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S&P lowers DynCorp to stable
S&P said it revised the outlook on DynCorp International Inc. to stable from positive.
The agency also said it affirmed the company’s CCC+ corporate credit rating.
The outlook revision reflects a belief that the recent loss of the INL-Air Wing contract will make it more difficult for the company to achieve expected revenue targets and earnings growth assumptions over the next few years, S&P explained.
This reduces the likelihood of an upgrade, the agency said.
On Sept. 1, the company was notified by the U.S. State Department that the new INL-Air Wing contract, which could be worth up to $10 billion over the 11-year contract term, was awarded to competitor AAR Corp.
INL-Air Wing is a major contract for DynCorp and although the current contract expires in October 2016, the company is negotiating for an extension through October 2017, S&P said.
The company’s credit ratios are expected remain weak in 2016 with debt-to-EBITDA of 8.5x to 9.5x, the agency said, but should improve with higher earnings as less profitable contracts end and are replaced with new business.
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