- Revenue of $480.8 million
- Net income attributable to Delta Tucker Holdings, Inc. of $11.6 million
- Adjusted EBITDA of $39.3 million
- Total backlog of $3.7 billion
- DSO of 50 days
MCLEAN, Va.–(BUSINESS WIRE)–Delta Tucker Holdings, Inc. (“Holdings”), the parent of DynCorp
International Inc. (“DI,” and together with Holdings, the “Company”), a
leading global services provider, today reported first quarter 2019
financial results.
First quarter 2019 revenue was $480.8 million, down 10.0% compared to
$534.3 million recorded in the first quarter of 2018. The decrease was
primarily due to the completion of the INL Air Wing extension and the
completion of the T-6 Contractor Operated and Maintained Base Supply
(“T-6 COMBS”) Bridge contract, partially offset by the Logistics Civil
Augmentation Program IV (“LOGCAP IV”) and the Contractor Logistics
Support: C-12, C-26, UC-35 and T-6 Transport (“CLS Transport”)
contracts. Net income attributable to Holdings for the first quarter of
2019 was $11.6 million compared to $16.4 million in the first quarter of
2018. The Company reported Adjusted EBITDA of $39.3 million for the
first quarter of 2019 compared to $47.2 million for the same period in
2018.
“With more than $5.0 billion in proposals submitted and awaiting award
across our DynAviation and DynLogistics businesses, and a supportive
defense budget backdrop, I remain confident that we will achieve our
objectives in 2019,” said chief executive officer George Krivo.
First Quarter Highlights and Other Recent Developments
-
In February 2019, DynLogistics announced the award of a task order for
the F-15 Acquisition Support, under the Air Force Contract
Augmentation contract, Foreign Military Sales Program. The task order
has a total potential contract value of $14.8 million. -
In February 2019, DynLogistics announced the award of a task order for
the Air Force Contract Augmentation contract for Mission Support
Services at Ali Al Salem Air Base, Kuwait. The task order has a total
potential contract value of $11.4 million. -
In March 2019, DynLogistics announced a six-month contract extension
on the Fort Irwin National Training Center on the Northcom task order
under the LOGCAP IV contract. The extension has a total potential
value of $50.2 million. -
In March 2019, DynLogistics announced a six-month contract extension
to support the U.S. Army Garrison-Kwajalein Atoll on the U.S. Army
Pacific Command (“PACOM”) task order under the LOGCAP IV contract. The
extension has a total potential value of $61.2 million. -
In March 2019, DynAviation announced the award of the J85 engine
maintenance contract to provide full cycle management of jet engine
and support equipment at Laughlin Air Force Base, Texas. The contract
has a total potential value of $18.6 million. -
In March 2019, DynLogistics announced the award of a task order under
the Air Force Contract Augmentation contract to provide Offutt
Recovery Support with a period of performance from March 2019 to March
2020. The task order has a total potential contract value of $50.0
million. -
In April 2019, we were notified that we were not an awardee on the
LOGCAP V contract vehicle. In April 2019, we filed a protest against
awards for the LOGCAP V contract vehicle. A Government Accountability
Office ruling is anticipated by July 31, 2019. -
In April 2019, DynAviation announced the award of the Aviation Field
Maintenance and Sustainment Level Maintenance (“AFM West”) contract
for the AFM Directorate to perform management, aircraft and ground
support equipment maintenance, as well as aircraft modifications, and
other logistical support to aviation customers worldwide. The contract
has a one-year base period and seven one-year option periods and a
total potential contract value of $1.1 billion.
Reportable Segment Results
DynAviation
Revenue in the first quarter of 2019 was $224.4 million, down 29.3%
compared with $317.2 million recorded in the same period in 2018
primarily due to the completion of the INL Air Wing extension, the
completion of the T-6 COMBS Bridge contract and the completion of the
MD530 subcontract. The decrease in revenue was partially offset by the
CLS Transport contract. Adjusted EBITDA was $10.6 million, compared to
$27.0 million for the first quarter of 2018. The decrease was primarily
due to the completion of the INL Air Wing extension, the completion of
the T-6 COMBS Bridge contract and the completion of certain other
contracts partially offset by the performance of our CLS Transport
contract.
DynLogistics
Revenue in the first quarter of 2019 was $256.5 million, up 17.9%
compared with $217.5 million recorded in the same period in 2018. The
increase was primarily due to increased scope on the LOGCAP IV, G4
Worldwide Logistics Support and the ALiSS contracts. Adjusted EBITDA was
$29.3 million, compared to $22.5 million for the first quarter of 2018.
The increase was primarily due to higher volume as described above and
productivity and margin expansion across several contracts.
Liquidity
Cash provided by operating activities at the end of the first quarter of
2019 was $4.0 million compared to $8.0 million for the same period in
2018.
The unrestricted cash balance at quarter-end was $189.1 million with no
borrowings outstanding under the Company’s revolving credit facility.
DSO at of the end of the first quarter of 2019 was 50 days, a one-day
increase from 2018 year-end as we continued to focus on managing our
customer payment cycles.
Bill Kansky, Chief Financial Officer, added, “Based on first quarter
results, we expect full year 2019 revenue to come in between $1.95
billion and $2.05 billion, and full year Adjusted EBITDA between $135.0
million and $145.0 million.”
Conference Call
The Company will host a conference call at 10:00 a.m. Eastern Time on
May 14, 2019, to discuss results for the first quarter 2019. The call
may be accessed by webcast or through a dial-in conference line.
To access the webcast and view the accompanying presentation, please go
to http://www.dyn-intl.com,
click on “Investor Relations” and “Events & Presentations.” Please go to
the site approximately fifteen minutes prior to the start of the call to
register, download and install any necessary audio software.
To participate by phone, dial (866) 871-0758 and enter the conference ID
number: 5997259. 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. Eastern Time on May 14, 2019, through 11:59
p.m. Eastern Time on June 14, 2019. To access the replay, please dial
(855) 859-2056 or (404) 537-3406 and enter the conference ID number.
About DynCorp International
DynCorp International, a wholly owned subsidiary of Delta Tucker
Holdings, Inc., is a leading global services provider offering unique,
tailored solutions for an ever-changing world. Built on seven decades of
experience as a trusted partner to commercial, government and military
customers, DI provides sophisticated aviation, logistics, training,
intelligence and operational solutions wherever we are needed. DynCorp
International is headquartered in McLean, Va. For more information,
visit www.dyn-intl.com.
Reconciliation to GAAP
In addition to the Company’s financial results reported in accordance
with accounting principles generally accepted in the United States of
America (“GAAP”) included in this press release, the Company has
provided certain financial measures that are not calculated according to
GAAP, including EBITDA and Adjusted EBITDA. We define EBITDA as GAAP net
income attributable to the Company adjusted for interest, taxes,
depreciation and amortization. Adjusted EBITDA is calculated by
adjusting EBITDA for certain items from operations and certain other
items as defined in our Indenture and New Senior Credit Facility.
Management believes these non-GAAP financial measures are useful in
evaluating operating performance and are regularly used by security
analysts, institutional investors and other interested parties in
reviewing the Company. We believe that Adjusted EBITDA is useful in
assessing our ability to generate cash to cover our debt obligations
including interest and principal payments. Non-GAAP financial measures,
such as EBITDA and Adjusted EBITDA are not intended to be a substitute
for any GAAP financial measure and, as calculated, may not be comparable
to other similarly titled measures of the performance of other companies.
For a reconciliation of non-GAAP financial measures to the comparable
GAAP financial measures please see the financial schedules accompanying
this release.
The Company does not provide reconciliations of guidance for Adjusted
EBITDA to Operating Income, in reliance on the unreasonable efforts
exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The
Company is unable, without unreasonable efforts, to forecast certain
items required to develop meaningful comparable GAAP financial measures.
These items include other income and certain income/expense or gain/loss
adjustments under the Company’s debt agreements that are difficult to
predict in advance in order to include in a GAAP estimate.
Forward-looking Statements
This announcement may contain forward-looking statements regarding
future events and our future results that are subject to the safe
harbors created by the Private Securities Litigation Reform Act of 1995
under the Securities Act of 1933 and the Securities Exchange Act of
1934. Without limiting the foregoing, the words “believes,” “thinks,”
“anticipates,” “plans,” “expects” and similar expressions are intended
to identify forward-looking statements. Forward-looking statements
involve risks and uncertainties. Statements regarding the amount of our
backlog, estimated total contract values, and 2019 outlook are other
examples of forward-looking statements. We caution that these statements
are further qualified by important economic, competitive, governmental,
international and technological factors that could cause our business,
strategy, projections or actual results or events to differ materially,
or otherwise, from those in the forward-looking statements. These
factors, risks and uncertainties include, among others, the following:
our current or future levels of indebtedness, our ability to refinance
or amend the terms of that indebtedness, and changes in availability of
capital and cost of capital; the ability to refinance, amend or generate
sufficient cash to repay our New Senior Credit Facility, consisting of
our class B revolving facility and Term Loan facility under the New
Senior Credit Facility maturing on July 7, 2019 and July 7, 2020,
respectively, or to refinance, amend or repay our other indebtedness,
including any future indebtedness, which may force us to take other
actions to satisfy our obligations under our indebtedness, which may not
be successful; the future impact of mergers, acquisitions, divestitures,
joint ventures or teaming agreements; the outcome of any material
litigation, government investigation, audit or other regulatory matters;
restatement of our financial statements causing credit ratings to be
downgraded or covenant violations under our debt agreements; policy
and/or spending changes implemented by the Trump Administration, any
subsequent administration or Congress, including any further changes to
the sequestration that the United States (“U.S.”) Department of Defense
(“DoD”) is currently operating under; termination or modification of key
U.S. government or commercial contracts, including subcontracts; changes
in the demand for services that we provide or work awarded under our
contracts, including without limitation, the LOGCAP IV contract and any
impact from the result of the LOGCAP IV re-compete (“LOGCAP V”); the
outcome of future extensions on awarded contracts and the outcomes of
re-competes on existing programs; changes in the demand for services
provided by our joint venture partners; changes due to pursuit of new
commercial business in the U.S. and abroad; activities of competitors
and the outcome of bid protests, including, without limitation, the
protest against awards for LOGCAP V filed by the Company on April 22,
2019; changes in significant operating expenses; impact of lower than
expected win rates for new business; general political, economic,
regulatory and business conditions in the U.S. or in other countries in
which we operate; acts of war or terrorist activities, including cyber
security threats; variations in performance of financial markets; the
inherent difficulties of estimating future contract revenue and changes
in anticipated revenue from indefinite delivery, indefinite quantity
(“IDIQ”) contracts and indefinite quantity contracts (“IQC”); the timing
or magnitude of any award, performance or incentive fee or any penalty,
liquidated damages or disincentive under our government contracts;
changes in expected percentages of future revenue represented by
fixed-price and time-and-materials contracts, including increased
competition with respect to task orders subject to such contracts;
decline in the estimated fair value of a reporting unit resulting in a
goodwill impairment and a related non-cash impairment charged against
earnings; changes in underlying assumptions, circumstances or estimates
that may have a material adverse effect upon the profitability of one or
more contracts and our performance; impact of the tax reform legislation
known colloquially as the Tax Cuts and Jobs Act (the “Tax Act”) or other
tax reform implemented by the Trump Administration, and any subsequent
administration or Congress; changes in our tax provisions or exposure to
additional income tax liabilities that could affect our profitability
and cash flows; uncertainty created by changes in management or other
restructuring activities; termination or modification of key
subcontractor performance or delivery; the ability to receive timely
payments from prime contractors where we act as a subcontractor; and
statements covering our business strategy, those described in “Risk
Factors” in our Annual Report on Form 10-K for the year ended December
31, 2018, filed with the Securities and Exchange Commission (“SEC”) on
March 19, 2019, and other risks detailed from time to time in our
reports filed with the SEC and other risks detailed from time to time in
our reports posted to our website or made available publicly through
other means. Accordingly, such forward-looking statements do not purport
to be predictions of future events or circumstances and therefore, there
can be no assurance that any forward-looking statements contained herein
will prove to be accurate. We assume no obligation to update the
forward-looking statements. Given these risk and uncertainties, you are
cautioned not to place undue reliance on forward-looking statements. The
Company’s actual results could differ materially from those contained in
the forward-looking statements.
| DELTA TUCKER HOLDINGS, INC. (DTH, Inc.) | ||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (Amounts in thousands) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, 2019 | March 31, 2018 | |||||||||
| Revenue | $ | 480,785 | $ | 534,293 | ||||||
| Cost of services | (419,467 | ) | (465,423 | ) | ||||||
| Selling, general and administrative expenses | (25,722 | ) | (25,359 | ) | ||||||
| Depreciation and amortization expense | (5,854 | ) | (6,057 | ) | ||||||
| Earnings from equity method investees | — | 47 | ||||||||
| Operating income | 29,742 | 37,501 | ||||||||
| Interest expense | (14,684 | ) | (16,988 | ) | ||||||
| Loss on early extinguishment of debt | (623 | ) | (239 | ) | ||||||
| Interest income | 1,035 | 525 | ||||||||
| Other income, net | 624 | 649 | ||||||||
| Income before income taxes | 16,094 | 21,448 | ||||||||
| Provision for income taxes | (4,241 | ) | (4,744 | ) | ||||||
| Net income | 11,853 | 16,704 | ||||||||
| Noncontrolling interests | (244 | ) | (296 | ) | ||||||
| Net income attributable to Delta Tucker Holdings, Inc. | $ | 11,609 | $ | 16,408 | ||||||
| Provision for income taxes | 4,241 | 4,744 | ||||||||
| Interest expense, net of interest income | 13,649 | 16,463 | ||||||||
| Depreciation and amortization (1) | 6,786 | 6,820 | ||||||||
| EBITDA (2) | $ | 36,285 | $ | 44,435 | ||||||
|
Certain income/expense or gain/loss adjustments per our credit agreements (3) |
2,496 | 2,980 | ||||||||
|
Employee share based compensation, severance, relocation and retention expense (4) |
83 | 373 | ||||||||
| Cerberus fees (5) | 20 | 31 | ||||||||
| Other (6) | 408 | (634 | ) | |||||||
| Adjusted EBITDA | $ | 39,292 | $ | 47,185 | ||||||
| (1) |
Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
|
| (2) |
We define EBITDA as GAAP net income attributable to DTH, Inc. adjusted for interest, taxes, depreciation and amortization. We believe these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. Non-GAAP financial measures are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of the performance of other companies. |
|
| (3) |
Includes the completion of certain contracts and certain unusual income and expense items, as defined in the Indenture and New Senior Credit Facility. |
|
| (4) |
Includes post-employment benefit expense related to severance in |
|
| (5) |
Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
|
| (6) |
Includes changes due to fluctuations in foreign exchange rates, |
|
| DELTA TUCKER HOLDINGS, INC. (DTH, Inc.) | |||||||||||||||||||
| Credit Agreement Adjusted EBITDA Calculation by Segment | |||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| DTH, Inc. CY19 QTD Q1 | |||||||||||||||||||
| DynAviation | DynLogistics |
Headquarters/ |
Consolidated | ||||||||||||||||
| Operating income (loss) | $ | 9,808 | $ | 27,099 | $ | (7,165 | ) | $ | 29,742 | ||||||||||
| Depreciation and amortization expense (1) | 301 | 674 | 5,811 | 6,786 | |||||||||||||||
| Loss on early extinguishment of debt | — | — | (623 | ) | (623 | ) | |||||||||||||
| Noncontrolling interests | — | — | (244 | ) | (244 | ) | |||||||||||||
| Other income, net | 508 | — | 116 | 624 | |||||||||||||||
| EBITDA(2) | $ | 10,617 | $ | 27,773 | $ | (2,105 | ) | $ | 36,285 | ||||||||||
|
Certain income/expense or gain/loss adjustments per our credit agreements (3) |
24 | 1,493 | 979 | 2,496 | |||||||||||||||
|
Employee share based compensation, severance, relocation and retention expense (4) |
(2 | ) | 41 | 44 | 83 | ||||||||||||||
| Cerberus fees (5) | 9 | 10 | 1 | 20 | |||||||||||||||
| Other (6) | — | — | 408 | 408 | |||||||||||||||
| Adjusted EBITDA | $ | 10,648 | $ | 29,317 | $ | (673 | ) | $ | 39,292 | ||||||||||
| (1) |
Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
|
| (2) |
We define EBITDA as GAAP net income attributable to DTH, Inc. adjusted for interest, taxes, depreciation and amortization. We believe these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. Non-GAAP financial measures are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of the performance of other companies. |
|
| (3) |
Includes certain unusual income and expense items, as defined in the Indenture and New Senior Credit Facility. |
|
| (4) |
Includes post-employment benefit expense related to severance in |
|
| (5) |
Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
|
| (6) |
Includes changes due to fluctuations in foreign exchange rates, |
|
| DELTA TUCKER HOLDINGS, INC. (DTH, Inc.) | |||||||||||||||||||
| Credit Agreement Adjusted EBITDA Calculation by Segment | |||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| DTH, Inc. CY18 QTD Q1 | |||||||||||||||||||
| DynAviation | DynLogistics |
Headquarters/ |
Consolidated | ||||||||||||||||
| Operating income (loss) | $ | 25,934 | $ | 19,306 | $ | (7,739 | ) | $ | 37,501 | ||||||||||
| Depreciation and amortization expense (1) | 498 | 416 | 5,906 | 6,820 | |||||||||||||||
| Loss on early extinguishment of debt | — | — | (239 | ) | (239 | ) | |||||||||||||
| Noncontrolling interests | — | — | (296 | ) | (296 | ) | |||||||||||||
| Other income, net | 199 | 81 | 369 | 649 | |||||||||||||||
| EBITDA(2) | $ | 26,631 | $ | 19,803 | $ | (1,999 | ) | $ | 44,435 | ||||||||||
|
Certain income/expense or gain/loss adjustments per our credit agreements (3) |
79 | 2,636 | 265 | 2,980 | |||||||||||||||
|
Employee share based compensation, severance, relocation and retention expense (4) |
245 | 123 | 5 | 373 | |||||||||||||||
| Cerberus fees (5) | 14 | 9 | 8 | 31 | |||||||||||||||
| Other (6) | — | (56 | ) | (578 | ) | (634 | ) | ||||||||||||
| Adjusted EBITDA | $ | 26,969 | $ | 22,515 | $ | (2,299 | ) | $ | 47,185 | ||||||||||
| (1) |
Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
|
| (2) |
We define EBITDA as GAAP net income attributable to DTH, Inc. adjusted for interest, taxes, depreciation and amortization. We believe these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. Non-GAAP financial measures are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of the performance of other companies. |
|
| (3) |
Includes certain unusual income and expense items, as defined in the Indenture and New Senior Credit Facility. |
|
| (4) |
Includes post-employment benefit expense related to severance in |
|
| (5) |
Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
|
| (6) |
Includes changes due to fluctuations in foreign exchange rates, |
|
| DELTA TUCKER HOLDINGS, INC. (DTH, Inc.) | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Amounts in thousands) | ||||||||||
| As of | ||||||||||
| March 31, 2019 | December 31, 2018 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 189,116 | $ | 203,797 | ||||||
|
Accounts receivable, net of allowances of $3,274 and $2,784, respectively |
128,090 | 163,901 | ||||||||
| Contract assets | 171,244 | 172,137 | ||||||||
| Other current assets | 47,933 | 44,013 | ||||||||
| Total current assets | 536,383 | 583,848 | ||||||||
| Non-current assets | 153,979 | 134,451 | ||||||||
| Total assets | $ | 690,362 | $ | 718,299 | ||||||
| LIABILITIES AND DEFICIT | ||||||||||
| Current portion of long-term debt, net | $ | — | $ | 17,073 | ||||||
| Other current liabilities | 275,069 | 322,313 | ||||||||
| Total current liabilities | 275,069 | 339,386 | ||||||||
| Long-term debt, net | 478,671 | 474,660 | ||||||||
| Other long-term liabilities | 31,302 | 10,553 | ||||||||
| Total deficit attributable to Delta Tucker Holdings, Inc. | (100,110 | ) | (111,799 | ) | ||||||
| Noncontrolling interests | 5,430 | 5,499 | ||||||||
| Total deficit | (94,680 | ) | (106,300 | ) | ||||||
| Total liabilities and deficit | $ | 690,362 | $ | 718,299 | ||||||
| DELTA TUCKER HOLDINGS, INC. (DTH, Inc.) | ||||||||
| UNAUDITED OTHER CONTRACT DATA | ||||||||
| (Amounts in millions) | ||||||||
| As of | ||||||||
| March 31, 2019 | December 31, 2018 | |||||||
| Backlog(1): | ||||||||
| Funded backlog | $ | 811 | $ | 905 | ||||
| Unfunded backlog | 2,904 | 3,147 | ||||||
| Total Backlog | $ | 3,715 | $ | 4,052 | ||||
| (1) |
Backlog consists of funded and unfunded amounts under contracts. Funded backlog is equal to the amounts appropriated by a customer for payment of goods and services less actual revenue recognized as of the measurement date under that appropriation. Unfunded backlog is the dollar value of unexercised, priced contract options, and the unfunded portion of exercised contract options. Most of our U.S. government contracts allow the customer the option to extend the period of performance of a contract for a period of one or more years. |
|
Contacts
Brendan Burke
Vice President and Treasurer
(817) 224-7742
[email protected]
