V2X touts progress on its capture agenda
V2X's chief executive Jeremy Wensinger. V2X photo
By
Ross Wilkers
In talking with Wall Street, CEO Jeremy Wensinger said the company has won two of the five major opportunities on its priority list even as it awaits one to work through the protest process.
At the start of this year, V2X committed to pursuing five opportunities with ceiling values north of $1 billion each, as part of efforts to optimize its portfolio three years post-merger.
During V2X’s third-quarter earnings call with investors Oct. 27, chief executive Jeremy Wensinger said the company has gone 2-for-5 on that front, even as one of them remains tied up in a protest situation.
V2X fended off two other bids in August for a potential $4.3 billion Air Force contract covering broad support for the branch’s T-6 trainer jets. Then in September, AAR Corp. filed a lawsuit in the U.S. Court of Federal Claims to protest the nine-year award and seek a re-evaluation of proposals.
The Court of Federal Claims handles bid protests on a much more elongated timeline than the Government Accountability Office, which makes its decisions within 90 days of the protest being filed. As a result, V2X will have to wait on the judge’s ruling before it can add this program to the backlog.
However, award number two in that group of five is final. V2X secured a potential $1 billion foreign military sales contract over the summer to help modernize Iraq’s F-16 jets.
Wensinger also touted a potential $425 million Air Force award, another one booked during the second quarter, focused on modernizing cockpit displays for the U.S. fleet of F-16s.
“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 a multitude of things,” Wensinger told analysts. “I'm most excited about the fact the bids I'm seeing are bringing the entire company to bear on these pursuits.”
As for the Iraq F-16 contract, Wensinger called that an opportunity for allied customers to look at V2X’s modernization work for the U.S. government and get similar support.
Foreign military sales processes are more elongated and “take a lot of dwell time,” Wensinger said, given how these pacts are government-to-government versus government-to-industry.
“It’s hard for me to say when a country will decide and what's the timing of that, but what I like is the demand pull,” Wensinger said. “Being in-region creates demand pull for us, so having logistics and everything in that region gives them the easy button to pull us through.
“Being shoulder-to-shoulder with our customer in region and our allies seeing that support has created some demand pull that I'm very happy with,” he added.
Rapid prototyping is another growth avenue V2X has prioritized in its post-merger strategy, and that effort now includes Tempest, a rugged mobile fires platform the company designed with the help of commercial-off-the-shelf technology.
V2X has started to unveil Tempest as the newest leg of its product push that also includes the Gateway Mission Router, which is designed to give helicopter pilots more situational awareness.
Wensinger said Tempest could also be applied in the emerging market for technologies that counter unmanned aerial vehicles, which he described as having “many of the same characteristics” of platforms V2X supports today.
UAVs will also apparently need the same kind of maintenance, repair and overhaul support that larger systems require.
“I look at modernization and upgrades and our ability to support those aircraft no differently than I do what we're doing on an F-16 or C-130,” Wensinger said. “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.”
Third quarter revenue of $1.7 billion was up 8% over the prior year period, while profit of $85.2 million showed a 2% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
V2X lifted the low end of its sales guidance range to $4.425 billion from $4.375 billion, while the top end remains $4.5 billion. The low end of its adjusted EBITDA guidance is up to $312 million from $305 million, while the top end remains $320 million.