Vectrus provides critical infrastructure support services globally for a variety of national security missions. This core competency combined with our backlog of long-term contracts with the U.S. government creates operating and financial resiliency, with predictable free cash flow, that is foundational to our business model," said Chuck Prow, president and chief executive officer and 2020 Wash100 Award recipient. 

Vectrus reported that the company’s first quarter 2020 revenue of $351.7 million increased $25.8 million compared to first quarter 2019. The company saw increased revenue across all geographic regions with revenue growth of 15 percent in Europe, 14 percent growth in the United States and 5 percent growth in the Middle East.

"Our first quarter revenue grew 8 percent with minimal impact from COVID-19, and adjusted EBITDA margin expanded year-over-year. Additionally, our growth focused campaigns continue to drive results as we recorded wins with the Army, Navy and Air Force, including a position on the AFCAP V $6.4 billion IDIQ contract vehicle,” Prow added.

For the first quarter 2020, operating income was $12.5 million, EBITDA was $14.5 million or 4.1 percent margin for the first quarter 2020, compared to $11.8 million or 3.6 percent margin in the first quarter 2019. Adjusted EBITDA was $14.6 million or 4.2 percent margin for the first quarter 2020, compared to $12.8 million or 3.9 percent margin in the first quarter 2019.

Diluted EPS was $0.74 compared to $0.62 in the first quarter 2019. Adjusted diluted EPS1 for the first quarter 2020 was $0.75. The company's effective tax rate in the first quarter 2020 was 19.6 percent, compared to 19.8 percent in the first quarter 2019. On an adjusted basis diluted EPS grew 8.7 percent in the first quarter 2020.

Net cash provided by operating activities for the quarter ended April 3, 2020 was $1.1 million, compared to net cash used by operating activities of $6.4 million in the first quarter of 2019. Days sales outstanding (DSO) was 66 days in the first quarter of 2020.

The company noted net debt at April 3, 2020 was $37.8 million, essentially unchanged from the 2019 year-end, equating to a 0.5x net debt to consolidated EBITDA ratio. Total debt at April 3, 2020 was $184.0 million, up $110.0 million from $74.0 million at March 29, 2019. 

Cash at quarter-end was $146.2 million. At the onset of the COVID-19 pandemic, the company preemptively drew $115 million on its revolver to mitigate any liquidity issues that might have arisen as a result of the pandemic. Total backlog in the quarter ended April 3, 2020 was $4.1 billion and funded backlog was $1.1 billion.  

"Backlog grew 48 percent sequentially to a record $4.1 billion and drove a 1.5x trailing twelve-month book-to-bill ratio," said Susan Lynch, senior vice president and chief financial officer. "The size of our backlog is an attractive attribute of our business, representing 2.7 times the midpoint of our 2020 full year revenue guidance, providing visibility into the remainder of the year and beyond."

Vectrus reported minimal impact to revenue and operating income in the first quarter of 2020 due to COVID-19. The pandemic is estimated to have approximately a $20-25 million impact on revenue and a corresponding impact on operating income in the second quarter of 2020. The company continues to work with its clients with regard to its COVID-19 response and LOGCAP V phase in schedule and is maintaining its current guidance range.

In addition, guidance assumes capital expenditures of $7.0 million, depreciation and amortization of $8.4 million, mandatory debt payments of $6.5 million, interest expense of $5.6 million, tax rate of 23 percent, and weighted average diluted shares outstanding of 11.8 million at December 31, 2020.

"I'm pleased to announce that we were able to post strong top and bottom-line growth despite COVID-19, which reinforces the resiliency of our business," Lynch added. "We estimate that COVID-19 impacted first quarter 2020 revenue and earnings per share by $2.2 million and $0.02, respectively."

About Vectrus

Vectrus is a leading provider of global service solutions with a history in the services market that dates back more than 70 years. The company provides facility and base operations; supply chain and logistics services; information technology mission support; and engineering and digital technology services primarily 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 its clients' mission success. Vectrus is headquartered in Colorado Springs, Colo., and includes about 7,200 employees spanning 148 locations in 26 countries and territories across four continents. In 2019, Vectrus generated sales of $1.4 billion. 

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