Earnings call transcript: V2X beats Q2 2025 EPS expectations, stock rises 2.45%

V2X Inc. reported robust financial results for the second quarter of 2025, surpassing analysts’ expectations with an earnings per share (EPS) of $1.33 against a forecast of $1.03. The company also exceeded revenue forecasts, reporting $1.078 billion compared to the anticipated $1.05 billion. Following the earnings announcement, V2X’s stock rose by 2.45% in aftermarket trading, reflecting positive investor sentiment. According to InvestingPro data, the company maintains a GOOD Financial Health score and is expected to see net income growth this year. InvestingPro subscribers have access to 6 additional key insights about V2X’s performance and valuation.

Key Takeaways

• V2X delivered a 29.13% EPS surprise, significantly outperforming market expectations.
• The company reported strong revenue growth, with a 2.86% surprise over forecasts.
• V2X’s stock increased by 2.45% post-earnings, indicating positive market reception.
• The company reaffirmed its 2025 revenue guidance of $4.4 billion.
• V2X announced a $100 million share repurchase authorization.

Company Performance

V2X Inc. demonstrated strong performance in Q2 2025, with significant year-over-year growth in key financial metrics. Adjusted net income rose by 61% to $42.3 million, while adjusted EBITDA increased by 14% to $82.4 million, reflecting a 7.6% margin. The company’s strategic focus on operational efficiency and innovation contributed to its robust results. The company’s trailing twelve-month EBITDA stands at $272.77 million, though InvestingPro analysis indicates the company suffers from weak gross profit margins of 8.11%.

Financial Highlights

• Revenue: $1.078 billion, up from $1.05 billion forecasted.
• Earnings per share: $1.33, a 59% increase year-over-year.
• Adjusted EBITDA: $82.4 million, a 14% rise year-over-year.
• Total backlog: $11.3 billion, with a funded backlog of $2.3 billion.

Earnings vs. Forecast

V2X reported an EPS of $1.33, beating the forecast of $1.03 by 29.13%. Revenue for the quarter was $1.078 billion, exceeding the expected $1.05 billion by 2.86%. This marks a significant improvement over previous quarters, highlighting the company’s strong execution and strategic initiatives.

Market Reaction

Following the earnings release, V2X’s stock price increased by 2.45% in aftermarket trading, reaching $48.4. This movement places the stock closer to its 52-week high of $69.75, signaling strong investor confidence in the company’s performance and outlook. Based on comprehensive analysis from InvestingPro, V2X appears undervalued at current levels, with analyst targets ranging from $45 to $80 per share. For deeper insights into company valuations, explore InvestingPro’s detailed research reports covering over 1,400 US stocks.

Outlook & Guidance

V2X reaffirmed its 2025 revenue guidance of $4.4 billion and increased its adjusted EPS guidance to $4.80. The company expects a book-to-bill ratio of at least 1.0 for the year, with potential revenue from the T6 contract ranging from $200 million to $300 million annually. With a market capitalization of $1.52 billion and a revenue CAGR of 26% over the past five years, V2X shows strong growth potential. The company maintains a healthy current ratio of 1.16 and an impressive Piotroski Score of 8, indicating solid financial strength.

Executive Commentary

"Our strategic intent is nothing more than mission excellence," stated CEO Jeremy Wenziger, emphasizing the company’s commitment to delivering high-quality solutions. CFO Sean Morrell highlighted the company’s global capability and future growth prospects, stating, "We see this as a big lever for us going forward."

Risks and Challenges

• Supply chain management remains a focus area, with potential disruptions impacting operations.
• Transitioning to fixed-price contracts poses risks if cost estimates are inaccurate.
• The competitive landscape in mission readiness solutions could pressure margins.
• Macroeconomic factors, such as inflation and interest rates, may affect financial performance.

Q&A

During the earnings call, analysts inquired about the financial impact of the T6 contract, which is expected to contribute revenue starting in early 2026. Questions also addressed capital allocation strategies, with management emphasizing a focus on strategic acquisitions and debt reduction.

Full transcript - V2X Inc (VVX) Q2 2025:

Operator: Thank you for joining us for the V2X Second Quarter twenty twenty five Earnings Conference Call and Webcast. Today’s call is being recorded. My name is Betsy, and I’ll be the operator for today’s call. At this time, all participants have been placed in a listen only mode. Following management’s presentation, I will open up the call for a Q and A session.

Should you need assistance, your question, please press star then 2. Please note this event is being recorded. And now I’ll pass the call to your host, Mike Smith, vice president of treasury, investor relations, and corporate development at v two x.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X: Thank you. Good afternoon, everyone. Welcome to the V2X second quarter twenty twenty five earnings conference call. Joining us today are Jeremy Wenziger, President and Chief Executive Officer and Sean Morrell, Senior Vice President and Chief Financial Officer. Slides for today’s presentation are available on the Investor Relations section of our website, gov2x.com.

Please turn to Slide two. During today’s presentation, management will be making forward looking statements pursuant to the Safe Harbor provisions of the federal securities laws. Please review our Safe Harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward looking statements. The company assumes no obligation to update its forward looking statements. In addition, in today’s remarks, we will refer to certain non GAAP financial measures because management believes such measures are useful to investors.

You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website. At this time, I’d like to turn the call over to Jeremy.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. I’d like to start by thanking our entire team for their hard work, dedication and commitment to our customers’ mission. Please turn to slide three. During today’s call, I’m going to recap our second quarter results, talk about our strategic execution and why we are optimistic about our future.

Starting with the second quarter results, revenue was $1,080,000,000 Profitability was strong with adjusted EBITDA of 82,000,000 or 7.6% margin and adjusted net income of $42,000,000 Adjusted EPS was $1.33 increasing 59% year over year. Our financial performance, cash generation and balance sheet strength is providing significant flexibility and optionality for V2X. We are now positioned to enhance value creation through an active capital allocation strategy. As part of this strategy, we recently established a $100,000,000 share repurchase authorization, which Sean will discuss in more detail shortly. Given our year to date performance, we remain confident in our ability to achieve our 2025 commitments and are seeing additional positive uplift to earnings per share.

As such, we are increasing our adjusted EPS guidance and reaffirming our revenue, adjusted EBITDA and cash flow guidance. Reflecting on our recent operational performance, we are delivering on our commitments, executing on our strategy and bringing innovation and new approaches to rapidly deploy solutions for improved readiness. Our dedication to execution excellence was demonstrated during my recent visits with our customers. I witnessed firsthand the outcomes that our team is delivering. It is seamless support for the mission.

Our customers have acknowledged our performance, and our my visit reaffirms our strategy for growth. Our strategy is clear, and it is evident to me that our teams are delivering on mission readiness outcomes. The takeaway from my engagements reinforces what v two x is bringing in performance, reliability, and mission readiness. This is also reflected in our robust pipeline, which reflects the strategy we have put in place. Finally, our recent awards are validation of our customer intimacy and the commitment by the team to the execution of our strategy.

Please turn to slide four. We are making excellent progress executing our strategic growth initiatives. Starting with Optimize the Core, we are delivering proven performance excellence to strengthen the base. This is reflected by our ability to transition and support critical missions, such as recently reaching full operational capability on the army’s largest training program. This program will ensure the delivery of training solutions to army war fighters worldwide by infusing cutting edge innovations to adapt to an ever evolving mission.

Next, growth and adjacencies. This is best described as a demand pull on our customers’ recognition of our ability to deliver. An exemplar of this is our growing presence in the US Space Force at Ascension Island, which is a key Space Force tracking and instrumentation station. Another example, foreign military sales continue to represent a large and growing opportunity with international customers seeking out our performance, solutions, agility, and value that V2X is delivering for our customers. This was evidenced by the recent award of the Iraq F-sixteen program.

Moving to extended offerings. This is demonstrated by our collaboration with Bell Helicopter to support the training of new generation of army aviators. This pursuit is notable as it combines our capabilities in training, operational readiness with platform renewal. It also reflects an extension of a new customer in the aerospace domain. Lastly, strategic investments refer to the investments we are making in talent, capabilities that differentiate our offerings and the optimization of our tools and processes to deliver on our commitments and drive growth.

The combination of these initiatives was exemplified firsthand with the $4,300,000,000 nine year t six award. This is a fundamentally a v two x approach to customer engagement and demonstration of past performance as a differentiator for our customers. The t six aircraft is widely used in a multi service aviation training program that is critical to ensure new pilots are ready. This award is an example of the strategy we are executing, and it is an honor to have been selected to help ensure that every single pilot in the US Air Force, Navy, and Army will be trained and ready for their next mission. V two x will use commercial based approaches to provide full spectrum supply chain management solutions to enable this essential training mission over 700 aircraft.

Additionally, we believe the fixed price contract will allow V2X to leverage the power of data and decades of operational expertise to deliver enhanced readiness for our customer. In summary, we are executing these initiatives today. They are creating differentiation, driving value and fueling opportunities in the form of a robust pipeline. Please turn to Slide five. As mentioned, these initiatives on the prior page are driving significant opportunities for V2X, which is reflective in our three year pipeline valued at over $50,000,000,000 This pipeline reflects large franchise programs and opportunities to deliver solutions across all domains.

It also reflects a greater percentage of fixed price or outcome based contracts, which is at the heart of the V2X execution excellence value proposition. We see this as beneficial in proving out our operational excellence and institutional knowledge from successfully supporting global missions at scale for over seventy years. Lastly, while the pipeline of opportunity focuses on leveraging all of V2X’s capability, it also reflects a greater balance of platform modernization and renewal capabilities. We are optimistic in our ability to capture these opportunities, which we believe is supported by the progress we have demonstrated so far in converting key pursuits into long term programs. B2X is capitalizing on our large and growing market opportunities while investing to be a leader in data enabled mission solutions across all domains.

Now I’d like to turn the call over to Sean for a

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: review of the financials. Thank you, Jeremy. Please turn to Slide six. We are exceptionally pleased with our second quarter and year to date results. Our results continue to demonstrate the focus on disciplined execution and the strategic positions of the business.

We are proud of the accomplishments and excited about the future. Revenue in the second quarter was $1,078,000,000 This reflects the expected growth in the WTRS and F5 programs as well as the sunsetting of the KC-ten, T-1A and the reduction of a task order in The Middle East. Adjusted EBITDA in the quarter was $82,400,000 increasing 14% year over year and delivering a margin of 7.6%. The strong EBITDA performance was driven primarily by the conclusion of a nonrecurring contractual commitment, which was contemplated in our full year guidance, but occurred earlier than anticipated. Interest expense in the second quarter was $20,600,000 Cash interest expense was $19,100,000 improving $7,800,000 or 29% year over year, driven by our successful repricing activities, debt paydown and cash generation.

Net income for the quarter was $22,400,000 Adjusted net income was $42,300,000 increasing 61% year over year. Second quarter diluted EPS was $0.70 based on 31,900,000.0 weighted average shares. Adjusted diluted EPS in the quarter was $1.33 increasing approximately 59% from the prior year. The ability to generate strong free cash flow with low capital expenditures remains a strength of the business. This was demonstrated in the second quarter with adjusted operating cash flow of $58,300,000 Total backlog at the end of the second quarter was $11,300,000,000 Funded backlog was $2,300,000,000 which provides additional confidence in our ability to meet our 2025 commitments.

It’s important to note that at the current time, total backlog does not reflect a $4,300,000,000 T6 award. It also does not include any value associated with the recent CENTCOM and INDOPACOM extensions. Please turn to slide seven, where I’ll discuss our year to date results. Year to date revenue was $2,094,000,000 up slightly, reflecting new program starts and partially offset by sunsetting programs. Adjusted EBITDA for the first half of the year was $149,400,000 increasing approximately 6% year over year with a margin of 7.1%.

Interest expense through June was $40,300,000 Cash interest expense was $37,300,000 improving approximately $15,000,000 compared to the 2024. Year to date net income was $30,500,000 Adjusted net income was $73,800,000 increasing 34% year over year. Diluted EPS in the first half was $0.96 Adjusted diluted EPS was $2.31 up 34% compared to last year. Year to date net cash used by operating activities was $66,900,000 Adjusted net cash used by operating activities was $59,800,000 reflecting our normal seasonal patterns. Please turn to Slide eight.

We have made significant progress improving our balance sheet, leverage ratio and capital structure. This successful evolution provides flexibility in how we can allocate capital and accelerate value creation. We thought it important to highlight how we are thinking about things as we move forward. Our capital allocation strategy centers on three key pillars, generate, deploy and maintain. As it relates to the first pillar, we believe part of our value proposition is the company’s ability to deliver strong cash conversion.

Our target is to generate strong adjusted net income to cash conversion that you can see in our trailing 12 performance. This cash generation facilitates optionality as it relates to our second component, deploy. There are four methods by which we plan to deploy capital. The first is to strategically acquire complementary capabilities, access to new channels and solutions that accelerate our growth strategy. The second is increasing shareholder value by executing the recently authorized $100,000,000 share repurchase plan.

The third avenue consists of internal investments that would further advance our position as a differentiated provider of solutions. The fourth avenue is utilizing cash to further reduce debt via accelerating payments of our term loans. The deployment of capital in these areas is connected to the third component of our strategy, maintain, which is to deploy capital while maintaining a target net leverage ratio of approximately two to three times. We have started the next phase of our capital allocation journey and believe this strategy will yield strong returns for our shareholders. Please turn to Slide nine.

We are pleased with our performance. As such, the company is reaffirming revenue, adjusted EBITDA and cash flow guidance for 2025 and increasing its adjusted EPS guidance due to previously executed debt refinancing and tax benefits. At the midpoint, this reflects revenue of $4,400,000,000 adjusted EBITDA of $313,000,000 adjusted EPS of $4.8 In summary, we are continuing to execute and believe V2X is well positioned to meet our customers’ critical mission requirements. Jeremy, I’ll throw it back to you for some closing comments and thoughts.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Thank you, Sean. The team’s performance has me excited. We are delivering on our commitments and executing with excellence. Our robust pipeline reflects the strategy of the company going forward, and our awards are validating that strategy. Our strategic intent is nothing more than mission excellence.

My team is aligned and executing to our global strategy. It is an honor to be at V2X. Now let’s open it up for questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

The first question today comes from Ken Herbert with RBC Capital Markets. Please go ahead.

Ken Herbert, Analyst, RBC Capital Markets: Yeah. Hey, Jeremy and Sean and Mike. Nice quarter.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Thanks, Ken. Thank you, Ken.

Ken Herbert, Analyst, RBC Capital Markets: Hey, Jeremy. Maybe just to to kick off for Sean, how do we think about the T6 contract in terms of of sort of incremental revenues this year and next year in particular? How does that ramp and how does that scale up?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. Hey, thanks. Thanks, Ken. Yeah. We’re very excited about the award that was announced last week.

We think it’s a franchise that you know, the team clearly demonstrated the execution and strategy that that Jeremy has laid out, for the company. From a revenue standpoint and impact, you know, so so we began transition. I expect no impact to the financials this year. That transition period goes until early twenty twenty six. And then I think, you know, when we look at the historicals, the program has has been somewhere between $203,100,000,000 dollars a year is kinda how we’re thinking about it going forward.

But, obviously, you know, that that’s subject to a lot of variables, funding profiles. We we’ve gotta get through the protest period, that sort of stuff. So so we’ll see how things play out.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Kevin, hey, Jeremy. I would add to his comments just that this team did exactly what we have laid out in terms of strategy. I could not be happier with that team and what they’ve been able to accomplish. And I think their past performance was the driver here. And so we’re excited about the opportunity to stay in the program up.

But, you know, it really goes down to the past performance this team has been able to demonstrate. And I think the customer recognized that, and we’re just honored to be a part of it.

Ken Herbert, Analyst, RBC Capital Markets: That’s great. And and the full year guide implies sort of a a bit of a step down at least off the second quarter into the second half EBITDA margins. Was there anything in particular in the second quarter? Or or maybe how do we think about sort of the EBITDA margins in the second half and maybe upward potential to the guidance?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yes. I said in the prepared remarks, there was a the conclusion of a contractual commitment. That was worth about $6,000,000 in the quarter, Ken. And so we had contemplated that previously. We did have it in the back half of the year.

Team did a great job of, you know, closing on those actions and facilitating that. So that that was realized in in q two. So that’s really why you see the jump to the the 7.6%. You know, absent that, we’d have been at 7.1%, you know, for the quarter. But, again, those things are, we we knew it.

The team did a great job of executing it. They happen you know, I say they’re nonrecurring, but somewhat reoccurring in nature. It it’s just the, the types of contractual closeout activities, settlements, things of that nature that that happened, and and that happened in the second quarter. So we’re really happy with being able to to capture that early.

Ken Herbert, Analyst, RBC Capital Markets: No. That’s great. Nice work, Sean. I’ll I’ll pass it back there. Thank you.

Jeremy Wenziger, President and Chief Executive Officer, V2X: The next

Operator: question comes from Andre Madrid with BTIG. Please go ahead.

Andre Madrid, Analyst, BTIG: Jeremy, Sean, Mike, good afternoon, and thanks for taking the question.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Yeah. Great. Thanks, Hunter.

Andre Madrid, Analyst, BTIG: To to stay on T6 for a bit, I guess, at it, was this one of the five different one bill plus opportunities that you called out for ’25 that you were bidding on? And maybe just, I guess, more broadly, a status update on on how we are across those five.

Jeremy Wenziger, President and Chief Executive Officer, V2X: It was, and we’re honored to have the opportunity to to have it awarded right now. We continue to make progress on the other ones. Again, I think the team has aligned itself around, you know, the the ones I’ve laid out before, and they continue to execute to the strategy. And this is just a proof point on that strategy in terms of being able to So, again, I think I’m excited about, you know, what the business development team is doing.

I’m I’m really excited about what the execution team is doing to provide that past performance that customers are recognizing. So, again, I think we are, we continue to be excited about the pipeline that I’ve shared with you and also those major pursuits that, are kinda near term in nature.

Andre Madrid, Analyst, BTIG: Got it. Got it. And then, obviously, you you also called out, you know, strategic acquisitions in the cap deployment strategy. It was the top point actually. And and, you know, a peer of yours did you know, it was reported that earlier this quarter or this past quarter that they were looking to possibly sell their aircraft maintenance business.

I mean, how are you thinking about the legacy Vertex business? And is this something that you were looking to build out further inorganically? Would this be something of interest?

Jeremy Wenziger, President and Chief Executive Officer, V2X: No. I mean, I I you know, we have we love our aircraft maintenance business. I think we’ll continue to look at building out the MRO and mission modernization side and renewal side of the business. But, again, I think we’re we’re we’re positioned right now. I like what we’re doing.

I like the awards we have. And, you know, whatever capital allocation strategy we put forward is gonna be in the best interest of the shareholder.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Think of it. Andre, I you know, I think the way we we we view things a bit is complementary components that enable solutions for our customers. You know, I I I think those are the things that we would initially start to look at from an m and a. And and, you know,

Jeremy Wenziger, President and Chief Executive Officer, V2X: I think, again, I think

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: I said in the in the remarks, we have a target ratio of staying between approximately two and three. You know, I I I think Jeremy’s used the word optionality since he’s been here. And and to do things beyond that, I think I think constrain some of that optionality, to do other things from an investment standpoint, either in the business, or, or other things.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Yeah. I mean, again, I think keeping that optionality on the table is important to me. I think whatever we do is gonna be very thoughtfully done to add to the overall value of, what we’re offering. And, I’m not trying to use words that, you know, sound somewhat flowery, but you kinda get where I’m going in terms of I like having optionality on the table. I like the idea of doing, if we were to do any acquisitions that are gonna add to, the value that we offer to a customer today or extend to customers that we desire.

So, again, I look at the capital allocation strategy as one that keeps us within, as Sean said, that two to three range, but also adds value, like I said, to either what we’re doing today or things that we wanna do for someone, going forward.

Andre Madrid, Analyst, BTIG: Got it. That’s very helpful. I’ll leave it there. Thank you, gentlemen, for the time.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: The

Operator: next question comes from Jonathan Sigman with Stifel. Please go ahead.

Jonathan Sigman, Analyst, Stifel: Hey, good afternoon, Jeremy, Sean and Mike. Thank you for taking the question.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Hi. Hey, thank you.

Jonathan Sigman, Analyst, Stifel: So just back on the T6 contract, congratulations, a great takeaway win. Bo, Ken asked about how the revenue ramps. Can you talk about how you’re thinking about managing the risk? It is a new program, not new type of work, of course. But how does how do margins kinda flow relative to the company as a whole?

Thank you.

Jeremy Wenziger, President and Chief Executive Officer, V2X: I’ll let Sean talk the margin side. I I will tell you, I this team does this exceptionally well. One of the things that I have come to appreciate about this company is our ability to manage the execution of programs from from really cradle to grave. And they have, you know, a tremendous ability on a global basis, to support these programs, whether it’s supply chain, whether it’s the deployment of people. You know, if you think about, you know, just what we’ve hired in the last, I wanna say, thirty days, we’ve hired almost 1,200 people in the last thirty days in terms of standing up various programs.

You know, the this team does an amazing job at this, And I am I am greatly, impressed by their ability to manage the program startup, the execution of the program, and deliver on customer commitments. And that and that was what we were talking about with with regards to the Warfighter training program. Know, they went FOC in July, and, you know, that customer couldn’t be any happier with that team’s performance. And I think what Aileen and that team are doing is a demonstration of our ability to stand up these larger programs flawlessly. And so I I’m expecting nothing less than that on the t six program.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: When we think about the the margin specifically, John, so they will ramp. You know, traditionally, what we see on on a program of this nature is, you know, they will start at less than the company’s composite average and grow over time. And and by time, I would bound that in eighteen to twenty four months. And why do I say that? It takes some time to establish, and we’ve seen it in a program that we set up late last year like f five.

Get on the ground, understand how the supply chains work, understand the the workflow, understand the schedules to maintain aircraft availability, and that’s absolutely what we’re about bringing to our customers. And so it will take some time to go do those things. We expect nothing less on, on t six t six. And I can tell you that, you know, Jeremy, myself, Roger Mason personally went down, worked with the team on that proposal and engaged, and and the team’s got a very good plan that they’ll that they’ll begin executing exactly like Jeremy stated.

Jonathan Sigman, Analyst, Stifel: Excellent. And maybe if I could ask just on the budget environment. The big beautiful bill had quite a few things that seemed right online with readiness and areas that you could benefit from. Just any comments on that. And we’re hearing some other companies in the space talk about some frictions around contracting actions, anything like that.

So is there anything that you’re seeing pause in the environment that that you would flag for us? Thank you very much.

Jeremy Wenziger, President and Chief Executive Officer, V2X: No. Thank you. It’s a great question. I think what we have talked about, which is our focus on readiness, whether it’s aircraft or whether it’s, you know, mission support side that we do, we have seen that what we have as a strategy and what we have is capability aligns well with this administration’s goal on readiness. We’re excited on t six.

Look. We deliver some of the best readiness rates in the industry. We’re excited to to deliver those readiness rates to this customer. And so we think this budget aligns well with what we do. We have not seen friction, to date, on what we do.

Because, again, what we do aligns exceptionally well to this administration’s goal, and we’re all aligned with it. Thank you. Thanks, John.

Operator: The next question comes from Peter Arment with Baird. Please go ahead. Peter, your line is open. You may ask your question.

Peter Arment, Analyst, Baird: Do you you have me now?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yep. We got you, Peter. Got you, Peter.

Peter Arment, Analyst, Baird: Okay. Hey, man. Hey, Jeremy. Sean, Mike, nice results.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Good good

Peter Arment, Analyst, Baird: to chat with you. Hey. So just to follow-up on John’s kinda comment around the budget. Jeremy, you’ve made it a kind of a point to bid on a lot more, and you’ve kind of highlighted that on a much bigger pipeline. Maybe you and T6 is a great example.

But what what are the what else are you seeing that’s kind of that you think is in V2X’s wheelhouse? Are you getting a lot more opportunities?

Jeremy Wenziger, President and Chief Executive Officer, V2X: Well, I I I think we’re seeing, very good demand pull, and we referenced it in the, in the in the comments in the earnings call from FMS. We’re seeing customers want to for us to deliver what we do for the US government to them, and so we’re seeing nice demand pull there. I think we’re seeing good demand pull from renewal and modernization. I think those are areas where we are you know, from from a budgetary standpoint, we’re a good value proposition. You know, we’re extending the life of these assets.

We are giving them optionality on on the extension of these assets, and I think that is something that has resonated well with the customers. So, again, when I look at the overall portfolio, we are well positioned, but I am seeing certain customers that are, like I said, on the FMS side, wanting more of what we do for the, you know, in terms of, hey. You’re delivering these type of readiness rates. You’re delivering this type of capability. We see that, and we want that.

And so they’re pulling that, you know, through us. And I and, again, I think on the renewal and modernization front, this is just something that extends life of assets and gives them modernization of those assets and better lethality. So, again, I think everything we’re doing is aligned very well with this administration to give them value for the dollars they’re spending and giving them better, you know, outcomes as as a result of that.

Peter Arment, Analyst, Baird: Got it. That’s helpful. And then is is or should we think of FMS as a margin enhancer, or have we you’re still dealing with kind of, you know, past history of the way customers are are more buying from you?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. I’d I’d I’d say, you know, it’s it’s a little bit of both. The the recent award for the f 16, that that we announced earlier, you know, is an example of, again, that pull that Jeremy mentioned from customers. There are opportunities for margin enhancement. Absolutely.

We think it’s a big lever for us going forward from the like, a global capability and that that stickiness of, you know, kinda land and expand, Peter. They are and and this is, a great demonstrated capability for the team that leverages CLS support for a platform as well as base support. You’re seeing the breadth of capability that is v two x brought to these customers and and the ability to deliver. We think it’s a good economic case for the company as well as for the customers.

Jeremy Wenziger, President and Chief Executive Officer, V2X: And and Sean makes a good point. They’re not pulling one side of this business. They’re pulling the entire company. So the entire company was on that f 16 award. And so I think it’s important to to realize that doesn’t happen unless v two x is who it is today.

We are bringing the entire solution to the customer, and the customers recognize that and are asking for that.

Noah Poponak, Analyst, Goldman Sachs: Terrific to hear. I’ll jump back in the queue.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Thanks, guys. Nice part.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Thank you, Peter.

Operator: The next question comes from Tobey Sommer with Truist. Please go ahead.

Samantha Styro, Analyst, Bank of America: Thanks. Could you speak

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X0: to your expectations for a seasonally strong contract award quarter in calendar three q from here. And I understand we’ve already got the the t six awards. I’m I I kinda mean above and beyond that. Do you think we’re in store for a strong seasonal quarter, or, are there puts and takes?

Jeremy Wenziger, President and Chief Executive Officer, V2X: You know, it our awards tend to be fairly episodic. Again, we’re thrilled t six came out when it did. But, again, in terms of the other ones that we’re pursuing, you know, we’re always gonna be a little lumpy when it comes to our book to bill just because of the episodic nature of these awards. We’ll always have a steady flow of on contract growth and, you know, some smaller awards. But, again, as we pursue these larger and, you know, more franchise based programs, they’re gonna be more episodic.

And so I don’t worry about the current order book to bill. I look more at the TTM because I think that’s a better reflection of who we are and the type of business we’re in. So I hope that’s helpful because, again, in any given quarter, we may see very, very limited amount of new awards that are of any size. And then, again, you get something like t six and some other, awards that come through in any given quarter that make a quarter kinda kinda pop. But, again, I think on a TTM basis, that’s that’s the way I kinda look at the business.

Samantha Styro, Analyst, Bank of America: Thanks. It’s nice to

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X0: see the, army training contract ramp. But clearly, are some headwinds, some sunsetting and a task order reduction that you cited. Are are there any known incremental drags to ’26 revenue growth? Just kinda wanna get your sense now for what those other things on the other side of the ledger might look like.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. Great great question. The, yeah. A couple of, call it, headwinds sunsetting. You know, I’ll remind folks, we do participate in, you know, contingency support operations, and those things can be episodic in nature.

That’s exactly what we what we have today in The Middle East. You will have noticed the The Middle East is down slightly, you know, year over year. Beyond that, the the head the headwinds that we previously talked about, k c 10, t one a, you know, there’s a there’s a modest amount of that in the remaining of this year. For next year, you know, we just kicked off the planning cycle, you know, where we’re where we’re going through those details. There’s nothing that gives me tremendous, you know, pause or concern right now about ’26.

I think there’s better visibility in light of the, the t six award, the f 16 award, how those things will play out. We’re going through the planning phases because they are just now obviously ramping up and and award notifications within the last thirty days. Thank you. And if I

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X0: could sneak two in, you mentioned a a shift to fixed price. How is that occurring? Because it could happen because the customer is converting a cost plus to a fixed price, or you could simply be bidding on different kind of work that’s contracted differently or maybe a blend of the two. And then with respect to your share repurchase, do you anticipate that being open market, or would the company participate should there be any future secondary offerings?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: I’ll I’ll start with the with the fixed price question. So it it’s a little bit of both. Right? We have said previously, and the team continues to put what are today cost type contracts in front of customers to convert to fixed price. We we get mixed reactions to that.

I’m encouraged by some of the things that I’m hearing, but it hasn’t resulted in contractual actions yet. And then I think to Jeremy’s point on the you know, that he made in the prepared remarks on the on that pipeline, I think we’re seeing more of a shift of the the the programs that we are pursuing that are fixed price in nature.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Mhmm. Do agree, Jeremy? Absolutely. And and, again, we welcome it. I’ve said that, you know, before.

I have the utmost confidence in our team’s ability to deliver. And I think when you get to outcome based contracts, this is what this company does best. We are we we love contracts where it is entirely outcome based because our performance demonstrates to a customer that they can trust us, they can rely on us, and we’ll deliver. And then your question on the on

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: the share repurchase, I I I think it could be both. You know, we’ll see. We’ll do, again, what’s in the best interest of the of the shareholders. Very happy to have the plan in place. You know, we we talk about these things regularly.

We we think it’s the next evolution, for the company. And and, again, we we think we’re we think we’re extremely well positioned. We’re very excited about the growth, and and, you know, we’ll we’ll take advantage of what we can. Thank you.

Operator: The next question comes from Joe Gomes with NOBLE Capital.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X1: First question is, looking at the release, it looked like revenues in the Asia Pacific sector declined about 10%, a little over 9%, I guess, in the quarter. Just wondering, that due to an absence of exercises, or is there something else going on there?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: No. I’d say I I’d say there’s been some delays in some of those exercises. Know, when we think about the contractual the contracting environment, you know, it’s there have been some delays in initiating some actions on the part of our customers. The team has wonderful opportunity sets in front of us. Not all of them have been acted on.

I think they will be at some point, but we have seen, you’re exactly right, a little bit of decline. I’m not worried about it really for, you know, when I think longer term and as I as I think about 2026. But it it yeah. This quarter, we did we did experience modest amount of of reduction.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X1: Okay. Thanks for that. And then on the backlog, I wonder if you could just kind of provide some more color here. So in the the first quarter backlog was approximately 12,000,000,000. That did not include log cap, Ascension Island, or the full value of the training.

I think you mentioned this quarter, it’s 11,300,000,000.0. It does not include LOGCAP, but, you didn’t mention Ascension or the full value of training. So I just wonder if you could kinda walk me through that would be a fairly substantial decline in the backlog quarter over quarter.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Sure. Yeah. So so for q two, the net bookings were 517,000,000 for for the quarter. That’s a book to bill of 0.5, and the backlog is as you rightly point out at 11.3. Ascension Island is in that is in that, you know, bookings number.

And the award for the next, you know, year of WTRS will fall into the the order for that will fall into q three. So, you know, not really, I’ll say, surprised where we are when we think about the bookings for the year. It it’s played out almost exactly to where we thought it would, you know, in terms of its its weight distribution, kinda seventy thirty back half, first half. So, yeah, there’s plenty of things that are not in it as as we pointed out. But I I think we’ll we’ll see that pick up here in the back half of the year.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X1: Okay. Great. Thanks for that. Again, congrats on the quarter. I’ll get back in queue.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Great. Thank you.

Operator: The next question comes from Mariana Perez Mora with Bank of America. Please go ahead.

Samantha Styro, Analyst, Bank of America: Hi, good afternoon. This is Samantha Styro on for Mariana today. Was wondering if you could talk about the protest environment a little more broadly with the 40 five-fifty five, one half, two half split we discussed last quarter. How do we think about the risks of new awards being pushed to the right and slipping into 2026?

Jeremy Wenziger, President and Chief Executive Officer, V2X: No. It’s always a risk. Right? We manage those risk quite quite well. But, again, we don’t control the outcome of those protests.

But, again, we follow the process. We support our customers. Again, I’m, you know, I’m not surprised by protests when they happen, but I think the team does a very good job in in supporting protests as they get adjudicated. But, again, it’s the nature of this business. And like I said, I think the team does a good job in terms of supporting whatever is required in support of those protests.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: You know, what’s encouraging is the the cadence of the new awards that we expected has held from a timing standpoint, which has been very encouraging, you know, in terms of when you would expect to see new awards, it’s held. Whether or not, you know, folks protest, I don’t know. They’ll make their own decisions, you know, on those things. We we think our offerings stand on their own and and believe we offer great value to our customers.

Samantha Styro, Analyst, Bank of America: Thank you. And then switching gears a little bit, you highlighted using more of a commercial based approach on this latest t six award. Can you kinda dive into that and what that looks like?

Jeremy Wenziger, President and Chief Executive Officer, V2X: Well, I mean, the supply chain side of this business is a is a fairly significant part of the overall business that we run. I think the the procurement team again, I don’t wanna overemphasize the commercial aspect of it as much as it it is commercial by nature. You know, what they procure on a global basis and their ability to deliver that those goods and services on a global basis, you know, I’ll stand up against anybody. So when I look at what we have in front of us on p six and the number of aircraft that that we need to continue to fly, it will just leverage what we do best already, which is a commercial based approach to procurement.

Operator: The next question comes from Christine Lewag with Morgan Stanley.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X2: You know, a quick follow on question on the t six. So, I mean, this is an IDIQ award. You gave the revenue waterfall earlier. But I was wondering, with the IDIQ, like, what’s a sure revenue waterfall versus where could you potentially see plus ups or downside risk to the numbers that you gave?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. So so think of it as a it’s listed as an IDIQ. We we a lot of it will be dependent on funding availability. Right? So so, obviously, Jeremy mentioned the fleet 700.

You know, there are always things to go do on these platforms to to maintain readiness. I I think it will come down to the funding availability. It is you know, we are the only contractor that has been selected to execute this. So it’s not like you’re competing for task orders or things of that nature. It will be you know, do do the customers have the funding to improve availability, maintain it?

That that’s what that’s what this will be. I only go off of what, you know, what the program has historically executed. We’ll see what the priorities are in a in a more defined budget. And once we get beyond the the transition, which was, you know, announced last week.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Yeah. I I kinda view it the way if you think about the warfighter training, that was a single award IDIQ. There are dozens and dozens of task orders that we bid. It it has to do with individual tasks that you go after in terms of supporting various, you know, aspects of the program. I would’ve I would envision this one to be the same way, and I I think Sean’s right.

You know, they’re spending between 2 to $300,000,000 a year on this program today. I would envision that those same task orders would manifest itself, again in the new award.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X2: Great. That’s really helpful. And maybe following on what you guys said about the contract award pace, it seems to be progressing as you had expected. But if we look at book to bill, book to bill was 0.4 in 1Q and 0.5 this quarter. And this is taking aside, you know, the t six order.

But it seems like outside of t six, the the book to bill, you know, continues to be below one. Can you provide some context regarding what your expectations are for book to bill for the second half of the year? And if there are holdups in those contract structures, where are those? And does the big beautiful bill, you know, address some of those uncertainties? Because, ultimately, when we look at your your full year outlook for revenue and EBITDA, they didn’t change for the full year even though you’ve had a very strong second quarter.

So just want to understand the movers and shakers for your full year outlook.

Jeremy Wenziger, President and Chief Executive Officer, V2X: I think publishing the, you know, the pipeline gave you a a line of sight on, you know, the size of things that we are pursuing, which is, you know, pretty impressive. I think when I look at, like I said, book to bill, I look at the TTM on book to bill because the exotic nature of our awards. I don’t think any one quarter is is truly reflective of the business as much as it is on a twelve month basis. You know, our goal is to be obviously well over one, in a book to bill in any in any twelve month period, And, you know, that’s what we’re tracking to. And when I look at the number of, you know, major pursuits that I have in front of me, it supports that.

So, again, I think a quarter is interesting, but I think the TTM is much more reflective of a business like this.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Think, you know, you you mentioned, I call it a muted environment from a book to bill in the first two quarters. It’s it’s not dissimilar to what we thought when we came into the year, to be to be very candid with you. You know, we we forecast bookings, revenue, profitability, all those things, you know, and and it’s played out, you know, kinda in line with with what we thought. As Jeremy said, you know, by the end of this year at or above one, there’s lots of variables that will go into that. But we’re not seeing anything as we sit here right now, I think, that changes our perspective on being there at the end of the year.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X2: Great. And to get to that one or above one for the full year, you you’d have to have a pretty chunky order activity in the second half. Are there particular programs we should monitor or or milestones we should track?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Well, I’ve you know, I mean, one obviously was the was the t six. How that plays out, That that is a what I would consider kind of a binary event. Right? When we think about that, we’ll see how it plays out and what and what that would look like. The other one that, you know, I mentioned earlier that would that would happen here in the quarter would be the WTRS next year, or the the the second year of it.

And and, you know, we’re off in that transition, so I I would expect something there as well.

Jeremy Wenziger, President and Chief Executive Officer, V2X: And there’s some other ones that, obviously, we wouldn’t share because they’re competitive sensitive, but there are some other awards that we’re expecting in the second half of the year. But, again, when I look at the business on a twelve month basis, it is performing exactly where I would expect it to be.

Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development, V2X2: Thank you very much.

Operator: The next question comes from Noah Poponak with Goldman Sachs. Maybe

Noah Poponak, Analyst, Goldman Sachs: just staying on that, I think you said you expected the bookings split first half, second half to be 30%, 70%. And I guess the specific math on that would imply $2,000,000,000 of bookings in the back half, which would keep the book to bill below one. Is that more of a very directional statement? And as you mentioned, there’s some sort of binary ish things that could make it better than that. I guess to have book to bill at one for the year, it has to be one and a half in in the back half.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. I yes. It was more of a directional comment, Noah, but I I I think we have line of sight to a book to bill that is greater than one between now and the end of the year. There are some variables that will come into play that I would consider, you know, somewhat binary. But, again, we have line of sight into those things.

I think the the back half of the year will play out such that we end at or above one.

Noah Poponak, Analyst, Goldman Sachs: Okay. Will will the t six award likely have a protest, or is there a scenario where that goes clean without a protest?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: You know, I don’t know. Yeah. I I don’t think we know. You know, like I like I said, we we we were awarded the team’s begun transition, and that transition ends in January 2026. So we’ll we’ll see how how some some some things play out.

Noah Poponak, Analyst, Goldman Sachs: Okay. Can you remind us the drivers behind the pickup in the in top line organic revenue growth in the back half versus the first half?

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Sure. So f five, the the contract that we had a year ago, has some modest has some modest growth. Think of that as $2,020,000,000 ish or so. The WTRS award from a year ago, think of that as, you know, a 140, 100 and 25 in that range depending on how some things go. So so those are those are some of the big ones.

And the f 16 award that we had that that that we mentioned earlier. So those are some of the the bigger awards here in the back half of the year that, you know, we’re under contract. We’re executing, and we expect to we expect to deliver on.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Yeah. And I I think note of note, which I highlighted earlier, you know, you we hired about almost 1,200 people in the last thirty days in support of those programs. So, you know, we’re off and running on those programs.

Noah Poponak, Analyst, Goldman Sachs: Okay. Excellent. And then last one, what are the mechanics behind raising the EPS guidance but not the EBITDA or cash flow? Just it didn’t look like interest expense or tax rate or the normal below the operating line things were were unusual year to date.

Sean Morrell, Senior Vice President and Chief Financial Officer, V2X: Yeah. It’s it’s it’s the interest expense from earlier in the year when we did some refinancing. It was about 15¢ that contributed there at a very modest, maybe a penny or so of of tax benefit. So that was the was the basis for the raise from some refinancing that we did kinda back in q one that we that we now flowed through to the total year. This

Operator: concludes our question and answer session. I would like to turn the conference back over for any closing remarks.

Jeremy Wenziger, President and Chief Executive Officer, V2X: Great quarter. Thank you for your support. Thank you for taking the time to take the call. We’re excited about the second half of the year, and we look forward to talking to you further. Thank you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.