Fourth Quarter & Full-Year 2023 Results
T R U S T E D W H E R E V E R
T H E M I S S I O N L E A D S
M a r c h 5 , 2 0 2 4
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Disclaimers
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act), and the Private Securities Litigation Reform Act of 1995 and, as such, may involve risks and uncertainties. All statements included or incorporated by reference in this presentation, other than statements that are purely historical, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "could," "potential," "continue" or similar terminology. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to: our ability to submit proposals for and/or win all potential opportunities in our pipeline; our ability to retain and renew our existing contracts; our ability to compete with other companies in our market; security breaches and other disruptions to our information technology and operation; our mix of cost-plus,cost-reimbursable,firm-fixed-price, and time-and-materials contracts; maintaining our reputation and relationship with the U.S. government; protests of new awards; economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or international government defense budgets; government regulations and compliance therewith, including changes to the DoD procurement process; changes in technology; our ability to protect our intellectual property rights; governmental investigations, reviews, audits and cost adjustments; contingencies related to actual or alleged environmental contamination, claims and concerns; delays in completion of the U.S. government's budget; our success in extending, deepening, and enhancing our technical capabilities; our success in expanding our geographic footprint or broadening our customer base; our ability to realize the full amounts reflected in our backlog; impairment of goodwill; misconduct of our employees, subcontractors, agents, prime contractors and business partners; our ability to control costs; our level of indebtedness; terms of our credit agreement; inflation and interest rate risk; geopolitical risk, including as a result of recent international events; subcontractor performance; economic and capital markets conditions; our ability to maintain safe work sites and equipment; our ability to retain and recruit qualified personnel; our ability to maintain good relationships with our workforce; our teaming relationships with other contractors; changes in our accounting estimates; the adequacy of our insurance coverage; volatility in our stock price; changes in our tax provisions or exposure to additional income tax liabilities; risks and uncertainties relating to the post-merger integration efforts; changes in accounting principles generally accepted in the United States ("GAAP"); and other factors described in Item 1A, "Risk Factors" and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2023 and described in our other filings with the SEC.
Use of Projections
The financial projections, estimates and targets in this presentation are forward-looking statements that are based on assumptions that are inherently subject to significant uncertainties and contingencies, many of which are beyond the V2X's control. The assumptions and estimates underlying the projected, expected or target results are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the financial projections, estimates and targets. The inclusion of financial projections, estimates and targets in this presentation should not be regarded as an indication that V2X or its representatives considered or consider the financial projections, estimates and targets to be a reliable prediction of future events.
Use of Non-GAAP Financial Measures
This presentation includes certain non-GAAP financial measures that are not prepared in accordance with GAAP, including forward-looking measures, which may be different from non-GAAP financial measures used by other companies. These non- GAAP measures, and other measures that are calculated using these non-GAAP measures, are an addition, and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to operating income, net income or any other performance measures derived in accordance with GAAP. We have provided additional information regarding these measures in the Appendix to this presentation. Reconciliations of our forward-lookingnon-GAAP measures to the closest corresponding GAAP measures are not available without unreasonable efforts due to the uncertainties discussed above, which could have a potentially significant impact on our future results.
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Integrity, Professionalism, Respect, Responsibility
V2X for Everyone
Leveraging diversity to drive business outcomes.
~16,000
Employees who disclose personal demographic data:
99%
Millennial:
41%
Gen X:
36%
*U.S. data only
Total Global Employees
Employees who | Employees who self- |
self-identify as a | identify as a person |
veteran*: | with a disability: |
49% | 10% |
Supervisors who | Supervisors who self- |
self-identify as a | identify as a person |
veteran*: | with a disability: |
50% | 11% |
Employees who self-identify as a person of color:
42%
Supervisors who self-identify as a person of color:
40%
Employees who self-identify as a woman:
21%
Supervisors who self-identify as a woman:
21%
3
Transforming to Lead an Evolving Market
2020* | 2023 | 2020* | |||||||
Solutions | |||||||||
Revenue | $ | Aerospace | $ | 4.0B | Other | Army | |||
1.4B | 5% | 69% |
Adj. EBITDA1 | $56M | $294M | Air Force | ||
Navy | |||||
21% | |||||
Operating | 5% | ||||
24% | |||||
Cash Flow | $ | 64M | $ | 188M | US |
10% | |||||
Europe | |||||
Asia | |||||
Backlog | $5.1B | $12.8B | 1% | ||
ME | |||||
65% |
Revenue / | $ | 150K | $ | 250K | T&M | |
Employee | 3% | Cost | ||||
68% | ||||||
Fixed | ||||||
29% |
2023
Army
Other41%
14%
Air Force
14%Navy
31%
Europe | US |
58% | |
5% | |
Asia | |
7% | |
ME | |
30% | |
T&M | Cost |
56% | |
3% | |
Fixed
41%
4
1 See appendix for reconciliation and definitions of non-GAAP measures *FY 2020 information is standalone Vectrus reporting
Q4'23 and Full-Year Highlights
- FY'23 revenue +8% y/y to $4.0B; Q4'23 revenue +6% y/y to $1.0B
- INDOPACOM growth of 31% y/y in Q4'23 and 18% in CENTCOM
- FY'23 Adjusted EBITDA1 of $294M; Q4'23 Adjusted EBITDA1 of $82M
- Strong YTD adjusted operating cash flow1 of $159M; Record setting days sales outstanding (DSO) of 58 Days
- Net Leverage Ratio1 of 3.3x, driven by $137M y/y reduction in net debt
- Modernization & Sustainment awards of ~$70M
- Successfully designed and fielded a defense platform for a new client
- ~$500M+ of notable new wins in CENTCOM including $100M task order with the Air Force and a substantial Foreign Military Sales win
$1.04B
Q4'23 Revenue
$82.1M
Q4'23 Adj. EBITDA1
$159M
YTD Adj. Operating Cash
Flow1
$1.22
Q4'23 Adj. diluted EPS1
5
1 See appendix for reconciliation and definitions of non-GAAP measures
Foreign Military Sales (FMS) Gaining Traction
Our multi-year campaign and strategy to grow Foreign Military Sales is gaining traction and yielding favorable results
Recently selected to start the transition for our largest FMS opportunity to date
The effort is a long-term aviation support & training contract in CENTCOM and was the culmination of over two years of planning and engagement
Program is valued at ~$400M over the next five years
Total value of the FMS portfolio is ~$700M, with accretive margins
Continue to invest and pursue FMS opportunities that align to our core capabilities and geographic presence
Foreign Military Sales
Campaign
Strategy:
- Leverage geographic footprint, partnerships, and capabilities to deliver differentiated solutions
~$5.0B
Pipeline of Opportunities
Representative countries where V2X has FMS work today:
| Australia | | Kuwait |
| Canada | | Malaysia |
| Denmark | | Saudi Arabia |
| Japan | | Spain |
Photo source: U.S. Air Force | 6 |
Positive Leading Growth Indicators
1 Backlog
2 Bids Submitted
NTM
3 Pipeline
Limited 4 Recompetes
Provides solid topline
visibility
Supports further backlog growth
Enables future
organic revenue
growth
Solidifies revenue
base and reduces risk
~$12.8B
>$9.0B
~$14.9B
<5%1
1.Based on 2024 revenue guidance midpoint | 7 |
Q4'23 Financial Results
Revenue ($M) | Adjusted EBITDA1 ($M) | |
+6% Revenue
$978.2 | $1,040.3 | $82.3 | $82.1 |
Q4'22 | Q4'23 | Q4'22 | Q4'23 | |||
7.9% | Adj. EBITDA | Adj. EPS1 | Adj. OCF 1,2 ($M) | |||
margin1 | ||||||
195% | Adj. NI |
Conversion1,3 |
$1.22 | $75.9 | |||||
$0.97 | ||||||
$4.5 | ||||||
Q4'22 | Q4'23 | Q4'22 | Q4'23 | 8 | ||
1 See appendix for reconciliation and definitions of non-GAAP measures | ||||||
2 Q4'23 adjusted operating cash flow equals net cash provided by operating activities of $52.8M + $6.0M of M&A, integration, and related payments + $17.1M |
MARPA facility activity
3 Q4'23 adjusted net income (NI) conversion equals adjusted operating cash flow of $75.9M divided by Q4'23 adjusted NI of $38.9M
FY'23 Financial Results
+8%
7.4%
135%
Revenue | Revenue ($M) | Adjusted EBITDA1 ($M) | |
Adj. EBITDA | $3,669.6 | $3,963.1 | $278.0 | $293.9 | |
margin1 | |||||
PF'221 | FY'23 | PF'221 | FY'23 |
Adj. NI
Conversion1,2
1 See appendix for reconciliation and definitions of non-GAAP measures | 9 |
2 FY'23 adjusted net income (NI) conversion equals adjusted operating cash flow of $159.5M divided by FY'23 adjusted NI of $118.5M;FY'23 adjusted operating cash flow equals net cash provided by operating activities of $188.0M + $26.9M of M&A, integration, and related payments + $13.4M CARES Act - $68.8M MARPA facility activity
Momentum Achieving Leverage Target
4.0x | 3.7x | ||
3.3x | ≤ 3.0x | ||
Merger | Q4'22 | Q4'23 | 2024E |
Close |
Net leverage ratio1,2 at 3.3x
Net Leverage ratio1 improved by 0.4x in 2023
Driven by net debt reduction of $137.1M in 2023
Mid-term target of 2.0-3.0x net leverage ratio1
Clear Path to Deleveraging ≤ 3.0x in 2024
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1 See appendix for reconciliation and definitions of non-GAAP measures
2Net leverage ratio of 3.3x equals net debt of $1,084M divided by trailing twelve-month (TTM) bank EBITDA
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V2X Inc. published this content on 05 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 12:52:00 UTC.