Vectrus, Inc.

Thank you for joining us for Vectra's first quarter 2021 earnings conference call and webcast. Today's call is being recorded. My name is Sherry and I'll be the operator for today's call. At this time, all participants have been placed in the listen-only mode. Following management's presentation, I will open up the call for a Q&A session. If anybody needs operator assistance, please press star zero on your telephone keypad. I will now pass the call over to Mike Smith, Vice President of Treasury, Corporate Development, and Investor Relations at Vectris.

Thank you. Good afternoon, everyone. Welcome to the Vectris first quarter 2021 earnings conference call. Joining us today are Chuck Crowe, President and Chief Executive Officer, and Susan Lynch, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on our Investor Relations website, Investors, Please turn to slide two. During today's presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our safe harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. the company assumes no obligation to update its forward-looking statements. Additionally, I'd like to point out that we will be discussing and reporting adjusted non-GAAP metrics, including adjusted operating income and margin, adjusted EBITDA and margin, adjusted net income, and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials, press release, and Form 10-Q. At this time, I'd like to turn our call over to Chuck Pro.

Thank you, Mike, and good afternoon, everyone. Thank you for joining us on the call today. Please turn to slide three. During the first quarter, we continue to execute our strategy of making Vectris the premier converged infrastructure company in our market. I'd like to thank all of our employees and partners for their contributions in supporting the mission that we operate around the globe throughout the pandemic. Their innovation and resourcefulness are critical to our performance. We began the year with strong operating performance. Revenue in the first quarter increased 23% year-over-year to $434 million and was supported by organic growth of 4%. The growth in revenue was driven by our recent acquisitions, continued phasing of Block Cap 5, as well as growth in our core programs. We also improved adjusted EBITDA margins by 60 basis points year-over-year to 4.8%. Additionally, adjusted diluted earnings per share increased 46% year-over-year to $1.20. Last quarter, we completed two strategic acquisitions that added key clients, capabilities, and accelerated our converged infrastructure strategy. The integration of these acquisitions is well underway and on track. We remain excited about the combined talent, offerings, and opportunities for accelerated growth. In the first quarter, we won several important awards, reaffirming our strategy while helping to lay the groundwork for continued growth. We ended the quarter with total backlog of $4.5 billion. Both former total backlog is $5.8 billion and includes contracts awarded to veterans currently under protest. Subsequent to the fourth quarter, our $882 million on-deck SWACA recompete was protested with the GAO. A decision is expected in June. We remain confident in the Army's award decision and look forward to continuing to support this critical mission over the new five-year period of performance. Recently, the Biden administration announced that the U.S. would withdraw troops from Afghanistan. Vector's revenue in Afghanistan makes up a low single-digit percentage of total revenue. Importantly, the momentum we are seeing in our core business is expected to more than offset this minimal financial impact, from Afghanistan. As such, we are increasing the low end of our 2021 guidance. We are closely managing the phasing of Log Cap 5 and currently anticipate being at full operational capacity in Iraq this summer. In terms of IndoPATOM, the phasing process remains elongated due to base access restrictions associated with COVID-19. We anticipate phasing in later this year with full operational capability in early 2022. Please turn to slide four, where I will discuss market trends. As we have discussed on prior calls, due to technological advancement and cost pressures, our clients are rapidly migrating from traditional ways of operating their infrastructures to a much more instrumented, predictive, and converged approach. The expectations from our clients are evolving to include enhanced mission capabilities, improved performance, lower cost points, and outcome-based contract structures. At the macro level, we are seeing client examples and use cases rapidly emerging across defense, national security, and federal civilian markets that supports our expectation for future growth in the converged infrastructure market. Examples include 5G pilots, installation to the future, NASA Sustainability Center at Ames Research Laboratory, Yokota Air Force Base microgrid, and the construction of NGA's West Green Leeds facility. This migration has been amplified by our largest client, the U.S. Army, who recently released its installation strategy. This is the first strategy to identify the need for modernized, resilient, and sustainable installations. The strategy outlines how every installation will be a smart platform of capabilities utilizing connected sensors to enhance operational capacity and improve the delivery of services. The Army's goal is to modernize its 156 installations over the next 15 years. One of the Army's strategic outcomes is to enhance readiness and resiliency at its installations, which, as seen on the right side of the slide, implements solutions for protection, resilience, mission assurance, education, and training. As a leading provider of integrated security solutions that provide systemic protection Across the physical and digital spectrum, we believe Vectris is well positioned to support the Army in its mission. Increasingly, clients expect strategic outcomes to be supported by two enablers, data analytics and partnerships, both of which are part of Vectris' current initiatives. Overall, we believe this converged evolution will transform the federal technical services sector and yield greater addressable market to Vectris over time. Please turn to slide five, where I'll discuss how Vectris is innovating and investing to position for leadership in this market. As we started this journey in 2017 by constructing a go-to-market strategy and thoughtfully engaging clients. Next, we leveraged our experience and how installations are being supported today with how clients should prepare for the future by providing thought leadership and white papers to the marketplace. Then, we further enhanced our position by engaging in partnerships, creating solutions, and conducting strategic acquisitions. Today, we are inserting operational technologies that provide real-world, immediately practical capabilities into core functional services and at-point solutions to deliver integrated, innovative, smart, secure, and energy-efficient technologies to clients' infrastructures. These solutions, which you can see on the slide, include Vectris' Integrated Security Platform, Installation of the Future Platform, Zero Trust Logistics Modernization Architectural for 5G, and Vectris Energy Solutions. All of these offerings are now represented in our refreshed Vectris.com website and are either part of our current programs or being bid into contracts. As a result of our strategy and execution, Vectris is making great progress in positioning to be a leader for the next phase of growth in converged infrastructure. Please turn to slide six. Our differentiated capabilities are already resulting in awards, such as our work with the Navy and Marine Corps, which as you can see on the slide, is using 5G to build smart warehouses. Our operational technologies and solutions that have been developed over the past three years place Vectris at the forefront of 5G and converged infrastructure enablement. We plan to leverage our operational expertise and the work we are doing as part of the largest full-scale 5G test to support our clients' migration to converged infrastructures. Please turn to slide seven. We continue to make progress our deliberate campaign-based approach to growth with several important new ones in a quarter. We were awarded a position on the GSA contract to provide facilities maintenance, energy management, water conservation, and support services, as well as aerospace coating solutions to all federal agencies. This is the new route to market for VECRIS that currently sees approximately $500 million of full and open annual spending. We plan to utilize this vehicle as a channel to market some of our previously mentioned VECRIS solutions while accessing new clients such as the VA, HHS, and DHS. During the quarter, Vectris was awarded a CBRN Integrated Defense Prime OTA contract, which was based on our well-known capabilities in sensor integration, Internet of Things, and perimeter security solutions. The award is valued at $19 million over two years and extends Vectris' IoT, machine learning, and data analytics offerings. This effort is co-sponsored between DOD and the Department of Homeland Security and provides sensor integration as well as data integration and analysis related to threat detection domestically. This program brings our digitally integrated solutions that were originally deployed overseas to the U.S. to support the protection of the homeland. We are proud to have been selected for such an important mission and look forward to the opportunity to bring our unique and differentiated solutions utilized by the DOD to a new client and market. This work is illustrative of how Vetris is inserting technology to deliver a more integrated and comprehensive suite of solutions in support of the converged infrastructure market. Our work supporting the Air Force's most critical mission requirements was further strengthened in the first quarter with two wins under the Air Force Contract Augmentation Program, or FCAP-5 IDIQ contract. Given current trends, We believe our work on ASCAP 5 will surpass the $130 million of orders we achieved on the ASCAP 4. Our success on ASCAP demonstrates Vectris' ability to support our client's contingency and humanitarian support requirements with a full range of facilities and logistical services across the globe. We are pleased with the Air Force's confidence in Vectris to support their critical missions and look forward to building on our exemplary service and commitment to this very important program. We are also continuing to execute on our IDIQ portfolio and during the quarter won a $22 million five-year task order under the Army's ITES 3S contract to provide enterprise IT services to the U.S. Army Corps of Engineers across Europe. This is a notable win for Vectris, demonstrating an ability to execute on our IDIQ portfolio while leveraging our 30-year history providing complex, mission-critical IT services across the globe. Furthermore, this task order provides Vectris with an opportunity to grow its presence and support of the 37,000 U.S. Army Corps of Engineers civilians and soldiers in over 130 countries worldwide. While Vectris is well known for its IT, O&M, and network communication services in austere and challenging environments, We have significantly advanced our offering over the past several years. Most recently, the acquisition of Genetics brought capabilities such as IT service management design, including cloud implementations and application migration. Genetics has worked with more than 25 government clients to plan, design, and integrate IT service management solutions that are practical and maintainable. I am pleased to announce that in the first quarter, Finetics was awarded a $33 million four-year contract to support the Navy's technology modernization efforts, including systems migration, reporting and analysis, and operational support. We are using these enhanced capabilities to increase our already robust full lifecycle IT O&M service offering while inserting them into current programs. Please turn to slide eight. Our wins in the first quarter represent the progress we are making in executing our long-term strategy. We expect additional new wins in 2021, some more approximately $1.7 billion pipeline of bids currently submitted awaiting award. The outlook for future growth remains solid with $10 billion of new opportunities that we plan to bid over the next 12 months. While timing of awards is difficult to predict, We are confident in our ability to effectively compete for business in our approximately $12 billion new business pipeline. Now, I would like to turn the call over to our Chief Financial Officer, Susan Lynch, for a review of the financials.