Constellis 2015 Q2 update1
2015 Q2 Investor’s Call August 26, 2015
The following discussion and analysis of the Company’s financial condition and results of operations contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. In addition, the following discussion includes references to non-GAAP measures. For more information, please see the reconciliation attached as an appendix and our first quarter financial report. We believe these adjusted results, in addition to our GAAP results, provide a good basis to assess the operating and financial results.
August 26, 2015 - Business Confidential
2
Agenda Constellis Stand Alone Earnings (not including Olive Group and EI) Q2 2015 Earnings Results 2015 EAC Business Update
Olive Group Stand Alone (including EI) Q2 2015 Earnings Results 2015 EAC Business Update
Constellis Group Consolidated Pro Forma Earnings Q2 Earnings Results 2015 EAC
Questions
August 26, 2015 - Business Confidential
3
Constellis Stand Alone
FY 2015 Q2 Financial Results Constellis Stand Alone (not including OG and EI) Q2
Q2
2014
2015
$
%
Revenue
$84.3
$197.4
$113.1
134.2%
Gross Profit
$15.8
$37.7
$21.9
138.6%
Indirect Cost
$11.5
$23.5
$12.0
104.3%
Interest Expense
$0.9
$9.9
$9.0
-
-
$7.1
$7.1
-
Income Tax Expense
$0.1
$3.5
$3.4
-
Net Income (Loss)
$3.5
($5.7)
($9.2)
(262%)
$14.2
$25.6
$11.4
80.2%
Loss on Debt Extinguishment
AEBITDA
Variance to PY
Prior Year – –
Key driver in year over year performance was the acquisition of Triple Canopy on July 25, 2014. This resulted in an across the board increase to revenue, expenses and profitability. Increases to indirect costs were partially offset by realized synergies resulting from the consolidation of support services during the integration of Triple Canopy.
Current Year – – – –
Q2 revenue was 3% below forecast due partially to a one month delay in standing up TO-12. Indirect expenses positively reflect actual synergies realized from the TC acquisition. Interest expense increased related to new $450M senior secured notes and ABL credit facility. Early payment of prior debt and write off of deferred costs resulted in loss on debt extinguishment. August 26, 2015 - Business Confidential
5
FY 2015 Quarterly Results and EAC Constellis Stand Alone (not including OG and EI) 2014
Q1
Q2
Q3
Q4
2015
Actual
Actual
Actual
Forecast
Forecast
Forecast
Revenue
$755.8
$184.8
$197.4
$199.0
$214.6
$795.8
Gross Profit
$148.8
$38.2
$37.7
$33.2
$41.0
$150.1
Indirect Cost
$103.6
$19.5
$23.5
$23.1
$20.9
$87.0
Interest Expense
$15.8
$5.3
$9.9
$13.0
$13.0
$41.2
Loss on Debt Extinguishment
-
-
$7.1
-
-
$7.1
Income Tax Expense
$15.2
$3.3
$3.5
$3.4
$3.7
$13.9
Net Income (Loss)
$14.5
$10.4
($5.7)
($5.9)
$3.8
$2.6
AEBITDA
$115.4
$25.8
$23.5
$28.7
$28.0
$106.0
•
Current run rate as well as stand-up of recent wins & uplifts account for over 90% of forecast revenues.
•
EAC reflects revised timing of WPS uplift and associated training/life support/infrastructure projects and current pipeline of contract awards pending.
•
1 year review of TC integration combined with reduced forecast has resulted in reorganization to streamline the USG line of business and materially reduce indirect costs. We expect a reduction of approximately $10M annualized with a portion ($2M) occurring in Q4 2015.
•
Additional opportunities for synergy across the USG and commercial lines of business will be identified in Q3/Q4. August 26, 2015 - Business Confidential
6
Business Update Key wins in Q2 • • • •
DHS FPS OK Book value of $48M PoP Nov 2015-Nov 2019: (Domestic Security) DIA IPMT FACT Book Value $7.3M PoP 60 months (training) IC $6.8M PoP 12 months (mission support) WPS construction mod $7.7M PoP 9 months (mission support)
Key Opportunities • •
•
•
64 proposals under evaluation with a book value of $1.1B. WPS II Recompete - we expect the WPS II IDIQ to be awarded within the next 60 days. We remain very confident that we will retain our seat on the IDIQ and expect 4 to 5 other companies to capture seats on the IDIQ. KBOSSS Recompete - the current contract was extended thru Mar 2016 with a 90 day transition period thru Jun 2016. We expect the new contract to be awarded within the next 60 days and are competing on multiple teams including the incumbent. IDIQ’s (AFRICAP DoS Africa Support $1.5B)
Business Environment • •
Delays in USG uplifts and awards are pushing forecasted revenue into 2016. Clear indications of continued presence in Afghanistan. Increased requirements in Iraq have been slow to develop but show potential in 2016 and 2017.
Liquidity • •
Business has sufficient liquidity to fund future growth requirements. Based off current run rates we expect to have > $45 M in liquidity in 6 months and > $95M in 12 months.
Management • •
Recent enhancements to leadership team include new CFO & CGO; further additions to will be announced in the near future August 2015 reorganization and stream-lining of government business will produce $10M in cost savings and leaner management structure August 26, 2015 - Business Confidential
7
Olive Group Stand Alone (Including EI)
August 26, 2015 - Business Confidential
8
FY 2015 Q2 Financial Results Olive Group & EI Q2
Q2
2014
2015
$
%
Revenue
$69.2
$57.9
($11.3)
(16.3%)
Gross Profit
$21.2
$16.7
($4.5)
(21.2%)
Indirect Cost
$12.8
$13.5
$0.7
5.5%
Interest Expense
$0.5
$0.7
$0.2
40.0%
Net Income (Loss)
$7.5
$1.9
($5.6)
(74.7%)
$10.8
$7.5
($3.3)
(30.6 %)
AEBITDA •
Current Year – – –
•
Variance to PY
Budgeted delivery margins continue to be above plan, supporting a strong gross profit, even though revenue was lower than Q2 plan. Indirect costs are in line with Q2 plan and lower than Q1. This is as a result of action taken to reduce indirect costs as a result of revenue being below plan. AEBITDA adjustments = $1.0M ($0.7M subcontractors subsequently replaced + $0.3M in overhead reductions at Newport {2014 end of year acquisition by OG}).
Prior Year – –
The YoY decrease in revenue in Q2 was as a result of a reduction in revenues from FMS and EPC clients, partially offset by an increase in revenues from IOCs. Indirect costs in Q2 include those related to expanded operating footprint in Africa, but were not incurred in the prior year. Action has been taken to address these costs, and a further reduction in Q3 is forecasted. August 26, 2015 - Business Confidential
9
FY 2015 Quarterly Results and EAC Olive Group & EI
• • • •
Q1
Q2
Q3
Q4
2015
Actual
Actual
EAC
EAC
EAC
Revenue
$59.0
$57.9
$62.7
$84.3
$263.9
Gross Profit
$17.5
$16.7
$17.3
$22.8
$74.4
Indirect Cost
$14.9
$13.5
$10.2
$8.4
$46.9
Interest
$0.4
$0.7
$0.0
$0.0
$1.1
Net Income
$1.7
$1.9
$4.4
$12.8
$20.8
AEBITDA
$7.8
$7.5
$11.0
$18.7
$45.0
The award of several material contracts is expected in Q3, with mobilization in Q4, hence the increase in quarter-on-quarter revenue. Current backlog (contracted, extensions, options) covers 90% of full year forecast. Exit rate for revenue is expected to be strong, with an annualized revenue (Q4) of $337M. Action has been taken to materially reduce overheads. This is both through underlying efficiencies and through the integration with EI. August 26, 2015 - Business Confidential
10
Business Update Key wins in Q2 • • • • • •
Basra Gas Company – awarded $36M, 3 year static guarding contract starting on 1 January 2016 Afghan Airports - award of a 12 month extension from July 2015 at $11M pa Kentz - awarded an MSA for mobile security in Iraq. Kentz are Exxon’s main EPC contractor. Worth up to $22M over 2 years Unaoil - verbal notification of award on a $40M, 3 year contract in Iraq BPJV Algeria - uplift awarded of $0.8M, which should fall to EBITDA Other wins - Two US FOBs in Afghanistan, aviation awards in Iraq and strategic consultancy with Kogas with a total value of ~$3M
Key Opportunities • • • • • • • • •
$6.0B in proposals under evaluation Basra Gas Company - final award still pending. Contract will be split amongst security providers. Award value TBC - estimated value at minimum of $20M pa. Therefore, no change to forecast for this contract. PAE - up to $90M over 3 years in Afghanistan on DoS contract Lukoil - $90M over 3 years starting in Q4 2015 / Q1 2016. Project award may be delayed Beechcraft - $80M over 3 years starting in Q4 2015 KBR / FMS primes - $16M over 4 years starting in Q1 2016 Shell Nebras - expected to mobilize in Q4, and then building in Q1/Q2 2016 ELM - $50M over 3 years in Saudi Arabia CBNI - multiple contracts relating to LNG facility following award of prime contract to CBNI in Mozambique – $70M of opportunities being developed
Business Environment •
•
Oil & Gas market is still feeling the effect of a lower oil price, but there has been no material change in the demand for Olive or Edinburgh International’s services. Operationally we continue to reinforce both businesses through compliance, good practice and partnerships in our core markets. We are evaluating joint ventures to give us niche capability in Iraq and Mozambique. There was one significant event to report in H1 from an HSE perspective during 11.7M man hours worked and 7.2M km driven August 26, 2015 - Business Confidential
11
Integration – Olive •
The 60 day plan which integrated Edinburgh International with Olive Group has come to an end. The expected savings from the actions taken to date are $15.8M on an annualized basis.
•
The changes that drive these savings will not impact on our ability to deliver to our clients or our ability to win and deliver growth, but will allow us to gain a competitive advantage through more competitive pricing with similar margins.
•
Savings driven by decisions taken in Q2/Q3 will flow through into the financials during Q3, Q4 and into 2016, as there is a lag due to notice periods, break clauses on property leases etc.
•
Even though the 60 day plan has come to an end, we have not reviewed every opportunity to save. There are both opportunities to save that we have yet to executed, and several ongoing work streams to identify, define and execute additional efficiencies.
•
The next stage of the plan is to seek opportunities to across sales platforms for growth and to operational platforms for cost efficiency.
August 26, 2015 - Business Confidential
12
Constellis Group Pro Forma Consolidated Earnings
August 26, 2015 Business Confidential
13
FY 2015 Q2 Financial Results (Constellis Group Pro Forma Combined Consolidated) Q2
Q2
2014
2015
$
%
TTM
Revenue
$261.1
$255.3
($5.8)
(2.2%)
$1,010.0
Gross Profit
$64.8
$45.8
($19.0)
(29.3%)
$206.7
Indirect Cost
$42.7
$28.4
($14.3)
(33.5%)
$152.8
Interest Expense
$3.5
$10.6
$7.1
203.9%
$57.1
-
$7.1
$7.1
-
$7.1
Net Income (Loss)
$14.3
($3.9)
($18.2)
-
($19.8)
AEBITDA
$39.0
$34.7
($4.3)
(11.1%)
$162.9
Extinguishment of Debt
Variance to PY
August 26, 2015 - Business Confidential
Q2 2015
14
FY 2015 EAC (Constellis Group Pro Forma Combined Consolidated) 2014
Q1
Q2
Q3
Q4
2015
Actual
Actual
Actual
EAC
EAC
EAC
$1,026.3
$243.8
$255.3
$261.7
$298.9
$1,059.7
Gross Profit
$231.9
$46.1
$45.8
$45.2
$59.6
$196.7
Indirect Cost
$180.9
$24.8
$28.4
$28.0
$24.9
$106.1
Interest Expense
$50.3
$5.7
$10.6
$13.0
$13.0
$42.3
Loss on Debt Extinguishment
-
-
$7.1
-
-
$7.1
Net Income (Loss)
($1.9)
$12.1
($3.8)
($1.5)
$16.6
$23.4
AEBITDA
$162.5
$33.6
$31.0
$39.7
$46.7
$151.0
Pro forma AEBITDA
$172.5
$37.0
$34.7
$42.7
$46.7
$161.1
Revenue
• • • • •
Primary driver for year over year reduction in profitability and EBITDA is loss of key contracts in late 2014 due to restructure in Afghanistan. Forecasted uplifts and new work to replace cancelled contracts have been delayed into 2016. Acceleration of business in Q4 will continue into 2016. Pro forma $10M adjustment includes full year impact of Olive Group synergies realized in 2015. Capital expenditures are expected to be $18M for the year. –
Pro forma capital expenditures were ~$13M through June 2015 and expect to meet plan. August 26, 2015 - Business Confidential
15
Balance Sheets - June 2015 vs. December 2014
Constellis Group Consolidated 6/30/15 (12/31/14 excludes OG)
Assets Cash A/R Net Inventory
6/30/15
12/31/14
Liabilities & Equity
6/30/15
12/31/14
$14.1
$7.1
AP & Other Accrueds
$152.2
$108.5
$275.7
$207.1
Accrued Compensation
$29.1
$34.8
$9.3
$5.9
Current Portion Long-Term Debt
$0.3
$17.8
Prepaids & Other Current
$55.3
$39.2
Other Current Liabilities
$5.1
$2.8
Total Current
$354.4
$259.3
Total Current
$186.8
$163.9
PPE, Net
$114.9
$74.3
Long-Term Debt
$598.9
$282.5
Intangibles
$124.6
$95.7
Other Long-Term Liabilities
$17.8
$25.2
Goodwill
$305.3
$176.7
Total Liabilities
$803.8
$471.6
$5.9
$12.8
Total Equity
$101.2
$147.2
$905.0
$618.8
Total Liabilities & Equity
$905.0
$618.8
Deposits & Other Long-Term Total Assets
Assets
– – –
Increases in balances reflect acquisition of Olive Group in May 2015 A/R increased $10.8 which was primarily driven by an increase in unbilled A/R due to delays in the review and issuance of contract modifications under WPS (i.e. DBA and new task order awards). Partly offsetting these increases were collections during the period. Additional capacity has been provided in Iraq through the purchase of 48 additional armored vehicles. These were contract led purchases, and were purchased following contract award.
Liabilities & Equity –
Increase in debt related to new $450M senior secured notes and ABL credit facility, partly offset by the payoff of term loans and revolving credit facility in May when Olive Group was acquired.
August 26, 2015 - Business Confidential
16
Questions
The following discussion and analysis of the Company’s financial condition and results of operations contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. In addition, the following discussion includes references to non-GAAP measures. For more information, please see the reconciliation attached as an appendix and our first quarter financial report. We believe these adjusted results, in addition to our GAAP results, provide a good basis to assess the operating and financial results.
August 26, 2015 - Business Confidential
2
Agenda Constellis Stand Alone Earnings (not including Olive Group and EI) Q2 2015 Earnings Results 2015 EAC Business Update
Olive Group Stand Alone (including EI) Q2 2015 Earnings Results 2015 EAC Business Update
Constellis Group Consolidated Pro Forma Earnings Q2 Earnings Results 2015 EAC
Questions
August 26, 2015 - Business Confidential
3
Constellis Stand Alone
FY 2015 Q2 Financial Results Constellis Stand Alone (not including OG and EI) Q2
Q2
2014
2015
$
%
Revenue
$84.3
$197.4
$113.1
134.2%
Gross Profit
$15.8
$37.7
$21.9
138.6%
Indirect Cost
$11.5
$23.5
$12.0
104.3%
Interest Expense
$0.9
$9.9
$9.0
-
-
$7.1
$7.1
-
Income Tax Expense
$0.1
$3.5
$3.4
-
Net Income (Loss)
$3.5
($5.7)
($9.2)
(262%)
$14.2
$25.6
$11.4
80.2%
Loss on Debt Extinguishment
AEBITDA
Variance to PY
Prior Year – –
Key driver in year over year performance was the acquisition of Triple Canopy on July 25, 2014. This resulted in an across the board increase to revenue, expenses and profitability. Increases to indirect costs were partially offset by realized synergies resulting from the consolidation of support services during the integration of Triple Canopy.
Current Year – – – –
Q2 revenue was 3% below forecast due partially to a one month delay in standing up TO-12. Indirect expenses positively reflect actual synergies realized from the TC acquisition. Interest expense increased related to new $450M senior secured notes and ABL credit facility. Early payment of prior debt and write off of deferred costs resulted in loss on debt extinguishment. August 26, 2015 - Business Confidential
5
FY 2015 Quarterly Results and EAC Constellis Stand Alone (not including OG and EI) 2014
Q1
Q2
Q3
Q4
2015
Actual
Actual
Actual
Forecast
Forecast
Forecast
Revenue
$755.8
$184.8
$197.4
$199.0
$214.6
$795.8
Gross Profit
$148.8
$38.2
$37.7
$33.2
$41.0
$150.1
Indirect Cost
$103.6
$19.5
$23.5
$23.1
$20.9
$87.0
Interest Expense
$15.8
$5.3
$9.9
$13.0
$13.0
$41.2
Loss on Debt Extinguishment
-
-
$7.1
-
-
$7.1
Income Tax Expense
$15.2
$3.3
$3.5
$3.4
$3.7
$13.9
Net Income (Loss)
$14.5
$10.4
($5.7)
($5.9)
$3.8
$2.6
AEBITDA
$115.4
$25.8
$23.5
$28.7
$28.0
$106.0
•
Current run rate as well as stand-up of recent wins & uplifts account for over 90% of forecast revenues.
•
EAC reflects revised timing of WPS uplift and associated training/life support/infrastructure projects and current pipeline of contract awards pending.
•
1 year review of TC integration combined with reduced forecast has resulted in reorganization to streamline the USG line of business and materially reduce indirect costs. We expect a reduction of approximately $10M annualized with a portion ($2M) occurring in Q4 2015.
•
Additional opportunities for synergy across the USG and commercial lines of business will be identified in Q3/Q4. August 26, 2015 - Business Confidential
6
Business Update Key wins in Q2 • • • •
DHS FPS OK Book value of $48M PoP Nov 2015-Nov 2019: (Domestic Security) DIA IPMT FACT Book Value $7.3M PoP 60 months (training) IC $6.8M PoP 12 months (mission support) WPS construction mod $7.7M PoP 9 months (mission support)
Key Opportunities • •
•
•
64 proposals under evaluation with a book value of $1.1B. WPS II Recompete - we expect the WPS II IDIQ to be awarded within the next 60 days. We remain very confident that we will retain our seat on the IDIQ and expect 4 to 5 other companies to capture seats on the IDIQ. KBOSSS Recompete - the current contract was extended thru Mar 2016 with a 90 day transition period thru Jun 2016. We expect the new contract to be awarded within the next 60 days and are competing on multiple teams including the incumbent. IDIQ’s (AFRICAP DoS Africa Support $1.5B)
Business Environment • •
Delays in USG uplifts and awards are pushing forecasted revenue into 2016. Clear indications of continued presence in Afghanistan. Increased requirements in Iraq have been slow to develop but show potential in 2016 and 2017.
Liquidity • •
Business has sufficient liquidity to fund future growth requirements. Based off current run rates we expect to have > $45 M in liquidity in 6 months and > $95M in 12 months.
Management • •
Recent enhancements to leadership team include new CFO & CGO; further additions to will be announced in the near future August 2015 reorganization and stream-lining of government business will produce $10M in cost savings and leaner management structure August 26, 2015 - Business Confidential
7
Olive Group Stand Alone (Including EI)
August 26, 2015 - Business Confidential
8
FY 2015 Q2 Financial Results Olive Group & EI Q2
Q2
2014
2015
$
%
Revenue
$69.2
$57.9
($11.3)
(16.3%)
Gross Profit
$21.2
$16.7
($4.5)
(21.2%)
Indirect Cost
$12.8
$13.5
$0.7
5.5%
Interest Expense
$0.5
$0.7
$0.2
40.0%
Net Income (Loss)
$7.5
$1.9
($5.6)
(74.7%)
$10.8
$7.5
($3.3)
(30.6 %)
AEBITDA •
Current Year – – –
•
Variance to PY
Budgeted delivery margins continue to be above plan, supporting a strong gross profit, even though revenue was lower than Q2 plan. Indirect costs are in line with Q2 plan and lower than Q1. This is as a result of action taken to reduce indirect costs as a result of revenue being below plan. AEBITDA adjustments = $1.0M ($0.7M subcontractors subsequently replaced + $0.3M in overhead reductions at Newport {2014 end of year acquisition by OG}).
Prior Year – –
The YoY decrease in revenue in Q2 was as a result of a reduction in revenues from FMS and EPC clients, partially offset by an increase in revenues from IOCs. Indirect costs in Q2 include those related to expanded operating footprint in Africa, but were not incurred in the prior year. Action has been taken to address these costs, and a further reduction in Q3 is forecasted. August 26, 2015 - Business Confidential
9
FY 2015 Quarterly Results and EAC Olive Group & EI
• • • •
Q1
Q2
Q3
Q4
2015
Actual
Actual
EAC
EAC
EAC
Revenue
$59.0
$57.9
$62.7
$84.3
$263.9
Gross Profit
$17.5
$16.7
$17.3
$22.8
$74.4
Indirect Cost
$14.9
$13.5
$10.2
$8.4
$46.9
Interest
$0.4
$0.7
$0.0
$0.0
$1.1
Net Income
$1.7
$1.9
$4.4
$12.8
$20.8
AEBITDA
$7.8
$7.5
$11.0
$18.7
$45.0
The award of several material contracts is expected in Q3, with mobilization in Q4, hence the increase in quarter-on-quarter revenue. Current backlog (contracted, extensions, options) covers 90% of full year forecast. Exit rate for revenue is expected to be strong, with an annualized revenue (Q4) of $337M. Action has been taken to materially reduce overheads. This is both through underlying efficiencies and through the integration with EI. August 26, 2015 - Business Confidential
10
Business Update Key wins in Q2 • • • • • •
Basra Gas Company – awarded $36M, 3 year static guarding contract starting on 1 January 2016 Afghan Airports - award of a 12 month extension from July 2015 at $11M pa Kentz - awarded an MSA for mobile security in Iraq. Kentz are Exxon’s main EPC contractor. Worth up to $22M over 2 years Unaoil - verbal notification of award on a $40M, 3 year contract in Iraq BPJV Algeria - uplift awarded of $0.8M, which should fall to EBITDA Other wins - Two US FOBs in Afghanistan, aviation awards in Iraq and strategic consultancy with Kogas with a total value of ~$3M
Key Opportunities • • • • • • • • •
$6.0B in proposals under evaluation Basra Gas Company - final award still pending. Contract will be split amongst security providers. Award value TBC - estimated value at minimum of $20M pa. Therefore, no change to forecast for this contract. PAE - up to $90M over 3 years in Afghanistan on DoS contract Lukoil - $90M over 3 years starting in Q4 2015 / Q1 2016. Project award may be delayed Beechcraft - $80M over 3 years starting in Q4 2015 KBR / FMS primes - $16M over 4 years starting in Q1 2016 Shell Nebras - expected to mobilize in Q4, and then building in Q1/Q2 2016 ELM - $50M over 3 years in Saudi Arabia CBNI - multiple contracts relating to LNG facility following award of prime contract to CBNI in Mozambique – $70M of opportunities being developed
Business Environment •
•
Oil & Gas market is still feeling the effect of a lower oil price, but there has been no material change in the demand for Olive or Edinburgh International’s services. Operationally we continue to reinforce both businesses through compliance, good practice and partnerships in our core markets. We are evaluating joint ventures to give us niche capability in Iraq and Mozambique. There was one significant event to report in H1 from an HSE perspective during 11.7M man hours worked and 7.2M km driven August 26, 2015 - Business Confidential
11
Integration – Olive •
The 60 day plan which integrated Edinburgh International with Olive Group has come to an end. The expected savings from the actions taken to date are $15.8M on an annualized basis.
•
The changes that drive these savings will not impact on our ability to deliver to our clients or our ability to win and deliver growth, but will allow us to gain a competitive advantage through more competitive pricing with similar margins.
•
Savings driven by decisions taken in Q2/Q3 will flow through into the financials during Q3, Q4 and into 2016, as there is a lag due to notice periods, break clauses on property leases etc.
•
Even though the 60 day plan has come to an end, we have not reviewed every opportunity to save. There are both opportunities to save that we have yet to executed, and several ongoing work streams to identify, define and execute additional efficiencies.
•
The next stage of the plan is to seek opportunities to across sales platforms for growth and to operational platforms for cost efficiency.
August 26, 2015 - Business Confidential
12
Constellis Group Pro Forma Consolidated Earnings
August 26, 2015 Business Confidential
13
FY 2015 Q2 Financial Results (Constellis Group Pro Forma Combined Consolidated) Q2
Q2
2014
2015
$
%
TTM
Revenue
$261.1
$255.3
($5.8)
(2.2%)
$1,010.0
Gross Profit
$64.8
$45.8
($19.0)
(29.3%)
$206.7
Indirect Cost
$42.7
$28.4
($14.3)
(33.5%)
$152.8
Interest Expense
$3.5
$10.6
$7.1
203.9%
$57.1
-
$7.1
$7.1
-
$7.1
Net Income (Loss)
$14.3
($3.9)
($18.2)
-
($19.8)
AEBITDA
$39.0
$34.7
($4.3)
(11.1%)
$162.9
Extinguishment of Debt
Variance to PY
August 26, 2015 - Business Confidential
Q2 2015
14
FY 2015 EAC (Constellis Group Pro Forma Combined Consolidated) 2014
Q1
Q2
Q3
Q4
2015
Actual
Actual
Actual
EAC
EAC
EAC
$1,026.3
$243.8
$255.3
$261.7
$298.9
$1,059.7
Gross Profit
$231.9
$46.1
$45.8
$45.2
$59.6
$196.7
Indirect Cost
$180.9
$24.8
$28.4
$28.0
$24.9
$106.1
Interest Expense
$50.3
$5.7
$10.6
$13.0
$13.0
$42.3
Loss on Debt Extinguishment
-
-
$7.1
-
-
$7.1
Net Income (Loss)
($1.9)
$12.1
($3.8)
($1.5)
$16.6
$23.4
AEBITDA
$162.5
$33.6
$31.0
$39.7
$46.7
$151.0
Pro forma AEBITDA
$172.5
$37.0
$34.7
$42.7
$46.7
$161.1
Revenue
• • • • •
Primary driver for year over year reduction in profitability and EBITDA is loss of key contracts in late 2014 due to restructure in Afghanistan. Forecasted uplifts and new work to replace cancelled contracts have been delayed into 2016. Acceleration of business in Q4 will continue into 2016. Pro forma $10M adjustment includes full year impact of Olive Group synergies realized in 2015. Capital expenditures are expected to be $18M for the year. –
Pro forma capital expenditures were ~$13M through June 2015 and expect to meet plan. August 26, 2015 - Business Confidential
15
Balance Sheets - June 2015 vs. December 2014
Constellis Group Consolidated 6/30/15 (12/31/14 excludes OG)
Assets Cash A/R Net Inventory
6/30/15
12/31/14
Liabilities & Equity
6/30/15
12/31/14
$14.1
$7.1
AP & Other Accrueds
$152.2
$108.5
$275.7
$207.1
Accrued Compensation
$29.1
$34.8
$9.3
$5.9
Current Portion Long-Term Debt
$0.3
$17.8
Prepaids & Other Current
$55.3
$39.2
Other Current Liabilities
$5.1
$2.8
Total Current
$354.4
$259.3
Total Current
$186.8
$163.9
PPE, Net
$114.9
$74.3
Long-Term Debt
$598.9
$282.5
Intangibles
$124.6
$95.7
Other Long-Term Liabilities
$17.8
$25.2
Goodwill
$305.3
$176.7
Total Liabilities
$803.8
$471.6
$5.9
$12.8
Total Equity
$101.2
$147.2
$905.0
$618.8
Total Liabilities & Equity
$905.0
$618.8
Deposits & Other Long-Term Total Assets
Assets
– – –
Increases in balances reflect acquisition of Olive Group in May 2015 A/R increased $10.8 which was primarily driven by an increase in unbilled A/R due to delays in the review and issuance of contract modifications under WPS (i.e. DBA and new task order awards). Partly offsetting these increases were collections during the period. Additional capacity has been provided in Iraq through the purchase of 48 additional armored vehicles. These were contract led purchases, and were purchased following contract award.
Liabilities & Equity –
Increase in debt related to new $450M senior secured notes and ABL credit facility, partly offset by the payoff of term loans and revolving credit facility in May when Olive Group was acquired.
August 26, 2015 - Business Confidential
16
Questions
