PAE Inc logo

PAE - PAE Inc News Story

$7.95 0.0  0.4%

Last Trade - 16/04/21

Sector
Industrials
Size
Mid Cap
Market Cap £535.0m
Enterprise Value £1.12bn
Revenue £1.96bn
Position in Universe 3132nd / 6850

PAE to Acquire Metis Solutions, Expanding and Differentiating Its Intelligence Community and National Security Portfolio

Mon 16th November, 2020 11:30am
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20201116:nGNX6Z9s73


Highlights
* PAE will acquire Metis Solutions Corporation in a $92 million all-cash
transaction.
* The acquisition further strengthens PAE's intelligence, defense and national
security businesses in areas of high priority for the U.S. federal government.
* In conjunction with the previously announced CENTRA Technology acquisition,
the combination expands and differentiates PAE's capabilities in intelligence
analysis, training and program support for intelligence and defense customers.
* The acquisition is expected to be accretive to key financial metrics
including organic revenue growth, adjusted EBITDA margins and free cash flow.
* Metis’ business will further broaden PAE’s customer reach and adds
additional attractive contract vehicles to PAE’s portfolio.
FALLS CHURCH, Va., Nov. 16, 2020 (GLOBE NEWSWIRE) -- PAE (NASDAQ: PAE, PAEWW),
a global leader in delivering smart solutions to the U.S. government and its
allies, today announced that its subsidiary has entered into a definitive
agreement to acquire Metis Solutions Corporation, a leading provider of
intelligence analysis, operational and tactical training and program
management, for approximately $92 million in cash. This represents a
transaction multiple of approximately 9.7x CY2020 adjusted EBITDA, adjusted
for estimated annual cost synergies.

PAE President and CEO John Heller commented:

“This acquisition expands and builds scale in intelligence analysis,
training and program support, all of which are well-funded market areas of the
U.S. government and our allied nations. Moreover, the acquisition of Metis is
expected to be accretive to adjusted EBITDA margins and free cash flow.
Additionally, in combination with CENTRA Technology, PAE will have significant
breadth and depth across the Intelligence and National Security communities in
capability and customer access.”

Metis is a leading provider of intelligence analysis, operational and tactical
training and program management focused on supporting intelligence community,
national security and defense customers. Headquartered in Arlington, Virginia,
Metis has more than 450 employees, a majority of whom have top secret
clearances with subject matter expertise across a broad range of critical
national security issues.

“We are excited to join PAE and its heritage of service. Our shared cultures
of service excellence and innovation make this a compelling combination.
Together, we will pursue exciting new revenue opportunities,” said
Christopher Wynes, Metis president and CEO. “Joining together with PAE will
help accelerate growth in our intelligence and national security business and
enable us to pursue a broader customer base across more markets.”

Strategic and Financial Benefits of the Acquisition
* Breadth of Contract Vehicles: The transaction brings more than eight
strategic indefinite delivery, indefinite quantity contract vehicles,
representing more than $60 billion of ceiling value that is expected to
improve PAE’s business development pipeline in terms of number, size and
win-rate percentage of opportunities.
* Broadens Offerings and Capabilities: Expands and builds scale in PAE’s
intelligence analysis, training and program support business areas. These
market areas are all well-funded by the U.S. government and our allied
nations.
* Expands Whitespace Opportunity: Strategically positions PAE with new
customers across the intelligence and defense communities.
* Attractive Financial Profile: Metis’ current financial profile, coupled
with expected cost synergies, is expected to be accretive to organic revenue
growth, adjusted EBITDA margins and free cash flow per share.
Financing and Approvals

The transaction has been unanimously approved by the boards of directors of
both PAE and Metis. It is expected to close this quarter. PAE expects to fund
the purchase price of approximately $92 million with cash on hand and
utilization of its delayed draw term loan.

PAE is reiterating its fiscal year 2020 financial outlook provided on November
5(th), 2020. The 2020 financial outlook does not incorporate anticipated
financial results of CENTRA or Metis.

Advisors

Crowell & Moring LLP acted as legal advisor to PAE in connection with the
transaction.

Miles & Stockbridge P.C. acted as legal advisor and Raymond James &
Associates, Inc. acted as financial advisor to Metis in connection with the
transaction.

Conference Call and Webcast

PAE will host a conference call and webcast, November 16, 2020, at 8 a.m. ET
and will post an investor presentation to its website. Management will review
details of the acquisition, followed by a question-and-answer session.
Listeners and other interested parties will be able to access a presentation
summarizing the transaction on the PAE Investor Relations website
(https://www.globenewswire.com/Tracker?data=UOh72wRr69kyPLAmkmUcUCTlhFr-owIBQZMGpqRyrZ5-VNcdgNcygaJpUgrZy9zTQ-1Fjo3Wz0ZVXVrPZ-mW9grt5FePf3dRMAoPC4EHFaE=).

Interested parties are invited to join the webcast from the PAE Investor
Relations website. Due to the COVID-19 pandemic, teleconference providers
globally are experiencing significant increases in conference call volume. As
such, PAE recommends that parties participate by joining the webcast.
Alternatively, if the webcast is not practical, attendees may listen to the
conference call by dialing (855) 982-6676 and entering conference ID 2168537.
The international dial-in access number is (614) 999-9188.

PAE will post an archive of the webcast following the call on the PAE Investor
Relations website
(https://www.globenewswire.com/Tracker?data=UOh72wRr69kyPLAmkmUcUCTlhFr-owIBQZMGpqRyrZ7Sy6yzpIi6Pjss48RcWt7J9ft3hx9dX8ZHTX52cy7KFRga8R9zAfze7VKOZsSQHV0=).

About PAE

For 65 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 approximately 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
(https://www.globenewswire.com/Tracker?data=yZY_4W8-NgsD7cH951LSUixZCv6UbFP9WAfowJ-eKsKZTZwyyUz4crVRkGDcru_hEeAwrIxwPV67DO3-uDEkSQ==),
on Facebook
(https://www.globenewswire.com/Tracker?data=pqY7bc8oY8vNvNhz2yAQ3dmCMxpJxxyD0NMGQH8wsZGy7iyydXJMf3dbnmq2qgaZrE2Af-NEAdYNS8zMd8UZzuIBCLnP_wgmR7keD2jzdgw=),
Twitter
(https://www.globenewswire.com/Tracker?data=M0g8vMX15m4AiuAEXCWIN1g2gCXeNg0lXMqt3nAX_GoKOFLTqDr49CoauNRu29mHbQQWoHgPLtdtjBWkC2YDrQ==)
and LinkedIn
(https://www.globenewswire.com/Tracker?data=fo_LlCDW4-VcTt7zgvdq5gd2PRRNtYm-KvPwnW9aEjR8xZkT4uKzSb4lXqNeqNlEIsybegvwqxIqF3z4Xz2OHdCNG9k50FuCEIaWnCLZUL4=).

Forward-Looking Statements

This press release contains 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
our expectations and projections regarding the acquisition of Metis Solutions
Corporation, PAE’s possible or assumed future results of operations,
financial results, backlog, estimation of resources for contracts, strategy
for and management of growth, needs for additional capital, risks related to
government contracting generally, including failures to properly manage
projects and subcontractors, susceptibility to claims, litigation and other
disputes, and risks related to public health crises. 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.

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.

Non-GAAP Financial Measures

PAE Incorporated (the “Company”) uses adjusted EBITDA, adjusted EBITDA
margin and free cash flow 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 excludes certain amounts included in EBITDA.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenues
expressed as a percentage. Free cash flow is defined as cash flow provided by
operating activities less capital expenditures.

PAE believes that the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating the acquisition by PAE of
Metis Solutions Corporation and the projected future operating and financial
results of PAE. The non-GAAP financial measures provided in this press release
are forward-looking.

PAE is not providing a quantitative reconciliation of adjusted EBITDA or
adjusted EBITDA margin 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.

Use of Projections

This press release contains projections with respect to the Company and Metis
Solutions Corporation. The Company’s independent auditors have not audited,
reviewed, compiled, or performed any procedures with respect to the
projections for the purpose of their inclusion in this press release, and
accordingly, did not express an opinion or provide any other form of assurance
with respect thereto for the purpose of this press release. These projections
should not be relied upon as being necessarily indicative of future results.

For investor inquiries regarding PAE:

Mark Zindler
Vice President Investor Relations
PAE
703-717-6017
mark.zindler@pae.com

For media inquiries regarding PAE:

Terrence Nowlin
Senior Communications Manager
PAE
703-656-7423
terrence.nowlin@pae.com


(https://www.globenewswire.com/NewsRoom/AttachmentNg/fcc8a68c-a0d6-41da-9db8-5dd40cc2bf70)



GlobeNewswire, Inc. 2020
© Stockopedia 2021, Refinitiv, Share Data Services.
This site cannot substitute for professional investment advice or independent factual verification. To use it, you must accept our Terms of Use, Privacy and Disclaimer policies.