COLORADO SPRINGS, Colo.,
Dec. 28, 2020 /PRNewswire/ --
Vectrus, Inc. (NYSE: VEC) announced today that it has signed a
definitive agreement to acquire Zenetex, a leading provider of
technical and strategic solutions focused on enabling mission
readiness, performance, and enhanced protection for defense and
national security clients globally. The acquisition adds critical
new capabilities which will accelerate Vectrus' converged
infrastructure strategy and expands the company's client base with
new DoD, intelligence and foreign military clients. The transaction
is valued at approximately $112
million, net of $11 million of
expected tax benefits.
"I am excited to welcome the Zenetex employees to Vectrus," said
Chuck Prow, president and chief
executive officer of Vectrus. "This important acquisition
significantly enhances our capabilities across a number of high
priority clients and accelerates our strategy to deliver a more
integrated and comprehensive suite of solutions to our clients
globally. Zenetex broadens our reach into the Intelligence
Community and expands our engineering and digital technology
offerings, which is critical as we expand our capabilities to help
our clients' transition to a more instrumented and converged
approach to supply chain and facility management."
Strategic Benefits and Transaction Highlights:
- Strengthens Position as Leading Fully-Integrated Provider in
the Converged Infrastructure Market: Brings integrated security
capabilities that provide systematic protection of physical assets,
IP, and computer systems, which further builds on Vectrus'
integrated electronic security solutions that protect thousands of
facilities and assets.
- Adds Higher End Integrated Logistics: Brings people,
skills, knowledge, equipment, tools, and technical data to
establish, execute and maintain logistics policies, processes and
procedures, which builds on Vectrus' forward-deployed operational
logistics capabilities.
- Expands Operations and Maintenance Services to Increase
Content and Scope at Client Installations: Provides
mission-critical readiness services for legacy and next generation
aircraft through full spectrum Maintenance, Repair & Overhaul
services that include "backshop" operations, lab systems, and
weapon subsystems, which increases Vectrus' overall addressable
market and content at client installations, facilities, and
bases.
- Expands Intelligence and Federal Client Footprint:
Provides unique access to highly attractive Intelligence Community
clients and advances the company's Navy campaign to include Naval
Air Systems Command and Naval Supply Systems Command.
- Adds Foreign Military Sales (FMS) Clients and Expertise:
The company's FMS services supports more than 40 countries,
including Qatar, Malaysia, Spain, Morocco, Kuwait, Denmark, Australia, Canada, and provides significant channels for
future growth. The company's legacy and experience related to FMS
has resulted in a recent award to provide an International
Readiness Operational Software Management System, a prototype to
improve readiness initiatives, accelerate product delivery, and
optimize the reliability of operational and aviation readiness for
foreign partners abroad.
- Strong Backlog and Growth Outlook: Zenetex is at the
front end of significant new business awards with over $700 million in contract backlog that provides
strong revenue visibility and a foundation for continued
growth.
"Zenetex and Vectrus make an extremely powerful combination and
I couldn't be happier with this next step in our team's journey,"
said Mark Green, chairman and chief
executive officer of Zenetex. "Our culture, mission, vision, and
values are strongly aligned and founded on delivering successful
service in support of our clients' critical missions. The Zenetex
capabilities, client access, and high performing teams complement
the existing portfolio at Vectrus and will add additional value to
both company's clients while serving new markets with the combined
power of our people."
The transaction value of approximately $112 million is net of an anticipated $11
million transaction-related tax benefit and represents a
multiple of approximately 8.4x 2020E adjusted EBITDA, adjusted for
estimated annual cost synergies. For 2020, Zenetex is expected to
generate revenue of over $200
million. The transaction is expected to be accretive to
Vectrus' 2021 adjusted diluted earnings per share and adjusted
EBITDA margin. The transaction is expected to close in 2020,
subject to customary closing conditions. Vectrus was advised by
Skadden, Arps, Slate, Meagher & Flom LLP, Ernst & Young,
Covington & Burling LLP, and Wolf Den Associates. Zenetex was
advised by KippsDeSanto & Co. and Greenberg Traurig, LLP.
Headquartered in Herndon,
Virginia, Zenetex has a long history of providing integrated
logistics, advanced engineering, IT, RDT&E, and virtual
simulation focused on critical national security priorities and
defense aviation platforms. The company also provides integrated
security protection of physical assets, IP and computer systems as
well as mission performance services focused on Intelligence,
Surveillance and Reconnaissance systems for the Intelligence
Community and classified programs. Additionally, Zenetex is a
leader in providing full spectrum Maintenance, Repair &
Overhaul services focused on improving mission readiness for
critical defense aviation programs. The company brings with it a
long history serving the U.S. Navy, Intelligence Community and
foreign militaries, which together account for over 80% of the
company's revenue.
About Vectrus
Vectrus is a leading provider of
global service solutions with a history in the services market that
dates back more than 70 years. The company provides facility and
base operations; supply chain and logistics services; information
technology mission support; and engineering and digital technology
services primarily to U.S. government customers around the world.
Vectrus is differentiated by operational excellence, superior
program performance, a history of long-term customer relationships
and a strong commitment to its clients' mission success. Vectrus is
headquartered in Colorado Springs,
Colo., and includes about 7,100 employees spanning 148
locations in 26 countries and territories. In 2019, Vectrus
generated sales of $1.4 billion. For
more information, visit the company's website at www.vectrus.com or
connect with Vectrus on Facebook, Twitter, and LinkedIn.
Forward Looking Statements
Safe Harbor Statement
under the Private Securities Litigation Reform Act of 1995 (the
"Act"): Certain material presented herein includes forward-looking
statements intended to qualify for the safe harbor from liability
established by the Act. These forward-looking statements include,
but are not limited to, the possibility that anticipated benefits
of the acquisition may not be realized or may take longer to
realize than expected; the possibility that costs related to the
company's integration of Zenetex's operations may be greater than
expected and/or that revenues following the acquisition may be
lower than expected; the effect of the transaction on the ability
of the company to retain customers and retain and hire key
personnel of Zenetex and maintain relationships with their
suppliers and customers, including the U.S. Government; responses
from customers and competitors to the acquisition; the risk that
the integration of Zenetex may distract management from other
important matters; results from the acquisition may be different
than those anticipated; other statements about our 2020 performance
outlook, five-year growth plan, revenue, DSO, contract
opportunities; the potential impact of COVID-19, and any discussion
of future operating or financial performance.
Whenever used, words such as "may," "are considering," "will,"
"likely," "anticipate," "estimate," "expect," "project," "intend,"
"plan," "believe," "target," "could," "potential," "continue,"
"goal" or similar terminology are forward-looking statements. These
statements are based on the beliefs and assumptions of our
management based on information currently available to
management.
These forward-looking statements are not guarantees of future
performance, conditions or results, and involve a number of known
and unknown risks, uncertainties, assumptions and other important
factors, many of which are outside our management's control, that
could cause actual results to differ materially from the results
discussed in the forward-looking statements. For a discussion of
some of the risks and important factors that could cause actual
results to differ from such forward-looking statements, see the
risks and other factors detailed from time to time in our Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, and other
filings with the U.S. Securities and Exchange Commission.
We undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
Non-GAAP Financial Measures
Vectrus uses
adjusted EBITDA, adjusted EBITDA margin and adjusted earnings per
share as supplemental non-GAAP measures of performance. Vectrus
defines EBITDA as net income excluding (i) interest expense, (ii)
provision for or benefit from income taxes and (iii) depreciation
and amortization. Adjusted EBITDA excludes certain amounts included
in EBITDA. Adjusted EBITDA margin is calculated as adjusted EBITDA
divided by revenues expressed as a percentage.
Vectrus believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating the acquisition by Vectrus of Zenetex and the projected
future operating and financial results of Vectrus. The non-GAAP
financial measures provided in this press release are
forward-looking.
Vectrus is not providing a quantitative reconciliation of
adjusted EBITDA or adjusted EBITDA margin in reliance on the
"unreasonable efforts" exception for forward-looking non-GAAP
measures set forth in SEC rules because certain financial
information, the probable significance of which cannot be
determined, is not available and cannot be reasonably estimated
without unreasonable effort and expense. In this regard, Vectrus
does not provide a reconciliation of forward-looking adjusted
EBITDA (non-GAAP) to GAAP net income, due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliation. Because certain deductions for
non-GAAP exclusions used to calculate projected net income may vary
significantly based on actual events, Vectrus is not able to
forecast on a GAAP basis with reasonable certainty all deductions
needed in order to provide a GAAP calculation of projected net
income at this time. The amounts of these deductions may be
material and, therefore, could result in projected GAAP net income
being materially less than is indicated by estimated adjusted
EBITDA (non-GAAP).
CONTACT:
Vectrus
Mike Smith, CFA
719-637-5773
michael.smith@vectrus.com
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SOURCE Vectrus, Inc.