Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 25, 2022 | Jul. 02, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-36341 | ||
Entity Registrant Name | Vectrus, Inc. | ||
Entity Incorporation, State or Country Code | IN | ||
Entity Tax Identification Number | 38-3924636 | ||
Entity Address, Address Line One | 2424 Garden of the Gods Road, | ||
Entity Address, City or Town | Colorado Springs, | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80919 | ||
City Area Code | (719) | ||
Local Phone Number | 591-3600 | ||
Title of 12(b) Security | Common Stock, Par Value $.01 Per Share | ||
Trading Symbol | VEC | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 543,635,649 | ||
Entity Common Stock, Shares Outstanding | 11,738,546 | ||
Documents Incorporated by Reference | Portions of Part III will be incorporated by reference in accordance with Instruction G(3) to Form 10-K no later than 120 days after the end of the registrant’s fiscal year. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001601548 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 34 |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | Denver, Colorado |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | |||
Revenue | $ 1,783,665 | $ 1,395,529 | $ 1,382,525 |
Cost of revenue | 1,623,245 | 1,271,375 | 1,254,560 |
Selling, general, and administrative expenses | 98,400 | 80,679 | 78,316 |
Operating income | 62,020 | 43,475 | 49,649 |
Interest expense, net | (7,985) | (4,793) | (6,470) |
Income from operations before income taxes | 54,035 | 38,682 | 43,179 |
Income tax expense | 8,307 | 1,731 | 10,003 |
Net income | $ 45,728 | $ 36,951 | $ 33,176 |
Earnings per share | |||
Basic (in dollars per share) | $ 3.91 | $ 3.19 | $ 2.90 |
Diluted (in dollars per share) | $ 3.86 | $ 3.14 | $ 2.86 |
Weighted average common shares outstanding - basic (in shares) | 11,705 | 11,599 | 11,444 |
Weighted average common shares outstanding - diluted (in shares) | 11,836 | 11,751 | 11,612 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Net income | $ 45,728 | $ 36,951 | $ 33,176 |
Changes in derivative instrument: | |||
Tax benefit | 121 | 36 | 230 |
Net change in derivative instrument | 786 | (131) | (831) |
Foreign currency translation adjustments | (6,659) | 5,186 | (834) |
Accounting Standards Update (ASU) 2018-02 reclassification of certain tax effects to retained earnings | 0 | 0 | (259) |
Other comprehensive income (loss), net of tax | (5,873) | 5,055 | (1,924) |
Total comprehensive income | 39,855 | 42,006 | 31,252 |
Interest rate swap | |||
Changes in derivative instrument: | |||
Net change in fair value | 1,099 | (756) | (1,234) |
Foreign exchange forward | |||
Changes in derivative instrument: | |||
Net change in fair value | $ (434) | $ 589 | $ 173 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 38,513 | $ 66,949 |
Restricted cash | 0 | 1,778 |
Receivables | 348,605 | 314,959 |
Prepaid expenses | 21,160 | 16,083 |
Other current assets | 15,062 | 8,619 |
Total current assets | 423,340 | 408,388 |
Property, plant, and equipment, net | 23,758 | 22,573 |
Goodwill | 321,734 | 339,702 |
Intangible assets, net | 66,582 | 48,105 |
Right-of-use assets | 43,651 | 18,718 |
Other non-current assets | 10,394 | 6,325 |
Total non-current assets | 466,119 | 435,423 |
Total Assets | 889,459 | 843,811 |
Current liabilities | ||
Accounts payable | 212,533 | 159,586 |
Compensation and other employee benefits | 80,284 | 79,568 |
Short-term debt | 10,400 | 8,600 |
Other accrued liabilities | 55,031 | 40,657 |
Total current liabilities | 358,248 | 288,411 |
Non-current liabilities | ||
Long-term debt, net | 94,246 | 168,751 |
Deferred tax liability | 32,214 | 39,386 |
Operating lease liabilities | 34,536 | 13,970 |
Other non-current liabilities | 20,128 | 28,355 |
Total non-current liabilities | 181,124 | 250,462 |
Total liabilities | 539,372 | 538,873 |
Commitments and contingencies (Note 15) | ||
Shareholders' Equity | ||
Preferred stock; $0.01 par value; 10,000 shares authorized; No shares issued and outstanding | 0 | 0 |
Common stock; $0.01 par value; 100,000 shares authorized; 11,738 and 11,625 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 117 | 116 |
Additional paid in capital | 88,116 | 82,823 |
Retained earnings | 267,754 | 222,026 |
Accumulated other comprehensive loss | (5,900) | (27) |
Total shareholders' equity | 350,087 | 304,938 |
Total Liabilities and Shareholders' Equity | $ 889,459 | $ 843,811 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 11,738,000 | 11,625,000 |
Common stock, shares outstanding (in shares) | 11,738,000 | 11,625,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities | |||
Net income | $ 45,728 | $ 36,951 | $ 33,176 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation expense | 6,526 | 4,097 | 3,379 |
Amortization of intangible assets | 10,028 | 4,029 | 3,111 |
(Gain) loss on disposal of property, plant, and equipment | 65 | (14) | 62 |
Stock-based compensation | 8,331 | 9,445 | 8,262 |
Amortization of debt issuance costs | 912 | 386 | 404 |
Changes in assets and liabilities: | |||
Receivables | (36,376) | 1,000 | (21,053) |
Prepaid expenses | (5,178) | (3,588) | (5,610) |
Other assets | (7,667) | (3,644) | 7,147 |
Accounts payable | 56,985 | (2,680) | (11,733) |
Deferred taxes | (7,280) | (10,665) | (7,173) |
Compensation and other employee benefits | 1,133 | 12,004 | 9,652 |
Other liabilities | (11,868) | 16,760 | 7,933 |
Net cash provided by operating activities | 61,339 | 64,081 | 27,557 |
Investing activities | |||
Purchases of capital assets and intangibles | (9,776) | (4,500) | (16,151) |
Proceeds from the disposition of assets | 16 | 84 | 5,400 |
Acquisition of business, net of cash acquired | 262 | (133,609) | (45,074) |
Contribution to joint venture | (3,145) | 0 | 0 |
Net cash (used in) investing activities | (12,643) | (138,025) | (55,825) |
Financing activities | |||
Repayments of long-term debt | (8,600) | (6,500) | (4,500) |
Proceeds from revolver | 529,000 | 314,000 | 333,500 |
Repayments of revolver | (594,000) | (199,000) | (333,500) |
Proceeds from exercise of stock options | 379 | 59 | 3,672 |
Payment of debt issuance costs | (17) | (830) | 0 |
Payments of employee withholding taxes on share-based compensation | (2,347) | (1,955) | (1,068) |
Net cash provided by (used in) financing activities | (75,585) | 105,774 | (1,896) |
Exchange rate effect on cash | (3,325) | 1,579 | (663) |
Net change in cash, cash equivalents and restricted cash | (30,214) | 33,409 | (30,827) |
Cash, cash equivalents and restricted cash - beginning of year | 68,727 | 35,318 | 66,145 |
Cash, cash equivalents and restricted cash - end of year | 38,513 | 68,727 | 35,318 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid | 5,801 | 3,717 | 6,229 |
Income taxes paid | 9,703 | 14,520 | 4,511 |
Purchase of capital assets on account | $ 277 | $ 2,226 | $ 556 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock Issued | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive LossCumulative Effect, Period of Adoption, Adjustment |
Balance (in shares) at Dec. 31, 2018 | 11,267 | |||||||
Balance at Dec. 31, 2018 | $ 220,324 | $ 0 | $ 113 | $ 71,729 | $ 151,640 | $ 259 | $ (3,158) | $ (259) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 33,176 | 33,176 | ||||||
Foreign currency translation adjustments | (834) | (834) | ||||||
Unrealized gain (loss) on cash flow hedge | (831) | (831) | ||||||
Employee stock awards and stock options (in shares) | 257 | |||||||
Employee stock awards and stock options | 3,673 | $ 2 | 3,671 | |||||
Taxes withheld on stock compensation awards | (1,069) | (1,069) | ||||||
Stock-based compensation | 4,426 | 4,426 | ||||||
Balance (in shares) at Dec. 31, 2019 | 11,524 | |||||||
Balance at Dec. 31, 2019 | 258,865 | $ 115 | 78,757 | 185,075 | (5,082) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 36,951 | 36,951 | ||||||
Foreign currency translation adjustments | 5,186 | 5,186 | ||||||
Unrealized gain (loss) on cash flow hedge | (131) | (131) | ||||||
Employee stock awards and stock options (in shares) | 101 | |||||||
Employee stock awards and stock options | 59 | $ 1 | 58 | |||||
Conversion of liability-based stock compensation awards to equity-based stock compensation awards | 405 | 405 | ||||||
Taxes withheld on stock compensation awards | (1,955) | (1,955) | ||||||
Stock-based compensation | 5,558 | 5,558 | ||||||
Balance (in shares) at Dec. 31, 2020 | 11,625 | |||||||
Balance at Dec. 31, 2020 | 304,938 | $ 116 | 82,823 | 222,026 | (27) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 45,728 | 45,728 | ||||||
Foreign currency translation adjustments | (6,659) | (6,659) | ||||||
Unrealized gain (loss) on cash flow hedge | 786 | 786 | ||||||
Employee stock awards and stock options (in shares) | 113 | |||||||
Employee stock awards and stock options | 378 | $ 1 | 377 | |||||
Taxes withheld on stock compensation awards | (2,345) | (2,345) | ||||||
Stock-based compensation | 7,261 | 7,261 | ||||||
Balance (in shares) at Dec. 31, 2021 | 11,738 | |||||||
Balance at Dec. 31, 2021 | $ 350,087 | $ 117 | $ 88,116 | $ 267,754 | $ (5,900) |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business and Basis of Presentation Our Business Vectrus, Inc. is a leading provider of global service solutions to the U.S. government worldwide. The Company operates as one segment and provides the following services and offerings: facility and base operations, supply chain and logistics services, information technology mission support, and engineering and digital integration services. Unless the context otherwise requires, references in these notes to "Vectrus", "we," "us," "our," "the Company" and "our Company" refer to Vectrus, Inc. Vectrus was incorporated in the State of Indiana in February 2014. On September 27, 2014, Exelis Inc. (Exelis) completed the Spin-off of Vectrus and Vectrus became an independent, publicly traded company. References in these notes to "Exelis" or "Former Parent" refer to Exelis Inc., an Indiana corporation, and its consolidated subsidiaries (other than Vectrus). Exelis was acquired by a predecessor entity of L3Harris Technologies, Inc. in May 2015. Equity Investment In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, we entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, we entered into a joint venture agreement with Kuwait Resources House for Human Resources Management and Services Company (KRH) . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC. (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by Vectrus and others around the world. We account for our investments in HDSS, J&J and ServCore under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest. We record our proportionate 40%, 50% and 40% shares, respectively, of income or losses from HDSS, J&J and ServCore in selling, general and administrative expenses in the Consolidated Statements of Income. Our investment in these joint ventures is recorded in other non-current assets in the Consolidated Balance Sheets. When we receive cash distributions from our equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Consolidated Statements of Cash Flows. As of December 31, 2021 and December 31, 2020, our combined investment balance in these joint ventures was $5.4 million and $1.4 million, respectively. Our proportionate share of income from HDSS, J&J and ServCore joint ventures was $1.9 million, $0.6 million, and $1.0 million for the years ended December 31, 2021, 2020, and 2019, respectively. Summary of Significant Accounting Policies Principles of Consolidation Vectrus consolidates companies in which it has a controlling financial interest. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income taxes, fair value and impairment of goodwill and intangible assets and valuation of assets and certain contingent liabilities. Actual results could differ from these estimates. Segment Information Management has concluded that the Company operates as one segment based upon the information used by the chief operating decision maker in evaluating the performance of the Company’s business and allocating resources and capital. Although we perform services worldwide, substantially all of our revenue for the years ended December 31, 2021, 2020 and 2019 was from the U.S. government. Reclassifications Certain reclassifications have been made to the presentation of amounts in our Consolidated Balance Sheet as of December 31, 2020 to conform to the current year presentation. Specifically, prepaid expenses were reclassified from other current assets, as well as operating lease liability from other non-current liabilities, and presented separately on our Consolidated Balance Sheets. Changes in prepaid expenses were reclassified from changes in other assets and presented separately on our Consolidated Statements of Cash Flows. Revenue Recognition As a defense contractor engaging in long-term contracts, substantially all of our revenue is derived from long-term service contracts. The unit of account for revenue in Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606) is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method, consideration is given as to whether a single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to perform an integrated set of tasks and deliverables as a single service solution, whereby each service is not separately identifiable from other promises in the contract and therefore is not distinct. As a result, when this integrated set of tasks exists, the contract is accounted for as one performance obligation. The vast majority of our contracts have a single performance obligation. Unexercised contract options and indefinite delivery and indefinite quantity (IDIQ) contracts are considered to be separate performance obligations when the option or IDIQ task order is exercised or awarded. Our performance obligations are satisfied over time as services are provided throughout the contract term. We recognize revenue over time using the input method (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Our over time recognition is reinforced by the fact that our customers simultaneously receive and consume the benefits of our services as they are performed. For most U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. This continuous transfer of control requires that we track progress towards completion of performance obligations in order to measure and recognize revenue. Accounting for contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability; the complexity of the services being performed; the cost and availability of materials; the performance of subcontractors; and negotiations with the customer on contract modifications. When the estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at a contract level and is recognized in the period in which the loss was determined. The nature of our contracts gives rise to several types of variable consideration, including award and incentive fees, inspection of supplies and services, undefinitized change orders, and fluctuation in allowable indirect reimbursable costs. We include award or incentive fees in the estimated transaction price when there is certainty and a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. The inspection of supplies and services is a factor because the U.S. government can reduce the transaction price if we do not perform the services in compliance with contract requirements. Variable consideration associated with undefinitized change orders is included to the extent related estimated costs have been included in the expected costs to complete a contract. The fluctuation of allowable indirect reimbursable costs is a factor because the U.S. government has the right to review our accounting records and retroactively adjust the reimbursable rate. Any prior adjustments are reflected in the U.S. government reserve amounts recorded in our financial statements. We estimate variable consideration at the most likely amount that we expect to be entitled to receive, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Refer to Note 15, "Commitments and Contingencies" for additional information regarding U.S. government reserve amounts. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract estimates regularly. We recognize adjustments in estimated profit on executed contracts cumulatively. The impact of the adjustments on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter it is identified. Contracts are often modified to account for changes in contract specifications and requirements. If the modification either creates new enforceable rights and obligations or changes the existing enforceable rights and obligations, the modification will be treated as a separate contract. Our contract modifications, except for those to exercise option years, have historically not been distinct from the existing contract and have been accounted for as if they were part of that existing contract. The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to fund current operating expenses under the contract. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Receivables Receivables include amounts billed and currently due from customers, amounts unbilled, certain estimated contract change amounts, estimates related to expected award fees, claims or requests for equitable adjustment in negotiation that are probable of recovery, and amounts retained by the customer pending contract completion. Unbilled receivables are classified as current assets based on our contract operating cycle. Restricted Cash The Company had no restricted cash at December 31, 2021. At December 31, 2020 the Company had total cash, cash equivalents and restricted cash of $68.7 million which included $1.8 million of restricted cash related to collateral security for an outstanding letter of credit. Earnings Per Share We compute earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods. Stock-Based Compensation We recognize stock-based compensation expense based on the grant date fair values of the equity instruments issued or on the fair values of the liabilities incurred. The expense is recognized primarily within selling, general and administrative expenses over the requisite service periods of the awards, which are generally equivalent to the vesting terms. Property, Plant and Equipment, Net Property, plant and equipment, net are stated at cost less accumulated depreciation. Major improvements are capitalized at cost while expenditures for maintenance, repairs and minor improvements are expensed. For asset sales or retirements, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in operating income. Depreciation and amortization are generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease terms as follows: Years Buildings and improvements 3 – 11 Machinery, equipment and vehicles 3 – 12 Office furniture and equipment, computers and software 3 – 7 Long-Lived Asset Impairment Long-lived assets are tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate. When carrying value exceeds the undiscounted future cash flow, an impairment is recorded when the carrying value of the asset exceeds its estimated fair value based on a discounted cash flow approach or, when available and appropriate, comparable market values. Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the fair values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment annually (or more frequently if impairment indicators arise, such as changes to the reporting unit structure or significant adverse changes in the business climate). We conduct our annual impairment testing on the first day of the Company's fourth fiscal quarter. In reviewing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we then perform a quantitative impairment test as described below. Otherwise, no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. For the quantitative impairment test we compare the estimated fair value of a reporting unit to its carrying value, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not impaired. If the carrying value of the reporting unit, including goodwill, exceeds its estimated fair value, a goodwill impairment loss is recognized in an amount equal to that excess limited to the total amount of goodwill allocated to that reporting unit. We estimate the fair value of our reporting unit using an income approach and a market approach. Under the income approach, we estimate fair value based on the present value of estimated future cash flows. Under the market approach, we compare our company to select reasonably similar publicly traded companies. Intangible Assets We recognize acquired intangible assets apart from goodwill whenever the intangible assets arise from contractual or other legal rights, or whenever they can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their estimated useful lives unless the estimated useful life is determined to be indefinite. Finite lived intangible assets are being amortized over useful lives of four Leases On January 1, 2019, the Company adopted ASC Topic 842, Leases (ASC Topic 842). Operating leases are included on our Consolidated Balance Sheets as right-of-use (ROU) assets, other accrued liabilities and operating lease liabilities. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Because most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate as of January 1, 2019 was applied to operating leases in effect as of that date. The lease ROU assets also include any prepaid lease payments and exclude lease incentives. Many of our leases include one or more options to renew or terminate the lease, solely at our discretion. Such options are factored into the lease term when it is reasonably certain that we will exercise the option. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. As allowed under ASC Topic 842, the Company elected the package of practical expedients permitted under the transition guidance which allowed the Company to carry forward the historical lease classification, assessment of whether a contract was or contained a lease and assessment of initial direct costs. In addition, we have made policy elections to apply the short-term leases practical expedient, whereby leases with a term of 12 months or less are not recorded on our balance sheet, and the practical expedient to not separate lease components from non-lease components. The latter expedient is applied to all of our leases. We did not elect to apply the hindsight practical expedient in determining lease terms and assessing impairment of ROU assets. See Note 12, "Leases" for further information. Income Taxes We determine the provision or benefit for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies, and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. Commitments and Contingencies We record accruals for commitments and loss contingencies when they are probable of occurrence and the amounts can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information. Derivative Instruments Derivative instruments are recognized as either an asset or liability at fair value in our Consolidated Balance Sheets and are classified as current or long-term based on the scheduled maturity of the instrument. Our derivative instruments have been formally designated and qualify as part of a cash flow hedging relationship under applicable accounting standards. The interest rate derivative instruments are adjusted to fair value through accumulated other comprehensive income (loss). If we were to determine that a derivative was no longer highly effective as a hedge, we would discontinue the hedge accounting prospectively. Gains or losses would be immediately reclassified from accumulated other comprehensive income (loss) to earnings relating to hedged forecasted transactions that are no longer probable of occurring. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions would still be probable of occurring would be deferred and recognized consistent with the income or loss recognition of the underlying hedged item. Refer to Note 11, "Derivative Instruments," for additional information regarding our derivative activities. Severance Expense We periodically initiate management-approved restructuring activities to achieve cost savings through reduced operational redundancies and to strategically position ourselves in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance and related benefit charges. For involuntary separation plans, a liability is recognized when it is probable, reasonably estimable, and communicated to employees. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the termination. Fair Value Measurements We determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. There are three levels of the fair value hierarchy. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in nonactive markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the assets or liabilities. Foreign Currency Translation |
Recent Accounting Standards Upd
Recent Accounting Standards Updates | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Standards Updates | RECENT ACCOUNTING STANDARDS UPDATES Accounting Standards Updates Issued but Not Yet Adopted There were no accounting standards issued during 2021 that are expected to have a material impact on the Company's financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This update provides optional expedients for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of the reference rate reform. The amendments in this update are effective for all entities as of March 2020 and can be adopted using a prospective approach no later than December 31, 2022. We are currently evaluating the impacts of the reference rate reform. Accounting Standards Updates Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (ASU 2019-12). The objectives of ASU 2019-12 are (i) to simplify the accounting for income taxes by removing certain exceptions, (ii) to update certain requirements to simplify the accounting for income taxes, and (iii) to make minor codification improvements for income taxes. The Company adopted the standard as of January 1, 2021 and it did not have a material impact on the Company’s financial statements. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisitions | ACQUISITIONS In accordance with ASC Topic 805, Business Combinations , we accounted for the below transactions using the acquisition method. We conducted valuations of certain acquired assets and liabilities for inclusion in our Consolidated Balance Sheets as of the date of the acquisitions. Assets that normally would not be recorded in ordinary operations, such as intangibles related to contractual relationships, were recorded at their estimated fair values. The excess purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. Zenetex On December 31, 2020, we acquired Zenetex, LLC (Zenetex) a leading provider of technical and strategic solutions focused on enabling mission readiness, performance, and enhancement of protection for defense and national security clients globally. The total net consideration paid for the acquisition was approximately $117.6 million, consisting of the purchase price of $122.8 million, net of cash acquired, less $5.2 million for a working capital shortfall compared with the working capital requirement agreed upon in the stock purchase agreement. The acquisition was funded by utilizing available capacity from our Amended Revolver (as defined in Note 10, “Debt”) and cash on hand. A breakdown of the purchase price allocation, net of cash acquired, is as follows: (In thousands) Allocation of Purchase Price Receivables $ 40,144 Deferred taxes 88 Other current assets 1,314 Property, plant and equipment 1,108 Goodwill 53,541 Intangible assets 57,100 Right-of-use assets 7,930 Accounts payable (7,381) Other current liabilities (15,821) Accrued compensation (12,087) Lease liabilities (8,275) Other non-current liabilities (55) Purchase price, net of cash acquired $ 117,606 We finalized our determination of the fair values of the assets acquired and liabilities assumed during the fourth quarter of 2021. Based on additional information obtained during the measurement period, we refined our initial assessment of fair value and recognized the following significant adjustments to our preliminary purchase price allocation: Intangible assets increased $23.9 million, Other current liabilities increased $14.2 million, Accounts payable decreased $3.1 million, and Goodwill decreased $13.4 million. The Company recognized customer related intangible assets arising from the acquisition. The related fair value was $57.1 million with an amortization period of 11.8 years. Fair value of intangible assets was based upon a cash flow analysis using management's best estimate of future revenue, earnings and cash flows, as well as analysis of historic performance of Zenetex. The cash flow analysis were discounted to adjust for risks in these estimates. Additionally, the Company recognized goodwill of $53.5 million arising from the acquisition, which relates primarily to acquired product and services strengthening our position as a leading fully-integrated provider in the converged infrastructure market, as well as extending our operations and maintenance services to increase content and scope at client installations. Goodwill also includes other intangibles that do not qualify for separate recognition. The goodwill recognized for the Zenetex acquisition is fully deductible for income tax purposes. Zenetex results of operations have been included in our Consolidated Statements of Income for the periods subsequent to acquisition on December 31, 2020. On a proforma basis, the acquired business would have recognized revenue of $238.0 million and $208.8 million for the years ended December 31, 2020 and December 31, 2019, respectively, and an insignificant amount of income before taxes after proforma adjustments. HHB On December 31, 2020, we acquired Higgins, Hermansen, Banikas, LLC (HHB). HHB is a leading provider of high-end solutions for facilities management, logistics, engineering, enterprise operations and asset management solutions for supporting intelligence community projects. The total net consideration paid for the acquisition was approximately $15.5 million. The acquisition was funded by utilizing available capacity from our Amended Revolver and cash on hand. We finalized our determination of the fair values of the assets acquired and liabilities assumed during the fourth quarter of 2021. Based on additional information obtained during the measurement period, we refined our initial assessment of fair value and recognized the following significant adjustments to our preliminary purchase price allocation: Intangible assets increased $4.6 million and Goodwill decreased $4.5 million. The Company recognized a customer related intangible assets arising from the acquisition. The fair value was $8.6 million with an amortization period of 7.4 years. Fair value of the intangible assets was based upon a cash flow analysis using management's best estimate of future revenue, earnings and cash flows, as well as analysis of historic performance of HHB. The cash flow analysis were discounted to adjust for risks in these estimates. Additionally, the Company recognized goodwill of $6.1 million arising from the acquisition, which relates primarily to growth opportunities in the intelligence community as a converged infrastructure provider. Goodwill also includes other intangibles that do not qualify for separate recognition. The goodwill recognized for the HHB acquisition is fully deductible for income tax purposes. The remainder of the purchase price was allocated primarily to working capital. Advantor On July 8, 2019, we acquired Advantor from Infrasafe Holding, Inc. and Infrasafe, LLC (collectively, Infrasafe). Advantor is a leading provider of integrated electronic security systems to the U.S. government. The total net consideration paid for the acquisition was $45.1 million, consisting of the purchase price of $44.0 million, net of cash acquired, and $1.1 million for working capital in excess of the working capital requirement agreed upon in the stock purchase agreement. The acquisition was funded by utilizing cash on hand and available capacity from our Amended Revolver. A breakdown of the purchase price allocation, net of cash acquired, is as follows: (In thousands) Allocation of Purchase Price Receivables $ 11,388 Other current assets 2,719 Property, plant and equipment 155 Goodwill 28,511 Intangible assets 8,300 Other non-current assets 1,868 Accounts payable (4,223) Other current liabilities (1,519) Accrued compensation (907) Other non-current liabilities (1,218) Purchase price, net of cash acquired $ 45,074 We completed the purchase accounting as of July 3, 2020 with no material adjustments. The Company recognized two intangible assets related to customer contracts (backlog) and the Advantor trade name arising from the acquisition. The fair value of the customer contracts was $7.2 million, and the fair value of the Advantor trade name was $1.1 million with amortization periods of 5.0 years and 4.5 years, respectively. Additionally, the Company recognized goodwill of $28.5 million arising from the acquisition, which relates primarily to acquired product and services strengthening our advance into a higher value, technology-enabled and differentiated platform, as well as extending our facilities and logistics services to include the electronic protection and security of facilities. Goodwill also includes other intangibles that do not qualify for separate recognition. The goodwill recognized for the Advantor acquisition is fully deductible for income tax purposes. Advantor's results of operations have been included in our reported results since the date of acquisition. For the years ended December 31, 2020, and 2019, the Company recognized total acquisition related costs of $4.2 million, and $1.0 million, respectively, for the three transactions noted above. These costs are included in selling, general and administrative expenses in our Consolidated Statements of Income and do not reflect any other one-time internal non-recurring integration costs. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE Remaining Performance Obligations Remaining performance obligations represent firm orders by the customer and excludes potential orders under IDIQ contracts, unexercised contract options and contracts awarded to us that are being protested by competitors with the U.S. Government Accountability Office (GAO) or in the U.S. Court of Federal Claims. The level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles. Year-over-year comparisons could, at times, be impacted by these factors, among others. The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year (or less) option periods. The number of option periods varies by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when we are the prime contractor or of the prime contractor when we are a subcontractor. We expect to recognize a substantial portion of our performance obligations as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience or for cause. Substantially all of our contracts have terms that would permit us to recover all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience. Remaining performance obligations increased by $404.6 million to $1,398 million as of December 31, 2021 as compared to $993 million as of December 31, 2020. We expect to recognize approximately 77% of the remaining performance obligations as of December 31, 2021 as revenue in 2022. Remaining performance obligations as of December 31, 2021 and December 31, 2020 are presented in the following table: Year Ended December 31, (In millions) 2021 2020 Performance Obligations $ 1,398 $ 993 Contract Estimates The impact of adjustments in contract estimates on our operating income can be reflected in either revenue or cost of revenue. Cumulative adjustments for the years ended December 31, 2021 and 2020 were unfavorable by $1.3 million and $3.7 million, respectively, and for the year ended December 31, 2019 were favorable by $3.1 million. For the years ended December 31, 2021, 2020, and 2019, the net adjustments to operating income increased revenue by $0.4 million, decreased revenue by $1.8 million and increased revenue by $4.4 million, respectively. Revenue by Category Generally, the sales price elements for our contracts are cost-plus, cost-reimbursable or firm-fixed-price. We commonly have elements of cost-plus, cost-reimbursable and firm-fixed-price contracts on a single contract. On a cost-plus type contract, we are paid our allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement, up to funding levels predetermined by our customers. On cost-plus type contracts, we do not bear the risks of unexpected cost overruns, provided that we do not incur costs that exceed the predetermined funded amounts. Most of our cost-plus contracts also contain a firm-fixed-price element. Cost-plus type contracts with award and incentive fee provisions are our primary variable contract fee arrangement. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees provide for a fee based on the relationship between total allowable and target cost. On most of our contracts, a cost-reimbursable element captures consumable materials required for the program. Typically, these costs do not bear fees. On a firm-fixed-price type contract, we agree to perform the contractual statement of work for a predetermined contract price. A firm-fixed-price type contract typically offers higher profit margin potential than a cost-plus type contract, which is commensurate with the greater levels of risk we assume on a firm-fixed-price type contract. Although a firm-fixed-price type contract generally permits us to retain profits if the total actual contract costs are less than the estimated contract costs, we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract. Although the overall scope of work required under the contract may not change, profit may be adjusted as experience is gained and as efficiencies are realized or costs are incurred. The following tables present our revenue disaggregated by different categories. Revenue by contract type for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Cost-plus and cost-reimbursable $ 1,271,167 $ 955,506 $ 1,015,963 Firm-fixed-price 452,112 403,994 334,510 Time and material 60,386 36,029 32,052 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by geographic region in which the contract is performed for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Middle East $ 1,000,877 $ 902,162 $ 939,685 United States 578,255 328,214 301,991 Europe 142,606 155,169 137,915 Asia 61,927 9,984 2,934 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by contract relationship for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Prime contractor $ 1,663,828 $ 1,324,628 $ 1,312,928 Subcontractor 119,837 70,901 69,597 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by customer for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Army $ 1,134,849 $ 965,558 $ 958,582 Air Force 266,291 299,272 306,767 Navy 224,407 68,748 56,236 Other 158,118 61,951 60,940 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Contract Balances The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to ensure that both parties are in conformance with the primary contract terms. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. As of December 31, 2021, we had contract assets of $240.0 million. Contract assets primarily consist of unbilled receivables which represent rights to consideration for work completed but not billed as of the reporting date. The balance of unbilled receivables consists of costs and fees that are: (i) billable immediately; (ii) billable on contract completion; or (iii) billable upon other specified events, such as the resolution of a request for equitable adjustment. Refer to Note 5, "Receivables," for additional information regarding the composition of our receivables balances. As of December 31, 2021, our contract liabilities were insignificant. |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Receivables | RECEIVABLES Receivables were comprised of the following: December 31, (In thousands) 2021 2020 Billed receivables $ 104,074 $ 102,045 Unbilled receivables (contract assets) 239,979 203,127 Other 4,552 9,787 Total Receivables $ 348,605 $ 314,959 As of December 31, 2021 and 2020, substantially all billed receivables are due from the U.S. government, either directly as prime contractor to the U.S. government or as subcontractor to another prime contractor to the U.S. government. Because the Company’s billed receivables are with the U.S. government, the Company does not believe it has a material credit risk exposure. Unbilled receivables are contract assets that represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date. We expect to bill customers for the majority of the December 31, 2021 contract assets during 2022. Changes in the balance of receivables are primarily due to the timing differences between our performance and customer payments. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects potential dilution that could occur if securities to issue common stock were exercised or converted into common stock. Diluted EPS includes the dilutive effect of share-based compensation outstanding after application of the treasury stock method. Year Ended December 31, (In thousands, except per share data) 2021 2020 2019 Net Income $ 45,728 $ 36,951 $ 33,176 Weighted average common shares outstanding 11,705 11,599 11,444 Add: Dilutive impact of stock options 37 37 47 Add: Dilutive impact of restricted stock units 94 115 121 Diluted weighted average common shares outstanding 11,836 11,751 11,612 Earnings per share Basic $ 3.91 $ 3.19 $ 2.90 Diluted $ 3.86 $ 3.14 $ 2.86 The following table below summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Year Ended December 31, (In thousands) 2021 2020 2019 Anti-dilutive restricted stock units 1 2 4 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, Net | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following at December 31: (In thousands) 2021 2020 Buildings and improvements $ 2,232 $ 2,143 Machinery, equipment and vehicles 19,756 17,774 Office furniture and equipment, computers and software 21,672 17,346 Property, plant and equipment, gross 43,660 37,263 Less: accumulated depreciation and amortization (19,902) (14,690) Property, plant and equipment, net $ 23,758 $ 22,573 Depreciation expense of property, plant and equipment was $6.5 million, $4.1 million and $3.4 million in 2021, 2020, and 2019, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS The Company tests goodwill for impairment on the first day of the Company's fourth fiscal quarter each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual tests performed in the three years ended December 31, 2021 resulted in no impairment of goodwill. The change in the net carrying amount of goodwill for 2020 and 2021 is as follows (in thousands): Balance at December 31, 2019 $ 261,983 Adjustments to preliminary purchase price allocation of Advantor 147 Acquisition of HHB 10,647 Acquisition of Zenetex 66,925 Balance at December 31, 2020 $ 339,702 Adjustments to preliminary purchase price allocation of Zenetex (13,383) Adjustments to preliminary purchase price allocation of HHB (4,585) Balance at December 31, 2021 $ 321,734 Other identifiable intangible assets consist of the following: December 31, 2021 December 31, 2020 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract backlogs and recompetes $ 77,300 $ (14,988) $ 62,312 $ 48,800 $ (6,645) $ 42,155 Customer contracts 7,200 (3,572) 3,628 7,200 (2,133) 5,067 Trade names and other 1,249 (607) 642 1,243 (360) 883 Total intangible assets $ 85,749 $ (19,167) $ 66,582 $ 57,243 $ (9,138) $ 48,105 Intangible amortization expense was approximately $10.0 million and $4.0 million for years ended 2021 and 2020, respectively. As of December 31, 2021, the weighted-average intangible asset amortization period was 9.5 years. The estimated amortization expense for intangible assets for the next five years is as follows (in thousands): Period Amortization 2022 $ 8,499 2023 $ 8,403 2024 $ 7,296 2025 $ 6,499 2026 $ 6,028 After 2026 $ 29,857 |
Composition of Certain Financia
Composition of Certain Financial Statement Captions | 12 Months Ended |
Dec. 31, 2021 | |
Balance Sheet Related Disclosures [Abstract] | |
Composition of Certain Financial Statement Captions | COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS The following tables present financial information underlying certain balance sheet captions. Compensation and other employee benefits Compensation and other employee benefits are affected by short-term fluctuations in the timing of payments and were comprised of the following at December 31: (In thousands) 2021 2020 Accrued salaries and wages $ 37,883 $ 42,206 Accrued bonus 14,364 7,617 Accrued employee benefits 28,037 29,745 Total $ 80,284 $ 79,568 Other accrued liabilities Other accrued liabilities were comprised of the following at December 31: (In thousands) 2021 2020 Contract related reserves $ 15,699 $ 13,064 Current operating lease liabilities 11,983 6,245 Accrued non-payroll taxes 6,425 124 Workers' compensation, auto and general liability reserve 3,169 4,042 Other 17,755 17,182 Total $ 55,031 $ 40,657 Other non-current liabilities Other non-current liabilities were comprised of the following at December 31: (In thousands) 2021 2020 Income taxes payable $ 9,724 $ 7,352 CARES Act payroll tax deferral 8,448 16,806 Other 1,956 4,197 Total $ 20,128 $ 28,355 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Senior Secured Credit Facilities Term Loan and Revolver. In September 2014, we and our wholly owned subsidiary, VSC, entered into a credit agreement. The credit agreement was subsequently amended on December 24, 2020 and January 24, 2022 (see Note 18 Subsequent Events) and is collectively referred to as the Amended Agreement. The credit agreement consists of a term loan (Amended Term Loan) and a $270.0 million revolving credit facility (Amended Revolver) as of December 31, 2021. The Amendment Agreement includes an accordion feature that allows the Company to draw up to an additional $100.0 million subject to the lender's consent on the same terms and conditions as the existing commitments. The Amendment Agreement also permits the Company to borrow up to $75.0 million in unsecured debt as long as the aggregated sum of both the unsecured debt and the accordion does not exceed $100.0 million. The Amended Term Loan amortizes in an amount equal to $2.6 million per quarter for the fiscal quarters ending December 31, 2021 through September 30, 2023, with the balance of $37.2 million due on November 15, 2023. Amounts borrowed under the Amended Term Loan that are repaid or prepaid may not be re-borrowed. Any unpaid amounts must be repaid by the maturity dates. As of December 31, 2021 and December 31, 2020 the balance outstanding under the Amended Term Loan was $55.4 million and $64.0 million, respectively. The Amended Revolver is available for working capital, capital expenditures, and other general corporate purposes. There were $50.0 million of outstanding borrowings under the Amended Revolver at December 31, 2021. Up to $25.0 million of the Amended Revolver is available for the issuance of letters of credit. As of December 31, 2021, there were two letters of credit outstanding in the aggregate amount of $2.7 million, which reduced our borrowing availability under the Amended Revolver to $217.3 million. At December 31, 2020, t here were $115.0 million of outstanding borrowings under the Amended Revolver which had been used in the December 31, 2020 acquisitions of Zenetex and HHB (see Note 3, Acquisitions). All outstanding amounts under the Amended Agreement as of December 31, 2021, were due in 2022 prior to consideration of the January 24, 2022 amendment. The Company's aggregate scheduled maturities at December 31, 2021, after consideration of the January 24, 2022 amendment, are as follows: (In thousands) Payments due 2022 $ 10,400 2023 95,000 Total $ 105,400 Guarantees and Collateral. The indebtedness and other obligations under the Amended Agreement are unconditionally guaranteed jointly and severally on a senior secured basis by us and certain of our restricted subsidiaries and are secured, subject to permitted liens and other exceptions, by a first-priority lien on substantially all of our tangible and intangible assets and those of each domestic guarantor. Voluntary Prepayments . We may voluntarily prepay the Amended Term Loan in whole or in part at any time without premium or penalty, subject to the payment of customary breakage costs under certain conditions. Voluntary prepayments of the Amended Term Loan will be applied to the remaining installments thereof as directed by us. We may reduce the commitments under the Amended Revolver in whole or in part at any time without premium or penalty. Covenants . The Amended Agreement contains customary covenants, including covenants that, under certain circumstances and subject to certain qualifications and exceptions: limit or restrict our ability to incur additional indebtedness; merge, dissolve, liquidate or consolidate; make acquisitions, investments, advances or loans; dispose of or transfer assets; pay dividends; redeem or repurchase certain debt; and enter into certain restrictive agreements. In addition, we are required to comply with (a) a maximum ratio of total consolidated indebtedness to consolidated earnings before interest, tax, depreciation and amortization (EBITDA) of 3.00 to 1.00 (or 3.50 to 1.00 for the 12 months following a qualified acquisition), and (b) a minimum ratio of consolidated EBITDA to consolidated interest expense (net of cash interest income) of 4.50 to 1.00. As of December 31, 2021, we had a ratio of total consolidated indebtedness to EBITDA of 1.2 to 1.00 and a ratio of consolidated EBITDA to consolidated interest expense of 12.39 to 1.00. We were in compliance with all covenants related to the Amended Agreement as of December 31, 2021. Interest Rates and Fees . Outstanding borrowings under the Amended Agreement accrue interest, at our option, at a per annum rate of (i) SOFR plus the applicable margin, which ranges from 1.75% to 2.50% depending on the leverage ratio, or (ii) a base rate plus the applicable margin, which ranges from 0.75% to 1.50% depending on the leverage ratio. The interest rate under the Amended Agreement at December 31, 2021 was 2.11% . We pay a commitment fee on the undrawn portion of the Amended Revolver ranging from 0.30% to 0.45%, depending on the leverage ratio. Carrying Value and Fair Value . The fair value of the Amended Term Loan and Amended Revolver approximates the carrying value as of December 31, 2021, because the debt bears interest at a floating rate of interest. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt. |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS Interest Rate Derivative Instruments The Company is exposed to the risk that our earnings and cash flows could be adversely impacted due to fluctuations in interest rates. To manage this risk, the Company periodically enters into interest rate swaps in which we agree to exchange, at specified intervals, the difference between variable and fixed interest amounts calculated by reference to an agreed-upon notional amount. Derivative instruments are not used for trading purposes or to manage exposure to changes in interest rates for investment securities, and our outstanding derivative instruments do not contain credit risk related contingent features. Collateral is generally not required. The interest rate swaps are measured at fair value on a recurring basis and are determined using the income approach based on a discounted cash flow model to determine the present value of future cash flows over the remaining term of the contract incorporating observable market inputs such as prevailing interest rates as of the reporting date (Level 2). Changes in fair value of the interest rate swap are recorded, net of tax, as a component of accumulated other comprehensive loss in the accompanying Consolidated Balance Sheets. We reclassify the effective gain or loss from accumulated other comprehensive loss, net of tax, to interest expense on the Consolidated Statements of Income as the interest expense is recognized on the related debt. The ineffective portion of the change in fair value of the interest rate swap, if any, is recognized directly in earnings in interest expense. Our interest rate swaps are designated and qualify as effective cash flow hedges. The contracts, with a notional amount totaling $41.8 million at December 31, 2021 and expiration dates through November 2022, are recorded at fair value. The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2021: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 666 The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2020: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 1,015 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 750 By utilizing interest rate swaps, we are exposed to credit-related losses in the event that the counterparty fails to perform under the terms of the derivative contract. To mitigate this risk, we entered into the interest rate swap with a major financial institution based upon credit ratings and other factors. We regularly assess the creditworthiness of the counterparty. As of December 31, 2021, the counterparty to the interest rate swap had performed in accordance with its contractual obligations. Both the counterparty credit risk and our credit risk were considered in the fair value determination. Net interest rate derivative losses of $1.0 million , $0.9 million, and less than $0.1 million were reclassified from accumulated other comprehensive loss to interest expense in our Consolidated Statements of Income during 2021, 2020, and 2019, respectively. We expect $0.7 million of existing interest rate swap losses reported in accumulated other comprehensive loss as of December 31, 2021, to be reclassified into earnings within the next 12 months. Foreign Currency Derivative Instrument We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk that impacts the reported U.S. dollar amounts of revenues, costs, and certain foreign currency monetary assets and liabilities. In order to manage exposure to fluctuations in foreign currency and to reduce the volatility in cash flows and earnings caused by fluctuations in foreign exchange rates, we entered into forward contracts to buy and sell foreign currency. By policy, we do not enter into these contracts for trading purposes or speculation. As of December 31, 2021, we had economically hedged certain portions of our foreign currency risk in anticipated transactions using derivative instruments with expiration dates through January 2022. Counterparty default risk is considered low because the forward contracts that we entered into are over-the-counter instruments transacted with highly rated financial institutions. We were not required to, and did not, post collateral as of December 31, 2021. Our foreign currency derivative instruments are recorded at fair value as a derivative asset or liability in the Consolidated Balance Sheets. The foreign currency forward contracts are measured at fair value on a recurring basis and are determined using the income approach based on a discounted cash flow model to determine the present value of future cash flows over the remaining term of the contract incorporating observable market inputs such as prevailing foreign currency exchange rates as of the reporting date (Level 2). Our forward contracts were designated and qualify as hedging instruments. Changes in the fair value of these instruments are recorded, net of tax, as a component of accumulated other comprehensive loss in the accompanying Consolidated Balance Sheets. We reclassify the effective gain or loss from accumulated other comprehensive loss, net of tax, within selling, general and administrative expense on the Consolidated Statements of Income as the forward contracts are settled. The ineffective portion of the change in fair value of the forward contracts, if any, is recognized directly in earnings in selling, general and administrative expense. In the Consolidated Statements of Cash Flows, we classify cash flows from foreign currency derivative instruments at settlement in the same category as the cash flows from the related hedged item, generally within cash provided by operating activities. Net foreign currency derivative gains of less than $0.1 million and losses of $0.1 million, and $0.6 million were recognized in selling, general and administrative expense, during 2021, 2020, and 2019, respectively. We expect less than $0.1 million of existing foreign currency forward contract losses reported in accumulated other comprehensive loss as of December 31, 2021, to be reclassified into earnings within the next 12 months. The following table summarizes the amount at fair value and location of the derivative instruments used for our forward contract hedges in the Consolidated Balance Sheet as of December 31, 2021. Fair Value (In thousands) Balance sheet caption Amount Foreign currency forward contracts designated as cash flow hedge Other accrued liabilities $ 30 The following table summarizes the amount at fair value and location of the derivative instruments used for our forward contract hedges in the Consolidated Balance Sheet as of December 31, 2020. Fair Value (In thousands) Balance sheet caption Amount Foreign currency forward contracts designated as cash flow hedge Other current assets $ 404 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | LEASES We determine whether an arrangement contains a lease at inception. We have operating leases for office space, apartments, vehicles, and machinery and equipment. Our operating leases have lease terms of less than one year to ten years. We do not separate lease components from non-lease components (e.g., common area maintenance, property taxes, and insurance) but account for both components in a contract as a single lease component. The components of lease expense are as follows: Year Ended (In thousands) December 31, 2021 December 31, 2020 Operating lease expense $ 11,477 $ 6,952 Variable lease expense 783 736 Short-term lease expense 62,124 53,528 Total lease expense $ 74,384 $ 61,216 Supplemental balance sheet information related to our operating leases is as follows: Year Ended (In thousands) December 31, 2021 December 31, 2020 Right-of-use assets $ 43,651 $ 18,718 Current lease liabilities (recorded in other accrued liabilities) $ 11,983 $ 6,245 Long-term operating lease liabilities 34,536 13,970 Total operating lease liabilities $ 46,519 $ 20,215 Additional ROU assets from operating lease arrangements of $35.3 million were recognized as non-cash asset additions during the year ended December 31, 2021 . The increase in ROU assets is due primarily to ne w leases executed to support the OMDAC-SWACA contract extension and to replace expiring office space leases. The weighted average remaining lease term and discount rate for our operating leases at December 31, 2021 were 5.2 years and 3.7%, respectively. Maturities of lease liabilities at December 31, 2021 were as follows: (In thousands) Payments due 2022 $ 13,198 2023 12,762 2024 8,228 2025 4,166 2026 3,479 After 2026 10,163 Total minimum lease payments $ 51,996 Less: Imputed interest (5,477) Total operating lease liabilities $ 46,519 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES We determine the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. For the year ended December 31, 2021, we did not establish or release an additional valuation allowance. The sources of pre-tax income and the components of income tax expense for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows: (in thousands) 2021 2020 2019 Income Components United States $ 51,532 $ 33,946 $ 37,521 Foreign 2,503 4,736 5,658 Total pre-tax income from continuing operations $ 54,035 $ 38,682 $ 43,179 Income tax expense components Current income tax provision United States-Federal $ 11,860 $ 9,920 $ 12,017 United States-State and local 740 735 866 Foreign 1,477 1,704 3,883 Total current income tax provision 14,077 12,359 16,766 Deferred income tax provision (benefit) United States-Federal (5,008) (9,953) (6,689) United States-State and local (211) (342) (387) Foreign (551) (333) 313 Total deferred income tax provision (benefit) (5,770) (10,628) (6,763) Total income tax expense $ 8,307 $ 1,731 $ 10,003 Effective income tax rate 15.4 % 4.5 % 23.2 % A reconciliation of the income tax provision at the U.S. statutory rate to the effective income tax rate as reported is as follows: 2021 2020 2019 Tax provision at U.S. statutory rate 21.0 % 21.0 % 21.0 % State and local income tax, net of federal benefit 1.1 % 1.5 % 0.8 % Foreign taxes 0.3 % 0.8 % 0.5 % Uncertain tax positions 4.1 % (4.5) % 8.0 % Prior year true-ups (0.5) % 0.3 % 0.4 % Foreign derived intangible income deduction (7.3) % (13.8) % (8.0) % Credits (3.8) % (1.0) % (1.3) % Other 0.5 % 0.2 % 1.8 % Effective income tax rate 15.4 % 4.5 % 23.2 % Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates in effect for the year in which we expect the differences will reverse. Deferred tax assets and liabilities include the following: (in thousands) 2021 2020 Deferred tax assets Compensation and benefits $ 8,125 $ 7,180 Reserves 4,632 4,359 Lease liability 10,204 4,818 Social security deferral 1,874 3,717 Other 2,515 581 Net operating losses 1,912 1,889 Total deferred tax assets $ 29,262 $ 22,544 Deferred tax liabilities Goodwill and intangibles $ (47,228) $ (46,493) Unbilled receivables — (5,043) Property, plant and equipment, net (2,179) (2,492) Right-of-use assets (9,571) (4,479) Other liabilities (1,845) (1,669) Total deferred tax liabilities (60,823) (60,176) Net deferred tax liabilities $ (31,561) $ (37,632) Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2021, 2020 and 2019 is as follows: (in thousands) 2021 2020 2019 Unrecognized tax benefits-January 1, $ 7,411 $ 7,945 $ 1,755 Additions for: Current year tax positions 2,139 2,765 3,613 Prior year tax positions 251 — 2,577 Reductions for: Lapse of statute of limitations (480) — — Prior year tax positions — (3,299) — Unrecognized tax benefits-December 31, $ 9,321 $ 7,411 $ 7,945 As of December 31, 2021, 2020, and 2019, unrecognized tax benefits from uncertain tax positions were $9.3 million, $7.4 million and $7.9 million, respectively. It is reasonably possible that the Company's total unrecognized tax benefits will decrease by approximately $1.7 million during the next 12 months in connection with maters which may be resolved. The total amount of unrecognized benefit that, if recognized, would affect the effective tax rate was $9.3 million, $7.1 million, and $7.5 million as of December 31, 2021, 2020, and 2019, respectively, excluding the interest and penalties. During the quarter ended December 31, 2020, the Company undertook a profit split transfer pricing analysis to determine if any potential Foreign Derived Intangible Income (FDII) deduction could be derived for financial reporting purposes. Vectrus performed a functional analysis focusing on the U.S. and non-U.S. roles and support activities relating to the Vectrus programs for services being provided to U.S military bases that are located in foreign countries. Based on this further analysis, it was determined that the Company could support $7.1 million of federal and state FDII benefit over the three-year period from 2018 to 2020, with $2.6 million, $2.5 million, and $2.0 million related to December 31, 2020, 2019, and 2018, respectively. During the quarter ended December 31, 2021, the Company updated the profit split analysis for 2021 to account for changes in the Vectrus programs. Based on the updated analysis, the Company provided for a FDII benefit of $1.8 million. The Company continues to reserve a portion of the FDII benefit on an annual basis and continues to monitor further guidance and potential U.S. Tax Reform which could make changes to the mechanics around the way FDII is calculated. We classify interest relating to tax matters as a component of interest expense and tax penalties as a component of income tax expense in our Consolidated and Combined Statements of Income. The Company recognized interest related to tax matters of $0.2 million, $0.0 million, and $0.2 million during the years ended December 31, 2021, 2020 and 2019, respectively. The Company has accrued $0.4 million and $0.2 million for the payment of interest and penalties as of December 31, 2021, and 2020, respectively. The Company has not recorded a deferred tax liability for undistributed earnings of certain foreign subsidiaries, since such earnings are considered to be reinvested indefinitely. If the earnings were distributed, the Company may be subject to federal income and foreign withholding taxes. The Company files income tax returns in the United States and in various foreign jurisdictions. The Company is no longer subject to U.S. federal or state income tax examinations for years prior to 2018. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (i) treating taxes due on future U.S. inclusions in taxable income related to global intangible low taxed income (GILTI) as a current-period expense when incurred (the “period cost method”) or (ii) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). We have chosen to account for GILTI under the period cost method as an accounting policy, and therefore the anticipated future expense associated with GILTI is not reflected in our financial statements. |
Post Employment Benefit Plans
Post Employment Benefit Plans | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Post Employment Benefit Plans | POST EMPLOYMENT BENEFIT PLANS We sponsor two defined contribution savings plans, which allow employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. The Company matches a percentage of eligible employee contributions up to certain limits of employee base pay. Our portion of the matching contributions charged to income amounted to $8.7 million and $6.5 million for the years ended December 31, 2021, and 2020, respectively. The Company participates in multiemployer pension plans for certain employees in the United States covered by collective bargaining agreements. Contributions are based on specified hourly rates for eligible hours. Company expenses related to these plans were $1.1 million, $3.0 million and $4.9 million during 2021, 2020, and 2019, respectively. The decrease in expense is attributable to the completion of a subcontract in September 2020. At the time the subcontract was completed, the individuals ceased being Company employees and the Company was relieved of its contractual obligation to fund the related multiemployer pension plans on the former employee's behalf. The Company is unaware of any significant future obligations or funding requirements related to these plans other than the ongoing contributions that are paid as hours are worked by plan participants. None of these multiemployer pension plans are individually significant to the Company. During the first quarter of 2021, the Company established a non-qualified deferred compensation plan under which participants are eligible to defer a portion of their compensation on a tax deferred basis. The assets in the plan are held in a Rabbi trust. Plan investments and obligations were recorded in other non-current assets and other non-current liabilities, respectively, in the consolidated balance sheets, representing the fair value related to the deferred compensation plan. Adjustments to the fair value of the plan investments and obligations are recorded in operating expenses. The plan assets and liabilities as of December 31, 2021, were $0.5 million. On September 11, 2014, our Board of Directors adopted and approved the Vectrus Systems Corporation Excess Savings Plan (the Excess Savings Plan). Since federal law limits the amount of compensation that can be used to determine employee and employer contribution amounts to our tax-qualified plans, we established the Excess Savings Plan to allow for Company contributions based on an eligible employee's base salary in excess of these limits. No employee contributions are permitted. All balances under the Excess Savings Plan are maintained on the books of the Company and credits and deductions are made to the accumulated savings under the plan based on the earnings or losses attributable to a stable value fund as defined in the Excess Savings Plan. Benefits will be paid in a lump sum generally in the seventh month following the date on which the employee's separation from service occurs. Employees are 100% vested at all times in any amounts credited to their accounts. As of December 31, 2021, and 2020, we had accrued $0.2 million and $0.1 million, respectively, o f contributions under the Excess Savings Plan. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES General From time to time, we are involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings seek remedies relating to employment matters, matters in connection with our contracts and matters arising under laws relating to the protection of the environment. Additionally, U.S. government customers periodically advise the Company of claims and penalties concerning certain potential disallowed costs. When such findings are presented, Vectrus and the U.S. government representatives engage in discussions to enable Vectrus to evaluate the merits of these claims as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect probable losses related to the matters raised by the U.S. government representatives. Such assessments, along with any assessments regarding provisions for legal proceedings, are reviewed on a quarterly basis for sufficiency based on the most recent information available to us. We have estimated and accrued $9.6 million a nd $11.7 million as of December 31, 2021 and 2020, respectively, in other accrued liabilities in the Consolidated Balance Sheets for legal proceedings and for claims with respect to our government contracts as discussed below, including years where the U.S. government has not completed its incurred cost audits. Although the ultimate outcome of any legal matter or claim cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal or contractual claims or proceedings, individually or in the aggregate, will have a material adverse effect on our cash flow, results of operations or financial condition. Legal Proceedings From time to time we are involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings seek remedies relating to employment matters, matters in connection with our contracts and matters arising under laws relating to the protection of the environment. As a result of final indirect rate negotiations between the U.S. government and our Former Parent, we may be subject to adjustments to costs previously allocated by our Former Parent to our business, which was formerly Exelis’ Mission Systems Business, from 2007 through 2014. We are in discussions with our Former Parent and the U.S. government regarding these cost adjustments from 2007 through 2014 and believe that our potential cumulative liability for these years is insignificant. Between June 2019 and March 2021, the U.S. government provided us with three Contracting Officers Final Decisions (COFD) for the years from 2007 through 2014 related to Former Parent costs. We filed appeals of the COFDs with the Armed Services Board of Contract Appeals (ASBCA), which have been consolidated. The ASBCA has granted Vectrus’ and the U.S. government’s joint requests to stay proceedings in the appeal, most recently through March 21, 2022 , to enable ongoing discussions regarding the matter between the parties. The U.S. government subsequently offered a settlement to reduce the costs to an insignificant amount to address errors and costs related to contracts novated to our Former Parent, which we are currently reviewing. We believe we are fully indemnified under our Distribution Agreement with our Former Parent and have notified our Former Parent of our appeal of the U.S. government's decision in this matter. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal claims or proceedings, individually or in the aggregate, will have a material adverse effect on our cash flow, results of operations or financial condition. U.S. Government Contracts, Investigations and Claims We have U.S. government contracts that are funded incrementally on a year-to-year basis. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could have a material adverse effect on our financial condition or results of operations. Furthermore, our contracts with the U.S. government may be terminated or suspended by the U.S. government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect our financial condition and results of operations. Departments and agencies of the U.S. government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on the Company because of its reliance on U.S. government contracts. U.S. government agencies, including the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency (DCMA) and others, routinely audit and review our performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Accordingly, costs billed or billable to U.S. government customers are subject to potential adjustment upon audit by such agencies. The U.S. government agencies also review the adequacy of our compliance with government standards for our business systems, including our accounting, earned value management, estimating, materials management and accounting, purchasing, and property management systems. COVID-19 Pandemic On March 11, 2020, the World Health Organization designated the outbreak of COVID-19 as a global pandemic. Governments and businesses around the world have taken unprecedented actions to mitigate the spread of COVID-19, including, but not limited to, shelter-in-place orders, quarantines, significant restrictions on travel, social distancing guidelines, and restrictions on employees going to work. Uncertainty with respect to the economic impacts of the pandemic has introduced significant volatility in the financial markets. The Company has observed, and continues to experience, some disruptions on its operations due to government and supply chain delays related to the global pandemic. While the extent to which COVID-19 ultimately impacts the Company’s future results will depend on future developments, the pandemic and associated economic impacts, particularly with respect to newly issued vaccine mandates for government contractors and subcontractors, could result in a material impact to the Company’s future financial condition, results of operations and cash flows. Contractual Commitment On September 30, 2021, the Company signed a forward-starting agreement for warehouse space in support of its contractual obligations under a task order issued under the Logistics Civil Augmentation Program (LOGCAP) V support services contract in support of the U.S. Military. The agreement commencement date, which is anticipated in early 2022, is subject to the completion of certain documents and the receipt of related government regulatory and other third-party approvals. The term of the agreement consists of eight one-year extension options and one additional six-month option period, consistent with our LOGCAP V contract with the U.S. Military. The annual obligations are $20 million per year, subject to a market adjustment beginning in the sixth year, and additional obligations for certain operating expenses. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION The Company maintains an equity incentive plan, the 2014 Omnibus Incentive Plan, as amended and restated effective as of May 13, 2016 (the 2014 Omnibus Plan), to govern awards granted to Vectrus employees and directors, including nonqualified stock options (NQOs), restricted stock units (RSUs), total shareholder return (TSR) awards and other awards. We account for NQOs and stock-settled RSUs as equity-based compensation awards. TSR awards, described below, and cash-settled RSUs are accounted for as liability-based compensation awards. The maximum number of shares of the Company's common stock authorized for issuance under the 2014 Omnibus Plan is 2.6 million shares. As of December 31, 2021, there wer e 0.8 million shares remaining available for future awards. Stock-based compensation expense and the associated tax b enefits impacting our Consolidated Statements of Income were as follows: Year Ended December 31, (In thousands) 2021 2020 Compensation costs for equity-based awards $ 7,261 $ 5,558 Compensation costs for liability-based awards 1,070 3,887 Total compensation costs, pre-tax $ 8,331 $ 9,445 Future tax benefit $ 1,810 $ 2,040 Liability-based awards are revalued at the end of each reporting period to reflect changes in fair value. The Company paid $2.5 million and $2.4 million related to liability-based compensation awards during the years ended December 31, 2021 and 2020, respectively. At December 31, 2021, total unrecognized compensation costs related to equity-based awards and liability-based awards were $5.3 million and $1.6 million, respectively, which are expected to be recognized ratably over a weighted average period of 1.76 years and 1.63 years, respectively. Non-Qualified Stock Options NQOs vest in one-third increments on the first, second and third anniversaries of the grant date and expire 10 years from the date of grant. A summary of the status of our NQOs as of December 31, 2021, 2020 and 2019 and changes during the years then ended is presented below: Year Ended December 31, 2021 2020 2019 (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Outstanding at January 1, 74 $ 23.37 77 $ 23.30 251 $ 23.00 Granted — $ — — $ — — $ — Exercised (15) $ 24.04 (3) $ 21.43 (161) $ 22.74 Forfeited, canceled or expired — $ — — $ — (13) $ 24.47 Outstanding at December 31, 59 $ 23.19 74 $ 23.37 77 $ 23.30 Options exercisable 59 $ 23.19 74 $ 23.37 59 $ 23.35 All outstanding NQOs are exercisable. The following table summarizes information about NQOs outstanding and exercisable as of December 31, 2021: (In thousands, except per share data) Options Outstanding and Exercisable Range of Exercise Prices Per Share Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value $20.06 - $21.98 44 4.03 $ 21.56 $ 1,049 $24.61 - $32.49 15 2.53 27.83 274 Total options and aggregate intrinsic value 59 3.63 $ 23.19 $ 1,323 The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $45.77 per share on December 31, 2021, which would have been received by the option holders if all option holders had exercised their options as of that date. There were no exercisable options "out of the money" as of December 31, 2021. The aggregate intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $0.4 million, $0.1 million and $2.1 million, respectively. Restricted Stock Units The fair value of RSUs is determined based on the closing price of Vectrus common stock on the date of the grant. In general, under the 2014 Omnibus Plan, for employee RSUs granted in 2014 and after, one-third of the award vests on each of the three anniversary dates following the grant date. Director RSUs are granted on the date of the annual meeting and vest the business day immediately prior to the next annual meeting. RSUs have no voting rights. If an employee leaves the Company prior to vesting, whether through resignation or termination for cause, the RSUs are forfeited. If an employee retires or is terminated by the Company other than for cause, all or a pro rata portion of the RSUs may vest. The table below provides a roll-forward of outstanding RSUs for the years ended December 31, 2021, 2020, and 2019. Year Ended December 31, 2021 2020 2019 (In thousands, except per share data) Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 253 $ 41.67 301 $ 30.30 257 $ 28.90 Granted 155 $ 56.43 130 $ 51.82 206 $ 30.03 Vested (137) $ 40.04 (152) $ 30.60 (138) $ 31.92 Issued in exchange — $ — 16 $ 52.28 — $ — Cancelled in exchange — $ — (16) $ 29.00 — $ — Forfeited or canceled (26) $ 48.73 (26) $ 45.59 (24) $ 35.57 Outstanding at December 31, 245 $ 51.18 253 $ 41.67 301 $ 30.30 The total grant date fair value of RSUs that vested during the years ended December 31, 2021, 2020 and 2019 was $5.5 million , $4.6 million and $4.1 million, respectively. On August 11, 2020, our total outstanding 15,839 CRSUs were exchanged for 15,839 RSUs. As of the exchange date, both the CRSUs and RSUs had the same vesting conditions, fair value of $52.28, and unrecognized compensation expense of $0.4 million. Total Shareholder Return Awards TSR awards are performance-based cash awards that are subject to a three-year performance period. Any payments earned are made in cash following completion of the performance period according to the achievement of specified performance goals. During the years ended December 31, 2021 , 2020, and 2019, we granted TSR awards with aggregate target TSR values of $2.2 million , $3.1 million, and $2.5 million, respectively. The fair value of TSR awards is measured quarterly and is based on the Company’s performance relative to the performance of the Aerospace and Defense Companies in the S&P 1500 Index. Depending on the Company’s performance during the three-year performance period, payments can range from 0% to 200% of the target value. For the years ended December 31, 2021, 2020, and 2019, we recorded $1.1 million , $3.6 million and $2.9 million, respectively, in compensation expense related to TSR awards. Payments of $2.9 million were made in January 2022 for the 2019 TSR awards, payments of $2.5 million were made in January 2021 for the 2018 TSR awards, and payments of $1.6 million were made in January 2020 for the 2017 TSR awards. Payments, if any, for the 2020 and 2021 TSR awards are expected to be made in January 2023 and January 2024, respectively. As of December 31, 2021 and 2020, we had $4.5 million |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Shareholders' Equity | SHAREHOLDERS' EQUITY As of December 31, 2021, our authorized capital was comprised of 100.0 million shares of common stock and 10.0 million shares of preferred stock. At December 31, 2021, there were 11.7 million shares of common stock issued and outstanding. No preferred stock was issued and outstanding at December 31, 2021 and 2020. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Merger Agreement On March 7, 2022, the Company, including its subsidiaries Andor M erger Sub LLC (“Merger Sub LLC”) and Andor Merger Sub Inc. (“Merger Sub Inc.”), and Vertex Aerospace Services Holding Corp. (“Vertex”), entered into an agreement and plan of merger (the “Merger Agreement”) proposing that Merger Sub Inc. merge with and into Vertex (the “First Merger”), and immediately thereafter, Vertex, as the surviving company of the First Merger, merge with and into Merger Sub LLC (the “Second Merger”), with Merger Sub LLC surviving the Second Merger as a direct, wholly owned subsidiary of the Company (the “Proposed Transaction”). The Proposed Transaction is structured so that the existing stockholders of Vertex will own approximately 62% of the issued and outstanding Company common shares following the consummation of the Proposed Transaction, and the existing shareholders of the Company will own approximately 38%. The consummation of the Proposed Transaction is subject to the satisfaction of certain conditions, including, among others, the expiration or termination of antitrust waiting periods and receipt of certain other regulatory approvals, absence of injunctions or restraints prohibiting consummation of the Proposed Transaction, the Vectrus shareholder approval being obtained, the shares issued to Vertex being approved for listing on the New York Stock Exchange and the execution and delivery of a shareholder rights and registration rights agreements. The obligation of each party to consummate the Proposed Transaction is also conditioned on the other party’s representations and warranties being true and correct, the other party having performed in all material respects its obligations under the Merger Agreement, and the absence of any material adverse effect after the date of the Merger Agreement. The Merger Agreement provides certain termination rights for both the Company and Vertex, and further provides that upon termination of the Merger Agreement under certain circumstances, the Company will be obligated to pay Vertex a termination fee of $16.6 million . Amended Credit Agreement On January 24, 2022, Vectrus Inc, entered into an Amendment No. 2 (the “Amendment Agreement”) by and among the Company, Vectrus Systems Corporation, as borrower (“VSC”), certain other wholly-owned domestic subsidiaries of the Company, as guarantors party thereto (collectively, the “Subsidiary Guarantors”), the lenders and issuing banks party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (“JPMorgan”), which provides for the amendment of the Credit Agreement dated as of September 17, 2014 (as amended by that certain Amendment No. 1, dated as of April 19, 2016, as further amended and restated by that certain Amendment and Restatement Agreement, dated as of November 15, 2017, as further amended by that certain Amendment No. 1, dated as of December 24, 2020, and as further amended, restated, amended and restated, supplemented or otherwise modified prior to the Closing Date, the “Original Credit Agreement”; the Original Credit Agreement as amended by the Amendment Agreement is referred to herein as the “Amended Credit Agreement”), among the Company, VSC, the lenders and issuing banks party thereto and JPMorgan. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Our Business | Our Business Vectrus, Inc. is a leading provider of global service solutions to the U.S. government worldwide. The Company operates as one segment and provides the following services and offerings: facility and base operations, supply chain and logistics services, information technology mission support, and engineering and digital integration services. |
Equity Investment | Equity Investment In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, we entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, we entered into a joint venture agreement with Kuwait Resources House for Human Resources Management and Services Company (KRH) . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC. (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by Vectrus and others around the world. We account for our investments in HDSS, J&J and ServCore under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest. We record our proportionate 40%, 50% and 40% shares, respectively, of income or losses from HDSS, J&J and ServCore in selling, general and administrative expenses in the Consolidated Statements of Income. Our investment in these joint ventures is recorded in other non-current assets in the Consolidated Balance Sheets. When we receive cash distributions from our equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Consolidated Statements of Cash Flows. As of December 31, 2021 and December 31, 2020, our combined investment balance in these joint ventures was $5.4 million and $1.4 million, respectively. Our proportionate share of income from HDSS, J&J and ServCore joint ventures was $1.9 million, $0.6 million, and $1.0 million for the years ended December 31, 2021, 2020, and 2019, respectively. |
Principles of Consolidation | Principles of Consolidation Vectrus consolidates companies in which it has a controlling financial interest. All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, revenue recognition, income taxes, fair value and impairment of goodwill and intangible assets and valuation of assets and certain contingent liabilities. Actual results could differ from these estimates. |
Segment Information | Segment InformationManagement has concluded that the Company operates as one segment based upon the information used by the chief operating decision maker in evaluating the performance of the Company’s business and allocating resources and capital. Although we perform services worldwide, substantially all of our revenue for the years ended December 31, 2021, 2020 and 2019 was from the U.S. government. |
Reclassifications | Reclassifications Certain reclassifications have been made to the presentation of amounts in our Consolidated Balance Sheet as of December 31, 2020 to conform to the current year presentation. Specifically, prepaid expenses were reclassified from other current assets, as well as operating lease liability from other non-current liabilities, and presented separately on our Consolidated Balance Sheets. Changes in prepaid expenses were reclassified from changes in other assets and presented separately on our Consolidated Statements of Cash Flows. |
Revenue Recognition | Revenue Recognition As a defense contractor engaging in long-term contracts, substantially all of our revenue is derived from long-term service contracts. The unit of account for revenue in Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606) is a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method, consideration is given as to whether a single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to perform an integrated set of tasks and deliverables as a single service solution, whereby each service is not separately identifiable from other promises in the contract and therefore is not distinct. As a result, when this integrated set of tasks exists, the contract is accounted for as one performance obligation. The vast majority of our contracts have a single performance obligation. Unexercised contract options and indefinite delivery and indefinite quantity (IDIQ) contracts are considered to be separate performance obligations when the option or IDIQ task order is exercised or awarded. Our performance obligations are satisfied over time as services are provided throughout the contract term. We recognize revenue over time using the input method (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Our over time recognition is reinforced by the fact that our customers simultaneously receive and consume the benefits of our services as they are performed. For most U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. This continuous transfer of control requires that we track progress towards completion of performance obligations in order to measure and recognize revenue. Accounting for contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability; the complexity of the services being performed; the cost and availability of materials; the performance of subcontractors; and negotiations with the customer on contract modifications. When the estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at a contract level and is recognized in the period in which the loss was determined. The nature of our contracts gives rise to several types of variable consideration, including award and incentive fees, inspection of supplies and services, undefinitized change orders, and fluctuation in allowable indirect reimbursable costs. We include award or incentive fees in the estimated transaction price when there is certainty and a basis to reasonably estimate the amount of the fee. These estimates are based on historical award experience, anticipated performance and our best judgment at the time. The inspection of supplies and services is a factor because the U.S. government can reduce the transaction price if we do not perform the services in compliance with contract requirements. Variable consideration associated with undefinitized change orders is included to the extent related estimated costs have been included in the expected costs to complete a contract. The fluctuation of allowable indirect reimbursable costs is a factor because the U.S. government has the right to review our accounting records and retroactively adjust the reimbursable rate. Any prior adjustments are reflected in the U.S. government reserve amounts recorded in our financial statements. We estimate variable consideration at the most likely amount that we expect to be entitled to receive, which is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Refer to Note 15, "Commitments and Contingencies" for additional information regarding U.S. government reserve amounts. As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract estimates regularly. We recognize adjustments in estimated profit on executed contracts cumulatively. The impact of the adjustments on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the quarter it is identified. Contracts are often modified to account for changes in contract specifications and requirements. If the modification either creates new enforceable rights and obligations or changes the existing enforceable rights and obligations, the modification will be treated as a separate contract. Our contract modifications, except for those to exercise option years, have historically not been distinct from the existing contract and have been accounted for as if they were part of that existing contract. The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to fund current operating expenses under the contract. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. |
Receivables | ReceivablesReceivables include amounts billed and currently due from customers, amounts unbilled, certain estimated contract change amounts, estimates related to expected award fees, claims or requests for equitable adjustment in negotiation that are probable of recovery, and amounts retained by the customer pending contract completion. Unbilled receivables are classified as current assets based on our contract operating cycle. |
Restricted Cash | Restricted Cash The Company had no restricted cash at December 31, 2021. At December 31, 2020 the Company had total cash, cash equivalents and restricted cash of $68.7 million which included $1.8 million of restricted cash related to collateral security for an outstanding letter of credit. |
Earnings Per Share | Earnings Per Share We compute earnings per common share on the basis of the weighted average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods. |
Stock-Based Compensation | Stock-Based CompensationWe recognize stock-based compensation expense based on the grant date fair values of the equity instruments issued or on the fair values of the liabilities incurred. The expense is recognized primarily within selling, general and administrative expenses over the requisite service periods of the awards, which are generally equivalent to the vesting terms. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment, net are stated at cost less accumulated depreciation. Major improvements are capitalized at cost while expenditures for maintenance, repairs and minor improvements are expensed. For asset sales or retirements, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in operating income. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment Long-lived assets are tested for impairment whenever events or changes in circumstances indicate their carrying value may not be recoverable. We assess the recoverability of long-lived assets based on the undiscounted future cash flow the assets are expected to generate. When carrying value exceeds the undiscounted future cash flow, an impairment is recorded when the carrying value of the asset exceeds its estimated fair value based on a discounted cash flow approach or, when available and appropriate, comparable market values. |
Goodwill | Goodwill Goodwill represents purchase consideration paid in a business combination that exceeds the fair values assigned to the net assets of acquired businesses. Goodwill is not amortized, but instead is tested for impairment annually (or more frequently if impairment indicators arise, such as changes to the reporting unit structure or significant adverse changes in the business climate). We conduct our annual impairment testing on the first day of the Company's fourth fiscal quarter. In reviewing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we then perform a quantitative impairment test as described below. Otherwise, no further analysis is required. We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. |
Intangible Assets | Intangible AssetsWe recognize acquired intangible assets apart from goodwill whenever the intangible assets arise from contractual or other legal rights, or whenever they can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their estimated useful lives unless the estimated useful life is determined to be indefinite. Finite lived intangible assets are being amortized over useful lives of four |
Leases | Leases On January 1, 2019, the Company adopted ASC Topic 842, Leases (ASC Topic 842). Operating leases are included on our Consolidated Balance Sheets as right-of-use (ROU) assets, other accrued liabilities and operating lease liabilities. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Because most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate as of January 1, 2019 was applied to operating leases in effect as of that date. The lease ROU assets also include any prepaid lease payments and exclude lease incentives. Many of our leases include one or more options to renew or terminate the lease, solely at our discretion. Such options are factored into the lease term when it is reasonably certain that we will exercise the option. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. As allowed under ASC Topic 842, the Company elected the package of practical expedients permitted under the transition guidance which allowed the Company to carry forward the historical lease classification, assessment of whether a contract was or contained a lease and assessment of initial direct costs. In addition, we have made policy elections to apply the short-term leases practical expedient, whereby leases with a term of 12 months or less are not recorded on our balance sheet, and the practical expedient to not separate lease components from non-lease components. The latter expedient is applied to all of our leases. We did not elect to apply the hindsight practical expedient in determining lease terms and assessing impairment of ROU assets. See Note 12, "Leases" for further information. |
Income Taxes | Income TaxesWe determine the provision or benefit for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In assessing the need for a valuation allowance, we look to the future reversal of existing taxable temporary differences, taxable income in carryback years, the feasibility of tax planning strategies, and estimated future taxable income. The valuation allowance can be affected by changes to tax laws, changes to statutory tax rates and changes to future taxable income estimates. |
Commitments and Contingencies | Commitments and Contingencies We record accruals for commitments and loss contingencies when they are probable of occurrence and the amounts can be reasonably estimated. In addition, legal fees are accrued for cases where a loss is probable and the related fees can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount of loss. We review these accruals quarterly and adjust the accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information. |
Derivative Instruments | Derivative Instruments Derivative instruments are recognized as either an asset or liability at fair value in our Consolidated Balance Sheets and are classified as current or long-term based on the scheduled maturity of the instrument. Our derivative instruments have been formally designated and qualify as part of a cash flow hedging relationship under applicable accounting standards. The interest rate derivative instruments are adjusted to fair value through accumulated other comprehensive income (loss). If we were to determine that a derivative was no longer highly effective as a hedge, we would discontinue the hedge accounting prospectively. Gains or losses would be immediately reclassified from accumulated other comprehensive income (loss) to earnings relating to hedged forecasted transactions that are no longer probable of occurring. Gains or losses relating to terminations of effective cash flow hedges in which the forecasted transactions would still be probable of occurring would be deferred and recognized consistent with the income or loss recognition of the underlying hedged item. |
Severance Expense | Severance Expense We periodically initiate management-approved restructuring activities to achieve cost savings through reduced operational redundancies and to strategically position ourselves in the market in response to prevailing economic conditions and associated customer demand. Costs associated with restructuring actions can include severance and related benefit charges. For involuntary separation plans, a liability is recognized when it is probable, reasonably estimable, and communicated to employees. For voluntary separation plans, a liability is recognized when the employee irrevocably accepts the termination. |
Fair Value Measurements | Fair Value MeasurementsWe determine fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In measuring fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. There are three levels of the fair value hierarchy. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices (in nonactive markets or in active markets for similar assets or liabilities), inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the assets or liabilities. |
Foreign Currency Transactions | Foreign Currency TranslationThe financial statements of programs for which the functional currency is not the U.S. dollar are translated into U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at the end of each period; income statement accounts are translated at the average rates of exchange prevailing during the period. Gains and losses on foreign currency translations are recorded as translation adjustments to other comprehensive (loss) income. Net gains or losses from foreign currency transactions are reported in selling, general and administrative expenses and have historically been insignificant. |
Recent Accounting Pronouncements | Accounting Standards Updates Issued but Not Yet Adopted There were no accounting standards issued during 2021 that are expected to have a material impact on the Company's financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) which provides companies with optional expedients and exceptions to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This update provides optional expedients for applying accounting guidance to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of the reference rate reform. The amendments in this update are effective for all entities as of March 2020 and can be adopted using a prospective approach no later than December 31, 2022. We are currently evaluating the impacts of the reference rate reform. Accounting Standards Updates Adopted In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (ASU 2019-12). The objectives of ASU 2019-12 are (i) to simplify the accounting for income taxes by removing certain exceptions, (ii) to update certain requirements to simplify the accounting for income taxes, and (iii) to make minor codification improvements for income taxes. The Company adopted the standard as of January 1, 2021 and it did not have a material impact on the Company’s financial statements. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Useful Lives | Depreciation and amortization are generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease terms as follows: Years Buildings and improvements 3 – 11 Machinery, equipment and vehicles 3 – 12 Office furniture and equipment, computers and software 3 – 7 Property, plant and equipment, net consisted of the following at December 31: (In thousands) 2021 2020 Buildings and improvements $ 2,232 $ 2,143 Machinery, equipment and vehicles 19,756 17,774 Office furniture and equipment, computers and software 21,672 17,346 Property, plant and equipment, gross 43,660 37,263 Less: accumulated depreciation and amortization (19,902) (14,690) Property, plant and equipment, net $ 23,758 $ 22,573 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of Purchase Price Allocation | A breakdown of the purchase price allocation, net of cash acquired, is as follows: (In thousands) Allocation of Purchase Price Receivables $ 40,144 Deferred taxes 88 Other current assets 1,314 Property, plant and equipment 1,108 Goodwill 53,541 Intangible assets 57,100 Right-of-use assets 7,930 Accounts payable (7,381) Other current liabilities (15,821) Accrued compensation (12,087) Lease liabilities (8,275) Other non-current liabilities (55) Purchase price, net of cash acquired $ 117,606 A breakdown of the purchase price allocation, net of cash acquired, is as follows: (In thousands) Allocation of Purchase Price Receivables $ 11,388 Other current assets 2,719 Property, plant and equipment 155 Goodwill 28,511 Intangible assets 8,300 Other non-current assets 1,868 Accounts payable (4,223) Other current liabilities (1,519) Accrued compensation (907) Other non-current liabilities (1,218) Purchase price, net of cash acquired $ 45,074 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, Remaining Performance Obligation | Remaining performance obligations as of December 31, 2021 and December 31, 2020 are presented in the following table: Year Ended December 31, (In millions) 2021 2020 Performance Obligations $ 1,398 $ 993 |
Disaggregation of Revenue | The following tables present our revenue disaggregated by different categories. Revenue by contract type for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Cost-plus and cost-reimbursable $ 1,271,167 $ 955,506 $ 1,015,963 Firm-fixed-price 452,112 403,994 334,510 Time and material 60,386 36,029 32,052 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by geographic region in which the contract is performed for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Middle East $ 1,000,877 $ 902,162 $ 939,685 United States 578,255 328,214 301,991 Europe 142,606 155,169 137,915 Asia 61,927 9,984 2,934 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by contract relationship for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Prime contractor $ 1,663,828 $ 1,324,628 $ 1,312,928 Subcontractor 119,837 70,901 69,597 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 Revenue by customer for the years 2021, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2021 2020 2019 Army $ 1,134,849 $ 965,558 $ 958,582 Air Force 266,291 299,272 306,767 Navy 224,407 68,748 56,236 Other 158,118 61,951 60,940 Total revenue $ 1,783,665 $ 1,395,529 $ 1,382,525 |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Receivables | Receivables were comprised of the following: December 31, (In thousands) 2021 2020 Billed receivables $ 104,074 $ 102,045 Unbilled receivables (contract assets) 239,979 203,127 Other 4,552 9,787 Total Receivables $ 348,605 $ 314,959 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares Outstanding | Year Ended December 31, (In thousands, except per share data) 2021 2020 2019 Net Income $ 45,728 $ 36,951 $ 33,176 Weighted average common shares outstanding 11,705 11,599 11,444 Add: Dilutive impact of stock options 37 37 47 Add: Dilutive impact of restricted stock units 94 115 121 Diluted weighted average common shares outstanding 11,836 11,751 11,612 Earnings per share Basic $ 3.91 $ 3.19 $ 2.90 Diluted $ 3.86 $ 3.14 $ 2.86 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table below summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Year Ended December 31, (In thousands) 2021 2020 2019 Anti-dilutive restricted stock units 1 2 4 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Depreciation and amortization are generally computed using either an accelerated or straight-line method and is based on estimated useful lives or lease terms as follows: Years Buildings and improvements 3 – 11 Machinery, equipment and vehicles 3 – 12 Office furniture and equipment, computers and software 3 – 7 Property, plant and equipment, net consisted of the following at December 31: (In thousands) 2021 2020 Buildings and improvements $ 2,232 $ 2,143 Machinery, equipment and vehicles 19,756 17,774 Office furniture and equipment, computers and software 21,672 17,346 Property, plant and equipment, gross 43,660 37,263 Less: accumulated depreciation and amortization (19,902) (14,690) Property, plant and equipment, net $ 23,758 $ 22,573 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The change in the net carrying amount of goodwill for 2020 and 2021 is as follows (in thousands): Balance at December 31, 2019 $ 261,983 Adjustments to preliminary purchase price allocation of Advantor 147 Acquisition of HHB 10,647 Acquisition of Zenetex 66,925 Balance at December 31, 2020 $ 339,702 Adjustments to preliminary purchase price allocation of Zenetex (13,383) Adjustments to preliminary purchase price allocation of HHB (4,585) Balance at December 31, 2021 $ 321,734 |
Schedule of Finite-Lived Intangible Assets | Other identifiable intangible assets consist of the following: December 31, 2021 December 31, 2020 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract backlogs and recompetes $ 77,300 $ (14,988) $ 62,312 $ 48,800 $ (6,645) $ 42,155 Customer contracts 7,200 (3,572) 3,628 7,200 (2,133) 5,067 Trade names and other 1,249 (607) 642 1,243 (360) 883 Total intangible assets $ 85,749 $ (19,167) $ 66,582 $ 57,243 $ (9,138) $ 48,105 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated amortization expense for intangible assets for the next five years is as follows (in thousands): Period Amortization 2022 $ 8,499 2023 $ 8,403 2024 $ 7,296 2025 $ 6,499 2026 $ 6,028 After 2026 $ 29,857 |
Composition of Certain Financ_2
Composition of Certain Financial Statement Captions (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Compensation and Other Employee Benefits | Compensation and other employee benefits are affected by short-term fluctuations in the timing of payments and were comprised of the following at December 31: (In thousands) 2021 2020 Accrued salaries and wages $ 37,883 $ 42,206 Accrued bonus 14,364 7,617 Accrued employee benefits 28,037 29,745 Total $ 80,284 $ 79,568 |
Schedule of Other Accrued Liabilities | Other accrued liabilities were comprised of the following at December 31: (In thousands) 2021 2020 Contract related reserves $ 15,699 $ 13,064 Current operating lease liabilities 11,983 6,245 Accrued non-payroll taxes 6,425 124 Workers' compensation, auto and general liability reserve 3,169 4,042 Other 17,755 17,182 Total $ 55,031 $ 40,657 |
Schedule of Other Non-current Liabilities | Other non-current liabilities were comprised of the following at December 31: (In thousands) 2021 2020 Income taxes payable $ 9,724 $ 7,352 CARES Act payroll tax deferral 8,448 16,806 Other 1,956 4,197 Total $ 20,128 $ 28,355 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Term Facility | The Company's aggregate scheduled maturities at December 31, 2021, after consideration of the January 24, 2022 amendment, are as follows: (In thousands) Payments due 2022 $ 10,400 2023 95,000 Total $ 105,400 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2021: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 666 The following table summarizes the amount at fair value and location of the derivative instruments in the Consolidated Balance Sheet as of December 31, 2020: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 1,015 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 750 |
Schedule of Foreign Exchange Contracts | The following table summarizes the amount at fair value and location of the derivative instruments used for our forward contract hedges in the Consolidated Balance Sheet as of December 31, 2021. Fair Value (In thousands) Balance sheet caption Amount Foreign currency forward contracts designated as cash flow hedge Other accrued liabilities $ 30 The following table summarizes the amount at fair value and location of the derivative instruments used for our forward contract hedges in the Consolidated Balance Sheet as of December 31, 2020. Fair Value (In thousands) Balance sheet caption Amount Foreign currency forward contracts designated as cash flow hedge Other current assets $ 404 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Components of Lease Expense | The components of lease expense are as follows: Year Ended (In thousands) December 31, 2021 December 31, 2020 Operating lease expense $ 11,477 $ 6,952 Variable lease expense 783 736 Short-term lease expense 62,124 53,528 Total lease expense $ 74,384 $ 61,216 |
Assets And Liabilities, Lessee | Supplemental balance sheet information related to our operating leases is as follows: Year Ended (In thousands) December 31, 2021 December 31, 2020 Right-of-use assets $ 43,651 $ 18,718 Current lease liabilities (recorded in other accrued liabilities) $ 11,983 $ 6,245 Long-term operating lease liabilities 34,536 13,970 Total operating lease liabilities $ 46,519 $ 20,215 |
Maturities of Lease Liabilities | Maturities of lease liabilities at December 31, 2021 were as follows: (In thousands) Payments due 2022 $ 13,198 2023 12,762 2024 8,228 2025 4,166 2026 3,479 After 2026 10,163 Total minimum lease payments $ 51,996 Less: Imputed interest (5,477) Total operating lease liabilities $ 46,519 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | The sources of pre-tax income and the components of income tax expense for the years ended December 31, 2021, 2020 and 2019, respectively, are as follows: (in thousands) 2021 2020 2019 Income Components United States $ 51,532 $ 33,946 $ 37,521 Foreign 2,503 4,736 5,658 Total pre-tax income from continuing operations $ 54,035 $ 38,682 $ 43,179 Income tax expense components Current income tax provision United States-Federal $ 11,860 $ 9,920 $ 12,017 United States-State and local 740 735 866 Foreign 1,477 1,704 3,883 Total current income tax provision 14,077 12,359 16,766 Deferred income tax provision (benefit) United States-Federal (5,008) (9,953) (6,689) United States-State and local (211) (342) (387) Foreign (551) (333) 313 Total deferred income tax provision (benefit) (5,770) (10,628) (6,763) Total income tax expense $ 8,307 $ 1,731 $ 10,003 Effective income tax rate 15.4 % 4.5 % 23.2 % |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the income tax provision at the U.S. statutory rate to the effective income tax rate as reported is as follows: 2021 2020 2019 Tax provision at U.S. statutory rate 21.0 % 21.0 % 21.0 % State and local income tax, net of federal benefit 1.1 % 1.5 % 0.8 % Foreign taxes 0.3 % 0.8 % 0.5 % Uncertain tax positions 4.1 % (4.5) % 8.0 % Prior year true-ups (0.5) % 0.3 % 0.4 % Foreign derived intangible income deduction (7.3) % (13.8) % (8.0) % Credits (3.8) % (1.0) % (1.3) % Other 0.5 % 0.2 % 1.8 % Effective income tax rate 15.4 % 4.5 % 23.2 % |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities include the following: (in thousands) 2021 2020 Deferred tax assets Compensation and benefits $ 8,125 $ 7,180 Reserves 4,632 4,359 Lease liability 10,204 4,818 Social security deferral 1,874 3,717 Other 2,515 581 Net operating losses 1,912 1,889 Total deferred tax assets $ 29,262 $ 22,544 Deferred tax liabilities Goodwill and intangibles $ (47,228) $ (46,493) Unbilled receivables — (5,043) Property, plant and equipment, net (2,179) (2,492) Right-of-use assets (9,571) (4,479) Other liabilities (1,845) (1,669) Total deferred tax liabilities (60,823) (60,176) Net deferred tax liabilities $ (31,561) $ (37,632) |
Schedule of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits as of December 31, 2021, 2020 and 2019 is as follows: (in thousands) 2021 2020 2019 Unrecognized tax benefits-January 1, $ 7,411 $ 7,945 $ 1,755 Additions for: Current year tax positions 2,139 2,765 3,613 Prior year tax positions 251 — 2,577 Reductions for: Lapse of statute of limitations (480) — — Prior year tax positions — (3,299) — Unrecognized tax benefits-December 31, $ 9,321 $ 7,411 $ 7,945 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Impact of Stock-Based Compensation in Consolidated and Combined Statements of Income | Stock-based compensation expense and the associated tax b enefits impacting our Consolidated Statements of Income were as follows: Year Ended December 31, (In thousands) 2021 2020 Compensation costs for equity-based awards $ 7,261 $ 5,558 Compensation costs for liability-based awards 1,070 3,887 Total compensation costs, pre-tax $ 8,331 $ 9,445 Future tax benefit $ 1,810 $ 2,040 |
Schedule of Non-Qualified Stock Options, Activity | A summary of the status of our NQOs as of December 31, 2021, 2020 and 2019 and changes during the years then ended is presented below: Year Ended December 31, 2021 2020 2019 (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Shares Weighted Average Exercise Price Per Share Outstanding at January 1, 74 $ 23.37 77 $ 23.30 251 $ 23.00 Granted — $ — — $ — — $ — Exercised (15) $ 24.04 (3) $ 21.43 (161) $ 22.74 Forfeited, canceled or expired — $ — — $ — (13) $ 24.47 Outstanding at December 31, 59 $ 23.19 74 $ 23.37 77 $ 23.30 Options exercisable 59 $ 23.19 74 $ 23.37 59 $ 23.35 |
Schedule of Non-Qualified Stock Options Outstanding and Exercisable | The following table summarizes information about NQOs outstanding and exercisable as of December 31, 2021: (In thousands, except per share data) Options Outstanding and Exercisable Range of Exercise Prices Per Share Number Weighted Average Remaining Contractual Life (In Years) Weighted Average Exercise Price Per Share Aggregate Intrinsic Value $20.06 - $21.98 44 4.03 $ 21.56 $ 1,049 $24.61 - $32.49 15 2.53 27.83 274 Total options and aggregate intrinsic value 59 3.63 $ 23.19 $ 1,323 |
Schedule of Restricted Stock Units, Activity | The table below provides a roll-forward of outstanding RSUs for the years ended December 31, 2021, 2020, and 2019. Year Ended December 31, 2021 2020 2019 (In thousands, except per share data) Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 253 $ 41.67 301 $ 30.30 257 $ 28.90 Granted 155 $ 56.43 130 $ 51.82 206 $ 30.03 Vested (137) $ 40.04 (152) $ 30.60 (138) $ 31.92 Issued in exchange — $ — 16 $ 52.28 — $ — Cancelled in exchange — $ — (16) $ 29.00 — $ — Forfeited or canceled (26) $ 48.73 (26) $ 45.59 (24) $ 35.57 Outstanding at December 31, 245 $ 51.18 253 $ 41.67 301 $ 30.30 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021USD ($)segment | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Accounting Policies [Line Items] | ||||
Number of reportable segments | segment | 1 | |||
Equity investment balance | $ 5,400 | $ 1,400 | ||
Share of income from equity method investments | 1,900 | 600 | $ 1,000 | |
Restricted cash | 0 | 1,800 | ||
Cash, cash equivalents and restricted cash | $ 38,513 | $ 68,727 | $ 35,318 | $ 66,145 |
Minimum | ||||
Accounting Policies [Line Items] | ||||
Finite lived intangible asset amortization period | 4 years | |||
Maximum | ||||
Accounting Policies [Line Items] | ||||
Finite lived intangible asset amortization period | 12 years | |||
Buildings and improvements | Minimum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Buildings and improvements | Maximum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 11 years | |||
Machinery, equipment and vehicles | Minimum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Machinery, equipment and vehicles | Maximum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 12 years | |||
Office furniture and equipment, computers and software | Minimum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Office furniture and equipment, computers and software | Maximum | ||||
Accounting Policies [Line Items] | ||||
Estimated useful life | 7 years | |||
High Desert Support Services (HDSS) | ||||
Accounting Policies [Line Items] | ||||
Ownership | 40.00% | |||
J&J Maintenance | ||||
Accounting Policies [Line Items] | ||||
Ownership | 50.00% | |||
Servcore Resources and Services Solutions, LLC | ||||
Accounting Policies [Line Items] | ||||
Ownership | 40.00% |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Thousands | Dec. 31, 2020USD ($) | Jul. 08, 2019USD ($)intangible_asset | Dec. 31, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Purchase price | $ (262) | $ 133,609 | $ 45,074 | |||
Adjustments to preliminary purchase price allocation | 13,400 | |||||
Goodwill | $ 339,702 | $ 321,734 | 321,734 | 339,702 | 261,983 | |
Amortization of intangible assets | 10,028 | 4,029 | 3,111 | |||
Acquisition-related costs | 4,200 | 1,000 | ||||
Zenetex | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Consideration transferred | 117,600 | |||||
Purchase price | 122,800 | |||||
Working capital shortfall | 5,200 | |||||
Purchase price allocation adjustment, intangible assets | 23,900 | |||||
Purchase price allocation adjustment, other current liabilities | 14,200 | |||||
Purchase price allocation adjustment, accounts payable | 3,100 | |||||
Adjustments to preliminary purchase price allocation | 13,383 | |||||
Goodwill | 53,541 | 53,541 | ||||
Pro forma revenue | 238,000 | $ 208,800 | ||||
HHB | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Consideration transferred | 15,500 | |||||
Purchase price allocation adjustment, intangible assets | 4,600 | |||||
Adjustments to preliminary purchase price allocation | $ 4,500 | $ 4,585 | ||||
Goodwill | 6,100 | 6,100 | ||||
Advantor | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Consideration transferred | $ 45,100 | |||||
Purchase price | 44,000 | |||||
Adjustments to preliminary purchase price allocation | (147) | |||||
Goodwill | 28,511 | |||||
Working capital adjustment | $ 1,100 | |||||
Number of intangible assets acquired | intangible_asset | 2 | |||||
Trade names and other | Advantor | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets | $ 1,100 | |||||
Useful life | 4 years 6 months | |||||
Customer contracts | Zenetex | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets | $ 57,100 | 57,100 | ||||
Useful life | 11 years 9 months 18 days | |||||
Customer contracts | HHB | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets | $ 8,600 | $ 8,600 | ||||
Useful life | 7 years 4 months 24 days | |||||
Customer contracts | Advantor | ||||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible assets | $ 7,200 | |||||
Useful life | 5 years |
Acquisitions - Schedule of Busi
Acquisitions - Schedule of Business Acquisition (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 08, 2019 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 321,734 | $ 339,702 | $ 261,983 | |
Zenetex | ||||
Business Acquisition [Line Items] | ||||
Receivables | 40,144 | |||
Deferred taxes | 88 | |||
Other current assets | 1,314 | |||
Property, plant and equipment | 1,108 | |||
Goodwill | 53,541 | |||
Intangible assets | 57,100 | |||
Right-of-use assets | 7,930 | |||
Accounts payable | (7,381) | |||
Other current liabilities | (15,821) | |||
Accrued compensation | (12,087) | |||
Lease liabilities | (8,275) | |||
Other non-current liabilities | (55) | |||
Purchase price, net of cash acquired | $ 117,606 | |||
Advantor | ||||
Business Acquisition [Line Items] | ||||
Receivables | $ 11,388 | |||
Other current assets | 2,719 | |||
Property, plant and equipment | 155 | |||
Goodwill | 28,511 | |||
Intangible assets | 8,300 | |||
Other non-current assets | 1,868 | |||
Accounts payable | (4,223) | |||
Other current liabilities | (1,519) | |||
Accrued compensation | (907) | |||
Other non-current liabilities | (1,218) | |||
Purchase price, net of cash acquired | $ 45,074 |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
Performance obligation timing | The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year (or less) option periods. | |
Increase in remaining performance obligations | $ 404.6 | |
Performance Obligations | $ 1,398 | $ 993 |
Revenue - Performance Obligat_2
Revenue - Performance Obligations (Percentage and Remaining Period of Time) (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | Dec. 31, 2021 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 77.00% |
Remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue - Contract Estimates (D
Revenue - Contract Estimates (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |||
Unfavorable adjustments to operating income | $ 1.3 | $ 3.7 | |
Favorable adjustments to operating income | $ 3.1 | ||
Favorable adjustments to revenue | $ 0.4 | $ 4.4 | |
Unfavorable adjustments to revenue | $ 1.8 |
Revenue - Revenue by Contract T
Revenue - Revenue by Contract Type (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 1,783,665 | $ 1,395,529 | $ 1,382,525 |
Cost-plus and cost-reimbursable | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 1,271,167 | 955,506 | 1,015,963 |
Firm-fixed-price | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 452,112 | 403,994 | 334,510 |
Time and material | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 60,386 | $ 36,029 | $ 32,052 |
Revenue - Revenue by Geographic
Revenue - Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 1,783,665 | $ 1,395,529 | $ 1,382,525 |
Middle East | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 1,000,877 | 902,162 | 939,685 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 578,255 | 328,214 | 301,991 |
Europe | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 142,606 | 155,169 | 137,915 |
Asia | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 61,927 | $ 9,984 | $ 2,934 |
Revenue - Revenue by Contract R
Revenue - Revenue by Contract Relationship (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 1,783,665 | $ 1,395,529 | $ 1,382,525 |
Prime contractor | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 1,663,828 | 1,324,628 | 1,312,928 |
Subcontractor | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 119,837 | $ 70,901 | $ 69,597 |
Revenue - Revenue by Customer (
Revenue - Revenue by Customer (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 1,783,665 | $ 1,395,529 | $ 1,382,525 |
Army | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 1,134,849 | 965,558 | 958,582 |
Air Force | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 266,291 | 299,272 | 306,767 |
Navy | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | 224,407 | 68,748 | 56,236 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenue | $ 158,118 | $ 61,951 | $ 60,940 |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) $ in Millions | Dec. 31, 2021USD ($) |
Revenue from Contract with Customer [Abstract] | |
Contract assets | $ 240 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Billed receivables | $ 104,074 | $ 102,045 |
Unbilled receivables (contract assets) | 239,979 | 203,127 |
Other | 4,552 | 9,787 |
Total Receivables | $ 348,605 | $ 314,959 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic and Diluted Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net income | $ 45,728 | $ 36,951 | $ 33,176 |
Weighted average common shares outstanding - basic (in shares) | 11,705 | 11,599 | 11,444 |
Add: Dilutive impact of stock options (in shares) | 37 | 37 | 47 |
Weighted average number of shares outstanding - diluted (in shares) | 11,836 | 11,751 | 11,612 |
Basic earnings per share (in dollars per share) | $ 3.91 | $ 3.19 | $ 2.90 |
Diluted earnings per share (in dollars per share) | $ 3.86 | $ 3.14 | $ 2.86 |
Anti-dilutive restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Add: Dilutive impact of restricted stock units (in shares) | 94 | 115 | 121 |
Earnings Per Share Earnings Per
Earnings Per Share Earnings Per Share - Anti-dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Anti-dilutive restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive stock options (in shares) | 1 | 2 | 4 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net - Plant, Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 43,660 | $ 37,263 |
Less: accumulated depreciation and amortization | (19,902) | (14,690) |
Property, plant and equipment, net | 23,758 | 22,573 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 2,232 | 2,143 |
Machinery, equipment and vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 19,756 | 17,774 |
Office furniture and equipment, computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 21,672 | $ 17,346 |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 6,526 | $ 4,097 | $ 3,379 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
Amortization of intangible assets | $ 10,028,000 | $ 4,029,000 | $ 3,111,000 |
Weighted average remaining useful life | 9 years 6 months |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 339,702 | $ 261,983 | |
Adjustments to preliminary purchase price allocation | (13,400) | ||
Goodwill, ending balance | $ 321,734 | 321,734 | 339,702 |
Advantor | |||
Goodwill [Roll Forward] | |||
Adjustments to preliminary purchase price allocation | 147 | ||
HHB Systems | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 6,100 | ||
Adjustments to preliminary purchase price allocation | $ (4,500) | (4,585) | |
Goodwill acquired | 10,647 | ||
Goodwill, ending balance | 6,100 | ||
Zenetex | |||
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | 53,541 | ||
Adjustments to preliminary purchase price allocation | $ (13,383) | ||
Goodwill acquired | 66,925 | ||
Goodwill, ending balance | $ 53,541 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Identifiable Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 85,749 | $ 57,243 |
Accumulated Amortization | (19,167) | (9,138) |
Net Carrying Amount | 66,582 | 48,105 |
Contract backlogs and recompetes | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 77,300 | 48,800 |
Accumulated Amortization | (14,988) | (6,645) |
Net Carrying Amount | 62,312 | 42,155 |
Customer contracts | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,200 | 7,200 |
Accumulated Amortization | (3,572) | (2,133) |
Net Carrying Amount | 3,628 | 5,067 |
Trade names and other | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,249 | 1,243 |
Accumulated Amortization | (607) | (360) |
Net Carrying Amount | $ 642 | $ 883 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Schedule of Amortization Expense (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 | $ 8,499 |
2023 | 8,403 |
2024 | 7,296 |
2025 | 6,499 |
2026 | 6,028 |
After 2026 | $ 29,857 |
Composition of Certain Financ_3
Composition of Certain Financial Statement Captions - Schedule of Compensation and Other Employee Benefits (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Compensation and Other Employee Benefits | ||
Accrued salaries and wages | $ 37,883 | $ 42,206 |
Accrued bonus | 14,364 | 7,617 |
Accrued employee benefits | 28,037 | 29,745 |
Total | $ 80,284 | $ 79,568 |
Composition of Certain Financ_4
Composition of Certain Financial Statement Captions - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other Accrued Liabilities | ||
Contract related reserves | $ 15,699 | $ 13,064 |
Current operating lease liabilities | 11,983 | 6,245 |
Accrued non-payroll taxes | 6,425 | 124 |
Workers' compensation, auto and general liability reserve | 3,169 | 4,042 |
Other | 17,755 | 17,182 |
Total | $ 55,031 | $ 40,657 |
Composition of Certain Financ_5
Composition of Certain Financial Statement Captions - Schedule of Other Non-current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Income taxes payable | $ 9,724 | $ 7,352 |
CARES Act payroll tax deferral | 8,448 | 16,806 |
Other | 1,956 | 4,197 |
Other non-current liabilities | $ 20,128 | $ 28,355 |
Debt - Additional Information (
Debt - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2021USD ($)letters_of_credit | Dec. 31, 2020USD ($) | Dec. 24, 2020USD ($) | |
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 100,000,000 | ||
Accordion feature, increase limit | 100,000,000 | ||
Letters of credit | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 25,000,000 | ||
Number of letters of credit outstanding | letters_of_credit | 2 | ||
Letters of credit outstanding | $ 2,700,000 | ||
Amended Revolver | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 270,000,000 | ||
Line of credit | 50,000,000 | $ 115,000,000 | |
Available borrowing capacity | 217,300,000 | ||
Amended Term Loan | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 75,000,000 | ||
Line of credit | $ 55,400,000 | $ 64,000,000 | |
Amended Term Loan and Revolver | |||
Debt Instrument [Line Items] | |||
Covenant terms, ratio of total indebtedness to combined EBITDA | 3 | ||
Covenant terms, maximum debt to EBITDA ratio, 12 months following purchase | 3.50 | ||
Covenant terms, ratio of combined EBITDA to combined interest expense | 4.50 | ||
Ratio of total indebtedness to combined EBITDA | 1.2 | ||
Ratio of combined EBITDA to combined interest expense | 12.39 | ||
Interest rate | 2.11% | ||
Amended Term Loan and Revolver | Minimum | |||
Debt Instrument [Line Items] | |||
Undrawn portion of revolving facility, commitment fee percentage | 0.30% | ||
Amended Term Loan and Revolver | Maximum | |||
Debt Instrument [Line Items] | |||
Undrawn portion of revolving facility, commitment fee percentage | 0.45% | ||
Amended Term Loan and Revolver | SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 1.75% | ||
Amended Term Loan and Revolver | SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 2.50% | ||
Amended Term Loan and Revolver | Base rate | Minimum | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 0.75% | ||
Amended Term Loan and Revolver | Base rate | Maximum | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 1.50% | ||
Quarterly Fiscal Quarters December 31, 2021 Through September 30, 2023 | Amended Term Loan | |||
Debt Instrument [Line Items] | |||
Line of credit | 2,600,000 | ||
Due November 15, 2023 | Amended Term Loan | |||
Debt Instrument [Line Items] | |||
Line of credit | $ 37,200,000 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Term Facility (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2022 | $ 10,400 |
2023 | 95,000 |
Total | $ 105,400 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Interest rate swap | |||
Derivative [Line Items] | |||
Accumulated other comprehensive loss, losses expected to be reclassified | $ 0.7 | ||
Interest rate swap | Cash flow hedging | Designated as hedging instrument | |||
Derivative [Line Items] | |||
Derivative notional amount | 41.8 | ||
Gains (losses) on derivative instruments | (1) | $ (0.9) | $ (0.1) |
Foreign exchange forward | |||
Derivative [Line Items] | |||
Gains (losses) on derivative instruments | 0.1 | $ (0.1) | $ (0.6) |
Accumulated other comprehensive loss, losses expected to be reclassified | 0.1 | ||
Foreign exchange forward | Cash flow hedging | Designated as hedging instrument | |||
Derivative [Line Items] | |||
Derivative notional amount | $ 0.5 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Hedges in the Consolidated Balance Sheets (Details) - Designated as hedging instrument - Cash flow hedging - Interest rate swap - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other accrued liabilities | ||
Derivative [Line Items] | ||
Interest rate swap liabilities designated as cash flow hedge | $ 666 | |
Interest rate swap assets designated as cash flow hedge | $ 1,015 | |
Other non-current liabilities | ||
Derivative [Line Items] | ||
Interest rate swap assets designated as cash flow hedge | $ 750 |
Derivative instruments - Forwar
Derivative instruments - Forward Contract Hedges in the Consolidated Balance Sheets (Details) - Foreign exchange forward - Designated as hedging instrument - Cash flow hedging - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Other accrued liabilities | ||
Derivative [Line Items] | ||
Foreign currency forward contracts designated as cash flow hedge | $ 30 | |
Other current assets | ||
Derivative [Line Items] | ||
Foreign currency forward contracts designated as cash flow hedge | $ 404 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Lessee, Lease, Description [Line Items] | |
ROA assets from operating lease arrangements | $ 35.3 |
Weighted average remaining lease term | 5 years 2 months 12 days |
Weighted average discount rate | 3.70% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Term of lease | 10 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease expense | $ 11,477 | $ 6,952 |
Variable lease expense | 783 | 736 |
Short-term lease expense | 62,124 | 53,528 |
Total lease expense | $ 74,384 | $ 61,216 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Right-of-use assets | $ 43,651 | $ 18,718 |
Current lease liabilities (recorded in other accrued liabilities) | $ 11,983 | $ 6,245 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued liabilities | Other accrued liabilities |
Long-term operating lease liabilities | $ 34,536 | $ 13,970 |
Total operating lease liabilities | $ 46,519 | $ 20,215 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2022 | $ 13,198 | |
2023 | 12,762 | |
2024 | 8,228 | |
2025 | 4,166 | |
2026 | 3,479 | |
After 2026 | 10,163 | |
Total minimum lease payments | 51,996 | |
Less: Imputed interest | (5,477) | |
Total operating lease liabilities | $ 46,519 | $ 20,215 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Components | |||
United States | $ 51,532 | $ 33,946 | $ 37,521 |
Foreign | 2,503 | 4,736 | 5,658 |
Income from operations before income taxes | 54,035 | 38,682 | 43,179 |
Current income tax provision | |||
United States-Federal | 11,860 | 9,920 | 12,017 |
United States-State and local | 740 | 735 | 866 |
Foreign | 1,477 | 1,704 | 3,883 |
Total current income tax provision | 14,077 | 12,359 | 16,766 |
Deferred income tax provision (benefit) | |||
United States-Federal | (5,008) | (9,953) | (6,689) |
United States-State and local | (211) | (342) | (387) |
Foreign | (551) | (333) | 313 |
Total deferred income tax provision (benefit) | (5,770) | (10,628) | (6,763) |
Total income tax expense | $ 8,307 | $ 1,731 | $ 10,003 |
Effective income tax rate | 15.40% | 4.50% | 23.20% |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Tax provision at U.S. statutory rate | 21.00% | 21.00% | 21.00% |
State and local income tax, net of federal benefit | 1.10% | 1.50% | 0.80% |
Foreign taxes | 0.30% | 0.80% | 0.50% |
Uncertain tax positions | 4.10% | (4.50%) | 8.00% |
Prior year true-ups | (0.50%) | 0.30% | 0.40% |
Foreign derived intangible income deduction | (7.30%) | (13.80%) | (8.00%) |
Credits | (3.80%) | (1.00%) | (1.30%) |
Other | 0.50% | 0.20% | 1.80% |
Effective income tax rate | 15.40% | 4.50% | 23.20% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets | ||
Compensation and benefits | $ 8,125 | $ 7,180 |
Reserves | 4,632 | 4,359 |
Lease liability | 10,204 | 4,818 |
Social security deferral | 1,874 | 3,717 |
Other | 2,515 | 581 |
Net operating losses | 1,912 | 1,889 |
Total deferred tax assets | 29,262 | 22,544 |
Deferred tax liabilities | ||
Goodwill and intangibles | (47,228) | (46,493) |
Unbilled receivables | 0 | (5,043) |
Property, plant and equipment, net | (2,179) | (2,492) |
Right-of-use assets | (9,571) | (4,479) |
Other liabilities | (1,845) | (1,669) |
Total deferred tax liabilities | (60,823) | (60,176) |
Net deferred tax liabilities | $ (31,561) | $ (37,632) |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits-January 1, | $ 7,411 | $ 7,945 | $ 1,755 |
Additions for: | |||
Current year tax positions | 2,139 | 2,765 | 3,613 |
Prior year tax positions | 251 | 0 | 2,577 |
Reductions for: | |||
Lapse of statute of limitations | (480) | 0 | 0 |
Prior year tax positions | 0 | (3,299) | 0 |
Unrecognized tax benefits-December 31, | $ 9,321 | $ 7,411 | $ 7,945 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | 36 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2020 | |
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
Unrecognized tax benefits | $ 9,321 | $ 7,411 | $ 7,945 | $ 1,755 | $ 7,411 |
Decrease in unrecognized tax benefits reasonably possible in next twelve months | 1,700 | ||||
Unrecognized tax benefits that would affect the effective tax rate | 9,300 | 7,100 | 7,500 | 7,100 | |
FDII income tax benefit | 1,800 | 2,600 | 2,500 | $ 2,000 | 7,100 |
Interest expense related to tax matters | 200 | 0 | $ 200 | ||
Accrued interest and penalties | 400 | $ 200 | $ 200 | ||
Foreign | |||||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible [Line Items] | |||||
NOL carryforwards | $ 5,500 |
Post Employment Benefit Plans (
Post Employment Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021USD ($)plan | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Retirement Benefits [Abstract] | |||
Number of defined contribution plan | plan | 2 | ||
Portion of contributions charged to income | $ 8.7 | $ 6.5 | |
Multiemployer plan, employer contribution | 1.1 | 3 | $ 4.9 |
Deferred compensation plan assets | $ 0.5 | ||
Benefits plan vesting percentage | 100.00% | ||
Benefit contributions accrued | $ 0.2 | $ 0.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Sep. 30, 2021USD ($)extension_option | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Loss Contingencies [Line Items] | |||
Annual obligation | $ | $ 20 | ||
Lease Extension Tranche One | |||
Loss Contingencies [Line Items] | |||
Number of lease extension options | extension_option | 8 | ||
Lease extension term | 1 year | ||
Lease Extension Tranche Two | |||
Loss Contingencies [Line Items] | |||
Number of lease extension options | extension_option | 1 | ||
Lease extension term | 6 months | ||
Contract Compliance | |||
Loss Contingencies [Line Items] | |||
Loss contingency accrual | $ | $ 9.6 | $ 11.7 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 11, 2020 | Jan. 31, 2022 | Jan. 31, 2021 | Jan. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation cost for awards | $ 8,331 | $ 9,445 | |||||
Equity Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | $ 5,300 | ||||||
Unrecognized compensation costs, period for recognition | 1 year 9 months 3 days | ||||||
Compensation cost for awards | $ 7,261 | 5,558 | |||||
Liability Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based liabilities paid | 2,500 | 2,400 | |||||
Unrecognized compensation costs | $ 1,600 | ||||||
Unrecognized compensation costs, period for recognition | 1 year 7 months 17 days | ||||||
Compensation cost for awards | $ 1,070 | 3,887 | |||||
Non-Qualified Stock Options (NQO) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expiration from the date of grant | 10 years | ||||||
Stock price (in dollars per share) | $ 45.77 | ||||||
Options exercised in period, intrinsic value | $ 400 | 100 | $ 2,100 | ||||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | $ 400 | ||||||
RSU's vested in period, fair value | $ 5,500 | $ 4,600 | $ 4,100 | ||||
Shares cancelled in exchanged (in shares) | 15,839 | 0 | 16,000 | 0 | |||
Shares issued in exchange (in shares) | 15,839 | 0 | 16,000 | 0 | |||
Shares issued in exchange, fair value (in dollars per share) | $ 52.28 | $ 0 | $ 52.28 | $ 0 | |||
Key Employees | Total Shareholder Return Awards (TSR) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Aggregate award target value | $ 2,200 | $ 3,100 | $ 2,500 | ||||
Compensation cost for awards | 1,100 | 3,600 | $ 2,900 | ||||
Cash paid to settle awards | $ 2,500 | $ 1,600 | |||||
Compensation and other employee benefits non-current | $ 4,500 | $ 6,000 | |||||
Key Employees | Total Shareholder Return Awards (TSR) | Subsequent event | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Cash paid to settle awards | $ 2,900 | ||||||
Key Employees | Minimum | Total Shareholder Return Awards (TSR) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of shareholder return award target | 0.00% | ||||||
Key Employees | Maximum | Total Shareholder Return Awards (TSR) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of shareholder return award target | 200.00% | ||||||
2014 Omnibus Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum number of shares of Company's common stock authorized for issuance (in shares) | 2,600,000 | ||||||
Shares available (in shares) | 800,000 | ||||||
Share-based Compensation Award, Tranche One | Non-Qualified Stock Options (NQO) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
Share-based Compensation Award, Tranche One | Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
Share-based Compensation Award, Tranche Two | Non-Qualified Stock Options (NQO) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
Share-based Compensation Award, Tranche Two | Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
Share-based Compensation Award, Tranche Three | Non-Qualified Stock Options (NQO) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
Share-based Compensation Award, Tranche Three | Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Impact of Stock-Based Compensation in Consolidated and Combined Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | $ 8,331 | $ 9,445 |
Future tax benefit | 1,810 | 2,040 |
Compensation costs for equity-based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | 7,261 | 5,558 |
Compensation costs for liability-based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Compensation cost for awards | $ 1,070 | $ 3,887 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Non-Qualified Stock Options, Activity (Details) - Non-Qualified Stock Options (NQO) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Shares | |||
Outstanding at beginning of year (in shares) | 74 | 77 | 251 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | (15) | (3) | (161) |
Forfeited, canceled or expired (in shares) | 0 | 0 | (13) |
Outstanding at end of year (in shares) | 59 | 74 | 77 |
Options exercisable (in shares) | 59 | 74 | 59 |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of year (in dollars per share) | $ 23.37 | $ 23.30 | $ 23 |
Granted (in dollars per share) | 0 | 0 | 0 |
Exercised (in dollars per share) | 24.04 | 21.43 | 22.74 |
Forfeited, canceled or expired (in dollars per share) | 0 | 0 | 24.47 |
Outstanding at end of year (in dollars per share) | 23.19 | 23.37 | 23.30 |
Options exercisable (in dollars per share) | $ 23.19 | $ 23.37 | $ 23.35 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Non-Qualified Stock Options Outstanding and Exercisable (Details) - Non-Qualified Stock Options (NQO) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 59 | 74 | 77 | 251 |
Options outstanding, weighted average remaining contractual life | 3 years 7 months 17 days | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 23.19 | $ 23.37 | $ 23.30 | $ 23 |
Options outstanding, aggregate intrinsic value | $ 1,323 | |||
Range of exercise prices one | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 44 | |||
Options outstanding, weighted average remaining contractual life | 4 years 10 days | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 21.56 | |||
Options outstanding, aggregate intrinsic value | $ 1,049 | |||
Exercise price per share, lower range (in dollars per share) | $ 20.06 | |||
Exercise price per share, upper range (in dollars per share) | $ 21.98 | |||
Range of exercise prices two | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||
Options outstanding (in shares) | 15 | |||
Options outstanding, weighted average remaining contractual life | 2 years 6 months 10 days | |||
Options outstanding, weighted average price per share (in dollars per share) | $ 27.83 | |||
Options outstanding, aggregate intrinsic value | $ 274 | |||
Exercise price per share, lower range (in dollars per share) | $ 24.61 | |||
Exercise price per share, upper range (in dollars per share) | $ 32.49 |
Stock-Based Compensation - Sc_4
Stock-Based Compensation - Schedule of Restricted Stock Units, Activity (Details) - Restricted Stock Units (RSUs) - $ / shares | Aug. 11, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Shares | ||||
Outstanding at beginning of year (in shares) | 253,000 | 301,000 | 257,000 | |
Granted (in shares) | 155,000 | 130,000 | 206,000 | |
Vested (in shares) | (137,000) | (152,000) | (138,000) | |
Issued in exchange (in shares) | 15,839 | 0 | 16,000 | 0 |
Cancelled in exchange (in shares) | (15,839) | 0 | (16,000) | 0 |
Forfeited or canceled (in shares) | (26,000) | (26,000) | (24,000) | |
Outstanding at end of year (in shares) | 245,000 | 253,000 | 301,000 | |
Weighted Average Exercise Price Per Share | ||||
Outstanding at beginning of year (in dollars per share) | $ 41.67 | $ 30.30 | $ 28.90 | |
Granted (in dollars per share) | 56.43 | 51.82 | 30.03 | |
Vested (in dollars per share) | 40.04 | 30.60 | 31.92 | |
Issued in exchange (in dollars per share) | $ 52.28 | 0 | 52.28 | 0 |
Cancelled in exchange (in dollars per share) | 0 | 29 | 0 | |
Forfeited or canceled (in dollars per share) | 48.73 | 45.59 | 35.57 | |
Outstanding at end of year (in dollars per share) | $ 51.18 | $ 41.67 | $ 30.30 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - shares | Dec. 31, 2021 | Dec. 31, 2020 |
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, shares issued (in shares) | 11,738,000 | 11,625,000 |
Common stock, shares outstanding (in shares) | 11,738,000 | 11,625,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
2014 Omnibus Plan | ||
Class of Stock [Line Items] | ||
Maximum number of shares of Company's common stock authorized for issuance (in shares) | 2,600,000 | |
Shares available (in shares) | 800,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - Scenario, Forecast $ in Millions | Mar. 07, 2022USD ($) |
Subsidiary, Sale of Stock [Line Items] | |
Termination fee | $ 16.6 |
Vectrus | Vertex | |
Subsidiary, Sale of Stock [Line Items] | |
Percentage of ownership after transaction | 62.00% |
Vectrus | Vectrus Existing Shareholders | |
Subsidiary, Sale of Stock [Line Items] | |
Percentage of ownership after transaction | 38.00% |
Uncategorized Items - vec-20211
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2018-02 [Member] |