- Revenue of $961.1 million, up 4.6% from second quarter2011
- Net income attributable to Delta Tucker Holdings, Inc. of $9.0million, up $5.7 million from second quarter 2011
- Adjusted EBITDA of $51.8 million, up 18.1% or $8.0 million fromsecond quarter 2011
- Total Backlog of $5.2 billion
FALLS CHURCH, Va. – (August 13, 2012) – DeltaTucker Holdings, Inc. (“Holdings”), the parent of DynCorpInternational Inc. (“DI”, and together with Holdings, the”Company”), a global government services provider supportingnational security and foreign policy objectives, today reportedsecond quarter 2012 operational results with revenue of $961.1million, an increase of 4.6% over second quarter 2011. Net incomeattributable to Holdings was $9.0 million for the quarter,representing a 170% increase from the reported $3.3 million in netincome attributable to Holdings in second quarter 2011.
“Our wins in Aviation and Global Logistics and DevelopmentSolutions groups were particular bright spots this quarter,” saidSteve Gaffney, chairman and chief executive officer, DynCorpInternational. “Not only did we reaffirm our position in thePhilippines, and further strengthen our relationship with the AirForce through several new programs, but we recaptured an importantposition in support of the 160th Special Operations AviationRegiment at Fort Campbell. Even amid significant challenges for ourindustry, this team is strong and thriving.”
Second Quarter and Other Recent Highlights
- In April 2012, DI was awarded a contract with NationalAeronautics and Space Administration (“NASA”) to provide aircraftmaintenance and operational support services at various locations.The contract will include work at Ellington Field at NASA’s JohnsonSpace Center in Houston; NASA’s Langley Research Center in Hampton,Virginia; NASA facilities in El Paso, Texas, and Edwards Air ForceBase, California; and other locations worldwide as required. Thefixed-price-award-fee/cost-plus-award-fee contract has a $46.6million base contract, beginning June 1 for one year and fourmonths, with two two-year option periods, with a total value of$176.9 million if all options are exercised.
- In May 2012, DI won a task order from the U.S. Air Force underthe Contract Field Teams (“CFT”) contract vehicle to provideaircraft maintenance support at Robins Air Force Base in Georgia.DI was the sole awardee for this IDIQ contract which has one baseyear and one option year and a total potential contract value of$92.6 million.
- In June 2012, the Naval Facilities Engineering Command-Pacificawarded DI a contract to provide operations support services withinthe Joint Operation Area and Manila, Republic of the Philippines.The cost-plus-award fee contract has a base year and four optionyears with a total potential contract value of $198 million.
- In June 2012, DI was awarded a contract with the U.S. Air ForceMateriel Command to provide support services for T-6A and T-6Baircraft at several Air Force and Navy locations throughout theU.S. The firm-fixed price contract has one base year, one optionyear and a total potential contract value of $432 million.
- In June 2012, DI received a task order with the U.S. ArmySpecial Operations Command (“USASOAC”) under the CFT contract toprovide aviation support to the 160th Special Operations AviationRegiment – Airborne at Fort Campbell, Kentucky. The IDIQ contracthas an eight month base period, two one-year options and a totalpotential contract value of $54.5 million.
Summary Operating Results
Revenue for the second quarter of $961.1 million was up 4.6%from the same quarter in 2011 based on: new contract wins withinthe Aviation Group along with continued strong demand under theDepartment of State Bureau for International Narcotics and LawEnforcement Affairs (“INL”) -Air Wing contract primarily due tosecure air transportation services in Iraq and Afghanistan andconstruction services in Iraq; continued growth under the Logisticsand Civil Augmentation Program (“LOGCAP”) IV contract; performanceof new contracts under the Security Services Group; the ramp-up ofthe Oshkosh Defense contract under Global Logistics &Development Solutions (“GLDS”); and increased volume under theAfghanistan Ministry of Defense Program (“AMDP”). Revenue growth inthe quarter was partially offset by lower volume under theInternational Civilian Police Program (“CivPol”) in both Iraq andAfghanistan, and the completion of the Multinational SecurityTransition Command-Iraq (“MNSTC-I”) contract.
Second quarter net income attributable to Holdings was $9.0million compared to $3.3 million reported in the comparable periodin 2011. The change in net income attributable to Holdings was dueprimarily to revenue growth noted above with higher operatingmargins, primarily relating to the Aviation and GLDS Groups, andlower interest expense as a result of the $151.3 million in debtthe Company retired during 2011. These benefits were partiallyoffset by lower profitability driven by the mix of increasedbusiness under the AMDP contract and lower demand under the CivPolcontract as the AMDP contract carries lower margins based on itscost responsive nature and lack of fee on certain other directcosts. Additionally, the Company recorded lower earnings fromequity method investees related to the GLS joint venture.
Adjusted EBITDA for second quarter 2012 was $51.8 million or$8.0 million higher than the comparable period in 2011 primarilydue to the net income items discussed above and the impact ofhigher cash received from unconsolidated affiliates.
“I am pleased to report the Company exceeded its internalrevenue and earnings plan this quarter, with the Aviation Groupleading the way. Aviation’s recent wins, coupled with productivitygains on their fixed price contracts, drove margin expansion in thequarter,” said Bill Kansky, chief financial officer. “We are alsoexcited about a small acquisition that occurred just after thequarter. The acquisition of Heliworks LLC adds commercial aviation,and maintenance, repair and overhaul (MRO) capabilities to thealready robust and longstanding aviation expertise offered in theDynCorp International portfolio.”
Reportable Segments Results:
Revenue of $417.5 million increased $15.5 million, or 3.9%,during the three months ended June 29, 2012, compared to the threemonths ended July 1, 2011, primarily as a result of continuedincreased demand for services under the Afghanistan task order.During the quarter DI received award fee determination letters thatwere, in the aggregate, higher than previous estimates and resultedin an aggregate adjustment to revenue of $2.0 million for thequarter.
Adjusted EBITDA of $10.6 million increased $0.7 million, or7.5%, for the three months ended June 29, 2012, compared with thethree months ended July 1, 2011, as a result of the increase involume discussed above. As a percentage of revenue, Adjusted EBITDAwas relatively flat at 2.5%, for the second quarter of 2012compared to the second quarter of 2011.
Revenue of $313.2 million increased $43.4 million, or 16.1%,during the three months ended June 29, 2012, compared to the threemonths ended July 1, 2011. The change was primarily the result ofan increase in demand under the INL Air Wing program forintra-theater transportation services in Iraq and Afghanistan andconstruction services in Iraq and growth under theCounter-Narcoterrorism Technology Program Office (“CNTPO”)contract. Operations under the new Naval Test Wing Patuxent RiverMD (“Pax River”) contract and the new task orders under the CFTprogram, including the Regional Aviation Support Management-West(“RASM-W”), Fort Drum and NASA Amos contracts, also contributed tothe increase in revenue for the three months ended June 29,2012.
Adjusted EBITDA of $29.2 million increased $9.5 million, or48.4%, during the three months ended June 29, 2012, compared to thethree months ended July 1, 2011, primarily as a result of theincreased volume discussed above, including new contracts, andimproved performance under the CNTPO program. The new contracts arealso operating at higher margins relative to the overall contractmix in the prior year which is the primary driver of the increasein Adjusted EBITDA as a percentage of revenue to 9.3% for the threemonths ended June 29, 2012, from 7.3% for the three months endedJuly 1, 2011.
Training and IntelligenceSolutions
Revenue of $132.3 million decreased $29.3 million, or 18.1%,during the three months ended June 29, 2012, compared to the threemonths ended July 1, 2011. The decrease was primarily driven by theramp-down of operations under the CivPol program and the loss ofrevenue from the MNSTC-I program, which concluded during calendaryear 2011. The decrease in revenue was partially offset byincreased volume under the AMDP program which was fully operationalbeginning in the third quarter of 2011.
Adjusted EBITDA of $4.7 million decreased $5.8 million, or55.3%, during the three months ended June 29, 2012, compared to thethree months ended July 1, 2011, primarily as a result of thedecreases in volume discussed above partially offset by increasedvolume under the AMDP program for the three months ended June 29,2012. The replacement of the CivPol Afghanistan program with theAMDP program, which operates at lower margins due to acost-reimbursable contract structure that does not provide for feeson certain components, drove the decrease in Adjusted EBITDA as apercentage of revenue to 3.6% for the second quarter 2012 from 6.5%for the second quarter 2011.
Global Logistics & DevelopmentSolutions
Revenue of $70.7 million decreased $2.9 million, or 3.9%, duringthe three months ended June 29, 2012, compared to the three monthsended July 1, 2011, primarily as a result of the completion ofseveral contracts during calendar year 2011 under the subsidiaryCasals & Associates, Inc. and the Air Force ContractAugmentation Program (“AFCAP”) contract. The decrease in revenuewas partially offset by operations under the Egyptian PersonnelSupport Services (“EPSS”) contract, which began in May 2012, andrevenue growth under the Oshkosh Defense and War Reserve Materiel(“WRM”) programs.
Adjusted EBITDA of $7.0 million increased $3.9 million, or126.0%, during the second quarter of 2012 compared to the secondquarter 2011. During the three months ended July 1, 2011 AdjustedEBITDA was impacted by a non-recurring contract loss incurred tostrategically enter into to service areas within Afghanistan.Adjusted EBITDA was also positively impacted during the threemonths ended June 29, 2012, by the new operations under the EPSScontract as well as improved margin performance under the OshkoshDefense and WRM programs. These margin improvements also drove theincrease in Adjusted EBITDA as a percentage of revenue to 9.9% forthe three months ended June 29, 2012, from 4.2% for the threemonths ended July 1, 2011.
Revenue of $27.4 million increased $14.5 million, or 112.7%,during the three months ended June 29, 2012, compared to the threemonths ended July 1, 2011, primarily as a result of the replacementof the Worldwide Personal Protection Program (“WPPS”) with thehigher volume Worldwide Protective Services (“WPS”) program duringcalendar year 2011, and the addition of the Chemonics and Bondsteelcontracts, which became operational during the first quarter of2012.
Adjusted EBITDA loss of $1.5 million for three months ended June29, 2012, as compared to Adjusted EBITDA of $0.8 million for thethree months ended July 1, 2011, was primarily due to general andadministrative expenses incurred during the period.
Cash provided by operating activities during the six monthsended June 29, 2012 was $52.8 million as compared to cash providedby operating activities of $76.2 million during the six monthsended July 1, 2011. On a comparative basis, cash flow fromoperations during the six months ended June 29, 2012 was lower thanthe six months ended July 1, 2011 due to the non-recurring incometax refund received during the first quarter of calendar year 2011.Cash provided by operations for the six months ended June 29, 2012was primarily the result of the release of restricted cash, theutilization of prepaid expenses and the increase in accountspayable partially offset by the growth in revenue out-pacingcollections on our accounts receivable. Cash provided by operatingactivities during the six months ended July 1, 2011 was primarilydue to $48.0 million in income tax refunds received in the firstquarter of calendar year 2011 related to the approved Change inAccounting Methodology (“CIAM”) with the Internal Revenue Service(“IRS”).
DSO for the quarter increased six days from first quarter endedMarch 30, 2012, primarily as a result of a LOGCAP IV receipt thatcame in on the first day of the third quarter in 2012.
The cash balance at the end of the quarter was $77.6 millionafter the Company made a $30 million voluntary principal payment onits secured term loan. The Company did not have any borrowingsunder its revolving credit facility at quarter end.
The Company will host a conference call at 10:00 a.m. EDT onMonday August 13, 2012, to discuss results for second quarter 2012.The call may be accessed by webcast or through a dial-in conferenceline.
To access the webcast and view the accompanying presentation,please go to www.dyn-intl.com, click on”Investor Relations” and “Events & Presentations.” Please go tothe 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: 15048107. International callers should dial(706) 634-5249 and enter the same conference ID number above. Atelephonic replay will be available from 1:00 p.m. EDT on August13, 2012, through 11:59 PM EDT September 13, 2012. To access thereplay, please dial (855) 859-2056 or (404) 537-3406 and enter theconference ID number.
About DynCorp International
DynCorp International Inc., a wholly owned subsidiary of DeltaTucker Holdings, Inc., is a global government services providerworking 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 reported inaccordance 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, including EBITDA and Adjusted EBITDA.We define EBITDA as GAAP net income attributable to the CompanyAdjusted for interest, taxes, depreciation and amortization.Adjusted EBITDA is calculated by adjusting EBITDA for certainnoncash items from operations and certain other items as defined inour 10.375% Senior Unsecured Notes and our Credit Facility.Management believes these non-GAAP financial measures are useful inevaluating operating performance and are regularly used by securityanalysts, institutional investors and other interested parties inreviewing the Company. We believe that Adjusted EBITDA is useful inassessing our ability to generate cash to cover our debtobligations including interest and principal payments. Non-GAAPfinancial measures, such as EBITDA and Adjusted EBITDA are notintended to be a substitute for any GAAP financial measure a
d, ascalculated, may not be comparable to other similarly titledmeasures of the performance of other companies.
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 by the Private Securities LitigationReform Act of 1995 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, estimated totalcontract values, and 2012 outlook are other examples offorward-looking statements. We caution that these statements arefurther qualified by important economic, competitive, governmental,international and technological factors that could cause ourbusiness, strategy, projections or actual results or events todiffer materially, or otherwise, from those in the forward-lookingstatements. These factors, risks and uncertainties include, amongothers, the following: the future impact of mergers acquisitions,joint ventures or teaming agreements; our substantial level ofindebtedness and changes in availability of capital and cost ofcapital; our dependence on customers within the defense industryand business risks related to that industry, including changingpriorities or reductions in the annual U.S. Department of Defense(“DoD”) budgets and the outcome of potential additional reductionsdue to the sequestration process; the outcome of any materiallitigation, government investigation, government audit or otherregulatory matters; policy and/or spending changes implemented bythe Obama Administration, any subsequent administration orCongress; termination or modification of key U.S. government orcommercial contracts, including subcontracts; changes in the demandfor services that we provide or work awarded under our contracts,including without limitation, the Civilian Police, InternationalNarcotics and Law Enforcement, Worldwide Personal ProtectionServices and LOGCAP IV contracts; changes in the demand forservices provided by our joint venture partners; 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; and statements coveringour business strategy, those described in “Risk Factors” in ourAnnual Report on Form 10-K for the year ended December 30, 2011filed with the SEC on April 9, 2012 and other risks detailed fromtime to time in our reports filed with the SEC and other risksdetailed from time to time in our reports posted to our website ormade available publicly through other means. Accordingly, suchforward-looking statements do not purport to be predictions offuture events or circumstances and therefore, there can be noassurance that any forward-looking statement contained herein willprove to be accurate. We assume no obligation to update theforward-looking statements. Given these risk and uncertainties, youare cautioned not to place undue reliance on forward-lookingstatements. The Company’s actual results could differ materiallyfrom those contained in the forward-looking statements.
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