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

Second quarter revenue was $451.0 million, compared to $490.2 million in the second quarter 2015, with the decrease primarily driven by the continued drawdown of U.S. forces in Afghanistan which impacted the demand for services under our Logistics Civil Augmentation Program (“LOGCAP IV”) and lower content on the U.S. Department of State Bureau for International Narcotics and Law Enforcement Affairs Office of Aviation (“INL Air Wing”) program, partially offset by new contracts wins in our DynLogistics segment. Net loss attributable to Holdings for the second quarter 2016 was $25.1 million, compared with a net loss attributable to Holdings of $90.1 million in the second quarter 2015. The loss in the second quarter 2016 was primarily due to costs associated with Global Advisory Group, the previously announced refinancing transactions and a charge on a U.S. Air Force contract that is in a forward loss position. This was partially offset by a favorable legal settlement. The loss recorded in the second quarter of 2015 was primarily due to a goodwill impairment charge. The Company reported Adjusted EBITDA of $22.0 million for the second quarter, compared with $26.2 million for the same period in 2015.  

“We successfully closed our extremely important refinancing transactions in the second quarter that extend the majority of our debt to 2020,” said Lou Von Thaer, chief executive officer. “With the refinancing transactions behind us and our track record of sustained superior performance, we are focused on our growth strategy and building this great company.”    

Bill Kansky, chief financial officer, added "We now expect full year 2016 revenue to come in at $1.825 billion and full year Adjusted EBITDA to be $92.0 million, at the midpoint of the ranges in our current projections. Top line softness is primarily driven by timing of awards including the GIS G4 award which remains under protest. We are raising our full year Adjusted EBITDA guidance on the strength of DynLogistics, which continues to outperform.”  

Second Quarter Highlights

 In May 2016, DynAviation announced the award of a contract in support of the Advanced Military Maintenance and Repair Overhaul Center ("AMMROC") and the United Arab Emirates ("UAE") military to provide support to the military aircraft and facilities of the UAE. The contract has a one‐year base period with two, one‐year options with a total potential value of $102 million.
 On May 26, 2016, we were notified that the Company’s claim before the Armed Services Board of Contract Appeals seeking contractual reinterpretation and restructure on a specific U.S. Air Force contract was denied. Based on the outcome, the customer is now requiring the Company to process additional engines. We have reached an agreement with the U.S. Air Force related to performance requirements on this contract and, as previously disclosed, recorded a charge associated with this matter in the second quarter of 2016.
 On June 3, 2016 the Department of State Office of Acquisition Management released a Justification and Approval for other than full and open competition which detailed its intent to extend the INL Air Wing contract for a period of 12 months.  
 In June 2016, DynLogistics announced the award of three task orders on the Air Force Augmentation Program ("AFCAP IV") from the U.S. Air Force. The amounts of awards taken together total $79.9 million as further described in Notable Events section of our second quarter Form 10‐Q.    
 On June 15, 2016, the Company completed its previously announced exchange offer and other refinancing transactions.   

Reportable Segment Results

DynAviation

Revenue for DynAviation was $298.6 million, compared with $324.5 million for the same period in 2015. The decrease was primarily a result of lower content on the INL Air Wing and Multi Sensor Aerial Intelligence Surveillance and Reconnaissance Operations and Sustainment (“MAISR”) programs. This decline was partially offset by new business from the Saudi Arabian National Guard ("SANG") contract and increased content on the Theater Aviation Sustainment Manager ‐ OCONUS (“TASM‐O”) contract.   Adjusted EBITDA was $5.9 million, compared to $14.1 million for the second quarter of 2015, the decrease was primarily attributed to a charge taken on a U.S. Air Force contract partially offset by a favorable legal settlement.     DynLogistics Revenue for DynLogistics was $152.7 million, compared with $166.2 million for the second quarter 2015. The decrease was primarily a result of reductions in manning, materials and other direct costs under the Afghan Area of Responsibility ("AOR") task order and completion of the Kuwait task orders under the LOGCAP IV program and the completion of certain other contracts. This decline was partially offset by the new Afghanistan Life Support Services ("ALiSS") contract and the new contract from the U.S. Army Contracting Command to provide technical support services to the Iraqi Army in Taji and growth on the Afghanistan National Army (“ANA”) program.   Adjusted EBITDA was $17.6 million, compared to $12.8 million for the second quarter of 2015, the increase was attributed to definitization of cost and fee on certain legacy programs and productivity gains on certain firm fixed‐ price contracts partially offset by the decline in revenue in 2016.  

Liquidity

Cash provided by operating activities during the six months ended June 24, 2016, was $27.6 million compared with a cash outflow of $13.0 million for the same period in 2015.   The unrestricted cash balance at quarter‐end was $96.3 million with no borrowings outstanding under the Company’s revolving credit facility.   DSO at the end of the second quarter 2016 was 62, an 11 day decrease from year‐end primarily attributable to our focus on managing customer payment cycles.   

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 approximately 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.