V2X (VVX) Q4 2025 Earnings Call Transcript
V2X (VVX) Q4 2025 Earnings Call Transcript
Motley Fool Transcribing, The Motley FoolMon, February 23, 2026 at 11:23 PM UTC
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Feb. 23, 2026
CALL PARTICIPANTS -
Chief Executive Officer — Jeremy C. Wensinger
Chief Financial Officer — Shawn M. Mural
Operator
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TAKEAWAYS -
Revenue -- $1.22 billion for the quarter, up 5% year over year, led by training, foreign military sales, and rapid prototyping programs.
Full-year revenue -- $4.48 billion, representing 4% annual growth, and landing at the upper end of 2025 guidance.
Adjusted EBITDA -- $88.7 million for the quarter, a company record, with a 7.3% margin.
Full-year adjusted EBITDA -- $323.3 million, exceeding the high end of guidance, and yielding a 7.2% margin.
Adjusted net income -- $49.3 million for the quarter, a 16% increase year over year.
Full-year adjusted net income -- $166.8 million, up 20% year over year.
Adjusted diluted EPS -- $1.56 for the quarter, approximately 17% year-over-year growth; $5.24 for the year, up 21%.
Net debt reduction -- $116 million reduction in net debt year over year, bringing net debt to $758 million, and lowering net leverage ratio to 2.2x.
Backlog -- $11.1 billion total backlog at year-end; funded backlog of $2.3 billion, excluding the approximately $4 billion T-6 award to be added in the first quarter.
Book-to-bill ratio -- 0.9 for the trailing twelve months; guidance for above 1.0 in 2026, with T-6 award as a critical contributor.
Pipeline -- Qualified pipeline over $60 billion, with a 50% increase in bid velocity during 2025, and a further 30% bid velocity increase targeted for 2026.
Contract wins -- Two contracts exceeding $1 billion each, plus ten awards over $100 million in 2025.
Key program contribution -- Expected T-6 contract revenue contribution of around $140 million–$160 million in 2026.
2026 revenue guidance -- $4.675 billion to $4.825 billion, for 6% growth at the midpoint.
2026 adjusted EBITDA guidance -- $335 million to $350 million on an adjusted basis.
2026 adjusted EPS guidance -- $5.50 to $5.90, midpoint representing 9% growth.
2026 adjusted operating cash flow guidance -- $150 million to $170 million, factoring in an additional $50 million payroll cost in 2026.
Cash interest expense -- Expected at $69 million for 2026; $73.7 million for 2025, a $27 million improvement from prior year.
Capital expenditures -- Approximately $25 million expected in 2026.
AI and technology partnerships -- Announced partnerships with Amazon Web Services, and Google Public Sector, to drive modernization in warehousing, logistics, and secure AI deployment.
Contract mix and fixed price trends -- Management noted an uptick in customers soliciting fixed-price contract offerings, though major contract awards remain cost-type at present.
Backlog coverage -- Approximately 85% of 2026 revenue guidance is covered by existing backlog, excluding the T-6 award.
Recompete exposure -- Roughly 3% of projected 2026 revenue is subject to recompete risk.
Geographic performance -- Indo-Pacific revenue described as flat to slightly down, with no significant improvement anticipated in early 2026.
Middle East developments -- Mission support activity in the Middle East is ramping down as previously planned, with no incremental revenue from emerging regional instability included in current forecasts.
Operating cash flow -- Adjusted net cash provided by operating activities was $148.3 million for 2025; year-end net cash provided by operating activities totaled $182 million.
Management communicated that the extended U.S. government shutdown did not materially impact quarterly financials, highlighting the resilience and alignment of its business model with mission-critical needs. Executives stated that the company expects the ramp up of the T-6 training contract to begin March 1, with a planned revenue contribution of $140 million–$160 million in 2026, and that the entire value will be reflected in backlog in the first quarter. The company's bid pipeline expanded due to strategic investments in people, process, and technology, and a further 30% increase in bid velocity is targeted for the current year. New partnerships with Amazon Web Services, and Google Public Sector, are being leveraged to deliver data-driven supply chain, and AI-based solutions for defense and commercial customers. Rapid prototyping and technology-first initiatives are designed to accelerate customer mission readiness, and are materially supported by co-investment from customers via CRAD funds.
Executives characterized the backlog composition—excluding the T-6 award—as providing about 85% revenue coverage for the upcoming year, with the unfunded/funded mix to align with typical program structures, and seasonality.
Management noted that margin expansion from newly awarded programs is expected to occur over time, as early phases may be margin-dilutive while processes are reengineered for operational efficiency.
Guidance for 2026 assumes a typical cash flow seasonality pattern, and indicates that net income conversion at the midpoint of the guide is approximately 115%, taking into account an additional payroll period.
"We are extremely happy with the leverage that the company is at. And Jeremy said consistently, that opens up optionality," according to management, enabling further internal investment, and potential strategic acquisitions.
The company confirmed that book-to-bill guidance above one for 2026 relies critically on booking the T-6 award; without it, the ratio could be lower.
Executives stated that the risk profile for 2026 is more closely tied to operational responsiveness to customer needs rather than to specific contract or geopolitical disruptions, according to the transcript.
INDUSTRY GLOSSARY -
IDIQ (Indefinite Delivery, Indefinite Quantity): A U.S. government contract type which allows for an indefinite quantity of services or supplies during a fixed period, with work ordered via task or delivery orders.
CRAD (Customer Research and Development): Funding provided by government customers to support contractor-led development or rapid prototyping projects.
T-6 award: Refers to a large-scale U.S. Air Force training aircraft maintenance and support contract won by V2X, with an approximate value of $4 billion.
Book-to-bill ratio: A measure of order intake versus billing/revenue in a given period, used to assess future revenue visibility and growth prospects.
Full Conference Call Transcript
Operator: Results and the progress we have made. We reported solid top line growth and strong operating performance. In the fourth quarter, we drove record quarterly revenue, adjusted EBITDA, and adjusted cash flow. This is a testament to our commitment to generate value. Revenue increased 5% year over year to a record $1,220,000,000. For the full year, revenue grew 4% to $4,480,000,000, hitting the upper end of our 2025 guidance range. Adjusted EBITDA was $88,700,000 for the quarter, a record for the company. In exceeding our expectations, we delivered a full year adjusted EBITDA of $323,300,000 with a margin of 7.2%. Adjusted net income was $49,300,000 and adjusted EPS was $1.56, both representing double digit year over year growth.
Adjusted net income was $166,800,000 for the full year, representing a 20% increase year over year. Adjusted diluted EPS was $5.24, 2025, increasing 21% year over year. Our ongoing emphasis on reducing debt and generating cash allowed us to improve our net debt $116,000,000 compared to last year. As a result, our net leverage ratio now stands at 2.2 times. Shawn will share more of our financials and our outlook later in the presentation. Turning to Slide 5. The progress we have made this year exemplifies how our readiness enabled solutions continue to support our customers' evolving requirements and create tailwinds for continued growth.
We have won a number of recent contracts across key growth areas reflecting both the depth of our customer relationships and our ability to deliver at scale complex high consequence missions. In 2025, we delivered two contract wins valued at more than $1,000,000,000 each and 10 awards each exceeding $100,000,000. In supporting mission readiness, the successful T-6 aircraft award represents approximately $4,300,000,000 and underscores customer confidence in our execution and industry leading readiness rates. Similarly, the F-16 modernization and services award reflects our ability to support fleet readiness through modernization, sustainment, integrated support, and capabilities that remain essential to our customers' mission priorities. We are also seeing continued traction in training and services.
The more than $100,000,000 General Motors training award demonstrates how our core competency translates effectively across both defense and commercial environments. In advanced capabilities, the MDA Shield IDIQ award positions us to extend our space domain awareness and emerging missile defense priorities. The advanced technology support program, IDIQ, reflects our growing role in rapid development and fielding of emerging technologies, an area where speed, integration, and trust matter deeply. For national security programs, our classified awards across cyber operations and systems reinforce the relevance of our capabilities in highly sensitive mission critical environments. Looking ahead, our qualified pipeline stands at more than $60,000,000,000 reflecting both scale of opportunities and demand for our offerings.
We talked through 2025 about an increase of 50% in bid velocity, and that is exactly what we did. Our continued investment in people, process, and technology have allowed us to pursue expanded opportunities. In 2026, we are targeting an additional 30% increase as we further leverage investments to cap capture larger and more complex programs. We are confident in our momentum exiting 2025 and our ability to carry it forward. We are aligned with well funded priorities, have secured long duration programs, and are positioned with customers who value proven execution. Before we move on, I want to note that this slide really represents a company that is winning.
V2X, Inc. excels in mission critical work with long term customers in areas aligned with national security priorities. As we look ahead, we believe this foundation positions V2X, Inc. well for continued growth. Turning to Slide 6. I would like to discuss something that we are very excited about in the transformation it represents. We are continuing to build our technology first foundation, including targeted investment in best in class partnerships. These efforts are driving innovation across our base and improving outcomes for our customers. Let me walk through how we think about this. Our investments are focused on high growth opportunities where technology can accelerate modernization and strengthen our technical depth for customers.
These investments are designed to use data to move us faster from concept to deployment while remaining tightly aligned with mission needs. Second, we are partnering with the best. We recognize that innovation at scale requires access to world class platforms and capabilities. That is why we have established partnerships with leading technology companies that bring AI, data, automation, and advanced robotic capabilities to deliver mission outcomes. Recently, we announced a partnership with Amazon Web Services to advance smart warehousing and global logistics automation. This partnership helps modernize supply chains, improve visibility, and enhance resilience across distributed operations.
We also recently partnered with Google Public Sector to deploy secure responsible AI solutions in a way that meets the stringent security and requirements of our customers. These partnerships allow our customers to benefit from proven scalable platforms, and V2X, Inc. provides the mission context, integration experience, and operational know how needed to deploy them effectively at speed. These initiatives allow us to apply top tier innovation across our base. We will be able to innovate program execution through predictive data enabled solutions to improve decision making, increase speed, and drive more consistent outcomes. Simply put, we are deepening our bias for innovation. We are transforming our global presence into a true global persistence through speed and execution.
With operations expanding some of the most complex environments in the world, speed banners. By connecting data, systems, and teams across geographies, we will be able to execute faster, respond quicker, and deliver consistent performance at scale. We are turning our footprint into a strategic advantage. We put it all together. You can see how our capabilities come to life. This is what we mean by technology first solutions, mission tested engineering, and global persistent operations working together. No one is better positioned than V2X, Inc. to meet the mission needs of our customers today and tomorrow.
Our recent progress reflects our strategy, and as we continue to invest, partner, and innovate with discipline, we believe V2X, Inc. is uniquely positioned to extend that momentum, delivering greater value for our customers and creating sustainable, long term value for our shareholders. With that, I will turn the call over to Shawn M. Mural for a review of our financials.
Shawn M. Mural: Thank you, Jeremy. Afternoon, everyone. Please turn to Slide 7. The value V2X, Inc. delivers for its customers was clearly demonstrated in the fourth quarter with notable top line growth and strong operating performance. Revenue in the fourth quarter increased 5% to $1,219,000,000. Growth was primarily fueled by our training, foreign military sales, and rapid prototyping programs. Adjusted EBITDA in the quarter was $88,700,000, a record for the company. Adjusted EBITDA margin was 7.3%. Interest expense in the fourth quarter was $19,600,000. Cash interest expense was $18,000,000, improving $4,700,000 year over year. Net income for the quarter was $22,800,000. Adjusted net income was $49,300,000, up 16% year over year.
Fourth quarter diluted EPS was $0.72 based on 31,600,000 weighted average shares. Adjusted diluted EPS in the quarter increased approximately 17% year over year to a record $1.56. Adjusted operating cash flow in the fourth quarter was $172,400,000. I feel it important to highlight that the extended government shutdown did not have a material effect on our financial results in the fourth quarter, further demonstrating the enduring and mission aligned nature of our business. Please turn to Slide 8, where I will discuss our full year results. Revenue in 2025 increased 4% on a year over year basis to $4,480,000,000. Adjusted EBITDA for the year was $323,300,000, exceeding the high end of our guidance range.
Interest expense for the year was $79,900,000. Cash interest expense was $73,700,000, improving approximately $27,000,000 compared to the prior year period, demonstrating our proactive repricing activities, debt paydown, and cash flow generation. Net income for the year was $77,900,000. Adjusted net income was $166,800,000, increasing 20% year over year. Diluted EPS for the year was $2.45. Adjusted diluted EPS increased 21% year over year to $5.24, exceeding the high end of our range. Year to date net cash provided by operating activities was $182,000,000. Adjusted net cash provided by operating activities $148,300,000. The ability to generate strong cash is an important characteristic of our business, and is further highlighted on Slide 9.
In 2025, our solid cash flow generation drove a $116,000,000 year over year improvement in net debt to $758,000,000. This positive performance yielded a net leverage ratio of 2.2 times, representing over one full turn of improvement in just 24 months. We thought it important to highlight that we achieved this success while executing our capital allocation strategy, which included deploying over $50,000,000 in the second half of the year to accelerate value creation. The strength of our balance sheet and cash flow provide substantial flexibility and optionality to deploy capital, including internal investments and to strategically acquire complementary capabilities, access to new channels, solutions that accelerate our growth strategy.
In summary, we are executing on the capital allocation strategy we outlined in the second quarter and see further opportunities in 2026 and beyond. Please turn to Slide 10. Our backlog and recent wins provide a clear path to revenue growth as we look into 2026. Our backlog at the end of the year was $11,100,000,000. Funded backlog improved slightly from the last quarter to $2,300,000,000. Important to note that our backlog at the end of the year does not include the approximate $4,000,000,000 T-6 award. Subsequent to the fourth quarter, the award decision to V2X, Inc. was upheld, and we expect to book this award to backlog in the first quarter.
This is a great outcome for V2X, Inc., representing a milestone program that we expect to add positively to our backlog and revenue visibility. We look forward to delivering our industry leading mission readiness rates for this important training platform. The book to bill ratio for the trailing twelve months was 0.9, in line with our expectations and consistent with our commentary last quarter. Also, as previously mentioned, we expect book to bill will be above one in 2026. Please turn to Slide 11. We made exceptional progress executing our strategy in 2025.
Looking ahead, we believe our recent wins, backlog, limited recompetes, and solutions that are transforming the speed with which our customers can achieve mission readiness positions us to continue this momentum. For 2026, revenue is expected to be $4,675,000,000 to $4,825,000,000. We expect revenue growth to accelerate to 6% or $4,750,000,000 at the midpoint, which compares favorably when taking into account 2025 revenue was at the upper end of our guidance range. Revenue in 2026 incorporates the incremental contribution from our training, foreign military sales, and rapid prototyping programs, as well as the initial ramp on T-6 and completion of previously referenced certain mission support activities in the Middle East.
Additionally, a percent of revenue expected to come from recompetes has improved going into 2026 and now represents approximately 3% of revenue at the midpoint of the guide. Adjusted EBITDA is estimated at $335,000,000 to $350,000,000. Adjusted diluted earnings per share guidance is $5.50 to $5.90, representing 9% growth at the midpoint. We expect adjusted net cash provided by operating activities to be $150,000,000 to $170,000,000. Cash flow in 2026 assumes one additional payroll in 2025, is estimated at approximately $50,000,000. We believe cash flow should be in line with our normal seasonal pattern and cash generation occurring in the second half of the year. Cash interest expense is expected to be approximately $69,000,000 with other expenses of $15,000,000.
Capital expenditures for the year are estimated at approximately $25,000,000. In summary, 2025 was a successful year on many fronts, in both supporting our customers' missions and achieving our commitments to our shareholders and employees. We are well positioned going into 2026, and look forward to discussing our progress with you throughout the year. Jeremy, back over to you.
Jeremy C. Wensinger: Thanks, Shawn. 2025 was a great year for V2X, Inc. We are accelerating our position as a leading provider of mission capabilities. Before I turn it over to Q&A, I would like to take a moment of appreciation for over 16,000 employees across the globe. Their execution and commitment to our customers' mission propels V2X, Inc. forward and prepares us today to take on the missions of tomorrow. With that, I would like to open it up for questions.
Operator: We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. Our first question today is from Tobey O'Brien Sommer with Truist. Please go ahead.
Tobey O'Brien Sommer: I was wondering if you could comment on what has been the trajectory of the company's revenue and activity in the Middle East region, with the shifting of resources that direction. Towards Iran? Thank you.
Jeremy C. Wensinger: Yeah. Good to hear from you, Tobey. Thanks. Yeah. So, you know, at this time, obviously, you know, the situation is, I will say, fluid. You know, our priority right now is make sure everyone's safe. You know, I would like to think that, you know, we will participate in whatever the outcome looks like eventually. But today, it is, like I said, fairly fluid with ensuring the safety of all of our employees in the region that we have throughout that area. So we will certainly see how things evolve as time progresses. But that is kind of where we are today. Hey, Tobey. It is Jeremy.
I think the one thing I would add to that is and Shawn is right. We were highly concerned for our employees. And, you know, we have actually an activity every day that allows us to understand where everybody is. But I do think presence matters. And, you know, we talk about that all the time. I think being in the region allowing and supporting our customer in terms of what they are going to do in the region is something very important. Whatever happens there, I think.
But, you know, the single most important thing we are doing right now, and I think everybody needs to keep this in mind, is that our employee safety and our concern for them is number one.
Tobey O'Brien Sommer: And how much contribution do you expect from the T-6 contract? And is that do you think that there will be additional legal hurdles to that transition?
Jeremy C. Wensinger: You know, I cannot speculate on legal hurdles, Tobey. I will tell you the assumptions that we have made. So, you know, you have heard what we said in the prepared remarks. We will effectively start that program on March 1. Where transition will be complete. You may recall we began executing that in the mid third quarter through the fourth quarter. We were paused for a brief period after the first of the year. And so now we will pick it up in, you know, in March. From a planning standpoint, here is a little bit about the assumption that we have made on that. There is an inherent lag.
This is a largely material receipts job for us, at least at first. And there is a 90 to 120 day type of lag. So in the guide that we gave at the midpoint, you should think it is somewhere around $140,000,000 to $160,000,000 of revenue for us this year.
Tobey O'Brien Sommer: Okay. I appreciate that. And what are you seeing in your Intel business, which kind of the exposures are relatively new to you, but you had some classified work announced not too long ago. What is the trajectory of that? In your guide? Is that an area of sort of a source of accretive growth there?
Jeremy C. Wensinger: Yeah. I think what we did with the Kinetic acquisition was positioning us well to augment what we do today. We are excited about what that business brings to us. Excited about, you know, the fact that it builds on a pipeline that is going to only grow. So I think that is a business that we are very excited about.
Operator: Thank you. The next question is from Andre Madrid with BTIG. Please go ahead.
Andre Madrid: Hey, good afternoon, everyone. Thanks for taking my question. So, so I know last year, we had you guys had called out, you know, five one plus bill opportunities that you were targeting. And Slide 5, I know you called out $2,000,000,000 of being awarded. Is there a status update that you can give on the remaining opportunities? Are those still stuff that you are actively bidding on? Were you know, any color there?
Jeremy C. Wensinger: I think, you know, the two that we retired obviously, we are thrilled about. We obviously have, you know, that plus we have added to that portfolio this year, terms of what we are bidding when I talk about 30% increase in overall bid velocity. But, yeah, we are waiting on adjudication on the remaining three. That we feel very good about, but,again, we have to wait for adjudication. But again, the fact that we were able to retire two of them in the fiscal year plus, you know, the 10 plus $100,000,000 one, I think bodes well for the business in terms of not only bid velocity, but also our ability to win.
So I think those bode well for the company.
Shawn M. Mural: Yeah. Andre, too. To put a fine point on it. So one of those was bid in the fall. One of the three was bid in the fall. Two were captured, as exactly as Jeremy said. And then there is one to be bid this year and one to be bid in 2027. And there is about a year lag between the time the bid goes in and any award assumption that we would have on those things. Not counting any protest periods or anything like that. So very modest to any impact in 2026 as a result of any of those captures. We will be talking about those for some time to come, I suspect.
Remain very happy with where we are positioned on those. Teams worked extremely hard to put together, you know, wonderful offerings and teammates.
Andre Madrid: Got it. Got it. No. That is very helpful. And then, I mean, pivoting, it seems like everybody wants to, you know, talk about them at least, but I know you guys called out the Indo-Pacific as a growth area for you throughout much of 2025. Any updates that you could provide there as to how that market is materializing?
Shawn M. Mural: Yeah. You know what? You know, when you look at the breakdown in the details that we provided, it was flat to slightly down. We are seeing that, I will say, continue into 2026. So folks may recall, odd number years tends to be training years in the region. We did not necessarily see that materialize to the volume that we had historically seen. Now we saw an increase in, you know, I will say, requests to put to put things in front of customers. They did not necessarily materialize. So we will see how things play out in 2026, but as I sit here today thinking about, you know, where the growth will come from, we are positioned.
There is very good ops tempo. We are really happy with the positioning. Jeremy consistently talks about presence. And, you know, there is not a month that goes by that we do not talk about opportunity sets in the region. I do not know that there is anything imminent. As I sit here today, Andre, we think about, you know, kind of early 2026, but we will see. We are just starting with the early innings.
Andre Madrid: Got it. Got it. I will leave it there. Thank you, gentlemen.
Operator: Thank you. The next question is from Peter J. Arment with Baird. Please go ahead.
Peter J. Arment: Yes, thanks. Good afternoon, Jeremy, Shawn, Mike. Nice results. Hey, Jeremy, on the you had a really strong year in kind of ramping up the bid velocity and you talk about a big pipeline. How should we think about are there more like opportunities the size of, you know, the T-6s of the world, or is this going to be more kind of the ones you mentioned where you had, you know, 10, a $100 plus million dollar awards? You know, how should we think about just the pipeline of what you are bidding? Thanks.
Jeremy C. Wensinger: No. It is a really good question, Peter, because I think we are trying to balance it. We are trying to balance what I call, you know, big game hunting with, you know, singles and doubles. And I think both of them fit in the portfolio very well. But, you know, clearly, the administration and prior administrations have kind of consolidated some of these buys into bigger buys. Which, you know, at our scale, allows us to compete. But, again, I think the singles and doubles are just as important and I think they add to the overall value of the company.
And so when I look at it, candidly, you are right, I look at bid velocity as the metric. As long as I am getting, you know, the bid volume out the door, it could be big ones. It could be small ones. You know, it could be intermediate ones. And I think that is important to the company because I think that is what feeds the system.
Peter J. Arment: Got it. That is helpful. And then just also, there were some pursuits around, you know, that you guys have had a lot of opportunities to think about, you know, contracts maybe moving to fixed price or things of that nature. Has there been any kind of further financing of that with the administration now kind of, you know, more, I guess, up and running with the Department of War? Are there opportunities you think you are pursuing on a fixed price basis?
Shawn M. Mural: Yeah. I think we are seeing more fixed price opportunities than we have in the past. I do not know, Shawn, if you want to add to that. But I think it is I think it is clearly an avenue for us, which we are really good. Customers that have historically been cost type have approached us. It has not translated into an award yet as fixed price feeder, but between, I will call it, you know, late mid to late fourth quarter and as we sit here today, we have seen a higher ops tempo with customers and soliciting those type of offerings from us. So, you know, we will see how that plays out.
But encouraging to see, I will say, some more traction around getting, you know, contracts and up the appropriate parties that would make that happen engaged. So it has gone from more than just talk to words on paper.
Peter J. Arment: Got it. And just lastly, Shawn, on the net leverage. You guys have done incredible job of obviously, setting yourselves up. Are we thinking about kind of the go forward? Is it further, you know, a reduction, or is are you looking at other pursuits on an M&A perspective?
Shawn M. Mural: Yeah. You know, listen. I think we have said we will at all options for value creation for the shareholders. And that remains the case, Peter, right? We are extremely happy with the leverage that the company is at. And Jeremy said consistently, that opens up optionality. I think I highlighted it in the remarks. Really happy to deliver 2.2 while deploying $50,000,000 of capital last year to further enhance shareholder value. So we will see how 2026 plays out, but, you know, it is a good spot for us to be in. To have those options in front of us.
Peter J. Arment: Appreciate all the color. I will jump back in the queue. Thanks, guys.
Operator: The next question is from Trevor Walsh with Citizens JMP. Please go ahead.
Trevor Walsh: Great. Hey, team. Thanks for taking the question. Wanted to start with the AI partnerships with Google and AWS. Can you maybe just click in one level deeper around what those opportunities look like sort of broadly as you look at them going forward? Are they more technology centric type of implementations with the smart warehousing, or is it more just traditional IT system integrator type work? Just want to try to get a sense of what that could look like and then kind of relatedly, how does how does it maybe shift by opportunity around, like, what the margin contract kind of profile might be of those opportunities.
Jeremy C. Wensinger: No. It is a really good question, and I appreciate you asking it. I think AWS was an opportunity for us to look at somebody who does some of the best smart warehousing around the globe. And use them on things that we do every day. I mean, if you think about everywhere we are around the globe, there is a warehouse. And I think AWS is, you know, one of the best in the world at the ability to manage a warehouse and put their smart warehousing capability in play. We own all the data. And what they own is the process.
And so I think the combination between us and AWS and us and Google who is clearly invested in AI is taking our data and using our data in a way that is going to enable my customer to have better outcomes. Faster outcomes, better outcomes, and more efficient outcomes. So I wanted to put myself in a position where I was partnered with the best in the industry to deliver these capabilities because all the data I have and I own. And so they are going to use my data to deliver better outcomes for my customer using their technology. And I think at the end, it ended up being a perfect partnership. Partnership between them.
You know, if you think about AWS, Google, and IBM, it was a perfect partnership for us to go with.
Shawn M. Mural: There is a speed to market aspect here too, right, in terms of how quickly we can deploy things. You have heard us talk about global footprint. Right? So do not think about do not think about it only from a pursuit standpoint. Like, capability that we have that we can deploy in a broad scale today. And we will see, you know, we will see how things evolve. But exactly as Jeremy said, a wonderful partnership to go forward and deliver, we think, enhanced capability to our customers at speed and at scale.
Jeremy C. Wensinger: I mean, we are already doing it on the WTRS program. But we are giving them capability that they never had before. And I am looking forward to extend that to other customers.
Trevor Walsh: Great. That is fantastic. Thanks, both. Shawn, maybe just a quick follow-up then for you. On the T-6 contract, appreciate that color that you gave around the revenue. You maybe provide a little bit of color as well on how that is going to affect backlog? I realize that the whole amount will go into backlog in Q1, as you mentioned, but could you maybe give us a sense of what would be funded or unfunded if you have like a high level take just as we think about that?
Shawn M. Mural: I do not have the, you know, I do not have the funding and unfunded portion yet. You know, we are working through that with the customer. But if it is like other programs we have, it would not shock me if it was funded annually or slightly less in terms of what we would get incrementally. That is not at all unusual in these type of programs. I do think the, you know, the booking that we will take in Q4 will not be the entire con value that we were awarded. There is options in there. That cannot all be exercised. And I say that it is kind of one or the other from an optionality standpoint, Trevor.
Right? So, you know, the team is going through that right now. From a bookings and backlog practice. You should all think of this as being tying our booking to what our performance obligations on the contract to include the options will be. And that is what will end up in our backlog here at the end of the quarter.
Trevor Walsh: Got it. Super helpful. Thanks, all. I will leave it there.
Operator: The next question is from Jonathan Siegmann with Stifel. Please go ahead.
Jonathan Siegmann: Hey, good afternoon, Jeremy, Shawn and Michael. This is actually Sebastian Rivera on the line for Sean Siegmann. Congrats on strong print here. I guess, just wanted to start with a broader question. There has kind of been some AI existential threat jitters recently to service names and kind of wanted to just get your glass half full view, if you will, on how AI will be a lever for the company over the short to medium term and kind of perhaps in the context of some of your recent wins and partnership announcements.
Jeremy C. Wensinger: Yeah. I think, Sebastian, that is why we lean forward with the partnerships that we have. We decided that we wanted to be on with partners whose critical path was the future of AI. And I think Google is that. And I think Google also recognized that we have the information that makes AI operate. And so when I look at the transformational app of AI in our business, I wanted to partner with somebody who brought a tool and I brought the data. And I brought the vision capability, and I want in the context, and the contract, that enable that AI to work.
So it was a natural partnership that occurred and I am thrilled to have that part of the team. I am thrilled to have Amazon part of the team. I am thrilled to have IBM part of the team. Because I think our business is going to be enabled by this transformational technology. Because we have all the, you know, we have all the mission know how. I mean, I am the guy on the ground. I am the guy doing all the work. And they are going to enable me to do that work much better, much faster, and much more efficient and deliver my customer a much better outcome. So we are excited about that.
Shawn M. Mural: And I will, Sebastian, I will say that, you know, think of this in increments. Right? There is not a big bang here. There is incremental filtering, sorting, sourcing, those types of things that can be done to demonstrate speed and agility to our customers by using capabilities that already exist. And exactly as Jeremy, again, has said before, we have data. We have presence. So let's leverage those things and make incremental progress on this. The adoption of these tools and capabilities as we go forward.
Jonathan Siegmann: Got it. Yeah. That is super helpful. And then on the back of the recent Shield IDIQ, can you maybe provide some more high level color on kind of where you see company kind of positioning with regard to Golden Dome requirements over time, I guess, kind of beyond the Cobra Dane, Cobra King, if you have that visibility today. I will jump back in the queue. Thank you.
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Jeremy C. Wensinger: I think that is going to be a longer term play. Again, I would call presence and also contract vehicles as the key to participating. Obviously, getting on the contract, having the presence on the ground, having the presence at the local facilities is everything. So as this thing evolves, our goal was to get into the mix that allowed us to be a participant to enable the government to deliver Golden Dome. We think we are well positioned to do that.
Operator: The next question is from John Godin with Citi. Please go ahead.
John Godin: Hey, thank you for taking my question. I wanted to follow-up on the commentary about book to bill and just make sure I understand it. The T-6 award is hitting in the first quarter. Is that correct?
Shawn M. Mural: Correct. Yep. We will book it. The protest was resolved here in the first quarter. And so we will we will reflect it in our backlog at the end of Q1.
John Godin: Okay. And is the pipeline some of the commentary around that, seems very positive and optimistic. I was curious that the guidance of being above a 1x book to bill for the full year is that would that still be the case if we excluded the T-6 award? Or is the T-6 award kind of critical in hitting the greater than 1x book to bill for the full year?
Shawn M. Mural: Yeah. I would say, you know, the T-6 award we should certainly be above one with the T-6. Like I said earlier, it is early innings in the year, you know, we will see how some things play out, but we are confident that we will be at one. There is opportunity to be well above one, 1.4, 1.5, or more depending on how some other things play. But we will see the timing of certain awards, you know, as they play out in the year.
We can never we can never predict those things perfectly, and protest factors and such, but again, feel very, very comfortable where we where we sit today with the guide that we have put out.
Jeremy C. Wensinger: I think, John, the place I would probably burn your calories on is, you know, we bid 50% more last year than we did the year before. We are projected to bid 30% more this year than we did last year. Our win rates are, you know, I will stand them up against anybody in the industry. That is an easy way for you to think about it.
John Godin: Oh, okay. But it sounds like we need that T-6 award in the number to be above on book to bill. Is that am I hearing that right?
Shawn M. Mural: Yeah. That is a fair interpretation.
John Godin: Okay. And then if we just look at the full year guidance, just a simple question about kind of the sensitivity or the range around kind of low end versus high end. Maybe you guys can talk a little bit about on the revenue and the margin side, what drives the sort of midpoint versus the high end of the guide?
Shawn M. Mural: Yeah. Mostly timing of things. Right? So, you know, I think we put out there we are we only we are down to about 3% of the revenue at the midpoint is up for recompete. And so timing of other new business activities or contract growth, things of that could sway it, right, relative to that ops tempo, you know, and when we might see some things materialize. We are feeling very good as we sit here today for the line of sight we have to the total year, but specifically the first half. And we will see the timing of awards. But it is nothing more than that, really.
John Godin: Okay. Great. Thanks, guys.
Operator: The next question is from Kenneth George Herbert with RBC. Please go ahead.
Kenneth George Herbert: Yes. Hi, good afternoon, Jeremy and Shawn. And Mike. Hey, just wanted to follow-up maybe just wanted to follow-up on the margin discussion. How do we think about with the T-6 and incremental bookings you are seeing this year, what is the potential to see better than sort of the flattish margins in 2026? Or what are maybe the key puts and takes as we think about potential margin upside?
Shawn M. Mural: Yeah. So I will go to the, you know, many of our programs that start out early, and we have got several this year that are contributing to growth, they start out at margins that are, you know, somewhat dilutive to the company composite. And then they grow. And so T-6 in the early phases, you know, we will see. We are going to do the EAC here in Q1, and we will see. But it would not shock me if it follows the profile for most of our programs that are like that we tend to grow into the margins. It takes a little bit of time.
Because what you do is you reengineer the process around delivering those industry leading readiness rates that we have across the majority of the platforms that we have. And so you have kind of got to tear things down and then build them back up. You have got the supply base. All of those things that go into it, but we are really happy with the performance that we ultimately get. So I do not know that I look at that as being a real, you know, margin enhancement activity here in 2026. I think we have full confidence that the team will deliver to the commitments.
Jeremy C. Wensinger: 100%. Look, I think Shawn is right. I think every program kind of goes through its life cycle. But once my team gets in and they are able to get ahold of the supply chain and they are able to get ahold of, you know, the employment base, and they are able to understand what is the best in class way to do things to deliver the readiness rates that we deliver. I have all confidence in that team's ability to do this. Does it take us a little bit time to do it? Yes. You are taking over someone else's preexisting program. But it takes us a moment to just conform it to the way we do business.
And once we do, we do exceptionally well.
Kenneth George Herbert: Yeah. That is great. If I could, Jeremy, maybe just obviously, the scale of what you are bidding is up significantly, and I can appreciate then the tailwinds on the top line. Is it fair to say that the stuff you are bidding today to the extent to which you are successful on it would support sort of a structural step up in margins over time, obviously, as the new work ramps?
Jeremy C. Wensinger: I would say we are bidding work that is to the overall business as a norm to our posture going forward. Is our posture. Now to Shawn's point, will we have programs that start out because of where, you know, we inherit something, that is not accretive day one. But it grows into itself. Absolutely. But as a corporate policy and process, we have a strong conviction around growing margins.
Kenneth George Herbert: Perfect. Thanks, guys. Nice results.
Operator: The next question is from Noah Poponak with Goldman Sachs. Please go ahead.
Noah Poponak: Hey, good evening, guys. Last year and the year prior, the top line growth was stronger in the back half than the first half. I am just curious if that holds this year or if with the much easier compares in the first half and then the tougher compares in the back half if the shape of this year is different?
Shawn M. Mural: Yes. It is a little bit different. This year, I think it is more balanced. No. I think it is more 50/50, you know, in terms of what that profile looks like on the revenue side.
Noah Poponak: Okay. Helpful. And Shawn, can you just walk us through the moving pieces on cash flow as you wrapped up 2025, you had the, you know, you sort of flagged the possibility of collections related to government shutdown. You ended up coming in fairly close to the low end of the original range. I guess I would have thought 2026 would have maybe grown from the 2025 original range. And then also had that working capital catch up. Can you maybe just bridge us through that or just sort of where should we think of how should we think of converting the EBITDA to the free cash flow? Going forward?
Shawn M. Mural: Yes. Yes. So I think yes, you are right. 2025 did come in a little bit certainly higher than the midpoint of the guide that we gave. You know, at the $148,300,000. You know, having a couple extra days, we saw significant, I will say, right at the end. And, candidly, that is why we that is why we adjusted because there was timing that was, I will call it, somewhat unpredictable. In terms of 2026, I think when we look at we have an extra pay period in 2026 that is, you know, worth about $50,000,000.
I think when we think about net income conversion, at the midpoint of the guide we put out, we are about 115% net income conversion. So I think it is I think we are pretty good this year. There are some that we will be cash negative in the first half of the year. As always, the profile will look, you know, probably very similar to what played out in 2025.
Noah Poponak: Okay. And then just maybe zooming out and thinking about long term growth. You know, you have some new programs ramping this year that drives a pretty good looking growth rate relative to the industry. Okay. You know, that has to keep growing. And then you have discussed a pretty healthy bid pipeline. Can you grow what you are forecasting this year for multiple years, or do you start to hit, you know, just a higher base and tougher compares that drives it decelerate from here.
Jeremy C. Wensinger: No. I think we are sitting on a target rich environment. When I look at the pipeline, we are very, very selective about what ends up in the pipeline. And it is all around our ability to capture and win and not burn that unnecessary resources on something that is a flyer. So when I look at that, you know, that pipeline that Roger has put together and I look at the win rates that are reflective of that, I feel very good about the fact that we can continue to grow. We are we have, you know, expanded look. We are not touching the vast majority of what is an addressable market.
And we have nothing but opportunity in front of us. We continue to build out Rogers' organization in terms of growth. We continue to hire new people all the time. That is the least of my concerns about having something to grow on. You know, it is trying to make sure that we are prepared for that growth. That is where my focus is.
Operator: The next question is from Mariana Perez Mora with Bank of America. Please go ahead.
Mariana Perez Mora: Good morning, everyone. Good morning now. Good afternoon. See? Long day.
Jeremy C. Wensinger: Yeah. Went straight where you were, Mary. See? You guys laughed.
Mariana Perez Mora: So first one on 2026 guidance. Could you mind discussing for the midpoint what kind of recompete risk you are thinking about? And then, like, what are the major programs, like, that are driving this growth? Like, is WTRS ramping that much or even within, like, you mentioned FMS and international. Is CMRS IDIQ also, like, expanding, like, what are the main drivers for that midpoint?
Shawn M. Mural: Yeah. Yeah. Sure. So I will give you color around what I said in the prepared remarks. So from an SMS standpoint, you know, we are growing from a from a range standpoint. Think of $150,000,000 to $170,000,000 in that area. From a training standpoint, year over year, we are about $130,000,000 to $150,000,000. I mentioned the T-6. We do have, and I previously mentioned, some Middle East mission support activities that are concluding and kind of ramping down. And so when you net all those things together, you get to, you know, the midpoint, the midpoint year over year growth of about 6%. You hit on recompetes.
Recompetes are about 3% today of the revenue projected revenue growth at the midpoint.
Mariana Perez Mora: Thank you. And then how should we think about, like, at the midpoint, how much is already covered by the funded backlog and how much you guys have to still go and, like, get. And then as a link to that, the context or the framework for this question is, we have seen a shutdown. We are getting into a year where we will see midterm elections later in the year. Like, how is the award environment and how that could affect this, like, range from 2026?
Shawn M. Mural: Sure. I will answer your question on the backlog, the revenue and backlog, although I would distinguish its total, it is not necessarily funded at this time because funded has seasonality to it. When, you know, contract period performances, you know, flip in the middle of the year and that sort of stuff. But approximately 85% of the total year's revenue is in backlog today. That, of course, excludes T-6. That I mentioned earlier because we will book that in Q1. From an award cadence standpoint, you know, I think the fourth quarter played out almost exactly as we thought in terms of where we ended up. The first quarter is playing out, you know, kind of very, very similar.
We will see how the stuff progresses throughout the year. But I will go back even a year ago, when we play when 2025 played out, the booking cadence was by and large on plan. Terms of what we saw. Will that persist? And for all the reasons that you just mentioned, Mariana, I do not know. But in terms of a cadence, in terms of an expectation, and aligned with what our internal plans have been, I think it has been pretty consistent.
Jeremy C. Wensinger: Yeah. Think, Mariana, the way you need to think about us is persistence at the mission level requires somebody to be there. And most almost entirely what of what we bid is keeping aircraft in the air, keeping them base running, you know, delivering technology and capability. Those things. And, yes, they could be influenced by an election. They could be influenced by budgets. Whatever you want to do. But, you know, candidly, we saw very little implications associated with government shutdown, associated with the fact that, you know, people want to keep aircraft in the air. People want to keep bases running. People want to have technology delivered. You know, we saw very few implications with that.
And so do I think we could be impacted by, you know, politics? Absolutely. Did we see it? To Shawn's point, no. Everything pretty much stayed on schedule. Which we were pleasantly surprised by.
Mariana Perez Mora: Alright. Thank you. And last one from me. You mentioned throughout the call how you want to use deployment and partnerships to be prepared to get to, I do not know, support these more complex and larger programs. Particularly around rapid development and fielding of these new technologies. You mind discussing, number one, if you already how strong is the M&A pipeline? And number two, any particular efforts that you can highlight that you are doing internally to be able to support these things and to have the best technologies?
Shawn M. Mural: Yeah. I think, you know, one of the things that we are really happy about from an investment standpoint and the way things have played out for us has been some of our rapid prototyping activities. We talked about that last year. You know, the team's ability to field assets, go from a paper design to a fielded asset in a very short period of time is just been remarkable. We measure that in months or weeks in some cases. Right?
So that speaks to some of the investments that we have made, you know, internally as well as, you know, people might not think of it this much, but we get co investment from our customers or CRAD dollars to help support those rapid prototyping, that development work, certainly low risk to us. Speaks to our ability to get things fielded in a fairly timely manner we think distinguishes us in the marketplace.
Jeremy C. Wensinger: I would agree with that. But I would also tell you, Mariana, we decided in August 2024 to make a fundamental shift in how we think about the next, you know, three to five years in the business. And I think, you know, when you saw the announcement that announcements that we put out, it was because we made those investments. Made those investments in the future of the company. And those investments are going to pay dividends because we believe that our ability to be effective for our customer means that we are going to deliver technology into our mission.
And that is the only way in which our benefit long term is taking advantage of what is commercially available everybody else, and we are leveraging it into what we do today.
Operator: The next question is from Joseph Anthony Gomes with NOBLE Capital. Please go ahead.
Joseph Anthony Gomes: Good evening. Thanks for taking my questions, most of which already been asked, but I will throw this one out there. So a lot of positives, but as you look at 2026, what do you see as kind of the biggest risks for the company to achieving the 2026 guidance? Is there a
Jeremy C. Wensinger: John, it is a great question because I think it always comes down to, you know, we are a very responsive company. And if the customer tells us to move left, we move left. If they tell us to move right, we move right. We do not always get to see, you know, like in the Middle East, what may or may not happen. You know? So that is not always a benefit, you know, in terms of foresight for us. But I do think that it creates opportunity for us and has for a long time. Because we are so responsive. I do not view it as risks as much as it is being prepared.
You know, to making sure our recruiting team is prepared. Making sure that our team is prepared on the ground, making sure we are able to move when the customer needs us to move. Building whatever they need us to build. Making sure the aircraft is in the air. You know, those are things that we are very good at. I do not see the risk in 2026 as much as I, you know, it keeps me up at night is making sure we are prepared for that customer when they move at that moment's notice on the admission requirement. And we are there to support them at the time and speed at which they need us to be.
That is what keeps me up at night.
Joseph Anthony Gomes: Great. Thanks for that. Appreciate the insight.
Operator: The next question is from Kristine T. Liwag with Morgan Stanley. Please go ahead.
Kristine T. Liwag: Hey. Good afternoon, everyone. Just following up on Noah's question earlier on cash flow. When we look at adjusting the operating cash divided by adjusted EBITDA, it looks like, you know, 2024 was a higher watermark at 52% of that conversion versus 46% last year. And the midpoint of your guide for this year implies 47%. I guess I would have thought that this would have been trending higher, especially as the leverage comes down and you get some tailwind from interest expense. So how should we think about these metrics? Is this the right to think about the cash generation of the business?
Is there anything that is changing in the cash cycle or cash milestones that we should think about?
Shawn M. Mural: No. It is really just the additional payroll that we have year, which is worth about $50,000,000. So if you adjust it for that on the midpoint of the guide, you know, the conversion would be about 115% against net income. And so, you know, it is really nothing more than that.
Kristine T. Liwag: Gotcha. And then does that mean for 2027 with, you know, with the extra payroll for 2026, you should see a higher number for that conversion for that following year. Would that be fair?
Shawn M. Mural: All else being equal, yes.
Kristine T. Liwag: Great. And following up on you said on Middle East, you have got some contracts there are sunsetting that is factored into your guidance. Depending on how we see Iran play out this year, is there potentially more upside to that opportunity set in the region? And how do you think about potential timing or magnitude if anything does materialize?
Shawn M. Mural: No. No. No. It is very early. So, you know, our does not contemplate anything today because we do not have any requirements to react to. Right? As we said, you know, earlier in the call, we are ensuring the safety of all of our employees and, you know, in the region. Could things develop? Yes. They have in the past. And, you know, those things, it is hard it would purely be speculative at this point, Christine, to think about what that could turn into. Or where it might be. We know that there is a very large mobilization effort going on in the region.
Think they said the highest amount since 2003 in terms of assets in the region. So, you know, could there be some space for us? Yes. We have not contemplated any of that today.
Kristine T. Liwag: No. Great. Thank you for the color.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Jeremy C. Wensinger for any closing remarks.
Jeremy C. Wensinger: Thank you for joining us today. I really appreciate you taking the time to, you know, share with us what we did in 2025. I am so proud of the team. I am proud of the, you know, the 16,000 plus employees and what they do for us day. And I appreciate your interest in V2X, Inc. And I hope that we were fulsome and clear on our remarks. So thank you so much.
Operator: Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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