Company achieves 8% quarter-over-quarter revenue growth driven
by key wins and growth within Analytics; cost savings initiatives
expected to drive $20 million of annualized expense savings
BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or
the “Company”), a leader in AI-powered analytics and cyber
engineering solutions, today announced financial results for the
third quarter of 2022.
Financial Highlights
- Revenue of $40.7 million, compared to $40.2 million for the
third quarter of 2021
- Analytics revenue increased $1.7 million, or 8%, as compared to
the same period in 2021, primarily driven by the award of the U.S.
Army Global Force Information Management (GFIM) contract in the
third quarter of 2022
- Gross margin of 29%, compared to 27% for the third quarter of
2021
- Segment adjusted gross margin of 43% for the Analytics segment,
compared to 49% for the third quarter of 2021, driven primarily by
contract mix
- Segment adjusted gross margin of 22% for the Cyber &
Engineering segment, compared to 21% for the third quarter of
2021
- Net loss of $(16.1) million, compared to $(3.1) million for the
third quarter of 2021, primarily driven by higher public company
expenses as well as infrastructure and integration costs
- Non-GAAP adjusted EBITDA* of $(3.9) million
- Ending backlog of $288 million
- Ending cash balance of $22 million
- On-track with planned cost savings initiatives expected to
drive $20 million of annualized operating expense savings
- Affirmed 2022 financial outlook
Mandy Long, who joined BigBear.ai in October as the Company’s
CEO, said, “In the third quarter, we made significant progress to
improve our financial profile, including 8% revenue growth in our
analytics business, with a key $14.8 million sole-source contract
award from the U.S. Army to implement the Global Force Information
Management (GFIM) system. In addition, our ongoing actions to
reduce expenses and cash usage are helping move us to a sustainable
growth model. Based on our improved operational efficiency and the
continued health of our backlog, we are reaffirming our outlook for
2022.”
Third Quarter 2022 vs. Second Quarter
2022 Comparative Financial Highlights
- Analytics revenue increased $3.7 million, or 20%, primarily
driven by the award of the U.S. Army GFIM contract in the third
quarter of 2022, as well as increased volume on other Analytics
programs
- Gross margins expanded from 25% in the second quarter of 2022
to 29% in the third quarter of 2022, primarily driven by reduced
volume on low margin contracts
- Net cash used in operating activities was $6.4 million in the
third quarter, compared to $24.5 million in the second quarter,
driven primarily by lower operational spending and integration
costs, investment contracts, and interest payments
BigBear.ai CFO Julie Peffer said, “In the third quarter, we made
substantial progress on our initiatives to reduce expenses, manage
our working capital, and significantly increase our operational
efficiency, including our previously announced reduction in force,
largely focused on non-billable headcount reduction. In the fourth
quarter, the effects of rightsizing our cost structure will
continue, and we expect to realize additional operational
efficiencies.
“From a liquidity perspective, we ended the third quarter with
$22 million of cash on our balance sheet, and we are amending our
credit facility with Bank of America which will give us access to
$25 million of additional liquidity, upon meeting the terms of the
agreement. Our improved operational discipline coupled with our
stabilized liquidity position will enable us to target and pursue
the right investments for sustainable growth,” concluded
Peffer.
Financial Outlook
The following information and other sections of this release
contain forward-looking statements, which are based on the
Company’s current expectations. Actual results may differ
materially from those projected. It is the Company’s practice not
to incorporate adjustments into its financial outlook for proposed
acquisitions, divestitures, changes in law, or new accounting
standards until such items have been consummated, enacted, or
adopted. For additional factors that may impact the Company’s
actual results, refer to the “Forward-Looking Statements” section
in this release.
The Company is affirming the following guidance:
- Revenue of approximately between $150 million to $170 million
for the year-ended December 31, 2022
- Single-digit negative Adjusted EBITDA*, in millions, for the
second half of 2022
Summary of Results for the Third Quarter and Year to Date
Periods EndedSeptember 30, 2022 and September 30,
2021(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
$ thousands (expect per share amounts)
2022
2021
2022
2021
Revenues
$
40,651
$
40,219
$
114,654
$
112,100
Cost of revenues
28,900
29,421
83,446
81,859
Gross margin
11,751
10,798
31,208
30,241
Operating expenses:
Selling, general and administrative
20,233
12,038
69,205
32,557
Research and development
1,785
1,363
7,194
4,158
Restructuring charges
1,562
—
1,562
—
Transaction expenses
566
—
2,151
—
Goodwill impairment
—
—
35,252
—
Operating loss
(12,395
)
(2,603
)
(84,156
)
(6,474
)
Interest expense
3,557
1,870
10,666
5,579
Net decrease in fair value of
derivatives
(102
)
—
(1,564
)
—
Loss on extinguishment of debt
—
—
—
—
Other expense (income)
8
—
12
(1
)
Loss before taxes
(15,858
)
(4,473
)
(93,270
)
(12,052
)
Income tax expense (benefit)
252
(1,327
)
(1,491
)
(3,294
)
Net loss
$
(16,110
)
$
(3,146
)
$
(91,779
)
$
(8,758
)
Basic and diluted net loss per
share
$
(0.13
)
$
(0.03
)
$
(0.72
)
$
(0.08
)
EBITDA* and Adjusted EBITDA*
for the Third Quarter and Year to Date Periods Ended
September 30, 2022 and
September 30, 2021
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
$ thousands
2022
2021
2022
2021
Net loss
$
(16,110
)
$
(3,146
)
$
(91,779
)
$
(8,758
)
Interest expense
3,557
1,870
10,666
5,579
Income tax benefit
252
(1,327
)
(1,491
)
(3,294
)
Depreciation and amortization
2,038
1,759
5,764
5,432
EBITDA
(10,263
)
(844
)
(76,840
)
(1,041
)
Adjustments:
Equity-based compensation
2,222
30
11,160
86
Net decrease in fair value of
derivatives(1)
(102
)
—
(1,564
)
—
Restructuring charges(2)
1,562
—
1,562
—
Capital market advisory fees(3)
—
1,510
741
3,956
Termination of legacy benefits(4)
—
1,482
—
1,482
Management fees(5)
—
229
—
683
Integration costs(6)
2,075
740
6,474
1,245
Commercial start-up costs(7)
—
773
6,490
773
Transaction expenses(8)
566
—
2,151
—
Goodwill impairment(9)
—
—
35,252
—
Adjusted EBITDA
$
(3,940
)
$
3,920
$
(14,574
)
$
7,184
(1)
The decrease in fair value of derivatives
primarily relates to the changes in the fair value of certain
Forward Share Purchase Agreements (FPAs) that were entered into
prior to the closing of the Business Combination and were fully
settled during the first quarter of 2022, as well as changes in the
fair value of private warrants.
(2)
In the third quarter of 2022, the Company
incurred employee separation costs associated with a strategic
review of the Company’s capacity and future projections to better
align the organization and cost structure and improve the
affordability of its products and services.
(3)
The Company incurred capital market and
advisory fees related to advisors assisting with the Business
Combination.
(4)
In the third quarter of 2021, the Company
elected to terminate certain legacy employee incentive benefits
with final payments made in the fourth quarter of 2021.
(5)
Management and other related consulting
fees paid to AE Partners. These fees ceased subsequent to the
Business Combination.
(6)
Internal integration costs related to
business combinations.
(7)
Commercial start-up costs include certain
non-recurring expenses associated with tailoring the Company’s
software products for commercial customers and use cases.
(8)
Transaction expenses primarily related to
the acquisition of ProModel Corporation, which closed on April 7,
2022, as well as costs associated with evaluating other acquisition
opportunities.
(9)
During the second quarter of 2022, the
Company recognized a non-cash goodwill impairment charge related to
its Cyber & Engineering business segment.
Consolidated Balance Sheets as
of
September 30, 2022 and
December 31, 2021
(Unaudited)
$ in thousands
September 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
21,955
$
68,900
Restricted cash
—
101,021
Accounts receivable, less allowance for
doubtful accounts
31,652
28,605
Contract assets
1,323
628
Prepaid expenses and other current
assets
5,084
7,028
Total current assets
60,014
206,182
Non-current assets:
Property and equipment, net
1,528
1,078
Goodwill
67,125
91,636
Intangible assets, net
87,551
83,646
Other non-current assets
692
780
Total assets
$
216,910
$
383,322
Liabilities and equity
Current liabilities:
Accounts payable
$
7,426
$
5,475
Short-term debt, including current portion
of long-term debt
769
4,233
Accrued liabilities
17,494
10,735
Contract liabilities
4,758
4,207
Derivative liabilities
—
44,827
Other current liabilities
2,290
541
Total current liabilities
32,737
70,018
Non-current liabilities:
Long-term debt, net of current portion
191,830
190,364
Deferred tax liabilities
406
248
Other non-current liabilities
36
324
Total liabilities
225,009
260,954
Stockholders’ (deficit) equity:
Common stock
14
14
Additional paid-in capital
272,406
253,744
Members’ contribution
—
—
Treasury stock, at cost 9,952,803 shares
at September 30, 2022 and — shares at December 31, 2021
(57,350
)
—
Accumulated deficit
(223,169
)
(131,390
)
Total stockholders’ (deficit)
equity
(8,099
)
122,368
Total liabilities and stockholders’
(deficit) equity
$
216,910
$
383,322
Consolidated Statements of
Cash Flows for the Nine Months Ended
September 30, 2022 and
September 30, 2021
(Unaudited)
Nine Months Ended September
30,
$ in thousands
2022
2021
Cash flows from operating
activities:
Net loss
$
(91,779
)
$
(8,758
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization expense
5,764
5,432
Amortization of debt issuance costs
1,570
429
Equity-based compensation expense
11,160
86
Goodwill impairment
35,252
—
Provision for doubtful accounts
55
—
Deferred income tax benefit
(1,450
)
(3,341
)
Net decrease in fair value of
derivatives
(1,564
)
—
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable
(2,359
)
163
Increase in contract assets
(297
)
(288
)
Decrease (increase) in prepaid expenses
and other assets
3,549
(5,829
)
Increase in accounts payable
1,946
6,737
(Decrease) increase in accrued
liabilities
(993
)
4,733
(Decrease) increase in contract
liabilities
(1,004
)
1,595
Increase in other liabilities
1,760
263
Net cash (used in) provided by
operating activities
(38,390
)
1,222
Cash flows from investing
activities:
Acquisition of businesses, net of cash
acquired
(4,465
)
(224
)
Purchases of property and equipment
(736
)
(601
)
Net cash used in investing
activities
(5,201
)
(825
)
Cash flows from financing
activities:
Repurchase of shares as a result of
forward share purchase agreements
(100,896
)
—
Repayment of short-term borrowings
(3,464
)
—
Repayment of term loan
—
(825
)
Proceeds from promissory notes
—
1,500
Payments for taxes related to net share
settlement of equity awards
(15
)
—
Net cash (used in) provided by
financing activities
(104,375
)
675
Net (decrease) increase in cash and cash
equivalents and restricted cash
(147,966
)
1,072
Cash and cash equivalents and restricted
cash at the beginning of period
169,921
9,704
Cash and cash equivalents and
restricted cash at the end of the period
$
21,955
$
10,776
*Refer to the "Non-GAAP Financial Measures" section in this
press release.
Forward-Looking
Statements
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of
the Exchange Act. Forward-looking statements generally are
accompanied by words such as “believe,” “may,” “will,” “estimate,”
“continue,” “anticipate,” “intend,” “expect,” “should,” “would,”
“plan,” “predict,” “potential,” “seem,” “seek,” “future,”
“outlook,” and similar expressions that predict or indicate future
events or trends or that are not statements of historical matters.
These forward-looking statements include, but are not limited to,
statements regarding BigBear.ai’s industry, future events, and
other statements that are not historical facts. These statements
are based on various assumptions, whether or not identified herein,
and on the current expectations of BigBear.ai’s management and are
not predictions of actual performance. These forward-looking
statements are provided for illustrative purposes only and are not
intended to serve as, and must not be relied on by you or any other
investor as, a guarantee, an assurance, a prediction or a
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and will
differ from assumptions. Many actual events and circumstances are
beyond our control. These forward-looking statements are subject to
a number of risks and uncertainties, including changes in domestic
and foreign business, market, financial, political, and legal
conditions; risks related to the uncertainty of the projected
financial information (including on a segment reporting basis);
risks related to delays caused by factors outside of our control,
including changes in fiscal or contracting policies or decreases in
available government funding; changes in government programs or
applicable requirements; budgetary constraints, including automatic
reductions as a result of “sequestration” or similar measures and
constraints imposed by any lapses in appropriations for the federal
government or certain of its departments and agencies; influence
by, or competition from, third parties with respect to pending,
new, or existing contracts with government customers; potential
delays or changes in the government appropriations or procurement
processes, including as a result of events such as war, incidents
of terrorism, natural disasters, and public health concerns or
epidemics, such as the recent coronavirus outbreak; and increased
or unexpected costs or unanticipated delays caused by other factors
outside of our control, such as performance failures of our
subcontractors; risks related to the rollout of the business and
the timing of expected business milestones; the effects of
competition on our future business; our ability to issue equity or
equity-linked securities in the future, and those factors discussed
in the Company’s reports and other documents filed with the SEC,
including under the heading “Risk Factors.” If any of these risks
materialize or our assumptions prove incorrect, actual results
could differ materially from the results implied by these
forward-looking statements. There may be additional risks that
BigBear.ai presently does not know or that BigBear.ai currently
believes are immaterial which could also cause actual results to
differ from those contained in the forward-looking statements. In
addition, forward-looking statements reflect BigBear.ai’s
expectations, plans or forecasts of future events and views as of
the date of this release. BigBear.ai anticipates that subsequent
events and developments will cause BigBear.ai’s assessments to
change. However, while BigBear.ai may elect to update these
forward-looking statements at some point in the future, BigBear.ai
specifically disclaims any obligation to do so. Accordingly, undue
reliance should not be placed upon the forward-looking
statements.
Non-GAAP Financial
Measures
The financial information and data contained in this press
release is unaudited. Some of the financial information and data
contained in this press release, such as EBITDA and Adjusted
EBITDA, have not been prepared in accordance with United States
generally accepted accounting principles (“GAAP”). To
supplement our unaudited condensed consolidated financial
statements, which are prepared and presented in accordance with
GAAP in our press release, we also report certain non-GAAP
financial measures. A “non-GAAP financial measure” refers to a
numerical measure of a company’s historical or future financial
performance, financial position, or cash flows that excludes (or
includes) amounts that are included in (or excluded from) the most
directly comparable measure calculated and presented in accordance
with GAAP in such company’s financial statements.
The presentation of these financial measures is not intended to
be considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with
GAAP and should not be considered measures of BigBear.ai’s
liquidity. Investors are cautioned that there are material
limitations associated with the use of non-GAAP financial measures
as an analytical tool. In particular, many of the adjustments to
our GAAP financial measures reflect the exclusion of certain items,
as defined in our non-GAAP definitions below, which are recurring
and will be reflected in our financial results for the foreseeable
future. In addition, these measures may be different from non-GAAP
financial measures used by other companies, even where similarly
titled, limiting their usefulness for comparison purposes and
therefore should not be used to compare BigBear.ai’s performance to
that of other companies. We endeavor to compensate for the
limitation of the non-GAAP financial measures presented by also
providing the most directly comparable GAAP measures and
descriptions of the reconciling items and adjustments to derive the
non-GAAP financial measures.
We believe these non-GAAP financial measures provide investors
and analysts with useful supplemental information about the
financial performance of our business, enable comparison of
financial results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key measures used by management to
operate and analyze our business over different periods of
time.
Adjusted EBITDA is defined as of any date of calculation, the
consolidated pro forma earnings of the Company and its
subsidiaries, before finance income and finance cost (including
bank charges), tax, depreciation and amortization calculated from
the audited consolidated financial statements of such party and its
subsidiaries (prepared in accordance with GAAP), transaction fees
and other non-recurring costs. Similar excluded expenses may be
incurred in future periods when calculating these measures.
BigBear.ai believes these non-GAAP measures of financial results
provide useful information to management and investors regarding
certain financial and business trends relating to the Company’s
financial condition and results of operations. BigBear.ai believes
that the use of these non-GAAP financial measures provides an
additional tool for investors to use in evaluating projected
operating results and trends and in comparing BigBear.ai’s
financial measures with other similar companies, many of which
present similar non-GAAP financial measures to investors.
Management does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitation of these non-GAAP
financial measures is that they exclude significant expenses and
income that are required by GAAP to be recorded in the Company’s
financial statements. In addition, they are subject to inherent
limitations as they reflect the exercise of judgment by management
about which expense and income items are excluded or included in
determining these non-GAAP financial measures.
Management uses EBITDA and adjusted EBITDA as a non-GAAP
performance measure which is defined in and is reconciled to net
loss, the most directly comparable GAAP measure, in the tables
above. The Company does not present a quantitative reconciliation
of forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measure (or otherwise present such
forward-looking GAAP measure) because it is not able to forecast
the most directly comparable measure calculated and presented in
accordance with GAAP without unreasonable effort. Certain elements
of the composition of the GAAP amounts are not predictable, making
it impracticable for the Company to forecast. As a result, no GAAP
guidance or reconciliation of the Company’s adjusted EBITDA*
guidance is provided. For the same reasons, the Company is unable
to assess the probable significance of the unavailable information,
which could have a potentially significant impact on its future
GAAP financial results.
Conference Call / Webcast
Information
BigBear.ai will host its earnings results conference call and
audio webcast (listen-only mode) on Wednesday, November, 9, 2022 at
5:00 p.m. ET. The earnings conference call can be accessed by
calling 877-485-3107 (toll-free) or 201-689-8427 (toll). The
listen-only audio webcast of the call will be available on the
BigBear.ai Investor Relations website: https://ir.bigbear.ai. For
those who are unable to listen to the live event, a replay will be
available for two weeks following the event by dialing 877-660-6853
(toll-free) or 201-612-7415 (toll) and entering the access code
13733601. To access the webcast replay, visit
https://ir.bigbear.ai.
About BigBear.ai
BigBear.ai delivers AI-powered analytics and cyber engineering
solutions to support mission-critical operations and
decision-making in complex, real-world environments. BigBear.ai’s
customers, which include the US Intelligence Community, Department
of Defense, the US Federal Government, as well as customers in
manufacturing, healthcare, commercial space, and other sectors,
rely on BigBear.ai’s solutions to see and shape their world through
reliable, predictive insights and goal-oriented advice.
Headquartered in Columbia, Maryland, BigBear.ai is a global, public
company traded on the NYSE under the symbol BBAI. For more
information, please visit: http://bigbear.ai/ and follow BigBear.ai
on Twitter: @BigBearai.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221109005865/en/
BigBear.ai Tyler Sigmon 443-430-2622 Tyler.Sigmon@bigbear.ai
Reevemark Paul Caminiti/Delia Cannan/Pam Greene 212-433-4600
bigbear.ai@reevemark.com or investors@bigbear.ai
BigBear ai (NYSE:BBAI)
Historical Stock Chart
From Apr 2024 to May 2024
BigBear ai (NYSE:BBAI)
Historical Stock Chart
From May 2023 to May 2024