DynCorp International Inc.’s Parent Reports Results for Fourth Quarter and Full Year of 2016

MCLEAN, Va.–(BUSINESS WIRE)–

Delta Tucker Holdings, Inc. (“Holdings”), the parent of DynCorp International Inc. (“DI”), and together with Holdings, (the “Company”), a global services provider, today reported fourth quarter and full year 2016 financial results.

Fourth quarter revenue was $461.8 million, compared to $486.2 million in the fourth quarter 2015, with the decrease primarily driven by decreased volume on the INL Air Wing program. Net loss attributable to Holdings for the fourth quarter 2016 was $6.9 million, compared with a net loss attributable to Holdings of $12.0 million in the fourth quarter 2015, the improvement driven primarily by a decrease in selling, general and administrative expenses. Selling, general and administrative expense as a percentage of revenue for fourth quarter 2016 was 6.5% versus 7.6% for the fourth quarter of 2015. The Company reported Adjusted EBITDA of $32.0 million for the fourth quarter, compared with $23.9 million for the same period in 2015.

For the full year 2016, the Company reported revenue of $1.8 billion, compared with $1.9 billion for the year ended December 31, 2015. The decrease was primarily driven by the continued drawdown of U.S. forces in Afghanistan, which impacted the demand for services under our LOGCAP IV contract, and lower content on the INL Air Wing program, partially offset by new contract wins in our DynLogistics segment and increased content on contracts within our AELS segment. Net loss attributable to Holdings was $54.1 million for 2016 as compared to a net loss attributable to Holdings of $132.6 million for 2015, an improvement driven primarily by approximately $94.9 million decrease from 2016 versus 2015 in impairment of goodwill, intangibles and long lived assets. The Company also reported Adjusted EBITDA of $101.0 million for the year, which results in 5.5% margins for the period.

“I’m proud of the work done by the DI team in 2016, and especially pleased with our improvements in business development and operational excellence,” said Lou Von Thaer, Chief Executive Officer. “Our backlog reached a three-year high, and we expect to add to it in 2017.”

Fourth Quarter Highlights

  • In October 2016, AELS announced the award of a contract modification for a six month contract extension on the T6 COMBS contract to provide support services for T-6A and T-6B aircraft at ten Air Force and Navy locations throughout the U.S. The modification has a total potential value of $30.3 million.
  • In November 2016, AELS announced the development of a General Terms Agreement with Global Aerospace Logistics and has been awarded an Apache Services task order to maintain aircraft for the Joint Aviation Command of the UAE Armed Forces. The task order, which started September 1, 2016, has a two-year base period and a one-year option period and a total potential task order value of $61 million.
  • In December 2016, AELS announced the award of the Contract Field Teams (“CFT”) task order at the Davis-Monthan Air Force Base in Tucson, Arizona to provide maintenance on the 357th Aircraft Maintenance Unit’s A-10 Thunderbolt aircraft. The task order, which started November 1, 2016 and ends March 2018, has a total potential task order value of $23 million.
  • In December 2016, AELS announced the award of the CFT Multiple Award Contract (“MAC”) by the U.S. Air Force to perform modification, maintenance, inspection and repair of active systems in the U.S. government inventory. The IDIQ contract has a two-year base period and two two-year option periods and a total potential contract value of $11.4 billion.
  • In December 2016, DynLogistics announced the award of a contract in South and Southeast Asia and Oceania by the U.S. Navy to support various DoD missions, including humanitarian aid, civic assistance, military construction and contingency services. The contract has a one-year base period, with seven one-year options and one six-month option period and a total potential contract value of $93.8 million.
  • In December 2016, AELS announced the award of a contract by the U.S. Navy to maintain and provide logistics services for aircraft and support for equipment for the Naval Test Wing Atlantic on behalf of the Naval Warfare Center Aircraft Division in Patuxent River, Maryland. The contract has a one-year base period, with four one-year options and a total potential contract value of $546 million.
  • In December 2016, AOLC announced the award by the U.S. Army for the TASM-O contract Option Year 3 to provide aviation maintenance services under the AFM program. The one year contract modification has a total potential value of $125.5 million.
  • In December 2016, DynLogistics announced the award of a contract extension from the United States Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Defense. The one year contract extension has a total potential value of $54.2 million.
  • In December 2016, DynLogistics announced the award of a contract extension from the United States Army Contracting Command to provide advisory, training and mentoring services to the Afghanistan Ministry of Interior. The one year contract extension has a total potential value of $67.2 million.

Reportable Segment Results

AELS (Aviation Engineering, Logistics and Sustainment)
Revenue in the fourth quarter was $141.4 million, compared to $138.6 million in the same quarter in 2015. The increase was primarily a result of volume on our T-6 COMBS contract. Revenue for the year ended December 31, 2016, was $585.2 million, compared to $545.9 million in 2015. The increase was primarily as a result of increased content from T-6 Contractor Operated and Maintained Base Supply (“T-6 COMBS”), T-34, T-44/T-6 (“CLS”) and Naval Aviation Warfighting Development Center (“NAWDC”) contracts. The increase in revenue was partially offset by the completion of the Sheppard Air Force Base (“Sheppard AFB”) contract.

Adjusted EBITDA in the fourth quarter of ($3.0 million), compared to ($5.9 million) for the comparable period in 2015 was driven by the completion of an Air Force contract that was in a loss position and stronger performance on a certain Navy contract that was in a loss position in 2015. For the full year, Adjusted EBITDA was ($16.8 million), compared to ($4.8 million) in 2015 driven by a charge taken for forward losses on the T-6 COMBS contract.

AOLC (Aviation Operations and Life Cycle Management)
Revenue in the fourth quarter was $147.5 million, compared to $186.7 million for the same period in 2015. The decrease was primarily a result of lower content on the INL Air Wing program and the completion of certain Middle East contracts. Revenue for the year ended December 31, 2016 was $617.3 million, compared to $730.2 million in 2015. The decrease in revenue was due to lower content on the INL Air Wing and Multi Sensor Aerial Intelligence Surveillance and Reconnaissance Operations and Sustainment programs and the completion of certain Middle East contracts. The decrease in revenue was partially offset by new business from the Saudi Arabian National Guard (“SANG”) contract and increased content from the Theater Aviation Sustainment Management – OCONUS (“TASM-O”) contract.

Adjusted EBITDA in the fourth quarter was $17.1 million, compared with $17.6 million for the same period in 2015. The decrease was attributed to closure of certain Middle East programs. For the full year, Adjusted EBITDA was $56.8 million, compared with $50.3 million for the same period in 2015. The increase was attributed to a favorable legal settlement related to INL Air Wing as well as productivity and efficiencies on our AFM programs. These gains were partially offset by the closure of the F2AST program.

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