Revenue of $884.3 million down $9.7 million or 1.1% from FirstQuarter 2010, adjusted for the deconsolidation of the GlobalLinguist Solutions (“GLS”) joint venture. Reported revenuedown 16.1%.
Net Income attributable to Delta Tucker Holdings, Inc. of $4.9million, down $14.6 million from First Quarter 2010.
Adjusted EBITDA of $55.6 million, flat with First Quarter2010.
$50.0 million debt reduction in March 2011
Falls Church, Va. – (May 13, 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 reportedfirst quarter 2011 financial results.
“I am pleased with our operating results in the first quarter,which were primarily driven by higher award fee scores from ourLOGCAP program, ” said Steven F. Gaffney, DynCorp Internationalchairman and chief executive officer. “These results directlyreflect the team’s efforts to focus on satisfying our customers,improving processes and growing the business. The operationalefficiencies and organizational realignment that we began last fallare allowing us to compete more effectively and leverage the uniquespectrum of capabilities that DI offers.”
First Quarter 2011 Highlights
In January 2011, DI received a $46.0 million tax refund fromthe Internal Revenue Service (“IRS”). The Company previouslyreceived a $34.1 million tax refund from the IRS in December 2010,bringing the total refund to $80.1 million, related to an approvedchange in accounting method.
In February 2011, DI was notified that the Iraqi based portionof the Civilian Police (CivPol) contract was extended until March2012.
In February 2011, DI was awarded a new contract to supportanti-corruption efforts in Timor- Leste in its Developmentbusiness, formerly Casals and Associates, which was acquired inJanuary 2010.
In March 2011, DI received a second Logistics CivilAugmentation Program (LOGCAP IV) contract award fee determinationrelated to Afghanistan operations, which covered performance fromAugust 1, 2010 through January 31, 2011. The score was higherthan the Company’s previous award fee score and brought the totalaward fee recognized on LOGCAP IV to $14.1 million during thequarter.
In March 2011, DI was notified that that it lost the LCCS-Navycontract. This caused the Company to revalue certain inventory atmarket, which resulted in a $1.9 million write down. The Companyalso re-categorized the carrying value of $2.8 million of inventoryto held-for-sale.
In March 2011, DI made a $50.0 million term loanpayment.
Summary of First Quarter 2011 Operating Results
Revenue of $884.3 million was down $9.7 million or 1.1%from the comparable prior year quarter, adjusted for thedeconsolidation of GLS, which recorded $159.8 million of revenuefor the first quarter of 2010. The comparable revenue declinewas driven primarily by the loss of the Life Cycle Contract Support(LCCS)-Army contract, which transitioned in November 2010, and thecompletion of both the African Peacekeeping (APK) task order inSomalia and the Qatar guard contract under our Security Servicesbusiness. Lower volume on the Mine Resistant Ambush ProtectedVehicle (MRAP) program and the International Civilian PoliceProgram (CivPol) also contributed to the decline. Thesedeclines were offset by revenue gains from the ContingencyOperations business, primarily from LOGCAP IV contract, whichproduced revenue of $379.3 million, a 17.0% increase over the firstquarter 2010. Additionally, the Company experienced revenueincreases from its Training and Mentoring business, primarily fromthe Combined Security Transition Command Afghanistan (CSTC-A),Multinational Security Transition Command-Iraq (MNSTC-I) contracts,and the addition of the Afghanistan National Police-Ministry ofInterior (ANP-MoI) contract (formally NATO TrainingMission-Afghanistan), which ramped-up during the quarter to replacethe CivPol Afghanistan work under the Department of State.Additionally, revenue in the period benefited from increased demandfor secure aviation transport under the INL Air Wing contract withthe Department of State.
Net income attributable to Delta Tucker Holdings, Inc. of $4.9million, represents a decrease of $14.6 million from the comparableperiod in 2010. The decline primarily relates to increased Selling,general and administrative expenses due to cost associated with therestructuring announced in January, higher amortization ofintangibles resulting from the Merger and increased interestexpenses associated with the company’s newdebt.
Adjusted EBITDA of $55.6 million for the first quarter 2011 wasflat to the comparable period in 2010.
Global Stabilization and Development Solutions (GSDS)First Quarter Highlights:
GSDS segment revenue of $575.5 million represents 65.1%of our total revenue for the three months ended April 1, 2011, anincrease of 3.8% over the first quarter 2010. GSDS reportedadjusted EBITDA of $26.4 million for the first quarter 2011, an18.2% increase from the comparable period in 2010. Theperformance was primarily driven by the following:
Strong continued growth from the LOGCAP IV program with a 17%revenue increase from first quarter 2010 and improved award feescores on the Afghanistan task order which resulted in $14.1million award fee revenue during the period.
The Air Force Contract Augmentation Program (AFCAP) baseoperations contract contributed to revenue and adjusted EBITDAgrowth offset by the completion of the APK Somalia taskorder.
Training and Mentoring:
Revenue increased from the new ANP-MoI contract, increasedvolume under the CivPol-Afghanistan National Police task order aswell as continued operations under the CSTC-A and MNSTC-Icontracts. This increase was partially offset by a decline inthe CivPol program primarily from the transition of the Afghanistanwork from the Department of State contract to the new ANP-MoIcontract with the Department of Defense and lower volume inIraq.
Both Revenue and adjusted EBITDA were negatively impactedunder the Security Services business area with the completion ofthe Qatar security guard contract in 2010 and reduced demand underthe Worldwide Personal Protective Services business.
Global Platform Support Solutions (GPSS) First QuarterHighlights:
GPSS segment revenue of $306.2 million represents 34.6%of our total revenue for the three months ended April 1, 2011, adecrease of 9.8% over the first quarter 2010. GPSS alsoreported adjusted EBITDA of $18.8 million for the first quarter2010, a 28.2% decrease from the comparable period in 2010. The results were primarily driven by the following:
Revenue was negatively impacted by the loss of the LCCS-Armycontract in late 2010, partially offset by performance under thenew Fort Campbell and Saudi Arabia MSS contracts as well as volumeunder the Counter-Narcoterrorism Technology Program Office (CNTPO)contract.
Revenue increased due to demand for secure aviation transportin Iraq and Afghanistan, partially offset by the completion ofconstruction work in Iraq in 2010. Profitability decreased,compared to first quarter of 2010, as a result of the revenuemix.
Operations and Maintenance:
Revenue and adjusted EBITDA were negatively impacted in thefirst quarter of 2011, compared to the first quarter of 2010,primarily driven by lower volume and profitability under the MRAPprogram.
Global Linguist Solutions (GLS) First QuarterHighlights:
- Adjusted EBITDA of $4.7M for the first quarter of 2011 was down$1.1 million or 19.0% from the comparable quarter in 2010 and wasdriven by a reduction in deployed linguists in support of U.S.troop levels in Iraq, which has trended lower during the pastyear.
Total backlog as of April 1, 2011 of $4.3 billion represents adecrease of approximately $488.0 million since December 31, 2010.The decrease was primarily due to timing of orders.
Cash From Operating Activities (CFOA) of $25.8 million for thefirst quarter of 2011 benefited from $48.1 million in tax refunds,including $46.0 million from an approved change in accountingmethod, but was negatively impacted by an increase in workingcapital primarily driven by higher DSO from the CivPolcontract.
The Company will host a conference call at 10:00 a.m. EDTon Friday, May 13, 2011 to discuss results for the first quarter2011. The call may be accessed by webcast or through adial-in conference line.
To access the webcast and view the accompanying presentation,please go to www.dyn-intl.com, click on “InvestorRelations” and “Events & Presentations.” Please go to the siteapproximately fifteen minutes prior to the start of the call toregister, download and install any necessary audio software.
To participate by phone, dial (866) 871-0758 and enter theconference ID number: 65254985. International callers shoulddial (706) 634-5249 and enter the same conference ID numberabove.
A telephonic replay will be available from 1:00 p.m. EDT on May13th, 2011 through 11:59 PM EDT June 13, 2011. To access thereplay, please dial (800) 642-1687 or (706) 645-9291 and enter theconference ID number.
About DynCorp International
DynCorp International Inc., a wholly owned subsidiary of DeltaTucker Holdings, Inc., is a global government services provider insupport of U.S. national security and foreign policy objectives,delivering support solutions for defense, diplomacy, andinternational 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