Falls Church, Va. - March 30, 2011 - Delta Tucker Holdings, Inc. ("Holdings"), the parent of DynCorp International Inc. ("DI", and together with Holdings, the "Company"), a global government services provider supporting U.S. national security and foreign policy objectives, today reported fourth quarter and calendar year 2010 financial results, with adjusted annual revenue up 32.2% from calendar year 2009.
On July 7, 2010, DI completed a merger with an affiliate of Cerberus Capital Management, L.P. (the "Merger"), with DI as the surviving corporation. Upon completion of the Merger, DI became a wholly-owned subsidiary of Holdings. On December 16, 2010, the Company's board of directors approved a change in its fiscal year end, which previously ended on the Friday closest to March 31, to conform to the calendar year. This created a nine-month transition period, which began on April 1, 2010 (date of inception of Holdings) and ended on December 31, 2010. For the benefit of the Company's investors, comparisons of DynCorp International's Calendar Year 2009 and the combined Company's Calendar Year 2010 are discussed below and included in the financial schedules accompanying this release.
"I am extremely proud of what the team accomplished in 2010. We reorganized the business to better align ourselves with the markets we serve, improved our cost structure, simplified our organization, and reduced reporting layers, delivering approximately $27 million of gross savings, of which $9 million will increase our profitability in 2011," said Steve Gaffney, DynCorp International Chairman and CEO.
"I am confident that the work we have done to reorganize, to continue our outstanding work on existing contracts, and to focus on capturing new business opportunities has positioned us for a successful year ahead."
Fourth Quarter Calendar Year 2010 Highlights
Summary of Fourth Quarter Calendar Year 2010 Operating
Results
Revenue of $856.7 million was up 16.3% from the comparable
prior year quarter, adjusted for the deconsolidation of GLS upon
the completion of the Merger, which recorded $177.5 million 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 of Calendar Year
2009. Additionally, revenues in the period grew from increased
demand for secure aviation transport in Iraq, volume gains from the
contract to provide aircraft maintenance support at Sheppard Air
Force Base, and contributions from the acquisitions of the Phoenix
Consulting Group, Inc. and Casals & Associates, Inc.
Partially offsetting the increase were the completion of certain task orders from the Company's Training, Mentoring and Security contracts, 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 $0.6 million, represents a decrease of $18.4 million from the comparable period in Calendar Year 2009, primarily due to revenue mix, higher legal expenses, increased amortization of intangibles resulting from the Merger and higher interest expenses associated with the Company's new debt. In addition, increased volume from DI's LOGCAP IV business, which produces lower margins, did not offset lower profit levels in our MRAP program as that program transitions to an operations and maintenance phase, or the completion of certain profitable task orders in our Training, Mentoring & Security business.
Adjusted EBITDA of $46.8 million for the fourth quarter of Calendar Year 2010 decreased $10.3 million from the comparable period in 2009, primarily due to previously-described factors.
Summary of Calendar Year 2010 Operating Results
Revenue for the year ended December 31, 2010 was $3.4
billion, up 32.2% from the comparable period in 2009, adjusted for
the 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 Operations business, primarily from LOGCAP IV operations, which produced revenue of $1,356.7 million, up $1,002.9 million from Calendar Year 2009. Additionally, increased demand for secure aviation transport in Iraq and Afghanistan, coupled with the contract win to provide aircraft maintenance support at Sheppard Air Force Base, and contributions from the acquisitions of the Phoenix Consulting Group, Inc. and Casals & Associates, Inc. added to revenue growth.
Partially offsetting the increase were lower volumes in the Training, Mentoring and Security business, the loss of the LCCS contract and the Army Pre-positioned Stocks Program (APS3), reduced demand on MRAP contracts and the completion of certain Contract Field Team (CFT) task orders.
Net Loss attributable to Delta Tucker Holdings, Inc. of ($5.4) million decreased $79.3 million from Calendar Year 2009 primarily due to revenue mix, higher legal expenses, Merger expenses, increased amortization of intangibles resulting from the Merger and higher interest expense associated with new debt.
Additionally, increased volume from LOGCAP IV, which produces lower margins, did not offset lower profit levels in the MRAP program and CFT business. The completion of certain profitable task orders in the Training, Mentoring & Security business also reduced profitability. This was partially offset by higher award scores on DI's War Reserve Materiel (WRM) contract and the favorable 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 to the factors described above. This decline was partially offset by labor efficiencies of $6.3 million.
"Our initial LOGCAP award fee score was not where we anticipated, which impacted income for the quarter," said Bill Kansky, SVP and Chief Financial Officer. "I am, however, pleased with the progress the team has made and in fact this week we received the second award fee determination, which was much higher than 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 was primarily driven by new or modified task and delivery orders on the LOGCAP IV program. Partially offsetting this increase was the loss of the LCCS program.
Cash From Operating Activities (CFOA) provided $69.5 million in Calendar Year 2010, compared to $86.2 million of CFOA for Calendar Year 2009. The decline was driven by $63.1 million of Merger costs and higher interest cost of $16.8 million, due to higher post-Merger debt, partially offset by $28.8 million from net tax refunds and a decline in working capital.
Conference Call
The Company will host a conference call at 9:00 a.m. EDT
on Wednesday, March 30, 2011 to discuss results for the year-ended
December 31, 2010.
To participate in the conference call, dial (866) 871-0758 and enter the conference ID number: 52664207. 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 on March 30th, 2011 through 11:59 p.m. EDT April 30, 2011. To access the replay, please dial (800) 642-1687 or (706) 645-9291 and enter the conference ID number.
About DynCorp International
DynCorp International Inc., a wholly owned subsidiary of
Delta Tucker Holdings, Inc., is a global government services
provider in support of U.S. national security and foreign policy
objectives, delivering support solutions for defense, diplomacy,
and international development. DynCorp International operates major
programs in logistics, platform support, contingency operations,
and training and mentoring to reinforce security, community
stability, and the rule of law. DynCorp International is
headquartered in Falls Church, 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. 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.
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.
For a reconciliation of non-GAAP financial measures to the comparable GAAP financial measures please see the financial schedules accompanying this release.
Forward-looking Statements
Certain statements made in this announcement may
constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, regarding the
expectations of management with respect to revenue and
profitability. All of these forward-looking statements are based on
estimates and assumptions made by the Company's management that,
although believed by the Company to be reasonable, are inherently
uncertain. Forward-looking statements involve risks and
uncertainties, including, but not limited to, economic,
competitive, governmental, and technological factors outside of the
Company's control that may cause its business, strategy or actual
results or events to differ materially from the statements made
herein. These risks and uncertainties may include, but are not
limited to, the following: the future impact of mergers (including
the Merger with affiliates of Cerberus Capital Management L.P.
which was completed on July 7, 2010), acquisitions, joint ventures
or teaming agreements; our substantial level of indebtedness and
changes in availability of capital and cost of capital; the outcome
of any material litigation, government investigation, audit or
other regulatory matters; policy and/or spending changes
implemented by the Obama Administration, any subsequent
administration or Congress; termination or modification of key
United States ("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 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; 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; variations in
performance of financial markets; the inherent difficulties of
estimating future contract revenue and changes in anticipated
revenue from indefinite delivery, indefinite quantity
contracts; the timing or magnitude of any award fee granted
under our government contracts, including, but not limited to,
LOGCAP IV; changes in expected percentages of future revenue
represented by fixed-price and time-and-materials contracts; lower
than anticipated award fee determinations by the U.S. government;
and other risks detailed from time to time in the Company's
financial statements and reports to investors posted on its
website. Given these risks 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. The Company undertakes
no obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or
otherwise, except as required by law.
Company Contact:
Chris Porter
Vice President and Treasurer
(817) 224-7742
Christopher.Porter@dyn-intl.com
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