Q1 2025 V2X Inc Earnings Call

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After todays presentation, there will be an opportunity to ask questions.

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I would now like to turn the conference over to Mr. Mike Smith, Corporate Vice President Treasury Investor Relations and corporate development. Please.

Speaker Change: Please go ahead.

Speaker Change: Thank you good afternoon, everyone welcome to the <unk> first quarter 2025 earnings conference call.

Jeremy: Joining us today are Jeremy <unk>, President and Chief Executive Officer, and Sean morale, Senior Vice President and Chief Financial Officer.

Jeremy: Slides for today's presentation are available on the Investor Relations section of our website <unk> Dot com.

Jeremy: Please turn to slide two.

Jeremy: During today's presentation management will be making forward looking statements pursuant to the safe Harbor provisions of the federal Securities laws.

Jeremy: Please review our Safe Harbor statement 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.

Jeremy: The company assumes no obligation to update its forward looking statements.

Jeremy: In addition in todays remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors.

Jeremy: 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.

Jeremy: Both of which are available on the Investor Relations section of our website.

Jeremy: At this time I would like to turn the call over to Jeremy.

Jeremy: Thank you, Mike and good afternoon, everyone.

Jeremy: Thank you for joining us today before we get started I'd like to recognize our team for their contributions and unwavering commitment to our customers' mission success.

Jeremy: This commitment was demonstrated firsthand during the quarter with our customers.

Jeremy: Being awarded a meritorious unit Commendation for exceptional performance and training students naval aviators.

<unk> is proud to have contributed to this achievement by delivering industry, leading aircraft in fleet readiness that is yielding unprecedented success and preparing the next generation of naval aviators.

Jeremy: Our people are the foundation of our business and with that we're delighted to welcome Mellon <unk> as chief Human Resources Officer.

Jeremy: As we continue to scale globally and invest in growth and our people melon brings the right combination of experience and leadership to help shape the future of our workforce.

Jeremy: Please turn to slide three.

Jeremy: In today's call I'm going to discuss the trends, we're seeing in our business are solid positioning and catalysts in front of us to drive future growth and value creation.

Jeremy: Starting with the first quarter results revenue was $1 2 billion driven by a 10% year over year increase in the Asia Pacific region.

Jeremy: Adjusted EBITDA was $67 million consistent with our anticipated quarterly cadence.

Jeremy: Adjusted EPS was <unk> 98.

Jeremy: The overall trends in our market remain positive and are being driven by customer requirements to improve deterrence enhanced readiness and strengthen national security.

Jeremy: We are performing well as V to X possesses full lifecycle mission driven solutions that deliver on these requirements.

Jeremy: The <unk> value proposition is being recognized by customers and as demonstrated by our recent awards and extensions, which provides substantial visibility for the next several years.

Jeremy: We are leveraging our portfolio of capabilities geographic footprint and limited recompete cycle to pursue larger opportunities that leverage the full breadth of capabilities that I'll discuss in further detail shortly.

Jeremy: Additionally, the foreign military sales in international markets continue to represent a large and growing opportunity for us to deliver more solutions across areas we've already operate.

Jeremy: These customers know us and trust us and they see the benefits of our solutions.

Jeremy: Our focused engagement strategy and visible presence with customers is yielding substantial traction over several opportunities down the line exactly to our core capabilities.

Jeremy: I look forward to updating you on these opportunities as the mature here in 2025.

Jeremy: In total our bid velocity is increasing under the leadership of Roger Mason. Our visibility has improved we are investing for growth and taking advantage of the tailwind to drive future bookings revenue cash flow and value for our shareholders.

Jeremy: Our solid and consistent financial performance once again allowed us to enhance our capital structure.

Jeremy: Further reducing interest expense and improving key terms of our credit facility.

Jeremy: Importantly, our liquidity profile is strong at approximately $650 million.

Jeremy: There is nothing we have seen to date from tariffs budgetary request administration priorities that would change our strong position in the markets we serve.

Jeremy: Our visibility into future macroeconomic decisions policy trends national security and emerging defense budget priorities.

Jeremy: Positive impacts on our current work as well as favorable opportunities for our new business pipeline.

Jeremy: Given our first quarter performance market positioning and visibility we are remaining confident in our ability to achieve our 2025 commitments as such we are reaffirming our guidance.

Jeremy: Please turn to slide four.

Jeremy: The <unk> value proposition is being recognized by customers and as demonstrated by wins and accomplishments that are listed on this slide.

Jeremy: Today, we are with our customers at every phase of execution, playing a critical role delivering comprehensive end to end capabilities that support and during missions of consequence around the globe.

Jeremy: This was recently demonstrated through a $62 million contract with the space force to ensure operational readiness of the Cobra Dame radar system in Alaska.

Jeremy: <unk> is extending the capabilities and readiness of the key radar that supports U S ballistic missile defense and space domain awareness.

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Jeremy: On the upper right side of the page and with the same customer, but over 8000 miles away from Cobra Dane or value trust and ability to provide full lifecycle solutions was further recognized through a $140 million award to support our key space force tracking and instrumentation station at the Ascension Island.

At the Ascension Island.

Ascension Island, combined with Cobra Dane showcase our ability to deliver critical capabilities and support of national security at scale across the globe.

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: To ask a question, you may press star then 1 on your telephone keypad. Do we draw your questions?

<unk> is emerging as a critical enabler of our nation's marquee space domain awareness infrastructure.

Operator: you may press star then 2.

Jeremy: Essentially an island combined with Cobra <unk> showcase our ability to deliver critical capabilities and support of national security at scale across the globe.

Operator: Please note this event has been recorded.

One of our customers major priorities is ensuring our warfighters have the absolute best training in order to deter threats.

Michael Smith: I would now like to turn the conference over to Mr. Mike Smith, Corporate Vice President, Treasury, Investor Relations, and Corporate Development. Please go ahead, sir. Thank you.

Additionally, with military recruiting reaching the highest levels in decades, we believe the demand for training solutions continue to grow and received strong support for overall troop readiness as outlined by the administration.

Jeremy: <unk> is emerging as a critical enabler of our nation's marquee space domain awareness infrastructure.

Jeremy: One of our customers major priorities is ensuring our warfighters have the absolute best training in order to deter threats.

Jeremy Wensinger: Good afternoon, everyone.

Jeremy Wensinger: Welcome to the V2X first quarter 2025 earnings conference call.

This emphasis aligns precisely to where <unk> is positioned and growing for example, during the quarter. We were awarded positions on two training service programs, which are listed on the upper Middle section of the slide.

Jeremy Wensinger: Joining us today are Jeremy Wensinger, President and Chief Executive Officer, and Shawn Mural, Senior Vice President and Chief Financial Officer.

Jeremy: Additionally, with military recruiting reaching the highest levels in decades, we believe the demand for training solutions continue to grow and received strong support for overall troop readiness as outlined by the administration.

Jeremy Wensinger: 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 statement. In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors.

These wins when combined with our W. Trs Award complete <unk> with the Trifecta of Premier Army training contracts.

Jeremy: This emphasis aligns precisely to where <unk> is positioned and growing for example, during the quarter. We were awarded positions on two training service programs, which are listed on the upper Middle section of the slide.

From every soldier and every weapon system to every major training installation <unk> supports every stage of the Warfighters training journey with integrated solutions and <unk>.

Jeremy: These wins when combined with our W. Trs Award complete <unk> with the Trifecta of Premier Army training contracts.

Enhanced preparedness and National security.

Another top priority of administration is improving overall readiness capabilities, which is also a core <unk> offering and a differentiator.

Jeremy: From every soldier and every weapon system to every major training installation <unk> supports every stage of the Warfighters training journey with integrated solutions.

We deliver readiness multiplying solutions that are generating some of the highest aircraft readiness rates and are well positioned to capitalize on increasing customer demand.

Jeremy: That enhanced preparedness and national security.

Jeremy: Another top priority of administration is improving overall readiness capabilities, which is also a core <unk> offering and a differentiator we deliver readiness multiplying solutions that are generating some of the highest aircraft readiness rates and are well positioned to capitalize on increasing customer demand.

Jeremy Wensinger: 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, followed with the SEC, both of which are available on the investor relations section of our website.

This was most recently demonstrated through $103 million award to provide engineering upgrade maintenance and modifications to the Navy Sea 26 aircrafts.

This win highlights the Navy's confidence in <unk> ability to deliver mission capable aircraft with industry, leading readiness rates north of 90%.

Jeremy Wensinger: At this time, I would like to turn the call over to Jeremy. Thank you, Mike, and good afternoon, everyone. Thank you for joining us today.

Jeremy: This was most recently demonstrated through $103 million award to provide engineering upgrade maintenance and modifications to the Navy 26 aircrafts.

Our world class execution backed by customer ratings global footprint and comprehensive capabilities are creating avenues and opportunities with new customers that want the <unk> solution. This.

Jeremy Wensinger: Before we get started, I'd like to recognize our team for their contributions and unwavering commitment to our customers mission success. This commitment was demonstrated firsthand during the quarter with our customers being awarded a meritorious unit commendation for exceptional performance in training student naval aviators. B2X is proud to have contributed to this achievement by delivering industry-leading aircraft and fleet readiness that is yielding unprecedented success in preparing the next generation of naval aviators.

Jeremy: This win highlights the Navy's confidence in <unk> ability to deliver mission capable aircraft with industry, leading readiness rates north of 90%.

This was evidenced in the first quarter with $100 million reward with the FBI to make sure. The aircraft remain fully mission ready to meet evolving operational demands.

Jeremy: Our world class execution backed by customer ratings global footprint and comprehensive capabilities are creating avenues and opportunities with new customers that want the <unk> solution.

This customer saw the performance solutions agility.

And value of <unk> is delivering to other customers and sought after via <unk> to deliver the same operational readiness for their mission.

Jeremy: This was evidenced in the first quarter with $100 million reward with the FBI to make sure. The aircraft remain fully mission ready to meet evolving operational demands.

Jeremy Wensinger: Our people are the foundation of our business, and with that, we are delighted to welcome Melon Yeshula as Chief Human Resources Officer. As we continue to scale globally and invest in growth in our people, Melon brings the right combination of experience and leadership to help shape the future of our workforce.

<unk> improves customer outcomes with mission match solutions, our past performance has demonstrated our ability to support some of the highest priority national security requirements. Every single day. This is what makes us a trusted partner and was further validated with the army's notification to extend several of our Logcap task.

Jeremy: This customer saw the performance solutions agility.

Jeremy: And value of <unk> is delivering to other customers and sought after via <unk> to deliver the same operational readiness for their mission.

Jeremy: <unk> improves customer outcomes with mission match solutions, our past performance has demonstrated our ability to support some of the highest priority national security requirements. Every single day. This is what makes us a trusted partner and was further validated with the army's notification to extend several of our Logcap task.

Orders in the June 2030.

Jeremy Wensinger: Please turn to slide three. In today's call, I'm going to discuss the trends we are seeing in our business, our solid positioning, and catalysts in front of us to drive future growth and value creation. Starting with the first quarter results, revenue was $1.02 billion, driven by a 10% year-over-year increase in the Indo-Pacific region. Adjusted EBITDA was $67 million, consistent with our anticipated quarterly cadence. Adjusted EPS was $0.98. The overall trends in our market remain positive and are being driven by customer requirements to improve deterrence, enhance readiness, and strengthen national security. We are performing well as V2X possesses full lifecycle, mission-driven solutions that deliver on these requirements.

This combined with our recent awards further strengthens our foundation.

Now I'd like to turn it over to Sean who will discuss how these achievements are significantly improving our visibility and the base from which we can grow Sean.

Jeremy: Orders in the June 2030, this combined with our recent awards further strengthens our foundation.

Sean: Thanks, Jeremy and good afternoon, everyone. Please turn to slide five.

Sean: Our year to date success, securing new awards Recompete and extensions has resulted in significantly reducing the overall percentage of recompete that comprise our expected 2025 revenue.

Jeremy: Now I'd like to turn it over to Sean who will discuss how these achievements are significantly improving our visibility and the base from which we can grow Sean.

Sean: Thanks, Jeremy and good afternoon, everyone. Please turn to slide five.

Sean: The progress we are seeing and efforts that Jeremy just discussed as well as our growth related activities.

Sean: Our year to date success, securing new awards Recompete and extensions has resulted in significantly reducing the overall percentage of re competes that comprise our expected 2025 revenue.

Sean: An increasing proposal volume and larger scale opportunities bode well for continued growth and value creation.

Sean: Furthermore, with our awards and extensions visibility is improving with our top five programs, having approximately five years of revenue runway.

Sean: The progress we are seeing and efforts that Jeremy just discussed as well as our growth related activities focused on increasing proposal volume and larger scale opportunities bode well for continued growth and value creation.

Jeremy Wensinger: The V2X value proposition is being recognized by customers and is demonstrated by our recent awards and extensions, which provide substantial visibility for the next several years. We are leveraging our portfolio of capabilities, geographic footprint, and limited recompete cycle to pursue larger opportunities that leverage the full breadth of capabilities that I'll discuss in further detail shortly. Additionally, the foreign military sales and international markets continue to represent a large and growing opportunity for us to deliver more solutions across areas we've already operated. These customers know us and trust us, and they see the benefits of our solution.

Sean: This provides improved revenue visibility, while also presenting optionality to allocate resources for continued growth.

Sean: Furthermore, with our awards and extensions visibility is improving with our top five programs, having approximately five years of revenue runway. This.

Sean: We anticipate the combination of these efforts.

Speaker Change: <unk> bookings growth further strengthening backlog, which already represents approximately three times annual revenue.

Sean: This provides improved revenue visibility, while also presenting optionality to allocate resources for continued growth.

Speaker Change: I'd like to note that at the current time, the Logcap extensions and the Space Force Ascension Island Award. We just discussed are not included in backlog.

Sean: We anticipate the combination of these efforts will yield bookings growth further strengthening backlog, which already represents approximately three times annual revenue.

Speaker Change: Additionally, as previously discussed we expect to incrementally book activities associated with the Warfighter training and readiness program into backlog as they are transitioned.

Sean: I'd like to note that at the current time, the Logcap extensions and the Space Force Ascension Island Award. We just discussed are not included in backlog.

Jeremy Wensinger: Our focused engagement strategy and visible presence with customers is yielding substantial traction over several opportunities that align exactly to our core capabilities.

Speaker Change: I'll now turn it back over to Jeremy to discuss our growth efforts and catalysts.

Sean: Additionally, as previously discussed we expect to incrementally book activities associated with the Warfighter training and readiness program into backlog as they are transitioned.

Speaker Change: Please turn to slide six.

Jeremy Wensinger: I look forward to updating you on these opportunities as they mature here in 2025. In total, our bid velocity is increasing under the leadership of Roger Mason. Our visibility has improved. We are investing for growth and taking advantage of the tailwinds to drive future bookings, revenue, cash flow, and value for our shareholders. Our solid and consistent financial performance once again allowed us to enhance our capital structure, further reducing interest expense and improving key terms of our credit facility. Importantly, our liquidity profile is strong at approximately $650 million. There is nothing we have seen to date from tariffs, budgetary requests, administration priorities that would change our strong position in the markets we serve.

Speaker Change: <unk> is in an enviable position with our top five programs extending through mid 2029 and beyond.

Sean: I'll now turn it back over to Jeremy to discuss our growth efforts and catalysts.

Speaker Change: This significant recompete holiday creates a remarkable opportunity to further our focus to win new programs.

Jeremy: Please turn to slide six.

Jeremy: <unk> is in an enviable position with our top five programs extending through mid 2029 and beyond.

Speaker Change: We are already well underway capitalizing on disposition through accelerating the velocity the.

Speaker Change: The total volume of bids we plan to submit this year is 50% more and that will be submitted in 2024.

Jeremy: This significant recompete holiday creates a remarkable opportunity to further our focus to win new programs.

Speaker Change: We are not only bidding more opportunities, we're bidding bigger pursuits, and key franchise programs by leveraging the full depth and breadth of our portfolio.

Jeremy: We are already well underway capitalizing on disposition through accelerating bid velocity. The total volume of bids we plan to submit this year is 50% more and that will be submitted in 2024.

Speaker Change: This focus is reflected in the fact that over the next 12 months, we anticipate submitting bids on five opportunities that are valued at or above $1 billion.

Jeremy: We are not only bidding more opportunities, we're bidding bigger pursuits, and key franchise programs by leveraging the full depth and breadth of our portfolio.

Jeremy Wensinger: Our visibility into future macroeconomic decisions, policy trends, national security, and emerging defense budget priorities suggest positive impacts on our current work, as well as favorable opportunities for our new business pipeline.

Speaker Change: A majority of these bids require the capabilities from across the company executed as <unk> to pursue and win thus unlocking a larger pipeline of opportunities to drive future growth.

Jeremy: This focus is reflected in the fact that over the next 12 months, we anticipate submitting bids on five opportunities that are valued at or above $1 billion.

Jeremy Wensinger: Given our first quarter performance, market positioning and visibility, we are remaining confident in our ability to achieve our 2025 commitments.

Speaker Change: Importantly, we have the proof points that <unk> can win large multi dimensional programs, which was clearly demonstrated with the recent W. Trs Award.

Jeremy: A majority of these bids require the capabilities from across the company executed as <unk> to pursue and win thus unlocking a larger pipeline of opportunities to drive future growth.

Jeremy Wensinger: As such, we are reaffirming our guidance.

Jeremy Wensinger: please turn to slide four. The V2X value proposition is being recognized by customers and is demonstrated by wins and accomplishments that are listed on this slide. Today, we are with our customers at every phase of execution, playing a critical role delivering comprehensive end-to-end capabilities that support enduring missions of consequence around the globe.

Speaker Change: Since the award of FW Trs, we have incrementally added larger pursuits that leverages the full breadth of <unk> and look forward to updating you on the progress as these opportunities are awarded.

Jeremy: Importantly, we have the proof points that <unk> can win large multi dimensional programs, which was clearly demonstrated with the recent W. Trs Award.

Speaker Change: In addition to harnessing the full capability set of <unk>. We are prioritizing key partnerships that further elevate the value proposition of our solutions and expand our global addressable market.

Jeremy: Since the award of FW Trs, we have incrementally added larger pursuits that leverages the full breadth of <unk> and look forward to updating you on the progress as these opportunities are awarded.

Jeremy Wensinger: This was recently demonstrated through a $62 million contract with the Space Force to ensure operational readiness of the Cobra Dane radar system in Alaska. B-2X is extending the capabilities and readiness of the key radar that supports U.S. ballistic missile defense and space domain awareness. On the upper right side of the page, and with the same customer, but over 8,000 miles away from Cobra Dane, our value, trust, and ability to provide full lifecycle solutions was further recognized through a $140 million award to support a key space force tracking and instrumentation station at the Ascension Islands. Ascension Island, combined with Cobra Danes, showcase our ability to deliver critical capabilities in support of national security at scale across the globe.

Speaker Change: These channels have not been a material component of our business in the past, but represent a real near term opportunity to the growth of <unk> on a global basis being new channels.

Jeremy: In addition to harnessing the full capability set of <unk>. We are prioritizing key partnerships that further elevate the value proposition of our solutions and expand our global addressable market.

Speaker Change: I am excited about the opportunity to capture this expanding addressable market.

Jeremy: These channels have not been a material component of our business in the past, but represent a real near term opportunity to the growth of <unk> on a global basis being new channels I am excited about the opportunity to capture this expanding addressable market.

Speaker Change: What I can tell you after being here almost a year is this team has accomplished many things.

Speaker Change: Our revenue visibility has increased.

Speaker Change: <unk> access and routes to market have grown our.

Speaker Change: Our bid volume is doubling our differentiated ability to train equip and that support renewable and modernize is enabling us to pursue and capture larger and more complex contracts. Thus expanding our addressable market. We are unlocking value and are excited about the future.

Jeremy: What I can tell you after being here almost a year as this team has accomplished many things our revenue visibility has increased.

Jeremy: Our access and routes to markets have grown.

Jeremy: Our bid volume is doubling our differentiated ability to train equip connect support renewable and modernize is enabling us to pursue and capture larger and more complex contracts. Thus expanding our addressable market. We are unlocking value and are excited about the future.

Jeremy Wensinger: B2X is emerging as a critical enabler of our nation's marquee space domain awareness infrastructure.

For our shareholders customers and employees.

Sean: Now I'd like to turn the call over to Sean for the review of the financials.

Jeremy Wensinger: One of our customers' major priorities is ensuring our warfighters have the absolute best training in order to deter threats. Additionally, with military recruiting reaching the highest levels in decades, we believe the demand for training solutions continue to grow and receive strong support for overall troop readiness, as outlined by the administration. This emphasis aligns precisely to where V2X is positioned and growing. For example, during the quarter, we were awarded positions on two training service programs, which are listed on the upper middle section of the slide. These wins, when combined with our WTRS award, complete V2X with the trifecta of Premier Army Training Contract.

Sean: Please turn to slide seven.

Sean: We again are performing well, particularly in light of the overall market environment. We remain on track to achieve our commitments and are confident in the strength and resiliency of our business model that generates strong predictable cash flow.

Jeremy: For our shareholders customers and employees.

Sean: Now I'd like to turn the call over to Sean for the review of the financials.

Sean: Please turn to slide seven.

Sean: Revenue in the first quarter was $1.02 billion. This.

Speaker Change: We again are performing well, particularly in light of the overall market environment. We remain on track to achieve our commitments and are confident in the strength and resiliency of our business model that generates strong predictable cash flow.

Sean: This reflects continued growth in the Pacific region ran.

Sean: Ramping of the <unk> program and sunsetting of the previously discussed KC 10, and <unk> programs.

Speaker Change: Revenue in the first quarter was 1.02 billion. This reflects continued growth in the Pacific region.

Sean: Adjusted EBITDA in the quarter was $67 million delivering a margin of six 6%.

Speaker Change: Ramping of the <unk> program and sunsetting of the previously discussed KC 10 <unk> programs.

Sean: As we discussed previously we expect revenue and adjusted EBITDA to be weighted approximately 45% in the first half and 55% in the second half of the year.

Jeremy Wensinger: From every soldier and every weapon system to every major training installation, V2X supports every stage of the warfighter's training journey with integrated solutions that enhance preparedness and national security.

Speaker Change: Adjusted EBITDA in the quarter was $67 million delivering a margin of six 6%.

Sean: Interest expense in the first quarter was $19 7 million.

Speaker Change: As we discussed previously we expect revenue and adjusted EBITDA to be weighted approximately 45% in the first half and 55% in the second half of the year.

Sean: Cash interest expense was $18 2 million, improving $7 2 million or 28% year over year, driven by our successful repricing activities debt paydown and cash generation.

Jeremy Wensinger: Another top priority of the administration is improving overall readiness capabilities, which is also a core V2X offering and a differentiator. We deliver readiness, multiplying solutions that are generating some of the highest aircraft readiness rates and are well positioned to capitalize on increasing customer demand. This was most recently demonstrated through a $103 million award to provide engineering, upgrade maintenance, and modifications to the Navy's C-26 aircraft. This win highlights the Navy's confidence in V-2X's ability to deliver mission-capable aircraft with industry-leading readiness rates north of 90%. Our world-class execution backed by customer ratings, global footprint, and comprehensive capabilities are creating avenues and opportunities with new customers that want the V2X solution.

Speaker Change: Interest.

Speaker Change: In the first quarter was $19 $7 million.

Sean: Net income for the quarter was $8 1 million up from $1 $1 million from the prior year adjusted.

Speaker Change: Cash interest expense was $18 $2 million, improving $7 2 million.

Speaker Change: Or 28% year over year, driven by our successful repricing activities debt Paydown and cash generation.

Sean: Net income was $31 5 million, increasing 10% year over year.

Sean: First quarter EPS was <unk> 25.

Speaker Change: Net income for the quarter was $8 1 million up from $1 $1 million from the prior year.

Sean: Improving 21 from the prior year.

Sean: Adjusted EPS in the quarter was 98 inch.

Speaker Change: Adjusted net income was $31 5 million, increasing 10% year over year.

Sean: Increasing approximately 9% from the prior year.

Sean: An important attribute of our business is the ability to generate strong cash flow with low capital expenditure requirements.

Speaker Change: First quarter EPS was <unk> 25 improve.

Speaker Change: Improving 21 from the prior year.

Speaker Change: Adjusted EPS in the quarter was 98.

Sean: We continue to expect adjusted net cash provided by operating activities to be in the range of $150 million to $170 million for the year, representing over 100% adjusted net income conversion at the midpoint.

Jeremy Wensinger: This was evidenced in the first quarter with a hundred million dollar reward with the FBI to make sure the aircraft remained fully mission ready to meet evolving operational demands. This customer saw the performance, solutions, agility, and value V2X is delivering to other customers and sought after V2X to deliver the same operational readiness for their mission. B2X improves customer outcomes with mission match solutions. Our past performance has demonstrated our ability to support some of the highest priority national security requirements every single day.

Speaker Change: Increasing approximately 9% from the prior year.

Speaker Change: An important attribute of our business is the ability to generate strong cash flow with low capital expenditure requirements.

Sean: During the quarter adjusted net cash used by operating activities was $118 $1 million consistent with our expectations.

Speaker Change: We continue to expect adjusted net cash provided by operating activities to be in the range of $150 million to $170 million for the year, representing over 100% adjusted net income conversion at the midpoint.

Sean: Please turn to slide eight.

Sean: During the quarter, we continued to demonstrate our steadfast commitment to increasing shareholder value by making further enhancements to our capital structure.

During the quarter adjusted net cash used by operating activities was $118 $1 million consistent with our expectations.

Our strong fundamentals and consistent financial performance.

Jeremy Wensinger: This is what makes us a trusted partner and was further validated with the Army's notification to extend several of our log cap task orders into June 2030.

Sean: At a compelling opportunity to reprice and extend both our revolver and term loan a.

Speaker Change: Please turn to slide eight.

Speaker Change: During the quarter, we continued to demonstrate our steadfast commitment to increasing shareholder value by making further enhancements to our capital structure, our strong fundamentals and consistent financial performance created a compelling opportunity to reprice and extend both our revolver and term loan a.

Sean: The outcome was extremely positive with the cost of debt on these facilities improving by over 50 basis points.

Jeremy Wensinger: This, combined with our recent awards, further strengthens our foundation.

Sean: This yields additional interest expense savings and cash flow on top of the benefits announced just last quarter with the successful term loan B repricing.

Shawn Mural: Now I'd like to turn it over to Shawn, who will discuss how these achievements are significantly improving our visibility in the base from which we can grow. Thanks, Jeremy, and good afternoon, everyone.

Speaker Change: The outcome was extremely positive with the cost of debt on these facilities improving by over 50 basis points.

Sean: From a liquidity perspective, we are in a strong and enviable position with approximately $170 million of cash on the balance sheet any $500 million revolver that had a zero balance at the end of the quarter.

Shawn Mural: Please turn to slide five. Our year-to-date success with securing new awards, re-competes, and extensions has resulted in significantly reducing the overall percentage of re-competes that comprise our expected 2025 revenue. The progress we are seeing in efforts that Jeremy just discussed, as well as our growth-related activities focused on increasing proposal volume and larger-scale opportunities, bode well for continued growth and value creation.

Speaker Change: This yields additional interest expense savings and cash flow on top of the benefits announced just last quarter with the successful term loan B repricing.

Sean: The strength of our business is in its cash generation and we remain focused on delivering strong predictable cash flow that can be thoughtfully deployed to generate the best returns for shareholders. Please.

Speaker Change: From a liquidity perspective, we are in a strong and enviable position with approximately $170 million of cash on the balance sheet and a $500 million revolver that had a zero balance at the end of the quarter.

Sean: Please turn to slide nine.

Sean: The trends in demand signals in our business remain positive and we believe our strategy visibility and targeted growth opportunities will yield substantial value creation.

Speaker Change: The strength of our business is in its cash generation and we remain focused on delivering strong predictable cash flow that can be thoughtfully deployed to generate the best returns for shareholders. Please.

Shawn Mural: Furthermore, with our awards and extensions, visibility is improving with our top five programs having approximately five years of revenue runway. This provides improved revenue visibility while also presenting optionality to allocate resources for continued growth. We anticipate the combination of these efforts will yield bookings growth, further strengthening backlog, which already represents approximately three times annual revenue.

Sean: As it relates to tariffs, we do not expect a noticeable financial impact from any tariffs that have been discussed thus far.

Speaker Change: Please turn to slide nine.

Speaker Change: The trends in demand signals in our business remain positive and we believe our strategy visibility and targeted growth opportunities will yield substantial value creation.

Sean: Given our performance in the first quarter and current trends the company is reaffirming guidance for 2025.

Sean: At the midpoint. This reflects revenue of $4 4 billion.

Speaker Change: As it relates to tariffs, we do not expect a noticeable financial impact from any tariffs that have been discussed thus far.

Sean: Adjusted EBITDA of $313 million adjusted.

Sean: Adjusted EPS of $4 65.

Speaker Change: Given our performance in the first quarter and current trends the company is reaffirming guidance for 2025.

Shawn Mural: I'd like to note that at the current time, the Log Cap Extensions and the Space Force Ascension Island Award we just discussed are not included in backlog. Additionally, as previously discussed, we expect to incrementally book activities associated with the Warfighter Training and Readiness Program into backlog as they are transitioned.

Sean: And over 100% net income conversion to cash.

Speaker Change: At the midpoint. This reflects revenue of $4 4 billion.

Sean: In summary, we are pleased with the performance across our business and the start of the year.

Speaker Change: Adjusted EBITDA of $313 million adjusted EPS of $4 65.

Sean: Our teams continue to execute in a dynamic market, bringing the best of <unk> to meet our customers' critical mission requirements.

Speaker Change: And over 100% net income conversion to cash.

Sean: That we'd like to open the call to your questions operator.

Speaker Change: In summary, we are pleased with the performance across our business and the start of the year.

Shawn Mural: I'll now turn it back over to Jeremy to discuss our growth efforts and cattle.

Sean: We will now begin the question and answer session.

Speaker Change: Our teams continue to execute in a dynamic market, bringing the best of <unk> to meet our customers' critical mission requirements.

Sean: To ask a question you May press Star then one on your telephone keypad.

Jeremy Wensinger: Please turn to slide six. B2X is in an enviable position, with our top five programs extending through mid-2029 and beyond. This significant re-compete holiday creates a remarkable opportunity to further our focus to win new programs. We are already well underway capitalizing on this position through accelerating bid velocity. The total volume of bids we plan to submit this year is 50% more than that will be submitted in 2024. We are not only bidding more opportunities, we are bidding bigger pursuits and key franchise programs by leveraging the full depth and breadth of our portfolio.

Sean: If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: <unk> wed like to open the call to your questions operator.

Sean: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Sean: At this time, we will pause momentarily to assemble our roster.

Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: The first question comes from Andre Madrid with BTG. Please go ahead.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Andre Madrid: Yes. Thank you good afternoon, everyone.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Andre Madrid: You talk about the growth in the international portfolio, but can you maybe talk about international book to Bill is that something you'd be willing to share.

Speaker Change: The first question comes from Andre Madrid with BTG. Please go ahead.

Jeremy Wensinger: This focus is reflected in the fact that over the next 12 months, we anticipate submitting bids on five opportunities that are valued at or above $1 billion. A majority of these bids require the capabilities from across the company executed as one V2X to pursue and win, thus unlocking a larger pipeline of opportunities to drive future growth. Importantly, we have the proof points that B2X can win large multidimensional programs, which was clearly demonstrated with the recent WTRS award. Since the award of WTRS, we have incrementally added larger pursuits that leverage the full breadth of V2X and look forward to updating you on the progress as these opportunities are awarded.

So hey, Andre good too.

Andre Madrid: Yes. Thank you good afternoon, everyone.

Andre Madrid: To hear from you.

Andre Madrid: So we don't talk about the.

Andre Madrid: You talk about the growth in the international portfolio, but can you maybe talk about international book to Bill is that something you'd be willing to share.

Andre Madrid: The book to Bill by region.

Andre Madrid: I will give a little bit of color on what we're expecting as we go forward a bit when we think about where we are in the year.

Speaker Change: So hey, Andrew good to hear from you.

Speaker Change: So we don't talk about the.

Andre Madrid: We do have more concentration in expected awards that we will believe that we believe will contribute to the backlog in fixed price.

Book to Bill by region.

Speaker Change: I will give a little bit of color on what we're expecting as we go forward a bit when we think about where we are in the year.

Andre Madrid: Activities, which we're very encouraged by you heard Jeremy talked in the prepared remarks remarks around.

We do have more concentration in expected awards that we will believe that we believe will contribute to the backlog in fixed price.

Andre Madrid: Larger scale opportunities that we're pursuing we're seeing those in the back half of the year predominantly and fixed price in nature, Jeremy anything Andre. Thank you for the question and I think it's a great question and I think when I look at the.

Speaker Change: Activities, which we're very encouraged by you heard Jeremy talk in the prepared remarks remarks around.

Jeremy Wensinger: In addition to harnessing the full capability set of V2X, we are prioritizing key partnerships that further elevate the value proposition of our solutions and expand our global addressable market. These channels have not been a material component of our business in the past, but represent a real near-term opportunity to the growth of V2X on a global basis via new channels. I'm excited about the opportunity to capture this expanding addressable market.

Andre Madrid: The pipeline and I look at what we have in terms of being awarded.

Speaker Change: Larger scale opportunities that we're pursuing we're seeing those in the back half of the year predominantly and fixed price in nature, Jeremy anything Andre. Thank you for the question and I think it's a great question.

Andre Madrid: As Sean said, we're excited about getting stuff adjudicated, but we're also excited about that for which is in the pipeline as I mentioned of around.

Andre Madrid: The five plus billion dollars of $1 billion plus awards that were.

Speaker Change: As I look at the.

Speaker Change: The pipeline and I look at what we have in terms of being awarded.

Andre Madrid: Talking about so I am excited about the opportunity we have in front of us.

As Sean said, we're excited about getting stuff adjudicated, but we're also excited about that for which is in the pipeline as I mentioned of around the.

Andre Madrid: Got it got it and then I guess.

Jeremy Wensinger: What I can tell you after being here almost a year is this team has accomplished many things. Our revenue visibility has increased. Our access and routes to markets have grown. Our bid volume is doubling. Our differentiated ability to train, equip, connect, support, renew, and modernize is enabling us to pursue and capture larger and more complex contracts, thus expanding our addressable market. We are unlocking value and are excited about the future for our shareholders, customers, and employees.

Andre Madrid: Deleveraging I guess what are the other capital deployment priorities that you guys are looking at as you continue to push forward with strong cash generation and I guess on that 0.2, how have you been finding the M&A environment as of late.

Speaker Change: The five plus billion dollars of $1 billion plus awards that were.

Speaker Change: Talking about so I am excited about the opportunity we have in front of us.

Speaker Change: Got it got it and then I guess.

Andre Madrid: Yes, I will say this andre.

Speaker Change: Beyond deleveraging I guess what are the other capital deployment priorities that you guys are looking at as you continue to push forward with strong cash generation and I guess on that 0.2, how have you been finding the M&A environment as of late.

Andre Madrid: We're always looking at Optionality.

Speaker Change: <unk> Jeremy have said it repeatedly.

Repeatedly.

Speaker Change: The things that will return the greatest value to shareholders or are our utmost priority.

Andre Madrid: Yes, I'll say this andre.

Speaker Change: Relative to M&A, it's stuff that we're consistently looking at we've never stopped.

Speaker Change: We're always looking at Optionality, Jeremy have said it repeatedly the things that will return the greatest value to shareholders R. R.

Shawn Mural: Now I'd like to turn the call over to Shawn for the review of the financial.

Speaker Change: We won't.

Speaker Change: I won't I don't want to get into specifics on the market itself.

Shawn Mural: Please turn to slide seven. We again are performing well, particularly in light of the overall market environment. We remain on track to achieve our commitments and are confident in the strength and resiliency of our business model that generates strong, predictable cash flow. Revenue in the first quarter was $1.02 billion. This reflects continued growth in the Pacific region, ramping of the WTRS program, and sunsetting of the previously discussed KC-10 NT1A program. Adjusted EBITDA in the quarter was $67 million, delivering a margin of 6.6%. As we discussed previously, we expect revenue and adjusted EBITDA to be weighted approximately 45% in the first half and 55% in the second half of the year.

Jeremy: Jeremy anything else no I, what I would say is we're exceptionally patient.

Speaker Change: Our utmost priority.

Speaker Change: Relative to M&A, it's stuff that we're consistently looking at we've never stopped we won't.

Jeremy: I don't believe were on a burning platform.

Jeremy: But I do believe that we are in a position to look at optionality around what is going to create the greatest shareholder value, but again I think in this market I think patience is well served and.

Speaker Change: I won't I don't want to get into specifics on the market itself.

Speaker Change: Jeremy anything else no what I would say is we're exceptionally patient.

Jeremy: You'll see us.

Speaker Change: I don't believe were on a burning platform.

Jeremy: Look at Optionality as we go out throughout this fiscal year.

Speaker Change: But I do believe that we are in a position to.

Speaker Change: Look at Optionality around what is going to create the greatest shareholder value, but again I think in this market I think patience is well served and.

Speaker Change: Could you give any color on what you guys might even be looking for if that were to be the approach.

Speaker Change: I think.

Speaker Change: If you look at back to when we talked about the wheel, obviously getting more balanced in the wheel is something that we would look at as favorable to the shareholders and also too.

Speaker Change: You'll see us.

Speaker Change: Look at Optionality as we go out throughout this fiscal year.

Speaker Change: Could you give any color on what you guys might even be looking for if that were to be the approach.

Speaker Change: The markets, we serve but again I think patience is probably best served at this point in time to see how the market is going to react to this administration and things that might or might not become available but again.

Speaker Change: I think.

Speaker Change: If you look at back to when we talked about the wheel, obviously getting more balanced in the wheel is something that we would look at as favorable to the shareholders and also too.

Shawn Mural: Interest expense in the first quarter was $19.7 million. Cash interest expense was $18.2 million, improving $7.2 million, or 28% year over year, driven by our successful repricing activities, debt paydown, and cash generation. Net income for the quarter was $8.1 million, up from $1.1 million from the prior year. Adjusted net income was $31.5 million, increasing 10% year over year. First quarter EPS was $0.25, improving $0.21 from the prior year. Adjusted EPS in the quarter was $0.98, increasing approximately 9% from the prior year. An important attribute of our business is the ability to generate strong cash flow with low capital expenditure requirements.

Speaker Change: I think the best thing we can do for the shareholder at this point is trying to create greater optionality around what we serve in terms of core markets and that means creating greater balance in terms of how we serve that customer.

Speaker Change: The markets, we serve but again I think patience is probably best served at this point in time to see how the market is going to react to this administration and things that might or might not become available but again.

Speaker Change: Think about it from a complementary nature, perhaps Andre right. When we talk about the things that we do and do very very well, it's training equipping deploying monetization and repair and refurbishment. So those are core capabilities that the company offers and I think youll see us stay true to what and who we are absolutely.

Speaker Change: I think the best thing we can do for the shareholder at this point is trying to create greater optionality around what we serve in terms of core markets and that means creating greater balance in terms of how we serve that customer.

Speaker Change: Think about it from a complementary nature, perhaps ongoing right. When we talk about the things that we do and do very very well, it's training equipping deploying monetization and repair and refurbishment. So those are core capabilities that the company offers and I think youll see us stay true to what and who we are absolutely.

Speaker Change: Got it got it Jeremy Sean Thanks, so much for the colors always.

Speaker Change: Thank you Andre.

Speaker Change: Our next question is from Peter Arment with Baird. Please go ahead.

Peter Arment: Yes. Thanks.

Speaker Change: And Jeremy Sean Mike.

Shawn Mural: We continue to expect adjusted net cash provided by operating activities to be in the range of $150 million to $170 million for the year, representing over 100% adjusted net income conversion at the midpoint.

Speaker Change: Got it got it Jeremy Sean Thanks, so much for the color as always.

Speaker Change: Nice nice results the way to start the year.

Speaker Change: It could just for clarification, what is left for Recompete for this year.

Andre Madrid: Thank you Andre.

Our next question is from Peter Arment with Baird. Please go ahead.

Speaker Change: I don't know if I heard you gave a percentage at all.

Speaker Change: We didn't.

Speaker Change: Yes. Thanks.

Speaker Change: It's fairly modest so we started the year at right around 5%, Peter and and it's less it's right around two.

Speaker Change: Jeremy Sean Mike.

Shawn Mural: During the quarter adjusted net cash used by operating activities was $118.1 million, consistent with our expectation.

Speaker Change: Nice nice results the way to start the year.

Speaker Change: Just for clarification, what is left for re competes for this year.

Speaker Change: Between 1% and 2% for the total year with re competes.

Speaker Change: I don't know if I heard you're given a percentage at all.

Shawn Mural: Please turn to slide 8. During the quarter, we continued to demonstrate our steadfast commitment to increasing shareholder value by making further enhancements to our capital structure. Our strong fundamentals and consistent financial performance created a compelling opportunity to reprice and extend both our revolver and term loan A. The outcome was extremely positive, with the cost of debt on these facilities improving by over 50 basis points. This yields additional interest expense savings and cash flow on top of the benefits announced just last quarter with the successful term loan be repriced.

Speaker Change: Great.

Speaker Change: We didn't.

Speaker Change: Right.

Speaker Change: It's fairly modest so we started the year at right around 5%, Peter and and it's less it's right around two.

Speaker Change: And then kind of related to what Andre asked around the foreign military sales opportunities when when Youre looking I guess, Jeremy when you called out these kind of new top five new pursuits that are over kind of a $1 billion or any of those in that bucket on the international side.

Speaker Change: Between 1% and 2% for the total year with re competes.

Speaker Change: Great.

Right.

Speaker Change: And then kind of related to what Andre asked around the foreign military sales opportunities when when Youre looking I guess, Jeremy when you called out these kind of new top five new pursuits that are over kind of a $1 billion or any of those in that bucket on the international side.

Speaker Change: Yes, they are.

Speaker Change: And I think between that and partnerships that we have opened up with other.

Speaker Change: Key partners in the industry I'm excited about these new channels to market and excited about the opportunity to have for the company because I think they are channels that have been historically underserved, but represent an opportunity for us as we go forward.

Speaker Change: Yes, they are and I think between that and partnerships that we have opened up with other.

Shawn Mural: From a liquidity perspective, we are in a strong and enviable position with approximately $170 million of cash on the balance sheet and a $500 million revolver that had a zero balance at the end of the quarter. The strength of our business is in its cash generation, and we remain focused on delivering strong, predictable cash flow that can be thoughtfully deployed to generate the best returns for shareholders.

Speaker Change: Okay, Great and then just regarding I guess, Sean on the liquidity side, great progress there.

Speaker Change: Key partners in the industry I'm excited about these new channels to market and excited about the opportunity to have for the company because I think they are channels that have been historically underserved, but represent an opportunity for us as we go forward.

Speaker Change: Congrats on the.

Speaker Change: On the re pricing and everything else, what's the expectations for kind of a.

Speaker Change: Target on debt reduction for this year.

Speaker Change: Okay, Great and then just regarding I guess, Sean on the liquidity side, great progress there.

Speaker Change: Yeah, yeah. Thanks.

Speaker Change: We're very happy obviously, we were below three we said we would be.

Shawn Mural: Please turn to slide nine. Trends and demand signals in our business remain positive and we believe our strategy, visibility, and targeted growth opportunities will yield substantial value creation. As it relates to tariffs, we do not expect a noticeable financial impact from any tariffs that have been discussed thus far.

Speaker Change: Congrats on the on.

Speaker Change: To see that continue of course in in the first quarter.

Speaker Change: On the re pricing and everything else, what's the expectations for kind of a.

Speaker Change: Very encouraged.

Speaker Change: Target on debt reduction for this year.

Speaker Change: We're comfortable between two and three.

Speaker Change: Yeah, yeah. Thanks.

Speaker Change: There is always going to be fluctuations to it.

Speaker Change: We're very happy obviously, we were below three we said we would be to see that continue of course in in the first quarter.

Speaker Change: <unk> will obviously be at the end of the year, we'll be in better position than nics sequentially, improving as we go throughout the year.

Speaker Change: Very encouraged we're comfortable between two and three there is always going to be fluctuations to it. The plan will obviously be at the end of the year, we'll be in better position in and I see it sequentially improving as we go throughout the year.

Speaker Change: Unless we have anything other to talk about right, but from a.

Shawn Mural: Given our performance in the first quarter and current trends, the company is reaffirming guidance for 2025. At the midpoint, this reflects revenue of $4.4 billion. adjusted EBITDA of $313 million. adjusted EPS of $4.65 and over 100% net income conversion to cash.

Peter Arment: Again, the normal cash flow cadence of the business will be back half weighted and and that's just that's the way we see it playing out right now Peter.

Peter Arment: Terrific and then just lastly on the extension Jeremy that's great kind of visibility for you guys.

Speaker Change: Unless we have anything other to talk about right, but but from a again the normal cash flow cadence of the business will be back half weighted and and that's just that's the way we see playing out right now Peter.

Peter Arment: How are we thinking about kind of the.

Peter Arment: When we think about the second half of the year. Just this is the first time, we're seeing a full year CR.

Shawn Mural: In summary, we are pleased with the performance across our business and the start of the year. Our teams continue to execute in a dynamic market, bringing the best of V2X to meet our customers' critical mission requirements.

Speaker Change: How has it affected your business so far.

Speaker Change: Terrific and then just lastly on the extension that's great kind of visibility for you guys.

Speaker Change: I would say from what we've seen.

Speaker Change: Just how are we thinking about kind of the.

Speaker Change: Modest right. So we have generally been I won't say entirely immune Peter but by and large Crs have not been perturbations for us I will highlight one of the things we did see in the quarter and it was modest and very temporary in nature, but we did see some disruption to some funding streams.

Operator: With that, we'd like to open the call to your questions, operator.

Speaker Change: When we think about the second half of the year. Just this is the first time, we're seeing a full year CR.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: How has it affected your business so far.

Speaker Change: I would say from what we've seen.

Speaker Change: Modest right. So we have generally been I won't say entirely immune Peter but by and large Crs have not been perturbations for us I will highlight one of the things we did see in the quarter and it was modest and very temporary in nature, but we did see some disruption to some funding streams.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker Change: On two small programs they very quickly restarted.

Speaker Change: And got going so there were a couple of perturbations, but it was not at all <unk> related it was just changes in funding profiles that sort of stuff.

Andre Madrid: The first question comes from Andre Madrid with BTIG. Please go ahead. Yes, thank you. Good afternoon, everyone. You talk about the growth in the international portfolio, but can you maybe talk about international book-to-bill? Is that something you'd be willing to share?

Speaker Change: I appreciate the color guys nice results.

Speaker Change: On two small programs they very quickly restarted.

Speaker Change: Sure. Thank you. Thank you Peter.

Speaker Change: And got going so there were a couple of perturbations, but it was not at all CR related it was just changes in funding profiles that sort of stuff.

Travel Walsh: The next question is from travel Walsh with citizens JMP. Please go ahead.

Speaker Change: Great Hey, gents, thanks for taking the questions.

Speaker Change: I appreciate the color guys nice results. Thanks sure. Thank you for your thank you Peter.

Speaker Change: Great to see all the wins kind of across the platform kind of that you laid out Jeremy but I did notice that the air force revenues were down pretty significantly.

Shawn Mural: So, hey, Andre, good to good to hear from you. So, you know, we don't talk about the. book to bill, you know, by region. I will give a little bit of color on what we're expecting as we go forward a bit. You know, when we think about, you know, where we are in the year, you know, we do have more concentration in expected awards that we believe will contribute to the backlog in fixed price activities, which we're very encouraged by. You heard Jeremy talk in the prepared remarks around, you know, larger scale opportunities that we're pursuing.

Travel Walsh: The next question is from travel Walsh with citizens JMP. Please go ahead.

Speaker Change: Year over year understand Theres, some sunsetting of programs, that's probably kind of messing with that a little bit or at least influencing that can you provide maybe a little bit of a normalized kind of growth rate absent those sensitive programs and then and then maybe just comment generally on how Air Force Award activity was progressing in the quarter.

Great Hey, gents, thanks for taking the questions.

Travel Walsh: On the great to see all the wins kind of across the platform kind of that you laid out Jeremy but I did notice that the air force revenues were down pretty significantly year over year understand theres. Some sunsetting of programs, that's probably kind of messing with that a little bit or at least influencing that can you provide maybe a little bit of a normalized.

Speaker Change: Yes, let me.

Speaker Change: Thanks for the question Trevor.

Speaker Change: Let me give you a bit of a walk on the quarter, specifically consistent with what we've said before right. So so we had the ramp that happened in the quarter on the WT Rs program fairly modest again, what we've said before is that that will predominantly ramp in the second half of the year. So that was in the 10 15 ish.

Travel Walsh: Kind of growth rate absent those sensitive programs and then and then maybe just comment generally on how Air Force Award activity was progressing in the quarter.

Jeremy Wensinger: We're seeing those in the back half of the year predominantly and fixed price in nature. Jeremy, anything else? No, Andre, thank you for the question. I think it's a great question. And I think as I look at, you know, the pipeline and I look at what we have in terms of being awarded, as Shawn said, you know, we're excited about getting stuff adjudicated, but we're also about that for which is in the pipeline, as I mentioned, around the five plus billion dollars of $1 billion plus awards that we're, you know, talking about. So I'm excited about the opportunity we have in front of us.

Travel Walsh: Yes, let me.

Speaker Change: Thanks for the question Trevor Let me give you a bit of a walk on the quarter, specifically consistent with what we've said before right. So so we had the ramp that happened in the quarter on the WT Rs program fairly modest again, what we've said before is that that will predominantly ramp in the second half of the year. So that was in the.

Speaker Change: Dollars range, we had a full quarter of the F. Five that we've talked about before thats in a comparable range and then we had the sunsetting programs again consistent with what we said on KC 10 and <unk>.

Speaker Change: 10, 15 ish million dollars range, we had a full quarter of the F. Five that we've talked about before thats in a comparable range and then we had the sunsetting programs again consistent with what we said on KC 10 and <unk>.

Speaker Change: And so that was that was the downward pressure that you saw there a little bit on the airports, but thats how it played out in the quarter nothing really inconsistent with what we talked about previously there are ebbs and flows to things as you rightly point out.

Shawn Mural: And then I guess beyond, you know, deleveraging, I guess, what are the other capital deployment priorities that you guys are looking at as you continue to push forward with, you know, strong cash generation? And I guess on that point, too, how have you been finding the M&A environment as of late? Yeah, I'll say this, Andre. We're, you know, we're always looking at optionality. You know, Jeremy has said it repeatedly. The things that will return the greatest value to shareholders are our utmost priority. You know, relative to, you know, M&A, it's stuff that we're consistently looking at.

Speaker Change: That we see.

Speaker Change: And so that was that was the downward pressure that you saw there a little bit on the air force, but thats how it played out in the quarter nothing really inconsistent with what we talked about previously there are ebbs and flows to things as you rightly point out.

Speaker Change: Time to time periodically, but nothing that.

Speaker Change: Nothing that we think is.

Speaker Change: And consistent with what our expectations were.

Sean: Great. Thanks, Sean.

Sean: Maybe sticking with you, although Jeremy feel free to jump in also.

Speaker Change: That we see.

Speaker Change: Time to time periodically, but nothing that.

Speaker Change: The logcap.

Speaker Change: Nothing that we think is.

Speaker Change: Got extended out to 2030 can you maybe just remind us how much optionality you feel like Youll have given there's kind of a new five year time, plus time horizon for kind of EBIT or earnings margin expansion around that contract, particularly in those task orders or is this really as we think about kind of where you kind of can gain leverage more.

Speaker Change: Inconsistent with what our expectations were.

Sean: Great. Thanks, Sean.

Speaker Change: Maybe sticking with you, although Jeremy feel free to jump in also.

Jeremy Wensinger: We've never stopped. We won't, you know, I don't want to get into specifics on the itself. Jeremy, anything else? No, what I would say is we're exceptionally patient. I don't believe we're on a burning platform. But I do believe that we are in a position to look at optionality around what is going to create the greatest shareholder value. But again, I think in this market, I think patience is well served. And I think you'll see us look at optionality as we, you know, go out throughout this fiscal year.

Speaker Change: The logcap.

Speaker Change: Got extended out to 2030 can you, maybe just remind us kind of how much optionality you feel like Youll have given there's kind of a new five year type plus time horizon for kind of EBIT or just the earnings margin expansion around that contract for supply in those task orders or is this really as we think about kind of where you kind of can gain leverage more.

Speaker Change: In the newer thinking that youre, bringing on those $1 billion plus.

Speaker Change: Contracts et cetera, it does kind of newer contracts that you can kind of optimize overtime.

Roger Mason: Yes, if you think we're Roger Mason and his team are spending their time.

Speaker Change: Theyre spending it on New awards.

Speaker Change: To have this type of Recompete holiday is.

Speaker Change: <unk> in the newer thinking youre, bringing on those $1 billion plus contracts et cetera, those kind of newer contracts that you can kind of optimize over time.

Speaker Change: It's a unique position to be in and I feel very comfortable that what we're burning calories on are things that are going to drive additional top line growth.

Shawn Mural: Could you give any color on what you guys might even be looking for if that were to be the approach? I think, you know, as I if you look at back to when we talked about the wheel, obviously getting more balance in the wheel is something that we would look at as favorable to the shareholders and also to, you know, the markets we serve. But again, I think patience is probably best served at this point in time to see how the market is going to react to this administration and things that might or might not become available.

Speaker Change: Yes, if you think we're Roger Mason and his team are spending their time.

Speaker Change: Theyre spending it on New awards.

Speaker Change: I look at it as an opportunity for the company to like I said through partnerships and through additional markets like foreign military sales to continue the growth trajectory of the company. So I'm very comfortable with what we're doing in the new market side under Roger's leadership.

Speaker Change: To have this type of Recompete holiday as it is.

A unique position to be in and I feel very comfortable that what we're burning calories on are things that are going to drive additional top line growth.

Speaker Change: I look at it as an opportunity for the company to like I said through partnerships and through additional markets like foreign military sales to continue the growth trajectory of the company. So I'm very comfortable with what we're doing in the new market side under Roger's leadership.

Speaker Change: Awesome.

Speaker Change: Last quick one.

Speaker Change: The tariff kind of impacts understand that is kind of broadly speaking not necessarily an issue.

Jeremy Wensinger: But again, I think the best thing we can do for the shareholder at this point is try to create greater optionality around what we serve in terms of core markets, and that means creating greater balance in terms of how we serve that customer. Think about it from a complimentary nature, perhaps, Andre, right? When we talk about the things that we do and do very, very well, it's training, equipping, deploying, modernization, and repair and refurbishment. So those are core capabilities that the company offers. And I think you'll see us stay true to what and who we are.

Speaker Change: Is there anything I know this is a smaller piece of the business, but with your more product focused type of efforts like GMO and those types of initiatives.

Speaker Change: Awesome, maybe one just one last quick one.

Speaker Change: The tariff kind of impacts understand that it is kind of broadly speaking not necessarily an issue.

Speaker Change: Any any issues that you kind of foresee I know.

Speaker Change: They're small, but just around components or just the pieces of those hardware.

Speaker Change: Is there anything and this is a smaller piece of the business, but with your more product focused type of efforts like GMO and those types of initiatives.

Speaker Change: Aspects anything kind of coming on the radar from from a tariff perspective there.

Speaker Change: We haven't we haven't seen anything we're doing constant surveillance if you will.

Speaker Change: Any any issues that you kind of foresee that small, but just around components or just the pieces of those hardware.

Speaker Change: To make sure that that were checking with the supply base and that sort of stuff in and given the nature of what those things are.

Andre Madrid: Absolutely. Got it.

Andre Madrid: Jeremy, Shawn, thanks so much for the call as always. Thank you, Andre.

Speaker Change: Aspects anything kind of coming on the radar from from a tariff perspective there.

Speaker Change: Largely domestic.

Peter Arment: Our next question is from Peter Arment with Baird. Please go ahead. Yeah, thanks. Good afternoon, Jeremy, Shawn, Mike. Nice, nice results. Way to start the year. Hey, just for clarification, what is left for re-competes for this year? I don't know if I heard you give a percentage at all. We didn't. We're, it's fairly modest.

Sourcing and so.

Speaker Change: We haven't we haven't seen anything we're doing constant surveillance. If you will try to make sure that that were checking with the supply base and that sort of stuff in and given the nature of what those things are.

Speaker Change: Not seeing anything with those product based activities.

Speaker Change: Yes, it makes sense great. Thanks al appreciate it great results. Thank you.

Trevor: Thanks Trevor.

Speaker Change: Largely domestic sourcing and so.

Ken Herbert: The next question is from Ken Herbert with RBC capital markets. Please go ahead.

Speaker Change: We're not seeing anything with those product based activities.

Speaker Change: Yeah, Hey, Jeremy Hey, Sean.

Speaker Change: Yes makes sense great. Thanks al appreciate it great results. Thank you.

Shawn Mural: So we started it the year at, you know, right around 5%, Peter, and, and it's less, it's right around two, between one and 2% for the total year with recompute. to go. Yes, they are.

Speaker Change: And Mike.

Speaker Change: It sounds like bookings in the first quarter, obviously, the extension water some of the other stuff not in the quarter.

Trevor: Thanks Trevor.

Speaker Change: The next question is from Ken Herbert with RBC capital markets. Please go ahead.

Speaker Change: Was there anything else that maybe you were expecting to get in the first quarter in terms of bookings that might explain some of the book to bill in the quarter and where it ended up.

Speaker Change: Yeah, Hey, Jeremy Hey, Sean.

Trevor: And Mike.

Speaker Change: It sounds like.

Speaker Change: Bookings in the first quarter, obviously, the extension water some of the other stuff not in the quarter.

Speaker Change: Actually bookings playing out let me give a little bit more color.

Speaker Change: Was there anything else that maybe you were expecting to get in the first quarter in terms of booking that might explain some of the book to bill in the quarter and where it ended up.

Speaker Change: On it we see it very much back half weighted.

From a bookings profile standpoint for the for the total year.

Shawn Mural: And I think that, you know, between that and partnerships that we have opened up with other, you know, key partners in the industry, I'm excited about these new channels to market and excited about the opportunity they have for the company, because I think they are channels that have been historically underserved, but represent an opportunity for us as we go forward. Great. And then, just regarding, I guess, Shawn, on the liquidity side, great progress there, and congrats on the repricing and everything else. What's the expectations for kind of a target on debt reduction for this year?

Speaker Change: Sure.

Speaker Change: Somewhat consistent with what we saw last year.

Speaker Change: No actually bookings playing out let me give a little bit more color.

Speaker Change: We didn't necessarily see delays.

Speaker Change: On it we see it very much back half weighted.

Speaker Change: We did see.

Speaker Change: I should say, we're more hearing Ken.

Speaker Change: From a bookings profile standpoint for the for the total year.

Speaker Change: On contracting officers.

Speaker Change: Sure.

Speaker Change: Administrative kind of processing of things that sort of stuff, but we didn't see it result in necessarily changes.

Speaker Change: Somewhat consistent with what we saw last year.

Speaker Change: We didn't necessarily see delays.

Speaker Change: Expected order intake.

Speaker Change: We did see.

Speaker Change: Okay. Okay. That's helpful.

Speaker Change: I should say, we're more hearing Ken.

Speaker Change: And your $45 25 sort of first half second half dynamic implies relatively soft second quarter in sales within a.

Speaker Change: On contracting officers.

Speaker Change: Administrative kind of processing of things that sort of stuff, but we didn't see it result in necessarily changes.

Shawn Mural: Yeah, yeah, thanks. You know, we're very happy. Obviously, we were below three. We said we would be to see that continue, of course, in in the first quarter. Very encouraged. You know, we're comfortable between two and three. There's always going to be fluctuations to it.

Speaker Change: Pretty big uptick sort of high single digit growth in the back half and I think it's pretty consistent seasonally with what you've talked about and obviously some of your awards, but just wanted to see if there was anything in particular in the second quarter, we should keep in mind or that you'd call out that might drive a little bit more weakness, but then also.

Speaker Change: Expected order intake.

Speaker Change: Okay. Okay. That's helpful.

Speaker Change: And your $45 25 sort of first half second half dynamic implies a relatively soft second quarter in sales within a.

Shawn Mural: You know, the plan will obviously be, you know, at the end of the year, we'll be in better position. And and I see it sequentially improving as we go throughout the year. You know, unless we have anything other to talk about. Right. But but from again, the normal cash flow cadence of the business will be back half-weighted. And and that's that's the way we see it playing out right now. Terrific.

Speaker Change: Pretty big uptick sort of high single digit growth in the back half and I think it's pretty consistent seasonally with what you've talked about and obviously some of your awards, but just wanted to see if there was anything in particular in the second quarter, we should keep in mind that you'd call out that might drive a little bit more weakness, but then also.

Speaker Change: Beyond what you've outlined already in terms of second half strength anything else in particular.

Speaker Change: You would say that to really help with confidence on that second half ramp.

Speaker Change: Yeah, Let me let me, let me provide some clarity on the on the Spa.

Speaker Change: So on the revenue side Ken.

Speaker Change: Beyond what you've outlined already in terms of second half strength anything else in particular.

Speaker Change: No.

Shawn Mural: And just lastly, on the extensions and everything else, that's great kind of visibility here for you guys. Just how are we thinking about kind of the, you know, when we think about the second half of the year, just, you know, this is the first time we're seeing a full year's CR. How has it affected your business so far? You know, I'd say from what we've seen, modest, right? So, we have generally been, I won't say entirely immune, Peter, but by and large, CRs have not been perturbations for us. I will highlight, you know, one of the things we did see in the quarter, and it was modest and very temporary in nature, but we did see some disruption to some funding streams. You know, on two small programs, they very quickly restarted.

Speaker Change: And you might say, we're splitting hairs here, a little bit, but its probably slightly it might be closer to 46% on the revenue side and 45% on the profit side.

Speaker Change: But you would say that to really help with confidence on that second half ramp.

Speaker Change: Yeah, Let me let me let me provide some clarity on the on the split so on the revenue side Ken.

Speaker Change: In the first half.

Speaker Change: It's not it's not perfect of course, there's always timing of material receipts and and things of that nature.

Speaker Change: No.

Speaker Change: And you might say, we're splitting hairs here, a little bit, but its probably slightly it might be closer to 46% on the revenue side and 45% on the profit side.

Speaker Change: We saw some of that happen in the end of the ended the first quarter. So nothing thats.

Speaker Change: In the first half.

Speaker Change: Nothing that's material in nature and like I said they are.

Speaker Change: It's not it's not perfect of course, there's always timing of material receipts and and things of that nature.

Maybe 46 ish type percent or.

Speaker Change: For first half revenue.

Speaker Change: We saw some of that happened in the end of the ended the first quarter, So nothing thats not.

Speaker Change: Okay, that's perfect Shawn Thanks, and I guess, the second half ramp I mean, obviously you called out your between waters and umbrella programs you feel pretty good about that I guess.

Speaker Change: Nothing that's material in nature and like I said.

Speaker Change: Maybe 46 ish type percent for.

Peter Arment: You know, and got going. So, there were a couple of perturbations, but it was not at all CR-related. It was just changes in funding profiles, that sort of thing. Appreciate the call, guys. Nice results. Thanks. Thank you.

Speaker Change: We do and again consistent with what we said and I'll give a little bit of color. The <unk> program will ramp really beginning in that July timeframe. When transition is complete that's to say we are doing some activities. Today. Obviously you heard me talk about some of the Q1 numbers with the ramp is really back half.

Speaker Change: For first half revenue.

Sean: Okay, that's perfect Shawn Thanks, and I guess, the second half ramp I mean, obviously you called out here between waters in a number of other programs you feel pretty good about that I guess.

Trevor Walsh: The next question is from Trevor Walsh with Citizens JMP, please go ahead. Great. Hey, Jen. Thanks for taking the questions. Great to see all the wins kind of across the platform kind of that you laid out, Jeremy. But I did notice that the Air Force revenues were down pretty significantly year over year. I understand there's some sunsetting of programs. It's probably kind of messing with that a little bit or at least influencing that. Can you provide maybe a little bit of a normalized kind of growth rate absent those programs and then maybe just comment generally on how Air Force award activity was progressing in the quarter?

Sean: We do and again consistent with what we said and I'll give a little bit of color. The WTS program will ramp really beginning in that July timeframe. When transition is complete that is to say we're doing some activities. Today. Obviously you heard me talk about some of the Q1 numbers with the ramp is really back half.

Speaker Change: Weighted and we will get a good.

Speaker Change: Good second half on that and then we will have the F. Five right. So we're executing F. Five transition was completed late last year team has done a wonderful job.

Speaker Change: And from a comp standpoint in the back half of the year, we didn't have that previously.

Sean: Weighted and we will get a good.

Sean: Good second half on that and then we will have the F. Five right. So we're executing F. Five transition was completed late last year team has done a wonderful job.

Speaker Change: And then again, the KC 10, and <unk> headwinds so nothing that we've seen in the first.

Speaker Change: Quarter outside.

Speaker Change: That is that is causing any perturbations are different to what we would expected with that ramp.

Sean: And from a comp standpoint in the back half of the year.

Sean: Didn't have that.

Sean: Previously.

Jeremy Wensinger: Yeah, let me, thanks for the question, Trevor. Let me give you a bit of a walk on the quarter specifically, consistent with what we've said before, right? So we had the ramp that happened in the quarter on the WTRS program, fairly modest. Again, what we've said before is that that will predominantly ramp in the second half of the year. So that was in the 10, 15-ish million dollar range. We had a full quarter of the F5 that we've talked about before. That's an comparable range. And then we had the sun setting programs, again, consistent with what we said on KC10 and T1A.

Speaker Change: Perfect. Thanks, Sean I appreciate the color.

Sean: And then again, the KC 10, and <unk> headwinds so nothing that we've seen in the first.

Ken Herbert: Thanks, Ken.

Ken Herbert: The next question is from Jason Gursky with Citigroup. Please go ahead.

Sean: Quarter, I'll say that is that is causing any perturbations are different to what we would expected with that ramp.

Jason Gursky: Hey, good afternoon everybody.

Ken Herbert: <unk>.

Sean: Perfect. Thanks, Sean I appreciate the color.

Ken Herbert: Few questions here first can you talk a little bit about any exposure that you might have to do.

Ken Herbert: Thanks, Ken.

Ken Herbert: The next question is from Jason Gursky with Citigroup. Please go ahead.

<unk> buying kind of writ large and whether youre seeing a push too.

Jason Gursky: Hey, good afternoon everybody.

Ken Herbert: Move any of the work that you are currently doing more into the.

Ken Herbert: <unk>.

Ken Herbert: Two questions here first can you talk a little bit about any exposure that you might have to.

Ken Herbert: The purview of the GSA.

Ken Herbert: Not that we're seeing I mean again most of our work in the O&M World.

Ken Herbert: <unk> buying kind of writ large and whether youre seeing a push too.

Shawn Mural: And so that was the downward pressure that you saw there a little bit on the Air Force. But that's how it played out in the quarter. Nothing really inconsistent with what we talked about previously. There are ebbs and flows to things, as you rightly point out, you know, that we see, you know, time to time, periodically, but nothing that we think is inconsistent with what our expectations.

Ken Herbert: As well funded.

Ken Herbert: Move any of the work that you are currently doing more into the.

Ken Herbert: Part of the priorities for this administration and in terms of readiness.

Ken Herbert: The purview of the GSA.

Speaker Change: I don't see anything today.

Not that we're seeing I mean again most of our work in the O&M World.

Ken Herbert: Okay.

Ken Herbert: Fair enough. Thanks.

Ken Herbert: And then there has been.

Ken Herbert: As well funded.

A bit of a push here.

Ken Herbert: Part of the priorities for this administration and in terms of readiness.

Ken Herbert: By the administration through executive order.

Ken Herbert: In particular to go through a bit of a reform process on <unk>.

Shawn Mural: Great. Thanks, Shawn. Maybe I'll stick with you, although, Jeremy, feel free to jump in. Also great to hear that the log cap got extended out to 2030. Can you maybe just remind us kind of how much optionality you feel like you'll have, given there's kind of a new, you know, five-year plus time horizon for kind of EBIT or just for earnings margin expansion around that contract, specifically in those task orders? Or is this really, as we think about kind of where you kind of can gain leverage more in the newer things that you're bringing on, those $1 billion plus contracts, et cetera, those kind of newer contracts that you can kind of optimize?

Speaker Change: I don't see anything today.

Ken Herbert: Far federal acquisition regulation.

Ken Herbert: Okay.

Ken Herbert: Fair enough. Thanks.

Speaker Change: I'm just kind of curious.

Ken Herbert: And then there has been.

Ken Herbert: A bit of a push here.

Speaker Change: What impacts do you think this effort might have to the industrial base writ large.

Ken Herbert: By the administration through executive order in particular to go through a bit of a reform process on.

Speaker Change: And two.

Speaker Change: And to the company or specifically.

Ken Herbert: Far federal acquisition regulation.

Speaker Change: I think it's very early in the play to determine how they're going to go about doing that.

Ken Herbert: I'm just kind of curious.

Ken Herbert: What impacts do you think this effort might have to the industrial base writ large.

Speaker Change: Obviously, we are listing like everybody else's in the industry, but again I think it's very early.

Ken Herbert: Two.

Ken Herbert: And to the company here specifically.

Speaker Change: Trying to draw a conclusion as to where theyre going to go with that.

Shawn Mural: Yeah, if you think we're Roger Mason and his team are spending their time They're spending it on new awards. To have this type of recompete holiday is, you know, it's a unique position to be in. And I feel very comfortable that what we're burning calories on are things that are going to drive additional top line growth. I look at it as an opportunity for the company to, like I said, through partnerships and through, you know, additional markets like foreign military sales to continue the growth trajectory of the company. So I'm very comfortable with what we're doing in the new market side under Roger's leadership.

Ken Herbert: I think it's very early in the play to determine how they're going to go about doing that obviously, we're listing like everybody else's in the industry, but again I think it's very early.

Speaker Change: Okay.

Speaker Change: Great and then lastly, I guess.

Speaker Change: It was released on Friday last week of the Skinny budget with some top line numbers in it.

Speaker Change: Not a lot of program attic stuff, but clearly some indications about spend.

Ken Herbert: To try to draw conclusions as to where theyre going to go with that.

Ken Herbert: Okay.

Speaker Change: Spending priorities going forward.

Ken Herbert: Great and then lastly, I guess the budget was released on Friday last week of the Skinny budget with some top line numbers in it.

Speaker Change: 100.

Speaker Change: 113 of $119 billion, plus up for National security spending.

Ken Herbert: Not a lot of program attic stuff, but clearly some indications about.

Speaker Change: Looks like it's going to be spread across five different.

Speaker Change: Buckets Goldman don't ship building nuclear deterrent space domain and protecting the border.

Ken Herbert: Spending priorities going forward.

Ken Herbert: 100.

Ken Herbert: 113 of $119 billion, plus up for National security spending.

Speaker Change: I'm wondering if you wouldn't just spend a few minutes talking through the capability set of the company.

Trevor Walsh: Awesome.

Trevor Walsh: Maybe just one last quick one. For the tariff kind of impacts, I understand that it's kind of broadly speaking not necessarily an issue. Is there anything, I know this is a smaller kind of piece of the business, but with your more product-focused type of efforts like GMR 1000 and those types of initiatives, any issues that you kind of foresee? I know they're small, but just around components or just the pieces of those hardware kind of aspects, anything kind of coming on the radar from a tariff perspective there? We haven't seen anything. You know, we're doing constant surveillance, if you will, Trevor, to make sure that we're checking with the supply base and that sort of stuff.

Ken Herbert: Looks like it's going to be spread across five different.

Speaker Change: And how it.

Ken Herbert: Buckets Golden Dome shipbuilding nuclear deterrent space domain and protecting the border.

Speaker Change: Kind of lines up with those.

Speaker Change: Five spending priorities that the administration would like to focus on here going forward. Thanks.

Speaker Change: Wondering if you wouldn't just spend a few minutes talking through the capability set of the company.

Speaker Change: I think the administration has been very clear about the priority around readiness.

Ken Herbert: And how it.

Speaker Change: Kind of lines up with those.

Speaker Change: And when I look at what we do and Sean highlighted earlier with regards to training the Warfighter equipping the Warfighter supporting the war fighter and renewing and refreshing that equipment is it.

Speaker Change: Five spending priorities that the administration would like to focus on here going forward. Thanks.

I think the administration has been very clear about the priority around readiness.

Speaker Change: As it's required.

Speaker Change: And when I look at what we do and Sean highlighted earlier with regards to training the Warfighter equipping the Warfighter supporting the war fighter.

Speaker Change: Those are all things that fit very well with this administration's priorities.

Trevor Walsh: And given the nature of what those things are, you know, largely domestic sourcing. And so, you know, we're not seeing anything with those product-based activities. Yep, makes sense. Great. Thanks all. Appreciate it. Great results. Thank you.

Speaker Change: Again, I know that gave some top line.

Speaker Change: Items that they were interested in but again, if you look at where we are supporting the Warfighter I think they align very well with this administration's priorities.

Speaker Change: Renewing and refreshing that equipment is it.

Speaker Change: As it is required.

Speaker Change: Those are all things that fit very well with this administration's priorities.

Speaker Change: Also the geography base right, we've talked about where we are around the globe and how those enduring missions.

Trevor Walsh: Thanks, Trevor.

Speaker Change: Again, I know that gave some topline.

Ken Herbert: The next question is from Ken Herbert with RBC Capital Markets.

Speaker Change: Items that they were interested in but again, if you look at where we are supporting the Warfighter I think they align very well with this administration's priorities because also the geography base right. We've talked about where we are around the globe and how those enduring missions.

Speaker Change: Sustained and I.

Ken Herbert: Please go ahead.

Speaker Change: I think we're extremely well positioned one of the things Thats exciting if we think about some of our journey here since the WT Rs Award last year, when we brought the breath of the entirety of the company together and you heard Jeremy talk about this we're seeing that take root in a number of different areas in various geographies.

Ken Herbert: Hey Jeremy, hey Shawn and Mike. It sounds like bookings in the first quarter, obviously the extensions, water, some of the other stuff, not in the quarter, was there anything else that maybe you were expecting to get in the first quarter in terms of bookings that might explain some of the book-to-bill in the quarter and where it ended up? Actually, Booking's playing out. Let me give a little bit more color on it. We see it very much back to half-weighted from a Booking's profile standpoint for the total year. We're, you know, somewhat consistent with what we saw last year.

Speaker Change: Sustained.

Speaker Change: <unk>.

Speaker Change: Think we're extremely well positioned one of the things Thats exciting if we think about some of our journey here since the <unk> Award last year. When we brought the breath of the entirety of the company together and you heard Jeremy talk about this we're seeing that take root in a number of different areas in various geographies.

Speaker Change: <unk> around the globe. So in terms of exactly as Jeremy said administration priorities as well as geography, we think we're exceptionally well positioned to continue to be.

Speaker Change: Successful.

Speaker Change: And I think it shows itself honestly, Jason with regards to the growth we saw in into pay com.

Speaker Change: So fees around the globe. So in terms of exactly as Jeremy said administration priorities as well as geography, we think we're exceptionally well positioned to continue to be.

Speaker Change: I think the administration priorities in terms of that theater, we are well positioned to support the administration and their efforts to.

Shawn Mural: We didn't necessarily see, you know, delays. We did see, well, I should say we're more hearing, Ken, on contracting officers, administrative kind of processing of things, that sort of stuff, but we didn't see it result in necessarily changes to expected order in time.

Speaker Change: Successful.

Speaker Change: Fulfill their administrations priorities.

Speaker Change: I think it shows itself honestly, Jason with regards to the growth we saw in to pay com.

Speaker Change: Mhm, Okay, great. Thanks, everybody appreciate it.

Jason Gursky: Thanks, Jason.

Speaker Change: I think the administration priorities in terms of that theater, we are well positioned to support the administration and their efforts to.

Speaker Change: The next question is from Tobey Sommer with Truest. Please go ahead.

Shawn Mural: Okay, that's helpful. And your 45-25 sort of first half-second half dynamic implies a relatively soft second quarter in sales within a pretty big uptick, sort of high single-digit growth in the back half. And I think it's pretty consistent seasonally with what you've talked about and obviously some of your awards. But I just want to see if there was anything in particular in the second quarter we should keep in mind or that you'd call out that might drive a little bit more weakness, but then also beyond what you've outlined already in terms of second half strength, anything else in particular that you would say to really help with confidence on that second half ramp?

Speaker Change: Fulfill their administration priorities.

Jason Gursky: Yes.

Jason Gursky: Thanks.

Speaker Change: Okay, great. Thanks, everybody appreciate it.

Jason Gursky: Okay.

Jason Gursky: From a cadence perspective.

Jason Gursky: Thanks, Jason.

Jason Gursky: Could you give us a little bit more color on the principal drivers of the.

Speaker Change: The next question is from Tobey Sommer with Truest. Please go ahead.

Jason Gursky: Better year over year growth in the back half of the year, just kind of want to understand.

Jason Gursky: Yes.

Jason Gursky: Thanks.

Jason Gursky: Thanks, Doug.

Jason Gursky: The upside and downside risks.

Jason Gursky: From a cadence perspective.

Jason Gursky: To the top line at that period.

Jason Gursky: Could you give us a little bit more color on the principal drivers of the.

Jason Gursky: Sure.

Jason Gursky: In the back half of this year.

Jason Gursky: Better year over year growth in the back half of the year.

Jason Gursky: And I think I've said this before and again nothing's changed in the first quarter. So I think for the total year, we expect <unk> to contribute an incremental call it $125 million or so and that is predominantly back half weighted and then.

Jason Gursky: I want to understand the.

Jason Gursky: The upside and downside risks.

Jason Gursky: To the top line at that period.

Shawn Mural: Yeah, let me let me let me provide some clarity on the split. So on the revenue side, Ken, you know, and you might say we're splitting hairs here a little bit, but it's probably slightly, you know, it might be closer to 46% on the revenue side, and 45% on the profit side. In the first half, you know, it's, it's not it's not perfect. Of course, there's always timing of material receipts and, and things of that nature. You know, we saw some of that happen in the end of the in the end of the first quarter.

Jason Gursky: Sure.

Jason Gursky: In the back half of this year.

Jason Gursky: And I think I've said this before and again nothing's changed in the first quarter. So I think for the total year, we expect <unk> to contribute an incremental call it $125 million or so and that is predominantly back half weighted and then the.

Jason Gursky: <unk>.

Jason Gursky: Second half of the year, we get a full full two quarters of the five and think of that as $50 million.

Jason Gursky: Okay. So those are really some of that growth in the back half of the year.

Jason Gursky: Theres, obviously other things that are coming on and the team is doing a wonderful job of.

Jason Gursky: Second half of the year, we get a full full two quarters of the five and think of that as $50 million.

Jason Gursky: Continuing to grow in a variety of areas, but but that's a lot of the back half of the year growth.

Jason Gursky: Thank you.

Jason Gursky: So those are really some of that growth in the back half of the year.

Jason Gursky: With respect to your.

Shawn Mural: So nothing that's nothing that's material in nature. And like I said, they, you know, maybe 46 ish type percent for for first half revenue.

Jason Gursky: International opportunities.

Jason Gursky: Theres, obviously other things that are coming on and the team is doing a wonderful job of.

Jason Gursky: Hum.

Jason Gursky: Uh huh.

Jason Gursky: Continuing to grow in a variety of areas, but but that's a lot of the back half of the year growth.

Jason Gursky: The last couple of months with.

Jason Gursky: A lot of new decisions coming out of Washington.

Shawn Mural: Okay, that's perfect, Shawn. Thanks. And I guess the second half ramp, I mean, obviously, you've called out your, you know, between waters and other programs, you feel pretty good about that, I guess. do and you know again consistent with what we said and I'll give a little bit of color the WTRS program will ramp really beginning in that July time frame when transition is complete that's to say we're doing some activities today obviously you heard me talk about some of the q1 numbers but the ramp was really back half-weighted and we'll get a good good second half on that and then we'll have the f5 right so we're executing f5 transition was completed late last year teams done a wonderful job and you know we from a comp standpoint in the back half of the year we didn't have that previously and then again the the kc-10 and t1a had wins so nothing that we've seen in the first quarter outside that is that is causing any perturbations or difference to what we would expected with that ramp Thanks, Shawn.

Jason Gursky: Thank you.

Speaker Change: With respect to your.

Jason Gursky: Is that.

Speaker Change: International opportunities.

Jason Gursky: And enhance the opportunity or detracted from it.

Speaker Change: <unk>.

The.

Jason Gursky: I don't think it's changed it I think the team that's doing.

Speaker Change: The last couple of months with.

Speaker Change: A lot of new decisions coming out of Washington.

Jason Gursky: That work for us has seen persistent.

Speaker Change: Is that.

Jason Gursky: Demand.

Speaker Change: And enhance the opportunity or detracted from it.

Jason Gursky: Granted they take time.

Jason Gursky: They're not as clean as some of the Rfps coming out of the U S. Government in terms of the time schedules. So they do take time, but we've not seen any change in the demand pull from the international market and the team. That's doing that is doing an exceptional job in terms of serving those customers on a global basis.

Speaker Change: I think it's changed it I think the team that's doing.

Speaker Change: That work for us has seen persistent.

Speaker Change: Demand.

Speaker Change: Granted they take time.

Speaker Change: They're not as clean as some of the Rfps coming out of the U S. Government in terms of time schedules. So they do take time, but we've not seen any change in the demand pull from the international market and the team. That's doing that is doing an exceptional job in terms of serving those customers on a global basis.

Jason Gursky: I appreciate that.

Jason Gursky: Last one for me.

Jason Gursky: With the deleveraging that has occurred.

Jason Gursky: Pricing.

Jason Gursky: That sort of up and down the stack.

Jason Gursky: Are you at this juncture now where you would.

Speaker Change: I appreciate that.

Jason Gursky: In addition to.

Jason Gursky: Potentially delevering.

Speaker Change: Last one for me.

Speaker Change: With the deleveraging that has occurred.

Jason Gursky: Look at deploying capital towards acquisitions.

Speaker Change: Pricing.

Ken Herbert: I appreciate the cover.

Speaker Change: That sort of up and down the stack.

Jason Gursky: Yes, I think.

Jason Gursky: I think I said it earlier.

Speaker Change: Are you at a juncture now where you would.

Jason Gursky: The next question is from Jason Gursky with Citigroup. Please go ahead. Good afternoon, everybody. A few questions here. First, can you talk a little bit about any exposure that you might have to GSA buying kind of writ large and whether you're seeing a push to move any of the work that you're currently doing more into the purview of the... Not that we're seeing, I mean, again, most of our work in the O&M world. It's well funded, it's part of the priorities of this administration, and in terms of readiness, so I don't see anything today.

Jason Gursky: We are continually looking at Optionality.

Jason Gursky: And so again the team has done a wonderful job.

Speaker Change: In addition.

Speaker Change: Potentially delevering look at deploying capital towards acquisitions.

Jason Gursky: Delevering as you as you pointed out Tobey and.

Jason Gursky: We will look at those things consistently it could be buybacks it could be M&A it could be investing in ourselves right in other things.

Yes, I think.

Speaker Change: I think I said it earlier.

Speaker Change: We are continually looking at Optionality.

Speaker Change: And so again the team has done a wonderful job.

Jason Gursky: Those are those are top of mind consistently and.

Speaker Change: Delevering as you as you pointed out Tobey.

Jason Gursky: I'm encouraged the leverage ratio at $2 nine aged did exactly what we said we were going to do.

Speaker Change: We'll look at those things consistently it could be buybacks it could be M&A it could be investing in ourselves right in other things.

We think it will continue to to decline sequentially as we go throughout the year and I think we're encouraged by the opportunity set that's in front of us in those areas Jeremy anything else down.

Speaker Change: Those are those are top of mind consistently and.

Speaker Change: I'm encouraged the leverage ratio at $2 98.

Speaker Change: Did exactly what we said we were going to go do.

Jason Gursky: Thanks, John Brad I think patients.

Speaker Change: We think it will continue to to decline sequentially as we go throughout the year and I think we're encouraged by the opportunity set that's in front of us in those areas Jeremy anything else to.

Jason Gursky: It is what is awarded right now and we will look at the Optionality that is created by the work. The team has done to bring the leverage ratio down, but again I think patients in terms of how do we build shareholder value is front of mind.

Jason Gursky: Okay, fair enough. Thanks.

Jason Gursky: And then there's been a bit of a push here by the administration through executive order in particular to go through a bit of a reform process. I'm just kind of curious, what impacts do you think this effort might have to the industrial base writ large and to the company here specifically? I think it's very early in the play to determine how they're going to go about doing that. Obviously, we're listening like everybody else is in the industry, but again, I think it's very early to try to draw a conclusion as to where they're going to go with that.

Speaker Change: I think John is right I think patients.

Jason Gursky: Thank you very much.

Speaker Change: It is what is awarded right now and we will look at the Optionality that is created by the work. The team has done to bring the leverage ratio down, but again I think patients in terms of how to rebuild shareholder value is front of mind.

Tobey: Thanks Tobey.

Speaker Change: The next question is from Joe Gomes with Noble capital. Please go ahead.

Joe Gomes: Good afternoon.

Speaker Change: Hey, Joe Hey, Joe.

Speaker Change: Thank you very much.

Speaker Change: Assuming I did my math correctly here it looks like gross margin was all about 75 basis points in the quarter. Just wondering what was the driver for that.

Tobey: Thanks Tobey.

Speaker Change: The next question is from Joe Gomes with Noble capital. Please go ahead.

Joe Gomes: Good afternoon.

Speaker Change: Sorry, say that again, Joe I didn't hear you.

Speaker Change: Hey, Joe Hey, Joe.

Assuming I did my math correctly here it looks like gross margin was all about 75 basis points in the quarter. Just wondering what was the driver for that.

Speaker Change: And it looks like gross margin or what I would.

Jason Gursky: Okay. Um, great.

Speaker Change: The gross margin for the company was up about 75 basis points.

Jason Gursky: And then lastly, I guess, um, the budget, you know, was released on Friday, last week of this county budget with some top line numbers in it. Um, not a lot of programmatic stuff, but clearly, uh, some indications about, um, you know, spending priorities going forward. Um, you know, the hundred and, 113 of the $119 billion plus up for national security spending, um, looks like it's going to be spread across five different Buckets, Golden Dome, Shipbuilding, Nuclear Deterrence, Space Domain, and Protecting the I'm wondering if you wouldn't just spend a few minutes talking through, you know, the capabilities set at the company and how it kind of lines up with those five spending priorities that the administration would like to focus on here going forward.

Speaker Change: In the quarter I was just wondering what was the drivers behind that.

Speaker Change: Say that again, Joe I didn't hear you.

Speaker Change: I think its just some timing of some of the expenses that we had in the quarter.

Speaker Change: And it looks like gross margin or what I would.

Speaker Change: Versus prior year, but nothing nothing of note it is that.

Speaker Change: Gross margin for the company was up about 75 basis points.

In the quarter I was just wondering what was the drivers behind that.

Speaker Change: And that is causing us any either concern or anything other than what we had planned.

Speaker Change: I think it is just some timing of some of the expenses that we had in the quarter.

Speaker Change: Okay.

Speaker Change: And then one of the things that.

Speaker Change: Prior year, but nothing nothing of note it is.

Speaker Change: It's been a benefit for the company historically has some of the exercises that had been done in India. Okay Commons.

Speaker Change: That is causing us any either concern or anything other than what we had planned.

Speaker Change: Wondering are any of those.

Speaker Change: Differently.

Speaker Change: Okay.

Speaker Change: Significant exercises scheduled for this year and when you would expect to see those occur.

Speaker Change: And then one of the things that.

Speaker Change: Been a benefit for the company historically has some of the exercises that had been done and they'll pay Commons.

Speaker Change: We were doing some today I will say so you're exactly right. This is an odd year on an odd numbered year and therefore, those initiatives and activities take place we have been passed with very modest.

Jeremy Wensinger: Thanks. I think the administration has been very clear about their priority around writing. And when I look at, you know, what we do, and Shawn had highlighted earlier, you know, with regards to training the warfighter, equipping the warfighter, supporting the warfighter, and, you know, renewing and refreshing that equipment as it, you know, as it's required, I think those are all things that fit very well with this administration's priorities. Again, I know they gave some top-line, you know, items that they were interested in, but again, if you look at where we are supporting the warfighter, I think they align very well with this administration's priorities.

Speaker Change: Wondering are any.

Any of those significantly.

Speaker Change: Significant exercises scheduled for this year and when you would expect to see those occur.

Speaker Change: We were doing some today I will say so you're exactly right. This is an odd year on an odd numbered year and therefore, those initiatives and activities take place we have been passed with very modest.

Speaker Change: Support today.

Speaker Change: We'll see if having a budget and getting some additional clarity changes that.

Speaker Change: But right now we're often executing some some of those activities in the region.

Speaker Change: Between now and call it the end of the summer type of timeframe.

Speaker Change: Support today.

Speaker Change: We'll see if having a budget and getting some additional clarity changes that.

Speaker Change: Okay, and then one more.

Jeremy Wensinger: I think there's also the geography base, right? We've talked about where we are around the globe, and how those enduring missions sustain. And, you know, I think we're extremely well positioned. One of the things that's exciting, if we think about, you know, of our journey here, since the WTRS award last year, when we brought the breadth of the entirety of the company together, and you heard Jeremy talk about this, we're seeing that take root in a number of different areas in various geographies around the globe. So, in terms of exactly as Jeremy said, administration priorities, as well as geography, we think we're exceptionally well positioned to continue to be, you know, successful.

Speaker Change: And I know you've talked about.

Speaker Change: But right now we're often executing some some of those activities in the region.

Speaker Change: We're expecting the second half to be bigger than the first half.

Speaker Change: We are under that we'll call it a full year CR, but kind of just.

Speaker Change: Between now and call it the end of the summer type of timeframe.

Speaker Change: Okay, and then one more.

Speaker Change: Through the year to date.

Speaker Change: You've seen the pace of awards.

Speaker Change: And I know you've talked about.

Speaker Change: In fact in the second half to be bigger than the first half.

Speaker Change: So far and are you starting to see any pick up here as maybe we get some a little more clarity on.

Speaker Change: We are honored that will call for full year, CR, but kind of just.

Speaker Change: Budgeting.

Speaker Change: I think we saw the awards in the first quarter pretty consistent with what we expected.

Speaker Change: Through the year to date.

Speaker Change: <unk> seen the pace of awards.

Speaker Change: So we're very encouraged that the awards will will stay on schedule I think Sean referenced.

So far and are you starting to see any pick up here as maybe we get some a little more clarity on.

Speaker Change: Some of the contracting officers, having elected to take the offer.

Speaker Change: Budgeting.

Speaker Change: I think we saw the awards in the first quarter pretty consistent with what we expected.

Speaker Change: Has created some interesting items in terms of funding profiles, but in terms of awards. We are very excited about the fact that they stayed on what we thought it would be in the first quarter and we're excited to get the Ascension Island program up and running.

Jeremy Wensinger: And I think it shows itself, honestly, Jason, with regards to the growth we saw in INDOPACOM. You know, I think the administration priorities in terms of that theater, we are well positioned to support the administration and their efforts to fulfill their administration priorities.

Speaker Change: So we're very encouraged that the awards will will stay on schedule I think Sean referenced.

Speaker Change: Some of the contracting officers.

Speaker Change: Having elected to take the offer.

Speaker Change: Yes, the amplify that Joe we've seen albeit modest occasionally.

Speaker Change: Has created some interesting items in terms of funding profiles, but in terms of awards.

Jason Gursky: Okay, great. Thanks, everybody. Appreciate it.

Speaker Change: And more than previously perhaps some changes in funding and just for.

Jason Gursky: Thanks, Chase.

Speaker Change: Very excited about the fact, the pace stayed on what we thought it would be in the first quarter and we're excited to get the essence styling program up and running.

Tobey Sommer: The next question is from Tobey Sommer with Truist, please go ahead. From a cadence perspective, can you give us a little bit more color on the principal drivers of the better year-over-year growth in the back half of the year? I just kind of want to understand that. the upside and downside risks to the pipeline at that period. In the back half of this year, it's You know, and I think I said this before, and again, nothing's changed in the first quarter. So I think for the total year, we expect WTRS to contribute an incremental, call it 125 million or so, and that is predominantly back half-weighted.

Speaker Change: Just for clarity, sometimes we get funded monthly sometimes we get funded annually right every contract is different and so changes in personnel changes in funding streams whatever.

Speaker Change: Sure.

Speaker Change: Yes, the amplify that Joe we've seen.

Speaker Change: Modest occasionally.

Speaker Change: And more than previously perhaps some changes in funding and just for.

Speaker Change: In June caused some perturbations that did that did play out, albeit modest.

Speaker Change: Just for clarity, sometimes we get funded monthly sometimes we get funded annually right every contract is different and so changes in personnel changes in funding streams whatever.

Speaker Change: In the quarter end.

Speaker Change: We don't expect anything.

Speaker Change: The material issues or anything going forward.

Speaker Change: Great. Thanks for that appreciate it.

<unk> can cause some perturbations that did that did play out, albeit modest.

Sure.

Speaker Change: Our next question is from Cristina <unk> with Morgan Stanley. Please go ahead.

Speaker Change: In the quarter, and we don't expect anything of material issues or anything going forward.

Speaker Change: Hey, this is Justin on for Christine Thanks for taking the question.

Speaker Change: Great. Thanks for that appreciate it.

Speaker Change: Just.

Speaker Change: On the revenue by region. It looks like Middle East revenue was down a little bit this quarter. After some pretty nice growth over the past few quarters. So just wondering if anything discrete to call out there or maybe it's just tougher comps or if anything is related to some of the sunsetting programs you've called out any color there would be helpful.

Speaker Change: Sure.

Speaker Change: Our next question is from Cristina <unk> with Morgan Stanley. Please go ahead.

Tobey Sommer: And then the second half of the year, we get a full, you know, full two quarters of the F5, and think of that as $50 million. Okay, so those are really some of that growth in the back half of the year. There's obviously other things that are coming on and the team's doing a wonderful job of continuing to grow in a variety of areas, but that's a lot of the back half of the year growth.

Speaker Change: Hey, this is Justin on for Christine Thanks for taking the question.

Speaker Change: <unk>.

Speaker Change: On the revenue by region. It looks like Middle East revenue was down a little bit this quarter. After some pretty nice growth over the past few quarters. So just wondering if anything discrete to call out there or maybe it's just tougher comps or if anything is related to some of the sunsetting programs you've called out any color that would be helpful.

Speaker Change: Yes, there is.

Speaker Change: The submission support activities that we do.

Speaker Change: Have done it on a consistent basis if.

Speaker Change: If you will.

Speaker Change: Some timing associated with those things the volume of activities in that region. You are absolutely right was down from what we had done before there are I think you said it probably better than either are some tough comps from a prior year standpoint.

Tobey Sommer: And with respect to your international opportunities, have the The last couple of months with a lot of new decisions coming out of Washington, has that to enhance the opportunity or detracted from it? I don't think it's changed it. I think, you know, the team that's doing that work for us has seen a persistent you know, demand. Granted, they take time. They're not as they're not as clean as some of the RPs coming out of the U. S. Government in terms of time schedules. So they do take time, but we've not seen any change in the demand pull from the international market.

Speaker Change: Yes, there is.

Speaker Change: So submission support activities that we do.

Have done it on a consistent basis.

Speaker Change: You will there is some timing associated with those things the volume of activities in that region. You are absolutely right was down from what we had done before.

Speaker Change: We're we're nothing outside of what we had planned.

As what we saw in the quarter.

Speaker Change: I do think the year over year in the.

Speaker Change: You said, it probably better than either are some tough comps from a prior year standpoint.

Speaker Change: The middle East could be it could be down slightly but again. This team does a wonderful job to respond at a moment's notice to our customers' needs. This team did that last year.

Speaker Change: We're we're nothing outside of what we had planned.

Speaker Change: As what we saw in the quarter.

Speaker Change: I do think the year over year in the.

Speaker Change: <unk> continue at the same pace hard exactly to say everything that we've talked about has contemplated it so nothing unusual.

Speaker Change: The middle East could be it could be down slightly but again. This team does a wonderful job to respond at a moment's notice to our customers' needs. This team did that last year.

Speaker Change: Okay, Great. That's helpful. And then maybe just quickly circling back to earlier questions around booking trends it sounds like you.

Tobey Sommer: And the team that's doing that is doing an exceptional job in terms of serving those customers on a on a global basis.

Speaker Change: <unk> continue at the same pace hard exactly to say everything that we've talked about is contemplated it's so nothing unusual.

Speaker Change: You have a lot of exciting opportunities coming in the back half here or you're also expecting some nice revenue acceleration so I.

Speaker Change: I guess net net are you expecting book to bill to be above one for the full year.

Shawn Mural: Appreciate that. Last one for me. With the deleveraging that has occurred and the repricing of debt, sort of up and down the stack, Are you at a juncture now where you would, in addition to, you know, potentially de-levering, look at deploying capital towards acquisition? I think I said it earlier, we are continually looking at optionality. And so, again, the team's done a wonderful job de-levering, as you point out, Tobey, and we'll look at those things consistently. It could be buybacks, it could be M&A, it could be investing in ourselves, right, in other things. Those are top of mind consistently.

Okay, Great. That's helpful. And then maybe just quickly circling back to earlier questions around booking trends it sounds like you.

Speaker Change: Say it this way Justin from from a from a net bookings standpoint, we expect to add to our backlog it's back half weighted as I've said and I'll put some other finer points on it just to give color to folks.

Speaker Change: Do you have a lot of exciting opportunities coming in the back half here are you also expecting some nice revenue acceleration so.

Speaker Change: I guess net net are you expecting book to bill to be above one for the full year.

Speaker Change: Think of the first half from a net bookings order intake standpoint.

Speaker Change: Say it this way Justin from from a from a net bookings standpoint, we expect to add to our backlog it's back half weighted as I've said and I'll put some other finer points on it just to give color to folks.

Speaker Change: 30% to 40% of what we would expect in the total year and then.

Speaker Change: Obviously much more in the back half.

Speaker Change: More.

Speaker Change: Think of the first half from a net bookings order intake standpoint.

Speaker Change: Fixed price in nature.

Speaker Change: And more domestic okay. Some of that is consistent with the awards that we've already talked about.

Speaker Change: 30% to 40% of what we would expect in the total year and then.

Speaker Change: That arent not necessarily in backlog so.

Speaker Change: Obviously much more in the back half more.

Speaker Change: Obviously, we expect to end the year with accretive backlog.

Jeremy Wensinger: And I'm encouraged the leverage ratio at 2.98 did exactly what we said we were going to go do. We think it'll continue to decline sequentially as we go throughout the year, and I think we're encouraged by the opportunity set that's in front of us in those areas.

Speaker Change: Fixed price in nature.

Speaker Change: Okay, Great Super helpful. Thank you.

Speaker Change: And more domestic some of that is consistent with the awards that we've already talked about.

Speaker Change: Alright.

Speaker Change: The next question is from Noah <unk> with Goldman Sachs. Please go ahead.

Speaker Change: That arent not necessarily in backlog so.

Speaker Change: Obviously, we expect to end the year with accretive backlog.

Noah: Hey, good evening everyone.

Speaker Change: If we could turn out in another moment.

Speaker Change: Okay, Great Super helpful. Thank you.

Jeremy Wensinger: Jeremy, anything else? I think Shawn's right. I think patience is what is awarded right now, and we will look at the optionality that is created by the work the team's done to bring the leverage ratio down. But again, I think patience in terms of how do we build shareholder value is front of mind.

Noah: Hey, Thanks, a lot for the time.

Speaker Change: Right.

Noah: I Wonder if you could just spend another minute on cash flow just given the.

Speaker Change: The next question is from Noah <unk> with Goldman Sachs. Please go ahead.

Noah: In <unk> I know, it's seasonally usually use but it looks larger than it's been in the past can you just give us a little more detail on what.

Noah: Hey, good evening everyone.

Speaker Change: If you could point out in another moment.

Speaker Change: Hey, Thanks, a lot for the time.

Noah: What drove that and.

Speaker Change: I Wonder if you could just spend another minute on cash flow just given the.

Noah: How the cadence shakes out through the rest of the year and what.

Joe Gomes: Thank you very much. Thanks, Tobey.

Speaker Change: Use in <unk> I know, it's seasonally usually use but it looks larger than it has been in the past can you just give us a little more detail on what.

Noah: Full year free cash net income conversion youre looking for.

Joe Gomes: The next question is from Joe Gomes with Nobel Capital. Please go ahead. Good afternoon. Joe. Hey, Joe. Assuming I did my math correctly here, it looks like gross margin was about 75 basis points. I'm just wondering what was the driver for that? Say that again, Joe, I didn't hear you. It looks like gross margin, or what I... called the gross margin for the company was up about 75 basis points. in the quarter and just wondering what was the drivers behind.

Noah: Yeah. So.

Noah: Uh huh.

Noah: Adjusted net income to cash conversion in excess of a 100%.

Speaker Change: What drove that and.

Speaker Change: How the cadence shakes out through the rest of the year and what <unk>.

Noah: For the total year, absolutely back half weighted.

Noah: And with what we have we were if you look year over year, we were slightly down right I think we consumed about $83 million last year.

Speaker Change: Full year free cash net income conversion youre looking for.

Speaker Change: Yes, so the.

Speaker Change: Adjusted net income to cash conversion in excess of a 100%.

Speaker Change: About $118 million.

Speaker Change: It was absolutely in line with what we expected a little bit more working capital usage.

Speaker Change: For the total year, absolutely back half weighted consistent with what we have we were if you look year over year, we were slightly down right I think we consumed about $83 million last year.

Speaker Change: Nothing that causes us concern at this point I would say, we expect to be positive in every subsequent quarter.

Speaker Change: About $118 million, we had it was absolutely in line with what we expected a little bit more working capital usage.

Speaker Change: And build throughout the year. So I think we're in I think we're in good shape.

Shawn Mural: I think it's just some timing of some of the expenses that we had in the quarter versus, you know, prior year, but nothing of note that is causing us any, either concern or anything other than what we had planned.

Speaker Change: I would tell you that we saw some very good collections after the quarter closed and so.

Speaker Change: Nothing that causes us concern at this point I would say, we expect to be positive in every subsequent quarter end.

Speaker Change: Nothing Thats nothing thats sticking out as being anything other than what we had planned.

Speaker Change: And build throughout the year so.

Speaker Change: We are and I think we're in good shape I would tell you that we saw some very good collections after the quarter closed and so.

Speaker Change: Okay. So maybe just some working capital timing late in the quarter slide precisely <unk>.

Jeremy Wensinger: And then, you know, one of the things that, you know, has been a benefit for the company historically is some of the exercises that have been done in the Indo-Pecan. Wondering, you know, are any of those significant exercises scheduled for this year and when you would expect? to see those occur. We're doing some today. I will say, you know, so you're exactly right. This is an odd year, an odd numbered year, and therefore those initiatives and activities take place. We have been tasked with very modest support today. You know, we'll see if having a budget and getting some additional clarity changes that.

Speaker Change: Okay.

Speaker Change: Nothing Thats nothing thats sticking out as being anything other than what we had planned.

Speaker Change: Excellent.

Speaker Change: And then I wanted to ask just.

Speaker Change: With a framework for a year, that's a little backend loaded.

Speaker Change: Okay. So maybe just some working capital timing late in the quarter.

Speaker Change: The backdrop, where funds seem to be.

Speaker Change: Precisely.

Speaker Change: Sure.

Speaker Change: Flowing a little slower.

Speaker Change: Precisely.

Speaker Change: Excellent.

Speaker Change: Is there anything in the back half.

And then I wanted to ask just.

Speaker Change: You see a risk of sliding into the early part of 2006 and <unk>.

Speaker Change: With a framework for a year, that's a little backend loaded.

Speaker Change: In a backdrop where funds seem to be.

Speaker Change: So just wanted to ask.

Speaker Change: And that's our waters ramps up what is the early.

Speaker Change: Slowing a little slower.

Speaker Change: Margin profile look like on that program as we try to.

Speaker Change: Is there anything in the back half.

Speaker Change: You will see us re.

Speaker Change: Map out the door.

Speaker Change: Risk of sliding into the early part of 2006 and <unk>.

Speaker Change: Margin ramp in addition to the revenue walk.

Speaker Change: Yeah, I'll start with the <unk>.

Speaker Change: Also just wanted to ask.

Jeremy Wensinger: But, you know, right now we're off and executing some of those activities in the region, you know, between now and call it the end of the summer type of time frame.

Speaker Change: Chart with Alaska.

Speaker Change: Waters ramps up what is the early.

Speaker Change: Part first and then Jeremy can add color on.

Speaker Change: Margin profile look like on that program as we tried to.

Speaker Change: The.

Speaker Change: Total year.

Speaker Change: Relative to waters.

Speaker Change: Map out the margin ramp in addition to the revenue ramp.

Speaker Change: Our margins are accretive when waters comes online in the second half of the year, they will be accretive to where the company composite is.

Joe Gomes: And then one more. And I know you've talked about, you know, you're expecting the second half to be bigger than the first half. You know, we are under that, you know, we'll call it the full year CR, but, you know, kind of just. through the year-to-date, how have you seen the pace of awards so far, and are you starting to see any pickup here as maybe we get some a little more clarity on budgeting? I think we saw the awards in the first quarter pretty consistent with what we expected. So we're very encouraged that the awards will stay on schedule.

Speaker Change: Yeah, I'll start with the <unk>.

Speaker Change: Start with the last.

Jeremy: Part first and then Jeremy can add color on the on the.

There is.

Speaker Change: Today that is not necessarily the case, Noah and it's because of the types of stuff that we're procuring and things of that nature, as we get ready to kind of ramp up but it'll it'll be.

Jeremy: Total year so.

Jeremy: So relative to waters.

Jeremy: Our margins are accretive when waters comes online in the second half of the year, they will be accretive to where the company composite is.

Speaker Change: Like I said accretive to the company's composite in the back half of the year. If I were to look at our total margin.

Jeremy: There is today that is not necessarily the case now and it's because of the types of stuff that we're procuring and things of that nature, as we get ready to to kind of ramp up but it'll it'll be.

Speaker Change: It's depending on how the growth exactly plays out you heard me referenced to $125 million year over year.

It's a few basis points to the company's composite cost plus margin performance.

Jeremy: Like I said accretive to the company's composite in the back half of the year. If I were to look at our total margin, it's going to it's depending on how the growth exactly plays out you heard me referenced $125 million year over year.

Shawn Mural: I think Shawn referenced, you know, some of the contracting officers, you know, having elected to take the offer has created, you know, some interesting items in terms of funding profiles. But in terms of awards, we were very excited about the fact that they stayed on what we thought it would be in the first quarter, and we're excited to get the Ascension Island program up and running. Yeah, to amplify that, Joe, we've seen, albeit modest, occasionally, and more than previously, perhaps, some changes in funding. And just for clarity, sometimes we get funded monthly, sometimes we get funded annually, right, every contract is different.

Speaker Change: And I'll address the award side.

Speaker Change: When I look at where we are in terms of the enviable nature of the Recompete holiday that we're experiencing and I look at the bid volume that Roger and his team are putting out in terms of being 50% more than last year.

Jeremy: It's a it's a few basis points to the company's composite cost plus margin performance.

Jeremy: And I'll address the award side.

Speaker Change: Provided they stay on schedule, which to date, if you looked at first quarter and you look at the awards, we have been on schedule with regards to what we thought they were going to award.

Jeremy: When I look at where we are in terms of the enviable nature of the Recompete holiday that we're experiencing and I look at the bid volume that Roger and his team are putting out in terms of being 50% more than last year.

Speaker Change: I'm very excited about the opportunity as we look forward.

Speaker Change: To capture the stuff that we bid and also the stuff that we're going to bid. So again I have not seen any perturbations to date, but again I think the work that the team is doing is exceptional and.

Jeremy: Provided they stay on schedule, which to date if you looked at first quarter as you look at the awards, we have been on schedule with regards to what we thought they were going to award.

Shawn Mural: And so changes in personnel, changes in funding streams, whatever, can cause some perturbations. That did play out, albeit modest, you know, in the quarter, and, you know, we don't expect anything of material issues or anything going forward. Great. Thanks for that. Appreciate it. Sure.

Jeremy: Im very excited about the opportunity as we look forward.

Speaker Change: We're taking advantage of the opportunities we have in terms of partnerships foreign military sales and also domestic sales as well.

Jeremy: To capture the stuff that we bid and also the stuff that we're going to bid. So again I have not seen any perturbations to date, but again I think the work that the team is doing.

Speaker Change: Okay. Thank you so much.

Speaker Change: Thanks Noah.

Speaker Change: Thank you.

Jeremy: It is exceptional and we.

Speaker Change: This concludes our question and answer session.

Jeremy: We're taking advantage of the opportunities we have in terms of partnerships foreign military sales and also domestic sales as well.

Speaker Change: I would like to turn the conference back over to Mr. Jeremy went singer CEO for any closing remarks.

Christine Lewag: Our next question is from Christine Lewag with Morgan Stanley. Please go ahead. Hey, this is Justin on for Christine. Thanks for taking the question Just on the revenue by region It looked like Middle East revenue was down a little bit this quarter after some pretty nice growth of the past few quarters So just wondering if anything Discreet to call out there or maybe it's just tougher comps or if anything's related to some of the sun setting programs You called out any color that would be helpful Yeah, there's some mission support activities that we do, you know, have done on a consistent basis, if you will, there's some timing associated with those things, the volume of activities in that region, you're absolutely right, was down from what we had done before.

Jeremy: Okay. Thank you so much.

Speaker Change: Thank you everyone for joining us really appreciate you taking the time to join US on this first quarter call.

Speaker Change: Thanks Noah.

Speaker Change: Thank you.

Speaker Change: This concludes our question and answer session.

Speaker Change: The team has done an exceptional job.

Speaker Change: I am excited about the opportunity we have in front of us and I think youll see these results manifest itself over the next several quarters. So thank you again for joining the call and have a great day.

Speaker Change: I would like to turn the conference back over to Mr. Jeremy went singer CEO for any closing remarks.

Speaker Change: Thank you everyone for joining really appreciate you taking the time to join US on this first quarter call.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: He has done an exceptional job.

Speaker Change: Im excited about the opportunity we have in front of us and I think youll see these results manifest itself over the next several quarters. So thank you again for joining the call and have a great day. Thanks.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Christine Lewag: There are, I think you said it probably better than I, there are some tough comps from a prior year standpoint, you know, we're, we're nothing outside of what we had planned, you know, is, is what we saw in the quarter, I do think the year over year in the, in the Middle East, you know, could be could be down slightly, but again, this team does a wonderful job to, to respond at a moment's notice to our customers needs. This team did that last year. Will that continue at the same pace? Hard exactly to say. Everything that we've talked about has contemplated it.

Christine Lewag: So nothing unusual.

Christine Lewag: Okay, great. That's helpful.

Justin: And then maybe just quickly circling back to earlier questions around booking trends. It sounds like you have a lot of exciting opportunities coming in the back half here, but you're also expecting some nice revenue acceleration. So, I guess, are you expecting book-to-bill to be sort of above one for the full year? say it this way, Justin, from a net booking standpoint, we expect to add to our backlog. It's back half-weighted, as I said, and I'll put some other finer points on it just to give color to folks. Think of the first half from a net bookings order intake standpoint, 30 to 40% of what we would expect in the total year, and then obviously much more in the back half, more fixed price in nature, and more domestic, okay?

Justin: Some of that is consistent with the awards that we've already talked about that are not necessarily in backlog. So, you know, obviously we expect to end the year with a creative backlog.

Justin: Okay, great. Super helpful. Thank you.

Noah Poponak: The next question is from Noah Poponak with Goldman Sachs. Please go ahead. Hey, good evening, everyone. I wonder if we could spend another minute. Hey, hey, thanks a lot for the time. I wonder if we could just spend another minute on cash flow, just given the use in 1Q. I know it's seasonally usually a use, but it looks larger than it's been in the past.

Shawn Mural: Can you just give us a little more detail on what drove that and how the cadence shakes out through the rest of the year and what full year free cash net income conversion you're looking for? So the adjusted net income to cash conversion in excess of 100% for the total year, absolutely back half-weighted, consistent with what we have. We were, if you look year over year, we were slightly down, right? I think we consumed about 83 million last year, about 118 million. It was absolutely in line with what we expected, a little bit more working capital usage, nothing that causes us concern at this point.

Shawn Mural: I would say, you know, we expect to be positive in every subsequent quarter and build throughout the year. So, you know, I think we're in good shape. I would tell you that we saw some very good collections after the quarter closed. And so, you know, nothing that's sticking out as being anything other than what we had planned.

Shawn Mural: Okay, so maybe just some working capital timing late late in the quarter sliding precisely to precisely And then I wanted to ask just, you know, with a framework for a year that's a little back end loaded. in a backdrop where funds seem to be flowing a little slower. Is there anything in the back half that you see as risk of sliding into the early part of 26?

Shawn Mural: And then I also just wanted to ask, as Waters ramps up, what does the early margin profile look like on that program as we try to map out the margin ramp in addition to the revenue? I'll start with the last part first, and then Jeremy, you can add color on the total year. So relative to Waters, our margins are accretive to when Waters comes online in the second half of the year, they will be accretive to where the company composite is. Today, that is not necessarily the case, Noah, and it's because of the types of stuff that we're procuring and things of that to kind of ramp up.

Shawn Mural: But it'll be, like I said, accretive to the company's composite in the back half of the year. If I were to look at our total margin, depending on how the growth exactly plays out, you heard me reference 125 million year over year, it's a few basis points to the company's composite cost plus margin. And I'll address the award side. When I look at where we are in terms of the enviable nature of the, you know, recompute holiday that we're experiencing, and I look at the bid volume that Roger and his team are putting out in terms of being 50% more than last year, provided they stay on schedule, which today, if you looked at first quarter, you look at the awards, we have been on schedule with regards to what we thought they were going to award.

Noah Poponak: I'm very excited about the opportunity as we look forward to, you know, capture the stuff that we bid and also the stuff that we're going to bid. So again, I've not seen any perturbations to date, but again, I think the work that the team is doing is exceptional and we're taking advantage of the opportunities we have in terms of partnerships, foreign military sales, and also domestic sales as well. Okay, thank you so much. Thanks, Noah. Thank you.

Operator: This concludes our question and answer session.

Jeremy Wensinger: I would like to turn the conference back over to Mr. Jeremy Wensinger, CEO, for any closing remarks. Thank you everyone for joining today. I really appreciate you taking the time to join us on this first quarter call. The team has done an exceptional job. I'm excited about the opportunity we have in front of us and I think you'll see these results manifest itself over the next several quarters. So thank you again for joining the call and have a great day. Thanks.

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