V2X (VVX) Q3 2025 Earnings Call Transcript

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Date

Monday, Nov. 3, 2025 at 4:30 p.m. ET

Call participants

President and Chief Executive Officer — Jeremy Wensinger

Senior Vice President and Chief Financial Officer — Shawn Mural

Vice President, Investor Relations — Mike Smith

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Risks

Adjusted operating cash flow guidance was proactively reduced at the midpoint to account for possible timing delays in collections from the government shutdown, with Shawn Mural stating, "we felt, you know, it appropriate to bring down the midpoint about $25 million. Again, purely timing."

Book-to-bill ratio for the trailing twelve months was 0.9, and management indicated full-year book-to-bill "will be below one" according to Shawn Mural due to award slippage from the shutdown.

Takeaways

Revenue -- $1.167 billion, up 8% year over year in the third quarter, attributed to WTRS, F-5, and Iraq F-16 programs.

Adjusted diluted EPS -- $1.37, representing an approximately 6% increase year over year.

Adjusted EBITDA -- $85.2 million for a 7.3% margin.

Net income -- $24.6 million for the quarter.

Adjusted net income -- Adjusted net income was $43.7 million, up 6% year over year.

Share repurchase -- $10 million of shares repurchased in the quarter as part of capital allocation strategy execution.

Backlog -- Total backlog at quarter end was $11.6 billion, funded backlog at $2.3 billion; backlog excludes approximately $4 billion T6 award and value beyond transition for F-16 Iraq.

Book-to-bill ratio -- 1.2 in the quarter; trailing twelve months at 0.9, supporting demand momentum.

Strategic contract wins -- Achieved two major contracts (T6 and F-16 Iraq), each valued over $1 billion; three strategic awards in eighteen months exceeded $9 billion total value.

Adjusted operating cash flow (non-GAAP) -- $35.8 million for the quarter.

Updated 2025 guidance (midpoint) -- Adjusted revenue: $4.5 billion; adjusted EBITDA: $316 million; adjusted EPS: $4.95; adjusted operating cash flow midpoint reduced for potential timing delays.

Acquisition activity -- Completed a small acquisition expanding access to intelligence community customers; not yet included in pipeline figures.

Program awards -- $425 million F-16 cockpit modernization contract with US Air Force; approximately $275 million in rapid prototyping and support awards, including the Tempus counter UAS system and gateway mission router family.

Pipeline opportunity -- Over $50 billion in qualified pipeline cited by management.

Summary

Management increased the midpoints for 2025 revenue, adjusted EBITDA, and adjusted EPS guidance, citing strong program execution and recent large contract awards as key drivers. The $4 billion T6 award and the majority of the F-16 Iraq contract are not yet included in the reported backlog due to a protest and contract definitization, potentially representing significant future backlog additions. Book-to-bill for the full year is projected below one, with a return to above one anticipated in fiscal 2026 as delayed awards resolve. The reserve in adjusted cash flow guidance is strictly timing-related and tied to delayed payments from the government shutdown, with management stating there is no risk to ultimate collection. Continued investments in technology, rapid prototyping, and expanded customer access are positioned to support growth into 2026 and beyond.

President Wensinger said, "we delivered a solid 1.2 times book-to-bill ratio," providing evidence of strong demand despite government contracting headwinds.

Chief Financial Officer Mural stated, "the impact on the funding or operations of the current contracts has been modest to date," confirming limited near-term disruption from the ongoing government shutdown.

Management noted "Funding, as you can imagine, in light of the shutdown is a significant variable," indicating continued uncertainty around contract timing and financial flows for year-end.

The company reported a "recompete holiday" according to Andre Madrid with only 7% recompetes expected in 2026, limiting downside risk to backlog stability next year.

Management highlighted that transition work for T6 and F-16 Iraq is ongoing and acknowledged, "None of that work is in backlog, and that's our standard practice," clarifying accounting treatment and future upside potential.

Industry glossary

Book-to-bill ratio: The ratio of new contract awards to revenue recognized over a specified period; a value above one signals backlog growth.

Backlog: The total value of contracted but uncompleted work, representing future revenue.

Funded backlog: Portion of backlog for which funding has been authorized and is immediately accessible under contract.

Adjusted EBITDA: Earnings before interest, tax, depreciation, and amortization, adjusted for unusual or non-cash items as defined by management.

Adjusted EPS: Earnings per share after adjusting for extraordinary items or management-defined factors.

Foreign Military Sales (FMS): US government-facilitated sales of defense articles, services, and training to allied foreign governments.

Counter UAS: Technologies and platforms for detecting, tracking, and mitigating unmanned aerial systems (drones) used by adversaries.

WTRS: Acronym for a major V2X program referenced as a key revenue driver in the quarter; full program name is not specified in the call.

Contingency task orders: Short-term contracts to provide urgent or temporary support, often in response to unforeseen operational needs.

Full Conference Call Transcript

Mike Smith: Joining us today are Jeremy Wensinger, President and Chief Executive Officer, and Shawn Mural, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on the Investor Relations section of our website gov2x.com. Please turn to slide two. 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.

In addition, in today's remarks, we will refer to certain non-GAAP financial measures because management believes such measures are useful to investors. You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC, both of which are available on the Investor Relations section of our website. At this time, I'd like to turn the call over to Jeremy.

Jeremy Wensinger: Thank you, Mike. And good afternoon, everyone. Thank you for joining us today. I am proud to share the results from this quarter. The dedication of our team continues to drive outstanding execution. Please turn to slide three. During today's call, I'm going to recap our third quarter results, discuss our positioning, and how our strategic execution has created tailwinds for growth. Let's start with our quarter three results. Performance was strong, yielding both record revenue and adjusted EPS in the third quarter. Revenue increased 8% year over year to $1.17 billion, delivering adjusted EPS of $1.37. Adjusted EBITDA was $85 million in the quarter, or a 7.3% margin.

Importantly, to date, we have not seen a material impact on our business from the current government shutdown, and if anything, this event has reinforced just how essential our services are to the government. Last quarter, Shawn and I described our capital allocation strategy to you. Since then, we've been executing on this strategy. During the quarter, we completed an acquisition that brings new capabilities and increases access to customers in the intelligence community. This customer access cannot be understated. And we believe it will add to our already robust pipeline. Additionally, we repurchased $10 million worth of shares in the quarter, further driving value for our shareholders. Our strategic execution is paying off.

This quarter, we delivered a solid 1.2 times book-to-bill ratio, which speaks to the strong demand we are seeing. We also recently achieved two of the five major captures we've been pursuing that I discussed in prior calls. This includes the T6 and F-16 Iraq program, each worth over a billion dollars, demonstrating the momentum we are building. We remain optimistic about what's ahead. Given our performance to date and the trends in our business, we're increasing the midpoint of our revenue, adjusted EBITDA, and adjusted EPS ranges. Although we have not seen a material impact from the government shutdown, we are proactively lowering the midpoint of our cash flow guidance to account for possible temporary delays in collections.

I want to emphasize this is only timing-related and not reflective of the underlying changes in our business. Please turn to slide four. Our customers are seeing value in our solutions and offerings, and the programs on this slide showcase those examples. From start to finish, we work alongside our customers, delivering a full spectrum of capabilities that maintain readiness around the globe. In the last eighteen months, we've won three strategic awards greater than $1 billion using the breadth of the company in execution. The cumulative value of these awards exceeded $9 billion. An example is the previously announced T6 award.

This is a cornerstone award and critical to readiness by ensuring that every single Navy, Air Force, and Army pilot will be trained by V2X. This ties into the theme you're seeing in training, mission support, and modernization that are foundational to everything we provide. While this award is under protest, we're confident in our solution and continue to execute the transition activities to support our customer. We've been awarded what we expect to be a $1 billion foreign military sales for Iraq's F-16 program. This, coupled with our $425 million cockpit modernization contract with the US Air Force, showcases our expertise in supporting the F-16 fleet for multiple customers.

And finally, we were awarded approximately $275 million for rapid prototyping, engineering, integration, and follow-on support for platforms like Tempus, our counter UAS solution, and our gateway mission router family of systems. There's a strong demand for our technology, and I'll touch on that later. These awards are validation of our partnership with our customers and disciplined execution of our strategy. Please turn to slide five. V2X is capitalizing on large and growing market opportunities while investing in technologies that will shape our future and our industry. We see data and AI as powerful tools that can deliver mission success. These tools help us enhance readiness, drive efficiencies, and even change the way the marketplace operates.

Combined with our operational experience and close relationships with our customers, we are in a strong position to turn data into real decision advantages. On the readiness front, we continue to expand our training portfolio. A good example is our support of the Army SABRE Junction Training exercise in Germany, which simulated chemical attacks. This demonstrates how the scope of our training portfolio continues to expand. Additionally, our focus areas on readiness and modernization continue to align with our customers' mission and budgetary priorities. Our Counter UAS platform has demonstrated our capabilities to deliver rapid prototyping and hardware integration to support customers.

In the near future, we are expecting orders from new customers looking to deploy the platforms in various theaters around the globe. We are now leveraging the core capabilities of that system to adapt it for use across other operational environments in emerging threat landscapes, positioning us for continued growth. With the combination of our investments in technology, our ability to convert opportunities into success, and our over $50 billion pipeline, our path forward looks strong. With that, I'll turn the call over to Shawn for a review of our financials.

Shawn Mural: Thank you, Jeremy. And good afternoon, everyone. Please turn to Slide six. Our momentum continued in the third quarter, reflecting focus on operational performance. Revenue in the third quarter increased 8% to $1.167 billion. Growth was fueled by the WTRS, F-5, and Iraq F-16 programs. Adjusted EBITDA in the quarter was $85.2 million, delivering a margin of 7.3%. Interest expense in the third quarter was $20 million. Cash interest expense was $18.4 million, improving $7.2 million year over year. Net income for the quarter was $24.6 million. Adjusted net income was $43.7 million, up 6% year over year. Third quarter diluted EPS was $0.77 based on 31.9 million weighted average shares.

Adjusted diluted EPS in the quarter increased approximately 6% to $1.37 from the prior year. Adjusted operating cash flow in the quarter was $35.8 million. We are leveraging our strong balance sheet, and during Q3, we made notable progress executing our capital allocation strategy. As Jeremy mentioned, we completed a small acquisition that provides additional market opportunity and repurchased $10 million worth of shares. These activities clearly demonstrate our focus on delivering value for our shareholders. Please turn to Slide seven, where I'll discuss our year-to-date results. Year-to-date revenue was $3.261 billion, up 3% year over year.

Adjusted EBITDA increased 5% for the first nine months of the year to $234.6 million, reflecting a 10 basis point increase in margin to 7.2%. Year-to-date interest expense was $60.3 million. Cash interest expense was $55.7 million, improving approximately $22 million compared to the prior year period. Year-to-date net income was $55.1 million. Adjusted net income was $117.5 million, increasing 22% year over year. Diluted EPS in the first nine months was $1.73. Adjusted diluted EPS was $3.68, up 22% compared to last year. Year-to-date net cash used by operating activities was $27.5 million. Adjusted net cash used by operating activities was $24.1 million. Please turn to Slide eight.

Our strategy and the continued demand for our solutions is yielding awards that support future growth and value creation. This was reflected in third quarter net bookings of $1.4 billion and sequential backlog growth of approximately $240 million. Total backlog at the end of the third quarter was $11.6 billion. Funded backlog was $2.3 billion. With respect to the current government shutdown, the impact on the funding or operations of the current contracts has been modest to date. We feel it important to note that backlog does not include the approximate $4 billion T6 award as it is currently under protest. We continue to execute the transition activities supporting the customer at this time.

Additionally, as it relates to the F-16 Iraq program, backlog does not reflect any value beyond the transition amount initially awarded in Q2 of this year. The contract is currently being definitized. These programs will add substantially to our backlog and ability to continue our growth. Book-to-bill ratio for the trailing twelve months is 0.9. Looking ahead, based on potential slippage of awards due to the shutdown, we believe book-to-bill will be below one for the full year and accelerate to above one in fiscal year 2026. With that said, I want to be clear that we believe the company is in an excellent position to demonstrate top-line growth heading into 2026.

Let's move to slide nine for our updated guidance. We continue our focus on execution. And given our solid performance, we are increasing the midpoint of our 2025 guidance for revenue, adjusted EBITDA, and adjusted EPS to $4.5 billion, $316 million, and $4.95, respectively. We're proactively lowering the midpoint of our adjusted operating cash flow guidance to account for potential timing delays in collections related to the government shutdown. These adjustments reflect potential near-term payments or contract actions that we had contemplated being completed by year-end 2025, which may now slip into 2026. Again, purely a timing adjustment and doesn't reflect any changes to the fundamentals of the business.

Overall, we're very pleased with the execution of our strategic priorities, ability to deliver differentiated technology solutions, and strong program performance. We are confident in a strong close to 2025 and continued momentum into 2026. Jeremy, back to you.

Jeremy Wensinger: Thanks, Shawn. Please turn to Slide 10. We want to provide some additional color about 2026. With solid awards secured and minimal recompete exposure, we're confident of our future growth. In addition to our continued success in training programs like the WTRS, recent wins like our rapid prototyping awards, and the Iraq F-16 program support top-line growth next year. The completion of contingency task orders is partially offsetting this growth. Overall, the net of these items are expected to drive year-over-year revenue growth in 2026. A successful outcome of the T6 protest would have incremental improvements in 2026.

While we're keeping an eye on potential impacts from the ongoing government shutdown, our essential mission-critical work gives us confidence in the strength of demand. The maturity of the company is becoming increasingly apparent in our ability to capture and win new business. We continue to deliver on our commitments. We are proud of our third-quarter performance. Our teams continue to bring the full spectrum of V2X to meet our customers' critical mission requirements. And with that, I'd like to open the call to questions. Operator?

Operator: Thank you. You will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time a question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Peter Arment with Baird. Please go ahead.

Peter Arment: Yes. Good afternoon, Jeremy, Shawn, Mike. Nice results. Shawn, could you just give us a little more color on the reduction in the cash? You said it's sort of being more cautious just given the government environment. But if the government reopens here relatively soon, does that change, or how are we approaching that?

Shawn Mural: Yes. Thank you. Good to hear from you, Peter. Yeah. So in our guide, we've assumed that there are certain contract actions, and this is a normal course of the business, Peter, that, you know, we get change orders, things of that nature. That routinely happen. They may not occur. Even if the government were to open tomorrow, you know, the backlog of things and what we're seeing a little bit, Peter, is while we're still getting paid, that payment has been elongated a bit, on average, about seven days difference between what we experienced in the first half of the year and what we're experiencing today.

So the adjudication of those contract items and then the ability to get paid, we felt, you know, it appropriate to bring down the midpoint about $25 million. Again, purely timing. We have we don't think there's risk to the receipts or anything like that. It's whether or not they slip into 2026. How we're thinking about it.

Peter Arment: Got it. I appreciate that. And then just, Jeremy, you've talked a little bit about, this year, about just a much bigger qualified pipeline and ability to bid more. Maybe you could just give us a little more color on how you're doing on making progress there. Thanks.

Jeremy Wensinger: Well, I think I've talked in the past that we hired Roger Mason as the Chief Growth Officer. I think and I mentioned in the script that, you know, we're seeing the maturity of the company come to bear. And I feel really good about the fact that we've retired two of five, you know, major pursuits that we had talked about previously. As success. And, again, we'll see where T6 kinda rolls out. But, again, I think the maturity of the company along with the maturity in the growth organization is starting to come to bear on our ability to win, our ability to build a pipeline, and our ability to pursue, you know, a multitude of things.

I'm most excited about the fact the bids I'm seeing are bringing the entire company to bear on these pursuits. It is it is really making a difference. And that's the part I'm most excited about.

Peter Arment: Appreciate the color. I'll jump back in queue. Nice results, guys.

Operator: Thanks, Peter. The next question comes from Jonathan Siegmann with Stifel. Please go ahead.

Jonathan Siegmann: Hey, good afternoon, Jeremy, Shawn, and Mike. Thanks for taking the question.

Jeremy Wensinger: Hey, John.

Jonathan Siegmann: Just real quickly, a simple one for you. So you're very clear that you did not include T6 award in the backlog. But just because there are some companies in the public arena that do include protested contracts in their backlog, I just wanted to confirm, this is your standard practice and not an indication of any higher risk associated with this decision.

Shawn Mural: Yeah, absolutely. It's our policy. That we have. Anything in protest, we would not take a booking on. There is a modest amount of work that we are doing today, to be very clear, on We did book that, but it's low single-digit millions. The main award, you know, should it stick to the schedule that it was awarded under, would have us begin work in February 2026 and then go on for the period of ten years. None of that work is in backlog, and that's our standard practice, John.

Jonathan Siegmann: John, just to be clear, that modest transition that we're doing, was funded.

Jonathan Siegmann: Thank you. That's real helpful. And then the other three of the five contracts that you're elephant hunting there, is there any sense of when the timing of those could be? Is that probably all delayed with the government shutdown as well? Thank you.

Jeremy Wensinger: It's a great question. I think it's still TBD. And but, you know, we're actively bidding a few of those. So we'll see what transpires with the government shutdown and the timing of awards. But, again, it's all, you know, a little bit of TBD at this point to see, you know, because, again, a lot of our contracting officers are not at work. You know, things are kinda, as Shawn said, in terms of the cash side of it, waiting for them to do the adjudication of contract modifications. So I think it's unknown at this point.

But, again, I think it'll once we have certainty around the stand-up of the government again, we'll know more because they'll be back to work, we can ask those questions.

Jonathan Siegmann: Thank you.

Operator: Thanks, John. The next question comes from Andre Madrid with BTIG. Please go ahead.

Andre Madrid: Hey, Jeremy, Shawn, and Mike. Good afternoon.

Jeremy Wensinger: Hey, Andre.

Andre Madrid: You know, not to harp on the shutdown, but, you know, it is the elephant in the room here. I mean, how should we think about this weighing on the potential benefit of your previously disclosed recompete holiday? Does this kinda just get pushed out into '26, like what you guys teased on the tenth slide there?

Shawn Mural: Well, yeah, that you know, candidly, that's a lot of why we want to talk a little bit and give some color around '26. So I think we say, right, 7% recompetes next year. As we sit here today. One, that's a that's a great spot to be in, of course. We'll see how those recompetes play out. I mean, there's always the to do a bridge or exercise an extension or something. I don't know. But again, I think we feel good in terms of where we sit today, what we have in backlog. And our ability to continue to grow.

Andre Madrid: Got it. Got it. And I guess on that point, you know, looking at '26, I feel like each quarter looks like, you know, growth could be kind of lumpy based on the service branch, based on the geography. But I guess as we look ahead into the New Year, what do you really expect to be the fastest-growing branches and geographies and

Shawn Mural: Well, I think so. A couple of things. Thanks for the question. I'll give a little bit of color. I think we'll see cost-type revenue grow faster, I should say. And when we think about things, you know, we see that becoming a greater percentage of the portfolio. I think we see from a region standpoint, the US growing faster than some other areas. And that's again, you know, things like we've seen with WTRS, things of that nature. So, you know, that's a little bit of additional color as we sit here today. There's a lot to go relative to funding. Right? So, again, we're trying to provide a little bit of color and context for 26.

Funding, as you can imagine, in light of the shutdown is a significant variable. Right? And we're seeing customers make changes and stuff like that to do as much as they possibly can. So I am certain that, obviously, we will provide additional clarity and visibility to you as we report Q4. But felt it very important because we're seeing good demand. I think you saw a very good book-to-bill in the quarter. That's been a question previously. And so wanted to highlight a couple of those things. So hopefully that gives you a little bit of a little bit more color.

Andre Madrid: No. That's super helpful. Thanks so much, Shawn. I'll leave it at two. Thanks, folks.

Operator: The next question comes from Ken Herbert with RBC Capital Markets. Please go ahead.

Ken Herbert: Yeah. Hey. Good afternoon, Jeremy and Shawn and Mike. When we look at the strong growth in the third quarter, you called out specifically F-16, F-5, and WTRS driving the 8% growth. Is it possible to parse that out a bit? And were any of those maybe a little better than expected or better performance on contracts in the quarter?

Shawn Mural: Not really. I think things are playing out, you know, kinda as we expected. We did get some modest material that had previously been planned to come in Q3. Came in, but it wasn't really significant. You know, to be honest with you, Ken. I think we're, again, happy with where we sit. We see sequential growth continuing as we go into Q4. You know? And, obviously, you saw us bring up the low end of the range, you know, as a result of that. Still some variables out there, of course. But yeah, no. I think, again, the strength of those three programs continues, and we expect that trajectory to continue into Q4.

Jeremy Wensinger: And Ken, I would just add, I think Shawn's been very clear all year long. The second half of the year was gonna be, you know, the opportunity for us based on program execution on F-5. On the WTRS program. So again, I don't think anything we saw in the quarter was really unexpected. Program teams executing the way they should execute. They're doing great. And we're just bringing these programs online.

Ken Herbert: That's great. Thanks, Jeremy. And as we look at the revised guide, it implies a bit of a sequential step down in margins into the fourth quarter. Is that maybe just conservatism? Or is there anything else we should keep in mind on that?

Shawn Mural: There's always some timing of expenses. And so we have some incremental expense in Q4. By the way, again, not unanticipated per se. The teams have done a wonderful job of risk mitigation. You've heard us talk about that. Earlier in the year, specifically the first half. So nothing I'd say terribly significant, to be honest with you, Ken. It's how we see things playing out. We're happy with, you know, raising the midpoint of the guide, you know, call it 3 and a half, $4 million at the midpoint from where we were before. And about 10 basis points in incremental margin.

So again, the prior midpoints that we had established, so mostly timing of expenses is the way that I'd frame it up.

Ken Herbert: That's great. Thanks, Shawn. Nice results, you guys.

Shawn Mural: Thank you.

Operator: The next question comes from Tobey Sommer with Truist. Please go ahead.

Tobey Sommer: Thank you. What does the opportunity look like for sales, ongoing and new sales outside the US maybe just to push it outside the constraints of a shutdown?

Jeremy Wensinger: Well, I think the one we announced on the F-16 with Iraq is an emerging opportunity for us. On the FMS side. I think that is an opportunity that customers see what we're doing for our primary set of customers. And those country customers are really saying, hey. I want that kind of support. And I need that kind of modernization. So that part has been an opportunity for us to look at how do we take what we do for the US government and take it to these other countries that need our support and are allies of the country, you know, the US. So I think outside the country, though, that's a channel for us.

But inside the country, it has been really the modernization side of it along with the work that we're doing in the aero business.

Tobey Sommer: If we fast forward a, you know, two or three years from now, do you think you'll be you'll have a wider array of foreign military sales contracts that you'll be working on?

Jeremy Wensinger: It's you know, the foreign military sales take a lot of dwell time. So it's hard for me to tell you exactly, you know, what that would look like three years from now. You know, we've been working the F-16 FMS deal for quite a while. So, again, it's hard for me to say when a country will decide and, you know, what's the timing of that. But, again, what I like is I like the demand pull. I guess that's where I would put it. They were looking at what we were doing for the US government and said, I want that. We are in region, and that's one of the things we talk about all the time.

Being in region creates demand pull for us. So, you know, having logistics and everything in that region gives them the easy button to pull us through. So, again, it's hard for me to look three years out and say what that looks like. All I can tell you is being shoulder to shoulder with our customer and region, and our allies seeing that support has created some demand pull that I'm very happy with.

Shawn Mural: I think a great example of that to amplify it is our Tempest product. Right? That was highlighted at the recent AUSA. When we think about global demand for a product like that has applications, you know, around the globe and the teams sensing some strong demand pulls. Jeremy mentioned it, I think, in his prepared remarks. So could those things go FMS? Could they go DCS? You know, I know. We'll see. It's an emerging market for us. We're really happy with the rapid prototyping and our ability to deliver that capability, you know, in a very short period of time, and it's getting some good traction from customers.

Tobey Sommer: Appreciate it. And then with respect to the timing of payments and the elongation of DSO, is that a widespread phenomenon under the shutdown? Or is it a discrete impact of some payment offices that just happen to matter for the company?

Shawn Mural: Yeah. It's, you know, it's interesting. There's a, you know, payment as I think I said earlier, when Peter asked, there was a we're seeing payments take longer. Roughly seven days. Than what we saw earlier. In the year. The knockdown a bit here is there are sometimes contract actions that we need to be adjudicated to get the funding moved around. Whatever to the appropriate claims, things of this nature. That's kind of the this is the secondary effect of the inability to have those things occur today. So will they be done by the end of the year? Potentially. You know, there's we don't see risk to them in aggregate, obviously.

This is, like I said, purely timing in terms of the ability for if it's funding on a certain clinic, for example, Toby, to be moved, they have mod issued then issue the invoice, and then pay in what are now elongated terms from what we've experienced. Previously. It's nothing more than that, if that helps give some color.

Tobey Sommer: It does. Thank you very much.

Operator: Next question comes from Joseph Gomes with Noble Capital. Please go ahead.

Joseph Gomes: Good evening. Congrats on the quarter.

Jeremy Wensinger: Hey, thanks, Joe.

Joseph Gomes: So was wondering, maybe you can give us a little update on, you know, the efforts in the INDOPACOM and how that transpired in the third quarter and what you're seeing, you know, here for the fourth quarter?

Jeremy Wensinger: I mean, we continue to be very confident in our position in INDOPACOM. I mean, obviously, with being present in region, it has given us an opportunity to participate with the customer both directly and indirectly. So, again, I think, you know, INDOPACOM is going to be and has been an emerging market for, you know, any even think, you know, what Shawn just mentioned about the Tempest unit. I think there is an opportunity for us to continue to expand our presence in that region. Little disappointed that some of the training activities were a little less than what we anticipated for the year, but I think overall, I think the positioning is something that we're exceptionally proud of.

And look forward to a long relationship with that customer in that region.

Joseph Gomes: Okay. Great. Thanks for that. And then just, you know, don't want to beat a dead horse, but and I know it's difficult to answer completely here, but, you know, we've talked about the government shutdown. Things getting pushed out. You know? On the T6 with under protest, I mean, how far can we get that pushed out where maybe, you know, that February expected start date gets pushed out significantly. As opposed to maybe, you know, with some of the other things here we're talking about that might turn fast I don't know if you get any sense of that or can give any more color or detail on that.

Shawn Mural: Yeah. That's that one's a hard one. You know, obviously, as you know, in the court of federal claims. So it's a hard one to predict. The exact timing on it. We continue to monitor it. And I know they're making progress. But, again, that's gonna be a hard one for us to predict if that will or will not slide.

Jeremy Wensinger: I think, Joe, that's a little bit why again, the materials that Jeremy walked through at the conclusion of the prepared remarks wanted to give color around, we're treating T6 as kind of a binary event for '26 for exactly the reasons that Jeremy mentioned. And, you know, and we're going to grow. Again, we're not issuing guidance for '26. But because of the nature of how that could play out, you know, if it stays according to schedule, fantastic. If it slips, we'll see app you know, irrespective this company is gonna grow. And continue to do that, like I said, in 2026.

Joseph Gomes: Great. I'll get back in queue. Thank you very much.

Operator: The next question comes from Trevor Walsh with Citizens JMP. Please go ahead.

Trevor Walsh: Great. Hey, all. Thanks for taking my questions. On the Tempest piece, really impressive just to see or understand time to development to getting that system fielded. Just more broadly, I guess, within Counter UAS or even just training support around UAS generally. What things or opportunities might be out there that we're not necessarily thinking about? That Tempest just seemed to come along very fast and ferocious. So what kind of things might there be within the realm of unmanned systems that we could be thinking about for you guys?

Jeremy Wensinger: I think Tempest is a good example of what this evolving landscape of threat is showing us as, you know, as a country. But, you know, I'll highlight something that we've talked about before. On the, you know, unmanned system side, when you think about an unmanned aerial vehicle, it has an airframe. It has many of the same characteristics that we support today, on the with the MRO front. And I look at, you know, modernization and upgrades and our ability to support those aircraft no differently than I do what we're doing on an F-16. Or a C-130.

So when I think about the emerging market on UAVs, it can be what we're doing today with Tempest or it can go extend all the way down to flight line support all the way down to modernization and upgrades of those aircraft. So I think it's an opportunity for us. I think we've shown that as an opportunity with Tempest. And I think we'll continue to demonstrate our toehold in the UAS market.

Shawn Mural: The underlying capability is the engineering prowess and capability that the corporation has. Move with speed and agility and deliver that rapid prototyping. That's what you saw. It has a variety of applications, as Jeremy just walked through. And so we're continuing to add to that capability set, you know, across the organization with delivering technology infusing it into a variety of platforms and ways that, again, Jeremy mentioned.

Trevor Walsh: Great. Thanks, both. Maybe just one quick one or one last one. With respect to the acquisition that you closed, I understand it's probably kind of smaller in terms of kind of material contribution to 25, but can you maybe tell us about how the '26 pipeline or even beyond associated kind of with the opening up of that customer around that acquisition, if that's reflected in, I think, the $50 billion or so pipeline that you threw out there today in the slides? Or is there I guess, how much kind of ramp is required to sort of get that really going from kind of the broader opportunity that kind of offered there.

Jeremy Wensinger: Yeah. No. Thank you. It's a good question. It is not in the pipeline. We are we're just working our way through integration now. But again, to there is nothing different on as you know, I've come from that side of the world. There is nothing different on that side of the world that isn't isn't being done at V2X today. We just did not have access from a customer standpoint to demonstrate that capability to them. So this is more about customer access and not size.

The size of the acquisition was modest, but to be able to get back to that customer sets and be able to show them the things that we do as a core company and give them the confidence and the access to our talent, was 100% why we did that deal.

Trevor Walsh: Terrific. Thanks, gents. Appreciate it.

Operator: The next question comes from Mariana Perez with Bank of America. The current line has been disconnected. We'll move on to the next question. It's from the line of Kristine Liwag with Morgan Stanley. Please go ahead.

Kristine Liwag: Good afternoon, guys. Jeremy, you called out funding as the uncertainty with the government shutdown. And, you know, when you look at the strong book-to-bill of 1.2 in the quarter, was there a pull forward of project awards? Were the customers anticipating this funding uncertainty and try to get those awards out the door?

Jeremy Wensinger: I don't it was mostly just normal timing. I mean, I didn't see anybody move anything around. Even, you know, I think we talked about in the past even with the initiatives the government had in the first half of the year, we've seen awards basically occur on schedule. And so these were not unexpected. They weren't moved forward. They were all awards that, you know, we expected to happen. What I don't know is in quarter four, whether the items that we thought were going to be adjudicated because there's no contracting officers around, to do it, whether those will happen or not. So I feel confident about what we have in terms of our bid velocity.

I feel confident about what the bids we've submitted. Just I just don't know whether they're gonna get adjudicated with the government shutdown.

Kristine Liwag: I see. And look. If I could, squeeze a second question, I'll you know, the U.S. decision to withdraw some troops out of Romania was a surprise to many. So I was wondering, was that a surprise to you, or was that anticipated? I know you don't have direct revenue from that specific base. But when you look at regional priorities, I mean, do you think about potential incremental headwinds from Europe? And how does that balance with the stronger demand signals from INDOPACOM?

Jeremy Wensinger: I think the work we do in Romania is an extremely important part of our, what I should say, defense strategy. And so I, you know, we were not affected by that, and I cannot believe that would that work we're doing would go away anytime soon. It is extremely important. And, you know, in terms of defense. So that's all I'm gonna say. But it is, you know, the Aegis Ashore program is a very important program. And I don't see a strategic move off that. Unless there's a policy change in the government.

Operator: Thank you. The next question comes from Noah Poponak with Goldman Sachs.

Noah Poponak: Hey, everyone.

Jeremy Wensinger: Hello.

Noah Poponak: Hey. How are you doing?

Jeremy Wensinger: Hey. Good. Thanks for the question.

Noah Poponak: If I take the updated full-year revenue guidance, which is the last quarter of the year remaining, it implies the range implies 4Q either flat all the way up to up 7% at the high end. Can you is that just government shutdown related at the low end? Or are there other pieces that would move you around within that range?

Shawn Mural: Yeah. No. Great question. So, you know, as you can imagine, funding is a dynamic situation, and we've got a wonderful cadence within the organization that looks at, you know, a typical contracts waterfall based on how funding may change or not. To date, we've had very modest impact, as I think we said in the prepared remarks. But if I look out through the end of the quarter, there could be more impacts in terms of reductions on, you know, current contracts we have. And hence, you know, kind of the range of the guide. Nothing more than that. We wanted to make sure that we took that into account because it's a variable.

The teams are, you know, like I said, all over it. And to date, we have seen customers move funding to ensure that capability persists and remains. I think that speaks to the underlying critical nature of how our customers look at the services we provide. So that hence, the basis for the distribution on the range.

Noah Poponak: Okay. And, Shawn, I guess, if I, you know, kinda look at the progression through the year, posted a flat in the first half, now you have this update. You know, midpoint of the range for 4Q up mid-single. You guys had talked about needing WTRS to ramp to get to that higher growth rate in the back half. As we as I keep flowing through the model into 2026, with WTRS continuing to ramp, easy compares in the first half, and I guess, why wouldn't it be reasonable to think of '26 as looking like the exit rate of '25? In terms of top-line growth? Or is it more complicated than that?

Shawn Mural: Yeah. There's a couple of things. I'll give a little bit of color. Like I said, we wanted to make sure we talked about '26 because it's top of mind for obviously everyone. So when I think about it, you know, WTRS will continue to ramp next year. The F-16 Iraq award will ramp next year. From an incremental standpoint. There is the contingency support activities, specifically in The Middle East, that have largely ramped down throughout 2025. We've seen that. That will present rather a headwind going into kind of the first March 2026. So I won't talk numbers specifically because funding is so, you know, variable right now, to be honest with you.

But yeah, the WTRS and F-16 Iraq should continue to ramp at the exit rate that they conclude at in '25.

Noah Poponak: Okay. That's really helpful. On margins, should we think of V2X as a multiyear margin expansion opportunity? Or should we think of it as top-line growth and hold the margins and convert it to cash flow?

Shawn Mural: You know, listen, I think over time, we certainly see margin expansion opportunities. I mean, that's the nature of what we're here to help generate and our program teams do it, you know, consistently. We're learning through what's in the backlog, as you would expect. As new programs have come on, I've said this before. I think they typically start lower and then they ramp and improve sequentially. The great news in some of the awards that we have today is that these are long-term franchise programs when you think five plus years in, you know, just between WTRS, F-16 Iraq, and then depending on what happens with T6, that's, you know, that's up to a ten-year program.

So good stability there. Opportunities to go work margin expansion here, but it is I think you're thinking about it exactly right. It's a multiyear.

Noah Poponak: Okay. Last one for me. If you do, in fact, have the 20 to 30 million of cash flow slide from, you know, payment timing given the shutdown, should we then think of '26 as your normal 100% conversion from the adjusted net income to free cash flow plus getting that 20 to 30 back? Or, you know, is it the type of thing that kinda ends up, you know, being recaptured over a longer window of time and you never really quite see it, you know, in a shorter window of conversion?

Shawn Mural: No. We're thinking of '26 exactly as you are as I sit here today. It's dependent on the revenue, of course. Right? So as long as the revenue holds to, like I said, the, you know, kind of the midpoint of the guide, then it would purely be a function of timing. And we wouldn't have, you know, it would we would be incremental and at or above 100% in '26. That's exactly the way to think about it.

Noah Poponak: Okay, thank you.

Shawn Mural: Sure.

Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Jeremy Wensinger for any closing remarks.

Jeremy Wensinger: Thank you so much for the time today. I appreciate everyone taking the opportunity to share with us our quarter results. And, again, just much appreciated for everything that you guys are doing in terms of showing interest in V2X. Thank you, and have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

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