Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 26, 2021 | Nov. 02, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 26, 2021 | |
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 | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 93,117,234 | |
Entity Central Index Key | 0001720821 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
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. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Income Statement [Abstract] | ||||
Revenues | $ 689,514 | $ 666,240 | $ 2,185,279 | $ 1,926,795 |
Cost of revenues | 511,852 | 512,877 | 1,643,470 | 1,474,763 |
Selling, general and administrative expenses | 140,170 | 119,168 | 428,237 | 361,945 |
Amortization of intangible assets | 12,630 | 8,047 | 37,476 | 24,141 |
Total operating expenses | 664,652 | 640,092 | 2,109,183 | 1,860,849 |
Program profit | 24,862 | 26,148 | 76,096 | 65,946 |
Other operating income, net | 1,174 | 2,384 | 6,897 | 4,338 |
Operating income | 26,036 | 28,532 | 82,993 | 70,284 |
Interest expense, net | (13,109) | (13,607) | (38,783) | (48,312) |
Other income, net | 16,399 | 5,000 | 17,533 | 15,645 |
Income before income taxes | 29,326 | 19,925 | 61,743 | 37,617 |
Expense (benefit) from income taxes | 1,495 | 4,194 | 6,730 | (1,582) |
Net income | 27,831 | 15,731 | 55,013 | 39,199 |
Noncontrolling interest in earnings of ventures | (1,958) | 413 | (2,510) | 1,344 |
Net income attributed to PAE Incorporated | $ 29,789 | $ 15,318 | $ 57,523 | $ 37,855 |
Net income per share attributed to PAE Incorporated: | ||||
Basic (in dollars per share) | $ 0.32 | $ 0.17 | $ 0.62 | $ 0.47 |
Diluted (in dollars per share) | $ 0.31 | $ 0.16 | $ 0.60 | $ 0.46 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 93,122,414 | 92,070,306 | 92,949,301 | 81,323,258 |
Diluted (in shares) | 95,836,986 | 93,392,565 | 95,599,019 | 82,115,825 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 27,831 | $ 15,731 | $ 55,013 | $ 39,199 |
Other comprehensive (loss) income: | ||||
Change in foreign currency translation adjustment, net of tax | (282) | 780 | (647) | (137) |
Other, net | 2 | 1 | 1 | 424 |
Other comprehensive (loss) income | (280) | 781 | (646) | 287 |
Comprehensive income | 27,551 | 16,512 | 54,367 | 39,486 |
Comprehensive (loss) income attributed to noncontrolling interests | (2,050) | 505 | (2,752) | 1,287 |
Comprehensive income attributed to PAE Incorporated | $ 29,601 | $ 16,007 | $ 57,119 | $ 38,199 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 157,268 | $ 85,908 |
Accounts receivable, net | 524,707 | 585,511 |
Prepaid expenses and other current assets | 63,043 | 61,607 |
Total current assets | 745,018 | 733,026 |
Property and equipment, net | 36,600 | 27,615 |
Investments | 15,407 | 18,272 |
Goodwill | 593,171 | 590,668 |
Intangible assets, net | 220,734 | 258,210 |
Operating lease right-of-use assets, net | 192,638 | 191,370 |
Other noncurrent assets | 14,928 | 10,209 |
Total assets | 1,818,496 | 1,829,370 |
Current liabilities: | ||
Accounts payable | 124,959 | 152,962 |
Accrued expenses | 107,446 | 114,222 |
Customer advances and billings in excess of costs | 106,221 | 106,475 |
Salaries, benefits and payroll taxes | 153,229 | 145,186 |
Accrued taxes | 12,132 | 15,582 |
Current portion of long-term debt, net | 7,036 | 5,961 |
Operating lease liabilities, current portion | 47,205 | 46,756 |
Other current liabilities | 38,559 | 45,037 |
Total current liabilities | 596,787 | 632,181 |
Deferred income taxes, net | 11,006 | 4,389 |
Long-term debt, net | 865,016 | 860,306 |
Long-term operating lease liabilities | 150,280 | 145,569 |
Warrant liability | 32,934 | 50,467 |
Other long-term liabilities | 13,509 | 30,273 |
Total liabilities | 1,669,532 | 1,723,185 |
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; 93,115,801 and 92,040,654 shares issued and outstanding as of September 26, 2021 and December 31, 2020, respectively | 9 | 9 |
Additional paid-in capital | 171,807 | 188,685 |
Accumulated deficit | (59,098) | (116,621) |
Accumulated other comprehensive income | 1,230 | 1,876 |
Total PAE Incorporated stockholders' equity | 113,948 | 73,949 |
Noncontrolling interests | 35,016 | 32,236 |
Total liabilities and stockholders’ equity | $ 1,818,496 | $ 1,829,370 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 26, 2021 | Dec. 31, 2020 |
Stockholders’ equity: | ||
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) | 93,115,801 | 92,040,654 |
Common stock outstanding (in shares) | 93,115,801 | 92,040,654 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands | Total | Previously Reported | Revision of Prior Period, Adjustment | Total PAE Incorporated Stockholders’ Equity | Total PAE Incorporated Stockholders’ EquityPreviously Reported | Common Stock | Common StockPreviously Reported | Common StockRevision of Prior Period, Adjustment | Additional Paid-in Capital | Additional Paid-in CapitalPreviously Reported | Additional Paid-in CapitalRevision of Prior Period, 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, 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 | 282,047 | 20,845,776 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 26,150 | 25,984 | 25,984 | 166 | |||||||||||||
Other comprehensive income (loss), net | (695) | (695) | (695) | ||||||||||||||
Equity contributions from venture partners | 165 | 13 | 13 | 152 | |||||||||||||
Equity infusion from Gores | 307,941 | 307,941 | $ 5 | 307,936 | |||||||||||||
Equity infusion from Gores (in shares) | 46,999,787 | ||||||||||||||||
Private placement | 212,910 | 212,910 | $ 2 | 212,908 | |||||||||||||
Private placement (in shares) | 23,913,044 | ||||||||||||||||
Payment to Shay stockholders | (424,243) | (424,243) | (424,243) | ||||||||||||||
Ending balance at Mar. 29, 2020 | 110,319 | 78,150 | $ 9 | 198,357 | (119,387) | (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 | 282,047 | 20,845,776 | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 39,199 | ||||||||||||||||
Other comprehensive income (loss), net | 287 | ||||||||||||||||
Ending balance at Sep. 27, 2020 | 114,542 | 79,525 | $ 9 | 186,878 | (107,515) | 153 | 35,017 | ||||||||||
Ending balance (in shares) at Sep. 27, 2020 | 92,040,654 | ||||||||||||||||
Beginning balance at Mar. 29, 2020 | 110,319 | 78,150 | $ 9 | 198,357 | (119,387) | (829) | 32,169 | ||||||||||
Beginning balance (in shares) at Mar. 29, 2020 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | (2,681) | (3,446) | (3,446) | 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 | 92,866 | 58,436 | $ 9 | 181,888 | (122,833) | (628) | 34,430 | ||||||||||
Ending balance (in shares) at Jun. 28, 2020 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 15,731 | 15,318 | 15,318 | 413 | |||||||||||||
Other comprehensive income (loss), net | 781 | 781 | 781 | ||||||||||||||
Distributions to venture partners and other | 174 | 174 | |||||||||||||||
Equity contributions from venture partners | (146) | (146) | (146) | ||||||||||||||
Payment to Shay stockholders | 818 | 818 | 818 | ||||||||||||||
Stock-based compensation | 4,318 | 4,318 | 4,318 | ||||||||||||||
Ending balance at Sep. 27, 2020 | 114,542 | 79,525 | $ 9 | 186,878 | (107,515) | 153 | 35,017 | ||||||||||
Ending balance (in shares) at Sep. 27, 2020 | 92,040,654 | ||||||||||||||||
Beginning balance at Dec. 31, 2020 | $ 106,185 | 73,949 | $ 9 | 188,685 | (116,621) | 1,876 | 32,236 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 92,040,654 | 92,040,654 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | $ 12,273 | 13,384 | 13,384 | (1,111) | |||||||||||||
Other comprehensive income (loss), net | (995) | (995) | (995) | ||||||||||||||
Equity contributions from venture partners | 467 | 467 | |||||||||||||||
Deconsolidation of venture | 188 | 188 | |||||||||||||||
Purchase of noncontrolling interest | (15,174) | (17,398) | (17,398) | 2,224 | |||||||||||||
Stock-based compensation tax withholding obligation | (5,659) | (5,659) | (5,659) | ||||||||||||||
Stock-based compensation | 2,270 | 2,270 | 2,270 | ||||||||||||||
Ending balance at Mar. 28, 2021 | 99,555 | 65,551 | $ 9 | 167,898 | (103,237) | 881 | 34,004 | ||||||||||
Ending balance (in shares) at Mar. 28, 2021 | 92,040,654 | ||||||||||||||||
Beginning balance at Dec. 31, 2020 | $ 106,185 | 73,949 | $ 9 | 188,685 | (116,621) | 1,876 | 32,236 | ||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 92,040,654 | 92,040,654 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | $ 55,013 | ||||||||||||||||
Other comprehensive income (loss), net | (646) | ||||||||||||||||
Ending balance at Sep. 26, 2021 | $ 148,964 | 113,948 | $ 9 | 171,807 | (59,098) | 1,230 | 35,016 | ||||||||||
Ending balance (in shares) at Sep. 26, 2021 | 93,115,801 | 92,040,654 | |||||||||||||||
Beginning balance at Mar. 28, 2021 | $ 99,555 | 65,551 | $ 9 | 167,898 | (103,237) | 881 | 34,004 | ||||||||||
Beginning balance (in shares) at Mar. 28, 2021 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 14,909 | 14,350 | 14,350 | 559 | |||||||||||||
Other comprehensive income (loss), net | 629 | 629 | 629 | ||||||||||||||
Distributions to venture partners and other | (850) | (850) | |||||||||||||||
Purchase of noncontrolling interest | (8) | (8) | (8) | ||||||||||||||
Stock-based compensation | 2,355 | 2,355 | 2,355 | ||||||||||||||
Ending balance at Jun. 27, 2021 | 116,590 | 82,877 | $ 9 | 170,245 | (88,887) | 1,510 | 33,713 | ||||||||||
Ending balance (in shares) at Jun. 27, 2021 | 92,040,654 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Net income (loss) | 27,831 | 29,789 | 29,789 | (1,958) | |||||||||||||
Other comprehensive income (loss), net | (280) | (280) | (280) | ||||||||||||||
Distributions to venture partners and other | (500) | (500) | |||||||||||||||
Equity contributions from venture partners | 3,761 | 3,761 | |||||||||||||||
Stock-based compensation tax withholding obligation | (160) | (160) | (160) | ||||||||||||||
Stock-based compensation | 1,722 | 1,722 | 1,722 | ||||||||||||||
Ending balance at Sep. 26, 2021 | $ 148,964 | $ 113,948 | $ 9 | $ 171,807 | $ (59,098) | $ 1,230 | $ 35,016 | ||||||||||
Ending balance (in shares) at Sep. 26, 2021 | 93,115,801 | 92,040,654 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2021 | Sep. 27, 2020 | |
Operating activities | ||
Net income | $ 55,013 | $ 39,199 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation of property and equipment | 7,768 | 7,263 |
Amortization of intangible assets | 37,476 | 24,141 |
Amortization of debt issuance cost | 2,387 | 9,560 |
Stock-based compensation | 6,347 | 8,018 |
Net undistributed income from unconsolidated ventures | (8,625) | (3,533) |
Deferred income taxes, net | 7,249 | (12,044) |
Change in fair value of warrant liability | (17,533) | (19,132) |
Other non-cash activities, net | (2,714) | 382 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable, net | 61,375 | (3,477) |
Accounts payable | (28,195) | 15,852 |
Accrued expenses | (7,105) | 4,252 |
Customer advances and billings in excess of costs | (256) | 8,923 |
Salaries, benefits and payroll taxes | 7,488 | 10,975 |
Prepaid expenses and other current assets | (2,124) | (2,118) |
Other current and noncurrent liabilities | (19,620) | 71 |
Investments | 9,907 | 2,793 |
Other noncurrent assets | (5,576) | 5,903 |
Accrued taxes | (3,458) | (4,904) |
Net cash provided by operating activities | 99,804 | 92,124 |
Investing activities | ||
Expenditures for property and equipment | (19,577) | (2,628) |
Proceeds from sales of property | 5,195 | 0 |
Acquisition of CENTRA Technology, Inc., net of acquired cash | (1,441) | 0 |
Acquisition of Metis Solutions Corporation, net of acquired cash | (521) | 0 |
Acquisition of noncontrolling interest | (14,308) | 0 |
Other investing activities, net | 2,030 | (72) |
Net cash used in investing activities | (28,622) | (2,700) |
Financing activities | ||
Net contributions from noncontrolling interests | 2,927 | 2,095 |
Borrowings on long-term debt | 237,010 | 60,734 |
Repayments on long-term debt | (233,409) | (212,184) |
Payment of debt issuance costs | 0 | (964) |
Recapitalization from merger with Gores Holdings III, Inc. | 0 | 605,713 |
Payment of underwriting and transaction costs | 0 | (27,267) |
Distribution to selling stockholders | 0 | (439,719) |
Stock-based compensation tax withholding obligation | (5,818) | 0 |
Other financing activities, net | 0 | (292) |
Net cash provided by (used in) financing activities | 710 | (11,884) |
Effect of exchange rate changes on cash and cash equivalents | (532) | (129) |
Net increase in cash and cash equivalents | 71,360 | 77,411 |
Cash and cash equivalents at beginning of period | 85,908 | 68,035 |
Cash and cash equivalents at end of period | 157,268 | 145,446 |
Supplemental cash flow information | ||
Cash paid for interest | 40,048 | 35,085 |
Cash paid for taxes | $ 9,343 | $ 5,304 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 26, 2021 | |
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 that certain Agreement and Plan of Merger, dated November 1, 2019, by and among Gores III, EAP Merger Sub, Inc., EAP Merger Sub II, LLC, Shay, and Platinum Equity Advisors, LLC (in its capacity as the stockholder representative) (the “Gores Merger Agreement”)) and its subsidiaries. Additionally, the stockholders of Shay as of immediately prior to the transaction held a portion of the common stock of the Company. For accounting purposes, the Business Combination is treated as a reverse acquisition and recapitalization (the “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 currently 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. 26, 2021 | |
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”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for annual financial information. In management’s opinion, all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation have been included. The Company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business process, which were on September 26, 2021 and September 27, 2020, 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 condensed 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, inputs in the valuation of the warrants liability and anticipated contract costs and revenues utilized in the earnings recognition process, which affect the reported amounts in the condensed 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 timing and risks. Actual results may differ from management’s estimates and changes in these estimates are recorded when known. Update to Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies described in the Company’s Form 10-K/A filed with the SEC on May 7, 2021. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 26, 2021 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective in 2021 and interim periods within that year and permits for an early adoption. The Company adopted ASU 2019-12 effective January 1, 2021. The adoption of the guidance did not have a material impact on its financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted |
Revenues
Revenues | 9 Months Ended |
Sep. 26, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Disaggregated Revenues Disaggregated revenues by customer type were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total DoD $ 129,261 $ 87,886 $ 217,147 Other U.S. government agencies 288,543 131,212 419,755 Commercial and non-U.S. customers 30,274 22,338 52,612 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total DoD $ 486,292 $ 251,706 $ 737,998 Other U.S. government agencies 824,920 383,155 1,208,075 Commercial and non-U.S. customers 169,770 69,436 239,206 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Revenues by contract type were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 218,152 $ 89,948 $ 308,100 Fixed-price 191,530 85,287 276,817 Time and materials 38,396 66,201 104,597 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 764,625 $ 273,695 $ 1,038,320 Fixed-price 532,789 246,840 779,629 Time and materials 183,568 183,762 367,330 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total United States $ 246,903 $ 239,723 $ 486,626 International 201,175 1,713 202,888 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total United States $ 801,944 $ 700,299 $ 1,502,243 International 679,038 3,998 683,036 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 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 26, 2021 and December 31, 2020 was $1,701.1 million and $1,722.0 million, respectively. As of September 26, 2021, the Company expects to recognize approximately 87.8% and 12.2% 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 26, December 31, 2021 2020 Contract assets $ 358,345 $ 360,552 Contract liabilities $ 106,221 $ 106,475 The decrease in contract assets of $2.2 million during the nine months ended September 26, 2021 was primarily due to the timing of billings, partially offset by revenue recognized related to the satisfaction of performance obligations. The decrease in contract liabilities of $0.3 million during the nine months ended September 26, 2021 was primarily due to the timing of advance payments from customers offset by revenue recognized during the period. |
Contract Assets and Contract Li
Contract Assets and Contract Liabilities | 9 Months Ended |
Sep. 26, 2021 | |
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 26, 2021 GMS NSS Total DoD $ 129,261 $ 87,886 $ 217,147 Other U.S. government agencies 288,543 131,212 419,755 Commercial and non-U.S. customers 30,274 22,338 52,612 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total DoD $ 486,292 $ 251,706 $ 737,998 Other U.S. government agencies 824,920 383,155 1,208,075 Commercial and non-U.S. customers 169,770 69,436 239,206 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Revenues by contract type were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 218,152 $ 89,948 $ 308,100 Fixed-price 191,530 85,287 276,817 Time and materials 38,396 66,201 104,597 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 764,625 $ 273,695 $ 1,038,320 Fixed-price 532,789 246,840 779,629 Time and materials 183,568 183,762 367,330 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total United States $ 246,903 $ 239,723 $ 486,626 International 201,175 1,713 202,888 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total United States $ 801,944 $ 700,299 $ 1,502,243 International 679,038 3,998 683,036 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 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 26, 2021 and December 31, 2020 was $1,701.1 million and $1,722.0 million, respectively. As of September 26, 2021, the Company expects to recognize approximately 87.8% and 12.2% 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 26, December 31, 2021 2020 Contract assets $ 358,345 $ 360,552 Contract liabilities $ 106,221 $ 106,475 The decrease in contract assets of $2.2 million during the nine months ended September 26, 2021 was primarily due to the timing of billings, partially offset by revenue recognized related to the satisfaction of performance obligations. The decrease in contract liabilities of $0.3 million during the nine months ended September 26, 2021 was primarily due to the timing of advance payments from customers offset by revenue recognized during the period. |
Business Combinations and Acqui
Business Combinations and Acquisitions | 9 Months Ended |
Sep. 26, 2021 | |
Business Combination and Asset Acquisition [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 simultaneously by the 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 (as defined below) 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. In connection with the Business Combination, the Company recorded $18.2 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. In addition, the Company recorded $3.4 million of transaction costs related to the warrants as non-operating expense in the consolidated statement of operations. During the third quarter of 2020, pursuant to the post-closing adjustment provisions contained in the Gores Merger Agreement, the Company made a post-closing adjustment payment of $20.2 million to the Shay Stockholders. In addition, the Company paid $1.0 million to certain members of PAE management in connection with the post-closing adjustment, and such amount was recorded as compensation expense. CENTRA Technology, Inc. On November 20, 2020, the Company acquired 100% of the capital stock of CENTRA Technology, Inc. (“CENTRA”) for a consideration paid of $225.3 million, net. The results of CENTRA’s operations have been included in the Company’s condensed consolidated financial statements since that date. This business combination expands and differentiates PAE's capabilities in intelligence analysis, communication systems integration and research and development services for intelligence and defense customers. During the second quarter of 2021, the Company made a payment of $1.4 million related to the working capital adjustment, pursuant to the Stock Purchase Agreement (as defined below). The Company has completed the purchase accounting valuation for this acquisition and recorded final purchase accounting adjustments. As a result, the Company recognized fair values of assets acquired of $177.4 million and assumed liabilities of $77.2 million allocating $126.4 million to goodwill and $74.1 million to intangible assets. The goodwill of $126.4 million arising from the acquisition relates primarily to revenue and cost synergies. This goodwill is not deductible for tax purposes. Metis Solutions Corporation On November 23, 2020, the Company completed the acquisition of 100% of the capital stock of Metis Solutions Corporation (“Metis”) for a consideration paid of $95.7 million in cash. The results of Metis’s operations have been included in the condensed consolidated financial statements since that date. This business combination expands and differentiates PAE's capabilities in intelligence analysis, training and program support for intelligence and defense customers. During the second quarter of 2021, pursuant to the purchase price adjustment provisions of the Metis Merger Agreement (as defined below), the Company made a payment of $0.5 million to the option holders as a result of a closing adjustment. The Company has completed the purchase accounting valuation for this acquisition and recorded final purchase accounting adjustments. As a result, the Company recognized fair values of assets acquired of $60.4 million and assumed liabilities of $20.7 million allocating $56.5 million to goodwill and $37.8 million to intangible assets. The goodwill of $56.5 million arising from the acquisition relates primarily to revenue and cost synergies. This goodwill is not deductible for tax purposes. |
Accounts Receivable, net
Accounts Receivable, net | 9 Months Ended |
Sep. 26, 2021 | |
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 26, December 31, 2021 2020 Billed receivables $ 170,005 $ 227,787 Unbilled receivables 358,345 360,552 Less allowance for credit losses (3,643) (2,828) Total accounts receivables, net $ 524,707 $ 585,511 As of September 26, 2021 approximately 92.4% 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. 26, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | Goodwill and Intangible Assets, net Goodwill There was no impairment for the three month and nine month periods ended September 26, 2021 and September 27, 2020, respectively. Intangible Assets, net The components of intangible assets, net consisted of the following as of the dates presented (in thousands): September 26, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 390,900 $ (184,427) $ 206,473 Technology 1,700 (1,700) — Trade name 24,800 (10,539) 14,261 Total $ 417,400 $ (196,666) $ 220,734 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 390,900 $ (149,163) $ 241,737 Technology 1,700 (1,700) — Trade name 24,800 (8,327) 16,473 Total $ 417,400 $ (159,190) $ 258,210 As of the nine months period ended September 26, 2021, customer relationships and trade name intangibles had weighted average remaining useful lives of 7.6 years and 5.2 years, respectively. For the nine months ended September 26, 2021 and September 27, 2020, amortization expense was approximately $37.5 million and $24.1 million, respectively. For the three months ended September 26, 2021 and September 27, 2020, amortization expense was approximately $12.6 million and $8.0 million, respectively. Estimated amortization expense in future years is expected to be: As of September 26, 2021 Remainder of 2021 $ 12,630 2022 50,089 2023 40,666 2024 33,782 2025 28,015 Thereafter 55,552 Total $ 220,734 |
Consolidated Ventures
Consolidated Ventures | 9 Months Ended |
Sep. 26, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Ventures | Consolidated Ventures The Company consolidates an investment when it has determined that the investment is a variable interest entity (“VIE”) and that the Company is the primary beneficiary. 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 liabilities 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 26, December 31, 2021 2020 Assets Total assets $ 149,866 $ 145,664 Liabilities and equity Total liabilities $ 99,559 $ 96,318 Total equity 50,307 49,346 Total liabilities and equity $ 149,866 $ 145,664 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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Income statements Revenues $ 97,986 $ 87,324 $ 300,999 $ 268,969 Cost of revenues 82,913 70,707 249,013 215,866 Selling, general and administrative expenses 18,998 16,595 55,289 50,477 Total operating expenses 101,911 87,302 304,302 266,343 Program (loss) income (3,925) 22 (3,303) 2,626 Other loss, net (96) (32) (715) (241) Net (loss) income $ (4,021) $ (10) $ (4,018) $ 2,385 DZSP 21 LLC |
Debt
Debt | 9 Months Ended |
Sep. 26, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following as of the dates presented ( in thousands ): September 26, December 31, 2021 2020 First Term Loan $ 885,550 $ 890,000 Other debt 8,051 — Total debt 893,601 890,000 Unamortized discount and debt issuance costs (21,549) (23,733) Total debt, net of discount and debt issuance costs 872,052 866,267 Less current maturities of long-term debt (7,036) (5,961) Total long-term debt, net of current $ 865,016 $ 860,306 Credit Agreements Term Loan On October 19, 2020, the Company refinanced the 2016 credit agreements (comprised of (i) a first lien term loan credit agreement, as amended; (ii) a second lien term loan credit agreement, as amended; and (iii) a revolving credit facility, as amended, each dated as of October 26, 2016) (the “2016 Credit Agreements”) and entered into new senior secured credit facilities (the “2020 Credit Agreements”). The 2020 Credit Agreements provide for borrowings up to $890.0 million. The 2020 Credit Agreements established a $740.0 million term loan facility maturing in October 2027 priced at LIBOR plus a spread of 4.5%, a $150.0 million delayed draw term loan facility maturing in October 2027 priced at LIBOR plus a spread of 4.5% (together the “First Term Loan”), and a $175.0 million senior secured revolving credit facility (the “2020 ABL Credit Agreement”) maturing in October 2025 priced at LIBOR plus a spread of 1.8% to 2.3%. The 2020 Credit Agreements require the Company to comply with specified financial covenants under certain circumstances, including the maintenance of certain leverage ratios. The 2020 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. PAE was in compliance with the financial covenants under the 2020 Credit Agreements as of September 26, 2021 and December 31, 2020, respectively. Equipment Notes The Company, through DZSP, entered into a line of credit with Bank of America for the financing of program specific equipment through the issuance of secured loan notes. Each note represents a separate and independent financing of equipment. As of September 26, 2021, PAE has two outstanding equipment loan notes (the “Equipment Notes”) in an aggregate amount of $8.1 million with a maturity date of March 2028 and August 2028, respectively. The interest rate per annum applicable to the Equipment Notes is equal to a fixed rate of 2.8% and 2.9%, respectively. Future principal maturities of the Company’s long-term debt are summarized as follows ( in thousands ): As of September 26, 2021 Remainder of 2021 $ 4,759 2022 10,016 2023 10,048 2024 10,082 2025 10,116 Thereafter 848,580 Total $ 893,601 As of September 26, 2021 and December 31, 2020, the available borrowing capacity under the 2020 ABL Credit Agreement was approximately $151.8 million and $132.8 million, respectively. Interest Rates on Credit Agreements The interest rate per annum applicable to amounts borrowed under the 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) 3.5% 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 Term 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. 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 2020 Credit Agreements). As of September 26, 2021 and December 31, 2020, the applicable interest rate on the amounts borrowed under the First Term Loan was 5.3% for each period, respectively. The interest rate per annum applicable to the 2020 Credit Agreements 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 26, 2021 and December 31, 2020, the applicable interest rate on amounts borrowed under the 2020 Revolving Credit Facility was 4.0% for each period, respectively. Letters of Credit The Company had ten outstanding letters of credit for program and insurance requirements totaling approximately $23.2 million as of September 26, 2021 and 13 outstanding letters of credit for program and insurance requirements totaling approximately $23.9 million as of December 31, 2020. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 26, 2021 | |
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. 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 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, as 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 follows: (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 Gores 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 26, 2021. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 26, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Net Income Per ShareBasic net income per common share is determined by dividing the net income attributed to stockholders by the weighted average number of common shares outstanding during the period presented. Diluted income 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 income 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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Numerator: Net income attributed to PAE Incorporated $ 29,789 $ 15,318 $ 57,523 $ 37,855 Denominator: Basic weighted average shares 93,122,414 92,070,306 92,949,301 81,323,258 Diluted weighted average shares 95,836,986 93,392,565 95,599,019 82,115,825 Basic income per share $ 0.32 $ 0.17 $ 0.62 $ 0.47 Diluted income per share $ 0.31 $ 0.16 $ 0.60 $ 0.46 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 per share for the three months and nine months ended September 26, 2021. 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 income per share for the three months and nine months ended September 26, 2021. 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 26, 2021. Unvested RSUs and PSUs will not impact the calculation of basic earnings per share (“EPS”) until vested, in which case they would be included in the total weighted average number of shares. All potential dilutive securities, which include unvested RSUs, are included in the diluted EPS calculation. Unvested PSUs are included in the calculation of diluted EPS to the extent that the performance criteria have been achieved. |
Leases
Leases | 9 Months Ended |
Sep. 26, 2021 | |
Leases [Abstract] | |
Leases | Leases As of September 26, 2021, the Company had right-of-use (“ROU”) assets, net of $192.6 million and lease liabilities of $197.5 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 26, 2021, the Company recognized operating lease costs of approximately $15.3 million and $46.1 million, respectively. The Company’s future minimum operating lease payments for noncancelable operating leases were as follows ( in thousands ): September 26, 2021 Remainder of 2021 $ 12,432 2022 47,908 2023 43,401 2024 35,333 2025 28,928 Thereafter 69,772 Total future minimum lease payments 237,774 Less imputed interest 40,289 Present value of minimum lease payments 197,485 Less current maturities of lease liabilities 47,205 Long-term lease liabilities $ 150,280 The weighted-average remaining lease term and the weighted-average discount rate for the Company’s operating leases were approximately 6.6 years and 6.0%, respectively, at September 26, 2021. The Company made cash payments of approximately $12.2 million and $36.5 million for operating leases for the three month and nine month periods ended September 26, 2021, which are included in cash flows from operating activities in the condensed consolidated statement of cash flows. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 26, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements 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 utilizes 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 observable 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 and reflect the Company’s own estimates and assumptions. 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 available for debt with terms and maturities similar to the Company’s 2020 Credit Agreements. The warrant liability is measured at fair value at each reporting period and changes in fair value are recorded in other income, net. The public warrants liability is measured using Level 1 inputs based on observable active markets. The private placement warrants liability is measured using Level 3 inputs using the Black-Scholes option pricing model. The significant assumptions the Company used in the model are: Valuation Inputs September 26, 2021 December 31, 2020 Asset price $ 5.7 $ 9.2 Exercise price $ 11.5 $ 11.5 Contractual term 3.4 4.1 Volatility 84.1 % 50.0 % Risk-free rate of return 0.6 % 0.3 % Dividend yield — % — % Details of the changes in fair value for the public warrants and private placement warrants are as follows: Public warrant liability September 26, 2021 Public warrant liability as of December 31 $ 30,667 Changes in fair value (13,200) Ending public warrant liability $ 17,467 Private warrant liability September 26, 2021 Private warrant liability as of December 31 $ 19,800 Changes in fair value (4,333) Ending private warrant liability $ 15,467 |
Legal Proceedings, Commitments,
Legal Proceedings, Commitments, and Contingencies | 9 Months Ended |
Sep. 26, 2021 | |
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. 26, 2021 | |
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”) 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 and allocate resources 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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Revenues GMS $ 448,078 $ 521,346 $ 1,480,982 $ 1,486,643 NSS 241,436 144,894 704,297 440,152 Corporate — — — — Total revenues $ 689,514 $ 666,240 $ 2,185,279 $ 1,926,795 Operating income (loss) GMS $ 20,459 $ 31,401 $ 73,673 $ 75,541 NSS 13,091 5,679 33,729 17,770 Corporate (7,514) (8,548) (24,409) (23,027) Total operating income $ 26,036 $ 28,532 $ 82,993 $ 70,284 Amortization of intangible assets GMS $ 4,161 $ 4,115 $ 12,483 $ 12,346 NSS 8,469 3,932 24,993 11,795 Corporate — — — Total amortization of intangible assets $ 12,630 $ 8,047 $ 37,476 $ 24,141 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. Less than 10.0% of the Company’s revenues and tangible long-lived assets are generated by or owned by entities outside of the United States. Therefore, additional segment financial information by geographic location is not presented. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 26, 2021 | |
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 sheet as of September 26, 2021. Advisory Services During the nine months ended September 26, 2021, there were no management fees, transaction and advisory fee recognized related to any of the Company’s affiliates. During the nine months ended September 27, 2020, the Company recognized management fees, transaction and advisory fees, and related expenses of approximately $15.8 million. These expenses were for services rendered by one or more affiliates of Platinum Equity, LLC. As a result of the Business Combination, $15.0 million was included 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 26, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s provision for income tax expense (benefits) was approximately $1.5 million and $6.7 million and its effective income tax rates were 5.1% and 10.9% for the three months and nine months period ended September 26, 2021, respectively. The Company’s provision for income tax expense (benefits) were approximately $4.2 million, and $(1.6) million and its effective income tax rates were 21.0% and (4.2)% for the three months and nine months periods ended September 27, 2020, respectively. The provision for income taxes for the period ended September 26, 2021 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”), nontaxable income including the fair value adjustment for warrants, offset by the effect of foreign operations. 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 FDII, increased prior year interest expense deduction under the Coronavirus Aid, Relief and Economic Security Act (as amended, the “CARES Act”) adjustments, nontaxable income including the fair value adjustment for warrants, and settlement of foreign taxes, offset by disallowed compensation deduction under Internal Revenue Code Section 162(m) and disallowed transaction costs. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 26, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn October 25, 2021, PAE Incorporated (the “Company”) entered into an Agreement and Plan of Merger (the “Amentum Merger Agreement”) with Amentum Government Services Holdings LLC (“Parent”) and Pinnacle Virginia Merger Sub Inc., an indirect wholly-owned subsidiary of Parent (“Merger Sub”), providing for the merger of Merger Sub with and into the Company (the “Merger”), with the Company continuing as the surviving company of the Merger and an indirect wholly-owned subsidiary of Parent (the “Surviving Corporation”). Pursuant to the terms and conditions set forth in the Amentum Merger Agreement, at the effective time of the merger (the “Effective Time”), each share of Class A common stock par value $0.0001 of the Company outstanding as of immediately prior to the Effective Time will automatically be canceled, extinguished and converted into the right to receive an amount equal to $10.05 in cash per share, net any applicable withholding and without interest. The Amentum Merger Agreement prohibits the Company and its advisors and representatives from soliciting, encouraging, providing information or entering into discussions concerning proposals relating to alternative business combination transactions, subject to certain limited exceptions. However, during the period beginning on October 25, 2021 and continuing until November 29, 2021 (the “Go-Shop Period”), the Company is permitted to take such actions with respect to certain competing acquisition proposals. At the end of the Go-Shop Period, the Company will cease such activities and will be subject to customary “no shop” restrictions on its ability to solicit third party proposals relating to competing acquisition proposals or to provide information to and engage in discussions with certain third parties. In the event the Amentum Merger Agreement is terminated by the Company in certain circumstances, the Company may be required to pay a termination fee of either $15.0 million or $30.0 million (including in order to enter into a definitive agreement with respect to a Company Superior Proposal, as defined in the Amentum Merger Agreement) to the Parent. The termination rights of the parties to the Amentum Merger Agreement are subject to certain notice, cure and other rights. |
Significant Accounting Princi_2
Significant Accounting Principles and Policies (Policies) | 9 Months Ended |
Sep. 26, 2021 | |
Accounting Policies [Abstract] | |
Segment Reporting | The Company’s operations are currently 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”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for annual financial information. In management’s opinion, all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation have been included. The Company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business process, which were on September 26, 2021 and September 27, 2020, 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 condensed 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, inputs in the valuation of the warrants liability and anticipated contract costs and revenues utilized in the earnings recognition process, which affect the reported amounts in the condensed 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 timing and risks. Actual results may differ from management’s estimates and changes in these estimates are recorded when known. |
Accounting Pronouncements Adopted and Accounting Pronouncements Not Yet Adopted | Accounting Pronouncements Adopted In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective in 2021 and interim periods within that year and permits for an early adoption. The Company adopted ASU 2019-12 effective January 1, 2021. The adoption of the guidance did not have a material impact on its financial statements and related disclosures. Accounting Pronouncements Not Yet Adopted |
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 utilizes 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 observable 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 and reflect the Company’s own estimates and assumptions. 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. |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregated Revenues | Disaggregated revenues by customer type were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total DoD $ 129,261 $ 87,886 $ 217,147 Other U.S. government agencies 288,543 131,212 419,755 Commercial and non-U.S. customers 30,274 22,338 52,612 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total DoD $ 486,292 $ 251,706 $ 737,998 Other U.S. government agencies 824,920 383,155 1,208,075 Commercial and non-U.S. customers 169,770 69,436 239,206 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Revenues by contract type were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 218,152 $ 89,948 $ 308,100 Fixed-price 191,530 85,287 276,817 Time and materials 38,396 66,201 104,597 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total Cost-reimbursable $ 764,625 $ 273,695 $ 1,038,320 Fixed-price 532,789 246,840 779,629 Time and materials 183,568 183,762 367,330 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 Disaggregated revenues by geographic location were as follows ( in thousands ): Three Months Ended September 26, 2021 GMS NSS Total United States $ 246,903 $ 239,723 $ 486,626 International 201,175 1,713 202,888 Total $ 448,078 $ 241,436 $ 689,514 Nine Months Ended September 26, 2021 GMS NSS Total United States $ 801,944 $ 700,299 $ 1,502,243 International 679,038 3,998 683,036 Total $ 1,480,982 $ 704,297 $ 2,185,279 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 |
Contract Assets and Contract _2
Contract Assets and Contract Liabilities (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, December 31, 2021 2020 Contract assets $ 358,345 $ 360,552 Contract liabilities $ 106,221 $ 106,475 |
Accounts Receivable, net (Table
Accounts Receivable, net (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, December 31, 2021 2020 Billed receivables $ 170,005 $ 227,787 Unbilled receivables 358,345 360,552 Less allowance for credit losses (3,643) (2,828) Total accounts receivables, net $ 524,707 $ 585,511 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 390,900 $ (184,427) $ 206,473 Technology 1,700 (1,700) — Trade name 24,800 (10,539) 14,261 Total $ 417,400 $ (196,666) $ 220,734 December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 390,900 $ (149,163) $ 241,737 Technology 1,700 (1,700) — Trade name 24,800 (8,327) 16,473 Total $ 417,400 $ (159,190) $ 258,210 |
Estimated Amortization Expense in Future Years | Estimated amortization expense in future years is expected to be: As of September 26, 2021 Remainder of 2021 $ 12,630 2022 50,089 2023 40,666 2024 33,782 2025 28,015 Thereafter 55,552 Total $ 220,734 |
Consolidated Ventures (Tables)
Consolidated Ventures (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, December 31, 2021 2020 Assets Total assets $ 149,866 $ 145,664 Liabilities and equity Total liabilities $ 99,559 $ 96,318 Total equity 50,307 49,346 Total liabilities and equity $ 149,866 $ 145,664 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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Income statements Revenues $ 97,986 $ 87,324 $ 300,999 $ 268,969 Cost of revenues 82,913 70,707 249,013 215,866 Selling, general and administrative expenses 18,998 16,595 55,289 50,477 Total operating expenses 101,911 87,302 304,302 266,343 Program (loss) income (3,925) 22 (3,303) 2,626 Other loss, net (96) (32) (715) (241) Net (loss) income $ (4,021) $ (10) $ (4,018) $ 2,385 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term debt consisted of the following as of the dates presented ( in thousands ): September 26, December 31, 2021 2020 First Term Loan $ 885,550 $ 890,000 Other debt 8,051 — Total debt 893,601 890,000 Unamortized discount and debt issuance costs (21,549) (23,733) Total debt, net of discount and debt issuance costs 872,052 866,267 Less current maturities of long-term debt (7,036) (5,961) Total long-term debt, net of current $ 865,016 $ 860,306 |
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 26, 2021 Remainder of 2021 $ 4,759 2022 10,016 2023 10,048 2024 10,082 2025 10,116 Thereafter 848,580 Total $ 893,601 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Income Per Share | The following table sets forth the computation of basic and diluted income 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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Numerator: Net income attributed to PAE Incorporated $ 29,789 $ 15,318 $ 57,523 $ 37,855 Denominator: Basic weighted average shares 93,122,414 92,070,306 92,949,301 81,323,258 Diluted weighted average shares 95,836,986 93,392,565 95,599,019 82,115,825 Basic income per share $ 0.32 $ 0.17 $ 0.62 $ 0.47 Diluted income per share $ 0.31 $ 0.16 $ 0.60 $ 0.46 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, 2021 Remainder of 2021 $ 12,432 2022 47,908 2023 43,401 2024 35,333 2025 28,928 Thereafter 69,772 Total future minimum lease payments 237,774 Less imputed interest 40,289 Present value of minimum lease payments 197,485 Less current maturities of lease liabilities 47,205 Long-term lease liabilities $ 150,280 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Assumptions | The significant assumptions the Company used in the model are: Valuation Inputs September 26, 2021 December 31, 2020 Asset price $ 5.7 $ 9.2 Exercise price $ 11.5 $ 11.5 Contractual term 3.4 4.1 Volatility 84.1 % 50.0 % Risk-free rate of return 0.6 % 0.3 % Dividend yield — % — % |
Schedule of Changes in Fair Value of Warrants | Details of the changes in fair value for the public warrants and private placement warrants are as follows: Public warrant liability September 26, 2021 Public warrant liability as of December 31 $ 30,667 Changes in fair value (13,200) Ending public warrant liability $ 17,467 Private warrant liability September 26, 2021 Private warrant liability as of December 31 $ 19,800 Changes in fair value (4,333) Ending private warrant liability $ 15,467 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 26, 2021 | |
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 26, September 27, September 26, September 27, 2021 2020 2021 2020 Revenues GMS $ 448,078 $ 521,346 $ 1,480,982 $ 1,486,643 NSS 241,436 144,894 704,297 440,152 Corporate — — — — Total revenues $ 689,514 $ 666,240 $ 2,185,279 $ 1,926,795 Operating income (loss) GMS $ 20,459 $ 31,401 $ 73,673 $ 75,541 NSS 13,091 5,679 33,729 17,770 Corporate (7,514) (8,548) (24,409) (23,027) Total operating income $ 26,036 $ 28,532 $ 82,993 $ 70,284 Amortization of intangible assets GMS $ 4,161 $ 4,115 $ 12,483 $ 12,346 NSS 8,469 3,932 24,993 11,795 Corporate — — — Total amortization of intangible assets $ 12,630 $ 8,047 $ 37,476 $ 24,141 |
Description of Business (Detail
Description of Business (Details) | 9 Months Ended |
Sep. 26, 2021segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Revenues - Disaggregated Revenu
Revenues - Disaggregated Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 689,514 | $ 666,240 | $ 2,185,279 | $ 1,926,795 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 486,626 | 418,675 | 1,502,243 | 1,237,134 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 202,888 | 247,565 | 683,036 | 689,661 |
Cost-reimbursable | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 308,100 | 338,451 | 1,038,320 | 975,628 |
Fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 276,817 | 223,592 | 779,629 | 666,527 |
Time and materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 104,597 | 104,197 | 367,330 | 284,640 |
GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 448,078 | 521,346 | 1,480,982 | 1,486,643 |
GMS | United States | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 246,903 | 275,785 | 801,944 | 802,230 |
GMS | International | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 201,175 | 245,561 | 679,038 | 684,413 |
GMS | Cost-reimbursable | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 218,152 | 302,795 | 764,625 | 868,780 |
GMS | Fixed-price | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 191,530 | 161,024 | 532,789 | 481,309 |
GMS | Time and materials | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 38,396 | 57,527 | 183,568 | 136,554 |
NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 241,436 | 144,894 | 704,297 | 440,152 |
NSS | United States | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 239,723 | 142,890 | 700,299 | 434,904 |
NSS | International | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,713 | 2,004 | 3,998 | 5,248 |
NSS | Cost-reimbursable | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 89,948 | 35,656 | 273,695 | 106,848 |
NSS | Fixed-price | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 85,287 | 62,568 | 246,840 | 185,218 |
NSS | Time and materials | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 66,201 | 46,670 | 183,762 | 148,086 |
DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 217,147 | 269,047 | 737,998 | 790,562 |
DoD | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 129,261 | 203,693 | 486,292 | 595,933 |
DoD | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 87,886 | 65,354 | 251,706 | 194,629 |
Other U.S. government agencies | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 419,755 | 327,723 | 1,208,075 | 958,539 |
Other U.S. government agencies | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 288,543 | 270,344 | 824,920 | 781,004 |
Other U.S. government agencies | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 131,212 | 57,379 | 383,155 | 177,535 |
Commercial and non-U.S. customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 52,612 | 69,470 | 239,206 | 177,694 |
Commercial and non-U.S. customers | GMS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 30,274 | 47,309 | 169,770 | 109,706 |
Commercial and non-U.S. customers | NSS | Operating Segments | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 22,338 | $ 22,161 | $ 69,436 | $ 67,988 |
Revenues - Narrative (Details)
Revenues - Narrative (Details) - USD ($) $ in Millions | Sep. 26, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligations balance | $ 1,701.1 | $ 1,722 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-09-27 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected revenue recognized (as a percent) | 87.80% | |
Expected period of satisfaction | 1 year | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-09-27 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Expected revenue recognized (as a percent) | 12.20% | |
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. 26, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 358,345 | $ 360,552 |
Contract liabilities | $ 106,221 | $ 106,475 |
Contract Assets and Contract _4
Contract Assets and Contract Liabilities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | ||||
Increase (decrease) in contract assets | $ (2.2) | |||
Increase (decrease) in contract liabilities | (0.3) | |||
Recognition of contract liabilities | $ 5.9 | $ 1.2 | $ 89.5 | $ 34.6 |
Business Combinations and Acq_2
Business Combinations and Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 23, 2020 | Nov. 20, 2020 | Feb. 11, 2020 | Feb. 10, 2020 | Jun. 27, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||||||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||
Goodwill | $ 593,171 | $ 590,668 | ||||||
PE Shay Holdings, LLC | ||||||||
Business Acquisition [Line Items] | ||||||||
Post-closing adjustment payments | $ 20,200 | |||||||
PAE Management | ||||||||
Business Acquisition [Line Items] | ||||||||
Post-closing adjustment payments | $ 1,000 | |||||||
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 | $ 424,200 | |||||||
Transaction costs | $ 3,400 | |||||||
Shay Holding Corporation Merger | Earn-Out Shares | ||||||||
Business Acquisition [Line Items] | ||||||||
Period following completion of business combination (in years) | 5 years | 5 years | ||||||
Shay Holding Corporation Merger | Additional Paid-in Capital | ||||||||
Business Acquisition [Line Items] | ||||||||
Acquisition fees and expenses | $ 18,200 | |||||||
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 | 4,000,000 | ||||||
CENTRA | ||||||||
Business Acquisition [Line Items] | ||||||||
Post-closing adjustment payments | $ 1,400 | |||||||
Outstanding capital stock acquired (as a percent) | 100.00% | |||||||
Business combination, consideration transferred | $ 225,300 | |||||||
Assets acquired | 177,400 | |||||||
Liabilities assumed | 77,200 | |||||||
Goodwill | 126,400 | |||||||
Intangible assets acquired | $ 74,100 | |||||||
Metis Solution | ||||||||
Business Acquisition [Line Items] | ||||||||
Post-closing adjustment payments | $ 500 | |||||||
Outstanding capital stock acquired (as a percent) | 100.00% | |||||||
Business combination, consideration transferred | $ 95,700 | |||||||
Assets acquired | 60,400 | |||||||
Liabilities assumed | 20,700 | |||||||
Goodwill | 56,500 | |||||||
Intangible assets acquired | $ 37,800 |
Accounts Receivable, net - Comp
Accounts Receivable, net - Components of Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Billed receivables | $ 170,005 | $ 227,787 |
Unbilled receivables | 358,345 | 360,552 |
Less allowance for credit losses | (3,643) | (2,828) |
Total accounts receivables, net | $ 524,707 | $ 585,511 |
Accounts Receivable, net - Narr
Accounts Receivable, net - Narrative (Details) | 9 Months Ended |
Sep. 26, 2021 | |
Accounts Receivable | U.S. Government Agencies | Customer Concentration Risk | |
Product Information [Line Items] | |
Concentration risk (as a percent) | 92.40% |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 | $ 0 |
Amortization of intangible assets | $ 12,630,000 | $ 8,047,000 | $ 37,476,000 | $ 24,141,000 |
Customer relationships | Weighted Average | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life of finite-lived intangible assets (in years) | 7 years 7 months 6 days | |||
Trade name | Weighted Average | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life of finite-lived intangible assets (in years) | 5 years 2 months 12 days |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Intangible Assets, net (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 417,400 | $ 417,400 |
Accumulated Amortization | (196,666) | (159,190) |
Total | 220,734 | 258,210 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 390,900 | 390,900 |
Accumulated Amortization | (184,427) | (149,163) |
Total | 206,473 | 241,737 |
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 | 24,800 | 24,800 |
Accumulated Amortization | (10,539) | (8,327) |
Total | $ 14,261 | $ 16,473 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, net - Estimated Amortization Expense in Future Years (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
Remainder of 2021 | $ 12,630 | |
2022 | 50,089 | |
2023 | 40,666 | |
2024 | 33,782 | |
2025 | 28,015 | |
Thereafter | 55,552 | |
Total | $ 220,734 | $ 258,210 |
Consolidated Ventures - Balance
Consolidated Ventures - Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Assets | ||
Total assets | $ 1,818,496 | $ 1,829,370 |
Liabilities and equity | ||
Total liabilities | 1,669,532 | 1,723,185 |
Total equity | 113,948 | 73,949 |
Total liabilities and stockholders’ equity | 1,818,496 | 1,829,370 |
Variable Interest Entity, Primary Beneficiary | ||
Assets | ||
Total assets | 149,866 | 145,664 |
Liabilities and equity | ||
Total liabilities | 99,559 | 96,318 |
Total equity | 50,307 | 49,346 |
Total liabilities and stockholders’ equity | $ 149,866 | $ 145,664 |
Consolidated Ventures - Stateme
Consolidated Ventures - Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Variable Interest Entity [Line Items] | ||||
Revenues | $ 689,514 | $ 666,240 | $ 2,185,279 | $ 1,926,795 |
Cost of revenues | 511,852 | 512,877 | 1,643,470 | 1,474,763 |
Selling, general and administrative expenses | 140,170 | 119,168 | 428,237 | 361,945 |
Total operating expenses | 664,652 | 640,092 | 2,109,183 | 1,860,849 |
Program profit | 24,862 | 26,148 | 76,096 | 65,946 |
Other loss, net | 1,174 | 2,384 | 6,897 | 4,338 |
Net income attributed to PAE Incorporated | 29,789 | 15,318 | 57,523 | 37,855 |
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Revenues | 97,986 | 87,324 | 300,999 | 268,969 |
Cost of revenues | 82,913 | 70,707 | 249,013 | 215,866 |
Selling, general and administrative expenses | 18,998 | 16,595 | 55,289 | 50,477 |
Total operating expenses | 101,911 | 87,302 | 304,302 | 266,343 |
Program profit | (3,925) | 22 | (3,303) | 2,626 |
Other loss, net | (96) | (32) | (715) | (241) |
Net income attributed to PAE Incorporated | $ (4,021) | $ (10) | $ (4,018) | $ 2,385 |
Consolidated Ventures - Narrati
Consolidated Ventures - Narrative (Details) - Parsons Government Services, Inc. $ in Millions | Jan. 31, 2021USD ($) |
Variable Interest Entity [Line Items] | |
Minority interest (as a percent) | 49.00% |
Payments to acquire equity method investments | $ 15.8 |
Ownership percentage (as a percent) | 100.00% |
Debt - Long-Term Debt (Details)
Debt - Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt | $ 893,601 | $ 890,000 |
Other debt | 8,051 | 0 |
Unamortized discount and debt issuance costs | (21,549) | (23,733) |
Total debt, net of discount and debt issuance costs | 872,052 | 866,267 |
Less current maturities of long-term debt | (7,036) | (5,961) |
Total long-term debt, net of current | 865,016 | 860,306 |
Secured Debt | First Term Loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 885,550 | $ 890,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) | Oct. 19, 2020USD ($) | Oct. 20, 2016 | Sep. 26, 2021USD ($)loanletter_of_credit | Dec. 31, 2020USD ($)letter_of_credit |
Debt Instrument [Line Items] | ||||
Number of letters of credit outstanding | letter_of_credit | 10 | 13 | ||
Letters of credit outstanding, amount | $ 23,200,000 | $ 23,900,000 | ||
London Interbank Offered Rate (LIBOR) | Addition to LIBO Rate | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 1.00% | |||
Base Rate | Variable Rate Component One | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 0.50% | |||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Minimum | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 1.80% | |||
Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 2.30% | |||
First Term Loan | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 890,000,000 | |||
Debt instrument, interest rate during period (as a percent) | 5.30% | 5.30% | ||
First Term Loan | London Interbank Offered Rate (LIBOR) | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 3.50% | |||
First Term Loan | Base Rate | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 4.50% | |||
Term Loan Facility Maturing October 2027 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 740,000,000 | |||
Term Loan Facility Maturing October 2027 | Secured Debt | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 4.50% | |||
Delayed Draw Term Loan Facility Maturing October 2027 | Secured Debt | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 150,000,000 | |||
Delayed Draw Term Loan Facility Maturing October 2027 | Secured Debt | London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, basis spread on variable rate | 4.50% | |||
Delayed Draw Term Loan Facility Maturing October 2027 | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 175,000,000 | |||
Equipment Loan One | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 8,100,000 | |||
Number of equipment loans | loan | 2 | |||
Interest rate (as a percent) | 2.80% | |||
Equipment Loan Two | ||||
Debt Instrument [Line Items] | ||||
Interest rate (as a percent) | 2.90% | |||
Revolving Credit Facility | Revolving Credit Facility | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | $ 151,800,000 | $ 132,800,000 | ||
Applicable interest rate (as a percent) | 4.00% | 4.00% | ||
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% | |||
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% |
Debt - Future Principal Maturit
Debt - Future Principal Maturities of Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Remainder of 2021 | $ 4,759 | |
2022 | 10,016 | |
2023 | 10,048 | |
2024 | 10,082 | |
2025 | 10,116 | |
Thereafter | 848,580 | |
Total | $ 893,601 | $ 890,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - $ / shares | Feb. 11, 2020 | Feb. 10, 2020 | Sep. 26, 2021 | Dec. 31, 2020 |
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 | ||
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 | 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 | |||
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 | |||
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 | 4,000,000 | ||
Minimum threshold trading days | 10 days | |||
Consecutive trading days | 20 days |
Net Income Per Share - Computat
Net Income Per Share - Computation of Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Numerator: | ||||
Net income attributed to PAE Incorporated | $ 29,789 | $ 15,318 | $ 57,523 | $ 37,855 |
Denominator: | ||||
Basic weighted average shares (in shares) | 93,122,414 | 92,070,306 | 92,949,301 | 81,323,258 |
Diluted weighted average shares (in shares) | 95,836,986 | 93,392,565 | 95,599,019 | 82,115,825 |
Basic income per share (in dollars per share) | $ 0.32 | $ 0.17 | $ 0.62 | $ 0.47 |
Diluted income per share (in dollars per share) | $ 0.31 | $ 0.16 | $ 0.60 | $ 0.46 |
Net Income Per Share - Narrativ
Net Income Per Share - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended |
Sep. 26, 2021 | Sep. 26, 2021 | |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from calculation of diluted income (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 income (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. 26, 2021 | Sep. 26, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating lease right-of-use assets, net | $ 192,638 | $ 192,638 | $ 191,370 |
Operating lease liabilities | 197,485 | 197,485 | |
Operating lease cost | $ 15,300 | $ 46,100 | |
Weighted average remaining lease term (in years) | 6 years 7 months 6 days | 6 years 7 months 6 days | |
Weighted average discount rate (as a percent) | 6.00% | 6.00% | |
Cash payments for operating leases | $ 12,200 | $ 36,500 |
Leases - Future Minimum Operati
Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands | Sep. 26, 2021 | Dec. 31, 2020 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Remainder of 2021 | $ 12,432 | |
2022 | 47,908 | |
2023 | 43,401 | |
2024 | 35,333 | |
2025 | 28,928 | |
Thereafter | 69,772 | |
Total future minimum lease payments | 237,774 | |
Less imputed interest | 40,289 | |
Present value of minimum lease payments | 197,485 | |
Less current maturities of lease liabilities | 47,205 | $ 46,756 |
Long-term lease liabilities | $ 150,280 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Assumptions (Details) | Sep. 26, 2021$ / shares | Dec. 31, 2020$ / shares |
Asset price | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 5.7 | 9.2 |
Exercise price | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 11.5 | 11.5 |
Contractual term | ||
Class of Warrant or Right [Line Items] | ||
Warrant, term | 3 years 4 months 24 days | 4 years 1 month 6 days |
Volatility | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 0.841 | 0.500 |
Risk-free rate of return | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 0.006 | 0.003 |
Dividend yield | ||
Class of Warrant or Right [Line Items] | ||
Warrant liability, measurement input | 0 | 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Changes in Fair Value of Warrants (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 26, 2021 | Sep. 27, 2020 | |
Warrants and Rights Outstanding [Roll Forward] | ||
Beginning balance | $ 50,467 | |
Changes in fair value | 17,533 | $ 19,132 |
Ending balance | 32,934 | |
Public Warrants | ||
Warrants and Rights Outstanding [Roll Forward] | ||
Beginning balance | 30,667 | |
Changes in fair value | (13,200) | |
Ending balance | 17,467 | |
Private Placement | ||
Warrants and Rights Outstanding [Roll Forward] | ||
Beginning balance | 19,800 | |
Changes in fair value | (4,333) | |
Ending balance | $ 15,467 |
Segment Reporting - Information
Segment Reporting - Information by Reportable Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 689,514 | $ 666,240 | $ 2,185,279 | $ 1,926,795 |
Operating income (loss) | 26,036 | 28,532 | 82,993 | 70,284 |
Amortization of intangible assets | 12,630 | 8,047 | 37,476 | 24,141 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Operating income (loss) | (7,514) | (8,548) | (24,409) | (23,027) |
Amortization of intangible assets | 0 | 0 | 0 | |
GMS | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 448,078 | 521,346 | 1,480,982 | 1,486,643 |
Operating income (loss) | 20,459 | 31,401 | 73,673 | 75,541 |
Amortization of intangible assets | 4,161 | 4,115 | 12,483 | 12,346 |
NSS | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 241,436 | 144,894 | 704,297 | 440,152 |
Operating income (loss) | 13,091 | 5,679 | 33,729 | 17,770 |
Amortization of intangible assets | $ 8,469 | $ 3,932 | $ 24,993 | $ 11,795 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | Feb. 10, 2020 | Sep. 26, 2021 | Sep. 27, 2020 |
PE Shay Holdings, LLC | |||
Related Party Transaction [Line Items] | |||
Liability for estimated payment to platinum stockholder | $ 4,700,000 | ||
Affiliated Entity | Advisory Services | |||
Related Party Transaction [Line Items] | |||
Related party transaction expenses | $ 15,000,000 | $ 0 | $ 15,800,000 |
Affiliated Entity | Advisory Services | Selling, General and Administrative Expenses | |||
Related Party Transaction [Line Items] | |||
Related party transaction expenses | $ 800,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 26, 2021 | Sep. 27, 2020 | Sep. 26, 2021 | Sep. 27, 2020 | Mar. 27, 2020 | |
Income Tax Disclosure [Abstract] | |||||
Expense (benefit) from income taxes | $ 1,495 | $ 4,194 | $ 6,730 | $ (1,582) | |
Effective income tax rate (as a percent) | 5.10% | 21.00% | 10.90% | (4.20%) | |
Payroll tax funding deferral | $ 37,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 25, 2021 | Oct. 24, 2021 | Sep. 26, 2021 | Dec. 31, 2020 |
Subsequent Event [Line Items] | ||||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Common stock par value (in dollars per share) | $ 0.0001 | |||
Subsequent Event | Minimum | Amentum Merger Agreement | ||||
Subsequent Event [Line Items] | ||||
Merger agreement, right to receive amount (in dollars per share) | $ 10.05 | |||
Termination fee | $ 15 | |||
Subsequent Event | Maximum | Amentum Merger Agreement | ||||
Subsequent Event [Line Items] | ||||
Termination fee | $ 30 |