Thank you for joining us for the Vectrus Second Quarter 2020 Earnings Conference Call and Webcast. Today’s call is being recorded. My name is Robert, and I’ll be the operator for today’s call. At this time, all participants have been placed in a listen-only mode. Following management’s presentation, I will open up the call for a question-and-answer session. Instructions will be given at that time. And now, I’ll pass the call over to your host, Mike Smith, Vice President of Investor Relations and Corporate Development at Vectrus. Thank you. You may begin.

Thank you. Good afternoon, everyone. Welcome to the Vectrus second quarter 2020 earnings conference call. Joining us today are Chuck Prow, President and Chief Executive Officer; and Susan Lynch, Senior Vice President and Chief Financial Officer. Slides for today’s presentation are available on our Investor Relations website, investors.vectrus.com. Please turn to slide 2. During today’s presentation, management will be making forward-looking statements pursuant to the Safe Harbor provisions of the federal securities laws. Please review our Safe Harbor statements in our press release and presentation material for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. The Company assumes no obligation to update its forward-looking statements. Additionally, I would like to point out that we will be discussing and reporting adjusted non-GAAP metrics, including adjusted operating income and margin, adjusted EBITDA and margin, adjusted net income, and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials, press release, and Form 10-Q. At this time, I’d like to turn the call over to Chuck Prow.

Thank you, Mike, and good afternoon everyone. Thank you for joining us on the call today. We reported a solid quarter concerning revenue, new business, and cash flow. EBITDA and earnings were adversely impacted by factors that I’ll explain shortly. However, Vectrus remains stronger than ever and is expected to achieve meaningful EPS growth in the second half of the year, despite the backdrop of COVID-19. Please turn to slide 3 to discuss our financial results. Revenue in the second quarter increased slightly from last year. We estimate that COVID-19 impacted revenue by $22 million, which we expect to be deferred into future periods due to host nation and base access restrictions across the contract portfolio. Operating cash flow in the quarter was up over 50% from last year, yielding nearly zero net debt today, and our strong cash flow profile is characteristic of our resilient business and client base. While our revenue and operating cash flow performances were solid in the quarter, our adjusted margins and EPS were affected by a contract adjustment to a European program, one-time closeout, and COVID-19 impacts. I will discuss the contract and contract closeout adjustments in greater detail in a moment. Our adjusted EBITDA margin in the second quarter was 2%. The previously mentioned adjustments adversely impacted margin by 240 basis points. Regarding COVID-19, the deferral of higher-margin revenue had a disproportionate 30 basis-point impact on margin. Adjusted EPS of $0.24 was adversely impacted by $0.54 due to the previously mentioned adjustments. In addition, we estimate that COVID-19 had a $0.14 impact on adjusted EPS. Our GAAP EPS was also affected by M&A costs and LOGCAP V pre-operation legal costs of $0.14. While these challenges affected the quarter’s profitability, our growth engine continued to execute well and we were successful in winning significant new business in the quarter. Specifically, our Navy growth campaign went over $550 million in new programs. We also expect additional wins from our approximately $1.1 billion in bids submitted and pending potential award. Our backlog grew 18% year-over-year to $3.8 billion at the end of the second quarter. With respect to LOGCAP V, transition and startup activities are proceeding but at a slower pace because of COVID-19-related base access and host nation restrictions. The original LOGCAP V transition timeline called for a 180-day phase-in period, which is being extended as a result of the global pandemic. At this point, we do not anticipate full operational capability on LOGCAP V until 2021. With that being the case, we remain actively engaged with our clients and are already seeing additional task orders for work associated with this program. Also, while LOGCAP has historically been an army-centric contract, we are seeing demand from additional clients who utilize the program to support their critical mission requirements. In late July, subsequent to the second quarter, we were awarded a $529 million modification to the K-BOSSS program that extends the contract from September 2020 through September 2021, to support the transition into our LOGCAP V CENTCOM task order. Our priorities for the second half of the year include continued seamless LOGCAP V transition, ensuring program execution and delivery while keeping our teams and our clients safe during COVID-19, expanding our pipeline of opportunities, and continuing to pursue strategic M&A. Our revised full-year numbers reflect first-half results, the incremental impacts from COVID-19 on existing programs, including this impact on the transition of LOGCAP V and newly won programs. Both host nation and base access continue to be a gating factor to full operational capability. We estimate COVID-19 will impact revenue and EPS by $40 million and $0.13 in the second half. Additionally, protests of our new business awards are limiting our ability to conduct transition and phase-in activities. Susan will address the guidance in greater detail. But importantly, we expect the second half of 2020 results to be more representative of normal course growth and profitability. Now, I will go through the factors that impacted our 2Q results and full-year guidance. Please turn to slide 4. In the second quarter, we realized a contract adjustment to a European program, which had a $0.36 adverse impact on EPS. For a number of reasons, both volume and cost, the outcome-based contract is in a loss position. The Company is working with the client to resolve this issue before the next option period in mid-2021. Importantly, the rest of our portfolio continues to operate and perform well and remains on track with the plan. During the second quarter, earnings were also impacted by $0.18 due to one-time adjustments associated with contract closeout, contract adjustments, and government fiscal year closeout. Vectrus has been aggressively investing and expanding the pace of its internal investments in order to further enhance our talent, processes, and systems to support future growth. These investments support the execution of our enterprise-wide performance improvement initiative, enterprise Vectrus, which is streamlining, modernizing, and automating our core program and support processes. Part of this effort includes the implementation of our modernized, enterprise IT platform, several aspects of which are operational and are scheduled to be completed in the first half of 2021. Please turn to slide 5 to touch on our notable contract wins. We continue to make investments in growth-focused talents and capabilities that support differentiation and are yielding growth. Through the second quarter, Vectrus has received $1.7 billion in awards by delivering exceptional program performance to our clients and adhering to our growth strategy of conducting targeted campaigns designed to communicate the value we deliver. Specifically, with the Navy, Vectrus was awarded an eight-year $210 million firm fixed-price contract to provide base operations support to Isa Air Base in Bahrain. Also, as we discussed last quarter, our new joint venture was awarded an eight-year, $190 million contract to provide base operation support services at Naval Station Patuxent River. And finally, the same joint venture was awarded a seven-year $154 million firm fixed-price contract to support the U.S. Naval Academy. It is important to note that all of these awards are currently under protest. Given the protests, we now expect that the wins will not be material to 2020 results and will primarily begin contributing in 2021. Additionally, we were awarded a strategically important five-year fixed-price IDIQ to provide intrusion detection system supplies, hardware, and services at Edwards Air Force Base. This award was due to our position as a leading provider of integrated electronic security systems and the investments in operational technology to innovate and lead in the emerging converged infrastructure market. Now, let’s turn to slide 6 to discuss our backlog. As I discussed on the previous slide, our award activity remained strong. Total backlog is $3.8 billion, and subsequent to the quarter-end, our total pro forma backlog is $4 billion. The Company’s trailing 12-month book-to-bill ratio would equate to 1.6 times, based on a $4 billion pro forma backlog, taking into consideration part of the recent K-BOSSS modification, our three Navy awards that are under protest, and the obligation associated with a subcontract, which is now expected to be performed by the prime contractor. Additionally, regarding the OMDAC program, the contract is currently funded through August 28, 2020. And we have been notified that the contract will be extended for another six months. In terms of size, as a reference, OMDAC contributed $109 million of revenue during the first six months of the year. We believe the extension will be similar in size and add to the backlog once issued. Our backlog is a unique attribute of our business and represents 2.7 times the midpoint of our 2020 full-year revenue guidance, which provides insight into our ability to continue to generate revenue and cash flow in future years. Let’s move to slide 7 to discuss our new business pipeline. Our new business win rates remain solid, and I remain confident that our pipeline of new business opportunities supports continued growth in backlog and revenue. Our pipeline of opportunities continued to increase and is approaching $11 billion, which consists of $1.1 billion of bids that have been submitted and are awaiting award. Additionally, we have qualified new business opportunities valued at $9.5 billion that we plan to submit bids for in the next 12 months. As a result of the global pandemic, contract extensions are becoming more prevalent and could shift some of the procurement awards to the right. However, given our backlog and recent awards, we believe Vectrus is still in a solid position to grow. Please turn to slide 8 where I will discuss how we are well-aligned to mission-critical areas of the DoD budget. Regarding the federal spending environment and our Department of Defense client funding position, it is important to understand that over 90% of the work Vectrus performs is funded from the DoD operations and maintenance funding source, which has been resilient through various economic and political cycles and is instrumental to maintaining DoD readiness. Additionally, as a leading provider of facility support services to DoD, we believe the base operations and facilities sustainment budget, which makes up over $40 billion of $290 billion in O&M, is particularly relevant to Vectrus. This funding is necessary to keep facilities in working order while providing personnel and infrastructure support to sustain mission capability and quality of life. We believe this funding is vital to DoD mission essential operations and readiness and that Vectrus is well-positioned to continue to grow in this area, regardless of the broader economic or political shifts. Furthermore, while it is important to acknowledge and understand DoD spending and the budgetary outlook, as it pertains to Vectrus, we have been investing and expanding our strategic position to be a market leader in what we view as a much larger and rapidly expanding converged infrastructure market. In summary, we continue to see prospects for future growth within our current DoD client set, as well as the expansion into other federal and non-federal domains, but importantly, a significant opportunity to expand via the delivery of higher valued converged solutions and capabilities. Now, I would like to turn the call over to our Chief Financial Officer, Susan Lynch for a review of the financials.

Thanks, Chuck. And good afternoon, everyone. Turn with me now to slide 9 to discuss our second quarter results. Revenue increased $4.5 million in the quarter, a growth rate of 1.3% year-on-year. The Company experienced revenue delays of approximately $22 million due to the COVID-19 pandemic. Most of the revenue impact was high-margin work that customers delayed due to limited base access issues. In addition, the Company had onetime adjustments to revenue due to contract closeouts and, as Chuck mentioned, one specific European program. These adjustments reduced revenue by $4.2 million in the aggregate. Our K-BOSSS contract contributed $109 million of total revenue in the second quarter. Adjusted EBITDA was $6.7 million or a 2% margin. Adjusted EBITDA was adversely impacted by COVID-19 by $2.1 million and the contract adjustment and one-time closeout of $8.4 million. Second quarter 2020 interest expense was $1.3 million, flat to last year. Adjusted diluted EPS was $0.24 as compared to $0.74 last year. EPS was adversely impacted by $0.14 due to COVID-19 and $0.54 related to the previously mentioned adjustments. Turn now to slide 10 to discuss our liquidity. Year-to-date, cash provided by operating activities was $34.4 million and included a $13 million benefit from the CARES Act. Cash ended at $62.7 million, as compared to the end of the second quarter of 2019 of $70.3 million. Net debt was $4.8 million, in line with the prior year. The Company’s leverage ratio was 1.08 times. And liquidity, including cash on hand and the undrawn revolver, was $180 million. Let’s move to slide 11 to cover second half guidance. Our second half guidance reflects the delays in the transition of LOGCAP V and newly awarded programs which have slowed due to DoD COVID-19-related guidance and travel restrictions. Additionally, delays and protests on new business are limiting our ability to conduct transition and phase-in activities, causing revenue and earnings to be pushed to the right. Therefore, our second half revenue will be in the range of $697 million to $717 million. We have estimated a $40 million impact from COVID-19 in the second half. We’re working with our clients to ensure this revenue remains in our backlog and will be recognized as revenue in future periods. The Company continues to work with its clients to maintain operations and plan a safe return to work in light of the COVID-19 pandemic. Due to changes in volume that I’ve discussed, we have initiated actions to align indirect costs and SG&A accordingly. Adjusted EBITDA margin will be in the range of 4.8% to 5.0%. We have estimated approximately $2 million of adjusted EBITDA impact from COVID-19 in our guidance for the second half of the year. Adjusted diluted EPS will be in the range of $1.70 to $1.84 per share. The outlook for net cash from operations is $10.6 million to $20.6 million, which includes approximately $1 million from the CARES Act tax deferrals. Now, let’s turn to slide 12. The revised full-year guidance for revenue is $1.385 billion to $1.405 billion, which includes an approximately $65 million impact from COVID-19. We’re working with our clients to ensure this revenue remains in our backlog and will be recognized as revenue in future periods. Adjusted diluted EPS is estimated to be in the range of $2.68 to $2.82 per share, taking into consideration first-half actual and a $0.22 impact from COVID-19 expected deferrals, protests, and delays in the second half of the year. As previously mentioned, the Company is benefiting from the CARES Act deferrals in the current year by approximately $14 million. The repayment of these deferrals will be factored into our 2021 and 2022 cash flow guidance. A graphical reconciliation of these changes to our guidance can be found on the next slide. I’ll turn the call back over to Chuck now. Thank you.

Thank you, Susan. And before we turn to questions, I would like to thank our people and summarize the prospects for our future. I would like to acknowledge the dedication and innovation that our entire workforce has demonstrated throughout the ongoing global pandemic. Our workforce, many times operating in remote and austere environments, has gone above and beyond to keep the mission we operate at a higher level of readiness for our clients. The myriad of host nation and base-specific requirements and restrictions has been enormously complex, and the response of our people has been impressive. Amidst the backdrop of the pandemic, our organic growth engine powered by our growth team and client-tailored campaigns continue to perform very well. Our backlog is strong and represents 2.7 times the midpoint of our 2020 revenue guidance. The LOGCAP contract affords Vectrus access to the INDOPACOM AOR and, as evidenced by our growing pipeline, bodes well for the future. Cash performance remains strong and our clean balance sheet, essentially zero net debt provides us the opportunity to act on acquisition opportunities, as they are in line with our strategy. Susan did a nice job of describing our revised guidance. The impact of the pandemic on the timing of revenue is real, but so is the critical nature of the mission we operate on behalf of our clients. We in conjunction with our clients will utilize the remainder of the year to assess the timing of program transitions, considering the timing of potential COVID treatments and vaccines. As I mentioned previously, our pipeline and backlog continue to grow during this period, and our balance sheet remains very strong. We remain well-positioned for growth. This is a transformational time for our Company, and I look forward to updating you on our progress. Now, I’d like to open the call to questions.

Our first question comes from Joseph DeNardi with Stifel. Please proceed with your question.

Chuck, can you just talk a little bit more about the contract charge? Just kind of what contributed to it? What, if any, lessons learned? And then, does it influence ‘21, ‘22 earnings power at all? What’s the margin impact going forward? Thanks.

Yes, sure. The European contract that we discussed was an outcome-based contract, where we really had a disconnect between both volume and cost. The charge that we’ve taken this quarter in compliance with all the accounting regulations really takes us through the loss associated with the midpoint of next year. We are aggressively working with our clients on this topic, and we expect to have the contract issues resolved going into the following option year, which would begin midpoint of next year. So, the bottom line is, we expect it to be the final charge with regard to the European contract.

And then, you talked about interest from other customers on I guess to use LOGCAP. Can you talk a little bit about that kind of the magnitude of the opportunity? And then, now that you’re, I guess, into that contract a little bit, I recognize that it’s getting pushed to the right, but can you talk with any more specificity around kind of what the revenue opportunity from LOGCAP could be once you’re fully ramped on that?

We’re going to talk more here later in the year in terms of guiding for 2021. But I will say that we have received and we have responded to a number of task orders, predominantly in the INDOPACOM AOR, ranging from Thailand to Korea to other places. So, at this point in time, those tasks are not material, if you will, to 2020. But they do provide a really nice demand signal concerning what we would expect to see as LOGCAP V continues to mature.

Okay. And then, maybe a question for Sue. When you look at the green bar on slide 7, is there a point in the next couple of quarters when a greater portion of that becomes green? And are there larger contracts in the near-term that you plan to submit, or does that stay relatively steady going forward?

To make sure, you’re on the pipeline chart, correct?

That’s correct. Yes. Just trying to understand if there are any larger pursuits that are in the pipeline that you’ll submit bids for in the near term, so kind of more of the pipeline is kind of pending award rather than not?

What we have seen, because it’s about a year out, we have seen the bids pending evaluation by our clients to be somewhere between the $1 billion and $2 billion range. There could be a situation, I don’t anticipate it in the short term, where that could increase. But that’s a good rule of thumb. And quite frankly, that at this point in time has provided a good cadence for contract awards, which again, we are very, very pleased and satisfied with our win rates, and we believe that those win rates are at least industry average, if not quite a bit more.

Our next question comes from Joe Gomes with Noble Capital. Please proceed with your question.

Just real quick, with the whole COVID in here, you obviously talked about some of the contracts that you won being pushed to the right. Are you seeing any slowdown in RFPs from key customers also being pushed further and further to the right, all due to COVID?

It’s interesting as it relates to the other Joe’s question a minute ago. The rate and pace of RFPs that we are responding to continues to be breakneck; it really has been quite significant. We are, however, and I mentioned that in our prepared remarks, seeing some of the awards slipping to the right. And presumably that has COVID-19 reasons for that occurring. I will tell you that during the height of the pandemic, and this was not in our prepared remarks, we did successfully transition into Deveselu, which is a win from a few quarters ago that we had talked about a few quarters ago. So, there is progress. But, by and large, the ability to access host nations and the ability to access individual bases has seen an impact in COVID, and we really expect to see those impacts until we have either a treatment and/or vaccine.

Okay. You mentioned some charges related to M&A. Could you provide a bit more detail on that and perhaps an update on the current state of the M&A pipeline?

So, Joe, this is Susan. When the COVID pandemic emerged, the M&A pipeline nearly vanished. Many deals were postponed due to anticipated drops in valuations. We did pursue a strategic target acquisition during the quarter, but ultimately decided against it. The M&A pipeline has since replenished, and there are several targets we are considering. We will continue to examine these closely, and hopefully, one will align with our needs at the right price.

We have reached the end of the question-and-answer session. At this time, I’d like to turn the call back over to Chuck Prow for closing comments.

Very good. Thank you very much, Robert. I appreciate everybody’s time and attention today, and look forward to updating you on our progress in the next quarter. Thank you very much.

This concludes today’s conference. You may disconnect your lines at this time. And we thank you for your participation.