COLUMBIA, Md.–(BUSINESS WIRE)–BigBear.ai Holdings, Inc. (NYSE: BBAI) (“BigBear.ai” or the “Company”), a pacesetter in AI-powered analytics and cyber engineering options, at present introduced monetary outcomes for the second quarter of 2022.
BigBear.ai CEO Dr. Reggie Brothers stated, “We proceed to give attention to evolving our enterprise to grow to be a extra scalable and worthwhile technology-first firm. While the second quarter offered challenges to our 2022 efficiency and slowed the tempo of our transformation, we stay assured in our means to seize bigger, higher-margin initiatives with each federal and business clients to drive long-term progress.”
“Our ProModel acquisition this quarter considerably expanded our choices with industry-leading modeling, simulation, and planning purposes utilized by a whole bunch of worldwide clients. In healthcare, hospitals are leveraging our software program to foretell affected person hundreds, optimize affected person care, and enhance monetary efficiency. We are constructing a powerful pipeline, and within the second quarter we signed an settlement with one of many largest well being methods within the Eastern U.S. We are seeing related demand within the optimization of shipyard operations, a crucial half of the present challenges within the international provide chain. Although business gross sales cycles are transferring extra slowly because of financial uncertainty, we’re happy with the progress of our integration and preliminary bookings, and we anticipate to see a constructive affect on income within the second half of 2022 and a extra important affect in 2023.”
“For our authorities clients, their give attention to addressing speedy wants in Ukraine has slowed the pipeline and tempo of contract awards, pushing income additional to the fitting. We proceed to anticipate the geopolitical local weather to drive adoption of our choices over the long run, because it has heightened the necessity for superior AI instruments that present enhanced intelligence and full spectrum cyber operations – areas the place we have now unmatched capabilities.”
Dr. Brothers added, “While we nonetheless have a wholesome backlog and rising pipeline, the timing of recent offers has been tough to foretell given present market circumstances. As such, we’re taking a extra conservative strategy in estimating sure alternatives in our forecast and backlog. This change, mixed with delays in federal contract awards and longer gross sales cycles, has pushed us to revise our outlook for 2022.”
“Looking forward, our investments in Analytics and our business growth will assist us transition our enterprise to drive income and seize extra predictable, increased margin, SaaS-based initiatives. However, in gentle of our second quarter efficiency and revised steering, we’re taking stringent steps to cut back our bills and money utilization, and to considerably improve our operational effectivity going ahead.”
Financial Highlights
Revenue of $37.6 million, in comparison with $36.3 million for the second quarter of 2021
Analytics income elevated $2.9 million, or 18%, as in comparison with the identical interval in 2021, primarily pushed by continued growth of key packages
Gross margin of 25%, in comparison with 25% for the second quarter of 2021
Segment adjusted gross margin of 39% for the Analytics phase in comparison with 46% for the second quarter of 2021. The lower displays investments in prototype contracts which are anticipated to yield increased margins upon the award of subsequent manufacturing contracts
Segment adjusted gross margin of 24% for the Cyber & Engineering phase, in comparison with 22% for the second quarter of 2021
Net lack of $(56.8) million, in comparison with $(3.2) million for the second quarter of 2021, primarily pushed by a non-cash goodwill impairment cost of $35.3 million in our Cyber & Engineering phase. The improve within the internet loss was additionally a results of increased public firm bills in addition to infrastructure and integration prices
Non-GAAP adjusted EBITDA* of $(7.7) million, in comparison with $0.5 million for the second quarter of 2021, primarily pushed by elevated funding to assist future progress, function efficiently as a public firm, and improve or develop new capabilities via elevated funding in analysis and improvement
Ending backlog of $325 million because of a change to our methodology in measuring backlog. Under the revised methodology, backlog doesn’t embrace Anticipated Follow-on Awards, which have been traditionally estimated when a buyer notified us {that a} program we at present assist could be persevering with beneath a brand new contract. Additionally, we have now reassessed our unpriced, unexercised backlog, and whereas we have now this work beneath contract with not-to-exceed limits, we have now up to date our estimates on what we consider will really be funded sooner or later on these contracts.
Julie Peffer, who joined BigBear.ai in June because the Company’s CFO, stated, “In the second quarter, our prime line income was impacted by the give attention to the warfare in Ukraine, which delayed the timing on some anticipated contract awards in our near-term pipeline. Along with these income delays, our Adjusted EBITDA was impacted by strategic investments in sure decrease margin prototype contracts. While this prototype work regularly requires important up-front funding, it has the potential to result in massive multi-year contracts with significantly increased margins. We anticipate to see conversion quickly and persevering with via 2023 primarily based on preliminary buyer responses.”
“Additionally, our second quarter margins and Adjusted EBITDA have been impacted by the next stage of working bills linked to public firm governance, transaction and integration prices associated to the ProModel acquisition, and our go-to-market technique in our business enterprise. We are within the means of conducting a rigorous and disciplined evaluation of our price construction, and going ahead, we anticipate to considerably scale back our money burn via aggressive price financial savings initiatives, streamline operations, and absolutely combine as one enterprise. We consider added rigor round expense administration, coupled with our wholesome backlog, robust buyer relationships, and increasing addressable market, place BigBear.ai for long-term, worthwhile progress,” added Peffer.
Financial Outlook
The following data and different sections of this launch comprise forward-looking statements, that are primarily based on the Company’s present expectations. Actual outcomes could differ materially from these projected. It is the Company’s follow to not incorporate changes into its monetary outlook for proposed acquisitions, divestitures, modifications in legislation, or new accounting requirements till such gadgets have been consummated, enacted, or adopted. For extra elements that will affect the Company’s precise outcomes, confer with the “Forward-Looking Statements” part on this launch.
The Company now initiatives:
Revenue of roughly between $150 million to $170 million for the year-ended December 31, 2022
Single digit damaging Adjusted EBITDA*, in hundreds of thousands, for the second half of 2022
Summary of Results for the Second Quarter and Year to Date Periods Ended
June 30, 2022 and June 30, 2021
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
$ hundreds (anticipate per share quantities)
2022
2021
2022
2021
Revenues
$
37,613
$
36,311
$
74,003
$
71,881
Cost of revenues
28,023
27,148
54,546
52,438
Gross margin
9,590
9,163
19,457
19,443
Operating bills:
Selling, basic and administrative
26,952
10,405
48,972
20,519
Research and improvement
2,535
1,867
5,409
2,795
Transaction bills
186
—
1,585
—
Goodwill impairment
35,252
—
35,252
—
Operating loss
(55,335
)
(3,109
)
(71,761
)
(3,871
)
Interest expense
3,554
1,849
7,109
3,709
Net lower in honest worth of derivatives
(199
)
—
(1,462
)
—
Other (earnings) expense
(26
)
—
4
(1
)
Loss earlier than taxes
(58,664
)
(4,958
)
(77,412
)
(7,579
)
Income tax profit
(1,820
)
(1,783
)
(1,743
)
(1,967
)
Net loss
$
(56,844
)
$
(3,175
)
$
(75,669
)
$
(5,612
)
Basic and diluted internet loss per share
$
(0.45
)
$
(0.03
)
$
(0.59
)
$
(0.05
)
EBITDA* and Adjusted EBITDA* for the Second Quarter and Year to Date Periods Ended
June 30, 2022 and June 30, 2021
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
$ hundreds
2022
2021
2022
2021
Net loss
$
(56,844
)
$
(3,175
)
$
(75,669
)
$
(5,612
)
Interest expense
3,554
1,849
7,109
3,709
Income tax profit
(1,820
)
(1,783
)
(1,743
)
(1,967
)
Depreciation and amortization
1,954
1,752
3,726
3,673
EBITDA
(53,156
)
(1,357
)
(66,577
)
(197
)
Adjustments:
Equity-based compensation
5,080
31
8,938
56
Net lower in honest worth of derivatives(1)
(199
)
—
(1,462
)
—
Capital market advisory charges(2)
38
906
741
2,446
Management charges(3)
—
454
—
454
Non-recurring integration prices(4)
2,024
505
4,399
505
Commercial start-up prices(5)
3,063
—
6,490
—
Transaction bills(6)
186
—
1,585
—
Goodwill impairment(7)
35,252
—
35,252
—
Adjusted EBITDA
$
(7,712
)
$
539
$
(10,634
)
$
3,264
(1)
The lower in honest worth of derivatives primarily pertains to the modifications within the honest worth of sure Forward Share Purchase Agreements (FPAs) that have been entered into previous to the closing of the Business Combination and have been absolutely settled throughout the first quarter of 2022, in addition to modifications within the honest worth of personal warrants.
(2)
The Company incurred capital market and advisory charges associated to advisors helping with the Business Combination.
(3)
Management and different associated consulting charges paid to AE Partners. These charges ceased subsequent to the Business Combination.
(4)
Non-recurring inner integration prices associated to the Business Combination.
(5)
Commercial start-up prices contains sure non-recurring bills related to tailoring the Company’s software program merchandise for business clients and use instances.
(6)
Transaction bills associated to the acquisition of ProModel Corporation, which closed on April 7, 2022.
(7)
During the second quarter of 2022, the Company acknowledged a non-cash goodwill impairment cost associated to its Cyber & Engineering enterprise phase.
Consolidated Balance Sheets as of
June 30, 2022 and December 31, 2021
(Unaudited)
$ in hundreds
June 30,
2022
December 31,
2021
Assets
Current belongings:
Cash and money equivalents
$
29,829
$
68,900
Restricted money
—
101,021
Accounts receivable, much less allowance for uncertain accounts
28,546
28,605
Contract belongings
1,252
628
Prepaid bills and different present belongings
8,097
7,028
Total present belongings
67,724
206,182
Non-current belongings:
Property and tools, internet
1,433
1,078
Goodwill
67,164
91,636
Intangible belongings, internet
89,456
83,646
Other non-current belongings
727
780
Total belongings
$
226,504
$
383,322
Liabilities and fairness
Current liabilities:
Accounts payable
$
6,354
$
5,475
Short-term debt, together with present portion of long-term debt
1,921
4,233
Accrued liabilities
15,978
10,735
Contract liabilities
3,714
4,207
Derivative liabilities
—
44,827
Other present liabilities
881
541
Total present liabilities
28,848
70,018
Non-current liabilities:
Long-term debt, internet
191,341
190,364
Deferred tax liabilities
390
248
Other non-current liabilities
136
324
Total liabilities
220,715
260,954
Stockholders’ fairness:
Common inventory
14
14
Additional paid-in capital
270,184
253,744
Treasury inventory, at price 9,952,803 shares at June 30, 2022 and — shares at December 31, 2021
(57,350
)
—
Accumulated deficit
(207,059
)
(131,390
)
Total stockholders’ fairness
5,789
122,368
Total liabilities and stockholders’ fairness
$
226,504
$
383,322
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2022 and June 30, 2021
(Unaudited)
Six Months Ended June 30,
$ in hundreds
2022
2021
Cash flows from working actions:
Net loss
$
(75,669
)
$
(5,612
)
Adjustments to reconcile internet loss to internet money (utilized in) supplied by working actions:
Depreciation and amortization expense
3,726
3,673
Amortization of debt issuance prices
1,047
286
Equity-based compensation expense
8,938
56
Goodwill impairment
35,252
—
Provision for uncertain accounts
44
—
Deferred earnings tax expense (profit)
(1,594
)
(1,996
)
Net lower in honest worth of derivatives
(1,462
)
—
Changes in belongings and liabilities:
Decrease (improve) in accounts receivable
758
(1,580
)
(Increase) lower in contract belongings
(226
)
1,557
Decrease (improve) in pay as you go bills and different belongings
535
(4,299
)
Increase in accounts payable
874
2,251
(Decrease) improve in accrued liabilities
(2,509
)
5,227
(Decrease) improve in contract liabilities
(2,048
)
494
Increase in different liabilities
338
275
Net money (utilized in) supplied by working actions
(31,996
)
332
Cash flows from investing actions:
Acquisition of companies, internet of money acquired
(4,376
)
(224
)
Purchases of property and tools
(508
)
(282
)
Net money utilized in investing actions
(4,884
)
(506
)
Cash flows from financing actions:
Repurchase of shares because of ahead share buy agreements
(100,896
)
—
Repayment of short-term borrowings
(2,312
)
—
Repayment of time period mortgage
—
(550
)
Payments for taxes associated to internet share settlement of fairness awards
(4
)
—
Net money utilized in financing actions
(103,212
)
(550
)
Net lower in money and money equivalents and restricted money
(140,092
)
(724
)
Cash and money equivalents and restricted money firstly of interval
169,921
9,704
Cash and money equivalents and restricted money on the finish of the interval
$
29,829
$
8,980
Forward-Looking Statements
This launch comprises forward-looking statements inside the that means of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements usually are accompanied by phrases akin to “consider,” “could,” “will,” “estimate,” “proceed,” “anticipate,” “intend,” “anticipate,” “ought to,” “would,” “plan,” “predict,” “potential,” “appear,” “search,” “future,” “outlook,” and related expressions that predict or point out future occasions or traits or that aren’t statements of historic issues. These forward-looking statements embrace, however usually are not restricted to, statements relating to BigBear.ai’s {industry}, future occasions, and different statements that aren’t historic info. These statements are primarily based on varied assumptions, whether or not or not recognized herein, and on the present expectations of BigBear.ai’s administration and usually are not predictions of precise efficiency. These forward-looking statements are supplied for illustrative functions solely and usually are not supposed to function, and should not be relied on by you or some other investor as, a assure, an assurance, a prediction or a definitive assertion of reality or likelihood. Actual occasions and circumstances are tough or unattainable to foretell and can differ from assumptions. Many precise occasions and circumstances are past our management. These forward-looking statements are topic to a lot of dangers and uncertainties, together with modifications in home and overseas enterprise, market, monetary, political, and authorized circumstances; dangers associated to the uncertainty of the projected monetary data (together with on a phase reporting foundation); dangers associated to delays attributable to elements exterior of our management, together with modifications in fiscal or contracting insurance policies or decreases in obtainable authorities funding; modifications in authorities packages or relevant necessities; budgetary constraints, together with automated reductions because of “sequestration” or related measures and constraints imposed by any lapses in appropriations for the federal authorities or sure of its departments and businesses; affect by, or competitors from, third events with respect to pending, new, or present contracts with authorities clients; potential delays or modifications within the authorities appropriations or procurement processes, together with because of occasions akin to warfare, incidents of terrorism, pure disasters, and public well being issues or epidemics, such because the current coronavirus outbreak; and elevated or sudden prices or unanticipated delays attributable to different elements exterior of our management, akin to efficiency failures of our subcontractors; dangers associated to the rollout of the enterprise and the timing of anticipated enterprise milestones; the results of competitors on our future enterprise; our means to problem fairness or equity-linked securities sooner or later, and people elements mentioned within the Company’s experiences and different paperwork filed with the SEC, together with beneath the heading “Risk Factors.” If any of those dangers materialize or our assumptions show incorrect, precise outcomes may differ materially from the outcomes implied by these forward-looking statements. There could also be extra dangers that BigBear.ai presently doesn’t know or that BigBear.ai at present believes are immaterial which may additionally trigger precise outcomes to vary from these contained within the forward-looking statements. In addition, forward-looking statements replicate BigBear.ai’s expectations, plans or forecasts of future occasions and views as of the date of this launch. BigBear.ai anticipates that subsequent occasions and developments will trigger BigBear.ai’s assessments to alter. However, whereas BigBear.ai could elect to replace these forward-looking statements sooner or later sooner or later, BigBear.ai particularly disclaims any obligation to take action. Accordingly, undue reliance shouldn’t be positioned upon the forward-looking statements.
Non-GAAP Financial Measures
The monetary data and information contained on this press launch is unaudited. Some of the monetary data and information contained on this press launch, akin to Adjusted EBITDA, haven’t been ready in accordance with United States usually accepted accounting ideas (“GAAP”). To complement our unaudited condensed consolidated monetary statements, that are ready and offered in accordance with GAAP in our press launch, we additionally report sure non-GAAP monetary measures. A “non-GAAP monetary measure” refers to a numerical measure of an organization’s historic or future monetary efficiency, monetary place, or money flows that excludes (or contains) quantities which are included in (or excluded from) essentially the most instantly comparable measure calculated and offered in accordance with GAAP in such firm’s monetary statements.
The presentation of those monetary measures isn’t supposed to be thought-about in isolation or as an alternative to, or superior to, monetary data ready and offered in accordance with GAAP and shouldn’t be thought-about measures of BigBear.ai’s liquidity. Investors are cautioned that there are materials limitations related to the usage of non-GAAP monetary measures as an analytical instrument. In explicit, lots of the changes to our GAAP monetary measures replicate the exclusion of sure gadgets, as outlined in our non-GAAP definitions beneath, that are recurring and shall be mirrored in our monetary outcomes for the foreseeable future. In addition, these measures could also be completely different from non-GAAP monetary measures utilized by different corporations, even the place equally titled, limiting their usefulness for comparability functions and subsequently shouldn’t be used to check BigBear.ai’s efficiency to that of different corporations. We endeavor to compensate for the limitation of the non-GAAP monetary measures offered by additionally offering essentially the most instantly comparable GAAP measures and descriptions of the reconciling gadgets and changes to derive the non-GAAP monetary measures.
We consider these non-GAAP monetary measures present buyers and analysts with helpful supplemental details about the monetary efficiency of our enterprise, allow comparability of economic outcomes between intervals the place sure gadgets could range impartial of enterprise efficiency, and permit for higher transparency with respect to key measures utilized by administration to function and analyze our enterprise over completely different intervals of time
Adjusted EBITDA is outlined as of any date of calculation, the consolidated professional forma earnings of the Company and its subsidiaries, earlier than finance earnings and finance price (together with financial institution costs), tax, depreciation and amortization calculated from the audited consolidated monetary statements of such social gathering and its subsidiaries (ready in accordance with GAAP), transaction charges and different non-recurring prices. Similar excluded bills could also be incurred in future intervals when calculating these measures. BigBear.ai believes these non-GAAP measures of economic outcomes present helpful data to administration and buyers relating to sure monetary and enterprise traits referring to the Company’s monetary situation and outcomes of operations. BigBear.ai believes that the usage of these non-GAAP monetary measures gives an extra instrument for buyers to make use of in evaluating projected working outcomes and traits and in evaluating BigBear.ai’s monetary measures with different related corporations, a lot of which current related non-GAAP monetary measures to buyers.
Non-GAAP monetary efficiency measures are used to complement the monetary data offered on a GAAP foundation. This non-GAAP monetary measure shouldn’t be thought-about in isolation or as an alternative to the related GAAP measures and needs to be learn at the side of data offered on a GAAP foundation. Because not all corporations use similar calculations, our presentation of non-GAAP measures might not be corresponding to different equally titled measures of different corporations.
Management doesn’t think about these non-GAAP measures in isolation or as a substitute for monetary measures decided in accordance with GAAP. The principal limitation of those non-GAAP monetary measures is that they exclude important bills and earnings which are required by GAAP to be recorded within the Company’s monetary statements. In addition, they’re topic to inherent limitations as they replicate the train of judgment by administration about which expense and earnings gadgets are excluded or included in figuring out these non-GAAP monetary measures.
Management makes use of EBITDA and adjusted EBITDA as a non-GAAP efficiency measure which is outlined within the accompanying tables and is reconciled to earnings (loss) earlier than taxes.
We current reconciliations of those non-GAAP monetary measures to essentially the most instantly comparable GAAP measure within the tables above.
Conference Call / Webcast Information
BigBear.ai will host its earnings outcomes convention name and audio webcast (listen-only mode) on Tuesday, August 9, 2022 at 5:00 p.m. ET. The earnings convention name might be accessed by calling 877-485-3107 (toll-free) or 201-689-8427 (toll). The listen-only audio webcast of the decision shall be obtainable on the BigBear.ai Investor Relations web site: https://ir.bigbear.ai. For those that are unable to hearken to the reside occasion, a replay shall be obtainable for 2 weeks following the occasion by dialing 877-660-6853 (toll-free) or 201-612-7415 (toll) and getting into the entry code 13730749. To entry the webcast replay, go to https://ir.bigbear.ai.
About BigBear.ai
BigBear.ai delivers AI-powered analytics and cyber engineering options to assist mission-critical operations and decision-making in complicated, real-world environments. BigBear.ai’s clients, which embrace the US Intelligence Community, Department of Defense, the US Federal Government, in addition to clients in manufacturing, healthcare, business area, and different sectors, depend on BigBear.ai’s options to see and form their world via dependable, predictive insights and goal-oriented recommendation. Headquartered in Columbia, Maryland, BigBear.ai is a worldwide, public firm traded on the NYSE beneath the image BBAI. For extra data, please go to: http://bigbear.ai/ and observe BigBear.ai on Twitter: @BigBearai.
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