Attached files
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| 8-K - 8-K - Engility Holdings, Inc. | d695107d8k.htm |
Exhibit 99.1
Engility Reports Fourth Quarter and Full Year 2013 Results; Establishes 2014 Guidance
| • | Fourth quarter revenue of $329 million and adjusted diluted EPS of $1.00 |
| • | Adjusted operating margin increases to 9.3% from 8.9% in the prior quarter |
| • | Fourth quarter 2013 cash flow from operations of $41 million and $151 million for fiscal year 2013 |
| • | Fourth quarter 2013 book-to-bill ratio of 1.1 |
CHANTILLY, VA – March 13, 2014, Engility Holdings, Inc. (NYSE: EGL) today announced financial results for the fourth quarter and full year ended December 31, 2013.
Fourth Quarter 2013 Results
Total revenue for the fourth quarter of 2013 was $329 million and operating income was $19 million. Adjusted operating income for the fourth quarter was $31 million. Operating margin for the fourth quarter of 2013 was 5.7% and adjusted operating margin for the same period was 9.3%. Net income attributable to Engility was $11 million, or $0.60 per diluted share. Adjusted net income was $18 million, or $1.00 per diluted share. Our adjusted net income and operating margin excludes $8 million for restructuring costs primarily related to lease impairments on facilities which are not being utilized, $1 million of legal and settlement costs, $2 million for a non-income tax expense, and $1 million in acquisition-related costs. Information about our use of non-GAAP financial information is provided below under “Non-GAAP Measures”.
“We had another solid quarter of profitability and cash flow. Our focus on increasing our profitability and velocity of cash enabled us to achieve adjusted EPS and cash flow results that were consistent with our guidance,” said Tony Smeraglinolo, President and CEO of Engility. “Our ability to generate strong cash flow also facilitated our acquisition of Dynamics Research Corporation (DRC) in January 2014. This acquisition adds scale to our business, and expands our addressable markets, customer base and capabilities. It also further diversifies our portfolio away from in-theater efforts to more high-end services in areas such as high performance computing, healthcare IT and financial and regulatory reform. In addition, it is expected to be accretive to our 2014 earnings and significantly accretive to 2015 earnings and beyond.”
“2013 was a year of great uncertainty within the government services market, and we anticipate continued pressure on the Department of Defense and Federal civilian agency budgets. However, we are optimistic that the Federal government’s ability to pass the Bipartisan Budget Act of 2013, which sets fiscal years 2014 and 2015 spending targets for DoD and Federal civilian agencies, will provide our customers with the fiscal clarity and program stability they need to make more timely and cost effective purchasing decisions. We will continue to focus on what we can control to ensure we optimize our business model to further differentiate ourselves from our competitors and provide maximum value to our customers and shareholders.”
Key Performance Indicators
| • | Funded backlog at the end of the 2013 fourth quarter was $602 million, compared to $574 million at the end of the third quarter of 2013. |
| • | Contract funded orders in the fourth quarter of 2013 were $357 million, representing a book-to-bill ratio of 1.1. This compares to contract funded orders of $263 million, or a book-to-bill ratio of 0.8, for the third quarter of 2013. |
| • | Days sales outstanding (DSO), net of advanced payments, at the end of the 2013 fourth quarter was 73 days, compared to 77 days at the end of the third quarter of 2013. |
| • | Cash flow from operations was $41 million for the fourth quarter of 2013 and $151 million for fiscal year 2013. |
| • | Our net debt to trailing 12-month adjusted EBITDA leverage ratio was approximately 1.2 times as of December 31, 2013 (prior to the closing of the DRC acquisition). |
Significant Fourth Quarter 2013 Awards and Other Highlights
| • | Awarded a prime position on a $4 billion multi-award contract by the Defense Threat Reduction Agency (DTRA) to provide technology and engineering services to support research and development for combating weapons of mass destruction. Under this ten-year contract (five base years plus five option years), we will provide a range of work, including systems engineering, systems survivability, and weapons of mass destruction medical counter measures and physical counter measures. We also will provide technical nuclear forensics, nuclear detection, standoff detection, treaty and verification technologies and nuclear sensor platforms. |
| • | Awarded a $142 million option year to provide professional, financial and legal support to the Department of Justice’s (DOJ) Asset Forfeiture Program. This contract was awarded to Forfeiture Support Associates (FSA) LLC, a joint venture Engility has with AECOM Government Services Group. Under this single-award IDIQ contract, we provide analytical, legal and other program and business support services at various DOJ offices that are responsible for the administration of Federal Asset Forfeiture programs. |
| • | Awarded a prime position on a $50 million multi-award contract to provide a range of engineering and technology support for U.S. Navy anti-submarine warfare (ASW) sensor systems. Under this new contract, which was awarded by the Naval Air Warfare Aircraft Division based in Patuxent River, MD, we will provide technical and scientific research, development, integration, analysis, assessment, and test and evaluation of ASW sensor systems. Tasks will include work on manned and unmanned platform avionics and sensors overseen by the Acoustics Systems Division and the Electro-Optics and Special Mission Systems Division. |
| • | Awarded a $29.6 million single-award contract to provide engineering and technology support to the U.S. Navy’s Aircraft Launch and Recovery Equipment (ALRE) program. This new contract, which was awarded by the Naval Air Warfare Aircraft Division based in Lakehurst, NJ, will accommodate incumbent work from other contract vehicles and is also expected to create opportunities for additional work. This contract has a base period of approximately $9.8 million and two options years that, if exercised, will total $29.6 million. |
| • | Engility was ranked among the top 100 Military Friendly Employers by Victory Media, publisher of G.I. Jobs and Military Spouse magazines. This designation was based upon a data-driven survey of more than 5,000 companies and assesses a company’s long-term commitment to hiring former military personnel, as well as having the presence of special military recruitment programs, among other items. |
Fiscal Year 2013 Results
For fiscal year 2013, total revenue was $1.4 billion and operating income was $108 million. Adjusted operating income for fiscal year 2013 was $123 million. Operating margin for the 2013 full year was 7.7% and adjusted operating margin for the same period was 8.7%. Net income attributable to Engility was $50 million, or $2.81 per diluted share. Adjusted net income was $61 million, or $3.45 per diluted share. Our adjusted net income and operating margin excludes $8 million for restructuring costs primarily related to lease impairments on facilities which are not being utilized, $4 million of legal and settlement costs, $2 million for a non-income tax expense, and $1 million in acquisition-related costs. Information about our use of non-GAAP financial information is provided below under “Non-GAAP Measures”.
2014 Outlook
The table below summarizes our fiscal year 2014 guidance.
| 2014 Fiscal Year Outlook | ||
| Revenue |
$1.45 billion - $1.55 billion | |
| Adjusted Diluted EPS (1) (2) |
$2.70 - $3.20 | |
| GAAP Diluted EPS (1) |
$2.24 - $2.70 | |
| Operating cash flow |
$95 million - $105 million | |
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| (1) | 2014 GAAP and adjusted diluted EPS guidance assumes weighted-average outstanding shares of approximately 18.4 million and a full year effective tax rate of 39.0%. It also includes eleven months of DRC’s expected financial results since the acquisition closed on January 31, 2014. |
| (2) | Our adjusted diluted EPS guidance excludes an estimated $5.8 million, or $0.19 per share, of additional amortization of intangible asset expenses, and approximately $8.0 to $9.0 million, or $0.27 to $0.30 per share, of estimated integration costs associated with the DRC acquisition. |
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 Net Income, Adjusted Diluted EPS and Adjusted Diluted EPS Guidance, 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 the impact of (i) goodwill impairment charge during 2012, (ii) transaction-related-spin-off costs for the Company’s July 2012 spin-off from L-3 Communications Holdings, Inc., (iii) realignment and restructuring costs, (iv) legal and settlement costs, (v) non-income tax related expenses, (vi)
2
transaction costs and amortization expenses related to our acquisition of Dynamics Research Corporation, and (vii) the write-off of bank debt fees associated with the refinancing of our senior secured credit facility. 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 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 March 13, 2014, to discuss the financial results for the fourth quarter and full year 2013.
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 may also access a slide presentation on the website which summarizes our 2013 fourth quarter and full year results. 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 (877) 546-5019 (domestic) or (857) 244-7551 (international) and entering pass code 81293360.
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 March 20, 2014 at (888) 286-8010 (domestic) or (617) 801-6888 (international) and entering pass code 58982744.
ABOUT ENGILITY CORPORATION
Engility is a pure-play government services contractor providing highly skilled personnel wherever, whenever they are needed in a cost-effective manner. 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, and business plans. 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, 2012, and our more recent periodic reports, which 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.
| Corporate Communications and Media: | Investor Relations: | |
| Eric Ruff | Dave Spille | |
| Engility Holdings, Inc. | Engility Holdings, Inc. | |
| (703) 375-6463 | (703) 375-4221 | |
| eric.ruff@engilitycorp.com | dave.spille@engilitycorp.com |
3
ENGILITY HOLDINGS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2013 | 2012 | Change | 2013 | 2012 | Change | |||||||||||||||||||
| Revenue |
$ | 329,063 | $ | 395,684 | $ | (66,621 | ) | $ | 1,407,372 | $ | 1,555,310 | $ | (147,938 | ) | ||||||||||
| Revenue from former affiliated entities |
— | — | — | — | 100,034 | (100,034 | ) | |||||||||||||||||
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| Total revenue |
329,063 | 395,684 | (66,621 | ) | 1,407,372 | 1,655,344 | (247,972 | ) | ||||||||||||||||
| Costs and expenses |
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| Cost of revenue |
281,707 | 333,641 | (51,934 | ) | 1,214,581 | 1,315,352 | (100,771 | ) | ||||||||||||||||
| Cost of revenue from former affiliated entities |
— | — | — | — | 100,034 | (100,034 | ) | |||||||||||||||||
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| Total cost of revenue |
281,707 | 333,641 | (51,934 | ) | 1,214,581 | 1,415,386 | (200,805 | ) | ||||||||||||||||
| Selling, general and administrative expenses |
28,501 | 34,851 | (6,350 | ) | 84,635 | 142,440 | (57,805 | ) | ||||||||||||||||
| Goodwill impairment charge |
— | — | — | — | 426,436 | (426,436 | ) | |||||||||||||||||
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| Total costs and expenses |
310,208 | 368,492 | (58,284 | ) | 1,299,216 | 1,984,262 | (685,046 | ) | ||||||||||||||||
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| Operating income (loss) |
18,855 | 27,192 | (8,337 | ) | 108,156 | (328,918 | ) | 437,074 | ||||||||||||||||
| Interest expense, net |
2,549 | 5,830 | (3,281 | ) | 21,648 | 10,857 | 10,791 | |||||||||||||||||
| Other income, net |
527 | 188 | 339 | 793 | 136 | 657 | ||||||||||||||||||
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| Income (loss) from continuing operations before income taxes |
16,833 | 21,550 | (4,717 | ) | 87,301 | (339,639 | ) | 426,940 | ||||||||||||||||
| Provision for income taxes |
5,240 | (19,841 | ) | (25,081 | ) | 32,584 | 5,156 | 27,428 | ||||||||||||||||
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| Income (loss) from continuing operations |
11,593 | 41,391 | (29,798 | ) | 54,717 | (344,795 | ) | 399,512 | ||||||||||||||||
| Loss from discontinued operations before income taxes |
— | — | — | — | (1,017 | ) | 1,017 | |||||||||||||||||
| Benefit for income taxes |
— | — | — | — | (391 | ) | 391 | |||||||||||||||||
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| Loss from discontinued operations |
— | — | — | — | (626 | ) | 626 | |||||||||||||||||
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| Net income (loss) |
$ | 11,593 | $ | 41,391 | $ | (29,798 | ) | $ | 54,717 | $ | (345,421 | ) | $ | 400,138 | ||||||||||
| Less: Net income attributable to noncontrolling interest |
914 | 442 | 472 | 5,190 | 4,952 | 238 | ||||||||||||||||||
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| Net income (loss) attributable to Engility |
$ | 10,679 | $ | 40,949 | $ | (30,270 | ) | $ | 49,527 | $ | (350,373 | ) | $ | 399,900 | ||||||||||
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| Earnings (loss) per share allocable to Engility Holdings, Inc. common shareholders – Basic |
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| Net income (loss) per share from continuing operations less noncontrolling interest |
$ | 0.63 | $ | 2.47 | $ | (1.84 | ) | $ | 2.94 | $ | (21.48 | ) | $ | 24.42 | ||||||||||
| Net income (loss) per share from discontinued operations |
— | — | — | — | (0.04 | ) | 0.04 | |||||||||||||||||
| Net income (loss) per share attributable to Engility |
$ | 0.63 | $ | 2.47 | $ | (1.84 | ) | $ | 2.94 | $ | (21.52 | ) | $ | 24.46 | ||||||||||
| Earnings (loss) per share allocable to Engility Holdings, Inc. common shareholders – Diluted |
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| Net income (loss) per share from continuing operations less noncontrolling interest |
$ | 0.60 | $ | 2.38 | $ | (1.78 | ) | $ | 2.81 | $ | (21.48 | ) | $ | 24.29 | ||||||||||
| Net income (loss) per share from discontinued operations |
— | — | — | — | (0.04 | ) | 0.04 | |||||||||||||||||
| Net income (loss) per share attributable to Engility |
$ | 0.60 | $ | 2.38 | $ | (1.78 | ) | $ | 2.81 | $ | (21.52 | ) | $ | 24.33 | ||||||||||
| Weighted average number of shares outstanding |
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| Basic |
16,928 | 16,596 | 16,873 | 16,281 | ||||||||||||||||||||
| Diluted |
17,835 | 17,228 | 17,653 | 16,281 | ||||||||||||||||||||
4
ENGILITY HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
| December 31, | ||||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 29,003 | $ | 27,021 | ||||
| Receivables, net |
286,272 | 366,236 | ||||||
| Other current assets |
25,892 | 34,832 | ||||||
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| Total current assets |
341,167 | 428,089 | ||||||
| Property, plant and equipment, net |
11,895 | 11,941 | ||||||
| Goodwill |
477,604 | 477,604 | ||||||
| Identifiable intangible assets, net |
92,205 | 100,929 | ||||||
| Other assets |
7,183 | 8,887 | ||||||
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| Total assets |
$ | 930,054 | $ | 1,027,450 | ||||
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| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: |
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| Current portion of long-term debt |
$ | 10,000 | $ | 50,250 | ||||
| Accounts payable, trade |
28,286 | 16,861 | ||||||
| Accrued employment costs |
49,582 | 63,278 | ||||||
| Accrued expenses |
63,843 | 77,457 | ||||||
| Advance payments and billings in excess of costs incurred |
19,087 | 27,530 | ||||||
| Deferred income taxes, current and income taxes payable |
10,693 | 10,607 | ||||||
| Other current liabilities |
17,928 | 19,310 | ||||||
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| Total current liabilities |
199,419 | 265,293 | ||||||
| Long-term debt |
187,500 | 284,750 | ||||||
| Income tax payable |
77,494 | 68,725 | ||||||
| Other liabilities |
22,487 | 20,371 | ||||||
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| Total liabilities |
486,900 | 639,139 | ||||||
| Commitments and contingencies |
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| Equity: |
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| Preferred stock, par value $0.01 per share, 25,000 shares authorized, none issued or outstanding as of December 31, 2013 or December 31, 2012 |
— | — | ||||||
| Common stock, par value $0.01 per share, 175,000 shares authorized, 17,238 and 16,703 shares issued and outstanding as of December 31, 2013 and 2012, respectively |
172 | 168 | ||||||
| Additional paid in capital |
761,119 | 755,638 | ||||||
| Accumulated deficit |
(330,911 | ) | (380,438 | ) | ||||
| Non-controlling interest |
12,774 | 12,943 | ||||||
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| Total equity |
443,154 | 388,311 | ||||||
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| Total liabilities and equity |
$ | 930,054 | $ | 1,027,450 | ||||
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5
ENGILITY HOLDINGS, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, | ||||||||
| 2013 | 2012 | |||||||
| Operating activities: |
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| Net income (loss) |
$ | 54,717 | $ | (345,421 | ) | |||
| Less: income (loss) from discontinued operations, net of tax |
— | (626 | ) | |||||
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| Income (loss) from continuing operations |
54,717 | (344,795 | ) | |||||
| Goodwill impairment charge |
— | 426,436 | ||||||
| Share-based compensation |
8,691 | 7,487 | ||||||
| Depreciation and amortization |
12,106 | 16,410 | ||||||
| Amortization of bank debt fees |
6,264 | 1,662 | ||||||
| Deferred income tax benefit |
(1,377 | ) | (63,375 | ) | ||||
| Changes in operating assets and liabilities, excluding acquired amounts: |
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| Receivables |
79,964 | 28,606 | ||||||
| Other assets |
7,590 | (122 | ) | |||||
| Accounts payable, trade |
11,425 | (32,574 | ) | |||||
| Accrued employment costs |
(13,696 | ) | (9,263 | ) | ||||
| Accrued expenses |
(13,614 | ) | 3,351 | |||||
| Advance payments and billings in excess of costs incurred |
(8,443 | ) | 1,944 | |||||
| Other liabilities |
7,213 | (1,783 | ) | |||||
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| Net cash provided by operating activities from continuing operations |
150,840 | 33,984 | ||||||
| Investing activities: |
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| Capital expenditures |
(3,336 | ) | (2,164 | ) | ||||
| Proceeds from sale of property, plant, and equipment |
— | 680 | ||||||
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| Net cash used in investing activities from continuing operations |
(3,336 | ) | (1,484 | ) | ||||
| Financing activities: |
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| Gross borrowings from issuance of long-term debt |
200,000 | 335,000 | ||||||
| Repayments of long term debt |
(337,500 | ) | — | |||||
| Gross borrowings from revolving credit facility |
196,000 | 30,690 | ||||||
| Repayments of revolving credit facility |
(196,000 | ) | (30,690 | ) | ||||
| Debt issuance costs |
(2,493 | ) | (11,005 | ) | ||||
| Distributions to non-controlling interest member |
(5,359 | ) | (2,374 | ) | ||||
| Proceeds from share-based payment arrangements |
936 | 1,225 | ||||||
| Payment of employee withholding taxes on share-based compensation |
(1,106 | ) | (1,778 | ) | ||||
| Dividend to prior parent company |
— | (335,000 | ) | |||||
| Net transfers to prior parent company |
— | (5,235 | ) | |||||
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| Net cash used in financing activities from continuing operations |
(145,522 | ) | (19,167 | ) | ||||
| Discontinued Operations: |
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| Net cash provided by operating activities |
— | 25,952 | ||||||
| Net cash provided by (used in) financing activities |
— | (25,974 | ) | |||||
| Cash balance of discontinued operations |
— | 22 | ||||||
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| Net cash provided by (used in) discontinued operations |
— | — | ||||||
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| Net increase in cash and cash equivalents |
1,982 | 13,333 | ||||||
| Cash and cash equivalents, beginning of the year |
27,021 | 13,688 | ||||||
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| Cash and cash equivalents, end of the year |
$ | 29,003 | $ | 27,021 | ||||
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| Supplemental cash flow disclosure: |
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| Cash paid for taxes |
$ | 31,503 | $ | 15,972 | ||||
| Cash paid for interest |
$ | 14,623 | $ | 9,167 | ||||
6
ENGILITY HOLDINGS, INC.
RECONCILIATION OF NON-GAAP MEASURES
The following tables set forth a reconciliation of each of these Non-GAAP Measures to the most directly comparable GAAP measure for the periods presented (in thousands, except for ratio and per share amounts).
Adjusted Operating Income and Adjusted Operating Margin
(in thousands)
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Operating income |
$ | 18,855 | $ | 27,192 | $ | 108,156 | $ | (328,918 | ) | |||||||
| Adjustments |
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| Goodwill impairment charge |
— | — | — | 426,436 | ||||||||||||
| Transaction-related-spin-off costs |
— | — | — | 17,300 | ||||||||||||
| Restructuring costs (1) |
7,939 | 662 | 7,939 | 8,222 | ||||||||||||
| Legal and settlement costs |
1,065 | 272 | 4,293 | 5,552 | ||||||||||||
| Non-income tax expense |
1,769 | — | 1,769 | — | ||||||||||||
| Acquisition-related expenses |
903 | — | 903 | — | ||||||||||||
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| Total adjustments |
11,676 | 934 | 14,904 | 457,510 | ||||||||||||
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| Adjusted operating income |
$ | 30,531 | $ | 28,126 | $ | 123,060 | $ | 128,592 | ||||||||
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| Operating margin |
5.7 | % | 6.9 | % | 7.7 | % | (19.9 | )% | ||||||||
| Adjusted operating margin |
9.3 | % | 7.1 | % | 8.7 | % | 7.8 | % | ||||||||
| (1) | Restructuring costs for 2013 include $7.5 million in lease impairment costs and $0.4 million in severance costs. Restructuring costs for 2012 are primarily severance costs related to our strategic realignment. |
7
ENGILITY HOLDINGS, INC.
Adjusted Earnings Per Share
(in thousands, except per share data)
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Adjusted operating income |
$ | 30,531 | $ | 28,126 | $ | 123,060 | $ | 128,592 | ||||||||
| Other items |
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| Interest expense, net |
2,549 | 5,830 | 21,648 | 10,857 | ||||||||||||
| Other income, net |
527 | 188 | 793 | 136 | ||||||||||||
| Adjustment to operating income |
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| Bank fees previously capitalized and included in interest expense |
— | — | 3,684 | — | ||||||||||||
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| Adjusted income from continuing operations before income tax |
28,509 | 22,484 | 105,853 | 117,871 | ||||||||||||
| Provision for income taxes (1) |
9,724 | 8,817 | 39,727 | 44,917 | ||||||||||||
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| Adjusted income from continuing operations |
18,785 | 13,667 | 66,126 | 72,954 | ||||||||||||
| Loss from discontinued operations |
— | — | — | (626 | ) | |||||||||||
| Net income attributable to non-controlling interest |
914 | 442 | 5,190 | 4,952 | ||||||||||||
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| Adjusted net income attributable to Engility Holdings, Inc. |
$ | 17,871 | $ | 13,225 | $ | 60,936 | $ | 67,376 | ||||||||
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| GAAP earnings per share |
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| Net income (loss) attributable to Engility Holdings, Inc. |
$ | 10,679 | $ | 40,949 | $ | 49,527 | $ | (350,373 | ) | |||||||
| Earnings (loss) per share attributable to Engility Holdings, Inc. common shareholders |
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| Basic |
$ | 0.63 | $ | 2.47 | $ | 2.94 | $ | (21.52 | ) | |||||||
| Diluted |
$ | 0.60 | $ | 2.38 | $ | 2.81 | $ | (21.52 | ) | |||||||
| Weighted average common shares outstanding |
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| Basic |
16,928 | 16,596 | 16,873 | 16,281 | ||||||||||||
| Diluted |
17,835 | 17,228 | 17,653 | 16,281 | ||||||||||||
| Adjusted earnings per share attributable to Engility Holdings, Inc. common shareholders |
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| Basic |
$ | 1.06 | $ | 0.80 | $ | 3.61 | $ | 4.14 | ||||||||
| Diluted |
$ | 1.00 | $ | 0.77 | $ | 3.45 | $ | 4.06 | ||||||||
| Weighted average number of shares outstanding |
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| Basic |
16,928 | 16,596 | 16,873 | 16,281 | ||||||||||||
| Diluted |
17,835 | 17,228 | 17,653 | 16,577 | ||||||||||||
| (1) | Current period end tax provision is calculated at the associated actual period end effective tax rate. For the fourth quarter and full year 2013, the tax provision was adjusted by $849,000 to remove a favorable foreign income tax settlement. |
8
ENGILITY HOLDINGS, INC.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) and Adjusted EBITDA
(in thousands)
| Three Months Ended December 31, |
Year Ended December 31, |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Income (loss) from continuing operations |
$ | 11,593 | $ | 41,391 | $ | 54,717 | $ | (344,795 | ) | |||||||
| Interest, taxes, depreciation, and amortization |
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| Interest expense |
2,549 | 5,830 | 21,648 | 10,857 | ||||||||||||
| Provision for income taxes |
5,240 | (19,841 | ) | 32,584 | 5,156 | |||||||||||
| Depreciation and amortization |
3,051 | 4,045 | 12,106 | 16,410 | ||||||||||||
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| EBITDA |
$ | 22,433 | $ | 31,425 | $ | 121,055 | $ | (312,372 | ) | |||||||
| Adjustments to EBITDA |
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| Goodwill impairment charge |
— | — | — | 426,436 | ||||||||||||
| Transaction-related-spin-off costs |
— | — | — | 17,300 | ||||||||||||
| Restructuring costs |
7,939 | 662 | 7,939 | 8,222 | ||||||||||||
| Legal and settlement costs |
1,065 | 272 | 4,293 | 5,552 | ||||||||||||
| Non-income tax expense |
1,769 | — | 1,769 | — | ||||||||||||
| Acquisition-related costs |
903 | — | 903 | — | ||||||||||||
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| Total adjustments |
11,676 | 934 | 14,904 | 457,510 | ||||||||||||
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| Adjusted EBITDA |
$ | 34,109 | $ | 32,359 | $ | 135,959 | $ | 145,138 | ||||||||
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| EBITDA Margin |
6.8 | % | 7.9 | % | 8.6 | % | (18.9 | )% | ||||||||
| Adjusted EBITDA Margin |
10.4 | % | 8.2 | % | 9.7 | % | 8.8 | % | ||||||||
9