Transitions in Iraq, Afghanistan help DynCorp in third quarter
- By Matthew Weigelt
- Nov 15, 2011
DynCorp International, Inc. reported 11.2 percent revenue growth in its third quarter compared with 2010 due to more demand from its largest logistics contracts.
The global government services provider earned $935.4 million in revenue in the quarter, up $94.3 million, or 11.2 percent, from third quarter 2010, according to the company’s financial results reported Nov. 14.
DynCorp had more work coming from its Logistics Civil Augmentation Program IV contract and new task orders on the Air Force Contract Augmentation Program, the company said.
The revenue came also from work with sustained increases in business volume on its contract with the State Department on international narcotics and law enforcement. The company's work with building a ministry of defense and police training in Afghanistan also kept the pace for DynCorp.
However, the increases were partially offset by the loss of the Life Cycle Contract Support contract with the Army and Navy. DynCorp also had fewer deliveries on its police force-related contracts in Afghanistan and Iraq. Those programs transitioned to follow-on contracts, the company said.
Delta Tucker Holdings Inc., which owns DynCorp, had $7.5 million in net income in the third quarter, but it was offset by losses from the Global Linguist Solutions (GLS), a joint venture. It’s an 8.8-percent increase in income from 2010. However, the private equity firm reported a net loss of $41.6 million.
DynCorp has had its problems in the recent months.
On Oct. 5, the company had problems with inconsistencies of certain contractual requirements, and the Defense Contract Audit Agency issued a Form 1 in the amount of $95.5 million. The government informed GLS it would withhold 15 percent of outstanding and future invoices until the situation is resolved.
In view of these developments, DynCorp faced the winding down of GLS’ current task order in Iraq, the announced withdrawal of U.S. forces from that country by year's end and delays of new task orders under another contract. The company concluded that the carrying value of the GLS investment, which totaled $76.6 million as of Sept. 30, had a loss in value that was other than temporary. DynCorp recorded an impairment of its investment in GLS in the amount of $76.6 million.
Steven Gaffney, DynCorp’s chairman and CEO, was upbeat in his comments.
“Our employees continue to deliver superior performance for our customers, have rallied around our new structure, and are producing results that will lead us into the future,” he said. “The organizational changes made earlier this year continue to bear fruit, with a new business win rate that has jumped to over 40 percent.”
He also said the company’s strong backlog and new business is setting the company up for further growth.
DynCorp Inc. of Falls Church, Va., ranks No. 12 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.