[March 12, 2013]

Engility Reports Fourth Quarter and Full Year 2012 Results; Establishes 2013 Guidance

Engility Holdings, Inc. (NYSE: EGL), a global provider of technical and professional services for the U.S. Government, today announced financial results for the fourth quarter and full year ended December 31, 2012.

Fourth Quarter 2012 Results

Total revenue for the fourth quarter was $396 million and operating income for the quarter was $27 million. Adjusted operating income for the fourth quarter was $28 million. Net income attributable to Engility was $41 million, or $2.38 per diluted share. Adjusted net income was $13 million, or $0.77 per diluted share. Information about Engility's use of non-GAAP financial information is provided below under "Non-GAAP Measures."

"Our fourth quarter was very solid, as we exceeded our internal top and bottom line targets and won key IDIQ awards that will provide opportunities for 2013 and beyond," said Tony Smeraglinolo, President and CEO of Engility. "These achievements reflect the strength of our business model and validate that Engility is well positioned to meet the challenges of today's budget constrained environment. During the fourth quarter, we also completed our significant cost reduction initiatives ahead of schedule. This, along with the organizational realignment we implemented on January 1^st, enhances our competitive position in the market."

"The federal government market remains challenging given current budget uncertainties. Nevertheless, our long-standing success in supporting our customers' missions, combined with our enhanced operating efficiencies and disruptive pricing model is differentiating us from our competition. These characteristics also are enabling us to provide the mission critical services our customers require at prices that can ease their budget constraints. As we enter fiscal year 2013, we will remain focused on our pure-play services strategy and leveraging our strong current pipeline of opportunities to further increase shareholder value."

Key Performance Indicators

• Funded backlog as of December 31, 2012 was $856 million, compared to $788 million as of the end of the September 2012 quarter.
• Contract funded orders in the fourth quarter of 2012 were $461 million, representing a book-to-bill ratio of 1.2.
• Contract funded orders for the full year 2012 were $1.7 billion, representing a book-to-bill ratio of 1.0.
• Days sales outstanding at the end of the 2012 fourth quarter were 84 days, compared to 82 days at the end of the September 2012 quarter.

Significant Fourth Quarter 2012 Awards

Key indefinite delivery/indefinite quantity (IDIQ) awards won during the fourth quarter of 2012, which highlight the breadth of our value-added service offerings, include:

• A prime position on a $900 million multiple-award IDIQ contract for new work to provide Production, Installation, and In-Service Support (PII) services to the Space and Naval Warfare Systems Center (SPAWARSYSCEN) Atlantic, Charleston, SC. Under this five year contract, we will provide a wide array of services, including design, acquisition, production, integration, testing, installation, lifecycle support, and configuration management of certified Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance, and Reconnaissance (C5ISR) capabilities.
• A prime position on a $750 million multiple-award IDIQ contract for new work to support the Space and Naval Warfare Systems Center (SPAWARSYSCEN) Atlantic, Charleston, S.C. Under this five year contract, we will provide Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) and Information Technical (IT) expertise in support of customers in Charleston, central Europe and other locations outside the continental United States.
• A prime position on a $350 million multiple-award IDIQ contract for the U.S. Agency for International Development's (USAID) Clean Energy contract for Non-Critical Priority Countries. Under this five year contract, we will provide a range of critical activities, from energy sector reform to increasing human resource capacity related to energy services and fostering private sector participation and investment. This new work represents an expansion of energy support services that our highly skilled team of professionals has been providing on USAID's behalf for the past 34 years; and
• A prime position on four domain areas of a multi-million dollar contract to support the Joint Program Executive Office for Chemical and Biological Defense (JPEO-CBD). The potential value of this six-domain IDIQ five year contract is $495 million. For this new work award, we were selected to provide services in the fields of engineering and technical support, business and analytical assistance, information technology and logistics.

Fiscal Year 2012 Results

For fiscal year 2012, the Company reported total revenue of $1.66 billion and a GAAP operating loss of $329 million. Fiscal year 2012 adjusted operating income was $129 million, which excludes a total of $458 million before tax in spin-off related transaction costs, realignment costs, legal and settlement costs, and a non-cash goodwill impairment charge. GAAP net loss attributable to Engility was $350 million, or $21.52 per diluted share. Excluding the above charges, adjusted net income attributable to Engility was $67 million, or $4.06 per diluted share. We exceeded the revenue and adjusted diluted earnings per share guidance we issued on November 13, 2012, primarily as a result of stronger than expected revenue, lower overall costs, and a lower than anticipated share count. Information about Engility's use of non-GAAP financial information is provided below under "Non-GAAP Measures."

2013 Outlook

Our guidance for fiscal year 2013 does not reflect the potential impact of sequestration since it remains uncertain how the current mandated budget cuts may be implemented. However, our guidance does reflect the challenging environment we have experienced over the last several months leading up to the March 1, 2013 sequester deadline. The table below summarizes our fiscal year 2013 guidance.

* 2013 GAAP diluted EPS guidance assumes a weighted-average share count of approximately 17.5 million shares and a full year effective tax rate of 40%. Interest expense in 2013 is expected to be approximately $22 million, negatively impacting diluted EPS by approximately $0.38 compared to 2012.

Discontinued Operations

The Global Security Solutions business unit, which historically had been managed by Engility under the Professional Support Services segment, was retained by L-3 Communications Holdings, Inc. in connection with the spin-off and is shown as discontinued operations in Engility's financial statements.

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 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 the impact of (i) goodwill impairment, (ii) transaction-related-spin-off costs for the Company's July 2012 spin-off from L-3 Communications Holdings, Inc., (iii) severance and other costs related to the Company's strategic realignment announced in September 2012 and (iv) legal 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 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 Tuesday, March 12, 2013, to discuss the financial results for the fourth quarter and full year 2012.

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 that will be utilized during the call. Listeners should go to the website at least 15 minutes before the live event to download and install any necessary audio software.

Listeners may also participate in the conference call by dialing (800) 901-5231 (domestic) or (617) 786-2961 (international) and entering pass code 51672805.

Approximately two hours after the conference call, a replay will be available on the company's website. A telephonic replay will also be available for one year at (888) 286-8010 (domestic) or 617-801-6888 (international) and entering pass code 11907854.

ABOUT ENGILITY CORPORATION

Engility is a "pure-play" government services contractor providing highly-skilled personnel wherever and whenever they are needed, in a cost effective manner. Headquartered in Chantilly, Va., 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 with approximately 7,800 employees worldwide and sales of $1.66 billion in fiscal year 2012. 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, business plans, and our strategic realignment completed in the first quarter of 2013. 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" in the Information Statement included in our Registration Statement on Form 10, as amended, and Quarterly Report on Form 10-Q for the quarter ended September 28, 2012, which have been filed with the Securities and Exchange Commission (SEC) and are available on Engility's website (http://www.engilitycorp.com/investor-relations.html) 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.

[ Back To Technology News's Homepage ]