V2X (NYSE:VVX) Q4 2025 Earnings call February 23, 2026 04:30 PM ET Company ParticipantsJeremy Wensinger - CEOKristine Liwag - Executive DirectorMariana Perez Mora - Managing DirectorMike Smith - VP of Treasury, Investor Relations, and Corporate DevelopmentNoah Poponak - Managing DirectorSebastian Rivera - Equity Research AssociateShawn Mural - CFOTrevor Walsh - Director of Equity ResearchConference Call ParticipantsAndre Madrid - VP and Aerospace and Defense AnalystJoe Gomes - Senior Research AnalystJohn Go ...

Summary of Leidos Conference Call Company Overview - **Company Name**: Leidos - **Market Position**: A $17.5-$18 billion company with 48,000 employees, primarily serving the U.S. government in federal IT, national security, intelligence, health, and veterans health sectors. Significant presence in Australia and the U.K. [4][5] Core Business Lines - **Business Sectors**: 1. **Digital Modernization**: Core focus on IT services. 2. **Defense**: Consolidated defense products into one sector, focusing on maritime and space growth pillars. 3. **Homeland**: Encompasses work related to Australia, the U.K., energy, and Department of Homeland Security (DHS). 4. **Health**: Services for veterans and active service members. 5. **Intelligence**: Focused on serving the intelligence community effectively. [7][8][9] Market Trends and Opportunities - **Defense Budget Growth**: Anticipation of the Department of Defense budget exceeding $1 trillion by 2027, potentially reaching $1.5 trillion, which is expected to benefit Leidos' defense business. [10][11] - **Agency Spending**: Expectation of increased spending from agencies due to the reconciliation package, particularly in TSA and FAA modernization. [11][12] - **Intelligence Community Growth**: Increased budget allocation for the intelligence community, with Leidos positioned to play a significant role. [14] - **Digital Modernization**: Emphasis on AI as a growth pillar, with plans to leverage AI for business growth. [14][15] Strategic Initiatives - **R&D Investments**: Increased internal R&D spending from 17% to 24% to enhance technological capabilities and service offerings. [29][32] - **Acquisitions**: Recent acquisition of EnTrust to enhance capabilities in the energy sector, with plans for integration and efficiency improvements. [35][39] - **AI Strategy**: Leidos has been proactive in adopting AI, deploying OpenAI across desktops for employees to enhance business processes. [55][56] Financial Performance - **Record Earnings**: Despite headwinds, Leidos reported record earnings, cash flow, and profitability, with a profit margin of 14.1% last year. [5][15] - **Growth Expectations**: Anticipation of continued growth in 2026, driven by established growth pillars and new opportunities in modernization projects. [75] Challenges and Responses - **DOGE Administration**: Viewed as an opportunity rather than a threat, with proactive engagement to improve government efficiency. [17][18] - **Market Differentiation**: Leidos is recognized as a multifaceted service provider, distinguishing itself from peers in the federal services and IT sector. [24][25] Conclusion - **Outlook**: The company is optimistic about its trajectory, with a strong execution engine and clear growth pillars, expecting 2026 to be another exceptional year. [75]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $3.2 billion, reflecting normalized growth of 3% year-over-year [6][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, showing a 40 basis points year-over-year increase [20] - Adjusted diluted earnings per share increased by 6% year-over-year to $0.54 [6][20] Business Line Data and Key Metrics Changes - Digital Solutions segment revenue was $1.34 billion, representing 4% growth, and adjusted EBITDA increased to $103 million with margins of 7.7% [20][21] - Global Engineering Solutions segment revenue was $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4%, reflecting an 80 basis points year-over-year increase [21][22] Market Data and Key Metrics Changes - Amentum secured $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [7] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [7][25] Company Strategy and Development Direction - Amentum is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy, which are expected to drive long-term growth [12][14] - The company aims to prioritize higher-margin work and maintain a disciplined capital structure to enable flexible deployment [24][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance, citing strong demand signals and robust bookings [19][25] - The impact of the longest government shutdown in history was acknowledged, but management remains optimistic about future performance as operations normalize [6][19] Other Important Information - Amentum's cash position at the end of Q1 was $247 million, with a fully undrawn $850 million revolver [23] - The company received a credit rating upgrade from Moody's, which will reduce interest expenses and enhance financial flexibility [24] Q&A Session Summary Question: Free cash flow progression through the year - Management noted that Q1 cash performance was impacted by timing-related issues, with expectations for strong free cash flow in Q2 [28][30] Question: Award outlook by end market - Management highlighted an uptick in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one [34][35] Question: Nuclear business contribution to revenue and profit growth - Management indicated that while nuclear contracts will take time to impact revenue significantly, they expect positive contributions from accelerating growth markets [39][40] Question: Cash flow requirements for joint ventures - Management clarified that the high contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are expected to normalize [46][47] Question: Margin performance in Global Engineering Solutions - Management attributed the improved margins to strategic prioritization of higher-margin work and strong program performance [48][49] Question: Opportunities and challenges with NASA - Management expressed excitement about supporting NASA's goals and highlighted the importance of their role in upcoming missions [82][84]

Core Viewpoint - CACI International has shown a positive performance with a 1.8% increase in shares since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Financial Performance - CACI reported Q1 fiscal 2026 non-GAAP earnings of $6.85 per share, exceeding the Zacks Consensus Estimate by 10.48%, with a year-over-year increase of 15.5% driven by higher revenues and efficient cost management [2] - Revenues for the first quarter reached $2.29 billion, surpassing the consensus mark by 1.66%, and reflecting an 11.2% increase from the prior year, primarily due to 5.5% organic growth [3] Contract Awards and Backlog - In Q1, CACI secured contract awards totaling $5 billion, with approximately 60% attributed to new business [4] - The total backlog as of September 30, 2025, was $31.4 billion, a 9.8% increase from $28.6 billion a year ago, while the funded backlog rose 31.3% to $4.2 billion from $3.2 billion [5] Revenue Breakdown - The Department of Defense contributed 51.5% to total revenues, with the Intelligence Community at 26.1%, Federal Civilian Agencies at 18%, and Commercial and other customers at 4.4%. Revenue growth from these segments was 8.5%, 11.6%, 16.9%, and 20.2%, respectively [6] - Prime Contractor and Subcontractor revenues accounted for 90.8% and 9.2% of total revenues, with increases of 10.4% and 19.4%, respectively [7] Contract Types and Revenue Segments - Revenue contributions by contract type were 60.5% from cost-plus-fee-type, 26.7% from fixed-price, and 12.8% from time and material-type contracts. Cost-plus-fee-type and fixed-price contracts grew by 8% and 28.7%, while time and material-type contracts saw a decline of 2.7% [8] - Expertise and Technology segments accounted for 43.1% and 56.9% of total revenues, with Technology revenues increasing by 21.7% while Expertise revenues slightly declined by 0.1% [8] Operating Income and Cash Flow - Operating income for the quarter was $212.3 million, reflecting an 18% year-over-year increase, with an operating margin expansion of 60 basis points to 9.3% [9] - Adjusted EBITDA rose 24.4% year over year to $268.6 million, with an adjusted EBITDA margin increase of 120 basis points to 11.7% [9] - As of September 30, 2025, CACI had cash and cash equivalents of $133 million, an increase from $106.2 million in the previous quarter, and total long-term debt decreased to $2.71 billion from $2.85 billion [10] Fiscal Guidance - CACI maintains its fiscal 2026 revenue guidance between $9.2 billion and $9.4 billion, with adjusted net income projected between $605 million and $625 million, and non-GAAP earnings per share expected in the range of $27.13 to $28.03 [12] Market Outlook - Estimates for CACI have been trending upward, indicating a positive outlook, with the stock currently holding a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [15]

Core Viewpoint - Rosen Law Firm is reminding investors who purchased KBR, Inc. securities between May 6, 2025, and June 19, 2025, of the upcoming lead plaintiff deadline for a securities class action lawsuit set for November 18, 2025 [1]. Group 1: Class Action Details - Investors who bought KBR securities during the specified Class Period may be eligible for compensation without any out-of-pocket fees through a contingency fee arrangement [2]. - A class action lawsuit has already been filed, and those wishing to serve as lead plaintiff must act by November 18, 2025 [3]. - The lawsuit alleges that KBR made materially false and misleading statements regarding its business operations and the Global Household Goods Contract, which led to investor damages when the truth was revealed [5]. Group 2: Rosen Law Firm's Credentials - Rosen Law Firm emphasizes the importance of selecting qualified legal counsel with a proven track record in securities class actions, highlighting its own success in recovering hundreds of millions for investors [4]. - The firm achieved the largest securities class action settlement against a Chinese company at the time and has been consistently ranked among the top firms for securities class action settlements since 2013 [4].

Financial Data and Key Metrics Changes - The company reported total revenue of $1.6 billion, a decrease of 5% from the prior year period and down 9% on an organic basis. Excluding the confidential contract, total revenue grew 138% on an organic basis, driven by growth in transportation and cyber markets [27][28] - Adjusted EBITDA was $149 million, with a margin expansion of 40 basis points to 9.4%, marking a second quarter record [28][29] - The company achieved a free cash flow conversion rate of 151% for the quarter and 125% on a trailing twelve-month basis [6][33] Business Line Data and Key Metrics Changes - Federal Solutions segment saw a total revenue decrease of 19% from the prior year, but excluding the confidential contract, revenue increased 88% on an organic basis [29] - Critical Infrastructure segment revenue increased by $97 million or 14% from the previous year, driven by organic growth of 8% and contributions from recent acquisitions [30][31] Market Data and Key Metrics Changes - In North America, total revenue grew 177% on an organic basis, reflecting strong demand and successful contract execution [9][10] - The Middle East infrastructure business is expected to grow over 10% in 2025, marking the fourth consecutive year of double-digit organic revenue growth in the region [11][12] Company Strategy and Development Direction - The company is focused on hard infrastructure projects, aligning with bipartisan support and government priorities, particularly in areas like roads, bridges, and airports [10][55] - The acquisition of Chesapeake Technology International is expected to enhance capabilities in electronic warfare, cyber, and autonomous systems, strengthening relationships with key customers [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a robust backlog of nearly $9 billion, with 70% funded, and a pipeline of $55 billion including 114 opportunities worth $100 million or more [25][26] - The company anticipates a stronger Q3, traditionally the strongest quarter for federal business, and expects to maintain a book-to-bill ratio of 1.0 or greater [50][51] Other Important Information - The company was recognized as the top program manager firm globally by Engineering News Record, reflecting its reputation for complex program delivery [7] - Significant contract wins in Q2 included a $176 million contract with the U.S. Army Corps of Engineers and a $138 million contract for cyber work with the Defense Threat Reduction Agency [8][9] Q&A Session Summary Question: Opportunities related to Golden Dome and FAA procurement - Management highlighted strong past performance with the FAA and readiness to pursue the integration contract, emphasizing a partnership with IBM [41][44] Question: Expectations for Q3 and industry trends - Management expects a robust Q3, with a strong pipeline and historical performance indicating a continuation of growth [49][50] Question: Impact of the One Big Beautiful Bill on infrastructure - Management noted a shift in funding priorities towards hard infrastructure, which aligns well with the company's portfolio [55] Question: Guidance increase and contributions from acquisitions - The guidance increase is primarily attributed to the acquisition of CTI, which is expected to contribute significantly to revenue and earnings [57][58] Question: Organic growth outlook and performance in Critical Infrastructure - Management anticipates 18% organic growth in the second half, driven by existing contracts and strong hiring [66][71] Question: Unbooked backlog and funding environment - The unbooked backlog is over $11 billion, with strong funding and cash flow expected to support growth [101][105]

Financial Data and Key Metrics Changes - The company reported revenues of $3,400,000,000, reflecting a 2% year-over-year growth [7] - Adjusted EBITDA was $262,000,000, up 3% from the prior year quarter, with a 10 basis point increase in adjusted EBITDA margins [21] - Free cash flow for the first quarter was $102,000,000, indicating a positive start to the fiscal year [25] Business Line Data and Key Metrics Changes - Digital Solutions generated revenues of $1,300,000,000, representing 1% growth, with adjusted EBITDA increasing to $100,000,000 [22][23] - Global Engineering Solutions reported revenues of $2,100,000,000, reflecting a 3% growth, with adjusted EBITDA increasing by 4% [24] Market Data and Key Metrics Changes - The company achieved $3,600,000,000 in net bookings, resulting in a 1.1 times quarterly book-to-bill ratio and a total backlog of $45,000,000,000 [8] - The company has $30,000,000,000 in pending awards, driven by $12,000,000,000 of submitted bids in Q1 [11] Company Strategy and Development Direction - The company is focused on executing well-funded enduring programs of national significance, with a stable environment across long contracts [30] - The integration and value capture activities are on track, with expectations of achieving $30,000,000 in run rate synergies by the end of fiscal year 2025 [15] - The company is leveraging advanced technology solutions to drive efficiency and effectiveness for customers, particularly in defense and national security sectors [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to drive sustained shareholder value through long-term growth and strong free cash flow generation [19] - The company acknowledges potential impacts from the new administration's priorities but remains optimistic about its core business and demand in areas like cyber and space [34][36] Other Important Information - The company has a strong liquidity position with $522,000,000 in cash and no outstanding balances on its revolving credit facility [26] - The fiscal year 2025 guidance includes revenues in the range of $13,800,000,000 to $14,200,000, with adjusted EBITDA between $1,060,000,000 and $1,100,000,000 [27] Q&A Session Summary Question: Can you talk about areas where you're seeing an acceleration with the administration priorities? - Management noted a stable environment across long contracts, with some delays in awards due to government guidance [30][31] Question: Can you provide context on the pending awards and how they fit between digital solutions and global engineering? - Management indicated that roughly two-thirds of the pending awards are new business, well split between both segments [37] Question: Is there any seasonality we should think about in free cash flow between Q1 and Q4? - Management confirmed that Q4 is expected to be the strongest quarter for cash flow due to the alignment with the government fiscal year end [39] Question: What are you seeing in terms of demand in the commercial business? - Management expressed excitement about growth in the commercial sector, particularly in AI and advanced infrastructure [45] Question: How do you think personnel changes in the government could impact the business? - Management believes that the need for government services remains unchanged, and there are opportunities for companies that can deliver more efficient methods [74][76] Question: Can you elaborate on the 1% revenue impact from the new administration? - Management acknowledged the fluid situation but reaffirmed guidance, indicating minimal impacts primarily related to foreign aid contracts [78]