V2X(VVX) - 2021 Q3 - Earnings Call Transcript

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]