Engility Reports Second Quarter 2015 Results

CHANTILLY, Va., Aug. 6, 2015 /PRNewswire/ -- Engility Holdings, Inc. (NYSE: EGL) today announced financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Results

For the second quarter of 2015, the Company reported total revenue of $575 million. GAAP operating income was $38 million and GAAP operating margin was 6.6%. GAAP net income attributable to Engility was $13 million, or $0.35 per diluted share, which includes a non-cash tax benefit of approximately $11 million. Cash flow from operating activities was $17 million, which reflects the impact of $24 million of various acquisition and integration-related payments in the quarter.

Adjusted operating income was $52 million and adjusted operating margin was 9.1%. Adjusted net income attributable to Engility was $19 million, or $0.51 per diluted share. Adjusted EBITDA was $59 million and adjusted EBITDA margin was 10.2%.

Engility's adjusted results for net income, operating margin and EBITDA exclude $4 million of TASC acquisition and integration costs. Adjusted operating margin and adjusted net income also exclude $11 million of amortization of intangible asset expenses associated with the TASC and DRC acquisitions. Information about the Company's use of non-GAAP financial information is provided below under "Non-GAAP Measures."

"Our results for the quarter were solid; profitability exceeded our expectations and our funded order book-to-bill ratio remained healthy," said Tony Smeraglinolo, President and CEO of Engility. "Our TASC integration efforts also are progressing well, as we are realizing cost synergies ahead of schedule and continue to win new business. Our recent win with the U.S. Air Force represents Engility's largest take-away success in our brief history. This win is consistent with our stated strategy of pursing larger competitive opportunities and enabling our customers to realize considerable value from our cost efficiencies and technical expertise. While procurement and contract award delays continue, our proposal activity is strong and the amount of submitted bids awaiting adjudication continues to increase, providing optimism for our growth prospects."

Key Performance Indicators for the Second Quarter of 2015

• Contract funded orders were $546 million and funded backlog was $909 million.
• Funded order book-to-bill ratio was 0.95x.
• Days sales outstanding (DSO), net of advanced payments, was 60 days.

Significant Second Quarter 2015 Awards

• Awarded a $67 million contract to provide systems engineering and integration for the U.S. Air Force Global Positioning Systems (GPS) Directorate, the agency responsible for ensuring the space-based satellite navigation system is operational. The contract has a two-year base period and four-and-a-half option years that if exercised, total more than $200 million. Under this contract, TASC, an Engility company, will provide a broad range of technical, procurement and engineering assistance to the Air Force Directorate.
• Awarded a $35 million contract to continue providing radar engineering, software support and logistics services for the Naval Surface Warfare Center - Port Hueneme Division. This award, which is follow-on work to a TASC contract, has a cumulative value of $53 million if all options are exercised.
• Awarded a $14 million contract by the U.S. Agency for International Development (USAID) to provide specialized technical assistance in Tanzania. Engility will help the Tanzanian government fight illegal wildlife trade and increase tourism and related business activities in the country.
• Awarded an $8 million contract to provide specialized technical consulting to support USAID's program to build sustainable energy futures for Eastern Europe countries, the Balkans and the Caucasus. Under this contract, Engility will provide technical assistance to help these countries develop and use clean energy technology that will sustain economic growth and reduce poverty by promoting the transition to low-carbon economies. This transition will help reduce greenhouse gas emissions.

Fiscal Year 2015 Guidance

We are updating the fiscal year 2015 financial guidance we issued on May 11, 2015 based on our financial results for the first six months of 2015 and our outlook for the remainder of the year. We are increasing our fiscal year 2015 GAAP diluted EPS and adjusted diluted EPS guidance ranges. We also are increasing the lower-end of our adjusted EBITDA guidance range and narrowing our revenue guidance range. The table below summarizes our fiscal year 2015 guidance and includes approximately 10 months of TASC's expected financial results since the acquisition closed on February 26, 2015.

(1) 2015 GAAP and adjusted diluted EPS guidance assumes weighted average outstanding shares of approximately 34 million. GAAP diluted EPS assumes an effective tax rate of approximately 25 percent for the last six months of 2015. Adjusted diluted EPS assumes 2015 net cash tax payments of approximately $5 million. Our adjusted diluted EPS and adjusted EBITDA guidance excludes approximately $70 million to $75 million of amortization of acquired intangible assets, and deal and integration costs associated with the TASC and DRC acquisitions.

Non-GAAP Measures

The tables under "Engility Holdings, Inc. Reconciliation of Non-GAAP Measures" present Adjusted Operating Income, Adjusted Operating Margin, Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA), Adjusted EBITDA, EBITDA Margin, Adjusted EBITDA Margin, Adjusted Income before Income Tax, Adjusted Net Income, and Adjusted Diluted EPS, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Engility has provided these Non-GAAP Measures to adjust for, among other things, the impact of transaction and integration costs and amortization expenses related to our acquisitions of TASC and DRC, as well as restructuring and legal and settlement costs. These items have been adjusted because they are not considered core to the Company's business or otherwise not considered operational or because these charges are non-cash or non-recurring. The Company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Engility's performance during the periods presented and the Company's ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

CONFERENCE CALL INFORMATION

Engility will host a conference call at 5 P.M. ET on August 6, 2015, to discuss the financial results for our second quarter 2015.

Listeners may access a webcast of the live conference call from the Investor Relations section of the Company's website at http://www.EngilityCorp.com.  Listeners also may access a slide presentation on the website which summarizes our 2015 second quarter results and our fiscal year 2015 guidance. Listeners should go to the website at least 15 minutes before the live event to download and install any necessary audio software.

Listeners also may participate in the conference call by dialing (866) 300-6036 (domestic) or (412) 455-6216 (international) and entering pass code 82503886.

A replay will be available on the Company's website approximately two hours after the conference call and continuing for one year. A telephonic replay also will be available through August 13, 2015 at (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering pass code 82503886.

ABOUT ENGILITY

Engility is a pure-play government services provider that delivers highly skilled personnel wherever, whenever they are needed in a cost-efficient manner. The Company proudly serves customers that span the federal services market including the Department of Defense, the Intelligence community, Space and Federal Civilian agencies. Headquartered in Chantilly, Virginia, Engility is a leading provider of specialized technical consulting, program and business support services, engineering and technology lifecycle support, information technology, modernization and sustainment, supply chain services and logistics management, and training and education for the U.S. Government. To learn more about Engility, please visit www.engilitycorp.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Engility's future prospects, projected financial results, estimated integration costs and acquisition related amortization expenses, business plans, as well as the TASC transaction and its expected benefits and the timing of such benefits. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates" and similar expressions are also used to identify these forward-looking statements. These statements are based on the current beliefs and expectations of Engility's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause Engility's actual results to differ materially from those described in the forward-looking statements can be found under the heading "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2014, and more recent documents that have been filed with the Securities and Exchange Commission (SEC) and are available on the investor relations section of Engility's website (http://www.engilitycorp.com) and on the SEC's website (www.sec.gov). Forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, historical information should not be considered as an indicator of future performance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SOURCE Engility Holdings, Inc.