V2X, Inc. Q1 FY2026 earnings call

• Recognized team's hard work and dedication. - Achieved double-digit growth in revenue and earnings with consistent strategic execution. - Secured approximately 50 contract awards totaling $4.1 billion in the quarter, including work to modernize F-18, integrate advanced infrared countermeasures for KC-130J, and multiple training awards. - Delivered record backlog of $13.8 billion with bookings of $4.1 billion, driving book to bill ratio of 3.2 times in the quarter. - Made progress in investing in advanced capabilities, introducing three artificial intelligent platforms operating on enterprise IT infrastructure, with promising adoption and enhanced operational efficiency. - Aviation operations have an early prototype AI-enabled aerospace sustainment platform built with Google, Tactile, and NVIDIA products to improve aircraft availability, reduce delays, and streamline sustainment operations.

In the first quarter, revenue increased 23% year over year to $1.25 billion. Adjusted net income was $48.1 million, up 53% year-over-year. Adjusted EBITDA was $85.6 million with margins of 6.8%. Adjusted diluted EPS was $1.53, up 55% year-over-year. Revenue growth was driven by ramp up of training, foreign military sales, rapid prototyping, and engineering programs, as well as support for national security customers. Approximately 21% of revenue came from customers outside of the U.S. Army Navy, and Air Force, up from 13% in the prior year period.

• Increased guidance for 2026: Revenue expected to be between $4.825 billion and $4.975 billion. Adjusted EBITDA expected to be between $345 and $360 million. Adjusted diluted earnings per share expected to be between $5.75 and $6.15. Adjusted net cash from operations expected to be between $160 and $180 million. - Guide increase is a mix of new work like T6 standing up and announcements around jobs in the Middle East, with the team doing well in transitioning programs like T6 and seeing higher ops tempo.

Q: Across the scope of business, what are the puts and takes regarding the recent announcement of troops out of Germany and potential work scope change in Kuwait?

A: In Europe, well positioned with missions supported. In Kuwait, it's TBD but expect to continue supporting customers' missions with about $500 million in backlog.

Q: Guide increase, is it on the back of new work or a mix of previously awarded programs accelerating?

A: A little bit of both, including T6 standing up and jobs in the Middle East accelerating.

Q: On T6, is the range still appropriate or higher now?

A: Closer to 175 to 180 type of number for the year as the team did well in transitioning and has higher ops tempo.

Q: Asia revenues were flat, what's expected for the rest of the year?

A: Seeing interest and work with customers in Indopaycom region with presence and understanding of mission requirements paying off.

Q: SG&A expenses were higher, any unusual in there?

A: Had non-recurring costs related to potential growth opportunities in the first quarter.

Q: How to think about operational tempo increase and historical lag effect?

A: Team is very responsive, with some lag but not as much as thought, able to respond quickly to customer requirements.

Q: Time and materials as contract mix up, one-off or continuing?

A: Discrete national security customer activity set is time and materials and will continue throughout the year, with part of the guide increase associated with it.

Q: Duration of book to bill?

A: Typically five to seven years, with T6 contributing 3.3 billion in the quarter.

Q: Revenue visibility for full year, any upside?

A: About 94% revenue in backlog today is visible and under contract to perform.

Q: Long-term margin opportunity?

A: Early in 2026, with contracts in early stages of startup, margins tend to mature later, expecting margin expansion in the future.

Q: AI opportunities, line of sight on specific customer opportunities?

A: Partnered with best in industry, AI tools have good adoption internally, and relationships are enduring with potential for customer benefit.

Q: Cobra Dane and Golden Dome, any risk?

A: No risk, seen as an opportunity to help support modernization efforts.

Q: Outlook on budget requests and M&A activity?

A: Well positioned in budget with modernization and sustainment work, disciplined in capital deployment for shareholder value.

Q: Executive order on fixed price contracts, impact?

A: Welcome opportunity to do fixed price work, can create value for customers and save money.

Q: Strength in U.S. business, how much from Operation Epic Fury?

A: Guessing, but strength in U.S. business was from domestic work supporting national security customers, including ramp of F-16 allot work and warfighter training readiness support work.

Q: Rapid prototyping capabilities and tech partnerships augmenting ATS P5?

A: Team does well in taking concept to delivery quickly, with engineers turning concepts to fruition in short time periods.

Q: Outlook for Tempest over next one to three years?

A: Speculative but team has capabilities to respond quickly, seeing it as franchise-type programs with global reach