egl-ex991

CHANTILLY, VA – August 3, 2017, Engility Holdings, Inc. (NYSE: EGL) today announced financial results for the second quarter, which ended June 30, 2017.

“Our second quarter results were in-line with our overall expectations and reflect the positive changes we have made to our organization over the last 15 months,” said Lynn Dugle, Chief Executive Officer of Engility. “Our business is seeing the results from our ability to leverage our differentiated capabilities, improve organizational alignment and add key personnel. We also have benefited from stable industry conditions and positioned the company for future growth.”

Total revenue for the second quarter of 2017 was $495 million. GAAP operating income was $34 million and GAAP operating margin was 6.9%. GAAP net income attributable to Engility was $8 million, or $0.20 per diluted share. EBITDA was $45 million and EBITDA margin was 9.1%.

Adjusted operating income was $43 million and adjusted operating margin was 8.7%. Adjusted net income attributable to Engility was $22 million, or $0.60 per diluted share. Adjusted EBITDA was $48 million and adjusted EBITDA margin was 9.6%.

Information about the company's use of non-GAAP financial information is provided below under “Non-GAAP Measures.”

The company is reiterating the fiscal year 2017 guidance it first issued on March 9, 2017, based on Engility’s financial results for the first half of 2017 and its current outlook for the remainder of 2017. The table below summarizes the company’s fiscal year 2017 guidance.

This guidance reflects the IRG divestiture in January 2017. In fiscal year 2016, IRG generated $58 million in revenue and $1 million in EBITDA and operating income. IRG’s revenue and profitability results are included in the company’s fiscal year 2016 historical financial results, but are immaterial to Engility’s 2017 financial results as this business was sold on January 6, 2017.

⁽¹⁾ 2017 GAAP diluted EPS guidance includes approximately $4 million of restructuring and integration costs and $25 million of amortization expense related to intangible assets acquired by the company. It also assumes weighted-average outstanding shares of approximately 38 million and a full-year effective tax rate of 37 percent.

⁽²⁾ 2017 EBITDA guidance includes approximately $4 million of restructuring and integration costs.

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, among other things, the impact of amortization expenses related to our acquisitions of TASC, Inc. and Dynamics Research Corporation, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, acquisition and restructuring-related expenses, legal and settlement costs, refinancing-related expenses, and the impact of certain tax related items. 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 similarly titled metrics or 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.

With respect to our “Fiscal Year 2017 Guidance” above, reconciliation of EBITDA guidance to the closest corresponding GAAP measure on a forward-looking basis is not available without unreasonable efforts. We are unable to reconcile EBITDA to net income due to our inability to predict certain non-cash items included in net income, including taxes and timing of restructuring charges. The disclosure of such reconciliations may imply to our investors a degree of precision in our calculations that is not possible. For the same reasons, the company is unable to address the probable significance of the unavailable information.

Engility will host a conference call at 9:00 a.m. Eastern Time on August 3, 2017 (today), to discuss the financial results for its second quarter 2017.

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 also may access a slide presentation on the website, which summarizes the company’s 2017 second quarter results. Listeners should go to the website at least 15 minutes before the live event to download and install any necessary audio software.

Listeners also may participate in the conference call by dialing (888) 655-5029 (domestic) or (503) 343-6026 (international) and entering pass code 35454929.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year. A telephonic replay also will be available through August 10, 2017 at (855) 859-2056 (domestic) or (404) 537-3406 (international) and entering pass code 35454929.

Engility (NYSE: EGL) is engineered to make a difference. Built on six decades of heritage, Engility is a leading provider of integrated solutions and services, supporting U.S. government customers in the defense, federal civilian, intelligence and space communities. Our innovative, highly technical solutions and

engineering capabilities address diverse client missions. We draw upon our team’s intimate understanding of customer needs, deep domain expertise and technical skills to help solve our nation’s toughest challenges. Headquartered in Chantilly, Virginia, and with offices around the world, Engility’s array of specialized technical service offerings include high-performance computing, cybersecurity, enterprise modernization and systems engineering. To learn more about Engility, please visit www.engilitycorp.com and connect with us on Facebook, LinkedIn and Twitter.

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, estimated integration costs and acquisition related amortization expenses and business plans. 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" included in our Annual Report on Form 10-K for the year ended December 31, 2016, and more recent documents that have been filed with the Securities and Exchange Commission (SEC) and are available on the investor relations section of Engility’s website (http://www.engilitycorp.com) 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.

	Three Months Ended				Six Months Ended
	June 30, 2017		July 1, 2016		June 30, 2017		July 1, 2016
Revenue	$	494,671	$	535,432	$	979,886	$	1,058,211
Costs and expenses
Cost of revenue		422,999		456,902		838,022		906,232
Selling, general and administrative expenses		37,552		43,467		73,995		90,443
Total costs and expenses		460,551		500,369		912,017		996,675
Operating income		34,120		35,063		67,869		61,536
Interest expense, net		18,529		29,064		39,450		58,503
Other expenses, net		93		21		163		82
Income before income taxes		15,498		5,978		28,256		2,951
Provision for income taxes		6,050		1,924		11,060		1,022
Net income		9,448		4,054		17,196		1,929
Less: Net income attributable to non-controlling interest		1,817		1,560		2,632		2,665
Net income (loss) attributable to Engility	$	7,631	$	2,494	$	14,564	$	(736	)

Earnings (loss) per share attributable to Engility
Basic	$	0.21	$	0.07	$	0.40	$	(0.02	)
Diluted	$	0.20	$	0.07	$	0.39	$	(0.02	)

Weighted average number of shares outstanding
Basic		36,808		36,727		36,817		36,721
Diluted		37,290		37,350		37,332		36,721

	June 30, 2017			December 31, 2016
Assets:
Current assets:
Cash and cash equivalents	$	30,522		$	48,236
Receivables, net		351,914			334,248
Assets held for sale, current		—			20,242
Other current assets		24,728			30,404
Total current assets		407,164			433,130
Property, plant and equipment, net		43,652			46,547
Goodwill		1,078,454			1,078,454
Identifiable intangible assets, net		377,649			393,891
Deferred tax assets		221,642			232,283
Assets held for sale		—			11,962
Other assets		4,413			2,292
Total assets	$	2,132,974		$	2,198,559
Liabilities and Equity:
Current liabilities:
Current portion of long-term debt	$	26,947		$	26,947
Accounts payable, trade		54,076			43,943
Accrued employment costs		80,035			98,860
Accrued expenses		75,427			76,870
Advance payments and billings in excess of costs incurred		33,815			33,259
Deferred income taxes, current and income tax liabilities		193			209
Liabilities held for sale, current		—			4,341
Other current liabilities		30,336			36,410
Total current liabilities		300,829			320,839
Long-term debt		984,914			1,039,993
Income tax liabilities		63,256			64,852
Liabilities held for sale		—			1,084
Other liabilities		63,200			66,986
Total liabilities		1,412,199			1,493,754
Equity:
Preferred stock, par value $0.01 per share, 25,000 shares authorized, none issued or outstanding as of June 30, 2017 or December 31, 2016		—			—
Common stock, par value $0.01 per share, 175,000 shares authorized, 36,809 and 36,776 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively		368			368
Additional paid-in capital		1,240,948			1,237,826
Accumulated deficit		(526,264	)		(541,702	)
Accumulated other comprehensive loss		(5,449	)		(4,865	)
Non-controlling interest		11,172			13,178
Total equity		720,775			704,805
Total liabilities and equity	$	2,132,974		$	2,198,559

	Six Months Ended
	June 30, 2017			July 1, 2016
Operating activities:
Net income	$	17,196		$	1,929
Share-based compensation		3,736			4,828
Depreciation and amortization		21,971			24,642
Gain on sale of property, plant and equipment		(497	)		—
Amortization of bank debt fees		4,294			4,865
Deferred income taxes		11,841			2,035
Excess tax deduction on share-based compensation		(218	)		—
Changes in operating assets and liabilities:
Receivables		(17,665	)		14,010
Other assets		5,948			(3,251	)
Accounts payable, trade		10,134			5,597
Accrued employment costs		(18,826	)		4,192
Accrued expenses		(1,771	)		(903	)
Advance payments and billings in excess of costs incurred		555			(11,146	)
Other liabilities		(12,066	)		5,863
Net cash provided by operating activities		24,632			52,661
Investing activities:
Proceeds from sale of business, net of amount placed in escrow		23,005			—
Proceeds from sale of property, plant and equipment		2,902			—
Capital expenditures		(2,575	)		(9,832	)
Net cash provided by (used in) investing activities		23,332			(9,832	)
Financing activities:
Repayment of long-term debt		(59,373	)		(33,408	)
Gross borrowings from revolving credit facility		224,000			53,000
Gross repayments of revolving credit facility		(224,000	)		(53,000	)
Payment of employee withholding taxes on share-based compensation		(1,260	)		(1,776	)
Dividends paid		(407	)		(1,702	)
Distributions to non-controlling interest member		(4,638	)		(2,868	)
Net cash used in financing activities		(65,678	)		(39,540	)
Net change in cash and cash equivalents		(17,714	)		3,289
Cash and cash equivalents, beginning of period		48,236			30,022
Cash and cash equivalents, end of period	$	30,522		$	33,311

The following tables set forth a reconciliation of each of these Non-GAAP Measures to the most directly comparable GAAP measure for the periods presented.

	Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Operating income	$	34,120		$	35,063		$	67,869		$	61,536

Adjustments
Acquisition and restructuring-related expenses, excluding amortization		2,342			2,504			3,745			6,701
Acquisition-related intangible amortization		6,334			6,335			12,669			15,619
Loss (gain) on sale of property, plant and equipment		73			—			(497	)		—
Total adjustments		8,749			8,839			15,917			22,320
Adjusted operating income	$	42,869		$	43,902		$	83,786		$	83,856

Operating margin		6.9	%		6.5	%		6.9	%		5.8	%
Adjusted operating margin		8.7	%		8.2	%		8.6	%		7.9	%

	Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
GAAP net income (loss) attributable to Engility	$	7,631		$	2,494		$	14,564		$	(736	)
Net income attributable to non-controlling interest		1,817			1,560			2,632			2,665

GAAP net income		9,448			4,054			17,196			1,929
Provision for income taxes		6,050			1,924			11,060			1,022
Income tax rate		39.0	%		32.2	%		39.1	%		34.6	%

GAAP income before taxes		15,498			5,978			28,256			2,951

Adjustments
Acquisition and restructuring-related expenses, excluding amortization		2,342			2,504			3,745			6,701
Acquisition-related intangible amortization		6,334			6,335			12,669			15,619
Loss (gain) on sale of property, plant and equipment		73			—			(497	)		—
Refinancing-related expenses		—			—			1,692			—
Total adjustments		8,749			8,839			17,609			22,320

Adjusted income before income tax		24,247			14,817			45,865			25,271
Cash paid for income taxes		185			477			388			884
Adjusted income tax rate		0.8	%		3.2	%		0.8	%		3.5	%

Adjusted net income		24,062			14,340			45,477			24,387
Less: Net income attributable to non-controlling interest		1,817			1,560			2,632			2,665
Adjusted net income attributable to Engility	$	22,245		$	12,780		$	42,845		$	21,722

Diluted earnings (loss) per share attributable to Engility
GAAP	$	0.20		$	0.07		$	0.39		$	(0.02	)
Adjusted	$	0.60		$	0.34		$	1.15		$	0.58

Diluted weighted average number of shares outstanding
GAAP		37,290			37,350			37,332			36,721
Adjusted		37,290			37,350			37,332			37,347

Earnings before interest, taxes, depreciation, and amortization (EBITDA) and Adjusted EBITDA

	Three Months Ended						Six Months Ended
	June 30, 2017			July 1, 2016			June 30, 2017			July 1, 2016
Net income	$	9,448		$	4,054		$	17,196		$	1,929

Interest, taxes, and depreciation and amortization
Interest expense		18,529			29,064			39,450			58,503
Provision for income taxes		6,050			1,924			11,060			1,022
Depreciation and amortization		11,110			10,827			21,971			24,642
EBITDA		45,137			45,869			89,677			86,096

Adjustments to EBITDA
Acquisition and restructuring-related expenses, excluding amortization		2,342			2,504			3,745			6,701
Loss (gain) on sale of property, plant and equipment		73			—			(497	)		—
Adjusted EBITDA	$	47,552		$	48,373		$	92,925		$	92,797

EBITDA Margin		9.1	%		8.6	%		9.2	%		8.1	%
Adjusted EBITDA Margin		9.6	%		9.0	%		9.5	%		8.8	%


	Fiscal Year 2017 Guidance
Revenue	$1.95 billion - $2.05 billion
GAAP Diluted EPS ⁽¹⁾	$0.75 - $0.85
EBITDA ⁽²⁾	$173 million - $183 million
Cash Flow from Operations	$95 million - $105 million