Engility Reports Second Quarter 2016 Results

8/1/16

CHANTILLY, Va.--(BUSINESS WIRE)--Engility Holdings, Inc. (NYSE: EGL) today announced financial results for the second quarter ended July 1, 2016.

Second Quarter 2016 Results

Total revenue for the second quarter of 2016 was $535 million. GAAP operating income was $35 million and GAAP operating margin was 6.5%. GAAP net income attributable to Engility was $2 million, or $0.07 per diluted share. Cash flow from operating activities was $23 million.

Adjusted operating income was $44 million and adjusted operating margin was 8.2%. Adjusted net income attributable to Engility was $13 million, or $0.34 per diluted share. Adjusted EBITDA was $48 million and adjusted EBITDA margin was 9.0%.

Engility's adjusted results for net income, operating income and EBITDA exclude $3 million of acquisition and integration costs. Adjusted operating income and adjusted net income also exclude $6 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.”

CEO Commentary

“I am encouraged by our second quarter results. We have established a solid foundation to achieve our strategic objectives of organic growth, attracting and retaining key talent and strengthening our balance sheet,” said Lynn Dugle, Chief Executive Officer of Engility. “We have improved our book-to-bill ratio and increased our pipeline. Our solid operating cash flow results also enabled us to make additional voluntary debt prepayments in the second quarter.”

Key Performance Indicators for the Second Quarter of 2016

  • Book-to-bill ratio was 1.2x on net bookings of $632 million.
  • Funded backlog was $753 million and total backlog was $3.0 billion.
  • Days sales outstanding (DSO), net of advanced payments, was 55 days.

Significant Second Quarter 2016 Contract Awards

  • Awarded a $248 million recompete contract to provide complex technical consulting and systems engineering and technical assistance supporting the Defense Threat Reduction Agency’s (DTRA) mission to counter weapons of mass destruction.
  • Awarded a $90 million contract to perform operational testing and evaluation on the Transportation Security Administration’s (TSA) IT systems and security screening processes and equipment. Under this recompete award, the company will conduct test planning, test execution, data management and data analysis to support TSA.
  • Awarded a new $38 million contract by the Naval Air Systems Command (NAVAIR) Airworthiness and CYBERSAFE Office to provide a range of technical services supporting aircraft safety-of-flight determinations and preparing the resulting flight clearances. The Engility team also will convert Navy flight and technical information manuals to a digital format, making them fully accessible on electronic and mobile devices.
  • Awarded a new $29 million contract supporting the Naval Surface Warfare Center Panama City Division, delivering a broad spectrum of engineering services for Air Cushion Vehicles—the landing craft used by the U.S. Navy to move materiel and personnel from ship to shore and across the beach.
  • Awarded a $24 million contract to support the U.S. Army’s Tactical Exploitation of National Capabilities (TENCAP) program. TENCAP provides Army commanders with actionable intelligence information gathered around the world. Work under this recompete will allow the company to continue more than 25 years of engineering support for this customer and their mission.

Third Quarter 2016 Contract Award Activity

  • Since the end of the 2016 second quarter, Engility has received multiple new single award contracts or extensions with an expected value in excess of $500 million to provide program support to the U. S. Government. As certain of these awards are subject to protest, the Company cannot predict the potential revenue it may receive from these contracts until the protest periods are completed.

Fiscal Year 2016 Guidance

Based on Engility’s financial results for the first six months of 2016 and its outlook for the remainder of the year, the Company is updating the fiscal year 2016 guidance it issued on May 5, 2016. The Company is increasing its fiscal year 2016 GAAP diluted EPS and adjusted diluted EPS guidance. In addition, the Company is raising the lower-end of its revenue and adjusted EBITDA guidance ranges. The table below summarizes the Company’s fiscal year 2016 guidance. This guidance does not reflect the impact of the potential debt refinancing.

About Engility

Engility (NYSE: EGL), a leading provider of mission-critical and highly technical services to the U.S. government, is engineered to make a difference. Built on a five-decade commitment to our customers and our country, Engility delivers world-class performance, efficiency and value in a broad range of services, including engineering and technology life cycle support, program and business support and specialized technical consulting. Headquartered in Chantilly, Virginia, and with offices around the world, Engility supports customers throughout the defense, intelligence, space, federal civilian and international communities, drawing on our intimate understanding of customer needs, our deep domain expertise and our highly skilled employees to develop and deliver on-target solutions. To learn more about Engility, please visitwww.engilitycorp.com and connect with us on Facebook, LinkedIn and Twitter.