Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36341 V2X, Inc. (Exact name of registrant as specified in its charter) Indiana 38-3924636 (State or other jur ...

V2X, Inc. (NYSE:VVX) Q4 2022 Earnings Conference Call March 2, 2023 4:30 PM ET Company Participants Mike Smith - VP, Treasury, IR and Corporate Development Chuck Prow - President and CEO Susan Lynch - SVP and CFO Conference Call Participants Tobey Sommer - SunTrust Bert Subin - Stifel Brian Gesuale - Raymond James Ken Herbert - RBC Capital Joe Gomes - NOBLE Capital Operator Thank you for joining us for the V2X Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. Today's call is being reco ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) V2X provides critical mission solutions to global defense clients, expanding its capabilities through a significant 2022 merger and focusing on converged solutions - V2X, Inc (formerly Vectrus, Inc) is a leading provider of critical mission solutions primarily to defense clients, operating in **343 locations** and **45 countries** and territories worldwide[15](index=15&type=chunk) - On July 5, 2022, Vectrus completed its merger with Vertex Aerospace Services Holding Corp, forming V2X, creating a larger, more diversified company capable of competing for integrated business opportunities[17](index=17&type=chunk) - V2X's business strategies include expanding its base, capturing new markets, delivering with excellence, and enhancing its culture to connect people, technology, and capabilities[20](index=20&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk) - Effective January 1, 2023, the Company is organized across three core business areas: Aerospace Solutions, Advanced Technology, and Global Mission Training and Sustainment[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - As of December 31, 2022, V2X employed approximately **15,400 full-time employees**, a significant increase of 7,300 from the prior year, primarily due to the Vertex merger[51](index=51&type=chunk) Revenue by Customer (2020-2022) | (In thousands) | 2022 | 2021 | 2020 | |:---|:---|:---|:---| | Army | $1,342,406 | $1,134,849 | $965,558 | | Navy | $713,732 | $224,407 | $68,748 | | Air Force | $459,849 | $266,291 | $299,272 | | Other | $374,873 | $158,118 | $61,951 | | **Total revenue** | **$2,890,860** | **$1,783,665** | **$1,395,529** | Revenue by Contract Type (2020-2022) | Contract type | 2022 | 2021 | 2020 | |:---|:---|:---|:---| | Cost-plus and cost-reimbursable | 56 % | 71 % | 68 % | | Firm-fixed-price | 40 % | 25 % | 29 % | | Time-and-materials | 4 % | 4 % | 3 % | | **Total revenue** | **100 %** | **100 %** | **100 %** | [Item 1A. Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from personnel retention, contract competition, international operations, cybersecurity, and integration challenges from the Vertex merger - Key business risks include the inability to recruit and retain qualified personnel, potential harm from prolonged work stoppages due to a significant unionized workforce (**35% of employees** as of Dec 31, 2022), and intense competition[78](index=78&type=chunk)[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - The company's profitability and growth are highly dependent on winning new contracts and successfully recompeting existing ones, with a substantial majority of revenue derived from U.S government contracts[91](index=91&type=chunk)[92](index=92&type=chunk) - A significant portion of revenue (**31.0% in 2022**) is derived from a few large contracts, such as LOGCAP V Kuwait and Iraq Task Orders, making the company vulnerable to their loss[97](index=97&type=chunk)[98](index=98&type=chunk) - Operating in international, high-risk locations exposes employees and contractors to security risks, potentially leading to substantial costs and legal challenges[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - The merger with Vertex introduces integration challenges, potential difficulties in realizing anticipated benefits, and the need to effectively manage expanded operations[138](index=138&type=chunk)[139](index=139&type=chunk)[141](index=141&type=chunk) - Following the merger, V2X assumed significantly more indebtedness, totaling approximately **$1,336.8 million** as of December 31, 2022, which could adversely affect its business and exposes it to interest rate risks[175](index=175&type=chunk)[181](index=181&type=chunk) [Item 1B. Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[203](index=203&type=chunk) [Item 2. Properties](index=52&type=section&id=Item%202.%20Properties) V2X operates globally with key leased corporate and operations offices in Virginia, Colorado, and Mississippi - V2X has **343 locations** in **45 countries** and territories, with contract performance primarily at government customer facilities[204](index=204&type=chunk) - Key leased properties include the corporate headquarters in McLean, Virginia (**24,400 sq ft**), an operations office in Colorado Springs, Colorado (**65,000 sq ft**), and an operations office in Madison, Mississippi (**164,000 sq ft**)[204](index=204&type=chunk) [Item 3. Legal Proceedings](index=52&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal matters incidental to its business but does not expect them to have a material adverse effect - V2X is subject to various investigations, lawsuits, arbitration, claims, enforcement actions, and other legal proceedings, including government audits and claims related to its operations[205](index=205&type=chunk) - The company believes the outcome of ongoing government audits and investigations will not have a material impact on its results of operations, financial condition, or cash flows[205](index=205&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to V2X, Inc - Mine Safety Disclosures are not applicable to the registrant[207](index=207&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=53&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) V2X common stock trades on the NYSE under "VVX", with no dividends paid to date and no equity repurchases in 2022 - V2X common stock is traded on the NYSE under the symbol **"VVX"**[210](index=210&type=chunk) - As of February 28, 2023, there were approximately **3,899 stockholders** of record and **30.9 million shares** of common stock outstanding[210](index=210&type=chunk) - The company has not declared or paid any dividends on its common stock to date, and future dividend decisions are at the discretion of the Board of Directors[211](index=211&type=chunk) - V2X did not repurchase any of its equity securities for the year ended December 31, 2022[213](index=213&type=chunk) [Item 6. Selected Financial Data](index=54&type=section&id=Item%206.%20Selected%20Financial%20Data) This section is reserved, indicating no selected financial data is presented here - This section is reserved, meaning no selected financial data is provided[216](index=216&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial results, highlighting the Vertex merger's impact on revenue growth, operating income, backlog, and liquidity - V2X's primary customer is the U.S Department of Defense, with substantially all revenue derived from U.S government customers[222](index=222&type=chunk) - Revenue increased by **$1,107.2 million (62.1%)** in 2022, with **$908.4 million** attributed to the Vertex merger and the remainder from organic growth in legacy programs[223](index=223&type=chunk)[252](index=252&type=chunk) - Operating income decreased by **10.1%** primarily due to amortization of intangible assets and acquisition-related costs from the merger[224](index=224&type=chunk)[255](index=255&type=chunk) - The COVID-19 pandemic had an immaterial impact on financial results for 2022 and 2021, but caused an estimated **$63.1 million** reduction in revenue in 2020[233](index=233&type=chunk)[546](index=546&type=chunk) - Total backlog increased by **$7.3 billion** in 2022, primarily due to the Vertex merger[243](index=243&type=chunk) - V2X's liquidity is primarily supported by cash flows from operations, cash on hand, and credit facilities, with the company refinancing its debt on February 28, 2023[259](index=259&type=chunk)[268](index=268&type=chunk) - Net cash provided by operating activities increased in 2022 primarily due to the merger, while net cash from investing activities was largely due to **$193.7 million** cash acquired in the merger[272](index=272&type=chunk)[275](index=275&type=chunk) Key Financial Highlights (Year Ended December 31, 2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Revenue | $2,890,860 | $1,783,665 | $1,107,195 | 62.1 % | | Cost of revenue | $2,595,848 | $1,623,245 | $972,603 | 59.9 % | | Operating income | $55,771 | $62,020 | $(6,249) | (10.1)% | | Operating margin | 1.9 % | 3.5 % | - | - | | Interest expense, net | $(61,879) | $(7,985) | $(53,894) | 674.9 % | | Net (loss) income | $(14,330) | $45,728 | $(60,058) | (131.3)% | Total Backlog (Funded and Unfunded) (as of December 31) | (In millions) | 2022 | 2021 | |:---|:---|:---| | Funded backlog | $2,567 | $1,033 | | Unfunded backlog | $9,695 | $3,972 | | **Total backlog** | **$12,262** | **$5,005** | Net Cash Flow Activities (Year Ended December 31) | (In thousands) | 2022 | 2021 | 2020 | |:---|:---|:---|:---| | Operating activities | $93,495 | $61,339 | $64,081 | | Investing activities | $175,958 | $(12,643) | $(138,025) | | Financing activities | $(193,236) | $(75,585) | $105,774 | | Foreign exchange | $1,337 | $(3,325) | $1,579 | | **Net change in cash** | **$77,554** | **$(30,214)** | **$33,409** | [Forward-Looking Statement Information](index=54&type=section&id=Forward-Looking%20Statement%20Information) The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from expectations - These risks include the impact of COVID-19, contract awards, competition, security breaches, and economic conditions[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Overview](index=55&type=section&id=Overview) V2X operates as a single segment providing integrated mission solutions, with the U.S Army being a primary customer - V2X, formerly Vectrus, is a global provider of critical mission solutions, primarily to defense clients, operating as a single segment[221](index=221&type=chunk) Revenue from U.S. Government Customers (2020-2022) | Year | Total Revenue (in billions) | % from U.S. Army | |:---|:---|:---| | 2022 | $2.9 | 46% | | 2021 | $1.8 | 64% | | 2020 | $1.4 | 69% | [Executive Summary](index=55&type=section&id=Executive%20Summary) Revenue grew 62.1% in 2022 due to the Vertex merger, though operating income declined 10.1% from related acquisition costs and amortization - Revenue increased by **$1,107.2 million (62.1%)** in 2022 compared to 2021, with **$908.4 million** from the Vertex merger and the rest from organic growth[223](index=223&type=chunk)[252](index=252&type=chunk) - Operating income decreased by **$6.2 million (10.1%)** in 2022, primarily due to amortization of intangible assets and acquisition-related costs associated with the merger[224](index=224&type=chunk)[255](index=255&type=chunk) - The effective income tax rate was **(134.6)%** in 2022, compared to **15.4%** in 2021, influenced by non-deductible costs and the release of prior year uncertain tax positions[228](index=228&type=chunk)[258](index=258&type=chunk) [Merger with Vertex](index=57&type=section&id=Merger%20with%20Vertex) Details regarding the merger with Vertex and its financial implications are referenced in the Consolidated Financial Statements - The merger with Vertex and related debt and stock-based compensation obligations are discussed in detail in Notes 3, 10, and 16 of the Consolidated Financial Statements[230](index=230&type=chunk) [COVID-19 Impact](index=57&type=section&id=COVID-19%20Impact) The financial impact of COVID-19 was immaterial in 2022 and 2021, but significantly reduced revenue and EPS in 2020 - The impact of COVID-19 on V2X's financial results was immaterial for 2022 and 2021, but caused an estimated **$63.1 million** reduction in revenue and a **$0.39** reduction in diluted EPS in 2020[233](index=233&type=chunk)[546](index=546&type=chunk) - The ultimate impact of the pandemic remains uncertain, depending on future developments, vaccine effectiveness, and government regulations[232](index=232&type=chunk)[545](index=545&type=chunk) [Significant Contracts](index=57&type=section&id=Significant%20Contracts) Several large U.S Army contracts, including LOGCAP V task orders, represent a significant portion of the company's total revenue - The LOGCAP V - Kuwait Task Order contributed **$472.9 million** in revenue in 2022 and **$210.8 million** in 2021[236](index=236&type=chunk) - The LOGCAP V - Iraq Task Order contributed **$282.5 million** in revenue in 2022 and **$209.0 million** in 2021[237](index=237&type=chunk) - The OMDAC-SWACA contract contributed **$122.7 million** in 2022 and **$139.5 million** in 2021[238](index=238&type=chunk) - The K-BOSSS contract, which had components re-competed under LOGCAP V, contributed **$18.9 million** in 2022 and **$282.2 million** in 2021[239](index=239&type=chunk) Significant Contracts as % of Total Revenue (2020-2022) | Contract Name | 2022 | 2021 | 2020 | |:---|:---|:---|:---| | LOGCAP V - Kuwait Task Order | 16.4% | 11.8% | —% | | LOGCAP V - Iraq Task Order | 9.8% | 11.7% | —% | | OMDAC-SWACA | 4.2% | 7.8% | 14.2% | | K-BOSSS | 0.7% | 15.8% | 34.1% | [Backlog](index=59&type=section&id=Backlog) Total backlog increased significantly to $12.3 billion in 2022, driven primarily by the Vertex merger - Total backlog increased by **$7.3 billion** in 2022, primarily due to the Merger[243](index=243&type=chunk) - The company expects to recognize a substantial portion of its funded backlog as revenue within the next 12 months, though government contracts can be canceled at any time[242](index=242&type=chunk) Total Backlog (Funded and Unfunded) (as of December 31) | (In millions) | 2022 | 2021 | |:---|:---|:---| | Funded backlog | $2,567 | $1,033 | | Unfunded backlog | $9,695 | $3,972 | | **Total backlog** | **$12,262** | **$5,005** | [Economic Opportunities, Challenges and Risks](index=60&type=section&id=Economic%20Opportunities%2C%20Challenges%20and%20Risks) The company faces a mix of opportunities from defense spending and challenges from fiscal pressures, inflation, and rising interest rates - The U.S government's investment in national security creates opportunities, but fiscal challenges and political environment could pressure revenue and profit margins[244](index=244&type=chunk) - The FY 2023 Omnibus Appropriations Act provided **$817 billion** to the Defense Department, a **$44 billion** increase over the President's request, indicating continued high priority on national security spending[245](index=245&type=chunk) - Macroeconomic conditions, including inflation and rising interest rates, pose challenges that could adversely affect profit margins, especially on fixed-price contracts[248](index=248&type=chunk) [Discussion of Financial Results](index=61&type=section&id=Discussion%20of%20Financial%20Results) Financial results for 2022 show a 62.1% revenue increase due to the Vertex merger, offset by a 10.1% drop in operating income from related costs - Revenue increased by **62.1%** in 2022, primarily due to the Vertex merger (**$908.4 million**) and organic growth[252](index=252&type=chunk)[253](index=253&type=chunk) - SG&A expenses rose by **143.1%** in 2022, mainly due to the merger, including **$39.9 million** in acquisition-related costs[254](index=254&type=chunk)[255](index=255&type=chunk) - Net interest expense increased significantly by **$53.9 million (674.9%)** in 2022, driven by increased debt assumed with the merger[257](index=257&type=chunk)[258](index=258&type=chunk) Selected Financial Highlights (Year Ended December 31, 2022 vs. 2021) | (In thousands) | 2022 | 2021 | Change ($) | Change (%) | |:---|:---|:---|:---|:---| | Revenue | $2,890,860 | $1,783,665 | $1,107,195 | 62.1 % | | Cost of revenue | $2,595,848 | $1,623,245 | $972,603 | 59.9 % | | Selling, general and administrative expenses | $239,241 | $98,400 | $140,841 | 143.1 % | | Operating income | $55,771 | $62,020 | $(6,249) | (10.1)% | | Interest expense, net | $(61,879) | $(7,985) | $(53,894) | 674.9 % | | (Loss) income before taxes | $(6,108) | $54,035 | $(60,143) | (111.3)% | | Income tax expense | $8,222 | $8,307 | $(85) | (1.0)% | | Net (loss) income | $(14,330) | $45,728 | $(60,058) | (131.3)% | [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) V2X manages liquidity through cash flows and credit facilities, having undertaken significant debt restructuring and refinancing post-merger - V2X expects to fund operations, capital expenditures, and growth through cash flows, cash on hand, credit facilities, and potential equity/debt issuances[259](index=259&type=chunk) - In conjunction with the merger, V2X assumed **$1,182.7 million** in first lien debt and **$185.0 million** in second lien debt, and an ABL Credit Agreement for up to **$200.0 million**[264](index=264&type=chunk) - On February 28, 2023, V2X refinanced its debt, securing a new **$750 million** senior secured financing package to repay existing credit facilities[268](index=268&type=chunk) Contractual Obligations (as of December 31, 2022) | (In thousands) | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | |:---|:---|:---|:---|:---|:---| | Operating leases | $65,603 | $19,588 | $22,313 | $12,437 | $11,265 | | Principal payments on Vertex First Lien Credit Agreements | $1,176,763 | $11,850 | $23,700 | $23,700 | $1,117,513 | | Principal payments on Vertex Second Lien Credit Agreement | $160,000 | $0 | $0 | $0 | $160,000 | | Interest on Vertex First and Second Lien Credit Agreements | $688,689 | $115,603 | $228,636 | $222,872 | $121,578 | | **Total** | **$2,091,055** | **$147,041** | **$274,649** | **$259,009** | **$1,410,356** | [Critical Accounting Estimates](index=66&type=section&id=Critical%20Accounting%20Estimates) The company's financial statements rely on critical accounting estimates for revenue recognition, business combinations, goodwill, and income taxes - Critical accounting estimates include revenue recognition, business combinations, goodwill impairment, intangible assets, and income taxes, which involve significant judgment[283](index=283&type=chunk) - Revenue from long-term service contracts is recognized over time using the input method, requiring estimates of total contract revenue and costs[284](index=284&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk) - Goodwill and other intangible assets are tested for impairment annually, with **no goodwill impairment** recorded in 2022 or 2021[293](index=293&type=chunk)[294](index=294&type=chunk)[298](index=298&type=chunk) - Income tax provisions are determined using the asset and liability approach, with deferred tax assets and liabilities based on temporary differences and enacted tax rates[300](index=300&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) V2X is exposed to market risks from interest rate and foreign currency fluctuations, particularly due to its significant variable rate debt - V2X is exposed to market risks from fluctuations in interest rates and foreign currency exchange rates[305](index=305&type=chunk) - A **one percentage point change** in interest rates would result in a **$13.4 million** change in annual cash interest expenses for its variable rate debt[306](index=306&type=chunk) - The company terminated its interest rate swaps on June 29, 2022, and its foreign currency forward contracts expired in January 2022[308](index=308&type=chunk)[309](index=309&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the Index to Consolidated Financial Statements for detailed financial information - This item directs readers to the Index to Consolidated Financial Statements for detailed financial information[311](index=311&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with accountants on accounting and financial disclosure - There were no changes in or disagreements with accountants on accounting and financial disclosure[312](index=312&type=chunk) [Item 9A. Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective, though the internal control assessment excluded the recently acquired Vertex business - As of December 31, 2022, V2X's disclosure controls and procedures were deemed **effective** by management, including the CEO and CFO[313](index=313&type=chunk) - The internal control over financial reporting (ICFR) of Vertex was excluded from management's assessment due to the recent merger, with Vertex's excluded assets and revenues representing **45.1%** and **31.4%** of consolidated totals, respectively[314](index=314&type=chunk)[325](index=325&type=chunk) - Management concluded that V2X's ICFR was **effective** as of December 31, 2022, based on the COSO framework, and this effectiveness was audited by RSM US LLP, who expressed an unqualified opinion[317](index=317&type=chunk)[323](index=323&type=chunk) [Item 9B. Other Information](index=75&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - No other information is reported under this item[332](index=332&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=75&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to V2X, Inc - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[333](index=333&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=75&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's 2023 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement, with executive officer details also in Part I, Item 1 of this 10-K[335](index=335&type=chunk) [Item 11. Executive Compensation](index=75&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's 2023 Proxy Statement - Executive compensation information is incorporated by reference from the 2023 Proxy Statement[336](index=336&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=75&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's 2023 Proxy Statement - Security ownership information for beneficial owners and management, along with related stockholder matters, is incorporated by reference from the 2023 Proxy Statement[337](index=337&type=chunk) [Item 13. Certain Relationships and Related Transactions and Director Independence](index=75&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the company's 2023 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement[338](index=338&type=chunk) [Item 14. Principal Accountant Fees and Services](index=75&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2023 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement[339](index=339&type=chunk) PART IV [Item 15. Exhibit and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the report, including financial statements, various agreements, and certifications - This item lists documents filed as part of the report, including financial statements, merger agreements, credit agreements, and various certifications[343](index=343&type=chunk) - Financial statement schedules are omitted because the required information is either absent or already included in the Consolidated Financial Statements[347](index=347&type=chunk) [Item 16. Form 10-K Summary](index=125&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reported no Form 10-K Summary for this item - There is no Form 10-K Summary provided[566](index=566&type=chunk)

V2X, Inc. (NYSE:VVX) Q3 2022 Earnings Conference Call November 8, 2022 4:30 PM ET Company Participants Mike Smith - Vice President, Treasury, Investor Relations & Corporate Development Chuck Prow - President & Chief Executive Officer Susan Lynch - Senior Vice President & Chief Financial Officer Conference Call Participants Tobey Sommer - Truist Brian Gesuale - Raymond James Robert Connors - Stifel Joe Gomes - NOBLE Capital Operator Thank you for joining us for the V2X Third Quarter 2022 Earnings Conference ...

| --- | --- | --- | --- | |----------------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | Third Quarter 2022 Results TRUSTED WHEREVER THE MISSION LEADS | | | | | November 8, 2022 | | | | Call Participants Chuck Prow President and Chief Executive Officer Susan Lynch Senior Vice President and Chief Financial Officer Q3'22 Earnings Presentation \ \ 2 Disclaimers FORWARD-LOOKING STATEMENTS This presentation contains forward-looking s ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's Q3 2022 financial statements show revenue more than doubled post-Vertex merger, but a net loss resulted from merger costs and increased debt [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2022 revenue surged 108.6% to $958.2 million post-merger, resulting in a $17.0 million net loss despite revenue growth Q3 & Nine Months 2022 vs 2021 Financial Performance (in thousands) | Metric | Q3 2022 | Q3 2021 | Change | Nine Months 2022 | Nine Months 2021 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $958,156 | $459,408 | +108.6% | $1,912,693 | $1,364,257 | +40.2% | | **Operating Income** | $4,487 | $12,890 | -65.2% | $24,744 | $52,003 | -52.4% | | **Net (Loss) Income** | $(17,039) | $10,258 | -266.1% | $(3,711) | $38,240 | -109.7% | | **Diluted (Loss) EPS** | $(0.56) | $0.87 | - | $(0.21) | $3.23 | - | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet expanded significantly post-merger, with total assets reaching **$3.17 billion** and liabilities **$2.18 billion** by September 30, 2022 Balance Sheet Comparison (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $925,197 | $423,340 | | **Goodwill** | $1,537,710 | $321,734 | | **Intangible assets, net** | $559,985 | $66,582 | | **Total Assets** | $3,168,452 | $889,459 | | **Total Current Liabilities** | $717,683 | $358,248 | | **Long-term debt, net** | $1,286,985 | $94,246 | | **Total Liabilities** | $2,180,069 | $539,372 | | **Total Shareholders' Equity** | $988,383 | $350,087 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, operating cash flow increased to **$99.8 million**, with positive investing activities from **$194.4 million** cash acquired in the merger Cash Flow Summary - Nine Months Ended (in thousands) | Activity | Sep 30, 2022 | Oct 1, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $99,768 | $53,378 | | Net cash provided by (used in) investing activities | $186,220 | $(9,868) | | Net cash used in financing activities | $(165,251) | $(53,220) | | **Net change in cash** | **$108,860** | **$(12,494)** | [Note 3. Merger](index=12&type=section&id=Note%203.%20Merger) Vectrus completed its merger with Vertex on July 5, 2022, forming V2X, Inc., with a **$634.0 million** consideration, recognizing **$1.22 billion** in goodwill - Vectrus completed its merger with Vertex on **July 5, 2022**, acquiring all outstanding shares of Vertex[38](index=38&type=chunk) Merger Consideration (in thousands) | Component | Value | | :--- | :--- | | Fair value of common shares issued | $630,636 | | Fair value of cash consideration | $3,315 | | **Total consideration transferred** | **$633,951** | - The merger resulted in the recognition of **$1,216.0 million** of goodwill and **$522.0 million** for customer-related amortizable intangible assets[44](index=44&type=chunk) - Acquisition-related costs totaled **$41.3 million** for the nine months ended September 30, 2022, and were expensed as incurred within SG&A[41](index=41&type=chunk) [Note 4. Revenue](index=14&type=section&id=Note%204.%20Revenue) Remaining performance obligations surged to **$3.36 billion** by September 30, 2022, reflecting Vertex contracts, and Q3 2022 revenue mix shifted significantly Remaining Performance Obligations (in millions) | Date | Amount | | :--- | :--- | | September 30, 2022 | $3,362 | | December 31, 2021 | $1,398 | Q3 Revenue by Contract Type (in thousands) | Contract Type | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | Cost-plus and cost reimbursable | $505,743 | $338,007 | 49.6% | | Firm-fixed-price | $416,618 | $105,619 | 294.5% | | Time and material | $35,795 | $15,782 | 126.8% | Q3 Revenue by Geographic Region (in thousands) | Region | Q3 2022 | Q3 2021 | % Change | | :--- | :--- | :--- | :--- | | United States | $582,817 | $139,357 | 318.2% | | Middle East | $261,997 | $263,257 | (0.5)% | | Europe | $62,669 | $34,902 | 79.6% | | Asia | $50,673 | $21,892 | 131.5% | [Note 7. Debt](index=17&type=section&id=Note%207.%20Debt) The company's debt structure was overhauled post-merger, with prior debt repaid and **$1.185 billion** First Lien and **$185.0 million** Second Lien facilities assumed - On the merger closing date, the company repaid its existing Amended Term Loan (**$50.2 million**) and Amended Revolver (**$40.0 million**)[71](index=71&type=chunk) - The company assumed new debt facilities, including a First Lien Credit Agreement for **$1,185.0 million** and a Second Lien Credit Agreement for **$185.0 million**[72](index=72&type=chunk)[79](index=79&type=chunk) - An ABL Credit Agreement provides for a revolving loan facility of up to **$200.0 million**, with no outstanding balance as of September 30, 2022[85](index=85&type=chunk)[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q3 revenue growth to the Vertex merger, but operating income declined due to M&A costs, while total backlog more than doubled to **$12.7 billion** post-merger [Backlog](index=29&type=section&id=Backlog) Total backlog significantly increased to **$12.7 billion** by September 30, 2022, from **$5.0 billion** at year-end 2021, primarily due to the Vertex merger Backlog Summary (in millions) | Category | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Funded backlog | $2,943 | $1,033 | | Unfunded backlog | $9,762 | $3,972 | | **Total backlog** | **$12,705** | **$5,005** | [Discussion of Financial Results](index=31&type=section&id=Discussion%20of%20Financial%20Results) Q3 2022 revenue grew **108.6%** due to the Vertex merger, but operating income declined **65.2%** as SG&A expenses, including **$44.9 million** in M&A costs, significantly increased - Q3 2022 SG&A expenses increased by **$65.0 million**, which included **$44.9 million** in M&A and integration costs from the merger[167](index=167&type=chunk) - Nine-month 2022 SG&A expenses increased by **$77.3 million**, including **$59.9 million** in M&A and integration costs[173](index=173&type=chunk) - The increase in net interest expense of **$24.8 million** for the nine months ended September 30, 2022, was due to increased debt assumed with the Merger[176](index=176&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity with **$144.1 million** cash and **$184.9 million** ABL availability, despite adding over **$1.3 billion** in debt post-merger, while DSO improved to **65 days** - As of September 30, 2022, the company had **$144.1 million** in unrestricted cash and **$184.9 million** of available borrowing capacity under the ABL Facility[195](index=195&type=chunk) - In conjunction with the Merger, V2X assumed first and second lien debt of **$1,182.7 million** and **$185.0 million** respectively[183](index=183&type=chunk) - Days Sales Outstanding (DSO) improved to **65 days** as of September 30, 2022, from **75 days** as of December 31, 2021[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Post-merger, the company's market risk profile shows heightened exposure to interest rate fluctuations, with a **1%** change impacting annual interest expense by **$13.6 million** - A **one percentage point** change in interest rates on the variable rate Vertex First and Second Lien Credit Agreements would change annual cash interest expenses by **$13.6 million**[205](index=205&type=chunk) - The company terminated its remaining interest rate swaps on **June 29, 2022**, in conjunction with the extinguishment of its prior debt[206](index=206&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management deemed disclosure controls effective as of September 30, 2022, but excluded newly acquired Vertex from internal control over financial reporting evaluation per SEC guidance - Management has excluded the internal control over financial reporting of the newly acquired Vertex from its evaluation of disclosure controls and procedures as of **September 30, 2022**, as permitted by SEC guidance[209](index=209&type=chunk) [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but management does not anticipate any material adverse effects on its financial condition or operations - The company does not expect that any asserted or unasserted legal claims or proceedings will have a material adverse effect on its results of operations, financial condition or cash flows[213](index=213&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Post-merger, a key risk factor is increased exposure to losses from fixed-price contracts, which now constitute approximately **40%** of U.S. government contract revenue - Post-merger, approximately **40%** of the company's U.S. government contract revenue is derived from fixed-price and time and materials contracts[216](index=216&type=chunk) - The higher proportion of fixed-price contracts subjects the company to greater risks of losses from **cost overruns**, **technological difficulties**, **inflation**, and **supplier problems**[216](index=216&type=chunk)[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, merger-related credit agreements, and executive certifications

Vectrus, Inc. (VEC) Q1 2022 Earnings Conference Call May 10, 2022 4:30 PM ET Company Participants Michael Smith - Director-Investor Relations and Corporate Development Charles Prow - President and Chief Executive Officer Susan Lynch - Chief Financial Officer Conference Call Participants Joseph Gomes - NOBLE Capital Markets Tobey Sommer - Truist Securities Bert Subin - Stifel Operator Thank you for joining us for the Vectrus First Quarter 2022 Earnings Conference Call and Webcast. Today's call is being recor ...

LEI VECTRUS 1st Quarter 2022 Results Chuck Prow – President and Chief Executive Officer Susan Lynch – Senior Vice President and Chief Financial Officer May 10, 2022 Disclaimers FORWARD-LOOKING STATEMENTS Certain material presented in this presentation includes forward-looking statements intended to qualify for the safe harbor from liability established by the Securities Exchange Act of 1934, as amended. These forwardlooking statements include, but are not limited to, Vectrus may be unable to obtain sharehol ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-36341 Vectrus, Inc. (Exact name of registrant as specified in its charter) Indiana 38-3924636 (State or other juri ...

Financial Data and Key Metrics Changes - Third quarter 2021 revenue grew 30% year-over-year to approximately $459 million, with organic growth of 13% [10][38] - Adjusted EBITDA margin for the quarter was 4.5%, down from 4.8% in the prior year [11][39] - Adjusted diluted earnings per share increased 19% year-over-year to $1.15 [12][40] - Operating cash flows were $39.4 million for the quarter, significantly up from $3.3 million in the same period last year [41][39] - Total backlog was $4.9 billion, compared to $3.7 billion in Q3 2020 [45] Business Line Data and Key Metrics Changes - Revenue from Navy campaigns increased 180% year-over-year, now representing 11% of total revenue [23][42] - Revenue in INDOPACOM grew to approximately $19 million year-over-year, now accounting for 5% of total revenue [43][42] Market Data and Key Metrics Changes - U.S.-based revenue composition grew to 30% of total revenue, up from 25% in the same period last year [44] - The company's trailing 12-month pro forma book-to-bill ratio was 1.4 times, compared to 1.5 times in Q3 2020 [45] Company Strategy and Development Direction - The company is focusing on diversifying its portfolio through organic and inorganic investments, particularly in the Navy and INDOPACOM regions [42][43] - The company aims to enhance its position in the market through strategic acquisitions and investments that align with its growth strategy [47][48] Management's Comments on Operating Environment and Future Outlook - Management reiterated 2021 guidance ranges, expecting revenue between $1.745 billion and $1.78 billion, reflecting 25% to 28% growth [49] - The company is mindful of potential impacts from ongoing transitions in contracts and geopolitical factors affecting operations [62] Other Important Information - The company ended the quarter with cash of $53.4 million and total debt of $128 million, with a total leverage ratio of 1.33 times [46] - The company plans to introduce a larger, more favorable credit facility to support its growth plan [48] Q&A Session Summary Question: Potential opportunity in INDOPACOM - Management indicated that INDOPACOM is an increasing portion of the overall pipeline, with expectations that the Kwajalein contract will contribute more than 10% of revenue [54][55][56] Question: Staffing challenges and vaccine mandates - Management acknowledged challenges in staffing due to COVID-19 but noted successful resource deployment. The vaccine mandate primarily affects U.S.-based employees [58][60] Question: Guidance maintenance despite strong quarter - Management explained that while the year is solid, they are being cautious due to effects from Afghanistan, contract transitions, and the lumpiness of revenue from contingency operations [61][62]