V2X, Inc. (VVX) September 2026 Conference Transcript

Good afternoon, everybody. My name is Dominic Aquilina, Managing Director with Jeffries and the Aerospace Defense and Government Group. With me today, I've got Jeremy Wensinger, the President and Chief Executive Officer of B2X. Appreciate everyone's time. Just a quick format check before we jump in. I'm going to turn it over to Jeremy to kick it off with a few slides, an overview of the company. We'll go through a few discussion points and then we'll open it up to the floor for questions if we've got remaining time. So thanks, and Jeremy, over to you.

Appreciate the time. Thanks for taking the time, especially during lunch hour, to do this. So V2X plays in the government services space. We are principally a provider to DOW and the intel community. We do have some civil work with NASA and the FBI and DEA, but most of it is either going to be MRO work or some very specific work that we do for for nasa and then obviously we have some classified work that is in the portfolio as well about you know you can see about 4.9 billion dollars in revenue you know 16 000 employees we're in almost every single time zone around the globe it's a it's a global company in the sense of supporting our customers and we support them in kind of numerous ways base operating support so think about a base somebody's got to be able to run the infrastructure for the base so that we can support support the warfighter or in the mro world keeping aircraft in the air from for our customers and then there's a another leg of of the business it's a lot of engineering doing very bespoke work for the department of war and some other customers but it's a lot of engineering. It's about a million square feet in Indianapolis that we support that engineering business with. And then there's a C5 ISR part of the portfolio, mostly services again, and in the Intel space, which is a lot of services. So, again, around the globe, high logistics company in terms of our ability to move equipment around the world. Pretty good balance in terms of portfolio of customers. But, again, we play in the O&M budget, which is a pretty attractive budget when it comes to budgetary activity on the Hill. Typically doesn't get caught up in all of the congressional stuff. And so we like where we play. And we've seen good growth in our business over the last couple of years. And principally it's because we have been able to take the entire company to a lot of these bids and create separation and differentiation with our customers. and I'll just highlight on the next page. And here's some recent awards, and you can see on the left-hand side, it kind of spans the entire portfolio. So we're winning work in each of our portfolio areas. We think the differentiation that the combination of these companies came together several years ago is starting to bear fruit. And if you look at our book-to-bill or you look at our revenue growth, I think all the metrics are pointing in the same direction that I just conveyed. We've really started to see the benefits of this merger several years ago.

So with that, yeah, let's jump in. Well, you know, Jeremy, I want to congratulate you for your just passing your two-year anniversary with V2X. And just curious kind of what are some of your key takeaways with your time so far with the company and kind of what are you most excited about moving forward?

Yeah, in the two years, the things that I've been most impressed by is the persistence of the missions we support. They have long legs to them. They're enduring. And just the complicating side of how do you do business in all these foreign countries? How do we get licensing, bank accounts? All the stuff that in my prior job was a stumbling block because it was not a core muscle memory of those companies. Where it is, I think, for V2X, it's been very impressive. And then just the ability to move equipment around the globe seamlessly, big supply chain. I really did not appreciate that when I when I first came in. But again, I think when I look at the overall missions that we support and the enduring nature that they are, and our customers willingness to continually turn to us based on our execution for continued growth, we do an awful lot of on contract growth, and we're winning our fair share or more of new work as well. So, you know, it's been a great two years in terms of learning for me to understand what are those levers that drive the business outcomes. And we've built a good team. And so over that two-year period, we've seen it kind of transform from dispersed companies that kind of came together to now it's really one company. And it's operating as one.

You know, I think top of mind for investors is always, from a macro perspective, the budget, the environment. I'd say right now it seems to be more dynamic than it's been. you know, in a long time. And part of that is the threat environment. But how do you think about B2X and their relative positioning against some of the funding priorities and where dollars are heading, readiness, modernization, national security, evolving threats?

Yeah, if you look at those awards that I was showing on the other page, they're mostly readiness and modernization type of awards. This administration has put a strong focus on us being ready and modernizing where we can. And it plays well in terms of the portfolio. And I think that's why we're experiencing the growth that we're having. And two, like I said before, a lot of where we're at, these are enduring missions that they're not going to go away overnight. So when I look at budgetary stuff, I look at the overall O&M budget. Like I said before, it typically doesn't get a lot of notice other than just the dollar size in terms of Congress fussing with it. What they really want they want to keep aircraft in the air, keep bases protected, keep our personnel in a way that they're ready to fight. And so I think when I look at what we do really well, and then when I look at, you know, the Indy facility, our ability to take very quick react contracts and put them in a way that puts them in the theater in a very short period of time. I think that capability has really proven well for us and for our customers.

Being nimble, quick i always refer to us as kind of scrappy you know we um we are very easily easy to work with and also i think just quick in terms of our ability to be responsive to needs you mentioned the indy facility and you know let me just double click on that a little bit um and you're doing some rapid prototyping some modernization work there i think in the last quarter you called out an award um for the multi-production of the carriage equipment strategic bomber fleet. You mentioned the Tempest CUS system. Not something that I think maybe some investors think about when they're looking at a traditional services company. Talk a little bit more about what's going on there and kind of how that positions you for growth going forward.

I think when I, I mean, obviously the carriage was something that that facility does very well and has for a long period of time. But when I look at the Tempest family of products, that really started with a customer who took a visit to the site and realized that we had a million square feet they had an urgent need we went from back of the napkin to fielding those systems in you know months so it isn't like i have a five-year development program and i go to lrip and i go to production we were in theater in months and i think the customer and it and it was It was taking everything best of breed and putting it all together in one system for this customer because they had an urgent and compelling need. And I think that site has given us lots of opportunities, I think, as I look downstream. But also, we use that engineering capability when we bid other parts of the business. So if you think about our Center of Excellence that's in Orlando, Florida for proposal support, If we're doing a bid down there, we may have people from all parts of the business contributing to that bid because there might be an engineering requirement for it. There might be a logistics requirement for it. There might be an MRO requirement. Whatever it is, we tend to bring everybody into that facility that can support that proposal activity. And I think it's boding well for us. Our CTO has a nice, I think, a very focused perspective on the technologies that are going to be relevant to our business in the future. And we're making progress on that, both internally and in terms of creating separation with us in the competitive environment with his work.

That's great. Maybe quickly hitting on Q2 a little bit more. Obviously, results you announced a few weeks ago off to a really strong start for the year. I think you talked about some of the growth you're seeing in the Pacific theater. Talk a little bit more about what you're seeing there, the opportunity there. And then maybe just more broadly, when you kicked off the presentation, you mentioned the global presence as a differentiator against some of your peers. Maybe talk and double-click on that a little bit.

I mean, obviously, the Pacific Rim is a high area of interest for not just this administration, but administrations going back. We have presence there. We have a presence that I think matters. And I think one of the things that people don't underscore enough is, one, is the contract vehicle so they can get access to you. But, two, being present in theater where they have an urgent need or they have an emerging need and they can quickly turn to you. And so when I see the Pacific Rim, I see growth coming in the Pacific Rim. um you know it you just cannot underscore the fact that being with the customer shoulder to shoulder with them every day like i'm gonna i'm gonna fly to quadron here at the end of the month for the sole purpose of they have urgent and compelling needs and i want them to know we're focused and we're committed so i'm gonna go there just like i went to the middle east last year so i think the the indopaycom i see growth definitely i you know i see the opportunity and really in all regions that we're at, by being present, the customer returns to you. And that was, I think we announced in the first quarter, an award in Israel. That award doesn't happen, or the one in Balad, doesn't happen if I wasn't present in that theater.

It's almost like a geographic incumbency. It's really hard to replicate and challenge if you're not there.

Now, we're not the only people in Indopaycom, but I don't think you're going to do a lot of work in Indopaycom if you're not there. Yeah.

You mentioned earlier that the billion dollars of awards that you announced on the Q2 call as well as your backlog, which is almost $13 billion. How do you think about how that translates into revenue visibility for the next couple of years here?

Yeah. We have very good revenue visibility just based on the type of work that we're awarded. When you're awarded a five-year contract, you can pretty much work your way down that revenue profile. The fact that we've had so few re-competes, I called it a re-compete holiday, so the stuff that we're winning now is almost entirely, except for C12, that was a re-compete that we won, gives us that opportunity to grow the top line. And you're seeing it kind of fall through. Right. And you're seeing it in terms of our, you know, 12, trailing 12 month book to bill. You know, we're well over one, which is good. That'll that'll that'll give some visibility to an analyst as to what, you know, the growth profile that we're going to demonstrate in the future. But again, you know, when I look at our revenue, again, having so few recompetes and being able to put new bids on the street that are, you know, going to create new opportunities for the company, our average contracts last between five and seven years. So, you know, that $12 billion of backlog, you can kind of get an idea of what that revenue profile looks like. And again, as we continue to add new work through our bid process, we'll just continue to replenish that backlog.

Maybe following up on kind of the bid environment, I think you reported last year a 50% increase in bid velocity for 25, targeting 30% this year. Where are you seeing strongest demand? What's giving you confidence in kind of converting those bids into wins?

Well, I think you saw on the awards, we are not struggling to find things to bid. But, you know, we are working in every part of our capabilities has its own pipeline, has the ability to grow. And so when I look at that 30%, you know, growth, it is really across the portfolio. There's really not one area that I'm seeing is more high demand than others. And the other thing that I think gets a little bit underscored, sometimes not enough, is the fact that our on-contract growth is a core competency of this company. The ability to be sitting somewhere in one of the regions of the world, have an existing contract, and the customers say, I have an emerging need. Can we just add it to your contract? You know, that doesn't come across as, you know, a new win. That comes across as on-contract growth. And our team does an exceptional job at that.

That's great. You know, your margins have been fairly steady over the past few years and quarters, fairly predictable. You know, what are the levels you have? Is it business mix, product versus services scale? Is it, you know, AI efficiency that you could push that higher?

Well, we're 60% cost plus. So that kind of tells you that you're kind of frozen a little bit until we bleed that backlog off. Now, those awards that we put up there, they were all margin accretive. We are highly focused on, you know, as I tell the team all the time, we're going to get paid for what we do because we do it really well. And so when we look at, you know, pricing, we look at what competitive discriminators can we put on the table that's going to make it a compelling technical offering. And can we make that then a margin accretive? The cash flow side is very predictable because of the nature of work that we do. And so we are very strong cash flow conversion. We're highly focused on margin accretion. But again, some of the, you know, some of the older stuff that's sitting in backlog has to bleed its way out as some of the new stuff comes in. So it's not going to be like overnight we're like popping on margins. It's going to be the slow boil that, you know, that you have to kind of go through to get up there.

And you mentioned the cost plus versus, you know, fixed price dynamic. You know, it's definitely being discussed kind of the shift in certain areas of the mission that the government's pushing more and more contractors to focus on fixed price. some with success, some with some challenges. What's your kind of philosophy?

We push our customers all the time to convert our stuff to fixed price. We love fixed price. We do exceptionally well on fixed price work. And in many of the places where we're doing Cost Plus work, I've been doing it for 10 years on Cost Plus. I know what to do. I think one of the challenges that our customers have is when Doge came around, a lot of contracting officers took the offer and so I think they're they're terribly overworked and they do a great job but there there's just not enough of them you know and so when we look at fixed price conversions we'd love to see it go faster but it's moving just not as fast as we'd like it to happen um uh AI is obviously being discussed in every meeting if you're being asked about it several times i've talked about it several times already today um can you tell the that maybe give us a little bit on the b2x story and and kind of where you're investing where you're excited about it yeah difference maker i and i get it every meeting you're in somebody's gonna have to mention ai just so you gotta check yeah you gotta check the box i get it i you know for us you know in the type of work that we do i can spend my calories keeping an aircraft in the air by fixing a broken part, or I can spend my calories preventing that part from breaking to keep that aircraft in the air. So I'll give you one example. If an aircraft goes down for maintenance or repair, even though I might flip that aircraft that day, that pilot has to wait seven days to get back on schedule. So if you think about your training profile, if you've got six weeks to train on an aircraft, now I've just extended you to seven weeks versus if I could get in front of that repair earlier so what we're spending calories on ai is creating digital twins digital twins of every aircraft that we service digital twins of bases that we support and and it gives us the ability because we own all the data so when we went to google and ibm and all that the advantage that i had for with them is ai is on their critical path and i wanted to be i wanted to hook my wagon to somebody whose future was dependent on them being great at ai and i own all the data which was attractive to them. So taking our data and using it in a way that does more predictive analytics than reactive analytics is where we see AI being an enabler for us going forward. And then the corollary to that is we're using it internally, whether it's in writing software code, whether it's using bots to make your experience that helped us better, whether it's using AI to help our supply chain better manage the global logistics. So we've kind of embraced it. And And I will tell you, Google has been a tremendous partner. They've been wonderful to work with, and we're excited about the prospects of this going forward.

On the digital twin side, is finding that more to be kind of a pull from the customer, just a differentiator that you're able to bring? That's what we need to kind of take labor out or be more competitive on pricing. How is it actually?

I think it's all of the above. The customer didn't ask for it. And we just saw this as a requirement for us to be relevant in the future. And so not moving was going to mean we were not relevant. And so this is for us to be relevant, give them a better solution, give them better readiness rates, and save them money in the long run.

Yeah, that makes sense. Maybe flipping a little bit to the balance sheet, you guys have been steadily delivering. I think you're targeting at or below two times for the end of the year. As you continue to de-lever, kind of how are you thinking about capital deployment going forward and, you know, investment organic versus, you know, potentially M&A?

Yeah, I think, you know, our internal investments are built into our rates. So, you know, that's really not a capital allocation strategy as much as it is more of an expense strategy and making sure we maintain our competitiveness from an expense standpoint. But when I look at the balance sheet and, you know, get us to two or less, you know, in terms of capital deployment, we will be very disciplined on how we think about deploying that capital. You know, are there areas that we're not going to change our stripes? So if we look at anything in terms of M&A, it's going to be right down Main Street with what we do. So I'll give you the example. When we bought the, you know, we did a small deal last year on Kinetic. It was the Intel business. the reason that we did that was there was a place in the intel community that you you can't bid there unless you have the tickets we had tickets in a lot of other places but this one gave us tickets to a place that buys the same things that we do today they have global um requirements every they have aircraft you know so there's a lot of things we can do for them that we already do for other people. And so what I always say, it kind of filled in a circle for us. It was small, but it was a very important strategic move. So when I think about acquisitions going forward, if in time we ever do one, it's going to be consistent with who we are. And it's either going to augment something we do already and give us more access to a customer or another capability that's going to augment what we already have and make us even bigger player in that market. So again, it's not like we're going to go fly off the reservation and do something really, you know, turn left with the portfolio strategy. I like what we do. It's a very, very sticky business. And I think our customers appreciate our commitment to it because, you know, they keep turning to us in these awards. And I think the best demonstration of someone's confidence in you is they keep awarding you work. So I like what we do.

And maybe one more question to kind of wrap up Or, you know, rep to where you started. I mean, when you joined, you know, B2X was in year maybe, what, two or three of its combination.

Yeah, I think it was year two.

Curious, you know, if you could talk about some examples of the power of the combination where you're taking, you know, you're succeeding and taking the capabilities and the combined footprint of the business to make a difference and win awards.

I think, and I didn't bet it. It was an award that happened right as I arrived, and that was the WTRS program. I don't think V2X would have been capable of bidding that without these companies coming together. It brought the best of all three parts of the company, you know, the global logistics, the training side of it, some of the engineering side. So, you know, it was a good proof point that the investment thesis made sense. We have continued to use that investment thesis as we bid stuff. It's not uncommon, as I said, to show up in Orlando, and you will have multiple sides of the company all sitting around the table trying to figure out how we bring the best of the best to that offering. So I think the investment thesis was right. But staying true to who we are is probably the most important thing because, one, it's a very, very large market. We have competitive, I think we have competitive cost structure, and I think we have a competitive differentiation in terms of how we look at it with that global footprint and the engineering side of it. So, you know, I get excited about the portfolio going forward because, again, I'm not lacking things to go bid, you know. In many instances, it's, you know, we are resource constrained with people, you know. You know, how many multi-billion dollar bids can you get out the door in one month, right? You know, you can only do so many. And so, you know, we're very selective about what we bid based on our ability to win it. But again, I think it's a great market.

Yeah. Maybe to that point, like, how are you prioritizing, you know, this plethora of opportunities that you're seeing?

It is probably the hardest thing in our space is to figure out what you're not going to bid before what you bid, because there are so many opportunities. And then there's just certain certain segments that are less attractive to us, even though it's a similar type work, that segment might be less attractive. And so we have a very good what I call vetting process on how a bid arrives at a gate review and makes it way all the way up to an offering. So I love the discipline that we have in place, and I think it's standard around our industry, but I like the way we've done it, and I think it's proven to be a success model for us.

Well, I want to give the opportunity to provide some closing remarks, anything you want to leave with the audience, and I think we have a few minutes left to see if there's anybody.

Yeah, no, I want to thank you for the time. I appreciate you showing interest in the company. Like I said, it is a great business, and it's a great business model because of the nature of the work that we do. It ends up being, like I said, very sticky and nationally important. You know, keeping, you know, training pilots, keeping aircraft in the air, you know, making sure our bases are well operating and, you know, secure for the warfighter. You know, if you can't get excited about doing this type of work, you're not going to get excited about national defense. And so I love what we do for a living, and I love the engineering component. I love the fact that we took something that was on the back of a napkin, went in theater in six-ish months, and had a 97% kill rate. Yeah, and it's just fascinating to watch them do it. Anyway, thank you for the time, and I appreciate you showing interest in the company. Thanks. Any questions from the audience?

Well, thank you, guys. Appreciate the time.