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    VVX
    Earnings call· Jun 2026(Q2 FY26)

    V2X Q2 FY26 earnings call VVX

    Aug 3, 2026 Source

    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

    5

    • 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

    2

    • 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

    11
    CategoryTargetConfidence
    Full-year Revenue
    $4.875 billion - $5.025 billion
    high materiality
    High
    Full-year Adjusted EBITDA
    $347.5 million - $362.5 million
    high materiality
    High
    Full-year Adjusted Diluted EPS
    $5.90 - $6.30
    high materiality
    High
    Full-year Adjusted Net Cash from Operating Activities
    $160 million - $180 million
    medium materiality
    High
    Full-year Book-to-bill Ratio
    1.3x - 1.5x
    high materiality
    High
    Net Leverage Ratio
    approximately 2x or below
    medium materiality
    High
    Adjusted Net Income Conversion
    at or above 100% on average
    medium materiality
    High
    National Security Support Missions
    continuing
    medium materiality
    Medium
    Middle East Revenue
    flat to down
    medium materiality
    Medium
    Kuwait Activity Revenue
    $20 million - $30 million
    medium materiality
    High
    T-6 Program Revenue
    approximately $100 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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——

    Operational metrics

    23
    Revenue
    $1.257 billionup 17% YoY
    Q2 FY26

    Driven primarily by ramp-up of training and aerospace programs and continued support for national security activities.

    Adjusted EBITDA
    $89.8 millionup 9% YoY
    Q2 FY26

    Reflects solid financial and operating performance.

    Adjusted Net Income
    $51.6 millionup 22% YoY
    Q2 FY26

    Reflects strong financial performance.

    Adjusted Diluted EPS
    $1.64up 23% YoY
    Q2 FY26

    Reflects strong financial performance.

    Interest Expense
    $16.7 million
    Q2 FY26

    Reported interest expense for the quarter.

    Cash Interest Expense
    $15.1 million21% improvement YoY
    Q2 FY26

    Reflects lower borrowing costs due to term loan repricing.

    Net Income
    $25.5 million
    Q2 FY26

    GAAP net income for the quarter.

    Diluted EPS
    $0.81
    Q2 FY26

    GAAP diluted EPS for the quarter.

    Revenue
    $2.511 billionup 20% YoY
    YTD H1 FY26

    Driven by new programs and on-contract growth, partially offset by lower volume on certain logistics programs.

    Adjusted EBITDA
    $175.4 millionup 17% YoY
    YTD H1 FY26

    Reflects strong year-to-date performance.

    Interest Expense
    $34.8 million
    YTD H1 FY26

    Reported interest expense for the first half of the year.

    Cash Interest Expense
    $31.6 millionimproved 15% YoY
    YTD H1 FY26

    Reflects lower borrowing costs.

    Net Income
    $44.5 million
    YTD H1 FY26

    GAAP net income for the first half of the year.

    Adjusted Net Income
    $99.7 millionup 35% YoY
    YTD H1 FY26

    Reflects strong year-to-date performance.

    Diluted EPS
    $1.41
    YTD H1 FY26

    GAAP diluted EPS for the first half of the year.

    Adjusted Diluted EPS
    $3.16up 37% YoY
    YTD H1 FY26

    Reflects strong year-to-date performance.

    Net Cash Used by Operating Activities
    $108.4 million
    YTD H1 FY26

    Cash flow used by operating activities for the first half of the year.

    Capital Expenditure as % of Revenue
    0.4%
    past 3 years average

    Reflects disciplined capital expenditure requirements.

    Net Debt Improvement
    $71.4 million
    YoY

    Strengthening balance sheet.

    Adjusted EBITDA Split
    49% H1 / 51% H2
    FY26

    Implies higher margin contribution in the second half due to productivity improvements and contract actions.

    Kuwait Revenue Contribution
    $180 million
    H1 FY26

    Revenue generated from activities in Kuwait during the first half of the year.

    National Security Support Revenue
    $200 million
    H1 FY26

    Revenue from national security support missions in the first half of the year, primarily in the T&M line.

    T-6 Program Revenue
    $40 million
    H1 FY26

    Revenue generated by the T-6 program in the first half of the year, tracking as expected.

    Industry KPIs

    3
    MetricValueDetails
    Book to bill ratio0.5xratio
    Total company backlog$12.7 billionUSD
    Defense program awards—

    Orderbook & backlog

    4
    Bookings$600 millionQ2 FY26

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

    Total Backlog$12.7 billionQ2 FY26

    Includes modified scope of LOGCAP work in Kuwait.

    Funded Backlog$2.5 billionQ2 FY26

    up 10% sequentially, up 8% YoY

    Supports confidence in 2026 outlook and demonstrates strong funding environment.

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

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

    Capital programs

    1
    Carriage equipment production for strategic bomber fleetfull 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

    2
    Kuwait logistics contracts shiftH2 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

    5

    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.

    Q&A highlights

    6

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.