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VI

V2X, Inc. (VVX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered resilient execution: revenue $1.08B, GAAP diluted EPS $0.70, adjusted EPS $1.33, and adjusted EBITDA $82.4M with 7.6% margin .
  • Results beat S&P Global consensus: EPS $1.33 vs $1.04*, revenue $1.078B vs $1.059B*, and EBITDA $79.4M vs $72.2M*; management raised full-year adjusted EPS guidance to $4.65–$4.95 while reaffirming revenue, EBITDA, and cash flow ranges .
  • Strategic wins support the backlog outlook: $4.3B T‑6 aircraft program award; management emphasized fixed-price/outcome-based pipeline and noted backlog of ~$11.3B excluding the T‑6 award and recent extensions, with funded backlog $2.3B .
  • Capital allocation: new $100M repurchase authorization and a secondary offering by Vertex Aerospace with VVX repurchasing 200K shares, alongside y/y net debt improvement of ~$200M .

What Went Well and What Went Wrong

What Went Well

  • Strong operational performance with adjusted net income up 61% y/y to $42.3M and adjusted EPS up 59% y/y to $1.33, driven by process optimization and cash interest savings .
  • Major contract award: $4.3B USAF T‑6 program strengthens multi‑service training readiness and underscores commercial-based supply chain capabilities; expected performance through July 2034 .
  • Guidance confidence: raised FY25 adjusted EPS to $4.65–$4.95 while reaffirming revenue ($4.375–$4.500B), adjusted EBITDA ($305–$320M), and adjusted operating cash flow ($150–$170M) .

Management quotes:

  • “Our second quarter results reflect V2X’s ability to execute in all market environments and further demonstrate the resiliency of our business.” — CEO Jeremy Wensinger .
  • “The performance in the second quarter was strong and provides additional confidence to deliver on our full year commitments.” — CFO Shawn Mural .

What Went Wrong

  • Regional softness: Middle East (-11.3% y/y), Asia (-9.3% y/y) revenue declines; Air Force revenue down 15.4% y/y in Q2 .
  • Book-to-bill below 1 in Q2 and year-to-date; management expects ≥1.0 by year-end contingent on several binary awards .
  • Backlog lower vs Q4: Q2 total backlog reported at ~$11.3B (ex-T‑6 and extensions) vs $12.5B at Q4 2024; funded backlog $2.3B .

Financial Results

Quarterly Comparison vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$1,157.8 $1,015.9 $1,078.3
Diluted EPS ($USD)$0.78 $0.25 $0.70
Adjusted Diluted EPS ($USD)$1.33 $0.98$1.33
Adjusted EBITDA ($USD Millions)$86.2 $67.0$82.4
Adjusted EBITDA Margin (%)7.4% 6.6%7.6%

Actual vs S&P Global Consensus (Q2 2025)

MetricActualConsensusSurprise
Revenue ($USD Millions)$1,078.3 $1,058.6*+$19.7M / +1.9%*
Primary EPS ($USD)$1.33 $1.04*+$0.29 / +27.5%*
EBITDA ($USD Millions)$79.4 $72.2*+$7.2 / +10.0%*

Values with asterisks retrieved from S&P Global.

Segment/Customer Mix (Revenue) — Q2 YoY

CustomerQ2 2024 ($USD Thousands)Q2 2025 ($USD Thousands)YoY Change
Army$456,690 $457,443 +0.2%
Navy$349,824 $354,282 +1.3%
Air Force$127,467 $107,822 -15.4%
Other$138,202 $158,783 +14.9%
Total$1,072,183 $1,078,330 +0.6% (calc)

Contract Type Mix — Q2 YoY

Contract TypeQ2 2024 ($USD Thousands)Q2 2025 ($USD Thousands)YoY Change
Cost-plus & cost-reimbursable$615,837 $647,582 +5.2%
Firm-fixed-price$429,182 $405,091 -5.6%
Time-and-materials$27,164 $25,657 -5.5%
Total$1,072,183 $1,078,330 +0.6% (calc)

Geographic Mix — Q2 YoY

RegionQ2 2024 ($USD Thousands)Q2 2025 ($USD Thousands)YoY Change
United States$578,881 $632,357 +9.2%
Middle East$361,064 $320,317 -11.3%
Asia$84,663 $76,793 -9.3%
Europe$47,575 $48,863 +2.7%
Total$1,072,183 $1,078,330 +0.6% (calc)

KPIs

KPIQ4 2024Q1 2025Q2 2025
Total Backlog ($USD Billions)$12.5 n/a~$11.3 (ex-T‑6 & recent extensions)
Funded Backlog ($USD Billions)$2.3 n/a$2.3
Book-to-Bill (x)~1.2x <1x YTD <1x in Q2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$4.375–$4.500 $4.375–$4.500 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$305–$320 $305–$320 Maintained
Adjusted Diluted EPS ($USD)FY 2025$4.45–$4.85 $4.65–$4.95 Raised
Adjusted Net Cash from Ops ($USD Millions)FY 2025$150–$170 $150–$170 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024)Previous Mentions (Q-1: Q1 2025)Current Period (Q2 2025)Trend
Backlog & PipelineBacklog $12.5B; book-to-bill ~1.2x; strong pipeline across geographies Increased bid velocity; large foreign military sales opportunities Total backlog ~$11.3B excluding T‑6/CENTCOM/INDOPACOM; three‑year pipeline >$50B Slightly softer backlog, robust pipeline
Contract MixBalanced; high cost‑plus Continued mix of cost‑plus; firm‑fixed price lower y/yGrowing fixed‑price/outcome-based concentration in pipeline Mix shifting toward fixed-price
Regional DynamicsIndo-Pacific +27% y/y; global strength Indo-Pacific +10% y/y; visibility improving Asia contraction due to contracting/postponements; U.S. +9% y/y; Middle East -11% y/y Mixed; U.S. strong, Asia/Middle East softer
Major AwardsQ4 awards; backlog expansion Recompetes factored into FY25 midpoint $4.3B T‑6 award; ramp through 2026 transition Award-driven growth ahead
Capital AllocationNet leverage 2.6x; strong cash generation Reprice/extend revolver & Term Loan A $100M buyback authorization; Vertex secondary with VVX repurchase of 200K shares Shareholder-friendly, deleveraging

Management Commentary

  • CEO Jeremy Wensinger: “We are transforming V2X to be a leader in data‑enabled mission solutions across all domains…optimizing our core…leveraging capabilities into adjacent markets, extending new offerings, and strategically investing both internally and externally” .
  • CFO Shawn Mural: “The performance in the second quarter was strong…Adjusted EBITDA of $82.4 million with a margin of 7.6%…Adjusted net cash provided by operating activities increased $112.1 million y/y to $58.3 million” .
  • On T‑6 award: “The T‑6 aircraft…is critical to ensure new pilot readiness…V2X will use commercial‑based approaches to provide full spectrum supply chain management solutions” .

Q&A Highlights

  • T‑6 revenue ramp and timing: Transition underway; minimal impact to FY25 financials; historical annual run-rate ~$200–$300M, subject to funding and protest periods .
  • Margins cadence: One contractual commitment (~$6M) concluded in Q2 pulled forward; absent that, margin would have been ~7.1% for the quarter .
  • Backlog/book-to-bill: Backlog excludes T‑6 and recent extensions; book-to-bill below 1 in Q2 and YTD, management expects ≥1.0 by year-end on binary awards .
  • Fixed‑price exposure: Increasing concentration via conversions and selective bidding aligned with operational strengths .

Estimates Context

  • VVX delivered broad-based beats vs S&P Global consensus in Q2: EPS $1.33 vs $1.04*, revenue $1.078B vs $1.059B*, EBITDA $79.4M vs $72.2M* .
  • Given the beat and raised EPS guidance, Street models likely need to reflect stronger interest savings, lower cash interest, and operational execution (process optimization), while incorporating transition timing for T‑6 and potential award protests .
    Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • VVX posted an across-the-board beat and raised adjusted EPS guidance; narrative is shifting to fixed‑price/outcome-based contracts with strong execution in core cost‑plus programs .
  • Near-term catalysts: $4.3B T‑6 award, CENTCOM/INDOPACOM extensions not yet reflected in backlog figures, plus a three‑year pipeline >$50B; watch binary award timing for year-end book-to-bill inflection .
  • Margin trajectory: Adjusted EBITDA margin improved to 7.6%; expect transitional drag then normalization as T‑6 supply chains and workflows establish over 18–24 months .
  • Capital and share count dynamics: $100M buyback authorization and 200K share repurchase alongside Vertex secondary; leverage and cash interest trending favorably y/y .
  • Regional mix: U.S. strength offset by Middle East and Asia softness; monitoring contracting delays and exercise schedules in Asia .
  • Risk watch: Award protests/delays, firm‑fixed price mix expansion, Air Force program headwinds; backlog dipped vs Q4 but should recover as awards are booked .
  • Trading lens: Beating and raising with visible award catalysts is positive; pace of backlog conversion and clarity on T‑6 ramp into 2026 are likely swing factors for sentiment and multiples .