V2X, Inc.

Good day and welcome to the V2X second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Michael Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X. Thank you.

Good afternoon, everyone. Welcome to the V2X Second Quarter 2023 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 the Investor Relations section of our website, www.gov2x.com. Please turn to slide three. During today's presentation, managers 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 would like to point out that in addition to GAAP earnings, we will be discussing and reporting various adjusted non-GAAP metrics, including pro forma revenue, adjusted EBITDA and margin, adjusted operating cash flow, adjusted net income, and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials available on our Investor Relations website and in our press release filed with the SEC. At this time, I would like to turn the call over to Chuck Probe, President and Chief Executive Officer of V2A.

Thank you, Mike. Good afternoon, everyone. Thank you for joining us on the call today. Please turn to slide four. This afternoon, Susan and I will update you on a strong second quarter for V2X. Our over 10% organic revenue growth, significant bookings and awards, and key near-term opportunities are representative of our momentum and differentiation in the marketplace. Our future results reflect the continued innovation, value, and commitment that our talented employees are bringing to our clients' most complex missions. I'd like to highlight a foundational aspect of our business and one that I and the V2X senior leadership team are extremely proud of. With more than 42% of our U.S. employees reporting as military background, V2X is a leading participant in the veterans' ecosystem. I am pleased to announce that during the second quarter, V2X was once again recognized as a leading employer of veterans by VETS indexes. Our employees' culture and diversity enable success for V2X, and I'd like to thank our over 15,000 global employees that are helping drive positive results across our business while improving outcomes for our clients. Please turn to slide five. are strong, 10.2% year-over-year revenue growth, continues a double-digit performance demonstrated last quarter, and is due to continued expansion on existing programs, contribution from new awards, as well as further success in securing recompete wins. Adjusted EBITDA for the quarter was $76.4 million, or 7.8% margin, and adjusted diluted earning per share was $1.01. Importantly, during the second quarter, our net debt to EBITDA leverage ratio improved and is now below 3.5 times. The Pacific, or Indo-Pacom region, continues to be a key long-term growth driver for V2X. Revenue increased 41% year-over-year in the region, driven by expansion on existing programs, new efforts and exercises, including Talisman Sabre. The mission requirements continue to increase in the region. Just a couple of weeks ago, the Secretary of Defense conducted a week-long trip in the region, visiting with allies to discuss enhanced force posture, capability development, defense industrial-based cooperation, and regional security integration. While overseas, the Secretary also visited with American service members participating in the Talisman Sabre 2023 exercise. The exercise involves more than 30,000 military personnel from 13 nations. V2X is privileged to support this important biannual exercise that is strengthening partnerships and interoperability among key allies. Looking ahead, we see numerous opportunities to further support our clients' initiatives and priorities in the region. Bookings activity in the quarter was strong at $2.1 billion in awards to V2X, resulting in a book-to-bill ratio of 2.2 times. This yielded total backlog of $13 billion, growing 10% sequentially. Recent awards, including Naval Test Wing Pacific, would drive backlog to over $13.5 billion. Our backlog positions V2X for positive momentum leading into 2024. Contributing to bookings was notable success in capturing several new business pursuits, including a $100 million five-year task order with the Department of State to provide logistics support internationally. This represents our most substantive and strategic win with the Department of State, and it's a culmination of a multi-year client engagement and targeted growth campaign. We are also seeing successful results executing our sell-through business model that is leveraging our engineering, software development, testing, and production capabilities. V2X has enhanced the breadth of its addressable market with differentiated solutions, allowing V2X to win new work that I'll discuss in greater detail shortly. I am pleased to announce that subsequent to the quarter end, B2X began the phase-in of the $440 million Naval Test Wing Pacific Award, supporting critical test and evaluation activities for the Navy over the next seven years. Given the momentum on our business, we are increasing the midpoint of our 2023 guidance for revenue, adjusted EBITDA, and adjusted earnings per share. Please turn to slide six. B2X is harnessing its converged capabilities and is growing its core programs, securing re-competes and winning new business. During the quarter, we won over $520 million in re-competes, further extending our strong foundation of business. This includes an eight-year, $328 million contract with the Naval Facility Systems Command to provide infrastructure sustainment, including the application of our unique converged solutions. We also secured a five-year $122 million contract with NAVAIR Fleet Readiness Center Southwest for DEPO-level maintenance support services. A compelling example of how our teams are leveraging our core competencies to win new business with new clients is the Department of State's win referenced on the prior slide. This Department of State mission is also being supported by our Log Cap 5 team, which was awarded a $165 million one-year task order to provide critical operational and life support logistics to the state effort. I was in the Middle East region last week engaging with our clients and teams. Our agility and high level of readiness to support mission requirements was evident, recognized by our clients, and was a strategic differentiator for V2X in the Department of State and LogCap Awards. Looking ahead, we see significant opportunity to further support the global missions of the Department of State while leveraging V2X's global contingency and logistics capabilities with our geographic footprint. We are seeing successful results executing our sell-through business model by leveraging our engineering and manufacturing center of excellence. This unique facility provides over 900,000 square feet of space, allowing V2X to deliver engineering, software development, testing, and production solutions in support of modernization and sustainment efforts. Our ability to provide full lifecycle solutions from concept to sustainment is a significant differentiator that is driving new awards. For example, during the quarter, V2X successfully finalized three separate efforts with new clients that utilize our engineering, integration, and manufacturing capabilities. This work is important to note because it is a true representation of the increased pipeline and opportunities due to the merger. We were also awarded an engineering development and prototyping effort with a new client that is expected to lead to new proprietary products with enduring follow-on business. This opportunity represents a brand-new product that will be designed, produced, and sustained by V2X. Our market approach and the merger enable the successful capture of this program. Please turn to slide seven. We see significant opportunities to drive growth with our modernization and sustainment solutions across core markets while unlocking additional opportunities that the company was not able to previously pursue. One opportunity we see nearer term is with the Proprietary Gateway Mission Router 1000, or GMR-1000, which is a fully ruggedized and cyber-hardened multi-domain router that provides cutting-edge situational awareness. The GMR solution was originally developed and deployed to provide enhanced situational awareness for helicopter pilots. Our continued advancement of the technology have yielded the GMR-1000, which is capable of integrating data from multiple sources across classified and unclassified connections, enabling a fully converged environment on the battlefield. Over the past year, the GMR-1000 has been successfully integrated and tested on air and land systems. demonstrating its ability to link information across various technologies and platforms. As an outcome of the successful demonstration, the Army recently issued a notice stating that it intends to issue a sole source contract to B2X to produce up to 3,000 GMRs. Beyond this potential near-term opportunity, we believe the platform-agnostic force-multiplying benefits of the GMR-1000 have broad applicability and can be integrated on numerous platforms in support of the DOD's Joint All-Domain Command and Control, or GED-C2, effort. Please turn to slide eight. GMR is a perfect example of how V2X is able to combine its deep capabilities and mission expertise to develop cutting-edge solutions for use on tomorrow's battlefield. V2X also has a rich history of developing solutions that insert innovative technologies to modernize the capabilities of legacy platforms, significantly improving their useful life. For example, today, V2X is modernizing and enhancing the effectiveness of the F-16 Fighting Falcon by inserting new technology and upgrading the Aircraft Center Display Unit, or CDU. It's important to note that V2X is the OEM of the CDU, And our success in helping the Air Force provide its pilots with new technology and advanced capabilities at minimal cost has allowed us to expand our original work. We are now extending our efforts across the entire Air Force fleet of F-16s, which currently stand at over 1,000 aircraft. We believe V2X is well-positioned to grow its work associated with this program and modernization of the F-16s. Nearer term, the Air Force is expected to award a contract to upgrade approximately 300 CDUs. Longer term, our team is focused on continuously incorporating new technology to enhance the digital backbone of this important aircraft that's expected to continue flying for the next couple of decades. Now, I'd like to turn the call over to our Chief Financial Officer, Susan Lynch, to discuss our second quarter results.