![]() April 9, 2012 Delta Tucker Holdings, Inc. Parent of DynCorp International, Inc. 4th Quarter 2011 Final Earnings Presentation Exhibit 99.2 |
![]() Page 2 April 9, 2012 Forward-Looking Statements and Non-GAAP Measures This presentation includes forward-looking statements about Company’s future business and financial performance, plans, goals, beliefs, or expectations. All of these forward-looking statements are based on estimates and assumptions made by the Company’s management that, although believed by the Company to be reasonable, are inherently uncertain. Forward- looking statements involve risks and uncertainties, including, but not limited to, our substantial level of indebtedness; the outcome of any litigation, government investigation, audit or other regulatory matters; award fee determination; termination or modification of key contracts; changes in the demand for services; acts of war or terrorist activities; changes in significant operating expenses; and other economic, competitive, governmental, political and technological factors outside of the Company’s control. These risks and uncertainties may cause the Company’s business, strategy or actual results or events to differ materially from the statements made herein. All forward looking statements included in this presentation are based upon information presently available. DynCorp International undertakes no obligation to update or revise any forward-looking statement it makes to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events. The risks and uncertainties relating to the forward-looking statements in this presentation include those described under the caption “Risk Factors” and “Forward-Looking Statements” detailed from time to time in our reports filed with the SEC. This presentation includes non-GAAP financial measures, including Adjusted EBITDA, that are different from financial measures calculated in accordance with GAAP and may be different from non-GAAP calculations made by other companies. Management believes these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by investors, lenders and other interested parties in reviewing the Company. For a reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures, see the earnings press release dated April 9, 2012 filed with the SEC on Current Report on Form 8-K and posted on our website. |
![]() Page 3 April 9, 2012 DI Year in Review 2011 Initiatives Made an Impact Reorganized Business & COEs Win Rate Above 40% / Booked Over $5.1B of Orders Stood Up a Supply Chain Organization Leveraged $75M in Annual Savings Implemented a Working Capital Improvement Plan DSO Improves 13 Days from 2010 Levels Focused on Leadership Developed and Aligned the Team Achieved Solid Financial Performance Revenue of $3.7B – Up 9.9% From 2010 Levels Recorded $193.6M in Adjusted EBITDA – Margins at 5.2% Reduced Term Loan by $151M |
![]() Page 4 April 9, 2012 Area of Concern Priority Actions Status Comments Business Development Redesign • Develop Marketing Department • Enhance Capture Process • Align Pricing Function Redesigned Business Development Function Created Marketing Function Increased Funnel by $6.2 Billion (38% Increase) Business System Redesign • Leverage Company spend • Strategize Terms and Conditions (T/Cs) • Develop Strategic Discriminator Prior Corrective Action Plans Scrubbed Enhanced Focus on Business Systems Launched 3-Phase Business System Remediation Plan Cost Structure • Delayer • Develop Market Focus • Optimize Business Processes De-layered: Introduced Business Area Teams (“BAT”) and Centers of Excellence (“COE”) Supply Chain Redesign • Identify the Right Leaders • Develop Second and Third Tier Leaders to Support Growth Organization Redesign Completed Spend Analysis Underway Master Service Agreements Being Developed Compliance • Identify and Develop Brand Identity • Educate External Audiences (Media, Administration, Congress, Customers, Partners, Oversight, decision Makers and Opinion leaders) Formalized Investigation and Adjudication Process Code of Ethics and Business Conduct Rollout Compliance Newsletter Re-vamped Training Leadership Development • Who Are We Training? • When Do We Reach Them? • With What Information? Talent Review Conducted New Organization Formed Training Framework Defined; Courses in Development Brand and Communications • Focus on Employees • Build a Foundation of Public Understanding • Take a Strategic Approach to Proactive Communications Launched Advertising and Online Reputation Management Campaigns Launched Employee Spotlight for Internal/External Use Increased Proactive Outreach Around BAT Teams 2011 Critical Action Plan - Status |
![]() Page 5 April 9, 2012 CEO View on 2012 Environment Remains Uncertain The U.S. Afghan Strategy Under a Microscope Middle East Remains Unstable U.S. Presidential Election 2012 DoD Budget Still Robust 2012 O&M Budget at $197B Continue to Make Progress on Strategic Initiatives Large IDIQs Diversify Offering Focus on Program and Operational Excellence LOGCAP Award Fee Scores Reorganized into Strategic Groups to Fit the Changing Environment |
![]() Page 6 April 9, 2012 2012 New Business Construct – Strategic Groups GPSS: Aviation Group – Aviation BAT, Air Ops BAT Global Logistics & Development Solutions Group – Development, O&M and Contingency Operations BATs (excluding LOGCAP IV) GSDS: Security Services Group – Security BAT Training & Intelligence Group – T&M BAT, Intelligence Training & Solutions BAT LOGCAP IV program – Standalone Group to Optimize Management, Oversight and Performance of the Program |
![]() Page 7 April 9, 2012 Big Drivers in U.S. Defense and Foreign Policy Budget Season Sequester would “Automatically hollow out the force!” Secretary Leon Panetta FY12 DOD Enacted • $646B FY13 DOD Request • $613.9B FY13 DOD Budget Winners/Losers • FY13 Modernization cut 53% • O&M Base -- $209B (+$11.7B) FY12 State Enacted • $54B FY13 State Request • $51.6B FY13 State Winners/Losers • Topline down $2.4B • OCO -- up in Afghanistan, down in Iraq • State funding is Obama priority Sequester • “Goofy!” Secretary Panetta Derailing the Strategy? • Green on Blue • Quran Burning • Civilian Shootings Transition to Afghan Lead • Advisory teams embedded Afghan Security Forces Strategy State Department Transition • “Early phases of military-to- civilian transition” • Embassy branches in Kandahar, Mazar-i-Sharif, Herat, and Jalalabad Long Term Presence • Strategic Partnership • De-scope vs. MILCON • Special Operations lead Afghanistan: Transition not Withdrawal “Our forces will still be fighting on the ground, before, during and after 2014.” Ambassador Neumann War with Iran “We will take every step available to prevent Iran from obtaining a nuclear weapon.” President Barack Obama “Zone of Immunity” • Israeli strike? • “Iran will have nuclear capability of a dozen weapons within 60 months.” General Barry McCaffrey Iranian Military Capable • Submarines • Modern missile boats • Capable of significant damage to Saudi and GCC oil shipping and production Worldwide Economic Impact • Iran is 4 th largest oil producer • Massive oil market disruptions Policy Options • Acquiescence • Diplomacy. • Containment / Deterrence /SPECOPS • Military Action Interesting Times “The United States should lead an international effort to protect key population centers in Syria.” Senator John McCain Syrian Crisis • Civil War Pakistan • Secret cable warns about havens Iraq • Stabilizing or not? African Contingency • Washington Post: “Constellation of secret bases” Latin American Drug Wars • Mexico: Merida Initiative • Central America Security Initiative • Caribbean Basin Security Initiative Pivot to Asia • Philippine Base Access • Australia hosts American troops |
![]() Page 8 April 9, 2012 2013 Budget Request Outlook • OCO Declines as Wars Wind Down • Base Requirement Continues • O&M Base Adjusting – Big Requirement Moving Forward • Fundamental Shift in how DoS Funds Global Demands |
![]() Page 9 April 9, 2012 Strategy to Market Alignment Cut Procurement & RDT&E Funding Reduce Force Structure Increase O&M Funding Enterprise IDIQs MRAP Sustainment and Support $2B+ Aviation Field Maintenance (AFM) $2B+ CNTPO $3B+ Eagle (Follow on to First) IDIQ $30B DI Strategies and Actions Arab Awakening GCC Customers Spending Increased Opportunity in Africa Spending + Central/South America Established KSA Office U.K. Opportunities LOGCAP Africa ARAVI Win Egypt PSS Win DI Strategies and Actions Region Rife with Tension U.S. Repositioning Forces Maritime & Aviation Focus Increased SOCOM Activity Partnering for Australian Opportunities Expand in the Philippines Align with U.S. Asia/Pacific BOS Expansion DI Strategies and Actions Market Dynamics / Customer Actions Market Dynamics / Geopolitics Market Dynamics / Pivot to Asia |
![]() Page 10 April 9, 2012 Financial Review |
![]() Page 11 April 9, 2012 Full Year Highlights Revenue LOGCAP IV INL Air Wing CSTC-A, AMDP CNTPO, CFT Aviation CivPol Afghanistan and Iraq Program Losses-APK Somalia, LCCS Adjusted EBITDA LOGCAP IV Volume INL Air Wing CFT Margins CNTPO Aviation New Contracts CivPol Volume & Mix MRAP Lower Profitability Program Losses GLS (JV) Lower Troop Levels in Iraq Dollars in millions Q4 2011 CY 2011 2011 vs. 2010 Revenue $983.0 $3,721.5 $334.4 9.9%* Adjusted EBITDA $41.4 $193.6 ($26.2) (11.9%) Adjusted EBITDA Margin 4.2% 5.2% (129 bps) Total Backlog $5,741 $959 20.1% 2011 Results *excluding GLS revenue in 2010 |
![]() Page 12 April 9, 2012 Global Stabilization and Development Solutions Adjusted EBITDA Training and Mentoring – CSTC-A, AMDP, CivPol Security Services Contingency Operations – LOGCAP IV AF Score Total Backlog LOGCAP IV, Security Services, ITS CivPol, CSTC-A, Development, APK, MNSTC-I Dollars in millions Revenue Contingency Operations – LOGCAP IV, AFRICAP Training and Mentoring – AMDP, CSTC-A Security Services – WPS CivPol Q4 2011 CY 2011 2011 vs. 2010 Revenue $638.8 $2,402.1 $315.3 15.1% Adjusted EBITDA $12.5 $77.2 ($22.3) (22.4%) Adjusted EBITDA Margin 2.0% 3.2% (155 bps) Total Backlog $2,940 $184 6.7% 4Q-Highlights |
![]() Page 13 April 9, 2012 Global Platform Support Solutions Total Backlog CFT, Andrews, C21, Pax River, International INL Air Wing, Columbus, Sheppard Dollars in millions Revenue Air Operations – INL Air Wing Aviation – CFT, VIPSAM, CNTPO, Ft. Campbell, Pax River O&M-MRAP Programs Aviation – LCCS Loss Adjusted EBITDA Air Operations – INL Air Wing Aviation – CNTPO Volume, CFT Margins, VIPSAM, Pax River O&M – MRAP – Lower Profit on New Contract Aviation – LCCS Loss 4Q-Highlights Q4 2011 CY 2011 2011 vs. 2010 Revenue $349.4 $1,313.6 $17.5 1.3% Adjusted EBITDA $30.0 $104.8 $5.7 5.8% Adjusted EBITDA Margin 8.6% 8.0% (33 bps) Total Backlog $2,801 $775 38.3% |
![]() Page 14 April 9, 2012 EBITDA Down on Lower Troop Levels in Iraq Represents DI’s 51% Share of Joint Venture Investment in GLS Written Down in 3Q Dollars in millions Global Linguist Solutions Joint Venture (GLS) Q4 2011 CY 2011 2011 vs. 2010 Adjusted EBITDA $0.0 $11.8 ($8.4) (41.5%) |
![]() Page 15 April 9, 2012 2011 Free Cash Flow of $163.1M Cash From Operating Activities – $168M Purchase of Property, Equipment and Software – ($4.9M) Working Capital of $376M – 10.1% Improved Substantially from Q3 levels of 11.5% DSO at 69 – Improved 7 Days from Q3 & 13 Days from 2010 Current Net Debt Position of $802.7M Improved $83.4M from Q3 2011 Improved $169.0M from December 2010 Net Cash Position of $70.2M at December 2011 $151.3M of Total Debt Reduction in 2011 Financial Review – CY11 |
![]() Page 16 April 9, 2012 Internal Plan Forecasts Growth Revenue Growth Expected in Mid-Single Digit Range Adjusted EBITDA to Grow as Well Margins to Remain Flat Profitability & Margins to Expand in Aviation Group Final Year of Headwind from CivPol / AMDP Transition Loss of GLS Profitability in Iraq also a Headwind Cash Flows to Remain Strong Continued Liquidation of Investment in Working Capital 2012 Guidance |
![]() Page 17 April 9, 2012 CEO Summary Proud of the Team’s Accomplishments In 2011 Foreign Policy Environment Remains Uncertain Reorganized the Business to Align with New Realities Strong Backlog Provides Momentum for 2012 Must Focus On Program and Operational Excellence Increase LOGCAP Award fee Scores Continue to Execute our Strategies Enterprise IDIQs Diversify Our Offering Continue the Momentum Make Our Commitments in 2012 |
![]() Page 18 April 9, 2012 Q&A |
![]() Page 19 April 9, 2012 Appendix |
![]() Page 20 April 9, 2012 Condensed Consolidated Statement of Operations |
![]() Page 21 April 9, 2012 Adjusted EBITDA by Segment |
![]() Page 22 April 9, 2012 Condensed Consolidated Balance Sheets December 30, 2011 December 31, 2010 (unaudited) (unaudited) ASSETS Current assets: Cash and cash equivalents 70,205 $ 52,537 $ Restricted cash 10,773 9,342 Accounts receivable, net of allowances of $1,947 and $558, respectively 752,756 782,095 Other current assets 88,877 150,613 Total current assets 922,611 994,587 Non-current assets 1,091,810 1,268,768 Total assets 2,014,421 $ 2,263,355 $ LIABILITIES AND EQUITY Current portion of long-term debt - $ 5,700 $ Other current liabilities 633,259 639,172 Total current liabilities 633,259 644,872 Long-term debt, less current portion 872,909 1,018,512 Other long-term liabilities 50,768 82,645 Total equity attributable to Delta Tucker Holdings, Inc. 452,299 512,975 Noncontrolling interest 5,186 4,351 Total equity 457,485 517,326 Total liabilities and equity 2,014,421 $ 2,263,355 $ (Amounts in thousands) |