V2X Inc’s Earnings Call: Kuwait Revenue Outlook and T-6 Program Timing Don’t Match

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Date of Call: Aug 3, 2026

Financials Results

• Revenue: $1.26B, up 17% YOY
• EPS: $1.64 adjusted diluted EPS, up 23% YOY
• Operating Margin: 7.1% adjusted EBITDA margin

Guidance:

• Revenue expected between $4.875B and $5.025B (implied ~10% YOY growth at midpoint).
• Adjusted EBITDA expected between $347.5M and $362.5M.
• Adjusted diluted EPS expected between $5.90 and $6.30 (implied ~16% YOY growth at midpoint).
• Adjusted net cash from operating activities expected between $160M and $180M.
• Net leverage ratio expected to be ~2x or below by end of 2026.

Business Commentary:

Revenue and Earnings Growth:

• V2X reported revenue of $1.26 billion for Q2 2026, up 17% year-over-year. Adjusted net income increased by 22% to $51.6 million, and adjusted diluted EPS rose by 23% to $1.64.
• The growth was driven by the ramp-up of training and aerospace programs, continued support for national security activities, and increased demand in the Asia-Pacific region.

Backlog and Bookings:

• The company's total backlog for Q2 was $12.7 billion, with a funded backlog that increased 10% sequentially and 8% year-over-year to $2.5 billion. Bookings were $600 million, yielding a quarterly book-to-bill ratio of 0.5 times.
• This strong backlog and bookings performance was supported by recent contract wins and alignment with national security priorities.

AI Integration and Strategy:

• V2X is operating three AI platforms across its enterprise IT infrastructure and has incorporated AI capabilities into more than $8 billion in new bids submitted.
• The integration of AI solutions is aimed at enhancing internal operations, employee education, productivity, and customer-facing applications, such as predictive readiness and operational efficiency.

Geographic Revenue Performance:

• Revenue from the Asia-Pacific region increased 13% year-over-year, while U.S. revenue grew by 26%, driven by new program starts and national security support.
• The growth in these regions was due to increased activities and funding, reflecting strong demand signals and V2X's global presence and capability to meet customer needs.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed confidence: 'We are confident in our market position and are increasing our full year guidance...' and 'Our robust backlog...support our positioning and outlook...' Statements underscore strong momentum and delivery: 'Our results to date and momentum underway underscores our continued ability to deliver for our customers and shareholders.'

Q&A:

• Question from Jonathan Siegmann (Stifel): Real good. Hey, so nice news about that recompete you won on the C-12. You had talked about previously how this year was light for recompetes. Do you mind taking a forward look at 2027? Is there anything to think about as potential things that we should be tracking? I’d appreciate it. Thank you.
  Response: The company is in a 'rec ompete holiday' but will pursue others; focus is on new growth opportunities, not specific program details.

• Question from Jonathan Siegmann (Stifel): Great. Maybe just given the level of tempo for the war fighters is pretty high the last couple of months, is there any way to think about what that’s meant for your business and how that may or may not taper off in the months ahead? Thank you.
  Response: The global business can scale capabilities up or down; the portfolio's diversity and contract presence enable support wherever needed.

• Question from Trevor Walsh (Citizens): Jeremy, maybe for you, just piggybacking a little bit off the win rate. Can you just give us a sense of, for that new business, it sounds like you, both in the $1 billion or so that you’ve won across several opportunities and then the $8 billion plus that you’ve just submitted in pipeline. How are you assessing the win rates there in terms of what you’re expecting? I guess, is it by nature of what you’re actually bidding for? Do you feel like you have maybe better chances than what V2X may have had in the past? Maybe just give a sense of just how the team is just sort of seeing what the prospects are for kind of the things that you’ve submitted and kind of what your chances are there.
  Response: Bids are submitted only if there is a better-than-most chance of winning, supported by differentiation like AI, customer intimacy, and global capabilities.

• Question from Trevor Walsh (Citizens): Shawn, maybe just a quick follow-up for you around your comments for Middle East revenues being flat to maybe even down for the year. Obviously, everyone would like to have a crystal ball and a lot of moving kind of dynamics there as far as conflict with Iran, et cetera. Any just thoughts as far as the way you’ve got the guidance now kind of set up for the back half of the year, whether things that could move in the Middle East are pretty much more to the upside, or could there be any surprises kind of more on the negative? Do you think most of kind of the, I guess, the disruption has been washed out of the system for the most part, and you guys are sort of kind of know at least what’s happening there?
  Response: Guidance assumes modest ramp in Kuwait activities but includes a $150M sequential headwind from the first half; the region is dynamic, but 98% of annual revenue is in backlog, providing stability.

• Question from Tobey Sommer (Truist): Thank you. I was wondering if you could speak to the M&A market, what you’re seeing out in the market for opportunities for acquisitions, and whether you had any call-outs of professional fees in the quarter as you were looking for opportunities. Thanks.
  Response: The company has a disciplined M&A strategy focused on augmenting key domains; there was modest spend in the quarter, down from prior periods, with a solid pipeline.

• Question from Tobey Sommer (Truist): Were there any notable investments to pursue acquisitions in the quarter, or nothing to call out like in 1Q?
  Response: A modest amount of spend occurred, down from previous quarters, but no specific M&A activities were commented on.

• Question from Tobey Sommer (Truist): Great. If I could, on your recent wins that are coming in at a higher margin, and you said the bid pipeline, superior margin as well. How would you characterize that and sort of define it? Is it the contract type is varying, favoring higher margin forms like Fixed Price or Time and Materials? How would you sort of break that down and provide us a basis for understanding it further?
  Response: Higher margins stem from differentiation (e.g., AI tools, past performance, readiness rates), not contract type, which creates separation and better mission outcomes for customers.

• Question from Peter Arment (Baird): Yeah, good afternoon, Jeremy, Shawn, Mike. Nice results. Hey, Jeremy, 98% already in backlog. A CR to you, I guess, is more noise. Maybe you could just describe what you kind of baked in or assumed for kind of the budget process.
  Response: Continuing resolutions (CRs) have minimal impact as the company's work (readiness, production) is mission-critical and not at high risk of disruption.

• Question from Peter Arment (Baird): Regarding the T-6 program, would you just give us an update there how the second half ramp is scheduled to go? Thanks.
  Response: The T-6 program delivered ~$40M in the first half and is expected to deliver ~$100M in the second half, tracking exactly as planned.

• Question from Joe Gomez (Noble Capital): Good afternoon, thanks for taking the questions. Can you either from a high level, kind of break down the recent revenue growth into new program wins, expansion on existing contracts, and maybe higher volume on recompetes?
  Response: Growth is driven by existing contracts/vehicles and support for national security missions; specific new program wins like T-6 and BALAD are part of the core capability and existing portfolio.

• Question from Joe Gomez (Noble Capital): Okay. Jeremy, you’ve got a lot of wins here, a lot of high-profile, large wins. If you look at the recent awards, which one do you view as most strategically important rather than simply just the largest one for going forward for the company?
  Response: The C-12 recompete and the bomber fleet production award are seen as strategic proofs, demonstrating strategy execution and ability to move from development to long-term production.

• Question from Joe Gomez (Noble Capital): Okay. Shawn, just one real quick one here. On the guide, you’re guiding the revenue up roughly about $50 million, adjusted EBITDA only up by about $2.5 million, which would be below that kind of first half, 7% margin. Just maybe you could talk a little bit as to what is causing the lower projected margin on the guide for the second half of the year.
  Response: The lower margin is due to modest mix changes; the guide implies higher margin contribution in the second half (51% of adjusted EBITDA) consistent with historical productivity improvements and contract actions.

• Question from Andre Madrid (BTIG): Hey, good afternoon. This is actually Ned Morgan on for Andre. You guys highlighted recent awards are carrying margins above the current company average. I guess, how should we think about those high-quality awards impacting margins and when we can see the accretion?
  Response: As new, high-margin backlog replaces older backlog, it will progressively improve the overall margin profile; recent post-Q2 awards are multi-year and will contribute modestly to annual margins.

• Question from Andre Madrid (BTIG): Okay. Could you guys just discuss the opportunity you’re seeing in the Asia Pacific today? Where’s demand the strongest, and how could we think about that region becoming a more meaningful contributor to growth over the next couple of years?
  Response: Demand is strong, especially under INDOPACOM; the region delivered 13% YOY growth in Q2 with good demand signals, but conversion to funded activity is still needed.

• Question from John Godden (Citi): Congrats on the quarter. Just going back to Joe’s question, I was kind of wondering if you could dive a bit deeper into the main sources of upside to the new guide on the back of what looks like already pretty solid business momentum.
  Response: Upside is driven by assumptions on key programs: a ~$150M headwind from Kuwait, ~$20M incremental from national security support, and ~$60M incremental from T-6 ramp.

• Question from John Godden (Citi): As a follow-up, just kind of wanted to go pick your brain on your thought process behind what to expect with a potential blue wave now that we’re thinking about midterms and what you’d like investors to think about on that front.
  Response: Political shifts are not a major concern; the company's mission-critical work and national security readiness strategy are expected to remain stable and imperative.

• Question from Greg Parrish (Morgan Stanley): Hey, guys. Good evening. Congrats on the result. Wanted to ask about the national security customer. I appreciate the color you gave, Shawn, about demand signals through the end of the year early next year, maybe just zooming out. Is there potential for this pace to continue, or is the work more one time in nature?
  Response: Demand is evolving and dynamic; the company sees support extending into the first part of 2027 and remains ready to adapt to changing needs.

• Question from Greg Parrish (Morgan Stanley): I wanted to ask about AI, thank you for this AI slide. I think it’s sort of a great way to frame what you’re doing. You called out AI built into some of the bids that you’re putting out there. Fantastic opportunity. Maybe could you just give us some flavor and maybe some examples of what those AI capabilities that are built into these bids look like? Thanks.
  Response: AI is used internally to boost operational effectiveness and externally in bids to offer customers increased readiness rates, better training platforms, and predictive analytics, enhancing mission performance.

• Question from Ken Herbert (RBC): Yeah, hi, good afternoon. Again, congrats on the nice quarter. Maybe, Shawn, the guidance implies about 3% growth in the second half, and I know you’re facing some more challenging comps than you were in the first half. Appreciate all the detail you just went through on the programmatic basis here. I’m just trying to get a sense as to the bookings outlook in the quarter and where maybe could we see some conservatism in the assumptions for the second half of the year?
  Response: Bookings are expected to support a trailing 12-month book-to-bill of 1.3-1.5x; potential upside could come from changes in Middle East ops tempo or performance on T-6 and WTRS programs.

• Question from Ken Herbert (RBC): Yeah, that’s helpful, Shawn. Thank you. You’re going to exit this year, looks like, give or take 2 times levered. Is the goal as we think beyond this year to continue to push leverage down? Or how should we think about capital allocation post 2026, considering where the leverage should be?
  Response: The company has a healthy M&A pipeline to enhance the portfolio; capital allocation aims to drive shareholder value, with leverage expected to be ~2x or below by year-end 2026.

Contradiction Point 1

Sustainability of National Security/Operational Tempo Work

Contradiction on whether the high ops tempo is a temporary surge or a sustained demand.

Greg Parrish (Morgan Stanley) - Greg Parrish (Morgan Stanley)

2026Q2: The ops tempo has evolved and is expected to continue into the early part of 2027. - Shawn Mural and Jeremy Wensinger(CFO & CEO)

Is the pace of national security customer work sustainable beyond 2026, or is it more one-time, and can you provide examples of AI capabilities embedded in your bids? - Peter Arment (Baird)

2026Q1: The company's team is very responsive with minimal lag. Examples include rapid deployment to support the Air Force in Israel (days) and assets to INDY (weeks). They describe themselves as 'scrappy' and capable of quick reaction to customer requirements. - Jeremy Wensinger(CEO)

Contradiction Point 2

Revenue Outlook and Guidance Conservatism for Kuwait

Contradiction on the assumed impact of Kuwait activities on 2026 revenue guidance.

What are your comments on the recent earnings report, Trevor Walsh of Citizens? - Trevor Walsh (Citizens)

2026Q2: For 2026, Middle East revenue is expected to be flat to down due to a significant contraction in Kuwait activities (~$150M sequential headwind in H2). - Jeremy Wensinger and Shawn Mural(CEO & CFO)

What are the expected win rates for the ~$1 billion in recent awards and ~$8 billion in submitted bids, and how are potential surprises in the dynamic Middle East factored into your guidance? - Andre Madrid (BTIG)

2026Q1: Guidance increase is due to new work and acceleration of existing programs (e.g., T-6, Middle East jobs). T-6 program revenue is now expected at $175-$180M vs. prior $160M range. - Shawn Mural(CFO)

Contradiction Point 3

Margin Profile and Accretion from New Awards

Contradiction on the near-term margin impact of new, high-margin awards.

Ned Morgan (BTIG) - Ned Morgan (BTIG)

2026Q2: New, high-margin awards (e.g., C-12) will work their way into the overall margin profile as the backlog is worked down and replaced. These multi-year awards booked in Q3 will lead to incremental, but modest, annual margin improvements. - Jeremy Wensinger and Shawn Mural(CEO & CFO)

How will the high-margin recent awards impact overall company margins and when will we see accretion, and what are the current opportunities and growth outlook in the Asia-Pacific region? - Trevor Walsh (Citizens)

2026Q1: AI partnerships (Google, Amazon, NVIDIA) are core to current bids and internal use cases. The company is seeing high internal adoption and efficiency gains. These relationships are enduring and baked into winning solutions, delivering real customer value. - Jeremy Wensinger(CEO)

Contradiction Point 4

Characterization of Current Business Environment

Contradiction on whether the business is in a "rec ompete holiday" or actively pursuing recompetes.

Jonathan Siegmann (Stifel), what are your key takeaways from the earnings report? - Jonathan Siegmann (Stifel)

2026Q2: While the company is currently in a rec ompete holiday, it remains highly focused on pursuing recompetes. - Jeremy Wensinger(CFO)

What key metrics or factors should be monitored in 2027 following the C-12 recompete win and a historically light recompete year, and how will the sustained impact of high tempo operations on the business evolve in the future? - Trevor Walsh (Citizens)

20260224-2025 Q4: The company is actively pursuing recompetes and has a strong pipeline of opportunities. - Shawn Mural(CFO)

Contradiction Point 5

T-6 Program Timing and Impact

Contradiction on the program's 2026 financial impact and start date certainty.

Peter Arment (Baird) - Peter Arment (Baird)

2026Q2: The program is tracking as expected, delivering about $40M in H1 and is on a path to deliver about $100M in H2. - Shawn Mural(CFO) and Jeremy Wensinger(CEO)

What was baked into the guidance regarding the potential for a Continuing Resolution (CR), and can you provide an update on the T-6 program ramp for H2? - Joseph Gomes (NOBLE Capital)

20251104-2025 Q3: The timing of the T-6 award resolution is hard to predict as it is in the court of federal claims... The company expects growth in 2026 regardless of the T-6 outcome. - Jeremy Wensinger(CEO) and Shawn Mural(CFO)

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