Engility Holdings (NYSE: EGL) could make small “niche” acquisitions with support from the board of directors as the government services contractor looks to expand its current work and market footprints this year, chief executive Lynn Dugle told investors Monday.
“My full attention is on organic growth getting the team organized to getting the team organized and positioned to be able to grow the business that we have, take-away business from others and winning our recompetes, ” she said in the company’s second quarter earnings call.
Both earnings per share and revenue for the April-June period topped Wall Street’s consensus forecasts as Chantilly, Virginia-based Engility both lifted its full-year EPS guidance and held to its target of $5 billion in new bids for 2016.
Dugle and Chief Financial Officer Wayne Rehberger also offered analysts on Monday’s pre-market conference call more details on Engility’s plan announced July 25 to refinance all of the estimated $1.06 billion in net debt and expand its revolving credit facility.
Engility assumed $613 million in debt upon its February 2015 acquisition of neighboring services contractor TASC with $1.4 billion in net losses carried over to the parent company that are deductible from taxes with no meaningful cash tax payments until 2024
Rehberger said the company is looking to increase the duration of a short-term $200 million loan at an interest rate of 4.5-4.75 percent, plus aiming to secure a 4.75-5 percent interest rate on a seven-year, $600 million loan.
“We’re also looking to replace the second lien loan with a bond and that offering would happen shortly, ” Rehberger added.
Year-to-date voluntary debt repayments as of July 1 totaled $30 million and the company aims to pay down $70 million-$80 million for 2016.
Earnings before interest, taxes, depreciation and amortization as of the second quarter’s end on July 1 totaled $48.37 million with an EBITDA margin of 8.6 percent.
Engility’s stock was up 7.23 percent as of 12:00 p.m. Eastern time and hit a three-month high in morning trade.