V2X, Inc. Q1 FY2024 Earnings Call

Thank you for joining us for the V2X First Quarter 2024 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Rob, and I'll be the operator for today's call. Now I'll pass the call over to your host, Mike Smith, Vice President of Treasury, Investor Relations and Corporate Development at V2X.

Thank you. Good morning, everyone. Welcome to the V2X first quarter 2024 earnings conference call. Joining us today are Chuck Prow, President and Chief Executive Officer; and Shawn Mural, Senior Vice President and Chief Financial Officer. Today, Chuck will highlight the company's recent awards as well as some strategic initiatives, and then Shawn will walk us through the first quarter financial performance. Slides for today's presentation are available on the Investor Relations section of our website, gov2x.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 materials 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'd like to point out that in addition to GAAP earnings, we will be discussing and reporting various adjusted non-GAAP metrics, including adjusted EBITDA and margin, adjusted operating cash flow, adjusted net income, and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials available on our Investor Relations website and in our press release filed with the SEC. At this time, I would like to turn the call over to Chuck Prow.

Thank you, Mike, and good morning, everyone. Thank you for joining us on the call today. Please turn to Slide 3. I'd like to thank our employees for all of their contributions and commitment to our clients' missions that resulted in a great start to the year. In particular, I'd like to take a moment to recognize our veteran workforce. V2X remains a leading participant in the veterans ecosystem with almost 50% of our 16,000 employees having prior military service. Our veteran talent base has been key to V2X's growth, and I am honored to announce that V2X has once again been recognized as a top military-friendly employer by Viqtory. On a similar note, this month we'll recognize Memorial Day. As we honor the brave men and women who gave their lives in the service of our country, I would like to thank all of those, past and present, who have served to protect our freedom. Please turn to Slide 4. V2X reported a great start to the year with revenue increasing 7% year-over-year. Revenue in the first quarter was driven by a 22% year-over-year growth in the Middle East and 7% in the Pacific. Our growth in the Middle East, or CENTCOM, was driven primarily by expansion in Qatar and our recent Aviation Support & Training contract to support the Saudi Arabian Ministry of National Guard. This is a substantial foreign military sales program valued at approximately $400 million over 5 years. I am pleased to report that phase-in activities are well underway and the contract continues to ramp up. We anticipate the program to be operating at full run rate in the second half. As we have discussed previously, the demand signals from our clients in the region remain heightened. With a recent supplemental funding package, we are starting to see new requirements emerge. V2X is a top provider of services to the DoD in the region, and we remain ready to support our clients' mission requirements. We continue to demonstrate growth in the Pacific, or INDOPACOM, with revenue in the region increasing 7% year-over-year. This growth highlights the successful execution of our strategy to expand offerings, utilizing our geographic footprint. Our teams continue to demonstrate outstanding performance in INDOPACOM, which is leading to a greater number of opportunities to support our clients' increasing mission requirements. For example, V2X has been asked to support a series of smaller exercises in 2024 under Balikatan/Salaknib. This INDOPACOM growth is particularly notable since 2023 included the more significant Pacific exercises scheduled that occur in the odd-numbered years. Additionally, we are further expanding capabilities in the region, and I'm pleased to announce that just last week, we were awarded a new $88 million contract with the U.S. Navy. Under the new 5-year firm fixed price contract, V2X will provide IT O&M of Navy systems at the Naval Computer and Telecommunications Master Station Pacific. This win builds on our 40-year track record of providing cybersecurity, mission IT, and critical communications across the globe. I'll speak more on how we are expanding our offerings and existing business in the region shortly. Adjusted EBITDA in the quarter was $69.1 million, or 6.8% margin. Adjusted EPS increased 8% year-over-year to $0.90. V2X is differentiating its capability offering through converged solutions that sit at the intersection of technology and operations. This differentiation has led to recent awards valued at $75 million to provide technology solutions for the threat detection and response to chemical, biological, radiological, and nuclear hazards. I'll describe this award in more detail shortly. Our agility and ability to deliver mission critical capabilities on a global scale places V2X at a unique position to support our clients' evolving mission requirements and were demonstrated through recent notable awards. First, we were recently awarded over $140 million in task orders to continue providing support services to the U.S. Air Force in Jordan and Romania. The awards, which are firm fixed price, were made under the Air Force Contract Augmentation Program V, which is a multiple award IDIQ contract that provides worldwide contingency and humanitarian support. The contract extends through May of 2031 and was recently modified to increase the program ceiling value to $15 billion from $6.4 billion. Second, and building on AFCAP, during the first quarter, V2X was awarded a position on the U.S. Navy's Global Contingency Services Multiple Award Contract III, or GCSMAC III. The contract extends through April of 2032 and provides a similar scope of support services to AFCAP but is executed by the Navy. The total contract ceiling value at GCSMAC III is $2 billion, and V2X is one of six awardees. This ceiling value was significantly increased from the last version of which reached its ceiling value of $900 million. Importantly, we were the leading provider of services under the prior iteration of the contract, securing $300 million in task orders. We are honored to continue our support for the Navy and look forward to building on our track record of success. Please turn to Slide 5. V2X is creating more value in its core markets by inserting operational technologies into mission essential operations. This was recently exemplified through wins valued at $75 million through operationalized next-generation solutions for threat detection and response to chemical, biological, radiological, and nuclear, or CBRN hazards. Importantly, this work expanded from a prototype effort to a new sole source award for the production, upgrade, and fielding of cutting-edge systems at overseas operational locations. As part of this effort, we are the lead systems integrator for the CBRN Support to Command and Control program. This program, known as CSC2, is the program of record for the integration of CBRN, which will link sensors together to provide integrated situational awareness about potential hazards to inform end-user decision making. In addition to CSC2, V2X will modernize and rearchitect the CBRN threat warning and notification application and predictive hazard propagation tools for enhanced operational decision support. These awards illustrate how we are harnessing technology-based solutions, operational expertise, and global footprint to address high-consequence mission requirements. Please turn to Slide 6. One of our strategic imperatives includes enhancing value through technology expansion in our existing business. Our teams are demonstrating this through recent new awards to provide 5G, smart warehousing and integrated electronic security solutions. As it relates to 5G and smart warehousing, we were awarded additional scope under our existing LOGCAP V contract to deploy an insured and protected private 5G communication solution and enable smart logistics in the Philippines. While currently small in value, we believe the solution is scalable across the INDOPACOM region to provide protected and secured network infrastructure to support warehouse operations, field appointments, and exercises. This solution also aligns with the type of investments the DoD is making as part of the Pacific Deterrence Initiative, or PDI. The DoD recently released its fiscal 2025 PDI budget, which requests $9.9 billion, a 9% increase from the prior year and a 59% increase from 2023. Beyond LOGCAP, we also are supporting the design, implementation, testing, and operation of a private 5G cellular network and asset tracking support solution on Guam Naval Base. We continue to be optimistic about our ability to further expand these offerings on existing contracts. As it relates to electronic security, we remain a leader in providing integrated electronic security solutions that protect thousands of facilities and assets. Historically, these solutions have generally been procured on a standalone basis. However, I am pleased to announce that our team received a new task order under an existing contract vehicle in the Middle East. This award establishes our solution in the region and displaces an incumbent. This further demonstrates our ability to insert technology solutions into operations and logistics programs. We believe we are positioned to grow from this initial step and deliver a modernized integrated solution that significantly improves our clients' security posture. Building on the traction in the Middle East, we were also awarded the task to provide the initial establishment of this solution and capability in the Philippines. These two recent awards improve the installed base of our solutions and also offer ongoing operations and maintenance opportunities. These wins would not have been possible without our unified approach to growth and sell-through business model that is inserting solutions through existing contracts. Please turn to Slide 7. We believe our new business pipeline continues to support future backlog and revenue expansion. Our pipeline of near-term opportunities for new business currently stands at approximately $25 billion, comprising $16 billion of bids expected to be submitted over the next 12 months and $9 billion of bids pending award. The pace of award activity was somewhat muted through the first quarter but is increasing with several notable bids expected to award this year. Importantly, our strategy and company-wide focus on converged solutions is evident in our pipeline metrics with higher value and technology solutions comprising an increasing percentage of the total. As can be seen on the slide, over 50% of the bids we expect to submit in the next 12 months are tied to operational technology, engineered solutions, and training versus 20% of bids pending award. This demonstrates the enhanced capability that V2X brings to the market across a more diversified client base. We believe our pipeline, strong backlog, limited recompetes, and budgetary environment provides continued confidence and visibility to achieve our commitments. Now, I would like to turn the call over to Shawn for a review of the financials. Shawn?

Thanks, Chuck, and thanks, everyone, for joining us here today. Please turn to Slide 8. We started 2024 with strong performance, building on the momentum from 2023. Performance across our metrics was in line with our expectations for the quarter. Revenue of $1.11 billion in the quarter represents growth of 7% year-over-year. Revenue growth in the quarter was achieved through continued expansion of existing business in the Middle East and Pacific regions as well as new programs. This reflects the strong demand for our service offerings around the globe. Adjusted EBITDA in the quarter was $69.1 million, delivering a margin of 6.8%. As discussed previously, we expect revenue and adjusted EBITDA to ramp sequentially throughout the year. Adjusted diluted EPS was $0.90, up 8% from prior year. The growth reflects lower income tax and interest expense, partially offset by higher depreciation and other expenses. Interest expense for the quarter was $27.6 million. Cash interest expense was $25.4 million. An important attribute of our business is the ability to generate strong cash flow with low capital expenditure requirements. We continue to expect adjusted net cash provided by operating activities to be in the range of $145 million to $165 million for the year, representing 120% adjusted net income conversion at the midpoint. During the quarter, net cash used by operating activities was $57.2 million, following our historical pattern and reflective of a receivable delay that collected shortly after the quarter closed. Adjusted net cash used by operating activities was $83.5 million, adding back M&A and integration costs and removing the contribution of the master accounts receivable purchase agreement. Regarding capital expenditures. CapEx in the quarter was approximately $8 million. We expect our CapEx profile to be more heavily weighted towards the first half of 2024 as we deploy some engineering and infrastructure tools to enhance capabilities and further streamline back office operations. We continue to expect capital expenditures of approximately $30 million for the year. Please turn to Slide 9. We ended the quarter with $33.6 million of cash on the balance sheet, excluding $2.1 million of restricted cash. Net debt improved by $115.9 million compared to the prior year, demonstrating the strong cash flow nature of our business. At the end of the first quarter, net debt was $1.173 billion. The net debt-to-EBITDA leverage ratio was 3.5x at the end of the quarter, which improved notably from approximately 4x at merger close. Additionally, we continue to expect cash generation to follow the normal pattern of our business and build throughout the year, achieving a net leverage ratio at or below 3x by the end of 2024. The company's balance sheet and liquidity position remains strong with over $460 million in capacity, which includes approximately $427 million of availability on our revolver. Please turn to Slide 10. Total backlog was $12.6 billion in the first quarter, representing 3x revenue at the guidance midpoint. This key metric and leading indicator is an important attribute of our business and provides excellent revenue visibility. Backlog increased 6% year-over-year and does not reflect the full value of the approximate $400 million FMS win or the $458 million F5 adversary aircraft program currently under protest. It also does not include the $88 million Navy contract Chuck mentioned earlier as the award was made subsequent to the first quarter. Please turn to Slide 11. The company is reaffirming our guidance for 2024, which at the midpoint reflects 5% revenue and adjusted EBITDA growth, 8% adjusted EPS growth, and 120% net income conversion to cash. In summary, we are pleased with the performance across the business and start of the year. Our teams continue to execute, driving expansion on existing programs, phasing in new programs, and further improving our functional and core business operations. With that, we'd like to open the call to questions. Operator?

Our first question is from Ken Herbert with RBC Capital Markets.

Nice quarter.

Thanks, Ken. How are you?

Pretty good. Chuck, maybe just to start off. The timing of the supplemental doesn't seem like it was able to impact your first quarter, but you still put up some nice revenue growth. Can you maybe just walk through some of the pieces of the supplemental and how you perhaps view that supporting the top line opportunity at least through the rest of fiscal 2024?

Sure. We'll kind of walk around the globe to do that. So on the Middle East, you saw the nice year-over-year revenue growth in the Middle East. As we've talked about in prior quarters, that really represents just the increased OPTEMPO in addition to some nice new wins in the region. We are processing requests for additional requirements as we speak. None of those awards have actually occurred as of this morning, but we would expect to begin to execute new requirements in the region sometime this quarter. You saw continued growth in the Pacific. The exercises are, in fact, occurring. They're much smaller in the even years, as we've talked about in the past. But the military is really maintaining a balance between what's happening in Europe and the Middle East with the need to continue to enhance capabilities in the Pacific. As it relates to Europe, we are working with our clients and a couple of net new requirements. They may take a bit longer to materialize, but they are important capabilities that align with some of our newer modernization and sustainment activities as well as logistics enhancements in the region as well. So we're seeing high OPTEMPO across the globe. And probably throughout this quarter and into the third quarter, we'll begin to process net new requirements.

Great. You maintained the guidance as is. Can we assume that the supplemental information was mostly as anticipated and provides some additional confidence as we consider the top line for the rest of the year?

It's earlier in the year. And as you're aware of our typical practices, as these opportunities turn into signed task orders, we'll begin to think about the guidance. But we feel very comfortable with the guidance that we previously announced and that Shawn reaffirmed here this morning.

Perfect. And if I could just finally for Shawn. Cash usage in the quarter a little greater than we'd expected. I understand the moving pieces. To get to the full year number, can you just walk through maybe the quarterly cadence, I guess, maybe cash usage in the second quarter with a strong second half, but how do we think about that cadence?

Yes, that's exactly right, Ken. I think at the first half of the year will be a modest cash usage probably in aggregate, and then cash flow generation in the second half to get very consistent with the cadence. We did in the first quarter, and I mentioned it in the prepared remarks, we had a timing of some receivables that just missed the quarter close. Nothing that's concerning to us or anything like that, but that did cause the cash to be a little bit lower than we've traditionally seen. But again, first half of the year, modest usage, and then add to the cash in the back half of the year.

Our next question is from the line of Tobey Sommer with Truist Securities.

You described, I think, multiple kind of vectors of growth in demand that you're seeing. I was wondering if you could sort of comment about what the pipeline looks like from a margin perspective and also whether it embeds a kind of uplift in margin in terms of kind of the blended profitability of the pipeline as you see it.

Hi, Tobey. So we have a new format that we talked about this year and it's portrayed on Slide 7 of the presentation. What you will see is that the training and the operational technology and engineering pipeline is a traditionally higher margin aspect of our business, in fact, demonstrated to be a higher margin aspect of our business. I'm really pleased that the continued rate by which we've increased the pipeline of those two important capability sets. As you know, executing a pipeline in the federal services market is not an instantaneous thing. But I think the team's been doing a really nice job of very nicely balancing our traditional operational capabilities with the higher-margin aspects of our technology engineered solutions and training activities.

Great. That's what the answer I was hoping for. From a protest standpoint, could you update us on the timeline and milestones to think about for the most significant ones that we've sort of got our eyes on?

The F5 adversary is a significant challenge we are facing. It has resumed at GAO, and while predicting the future is difficult, it seems likely that this will be the final attempt at GAO. Our client is prepared to begin, and we are as well. We have even engaged in some modest preparatory activities prior to the recent protest. Currently, we are about halfway through this next GAO protest and are optimistic about moving forward once it concludes. This protest is the most important one we currently have. Shawn, do you have anything else to add?

No, that's the big one, and we'll see how it plays out.

Okay. Could you comment on the competitive landscape and maybe bifurcated in two areas, the logistics and overseas logistics area as well as the aircraft maintenance and sustainment? And maybe even a third area, if you could talk about that training, which seems to be growing in the pipeline?

Yes. The operational aspects of our business, including overseas base and logistics operations as well as contingency support, are experiencing significant stress levels due to the demands on both the Department of Defense and the State Department. Our role in supporting these important clients overseas will continue to benefit us because the rate and pace of the activities we see in the news are likely to persist for some time. Point one. Point to specific to the aircraft O&M business. We continue to see our clients extending the lifecycles of existing platforms and increasing the amount of pressure on themselves and then ultimately ourselves to keep planes in the air, especially as it relates to training. One of the major mission requirements of both the Navy and the Air Force is training pilots and they can't train enough pilots. So we see good OPTEMPO support in addition to net new requirements across those two parts of our business. And as you know, that aspect of our business has continued to consolidate over the last three years. With regard to modernization and sustainment and what we're now beginning to call engineered solutions, frankly, the large scale O&Ms are running at capacity. And we see a real opportunity for us to provide quick and agile solutions to integrate disparate platforms, point one. And then point two, extend the usefulness of existing platforms like you've seen with the F-16 central display unit. So that's how I would kind of view the demand profile of our major capabilities.

Our next question is from the line of Trevor Walsh with Citizens JMP.

I wanted to revisit the pipeline slide on Slide 7. I appreciate the breakdown provided. Chuck or Shawn, I'd like to hear your thoughts, particularly from Chuck. Regarding the growth of the OT&E business and its increasing contribution to the total, how much of this growth is driven by necessary engineering efforts? Or is it simply a reflection of how opportunities are evolving? Can you give us insight into whether R&D is the influencing factor for that segment expanding over time, or is there something else that I might be missing?

Thank you for the question, Trevor. We are actively marketing, selling, and collaborating with our clients in the operational technology and engineering sectors of our business. This strategic approach involves selling directly to those clients, some of whom are OEMs, as well as leveraging our existing contracts. We have seen successful examples of both strategies, which we discussed in our prepared remarks. The CBRN opportunity illustrates this perfectly. It began with experimentation with our clients, and once we proved the concept, they transitioned directly into a sole source contract. While this outcome doesn’t always occur, it is certainly a positive result when it does. Shawn, do you have anything to add?

Yes. No, the only thing I'd offer up is to ensure that the teams have everything that they need. We talked a little bit about some engineering tools and that sort of stuff in the CapEx. We started that last year because, as Chuck said, we see the opportunities, and we want to ensure that we're well prepared to capture that work. So again, I think we feel very good about the ability to address everything in that pipeline.

Great. Terrific. That's super helpful and good segue because I wanted to ask a question around that CBRN contract. Is it base or location kind of specific in terms of footprint where it can sort of expand into maybe other geos? Or is it fairly broad-based in terms of kind of where that solution is being implemented? And just talk through kind of the on the ground…

No, it is geography independent. It is currently being deployed overseas, but some of the earlier use cases were around events in the United States. It is a capability set that is very focused on those types of threats, but is geographically independent.

Got it. Great. And maybe just one last question. You mentioned that the Department of Defense needs to balance all the different requirements across major issues in various regions, whether it’s Europe, Ukraine, the Middle East, and INDOPACOM. How are you managing that or gauging the needs from that customer? Is there a delay in that balancing act regarding where you allocate resources and such? And how does that play out with the current progress? I imagine it’s dynamic, and I'm curious how you keep up with it as well.

As mentioned in the prepared remarks and shown on Slide 7, there are bids submitted totaling $9 billion, with an additional $16 billion in bids expected over the next 12 months, amounting to $25 billion in proposals. We have discussed in previous quarters that the pace of award announcements has been somewhat slow. However, we believe that significant awards, particularly related to overseas logistics for the Army and major training activities, will likely be announced soon. So, while the situation remains somewhat subdued, we expect that the bids totaling $9 billion will need to be awarded in the near future.

Our next questions comes from the line of Bert Subin with Stifel.

Chuck, maybe just following up on that question. Like if I look at those bids submitted of $9 billion, about $5 billion of that is for your aerospace solutions. I mean, I think we've heard for a while that there's demand there, there's a lot of bids going out, but there's sort of this slowness in things actually being awarded. And then when they're awarded, there's the protest phase. I guess can you give us some detail on maybe how your aerospace solutions business has been growing? I guess there's been a balance of sunsetting and then the new Navy Test Wing Atlantic and Pacific Awards. And do you think sort of the cadence we've seen is starting to improve imminently, or is sort of your hope that it will improve in coming quarters?

I believe we've experienced a strong period of organic growth in the aerospace segment of our business. The situation with the F5 adversary is significant and needs to be addressed. However, our pipeline for both our primary aerospace and global mission support sectors remains robust. As we've mentioned before, given the current budget constraints the country is facing, there will be increasing pressure to maintain existing assets and facilities for longer periods. The challenge is that introducing new products to the market is becoming progressively more difficult due to the financial realities. While this doesn't directly answer your question, the demand in both aerospace and global mission support sectors is not an issue. The focus is on collaborating with our clients to pursue the bids that have been submitted, ensuring they can be awarded so we can initiate the projects.

I just wanted to clarify if you've had success in smaller projects, logistics, or other areas within aerospace solutions, while the larger awards are currently delayed.

No, actually, we have. I think the on-contract growth in our aerospace business has been strong and continues to be strong. And the modernization and sustainment of the engineered solutions aspects of the pipeline that you see in many cases are going back to improved capabilities on those platforms that we're privileged to support.

Got it. Okay. I guess a follow-up for Shawn on the margin side. It seems like started the year maybe like in line-ish with expectations, and you made the comment, sort of sequential improvement through the year. I guess as we think about going back almost 2 years to when the deal between Vectrus and Vertex was done, and then like 8% plus margin profile, what's it going to take to get there? Is that just a function of better mix? Or are there specific things you think you can do on the cost side to get there faster?

Yes, I'll begin. I want to emphasize that we are starting the year as anticipated with $69 million. When we released our guidance, we mentioned that we would allocate 45% of the adjusted EBITDA in the first half, and that remains unchanged. We are optimistic about our current position and the opportunities we see ahead. Regarding margin growth, we are streamlining operations and implementing various processes and tools. While these efforts may not result in significant margin increases, they are contributing to our overall performance. Additionally, 60% of our revenue in the quarter came from cost-type programs, which we noted was trending higher last year, and that trend continues as we support our clients' demands. Page 7 shows some margin differences due to changes in our mix, and we are confident in our ability to tackle these factors. Our team is performing exceptionally well in improving program performance and ensuring we can address all opportunities in front of us. Chuck, do you have any additional comments?

No. No. I think you summarized it perfectly. It's just continuing to work on mix, and then our teams continuing to kind of lean out the operations. Maybe the last point that we didn't talk about was just the seasoning of the backlog. Our $12 billion in backlog continues to be very front-end loaded, i.e., in the first couple of three years of the execution. And historically, and the progress that we're seeing indicates that as that backlog continues to season, we'll drive higher margins.

That's great. I guess last question. Another one for you, Shawn, on the leverage side. It seems like that's ticking lower sort of as expected. And you have here that you're sort of targeting 3 turns or less by the end of the year, which is encouraging. I guess as you think about your position, one, what's the current variable split? Is that still roughly 70/30? And then 2, from the cash interest expense standpoint, seems like the first quarter benefited a little bit? I think you said $25 million, but you're looking for $116 million for the year. Just some commentary on why that steps back up.

Yes, the variable split remains at 70/30. For the quarter, we experienced some positive variance in interest expense, which can be attributed to timing. We feel confident with the guidance of about $116 million, and while there may be unexpected factors that arise, there's nothing significant in the guidance at that amount.

Our next question is from the line of Joe Gomes with NOBLE Capital.

Thanks for taking my questions.

Thank you, Joe.

Morning, Joe. How are you doing?

Doing well. I wanted to ask about the SG&A line, which appears to have decreased this quarter. Is there anything specific that contributed to this, and is this a sustainable level moving forward? Or should we anticipate it rising again?

Yes, as I mentioned earlier, Joe, we are continuing to focus on our back office operations. We made some modest adjustments and restructuring as we concluded 2023, which has had a slight impact on lower SG&A in Q1. Additionally, there is always some seasonality involved. One contributing factor to SG&A is our bids, proposals, and active pursuits, and those activities do exhibit seasonal variations. However, we are confident in our current cost structure, as it is well aligned with the business's needs. There is still more work to be done, and we are implementing the necessary tools and processes as expected.

Okay. Great. And then Chuck, maybe you can talk a little bit more about the Air Force Augmentation Program. The DoD announced that you guys are one of the awardees. And as you mentioned, it’s now a $15 billion program, up from $6.4 billion when it was last put out. Similar to the other program that we talked about, it was a $900 million and Vectrus was awarded about $300 million. Do you have similar type of numbers here, that $6.4 billion, what V2X end up getting under this Air Force program? And how do you see the opportunities on the Air Force program playing out from there?

Yes. I think under the last version of AFCAP, we were $250 million from 2021 on this one.

From 2021 on this one.

That AFCAP program has really been a good program for us. We've done a really nice job of expanding into new tasks. The margin profile has done a very nice job on the margin profile. And as I've mentioned, the demands around the world are not diminishing, point one. Point two, existing assets, deployed assets in the military and sometimes even to the State Department require extension. And the last point I'll make is that the prior version of AFCAP had many more awardees, but the consolidation of Dyn and PAE into Amentum has really continued to narrow the competitive set to the 4 or 5 players that you know. So it's a nice contract for us. I really like the operational capabilities that we've been able to develop internally in support of the Air Force client. And I look for the team to do a really nice job against the requirements that are to be issued here in the near term.

Great. Appreciate you taking the question.

Thanks a lot, Joe.

Thank you. At this time, we've reached the end of the question-and-answer session, and I'll turn the call over to Chuck Prow for closing remarks.

Thank you, Rob, and I appreciate everybody joining us on the call today. I think we've had a very nice quarter, and we'll be looking forward to updating you at the end of the second quarter. Have a good day.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.