How has the high tempo for warfighters impacted V2X's business, and is this sustainable or likely to taper off?

V2X's global business model allows it to spin up and down capabilities as needed. The diversity of the portfolio enables support for customers globally, regardless of the specific region. Management expressed pride in the team's unwavering support for customers in dynamic environments like the Middle East. “I mean, John, we don't talk specifically about programs. What I've been saying from the better part of the 18 months is we're in a nice recompete holiday.”

How are win rates assessed for new business, especially with the $8 billion in AI-integrated bids, and does V2X have better chances now?

V2X employs a disciplined bid process, only pursuing opportunities with a high chance of winning. The integration of AI capabilities, past performance, and readiness rates create differentiation, leading to compelling proposals that customers recognize for better mission outcomes. “I look at what we're doing in terms of the bid submittal. Now look, there's a very rigid process to get something to the point where you submit a bid, and it's a very disciplined process because we wouldn't bid something if we didn't feel like we had a better than most chance of winning it.”

What is the M&A market like for V2X, and were there any notable professional fees for M&A in the quarter?

V2X has a disciplined capital allocation strategy, looking for M&A opportunities that augment existing capabilities in areas like platform modernization, counter UAS, and electronic warfare. The market is dynamic, but patience and strategic fit are key. There was a modest amount of M&A spend in the quarter, less than previously. “But again, when someone comes to the market or it doesn't come to the market, I don't get to make that call. But again, I think the capital allocation strategy and being patient is probably the best thing that I would say that we have to date.”

VVX

V2X (VVX) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 3, 2026

Source: earnings call transcript

Executive summary

V2X Q2 FY26 — Double-Digit Growth Driven by Strategic Wins and AI Integration

V2X delivered strong Q2 FY26 results, driven by consistent execution, recent strategic contract wins, and alignment with national security priorities. The company is advancing its "Go Towards Tomorrow's" strategy by integrating AI into internal operations and new bids, leading to increased full-year guidance. Management emphasizes disciplined capital allocation and a focus on margin-accretive growth opportunities.

Highlights

Revenue increased 17% year-over-year to $1.26 billion in Q2 FY26.
Adjusted diluted EPS increased 23% year-over-year to $1.64 in Q2 FY26.
Secured approximately $1 billion in recent awards with accretive margins, reinforcing profitable growth.
Increased full-year guidance for revenue, adjusted EBITDA, and adjusted diluted EPS, reflecting strong momentum.
Funded backlog increased 10% sequentially and 8% year-over-year to $2.5 billion, supporting future outlook.

Concerns

Quarterly book-to-bill ratio was 0.5x, indicating backlog consumption in the quarter, though trailing 12-month book-to-bill was 1.4x.
Middle East revenue is expected to be flat to down for the full year, with Kuwait activity significantly contracting by approximately $150 million sequentially in H2 FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year Revenue	$4.875 billion - $5.025 billion high materiality	FY26	High
Full-year Adjusted EBITDA	$347.5 million - $362.5 million high materiality	FY26	High
Full-year Adjusted Diluted EPS	$5.90 - $6.30 high materiality	FY26	High
Full-year Adjusted Net Cash from Operating Activities	$160 million - $180 million medium materiality	FY26	High
Full-year Book-to-bill Ratio	1.3x - 1.5x high materiality	FY26	High
Net Leverage Ratio	approximately 2x or below medium materiality	end of FY26	High
Adjusted Net Income Conversion	at or above 100% on average medium materiality	over time	High
National Security Support Missions	continuing medium materiality	through 2026 and into early 2027 · FY26/FY27	Medium
Middle East Revenue	flat to down medium materiality	FY26	Medium
Kuwait Activity Revenue	$20 million - $30 million medium materiality	H2 FY26	High
T-6 Program Revenue	approximately $100 million medium materiality	H2 FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Asia Pacific Revenue increased year-over-year in Q2 FY26, driven by a step-up in activities and funding in the region. Strong demand signals are observed, with prospects for continued growth.	—	13%	—	—
U.S. Revenue increased year-over-year in Q2 FY26, primarily driven by new program starts and national security support.	—	26%	—	—
Middle East Revenue was up slightly year-over-year in Q2 FY26, reflecting contributions from foreign military sales. For the full year, revenue in the region is expected to be flat to down due to shifting logistics-related contracts.	—	slightly up	—	—

Orderbook & backlog

Bookings $600 million Q2 FY26

Does not reflect approximately $1 billion in recent awards that came in shortly after the quarter.

Total Backlog $12.7 billion Q2 FY26

Includes modified scope of LOGCAP work in Kuwait.

Funded Backlog $2.5 billion Q2 FY26

up 10% sequentially, up 8% YoY

Supports confidence in 2026 outlook and demonstrates strong funding environment.

Recent Awards (post-Q2) approximately $1 billion post Q2 FY26

Expected to improve composite margin of backlog; includes awards in modernization, global training, aerospace, and mission readiness.

Capital programs

Carriage equipment production for strategic bomber fleet full rate production

Benefit:enabling next-generation weapons

Transitioned from a development program to full-rate production, demonstrating engineering prowess and ability to move from design to long-term production.

Risks & headwinds

Kuwait logistics contracts shift H2 FY26

approximately $150 million sequential headwind

Mitigation:Diversity of portfolio and ability to ramp up activities in other regions (e.g., Israel, U.S. national security requirements).

Continuing Resolutions (CRs)

potential impact

Mitigation:Mission-critical nature of V2X's work (readiness, production programs) tends to be less affected, as essential activities must continue.

What to watch in Q3 FY26

Kuwait Revenue Trajectory

H2 FY26

Current ~$180M in H1 FY26

Target $20M-$30M in H2 FY26

Why it matters

To verify the expected significant contraction in Kuwait activities and its impact on overall revenue.

The first half of the year, Kuwait activities delivered approximately $180 million in revenue. In the second half, we see that as $20 million to $30 million in revenue.

Find out whether VVX delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the outlook for recompetes in 2027, given the C-12 win and the current 'recompete holiday'?

Management does not discuss specific programs but noted a 'recompete holiday' has allowed focus on new growth business. The C-12 win was positive, and the majority of capital allocation is on new business not currently in the portfolio, driving top-line growth and win rates.

“But if you look at the majority of the capital allocation for our new business, it's on growth. And it's on new business that is not in the portfolio today.”

asked by Jonathan Siegmann · answered by Jeremy Wensinger

2 min read 5 chapters

Detailed narrative

Strategic Focus on Profitable Growth and AI Integration

V2X is actively pursuing a 'Go Towards Tomorrow's' strategy, emphasizing profitable growth and the integration of AI solutions. The company submitted over $8 billion in new bids incorporating AI, aiming to enhance differentiation and secure margin-accretive opportunities. Internally, V2X operates three AI platforms to boost employee education, productivity, and operational efficiency, with plans for continued expansion of internal use cases and customer-facing applications.

Robust Backlog and Funding Environment

The company's robust backlog and pipeline of high-quality awards support its positive outlook for the remainder of 2026. Total backlog stands at $12.7 billion, including the modified scope of LOGCAP work in Kuwait. Importantly, funded backlog increased 10% sequentially and 8% year-over-year to $2.5 billion, demonstrating a strong funding environment for V2X's solutions and providing confidence in the 2026 outlook.

Capital Allocation and Balance Sheet Strength

V2X maintains a disciplined capital allocation strategy focused on generating strong, predictable cash flow and maintaining a low CapEx profile, averaging approximately 0.4% of revenue over the past three years. The company's net debt improved by $71.4 million year-over-year, and it successfully repriced its first lien term loan, lowering borrowing costs.

The goal is to achieve a net leverage ratio of approximately 2x or below by the end of 2026, supported by solid adjusted operating cash flow generation.

Geographic Demand and Operational Flexibility

V2X is experiencing continued demand across multiple geographies, with Asia Pacific revenue increasing 13% year-over-year and U.S. revenue up 26% in Q2 FY26. The company's global presence and operational excellence allow it to rapidly scale and adjust to evolving customer needs, such as ramping up support in Israel and for national security requirements in the U.S., while responding to shifts in Kuwait.

This flexibility is a key differentiator in supporting critical missions globally.

Impact of Continuing Resolutions (CRs)

Management noted that while Continuing Resolutions (CRs) can potentially impact operations, the mission-critical nature of V2X's work, particularly in readiness and production programs, tends to mitigate significant disruption. The company experienced minimal impact during the last protracted CR, as essential activities like keeping aircraft in the air and delivering on time-based production programs must continue regardless of budget uncertainties.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.