Revenue up 32.2% to $3.4 billion from Calendar Year 2009,adjusted for the deconsolidation of the Global Linguist Solutions(“GLS”) joint venture. Reported revenue up 11.1%.
- Net Loss attributable to Delta Tucker Holdings, Inc. of ($5.3)million, down $79.3 million from Calendar Year 2009, driven byMerger related expenses.
- Adjusted EBITDA of $219.7 million, down $28.5 million fromCalendar Year 2009.
- Funded Backlog of $1,824 million, up 20.0% since closing of theMerger with affiliates of Cerberus Capital Management.
- $50 million debt reduction in March 2011.
Falls Church, Va. – March 30, 2011 – DeltaTucker Holdings, Inc. (“Holdings”), the parent of DynCorpInternational Inc. (“DI”, and together with Holdings, the”Company”), a global government services provider supporting U.S.national security and foreign policy objectives, today reportedfourth quarter and calendar year 2010 financial results, withadjusted annual revenue up 32.2% from calendar year 2009.
On July 7, 2010, DI completed a merger with an affiliate ofCerberus Capital Management, L.P. (the “Merger”), with DI as thesurviving corporation. Upon completion of the Merger, DI became awholly-owned subsidiary of Holdings. On December 16, 2010, theCompany’s board of directors approved a change in its fiscal yearend, which previously ended on the Friday closest to March 31, toconform to the calendar year. This created a nine-monthtransition period, which began on April 1, 2010 (date of inceptionof Holdings) and ended on December 31, 2010. For the benefitof the Company’s investors, comparisons of DynCorp International’sCalendar Year 2009 and the combined Company’s Calendar Year 2010are discussed below and included in the financial schedulesaccompanying this release.
“I am extremely proud of what the team accomplished in 2010. Wereorganized the business to better align ourselves with the marketswe serve, improved our cost structure, simplified our organization,and reduced reporting layers, delivering approximately $27 millionof gross savings, of which $9 million will increase ourprofitability in 2011,” said Steve Gaffney, DynCorp InternationalChairman and CEO.
“I am confident that the work we have done to reorganize, tocontinue our outstanding work on existing contracts, and to focuson capturing new business opportunities has positioned us for asuccessful year ahead.”
Fourth Quarter Calendar Year 2010Highlights
In December 2010, DI was awarded the NATO TrainingMission-Afghanistan (NTM-A) contract by the U.S. Army, theDepartment of Defense follow-on contract to the civilian policetraining work that the Company performs under our CivPol contractin Afghanistan with the Department of State. The total value forthis thirty-six month contract is approximately $1.0 billion.
In December 2010, DI was notified of the award feedetermination on the Logistics Civil Augmentation Program (“LOGCAPIV”) contract related to operations in Kuwait and Afghanistan.Profit for the quarter benefited $3.7 million from the Afghanistanaward, which represented the period of performance from the startof the contract through December 2010.
In December 2010 and January 2011, DI received tax refundsfrom the Internal Revenue Service in the amounts of $34.1 millionand $46.0 million, respectively. The combined $80.1 million, $5.5million higher than expected, related to an approved change inaccounting method.
In October 2010, DI’s partner for its Global LinguistSolutions (GLS) joint venture contributed its share of workingcapital to the JV, which allowed GLS to extinguish its note payableto DI. As such, GLS ceased to be a guarantor on any of theCompany’s debt.
Summary of Fourth Quarter Calendar Year 2010 OperatingResults
Revenue of $856.7 million was up 16.3% from thecomparable prior year quarter, adjusted for the deconsolidation ofGLS upon the completion of the Merger, which recorded $177.5million of revenue for the fourth quarter of Calendar Year 2009.Revenue gains were driven by the Contingency Operations business,primarily from LOGCAP IV operations, which produced revenue of$379.1 million, doubling revenues recorded in the fourth quarter ofCalendar Year 2009. Additionally, revenues in the period grew fromincreased demand for secure aviation transport in Iraq, volumegains from the contract to provide aircraft maintenance support atSheppard Air Force Base, and contributions from the acquisitions ofthe Phoenix Consulting Group, Inc. and Casals & Associates,Inc.
Partially offsetting the increase were the completion of certaintask orders from the Company’s Training, Mentoring and Securitycontracts, lower volume on Mine Resistant Ambush Protected (MRAP)vehicle work and the loss of the Life Cycle Contractor Support(LCCS) contract.
Net income attributable to Delta Tucker Holdings, Inc. of $0.6million, represents a decrease of $18.4 million from the comparableperiod in Calendar Year 2009, primarily due to revenue mix, higherlegal expenses, increased amortization of intangibles resultingfrom the Merger and higher interest expenses associated with theCompany’s new debt. In addition, increased volume from DI’s LOGCAPIV business, which produces lower margins, did not offset lowerprofit levels in our MRAP program as that program transitions to anoperations and maintenance phase, or the completion of certainprofitable task orders in our Training, Mentoring & Securitybusiness.
Adjusted EBITDA of $46.8 million for the fourth quarter ofCalendar Year 2010 decreased $10.3 million from the comparableperiod in 2009, primarily due to previously-described factors.
Summary of Calendar Year 2010 Operating Results
Revenue for the year ended December 31, 2010 was $3.4billion, up 32.2% from the comparable period in 2009, adjusted forthe deconsolidation of GLS, which recorded $309.1 million and$764.6 million of revenue in Calendar Year 2010 and 2009,respectively.
Revenue gains were driven by DI’s Contingency Operationsbusiness, primarily from LOGCAP IV operations, which producedrevenue of $1,356.7 million, up $1,002.9 million from Calendar Year2009. Additionally, increased demand for secure aviation transportin Iraq and Afghanistan, coupled with the contract win to provideaircraft maintenance support at Sheppard Air Force Base, andcontributions from the acquisitions of the Phoenix ConsultingGroup, Inc. and Casals & Associates, Inc. added to revenuegrowth.
Partially offsetting the increase were lower volumes in theTraining, Mentoring and Security business, the loss of the LCCScontract and the Army Pre-positioned Stocks Program (APS3), reduceddemand on MRAP contracts and the completion of certain ContractField Team (CFT) task orders.
Net Loss attributable to Delta Tucker Holdings, Inc. of ($5.4)million decreased $79.3 million from Calendar Year 2009 primarilydue to revenue mix, higher legal expenses, Merger expenses,increased amortization of intangibles resulting from the Merger andhigher interest expense associated with new debt.
Additionally, increased volume from LOGCAP IV, which produceslower margins, did not offset lower profit levels in the MRAPprogram and CFT business. The completion of certain profitable taskorders in the Training, Mentoring & Security business alsoreduced profitability. This was partially offset by higher awardscores on DI’s War Reserve Materiel (WRM) contract and thefavorable settlement of a claim associated with LCCS.
Adjusted EBITDA of $219.7 million for Calendar Year 2010,decreased $28.5 million from the comparable period in 2009 due tothe factors described above. This decline was partially offset bylabor efficiencies of $6.3 million.
“Our initial LOGCAP award fee score was not where weanticipated, which impacted income for the quarter,” said BillKansky, SVP and Chief Financial Officer. “I am, however, pleasedwith the progress the team has made and in fact this week wereceived the second award fee determination, which was much higherthan the first score.”
Total funded backlog as of December 31, 2010 was $1.8 billion,an increase of $364 million since the Merger. This increase wasprimarily driven by new or modified task and delivery orders on theLOGCAP IV program. Partially offsetting this increase was the lossof the LCCS program.
Cash From Operating Activities (CFOA) provided $69.5 million inCalendar Year 2010, compared to $86.2 million of CFOA for CalendarYear 2009. The decline was driven by $63.1 million of Merger costsand higher interest cost of $16.8 million, due to higherpost-Merger debt, partially offset by $28.8 million from net taxrefunds and a decline in working capital.
The Company will host a conference call at 9:00 a.m. EDTon Wednesday, March 30, 2011 to discuss results for the year-endedDecember 31, 2010.
To participate in the conference call, dial (866) 871-0758 andenter the conference ID number: 52664207. International callersshould dial (706) 634-5249 and enter the same conference ID numberabove. A telephonic replay will be available from 1:00 p.m. EDT onMarch 30th, 2011 through 11:59 p.m. EDT April 30, 2011. To accessthe replay, please dial (800) 642-1687 or (706) 645-9291 and enterthe conference ID number.
About DynCorp International
DynCorp International Inc., a wholly owned subsidiary ofDelta Tucker Holdings, Inc., is a global government servicesprovider in support of U.S. national security and foreign policyobjectives, delivering support solutions for defense, diplomacy,and international development. DynCorp International operates majorprograms in logistics, platform support, contingency operations,and training and mentoring to reinforce security, communitystability, and the rule of law. DynCorp International isheadquartered in Falls Church, Va. For more information, visit www.dyn-intl.com.
Reconciliation to GAAP
In addition to the Company’s financial results reportedin accordance with accounting principles generally accepted in theUnited States of America (“GAAP”) included in this press release,the Company has provided certain financial measures that are notcalculated according to GAAP. Management believes these non-GAAPfinancial measures are useful in evaluating operating performanceand are regularly used by security analysts, institutionalinvestors and other interested parties in reviewing the Company.Non-GAAP financial measures are not intended to be a substitute forany GAAP financial measure and, as calculated, may not becomparable to other similarly titled measures of the performance ofother companies.
For a reconciliation of non-GAAP financial measures to thecomparable GAAP financial measures please see the financialschedules accompanying this release.
Certain statements made in this announcement mayconstitute “forward-looking statements” within the meaning of thePrivate Securities Litigation Reform Act of 1995, regarding theexpectations of management with respect to revenue andprofitability. All of these forward-looking statements are based onestimates and assumptions made by the Company’s management that,although believed by the Company to be reasonable, are inherentlyuncertain. Forward-looking statements involve risks anduncertainties, including, but not limited to, economic,competitive, governmental, and technological factors outside of theCompany’s control that may cause its business, strategy or actualresults or events to differ materially from the statements madeherein. These risks and uncertainties may include, but are notlimited to, the following: the future impact of mergers (includingthe Merger with affiliates of Cerberus Capital Management L.P.which was completed on July 7, 2010), acquisitions, joint venturesor teaming agreements; our substantial level of indebtedness andchanges in availability of capital and cost of capital; the outcomeof any material litigation, government investigation, audit orother regulatory matters; policy and/or spending changesimplemented by the Obama Administration, any subsequentadministration or Congress; termination or modification of keyUnited States (“U.S.”) government or commercial contracts,including subcontracts; changes in the demand for services that weprovide or work awarded under our contracts, including withoutlimitation, the CivPol, INL Air Wing, WPPS and LOGCAP IV contracts;pursuit of new commercial business in the U.S. and abroad;activities of competitors and the outcome of bid protests; changesin significant operating expenses; impact of lower than expectedwin rates for new business; general political, economic, regulatoryand business conditions in the U.S. or in other countries in whichwe operate; acts of war or terrorist activities; variations inperformance of financial markets; the inherent difficulties ofestimating future contract revenue and changes in anticipatedrevenue from indefinite delivery, indefinite quantitycontracts; the timing or magnitude of any award fee grantedunder our government contracts, including, but not limited to,LOGCAP IV; changes in expected percentages of future revenuerepresented by fixed-price and time-and-materials contracts; lowerthan anticipated award fee determinations by the U.S. government;and other risks detailed from time to time in the Company’sfinancial statements and reports to investors posted on itswebsite. Given these risks and uncertainties, you are cautioned notto place undue reliance on forward-looking statements. TheCompany’s actual results could differ materially from thosecontained in the forward-looking statements. The Company undertakesno obligation to publicly update or revise any forward-lookingstatement as a result of new information, future events orotherwise, except as required by law.
Vice President and Treasurer