Revenue of $918.7 million up 15.5% from second quarter 2010,adjusted for the deconsolidation of the Global Linguist Solutions(“GLS”) joint venture. Reported revenue down $26.0 million.
Net Income attributable to Delta Tucker Holdings, Inc. of $3.3million.
Adjusted EBITDA of $43.9 million.
Falls Church, Va. (August 15, 2011) – DeltaTucker Holdings, Inc. (“Holdings”), the parent of DynCorpInternational Inc. (“DI”, and together with Holdings, the”Company”), today reported 2011 second quarter revenue of $918.7million, up $123.3 million or 15.5% from the same quarter in 2010,adjusted for the deconsolidation of GLS, which recorded $149.3million of revenue during that quarter. The revenue increase wasdriven primarily from:
Strength in the Logistics Civil Augmentation Program (“LOGCAPIV”) contract under the Contingency Operations Business Area Team(“BAT”)
Volume increases in the Bureau of International Narcotics andLaw Enforcement Affairs (“INL”) Air Wing contract with the U.S.Department of State (“DoS”) under our Air Operations BAT and
The Combined Security Transition Command- Afghanistan(“CSTC-A”) contract to support the development of the AfghanistanMinistry of Defense that began in the third quarter 2010 under ourTraining and Mentoring BAT.
These increases were partially offset by the loss of the LifeCycle Contract Support (“LCCS”) Army and Navy contracts in theAviation BAT, the completion of the African Peacekeeping (“APK”)task order in Somalia under the Contingency Operations BAT andlower volume on the Mine Resistant Ambush Protected Vehicle(“MRAP”) program under the Operations and Maintenance BAT.
Net income attributable to Holdings was $3.3 million,representing an increase of $35.6 million over 2010, primarilydriven by non-recurring Merger related expenses in the secondquarter of 2010. Excluding these charges, net income attributableto Holdings would have been down $9.5 million, primarilyattributable to higher depreciation and amortization expense aswell as higher interest expense related to the Company’s newdebt.
Adjusted EBITDA for second quarter 2011 was $43.9 million or$8.6 million lower than the $52.5 million recorded for thecomparable period in 2010, a 16.4% decrease. Lower volume andprofitability under our MRAP contract as it moves to sustainmentphase, the transition from our CivPol-Afghanistan task order to thenew ANP MOI Development Program (“AMDP”) which carries lowermargins, coupled with an investment made in the power generationmarket and costs incurred to settle a customer matter contributedto the decrease. These factors were partially offset by increasedbusiness and profitability under our INL Air Wing and LOGCAP IVprograms.
Backlog of $3.9B was down $359.7 million sequentially from firstquarter 2011 due to timing of order patterns. The company hasalready booked over $2.5 billion in new orders for third quarter2011.
“This has been an extremely encouraging quarter with key winsacross the company,” said Steven F. Gaffney, DynCorp Internationalchairman and chief executive officer. “This diverse mix of contractawards – from Training and Mentoring to Contingency Operations toour Global Linguist Solutions joint venture – is evidence that theprocess improvement journey we have been on over the last severalquarters is making a difference. I’m pleased with what the team hasaccomplished and look forward to continued growth ahead.”
Second Quarter 2011 Highlights
In May and June of 2011, DI was awarded four new task ordersby the U.S. Air Force under the Air Force Contract AugmentationProgram (“AFCAP III”). Three of the task orders have a one yearbase and one option year, and the fourth has a one year base andtwo option years; the total value for all task orders if all optionyears are exercised is $48.4 million.
On May 10, 2011, DI was selected by INL as one of sevenproviders on the Criminal Justice Program Support contract. Themultiple-award, indefinite delivery / indefinite quantity (IDIQ)contract has one base year with four option years and a total valueof $10 billion across all providers. DI will compete with fourother providers for task orders to support criminal justice sectordevelopment programs worldwide, providing advisors, otherspecialists, and life and mission support services.
On July 1, 2011, GLS was awarded, by the Department of theArmy, a multiple-award IDIQ hybrid contract. GLS will be one of sixproviders that will compete for task orders on the $9.7 billionDefense Language Interpretation Translation Enterprise (“DLITE”)contract providing translation and interpretation services for Armypersonnel, among other services. GLS has provided translation andinterpretation services to the U.S. Army in Iraq and other areas inthe Gulf Region since 2008. The DLITE contract will covertranslation services worldwide.
Global Stabilization and Development Solutions (“GSDS”)Second Quarter Highlights:
GSDS segment revenue of $598.2 million, which represents 65.1%of our total revenue for the three months ended July 1, 2011,increased of 25.1% over the second quarter 2010. GSDS reportedadjusted EBITDA of $18.3 million for the second quarter, a decreaseof $4.6 million from the comparable period in 2010. The performancewas primarily driven by the following:
Contingency Operations – $417.1 million in Revenue:
Strong continued growth from the LOGCAP IV program with a$117.5 million, or 41.4%, revenue increase from second quarter 2010and improved margins based on the increased award fee scoresannounced in first quarter 2011.
The AFCAP base operations contract contributed to revenuegrowth offset by the completion of the APK Somalia task order.Adjusted EBITDA was negatively impacted by an investment made inthe power generation market.
Training and Mentoring–$156.0 million in Revenue:
The revenue increase from the new AMDP contract was offset bylower volume under the CivPol-Afghanistan Civilian Advisor Support(“ACAS”) task order. The AMDP contract offers lower margins thanACAS contract and combined to provide lower adjusted EBITDA.Continued operations under the CSTC-A and Multinational SecurityTraining Command-Iraq (“MNSTC-I”) contracts positively impactedboth revenue and adjusted EBITDA compared to second quarter 2010,but were partially offset by lower volume on the CivPol- Iraq taskorder.
Security Services– $12.9 million in Revenue:
Both revenue and adjusted EBITDA were negatively impactedunder the Security Services BAT with the completion of the Qatarsecurity guard contract in late 2010 and reduced demand under theWorldwide Personal Protective Services (“WPPS”) business.
Intelligence Training and Solutions– $8.4 million inRevenue:
Both revenue and adjusted EBITDA were down slightly in secondquarter 2011 versus 2010 based on lower demand for trainingservices.
Global Platform Support Solutions (“GPSS”) SecondQuarter Highlights:
GPSS segment revenue of $317.9 million, which represents 34.6%of our total revenue for the three months ended July 1, 2011, flatto second quarter 2010. GPSS also reported adjusted EBITDA of $24.3million for the second quarter 2011, an 8.1% increase from thecomparable period in 2010. The results were primarily driven by thefollowing:
Aviation–$156.7 million in Revenue:
Revenue was negatively impacted by the loss of the LCCS-Armycontract in late 2010 and the LCCS-Navy contract in first quarter2011, partially offset by performance under the Contract FieldTeams-Fort Campbell and Patuxent River contracts, the Saudi ArabiaMSS contract as well as volume under the Counter-NarcoterrorismTechnology Program Office (“CNTPO”) contract.
Air Operations—$113.1 million in Revenue:
Both Revenue and adjusted EBITDA were positively impacted bycontributions from our INLAir Wing program due to demand for secureaviation transport in Iraq and Afghanistan through DoS, partiallyoffset by lower demand under our WPPS aviation services businesscompared to second quarter of 2010.
Operations and Maintenance–$48.3 million inRevenue:
Revenue and adjusted EBITDA were negatively impacted in thesecond quarter of 2011, compared to the second quarter of 2010,primarily driven by lower volume and profitability under the MRAPprogram as it moves into a sustainment mode.
Global Linguist Solutions (GLS) Second QuarterHighlights:
Adjusted EBITDA of $3.2 million for the second quarter of 2011was down $1.6 million from the comparable quarter in 2010 driven bya reduction in deployed linguists in support of U.S. troop levelsin Iraq, which has trended lower during the past year.
Cash From Operating Activities of $50.3 million for thesecond quarter of 2011 benefited from a seven day reduction in DaysSales Outstanding from 86 days in first quarter 2011 to 79 days insecond quarter 2011, and an $18.0 million reduction in RestrictedCash. This benefit was partially offset by a reduction in ourAccounts Payable and Accruals.
The Company will host a conference call at 10:00 a.m. EDTon Monday August 15, 2011 to discuss results for the second quarter2011. The call may be accessed by webcast or through a dial-inconference line.
To access the webcast and view the accompanying presentation,please go to http://www.dyn-intl.com/, clickon “Investor Relations” and “Events & Presentations.” Please goto the site approximately fifteen minutes prior to the start of thecall to register, download and install any necessary audiosoftware.
To participate by phone, dial (866) 871-0758 and enter theconference ID number: 88783157. International callers should dial(706) 634-5249 and enter the same conference ID number above.
A telephonic replay will be available from 1:00 p.m. EDT onAugust 15, 2011 through 11:59 PM EDT September 15, 2011. To accessthe replay, please dial (855) 859-2056 or (404) 537-3406 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 http://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. We define EBITDA as GAAP net incomeattributable to the Company adjusted for interest, taxes,depreciation and amortization. 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 such as EBITDA and Adjusted EBITDA arenot intended to be a substitute for any GAAP financial measure and,as calculated, may not be comparable to other similarly titledmeasures of the performance of other companies. We believe thatAdjusted EBITDA is useful in assessing our ability to generate cashto cover our debt obligations including interest and principalpayments. As such, we add back certain noncash items fromoperations and certain other items as defined in our 10.375% SeniorUnsecured Notes and our Credit Facility. Non-GAAP financialmeasures are not intended to be a substitute for any GAAP financialmeasure and, as calculated, may not be comparable to othersimilarly titled measures of the performance of othercompanies.
For a reconciliation of non-GAAP financial measures to thecomparable GAAP financial measures please see the financialschedules accompanying this release.
This announcement may contain forward-looking statementsregarding future events and our future results that are subject tothe safe harbors created under the Securities Act of 1933 (the”Securities Act”) and the Securities Exchange Act of 1934 (the”Exchange Act”). Without limiting the foregoing, the words”believes,” “thinks,” “anticipates,” “plans,” “expects” and similarexpressions are intended to identify forward-looking statements.Forward-looking statements involve risks and uncertainties.Statements regarding the amount of our backlog and estimated totalcontract values are other examples of forward-looking statements.We caution that these statements are further qualified by importanteconomic, competitive, governmental, international andtechnological factors that could cause our business, strategy,projections or actual results or events to differ materially, orotherwise, from those in the forward-looking statements. Thesefactors, risks and uncertainties include, among others, thefollowing: the future impact of mergers acquisitions, jointventures or teaming agreements; our substantial level ofindebtedness and changes in availability of capital and cost ofcapital; the outcome of any material litigation, governmentinvestigation, audit or other regulatory matters; policy and/orspending changes implemented by the Obama Administration, anysubsequent administration or Congress; termination or modificationof key United 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 Civilian Police, International Narcotics and LawEnforcement, Worldwide Personal Protection Services and LogisticsCivil Augmentation Program (“LOGCAP IV”) contracts; pursuit of newcommercial business in the U.S. and abroad; activities ofcompetitors and the outcome of bid protests; changes in significantoperating expenses; impact of lower than expected win rates for newbusiness; general political, economic, regulatory and businessconditions in the U.S. or in other countries in which we operate;acts of war or terrorist activities; variations in performance offinancial markets; the inherent difficulties of estimating futurecontract revenue and changes in anticipated revenue from indefinitedelivery, indefinite quantity contracts; the timing or magnitude ofany award fee granted under our government contracts, including,but not limited to, LOGCAP IV; changes in expected percentages offuture revenue represented by fixed-price and time-and-materialscontracts, including increased competition with respect to taskorders subject to such contracts; termination or modification ofkey subcontractor performance or delivery; statements covering ourbusiness strategy, those described in “Risk Factors” and otherrisks detailed from time to time in our reports filed with the SEC;and other risks detailed from time to time in our reports posted toour website or made available publicly through other means.
Accordingly, such forward-looking statements do not purport tobe predictions of future events or circumstances and therefore,there can be no assurance that any forward-looking statementcontained herein will prove to be accurate. We assume no obligationto update the forward-looking statements. Given these risks anduncertainties, you are cautioned not to place undue reliance onforward-looking st
tements. The Company’s actual results coulddiffer materially from those contained in the forward-lookingstatements.
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