- Vectrus Inc (NYSE:VEC) entered a definitive agreement to combine with The Vertex Company in an all-stock merger.
- Vertex Company is headquartered in Madison, Mississippi, and employs ~6,000 employees. Vertex is majority-owned by American Industrial Partners Capital Fund VI LP.
- Vertex delivers integrated turnkey lifecycle support from concept definition to engineering and manufacturing.
- Vertex shareholders will own ~62% of the combined company, and Vectrus will own ~38%. The transaction implies a value for Vertex of ~$2.1 billion.
- The combined company would have 2021 pro forma revenue of ~$3.4 billion and adjusted EBITDA of ~$283 million, resulting in an adjusted EBITDA margin of more than 8%.
- Upon closing of the transaction, Chuck Prow, CEO of Vectrus, will serve as CEO of the combined company. Susan Lynch will serve as CFO.
- The combined company will introduce a new name post-closing and maintain its NYSE listing. The companies expect the deal to close in Q3 of 2022.
- Q4 Results: Vectrus reported fourth-quarter revenue growth of 18% year-over-year to $419.4 million and +0.9% on an organic basis, beating the estimate of $415 million.
- Adjusted EPS declined to $0.90 from $1.25 in 4Q20, beating the estimate of $0.86.
- Operating income declined by 27% Y/Y to $10.02 million, and margin contracted by 147 bps to 2.4%.
- Adjusted EBITDA was $15.3 million, with a margin of 3.6%, compared to $17.9 million and 5% in 4Q20.
- Vectrus' net cash provided by operating activities totaled $61.34 million, compared to $64.08 million a year ago.
- As of December 31, 2021, total liquidity was over $200 million, with cash and equivalents at $38.5 million.
- The total backlog was $5 billion, and the funded backlog was $1 billion as of December 31, 2021. The trailing-twelve-month book-to-bill was 1.0x.
- FY22 Guidance: Vectrus expects revenue of $1.82 billion - $1.860 billion and adjusted EPS of $4.57 - $4.93.
- Price Action: VEC shares are trading lower by 9.28% at $42.00 on the last check Monday.
