Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 27, 2020 | Oct. 31, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 27, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-38643 | |
Entity Registrant Name | PAE INCORPORATED | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-3173473 | |
Entity Address, Address Line One | 7799 Leesburg Pike | |
Entity Address, Address Line Two | Suite 300 North | |
Entity Address, City or Town | Falls Church | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22043 | |
City Area Code | 703 | |
Local Phone Number | 717-6000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 92,040,654 | |
Entity Central Index Key | 0001720821 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-31 | |
Class A Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | PAE | |
Security Exchange Name | NASDAQ | |
Warrants | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Warrants | |
Trading Symbol | PAEWW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 666,240 | $ 697,717 | $ 1,926,795 | $ 2,066,808 |
Cost of revenues | 512,877 | 565,703 | 1,474,763 | 1,623,634 |
Selling, general and administrative expenses | 119,168 | 133,215 | 361,945 | 394,689 |
Amortization of intangible assets | 8,047 | 8,176 | 24,141 | 25,029 |
Total operating expenses | 640,092 | 707,094 | 1,860,849 | 2,043,352 |
Program profit (loss) | 26,148 | (9,377) | 65,946 | 23,456 |
Other income (loss), net | 2,384 | (1,148) | 4,338 | 6,530 |
Operating income (loss) | 28,532 | (10,525) | 70,284 | 29,986 |
Interest expense, net | (13,607) | (20,983) | (48,312) | (65,260) |
Income (loss) before income taxes | 14,925 | (31,508) | 21,972 | (35,274) |
Expense (benefit) from income taxes | 4,194 | 117 | (767) | (1,877) |
Net income (loss) | 10,731 | (31,625) | 22,739 | (33,397) |
Noncontrolling interest in earnings of ventures | 413 | 545 | 1,344 | 1,819 |
Net income (loss) | $ 10,318 | $ (32,170) | $ 21,395 | $ (35,216) |
Net income (loss) per share attributed to PAE Incorporated: | ||||
Basic (in dollars per share) | $ 0.11 | $ (1.52) | $ 0.26 | $ (1.67) |
Diluted (in dollars per share) | $ 0.11 | $ (1.52) | $ 0.26 | $ (1.67) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 92,070,306 | 21,127,823 | 81,323,258 | 21,127,823 |
Diluted (in shares) | 93,392,565 | 21,127,823 | 82,115,825 | 21,127,823 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 10,731 | $ (31,625) | $ 22,739 | $ (33,397) |
Other comprehensive income (loss): | ||||
Change in foreign currency translation adjustment, net of tax | 780 | (432) | (137) | (557) |
Other, net | 1 | 422 | 424 | 1,265 |
Other comprehensive income (loss) | 781 | (10) | 287 | 708 |
Comprehensive income (loss) | 11,512 | (31,635) | 23,026 | (32,689) |
Comprehensive income attributed to noncontrolling interests | 505 | 298 | 1,287 | 1,523 |
Comprehensive income (loss) attributed to PAE Incorporated | $ 11,007 | $ (31,933) | $ 21,739 | $ (34,212) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 145,446 | $ 68,035 |
Accounts receivable, net | 445,429 | 442,180 |
Prepaid expenses and other current assets | 44,363 | 43,549 |
Total current assets | 635,238 | 553,764 |
Property and equipment, net | 25,696 | 30,404 |
Deferred income taxes, net | 13,419 | 3,212 |
Investments | 18,961 | 17,925 |
Goodwill | 409,588 | 409,588 |
Intangible assets, net | 156,323 | 180,464 |
Operating lease right-of-use assets, net | 159,975 | 162,184 |
Other noncurrent assets | 9,762 | 13,758 |
Total assets | 1,428,962 | 1,371,299 |
Current liabilities: | ||
Accounts payable | 140,515 | 124,661 |
Accrued expenses | 103,025 | 102,315 |
Customer advances and billings in excess of costs | 60,390 | 51,439 |
Salaries, benefits and payroll taxes | 141,537 | 130,633 |
Accrued taxes | 13,604 | 18,488 |
Current portion of long-term debt, net | 23,044 | 22,007 |
Operating lease liabilities, current portion | 40,979 | 36,997 |
Other current liabilities | 31,528 | 30,893 |
Total current liabilities | 554,622 | 517,433 |
Long-term debt, net | 584,038 | 727,930 |
Long-term operating lease liabilities | 120,883 | 129,244 |
Other long-term liabilities | 7,410 | 8,601 |
Total liabilities | 1,266,953 | 1,383,208 |
Stockholders’ equity: | ||
Preferred stock, $0.0001 par value per share, 1,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value per share: 210,000,000 shares authorized; 92,040,654 and 21,127,823 shares issued and outstanding as of September 27, 2020 and December 31, 2019, respectively | 9 | 2 |
Additional paid-in capital | 250,805 | 101,743 |
Accumulated deficit | (123,975) | (145,371) |
Accumulated other comprehensive income (loss) | 153 | (134) |
Total PAE Incorporated stockholders' equity | 126,992 | (43,760) |
Noncontrolling interests | 35,017 | 31,851 |
Total liabilities and equity | $ 1,428,962 | $ 1,371,299 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands | Total | Previously Reported | Restatement Adjustment | Total PAE Incorporated Stockholders' Equity | Total PAE Incorporated Stockholders' EquityPreviously Reported | Common Stock | Common StockPreviously Reported | Common StockRestatement Adjustment | Additional Paid-in Capital | Additional Paid-in CapitalPreviously Reported | Additional Paid-in CapitalRestatement Adjustment | Accumulated Deficit | Accumulated DeficitPreviously Reported | Accumulated Other Comprehensive (Loss) / Income | Accumulated Other Comprehensive (Loss) / IncomePreviously Reported | Noncontrolling Interests | Noncontrolling InterestsPreviously Reported |
Beginning balance at Dec. 31, 2018 | $ 31,485 | $ 31,485 | $ 0 | $ 4,045 | $ 4,045 | $ 2 | $ 3 | $ (1) | $ 101,743 | $ 101,742 | $ 1 | $ (95,562) | $ (95,562) | $ (2,138) | $ (2,138) | $ 27,440 | $ 27,440 |
Beginning balance (in shares) at Dec. 31, 2018 | 21,127,823 | 282,047 | 20,845,776 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | (5,160) | (5,719) | (5,719) | 559 | |||||||||||||
Other comprehensive income (loss), net | 712 | 712 | 712 | ||||||||||||||
Equity contributions from venture partners | 1,350 | 1,350 | |||||||||||||||
Ending balance at Mar. 31, 2019 | 28,387 | (962) | $ 2 | 101,743 | (101,281) | (1,426) | 29,349 | ||||||||||
Ending balance (in shares) at Mar. 31, 2019 | 21,127,823 | ||||||||||||||||
Beginning balance at Dec. 31, 2018 | 31,485 | 31,485 | 0 | 4,045 | 4,045 | $ 2 | $ 3 | $ (1) | 101,743 | 101,742 | 1 | (95,562) | (95,562) | (2,138) | (2,138) | 27,440 | 27,440 |
Beginning balance (in shares) at Dec. 31, 2018 | 21,127,823 | 282,047 | 20,845,776 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | (33,397) | ||||||||||||||||
Other comprehensive income (loss), net | 708 | ||||||||||||||||
Ending balance at Sep. 29, 2019 | 3,455 | (30,462) | $ 2 | 101,743 | (130,777) | (1,430) | 33,917 | ||||||||||
Ending balance (in shares) at Sep. 29, 2019 | 21,127,823 | ||||||||||||||||
Beginning balance at Mar. 31, 2019 | 28,387 | (962) | $ 2 | 101,743 | (101,281) | (1,426) | 29,349 | ||||||||||
Beginning balance (in shares) at Mar. 31, 2019 | 21,127,823 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | 3,389 | 2,674 | 2,674 | 715 | |||||||||||||
Other comprehensive income (loss), net | 6 | 6 | 6 | ||||||||||||||
Net contributions from noncontrolling interests | 4,050 | 4,050 | |||||||||||||||
Distributions to venture partners and other | (742) | (742) | |||||||||||||||
Ending balance at Jun. 30, 2019 | 35,090 | 1,718 | $ 2 | 101,743 | (98,607) | (1,420) | 33,372 | ||||||||||
Ending balance (in shares) at Jun. 30, 2019 | 21,127,823 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | (31,625) | (32,170) | (32,170) | 545 | |||||||||||||
Other comprehensive income (loss), net | (10) | (10) | (10) | ||||||||||||||
Ending balance at Sep. 29, 2019 | 3,455 | (30,462) | $ 2 | 101,743 | (130,777) | (1,430) | 33,917 | ||||||||||
Ending balance (in shares) at Sep. 29, 2019 | 21,127,823 | ||||||||||||||||
Beginning balance at Dec. 31, 2019 | $ (11,909) | (11,909) | 0 | (43,760) | (43,760) | $ 2 | $ 3 | $ (1) | 101,743 | 101,742 | 1 | (145,371) | (145,371) | (134) | (134) | 31,851 | 31,851 |
Beginning balance (in shares) at Dec. 31, 2019 | 21,127,823 | 21,127,823 | 282,047 | 20,845,776 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | $ (4,777) | (4,943) | (4,943) | 166 | |||||||||||||
Other comprehensive income (loss), net | (695) | (695) | (695) | ||||||||||||||
Distributions to venture partners and other | 152 | 152 | |||||||||||||||
Equity contributions from venture partners | 13 | 13 | 13 | ||||||||||||||
Equity infusion from Gores III | 364,778 | 364,778 | $ 5 | 364,773 | |||||||||||||
Equity infusion from Gores III (in shares) | 46,999,787 | ||||||||||||||||
Private placement | 220,000 | 220,000 | $ 2 | 219,998 | |||||||||||||
Private placement (in shares) | 23,913,044 | ||||||||||||||||
Payment to Shay Stockholders | (424,243) | (424,243) | (424,243) | ||||||||||||||
Ending balance at Mar. 29, 2020 | 143,319 | 111,150 | $ 9 | 262,284 | (150,314) | (829) | 32,169 | ||||||||||
Ending balance (in shares) at Mar. 29, 2020 | 92,040,654 | ||||||||||||||||
Beginning balance at Dec. 31, 2019 | $ (11,909) | $ (11,909) | $ 0 | (43,760) | $ (43,760) | $ 2 | $ 3 | $ (1) | 101,743 | $ 101,742 | $ 1 | (145,371) | $ (145,371) | (134) | $ (134) | 31,851 | $ 31,851 |
Beginning balance (in shares) at Dec. 31, 2019 | 21,127,823 | 21,127,823 | 282,047 | 20,845,776 | |||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | $ 22,739 | ||||||||||||||||
Other comprehensive income (loss), net | 287 | ||||||||||||||||
Ending balance at Sep. 27, 2020 | $ 162,009 | 126,992 | $ 9 | 250,805 | (123,975) | 153 | 35,017 | ||||||||||
Ending balance (in shares) at Sep. 27, 2020 | 92,040,654 | 92,040,654 | |||||||||||||||
Beginning balance at Mar. 29, 2020 | $ 143,319 | 111,150 | $ 9 | 262,284 | (150,314) | (829) | 32,169 | ||||||||||
Beginning balance (in shares) at Mar. 29, 2020 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | 16,786 | 16,021 | 16,021 | 765 | |||||||||||||
Other comprehensive income (loss), net | 201 | 201 | 201 | ||||||||||||||
Distributions to venture partners and other | (443) | (443) | |||||||||||||||
Equity contributions from venture partners | 1,939 | 1,939 | |||||||||||||||
Payment to Shay Stockholders | (20,169) | (20,169) | (20,169) | ||||||||||||||
Stock-based compensation | 3,700 | 3,700 | 3,700 | ||||||||||||||
Ending balance at Jun. 28, 2020 | 145,333 | 110,903 | $ 9 | 245,815 | (134,293) | (628) | 34,430 | ||||||||||
Ending balance (in shares) at Jun. 28, 2020 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net (loss) income | 10,731 | 10,318 | 10,318 | 413 | |||||||||||||
Other comprehensive income (loss), net | 781 | 781 | 781 | ||||||||||||||
Equity contributions from venture partners | 28 | (146) | (146) | 174 | |||||||||||||
Payment to Shay Stockholders | 818 | 818 | 818 | ||||||||||||||
Stock-based compensation | 4,318 | 4,318 | 4,318 | ||||||||||||||
Ending balance at Sep. 27, 2020 | $ 162,009 | $ 126,992 | $ 9 | $ 250,805 | $ (123,975) | $ 153 | $ 35,017 | ||||||||||
Ending balance (in shares) at Sep. 27, 2020 | 92,040,654 | 92,040,654 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Operating activities | ||
Net income (loss) | $ 22,739 | $ (33,397) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation of property and equipment | 7,263 | 9,468 |
Amortization of intangible assets | 24,141 | 25,029 |
Amortization of debt issuance cost | 9,560 | 6,096 |
Stock-based compensation | 8,018 | 0 |
Net undistributed income from unconsolidated ventures | (3,533) | (2,253) |
Deferred income taxes, net | (11,229) | (1,872) |
Other non-cash activities, net | 382 | 35,598 |
Changes in operating assets and liabilities, net: | ||
Accounts receivable, net | (3,477) | 65,752 |
Accounts payable | 15,852 | 1,310 |
Accrued expenses | 765 | 12,217 |
Customer advances and billings in excess of costs | 8,923 | 34,179 |
Salaries, benefits and payroll taxes | 10,975 | 1,569 |
Inventories, net | 2,291 | (2,195) |
Prepaid expenses and other current assets | (4,409) | 1,050 |
Other current and noncurrent liabilities | 71 | (17,172) |
Investments | 2,793 | 3,314 |
Other noncurrent assets | 5,903 | (6,289) |
Accrued taxes | (4,904) | (3,527) |
Net cash provided by operating activities | 92,124 | 128,877 |
Investing activities | ||
Expenditures for property and equipment | (2,628) | (8,421) |
Other investing activities, net | (72) | 2,221 |
Net cash used in investing activities | (2,700) | (6,200) |
Financing activities | ||
Net contributions from noncontrolling interests | 2,095 | 5,400 |
Borrowings on long-term debt | 60,734 | 161,409 |
Repayments on long-term debt | (212,184) | (246,411) |
Payments of debt issuance costs | (964) | 0 |
Recapitalization from merger with Gores III | 605,713 | 0 |
Payment of underwriting and transaction costs | (27,267) | 0 |
Distribution to selling stockholders | (439,719) | 0 |
Other financing activities, net | (292) | (742) |
Net cash used in financing activities | (11,884) | (80,344) |
Effect of exchange rate changes on cash and cash equivalents | (129) | (1,486) |
Net increase in cash and cash equivalents | 77,411 | 40,847 |
Cash and cash equivalents at beginning of period | 68,035 | 51,097 |
Cash and cash equivalents at end of period | 145,446 | 91,944 |
Supplemental cash flow information | ||
Cash paid for interest | 35,085 | 40,628 |
Cash paid for taxes | $ 5,304 | $ 6,936 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) - Parenthetical - $ / shares | Sep. 27, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (in shares) | 210,000,000 | 210,000,000 |
Common stock issued (in shares) | 92,040,654 | 21,127,823 |
Common stock outstanding (in shares) | 92,040,654 | 21,127,823 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business PAE Incorporated, formerly known as Gores Holdings III, Inc. (“Gores III”), was originally incorporated in Delaware on October 23, 2017 as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more target businesses. On September 11, 2018, Gores III consummated its initial public offering (the “IPO”), following which our shares began trading on the Nasdaq Stock Market (“Nasdaq”). Unless the context otherwise indicates, references herein to the “Company" or “PAE” refer to PAE Incorporated and its consolidated subsidiaries. On February 10, 2020 (the “Closing Date”), the Company completed the previously announced business combination (the “Business Combination”) in which Shay Holding Corporation (“Shay”) was acquired by Gores III. The transaction was completed in a multi-step process pursuant to which Shay ultimately merged with and into a wholly-owned subsidiary of Gores III, with the Gores III subsidiary continuing as the surviving company. As a result of the Business Combination, each share of common stock of Shay was cancelled and converted into the right to receive a portion of the consideration payable in connection with the transaction and Gores III acquired Shay (as it existed immediately prior to the Second Merger, as such term is defined in the Merger Agreement) and its subsidiaries. Additionally, the stockholders of Shay as of immediately prior to the transaction hold a portion of the common stock of the Company. For accounting purposes, the Business Combination is treated as a reverse acquisition and recapitalization, in which Shay is considered the accounting acquirer (and legal acquiree) and Gores III is considered the accounting acquiree (and legal acquirer). Accordingly, as of the Closing Date, Shay’s historical results of operations replaced Gores III’s historical results of operations for periods prior to the Business Combination and the results of operations of both companies are included in the accompanying condensed consolidated financial statements for periods following the Closing Date. See Note 6 - “Business Combinations and Acquisitions” for additional information. PAE provides a wide variety of integrated support solutions, including defense and military readiness, diplomacy, intelligence support, business process outsourcing, counter-terrorism solutions, peacekeeping, development, host nation capacity building, aircraft and ground equipment maintenance and logistics, and operations and maintenance of facilities and infrastructure. Customers include agencies of the U.S. Government, such as the Department of Defense (“DoD”) and Department of State (“DoS”), the National Aeronautics and Space Administration (“NASA”), Department of Homeland Security, intelligence community agencies and other civilian agencies, as well as allied foreign governments and international organizations. The Company’s operations are organized into the following two reportable segments: • Global Mission Services (“GMS”): GMS provides infrastructure and logistics management, international logistics and stabilization support, and aircraft and vehicle readiness and sustainment support. The segment focuses on customer relationships with DoD, DoS, NASA, and other government agencies for work both in the United States and outside of the United States. • National Security Solutions (“NSS”): NSS provides counter-threat solutions, business process outsourcing, adjudication support services and full life cycle support for complex legal matters. NSS focuses on customer relationships in the areas of intelligence, defense and security, and with civilian agencies. The Company separately presents the costs associated with certain corporate functions as “Corporate”, which primarily include costs that are not reimbursed by the Company’s U.S. Government customers. |
Significant Accounting Principl
Significant Accounting Principles and Policies | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Principles and Policies | Significant Accounting Principles and Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In management’s opinion, all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2019, which are filed as Exhibit 99.3 to the Company’s Form 8-K/A filed with the SEC on March 11, 2020. The Company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business processes, and therefore the closing of books and records for the third quarter was on September 27, 2020 and September 29, 2019, respectively. The condensed consolidated financial statements and disclosures included herein are labeled based on that convention. This practice only affects interim periods, as the Company’s fiscal year ends on December 31. The condensed consolidated financial statements include the accounts of PAE Incorporated and subsidiaries and ventures in which the Company owns more than 50% or otherwise controls. All intercompany amounts have been eliminated in consolidation. Use of Estimates These consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates and assumptions, including assumptions to determine the fair value of acquired assets and liabilities, recoverability of long-lived assets, goodwill, valuation allowances on deferred taxes, inputs used in stock based compensation and anticipated contract costs and revenues utilized in the earnings recognition process, which affect the reported amounts in the consolidated financial statements and accompanying notes. Due to the size and nature of many of the Company’s programs, the estimation of total revenues and cost at completion is subject to a wide range of variables, including assumptions for schedule and technical issues. Actual results may differ from management’s estimates. Update to Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies described in the Company’s Form 8-K/A filed with the SEC on March 11, 2020, other than Accounts Receivable, net and Net Income (Loss) Per Share as described below. Accounts Receivable, net Amounts billed and due from customers are recorded as billed receivables within accounts receivable, net on the condensed consolidated balance sheets. Generally, customer accounts are due within 30 to 45 days of billings. The Company recognizes an allowance for credit losses based on historical experience, current conditions and reasonable and supportable forecasts. The Company assesses its overall allowance for credit losses at least on a quarterly basis. Prior to the implementation of ASU 2016-13 “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, the Company recorded adjustments to an allowance for doubtful accounts when collectability was uncertain. Net Income (Loss) Per Share Basic net income (loss) per common share is determined by dividing the net income (loss) allocable to stockholders by the weighted average number of common shares outstanding during the periods presented. Diluted income (loss) per share is computed by dividing the net income (loss) allocable to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding for the period. Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants at the measurement date. The valuation techniques the Company utilized to measure the fair value of financial instruments are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 – Quoted prices for identical instruments in active markets. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 – Significant inputs to the valuation model are unobservable. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The carrying value of the Company’s outstanding debt obligations approximates its fair value. The fair value of long-term debt is calculated using Level 2 inputs, based on interest rates |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for financial instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, replacing the existing incurred loss impairment model. The new standard is effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance effective January 1, 2020 under the modified retrospective method and such adoption did not have a material impact on the Company’s financial statements. |
Revenues
Revenues | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregated Revenues Disaggregated revenues by customer type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total DoD $ 203,693 $ 65,354 $ 269,047 Other U.S. government agencies 270,344 57,379 327,723 Commercial and non-U.S. customers 47,309 22,161 69,470 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total DoD $ 595,933 $ 194,629 $ 790,562 Other U.S. government agencies 781,004 177,535 958,539 Commercial and non-U.S. customers 109,706 67,988 177,694 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total DoD $ 220,480 $ 46,941 $ 267,421 Other U.S. government agencies 284,218 94,105 378,323 Commercial and non-U.S. customers 30,937 21,036 51,973 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total DoD $ 635,531 $ 162,409 $ 797,940 Other U.S. government agencies 839,680 277,008 1,116,688 Commercial and non-U.S. customers 90,927 61,253 152,180 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by contract type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 302,795 $ 35,656 $ 338,451 Fixed-price 161,024 62,568 223,592 Time and materials 57,527 46,670 104,197 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 868,780 $ 106,848 $ 975,628 Fixed-price 481,309 185,218 666,527 Time and materials 136,554 148,086 284,640 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 274,776 $ 26,864 $ 301,640 Fixed-price 220,142 66,548 286,690 Time and materials 40,717 68,670 109,387 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 870,155 $ 72,566 $ 942,721 Fixed-price 571,132 215,143 786,275 Time and materials 124,851 212,961 337,812 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total United States $ 275,785 $ 142,890 $ 418,675 International 245,561 2,004 247,565 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total United States $ 802,230 $ 434,904 $ 1,237,134 International 684,413 5,248 689,661 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total United States $ 299,306 $ 160,412 $ 459,718 International 236,329 1,670 237,999 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total United States $ 817,437 $ 496,220 $ 1,313,657 International 748,701 4,450 753,151 Total $ 1,566,138 $ 500,670 $ 2,066,808 Remaining Performance Obligations The Company’s remaining performance obligations balance represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on existing contracts. This balance excludes unexercised contract option years and task orders that may be issued underneath an indefinite delivery, indefinite quantity contract. The remaining performance obligations balance as of September 27, 2020 and December 31, 2019 was $1,527.0 million and $1,640.0 million, respectively. The Company expects to recognize approximately 96.4% and 3.6% of the remaining performance obligations balance as revenue over the next year and thereafter, respectively. Contract assets consist of unbilled receivables which represent rights to payment for work or services completed but not billed as of the reporting date. Contract assets are recorded as unbilled receivables within accounts receivable, net on the condensed consolidated balance sheets. Contract liabilities are advances and milestone payments from customers on certain contracts that exceed revenue earned to date. Contract liabilities are recorded as customer advances and billings in excess of costs on the condensed consolidated balance sheets. Contract assets and contract liabilities consisted of the following as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 Contract assets $ 263,085 $ 295,103 Contract liabilities $ 60,390 $ 51,439 The decrease in contract assets of $(32.0) million during the nine-month period ended September 27, 2020 was primarily due to the timing of billings, partially offset by revenue recognized related to the satisfaction of performance obligations. The increase in contract liabilities of $9.0 million during the nine-month period ended September 27, 2020 was primarily due to the timing of advance payments from customers partially offset by revenue recognized during the period. During the three-month and nine-month periods ended September 27, 2020, the Company recognized $1.2 million and $34.6 million, respectively, relating to amounts that were included in the beginning balance of contract liabilities. During the three-month and nine-month periods ended September 29, 2019, the Company recognized $1.5 million and $21.2 million, respectively, relating to amounts that were included in the beginning balance of contract liabilities. |
Contract Assets and Contract Li
Contract Assets and Contract Liabilities | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract Assets and Contract Liabilities | Revenues Disaggregated Revenues Disaggregated revenues by customer type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total DoD $ 203,693 $ 65,354 $ 269,047 Other U.S. government agencies 270,344 57,379 327,723 Commercial and non-U.S. customers 47,309 22,161 69,470 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total DoD $ 595,933 $ 194,629 $ 790,562 Other U.S. government agencies 781,004 177,535 958,539 Commercial and non-U.S. customers 109,706 67,988 177,694 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total DoD $ 220,480 $ 46,941 $ 267,421 Other U.S. government agencies 284,218 94,105 378,323 Commercial and non-U.S. customers 30,937 21,036 51,973 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total DoD $ 635,531 $ 162,409 $ 797,940 Other U.S. government agencies 839,680 277,008 1,116,688 Commercial and non-U.S. customers 90,927 61,253 152,180 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by contract type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 302,795 $ 35,656 $ 338,451 Fixed-price 161,024 62,568 223,592 Time and materials 57,527 46,670 104,197 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 868,780 $ 106,848 $ 975,628 Fixed-price 481,309 185,218 666,527 Time and materials 136,554 148,086 284,640 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 274,776 $ 26,864 $ 301,640 Fixed-price 220,142 66,548 286,690 Time and materials 40,717 68,670 109,387 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 870,155 $ 72,566 $ 942,721 Fixed-price 571,132 215,143 786,275 Time and materials 124,851 212,961 337,812 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total United States $ 275,785 $ 142,890 $ 418,675 International 245,561 2,004 247,565 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total United States $ 802,230 $ 434,904 $ 1,237,134 International 684,413 5,248 689,661 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total United States $ 299,306 $ 160,412 $ 459,718 International 236,329 1,670 237,999 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total United States $ 817,437 $ 496,220 $ 1,313,657 International 748,701 4,450 753,151 Total $ 1,566,138 $ 500,670 $ 2,066,808 Remaining Performance Obligations The Company’s remaining performance obligations balance represents the expected revenue to be recognized for the satisfaction of remaining performance obligations on existing contracts. This balance excludes unexercised contract option years and task orders that may be issued underneath an indefinite delivery, indefinite quantity contract. The remaining performance obligations balance as of September 27, 2020 and December 31, 2019 was $1,527.0 million and $1,640.0 million, respectively. The Company expects to recognize approximately 96.4% and 3.6% of the remaining performance obligations balance as revenue over the next year and thereafter, respectively. Contract assets consist of unbilled receivables which represent rights to payment for work or services completed but not billed as of the reporting date. Contract assets are recorded as unbilled receivables within accounts receivable, net on the condensed consolidated balance sheets. Contract liabilities are advances and milestone payments from customers on certain contracts that exceed revenue earned to date. Contract liabilities are recorded as customer advances and billings in excess of costs on the condensed consolidated balance sheets. Contract assets and contract liabilities consisted of the following as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 Contract assets $ 263,085 $ 295,103 Contract liabilities $ 60,390 $ 51,439 The decrease in contract assets of $(32.0) million during the nine-month period ended September 27, 2020 was primarily due to the timing of billings, partially offset by revenue recognized related to the satisfaction of performance obligations. The increase in contract liabilities of $9.0 million during the nine-month period ended September 27, 2020 was primarily due to the timing of advance payments from customers partially offset by revenue recognized during the period. During the three-month and nine-month periods ended September 27, 2020, the Company recognized $1.2 million and $34.6 million, respectively, relating to amounts that were included in the beginning balance of contract liabilities. During the three-month and nine-month periods ended September 29, 2019, the Company recognized $1.5 million and $21.2 million, respectively, relating to amounts that were included in the beginning balance of contract liabilities. |
Business Combinations and Acqui
Business Combinations and Acquisitions | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
Business Combinations and Acquisitions | Business Combinations and Acquisitions As described in Note 1- “Description of Business”, the Business Combination was consummated on February 10, 2020. For financial accounting and reporting purposes under U.S. GAAP, the Business Combination was accounted for as a reverse acquisition and recapitalization, with no goodwill or other intangible asset recorded. Under this method of accounting, Gores III (legal acquirer) is treated as the acquired entity and Shay (legal acquiree) is deemed to have issued common stock for the net assets and equity of Gores III consisting of mainly cash, accompanied by simultaneous equity recapitalization of Shay (“Recapitalization”). The net assets of Gores III are stated at historical cost, and accordingly the equity and net assets of Shay have not been adjusted to fair value. Consequently, the consolidated assets, liabilities and results of operations of Shay are the historical financial statements of PAE Incorporated and the Gores III assets, liabilities and results of operations are consolidated with the assets, liabilities and results of operations of Shay beginning on the Closing Date. Shares and earnings per share information prior to the Business Combination have been retroactively restated to reflect the exchange ratio established in the Recapitalization. Other than professional fees paid to consummate the transaction, the Business Combination primarily involved the exchange of cash and equity between Gores III, Shay and the stockholders of the respective companies. The aggregate proceeds paid to the Shay Stockholders on the Closing Date was approximately $424.2 million. The remainder of the consideration paid to the Shay Stockholders consisted of 21,127,823 newly issued shares of Class A Common Stock of PAE Incorporated, par value $0.0001 per share (“Class A Common Stock”). In addition to the foregoing consideration paid on the Closing Date, former stockholders of Shay are entitled to receive additional Earn-Out Shares from PAE of up to an aggregate of 4,000,000 shares of Class A Common Stock if the price of Class A Common Stock trading on the Nasdaq exceeds certain thresholds during the five-year period following the completion of the Business Combination. See Note 11 - “Stockholders’ Equity - Earn-Out Agreement” for additional information. The Company also has certain warrants issued by Gores III that remain outstanding after the Business Combination. See Note 11 - “Stockholders’ Equity - Warrants” for further information about the warrants. In connection with the Business Combination, the Company recorded $20.9 million, net of tax as a reduction to additional paid in capital related to the transaction costs. These costs were directly attributable to the Recapitalization. Post-Closing Adjustment |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 27, 2020 | |
Receivables [Abstract] | |
Accounts Receivable, net | Accounts Receivable, net The components of Accounts receivable, net consisted of the following as of the dates presented (in thousands): September 27, December 31, 2020 2019 Billed receivables $ 184,700 $ 148,747 Unbilled receivables 263,085 295,103 Less allowance for credit losses (2,356) (1,670) Total accounts receivables, net $ 445,429 $ 442,180 As of September 27, 2020 approximately 90.7% of the Company’s accounts receivable are with the U.S. government. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | Goodwill and Intangible Assets, net Goodwill Based on management’s assessment of goodwill, there was no impairment or change for the three-month and nine-month periods ended September 27, 2020. The Company considered the implications of COVID-19 as it relates to goodwill and indefinite-lived assets fair value. COVID-19 has had a marginally unfavorable impact on the Company’s results of operations for the three-month and nine-month periods ended September 27, 2020. Since the Company’s primary customers are departments and agencies within the U.S. Government, it has not historically had significant issues collecting its receivables and management does not foresee issues collecting receivables in the foreseeable future. In addition, the Company’s contract awards typically extend to at least five years, including options, and it has a strong history of being awarded a majority of these contract options. Management does not anticipate that the pandemic will have a materially adverse impact on such options. The Company’s liquidity position has not been materially impacted, and management continues to believe that the Company has adequate liquidity to fund its operations and meet its debt service obligations for the foreseeable future. Based on management’s assessment there has been no material impact to goodwill and indefinite-lived assets fair value due to the implications of COVID-19. Intangible Assets, net The components of intangible assets, net consisted of the following as of the dates presented (in thousands): September 27, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 286,900 $ (139,699) $ 147,201 Technology 1,700 (1,700) — Trade name 16,900 (7,778) 9,122 Total $ 305,500 $ (149,177) $ 156,323 December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 286,900 $ (116,923) $ 169,977 Technology 1,700 (1,700) — Trade name 16,900 (6,413) 10,487 Total $ 305,500 $ (125,036) $ 180,464 As of the nine-month period ended September 27, 2020, customer relationships and trade name intangibles had weighted average remaining useful lives of 7.0 and 5.3 years, respectively. As of the year-ended December 31, 2019, customer relationships and trade name intangibles had weighted average remaining useful lives of 7.9 and 6.0 years, respectively. During the three-month and nine-month periods ended September 27, 2020 amortization expense was approximately $8.0 million and $24.1 million, respectively. During the three-month and nine-month periods ended September 29, 2019, amortization expense was approximately $8.2 million and $25.0 million, respectively. Estimated amortization expense in future years is expected to be: As of September 27, 2020 Remainder of 2020 $ 8,047 2021 31,824 2022 31,775 2023 24,565 2024 20,490 Thereafter 39,622 Total $ 156,323 |
Consolidated Variable Interest
Consolidated Variable Interest Entities | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Variable Interest Entities | Consolidated Variable Interest Entities The Company is the majority shareholder and primary beneficiary of PAE (New Zealand) Limited, ATOM Training Limited, PAE-Perini LLC, Syncom Space Services LLC, PAE-SGT Partners LLC, PAE-Parsons Global Logistics Services, LLC and accordingly, these entities are consolidated. As the primary beneficiary, the Company has a risk and obligation to absorb any losses significant to the VIE and the power, through voting rights or similar rights, to direct the activities that could impact economic performance of the VIE. The use of the assets of the VIEs to settle the Company’s obligations is subject to the approval of the managing body of each VIE. The cash flows generated by these VIEs are included within the Company’s condensed consolidated statements of cash flows. The condensed consolidated balance sheets include the following amounts from these consolidated VIEs as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 Assets Total assets $ 138,177 $ 127,742 Liabilities and equity Total liabilities $ 83,596 $ 80,151 Total equity 54,581 47,591 Total liabilities and equity $ 138,177 $ 127,742 The condensed consolidated statements of operations include the following amounts from consolidated VIEs for the periods presented ( in thousands ): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Income statements Revenues $ 87,324 $ 95,121 $ 268,969 $ 248,170 Cost of revenues 70,707 106,560 215,866 228,513 Selling, general and administrative expenses 16,595 24,100 50,477 63,828 Total operating expenses 87,302 130,660 266,343 292,341 Program income (loss) 22 (35,539) 2,626 (44,171) Other (income), net (32) (237) (241) (1,090) Net (loss) income $ (10) $ (35,776) $ 2,385 $ (45,261) |
Debt
Debt | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 First Term Loan $ 491,867 $ 506,772 Second Term Loan 128,783 265,329 Total debt 620,650 772,101 Unamortized discount and debt issuance costs (13,568) (22,164) Total debt, net of discount and debt issuance costs 607,082 749,937 Less current maturities of long-term debt (23,044) (22,007) Total long-term debt, net of current $ 584,038 $ 727,930 Credit Agreements The Company’s borrowing arrangement provides for current borrowings of $491.9 million under a first lien term loan credit agreement, dated October 26, 2016, as amended (the “2016 First Term Loan”), $128.8 million under a second lien term loan credit agreement, dated October 26, 2016, as amended (the “2016 Second Term Loan”), and $150.0 million under a revolving credit facility dated October 26, 2016, as amended (the “2016 Revolving Credit Facility,” and together with the 2016 First Term Loan and the 2016 Second Term Loan, the “2016 Credit Agreements”). Principal and interest are due quarterly on the 2016 First Term Loan and interest only is due quarterly on the 2016 Second Term Loan. The maturity date of the 2016 First Term Loan is October 20, 2022. For the 2016 Second Term Loan the maturity date is October 20, 2023. For the Company’s 2016 Revolving Credit Facility the maturity date is October 20, 2021. In connection with the Business Combination, Shay was required to amend its 2016 Credit Agreements and reduce its outstanding indebtedness under its credit facilities such that the total indebtedness under the facilities, minus cash on hand at the consummation of the transaction would not be greater than $572.1 million. Immediately after the closing of the Business Combination the outstanding balance on the 2016 Second Term Loan was reduced by approximately $136.5 million to a principal balance of $128.8 million. The 2016 Credit Agreements require the Company to comply with specified financial covenants under certain circumstances, including the maintenance of certain leverage ratios. The 2016 Credit Agreements also contain various non-financial covenants, including affirmative covenants with respect to reporting requirements and maintenance of business activities, and negative covenants that, among other things, may limit or impose restrictions on the Company’s ability to alter the character of the business, consolidate, merge, or sell assets, incur liens or additional indebtedness, make investments, and undertake certain additional actions. The Company was in compliance with the financial and non-financial covenants under the 2016 Credit Agreements as of September 27, 2020 and December 31, 2019, respectively. Future principal maturities of the Company’s long-term debt are summarized as follows ( in thousands ): As of September 27, 2020 Remainder of 2020 $ 14,905 2021 29,810 2022 447,152 2023 128,783 2024 — Thereafter — Total $ 620,650 As of September 27, 2020 and December 31, 2019, the available borrowing capacity under the 2016 Revolving Credit Facility was approximately $105.4 million and $121.8 million, respectively. Interest Rates on Credit Agreements The interest rate per annum applicable to amounts borrowed under the 2016 First Term Loan is equal to either the Base Rate (as defined below) or the LIBO Rate (as defined below), in either case, plus (i) 4.5% in the case of the Base Rate loans and (ii) 5.5% in the case of LIBO Rate loans. The interest rate per annum applicable to amounts borrowed under the 2016 Second Term Loan is equal to either the Base Rate or the LIBO Rate, in either case, plus (i) 8.5% in the case of the Base Rate loans and (ii) 9.5% in the case of LIBO Rate loans. The “Base Rate” is defined as a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus one half of one percent, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America (“BofA”) as its “prime rate,” and (c) the LIBO Rate for a LIBO Rate loan with a one month Interest Period commencing on such day plus 1.0%. The “prime rate” is a rate set by BofA based upon various factors including BofA’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. The LIBO Rate is defined as the rate per annum equal to the London Interbank Offered Rate or a comparable or successor rate, whichever rate is approved by the Administrative Agent (as that term is defined in the Credit Agreements). The interest rate per annum applicable to the 2016 Revolving Credit Facility is equal to either a Base Rate or a LIBO Rate plus (i) a range of 0.8% to 1.3% in the case of Base Rate loans and (ii) a range of 1.8% to 2.3% in the case of LIBO Rate loans, each based on average availability as of the first day of each quarter. As of September 27, 2020 and December 31, 2019, the applicable interest rate on the amounts borrowed under the 2016 First Term Loan was 6.5% and 7.4%, respectively. As of September 27, 2020 and December 31, 2019, the applicable interest rate on amounts borrowed under the 2016 Second Term Loan was 10.5% and 11.4%, respectively. As of September 27, 2020 and December 31, 2019, the applicable interest rate on amounts borrowed under the 2016 Revolving Credit Facility was 4.0% and 5.8%, respectively. In addition, the interest rate on our term loan borrowings and revolving loan borrowings is based on the London Interbank Offered Rate (“LIBOR” or “LIBO Rate”). LIBOR is the subject of recent national, international, and other regulatory guidance and proposals for reform. In July 2017, the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after 2021. This announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021, and it appears likely that LIBOR will be discontinued or modified by 2021. The consequences of the discontinuance of the LIBOR benchmark cannot be entirely predicted but could include an increase in the cost of our variable rate indebtedness. Letters of Credit The Company had 13 outstanding letters of credit for program and insurance requirements totaling approximately $23.9 million as of September 27, 2020 and 11 outstanding letters of credit for program and insurance requirements totaling approximately $21.2 million as of December 31, 2019. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 27, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Authorized and Outstanding Stock In connection with the Business Combination, the Company made changes to its capital stock. The Company’s amended and restated certificate of incorporation authorizes the issuance of 211,000,000 shares of capital stock, par value of $0.0001 per share, consisting of (a) 210,000,000 shares of Class A common stock, and (b) 1,000,000 shares of preferred stock. As a result of the Business Combination, the shares issued to Shay Stockholders are reflected as if they were issued and outstanding as of the earliest reported period to reflect the new capital structure. Warrants As of September 27, 2020, there were warrants outstanding to acquire 19,999,985 shares of our Class A Common Stock including: (i) 13,333,319 warrants sold as part of the public units issued in our IPO on September 11, 2018 (the “Public Warrants”), and (ii) 6,666,666 warrants issued or transferred to our former sponsor in a private placement on the IPO closing date (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”). The Company currently has an effective registration statement on Form S-1 relating to the issuance by the Company of up to (i) 13,333,333 shares of its Class A Common Stock issuable upon the exercise of the outstanding Public Warrants, and (ii) 6,666,666 shares of its Class A Common Stock issuable upon exercise of the Private Placement Warrants. Each whole Warrant entitles the registered holder to purchase one share of Class A Common Stock at a price of $11.50 per share. The Warrants became exercisable on March 11, 2020, thirty days following the completion of the Business Combination, and expire five years after that date, or upon redemption or liquidation. The Company may redeem outstanding Public Warrants and, unless held by the former sponsor or its permitted transferees, the Private Placement Warrants at a price of $0.01 per Warrant, provided the last reported sales price of the Company’s Class A Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading-day period ending on the third business day before the Company gives proper notice of such redemption to the warrant holders. The Private Placement Warrants are identical to the Public Warrants except that, so long as they are held by the former sponsor or its permitted transferees: (i) they will not be redeemable by the Company; (ii) they may be exercised by the holders on a cashless basis; and (iii) they are subject to registration rights. Any transactions related to the Warrants are recorded within the stockholders’ equity section of the Company’s condensed consolidated financial statements. However, the issuance of shares pursuant to the exercise of these warrants is contingent upon the share price reaching $11.50. Therefore, share activity related to such warrants will not be recorded until such time as the contingency has been met. Earn-Out Agreement In connection with the Business Combination, stockholders of Shay immediately prior to the transaction (which stockholders consisted of certain affiliates of Platinum Equity, LLC and members of PAE management (the “Shay Stockholders”)) are now entitled to receive up to an aggregate of 4,000,000 additional shares of Class A Common Stock (the “Earn-Out Shares”) if at any time during the five-year period following the Closing Date (the “Earn-Out Period”) the volume weighted average closing sale price of one share of Class A Common Stock on the Nasdaq (or the exchange which shares of Class A Common Stock are then listed) for a period of at least 10 days out of 20 consecutive trading days (the “Common Share Price”) exceeds certain thresholds, described below. The thresholds (each a “Triggering Event”) causing the Earn-Out Shares to be issued by the Company to the Shay Stockholders is any such event that occurs within the Earn-Out period as follow: (i) a one-time issuance of 1,000,000 shares if the Common Share Price is greater than $13.00; (ii) a one-time issuance of 1,000,000 shares if the Common Share Price is greater than $15.50; (iii) a one-time issuance of 1,000,000 shares if the Common Share Price is greater than $18.00; and (iv) a one-time issuance of 1,000,000 shares if the Common Share Price is greater than $20.50. Further, if during the Earn-Out Period there is a change in control (as defined in the Merger Agreement) that results in the holders of Class A Common Stock receiving a per share price in respect of their Class A Common Stock that is equal to or greater than the applicable Common Share Price required in connection with any Triggering Event (an “Acceleration Event”), then any such Triggering Event that has not previously occurred will be deemed to have occurred, and the Company must issue Earn-Out Shares accordingly. If no Triggering Event is achieved within the Earn-Out Period, the Company will not be required to issue the Earn-Out Shares. No Triggering Event was achieved during the three-month and nine-month periods ended September 27, 2020. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation 2016 Participation Plan On May 23, 2016, the Company adopted the Pacific Architects and Engineers Incorporated 2016 Participation Plan (the “2016 Participation Plan”). The purpose of the 2016 Participation Plan was to provide incentive compensation to key employees by granting performance units (“Units”). The Units were valued on the date of grant by the compensation committee of the pre-Business Combination company. Participants in the 2016 Participation Plan were entitled to receive compensation for their Units in the event a qualifying event occurs. In connection with the Business Combination, which was a qualifying event, the 2016 Participation Plan was terminated effective immediately prior to the Closing Date and, in exchange for a release of claims relating to the plan, plan participants received payments totaling approximately $17.4 million. The $17.4 million was paid out during the three-month ended March 29, 2020, and was recorded as compensation expense. 2020 Incentive Plan Prior to the closing of the Business Combination, the Gores III Board of Directors and stockholders approved the PAE Incorporated 2020 Equity Incentive Plan (the “2020 Incentive Plan”). The 2020 Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted units (RSUs) and other stock or cash-based awards. Restricted Stock Units During the three-month period ended September 27, 2020, the Company issued 454,709 RSUs to certain employees out of the shares approved for issuance under the 2020 Incentive Plan. RSUs cliff vest in accordance with their respective service period or grade vest on an anniversary date, subject to the terms of the grant agreements and the 2020 Incentive Plan. The Company recognized $4.0 million and $7.5 million in share-based compensation costs related to RSUs during the three-month and nine-month periods ended September 27, 2020, respectively. Forfeitures are recognized in compensation costs when those occur. Activity related to RSUs during the nine-months ended September 27, 2020 is as follows: As of September 27, 2020 Weighted-Average Grant Date Restricted Stock Unit Shares Fair Value Balance at December 31, 2019 — $ — Granted 2,631,857 7.45 Vested (34,366) 10.32 Forfeited — — Balance at September 27, 2020 2,597,491 $ 7.69 During the three-month period ended September 27, 2020, the Company issued 288,822 performance-based restricted stock units (“PSUs”) to certain employees out of the shares approved for issuance under the 2020 Incentive Plan. These PSUs earn out over a three-year performance period, subject to the terms of the grant agreements and the 2020 Incentive Plan. The vesting of PSUs is contingent on the achievement of performance goals stated in the agreement, such as revenue growth, weighted at 50%, and EBITDA margin, weighted at 50%. Compensation costs are recognized when the performance conditions are satisfied or likely to be satisfied. The Company recognized $0.3 million and $0.5 million in PSUs compensation costs during the three-month and nine-month periods ended September 27, 2020, respectively. Forfeitures are recognized in compensation costs as they occur. Activity related to PSUs during the nine months ended September 27, 2020 is as follows: As of September 27, 2020 Weighted-Average Grant Date Performance-based Restricted Stock Unit Shares Fair Value Balance at December 31, 2019 — $ — Granted 619,125 8.61 Vested — — Forfeited — — Balance at September 27, 2020 619,125 $ 8.61 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per common share is determined by dividing the net income (loss) attributed to stockholders by the weighted average number of common shares outstanding during the period presented. Diluted income (loss) per share is determined by adjusting the weighted average number of shares of common stock and common stock equivalents outstanding for the dilutive effect of common stock equivalents for the periods presented. The following table sets forth the computation of basic and diluted loss per share attributable to the Company’s common stockholders for the periods presented ( in thousands, except shares and per share amounts ): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Numerator: Net income (loss) attributed to PAE Incorporated $ 10,318 $ (32,170) $ 21,395 $ (35,216) Denominator: Basic weighted average shares 92,070,306 21,127,823 81,323,258 21,127,823 Diluted weighted average shares 93,392,565 21,127,823 82,115,825 21,127,823 Basic income (loss) per share $ 0.11 $ (1.52) $ 0.26 $ (1.67) Diluted income (loss) per share $ 0.11 $ (1.52) $ 0.26 $ (1.67) The Company has not included the effect of 19,999,985 shares of Common Stock issuable upon the exercise of Warrants in the calculation of diluted net income (loss) per share for the three-month and nine-month periods ended September 27, 2020. Warrants are excluded when the exercise price exceeds the average market value of the Company’s common stock price during the applicable period. The Company has not included the effect of 4,000,000 Earn-Out Shares in the calculation of basic and diluted net (loss) income per share for the three-month and nine-month periods ended September 27, 2020. The condition for the issuance of these shares is based on the weighted average closing sale price of the Company’s Class A Common Stock and such condition has not been met as of September 27, 2020. |
Leases
Leases | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Leases | Leases At September 27, 2020, the Company had right-of-use (“ROU”) assets, net of $160.0 million and lease liabilities of $161.9 million recorded on the condensed consolidated balance sheet. The Company rents certain facilities and equipment under operating leases. The Company’s total lease cost is recorded primarily within selling, general and administrative expenses on the condensed consolidated statements of operations. Rents which are directly chargeable to a project are charged to cost of revenues. During the three-month and nine-month periods ended September 27, 2020, the Company recognized operating lease costs of approximately $13.8 million and $42.3 million, respectively. The Company’s future minimum operating lease payments for noncancelable operating leases were as follows ( in thousands ): September 27, 2020 Remainder of 2020 $ 10,942 2021 41,682 2022 36,043 2023 31,331 2024 23,077 Thereafter 60,704 Total future minimum lease payments 203,779 Less imputed interest 41,917 Present value of minimum lease payments 161,862 Less current maturities of lease liabilities 40,979 Long-term lease liabilities $ 120,883 The weighted-average remaining lease term and the weighted-average discount rate for the Company’s operating leases were approximately 7.1 years and 7.1%, respectively, at September 27, 2020. The Company made cash payments of approximately $11.3 million and $32.5 million for operating leases for the three-month and nine-month periods ended September 27, 2020, which are included in cash flows from operating activities in the condensed consolidated statement of cash flows. |
Legal Proceedings, Commitments,
Legal Proceedings, Commitments, and Contingencies | 9 Months Ended |
Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings, Commitments, and Contingencies | Legal Proceedings, Commitments, and ContingenciesThe Company is a party to, or has property subject to, litigation and other proceedings. Management believes the probability is remote that the outcome of the matters will have a material adverse effect on its operations as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on net earnings in a future period. The Company cannot predict the outcome of legal proceedings and loss or range of loss contingencies with certainty. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company's operations and reportable segments are organized around the nature of the services and products provided to customers. The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), currently its President and Chief Executive Officer, manages the operations of the Company for purposes of allocating resources and assessing performance. The GMS operating segment provides support to the U.S. Government and its partners within and outside the United States providing sustainment, training and readiness support and advancing foreign policy objectives. The NSS operating segment provides a wide-ranging portfolio of offerings that support all facets of national security, including intelligence, homeland security and civil government missions. While the CODM uses a variety of different measures to evaluate the Company’s segments, the primary measures used to evaluate segment performance are revenues and operating income. As a result, interest expense, net and provision for income taxes as recorded on the condensed consolidated statements of operations are not allocated to the Company’s operating segments. The following table shows information by reportable segment for the periods presented (in thousands): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Revenues GMS $ 521,346 $ 535,635 $ 1,486,643 $ 1,566,138 NSS 144,894 162,082 440,152 500,670 Corporate — — — — Total revenues $ 666,240 $ 697,717 $ 1,926,795 $ 2,066,808 Operating income GMS $ 31,401 $ 26,000 $ 75,541 $ 77,449 NSS 5,679 (26,402) 17,770 (23,270) Corporate (8,548) (10,123) (23,027) (24,193) Total operating income $ 28,532 $ (10,525) $ 70,284 $ 29,986 Amortization of intangible assets GMS $ 4,115 $ 4,140 $ 12,346 $ 12,539 NSS 3,932 4,036 11,795 12,490 Corporate — — — — Total amortization of intangible assets $ 8,047 $ 8,176 $ 24,141 $ 25,029 Under U.S. Government cost accounting standards, indirect costs including depreciation expense are collected in numerous indirect cost pools, which are then collectively allocated to the Company’s reportable segments based on a representative causal or beneficial relationship of the costs in the pool to the costs in the base. While depreciation expense is a component of the allocated costs, the allocation process precludes depreciation expense from being specifically identified by the Company’s individual reportable segments. For this reason, depreciation expense by reportable segment is not presented separately above. Asset information by segment is not a key measure of performance used by the CODM and therefore segment assets are not presented. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 27, 2020 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Tax Overpayment/Underpayment Amount In connection with the Business Combination, the Shay Stockholders are entitled to a payment of the net cash savings in U.S. federal, state and local income tax that the post-closing company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing Date. The liability for this estimated payment and the corresponding charge to equity of $4.7 million are reflected in the Company’s consolidated balance sheets as of September 27, 2020. Advisory Services During the nine-month period ended September 27, 2020 and twelve-month period ended December 31, 2019, the Company recognized management fees, transaction and advisory fees, and expenses of approximately $15.8 million and $5.1 million, respectively. As a result of the Business Combination $15.0 million was grouped with other similar transactional expenses and recorded as a reduction to the recapitalized equity and $0.8 million was recorded in selling, general and administrative expenses. The amount of $5.1 million was recorded in selling, general and administrative expenses for the period ended December 31, 2019. These expenses were for services rendered by one or more affiliates of Platinum Equity, LLC. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income tax expense (benefits) were approximately $4.2 million and $(0.8) million and its effective income tax rates were 28.1% and (3.5)% for the three-month and nine-month periods ended September 27, 2020, respectively. The Company’s provision for income tax expense (benefits) were approximately $0.1 million and $(1.9) million and its effective income tax rates were (0.4)% and 5.3% for the three-month and nine-month periods ended September 29, 2019 respectively. The provision for income taxes for the period ended September 27, 2020 differed from the U.S. federal statutory rate computed by applying the U.S. federal statutory rate to income or loss before income taxes primarily due to the benefit of Foreign Derived Intangible Income (“FDII”), increased prior year interest expense deduction under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), nontaxable income and settlement of foreign taxes offset by disallowed compensation deduction under Section 162(m) and disallowed transaction costs. The provision for income taxes for the period ended September 29, 2019 differed from the U.S. federal statutory rate computed by applying the U.S. federal statutory rate to income or loss before income taxes primarily due to a disallowed interest deduction, non-deductible settlement paid to the U.S. Government, non-deductible goodwill and the effect of foreign operations offset by a benefit from foreign derived intangible income. On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carry-back periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 27, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Debt Refinancing On October 19, 2020 the Company refinanced the 2016 Credit Agreements and entered into new senior secured credit facilities (the “2020 Credit Agreements”). The 2020 Credit Agreements establish a $740 million term loan facility maturing in October 2027 priced at LIBOR plus a spread of 4.50%, a $150 million delayed draw term loan facility maturing in October 2027 priced at LIBOR plus a spread of 4.50%, and a $175 million senior secured revolving credit facility maturing in October 2025 priced at LIBOR plus a spread of 1.75% to 2.25%. The loans under the 2020 Credit Agreements are secured by a first lien over substantially all of the Company's assets as well as affirmative and negative covenants customary for transactions of this type, including limitations with respect to indebtedness, liens, investments, dividends, disposition of assets, change in business and transactions with affiliates. The Company used the proceeds from the 2020 Credit Agreements to repay the amounts outstanding under the 2016 First Term Loan and 2016 Second Term Loan, with the remaining amounts to be used for general corporate purposes, potential mergers and acquisitions, and transaction fees and expenses. For more information about the New Credit Agreements, see the Company’s Form 8-K filed October 22, 2020, File No. 001-38643. Agreement to Acquire CENTRA Technology, Inc. On October 26, 2020, Pacific Architects and Engineers, LLC, a Delaware limited liability company (the “Purchaser”), an indirect wholly owned subsidiary of the Company, entered into a stock purchase agreement (the “Stock Purchase Agreement”) by and among the Purchaser, CENTRA Technology, Inc., a Maryland corporation (“CENTRA”), certain stockholders of CENTRA, and Barbara Rosenbaum as the sellers representative. CENTRA provides mission critical services to the intelligence community and other U.S. national and homeland security customers. Pursuant to the Stock Purchase Agreement, the Purchaser has agreed to acquire all of the shares of CENTRA for approximately $208.0 million (net of tax benefits) in cash, subject to customary purchase price adjustments as set forth in the Stock Purchase Agreement (the “Transaction”). The Stock Purchase Agreement contains customary representations, warranties and covenants of the parties. The Stock Purchase Agreement also contains customary indemnities, and the Company has obtained representation and warranty insurance, subject to exclusions, policy limits and certain other terms and conditions, to obtain coverage for losses that may result from a breach of certain representations and warranties made by the sellers in the Stock Purchase Agreement. An aggregate of $5.0 million of the purchase price will be deposited into an escrow account to satisfy purchase price adjustments, if any. The parties to the Stock Purchase Agreement have certain customary rights to terminate the Stock Purchase Agreement. The closing of the Transaction is subject to customary closing conditions, and the Company expects that the closing will occur in the fourth quarter of 2020. |
Significant Accounting Princi_2
Significant Accounting Principles and Policies (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company’s operations are organized into the following two reportable segments: • Global Mission Services (“GMS”): GMS provides infrastructure and logistics management, international logistics and stabilization support, and aircraft and vehicle readiness and sustainment support. The segment focuses on customer relationships with DoD, DoS, NASA, and other government agencies for work both in the United States and outside of the United States. • National Security Solutions (“NSS”): NSS provides counter-threat solutions, business process outsourcing, adjudication support services and full life cycle support for complex legal matters. NSS focuses on customer relationships in the areas of intelligence, defense and security, and with civilian agencies. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In management’s opinion, all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2019, which are filed as Exhibit 99.3 to the Company’s Form 8-K/A filed with the SEC on March 11, 2020. The Company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business processes, and therefore the closing of books and records for the third quarter was on September 27, 2020 and September 29, 2019, respectively. The condensed consolidated financial statements and disclosures included herein are labeled based on that convention. This practice only affects interim periods, as the Company’s fiscal year ends on December 31. The condensed consolidated financial statements include the accounts of PAE Incorporated and subsidiaries and ventures in which the Company owns more than 50% or otherwise controls. All intercompany amounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates These consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates and assumptions, including assumptions to determine the fair value of acquired assets and liabilities, recoverability of long-lived assets, goodwill, valuation allowances on deferred taxes, inputs used in stock based compensation and anticipated contract costs and revenues utilized in the earnings recognition process, which affect the reported amounts in the consolidated financial statements and accompanying notes. Due to the size and nature of many of the Company’s programs, the estimation of total revenues and cost at completion is subject to a wide range of variables, including assumptions for schedule and technical issues. Actual results may differ from management’s estimates. |
Accounts Receivable, net | Accounts Receivable, net Amounts billed and due from customers are recorded as billed receivables within accounts receivable, net on the condensed consolidated balance sheets. Generally, customer accounts are due within 30 to 45 days of billings. The Company recognizes an allowance for credit losses based on historical experience, current conditions and reasonable and supportable forecasts. The Company assesses its overall allowance for credit losses at least on a quarterly basis. Prior to the implementation of ASU 2016-13 “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, the Company recorded adjustments to an allowance for doubtful accounts when collectability was uncertain. |
Net Income (Loss) Per Share | Net Income (Loss) Per ShareBasic net income (loss) per common share is determined by dividing the net income (loss) allocable to stockholders by the weighted average number of common shares outstanding during the periods presented. Diluted income (loss) per share is computed by dividing the net income (loss) allocable to common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding for the period. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants at the measurement date. The valuation techniques the Company utilized to measure the fair value of financial instruments are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 – Quoted prices for identical instruments in active markets. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 – Significant inputs to the valuation model are unobservable. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and amounts included in other current assets and current liabilities that meet the definition of a financial instrument approximate fair value because of the short-term nature of these amounts. The carrying value of the Company’s outstanding debt obligations approximates its fair value. The fair value of long-term debt is calculated using Level 2 inputs, based on interest rates |
Accounting Pronouncements Adopted and New Accounting Standards Issued and Not Yet Adopted | Accounting Pronouncements Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for financial instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, replacing the existing incurred loss impairment model. The new standard is effective for reporting periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance effective January 1, 2020 under the modified retrospective method and such adoption did not have a material impact on the Company’s financial statements. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenues | Disaggregated revenues by customer type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total DoD $ 203,693 $ 65,354 $ 269,047 Other U.S. government agencies 270,344 57,379 327,723 Commercial and non-U.S. customers 47,309 22,161 69,470 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total DoD $ 595,933 $ 194,629 $ 790,562 Other U.S. government agencies 781,004 177,535 958,539 Commercial and non-U.S. customers 109,706 67,988 177,694 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total DoD $ 220,480 $ 46,941 $ 267,421 Other U.S. government agencies 284,218 94,105 378,323 Commercial and non-U.S. customers 30,937 21,036 51,973 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total DoD $ 635,531 $ 162,409 $ 797,940 Other U.S. government agencies 839,680 277,008 1,116,688 Commercial and non-U.S. customers 90,927 61,253 152,180 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by contract type were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 302,795 $ 35,656 $ 338,451 Fixed-price 161,024 62,568 223,592 Time and materials 57,527 46,670 104,197 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total Cost-reimbursable $ 868,780 $ 106,848 $ 975,628 Fixed-price 481,309 185,218 666,527 Time and materials 136,554 148,086 284,640 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 274,776 $ 26,864 $ 301,640 Fixed-price 220,142 66,548 286,690 Time and materials 40,717 68,670 109,387 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total Cost-reimbursable $ 870,155 $ 72,566 $ 942,721 Fixed-price 571,132 215,143 786,275 Time and materials 124,851 212,961 337,812 Total $ 1,566,138 $ 500,670 $ 2,066,808 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 27, 2020 GMS NSS Total United States $ 275,785 $ 142,890 $ 418,675 International 245,561 2,004 247,565 Total $ 521,346 $ 144,894 $ 666,240 Nine Months Ended September 27, 2020 GMS NSS Total United States $ 802,230 $ 434,904 $ 1,237,134 International 684,413 5,248 689,661 Total $ 1,486,643 $ 440,152 $ 1,926,795 Three Months Ended September 29, 2019 GMS NSS Total United States $ 299,306 $ 160,412 $ 459,718 International 236,329 1,670 237,999 Total $ 535,635 $ 162,082 $ 697,717 Nine Months Ended September 29, 2019 GMS NSS Total United States $ 817,437 $ 496,220 $ 1,313,657 International 748,701 4,450 753,151 Total $ 1,566,138 $ 500,670 $ 2,066,808 |
Contract Assets and Contract _2
Contract Assets and Contract Liabilities (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Components of Contract Assets and Contract Liabilities | Contract assets and contract liabilities consisted of the following as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 Contract assets $ 263,085 $ 295,103 Contract liabilities $ 60,390 $ 51,439 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Receivables [Abstract] | |
Components of Accounts Receivable, Net | The components of Accounts receivable, net consisted of the following as of the dates presented (in thousands): September 27, December 31, 2020 2019 Billed receivables $ 184,700 $ 148,747 Unbilled receivables 263,085 295,103 Less allowance for credit losses (2,356) (1,670) Total accounts receivables, net $ 445,429 $ 442,180 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | The components of intangible assets, net consisted of the following as of the dates presented (in thousands): September 27, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 286,900 $ (139,699) $ 147,201 Technology 1,700 (1,700) — Trade name 16,900 (7,778) 9,122 Total $ 305,500 $ (149,177) $ 156,323 December 31, 2019 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 286,900 $ (116,923) $ 169,977 Technology 1,700 (1,700) — Trade name 16,900 (6,413) 10,487 Total $ 305,500 $ (125,036) $ 180,464 |
Estimated Amortization Expense in Future Years | Estimated amortization expense in future years is expected to be: As of September 27, 2020 Remainder of 2020 $ 8,047 2021 31,824 2022 31,775 2023 24,565 2024 20,490 Thereafter 39,622 Total $ 156,323 |
Consolidated Variable Interes_2
Consolidated Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The cash flows generated by these VIEs are included within the Company’s condensed consolidated statements of cash flows. The condensed consolidated balance sheets include the following amounts from these consolidated VIEs as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 Assets Total assets $ 138,177 $ 127,742 Liabilities and equity Total liabilities $ 83,596 $ 80,151 Total equity 54,581 47,591 Total liabilities and equity $ 138,177 $ 127,742 The condensed consolidated statements of operations include the following amounts from consolidated VIEs for the periods presented ( in thousands ): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Income statements Revenues $ 87,324 $ 95,121 $ 268,969 $ 248,170 Cost of revenues 70,707 106,560 215,866 228,513 Selling, general and administrative expenses 16,595 24,100 50,477 63,828 Total operating expenses 87,302 130,660 266,343 292,341 Program income (loss) 22 (35,539) 2,626 (44,171) Other (income), net (32) (237) (241) (1,090) Net (loss) income $ (10) $ (35,776) $ 2,385 $ (45,261) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt consisted of the following as of the dates presented ( in thousands ): September 27, December 31, 2020 2019 First Term Loan $ 491,867 $ 506,772 Second Term Loan 128,783 265,329 Total debt 620,650 772,101 Unamortized discount and debt issuance costs (13,568) (22,164) Total debt, net of discount and debt issuance costs 607,082 749,937 Less current maturities of long-term debt (23,044) (22,007) Total long-term debt, net of current $ 584,038 $ 727,930 |
Future Principal Maturities of Long-Term Debt | Future principal maturities of the Company’s long-term debt are summarized as follows ( in thousands ): As of September 27, 2020 Remainder of 2020 $ 14,905 2021 29,810 2022 447,152 2023 128,783 2024 — Thereafter — Total $ 620,650 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of RSUs | Activity related to RSUs during the nine-months ended September 27, 2020 is as follows: As of September 27, 2020 Weighted-Average Grant Date Restricted Stock Unit Shares Fair Value Balance at December 31, 2019 — $ — Granted 2,631,857 7.45 Vested (34,366) 10.32 Forfeited — — Balance at September 27, 2020 2,597,491 $ 7.69 |
Schedule of PSUs | Activity related to PSUs during the nine months ended September 27, 2020 is as follows: As of September 27, 2020 Weighted-Average Grant Date Performance-based Restricted Stock Unit Shares Fair Value Balance at December 31, 2019 — $ — Granted 619,125 8.61 Vested — — Forfeited — — Balance at September 27, 2020 619,125 $ 8.61 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Loss Per Share | The following table sets forth the computation of basic and diluted loss per share attributable to the Company’s common stockholders for the periods presented ( in thousands, except shares and per share amounts ): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Numerator: Net income (loss) attributed to PAE Incorporated $ 10,318 $ (32,170) $ 21,395 $ (35,216) Denominator: Basic weighted average shares 92,070,306 21,127,823 81,323,258 21,127,823 Diluted weighted average shares 93,392,565 21,127,823 82,115,825 21,127,823 Basic income (loss) per share $ 0.11 $ (1.52) $ 0.26 $ (1.67) Diluted income (loss) per share $ 0.11 $ (1.52) $ 0.26 $ (1.67) |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Future Minimum Operating Lease Payments | The Company’s future minimum operating lease payments for noncancelable operating leases were as follows ( in thousands ): September 27, 2020 Remainder of 2020 $ 10,942 2021 41,682 2022 36,043 2023 31,331 2024 23,077 Thereafter 60,704 Total future minimum lease payments 203,779 Less imputed interest 41,917 Present value of minimum lease payments 161,862 Less current maturities of lease liabilities 40,979 Long-term lease liabilities $ 120,883 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Information by Reportable Segment | The following table shows information by reportable segment for the periods presented (in thousands): Three Months Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019 Revenues GMS $ 521,346 $ 535,635 $ 1,486,643 $ 1,566,138 NSS 144,894 162,082 440,152 500,670 Corporate — — — — Total revenues $ 666,240 $ 697,717 $ 1,926,795 $ 2,066,808 Operating income GMS $ 31,401 $ 26,000 $ 75,541 $ 77,449 NSS 5,679 (26,402) 17,770 (23,270) Corporate (8,548) (10,123) (23,027) (24,193) Total operating income $ 28,532 $ (10,525) $ 70,284 $ 29,986 Amortization of intangible assets GMS $ 4,115 $ 4,140 $ 12,346 $ 12,539 NSS 3,932 4,036 11,795 12,490 Corporate — — — — Total amortization of intangible assets $ 8,047 $ 8,176 $ 24,141 $ 25,029 |
Description of Business (Detail
Description of Business (Details) | 9 Months Ended |
Sep. 27, 2020segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Significant Accounting Princi_3
Significant Accounting Principles and Policies - Narrative (Details) | 9 Months Ended |
Sep. 27, 2020 | |
Minimum | |
Product Information [Line Items] | |
Customer account due period (in days) | 30 days |
Maximum | |
Product Information [Line Items] | |
Customer account due period (in days) | 45 days |
Revenues - Disaggregated Revenu
Revenues - Disaggregated Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 666,240 | $ 697,717 | $ 1,926,795 | $ 2,066,808 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 418,675 | 459,718 | 1,237,134 | 1,313,657 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 247,565 | 237,999 | 689,661 | 753,151 |
Cost-reimbursable | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 338,451 | 301,640 | 975,628 | 942,721 |
Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 223,592 | 286,690 | 666,527 | 786,275 |
Time and materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 104,197 | 109,387 | 284,640 | 337,812 |
GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 521,346 | 535,635 | 1,486,643 | 1,566,138 |
GMS | United States | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 275,785 | 299,306 | 802,230 | 817,437 |
GMS | International | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 245,561 | 236,329 | 684,413 | 748,701 |
GMS | Cost-reimbursable | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 302,795 | 274,776 | 868,780 | 870,155 |
GMS | Fixed-price | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 161,024 | 220,142 | 481,309 | 571,132 |
GMS | Time and materials | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 57,527 | 40,717 | 136,554 | 124,851 |
NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 144,894 | 162,082 | 440,152 | 500,670 |
NSS | United States | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 142,890 | 160,412 | 434,904 | 496,220 |
NSS | International | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,004 | 1,670 | 5,248 | 4,450 |
NSS | Cost-reimbursable | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 35,656 | 26,864 | 106,848 | 72,566 |
NSS | Fixed-price | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 62,568 | 66,548 | 185,218 | 215,143 |
NSS | Time and materials | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 46,670 | 68,670 | 148,086 | 212,961 |
DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 269,047 | 267,421 | 790,562 | 797,940 |
DoD | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 203,693 | 220,480 | 595,933 | 635,531 |
DoD | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 65,354 | 46,941 | 194,629 | 162,409 |
Other U.S. government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 327,723 | 378,323 | 958,539 | 1,116,688 |
Other U.S. government agencies | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 270,344 | 284,218 | 781,004 | 839,680 |
Other U.S. government agencies | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 57,379 | 94,105 | 177,535 | 277,008 |
Commercial and non-U.S. customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 69,470 | 51,973 | 177,694 | 152,180 |
Commercial and non-U.S. customers | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 47,309 | 30,937 | 109,706 | 90,927 |
Commercial and non-U.S. customers | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 22,161 | $ 21,036 | $ 67,988 | $ 61,253 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligations balance | $ 1,527 | $ 1,640 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-28 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected revenue recognized (as a percent) | 96.40% | |
Expected period of satisfaction | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-09-28 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected revenue recognized (as a percent) | 3.60% | |
Expected period of satisfaction | 1 year |
Contract Assets and Contract _3
Contract Assets and Contract Liabilities - Components of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 263,085 | $ 295,103 |
Contract liabilities | $ 60,390 | $ 51,439 |
Contract Assets and Contract _4
Contract Assets and Contract Liabilities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Revenue from Contract with Customer [Abstract] | ||||
Increase (decrease) in contract assets | $ (32) | |||
Increase (decrease) in contract liabilities | 9 | |||
Recognition of contract liabilities | $ 1.2 | $ 1.5 | $ 34.6 | $ 21.2 |
Business Combinations and Acq_2
Business Combinations and Acquisitions (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 10, 2020 | Sep. 27, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
PE Shay Holdings, LLC | |||
Business Acquisition [Line Items] | |||
Post-closing adjustment, payment to management | $ 20.2 | ||
PAE Management | |||
Business Acquisition [Line Items] | |||
Post-closing adjustment, payment to management | $ 1 | ||
Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Common stock par value (in dollars per share) | $ 0.0001 | ||
Shay Holding Corporation Merger | |||
Business Acquisition [Line Items] | |||
Aggregate cash consideration paid | $ 424.2 | ||
Shay Holding Corporation Merger | Earn-Out Shares | |||
Business Acquisition [Line Items] | |||
Period following completion of business combination (in years) | 5 years | ||
Shay Holding Corporation Merger | Additional Paid-in Capital | |||
Business Acquisition [Line Items] | |||
Acquisition fees and expenses | $ 20.9 | ||
Shay Holding Corporation Merger | Class A Common Stock | |||
Business Acquisition [Line Items] | |||
Consideration paid (in shares) | 21,127,823 | ||
Shay Holding Corporation Merger | Class A Common Stock | Earn-Out Shares | |||
Business Acquisition [Line Items] | |||
Maximum additional earn-out (in shares) | 4,000,000 |
Accounts Receivable, net - Comp
Accounts Receivable, net - Components of Accounts receivable, net (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Billed receivables | $ 184,700 | $ 148,747 |
Unbilled receivables | 263,085 | 295,103 |
Less allowance for credit losses | (2,356) | (1,670) |
Total accounts receivables, net | $ 445,429 | $ 442,180 |
Accounts Receivable, net (Detai
Accounts Receivable, net (Details) | 9 Months Ended |
Sep. 27, 2020 | |
Accounts Receivable | U.S. Government Agencies | Customer Concentration Risk | |
Product Information [Line Items] | |
Concentration risk (as a percent) | 90.70% |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill impairment | $ 0 | $ 0 | |||
Amortization of intangible assets | $ 8,047,000 | $ 8,176,000 | $ 24,141,000 | $ 25,029,000 | |
Customer relationships | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life of finite-lived intangible assets (in years) | 7 years | 7 years 10 months 24 days | |||
Trade name | Weighted Average | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life of finite-lived intangible assets (in years) | 5 years 3 months 18 days | 6 years |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Intangible Assets, net (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 305,500 | $ 305,500 |
Accumulated Amortization | (149,177) | (125,036) |
Total | 156,323 | 180,464 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 286,900 | 286,900 |
Accumulated Amortization | (139,699) | (116,923) |
Total | 147,201 | 169,977 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,700 | 1,700 |
Accumulated Amortization | (1,700) | (1,700) |
Total | 0 | 0 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 16,900 | 16,900 |
Accumulated Amortization | (7,778) | (6,413) |
Total | $ 9,122 | $ 10,487 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, net - Estimated Amortization Expense in Future Years (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2020 | $ 8,047 | |
2021 | 31,824 | |
2022 | 31,775 | |
2023 | 24,565 | |
2024 | 20,490 | |
Thereafter | 39,622 | |
Total | $ 156,323 | $ 180,464 |
Consolidated Variable Interes_3
Consolidated Variable Interest Entities - Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Assets | ||
Total assets | $ 1,428,962 | $ 1,371,299 |
Liabilities and stockholders’ equity | ||
Total liabilities | 1,266,953 | 1,383,208 |
Total equity | 126,992 | (43,760) |
Total liabilities and equity | 1,428,962 | 1,371,299 |
Variable Interest Entity, Primary Beneficiary | ||
Assets | ||
Total assets | 138,177 | 127,742 |
Liabilities and stockholders’ equity | ||
Total liabilities | 83,596 | 80,151 |
Total equity | 54,581 | 47,591 |
Total liabilities and equity | $ 138,177 | $ 127,742 |
Consolidated Variable Interes_4
Consolidated Variable Interest Entities - Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Variable Interest Entity [Line Items] | ||||
Revenues | $ 666,240 | $ 697,717 | $ 1,926,795 | $ 2,066,808 |
Cost of revenues | 512,877 | 565,703 | 1,474,763 | 1,623,634 |
Selling, general and administrative expenses | 119,168 | 133,215 | 361,945 | 394,689 |
Total operating expenses | 640,092 | 707,094 | 1,860,849 | 2,043,352 |
Program profit (loss) | 26,148 | (9,377) | 65,946 | 23,456 |
Other (income), net | 2,384 | (1,148) | 4,338 | 6,530 |
Net income (loss) | 10,318 | (32,170) | 21,395 | (35,216) |
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Revenues | 87,324 | 95,121 | 268,969 | 248,170 |
Cost of revenues | 70,707 | 106,560 | 215,866 | 228,513 |
Selling, general and administrative expenses | 16,595 | 24,100 | 50,477 | 63,828 |
Total operating expenses | 87,302 | 130,660 | 266,343 | 292,341 |
Program profit (loss) | 22 | (35,539) | 2,626 | (44,171) |
Other (income), net | (32) | (237) | (241) | (1,090) |
Net income (loss) | $ (10) | $ (35,776) | $ 2,385 | $ (45,261) |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 620,650 | $ 772,101 |
Unamortized discount and debt issuance costs | (13,568) | (22,164) |
Total debt, net of discount and debt issuance costs | 607,082 | 749,937 |
Less current maturities of long-term debt | (23,044) | (22,007) |
Total long-term debt, net of current | 584,038 | 727,930 |
Secured Debt | First Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | 491,867 | 506,772 |
Secured Debt | Second Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 128,783 | $ 265,329 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Feb. 11, 2020USD ($) | Oct. 20, 2016 | Sep. 27, 2020USD ($)letter_of_credit | Dec. 31, 2019USD ($)letter_of_credit | Oct. 26, 2016USD ($) |
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 572,100,000 | ||||
Number of letters of credit outstanding | letter_of_credit | 13 | 11 | |||
Letters of credit outstanding, amount | $ 23,900,000 | $ 21,200,000 | |||
Base Rate | Addition to Federal Funds Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.50% | ||||
London Interbank Offered Rate (LIBOR) | Addition to LIBO Rate | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.00% | ||||
First Term Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 128,800,000 | $ 491,900,000 | |||
Debt instrument increase (decrease) | $ 136,500,000 | ||||
Debt instrument, interest rate during period (as a percent) | 6.50% | 7.40% | |||
First Term Loan | Base Rate | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 4.50% | ||||
First Term Loan | London Interbank Offered Rate (LIBOR) | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 5.50% | ||||
Second Term Loan | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 128,800,000 | ||||
Debt instrument, interest rate during period (as a percent) | 10.50% | 11.40% | |||
Second Term Loan | Base Rate | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 8.50% | ||||
Second Term Loan | London Interbank Offered Rate (LIBOR) | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 9.50% | ||||
Revolving Credit Facility | Revolving Credit Facility | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 150,000,000 | ||||
Remaining borrowing capacity | $ 105,400,000 | $ 121,800,000 | |||
Applicable interest rate (as a percent) | 4.00% | 5.80% | |||
Revolving Credit Facility | Revolving Credit Facility | Base Rate | Minimum | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 0.80% | ||||
Revolving Credit Facility | Revolving Credit Facility | Base Rate | Maximum | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.30% | ||||
Revolving Credit Facility | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 1.80% | ||||
Revolving Credit Facility | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.30% |
Debt - Future Principal Maturit
Debt - Future Principal Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
Remainder of 2020 | $ 14,905 | |
2021 | 29,810 | |
2022 | 447,152 | |
2023 | 128,783 | |
2024 | 0 | |
Thereafter | 0 | |
Total debt | $ 620,650 | $ 772,101 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Feb. 10, 2020 | Sep. 27, 2020 | Apr. 03, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Capital stock authorized (in shares) | 211,000,000 | |||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Preferred stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Common stock authorized (in shares) | 210,000,000 | 210,000,000 | ||
Preferred stock authorized (in shares) | 1,000,000 | 1,000,000 | ||
Class of warrant or right, outstanding (in shares) | 19,999,985 | |||
Shay Holding Corporation Merger | Earn-Out Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Period following completion of business combination (in years) | 5 years | |||
Shay Holding Corporation Merger | Earn-Out Shares, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum additional earn-out (in shares) | 1,000,000 | |||
Share price threshold (in dollars per share) | $ 13 | |||
Shay Holding Corporation Merger | Earn-Out Shares, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum additional earn-out (in shares) | 1,000,000 | |||
Share price threshold (in dollars per share) | $ 15.50 | |||
Shay Holding Corporation Merger | Earn-Out Shares, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum additional earn-out (in shares) | 1,000,000 | |||
Share price threshold (in dollars per share) | $ 18 | |||
Shay Holding Corporation Merger | Earn-Out Shares, Tranche Four | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum additional earn-out (in shares) | 1,000,000 | |||
Share price threshold (in dollars per share) | $ 20.50 | |||
Public Warrants | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Redeemable price of warrants or rights (in dollars per share) | 0.01 | |||
Private Placement | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Redeemable price of warrants or rights (in dollars per share) | 0.01 | |||
Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock par value (in dollars per share) | $ 0.0001 | |||
Number of securities called by each warrant or right (in shares) | 1 | |||
Exercise price of warrants or rights (in dollars per shares) | $ 11.50 | |||
Expiration period of warrants (in years) | 5 years | |||
Class A Common Stock | Shay Holding Corporation Merger | Earn-Out Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum additional earn-out (in shares) | 4,000,000 | |||
Minimum threshold trading days | 10 days | |||
Consecutive trading days | 20 days | |||
Class A Common Stock | Public Warrants | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Class of warrant or right, outstanding (in shares) | 13,333,319 | 13,333,333 | ||
Class A Common Stock | Private Placement | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Class of warrant or right, outstanding (in shares) | 6,666,666 | 6,666,666 | ||
Share price threshold (in dollars per share) | $ 18 | |||
Number of trading days | 20 days | |||
Trading day period | 30 days |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Millions | Feb. 09, 2020 | Sep. 27, 2020 | Sep. 27, 2020 |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 0.3 | $ 0.5 | |
2016 Participation Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 17.4 | ||
2020 Incentive Plan | Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 4 | $ 7.5 | |
Grants issued during period (in shares) | 2,631,857 | ||
2020 Incentive Plan | Restricted Stock Units (RSUs) | Share-based Payment Arrangement, Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award performance weight (as a percent) | 50.00% | ||
2020 Incentive Plan | Restricted Stock Units (RSUs) | Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grants issued during period (in shares) | 454,709 | ||
2020 Incentive Plan | Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grants issued during period (in shares) | 619,125 | ||
Award vesting period | 3 years | ||
2020 Incentive Plan | Performance Shares | Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Grants issued during period (in shares) | 288,822 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of RSUs and PSUs (Details) - 2020 Incentive Plan | 9 Months Ended |
Sep. 27, 2020$ / sharesshares | |
Restricted Stock Units (RSUs) | |
Shares | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 2,631,857 |
Vested (in shares) | shares | (34,366) |
Forfeited (in shares) | shares | 0 |
Ending balance (in shares) | shares | 2,597,491 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 7.45 |
Vested (in dollars per share) | $ / shares | 10.32 |
Forfeited (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 7.69 |
Performance Shares | |
Shares | |
Beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 619,125 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Ending balance (in shares) | shares | 619,125 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 8.61 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Ending balance (in dollars per share) | $ / shares | $ 8.61 |
Net Income (Loss) Per Share - C
Net Income (Loss) Per Share - Computation of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Numerator: | ||||
Net income (loss) attributed to PAE Incorporated | $ 10,318 | $ (32,170) | $ 21,395 | $ (35,216) |
Denominator: | ||||
Basic weighted average shares (in shares) | 92,070,306 | 21,127,823 | 81,323,258 | 21,127,823 |
Diluted weighted average shares (in shares) | 93,392,565 | 21,127,823 | 82,115,825 | 21,127,823 |
Basic income (loss) per share (in dollars per share) | $ 0.11 | $ (1.52) | $ 0.26 | $ (1.67) |
Diluted income (loss) per share (in dollars per share) | $ 0.11 | $ (1.52) | $ 0.26 | $ (1.67) |
Net Income (Loss) Per Share - N
Net Income (Loss) Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Sep. 27, 2020 | |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of diluted loss per share (in shares) | 19,999,985 | 19,999,985 |
Earn-Out Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of diluted loss per share (in shares) | 4,000,000 | 4,000,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 27, 2020 | Sep. 27, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Operating lease right-of-use assets, net | $ 159,975 | $ 159,975 | $ 162,184 |
Operating lease liabilities | 161,862 | 161,862 | |
Operating lease cost | $ 13,800 | $ 42,300 | |
Weighted average remaining lease term (in years) | 7 years 1 month 6 days | 7 years 1 month 6 days | |
Weighted average discount rate (as a percent) | 7.10% | 7.10% | |
Cash payments for operating leases | $ 11,300 | $ 32,500 |
Leases - Future Minimum Operati
Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands | Sep. 27, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 10,942 | |
2021 | 41,682 | |
2022 | 36,043 | |
2023 | 31,331 | |
2024 | 23,077 | |
Thereafter | 60,704 | |
Total future minimum lease payments | 203,779 | |
Less imputed interest | 41,917 | |
Present value of minimum lease payments | 161,862 | |
Less current maturities of lease liabilities | 40,979 | $ 36,997 |
Long-term lease liabilities | $ 120,883 | $ 129,244 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 666,240 | $ 697,717 | $ 1,926,795 | $ 2,066,808 |
Operating income | 28,532 | (10,525) | 70,284 | 29,986 |
Amortization of intangible assets | 8,047 | 8,176 | 24,141 | 25,029 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating income | (8,548) | (10,123) | (23,027) | (24,193) |
Amortization of intangible assets | 0 | 0 | 0 | 0 |
GMS | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 521,346 | 535,635 | 1,486,643 | 1,566,138 |
Operating income | 31,401 | 26,000 | 75,541 | 77,449 |
Amortization of intangible assets | 4,115 | 4,140 | 12,346 | 12,539 |
NSS | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 144,894 | 162,082 | 440,152 | 500,670 |
Operating income | 5,679 | (26,402) | 17,770 | (23,270) |
Amortization of intangible assets | $ 3,932 | $ 4,036 | $ 11,795 | $ 12,490 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) $ in Millions | Feb. 10, 2020 | Sep. 27, 2020 | Dec. 31, 2019 |
PE Shay Holdings, LLC | |||
Related Party Transaction [Line Items] | |||
Liability for estimated payment to platinum stockholder | $ 4.7 | ||
Affiliated Entity | Advisory Services | |||
Related Party Transaction [Line Items] | |||
Related party transaction expenses | $ 15 | $ 15.8 | $ 5.1 |
Affiliated Entity | Advisory Services | Selling, General and Administrative Expenses | |||
Related Party Transaction [Line Items] | |||
Related party transaction expenses | $ 0.8 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Expense (benefit) from income taxes | $ 4,194 | $ 117 | $ (767) | $ (1,877) |
Effective income tax rate (as a percent) | 28.10% | 0.40% | (3.50%) | 5.30% |
Tax expense (benefit) on increased interest expense deduction | $ 2,700 | |||
Payroll tax funding deferral | $ 36,000 | $ 36,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Oct. 26, 2020 | Oct. 19, 2020 | Feb. 11, 2020 |
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 572,100,000 | ||
Subsequent Event | CENTRA | |||
Subsequent Event [Line Items] | |||
Business combination, consideration transferred | $ 208,000,000 | ||
Escrow deposit | $ 5,000,000 | ||
Subsequent Event | Revolving Credit Facility | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 175,000,000 | ||
Subsequent Event | Revolving Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||
Subsequent Event [Line Items] | |||
Debt instrument, basis spread on variable rate | 1.75% | ||
Subsequent Event | Revolving Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||
Subsequent Event [Line Items] | |||
Debt instrument, basis spread on variable rate | 2.25% | ||
Subsequent Event | Term Loan Facility Maturing October 2027 | Secured Debt | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 740,000,000 | ||
Subsequent Event | Term Loan Facility Maturing October 2027 | Secured Debt | London Interbank Offered Rate (LIBOR) | |||
Subsequent Event [Line Items] | |||
Debt instrument, basis spread on variable rate | 4.50% | ||
Subsequent Event | Delayed Draw Term Loan Facility Maturing October 2027 | Secured Debt | |||
Subsequent Event [Line Items] | |||
Maximum borrowing capacity | $ 150,000,000 | ||
Subsequent Event | Delayed Draw Term Loan Facility Maturing October 2027 | Secured Debt | London Interbank Offered Rate (LIBOR) | |||
Subsequent Event [Line Items] | |||
Debt instrument, basis spread on variable rate | 4.50% |