Q1 2026 V2X Inc Earnings Call

May 4, 2026

Operator: Thank you for joining us for the V2X First Quarter 2026 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Gary, 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. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Now, I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X. Please go ahead.

Speaker #2: 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.

Speaker #2: To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. And now I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X.

Speaker #2: Please go ahead. Thank you. Good afternoon, everyone. Welcome to the V2X first quarter 2026 earnings conference call. Joining us today are Jeremy Wensinger, President and Chief Executive Officer; and Shawn Mural, Senior Vice President and Chief Financial Officer.

Mike Smith: Thank you. Good afternoon, everyone. Welcome to the V2X Q1 2026 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 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 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 today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Mike Smith: The company assumes no obligation to update its forward-looking statements. In today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the investor relations section of our website. At this time, I'd like to turn the call over to Jeremy.

Speaker #2: You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website.

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

Speaker #2: At this time, I'd like to turn the call over to Jeremy.

Speaker #3: Thank you, Mike. And good afternoon, everyone. We appreciate you all joining us today. Please turn to slide three. Today, we will be providing a recap of our first quarter results for 2026 and sharing more on our outlook for the year.

Jeremy Wensinger: Thank you, Mike. Good afternoon, everyone. We appreciate you all joining us today. Please turn to slide 3. Today, we will be providing a recap of our Q1 results for 2026 and sharing more on our outlook for the year. First, I want to acknowledge the talent of our team at V2X for their continued hard work and dedication to our company and our customers' mission success. With double-digit growth in revenue and earnings, we demonstrated how consistent strategic execution paired with the close alignment with national security priorities results in enhanced financial performance. The strength of our awards is further proof of the momentum underway and the continued demand for our capabilities we provide. With robust bookings of $4.1 billion in the quarter across all business areas, we achieved record backlog of $13.8 billion.

Speaker #3: First, I want to acknowledge the talent of our team at V2X for their continued hard work and dedication to our company, and our customers' mission success.

Speaker #3: With double-digit growth in revenue and earnings, we demonstrated how consistent strategic execution, paired with close alignment with national security priorities, results in enhanced financial performance.

Speaker #3: The strength of our awards is further proof of continued demand for our capabilities, we provide. With robust bookings of 4.1 billion in the quarter across all business areas, we achieved record backlog of 13.8 billion.

Speaker #3: We continue to make progress on our go-towards-tomorrow strategy, innovating across the enterprise. This in turn strengthens our global operations and delivers differentiated outcomes for our customers, who are operating in increasingly complex environments.

Jeremy Wensinger: We continue to make progress on our Go-Forward strategy, innovating across the enterprise. This in turn strengthens our global operations and delivers differentiated outcomes for our customers who are operating in increasingly complex environments. As we advance this innovation-forward strategy, we do so with the benefit of a healthy balance sheet and the flexibility to invest for growth. Looking forward, we are confident in our position in the market and are increasing our guidance for 2026. We now expect revenue and adjusted EBITDA to increase approximately 9% year over year at the midpoint and adjusted diluted EPS to increase approximately 14% at the midpoint. This is a testament to our ability in delivering enhanced value for both the customers and shareholders in the year ahead. With that, let's move to slide 4, which summarizes the quarter's financial and operational highlights.

Speaker #3: As we advance this innovation-forward strategy, we do so with the benefit of a healthy balance sheet and the flexibility to invest for growth.

Speaker #3: Looking forward, we are confident in our position in the market. And our increasing guidance for 2026. We now expect revenue and adjusted EBITDA to increase approximately 9% year over year at the midpoint, and adjusted diluted EPS to increase approximately 14% at the midpoint.

Speaker #3: This is a testament to our ability in delivering enhanced value for both the customers and shareholders in the year ahead. With that, let's move to slide four, which summarizes the quarter's financial and operational highlights.

Speaker #3: In quarter one, we achieved robust top-line growth and delivered strong operational results across the organization. Revenue increased 23% year over year to 1.25 billion dollars, marking a record year over year organic growth rate.

Jeremy Wensinger: In Q1, we achieved robust top-line growth and delivered strong operational results across the organization. Revenue increased 23% year over year to $1.25 billion, marking a record year-over-year organic growth rate for V2X. Adjusted net income for the quarter was $48.1 million, representing an increase of 53% year over year. Adjusted EBITDA was $85.6 million with margins of 6.8%. Meanwhile, adjusted diluted EPS was $1.53, representing a significant increase of 55% compared to the same period last year. We believe our financial performance underscores our position as a leading provider of mission capabilities. I want to also recognize some of the key contract wins and highlights we delivered in Q1. We secured approximately 50 contract awards, representing approximately $4.1 billion in total awards.

Speaker #3: For V2X, adjusted net income for the quarter was $48.1 million, representing an increase of 53% year over year. Adjusted EBITDA was $85.6 million, with margins of 6.8%.

Speaker #3: Meanwhile, adjusted diluted EPS was $1.53, representing a significant increase of 55% compared to the same period last year. We believe our financial performance underscores our position as a leading provider of mission capabilities.

Speaker #3: I want to also recognize some of the key contract wins and highlights we delivered in the first quarter. We secured approximately 50 contract awards, representing approximately 4.1 billion dollars in total awards.

Speaker #3: These awards were spread across all business areas. We were awarded work to modernize critical components of the F-18, as well as integrate advanced infrared countermeasures for the KC-130J.

Jeremy Wensinger: These awards were spread across all business areas. We were awarded work to modernize critical components of the F-18, as well as integrate advanced infrared countermeasures for the KC-130J. These programs showcase our role in supporting long-term platform readiness. As it relates to global trading, we captured multiple awards supporting customers across North America and Europe, reflecting both the reach of our training footprint and the demand for our capabilities. In aerospace, we achieved full operational execution for T-6 which highlights our ability to transition large national priority programs. Additionally, we supported the Artemis II mission, providing training, simulation, and recovery operations. This is another example of how technical expertise supports complex, high-visibility national initiatives. Finally, in mission readiness, we continue to support essential logistical requirements for national security customers across multiple geographic locations.

Speaker #3: These programs showcase our role in supporting long-term platform readiness. As it relates to global trading, we captured multiple awards supporting customers across North America and Europe, reflecting both the reach of our training footprint and the demand for our capabilities.

Speaker #3: In aerospace, we achieved full operational execution for T-6, which highlights our ability to transition large national priority programs. Additionally, we supported the Artemis II mission, providing training, simulation, and recovery operations.

Speaker #3: This is another example of how technical expertise supports complex, high-visibility national initiatives. And finally, in mission readiness, we continue to support essential logistical requirements for national security customers across multiple geographic locations.

Speaker #3: These awards demonstrate the breadth and diversity of our opportunities and the ability to execute across capabilities, to support our customers' most critical missions. Moving to slide five.

Jeremy Wensinger: These awards demonstrate the breadth and diversity of our opportunities and the ability to execute across capabilities to support our customers' most critical missions. Moving to slide 5. Our recent contract success is yielding record backlog, strengthening the foundation from which we are executing. As I mentioned, we delivered bookings in the quarter of approximately $4.1 billion, reflecting the strength of our portfolio and the demand for our diversified solutions. This drove quarterly book-to-bill ratio of 3.2 times and trailing 12 months book-to-bill ratio of 1.5 times. As a result of increased awards, total backlog for the quarter was $13.8 billion, up from $11.1 billion at the end of Q4, providing strong visibility into future revenue.

Speaker #3: Our recent contract success is yielding record backlog, strengthening the foundation from which we are executing. As I mentioned, we delivered bookings in the quarter of approximately 4.1 billion dollars, reflecting the strength of our portfolio and the demand for our diversified solutions.

Speaker #3: This drove quarterly book-to-bill ratio of 3.2 times and trailing 12 months book-to-bill ratio of 1.5 times. As a result of increased awards, total backlog for the quarter was 13.8 billion dollars, up from 11.1 billion dollars at the end of quarter four.

Speaker #3: Providing strong visibility into future revenue. And with the healthy pipeline, we remain on track to achieve 30% year over year increase in bid velocity in 2026.

Jeremy Wensinger: With the healthy pipeline, we remain on track to achieve 30% year-over-year increase in bid velocity in 2026. Overall, the expansion in backlog and robust pipeline and opportunities underscore the demand for our capabilities and reinforce our confidence in long-term growth outlook for the business. Turning now to slide 6. Last quarter, we introduced our efforts to invest in advanced capabilities and pursue best-in-class partnerships and drive innovation across the enterprise. In Q1, we made solid progress in executing this strategy. In the last 6 months, we have introduced 3 artificial intelligence platforms which are now operating on an enterprise IT infrastructure. We are seeing a promising pace of adoption across our employee base. We are also seeing significant expansion in AI-enabled productivity, which is enhancing operational efficiency in our support functions across the organization and will drive lower cost over time.

Speaker #3: Overall, the expansion in backlog and robust pipeline in opportunities underscore the demand for our capabilities and reinforce our confidence in the long-term growth outlook for the business.

Speaker #3: Turning now to slide six. Last quarter, we introduced our efforts to invest in advanced capabilities. In pursue best-in-class partnerships and drive innovation across the enterprise.

Speaker #3: In the first quarter, we made solid progress in executing this strategy. In the last six months, we have introduced three artificial intelligence platforms, which are now operating on an enterprise IT infrastructure.

Speaker #3: And we are seeing a promising pace of adoption across our employee base. We are also seeing significant expansion in AI-enabled productivity, which has enhanced operational efficiency in our support functions across the organization and will drive lower costs over time.

Jeremy Wensinger: We are also seeing significant expansion in AI-enabled productivity, which is enhancing operational efficiency in our support functions across the organization and will drive lower cost over time. At the customer level, the targeted investments we are making in innovation are creating new offerings to expand how we execute customer missions, enhancing our customer value proposition. One example of this strategy in action is aviation operations with our early prototype AI-enabled aerospace sustainment platform. We are building this platform with Google, Tact.ai, and NVIDIA products. Our goal is to capture unstructured data and turn it into predictive insights and automated decision support. We expect this, in turn, to improve aircraft availability, reduce delays, and streamline sustainment operations.

Speaker #3: At the customer level, the target investments we are making innovation are creating new offerings. To expand how we execute customer missions, enhancing our customer value proposition.

Jeremy Wensinger: At the customer level, the targeted investments we are making in innovation are creating new offerings to expand how we execute customer missions, enhancing our customer value proposition. One example of this strategy in action is aviation operations with our early prototype AI-enabled aerospace sustainment platform. We are building this platform with Google, Tact.ai, and NVIDIA products. Our goal is to capture unstructured data and turn it into predictive insights and automated decision support. We expect this, in turn, to improve aircraft availability, reduce delays, and streamline sustainment operations. I look forward to keeping you updated as we continue to invest in innovation to meet customers' evolving and complex requirements. With that, I'll turn the call over to Shawn for more detailed review of the financials.

Speaker #3: One example of this strategy in action is aviation operations. With our early prototype AI-enabled aerospace sustainment platform, we are building this platform with Google, Tactile, and NVIDIA products.

Speaker #3: Our goal is to capture unstructured data and turn it into predictive insights and automated decision support. We expect this in turn to improve aircraft availability, reduce delays, and streamline sustainment operations.

Speaker #3: I look forward to keeping you updated as we continue to invest in innovation to meet customers' evolving and complex requirements. With that, I'll turn the call over to Shawn for a more detailed review of the financials.

Jeremy Wensinger: I look forward to keeping you updated as we continue to invest in innovation to meet customers' evolving and complex requirements. With that, I'll turn the call over to Shawn for more detailed review of the financials.

Speaker #4: Thank you, Jeremy. And good afternoon, everyone. Please turn to slide seven. As you've heard, we've reported strong first quarter financial performance across all major metrics.

Shawn Mural: Thank you, Jeremy. Good afternoon, everyone. Please turn to slide 7. As you've heard, we've reported strong Q1 financial performance across all major metrics. Revenue in Q1 increased 23% to $1.254 billion. As Jeremy mentioned, this was a record organic growth rate for the company. It was driven primarily by the ramp-up of training, foreign military sales, rapid prototyping in engineering programs, as well as some discrete activities to support a national security customer. This growth also reflects continued diversification of capabilities across our business, which is visible in our customer mix with approximately 21% of revenue in Q1 coming from customers outside of the US Army, Navy, and Air Force. This percentage is up from approximately 13% in the prior year period, reflecting expansion with national security customers.

Speaker #4: Revenue in the first quarter increased 23% to $1.254 billion. As Jeremy mentioned, this was a record organic growth rate for the company. It was driven primarily by the ramp-up of training, foreign military sales, rapid prototyping, and engineering programs, as well as some discrete activities to support a national security customer.

Speaker #4: This growth also reflects continued diversification of capabilities across our business, which is visible in our customer mix, with approximately 21% of revenue in the first quarter coming from customers outside of the U.S. Army, Navy, and Air Force. This percentage is up from approximately 13% in the prior year period, reflecting expansion with national security customers.

Speaker #4: Adjusted EBITDA in the quarter was $85.6 million. Increasing 28% from the same period in the prior year. Adjusted EBITDA margin was 6.8%, improving approximately 20 basis points year over year.

Shawn Mural: Adjusted EBITDA in the quarter was $85.6 million, increasing 28% from the same period in the prior year. Adjusted EBITDA margin was 6.8%, improving approximately 20 basis points year over year. The increase was driven by volume and mix changes. Interest expense in Q1 was $18.1 million. Cash interest expense was $16.5 million. Net income for the quarter was $18.9 million. Adjusted net income was $48.1 million, up 53% year over year. Q1 diluted EPS was $0.60 based on 31.5 million weighted average shares. Adjusted diluted EPS in the quarter increased approximately 55% year over year to $1.53. Adjusted operating cash flow improved significantly year over year and was a $22.1 million use in the quarter.

Speaker #4: The increase was driven by volume and mix changes. Interest expense in the first quarter was $18.1 million. Cash interest expense was $16.5 million. Net income for the quarter was $18.9 million. Adjusted net income was $48.1 million, up 53% year over year.

Speaker #4: First quarter diluted EPS was $0.60, based on 31.5 million weighted average shares. Adjusted diluted EPS in the quarter increased approximately 55% year over year, to $1.53.

Speaker #4: Adjusted operating cash flow improved significantly year over year, and was a 22.1 million use in the quarter. This performance reflects our solid cash collections and focus on enhancing quarterly cadence.

Shawn Mural: This performance reflects our solid cash collections and focus on enhancing quarterly cadence. Based on our progress to date, we expect our cash flow performance in the H1 of 2026 to track more favorable relative to our historical profile. Please turn to slide 8. From a liquidity perspective, we are operating from a position of strength with approximately $200 million of cash on the balance sheet and a $500 million revolver that had a 0 balance at the end of the quarter. Additionally, we expect another year of solid operating cash flow generation, which we anticipate will drive our net leverage ratio to less than 2 times by the end of 2026. Our ongoing progress on this front is providing substantial flexibility and optionality to deploy capital for value creation.

Speaker #4: Based on our progress to date, we expect our cash flow performance in the first half of 2026 to track more favorable relative to our historical profile.

Speaker #4: Please turn to slide eight. From a liquidity perspective, we are operating from a position of strength. With approximately $200 million of cash on the balance sheet and a $500 million revolver that had a zero balance at the end of the quarter.

Speaker #4: Additionally, we expect another year of solid operating cash flow generation which we anticipate will drive our net leverage ratio to less than two times by the end of 2026.

Speaker #4: Our ongoing progress on this front is providing substantial flexibility and optionality to deploy capital for value creation. We have established clear criteria as we actively evaluate deploying capital to invest for growth, whether organically or through M&A.

Shawn Mural: We have established clear criteria as we actively evaluate deploying capital to invest for growth, whether organically or through M&A. This includes investments that accelerate our innovation strategy, expand our capabilities, provide access to incremental growth, and enhance our overall margin profile. We will continue to be disciplined in this regard with a focus on investing in growth opportunities that drive enhanced value for our customers and shareholders. Please turn to slide 9. Overall, our strategy is yielding positive results, as demonstrated by our strong financial performance this quarter. We believe the combination of our global reach, proximity to mission, national security priorities, and diverse capabilities position us well for the future. Given our momentum in Q1 and current trends, we are increasing our guidance ranges for 2026.

Speaker #4: This includes investments that accelerate our innovation strategy, expand our capabilities, provide access to incremental growth, and enhance our overall margin profile. We will continue to be disciplined in this regard with a focus on investing in growth opportunities that drive enhanced value for our customers and shareholders.

Speaker #4: Please turn to slide nine. Overall, our strategy is yielding positive results, as demonstrated by our strong financial performance this quarter. We believe the combination of our global reach, proximity to mission, national security priorities, and diverse capabilities position us well for the future.

Speaker #4: Given our momentum in the first quarter and current trends, we are increasing our guidance ranges for 2026. Revenue is now expected to be between $4.825 billion and $4.975 billion.

Shawn Mural: Revenue is now expected to be between $4.825 to 4.975 billion. Adjusted EBITDA is expected to be between $345 to 360 million. Adjusted diluted earnings per share is expected to be between $5.75 and $6.15. Adjusted net cash from operations is expected to be between $160 to 180 million. Overall, we are pleased with our performance across the business this quarter as our team continues to bring the best of V2X to meet our customers' critical mission requirements. Looking ahead, we believe this sets us up well for the rest of 2026. With that, I'd like to turn the call back to Jeremy for some closing remarks.

Speaker #4: Adjusted EBITDA is expected to be between $345 and $360 million. Adjusted diluted earnings per share is expected to be between $5.75 and $6.15. Adjusted net cash from operations is expected to be between $160 and $180 million.

Speaker #4: Overall, we are pleased with our performance across the business this quarter. As our team continues to bring the best of V2X to meet our customers' critical mission requirements, looking ahead, we believe this sets us up well for the rest of 2026.

Speaker #4: With that, I'd like to turn the call back to Jeremy for some closing remarks.

Speaker #5: Thanks, Shawn. As summarized on slide 10, our fiscal year 2026 is off to a really strong start. We continue to accelerate our position as a leading mission capability provider.

Jeremy Wensinger: Thanks, Shawn. As summarized on slide 10, our fiscal year 2026 is off to a really strong start. We continue to accelerate our position as a leading mission capability provider. Before we begin the Q&A, I'd like to recognize our more than 16,000 employees around the globe for their unwavering commitment to our company, each other, and the customers we serve. They come to work day in and day out focused on success of our customer, and it does not go unnoticed. Indeed, it's because of them that we are prepared for today to take on the missions of tomorrow. With that, I'll open it up for questions.

Speaker #5: Before we begin the Q&A, I'd like to recognize our more than 16,000 employees around the globe for their unwavering commitment to our company, each other, and the customers we serve.

Speaker #5: They come to work day in and day out, focused on the success of our customer, and it does not go unnoticed. Indeed, it's because of them that we are prepared for today to take on the missions of tomorrow.

Speaker #5: With that, I'll open it up for questions.

Speaker #6: 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.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Andre Madrid with BTIG. Please go ahead.

Speaker #6: To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question today is from Andre Madrid with BTIG.

Speaker #6: Please go ahead.

Speaker #7: Jeremy, Shawn, Mike, thanks for taking my question.

Andre Madrid: Jeremy, Shawn, Mike, thanks for taking my question.

Speaker #4: Hey, thanks, Andrei. Good to hear from you.

Shawn Mural: Hey, thanks, Andre. Good to hear from you.

Speaker #7: Andrei, nice to hear you. Looking across the scope of your business, there's the recent announcement of troops out of Germany and 5,000 troops there. I saw something in the queue about potential work scope change in Kuwait.

Jeremy Wensinger: Andre, nice to hear you.

Andre Madrid: Looking, you know, across the scope of your business, you know, the recent announcement of troops out of Germany, you know, 5,000 troops there. There's, you know, I saw something in the queue about, you know, a potential work scope change in Kuwait. I mean, what are the puts and takes that we should be looking out for across the regions right now?

Speaker #7: I mean, what are the puts and takes that we should be looking out for across the regions right now?

Speaker #4: It's a really good question. I think in Europe, I think what we do in terms of the missions we support are maybe not necessarily at risk because of the programs we operate.

Jeremy Wensinger: It's a really good question. I, you know, I think in Europe, I think what we do in terms of the missions we support are maybe not necessarily at risk because of the programs we operate. When I look at, you know, Europe, I look at COBRA DANE, I look at Ascension Island, I look at, you know, Thule, Greenland. I think we are well-positioned with the missions we support. When I think about, you know, Kuwait, I think that is one that's gonna be a TBD, but I don't see us changing our posture in the Middle East. At least that's not what we're hearing.

Speaker #4: And so when I look at Europe, I look at Coverdale, I look at Ascension Island, I look at Tully Greenland, I think we are well positioned with the missions we support.

Speaker #4: When I think about Kuwait, I think that is one that's going to be a TBD, but I don't see us changing our posture in the Middle East.

Speaker #4: At least that's not what we're hearing. So I see us in a very good position in the Middle East. So when I look at the macro side of it, it really looks like we are well positioned because of the contracts we have, the work we do, and the support we provide.

Jeremy Wensinger: I see us in a very good position in the Middle East. You know, when I look at the macro side of it really looks like we are well-positioned because of the contracts we have, the work we do, and the support we provide. You know, when I think about the overall posture of the company, I think we're in a really, really good position, both in Europe and in the Middle East to support our customer long term.

Speaker #4: And so when I think about the overall posture of the company, I think we're in a really, really good position. Both in Europe and in the Middle East, to support our customer long-term.

Speaker #7: Andrei, I'll just amplify because you mentioned we did, in our queue, have a disclosure of a subsequent event to the quarter relative to our Kuwait past quarter.

Shawn Mural: Andre, I'll just amplify 'cause you mentioned, we did in our queue have a disclosure of subsequent event to the quarter, relative to our Kuwait task order. Let me frame that a little bit for you and for everybody else. On Kuwait, we have about $500 million in backlog. Our guide assumes that we continue at the levels that we performed at in Q1. Exactly to Jeremy Wensinger's point, we're continuing to see demand signals. We're obviously working with our customer consistently on what that looks like, but we expect to be in the region and executing. We did wanna make sure that we brought that to everyone's attention. Our guide and everything that we're hearing assumes that we'll be continuing to support our customers' missions.

Speaker #7: And let me frame that a little bit for you and for everybody else. So on Kuwait, we have about 500 million dollars in backlog.

Speaker #7: Our guide assumes that we continue at the levels that we performed at in the first quarter. So exactly to Jeremy's point, we're continuing to see demand signals.

Speaker #7: We're obviously working with our customer consistently on what that looks like, but we expect to be in the region and executing and so we did want to make sure that we brought that to everyone's attention.

Speaker #7: But our guide and everything that we're hearing assumes that we'll be continuing to support our customer's missions. Got it. Got it. No, that's really helpful.

Andre Madrid: Got it. No, that's really helpful. I guess, you know, the guide increase is all of that on the back of the new work one, or is that a mix of some of the programs that you had previously been awarded and are just accelerating ahead of expectations?

Speaker #7: And I guess the guide increase is all of that on the back of the new work one or is that a mix of some other programs that you had previously been awarded and are just accelerating ahead of expectations?

Speaker #4: I think it's a little bit of both. I think one, we're getting T6 stood up and that's going to contribute obviously. And then we had some announcements around job in the Middle East.

Jeremy Wensinger: I think it's a little bit of both. I think, you know, one, we're getting T-6 stood up, and that's gonna contribute obviously. Then we had some announcements around a job in the Middle East, and that will accelerate as well. Again, I'm so proud of the team's ability to capture wins and capture work, and very happy with our ability to support our customer. On the back half of the year, we'll obviously accelerate based on those contract wins.

Speaker #4: And that will accelerate as well. But again, I'm so proud of the team's ability to capture wins. And capture work. And very happy with our ability to support our customer.

Speaker #4: And on the back half of the year, we'll obviously accelerate based on those contract wins.

Speaker #7: I guess just if I could just double-click real quick on the T6. Is the 140 to 160 range still appropriate or should we assume maybe closer to 160 now given the raising of the guide?

Andre Madrid: I guess just, if I could just double-click real quick on the T-6. Is the 140 to 160 range still appropriate, or should we assume maybe closer to 160 now given the raise of the guide for-

Shawn Mural: Yeah, you should think that's a little bit higher than the 160. You know, the team did a wonderful job transitioning that in the Q1. There's a little bit higher ops tempo that we're assuming as we're getting in, working through everything. We said there'd be an inherent lag in when we would, you know, execute and really get to a full run rate. That's going. The team's doing a wonderful job. We're closer to the 175 to 180 type of number for the year on that program, Andre.

Speaker #4: Yeah, so you should think that's a little bit higher than the 160. We're seeing some very good—the team did a wonderful job transitioning that in the first quarter.

Speaker #4: And so there's a little bit higher ops tempo that we're assuming as we're getting in working through everything we said there'd be an inherent lag in when we would execute and really get to a full run rate.

Speaker #4: That's going—the team's doing a wonderful job. And so we're closer to the 175 to 180 type of number for the year on that program.

Speaker #7: I mean, Andrei, the team went IOC and Q1. And I could not be prouder of the team. They have done an outstanding job standing that program up.

Jeremy Wensinger: I mean, Andre, the team went IOC in Q1. I could not be prouder of the team. They have done an outstanding job standing that program up. Program execution with that team and what they're doing with that customer, you know, I couldn't be prouder of them.

Speaker #7: And program execution on that team with that team and what they're doing with that customer. I couldn't be prouder of them. That's great to hear.

Andre Madrid: Well, that's great to hear. Appreciate all the context there, gentlemen. I'll leave it there.

Speaker #7: Appreciate all the context there, gentlemen. I'll leave it there.

Speaker #4: Thanks, Andrei.

Shawn Mural: Thanks, Andre.

Speaker #6: The next question is from Joe Gomez with Noble Capital. Please go ahead.

Operator: The next question is from Joseph Gomes with Noble Capital. Please go ahead.

Speaker #8: Good afternoon. Congrats on the quarter.

Joseph Gomes: Good afternoon. Congrats on the quarter.

Speaker #7: Thank you. Thanks, Joe. Thank you, Joe. Appreciate the sentiment.

Jeremy Wensinger: Thank you.

Shawn Mural: Thanks, Joe.

Jeremy Wensinger: Thank you, Joe. Appreciate the sentiment.

Joseph Gomes: We'll go from the Middle East to INDOPACOM. You know, the Asia revenues were pretty flat year over year. Just wondering, you know, what you're expecting there for the rest of the year? Are you seeing any interest, you know, maybe exercises? I know normally they're odd year, just little more color on what's going on in INDOPACOM region.

Speaker #8: We'll go from the Middle East to Indopaycom, the Asia revenues were pretty flat year over year. I was wondering what you're expecting there. For the rest of the year, are you seeing any interest maybe exercise?

Speaker #8: I know normally they're odd year but just a little more color on what's going on in Indopaycom region.

Jeremy Wensinger: You know, it's a great question. I think with the budget that we're seeing, I think we are seeing the fact that all the work that the team has done in INDOPACOM to help our customer understand where they might wanna help the mission is paying off. I'm very proud of the team, work with our customer to understand the priorities that we need to have in the INDOPACOM region. I think, again, you know, I say this all the time, presence is everything. I think the fact that we have presence, the fact that we understand what the mission requirements are, the fact that we're working shoulder to shoulder with the customer and helping them understand where, if they have budget, how can we help them, I think is paying off.

Speaker #7: It's a great question. I think with the budget that we're seeing, I think we are seeing the fact that all the work that the team has done in Indopaycom to help our customer understand where they might want to help the mission is paying off.

Speaker #7: I'm very proud of the team. Work with our customer to understand the priorities that we need to have in the Indopaycom region. And I think, again, I say this all the time.

Speaker #7: Presence is everything. I think the fact that we have presence, the fact that we understand what the mission requirements are, the fact that we're working shoulder to shoulder with the customer, and helping them understand where, if they have budget, how can we help them?

Speaker #7: I think it's paying off. So I'm excited about the Indopaycom region. But again, I think it comes down to. And I think our team being there means everything.

Jeremy Wensinger: I'm excited about the INDOPACOM region, but again, I think it comes down to, and I think our team being there means everything.

Speaker #8: Okay. Great. Thanks for that. And then just on the one of the your answers to the last question, you said the back half should accelerate I was just looking for a little clarity on that last quarter you were saying that this year should be more kind of like a 50-50 year first half versus second half.

Joseph Gomes: Okay, great. Thanks for that. Just on one of your answers to the last question, you said the back half should accelerate. I was just looking for a little clarity on that last quarter, you were saying that this year should be more kind of like a 50/50 year, H1 versus H2. Are you changing that into, you know, more of the historic where it was, 40/60, 45/55, or were you talking about something different?

Speaker #8: Are you changing that into more of the historic, where it was 40/60 or 55/55, or were you talking about something different?

Speaker #7: No, you're exactly right, Joe. We're going to be about 50-50, first half, second half. From a revenue standpoint, you saw some of that play out with the strength in Q1.

Shawn Mural: No, you're exactly right, Joe. We're gonna be about 50/50 H1, H2 from a revenue standpoint. You saw some of that play out with the strength in Q1. You know, we're standing by what we said previously. Same type of profile this year, which admittedly, as you rightly point out, is a little bit different than what we've seen historically.

Speaker #7: And so we're standing by what we said previously. Same type of profile this year, which admittedly, as you rightly point out, is a little bit different than what we've seen historically.

Speaker #8: Okay. Great. Thanks for that clarity. And one last one for me. SG&A expenses were a little bit higher and I think consensus and what we were looking for is anything unusual in there?

Joseph Gomes: Okay, great. Thanks for that clarity. One last one from me. SG&A expenses were a little bit higher than I think consensus and what we were looking for. Is anything unusual in there?

Speaker #7: Yeah. Great point. Yeah. We had some non-reoccurring costs related to potential growth opportunities that the business undertook in the first quarter. And so that's why you saw a spike in the SG&A there.

Shawn Mural: Yeah, great point. Yeah, we had some non-recurring costs related to potential growth opportunities that the business undertook in Q1. That's why you saw a spike in the in the SG&A there.

Speaker #8: Okay. Thanks for that. I'll get back in queue. Thank you. And again, congrats on the quarter.

Joseph Gomes: Okay. Thanks for that. I'll get back in queue. Thank you. again, congrats on the quarter.

Speaker #7: Thanks, Joe.

Shawn Mural: Thanks, Joe.

Speaker #6: The next question is from Peter Arment with Baird. Please go ahead.

Operator: The next question is from Peter Arment with Baird. Please go ahead.

Speaker #9: Yeah. Good afternoon, Jeremy, Shawn, Mike. Nice results. Thank you.

Peter Arment: Yeah, good afternoon, Jeremy, Shawn, Mike. Nice results.

Shawn Mural: Hey, thank you.

Speaker #7: Hey. Let me just circle back. Maybe just circle back on kind of the comments you were talking about. Just kind of either whether it was Indopaycom or Middle East, however you want to frame it up.

Peter Arment: Maybe just to circle back, maybe just circle back on kind of the comments you were talking about, just kind of either whether it was INDOPACOM or Middle East, however you wanna frame it up. What's the best way to think about when we see an operational tempo increase, why we see, you know, by the US military? You know, how quickly is there much of a historical lag effect of when you start seeing it impacted on your operations? Just curious on any insight, 'cause everyone obviously would be thinking that you would see an uptick in Middle East operation. Thanks.

Speaker #7: But what's the best way to think about when we see an operational tempo increase why we see by the US military? How quickly is there much of a historical lag effect of when you start seeing it impacted on your operations?

Speaker #7: Just curious on any insight, because everyone obviously would be thinking that you would see an uptick in Middle East operations. Thanks. No, it's a really good question.

Jeremy Wensinger: No, it's a really good question. I appreciate you asking it. I think, you know, Steve Shapiro, who, you know, has our mission support business and, you know, our team in Indy, who obviously have a role there as well, they do a really good job of reacting and responding real time. I think there is a bit of a lag, you know, not as much as you think. I mean, when I think about the fact that we have people helping, you know, the Air Force in Israel, that was days. It wasn't months, it wasn't weeks. I mean, they're there, they're standing that up today. When I think about what they did in Indy, the ability to get assets on the ground and deliver capability, that was, you know, weeks.

Speaker #7: And I appreciate you asking it. I think Steve Shapiro, who has our mission support business and our team in Indy who obviously have a role there as well, they do a really good job of reacting and responding real-time.

Speaker #7: I think there is a bit of a lag, but not as much as you think. I mean, when I think about the fact that we have people helping the Air Force in Israel, that was days.

Speaker #7: It wasn't months and it wasn't weeks. I standing that up today. When I think about what they did in Indy, the ability to get assets on the ground and deliver capability, that was weeks.

Speaker #7: I’m very proud of the team’s ability to respond quickly. We are very responsive to the customer. I like to think of us as scrappy.

Jeremy Wensinger: I'm very proud of the team's ability to respond quickly. We are very responsive to the customer. I like to think of us as scrappy because we are very capable of responding on a very quick basis, and I think the team responds very well to those requirements.

Speaker #7: Because we are very capable of responding on a very quick basis. And I think the team responds very well to those requirements.

Speaker #9: Got it. And then just a quick one, Shawn, on time and materials as a contract mix—it was up quite a bit this quarter. Was this just a one-off, or is this just a contract mix changing, and we'll see more of this going forward?

Peter Arment: Got it. Then just a quick one, Shawn Mural, on time and materials as a contract mix was up quite a bit this quarter. Was this just a one-off, or is this something that just contract mix changing and we'll see more of this going forward? Thanks.

Speaker #9: Thanks.

Speaker #7: Yeah. In the prepared remarks, Peter, you would have heard me mention a discrete national security customer that we were supporting. And that activity set is time and materials.

Shawn Mural: Yeah. In the prepared remarks, Peter, you would have heard me mention a discrete national security customer that we're supporting, and that activity set is a time and materials. That's what that change is.

Speaker #7: And so that's what that change is.

Speaker #9: Got it. Is it something that repeats or is it just can you give any color on that? I appreciate it.

Peter Arment: Got it. Is it something that repeats, or is it just, can you give any color on that?

Shawn Mural: Yeah.

Peter Arment: I appreciate it.

Speaker #7: Yeah. Yeah. There is so we are as part of the increase in our guide, Peter, this activity set will continue throughout the year. And so when we think about the raise that we did $150 million at the midpoint, about 70 to 80 million dollars of that is associated with this activity.

Shawn Mural: Yeah, yeah. There is, as part of the increase in our guide, Peter, this activity set will continue throughout the year. When we think about the raise that we did, you know, $150 million at the midpoint, about $70 to 80 million of that is associated with this activity. Important to note, it was contemplated when we put the guide out, so we had some of that already assumed. It has been an extension and continuation of those things, that's how to think about it. You know, based on everything that we know today, what we've reflected in the guide is what we are under contract to perform.

Speaker #7: It's important to note, it was contemplated when we put the guide out. So we had some of that already assumed. There's been an extension and continuation of those things.

Speaker #7: And so that's how to think about it. Based on everything that we know today, what we've reflected in the guide is what we are under contract to perform.

Speaker #7: And so we'll continue to do those things and see how we can support our customers going forward to execute their mission. Peter, what I would tell you that Sean just said was being at the right—being with the right contract vehicles and having proximity is everything.

Shawn Mural: We'll continue to do those things and see how we can support our customers going forward to execute their mission.

Jeremy Wensinger: Peter, what I would say is that.

Peter Arment: Appreciate that. Thanks.

Jeremy Wensinger: what Shawn just said was.

Peter Arment: Good

Jeremy Wensinger: Being at the right, you know, being with the right contract vehicles and having proximity is everything. Executing to the strategy that we have put in place is what you're seeing.

Speaker #7: And executing to the strategy that we have put in place is what you're seeing.

Speaker #9: No doubt. Thanks, Jeremy. I appreciate the color, guys.

Peter Arment: No doubt. Thanks, Jeremy. I appreciate the color, guys.

Speaker #7: Thanks, Peter. Have a good one.

Shawn Mural: Thanks, Peter. Have a good one.

Jeremy Wensinger: Thanks, Peter. Have a good one.

Speaker #6: The next question is from Toby Sommer with Truist. Please go ahead.

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

Speaker #7: Thanks. From a broad perspective, what's the duration of your book-to-bill in terms of number of years as that oscillates? Sometimes it's useful to have that context to be able to utilize that kind of figure for modeling.

Tobey Sommer: Thanks. From a broad perspective, what's the duration of your book-to-bill in terms of number of years? As that oscillates, sometimes it's useful to have that context to be able to utilize that kind of figure for modeling.

Speaker #5: Yeah, so if you think about our backlog, typically it's five to seven years that we get out of contract durations. Obviously, in the quarter, we booked a large award in T6.

Shawn Mural: Yeah. If you think about our backlog, typically it's five to seven years that we get out of contract durations. Obviously, in the quarter, we booked, you know, a large award in T-6 that will be for 10 years. That's a little bit longer that you're seeing go into the backlog for that discrete activity in Q1, Tobey. On average, typically it's five to seven years.

Speaker #5: That will be for 10 years. So that's a little bit that's a little bit longer that you're seeing go into the backlog for that discrete activity in Q1, Toby.

Speaker #5: But on average, typically, it's five to seven years.

Speaker #7: Okay, the uptick in the quarter, like you said, for guidance—$70 to $80 million—for the national security customer, you said that's expected to continue.

Tobey Sommer: Okay. The uptick in the quarter, like you said, or for guidance, $70, 80 million for the national security customer, you said that's expected to continue. How would you describe the sources of the remaining portion?

Speaker #7: How would you describe the sources of the remaining portion?

Speaker #5: Yeah, great. So let me give the walk from the midpoint prior. There’s between $40 and $50 million for additional support in the Middle East. The national security activities I mentioned is about $80 million.

Shawn Mural: Yeah, great. Let me give you a walk from the midpoint prior. There's between $40 and $50 for additional support in the Middle East. The national security activities I mentioned is about $80. T-6 is another call at $20 to $25 in there. That bridges you to the midpoint of the new guide, those three kind of activities that we're performing.

Speaker #5: And then T6 is another call of $20 to $25 million in there. So that bridges you to the midpoint of the new guide. Those are the three kind of activities that we're performing.

Speaker #7: Great, thank you for that. And then, how big were the professional fees in Q1, so we can try to model accurately in Q2? Or do those expenses continue into Q2?

Tobey Sommer: Great. Thank you for that. Then, how big were the professional fees in Q1 so we can try to model accurately in Q2, or do those expenses continue into Q2?

Shawn Mural: Yeah, there'll be a little bit here in the quarter. You should think that it's about $12 million in Q1.

Speaker #5: Yeah, there'll be a little bit here in the quarter. You should think that it's about $12 million in the first quarter.

Shawn Mural: Yeah, there'll be a little bit here in the quarter. You should think that it's about $12 million in Q1.

Tobey Sommer: Have the growth opportunities sort of come and gone at this point, or are those still out there as prospective potential?

Speaker #7: And has the have the growth opportunity sort of come and gone at this point, or are those still out there as prospective potential?

Tobey Sommer: Have the growth opportunities sort of come and gone at this point, or are those still out there as prospective potential?

Speaker #5: Yeah. So we evaluate a lot of different things, including and I think I said in the prepared remarks, both organic and inorganic activities. We are still pursuing a number of investments, both in ourselves as well as potential organic activities.

Shawn Mural: We evaluate a lot of different things, including, and I think I said in the prepared remarks, both organic and inorganic activities. We are still pursuing a number of adjustments both in ourselves as well as, you know, potential organic activities. That's what you see show up there. When we have something else to announce, we'll announce it. You know, we're very focused on growth and delivering returns and value for our shareholders. That's part of why we double-clicked a little bit on, you know, our capital allocation strategy this quarter, as we went through things, Tobey. We'll continue to keep everyone updated as things progress.

Speaker #5: And so that's what you see show up there. When we have something else to announce, we'll announce it. But we're very focused on growth and delivering returns and value for our shareholders.

Speaker #5: And that's part of why we double-clicked a little bit on a capital allocation strategy this quarter. As we went through things, Toby. And so we'll continue to keep everyone updated as things progress.

Speaker #7: Okay. And if we look at your last one from me, we looked at your customers' army and navy the other category is the that was up 105% year over year?

Tobey Sommer: Okay. If we look at your last one from me, we looked at your customers, Army, Navy, the other category is the that was up 105% year over year. Is that primarily driven by the national security customer, or are there any other customers to kind of highlight as helping to drive that growth?

Speaker #7: Is that primarily driven by the national security customer, or are there any other customers to kind of highlight as helping to drive that growth?

Speaker #5: Yeah. It's mostly that national security customer.

Shawn Mural: Yeah. It's mostly that national security customer.

Speaker #7: Okay. Thank you very much.

Tobey Sommer: Okay. Thank you very much.

Speaker #5: Sure. Thank you.

Shawn Mural: Sure. Thank you.

Speaker #6: The next question is from Ken Herbert with RBC Capital. Please go ahead.

Operator: The next question is from Kenneth Herbert with RBC Capital Markets. Please go ahead.

Speaker #7: Hey, good afternoon, guys. This is Steve Strakhaus on for Ken. Really nice growth in the quarter. I was hoping to maybe double-click on the bookings in the quarter.

[Analyst] (RBC Capital Markets): Hey, good afternoon, guys. This is Steve Shapiro on for Kenneth Herbert. Really nice growth in the quarter. Was hoping to maybe double-click on the bookings in the quarter. Can you discuss how much of an award the T-6 contributed to it, and/or maybe what the book-to-bill would have been if we kind of normalize without that award?

Speaker #7: Can you discuss how much of an award the T6 contributed to it and/or maybe what the book-to-bill would have been if we kind of normalized without that award?

Shawn Mural: Yeah. The T-6 was $3.3 billion in the quarter.

Speaker #5: Yeah, so the T6 was $3.3 billion in the quarter.

Shawn Mural: Yeah. The T-6 was $3.3 billion in the quarter.

Speaker #7: Okay. Great. And then maybe just two of the quick questions. In terms of revenue visibility for the full year, you guys had previously talked about, I think, 85% revenue visibility for 26.

[Analyst] (RBC Capital Markets): Okay, great. Maybe just two other quick questions. In terms of revenue visibility for the full year, you guys had previously talked about, I think, 85% revenue visibility for 2026. I'm assuming with all the strong bookings in the quarter, there's maybe a little bit of upside to that. That you see beyond 90%. Can you kind of level set us there?

Speaker #7: I'm assuming with all the strong bookings in the quarter, there's maybe a little bit of upside to that, or that you maybe see maybe beyond 90%.

Speaker #7: Can you kind of level set us there?

Speaker #5: Yeah, so in terms of the revenue that is in backlog today, it's about 94% that we have visibility into and that we are under contract to perform.

Shawn Mural: Yeah. So in terms of the revenue that is in backlog today, it's about 94% that we have visibility into and that we are under contract to perform. As we go through the year, that will continue to progress, obviously, with the strength in the bookings in the quarter, no surprise, you know, in terms of the notable uptick from where we began the year. Feeling really good. You know, Jeremy mentioned a number of the things in his prepared remarks. You know, we wanted to speak to the breadth and depth of the awards that we got. Approximately 50 different awards, covering everything in the portfolio. That really speaks to the strength and the demand signals we're seeing from the broad customer base and the capabilities we're delivering.

Speaker #5: So as we go through the year, that will continue to progress, obviously, with the strength in the bookings in the quarter, no surprise. In terms of the notable uptick from where we began the year and feeling really good.

Speaker #5: Jeremy mentioned a number of the things in his prepared remarks. We wanted to speak to the breadth and depth of the awards that we got, approximately 50 different awards covering everything in the portfolio.

Speaker #5: So that really speaks to the strength and the demand signals we're seeing from the broad customer base and the capabilities we're dealing with. Yeah.

Speaker #5: And I would, Jeremy, just highlight that bookings are interesting in the quarter. But TTM is where you need to earn your calories. And that's how we look at the business given the episodic nature of how awards come in.

Jeremy Wensinger: Yeah. I would just, you know, Jeremy, just highlight that, you know, bookings are interesting in the quarter, but TTM is where you need to burn your calories, and that's how we look at the business, given the episodic nature of how awards come in. That's why I'm so proud of the team. I mean, in the quarter, great. On a TTM basis, you know, for us to think about having something in the 1.4 to 1.5 range for the year, that's, you know, that's outstanding.

Speaker #5: And so that's why I'm so proud of the team. I mean, in the quarter, great. But on a TTM basis, for us to think about having something in the $1.4 to $1.5 billion range for the year, that's outstanding.

Speaker #7: Sounds good. And maybe last one from me. I can appreciate the T6 creates a bit of a margin overhang to kind of start the year, but with the 50 contract awards...

[Analyst] (RBC Capital Markets): Sounds good. Maybe last one from me. I can appreciate the T-6 creates a bit of a margin overhang to kind of start the year. With the 50 contract awards, can you maybe talk about the long-term margin opportunity within the business? Maybe as you kind of get out into, maybe, I hate to say, you know, 2027 already, could we be thinking about mid 7% adjusted EBITDA margins?

Speaker #7: Can you maybe talk about the long-term margin opportunity within the business? Maybe as you kind of get out into—maybe I hate to say '27 already, but could we be thinking about mid-7% adjusted EBIT margins?

Speaker #5: Yeah, so it's early in '26. We'll talk to you towards the back half of this year. One of the things to keep in mind—we've got a lot of contracts that are in the early stages of startup.

Shawn Mural: So, so, you know, it's early in 2026. We'll talk to you know, towards the back half of this year. One of the things to keep in mind, we've got a lot of contracts that are in the early stages of startup. You know, as we go through those things, margins tend to mature in the business. We don't expect them to, you know, peak early on. We build that in, and that's specifically in our Aero, in our Aero business as well as in our modernization sustainment business. Those things tend to mature. You know, we'll talk about 2027, you know, at another time, but we're feeling very good about where we're positioned to deliver margin expansion in the future across the business.

Speaker #5: And so as we go through those things, margins tend to mature in the business. And so we don't expect them to peak early on.

Speaker #5: We build that in, and that's specifically in our Arrow business as well as in our modernization sustainment business. Those things tend to mature. So we'll talk about '27 at another time, but we're feeling very good about where we're positioned to deliver margin expansion in the future across the business.

Speaker #7: Appreciate the color. I'll hop back into queue.

[Analyst] (RBC Capital Markets): Appreciate the color. I'll hop back. Thank you.

Speaker #5: Thank you.

Shawn Mural: Thank you.

Speaker #6: The next question is from Trevor Walsh with Citizens. Please go ahead.

Operator: The next question is from Trevor Walsh with Citizens. Please go ahead.

Speaker #7: Great. Hey, team. Thanks for taking the questions. Jeremy, you talked a little bit about some of the AI opportunities you guys are doing from a I think the case study was aviation operations call out, but I think there's other use cases or things that you guys can handle.

Trevor Walsh: Great. Hey, team. Thanks for taking the questions. Jeremy, you talked a little bit about some of the AI opportunities you guys are doing. I think that a case study was aviations operations, call-out. Yeah. I think there's other use cases or things that you guys can handle. Obviously a lot of great partnerships that you've announced in that effort as well. Do you have, I guess, line of sight on specific opportunities with customers for some of these AI-related things that you're working on specifically, and then that opportunity can maybe get? Duplicated out. I guess, talk to us about how that looks from just a pipeline. Are there other discrete things you're chasing or is this more like kind of build it, we think they're gonna come type of approach?

Shawn Mural: Yeah.

Shawn Mural: I think there's other use cases or things that you guys can handle. Obviously a lot of great partnerships that you've announced in that effort as well. Do you have, I guess, line of sight on specific opportunities with customers for some of these AI-related things that you're working on specifically, and then that opportunity can maybe get?

Speaker #7: Can you and then obviously a lot of great partnerships that you've announced in that effort as well. Do you have I guess line of sight on specific opportunities with customers for some of these AI-related things that you're working on specifically?

Speaker #7: And then that opportunity could maybe get duplicated out, I guess. Talk to us about how that looks from just a pipeline. Are there discrete things you're chasing, or is this more like kind of build it and we think they're going to come type of approach?

Trevor Walsh: Duplicated out. I guess, talk to us about how that looks from just a pipeline. Are there other discrete things you're chasing or is this more like kind of build it, we think they're gonna come type of approach?

Speaker #5: No, it's a really good question. No, we've partnered with some of the best in the industry. And I'm thrilled to have them as partners.

Jeremy Wensinger: No, it's a really good question. No, we partner with some of the best in the industry, and I'm thrilled to have them as partners. They are core to some of the bids we have on the street today. They're also core to some of the things we're doing internally. You know, when I look at the adoption rate of the AI tools internally and the efficiencies we're getting out of that, it is just outstanding. You know, I was in Orlando for, you know, almost two months, bidding a job, and the team did an outstanding job of putting both our relationship with Google, our relationship with Amazon and NVIDIA in that bid to create a differentiated solution for our customers. The customer's gonna benefit. That's the part that I'm most excited about.

Speaker #5: They are core to some of the bids we have on the street today. They're also core to some of the things we're doing internally.

Speaker #5: When I look at the adoption rate of the AI tools internally, and the efficiencies we're getting out of that, it is just outstanding. When I look at our I was in Orlando for almost two months.

Speaker #5: Bidding a job. And the team did an outstanding job of putting both our relationship with Google, our relationship with Amazon, and NVIDIA in that bid.

Speaker #5: To create a differentiated solution. For our customers. And the customer's going to benefit. That's the part that I'm most excited about. They're just going to benefit from this in the long run.

Jeremy Wensinger: They're just gonna benefit from this in the long run. I think these relationships are, you know, enduring. I look at the team and their ability to, you know, put us in a position to win. This is not base aware. This is really us putting, you know, our shoulder behind it and making sure that we're delivering this capability. The customer, I, you know, I think they're gonna see the value of that because I'm seeing the value internally. We are doing this internally. You know, it's one of those where we're doing what we said we would do because I'm doing it internally. I'm very excited about this. I'm excited about the prospects for our customer and their mission, and I think this is gonna be, you know, the new norm for V2X.

Speaker #5: And I think these relationships are enduring. And I look at the team and their ability to put us in a position to win. This has not vaporware.

Speaker #5: This is really us putting our shoulder behind it and making sure that we're delivering this capability. And the customer—I think they're going to see the value of that.

Speaker #5: Because I'm seeing the value internally. We are doing this internally. It's one of those where we are doing what we said we would do.

Speaker #5: Because I'm doing it internally. So I'm very excited about this. I'm excited about the prospects for our customer and their mission. And I think this is going to be the new norm for V2X.

Speaker #7: Great. That's terrific color. I appreciate it. Maybe just one quick follow-up. You called out Coverdain earlier from one of the first questions. There was, I think, some commentary from Space Force about that getting included into an RFI.

Trevor Walsh: Great. That's terrific color. Appreciate it. Maybe just one quick follow-up. You called out COBRA DANE earlier from one of the first questions.

Jeremy Wensinger: Mm-hmm

Trevor Walsh: I think some commentary from Space Force about that getting included into an RFI of just modernization efforts for ground-based radar. Just curious if that creates any risk at all around that or if whatever kind of happens as far as COBRA DANE getting upgraded and, you know, modernized, you guys will be kind of in that, in that party no matter kind of what's kind of the outcome is.

Speaker #7: And I'm just modernization efforts for ground-based radar. So just curious if that creates any risk at all around that or if you guys or if whatever kind of happens as far as Coverdain getting upgraded and modernized, if you guys will be kind of in that party no matter kind of what's kind of the outcome is.

Speaker #5: Well, as you know, we're part of the Golden Shield. So I think part of that is us being in a position to help the customer do that.

Jeremy Wensinger: Well, as you know, we're part of the Golden Dome. I think part of that is us being in a position to help the customer do that. I'm sorry, Golden Dome. Excuse me. I think the part of us being part of that is location. You know, we're on location, we're with them, we're helping them. I don't see that as a, as a risk. I see that as an opportunity, personally, to help the government put in the Golden Dome that they've, you know, said they would like to do. I don't think there's anybody better than someone who's at the location to help support that.

Speaker #5: And so, I'm sorry, Golden Dome. Excuse me. I think the part of us being part of that is location. We're on location. We're with them.

Speaker #5: We're helping them, and so I don't see that as a risk; I see that as an opportunity, personally, to help the government put in the Golden Dome that they've said they would like to do.

Speaker #5: And I don't think there's anybody better than someone who's at the location to help support that.

Speaker #7: Great. Terrific. Appreciate the questions all. I'll get back in queue.

Trevor Walsh: Great. Perfect. Appreciate the questions, all. I'll get back in queue.

Speaker #6: The next question is from John Godden with Citi. Please go ahead.

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

Speaker #8: Hi, guys. This is Jeremy Jason on for John. You guys were just literally just talking about Golden Dome. I kind of wanted to ask, we recently got a request for $1.5 trillion budget.

Jeremy Jason: Hi, guys. This is Jeremy Jason on for Jason Gursky. You guys were just literally just talking about Golden Dome. I kind of wanted to ask, we recently got a request for a $1.5 trillion budget. I just kind of wanted to get your sense of what opportunities you see from this and what are you most excited for. As a follow-up, I kind of want to get a sense of does this outlook sort of change with a possible blue wave?

Speaker #8: So, I just kind of wanted to get your sense of what opportunities you see from this, and what are you most excited for? And then, as a follow-up, I kind of want to get a sense of: does this outlook sort of change with a possible blue wave?

Speaker #5: Well, it's a I can't answer the question on the blue wave. But I can tell you that the budget is something that we've looked at carefully.

Jeremy Wensinger: Well, I can't answer the question on the blue wave, but I can tell you that the budget is something that, you know, we've looked at carefully. We have been helping the customer understand where we can support them in terms of modernizing and supporting their mission. You know, we're on the ground. We're with them every day. I think that has given them enough insight to understand where, if we were to modernize certain things like COBRA DANE, COBRA KING, you pick it. I think there are things that we've been able to provide them that say, "Hey, here's where we might think about helping you." They've been very receptive. I, you know, I'm excited about the budget. I think we're well-positioned in the budget because modernization and sustainment is exactly what we do.

Speaker #5: We have been helping the customer understand where we can support them. In terms of modernizing and supporting their mission, we are on the ground.

Speaker #5: We're with them every day. And I think that has given them enough insight to understand where if we were to modernize certain things like Coverdain, Cobra King, you pick it.

Speaker #5: I think there are things that we've been able to provide them that say, "Hey, here's where we might think about helping you." And they've been very receptive.

Speaker #5: And I'm excited about the budget. I think we're well positioned in the budget because modernization and sustainment is exactly what we do. We are that is exactly who we are.

Jeremy Wensinger: We are. That is exactly who we are.

Speaker #8: That's awesome. It's good to hear. And as one final question, just kind of wanted to get your outlook on possible M&A activity considering that you guys have such a clear line of sight on leverage.

Jeremy Jason: That's awesome. That's good to hear. As one final question, just kind of wanted to get your outlook on possible M&A activity, considering that you guys have such a clear line of sight on leverage.

Speaker #5: I have been very clear about this, which is we are very disciplined in how we look at how we deploy capital. Everything we do is going to be with a mindset on shareholder value.

Jeremy Wensinger: I have been very clear about this, which is we are very disciplined in how we look at how we deploy capital. Everything we do is gonna be with a mindset on shareholder value. You know, as I look at our balance sheet, yes, we have optionality. As I look at our balance sheet, you know, it is something that is top of mind in terms of how we think about creating shareholder value. We will be very, very disciplined in how we think about this going forward.

Speaker #5: So as I look at our balance sheet, yes, we have optionality. As I look at our balance sheet, it is something that is top of mind in terms of how we think about creating shareholder value.

Speaker #5: But we will be very, very disciplined in how we think about this going forward.

Speaker #8: Awesome. I really appreciate it. Thanks, guys.

Jeremy Jason: Awesome. I really appreciate it. Thanks, guys.

Speaker #6: The next question is from Greg Parrish with Morgan Stanley. Please go ahead.

Operator: The next question is from Kristine Liwag with Morgan Stanley. Please go ahead.

Speaker #9: Hey, guys. Good evening. Great to be on the call here with you. Congrats on the strong quarter.

Kristine Liwag: Hey, guys. Good evening. Great to be on the call here with you. Congrats on the strong quarter.

Greg Parrish: Hey, guys. Good evening. Great to be on the call here with you. Congrats on the strong quarter.

Speaker #10: Thank you. Welcome aboard, guys.

Jeremy Wensinger: Thank you.

Trevor Walsh: Thank you.

Kristine Liwag: Uh-huh.

Greg Parrish: Uh-huh.

Jeremy Wensinger: Welcome aboard, Kristine Liwag.

Speaker #6: Yeah, thank you. I want to ask—the Trump administration put out an executive order last week on maximizing fixed-price contracts. There are some carve-outs.

Kristine Liwag: Yeah. Thank you. I want to ask, the Trump administration put out an executive order last week on maximizing fixed-price contracts. There's some carve-outs. It's kind of complex logistically to get some of these converted, and I suppose we'll see. Maybe can you talk about the puts and takes impact to you? Obviously, maybe potentially opportunity on margin, but, like, do you actually see contracts being converted due to this? Maybe just help us.

Greg Parrish: Yeah. Thank you. I want to ask, the Trump administration put out an executive order last week on maximizing fixed-price contracts. There's some carve-outs. It's kind of complex logistically to get some of these converted, and I suppose we'll see. Maybe can you talk about the puts and takes impact to you? Obviously, maybe potentially opportunity on margin, but, like, do you actually see contracts being converted due to this? Maybe just help us.

Speaker #6: It's kind of complex logistically to get some of these converted. And I suppose we'll see. But maybe can you talk about the puts and takes impact to you?

Speaker #6: Obviously, maybe potentially opportunity on margin. But do you actually see contracts being converted due to this? Maybe just help us.

Jeremy Wensinger: You know, thank you for the question because we've been talking to the government about this for several years. We welcome the opportunity to do fixed price work. I think we are in a market that should welcome fixed price work. I think we can create a lot of value for our customer and save them money. We welcome it, and we have continuously talked to them about this. I think the executive order was perfect for the, you know, for the sustainment and modernization market. You know, again, we'll see how it manifests itself.

Speaker #5: Thank you for the question because we've been talking to the government about this for several years. We welcome the opportunity to do fixed price work.

Speaker #5: I think we are in a market that should welcome fixed price work. I think we can create a lot of value for our customer and save them money.

Speaker #5: And so we welcome it. And we have continuously talked to them about this. I think the executive order was perfect for the sustainment and modernization market.

Speaker #5: But again, we'll see how it manifests itself. And so my compliments to the administration. To push in this direction because I think it is a perfect opportunity for them not only to save money, but increase the value for the missions that we support.

Jeremy Wensinger: My, you know, my compliments to the administration to, you know, push in this direction because I think it is a perfect opportunity for them not only to save money, but increase your, you know, the value for, you know, the missions that we support. Allow us to create the innovation that we do every day and give them better optionality as they move downstream.

Speaker #5: And allow us to create the innovation that we do every day, and give them better optionality as they move downstream.

Speaker #9: Okay. Fantastic. That's very helpful. And then I wanted to maybe unpack the strength in the quarter a little bit more, particularly the US business up 40% year over year, a little over 800 million in revenue.

Kristine Liwag: Okay. Fantastic. That's very helpful. Then I wanted to maybe unpack the strength in the quarter a little bit more, particularly the US business up 40% year over year, a little over $800 million in revenue. Can you help contextualize, you know, how much of that was work on Operation Epic Fury?

Greg Parrish: Okay. Fantastic. That's very helpful. Then I wanted to maybe unpack the strength in the quarter a little bit more, particularly the US business up 40% year over year, a little over $800 million in revenue. Can you help contextualize, you know, how much of that was work on Operation Epic Fury?

Speaker #9: Can you help contextualize how much of that was work on operation Epic Fury?

Speaker #10: Oh, Epic Fury. Yeah. I'd be guessing. To be honest with you, associated with Epic Fury, I can tell you the strength that you saw in the quarter was domestic.

Shawn Mural: Oh, Epic Fury. Yeah, I'd be guessing, to be honest with you, associated with Epic Fury. I can tell you the strength that you saw in the quarter was domestic, you know, so US-based obviously as you point out where the growth is, and that's largely supporting our national security customer that I mentioned, you know, earlier. In terms of the other regions, you know, you saw a couple of puts and takes here and there, but obviously in the US. Now, we also had the ramp. When I think year over year, we had the ramp of the F-16 ALOT work. We had the ramp in the warfighter training readiness support work as well.

Speaker #10: So, U.S.-based, obviously, as you point out, where the growth is. And that's largely supporting our national security customer that I mentioned earlier. In terms of the other regions, you saw a couple of puts and takes here and there.

Speaker #10: But obviously, in the US. Now, we also had the ramp when I think year over year we had the ramp of the F-16 pilot work.

Speaker #10: We had the ramp in the warfighter training readiness support work as well. So those things all contributed to the strength in the quarter. Pretty much consistent with what we expected.

Shawn Mural: Those things all contributed to the strength in the quarter, pretty much consistent with what we expected, you know, when we started the year.

Speaker #10: When we started the year.

Speaker #9: Yep. Okay. That's helpful. Thank you, guys.

Kristine Liwag: Yep. Okay. That's helpful. Thank you, guys.

Greg Parrish: Yep. Okay. That's helpful. Thank you, guys.

Speaker #10: Thank you.

Jeremy Wensinger: Thank you.

Shawn Mural: Thank you.

Speaker #6: The next question is from John Segman with Stifel. Please go ahead.

Operator: The next question is from Joe DeNardi with Stifel. Please go ahead.

Speaker #11: Hey. Good afternoon, guys. This is actually Sebastian Rivera on the line for John today. Congrats on the strong quarter.

Sebastian Rivera: Hey, good afternoon, guys. This is actually Sebastian Rivera on the line for Joe DeNardi today. Congrats on the strong quarter.

Speaker #10: Thank you.

Jeremy Wensinger: Thank you.

Sebastian Rivera: Sorry if I missed this, can you maybe just flag some of your rapid prototyping capabilities you're most excited about and how you kind of envision some of your recent tech partnerships augmenting those capabilities on the ATSP5?

Speaker #11: Sorry if I missed this, but can you maybe just flag some of your rapid prototyping capabilities you're most excited about and how you kind of envision some of your recent tech partnerships augmenting those capabilities on the ATS P5?

Jeremy Wensinger: I, you know, I think one of the things that we do very well is take concept to delivery in a very short timeframe. You know, these are not programs of record. They're programs of need. I think the team does very well with that. I'm very proud of the fact that our engineers are able to turn something from, you know, a concept to fruition in a very short time period. I think it benefits our customers immensely. You know, we're a very scrappy company, and the team does exceptionally well at that. I'm very proud of what they've been able to deliver, both, you know, in terms of concept, but more importantly, in terms of actually fielded systems that are delivering outcomes on a daily basis.

Speaker #5: I think one of the things that we do very well is delivery in a very short time frame. These are not programs of record.

Speaker #5: They're programs of need. And I think the team does very well with that. And I'm very proud of the fact that our engineers are able to turn something from a concept to fruition in a very short time period.

Speaker #5: And I think it benefits our customers immensely, the fact that we're not—we're a very scrappy company. And the team does exceptionally well at that.

Speaker #5: And I'm very proud of what they've been able to deliver, both in terms of concept, but more importantly, in terms of actually fielded systems that are delivering outcomes on a daily basis.

Speaker #5: And if you ever want to go to Indy, it is a remarkable thing to watch.

Jeremy Wensinger: You know, if you ever wanna go to Indy, it's a remarkable thing to watch.

Speaker #11: Got it. That's very helpful. And then just one more quick one for me, kind of circling back on the budget requests, specifically around C-UAS, can you maybe—I know it's early days—but can you maybe just speak to your outlook for Tempest over the next sort of one to three years or so?

Sebastian Rivera: Got it. That's very helpful. Then, just one more quick one for me. kind of circling back on the budget requests, specifically around CUAS. can you maybe, I know it's early days, but can you maybe just speak to your outlook for Tempest over the next sort of 1 to 3 years or so? Thank you.

Speaker #11: Thank you.

Speaker #10: Yeah, Sebastian, it would be speculation—a bit, obviously—and you just heard Jeremy talk about the capabilities that we have to respond to customers' needs in a very compressed timetable.

Shawn Mural: Yeah, Sebastian. It would be speculation, you know, a bit obviously. You just heard Jeremy talk about the capabilities that we have to respond to customers' needs, in a very compressed timetable. We think that that is a family of systems that will deliver very unique capability, deployed from concept to fielded system very quickly. We've seen excellent growth in that part of the portfolio with its offerings. In terms of what does this look like, we think these are franchise type programs.

Speaker #10: So we think that that is a family of systems that will deliver very unique capability deployed from concept to fielded system very, very quickly.

Speaker #10: We've seen excellent growth in that part of the portfolio with its offerings. But in terms of what does this look like? We think these are franchise-type programs and capabilities that we will deliver to multiple customers.

Jeremy Wensinger: Mm-hmm.

Jeremy Wensinger: Capabilities that we will deliver to multiple customers, right? As we think about the entirety that is a counter UAS system and family of systems. Jeremy?

Shawn Mural: Capabilities that we will deliver to multiple customers, right? As we think about the entirety that is a counter UAS system and family of systems. Jeremy?

Speaker #10: Right? As we think about the entirety that is a counter-UAS system, and family of systems. Jeremy, anything else to?

Jeremy Wensinger: No, I would agree. I mean, I think it has a global reach. We'll see. We're trying not to get ahead of our skis here. You know, when I look at what we're doing today and where it would be applicable to other theaters, it's compelling. We're just trying to take one step at a time.

Speaker #5: No, I would agree. I mean, I think it has a global reach. We'll see. We're trying not to get ahead of our skis here.

Speaker #5: But when I look at what we're doing today and where it would be applicable to other theaters, it's compelling. And so we're just trying to take one step at a time.

Speaker #11: Very helpful. Congrats again.

Sebastian Rivera: Very helpful. Congrats again.

Speaker #6: This concludes our question-and-answer session. I would like to turn the conference back over to Jeremy Wensinger for any closing remarks.

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

Speaker #10: Thank you so much for joining us. Great first quarter. Appreciate you guys taking interest in us. So thank you for the questions, but more importantly, thank you to all of our employees.

Jeremy Wensinger: Thank you so much for joining us. Great Q1. Appreciate you guys taking interest in us. Thank you for the questions. More importantly, thank you to all of our employees, all 16,000 of them that, you know, care for each other every day. With that, I'll turn it back to the operator.

Speaker #10: All 16,000 of them that care for each other every day. And so with that, I'll turn it back to the operator.

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