V2X Reports Second Quarter Results with Record Revenue
Rhea-AI Summary
V2X, Inc. (NYSE:VVX) reported record revenue of $1.07 billion for Q2 2024, up 10% year-over-year. The company achieved operating income of $27.4 million and adjusted operating income of $65.8 million. However, V2X reported a net loss of $6.5 million, down $8.3 million year-over-year. Adjusted EBITDA was $72.3 million with a margin of 6.7%. The company secured over $4 billion in recent awards, including a new $3.0+ billion contract for next-generation readiness. V2X has raised its full-year revenue guidance while reaffirming Adjusted EBITDA, EPS, and Operating Cash Flow guidance for 2024.
Positive
- Record revenue of $1.07 billion, up 10% year-over-year
- Secured over $4 billion in recent awards, including a $3.0+ billion contract
- 29% year-over-year revenue growth in both Pacific and Middle East regions
- Raised full-year revenue guidance for 2024
- Successfully repriced and extended $904 million Term Loan B
Negative
- Net loss of $6.5 million, down $8.3 million year-over-year
- Negative net cash used by operating activities of $31.6 million
- Net leverage ratio of 3.56x, essentially flat compared to Q1 2024
News Market Reaction – VVX
On the day this news was published, VVX declined 2.76%, reflecting a moderate negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
Second Quarter and Recent Highlights
- Record revenue of
$1.07 billion 10% y/y - Operating income of
$27.4 million $65.8 million - Net loss of
$6.5 million $8.3 million - Adjusted EBITDA1 of
$72.3 million 6.7% - Diluted EPS of (
$0.21 $0.83 - Over
$4 billion $3 - Successfully repriced and extended
$904 million
2024 Guidance:
- Raising full-year revenue guidance and reaffirming Adjusted EBITDA, EPS, and Operating Cash Flow1
"I am honored to join the V2X team and look forward to leveraging our mission first culture, differentiated capabilities, and impressive past performance to achieve our next stage of growth," said Jeremy C. Wensinger, President and Chief Executive Officer of V2X. "Our people, processes, agility and expertise to operate worldwide are a differentiator. This enables alignment to critical missions with an ability to operate at scale around the globe."
Mr. Wensinger continued, "Demand remains strong for our mission based full lifecycle solutions and was demonstrated through several recent awards valued at over
"Importantly, our ability to deliver a full range of assured communications has resulted in two awards, further expanding our relationship with the Navy and our footprint in the Pacific. Our
Mr. Wensinger concluded, "V2X has great momentum and I believe there is substantial opportunity to build upon the impressive foundation by further leveraging technology and solutions to enhance business and customer outcomes."
Second Quarter 2024 Results
"V2X reported record revenue of
"For the quarter, the Company reported operating income of
"Year to date, net cash used by operating activities was
"At the end of the quarter, net debt for V2X was
"Total backlog as of June 28, 2024, was
Raising 2024 Revenue Guidance
Mr. Mural concluded, "Given our strong revenue performance in the first half of the year we are updating our total year guidance."
Guidance for 2024 is as follows:
$ millions, except for per share amounts | Prior 2024 Guidance | Updated 2024 Guidance | ||
Revenue | ||||
Adjusted EBITDA1 | ||||
Adjusted Diluted Earnings Per Share1 | ||||
Adjusted Net Cash Provided by | ||||
The Company is not providing a quantitative reconciliation with respect to this forward-looking non-GAAP measure in reliance on the "unreasonable efforts" exception set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, unusual, one-time, non-ordinary, or non-recurring costs, which relate to M&A, integration and related activities cannot be reasonably estimated. Forward-looking statements are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including those factors set forth in the Safe Harbor Statement below.
Second Quarter Conference Call
Management will conduct a conference call with analysts and investors at 8:00 a.m. ET on Tuesday, August 6, 2024.
A replay of the conference call will be posted on the V2X website shortly after completion of the call and will be available for one year. A telephonic replay will also be available through August 20, 2024, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 10190283.
Presentation slides that will be used in conjunction with the conference call will also be made available online in advance on the "investors" section of the company's website at https://gov2x.com. V2X recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under the
Footnotes:
1 See "Key Performance Indicators and Non-GAAP Financial Measures" for descriptions and reconciliations.
2 Net leverage ratio of 3.6x equals net debt of
About V2X
V2X builds innovative solutions that integrate physical and digital environments by aligning people, actions, and technology. V2X is embedded in all elements of a critical mission's lifecycle to enhance readiness, optimize resource management, and boost security. The company provides innovation spanning national security, defense, civilian, and international markets. With a global team of approximately 16,000 professionals, V2X enables mission success by injecting AI and machine learning capabilities to meet today's toughest challenges across all operational domains.
Investor Contact | Media Contact |
Mike Smith, CFA | Angelica Spanos Deoudes |
719-637-5773 | 571-338-5195 |
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the "Act"): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, all the statements and items listed under "2024 Guidance" above and other assumptions contained therein for purposes of such guidance, other statements about our 2024 performance outlook, revenue, contract opportunities, and any discussion of future operating or financial performance.
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.
These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside our management's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. 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. For a discussion of some of the risks and uncertainties that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the SEC.
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.
V2X, INC. | ||||||||
Three Months Ended | Six Months Ended | |||||||
June 28, | June 30, | June 28, | June 30, | |||||
(In thousands, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||
Revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | ||||
Cost of revenue | 998,348 | 890,452 | 1,938,638 | 1,755,082 | ||||
Selling, general, and administrative expenses | 46,409 | 53,130 | 86,352 | 101,381 | ||||
Operating income | 27,426 | 34,270 | 57,757 | 64,849 | ||||
Loss on extinguishment of debt | (1,998) | — | (1,998) | (22,052) | ||||
Interest expense, net | (28,807) | (31,950) | (56,381) | (63,694) | ||||
Other expense, net | (4,735) | (311) | (6,368) | (311) | ||||
(Loss) income from operations before income taxes | (8,114) | 2,009 | (6,990) | (21,208) | ||||
Income tax (benefit) expense | (1,570) | 210 | (1,590) | (5,527) | ||||
Net (loss) income | $ (6,544) | $ 1,799 | $ (5,400) | $ (15,681) | ||||
(Loss) earnings per share | ||||||||
Basic | $ (0.21) | $ 0.06 | $ (0.17) | $ (0.51) | ||||
Diluted | $ (0.21) | $ 0.06 | $ (0.17) | $ (0.51) | ||||
Weighted average common shares outstanding - basic | 31,470 | 31,033 | 31,411 | 30,981 | ||||
Weighted average common shares outstanding - diluted | 31,470 | 31,605 | 31,411 | 30,981 | ||||
V2X, INC. | ||||
June 28, | December 31, | |||
(In thousands, except per share data) | 2024 | 2023 | ||
Assets | ||||
Current assets | ||||
Cash, cash equivalents and restricted cash | $ 44,770 | $ 72,651 | ||
Receivables | 781,898 | 705,995 | ||
Prepaid expenses and other current assets | 149,925 | 96,223 | ||
Total current assets | 976,593 | 874,869 | ||
Property, plant, and equipment, net | 70,265 | 85,429 | ||
Goodwill | 1,655,905 | 1,656,926 | ||
Intangible assets, net | 367,148 | 407,530 | ||
Right-of-use assets | 35,594 | 41,215 | ||
Other non-current assets | 45,718 | 15,931 | ||
Total non-current assets | 2,174,630 | 2,207,031 | ||
Total Assets | $ 3,151,223 | $ 3,081,900 | ||
Liabilities and Shareholders' Equity | ||||
Current liabilities | ||||
Accounts payable | $ 462,496 | $ 453,052 | ||
Compensation and other employee benefits | 166,409 | 158,088 | ||
Short-term debt | 16,878 | 15,361 | ||
Other accrued liabilities | 242,398 | 213,700 | ||
Total current liabilities | 888,181 | 840,201 | ||
Long-term debt, net | 1,141,562 | 1,100,269 | ||
Deferred tax liabilities | 11,128 | 11,763 | ||
Operating lease liabilities | 31,778 | 34,691 | ||
Other non-current liabilities | 86,623 | 104,176 | ||
Total non-current liabilities | 1,271,091 | 1,250,899 | ||
Total liabilities | 2,159,272 | 2,091,100 | ||
Commitments and contingencies (Note 7) | ||||
Shareholders' Equity | ||||
Preferred stock; | — | — | ||
Common stock; | 315 | 312 | ||
Additional paid in capital | 767,982 | 762,324 | ||
Retained earnings | 225,451 | 230,851 | ||
Accumulated other comprehensive loss | (1,797) | (2,687) | ||
Total shareholders' equity | 991,951 | 990,800 | ||
Total Liabilities and Shareholders' Equity | $ 3,151,223 | $ 3,081,900 | ||
V2X, INC. | ||||
Six Months Ended | ||||
June 28, | June 30, | |||
(In thousands) | 2024 | 2023 | ||
Operating activities | ||||
Net loss | $ (5,400) | $ (15,681) | ||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||||
Depreciation expense | 11,870 | 11,326 | ||
Amortization of intangible assets | 45,525 | 45,211 | ||
Amortization of cloud computing arrangements | 886 | 142 | ||
Impairment of non-operating long-lived asset | 2,192 | — | ||
Loss on disposal of property, plant, and equipment | 269 | 522 | ||
Stock-based compensation | 11,794 | 20,446 | ||
Deferred taxes | (1,207) | (5,143) | ||
Amortization of debt issuance costs | 4,163 | 4,692 | ||
Loss on extinguishment of debt | 1,998 | 22,052 | ||
Changes in assets and liabilities: | ||||
Receivables | (51,693) | (20,404) | ||
Other assets | (56,734) | (1,351) | ||
Accounts payable | (9,505) | 7,647 | ||
Compensation and other employee benefits | 8,480 | (23,150) | ||
Other liabilities | 5,811 | 31,831 | ||
Net cash (used in) provided by operating activities | (31,551) | 78,140 | ||
Investing activities | ||||
Purchases of capital assets | (8,511) | (11,543) | ||
Proceeds from the disposition of assets | 11 | 5 | ||
Acquisitions of businesses | (16,939) | — | ||
Net cash used in investing activities | (25,439) | (11,538) | ||
Financing activities | ||||
Proceeds from issuance of long-term debt | — | 250,000 | ||
Repayments of long-term debt | (7,669) | (424,888) | ||
Proceeds from revolver | 648,750 | 552,750 | ||
Repayments of revolver | (602,750) | (467,750) | ||
Proceeds from stock awards and stock options | 149 | 6 | ||
Payment of debt issuance costs | (1,188) | (7,507) | ||
Prepayment premium on early redemption of debt | — | (1,600) | ||
Payments of employee withholding taxes on share-based compensation | (5,767) | (14,618) | ||
Net cash provided by (used in) financing activities | 31,525 | (113,607) | ||
Exchange rate effect on cash | (2,416) | 1,252 | ||
Net change in cash, cash equivalents and restricted cash | (27,881) | (45,753) | ||
Cash, cash equivalents and restricted cash - beginning of period | 72,651 | 116,067 | ||
Cash, cash equivalents and restricted cash - end of period | $ 44,770 | $ 70,314 | ||
Supplemental disclosure of cash flow information: | ||||
Interest paid | $ 55,374 | $ 58,300 | ||
Income taxes paid | $ 7,946 | $ 2,707 | ||
Purchase of capital assets on account | $ 520 | $ 1,813 | ||
Key Performance Indicators and Non-GAAP Measures
The primary financial performance measures we use to manage our business and monitor results of operations are revenue trends and operating income trends. Management believes that these financial performance measures are the primary drivers for our earnings and net cash from operating activities. Management evaluates its contracts and business performance by focusing on revenue, and operating income. Operating income represents revenue less both cost of revenue and selling, general and administrative (SG&A) expenses. Cost of revenue consists of labor, subcontracting costs, materials, and an allocation of indirect costs, which includes service center transaction costs. SG&A expenses consist of indirect labor costs (including wages and salaries for executives and administrative personnel), bid and proposal expenses and other general and administrative expenses not allocated to cost of revenue.
We manage the nature and amount of costs at the program level, which forms the basis for estimating our total costs and profitability. This is consistent with our approach for managing our business, which begins with management's assessing the bidding opportunity for each contract and then managing contract profitability throughout the performance period.
In addition to the key performance measures discussed above, we consider adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, and adjusted operating cash flow to be useful to management and investors in evaluating our operating performance, and to provide a tool for evaluating our ongoing operations. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives. We provide this information to our investors in our earnings releases, presentations, and other disclosures.
Adjusted net income, adjusted diluted earnings per share, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, and adjusted net cash provided by (used in) operating activities, however, are not measures of financial performance under GAAP and should not be considered a substitute for financial measures determined in accordance with GAAP. Definitions and reconciliations of these items are provided below.
- Adjusted operating income is defined as operating income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
- Adjusted EBITDA is defined as operating income, adjusted to exclude depreciation and amortization of intangible assets, and items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration, and related costs.
- Adjusted EBITDA margin is defined as adjusted EBITDA divided by revenue.
- Adjusted net income is defined as net income, adjusted to exclude items that may include, but are not limited to, significant charges or credits, and unusual and infrequent non-operating items that impact current results but are not related to our ongoing operations, such as M&A, integration and related costs, amortization of acquired intangible assets, amortization of debt issuance costs, and loss on extinguishment of debt.
- Adjusted diluted earnings per share is defined as adjusted net income divided by the weighted average diluted common shares outstanding.
- Cash interest expense, net is defined as interest expense, net adjusted to exclude amortization of debt issuance costs.
- Adjusted net cash provided by (used in) operating activities or adjusted operating cash flow is defined as net cash provided by (or used in) operating activities adjusted to exclude infrequent non-operating items, such as M&A payments and related costs.
- Net leverage ratio is defined as net debt (or total debt less unrestricted cash) divided by trailing twelve-month (TTM) bank EBITDA.
Non-GAAP Tables | |||||||
($K, except per share data) | Three Months Ended | Six Months Ended | |||||
June 28, 2024 | June 30, 2023 | June 28, 2024 | June 30, 2023 | ||||
Revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | |||
Net income (loss) | $ (6,544) | $ 1,799 | $ (5,400) | $ (15,681) | |||
Plus: | |||||||
Income tax expense (benefit) | (1,570) | 210 | (1,590) | (5,527) | |||
Other expense, net | 4,735 | 311 | 6,368 | 311 | |||
Interest expense, net | 28,807 | 31,950 | 56,381 | 63,694 | |||
Loss on extinguishment of debt | 1,998 | — | 1,998 | 22,052 | |||
Operating income | $ 27,426 | $ 34,270 | $ 57,757 | $ 64,849 | |||
Plus: | |||||||
Amortization of intangible assets | 22,986 | 22,605 | 45,525 | 45,211 | |||
M&A, integration and related costs | 15,344 | 14,964 | 25,325 | 25,731 | |||
Adjusted operating income | $ 65,756 | $ 71,839 | $ 128,607 | $ 135,791 | |||
Plus: | |||||||
Depreciation and CCA amortization | 6,513 | 5,914 | 12,756 | 11,326 | |||
Adjusted EBITDA | $ 72,269 | $ 77,753 | $ 141,363 | $ 147,117 | |||
Adjusted EBITDA margin | 6.7 % | 8.0 % | 6.8 % | 7.7 % | |||
Minus: | |||||||
Cash interest expense, net | 26,804 | 29,771 | 52,218 | 59,002 | |||
Income tax expense, as adjusted | 10,145 | 7,130 | 17,300 | 15,710 | |||
Depreciation and CCA amortization | 6,513 | 5,914 | 12,756 | 11,326 | |||
Other expense, net, as adjusted | 2,543 | 311 | 4,176 | 311 | |||
Adjusted net income | $ 26,264 | $ 34,627 | $ 54,913 | $ 60,768 | |||
($K, except per share data) | Three Months Ended | Six Months Ended | |||||
June 28, 2024 | June 30, 2023 | June 28, 2024 | June 30, 2023 | ||||
Diluted earnings (loss) per share | $ (0.21) | $ 0.06 | $ (0.17) | $ (0.51) | |||
Plus: | |||||||
M&A, integration and related costs | 0.36 | 0.38 | 0.60 | 0.64 | |||
Amortization of intangible assets | 0.53 | 0.58 | 1.09 | 1.13 | |||
Amortization of debt issuance costs and | 0.10 | 0.08 | 0.15 | 0.67 | |||
FMV land impairment | 0.05 | — | 0.05 | — | |||
Adjusted diluted earnings per share | $ 0.83 | $ 1.10 | $ 1.72 | $ 1.93 | |||
Average shares outstanding | |||||||
Basic, as reported | 31,470 | 31,033 | 31,411 | 30,981 | |||
Diluted, as reported | 31,470 | 31,605 | 31,411 | 30,981 | |||
Adjusted diluted | 31,510 | 31,605 | 31,894 | 31,449 | |||
SUPPLEMENTAL INFORMATION
Revenue by client branch, contract type, contract relationship, and geographic region for the periods presented below was as follows:
Revenue by Client | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 28, | June 30, | June 28, | June 30, | |||||||
(In thousands) | 2024 | % | 2023 | % | 2024 | % | 2023 | % | ||
Army | $ 456,690 | 43 % | $ 393,499 | 40 % | $ 890,120 | 43 % | $ 784,002 | 41 % | ||
Navy | 349,824 | 33 % | 293,198 | 30 % | 671,208 | 32 % | 585,888 | 30 % | ||
Air Force | 127,467 | 12 % | 154,001 | 16 % | 246,036 | 12 % | 283,982 | 15 % | ||
Other | 138,202 | 12 % | 137,154 | 14 % | 275,383 | 13 % | 267,440 | 14 % | ||
Total revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | ||||||
Revenue by Contract Type | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 28, | June 30, | June 28, | June 30, | |||||||
(In thousands) | 2024 | % | 2023 | % | 2024 | % | 2023 | % | ||
Cost-plus and cost-reimbursable | $ 615,837 | 57 % | $ 507,282 | 52 % | $ 1,200,659 | 58 % | $ 1,019,217 | 53 % | ||
Firm-fixed-price | 429,182 | 40 % | 438,684 | 45 % | 826,433 | 40 % | 834,891 | 43 % | ||
Time-and-materials | 27,164 | 3 % | 31,886 | 3 % | 55,655 | 2 % | 67,204 | 4 % | ||
Total revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | ||||||
Revenue by Contract Relationship | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 28, | June 30, | June 28, | June 30, | |||||||
(In thousands) | 2024 | % | 2023 | % | 2024 | % | 2023 | % | ||
Prime contractor | $ 1,006,121 | 94 % | $ 916,060 | 94 % | $ 1,951,276 | 94 % | $ 1,795,239 | 93 % | ||
Subcontractor | 66,062 | 6 % | 61,792 | 6 % | 131,471 | 6 % | 126,073 | 7 % | ||
Total revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | ||||||
Revenue by Geographic Region | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
June 28, | June 30, | June 28, | June 30, | |||||||
(In thousands) | 2024 | % | 2023 | % | 2024 | % | 2023 | % | ||
$ 578,881 | 54 % | $ 578,514 | 59 % | $ 1,123,608 | 54 % | $ 1,127,284 | 59 % | |||
361,064 | 34 % | 279,083 | 29 % | 704,361 | 34 % | 560,204 | 29 % | |||
84,663 | 8 % | 65,533 | 7 % | 153,464 | 7 % | 129,850 | 7 % | |||
47,575 | 4 % | 54,722 | 5 % | 101,314 | 5 % | 103,974 | 5 % | |||
Total revenue | $ 1,072,183 | $ 977,852 | $ 2,082,747 | $ 1,921,312 | ||||||
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SOURCE V2X, Inc.