 Highlights Second-quarter revenue of 643.3 million Second-quarter operating income of 34.3 million Second-quarter net income of 16.0 million Second-quarter adjusted EBITDA1 of 48.4 million 7.51 of revenue Second-quarter cash flows provided by operations of 44.7 million Second-quarter net bookings of 521 million 0.8x book-to-bill; 2.6 billion for the trailing twelve months 1.0x book-to-bill, which excludes the previously announced 1.3 billion U.S. Customs and Border Protection award which was protested Company revises fiscal 2020 financial guidanceFALLS CHURCH, Va., Aug. 06, 2020 GLOBE NEWSWIRE -- PAE Incorporated PAE or the Company NASDAQ: PAE, PAEWW today announced second-quarter 2020 financial and operating results.CEO CommentaryI am very pleased with our financial and operating performance, despite headwinds from COVID-19. Fundamentally, the core business is performing as we expected, and contract award win rates are consistent with our plan. Revenue, excluding impacts from COVID-19, is in line with our expectations, and profitability and cash flow exceeded expectations, said PAE President and Chief Executive Officer John Heller. I want to thank our dedicated workforce, partners and customers who continue to drive business performance and mission success amidst the pandemic. COVID-19 Financial ImpactWe estimate the second-quarter impact from the COVID-19 pandemic to be approximately 58.5 million of revenue and an immaterial net impact to adjusted EBITDA and free cash flow. These impacts were primarily driven by disruptions to logistics operations and PAE employees and subcontractors unable to access facilities to perform on customer contracts. Since the onset of the COVID-19 pandemic, PAE has operated as an essential business, continuing to operate and support our customers in a resilient market.Second-Quarter 2020 ResultsRevenues for the quarter of 643.3 million decreased 52.3 million, or 7.5, compared to the prior year period. The decrease was attributable to a 58.5 million impact from COVID-19, of which approximately 40.4 million was non-labor and 18.1 million was labor, which decrease was partially offset by a 6.2 million net increase in contract volume and new business programs. The Global Mission Services GMS and National Security Solutions NSS segments revenue decreased by approximately 18.2 million and 34.1 million, respectively.Operating income for the quarter was 34.3 million, compared with operating income of 26.2 million in the prior year period. The increase resulted from lower Selling, General and Administrative SGA expenses and increased volume on higher margin programs, which increase was partially offset by lower revenue volume.The net income attributed to PAE for the quarter was 16.0 million, or 0.17 per diluted share, compared with net income of approximately 2.7 million, or 0.13 per diluted share in the prior year period. The improvement in net income for the second quarter of 2020, was primarily driven by factors driving the increase in operating income and lower interest expense, which was driven by a reduction in debt year over year. Adjusted EBITDA for the quarter was 48.4 million, or 7.5 of revenue, compared to 39.5 million, or 5.7 of revenue, in the prior year period. Adjusted EBITDA and margins benefited by factors driving the increase in operating income.Global Mission Services GMS revenues for the quarter of 507.9 million decreased 18.2 million, or 3.5, compared to the prior year period. The decrease was attributable to a 40.7 million impact from COVID-19, of which approximately 29.7 million was non-labor and 11.0 million was labor, partially offset by a 22.5 million net increase in contract volume and new business programs.GMS operating income for the quarter was 31.5 million, compared to 25.3 million, in the prior-year period. The improvement was driven by increased volume on higher margin programs partially offset by lower revenue volume.GMS adjusted operating income2 for the quarter was 37.4 million, or 7.4 of revenue, compared to 30.7 million, or 5.8 of revenue, in the prior year period. GMS adjusted operating income and margins2 benefited by factors driving the increase in GMS operating income.National Security Solutions NSS revenues for the quarter of 135.4 million decreased 34.1 million, or 20.1, compared to the prior year period. The decrease was attributable to an 17.8 million impact from COVID-19, of which approximately 11.0 million was non-labor and 6.8 million was labor, and by a 16.3 million decrease from small business set-aside re-compete losses, net of new business wins.NSS operating income for the quarter was 7.7 million, compared to 4.0 million in the prior year period. The increase was driven by lower SGA expenses and increased volume on higher margin programs, partially offset by lower revenue volume.NSS adjusted operating income3 for the quarter was 11.0 million, or 8.1 of revenue, compared to 8.8 million, or 5.2 of revenue, in the prior year period. NSS adjusted operating income and margins benefited by factors driving the increase in NSS operating income. Cash Flow SummaryNet cash provided by operating activities for the quarter of 44.7 million, increased by 12.1 million over the prior year period, primarily as a result of an increase in accounts payable and accrued salaries, offset by reduced cash collections.As of June 28, 2020, PAE had cash and cash equivalents totaling 138.5 million and had no outstanding borrowings on its asset-based revolving loan credit facility.Business Development Highlights and Contract AwardsNet bookings totaled 521 million in the second quarter and 2.6 billion over the trailing 12 months, representing a book to bill ratio of 0.8x and 1.0x for the second quarter and trailing 12 months, respectively. The net bookings were comprised of comparable percentages of new business, contract extensions and recompete awards. Net bookings exclude the previously announced 1.3 billion U.S. Customs and Border Protection award previously protested.Notable second quarter awards received include:Notable New Business Award: Marine Corps Air Station Iwakuni, Japan: PAEs GMS segment was awarded a 25 million, 4-year contract with the U.S. Navy to support systems maintenance, testing and installation at the Marine Corps Air Station Iwakuni, Japan. Georgia World Congress Center: PAEs GMS segment was awarded a 21.5 million contract by the Georgia Emergency Management and Homeland Security Agency to mobilize the Georgia World Congress Center in Atlanta as an Alternative Care Site to provide treatment for COVID-19 patients. DTRA CTRIC III: PAEs NSS segment was awarded a 16.6 million, three-year contract with a national security customer providing counter-threat solutions.Notable Recompete Awards: Eglin Air Force Base: PAEs GMS segment was awarded a 158 million, seven-year contract with the U.S. Air Force to manage aircraft and equipment maintenance supporting 96th Test Wing missions at Eglin Air Force Base, Florida. The contract provides the potential to expand the scope of the previous contract to include new aircraft platforms.Notable IDIQ Awards: AFCAP V: PAE-Perini, a joint venture among PAE and Perini Management Services, Inc., was awarded one of eight positions on the Air Force Contract Augmentation Program IDIQ vehicle, also known as AFCAP V, with a combined ceiling value of 6.4 billion. Aircraft Maintenance Enterprise Solution: Subsequent to the end of the quarter, PAE also won a seat on the 14 billion multiple-award, IDIQ contract for Aircraft Maintenance Enterprise Solution -- a strategic sourcing vehicle for Air Force-wide contracted aircraft maintenance. PAE is one of eight awardees on the contract vehicle.The Companys backlog at the end of the quarter was 6.3 billion, of which 1.2 billion was funded. 2020 Financial OutlookAs a result of the Companys financial results for the first six months of 2020 and its updated outlook for the remainder of the year, the Company is revising its fiscal year 2020 guidance as follows: Revenues of 2,600 million to 2,700 million, down from previous guidance of 2,750 million to 2,850 million; Adjusted EBITDA of 172 million to 178 million, narrowed from previous guidance of 170 million to 178 million; and, Free Cash Flow of at least 100 million, unchanged from previous guidance.Due to COVID-19 impacts on our logistics operations, certain labor-driven Training and Business Process Outsourcing programs and delays in new business awards caused by COVID-19, we are lowering revenue guidance for the year. However, we are maintaining and narrowing our Adjusted EBITDA outlook driven by increased profitability on existing business and a shift in revenue mix toward higher margin labor revenue. Furthermore, we are also reiterating our free cash flow guidance, said PAE Executive Vice President and Chief Financial Officer Charlie Peiffer.Adjusted EBITDA is a non-GAAP financial measure. The Company is not providing a quantitative reconciliation of adjusted EBITDA in its 2020 financial guidance 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, the Company 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. 