On Wednesday, March 21 DynCorp International released impressive 2017 Q4 and full year financial results. Displaying growth in both revenue and profit with year-over-year revenue increasing by 9.2 percent and profits up by 50.9 percent. ExecutiveBiz had the opportunity to sit down with George Krivo, chief executive officer of DynCorp, and a 2018 Wash100 winner, to discuss what was behind these notable financial results.
“I attribute this success to the programs and the business units simply performing, which is just a great a compliment to all those people. I can't emphasize enough how pleased I am with the performance of our team, who make those of us at corporate headquarters look really good.“
ExecutiveBiz: Congratulations on DynCorp's very successful 2017 financial results. What are some of the highlights that stand out in your mind from 2017.
George Krivo: Our biggest highlight was winning new defense business, specifically being awarded with the U.S. Army's C-12 program in a deal valued about $795 million. We had the program many years ago and we were fortunate enough to be selected again.
Importantly, 2017 is the year that LOGCAP [Logistics Civil Augmentation Program IV], the capstone Army program out of Rock Island, Ill., started to grow again. The program afforded us a large number of new task orders including: a $123 million award to support the service branch's National Training Center in Fort Irwin, Calif., and an award to provide operations and support for the Kwajalein Atoll base in the Pacific Ocean.
So, on both sides of our business, logistics and aviation, we saw strong organic growth throughout 2017, after some tough years when LOGCAP was winding down and the company was going through restructuring and reorganization. But now we're structured correctly, the markets look good and the team is really performing well.
ExecutiveBiz: What are the key factors that contributed to the strong financial performance?
George Krivo: When we restructured and flattened the company we really tried to push authority and accountability down into the lower levels of the organization, which resulted in program managers and business leaders working without the distractions of a heavy cost structure. The results speak for themselves, specifically the 50% increase in profitability, year-over-year.
I attribute this success to the programs and the business units simply performing, which is a great a compliment to all those people. I can't emphasize enough how pleased I am with the performance of our team, who make those of us at corporate headquarters look really good.
ExecutiveBiz: Since being named CEO in July 2017 what changes and programs have been put in place?
George Krivo: As COO, prior to my appointment to CEO, we went through restructuring because our indirect costs made us resemble a company from the heights of the Iraq and Afghanistan wars. During that process, we went down to three business units and eliminated about 30% of our cost overhead. When I became CEO, we consolidated further into two units, DynAviation and DynLogistics.
Each of those businesses is worth about a billion dollars, so they have enough scale to do what they need and compete in their markets while having flat, efficient cost structures. We've been making sure our corporate headquarters doesn't distract or put costs on those businesses. We want to help them excel at meeting their financial goals.
The second part of our businesses reorganization focused on the productivity of our existing programs. Every week, we went through each program, contract by contract, and made sure every one of those programs was lean and efficient, laying them out and always looking for more opportunities to increase productivity.
The only other thing I would add is it’s important to consider the people. Most of the employees we have in key positions have a lot of cycles of learning, having been with the company for over a decade. They've seen the growth the cycle, the decline cycle and now the growth cycle again. That's a key change from when I first joined DynCorp in 2009, when we had explosive growth because of what was occurring in Iraq and Afghanistan and people were performing in roles they hadn't held before. That's certainly not the case now where we have the great advantage of having all these experienced leaders.
ExecutiveBiz: What does DynCorp look like in the next 12-24 months?
George Krivo: Improved financials allowed us to pay down our debt; we’re down about 57% on our debt from where we started. I look forward to continuing to pay down that debt, which frees up discretionary resources to reinvest into organic company growth. Given the attractiveness of our core markets, there's opportunity to continue both top and bottom line growth. This all coincides with the increased budgeting environment we're seeing right now, so it's perfect timing.
ExecutiveBiz: In addition to organic growth, do you see DynCorp growing through acquisitions in the near future?
George Krivo: We're opportunistic when it comes to acquisitions but are more of a buyer than a seller right now. However, it would have to be the right acquisition and I would look for something that is more of a concentration play than a diversification play. We are really comfortable in our core markets right now and we think our cost structure is better than many of our competitors, so if there's an opportunity to scale and increase our cost competitiveness further, and deliver greater value, that would be something we’d consider.
Before becoming CEO in 2017, George Krivo served as DynCorp's chief operating officer. He has held positions with SAIC, DRS Technologies and Cerberus Capital Management.
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- DynCorp Lands $123M Task Order to Support Army National Training Center
- DynCorp to Provide Base Support at Army Garrison Kwajalein Atoll
- DynCorp Lands $54M Navy Aircraft Maintenance, Crew Support Contract
- George Krivo Promoted to DynCorp CEO