V2X, Inc.

Thank you for joining us for the V2X Second Quarter 2026 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Gary, and I'll 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 your telephone keypad. 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. Please go ahead.

Thank you. Good afternoon, everyone. Welcome to the V2X second quarter 2026 earnings conference call. Joining us today are Jeremy Wensinger, President and Chief Executive Officer, and Shawn Mural, Senior Vice President, and Chief Financial Officer. Slides for today's presentation are available on the Investor Relations section of our website, gov2x.com. 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 view 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. 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 followed with the SEC, both of which are available on the Investors Relations section of our website. At this time, I'd like to turn the call over to Jeremy.

Thank you, Mike, and good afternoon, everyone. Thank you for joining us today. Please turn to slide three. Today, I will be providing a recap of our second quarter results for 2026 and sharing more of our outlook for the rest of the year. Before I go through some of the highlights, I want to thank our team at V2X for their continued focus and dedication to delivering our customers' mission. In the second quarter and first half, our consistent execution, recent contract wins, and continued alignment to national security priorities drove double-digit revenue growth. The value of our end-to-end solutions was reinforced by approximately $1 billion in recent awards across modernization, global training, aerospace, and mission readiness. These awards are expected to improve the composite margin of our backlog as we continue to prioritize profitable growth. We continue to pursue new bids throughout the quarter, leveraging our AI solutions that deliver differentiated customer outcomes. With more than $8 billion in bids submitted that incorporate these solutions, Our focus remains on margin accretive opportunities that further enhance the quality of our backlog. Supported by our strong cash generation and healthy balance sheet, we also continue to evaluate growth opportunities that allow us to further our go towards tomorrow strategy. As we enter the second half of 2026, we are confident in our market position and are increasing our full year guidance for revenue, adjusted EBITDA, and adjusted diluted EPS. We expect revenue and adjusted EBITDA to increase approximately 10% year over year at the midpoint and adjusted diluted EPS to increase 16% at the midpoint. Our results to date and momentum underway underscores our continued ability to deliver for our customers and shareholders. With that, let's move to slide four. which summarizes the financial operating highlights of the second quarter and the first half of 2026. In the second quarter, revenue increased 17% year over year to $1.26 billion. Adjusted net income was $51.6 million, representing an increase of 22% year over year. Adjusted EBITDA was $89.8 million, with a margin of 7.1%. Adjusted diluted EPS was $1.64, representing an increase of 23% compared to the same period last year. Our solid financial and operating performance reflects the progress we've been delivering on our strategic priorities and our position as a leading provider of mission capabilities. Turning now to slide five. We have received approximately $1 billion in recent awards, demonstrating the breadth of our portfolio and its close alignment with our customers' priorities. As it relates to modernization, we were selected to provide multi-year production of carriage equipment, enabling next-generation weapons for the strategic bomber fleet. And in global training, we captured awards to deliver solutions for enhanced UAS maintenance and operator training. This reflects the sustained demand We are seeing for training solutions that improve readiness and operational effectiveness. With respect to aerospace, we continue to support essential requirements securing a five-year re-compete to continue delivering proven readiness for the U.S. Air Force C-12 fleet. And in mission readiness, we received awards to support operations for U.S. Marine Corps assets and enhanced electronic security capabilities for a foreign military customer in the Middle East. With an aggregate margin that is accretive to our current portfolio, these recent awards reinforce our continued pursuit of high-quality, profitable growth opportunities and our team's focus on disciplined execution. Moreover, it underscores the diversity of our offerings across markets and capabilities. This is a great sample of differentiated, high-value work that our team is pursuing. While we recognize that not all our awards will have this margin profile, these awards exemplify the progress we have made in our strategic focus looking towards future opportunities. As an end-to-end mission provider, we are proud of our proven ability to support our customers wherever and however they need. Moving to slide six, our robust backlog. Funding and pipeline of high-quality awards support our positioning and outlook for the remainder of this year. Bookings were $600 million in the quarter, yielding a quarterly book-to-bill ratio of 0.5 times and a trailing 12-month book-to-bill of 1.4 times. I'd like to note that our bookings do not reflect approximately $1 billion in recent awards as they came in shortly after the quarter. Total backlog for the quarter was $12.7 billion, which includes the modified scope of our log cap work in Kuwait. Importantly, funded backlog increased 10% sequentially and 8% year over year, $2.5 billion. This further supports the confidence we have in our 2026 outlook and demonstrates the strong funding environment for the solutions we provide. We are also continuing to see increased activity and funding in the Asia Pacific region and are optimistic about the growth prospects. Altogether, our diverse portfolio, strong backlog, and continued demand position us well to drive value and deliver for our customers over the long term. Turning to slide seven, as we highlighted in the first quarter, we continue to advance our go towards tomorrow strategy. including expanding our AI capabilities. We are currently operating three AI platforms across our enterprise IT infrastructure, and we see strong adoption across the business. To further employee education, productivity, and operational efficiency, we're investing in ongoing training and continuing to expand internal use cases.