DYNCORP INTERNATIONAL INC. 
By DynCorp International Inc. (NYSE: DCP), a provider of specialized mission-critical technical services to civilian and military government agencies, today announced its results for the first quarter ended June 29, 2007.
First Quarter 2008 Results Compared to First Quarter 2007
Revenue for the first quarter of fiscal 2008 was $548.7 million, a 2.0% increase over revenue of $537.7 million for the first quarter of fiscal 2007. Revenue for the Government Services (GS) segment, which represented 65% of Company revenue in the first quarter, decreased to $358.0 million for the first quarter of fiscal 2008, down $0.9 million or 0.3% from the comparable period in fiscal 2007. GS revenue was impacted by task order losses under the Worldwide Personal Protective Services program and completion of construction projects under the CIVPOL program. Offsetting these reductions were revenue increases on the International Narcotics and Law Enforcement program, construction work in Africa and additional services in Afghanistan on the CIVPOL program. Revenue for the Maintenance and Technical Support Services (MTSS) segment for the first quarter of fiscal 2008 increased to $190.7 million, up $11.9 million or 6.7% as compared to the first quarter of fiscal 2007. MTSS revenue, which represented 35% of Company revenue in the first quarter of fiscal 2008, benefited from a new contract under which the Company provides logistics support services to the U.S. Air Force C-21 fleet.
Operating income was $31.7 million in the first quarter of fiscal 2008 compared to $28.8 million in the first quarter of fiscal 2007, a 10.0% increase. Operating margin was 5.8%, as compared to operating margin of 5.4% in the first quarter of fiscal 2007. Operating margin increased by 0.4% of revenue primarily due to improved contract performance. Earnings per share increased from a loss of $0.01 for the first quarter of fiscal 2007 to earnings of $0.22 for the first quarter of fiscal 2008. Earnings Per Share for the first quarter of fiscal 2007 was negatively impacted by $12.2 million from interest on preferred stock and the early extinguishment of debt and preferred stock
Earnings before interest, taxes, depreciation and amortization (EBITDA) in the first quarter of 2008 increased 8.7% to $44.4 million as compared to $40.8 million in first quarter of fiscal 2007.
Total debt was $595.5 million at June 29, 2007, a reduction of $35.5 million from March 30, 2007. Of this total, $34.6 million was due to an Excess Cash Flow payment requirement under the terms of our credit agreement. Accounts receivable as of June 29, 2007 was $496.1 million, up from $462.0 million as of March 30, 2007 which resulted in a corresponding increase in Days Sales Outstanding (DSO) to 74 days from 67 days. This increase was primarily due to payment timing issues related to a system change with the Department of State.
Backlog as of June 29, 2007 was $6.0 billion. Included in this total is $3.3 billion from the linguist and translation services contract awarded by the U.S. Army Intelligence and Security Command (INSCOM) to Global Linguist Solutions LLC (GLS), a joint venture of DynCorp International and McNeil Technologies. The incumbent contractor's protest of the award to GLS was sustained by the Government Accountability Office (GAO). The company's backlog and estimated remaining contract value metrics may require future adjustment depending on the outcome of future procurement actions taken by the U.S. Army in implementing the GAO's recommendation.
Fiscal 2008 Guidance
The Company confirms the previously provided guidance for its fiscal year ending March 28, 2008, based on its current backlog and management's estimate of future contract awards. This guidance excludes the previously discussed INSCOM contract award.
| FY 2008 | ||
| Revenue | $2.3 to $2.4 billion | |
| EBITDA | $190 to $200 million | |
| Diluted earnings per share | $1.00 to $1.10 | |
Conference Call
The Company will host a conference call at 8:30 a.m. EDT on Monday, July 30, 2007 to discuss fiscal 2008 first quarter results. To participate in the conference call, dial (866) 871-0758 and enter conference ID number: 6253830. International callers should dial (706) 634-5249 and enter the same conference ID number above. A telephonic replay will be available from 9:30 a.m. EDT on July 30, 2007 through 11:59 pm EDT on August 13, 2007. To access the replay, please dial (800) 642-1687 or (706) 645-9291 and enter the following ID number: 6253830 .
About DynCorp International
DynCorp International Inc., through its operating company DynCorp International LLC, is a provider of specialized mission-critical technical services to civilian and military government agencies. It operates major programs in law enforcement training and support, security services, base operations, aviation services and operations and logistics support worldwide. Headquartered in Falls Church, VA, DynCorp International Inc. has more than 14,600 employees worldwide. For more information, visit our website at 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 Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 its 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: changes in the demand for services the Company provides; termination of key U.S. government contracts; pursuit of new commercial business and foreign government opportunities; activities of competitors including the filing of bid protests; changes in significant operating expenses; changes in availability of capital; general economic and business conditions in the U.S. and abroad; acts of war or terrorist activities; variations in performance of financial markets; and other risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. 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.
| DYNCORP INTERNATIONAL INC. | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Amounts in thousands, except per share data) | ||||||||
| For the Three Months Ended | ||||||||
| June 29, 2007 | June 30, 2006 | |||||||
| (unaudited) | (unaudited) | |||||||
| Revenues | $ | 548,673 | $ | 537,684 | ||||
| Cost of services | (480,089 | ) | (470,334 | ) | ||||
| Selling, general and administrative expenses | (26,536 | ) | (27,405 | ) | ||||
| Depreciation and amortization expense | (10,390 | ) | (11,137 | ) | ||||
| Operating income | 31,658 | 28,808 | ||||||
| Other (expense) income: | ||||||||
| Interest expense | (14,489 | ) | (14,814 | ) | ||||
| Interest expense on mandatory redeemable shares | - | (3,002 | ) | |||||
| Loss on early extinguishment of debt and preferred stock (1) | - | (9,201 | ) | |||||
| Net earnings from affiliates | 891 | 446 | ||||||
| Interest income | 1,250 | 150 | ||||||
| Income before income taxes | 19,310 | 2,387 | ||||||
| Provision for income taxes | (7,052 | ) | (3,004 | ) | ||||
| Net income (loss) | $ | 12,258 | $ | (617 | ) | |||
| Earnings (loss) per share: | ||||||||
| Basis and diluted | $ | 0.22 | $ | (0.01 | ) | |||
| Average shares outstanding: | ||||||||
| Basic and diluted | 57,000 | 47,934 | ||||||
| EBITDA (2) | $ | 44,368 | $ | 40,804 | ||||
| EBITDA margin | 8.1 | % | 7.6 | % | ||||
| Operating cash flow | $ | 3,563 | $ | 2,977 | ||||
| (1) Represents the premium associated with the redemption of all of the outstanding preferred stock, premium on the redemption of a portion of the senior subordinated notes and write-off of deferred financing costs associated with the early retirement of a portion of the senior subordinated notes. | ||||||||
(2) EBITDA is a primary component of certain covenants under our senior secured credit facility and is defined as net income before interest expense, income taxes, depreciation and amortization. We believe that EBITDA is useful to investors as a way to evaluate our ability to incur and service debt, make capital expenditures and meet working capital requirements. EBITDA does not represent net income or cash flows from operations, as these terms are defined under generally accepted accounting principles (?GAAP?), and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with GAAP. EBITDA as presented in this press release is not necessarily comparable to similarly titled measures reported by other companies. | ||||||||
| DYNCORP INTERNATIONAL INC. | |||||||
| RECONCILIATION OF NET INCOME TO EBITDA | |||||||
| (In thousands) | |||||||
| For the Three Months Ended | |||||||
| June 29, 2007 | June 30, 2006 | ||||||
| (unaudited) | (unaudited) | ||||||
| Net income (loss) | $ | 12,258 | $ | (617 | ) | ||
| Provision for income taxes | 7,052 | 3,004 | |||||
| Interest expense | 14,489 | 14,814 | |||||
| Interest expense on mandatory redeemable shares | - | 3,002 | |||||
| Loss on early extinguishment of debt and preferred stock (1) | - | 9,201 | |||||
| Depreciation and amortization | 10,569 | 11,400 | |||||
| EBITDA | $ | 44,368 | $ | 40,804 | |||
| (1) Represents the premium associated with the redemption of all of the outstanding preferred stock, the premium on the redemption of a portion of the senior subordinated notes and the write-off of deferred financing costs associated with the early retirement of a portion of the senior subordinated notes. | |||||||
| DYNCORP INTERNATIONAL INC. | |||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||||
| June 29, 2007 | June 30, 2006 | ||||||||||||||||||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 12,258 | $ | (617 | ) | ||||||||||||||||||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities from continuing operations: | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 10,569 | 11,400 | |||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of debt | - | 2,657 | |||||||||||||||||||||||||||||||||||
| Loss on early extinguishment of preferred stock | - | 5,717 | |||||||||||||||||||||||||||||||||||
| Amortization of deferred loan costs | 753 | 1,579 | |||||||||||||||||||||||||||||||||||
| Recovery of losses on accounts receivable | (955 | ) | (2,250 | ) | |||||||||||||||||||||||||||||||||
| Net income from affiliates | (891 | ) | (446 | ) | |||||||||||||||||||||||||||||||||
| Deferred income taxes | 1,012 | (3,459 | ) | ||||||||||||||||||||||||||||||||||
| Equity-based compensation | 1,205 | 695 | |||||||||||||||||||||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||||||||||||||||||||
| Restricted cash | (3,591 | ) | - | ||||||||||||||||||||||||||||||||||
| Accounts receivable | (32,185 | ) | (31,353 | ) | |||||||||||||||||||||||||||||||||
| Prepaid expenses and other assets | (3,584 | ) | 1,802 | ||||||||||||||||||||||||||||||||||
| Accounts payable and accrued liabilities | 24,257 | 23,612 | |||||||||||||||||||||||||||||||||||
| Redeemable preferred stock dividend | - | (3,695 | ) | ||||||||||||||||||||||||||||||||||
| Income taxes payable | (5,285 | ) | (2,665 | ) | |||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | 3,563 | 2,977 | |||||||||||||||||||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||||||||||||||||
| Purchase of property and equipment | (520 | ) | (2,557 | ) | |||||||||||||||||||||||||||||||||
| Purchase of computer software | (753 | ) | (622 | ) | |||||||||||||||||||||||||||||||||
| Other assets | 100 | Share
© Business Wire - 2007
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