Q3 2022 V2X Inc Earnings Call
To grow generate substantial cash flow and increase value for our shareholders I'd like to thank all of our employees for their focus on delivering results and achieving significant progress on integration, while providing high quality uninterrupted service and support to our clients.
We reported third quarter pro forma revenue of $961 million.
Which is up 10% year over year compared to Vectrix and vertex <unk> third quarter 2021 results. This growth was driven by continued expansion on existing business and the phasing of New awards.
Notably year over year organic growth for the legacy Vectren with approximately 10% in the quarter driven by performance in Endo pay comp growth on Logcap contribution from Fort Benning, as well as volume associated with rapid response and contingency support <unk>.
Adjusted EBITDA was $79 million in the third quarter, representing an eight 2% margin adjusted diluted earnings per share was $1 33.
Results were ahead of our plan for the third quarter and driven by the solid execution of our teams in delivering strong results. There were also earlier than anticipated a.
A significant achievement in the quarter was <unk> solid adjusted operating cash flow of $121 million or cash generation reduced net debt by almost $90 million since July 5th and demonstrates the strong cash flow characteristics of our business.
Given our current momentum significant progress on integration and Q3 performance, we are increasing the midpoint of our guidance range for revenue adjusted EBITDA and adjusted operating cash flow.
During the quarter, we seamlessly executed across all aspects of our business and successfully reached full operational capability on our new seven year $850 million Navy Test wing Atlantic program, which included phasing in over 1000 team members across 35 different aircrafts.
Importantly, our phase <unk> included the implementation and deployment of our proprietary aircraft maintenance and management optimization or ammo solution, which is a <unk> differentiator ammo is designed to provide our client with significantly enhanced operational readiness and real time visibility into flight operations maintenance.
Readiness and supply chain by leveraging technology and data analytics.
This is a great representation of how the digital and physical merge creating that converged environment, and our <unk> and search technology to improve outcomes.
Ammo is just one example of a strong alignment of our two companies. We believe the breadth of our capability to provide meaningful future cross selling opportunities and revenue synergies that I'll discuss in greater detail shortly.
I am also pleased to report that our integration activities are making significant progress. Please turn to slide five where I'll elaborate on the integration timeline and goals.
Last quarter, we stated that our priority for the remainder of the year is to deliver on our 2022 commitments while executing integration plans to include achieving synergies. We are executing on this plan and delivering solid performance while meeting all major milestones our integration framework and strategy remains on.
Track our teams are focused on the harmonization of processes technology and applications, which is supporting our ability to generate rapid outcomes and positioning us to achieve our previously committed to cost synergies.
We remain excited about the potential opportunities that lie ahead for <unk> to lead in the converged environment and our teams have made great progress in building, our foundational structure for future growth for.
For example.
We recently conducted our first industry solutions summit at our Indianapolis Engineering production and technology facility during.
During these sessions the combined <unk> team from across the globe showcase of their representative solutions.
These solutions include a virtual reality training mobile sensors rapid prototyping engineering digital integration environmental effects cyber hardening Zero Trust architecture, and electronic security to name a few this provided an opportunity for our teams to further capitalize on the false.
Sweet of our combined capabilities develop relationships and identify how we can package and sell converged solutions and complementary capabilities to both new and existing clients.
This immersive session has already yielded additional opportunities for growth, including the potential to leverage <unk> engineering capabilities within the Navy to our vertex Air Force contract.
As you can see our integration efforts, so far are enabling us to deliver solid performance.
While aligning and engaging for future growth at <unk>.
<unk> ahead, we will enter 2023 with three operational business units that are focused on our core capabilities of advanced technology Aerospace and global mission training and support services, we anticipate all major integration work streams to be completed in 2023.
We also believe that the combined organization will be able to leverage its enhanced scale and more efficient cost structure to benefit our pipeline of current new business opportunities recompete as well as existing contracts. Furthermore, we expect to be well underway in executing incremental new business opportunities that neither company.
Worth pursuing previously.
By January 2020 for our organization will be fully integrated and is on track to achieve the full run rate cost synergies from the vertex merger.
Please turn to slide six.
We believe our key leading indicators support our expectations for long term growth.
Our current near term pipeline of new business of $20 billion.
Which increased 16% from last quarter. This includes current bid submitted pending awards of $2 7 billion.
And <unk> is expected to be submitted over the next 12 months of $17 2 billion.
Our bids submitted pending award have more than doubled from last quarter, which reflects a robust proposal environment, but also a notable delay in the rate and pace of awards.
It is difficult to forecast the timing of contract awards and ultimately the contribution to revenue. We believe <unk> is well positioned to win its fair share of these opportunities.
Even though award activity has slowed our teams have been able to increase work scope on existing programs, which results in additional orders and backlog. For example, we were recently awarded a $58 million contract to provide cockpit upgrades on 48, KC 130, Jay aircrafts. This.
As important win leveraged our existing work installing infrared countermeasures on the aircrafts. This work increases <unk> content on the KC 130, Jay and expands our current revenue base with the Marine Corps. Additionally.
Additionally, <unk> also won a four year task order with the U S space command to provide upgrades and engineering on the Cobra Dane radar system.
These upgrades will ultimately increase our radar capability and useful life. This award leveraged our sensor and platform integration capabilities that are focused on inserting technology and upgrades into complex airborne and ground systems.
Expansion on current contracts has historically been a key growth driver for the legacy vectors and we believe with a larger contract base. There is an opportunity to further expand our existing business as our sales teams bring innovation and technology to complex challenges throughout the mission lifecycle.
As we have discussed previously <unk> has won several significant contracts that are in the early stages of their lifecycle with notable periods of performance remaining these wounds are partially reflected in the trailing 12 months award in excess of $6 billion.
And our $13 billion backlog.
Our total backlog covers approximately three five times of our previously communicated 2022 pro forma revenue of $3 6 billion.
This is an important attribute of our business and provides significant revenue visibility for <unk>.
Please turn to slide seven.
<unk> secured a significant portion of its recompete contracts, which is reflected in our awards and backlog by successfully defending our recompete.
And with a solid amount of our revenue under contract over the next several years, we believe <unk> is well positioned to focus on addressing new opportunities and revenue synergies to further grow the business.
As a combined company <unk> has access to expanding and higher margin markets at the intersection of technology and operations that we believe will enable differentiation and drive growth.
We believe our unique and comprehensive set of capabilities will accelerate <unk> ability to lead and meet the mission essential requirements of our clients, while delivering cost savings increased security and resiliency.
The <unk> strategy is designed to drive growth by providing converged solutions that fuse that digital and physical aspects of our clients' infrastructures and missions.
We will leverage our core mission and operational strengths to create more value in core markets by inserting technology enhanced capabilities.
Increased market share in domains, where operational knowledge and past performance is differentiated.
And expand our mission and capability footprint into new Adjacencies.
Specific to our largest client the Dod.
Our solutions will allow <unk> to address a larger part of the <unk> $314 billion O&M budget that invest in the digital infrastructure to set the environment that connects all domains of military operations.
Importantly, our capability set will now positioned <unk> to address additional markets.
Historically available to the legacy companies.
For example, we believe our rapid prototyping engineering platform modernization.
<unk> predictive maintenance software development cyber asset hardening integrated electronic security and virtual reality training solution will allow <unk> to grow within the Dod is.
116 billion research development test and evaluation or <unk> budgets.
This portion of the Dod budget presents an opportunity to access additional spending while diversifying our funding streams.
In aggregate based upon our strategy, we are evaluating incremental new opportunities of approximately $20 billion to deliver a fully converged solutions throughout emission lifecycle now.
Now I would like to turn the call over to our Chief Financial Officer, Susan Lynch to discuss our third quarter results.
Thanks, Chuck and good afternoon, everyone turn with me now to slide eight.
Results, we will be discussing today reflect the contributions of veterans from July one through September 32022, and vertex from July 5th a close date through September 32022, unless otherwise noted.
Our third quarter financial results were strong and a great start for <unk>.
Third quarter, 2022 revenue with $958 2 million pro forma.
Revenue was 961 3 million, representing an increase of 10% year over year, when compared to revenue of $876 $3 million for Vectren and vertex and the third quarter of 2021.
Organic revenue growth was 10% for legacy veteran and was driven by continued strong performance on Logcap five.
Associated with the Port bidding Eagle contract award and volume associated with rapid response, and contingency efforts in Europe as well as endo pay com.
Organic revenue from <unk> com increased 113% year over year, which is a noteworthy achievement, especially given the revenue contribution from the Pacific defender exercise during the prior year period.
<unk> is continuing to increase its footprint in the region.
Additionally, and as well for growth to support our clients' mission and strategic initiatives and in their pay com.
Pro forma revenue growth was driven by the previously mentioned items. In addition to the ramp of new business wins, including <unk> advanced helicopter training system.
<unk> test with Atlantic and global strike command.
Today, <unk> has a more diversified portfolio from a client capability contract and geographic perspective, when compared to the legacy Vectren.
This diversification also helps provide topline resiliency through various economic and political cycle.
The improvement in <unk> portfolio composition as demonstrated in our third quarter revenue metrics.
Our revenue with the army and the third quarter now makes up 37% of total revenue compared to 66% for legacy Vectren last year.
Our revenue with the Air Force now makes up 17% of revenue compared to 14% last year.
And the revenue from the Navy now comprises 28% of total revenue compared to 11% last year.
Finally, our revenue from civilian and other clients, including the intelligence community NASA the drug enforcement agency, the UK Royal Navy and commercial comprising 18% of revenue compared to 8% last year.
From a contract mix perspective, our portfolio is now much more balanced.
Cost plus mix as a percentage of revenue in the third quarter was 53% compared to 74% for legacy versus last year, our fixed price contract mix is now 43% compared to 23% last year.
Regarding inflation.
To date, we have not experienced with broad based increases due to inflation and the cost of our fixed price and time and materials contracts that are material to the business as a whole.
We are continuing to monitor the impact of rising costs are active and future government contracts, but currently do not see a material impact to the business.
Operating income was $4 $5 million, including $44 9 million of merger and integration related costs as well as the amortization of acquired intangible assets of $24 2 million.
Adjusted EBITDA was $79 million or eight 2% margin compared to $25 million for legacy Vectren and the same time last year.
Adjusted EBITDA was higher than our estimate in the third quarter and was driven by our team's successful efforts and delivering solid results that were also earlier than originally anticipated.
Adjusted EBITDA compared to the prior year periods results for vectors and vertex was approximately unchanged due to a large contribution in Q3 'twenty one for programs that were in their final phases of completion.
Fully diluted earnings per share for the third quarter of 2022 was minus 56.
Adjusted EPS, which adds back merger integration and amortization of acquired intangible assets and debt issuance costs was $1 33 compared to $1 17 for legacy vectors in the same period last year.
Please note that because of the merger the calculation of adjusted EPS now adds back noncash amortization of debt issuance and related cost, which equates to roughly <unk> <unk> in the third quarter of 2022 and 2021, respectively.
Turn with me now to slide nine to discuss cash and liquidity.
Our focus on cash collection and process improvement in the quarter yielded strong results with significant cash generated from operating activities of $81 million.
Excluding merger related payments of $41 million adjusted cash from operations in the quarter was a $121 million.
This noteworthy performance resulted in a $87 million reduction in the company's net debt in less than three months exemplifying <unk> ability to generate strong cash flow with low capital requirements.
Net debt is $1 2 billion a reduction of 7% since the close of the merger on July 5th.
I would like to thank our operations contracts and finance team for their commitment to our all hands on deck cash approach and overall priority to deleveraging the company's balance sheet.
We have a clear path to rapidly reduce the company's debt, which is supported by our strong fundamentals, including a robust backlog supported by long term contracts limited recompete risk and solid revenue visibility.
Slide 10, further demonstrates our deleveraging approach and mindset.
We have been able to reduce our net debt leverage ratio from four times at close to three seven times as of September 30th.
Importantly, we have been able to reduce our leverage ahead of plan, which was previously expected to be three seven times at the end of Q4.
Given our current momentum we believe our net debt will show further improvement in Q4.
Debt reduction remains a primary goal for our management team and we continue to target a net leverage ratio of two to three times in the midterm.
Let's turn now to slide 11.
Given our current pace of integration and Q3 2022 results we.
We are increasing the midpoint of our second half guidance for revenue adjusted EBITDA and adjusted operating cash flow.
Revenue is now expected to be in the range of $1 92 to $1 $94 billion.
Adjusted EBITDA is now expected to be $145 million to $150 million.
Adjusted diluted EPS is expected to be in the range of $2 14 to $2 28.
Adjusted EPS guidance for the second half now reflects the add back for noncash amortization of debt issuance and related costs of $6 million or <unk> 15 of EPS.
Adjusted net cash provided from operating activities. Excluding merger payments is now expected to be in the range of $140 million to $150 million.
With that I'll turn the call back to Chuck.
Thank you Susan we have taken a great first step in our journey on <unk> and are excited about the path in front of us to continue driving results enhancing shareholder value.
Delivering converged solutions throughout the <unk> lifecycle.
Now I'd like to open the call up to questions.
Thank you.
At this time, we will begin the question and answer session.
A question you May Press Star then one on your Touchtone phone.
On a speaker phone. Please proceed with your handset before pressing the jays.
Your question. Please press Star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Tobey Sommer with Trust.
Okay.
Or is that you could pursue together that you weren't able to pursue separately very effectively issue had a list of those is there one you would highlight as sort of a near term opportunity.
One that might excite you the most over a medium one to two year period.
Thanks Tobey.
Cut out a bit in early part of your question I think the question was of the $20 billion.
New opportunities, we're pursuing which ones of those are most interesting in the near and longer term.
Okay.
That's right.
Okay, well, thank you and Hello, Tobey Hi, how are you doing it we talked about you well for retail.
In our last stop.
And our last discussion that we have opportunities that are emerging in both and NASA.
As well as the intelligence community that are very interesting to us in the shorter term.
You've mentioned in the prepared remarks that we've looked at approximately $20 billion.
Of net new opportunities that will be evaluated to be pursued and those are two categories of opportunities.
Again, I would put her in and put in the shorter term horizon say the next six months to 18 months and then longer term there are opportunities.
Like the Arctic opportunities in the National Science Foundation.
And there are also other also larger opportunities and both USAID and the department of state that would be out probably closer into the 18 two.
30 months horizon.
Any other question on that Tobey.
No no I think you addressed that well.
From the performance was good in the quarter.
Good.
Our adjusted guidance, which would you say that you have.
Improving visibility into financial performance as you enter into 2023.
So what are the main drivers.
Yes, I think I was very very pleased with the performance of our teams and that's really our first quarter.
As we talked about in the prepared remarks, we were.
Very fortunate to move both revenue and EBITDA to the left and.
<unk> was one of the drivers for our third quarter performance.
We'll say that we continue to see pressure.
Pressure than the marketplace in terms of slowing awards.
Having said that we do have.
Very good visibility into the fourth quarter.
We feel like we understand 2023 reasonably well now and we look forward to providing our guidance for 'twenty three in our February discussion, but again, we're very very confident of the guidance that we provided today for the remainder of the year.
Thank you.
And the next question comes from Brian <unk> with Raymond James.
Hey, good evening and thanks for taking my questions.
I wanted to talk about free cash flow it really outperformed what we were looking for.
Could you talk maybe about what the rate of debt pay down might be over the next few quarters.
And really what we can think of it from a cash flow perspective, as well as you've kind of integrated the businesses I'm, assuming there is some big improvements on Dsos maybe.
Talk about where the combined organization was.
In July which was a very long ago, where it is today and where you might be.
Six or nine months down the road. Thank you.
Yes, Brian Thanks for the question.
We had a really good cash flow quarter.
Tom.
<unk>.
Bill into a merger and you are kind of figuring out how to.
<unk>.
Forecast cash the team just did an excellent job in really exceeded our expectations and was able to whole.
A couple of things into the quarter, which we will see kind of be.
Be offset in the fourth quarter projection.
We are a low capital intensive business. So when you think about how you model our cash flow going forward.
I would just kind of think about our interest expense forecast.
We are a low cash tax payer.
And we've got low capex and so we're going to be working to pay down debt as quickly as possible.
Taking a look probably in the first half of next year of refinancing our debt and getting something with a little bit.
Lower cost of capital.
And so just stay tuned to hear more about that going forward outstanding quarter from a cash flow perspective.
Our viewpoint.
That's great I appreciate the color.
Wanted to maybe talk about it the integration sounds like it's going really well.
The fifth is a really good one between all the companies as well can you maybe talk about any synergies that you saw from this quarter from the mergers.
Which is probably very few.
And then really talk about the milestone to unlocking some of the key synergies that <unk> previously outlined thank you.
Yes, I've been very pleased with the kind of initial operation of the combined company.
As you remember the.
The legacy vertex company was.
Integrating a merger from Raytheon earlier in the year.
We saw very very strong execution and can continue to see strong execution in that aspect of our synergy case.
With regard to the combined operations of the <unk>.
We are very closely aligned and processes were closely aligned now in kind of our technology.
A very short amount of time, we found a way to consolidate our kind of financial operations. So that our operators can receive insights into their financial performance.
And we're on track as I mentioned in the prepared remarks.
To meet the synergy commitments that we have previously communicated on.
On top of all of that operational color.
The cultures couldnt be more aligned.
Focus of both legacy teams now one combined <unk>.
Its very mission oriented and given the complementary nature of the missions that we supported it's really been fun to watch the teams come together, we talked about the industry solutions summit that we had in Indianapolis and to me that just cross sell life, all the possibilities for future revenue synergies.
In addition to the cost synergies we've already discussed.
That's great and if I could just sneak one last one before I jump back into the queue. It looks like EBIT EBITDA margins. We're really healthy is this the way we should think about the run rate going forward.
Kind of pre synergies.
Or was there something kind.
Produce some of that incremental strength in this quarter that might be nonrecurring.
Yes, we were very pleased as both Susan and I have mentioned in our remarks about the EBIT performance in the quarter.
Hunter was aided by a couple of transactions that the team did a really great job of pulling into the quarter.
We did set and raise our EBIT guidance for the remainder of the year and we look forward to providing 23 guidance with regard to EBITDA. When we get together again in February but net net a very very strong performance in the quarter driven by great execution from teams that have now come together.
Fantastic congratulations ill jump in the queue.
Thank you good talking to you.
Thank you and the next question comes from Robert Connors with Stifel.
Hey, Chuck case Susan.
Thanks for taking my question.
Hi, Robert how are you.
Robert how are you doing thanks for the call I am doing well.
I think you guys gave a pretty good breakdown.
What sort of drove the revenue there.
And just doing the back of the envelope calc I think though the deferred tax portion in the quarter was about $453 million.
Of revenue, just wondering sort of what the flavor of.
That was year over year, and what what drove that on the legacy vertex.
Yes.
Mentioned the combined the combined growth rate was pretty well split up about 10% per per legacy company and I would say the complexion is very similar we had.
Really a healthy on contract growth and as we mentioned in a time, where we do have slowing awards that's important but it's also important to note that.
The legacy vertex part of our now combined <unk> company, but coming off a very very strong.
First half of this year in terms of New awards.
With Navy task, when Atlantic and global strike, so the vertex component of the business.
Again was was really aided by new startups, which I've just described as well as on contract growth.
Okay, great. Thank you and sort of a follow up for Susan of the.
About $90 million debt Paydown.
When I look at the three sort of tranches of debt.
With the majority of that pay down was it on the <unk>.
Higher cost of capital debt.
Yes, it was all on the ABL.
We have not yet paid down any of the second lien.
And that'll be our focus going forward.
Okay, great I'll jump back in queue.
And congrats on the quarter.
Thank you appreciate it thanks for the phone call.
Yes.
Thank you and the next question comes from Joe Gomes with Noble capital.
Good afternoon, congrats on the quarter.
Thank you Joe how are you.
Well, so I wanted to start off.
Circle back Susan you made a comment that you are monitoring inflation, but youre not seeing a material impact yet.
Number of the other companies I follow in the defense space have all identified inflation as a real headwind I'm wondering.
Maybe you could just give a little more insight as to why.
At this point in time inflation has not really been impacting.
<unk> guys.
Yes, Theres actually two things so most of our labor is.
Controlled by Labor unions, and I should say, our labor cost is controlled by the labor unions. So as we go through negotiations with the unions. We are also working with our customers to make sure that.
Those changes did include in our contracts via contract change order.
And then Conversely on almost all of our contracts except for.
One or two.
The materials are on cost recovery contract line items.
So we do the best that we can to negotiate with our suppliers to keep the cost low for our customers, but in the case that we cannot that cost is paid by our customers and we have seen our customers and we've not had to do this quite yet, but we will consider it.
Thats because our customers are becoming more open open to having an EPA or economic price adjustment clause in the contracts and so it's a.
It's a global issue with inflation, that's not one that we have.
Our loaner facing in.
We will be working with our customers when we do encounter a problem, we will be doing that proactively in our bidding process to include added that contract clause in our contracts and if we start to see an issue, we will be going back and negotiating with our customers.
Okay. Thank you for that.
You mentioned on the guidance for the last quarter.
When we talk and we are.
Talking about kind of the guidance split in revenue for the.
Back half of the year, you guys were kind of talking about.
45, 55 split it between the third and the fourth quarter.
Pardon me.
Given the performance.
In the quarter.
It looks like it's going to be much closer to a.
A 48 52 type of a.
Split and you mentioned you were able to pull some business forward into the quarter I was wondering if could talk a little bit more about the business, you're able to pull into the quarter.
And then maybe just highlight some of that as to where it came from and why you were able to pull it forward.
Yes. Thank you said there was actually two events.
One was a large revenue item that working with our customers we were able to for one of our customers we were able to meet their needs and so we were able to pull.
Forward into the quarter.
I would say I'll characterize it as the average margin item and then there was a second item that we actually had in our fourth quarter forecast as well that working with the customer if they were actually very motivated to get that into the third quarter and.
We accommodated them and that was a very high margin.
Type of.
Situation and so we.
We will actually be collecting that in the within our.
Second half in the fourth quarter forecast.
We've been able to confirm that we will be able to collect that in the fourth quarter. So.
Really two items.
And the underlying underlying business.
Were formed very very well and was within our forecast. So that was the main driver and you're exactly right at 48 to 52 split.
A little bit more of the EBITDA came into the third quarter.
From the fourth quarter, so you're exactly right on zone.
Okay. Thank you.
And then Chuck you mentioned about.
Somewhat of a slowing award environment.
Maybe give us a little more color and detail on that.
How does your thoughts here on the continuing resolution.
<unk>.
Which runs through mid December .
What kind of impact you see that having on the business here in the short term.
Yeah, I'll start I'll start with the later part of your question Joe as you know were predominantly funded across our business through the O&M budget, which is a bit more stable when it comes to.
Continuing resolutions and you also know we're heavily op tempo driven.
And given what's happening.
In Europe , and they are still afghani, new operations at rollout of activity and Endo pay com, we're seeing a good deal of activity.
That what I like to think about as kind of on contract growth. If you will.
With regard to our pipeline as I indicated in my prepared remarks, we are seeing a slowdown you saw that in the $2 $7 billion.
Whereas with pipe worth of pipeline that has already been submitted which was up 16% over last quarter. So we're continuing to see the bid submitted grow we're continuing to see a very strong pipeline growth as represented in the $20 million of the pipeline.
$20 billion of pipeline I should say.
But but it is it has slowed down I wouldn't necessarily attribute it to the continuing resolution.
But it's something that we're going to continue to work closely with our clients on.
Okay, great and one more if I may.
You talked Susan about potential next year, we're looking at.
Our refinancing.
The current debt out there.
Any thoughts I know, it's really early but are you just looking to lower rates are looking at maybe kind of getting a different type of debt structure out there.
Any thoughts you might have and again I understand it.
Are we really early in the process here.
No good question so.
The biggest thing is to lower the rates.
The rate on the second lien is quite costly.
So that is one.
Thing two is the labor intensity on the ABL.
I think Mike Smith, and I, and Chuck would really like to get into more of a traditional revolver where.
We have access to it and don't have to file a borrowing base.
Every month, but that being said, we really do appreciate the support and help that we get from our lenders.
Great. Thanks, I'll get back in queue.
Thank you Joe appreciate it.
Thank you and once again. Please press Star then one if you'd like to ask a question.
And our next question is half from Tobey Sommer with truest.
Thanks, I was wondering if you could give us some color for what the Recompete percentage of the book of business looks like over the next year or two you already talked about how you don't have anything chunky over the next two and a half years, but.
To what extent can you be outward facing defending the base.
Yes, we are we are really fortunate in that.
Many of our largest recompete are now behind us and as I stated in last quarter's remarks also.
In the discussion today as well.
Really don't have any recompete more than 2% of revenue for the next couple of years actually and tell me what that is going to allow us to do is going to allow us to free up some business development resources to focus on.
This net new combined opportunity set that we've talked about.
While theres always recompete in our portfolio.
So the broad as Vito axes.
It's pretty smooth when it comes to the size and that being our largest opportunities and as I've indicated that's going to free up some some time and attention to really to really focus on and make progress on these net new opportunities that are so attractive to us.
Just to drill into that would you describe it as sort of moderates.
Moderately lower than average in <unk>.
<unk> should not having anything of scale or would you call sustained I would say I would say.
Yes, I think just mathematically in the early years, just moderately lower than average.
And if you think about the way.
I have to seven year contracts go.
You understand the math of antibody it'll be lower in the first couple of years.
More average in the Middle and then higher at the end obviously.
Thank you very much.
I appreciate it good talking to you.
Thank you and we also have follow up from Robert Connors with Stifel.
Just to touch on the Indo pay com revenues, which was pretty strong in the quarter.
Can you give any sort of comments as far as like initial discussions youre, having with regards to future op tempo in the region.
Whether we can still see some sort of sequential growth out of that.
Sure, Yes, we couldnt be more pleased with the.
The connection we have with our clients in Indo pay Com, we're now.
Now at full operational capability on <unk> as you know we have been for a while there.
We actually have been.
Exercise support activity this year in Indo pay comment as well.
The work that we're doing in the Philippines is now at full operational capability as well.
And as you may or May not know every other year and Indo pay com.
There is a large exercise it with Pacific defender and 2021 and in 2023 the name of the exercises.
Allison favor talents in favor. Thank you skip online. So we're looking at another another large exercise in the <unk> region.
Next year as well the last point I'll make on this is that we really see an opportunity to.
To actually add onto Toby's earlier point with.
With regard to our aerospace business and our training business.
With regard to extending the capabilities we have.
And to augment the former vectors capability to endo pay come as well and we are closely looking at a number of opportunities.
That would provide that type of record revenue synergy into the future as well.
Okay great.
Very helpful and then if I if I remember.
One Q has sort of traditionally been the letter of the cash flow quarters.
The deal with <unk>. So I was just wondering.
Seasonality of just cash flows will change with the combined entities.
Yeah.
Great question.
It's almost identical to our cash flows.
So when you pay all your FICA few to suit under your management bonuses et cetera.
And even through I would say the first half of the year and Thats, where we really pushed to go cash flow positive and then we typically have just.
When we generate all of our operating cash flows in the second half of the year. So.
Unfortunately, it's almost identical.
Okay, great. Thanks for the help and thanks for taking my question again.
Okay. Thank you.
Thank you. This concludes our question and answer session I would like to turn the floor to truck pro for any closing comments.
Thank you and thank you all for joining us on the call today, and we really enjoy these discussions and we look forward to continuing to talk with you and we will we'll talk to you on our fourth quarter and year end call.
Next time talk to you soon thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.