Delaware | 333-173746 | 27-2525959 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: | March 29, 2017 | DELTA TUCKER HOLDINGS, INC. |
/s/ William T. Kansky | ||
William T. Kansky | ||
Senior Vice President and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | Press Release issued by the Companies on March 29, 2017, furnished pursuant to Item 2.02 of this Form 8-K. |
• |
• | Fourth quarter revenue $461.8 million; 2016 revenue of $1,836.2 million |
• | Fourth quarter net loss attributable to Delta Tucker Holdings, Inc. of $6.9 million |
• | Fourth quarter Adjusted EBITDA of $32.0 million; 2016 Adjusted EBITDA of $101.0 million |
• | Total backlog of $3.7 billion |
• | DSO of 56 days |
• | 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. |
Year Ended December 31, 2016 | Year Ended December 31, 2015 | ||||||
Revenue | $ | 1,836,154 | $ | 1,923,177 | |||
Cost of services | (1,636,331 | ) | (1,721,679 | ) | |||
Selling, general and administrative expenses | (139,531 | ) | (144,675 | ) | |||
Depreciation and amortization expense | (34,889 | ) | (34,986 | ) | |||
Earnings from equity method investees | 1,066 | 140 | |||||
Impairment of goodwill, intangibles and long lived assets | (1,782 | ) | (96,696 | ) | |||
Operating income (loss) | 24,687 | (74,719 | ) | ||||
Interest expense | (72,361 | ) | (68,824 | ) | |||
Loss on early extinguishment of debt | (328 | ) | — | ||||
Interest income | 212 | 110 | |||||
Other income, net | 4,935 | 3,968 | |||||
Loss before income taxes | (42,855 | ) | (139,465 | ) | |||
(Provision) benefit for income taxes | (10,138 | ) | 8,672 | ||||
Net loss | (52,993 | ) | (130,793 | ) | |||
Noncontrolling interests | (1,071 | ) | (1,809 | ) | |||
Net loss attributable to DTH, Inc. | $ | (54,064 | ) | $ | (132,602 | ) | |
Provision (benefit) for income taxes | 10,138 | (8,672 | ) | ||||
Interest expense, net of interest income | 72,149 | 68,714 | |||||
Depreciation and amortization (1) | 35,954 | 37,254 | |||||
EBITDA (2) | $ | 64,177 | $ | (35,306 | ) | ||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | 9,561 | 119,406 | |||||
Employee share based compensation, severance, relocation and retention expense (4) | 1,756 | 7,026 | |||||
Cerberus fees (5) | 3,053 | 4,062 | |||||
Global Advisory Group expenses (6) | 23,057 | — | |||||
Annualized operational efficiencies (7) | — | 2,094 | |||||
Other (8) | (581 | ) | (1,139 | ) | |||
Adjusted EBITDA | $ | 101,023 | $ | 96,143 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc. included in the Annual Report on Form 10-K. |
(2) | We define EBITDA as GAAP net loss 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 $1.8 million impairment of investment in affiliates and certain costs associated with the Refinancing Transactions in 2016, $86.8 million impairment of goodwill and the impairment of certain intangibles, indefinite-lived tradename and assets held for sale of $9.9 million in 2015, as well as 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 accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(5) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(6) | Reflects Global Advisory Group cost incurred during the year ended December 31, 2016 which we are able to add back to Adjusted EBITDA under the Indenture and New Senior Credit Facility in an aggregate amount up to a total of $30 million. |
(7) | Represents a defined EBITDA adjustment under the Indenture and Senior Credit Facility for the amount of cost savings, operating expense reductions and synergies projected as a result of specified actions taken or with respect to which substantial steps have been taken during the period. Per the Indenture and New Senior Credit Facility, annualized operational efficiencies are no longer defined as EBITDA adjustments as of the year ended December 31, 2016. |
(8) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
DTH, Inc. CY16 YTD | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating (loss) income | $ | (19,213 | ) | $ | 49,334 | $ | 70,402 | $ | (75,836 | ) | $ | 24,687 | |||||||
Depreciation and amortization expense (1) | 675 | 541 | 388 | 34,350 | 35,954 | ||||||||||||||
Loss on early extinguishment of debt | — | — | — | (328 | ) | (328 | ) | ||||||||||||
Noncontrolling interests | — | — | — | (1,071 | ) | (1,071 | ) | ||||||||||||
Other income (loss), net | 71 | 4,261 | (161 | ) | 764 | 4,935 | |||||||||||||
EBITDA(2) | $ | (18,467 | ) | $ | 54,136 | $ | 70,629 | $ | (42,121 | ) | $ | 64,177 | |||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | — | 1,436 | (482 | ) | 8,607 | 9,561 | |||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 758 | 343 | 356 | 299 | 1,756 | ||||||||||||||
Cerberus fees (5) | 935 | 883 | 847 | 388 | 3,053 | ||||||||||||||
Global Advisory Group expenses (6) | — | — | — | 23,057 | 23,057 | ||||||||||||||
Other (7) | 7 | 6 | 188 | (782 | ) | (581 | ) | ||||||||||||
Adjusted EBITDA | $ | (16,767 | ) | $ | 56,804 | $ | 71,538 | $ | (10,552 | ) | $ | 101,023 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc. included in the Annual Report on Form 10-K. |
(2) | We define EBITDA as GAAP net income (loss) 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 $1.8 million impairment of investment in affiliates and certain costs associated with the Refinancing Transactions, as well as 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 accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(5) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(6) | Reflects Global Advisory Group cost incurred during the year ended December 31, 2016 which we are able to add back to Adjusted EBITDA under the Indenture and New Senior Credit Facility in an aggregate amount up to a total of $30 million. |
(7) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
DTH, Inc. CY15 YTD | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating (loss) income | $ | (97,400 | ) | $ | 28,160 | $ | 42,496 | $ | (47,975 | ) | $ | (74,719 | ) | ||||||
Depreciation and amortization expense (1) | 1,400 | 1,073 | 250 | 34,531 | 37,254 | ||||||||||||||
Noncontrolling interests | — | — | — | (1,809 | ) | (1,809 | ) | ||||||||||||
Other income (loss), net | (894 | ) | 9 | 55 | 4,798 | 3,968 | |||||||||||||
EBITDA(2) | $ | (96,894 | ) | $ | 29,242 | $ | 42,801 | $ | (10,455 | ) | $ | (35,306 | ) | ||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | 88,489 | 17,390 | 10,568 | 2,959 | 119,406 | ||||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 2,319 | 2,432 | 1,284 | 991 | 7,026 | ||||||||||||||
Cerberus fees (5) | 1,239 | 1,171 | 1,180 | 472 | 4,062 | ||||||||||||||
Annualized operational efficiencies (6) | — | — | — | 2,094 | 2,094 | ||||||||||||||
Other (7) | 47 | 44 | 45 | (1,275 | ) | (1,139 | ) | ||||||||||||
Adjusted EBITDA | $ | (4,800 | ) | $ | 50,279 | $ | 55,878 | $ | (5,214 | ) | $ | 96,143 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc. included in the Annual Report on Form 10-K. |
(2) | We define EBITDA as GAAP net income (loss) 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 impairment of goodwill within the AELS reporting unit and the impairment of certain intangibles, indefinite-lived tradename and assets held for sale, as well as certain unusual income and expense items, as defined in the Indenture and Senior Credit Facility. |
(4) | Includes post-employment benefit expense related to severance in accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(5) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(6) | Represents a defined EBITDA adjustment under the Indenture and Senior Credit Facility for the amount of cost savings, operating expense reductions and synergies projected as a result of specified actions taken or with respect to which substantial steps have been taken during the period. Per the Indenture and New Senior Credit Facility, annualized operational efficiencies are no longer defined as EBITDA adjustments as of the year ended December 31, 2016. |
(7) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
DTH, Inc. CY16 QTD Q4 | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating (loss) income | $ | (3,676 | ) | $ | 16,591 | $ | 20,604 | $ | (18,772 | ) | $ | 14,747 | |||||||
Depreciation and amortization expense (1) | 244 | 28 | 128 | 8,755 | 9,155 | ||||||||||||||
Noncontrolling interests | — | — | — | (268 | ) | (268 | ) | ||||||||||||
Other income (loss), net | 42 | (394 | ) | (50 | ) | 158 | (244 | ) | |||||||||||
EBITDA(2) | $ | (3,390 | ) | $ | 16,225 | $ | 20,682 | $ | (10,127 | ) | $ | 23,390 | |||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | — | 420 | 794 | 267 | 1,481 | ||||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 297 | 302 | 148 | 9 | 756 | ||||||||||||||
Cerberus fees (5) | 198 | 186 | 203 | 72 | 659 | ||||||||||||||
Global Advisory Group expenses (6) | — | — | — | 5,801 | 5,801 | ||||||||||||||
Other (7) | (123 | ) | 6 | 188 | (148 | ) | (77 | ) | |||||||||||
Adjusted EBITDA | $ | (3,018 | ) | $ | 17,139 | $ | 22,015 | $ | (4,126 | ) | $ | 32,010 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc. included in the Annual Report on Form 10-K. |
(2) | We define EBITDA as GAAP net income (loss) 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 accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(5) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(6) | Reflects Global Advisory Group cost incurred during the year ended December 31, 2016 which we are able to add back to Adjusted EBITDA under the Indenture and New Senior Credit Facility in an aggregate amount up to a total of $30 million. |
(7) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
DTH, Inc. CY15 QTD Q4 | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating (loss) income | $ | (6,572 | ) | $ | 13,840 | $ | 14,689 | $ | (15,935 | ) | $ | 6,022 | |||||||
Depreciation and amortization expense (1) | 158 | 24 | 63 | 9,383 | 9,628 | ||||||||||||||
Noncontrolling interests | — | — | — | (582 | ) | (582 | ) | ||||||||||||
Other income (loss), net | 50 | (100 | ) | 1 | 2,342 | 2,293 | |||||||||||||
EBITDA(2) | $ | (6,364 | ) | $ | 13,764 | $ | 14,753 | $ | (4,792 | ) | $ | 17,361 | |||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | (86 | ) | 3,448 | 538 | 1,054 | 4,954 | |||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 207 | 97 | 131 | 354 | 789 | ||||||||||||||
Cerberus fees (5) | 302 | 285 | 269 | 154 | 1,010 | ||||||||||||||
Other (6) | 9 | — | — | (217 | ) | (208 | ) | ||||||||||||
Adjusted EBITDA | $ | (5,932 | ) | $ | 17,594 | $ | 15,691 | $ | (3,447 | ) | $ | 23,906 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the consolidated statements of operations of Delta Tucker Holdings, Inc. included in the Annual Report on Form 10-K. |
(2) | We define EBITDA as GAAP net income (loss) 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 impairment of certain intangibles, indefinite-lived tradename and assets held for sale, as well as certain unusual income and expense items, as defined in the Indenture and Senior Credit Facility. |
(4) | Includes post-employment benefit expense related to severance in accordance with ASC 712 - Compensation, relocation expenses, retention expense and share based compensation expense. |
(5) | Includes Cerberus Operations and Advisory Company expenses, net of recovery. |
(6) | Includes changes due to fluctuations in foreign exchange rates, earnings from affiliates not received in cash, costs incurred pursuant to ASC 805 - Business Combination and other immaterial items. |
As of | ||||||||
December 31, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 118,218 | $ | 108,782 | ||||
Restricted cash | 7,664 | 721 | ||||||
Accounts receivable, net of allowances of $17,189 and $16,283, respectively | 300,255 | 386,097 | ||||||
Other current assets | 65,694 | 55,683 | ||||||
Assets held for sale | — | 7,913 | ||||||
Total current assets | 491,831 | 559,196 | ||||||
Non-current assets | 184,706 | 225,493 | ||||||
Total assets | $ | 676,537 | $ | 784,689 | ||||
LIABILITIES AND DEFICIT | ||||||||
Current portion of long-term debt | 62,843 | 184,866 | ||||||
Other current liabilities | 278,703 | 342,257 | ||||||
Total current liabilities | 341,546 | 527,123 | ||||||
Long-term debt | 569,613 | 452,165 | ||||||
Other long-term liabilities | 27,315 | 13,571 | ||||||
Total deficit attributable to Delta Tucker Holdings, Inc. | (267,392 | ) | (213,962 | ) | ||||
Noncontrolling interests | 5,455 | 5,792 | ||||||
Total deficit | (261,937 | ) | (208,170 | ) | ||||
Total liabilities and deficit | $ | 676,537 | $ | 784,689 |
As of | ||||||||
December 31, 2016 | December 31, 2015 | |||||||
Backlog(1): | ||||||||
Funded backlog | $ | 1,403 | $ | 1,183 | ||||
Unfunded backlog | 2,313 | 1,859 | ||||||
Total Backlog | $ | 3,716 | $ | 3,042 |
(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. |
For the year ended | ||||||||
December 31, 2016 | December 31, 2015 | |||||||
Cash Flow Information: | ||||||||
Net cash provided by operating activities | $ | 41,153 | $ | 19,572 | ||||
Net cash used in investing activities | (16,940 | ) | (2,735 | ) | ||||
Net cash used in financing activities | (14,777 | ) | (2,059 | ) | ||||
Net cash provided by operating activities | 41,153 | 19,572 | ||||||
Less: Purchase of property and equipment | (5,346 | ) | (3,179 | ) | ||||
Proceeds from sale of property and equipment | 832 | 526 | ||||||
Less: Purchase of software | (2,634 | ) | (1,555 | ) | ||||
Free cash flow | $ | 34,005 | $ | 15,364 |
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