PAE to Acquire CENTRA Technology, Expanding its Intelligence Community Support Portfolio
- PAE will acquire
CENTRA Technology, Inc.in a $208 milliontransaction, net of tax benefits.
- The acquisition strengthens PAE's intelligence, defense, and national and homeland security businesses.
- The business combination expands and differentiates PAE's capabilities in intelligence analysis, communication systems integration and research and development services for intelligence and defense customers.
- The acquisition is expected to be accretive to key financial metrics including organic revenue growth, adjusted EBITDA margins and free cash flow.
- CENTRA’s business will broaden PAE’s customer reach and adds attractive contract vehicles to the company’s portfolio.
PAE President and CEO
“The acquisition firmly aligns with PAE’s strategy of expanding the business to higher-margin market areas. By acquiring CENTRA, PAE realizes a significant milestone in the execution of our strategic growth plan to be a provider of innovative, higher margin, knowledge-based offerings in attractive, resilient end markets. This exciting opportunity builds on our intelligence analysis capabilities while increasing customer access, accelerating growth and enhancing shareholder value. Additionally, the acquisition of CENTRA is expected to be accretive to adjusted EBITDA margins and free cash flow.”
CENTRA is an intelligence analysis service provider focused on providing mission critical services to the intelligence community and other
"This transaction will further enhance CENTRA’s capabilities and create new opportunities for our customers and employees," said
Strategic and Financial Benefits of the Acquisition
- Significantly Increases Addressable Market: Transaction increases PAE’s total addressable market by approximately
$36 billionin annual spending; provides PAE the ability to actionably pursue several large contracts in new market segments.
- Broadens Service and Technology Offerings: Brings new, value-add service and technology offerings to the portfolio; including intelligence analysis, communication systems integration and research and development services.
- Expands Customer Footprint and Contract Vehicles: Adds new customers within the Intelligence Community and Departments of Defense and Homeland Security, in addition to providing access to several large contract vehicles.
- Provides Additional Stability to Financial Profile: CENTRA’s contract portfolio is highlighted by low levels of recompete risk coupled with several recent large new business wins that provide approximately
$1 billionof backlog, or about 4x CY2020 revenue estimates.
- Adds Uniquely Qualified Employees to Workforce: Provides highly skilled and cleared professionals, including about 700 employees with Top Secret/Sensitive Compartmented Information clearances with subject matter expertise across a range of critical national security issues.
Financing and Approvals
The transaction has been unanimously approved by the boards of directors of both PAE and CENTRA and is expected to close in the fourth quarter of 2020, subject to regulatory approvals and customary closing conditions. PAE expects to fund the purchase price of approximately
Conference Call and Webcast
PAE will host a conference call and webcast,
Interested parties are invited to join the webcast from the PAE Investor Relations website. Due to the COVID-19 pandemic, teleconference providers globally are experiencing significant increases in conference call volume. As such, PAE recommends that parties participate by joining the webcast. Alternatively, if the webcast is not practical, attendees may listen to the conference call by dialing (855) 982-6676 and entering conference ID 1796253. The international dial-in access number is (614) 999-9188.
The company will post an archive of the webcast following the call on the PAE Investor Relations website.
For 65 years, PAE has tackled the world’s toughest challenges to deliver agile and steadfast solutions to the
This press release contains a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our expectations and projections regarding the acquisition of
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 PAE’s management’s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.
Forward-looking statements included in this release speak only as of the date of this release. PAE does not undertake any obligation to update its forward-looking statements to reflect events or circumstances after the date of this release except as may be required by the federal securities laws.
Non-GAAP Financial Measures
The Company uses adjusted EBITDA, adjusted EBITDA margin and free cash flow as supplemental non-GAAP measures of performance. PAE 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. Free cash flow is defined as cash flow provided by operating activities less capital expenditures.
PAE believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating the acquisition by PAE of
PAE 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
Use of Projections
This presentation contains projections with respect to the company and
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