V2X, Inc.

Thank you for joining us for the V2X third quarter 2024 earnings conference call and webcast. Today's call is being recorded. My name is Dave, and I will be the operator for today's call. At this time, all participants have been placed in a listen-only mode. Following management's presentation, I will open up the call for a Q&A session. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then two. And now, I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations, and Corporate Development at V2X.

Thank you. Good afternoon, everyone. Welcome to the V2X Third Quarter 2024 Earnings Conference Call. Joining us today are Jeremy Wentziker, President and Chief Executive Officer, and Sean Morrell, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on the investor relations section of our website, gov2x.com. We turn to slide one. 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 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. In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website. At this time, I would like to turn the call over to Jerem.

Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. Before we get started and advance to Veterans Day next Monday, I'd like to recognize all veterans for their service to our nation, particularly the over 4,000 that are part of the V2X team, enabling critical missions across the globe. We thank you for all that you've done and continue to do for our nation and our company. I'd also like to acknowledge the over 16,000 global employees at V2X, for their unwavering 24-7, 365 dedication to ensuring our customers' mission success. Please turn to slide two. B2X reported strong third quarter results with revenue of $1.08 billion, representing 8% growth year over year. One of the primary differentiators of growth enablement is our global reach. Being in every single time zone with the ability to operate at scale across all environments is not easily replicated. We are positioned in key theaters where missions matter and are receiving strong funding support. This was demonstrated in the third quarter with Indo-Pacific revenue growing 31% year over year. Revenue growth is being driven by increased demand to support the DOD's priorities to enhance U.S. readiness in the region. We are also seeing additional opportunities for growth in the region via foreign military sales that align to improving the capacity and capabilities of our allies. We are investing to capture this growth and believe V2X is positioned exceptionally well as a trusted partner to deliver value-added solutions and further expand in the region. Adjusted EBITDA in the quarter was $82.7 million, up 28% year-over-year, with a 7.6% margin, reflecting higher volume and strong program performance. Adjusted diluted EPS was $1.29, up 77% year-over-year. Adjusted operating cash flow in the quarter was also strong at $130 million, demonstrating the high cash flow yield expectations of our business. Our customer intimacy and ability to deliver full-spectrum capabilities across the mission lifecycle has resulted in V2X securing approximately $5 billion of recent awards. We are making excellent progress ensuring these programs are set up for long-term success and sustainable performance. I am pleased to report the F-5 Adversarial Aircraft Program, our Navy Pacific IT and Communications Contract, or NICTANSPAC, and our Saudi Arabia Aviation Support Training Program reach full operational capability in Quarter 3. In addition, our previously announced Warfighter Training Readiness Solutions, or WATRS, program supporting the U.S. Army has kicked off. We are currently on track to reach full operational capability of the Army Training Aids, Devices, and Simulator task order in the second half of 2025. In total, these wins to support mission-critical programs validate our strong positioning in the marketplace and our franchise programs that are expected to contribute to our financial performance for years to come. Given our year-to-date performance and awards, we are raising the low end of our 2024 revenue guidance and adjusted EPS. We are reaffirming adjusted EBITDA and net cash flow from operation. Please turn to slide three where I will discuss how our unique positioning in the mission lifecycle is yielding growth. Today, V2X enables some of the most important missions with end-to-end capabilities facilitated by our global reach. The fact that we are with our customers at every phase of the mission execution allows us to deliver best-of-breed, cost-effective technology solutions that enable successful outcomes. Starting at the top of the wheel with high-impact readiness and integrated supply chain management, both of these represent opportunities for us to prepare the warfighter for their mission and then equip and deploy the warfighter for their mission. Both of them are critical to the soldier and allow us to be in a position to understand their unique requirements, whether it's training, equipping, or deploying. The recent $3.7 billion waters program is illustrative of this capability. As I previously mentioned, we are currently transitioning the program and are currently assessing requirements to support training in Australia, the Netherlands, Lithuania, and Sweden. Another example of this capability is our recent award of the Defense Logistics Agency $11.9 billion JETS Multiple Award IDIQ contract. The JETS contract provides an opportunity for V2X to leverage its operational know-how and technology expertise to deliver mission-ready technologies such as 5G and smart warehousing that enhance DLA's ability to provide combat logistics support. Moving to the next capability, Assured Communications, we enable connectivity and communications throughout all aspects of the engagement. For example, V2X ensures our soldiers can communicate securely across the air, land, sea, and cyber domains. Several recent lands, which I'll discuss in greater detail shortly, are further examples of our Assured Communications capability. Not only do we connect, but we also protect and provide holistic support to our soldiers while deployed through our global mission solutions. For example, V2X provides situational awareness and command and control systems that protect thousands of critical assets. This is achieved through almost 100,000 alarm points operating 24-7, augmented by thousands of sensors. Further demonstrating this capability was our new eight-year $100 million contract awarded during quarter three to ensure the operations and readiness of an important overseas missile defense system. As you move up and to the left, this is where the assets have been deployed, returned from the field, and V2X resets them to zero hours and zero miles, extending the life or enhancing the platform effectiveness through system modernization and technology insertion. An example of these capabilities is the new $60 million contract awarded to V2X during the third quarter to keep over 100 T-8 Poseidon aircraft ready for their next maritime patrol, anti-submarine warfare, or ISR mission. We see additional opportunities to support the fleet requirements of international allies. We're also seeing continued expansion in our platform modernization solutions that are solving problems on today's multidimensional and evolving battlefields. Our engineering and rapid prototyping capabilities are delivering new systems that are maximizing legacy platforms with new functionality at significant cost benefits to our customers. Our platform agnostic approach, engineering prowess, and knowledge from living in the mission is allowing us to deliver differentiated cost-effective technology solutions that enable successful outcomes. As you can see, the depth and breadth of the V2X portfolio is differentiated, and I believe that we are in the early endings of what we can achieve. By harnessing our end-to-end capabilities, shoulder-to-shoulder intimacy, and global footprint, we are uniquely qualified to deliver on national security priorities. Please turn to slide four, where you will see how our capabilities and wins are enhancing assured communications for global missions. B2X remains focused on delivering technology solutions that solve mission gaps and enable seamless communications. This focus is yielding results, and some of you had the opportunity to see this firsthand at the AUSA symposium with the GMR-1000. The GMR is facilitating real-time situational awareness across air and ground platforms. We believe the demand for this technology is growing and are investing to enhance size, weight, and power. Beyond the GMR, I am pleased to announce recent wins valued at $270 million that are extending V2X's reach for ensuring secure communications across key regions, including the United States, Europe, Indo-Pacific, and the Middle East. For example, in Europe, we were recently awarded a $32 million three-year contract ensuring the connectivity of the U.S. Army networks across the region. In the Indo-Pacific region, we just completed the phase-in of the NICTAN-PAC program, which is the largest DoD communications hub in the Pacific, allowing secure communications across air, land, sea, and cyber domains. Additionally, our recent win of the $141 million Fleet System Engineering Teams contract is delivering end-to-end C4I communications system solutions to the U.S. Navy. This ensures that no U.S. Navy strike group deploys without V2X. In the United States, we secured a contract ensuring the integrity and availability of classified and unclassified networks for the Air National Guard. Finally, as a reminder, V2X continues to run the largest cyber center for the Army outside the United States. Located in the Middle East, this program provides 24-7, 365 connectivity for our soldiers to conduct their missions in that region. As you can see on the slide, V2X's capability and reach goes beyond the programs I just mentioned. Our comprehensive solutions and expertise spanning sensors, networks, and radars keeps our customers connected for all aspects of their multi-domain missions. Before I turn it over to Sean, I'd like to briefly outline some of our optimization efforts to build on our success and drive sustainable growth for V2X. First, we continue to build and enhance the breadth and depth of our pipeline as a result of our collective capabilities. Waters is a great example of our solutions that leverage the collective capabilities. We are building on that success to expand our addressable markets in all areas of the company. We see great value in the markets we serve and the importance they have to enduring missions. Pipeline expansion is core to the first step of optimization. Second, we are investing in this expanded pipeline to ensure that we address opportunities with talent and solutions that will differentiate B2X offerings. Third, to support our pipeline, our offerings will leverage our deep engineering expertise throughout the lifecycle wheel I just talked about. This ensures differentiation and a value-added solution for our customers. Lastly, optimization of our tools and processes will continue V2X's ability to be cost-effective in our markets and drive overall mission performance, while ensuring our employees have the tools and capabilities they need to drive continuous improvements. Now I'd like to turn the call over to Sean for a review of our financials. Sean?

Thanks, Jeremy. Thanks to everyone joining us this afternoon. Please turn to slide five. Our performance in Q3 continued to be strong. Revenue increased 8% on a year-over-year basis to $1.08 billion, setting another record for the company. This growth continues to demonstrate our ability to be in the right place at the right time to execute high-priority missions. continued our strong performance, delivering double digit revenue growth in the Indo-Pacific and Middle East regions, with revenue increasing 31% and 13% year over year, respectively. Adjusted EBITDA in the quarter was $82.7 million, increasing 28% from prior year and delivering a margin of 7.6%. EBITDA was also up $10.4 million sequentially. This performance was driven by growth productivity improvements, and program achievements consistent with our expectations. Interest expense for the quarter was $27.2 million. Cash interest expense was $25.6 million. Adjusted diluted EPS was $1.29, up 77% from the prior year. Third quarter adjusted net cash provided by operating activities was $130.1 million of 35% year-over-year. This performance reflects the strong cash generation capabilities of V2X and our normal cadence of cash flow being greater in the second half of the year. Please turn to slide six, where I'll talk about our year-to-date results. Year-to-date revenue was $3,164,000,000, increasing 8% year-over-year. Adjusted EBITDA for the first nine months of the year was $224.1 million, increasing 5.8% in the prior year and delivering a margin of 7.1%. Interest expense for the nine-month period was $83.5 million. Cash interest expense was $77.8 million, an improvement of $9.3 million compared to the prior period. This demonstrates our continued focus on improving our overall cost of debt and cash interest expense. Year-to-date adjusted diluted EPS was $3.01 based on approximately 32 million weighted average shares. Year-to-date adjusted net cash used by operating activities was $7.2 million, adding back approximately $25 million of M&A and integration costs, and removing the contribution of the Master Accounts Receivable Purchase, or MARPA facility, of $63.3 million. Turn to slide seven. During the quarter, we continued to demonstrate progress deleveraging the company. and net leverage on a sequential basis improved by a 0.29 turn to 3.27 times. We remain on track to reach a net leverage ratio at or below three times at the end of the year, consistent with our prior commitment. Net debt improved by $61 million sequentially, and our liquidity position remains strong with a zero balance and a $500 million revolver at quarter end. It made excellent progress enhancing the capital structure, cost of our credit facilities, which combined with that pay down was improving cash flow and earnings. We believe there's additional opportunity to further improve our cost of debt. Please turn to slide eight. Total backlog was $12.2 billion in the third quarter. Book to bill in the quarter was approximately one and reflects only the initial $225 million startup funding for the Waters Program. As a reminder, we expect to incrementally book activities associated with this contract as they are transitioned. As Jeremy mentioned, we reached full operational capability on the Saudi Arabia Aviation Training Support Services Program That block only reflects the initial phase in of this program, which is modest compared to the approximate $400 million award. Please turn to slide nine. Given our strong year-to-date top-line performance, we are raising the low end of our revenue guidance range to $4,225,000,000 to $4,275,000,000. Additionally, we are raising the low end of our adjusted EPS guidance range to $3.95 to $4.20 based on an improvement in our tax rate to 21% from 23%. We are reaffirming adjusted EBITDA and adjusted net cash from operating activities. We've had an exceptional year-to-date results, and Jeremy outlined some of the optimization efforts and near-term investments We will build upon our success delivering strong technical capabilities while strengthening business and financial performance. B2X is aligned to well-funded areas of the budget and high priority missions, and we believe our recent wins, backlog, and capabilities will continue to fuel growth and value for our shareholders. We are very pleased with our overall performance, proud of our teams, and well-positioned for the future. I'd now like to open the call for your questions. Operator?

We will now begin the question and the answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Toby Summer with Truist. Please go ahead.

Thank you. With the strong Contract awards booked a bill and funded backlog growth. I'm curious what kind of rate of organic growth you think would be reasonable for the company to be able to attain as we go into next year? Because the timing of how you're going to be ramping these new awards, we could probably use some color to inform the modeling into 2025. Yeah.

Hey Toby, this is Sean. Good to hear from you. So listen, we're in the middle of doing our planning as you would expect. I think obviously in light of where we are, we're going to grow in 2025. You know, there are, remind folks, we certainly have a couple of headwinds that are You know, we're always dealing with as programs sunset. We've had an excellent ops tempo in some of our contingency support, logistics support around the globe. So, you know, I don't want to get ahead of things, but obviously we're going to grow. We're feeling good about the backlog, that visibility that it provides. I don't want to give any numbers right now. because we're deep in the middle of that planning with various assumptions. And, you know, obviously there's things that can change very quickly in terms of where we would expect to be.

Okay. If I could ask you to double click in the Indopaycom and how big a slice of the company does that geography represent? And maybe could you give us some color and commentary around incremental opportunities that you talked about?

Yeah, so, you know, we did a little over $80 million in the quarter in the region. Excellent growth, as you've heard, and that's been a consistent theme, which is great. You know, we do expect to grow there next year. Obviously, there's exercises that are being planned. The timing of which and the value of which, we don't know. But I think, you know, we saw good growth in Quage and other places that were positioned, and I think we'll continue to see that as we go forward. But like I said, it's about $80 million in the quarter, and it's consistently built through, you know, the last year or so.

Tobias, Jeremy, I would add to that that, you know, I think I mentioned in the last call the, you know, the Pacific Deterrence Initiative that they funded. I think the presence that we have in that area and the overall strategy by our government and our allies in that area afford us opportunities to be in a position to be a recipient of some of those initiatives as they move forward. And like Sean said, I think the exercises are one thing, but as they continue to build out their strategy into PACOM, obviously with a strong presence there, it helps out quite a bit.

Thanks. Last question for me. I was wondering if you could expand upon the overseas opportunities that you see and maybe you could help us narrow the subset of the kinds of things that you could eventually win from our partners around the globe.

Yeah, I think if you listen to the call you'll hear me talk about in Europe, expanding opportunities there in terms of Assured Comm, same thing in the Middle East, same thing in Indo-PACOM. But again, we react to situations as they evolve, like in the Middle East. I think there's a long-term strategy in Indo-PACOM that we will be obviously benefiting from. But again, as items evolve in the Middle East, we always see ebbs and flows with regards to that activity. And again, obviously, in Europe with Ukraine, there is always an opportunity there for us to continue to support our allies.

Thank you very much. Thanks, Toby.

And the next question comes from Ken Herbert with RBC Capital Markets. Please go ahead.

Yeah, hi. Good afternoon.

Nice results this quarter. Thanks. Yeah, Sean or Jeremy, maybe, you had a really nice sequential step up from the second to third quarter, adjusting even the margins. Can you provide any more sort of color or granularity on maybe what drove that increase? And was there anything in terms of one time, you know, EACs or other benefits that might have contributed to the margin improvement sequentially?

Yeah, I'd say so, consistent with what we had said, right? When we came into the year, we said we'd be back-end weighted, you know, from a margin standpoint. That's because of the timing of certain programs, deliveries, EACs, as you mentioned, and improvements, and the team delivered, consistent with what they said. So, yeah, we did see, you know, a few million dollars, maybe $6 million or so of progress, of EAC improvements on that, you know, in the quarter. And I think it's a testament to the delivery of the products and services that are ahead of schedule to achieve the objectives.

I think it's Jeremy. I think also the team does an excellent job. They're very good executors. And, you know, we implemented early on this quarter the Program Management Executive Committee program That committee is for program managers to share best practices across the globe. And as that continues to take its maturation path, we're going to continue to see the best program managers of the company sharing those best practices with other program managers, and we'll continue to drive continuous improvement.

That's great. Thank you. And, Sean, in your prepared remarks, you made a comment that you could see some there's some options to maybe do more on the leverage or interest in 25. It can perhaps be a little early, but can you talk at all about sort of level set us on where you expect interest, you know, how much more leveraging should we expect, you know, exiting this year and in 25, and maybe what some of those options could be as you just think about sort of continuing to clean up the balance sheet?

Yeah, I think, so the interest today is, you know, You know, right around a little south of 8.1%. And so I think we'll look here, you know, depending on how rates are performing, we'll look at maybe the Term Loan A to see what options exist as we go into 2025. But again, great progress on the part of the team. We recently redid the B that you heard us talk about previously. And so, you know, we're always looking at options and scenarios. We'll see how rates play out and what could be available for us. But feeling good about where we sit today.

And, Sean, just remind us, what's the guidance in terms of fourth quarter leverage in terms of where you expect to end the year?

Yeah, so at or below 3. So 3.27 today. Okay. You know, the team did a wonderful job from a receipt standpoint in Q3. We look to continue to do that, to end right around, like I said, at or below three by year end count.

Perfect. Thank you very much.

Thank you. And the next question comes from Peter Arment with Baird. Please go ahead.

Yeah, good afternoon, Jeremy and Sean. Nice results. Hey, Peter. Hey, Jeremy, you made some comments on the Indopaycom region up 31%, really impressive. Middle East, I guess, was up, you know, kind of mid-teens as well. Can you maybe give us a little more color on kind of the operations that you're seeing there, any changes or any pickup in activity?

Yeah, like I mentioned before, I think in Indopaycom in 2025, we'll know what those exercises look like as the year progresses. It'll probably be closer to mid-year before we know exactly what they're going to do with those exercises. But again, I think, as I mentioned before, with the Pacific Deterrence Initiative that the government has funded, you'll continue to see efforts flow into that region. And so I'm very happy with the growth we have today. I'm excited about the future for that area for us, given the presence we have and capability that we've delivered to that customer. I think in the Middle East, that is 100% driven by what you read on the front page of the paper. That is a very difficult and dynamic environment there. But, again, the presence that we have allows us to be quickly reacting to needs that they have. And, obviously, we have benefited from that in this year thus far. But, again, it's a very dynamic situation, as you know. And so it would be difficult to say how that's going to play out. But, again, I think I go back to, you know, we are part of Enduring Missions. It is very important that we are shoulder to shoulder with our customer, making sure we're there to support them in any initiatives that they have to support the warfighter.

Got it. That's helpful.

And then just back to kind of some of the big awards that you, you know, booked this quarter, in particular the Warfighter Training Readiness Contract. Just, you know, generally speaking, I think, did you, if I heard you correctly, this should start to ramp up in the second half of 25. Is that correct? And when does it hit kind of run rate?

Yeah, I'd say exactly, Peter, the back half of 25. The initial booking that we took on the contract was $225 million. That'll really start, like I said, in call it mid-July. mid-25 ramp from there, and the team's doing a great job of – you heard Jeremy talk a little bit about other opportunities that exist that the team's evaluating in other nations. So I think feeling really good about the start that the team has on the program and look forward to serving that customer here and delivering exceptional capabilities.

Yeah, so those will come through in what we call TDLs. We're already putting together – PDL offerings for that customer like I referenced. But the big one will come mid-year, as Sean said. But I'm very pleased with the team, very pleased with the customer. The cooperation during startup review was extraordinary. And so I'm very confident and comfortable with where that program is as it heads towards full operational capacity.

That's great. Thanks for all the color and great results. Thanks, Peter.

And the next question comes from Joe Gomez with Noble Capital. Please go ahead.

Joe Gomez, thanks for taking my questions. Really nice quarter.

Thanks, Joe.

Thank you, Joe.

So I want to start on the 8% quarterly revenue growth. What percent of that was from organic growth, expansion of on-contract versus new program performance?

I'd say it's a mix, Joe, right? So certainly the timing of some of the things. You heard us talk a little bit about the full transition on the Saudi job. That certainly contributed growth in the quarter. But by and large, it's on-contract activities, specifically in, as we said, in both Quaj and, or I'm sorry, in Indo-Pacom and the Middle East. You know, that's obviously what's driven a lot. We have excellent presence in those regions and are able to to meet our customers' needs. And so that's really what contributed to a lot of that growth in the quarter.

Okay. And one of the markets and geographic areas that was down was the European revenues were down 22% in the quarter, down about 10% year-to-date, and just trying to get a little more color on on what is driving the weakness, at least through the first, you know, couple quarters here in 24 in the European market?

David Morgan Yes, I'd say, so there's one program specifically that is down, and it's admittedly a modest number, Joe. You know, I think the important thing is that we maintain a strong presence in Europe. There's a program that we had previously, you know, when you look at a year-over-year comp that's doing a little bit less volume this year that's driven some of that. But I think the exciting part is other growth opportunities that we've had with some hardware capabilities and things like that within Europe that we haven't delivered those things entirely yet. So they're, you know, I'll say they're underway. I think we're encouraged about the future that we have in Europe. Jeremy, anything else?

No, and I think one of the locations is absolutely core to the U.S. government. We're excited to be there. It's a long-term contract. That's a lot of ceiling on it. And we will continue to drive, you know, performance on that contract. And like I said, it is a key asset for the U.S. government.

Okay. And then try one other way on 2025. I know it's early and you guys mentioned you're in the process. But if we look at, you know, you know, the midpoint of the revenue guidance would suggest revenues would be up 7% year over year, 24 over 25. I'm wondering, one, can you repeat that type of performance in 2025? And two, if I'm looking at the adjusted EBITDA margin, again, at the midpoint, it's about 7.2%. Where do you think that margin could grow to?

Yeah, for 25 specifically, you're talking? Yes. So listen, I don't want to get into absolute values from a top-line standpoint. I'll say, you know, as we're doing our planning, 25 is not different than other years, right? There's always re-competes. We feel very good about the volume of re-competes we have in there. And I'll remind folks, we've said previously, It's fairly modest, 5-ish type percent as we go into the year. There's always the timing of what we would call Joe's sales from new bookings. And, you know, you heard us talk earlier this year about muted award environments, things like that. Hard to say how some of those things will play out. So, you know, I'll stand by what I said earlier, which is we will grow in 2025, and we feel good about our positioning. Okay. Relative to the margin, you know, when I think about 25, I look at the stuff that's in the backlog. You know, I see it probably similar to how we're seeing 2024 from an overall margin standpoint. Plus or minus, obviously, right? But, you know, the backlog is strong. We have pretty good visibility into those things. We know the recent awards, what we expect them to contribute. I'll remind folks that when we start new contracts, they tend to start at lower margins than where we end up. And so we'll be going through some of that, you know, obviously in 2025.

Okay, great. Thanks for taking my questions again, really, this quarter.

Thank you. Thank you. The next question comes from Trevor Walsh with Citizens GMP. Please go ahead.

Great. Thanks, team, for taking the questions. Appreciate the time. On the $5 billion of new awards that you have phasing in that you mentioned, F5, the Saudi Arabia aviation support, et cetera. Understand they're fully operational. Is there anything kind of heading into 2025 that could be a gotcha around any of those, either in particular or more broadly speaking, as to where that revenue might not flow in or things just might not go to plan, whether that's just kind of external forces that we should think about or just to avoid surprises next year?

I don't think there's any sitting here right now. Trevor, I don't know. I don't see anything that would tell me that. But, you know, listen, obviously, it's a dynamic environment. Funding priorities, things like that can certainly shift. Anytime we're dealing with international customers, which we are on the Saudi job, like you just mentioned, things can change. But as we sit here today, you know, there's nothing that I can think of that impacts our line of sight to those backlog programs.

I would just add that I think we need to get through tomorrow. and find what the sitting president's priorities are. But again, I think because we are part of enduring missions that are, you know, mission critical, I don't see any material change to, you know, who sits in the chair. But again, it's always nice to know what their priorities are and making sure they're aligned with, you know, our global footprint.

Great. Terrific. Appreciate the color on that. I also noted in one of the slides, there was a reference to a pending contract for the F-16 contract or cockpit upgrades. Just curious if that'll take, obviously it's pending. I get it. So probably can't provide specific details yet, but just curious if you can maybe give us a little bit of perspective, if it's similar to GMR where it's going to be something kind of more of an initial kind of smaller footprint of assets and then with a potential to expand or kind of how that's shaping up from just kind of a quantity perspective?

I think it looks a lot like GMR in the sense that, you know, we are moving from the development phase and into a phase where we are going to see an opportunity for that program to grow, obviously. There's a lot of F-16s out there. And so I view it in the same breath. You know, you kind of go through that development phase, you go into LRIP, and then obviously you move it into production. So, again, I'm very bullish about this program. I like the technology. I like what the team at Indy has done. I think they have created an opportunity for our customer that is differentiated. And so I'm looking forward to that program as it grows and matures.

The only thing I'd add there is, you know, I think as we sit here today, that'll look like an IDIQ contract probably. And so I don't know that you'll see, you know, a huge, you know, booking and order straight away. You know, we'll see depending on how many they end up putting on contract. But that's what we're seeing right now.

Got it. Okay. Thanks. Perfect. Super helpful. Last one for me, for Sean. Can you just maybe just walk us through your thinking around, I appreciate the revenue kind of narrowing up in the upward fashion on the full year guide. And then same for EPS, understand that there's some interest kind of affecting that EPS or at least putting a, you know, has a good contribution there. But notice that the adjusted EBITDA numbers just kind of stayed kind of consistent. So just maybe walk us through kind of the dynamics there and how you're thinking about kind of why that number, stay the same versus the other ones shifting up somewhat?

Yeah, yeah. So consistent with what we said, we've seen our cost type work, you know, increase throughout the year. So we're at 60% in the quarter. um you know obviously based on what we've experienced what we have on backlog that tends to be at a little bit lower margin and so you know you see you see a lot of that top line growth coming from some of those types of programs hence the hence the change in the in the guy for the for the second time this year and then uh you know we're very happy with the overall program performance like i said The productivity that we saw in, you know, in Q3, we think we're well positioned to meet our commitments here in Q4. But you are seeing some of that mix play out. I'll say, you know, again, consistent with what we thought it would be in the back half of this year.

Great. Thanks. Appreciate it. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Jeremy Wensinger for any closing remarks.

One, thank you for joining the call. We had a wonderful quarter. I'm thrilled with the team. We have great executors running our lines of business in terms of Kentries and Vinnie Caputo. They are great leaders and they're doing a wonderful job in terms of execution. We're focused obviously on finishing the year and making our commitments. But again, I'm proud of the team for the quarter they delivered, and I look forward to talking to you again real soon.

Operator, back to you. Conference has now been concluded. Thank you for attending today's presentation. You may now disconnect.