Executive Summary

Record Q4 revenue of $1.16B (+11% y/y), record adjusted EBITDA ($86.2M, 7.4% margin), and strong cash generation; backlog reached $12.5B with 1.2x book-to-bill, providing ~3x 2025 revenue coverage at guidance midpoint .
Net leverage improved to 2.62x (from ~3.27x in Q3), aided by $223M Q4 operating cash flow and $210M y/y net debt reduction, enhancing balance sheet optionality into 2025 .
2025 guidance introduced: revenue $4.375–$4.500B (midpoint $4.438B), adj. EBITDA $305–$320M (midpoint $313M), adj. EPS $4.45–$4.85 (midpoint $4.65); H2 weighted due to phase-ins; headwinds from KC-10/T-1A sunsets; cash interest ~$83M and other expense ~$12M; capex ~$30M .
Catalysts/themes: Indo‑Pacific momentum (+27% y/y in Q4; ~~24% for 2024), outcome‑based contracting push, W‑TRS ramp (~~$120M incremental topline in H2’25), deleveraging and debt repricing benefits; management views CR/budget risk as manageable given mission-critical, incumbent-heavy mix .

What Went Well and What Went Wrong

What Went Well
- “Record revenue of $1.16 billion…up 11% y/y,” driven by broad-based growth and strong Indo-Pacific (+27% y/y); record adjusted EBITDA ($86.2M) and adjusted EPS ($1.33, +9% y/y) .
- Backlog and awards underpin visibility: Q4 book-to-bill ~1.2x; total backlog $12.5B; 2024 awards >$5.5B; limited recompetes and robust pipeline .
- Cash and leverage: Q4 CFO $223.1M; net leverage cut to 2.6x; “reprice[d] our $900M first‑lien term loan,” 50 bps margin improvement since Q3’24, 135 bps since Oct’23 .
What Went Wrong
- 2025 margin headwinds near-term: completion of mature KC‑10/T‑1A programs and new work starting at lower margins weigh on implied FY’25 EBITDA margin progression (improves through H2 as ramp occurs) .
- Mix shift toward cost-type work can cap EBITDA margin; management reaffirmed this dynamic in 2H’24 and outlook framing .
- CR/budget uncertainty persists; while impact seen as “modest,” timing of awards/exercises remains a swing factor quarter-to-quarter .

Financial Results

Headline P&L and Profitability (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Billions)	$1.07B (1,072.183M)	$1.08B (1,081.656M)	$1.16B (1,157.752M)
GAAP Diluted EPS ($)	($0.21)	$0.47	$0.78
Adjusted Diluted EPS ($)	$0.83	$1.29	$1.33
Adjusted EBITDA ($USD Millions)	$72.3	$82.7	$86.2
Adjusted EBITDA Margin (%)	6.7%	7.6%	7.4%
Operating Income ($USD Millions)	$27.4	$49.9	$51.6
Vs. S&P Global Consensus	N/A (unavailable)	N/A (unavailable)	N/A (unavailable)

Note: S&P Global consensus estimates were unavailable at time of analysis due to access limitations; estimate comparisons are therefore not included.

KPIs and Balance Sheet (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Book-to-Bill (x)	~0.7x	~1.0x	~1.2x
Backlog ($USD Billions)	$12.2	$12.2	$12.5
Funded Backlog ($USD Billions)	$2.9	$3.0	$2.3
Net Leverage (x)	3.56x	3.27x	2.62x
Net Debt ($USD Millions)	$1,150	$1,088.8	$873.7
Operating Cash Flow ($USD Millions)	(Six months) $(31.6)	$62.7 (GAAP); $130.1 adj.	$223.1 (GAAP); $168.2 adj.

Segment/Geography Mix (FY view for context)

Revenue by Geography ($USD Millions)	FY 2023	FY 2024
United States	2,286.052	2,388.598
Middle East	1,193.598	1,399.436
Asia	264.346	326.961
Europe	219.130	207.160
Total	3,963.126	4,322.155

Management also highlighted Indo‑Pacific strength: Q4 region revenue growth +27% y/y; FY’24 Asia up ~24% y/y .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$4.225–$4.275B (raised low end)	N/A	N/A
Adjusted EBITDA	FY 2024	$300–$315M (reaffirmed)	N/A	N/A
Adjusted EPS	FY 2024	$3.95–$4.20 (raised low end; tax rate to 21%)	N/A	N/A
Adj. Net Cash from Ops	FY 2024	$145–$165M (reaffirmed)	N/A	N/A
Revenue	FY 2025	N/A	$4.375–$4.500B (midpoint $4.438B)	Introduced
Adjusted EBITDA	FY 2025	N/A	$305–$320M (midpoint $313M)	Introduced
Adjusted EPS	FY 2025	N/A	$4.45–$4.85 (midpoint $4.65)	Introduced
Adj. Net Cash from Ops	FY 2025	N/A	$150–$170M (midpoint $160M)	Introduced
Cash Interest Expense	FY 2025	N/A	~$83M	Introduced
Other Expense	FY 2025	N/A	~$12M	Introduced
Capex	FY 2025	N/A	~ $30M	Introduced

Management expects 2025 revenue/EBITDA to be H2‑weighted due to new award phase-ins; guidance contemplates ~4% contribution from recompetes at the revenue midpoint .

Earnings Call Themes & Trends

Topic	Q2 2024 (Q‑2)	Q3 2024 (Q‑1)	Q4 2024 (Current)	Trend
AI/Tech initiatives (GMR, assured comms, smart warehousing)	Introduced GMR production award, JADC2 linkage; expanding Navy C4I; emphasis on tech insertion	Showcased GMR 1000; wins across U.S./EU/INDOPACOM; $270M comms wins; JETS 2.0 IT/cyber	Continued emphasis on tech-driven modernization, cost savings (smart warehouse 69% cost reduction example)	Strengthening
Regional trends (INDOPACOM/Middle East)	Strong y/y growth; positioned in key theaters	INDOPACOM +31% y/y; Middle East +13% y/y; ~ $80M INDOPACOM quarterly run-rate	INDOPACOM +27% y/y in Q4; growth expected to continue; ME activity evolving	Positive momentum
Budget/CR/macro	Muted award pace H1 (book-to-bill ~0.7), expect pickup H2	Raised 2024 guidance low-end; deleveraging on track to ≤3x	CR impact seen as modest; business largely incumbent; policy/budget risk monitored	Manageable
Outcome/performance-based contracting	Discussed margin/contract mix effects	Optimization program mgmt best practices	Pursuing conversions to fixed‑price/outcome‑based where suitable	Expanding
Program pipeline and ramps	Large awards (F‑5, NASA, readiness) and backlog visibility	FOc ramp phasing; W‑TRS FOC in 2H’25; full-rate GMR	W‑TRS adds ~$120M to 2025 topline, H2‑weighted; ramp across new wins	Building

Management Commentary

“Our growth momentum continued into the fourth quarter with revenue increasing 11% year-over-year… underscored by 27% growth in the Indo-Pacific region… book-to-bill of 1.2x… backlog of $12.5 billion” — CEO Jeremy Wensinger .
“Record adjusted EBITDA of $86.2 million, with a margin of 7.4%… net leverage ratio of 2.6x… net debt improving $210 million y/y” — CFO Shawn Mural .
On positioning: “We are delivering innovative solutions… Smart Warehouse… 69% reduction in operating costs… tremendous opportunity for audit assurance and value creation” — CEO .
On contract strategy: “We have successfully converted [work] to fixed price… allows us to get more performance-based contracting and save [the customer] money” — CEO .

Q&A Highlights

Outcome-based/fixed-price conversion: Management is proactively proposing conversions for mature programs to performance-based/fixed-price where it benefits readiness and cost savings .
CR/budget dynamics: Guidance assumes “business as usual” with only modest CR impacts given incumbent-heavy, enduring missions; broader budget cuts would likely play via policy shifts rather than uniform program haircuts .
W‑TRS cadence: Adds about $120M incremental 2025 revenue, mainly in Q3–Q4; task orders flowing, back‑half loaded ramp .
2025 margin puts/takes: Loss of mature KC‑10/T‑1A programs plus new starts ramping at lower initial margins; margins expected higher in 2H’25 than 1H .
Deleveraging optionality: Achieved ≤3x net leverage target; repriced term loan; exploring options to maximize shareholder value .

Estimates Context

S&P Global consensus for Q4’24 revenue/EPS/EBITDA and FY’25 forecasts were unavailable due to access limitations at the time of this analysis; therefore, explicit beat/miss versus consensus could not be assessed. Expect analysts to refine FY’25 cadence (H2-weighted) and lower near-term EBITDA margin assumptions given program sunsets and new-start ramps, while incorporating W‑TRS and other awards that enhance 2H’25 visibility .

Key Takeaways for Investors

Strong exit velocity: Record Q4 revenue/EBITDA and robust cash flow reduced leverage to 2.6x; balance sheet flexibility creates capital allocation optionality in 2025 .
Visibility: Backlog $12.5B and 1.2x book‑to‑bill underpin ~3x revenue coverage for 2025 at guidance midpoint; limited recompetes (~4% midpoint) .
Mix/margin watch: Expect 1H’25 profitability softness from program sunsets and new-start ramps, improving into 2H; outcome‑based contracting could be an upside lever over time .
Growth vectors: INDOPACOM momentum, assured communications (GMR), W‑TRS ramp, and platform modernization support multi-year growth; FY’24 Asia +24%, Q4 Indo‑Pacific +27% y/y .
Cash interest tailwind: Debt repricing and deleveraging should lower cash interest in 2025 (~$83M planned), aiding EPS leverage versus EBITDA .
Execution focus: Management’s optimization push (program management, best practices, tooling) aims to drive productivity and margin improvement as ramps mature .
Risk framework: CR/budget/policy and timing of international exercises/awards remain swing factors, but mission-critical, incumbent-heavy portfolio mitigates downside .

Supporting detail:

Q4 results and 2025 guidance from earnings 8‑K/press release .
Q4 earnings call transcript for qualitative color, cadence, and detailed guidance components .
Prior quarter trends from Q3’24 press release/transcript and Q2’24 8‑K/transcript .

V2X, Inc. (VVX)·Q4 2024 Earnings Summary