- Fourth-quarter revenue from continuing operations of
$126.9 million ;$441.6 million for fiscal year 2017 - Fourth-quarter adjusted EBITDA from continuing operations (see table 1 below) of
$14.0 million (11.0% of revenue) and$40.6 million (9.2% of revenue) for fiscal year 2017 - Fourth-quarter diluted GAAP EPS from continuing operations of
$0.32 ; and$(0.22) for fiscal year 2017 - Full-year awards of
$548 million , or 1.1 times revenue; fourth-quarter awards of$78 million - Company issues fiscal 2018 financial guidance
CEO Commentary
“Our solid fourth-quarter results reflect our focus on establishing
“Integration efforts related to our
Business Development Highlights and Contract Awards
For the fourth quarter, contract awards totaled approximately
KeyW’s fourth-quarter awards reflected the company’s commitment to lead with technology to win new work in areas including, but not limited to, data science, cyber and autonomy. Notable among the fourth-quarter awards was a new win for research and development of data science applications in the cyber domain. In addition,
Lastly,
Fourth-Quarter 2017 Results from Continuing Operations
Revenue increased by
Operating income for the fourth quarter of 2017 was
Adjusted EBITDA from continuing operations was
Full-Year 2017 Results from Continuing Operations
Full-year 2017 revenue was
Additional Financial Metrics
Cash flow provided by operations for the full year 2017 was
2018 Financial Outlook
The table below summarizes the company’s fiscal year 2018 guidance, which incorporates a full fiscal year of Sotera operations:
Fiscal 2018 Guidance | |
Revenue | $495 million - $515 million |
Adjusted EBITDA margin | 8.9% - 9.3% |
Weber concluded: “KeyW achieved critical strategic objectives in 2017, which reinforced the solid growth foundation we’ve built. 2018 is about executing our operating plan, realizing new revenue synergies, generating strong cash flow and further de-leveraging the balance sheet to consider the year a success.”
Conference Call Information
As previously announced, a conference call has been scheduled to discuss these results today,
Interested parties will be able to connect to our webcast via the Investor Relations page on our website, http://investors.keywcorp.com, on
An archive of the webcast will be available on our website following the call. In addition, a podcast of our conference call will be available for download from the Investor Relations page of our website at approximately the same time as the webcast replay.
About
Forward-Looking Statements: Statements made in this press release that are not historical facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include but are not limited to: statements about our future expectations, plans and prospects; our full-year 2018 revenue and adjusted EBITDA margin estimates under the heading “2018 Financial Outlook”; our 2018 re-compete risk; and other statements containing the words “estimates,” “believes,” “anticipates,” “plans,” “expects,” “will,” “potential,” “opportunities,” and similar expressions. Our actual results, performance or achievements or industry results may differ materially from those expressed or implied in these forward-looking statements. These statements involve numerous risks and uncertainties, including but not limited to, those risk factors set forth in our Annual Report on Form 10-K for the year ended
Media Contact:
Heather Williams
Corporate Media Relations
443.733.1613
communications@keywcorp.com
Investor Contact:
Vice President, Investor Relations
703.880.9379
investors@keywcorp.com
THE KeyW HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | $ | 126,878 | $ | 68,928 | $ | 441,586 | $ | 288,027 | |||||||
Cost of revenue, excluding amortization | 96,443 | 48,196 | 331,629 | 196,772 | |||||||||||
Operating expenses | 23,422 | 19,619 | 103,973 | 71,434 | |||||||||||
Intangible amortization expense | 2,558 | 1,651 | 11,416 | 6,113 | |||||||||||
Operating income (loss) | 4,455 | (538 | ) | (5,432 | ) | 13,708 | |||||||||
Interest expense, net | 4,663 | 2,617 | 17,015 | 10,812 | |||||||||||
Other non-operating income, net | (61 | ) | (8 | ) | (436 | ) | (1,426 | ) | |||||||
(Loss) earnings before income taxes from continuing operations | (147 | ) | (3,147 | ) | (22,011 | ) | 4,322 | ||||||||
Income tax (benefit) expense net on continuing operations | (16,196 | ) | (35 | ) | (11,060 | ) | 2,457 | ||||||||
Net income (loss) from continuing operations | 16,049 | (3,112 | ) | (10,951 | ) | 1,865 | |||||||||
Loss before income taxes from discontinued operations | — | (93 | ) | — | (28,082 | ) | |||||||||
Income tax expense (benefit), net on discontinued operations | — | 5 | — | (489 | ) | ||||||||||
Net loss on discontinued operations | — | (98 | ) | — | (27,593 | ) | |||||||||
Net income (loss) | $ | 16,049 | $ | (3,210 | ) | $ | (10,951 | ) | $ | (25,728 | ) | ||||
Weighted average common shares outstanding | |||||||||||||||
Basic | 49,802 | 40,966 | 48,921 | 40,501 | |||||||||||
Diluted | 49,838 | 40,966 | 48,921 | 41,012 | |||||||||||
Basic net earnings (loss) per share: | |||||||||||||||
Continuing operations | $ | 0.32 | $ | (0.08 | ) | $ | (0.22 | ) | $ | 0.05 | |||||
Discontinued operations | — | — | — | (0.69 | ) | ||||||||||
Basic net earnings (loss) per share | $ | 0.32 | $ | (0.08 | ) | $ | (0.22 | ) | $ | (0.64 | ) | ||||
Diluted net earnings (loss) per share: | |||||||||||||||
Continuing operations | $ | 0.32 | $ | (0.08 | ) | $ | (0.22 | ) | $ | 0.05 | |||||
Discontinued operations | — | — | — | (0.68 | ) | ||||||||||
Diluted net earnings (loss) per share | $ | 0.32 | $ | (0.08 | ) | $ | (0.22 | ) | $ | (0.63 | ) | ||||
THE KeyW HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except par value per share amounts)
December 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 17,832 | $ | 41,871 | |||
Receivables | 87,665 | 43,141 | |||||
Inventories, net | 20,496 | 15,178 | |||||
Prepaid expenses | 2,266 | 1,350 | |||||
Income tax receivable | 210 | 318 | |||||
Assets of discontinued operations | — | 3,000 | |||||
Total current assets | 128,469 | 104,858 | |||||
Property and equipment, net | 43,283 | 40,615 | |||||
Goodwill | 455,197 | 290,710 | |||||
Other intangibles, net | 57,045 | 7,871 | |||||
Other assets | 2,913 | 1,399 | |||||
TOTAL ASSETS | $ | 686,907 | $ | 445,453 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 25,609 | $ | 6,913 | |||
Accrued expenses | 17,862 | 9,941 | |||||
Accrued salaries and wages | 29,341 | 15,122 | |||||
Term loan – current portion | 6,750 | — | |||||
Deferred revenue | 6,090 | 3,760 | |||||
Liabilities of discontinued operations | — | 1,185 | |||||
Total current liabilities | 85,652 | 36,921 | |||||
Convertible senior notes, net of discount | 138,998 | 132,482 | |||||
Term loan – non-current portion, net of discount | 120,627 | — | |||||
Non-current deferred tax liability, net | 19,174 | 30,409 | |||||
Other non-current liabilities | 11,444 | 12,705 | |||||
TOTAL LIABILITIES | 375,895 | 212,517 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value; 5,000 shares authorized, none issued | — | — | |||||
Common stock, $0.001 par value; 100,000 shares authorized, 49,876 and 40,977 shares issued and outstanding | 50 | 41 | |||||
Additional paid-in capital | 422,901 | 333,883 | |||||
Accumulated deficit | (111,939 | ) | (100,988 | ) | |||
Total stockholders’ equity | 311,012 | 232,936 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 686,907 | $ | 445,453 | |||
THE KeyW HOLDING CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Twelve months ended December 31, | |||||||
2017 | 2016 | ||||||
Net loss | $ | (10,951 | ) | $ | (25,728 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Stock compensation | 4,228 | 3,472 | |||||
Depreciation/amortization | 20,363 | 13,578 | |||||
Impairment of goodwill from discontinued operations | — | 6,980 | |||||
Non-cash interest expense | 7,252 | 6,294 | |||||
Write-off of deferred financing costs | — | 340 | |||||
Loss (gain) on disposal of long-lived assets | 5 | (3,447 | ) | ||||
Loss on sale of assets held for sale | — | 3,568 | |||||
Deferred taxes | (11,093 | ) | 1,967 | ||||
Changes in balance sheet items, excluding acquisitions: | |||||||
Receivables | (4,002 | ) | 15,516 | ||||
Inventories | (5,500 | ) | (663 | ) | |||
Prepaid expenses | 599 | (759 | ) | ||||
Income tax receivable | 108 | (16 | ) | ||||
Accounts payable | 11,689 | (4,694 | ) | ||||
Accrued expenses | (350 | ) | 6,240 | ||||
Other non-current assets/liabilities | (2,328 | ) | 447 | ||||
Net cash provided by operating activities | 10,202 | 23,095 | |||||
Cash flows from investing activities: | |||||||
Acquisitions, net of cash acquired | (235,856 | ) | (2,504 | ) | |||
Purchases of property and equipment | (10,121 | ) | (18,410 | ) | |||
Proceeds from sale of assets | — | 16,226 | |||||
Net cash (used in) provided by investing activities | (245,977 | ) | (4,688 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from stock issuance, net | 84,586 | — | |||||
Proceeds from issuance of term note | 135,000 | — | |||||
Principal payments of term note | (3,375 | ) | — | ||||
Deferred financing costs | (4,689 | ) | — | ||||
Proceeds from revolver | 10,000 | — | |||||
Repayment of revolver | (10,000 | ) | — | ||||
Proceeds from option and warrant exercises, net | 214 | 2,237 | |||||
Net cash provided by financing activities | 211,736 | 2,237 | |||||
Net (decrease) increase in cash and cash equivalents | (24,039 | ) | 20,644 | ||||
Cash and cash equivalents at beginning of period | 41,871 | 21,227 | |||||
Cash and cash equivalents at end of period | $ | 17,832 | $ | 41,871 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 8,426 | $ | 3,883 | |||
Cash paid for taxes | $ | 6 | $ | 40 | |||
Non-GAAP Financial Measures
Adjusted EBITDA from continuing operations, and estimated adjusted EBITDA margin, as defined by
We believe adjusted EBITDA from continuing operations and adjusted EBITDA margin are useful to investors in evaluating our operating performance for the following reasons:
- we have various non-recurring transactions or non-operating transactions and expenses that directly impact our net income from continuing operations. Adjusted EBITDA from continuing operations is intended to approximate the net cash provided by operations by adjusting for non-recurring or non-operating items; and
- securities analysts use adjusted EBITDA from continuing operations as a supplemental measure to evaluate the overall operating performance of companies.
Our board of directors and management use adjusted EBITDA from continuing operations:
- as a measure of operating performance;
- to determine a significant portion of management's incentive compensation;
- for planning purposes, including the preparation of our annual operating budget; and
- to evaluate the effectiveness of our business strategies.
Although adjusted EBITDA from continuing operations is frequently used by investors and securities analysts in their evaluations of companies, adjusted EBITDA from continuing operations has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under GAAP. Some of these limitations are:
- adjusted EBITDA from continuing operations does not reflect our cash expenditures or future requirements for capital expenditures or other contractual commitments;
- adjusted EBITDA from continuing operations does not reflect changes in, or cash requirements for, our working capital needs;
- adjusted EBITDA from continuing operations does not reflect interest expense or interest income;
- adjusted EBITDA from continuing operations does not reflect cash requirements for income taxes;
- adjusted EBITDA from continuing operations does not include non-cash expenses related to stock compensation;
- adjusted EBITDA from continuing operations does not include acquisition costs and other adjustments;
- although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and adjusted EBITDA from continuing operations does not reflect any cash requirements for these replacements; and
- other companies in our industry may calculate adjusted EBITDA from continuing operations or similarly titled measures differently than we do, limiting its usefulness as a comparative measure.
THE KeyW HOLDING CORPORATION AND SUBSIDIARIES
Adjusted EBITDA from Continuing Operations Reconciliation Table
(in thousands and unaudited)
Table 1
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
Net income (loss) from continuing operations | $ | 16,049 | $ | (3,112 | ) | $ | (10,951 | ) | $ | 1,865 | |||||
Depreciation | 2,781 | 1,468 | 8,946 | 6,449 | |||||||||||
Intangible amortization | 2,558 | 1,651 | 11,416 | 6,113 | |||||||||||
Stock based compensation | 1,174 | 1,300 | 4,228 | 3,472 | |||||||||||
Interest expense, net | 4,663 | 2,617 | 17,015 | 10,812 | |||||||||||
Tax (benefit) expense | (16,196 | ) | (35 | ) | (11,060 | ) | 2,457 | ||||||||
Acquisition costs and other adjustments | 2,986 | 1,299 | 21,046 | 255 | |||||||||||
Adjusted EBITDA | $ | 14,015 | $ | 5,188 | $ | 40,640 | $ | 31,423 | |||||||
Adjusted EBITDA as Percentage of Full Year Revenue Guidance Reconciliation Table
Fiscal Year 2018 Estimate | |||||
Low | High | ||||
Net (Loss) Income from Continuing Operations | -0.2 | % | 0.4 | % | |
Depreciation | 1.9 | % | 1.8 | % | |
Intangible Amortization | 2.6 | % | 2.4 | % | |
Stock Compensation Amortization | 0.8 | % | 0.8 | % | |
Interest Expense | 3.9 | % | 3.8 | % | |
Tax Expense | -0.1 | % | 0.1 | % | |
Acquisition Costs and Other Adjustments | 0.0 | % | 0.0 | % | |
Adjusted EBITDA Margin | 8.9 | % | 9.3 | % |
Source: KeyW Corp.