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VI

V2X, Inc. (VVX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.016B and adjusted EPS was $0.98, with adjusted EBITDA of $67.0M (6.6% margin). Management reaffirmed full-year 2025 guidance (revenue $4.375–$4.500B, adj. EBITDA $305–$320M, adj. EPS $4.45–$4.85, adj. operating cash flow $150–$170M) .
  • Versus Wall Street consensus: adjusted EPS beat (+$0.05), while revenue and EBITDA were modest misses. The company flagged back-half weighting (WTRS ramp and F-5) and reiterated confidence in FY targets (consensus values below; S&P Global) *.
  • Strategic backdrop: Indo-Pacific growth (+10% y/y in Asia) and high-visibility franchise programs; debt repricing reduced cash interest and extended facilities, supporting liquidity (~$170M cash and undrawn $500M revolver at Q1 close) .
  • Stock reaction catalysts: reaffirmed guidance, contractual wins (Space Force Ascension Island $140M; Navy C‑26 $103M), debt repricing savings (>50bp) and back-half ramp signals .

What Went Well and What Went Wrong

What Went Well

  • EPS beat vs consensus and y/y growth: Adjusted EPS $0.98 (+9% y/y); “we remain on track to achieve our commitments” – CFO .
  • Indo-Pacific momentum: Asia revenue +10.4% y/y; CEO: “in an enviable position with strong visibility… increasing bid velocity” .
  • Capital structure improvements: repriced Term Loan A and revolver, >50bp lower cost; cash interest expense down 28% y/y to $18.2M in Q1 .

What Went Wrong

  • Topline/EBITDA short of consensus: revenue $1.016B vs ~$1.036B consensus; EBITDA ~$61.1M vs ~$69.3M consensus (adjusted EBITDA reported $67.0M), reflecting program mix and early-phase margins on new awards (S&P Global)* .
  • Operating cash flow seasonality: net cash used in operations ($95.5M), tied to working-capital timing; management expects back-half cash generation .
  • Customer/geography softness: Air Force revenue down 16.4% y/y with KC‑10/T‑1A sunsets; Middle East down 7.3% y/y; Europe down 17.9% y/y .

Financial Results

Summary financial metrics

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.011 $1.158 $1.016
Operating Income ($USD Millions)$30.3 $51.6 $34.3
Net Income ($USD Millions)$1.1 $25.0 $8.1
Diluted EPS ($)$0.04 $0.78 $0.25
Adjusted EPS ($)$0.90 $1.33 $0.98
Adjusted EBITDA ($USD Millions)$69.1 $86.2 $67.0
Adjusted EBITDA Margin (%)6.8% 7.4% 6.6%
Net Cash from Operations ($USD Millions)$(57.2) $223.1 $(95.5)

Consensus vs actual (Q1 2025)

MetricConsensusActual
Revenue ($USD Billions)$1.036*$1.016
Adjusted EBITDA ($USD Millions)$69.3*$67.0
Adjusted EPS ($)$0.932*$0.98

Values marked with * are from S&P Global (Capital IQ).
Bold beats/misses: EPS beat; revenue and EBITDA modest misses (S&P Global).

Revenue breakdown

Revenue by Customer ($USD Millions)Q1 2024Q1 2025
Army$433.4 $442.1
Navy$321.4 $346.1
Air Force$118.6 $99.1
Other$137.2 $128.5
Total$1,010.6 $1,015.9
Revenue by Geography ($USD Millions)Q1 2024Q1 2025
United States$544.7 $577.5
Middle East$343.3 $318.3
Asia$68.8 $76.0
Europe$53.7 $44.1
Total$1,010.6 $1,015.9

KPIs and cash metrics

KPIQ1 2024Q1 2025
Cash interest expense, net ($USD Millions)$25.4 $18.2
Adjusted operating cash flow ($USD Millions)$(83.5) $(118.1)
Weighted avg diluted shares (Millions)31.79 32.02
Cash & equivalents ($USD Millions)$35.7 $169.1
Net leverage ratio (end-Q1)—~2.98 (management)

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Revenue ($USD Billions)FY 2025$4.375–$4.500; Mid $4.438 $4.375–$4.500; Mid $4.438 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$305–$320; Mid $313 $305–$320; Mid $313 Maintained
Adjusted EPS ($)FY 2025$4.45–$4.85; Mid $4.65 $4.45–$4.85; Mid $4.65 Maintained
Adjusted Net Cash from Ops ($USD Millions)FY 2025$150–$170; Mid $160 $150–$170; Mid $160 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Backlog/visibilityQ3: ~$12.2B backlog, book-to-bill ~1.0x; WTRS initial $225M; strong franchise programs . Q4: ~$12.5B backlog; book-to-bill ~1.2x; ~3x revenue coverage at FY25 midpoint .Backlog ~3x annual revenue; LOGCAP extensions and Ascension Island award not yet in backlog; top 5 programs ~5 years runway .Stable to improving visibility
Indo-Pacific growthQ3 Asia +31% y/y; presence and PDI focus . Q4: Indo-Pacific +27% y/y; continued priority .Asia +10.4% y/y; exercises in odd year; steady demand .Sustained growth, moderated comps
Tariffs/macroQ4: aligned to enduring missions; limited CR impact .Tariffs expected to have no noticeable impact; CR effects modest and temporary .Neutral
Debt/interestQ3: deleveraging progress; options to reduce interest further . Q4: term loan repricing; >50bp savings .Term Loan A and revolver repriced/extended; >50bp savings; cash interest down 28% y/y .Positive
WTRS rampQ3: back-half ‘25 ramp; initial $225M funding . Q4: +~$120M to topline back-half ’25 .Back-half 2025 ramp; +~$125M incremental; accretive margins vs company composite .Positive, back-half weighted
Program mixQ4: cost-plus mix increased (lower margins) .Early-phase margins on new awards; margin improvement expected as programs mature .Transitional headwind near-term

Management Commentary

  • CEO: “V2X is in an enviable position with strong visibility, differentiated capabilities, and a robust geographic footprint… increasing bid velocity” .
  • CFO: “Cash interest expense was $18.2M, improving $7.2M or 28% y/y… we repriced and extended both our revolver and Term Loan A” .
  • CEO on Space Force awards: Ascension Island ($140M) and COBRA DANE in Alaska highlight V2X as “critical enabler of our nation's marquee space domain awareness infrastructure” .
  • CFO: “Top 5 programs having approximately 5 years of revenue runway… backlog already represents ~3x annual revenue” .
  • CEO: “We are prioritizing key partnerships that further elevate the value proposition… submitting bids on 5 opportunities valued at or above $1B over next 12 months” .

Q&A Highlights

  • Recompetes: Started year ~5% of revenue; down to ~1–2% for the full year, increasing focus on new bids/channels .
  • WTRS ramp: Predominantly back-half 2025; +~$125M incremental revenue; margins accretive to company composite in H2 .
  • Air Force decline: y/y down due to KC‑10 and T‑1A sunsets; offset from WTRS and F‑5 programs .
  • Cash flow cadence: Larger Q1 working-capital use; collections improved post quarter; expect positive cash in subsequent quarters .
  • Tariffs/CR: No material tariff impact; CR-related disruptions modest and temporary .

Estimates Context

  • Q1 2025 vs consensus (S&P Global): adjusted EPS beat ($0.98 vs ~$0.932); revenue miss ($1.016B vs ~$1.036B); EBITDA miss ($67.0M vs ~$69.3M). 9 EPS estimates; 10 revenue estimates (S&P Global)*.
  • Implications: Modest topline/EBITDA undershoot amid early-phase margins and program mix; the reaffirmed FY guide and back-half ramp (WTRS/F‑5) point to potential estimate stability or mild H2 upward revisions contingent on execution .

Values marked with * are from S&P Global (Capital IQ).

Key Takeaways for Investors

  • Back-half weighted setup: Expect sequential acceleration as WTRS transitions and F‑5 runs at full rate; H2 margins should improve as programs mature .
  • Mix dynamics: Higher cost-plus exposure and new program start-up temper near-term margins; management targets performance-based contracting and fixed-price where appropriate .
  • Liquidity and interest savings: >50bp facility repricing and undrawn $500M revolver underpin flexibility; cash interest down materially y/y .
  • Geographic/story strength: Indo-Pacific remains a growth vector; Space Force and Navy awards strengthen strategic positioning and multi-year visibility .
  • Reaffirmed FY guide: No change to revenue/EBITDA/EPS/cash flow ranges; execution of back-half awards is key to hitting targets .
  • Near-term trading: Post-earnings, the narrative hinges on confirmed tasking and H2 ramp; watch bookings cadence, award timing, and Q2 seasonality for validation .
  • Medium-term thesis: Pipeline expansion (five ≥$1B pursuits), partnerships, and outcome-based contracting offer levers to drive scale and margin uplift over time .