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: | May 15, 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 May 15, 2017, furnished pursuant to Item 2.02 of this Form 8-K. |
• | Revenue $459.9 million |
• | Net loss attributable to Delta Tucker Holdings, Inc. of $0.487 million |
• | Adjusted EBITDA of $36.5 million |
• | Total backlog of $3.8 billion |
• | DSO of 56 days |
• | In January 2017, DynLogistics announced the award of a contract extension for the War Reserve Materiel II contract through September 30, 2017. The contract extension has a total potential value of $22.7 million. |
• | In January 2017, DynLogistics announced the award of the War Reserve Materiel III contract to manage the U.S. Air Force Central Command Area of Responsibility War Reserve Materiel Pre-positioning program, which includes operations in Oman, Bahrain, Qatar, Kuwait, United Arab Emirates and two locations in the United States. The contract has a three-month transition period, five-month base period with seven one-year options and a total potential contract value of $412 million. |
• | In April 2017, we completed the redemption of all $39.3 million principal amount of the Company’s remaining 10.375% Senior Unsecured Notes due 2017 using the proceeds of a capital contribution from an affiliate of Cerberus. |
Three Months Ended March 31, 2017 | Three Months Ended March 25, 2016 | ||||||
Revenue | $ | 459,872 | $ | 419,990 | |||
Cost of services | (399,477 | ) | (372,498 | ) | |||
Selling, general and administrative expenses | (31,719 | ) | (34,090 | ) | |||
Depreciation and amortization expense | (8,555 | ) | (8,291 | ) | |||
Earnings from equity method investees | 43 | 367 | |||||
Operating income | 20,164 | 5,478 | |||||
Interest expense | (18,715 | ) | (15,968 | ) | |||
Interest income | 5 | 60 | |||||
Other income, net | 1,373 | 352 | |||||
Income (loss) before income taxes | 2,827 | (10,078 | ) | ||||
Provision for income taxes | (3,039 | ) | (4,494 | ) | |||
Net loss | (212 | ) | (14,572 | ) | |||
Noncontrolling interests | (275 | ) | (187 | ) | |||
Net loss attributable to DTH, Inc. | $ | (487 | ) | $ | (14,759 | ) | |
Provision for income taxes | 3,039 | 4,494 | |||||
Interest expense, net of interest income | 18,710 | 15,908 | |||||
Depreciation and amortization (1) | 8,898 | 8,516 | |||||
EBITDA (2) | $ | 30,160 | $ | 14,159 | |||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | (166 | ) | 540 | ||||
Employee share based compensation, severance, relocation and retention expense (4) | 1,130 | 394 | |||||
Cerberus fees (5) | 650 | 909 | |||||
Global Advisory Group expenses (6) | 5,160 | 4,851 | |||||
Other (7) | (406 | ) | (359 | ) | |||
Adjusted EBITDA | $ | 36,528 | $ | 20,494 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
(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 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 three months ended March 31, 2017 and March 25, 2016, respectively, 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. CY17 QTD Q1 | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating income (loss) | $ | 3,279 | $ | 15,667 | $ | 17,500 | $ | (16,282 | ) | $ | 20,164 | ||||||||
Depreciation and amortization expense (1) | 265 | 24 | 140 | 8,469 | 8,898 | ||||||||||||||
Noncontrolling interests | — | — | — | (275 | ) | (275 | ) | ||||||||||||
Other income (loss), net | (52 | ) | 1,049 | 107 | 269 | 1,373 | |||||||||||||
EBITDA(2) | $ | 3,492 | $ | 16,740 | $ | 17,747 | $ | (7,819 | ) | $ | 30,160 | ||||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | — | — | (756 | ) | 590 | (166 | ) | ||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 546 | 247 | 323 | 14 | 1,130 | ||||||||||||||
Cerberus fees (5) | 201 | 200 | 215 | 34 | 650 | ||||||||||||||
Global Advisory Group expenses (6) | — | — | — | 5,160 | 5,160 | ||||||||||||||
Other (7) | — | — | (40 | ) | (366 | ) | (406 | ) | |||||||||||
Adjusted EBITDA | $ | 4,239 | $ | 17,187 | $ | 17,489 | $ | (2,387 | ) | $ | 36,528 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
(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 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 three months ended March 31, 2017 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. CY16 QTD Q1 | |||||||||||||||||||
AELS | AOLC | DynLogistics | Headquarters/ Others | Consolidated | |||||||||||||||
Operating income (loss) | $ | 1,741 | $ | 8,958 | $ | 9,956 | $ | (15,177 | ) | $ | 5,478 | ||||||||
Depreciation and amortization expense (1) | 129 | 34 | 62 | 8,291 | 8,516 | ||||||||||||||
Noncontrolling interests | — | — | — | (187 | ) | (187 | ) | ||||||||||||
Other income, net | 16 | 1 | 13 | 322 | 352 | ||||||||||||||
EBITDA(2) | $ | 1,886 | $ | 8,993 | $ | 10,031 | $ | (6,751 | ) | $ | 14,159 | ||||||||
Certain income/expense or gain/loss adjustments per our credit agreements (3) | — | 331 | 154 | 55 | 540 | ||||||||||||||
Employee share based compensation, severance, relocation and retention expense (4) | 314 | (71 | ) | 16 | 135 | 394 | |||||||||||||
Cerberus fees (5) | 267 | 253 | 238 | 151 | 909 | ||||||||||||||
Global Advisory Group expenses (6) | — | — | — | 4,851 | 4,851 | ||||||||||||||
Other (7) | (35 | ) | — | — | (324 | ) | (359 | ) | |||||||||||
Adjusted EBITDA | $ | 2,432 | $ | 9,506 | $ | 10,439 | $ | (1,883 | ) | $ | 20,494 |
(1) | Includes certain depreciation and amortization amounts which are classified as Cost of services in the condensed consolidated statements of operations. |
(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 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) | Reflects Global Advisory Group cost incurred during the three months ended March 25, 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. |
As of | ||||||||
March 31, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 107,207 | $ | 118,218 | ||||
Restricted cash | 2,504 | 7,664 | ||||||
Accounts receivable, net of allowances of $17,155 and $17,189, respectively | 306,030 | 300,255 | ||||||
Other current assets | 67,319 | 65,694 | ||||||
Total current assets | 483,060 | 491,831 | ||||||
Non-current assets | 176,485 | 184,706 | ||||||
Total assets | $ | 659,545 | $ | 676,537 | ||||
LIABILITIES AND DEFICIT | ||||||||
Current portion of long-term debt | $ | 62,955 | $ | 62,843 | ||||
Other current liabilities | 258,236 | 278,703 | ||||||
Total current liabilities | 321,191 | 341,546 | ||||||
Long-term debt | 574,032 | 569,613 | ||||||
Other long-term liabilities | 26,694 | 27,315 | ||||||
Total deficit attributable to Delta Tucker Holdings, Inc. | (267,832 | ) | (267,392 | ) | ||||
Noncontrolling interests | 5,460 | 5,455 | ||||||
Total deficit | (262,372 | ) | (261,937 | ) | ||||
Total liabilities and deficit | $ | 659,545 | $ | 676,537 |
As of | ||||||||
March 31, 2017 | December 31, 2016 | |||||||
Backlog(1): | ||||||||
Funded backlog | $ | 1,264 | $ | 1,403 | ||||
Unfunded backlog | 2,524 | 2,313 | ||||||
Total Backlog | $ | 3,788 | $ | 3,716 |
(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 three months ended | ||||||||
March 31, 2017 | March 25, 2016 | |||||||
Cash Flow Information: | ||||||||
Net cash used in operating activities | $ | (15,048 | ) | $ | (30,543 | ) | ||
Net cash provided by (used in) investing activities | 4,116 | (3,298 | ) | |||||
Net cash used in financing activities | (79 | ) | (154 | ) | ||||
Net cash provided by operating activities | (15,048 | ) | (30,543 | ) | ||||
Less: Purchase of property and equipment | (1,757 | ) | (812 | ) | ||||
Proceeds from sale of property and equipment | 370 | — | ||||||
Less: Purchase of software | (26 | ) | (1,261 | ) | ||||
Free cash flow | $ | (16,461 | ) | $ | (32,616 | ) |
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