Q2 2025 V2X Inc Earnings Call

Betsy: Thank you for joining us for the V2X second quarter 2025 earnings conference call and webcast. Today's call is being recorded. My name is Betsy, and I will be the operator for today's call. At this time, all participants have been placed in a listen-only mode. Following management's presentation, I will open up the call for a Q&A session. Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. Now I will pass the call over to your host, Michael Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X Inc.

2025 earnings conference call and webcast.

Today's call is being recorded.

My name is Betsy, and I'll be the operator for today's call.

At this time, all participants have been placed in a listen-only mode.

Following Management's presentation, I will open up the call for a Q&A session.

Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad.

To ask a question, you may press star followed by 1 on your telephone keypad to withdraw your question. Please press star followed by 2.

Please note this event is being recorded.

And now, I'll pass the call over to your host, Michael Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X.

Michael Smith: Thank you. Good afternoon, everyone. Welcome to the V2X second quarter 2025 earnings conference call. Joining us today are Jeremy Wensinger, President and Chief Executive Officer, and Shawn Mural, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on the Investor Relations section of our website, gov2x.com. Please turn to slide two. During today's presentation, management will be making forward-looking statements pursuant to the Safe Harbor provisions of the Federal Securities Laws. Please review our Safe Harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. The company assumes no obligation to update its forward-looking statements. In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors.

Thank you.

Good afternoon, everyone. Welcome to the v2x second quarter 2025 burning conference call.

Joining us today are Jeremy Wensinger, President and Chief Executive Officer.

And Sean moral senior, vice, president and Chief Financial Officer.

Slides for today's presentation are available on the investor relations section of our website. Go v2x cam.

Please turn to slide 2.

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, along with our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements.

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

In addition.

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

In today's remarks, we will refer to surgeon non-GAAP financial measures because management believes such measures are useful to investors.

You can find the 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 FCC, both of which are available on the Investor Relations section of our website.

Jeremy Wensinger: Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. I would like to start by thanking our entire team for their hard work, dedication, and commitment to our customers' mission. Please turn to slide three. During today's call, I am going to recap our Q2 results, talk about our strategic execution, and why we are optimistic about our future. Starting with the Q2 results, revenue was $1.08 billion. Profitability was strong with an adjusted EBITDA of $82 million, or 7.6% margin, and an adjusted net income of $42 million. Adjusted EPS was $1.33, increasing 59% year over year. Our financial performance, cash generation, and balance sheet strength is providing significant flexibility and optionality for V2X Inc. We are now positioned to enhance value creation through an active capital allocation strategy.

At this time, I'd like to turn the call over to Jeremy.

Thank you, Mike and good afternoon, everyone. Thank you for joining us today.

I'd like to start by thanking our entire team for their hard work, dedication and commitment to our customers mission.

Please turn to slide 3.

During today's call, I'm going to recap our second-quarter results.

Talk about our strategic execution and why we are optimistic about our future.

Starting with the second quarter results, revenue was $1.08 billion. Profitability was strong, with adjusted EBITDA of $82 million, or a 7.6% margin, and adjusted net income of $42 million.

Adjusted EPS was 1.33 increase in 59% year-over-year.

Performance cash, generation and balance sheet, strength is providing significant flexibility and optionality for v2x.

Jeremy Wensinger: As part of this strategy, we recently established a $100 million share repurchase authorization, which Shawn Mural will discuss in more detail shortly. Given our year-to-date performance, we remain confident in our ability to achieve our 2025 commitments and are seeing additional positive uplift to earnings per share. As such, we are increasing our adjusted EPS guidance and reaffirming our revenue adjusted EBITDA and cash flow guidance. Reflecting on our recent operational performance, we are delivering on our commitments, executing on our strategy, and bringing innovation and new approaches to rapidly deploy solutions for improved readiness. Our dedication to execution excellence was demonstrated during my recent visits with our customers. I witnessed firsthand the outcomes that our team is delivering. It is seamless support for the mission. Our customers have acknowledged our performance, and my visit reaffirms our strategy for growth.

We are now positioned to enhance value creation through an active Capital allocation strategy.

As part of this strategy, we recently established a $100 million, share repurchase authorization, which Sean will discuss in more detail shortly.

Given our year to date performance, we remain confident in our ability to achieve our 2025 commitments, and are seeing additional positive uplift uplift to earnings per share.

As such, we are increasing, our adjusted EPS guidance, and reaffirming our Revenue. Adjusted ebit da and cash flow guidance.

Reflecting on our recent operational performance. We are delivering on our commitments, executing on our strategy and bringing Innovation and new approaches to rapidly deploy solutions for improved readiness.

Our dedication to execution Excellence was demonstrated during my recent visits with our customers.

I witnessed firsthand the outcomes that our team is delivering it is seamless support for the mission.

Jeremy Wensinger: Our strategy is clear, and it is evident to me that our teams are delivering on mission readiness outcomes. The takeaway from my engagements reinforces what V2X Inc. is bringing in performance, reliability, and mission readiness. This is also reflected in our robust pipeline, which reflects the strategy we have put in place. Finally, our recent awards are a validation of our customer intimacy and the commitment by the team to the execution of our strategy. Please turn to slide four. We are making excellent progress executing our strategic growth initiatives. Starting with optimize the core, we are delivering proven performance excellence to strengthen the base. This is reflected by our ability to transition and support critical missions, such as recently reaching full operational capability on the Army's largest training program.

Our customers have acknowledged our performance. In our, my visit reaffirms our strategy for growth

Our strategy is clear, and it is evident to me that our teams are delivering on Mission Readiness outcomes.

The takeaway from my engagements, reinforces what? V2x is bringing in performance, reliability, and Mission readiness.

This is also reflected in our robust pipeline, which reflects the strategy we have put in place.

The words are validation of our customer intimacy and the commitment by the team to the execution of our strategy.

Please turn to slide 4.

We are making excellent progress, executing our strategic growth initiatives.

Jeremy Wensinger: This program will ensure the delivery of training solutions to Army warfighters worldwide by infusing cutting-edge innovations to adapt to an ever-evolving mission. Next, growth and adjacencies. This is best described as a demand pull on our customers' recognition of our ability to deliver. An exemplar of this is our growing presence in the U.S. Space Force at Ascension Island, which is a key Space Force tracking and instrumentation station. Another example, foreign military sales, continue to represent a large and growing opportunity with international customers seeking out our performance, solutions, agility, and value that V2X Inc. is delivering for our customers. This was evidenced by the recent award of the Iraq F-16 program. Moving to extended offerings, this is demonstrated by our collaboration with Bell Helicopter to support the training of a new generation of Army aviators.

Starting with optimized. The core we are delivering proven performance, Excellence to strengthen the base. This is reflected by our ability to transition and support critical missions. Such as recently, reaching full operational capability on the Army's largest training program.

This program will ensure that delivery of training solutions to army war Fighters, worldwide by infusing, Cutting Edge Innovations to adapt to an Ever evolving mission.

Next growth in adjacencies.

This is best described as a demand poll.

On our customers, recognition of our ability to deliver.

An exemplar of this is our growing presence in the U.S. Space Force at Ascension Island, which is a key Space Force tracking and instrumentation station.

Foreign military sales continue to represent a large and growing opportunity with international customers, seeking out our performance solutions, agility, and value that V2X is delivering for our customers.

This was evidenced by the recent Award of the Iraq F-16 program.

Moving to Extended offerings.

Jeremy Wensinger: This pursuit is notable as it combines our capabilities in training, operational readiness, with platform renewal. It also reflects an extension of a new customer in the aerospace domain. Lastly, strategic investments refer to the investments we are making in talent, capabilities that differentiate our offerings, and the optimization of our tools and processes to deliver on our commitments and drive growth. The culmination of these initiatives was exemplified firsthand with the $4.3 billion nine-year T-6 award. This is fundamentally a V2X Inc. approach to customer engagement and demonstration of past performance as a differentiator for our customers. The T-6 aircraft is widely used in a multi-service aviation training program that is critical to ensure new pilots are ready. This award is an example of the strategy we are executing, and it is an honor to have been selected to help ensure that every single pilot in the U.S.

This is demonstrated by our collaboration with Bell Helicopter, to support the training of new generation of army aviators.

This Pursuit is notable as it combines our capabilities in training, operational Readiness with platform renewal.

It also reflects an extension of a new customer in the Aerospace domain.

Lastly, strategic Investments, refer to the Investments. We are making in Talent.

capabilities at differentiated our offerings and the optimization of our tools and processes to deliver on our commitments and drive growth,

The combination of these initiatives was exemplified firsthand with the 4.3 billion dollar, 9-year T6 award.

This is fundamentally a V2X approach to customer engagement and the demonstration of past performance as a differentiator for our customers.

Jeremy Wensinger: Air Force, Navy, and Army will be trained and ready for their next mission. V2X Inc. will use commercial-based approaches to provide full-spectrum supply chain management solutions to enable this essential training mission over 700 aircraft. Additionally, we believe the fixed-price contract will allow V2X Inc. to leverage the power of data and decades of operational expertise to deliver enhanced readiness for our customer. In summary, we are executing these initiatives today. They are creating differentiation, driving value, and fueling opportunities in the form of a robust pipeline. Please turn to slide five. As mentioned, these initiatives on the prior page are driving significant opportunities for V2X Inc., which is reflective in our three-year pipeline valued at over $50 billion. This pipeline reflects large franchise programs and opportunities to deliver solutions across all domains.

The T-6 aircraft is widely used in a multi-service aviation training program that is critical to ensure new pilots are ready. This award is an example of the strategy we are executing, and it is an honor to have been selected to help ensure that every single pilot in the U.S. Air Force, Navy, and Army will be trained and ready for their next mission.

B2X will use commercial-based approaches to provide full-spectrum supply chain management solutions to enable this essential training mission for over 700 aircraft.

Additionally, we believe the fixed-price contract will allow V2X to leverage the power of data and decades of operational expertise to deliver enhanced readiness for our customer.

In summary, we are executing these initiatives today.

They are creating differentiation driving value and fueling opportunities in the form of a robust pipeline.

Please turn to slide 5.

As mentioned these initiatives on the prior page are driving significant opportunities for v2x which is reflective in our 3-year pipeline valued at over 50 billion dollars.

Jeremy Wensinger: It also reflects a greater percentage of fixed price or outcome-based contracts, which is at the heart of the V2X Inc. execution excellence value proposition. We see this as beneficial in proving out our operational excellence and institutional knowledge from successfully supporting global missions at scale for over 70 years. Lastly, while the pipeline of opportunity focuses on leveraging all of V2X Inc.'s capability, it also reflects a greater balance of platform modernization and renewal capabilities. We are optimistic in our ability to capture these opportunities, which we believe is supported by the progress we have demonstrated so far in converting key pursuits into long-term programs. V2X Inc. is capitalizing on our large and growing market opportunities while investing to be a leader in data-enabled mission solutions across all domains. Now I'd like to turn the call over to Shawn for a review of the financials.

This pipeline reflects large F franchise programs and opportunities to deliver Solutions across all domains.

It also reflects a greater percentage of fixed price or outcome based contracts which is at the heart of the v2x, execution Excellence value proposition.

We see this as beneficial in proving out our operational excellence and institutional knowledge from successfully supporting global missions at scale for over 70 years.

Lastly, while the pipeline of opportunity focuses on leveraging all of V2X's capabilities,

It also reflects a greater balance of platform modernization and renewal capabilities.

We are optimistic in our ability to capture these opportunities, which we believe is supported by the progress. We have demonstrated so far in converting key, Pursuits into long-term programs.

Noah Poponak: Thank you, Jeremy. Please turn to slide six. We are exceptionally pleased with our Q2 and year-to-date results. Our results continue to demonstrate the focus on disciplined execution and the strategic positions of the business. We are proud of the accomplishments and excited about the future. Revenue in the Q2 was $1,078,000,000. This reflects the expected growth in the WTRS and F-5 programs, as well as the sunsetting of the KC-10, T1A, and the reduction of a task order in the Middle East. Adjusted EBITDA in the quarter was $82.4 million, increasing 14% year over year and delivering a margin of 7.6%. The strong EBITDA performance was driven primarily by the conclusion of a non-recurring contractual commitment, which was contemplated in our full-year guidance, but occurred earlier than anticipated. Interest expense in the Q2 was $20.6 million.

V2x is capitalizing on our large and growing Market opportunities. While investing to be a leader in data enabled Mission Solutions across all domains. Now, I'd like to turn the call over to Sean for a review of the financials.

Thank you, Jeremy. Please turn to slide 6.

We are exceptionally pleased with our second quarter and year to date results.

Positions of the business.

We are proud of the accomplishments and excited about the future.

Revenue in the second quarter was 1,078 Million.

This reflects the expected growth in the wtrs and F5 programs, as well as the sun setting of The kc10 t1a and the reduction of a task order in the Middle East.

Adjusted EBITDA in the quarter was $82.4 million, increasing 14% year-over-year and delivering a margin of 7.6%.

the strong ibida performance was driven, primarily by the conclusion of a non-recurring contractual commitment, which was contemplated in our 4-year guidance, but occurred earlier than anticipated,

Noah Poponak: Cash interest expense was $19.1 million, improving $7.8 million, or 29% year over year, driven by our successful repricing activities, debt paydown, and cash generation. Net income for the quarter was $22.4 million. Adjusted net income was $42.3 million, increasing 61% year over year. Q2 diluted EPS was $0.70 based on 31.9 million weighted average shares. Adjusted diluted EPS in the quarter was $1.33, increasing approximately 59% from the prior year. The ability to generate strong free cash flow with low capital expenditures remains a strength of the business. This was demonstrated in the Q2 with adjusted operating cash flow of $58.3 million. Total backlog at the end of the Q2 was $11.3 billion. Funded backlog was $2.3 billion, which provides additional confidence in our ability to meet our 2025 commitments. It's important to note that at the current time, total backlog does not reflect the $4.3 billion T-6 award.

Interest expense in the second quarter was 20.6 Million.

Cash, interest expense was 19.1 Million, improving, 7.8 million or 29% year-over-year.

In our successful repricing activities that pay down and cash generation.

Net income for the quarter, was 22.4 million.

Adjusted. Net income was 42.3 Million increasing 61% year-over-year.

On 31.9 million weighted average shares.

Adjusted diluted EPS in the quarter was $1.33, increasing approximately 59% from the prior year.

The ability to generate strong free cash flow with low capital expenditures remains a strength of the business.

This was demonstrated in the second quarter with adjusted operating cash flow of $58.3 million.

Total backlog at the end of the second. Quarter was 11.3 billion.

Funded backlog was 2.3 billion, which provides additional confidence in our ability to meet our 2025 commitments.

Noah Poponak: It also does not include any value associated with the recent CENTCOM and INDOPACOM extensions. Please turn to slide seven, where I'll discuss our year-to-date results. Year-to-date revenue was $2.94 billion, up slightly, reflecting new program starts and partially offset by sunsetting programs. Adjusted EBITDA for the first half of the year was $149.4 million, increasing approximately 6% year over year with a margin of 7.1%. Interest expense through June was $40.3 million. Cash interest expense was $37.3 million, improving approximately $15 million compared to the first half of 2024. Year-to-date net income was $30.5 million. Adjusted net income was $73.8 million, increasing 34% year over year. Diluted EPS in the first half was $0.96. Adjusted diluted EPS was $2.31, up 34% compared to last year. Year-to-date net cash used by operating activities was $66.9 million.

It's important to note that at the current time. Total backlog does not reflect the 4.3 billion T6 award.

It also does not include any value associated with the recent Sencom and Indo Paycom extensions.

Please turn to slide 7. Where I'll discuss our year-to-date results.

Year-to-date revenue was $294 million, up slightly, reflecting new program starts and partially offset by sunsetting programs.

Adjusted ebitda for the first half of the year was 149.4 Million increasing approximately 6% year-over-year with a margin of 7.1%.

Interest expense through June was 40.3 Million.

Cash interest expense was $37.3 million, improving by approximately $15 million compared to the first half of 2024.

Year to date. Net income was 30.5 Million.

Adjusted. Net income was 73.8 Million. Increasing 34% year-over-year.

Due to EPS, the first half was 96 cents.

Adjusted to looted EPS, was $2.31, up 34% compared to last year.

Noah Poponak: Adjusted net cash used by operating activities was $59.8 million, reflecting our normal seasonal patterns. Please turn to slide eight. We have made significant progress improving our balance sheet, leverage ratio, and capital structure. This successful evolution provides flexibility in how we can allocate capital and accelerate value creation. We thought it important to highlight how we are thinking about things as we move forward. Our capital allocation strategy centers on three key pillars: generate, deploy, and maintain. As it relates to the first pillar, we believe part of our value proposition is the company's ability to deliver strong cash conversion. Our target is to generate strong adjusted net income to cash conversion that you can see in our trailing 12-month performance. This cash generation facilitates optionality as it relates to our second component, deploy. There are four methods by which we plan to deploy capital.

Year-to-date net cash used by operating activities was $66.9 million.

Adjusted net cash used by operating activities was 59.8 Million, reflecting our normal seasonal patterns.

We turned to slide 8.

We have made significant progress, improving our balance sheet, leverage ratio, and capital structure.

This successful Evolution provides flexibility in how we can allocate capital and accelerate value creation.

We thought it important to highlight, how we are thinking about things as we move forward.

Our Capital allocation strategy centers on 3 key pillars.

Generate deploy and maintain.

As it relates to the first pillar.

We believe part of our value proposition is the company's ability to deliver strong cash conversion.

Our target is to generate strong adjusted net income to cash conversion that you can see in our trailing 12 months performance.

This cash generation facilitates optionality, as it relates to our second component, deploy.

Noah Poponak: The first is to strategically acquire complementary capabilities, access to new channels, and solutions that accelerate our growth strategy. The second is increasing shareholder value by executing the recently authorized $100 million share repurchase plan. The third avenue consists of internal investments that would further advance our position as a differentiated provider of solutions. The fourth avenue is utilizing cash to further reduce debt via accelerating payments of our term loans. The deployment of capital in these areas is connected to the third component of our strategy, maintain, which is to deploy capital while maintaining a target net leverage ratio of approximately two to three times. We have started the next phase of our capital allocation journey and believe this strategy will yield strong returns for our shareholders. Please turn to slide nine. We are pleased with our performance.

There are 4 methods by which we plan to deploy capital.

Our growth strategy.

The second is increasing shareholder value by executing the recently authorized $100 million share repurchase plan.

The Third Avenue consists of internal investments that would further advance our position as a differentiated provider of solutions.

The Fourth Avenue is utilizing cash to further, reduce debt. The accelerating payments of our term loans.

the deployment of capital in these areas is connected, to the third component of our strategy maintained

Which is to deploy Capital while maintaining a Target net, leverage ratio of approximately 2 to 3 times.

We have started the next phase of our Capital allocation journey and believe that this strategy will yield strong returns for our shareholders.

Please turn to slide 9.

Noah Poponak: As such, the company is reaffirming revenue, adjusted EBITDA, and cash flow guidance for 2025 and increasing its adjusted EPS guidance due to previously executed debt refinancing and tax benefits. At the midpoint, this reflects revenue of $4.4 billion, adjusted EBITDA of $313 million, adjusted EPS of $4.80. In summary, we are continuing to execute and believe V2X Inc. is well positioned to meet our customers' critical mission requirements. Jeremy, I'll throw it back to you for some closing comments and thoughts.

We are pleased with our performance; as such, the company is reaffirming revenue, adjusted EBITDA, and cash flow guidance for 2025, and increasing its adjusted EPS guidance due to previously executed debt refinancing and tax benefits.

At the midpoint, this reflects revenue of $4.4 billion, adjusted EBITDA of $313 million, and adjusted EPS of $4.80.

In summary, We are continuing to execute and believe v2x is well positioned to meet our customers critical Mission requirements.

Jeremy Wensinger: Thank you, Shawn. The team's performance has me excited. We are delivering on our commitments and executing with excellence. Our robust pipeline reflects the strategy of the company going forward, and our awards are validating that strategy. Our strategic intent is nothing more than mission excellence. My team is aligned and executing to our global strategy. It is an honor to be at V2X Inc. Now let's open it up for questions.

Jeremy, I'll throw it back to you for some closing comments and thoughts.

Thank you, Sean. The team's performance has me excited.

We are delivering on our commitments and executing with excellence.

Our robust pipeline, reflects the strategy of the company going forward. And our awards are validating that strategy.

Our strategic intent is nothing more than Mission excellence.

My team is aligned and executing to our Global strategy, it is an honor to be a v2x.

Now, let's open it up for questions.

Betsy: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Kenneth Herbert with RBC Capital Markets. Please go ahead.

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.

If at any time your question has been addressed and you would like to withdraw your question, please press *2.

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

The first question today.

Comes from Ken Herbert with RBC Capital Markets. Please go ahead.

Jeremy Wensinger: Yeah. Hey, Jeremy, Shawn, and Mike. Nice quarter.

Shawn Mural: Thanks, Ken. Thank you, Ken.

Yeah. Hey Jeremy, Sean, and Mike, nice quarter.

Jeremy Wensinger: Hey, Jeremy, maybe just to kick off for Shawn, how do we think about the T-6 contract in terms of incremental revenues this year and next year in particular, and how does that ramp and how does that scale up?

Thanks Ken. Thank you Ken.

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

Shawn Mural: Yeah. Hey, thanks. Thanks, Ken. We are very excited about the award that was announced last week. We think it is a franchise that the team clearly demonstrated the execution and the strategy that Jeremy Wensinger has laid out for the company. From a revenue standpoint and impact, we began transition. I expect no impact to the financials this year. That transition period goes until early 2026. When we look at the historicals, the program has been somewhere between $200 million, $300 million a year, is kind of how we are thinking about it going forward. Obviously, that is subject to a lot of variables, funding profiles. We have got to get through the protest period, that sort of stuff. We will see how things play out.

Jeremy Wensinger: Ken, hey, it is Jeremy Wensinger. I would add to his comments just that this team did exactly what we have laid out in terms of strategy. I could not be happier with that team and what they have been able to to accomplish. I think their past performance was the driver here. We are excited about the opportunity to stand the program up. It really goes down to the past performance this team has been able to demonstrate. I think the customer recognized that, and we are just honored to be a part of it.

Yeah. Hey, thanks. Thanks Ken. Yeah. We're we're very excited about, uh, the award that was announced last week. Uh, we think it's a franchise that, uh, that, you know, the team clearly demonstrated, the execution of the strategy that that Jeremy has laid out, uh, for the company from a revenue standpoint that impact, you know. So, so we began transition. Um, I, I expect no impact to the financials this year that transition period, goes until early 2026. And then, I think, you know, when we look at the historicals, the program has has been somewhere between 200300 million dollars a year, uh, is kind of how we're thinking about it going forward. But obviously, you know, that that subject to a lot of variables funding profiles. Uh, we we've got to get through the protest period, uh, that sort of stuff. So, so we'll see how things play out.

Kevin: Hey, it's Jeremy. I would add to his comments just that.

This team did exactly what we have laid out in terms of strategy. I could not be happier with the results.

that team and what they've been able to accomplish and I think their past performance

Um, was the driver here. And so, we're excited about the opportunity to stay in the program up. But, you know, it really goes down to the Past performances team, has been able to demonstrate and I think the customer recognized that and we're just honored to be a part of it.

Shawn Mural: That's great. The full-year guide implies a bit of a step down, at least off the second quarter, into the second half EBITDA margins. Was there anything in particular in the second quarter, or maybe how do we think about the EBITDA margins in the second half and maybe upward potential to the guidance? I said in the prepared remarks, there was the conclusion of a contractual commitment that was worth about $6 million in the quarter, Ken. We had contemplated that previously. We did have it in the back half of the year. The team did a great job of closing on those actions and facilitating that. So that was realized in Q2. That's really why you see the jump to the 7.6%. Absent that, we would have been at 7.1% for the quarter. But again, those things are, we knew it.

That's great. And and the full year guide implies sort of a a bit of a step down at least off the second quarter into the second half. Ebita margins, was there anything in particular in the second quarter or or maybe how do we think about sort of the epitome of margins in the second half and maybe upward potential to the guidance?

Uh, Ken and so we had contemplated that previously. Uh, we did have it in the back half of the Year team. Did a great job of, uh, uh, you know, closing on those actions and facilitating that. So that that was realized in, uh,

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

In Q2. So that's really why you see the jump to the the 7.6%, you know, absent that we'd have been at 7.1%, uh, you know, for the quarter. But again, those things are, uh, we we knew it. Uh, the team did a great job of executing it, they happen, you know, I say they're non-recurring, but somewhat reoccurring in nature, uh, it it's just the, uh, the types of contractual closeout activities settlements. Things of that nature, that that happen. And, uh, and it happened in the second quarter. So we're really happy with being able to, uh, to to capture that early.

Jeremy Wensinger: No, that's great. Nice work, Shawn. I'll pass it back there. Thank you.

Shawn Mural: Sure.

No, that's great. Next work. Sean, I'll pass it back there. Thank you.

Betsy: The next question comes from Andre Madrid with BTIG. Please go ahead.

Sure.

Thanks for the next question. It comes from Andre Madrid with BTIG. Please go ahead.

Andre Madrid: Jeremy, Shawn, Mike, good afternoon, and thanks for taking the question.

Jeremy Wensinger: Yeah, Andre Madrid.

Jeremy, Sean. Mike, good afternoon, and thanks for taking the question.

Hey, Andre.

Andre Madrid: To stay on T-6 for a bit, I guess looking at it, was this one of the five different OneBuild Plus opportunities that you called out for 2025 that you were bidding on? Maybe just, I guess, more broadly, a status update on how we are across those five.

Um, to to stay on T6 for a bit. Um,

Jeremy Wensinger: It was, and we are honored to have the opportunity to have it awarded right now. We continue to make progress on the other ones. I think the team has aligned itself around the ones I have laid out before, and they continue to execute to the strategy. This is just a proof point on that strategy in terms of being able to capture this award. I think I am excited about what the business development team is doing. I am really excited about what the execution team is doing to provide that past performance that customers are recognizing. I think we continue to be excited about the pipeline that I have shared with you and also those major pursuits that are kind of near-term in nature.

I guess looking at it, was this one of the five different ones, Bill, plus the opportunities that you called out for $25 million that you were bidding on? And maybe just, I guess, more broadly, a status update on how we are across those five.

It was and we're honored to have the opportunity to have it awarded right now. Um we continue to make progress on the other ones. Um again I think the team has aligned itself around, you know, the the ones I've laid out before and they continue to execute to the strategy. And this is just a proof point on that strategy in terms of being able to capture this award. So again, I think

I'm excited about what the business development team is doing. I'm really excited about what the execution team is doing to provide that past performance.

That customers are recognizing. So again, I think we are, uh, we continue to be excited about the pipeline that I've shared with you. And also those major Pursuits that are kind of near-term in nature.

Andre Madrid: Got it. Got it. Obviously, you also called out strategic acquisitions in the CapEx deployment strategy. It was the top point, actually. A peer of yours, it was reported earlier this quarter or this past quarter that they were looking to possibly sell their aircraft maintenance business. How are you thinking about the legacy Vertex business, and is this something that you were looking to build out further organically? Would this be something of interest?

Got it, got it. And then obviously, you, you also called out, you know, strategic Acquisitions in the cap, deployment strategy. It was the top Point actually. And, and, you know, a peer of yours did.

You know, it was reported that earlier this quarter or this past quarter they were looking to possibly sell their aircraft maintenance business. I mean, how are you thinking about the legacy V2X business, and is this something that you are looking to build out further inorganically?

Would this be something of Interest?

Jeremy Wensinger: No. I mean, I, you know, we love our aircraft maintenance business. I think we will continue to look at building out the MRO and mission and modernization side and renewal side of the business. Again, I think where we are positioned right now, I like what we are doing. I like the awards we have. Whatever capital allocation strategy we put forward is going to be in the best interest of the shareholder.

Shawn Mural: I think of it, Andre, you know, I think the way we do things with V2X is complementary components that enable solutions for our customers. You know, I think those are the things that we would initially start to look at from an M&A. I think, again, I think I said in the remarks, we have a target ratio of staying between approximately two and three. You know, I think Jeremy Wensinger has used the word optionality since he has been here. To do things beyond that, I think, constrains some of that optionality to do other things from an investment standpoint, either in the business or other things.

No, I mean, I I you know, we have we love our aircraft maintenance business. Um, I think we'll continue to look at building out the mro and Mission and modernization side and renewal side of the business. Um but again I think we're we're we're positioned right now. Um I like what we're doing. Uh I like the awards we have and you know whatever Capital allocation strategy. We put forward is going to be in the best interest of the shareholder.

Think of it. Andre I, you know, I think the way we...

We view things with data as complementary components.

That enable solutions for our customers. Um, you know, I I, I think those are the things that we would initially start to look at uh, from an m&a. And and, you know, again, I think I said in the, in the remarks we have a Target ratio of staying between approximately 2 and 3. Um,

Jeremy Wensinger: Yeah. I mean, again, I think keeping that optionality on the table is important to me. I think whatever we do is going to be very thoughtfully done to add to the overall value of what we are offering. Again, I am not trying to use words that sound somewhat flowery, but you kind of get where I am going in terms of I like having optionality on the table. I like the idea of doing, if we were to do any acquisitions that are going to add to the value that we offer to a customer today or extend to customers that we desire.

You know, I I I think Jeremy used the word optionality since he's been here and, and to do things beyond that. I think, I think constrains some of that optionality um to do other things from an investment standpoint uh either in the business uh or or other things. Yeah, I mean again I think keep

Jeremy Wensinger: Again, I look at the capital allocation strategy as one that keeps us within, as Shawn Mural said, that two to three range, but also adds value, like I said, to either what we are doing today or things that we want to do for someone going forward.

Keeping that optionality on the table is important to me. I think whatever we do is going to be very thoughtfully, done to add to the overall value of um what we're offering and again I'm not trying to use words that you know sound somewhat flowery but you kind of get where I'm going in terms of, I like having optionality on the table. I like the idea of doing. Um, if we were to do any Acquisitions that are going to add to um, the value that we offer to a customer today or extend to a customer's that um we desire. So again I look at the capital allocation strategy is 1 that keeps us within as Sean said that 2 to 3 range. Um but also adds value like I said to either what we're doing today or things that we want to do for someone um going forward.

Andre Madrid: Got it. That is very helpful. I will leave it there. Thank you, gentlemen, for the time.

Got it, that that's very helpful. Uh, I'll leave it there. Thank you Jonathan for the time.

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

Thanks.

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

The next question comes from. Jonathan Sigmund with stifel, please. Go ahead.

Jeremy Wensinger: Hi.

Hey, good afternoon, Jeremy, Sean, and Mike. Thank you for taking the question.

Andre Madrid: Hey.

Jeremy Wensinger: Thank you.

Jonathan Sigman: Just back on the T-6 contract. Congratulations. A great takeaway win. Ken asked about how the revenue ramps. Can you talk about how you are thinking about managing the risk? It is a new program, not a new type of work, of course, but how do margins kind of flow relative to V2X Inc. as a whole? Thank you.

Hi. Hey, thank you.

So, just back on to the T6 contract. Congratulations, a great takeaway win. Um,

Jeremy Wensinger: will let Shawn talk the margin side. I will tell you, this team does this exceptionally well. One of the things that I have come to appreciate about this company is our ability to manage the execution of programs from really cradle to grave. They have a tremendous ability on a global basis to support these programs, whether it is supply chain, whether it is the deployment of people. If you think about just what we have hired in the last, I want to say, 30 days, we have hired almost 1,200 people in the last 30 days in terms of standing up various programs. This team does an amazing job at this. I am greatly impressed by their ability to manage the program startup, the execution of the program, and deliver on customer commitments. That was what we were talking about with regards to the Warfighter Training Program.

bo, uh, 10 asked about how the revenue Rams, can you talk about how you're thinking about, managing the risk? It is a new program, not new type of work, of course. But how does how do margins kind of flow relative to the company as a whole? Thank you.

I'll let Sean talk about the margin side. I will tell you that this team does this exceptionally well. One of the things that I have.

Come to appreciate about this company is our ability to manage the execution of programs from from really Cradle to grave.

Jeremy Wensinger: They went FOC in July. That customer couldn't be any happier with that team's performance. I think what Aileen and that team are doing is a demonstration of our ability to stand up these larger programs flawlessly. I am expecting nothing less than that on the T-6 program.

And they have, you know, a tremendous ability on a global basis, uh, to support these programs, whether its supply chain, whether it's the deployment of people, you know, if you think about, you know, just what we hired in the last, I want to say 30 days. We've hired almost 1,200 people in the last 30 days in terms of standing up various programs. Um, you know, this team does an amazing job at this and I am, I am greatly, uh, impressed by their ability to manage the program startup, the execution of the program and deliver on customer commitments. And that, and that was what we were talking about with, with regards to the war fighter training program.

You know, they went FC in July.

Shawn Mural: When we think about the margin specifically, John, they will ramp. Traditionally, what we see on a program of this nature is, they will start at less than the company's composite average and grow over time. By time, I would bound that in 18 to 24 months. Why do I say that? It takes some time to establish, and we have seen it in a program that we set up late last year like F-5. Get on the ground, understand how the supply chains work, understand the workflow, understand the schedules to maintain aircraft availability. That is absolutely what we are about bringing to our customers. It will take some time to go do those things. We expect nothing less on T-6. I can tell you that Jeremy Wensinger, myself, Roger Mason personally went down, worked with the team on that proposal and engaged.

And you know, that customer couldn't be any happier with that team's performance. And I think what Aileen and that team are doing is a demonstration of our ability to stand up these larger programs flawlessly. And so I, I'm expecting nothing less than that on the T6 program.

Shawn Mural: The team has got a very good plan that they will begin executing exactly like Jeremy stated.

When we think about the the margin specifically, John, um, so they will ramp, you know, traditionally what we see on on a program of this nature is, you know, they will start at less than the company's uh composite average and grow over time. And and by time I would bound that in 18 to 24 months. And why do I say that? Um it takes some time to establish and we've seen it in uh program that we set up late last year like F5, get on the ground understand how the supply chains, work. Understand. The the workflow understand the schedules to maintain aircraft availability and that's absolutely what we're about bringing to our customers and so it will take some time to go do those things. Um, we expect nothing less on, uh, on TSX and T6 and I can tell you that, you know, Jeremy myself. Roger Mason personally went down, uh, worked with the team on that proposal and engaged. And, and the team's got a very good plan that they'll that they'll begin executing. Uh, exactly like Jeremy stayed.

Jonathan Sigman: Excellent. Maybe if I could ask just on the budget environment, the big beautiful bill had quite a few things that seemed right on line with readiness and areas that you could benefit from. Just any comments on that? We are hearing some other companies in the space talk about some frictions around contracting actions and anything like that. Is there anything that you are seeing pause in the environment that you would flag for us? Thank you very much.

Jeremy Wensinger: No, thank you. It is a great question. I think what we have talked about, which is our focus on readiness, whether it is aircraft or whether it is mission support side that we do, we have seen that what we have as a strategy and what we have as capability aligns well with this administration's goal on readiness. We are excited on T-6. Look, we deliver some of the best readiness rates in the industry. We are excited to deliver those readiness rates to this customer. We think this budget aligns well with what we do. We have not seen friction to date on what we do because what we do aligns exceptionally well to this administration's goal. We are all aligned with it.

Excellent. And maybe if I could ask just on the budget environment, uh the big beautiful Bill had quite a few things that seemed right online with Readiness and areas that you could uh, benefit from just any comments or not. And we're hearing some other companies in the space. Talk about some frictions around Contracting actions or anything like that. So is there anything that you're seeing pause in the environment that uh, that you would flag for us? Thank you very much.

No, thank you. It's a great question. Um, I think what we have talked about which is our focus on readiness,

Whether it's aircraft or whether it's, you know, Mission support side that we do. Um, we have seen that what we have is a strategy and what we have is capability aligns, well with this administration's goal on Readiness, we're excited on. T6 look, we deliver some of the best Readiness rates in the industry. We're excited to to deliver those Readiness rates to this customer.

Um, and so we think this budget aligns well with what we do. We have not seen friction to date on what we do because, again, what we do aligns exceptionally well with this administration's goals, and we're all aligned with it.

Shawn Mural: Thank you.

Thank you.

Jeremy Wensinger: Thanks, Shawn.

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

Thanks John.

The next question comes from Peter. Armen with beard. Please go ahead.

Peter, your line is open. You may ask your question.

Andre Madrid: Do you have me now?

Jeremy Wensinger: Yep. We got you, Peter.

You have me now.

Andre Madrid: Okay. Hey, Jeremy, Shawn, Mike, nice results. Good to chat with you. Hey, just to follow up on John's comment around the budget, Jeremy, you have made it a point to bid on a lot more, and you have highlighted that on a much bigger pipeline. Maybe F-5 program is a great example. What else are you seeing that you think is in V2X Inc.'s wheelhouse, or you are getting a lot more opportunities?

Jeremy Wensinger: I think we are seeing a very good demand pull, and we referenced it in the comments in the earnings call from FMS. We are seeing customers want for us to deliver what we do for the U.S. government to them. So we are seeing a nice demand pull there. I think we are seeing a good demand pull from renewal and modernization. I think those are areas where we are, from a budgetary standpoint, a good value proposition. We are extending the life of these assets. We are giving them optionality on the extension of these assets. I think that is something that has resonated well with the customers.

So you're getting a lot more opportunities.

Jeremy Wensinger: So again, when I look at the overall portfolio, we are well positioned, but I am seeing certain customers that are, like I said, on the FMS side, wanting more of what we do for the, in terms of, hey, you are delivering these types of readiness rates, you are delivering this type of capability. We see that, and we want that. So they are pulling that through us. Again, I think on the renewal and modernization front, this is just something that extends life of assets and gives them modernization of those assets and better lethality. So again, I think everything we are doing is aligned very well with this administration to give them value for the dollars they are spending and giving them better outcomes as a result of that.

Well, I, I think we're seeing, um, very good demand, pull. Uh, and we reference it in the, um, in the in the comments, in the earnings call from FMS. Um, we're seeing customers want to for us to deliver what we do for the US government to them and so we're seeing nice demand pull their. Uh, I think we're seeing good demand, pull from renewal and modernization. I think those are areas where we are, you know, from from a budgetary standpoint. We're a good value proposition, you know, we're extending the life of these assets. We are giving them optionality on on the extension of these assets and I think that is something that has resonated well with the customers. So again, when I look at the overall portfolio

We are well positioned, uh, but I am seeing certain customers that are, um, like I said on the FMS side, wanting more of what we do for the, you know, in terms of, hey, you're delivering these type of Readiness rates, you're delivering this type of capability, we see that and we want that. And so they're pulling that, you know, through us. Um, and I and again, I think on the renewal and modernization front

Andre Madrid: Got it. That is helpful. Should we think of FMS as a margin enhancer, or are we still dealing with a past history the way customers are buying from you?

This is just something that extends life of assets and gives them modernization of those assets and better lethality. So, again, I think everything we're doing is aligned very well with this Administration to give them value for the dollars, they're spending and giving them better, you know, outcomes at as a result of that.

Got it, that's helpful. And then is, is are so we think of FMS.

As a as a margin enhancer or have we, are you still dealing with kind of uh, you know, past history. The way customers are are buying from you.

Shawn Mural: Yeah, I would say, you know, it is a little bit of both. The recent award for the F-5 program that we announced earlier, you know, is an example of, again, that pull that Jeremy Wensinger mentioned from customers. There are opportunities for margin enhancement, absolutely. We think it is a big lever for us going forward from a global capability and that stickiness of, you know, kind of land and expand, Peter Arment, where and this is, again, a great demonstrated capability for the team that leverages CLS support for a platform as well as base support. You are seeing the breadth of capability that is V2X Inc. brought to these customers and the ability to deliver. We think it is a good economic case for the company as well as for the customers.

Yeah, I’d say, you know, it’s a little bit of both. Um,

Jeremy Wensinger: Shawn makes a good point. They are not pulling one side of this business, they are pulling the entire company. The entire company was on that F-16 award. I think it is important to realize that does not happen unless V2X Inc. is who it is today. We are bringing the entire solution to the customer. The customers recognize that and are asking for that.

That the regional award for the F-16, uh, that that we announced earlier, you know, is an example of again, that poll that Jeremy mentioned from customers. Uh, there are opportunities for margin enhancement, absolutely. Uh, we think it's a big lever for us going forward from the, the, a global capability, uh, and that that stickiness of, you know, kind of land and expand Peter where. And, and this is again, a great demonstrated capability for the team that leverages CLS support for a platform as well as base support. Um, you're seeing the breadth of capability that is v2x brought to these customers and and the ability to deliver. We think it's uh good economic case for the company as well as for the customers. And I mean Sean makes a good point.

They're not pulling 1 side of this business. They're pulling the entire company.

So the entire company was on that, F-16 award. Um and so I think it's important to realize

That doesn't happen unless v2x is who it is. Today, we are bringing the entire solution to the customer and the customers recognize that and are asking for that.

Andre Madrid: Terrific to hear. I will jump back in the queue. Thanks, guys. Nice quarter.

Jeremy Wensinger: Thank you, Peter.

Terrific deal. I'll jump back in the queue. Thanks, guys. That's part of...

Thank you, Peter.

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

Tobey Sommer: Thanks. Could you speak to your expectations for a seasonally strong contract award quarter in calendar Q3 from here? I understand we have already got the T-6 award, so I kind of mean above and beyond that. Do you think we are in store for a strong seasonal quarter, or are there puts and takes?

The next question comes from, Toby, Somer with truist, please go ahead.

Thanks. Uh, could you speak to your expectations for a, a seasonally strong contract award quarter in, in calendar, 3Q from here? And I understand we've already got the, the T6 Awards. So, I'm I, I kind of mean a above and beyond that. Do you think we're in store for a strong seasonal, quarter, or, uh,

Are there puts and takes.

Jeremy Wensinger: You know, our awards tend to be fairly episodic. Again, we are thrilled T-6 came out when it did. But again, in terms of the other ones that we are pursuing, you know, we are always going to be a little lumpy when it comes to our book-to-bill just because of the episodic nature of these awards. We will always have a steady flow of on-contract growth and, you know, some smaller awards. But again, as we pursue these larger and, you know, more franchise-based programs, they are going to be more episodic. I do not worry about the current quarter book-to-bill. I look more at the TTM because I think that is a better reflection of who we are and the type of business we are in.

You know, our awards tend to be fairly episodic.

Um, again we're thrilled T6 came out when it did but again, in terms of the other ones that we're pursuing, you know, we're always going to be a little lumpy when it comes to our book to Bill. Just because of the episodic nature of these Awards, we'll always have a steady flow of on contract growth and, you know, some smaller Awards. But again, as we pursue these larger and you know, more franchised based programs, they're going to be more episodic. And so I don't worry about

the current quarter book, the bill, I look more at the TTM

Jeremy Wensinger: I hope that is helpful because, again, in any given quarter, we may see a very, very limited amount of new awards that are of any size. Then again, you get something like T-6 and some other awards that come through in any given quarter that make a quarter kind of pop. But again, I think on a TTM basis, that is the way I kind of look at the business.

Uh, because I think that's a better reflection of who we are and the type of business we're in. So, I hope that's helpful because again, at any given quarter, we may see, very, very limited amount of new awards that are of any size. And then again, you get something like, T6 and some other, uh, awards that come through in any given quarter, that make a quarter, kind of kind of Pop.

But again I think on the TTM basis that's that's the way I kind of look at the business.

Tobey Sommer: Thanks. It is nice to see the Army training contract ramp. But clearly, there are some headwinds, some sunsetting, and a task order reduction that you cited. Are there any known incremental drags to 2026 revenue growth? I just kind of want to get your sense now for what those other things on the other side of the ledger might look like.

Shawn Mural: Yeah, great question. A couple of, I am going to call it, headwinds sunsetting. I will remind folks, we do participate in contingency support operations, and those things can be episodic in nature. That is exactly what we have today in the Middle East. You will have noticed the Middle East is down slightly year over year. Beyond that, the headwinds that we previously talked about, KC-10, T1A, there is a modest amount of that in the remaining of this year. For next year, we just kicked off the planning cycle, where we are going through those details. There is nothing that gives me tremendous pause or concern right now about 2026.

Drags to 26 Revenue growth. Um just kind of want to get your sense. Now for what those other things on the other side of the Ledger might look like

Yeah, um, great great question. The, uh, yeah, a couple of, I call it headwinds, sun setting. You know, I'll remind folks, we do participate in, you know, contingency support operations, and those things can be episodic in nature. Uh, that's exactly what we have today in the Middle East. You will have noticed the Middle East is down slightly, um, you know, year-over-year.

on that the head, the headwinds that we've previously talked about kc10 t1a

Shawn Mural: I think there is better visibility in light of the T-6 award, the F-16 award, how those things will play out. We are going through the planning phases because they are just now, obviously, ramping up and award notifications within the last 30 days.

You know, there's a there's a modest amount of that in the remaining of this year for next year. You know, we just kicked off the planning cycle. Uh, you know, we're we're we're going through those details. There's nothing that gives me tremendous, you know, pause or concern right now about 26. I think there's better visibility in light of the uh, the T6 award, the F-16 award, how those things will play out. We're going through the planning phases, because they are just now obviously, ramping up and and award notifications within the last 30 days.

Tobey Sommer: Thank you. If I could sneak two in, you mentioned a shift to fixed price. How is that occurring? Because it could happen because the customer is converting a cost plus to a fixed price, or you could simply be bidding on different kind of work that is contracted differently, or maybe a blend of the two. With respect to your share repurchase, do you anticipate that being open market, or would the company participate should there be any future secondary offerings?

Thank you, and if I could speak to, in you mentioned, a shift to F fixed price. Uh, how is that occurring? Because it could happen because the customers converting a Cost Plus, to a fixed price. Or you could simply be bidding on different, kind of work, that's contracted differently or maybe a blend of the 2 and then with respect to your share of purchase, um, do you anticipate that being open market? Or would the company participate? Should there be any future secondary offerings?

Shawn Mural: will start with the fixed price question. It is a little bit of both, right? We have said previously, and the team continues to put what are today cost type contracts in front of customers to convert to fixed price. We get mixed reactions to that. I am encouraged by some of the things that I am hearing, but it has not resulted in contractual actions yet. Then I think to Jeremy Wensinger's point that he made in the prepared remarks on the pipeline, I think we are seeing more of a shift of the programs that we are pursuing that are fixed price in nature. Would you agree, Jeremy?

I'll I'll start with the, uh, with the fixed price question. So it it's a little bit of both, right? We have said, previously and the team continues to put

Jeremy Wensinger: Absolutely. Again, we welcome it. I've said that before. I have the utmost confidence in our team's ability to deliver. I think when you get to outcome-based contracts, this is what this company does best. We love contracts where it is entirely outcome-based because our performance demonstrates to a customer that they can trust us, they can rely on us, and we'll deliver.

What our today cost type, uh, contracts in front of customers to convert to fixed price. Um, we get mixed reactions to that. I'm encouraged by some of the things that I'm hearing, but it hasn't resulted in contractual actions yet. And then I think, to Jeremy's point on the, you know, that he made in the prepared remarks, on the, on the pipeline, I think we're seeing more of a shift of the, the, the programs that we are pursuing that are fixed price in nature, would you agree? Absolutely. And, and again, we welcome it. I've said that, you know, before, uh, I have the utmost confidence in our team's ability to deliver and I think when you get to outcome based contracts, this is what this company does best. We are, we we love contracts where it is going to entirely outcome based because our performance demonstrates to a customer that they can trust us.

Shawn Mural: Regarding your question on the share repurchase, I think it could be both. We will see. We will do, again, what is in the best interest of the shareholders. We are very happy to have the plan in place. We talk about these things regularly. We think it is the next evolution for the company. Again, we think we are extremely well positioned. We are very excited about the growth, and we will take advantage of what we can. Thank you.

They can rely on us and we'll deliver.

And then your question on the, on the share repurchase. I I I think it could be both, you know, we'll see. We'll do again, what's in the best interest of the, uh, of the shareholders. Very happy to have the plan in place. Um, you know, we, we talk about these things regularly. We, we think it's the next Evolution, uh, for the company and, and, uh, again, we, we think we're, we think we're extremely well, positioned. We're very excited about the growth and and, uh, you know, we'll we'll take advantage of what we can.

Thank you.

Betsy: The next question comes from Joseph Gomes with NOBLE Capital. Please go ahead.

The next question comes from.

No.

Please go ahead.

Joseph Gomes: Good afternoon. Congrats on the quarter.

Shawn Mural: Thanks, Joe. Joe, thank you.

Good afternoon. Congrats on the quarter.

Thanks Joe. Joe, thank you.

Joseph Gomes: First question is, looking at the release, it looked like revenues in the Asia Pacific sector declined about 10%, a little over 9%, I guess, in the quarter. Just wondering, is that due to an absence of exercises, or is there something else going on there?

Shawn Mural: No, I would say there has been some delays in some of those exercises. When we think about the contracting environment, there have been some delays in initiating some actions on the part of our customers. The team has wonderful opportunity sets in front of us. Not all of them have been acted on. I think they will be at some point, but we have seen, you are exactly right, a little bit of decline. I am not worried about it really when I think longer term and as I think about 2026. This quarter, we did experience a modest amount of reduction.

First question is um, you know, looking at the release it looked like uh revenues in the asia-pacific sector declined about 10% a little over 9%. I guess in the quarter just wondering is that due to an absence of um exercises or is there something else going on there?

No, I'd say, uh, I I'd say there's been some delays in some of those exercises. So, you know, when we think about the contractual, the Contracting environment, um, you know, it's there have been some delays in initiating some actions. On the part of our customers, uh, the team has wonderful opportunity sets in front of us. Um, not all of them have been acted on. Um, I think they will be at some point but we have seen your exactly right. A little bit of the client. I'm not worried about it. Really for you know, when I think longer term and as I as I think about 2026, um, but yeah, this quarter we did we did experience modest amount of uh of reduction

Joseph Gomes: Okay. Thanks for that. On the backlog, I wonder if you could just provide some more color here. In the first quarter, backlog was approximately $12 billion. That did not include LOGCAP, Ascension Island, or the full value of the training. I think you mentioned this quarter, it is $11.3 billion. It does not include LOGCAP, but you did not mention Ascension or the full value of training. I just wonder if you could kind of walk me through that. That would be a fairly substantial decline in the backlog quarter over quarter.

so that and then,

On the backlog. I wonder if you could just, you know, kind of provide some more color here. So

You know, in the first quarter, the log was $12 billion. That did not include LogCap, Ascension Island, or the full value of the training.

I think you mentioned this quarter, it's $11.3 billion. It does not include log cap, but you didn't mention Ascension or the full value of training.

Shawn Mural: Sure. Yeah. For Q2, the net bookings were $517 million for the quarter. That's a book to bill of $0.5. The backlog, as you rightly pointed out, is at $11.3. Ascension Island is in that bookings number. The award for the next year of WTRS will fall into the order for that will fall into Q3. Not really, I will say, surprised where we are when we think about the bookings for the year. It has played out almost exactly to where we thought it would in terms of its weight distribution, kind of 70/30, back half, first half. Yeah, there are plenty of things that are not in it, as we pointed out. I think we will see that pick up here in the back half of the year.

Um, so I'm just wondering if you could kind of walk me through that would be a fairly substantial decline in the backlog quarter or quarter.

Sure. Yeah. So so for Q2 the net bookings were 517 million, uh, for, for the quarter. That's a book to Bill of 0.5, uh, and the backlog. As, as you rightly pointed out at 11.323% of its its weight distribution, kind of 7030. Back half uh first half. So yeah there's there's

Plenty of things that are not in it as as we pointed out. But you know, I think we'll, we'll see that pick up here in the back half of the

Joseph Gomes: Great. Thanks for that. Again, congrats on the quarter. I will get back in queue.

Shawn Mural: Great. Thank you.

Okay, great. Thanks for that again. Congrats on the quarter. I'll get back in queue.

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

Great. Thank you.

Shawn Mural: Hi. Good afternoon. This is Shawn Mural on for Tobey Sommer today. I was wondering if you could talk about the protest environment a little more broadly with the 45/55 one half, two half split we discussed last quarter. How do we think about the risks of new awards being pushed to the back and slipping into 2026?

The next question comes from Mariana Perez, Mora with Bank of America, please go ahead.

Hi, good afternoon. This is Samantha styro on for Mariana today. Um, I was wondering if you could talk about the protest environment a little more broadly with the 4555 1/22 half split, we discussed last quarter. How do we think about the risks of new Awards being pushed to the right?

Um, and slipping into 2026.

Jeremy Wensinger: It is always a risk, right? We manage those risks quite well. But again, we do not control the outcome of those protests. Again, we follow the process. We support our customers. I am not surprised by protests when they happen. I think the team does a very good job in supporting protests as they get adjudicated. Again, it is the nature of this business. As I said, I think the team does a good job in terms of supporting whatever is required in support of those protests.

Well, it's always a risk, right? Um, we manage those risk quite well. But again, we don't control the outcome, uh, of those, uh, protests. But again, we follow the process, uh, we support our customers. Um, again, um, I'm, you know, I'm not surprised by protests when they happen, uh, but I think the team does a very good job in supporting um protests as they get adjudicated.

Shawn Mural: What's encouraging is the cadence of the new awards that we expected has held from a timing standpoint, which has been very encouraging. In terms of when you would expect to see new awards, it's held. Whether or not folks protest, I don't know, they'll make their own decisions on those things. We think our offerings stand on their own and believe we offer great value to our customers.

But again, it's a nature of this business and um, like I said, I think the team does a good job in terms of supporting whatever is required in support of those protests.

you know what to encouraging is the

The Cadence of the new awards that we expected has held.

Shawn Mural: Thank you. Switching gears a little bit, you highlighted using more of a commercial-based approach on this latest T-6 award. Can you kind of dive into that and what that looks like?

From a timing standpoint, um, which has been very encouraging. You know, in terms of when you would expect to see new awards, it's held whether or not, you know, folks protest. I don't know; they'll make their own decisions. Uh, you know, on those things we think our offerings stand on their own and, and, uh, believe we offer great value to our customers.

Thank you. And then, switching gears a little bit, you highlighted using more of a commercial-based approach on this latest T6 award. Can you kind of dive into that and what that looks like?

Jeremy Wensinger: The supply chain side of this business is a fairly significant part of the overall business that we run. I think the procurement team, again, I do not want to overemphasize the commercial aspect of it as much as it is commercial by nature. What they procure on a global basis and their ability to deliver those goods and services on a global basis, I will stand up against anybody. When I look at what we have in front of us on T-6 and the number of aircraft that we need to continue to fly, it will just leverage what we do best already, which is a commercial-based approach to procurement.

Well, so, I mean is the supply chain side of this business is a, is a fairly significant part of the overall business that we run.

I think the the procurement team.

Again I don't want to overemphasize the commercial aspect of it as much as it is it is commercial by Nature. Uh you know what they procure on a global basis and their ability to deliver that those goods and services on a global basis. You know, I'll stand up against anybody. So when I look at what we have in front of us on T6 and the number of aircraft that that we need to continue to fly, it will just leverage what we do best already, which is a commercial based approach to procurement.

Betsy: The next question comes from Christine Leuwag with Morgan Stanley. Please go ahead.

Shawn Mural: Hey, good afternoon, everyone. A quick follow-on question on the T-6. This is an IDIQ award. You gave the revenue waterfall earlier. I was wondering, with the IDIQ, what is a sure revenue waterfall versus where could you potentially see plus-ups or downside risks to the numbers that you gave?

The next question comes from, Christine Lee, with Morgan Stanley. Please go ahead.

Hey, uh, good afternoon everyone. Um, you know, a quick follow-up question on uh, the T6. So I mean, this is an idiq award. You gave the revenue waterfall earlier, but I was wondering, um, would the idiq like what's a Shore Revenue waterfall versus where could you potentially see plus UPS or, uh, downside risks to the numbers that you gave?

Shawn Mural: Yeah. So think of it as an IDIQ. A lot of it will be dependent on funding availability, right? So obviously, Jeremy mentioned the Fleet System Engineering Teams program. You know, there are always things to go do on these platforms to maintain readiness. I think it will come down to the funding availability. It is.

yeah, so so think of it as a

it's listed as an idiq. We we

Betsy: We are the only contractor that has been selected to execute this. It is not like you are competing for task orders or things of that nature. It will be, do the customers have the funding to improve availability, maintain it? That is what this will be. I only go off of what the program has historically executed. We will see what the priorities are in a more defined budget. Once we get beyond the transition, which was announced last week.

Jeremy Wensinger: Yeah, I kind of view it the way if you think about the warfighter training, that was a single award IDIQ. There are dozens and dozens of task orders that we bid. It has to do with individual tasks that you go after in terms of supporting various aspects of the program. I would envision this one to be the same way. I think Shawn's right. They are spending between $200 million to $300 million a year on this program today. I would envision that those same task orders would manifest itself again in the new award.

I, I think it will come down to the funding. Availability it is. You know, we are the only contractor that has been selected to execute this, so it's not like, you're competing for task orders or things of that nature. It will be, you know, do do the customers have the funding uh, to improve availability, maintain it. Uh, that's what that's what this will be. I only go off of what, you know, what the program has historically executed. We'll see what the priorities are in a, in a more defined budget. And once we get beyond the the transition which was, you know, announced last week. Yeah, I I kind of view it the way. I, if you think about the war fighter training, that was a single award idiq. There are dozens and dozens of task orders that we bid.

Um, it it has to do with individual tasks that you go after in terms of supporting various, you know, aspects of the program. I would I would Envision this 1 to be the same way and I think Sean's right, you know, they're spending between 2 to 3 hundred million dollars a year on this program today, I would Envision that those same task orders would manifest itself. Uh, again and the new award

Shawn Mural: Great, that's really helpful. And maybe a following on what you guys said about the contract award pace, it seems to be progressing as you had expected. But if we look at book to bill, book to bill was 0.4 in Q1 and 0.5 this quarter. And you know, this is taking aside, you know, the T6 order. But it seems like outside of T6, the book to bill, you know, continues to be below one. Can you provide some context regarding what your expectations are for book to bill for the second half of the year? And if there are holdups in those contract structures, where are those? And does the big beautiful bill, you know, address some of those uncertainties?

Great, great. That's really helpful and maybe a following on what you guys said about the contract, uh, award Pace. It seems to be progressing as you had expected. But if we look at the book to Bill book to bill was 0.4 and 1 q and 0.5 this quarter, um, and, you know, this is taking a sign, you know, the T6 order but, uh, it seems like outside of ticks

Shawn Mural: Because ultimately, when we look at your full year outlook for revenue and EBITDA, they didn't change for the full year, even though you've had a very strong second quarter. So just want to understand, you know, the movers and shakers for your full year outlook. Thanks.

The the book to bill, you know, continues to be below, 1, can you provide some context regarding uh what your expectations are for book to bill for the second half of the year and if there are holdups and those contract structures, where are those? And there's the big, beautiful bill, you know, address some of those uncertainties. Um, because ultimately, when we look at uh, your your full year outlook for revenue and ibida, they didn't change uh, for the full year, even though you've had a very strong, uh, second quarter. So just want to understand, you know, the movers and shakers uh, for your full year outlook. Thanks.

Jeremy Wensinger: I think publishing the pipeline gave you a line of sight on the size of things that we are pursuing, which is pretty impressive. I think when I look at, like I said, book to bill, I look at the TTM on book to bill because of the episodic nature of our awards. I do not think any one quarter is truly reflective of the business as much as it is on a 12-month basis. Our goal is to be obviously well over one in a book to bill in any 12-month period. That is what we are tracking to. When I look at the number of major pursuits that I have in front of me, it supports that. Again, I think a quarter is interesting, but I think the TTM is much more reflective of a business like this.

I think publishing the, you know, the pipeline gave you an a, a line of sight on, you know, the size of things that we are pursuing, which is, you know, pretty impressive.

Betsy: I think, you know, you mentioned, I will call it a muted environment from a book to bill in the first two quarters. It is not dissimilar to what we thought when we came into the year, to be very candid with you. You know, we forecast bookings, revenue, profitability, all those things. It has played out, you know, kind of in line with what we thought. Because Jeremy Wensinger said, you know, by the end of this year, at or above one, there are lots of variables that will go into that. But we are not seeing anything as we sit here right now. I think that changes our perspective on being there at the end of the year.

I think, when I look at, like I said, book to Bill, I look at the TTM on book to build because the episodic nature of our Awards. Um, I don't think anyone Porter is is truly reflective of the business as much as it is on the 12-month basis. You know, our goal is to be obviously well, over 1 uh, in a book to bill in any, in any 12-month period. And you know, that's what we're tracking to. And when I look at the number of, you know, major Pursuits that I have in front of me, it supports that. So, again, I think a quarter is interesting but I think the TTM is much more reflective of a business like this.

I think, you know, you you mentioned, uh, I call it a muted environment from a book to bill in the first 2 quarters. Um,

It's it's not dissimilar to what we thought when we came into the year to be, to be very candid with you. Uh, you know, we we forecast, bookings Revenue profitability, all those things, uh, you know, and it's played out, you know, kind of in line with, with what we thought was, Jeremy said, you know, by the end of this year at or above 1, um, there's lots of variables that will go into that, but we're not seeing anything as we sit here right now. I think that changes our perspective on, uh, being being there at the end of the year.

Shawn Mural: Great. To get to that one or above one for the full year, you would have to have a pretty chunky order activity in the second half. Are there particular programs we should monitor or milestones we should track?

Betsy: Well, you know, one obviously was the T6, how that plays out. That is what I would consider kind of a binary event, right? When we think about that, we will see how it plays out and what that would look like. The other one that, you know, I mentioned earlier that would happen here in the quarter would be the WTRS next year, or the second year of it. We are off in that transition, so I would expect something there as well.

Great. And to get to that 1 or above 1, for the full year, you you'd have to have a pretty chunky order activity in the second half. Are there particular programs we should monitor or or Milestones? Uh, we should uh, track

Well, I, you know, I mean, 1 obviously was the, was the T6, how that plays out, uh, that that is a, what I would consider kind of a binary event, right? When we think about that, um,

you'll see how it plays out and what, and what that would look like. The other 1 that, you know, I mentioned earlier, that would, that would happen here in the quarter, would be the wtrs next year, uh, the, the, the second year of it. Um, and, and, you know, we're off in that transition.

Jeremy Wensinger: There are some other ones that obviously we wouldn't share because they're competitive sensitive. But there are some other awards that we're expecting in the second half of the year. Again, when I look at the business on a 12-month basis, it is performing exactly where I would expect it to be.

Shawn Mural: Thank you very much.

So I I would expect something there as well. Yeah. And there's some other ones that obviously, we wouldn't share because they're competitive sensitive, but there are some other awards that we're expecting in the second half of the year. But again, when I look at the business on a 12-month basis, it is performing exactly where I would expect it to be.

Thank you very much.

Thanks.

Michael Smith: The next question comes from Noah Poponak with Goldman Sachs. Please go ahead.

The next question.

Noah Poponak: Hey, good evening, everyone. Maybe just staying on that, I think you said you expected the booking split, first half, second half to be 30%, 70%. I guess the specific math on that would imply $2 billion of bookings in the back half, which would keep the book to bill below one. Is that more of a very directional statement? As you mentioned, there are some sort of binary-ish things that could make it better than that. I guess to have book to bill at one for the year, it has to be one and a half in the back half.

With Goldman Sachs, please go ahead.

Hey, good evening everyone. Um

Maybe just staying on that. I think you said you expected the booking split for the first half and second half to be.

30% 70%.

And um, I guess the the specific math on that would imply.

Uh, 2 billion of bookings in the back half, which would keep the book to Bill below 1.

Is that more of a very directional statement. And as you mentioned, there's

some sort of binary things that could,

Betsy: Yes, it was more of a directional comment, Noah, but I think we have line of sight to a book to bill that is greater than one between now and the end of the year. There are some variables that will come into play that I would consider somewhat binary. Again, we have line of sight into those things. I think the back half of the year will play out such that we end at or above one.

Make it better than that. I I guess to have booked a bill at 1 for the year. It has to be 1 and a half in in the back half.

Yeah, I

Yes, it was more of a directional, comment Noah, but I I I think we have line of sight to book to Bill that is greater than 1.

Between now and the end of the year, there's some variables that will come into play. Um that I would consider um you know, somewhat binary but

Again, we have line of sight into those things. I think the back half of the year will play out such that we end at or above $1.

Noah Poponak: Will the T6 award likely have a protest, or is there a scenario where that goes clean without a protest?

Will will the T6 award, um, likely have a protest? Or is there a scenario where that goes clean without a protest?

Betsy: You know, yeah, I don't think we know. You know, like I said, we were awarded. The team's begun transition, and that transition ends in January of 2026. So we'll see how some things play out.

You know, I don't know. Yeah, I don't think we know. Um, you know, like I said, we were awarded.

Um, the team's begun transition, and that transition ends in January of 2026.

Noah Poponak: Can you remind us the drivers behind the pickup in the top line organic revenue growth in the back half versus the first half?

So we'll we'll see how uh, how some some some things play out.

Betsy: Sure. So F-5, the contract that we had a year ago, had some modest growth. Think of that as $20 million-ish or so. The WTRS award from a year ago, think of that as, you know, $140, $125 in that range, depending on how some things go. Those are some of the big ones. And the F-16 award that we had that we mentioned earlier. Those are some of the bigger awards here in the back half of the year that, you know, we're under contract, we're executing, and we expect to deliver on.

Can you remind us of the drivers behind the pickup in the topline organic revenue growth in the back half versus the first half?

Um, so F5 the, the contract that we had a year ago, has some modest, has some modest growth think of that as 2020 million or so. The wtrs,

Uh, award from a year ago, think of that, as, you know, 140 125 in that range depending on how some things go. So, so those are, those are some of the big ones. Um, and the F-16 award that we had, uh, that, that, that we mentioned earlier. So, those are some of the, the bigger Awards here in the back half of the year that, uh,

you know, we're under contract, we're executing and, uh, we expect to

Jeremy Wensinger: Noah, of note, which I highlighted earlier, we hired almost 1,200 people in the last 30 days in support of those programs. So, we are off and running on those programs.

Noah Poponak: Okay. Excellent. Last one, what are the mechanics behind raising the EPS guidance, but not the EBITDA or cash flow? It did not look like interest expense or tax rate or the normal below the operating line things were unusual year to date.

We expect to deliver on... Yeah, that's, I think, another note which I highlighted earlier. You know, we hired about almost 1,200 people in the last 30 days in support of those programs. So, you know, we're off and running on those programs.

Okay.

Excellent. And then last one, um,

What are the mechanics behind raising the EPS guidance? But not the EBA or cash flow. Just it didn't look like

Betsy: Yeah, it is the interest expense from earlier in the year when we did some refinancing. It was about $0.15 that contributed there and a very modest, maybe a penny or so, of tax benefit. That was the basis for the raise from some refinancing that we did kind of backing Q1 that we now float through to the total year.

interest expense or tax rate or the normal below. The operating line things were were unusual year to date.

Yeah. It's it's uh, it's the interest expense from earlier in the year when we did some refinancing there's about 15 cents.

Um, that contributed their, in a very modest, maybe a penny or so of tax benefit. So, that was the.

Noah Poponak: Okay, got it. Thank you.

That was the basis for the raise, from some refinancing that we did kind of backing Q1, um, that we now flow through to the total year.

Okay.

Betsy: Sure.

Got it. Thank you.

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

Your session. I would like to turn the conference back over for any closing remarks.

Jeremy Wensinger: Great. Thank you for your support. Thank you for taking the time to take the call. We're excited about the second half of the year, and we look forward to talking to you further. Thank you.

Great Porter, thank you for your support. Thank you for taking the time to take the call. We're excited about the second half of the year and we look forward to talking to you further. Thank you.

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

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