Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-36341 | |
Entity Registrant Name | V2X, Inc. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 38-3924636 | |
Entity Address, Address Line One | 7901 Jones Branch Drive, Suite 700, | |
Entity Address, City or Town | McLean | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22102 | |
City Area Code | (571) | |
Local Phone Number | 481-2000 | |
Title of 12(b) Security | Common Stock, Par Value $0.01 Per Share | |
Trading Symbol | VVX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,185,422 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001601548 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 977,852 | $ 498,066 | $ 1,921,312 | $ 954,537 |
Cost of revenue | 890,452 | 453,305 | 1,755,082 | 872,581 |
Selling, general, and administrative expenses | 53,130 | 29,740 | 101,381 | 61,699 |
Operating income | 34,270 | 15,021 | 64,849 | 20,257 |
Loss on extinguishment of debt | 0 | 0 | (22,052) | 0 |
Interest expense, net | (31,950) | (1,963) | (63,694) | (3,643) |
Other expense, net | (311) | 0 | (311) | 0 |
Income (loss) from operations before income taxes | 2,009 | 13,058 | (21,208) | 16,614 |
Income tax expense (benefit) | 210 | 2,586 | (5,527) | 3,287 |
Net income (loss) | $ 1,799 | $ 10,472 | $ (15,681) | $ 13,327 |
Earnings (loss) per share | ||||
Basic (in dollars per share) | $ 0.06 | $ 0.89 | $ (0.51) | $ 1.13 |
Diluted (in dollars per share) | $ 0.06 | $ 0.88 | $ (0.51) | $ 1.12 |
Weighted average common shares outstanding - basic (in shares) | 31,033 | 11,826 | 30,981 | 11,793 |
Weighted average common shares outstanding - basic (in shares) | 31,605 | 11,954 | 30,981 | 11,917 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Net income (loss) | $ 1,799 | $ 10,472 | $ (15,681) | $ 13,327 |
Changes in derivative instruments: | ||||
Tax (expense) benefit | (1,444) | 367 | (1,296) | 272 |
Net change in derivative instruments | 6,214 | 594 | 4,015 | 969 |
Foreign currency translation adjustments, net of tax | 274 | (3,637) | 2,080 | (4,254) |
Other comprehensive income (loss), net of tax | 6,488 | (3,043) | 6,095 | (3,285) |
Total comprehensive income (loss) | 8,287 | 7,429 | (9,586) | 10,042 |
Interest Rate Swap | ||||
Changes in derivative instruments: | ||||
Net change in fair value of cash flow hedges | 7,658 | 227 | 5,311 | 667 |
Foreign Currency Forward Contracts | ||||
Changes in derivative instruments: | ||||
Net change in fair value of cash flow hedges | $ 0 | $ 0 | $ 0 | $ 30 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 70,314 | $ 116,067 |
Receivables | 746,562 | 728,582 |
Prepaid expenses | 77,724 | 74,234 |
Other current assets | 23,906 | 13,049 |
Total current assets | 918,506 | 931,932 |
Property, plant, and equipment, net | 82,284 | 78,715 |
Goodwill | 1,656,965 | 1,653,822 |
Intangible assets, net | 452,739 | 497,951 |
Right-of-use assets | 46,017 | 52,825 |
Other non-current assets | 22,245 | 17,858 |
Total non-current assets | 2,260,250 | 2,301,171 |
Total Assets | 3,178,756 | 3,233,103 |
Current liabilities | ||
Accounts payable | 416,424 | 406,706 |
Compensation and other employee benefits | 145,000 | 168,038 |
Short-term debt | 15,500 | 11,850 |
Other accrued liabilities | 255,408 | 196,538 |
Total current liabilities | 832,332 | 783,132 |
Long-term debt, net | 1,190,023 | 1,262,811 |
Deferred tax liabilities | 13,773 | 15,813 |
Operating lease liabilities | 35,490 | 41,083 |
Other non-current liabilities | 114,420 | 133,185 |
Total non-current liabilities | 1,353,706 | 1,452,892 |
Total liabilities | 2,186,038 | 2,236,024 |
Commitments and contingencies (Note 8) | ||
Shareholders' Equity | ||
Preferred stock; $0.01 par value; 10,000 shares authorized; No shares issued and outstanding | 0 | 0 |
Common stock; $0.01 par value; 100,000 shares authorized; 31,081 and 30,470 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 311 | 305 |
Additional paid in capital | 754,096 | 748,877 |
Retained earnings | 237,743 | 253,424 |
Accumulated other comprehensive income (loss) | 568 | (5,527) |
Total shareholders' equity | 992,718 | 997,079 |
Total Liabilities and Shareholders' Equity | $ 3,178,756 | $ 3,233,103 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 31,081,000 | 30,470,000 |
Common stock, shares outstanding (in shares) | 31,081,000 | 30,470,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jul. 01, 2022 | |
Operating activities | ||
Net income (loss) | $ (15,681) | $ 13,327 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation expense | 11,326 | 3,238 |
Amortization of intangible assets | 45,211 | 4,423 |
Loss (gain) on disposal of property, plant, and equipment | 522 | (15) |
Stock-based compensation | 20,446 | 4,725 |
Amortization of debt issuance costs | 4,692 | 388 |
Loss on extinguishment of debt | 22,052 | 0 |
Changes in assets and liabilities: | ||
Receivables | (20,404) | (29,302) |
Prepaid expenses | (1,645) | (5,321) |
Other assets | 436 | 5,185 |
Accounts payable | 7,647 | 32,470 |
Deferred taxes | (5,143) | 0 |
Compensation and other employee benefits | (23,150) | 2,507 |
Other liabilities | 31,831 | (11,989) |
Net cash provided by operating activities | 78,140 | 19,636 |
Investing activities | ||
Purchases of capital assets | (11,543) | (3,492) |
Proceeds from the disposition of assets | 5 | 18 |
Contribution to joint venture | 0 | (2,113) |
Net cash used in investing activities | (11,538) | (5,587) |
Financing activities | ||
Proceeds from issuance of long-term debt | 250,000 | 0 |
Repayments of long-term debt | (424,888) | (5,200) |
Proceeds from revolver | 552,750 | 392,000 |
Repayments of revolver | (467,750) | (402,000) |
Proceeds from exercise of stock options | 6 | 370 |
Payment of debt issuance costs | (7,507) | (458) |
Prepayment premium on early redemption of debt | (1,600) | 0 |
Payments of employee withholding taxes on share-based compensation | (14,618) | (1,696) |
Net cash used in financing activities | (113,607) | (16,984) |
Exchange rate effect on cash | 1,252 | (507) |
Net change in cash and cash equivalents | (45,753) | (3,442) |
Cash and cash equivalents - beginning of period | 116,067 | 38,513 |
Cash and cash equivalents - end of period | 70,314 | 35,071 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 58,300 | 3,409 |
Income taxes paid | 2,707 | 6,112 |
Purchase of capital assets on account | $ 1,813 | $ 13 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes to Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Issued | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income |
Balance (in shares) at Dec. 31, 2021 | 11,738 | ||||
Balance at Dec. 31, 2021 | $ 350,087 | $ 117 | $ 88,116 | $ 267,754 | $ (5,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 2,855 | 2,855 | |||
Foreign currency translation adjustments | (616) | (616) | |||
Unrealized gain (loss) on cash flow hedge | 374 | 374 | |||
Employee stock awards and stock options (in shares) | 67 | ||||
Employee stock awards and stock options | 1 | $ 1 | |||
Taxes withheld on stock compensation awards | (1,626) | (1,626) | |||
Stock-based compensation | 3,100 | 3,100 | |||
Balance (in shares) at Apr. 01, 2022 | 11,805 | ||||
Balance at Apr. 01, 2022 | 354,175 | $ 118 | 89,590 | 270,609 | (6,142) |
Balance (in shares) at Dec. 31, 2021 | 11,738 | ||||
Balance at Dec. 31, 2021 | 350,087 | $ 117 | 88,116 | 267,754 | (5,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 13,327 | ||||
Foreign currency translation adjustments | (4,254) | ||||
Unrealized gain (loss) on cash flow hedge | 969 | ||||
Balance (in shares) at Jul. 01, 2022 | 11,846 | ||||
Balance at Jul. 01, 2022 | 363,478 | $ 118 | 91,464 | 281,081 | (9,185) |
Balance (in shares) at Apr. 01, 2022 | 11,805 | ||||
Balance at Apr. 01, 2022 | 354,175 | $ 118 | 89,590 | 270,609 | (6,142) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 10,472 | 10,472 | |||
Foreign currency translation adjustments | (3,637) | (3,637) | |||
Unrealized gain (loss) on cash flow hedge | 594 | 594 | |||
Employee stock awards and stock options (in shares) | 41 | ||||
Employee stock awards and stock options | 369 | 369 | |||
Taxes withheld on stock compensation awards | (70) | (70) | |||
Stock-based compensation | 1,575 | 1,575 | |||
Balance (in shares) at Jul. 01, 2022 | 11,846 | ||||
Balance at Jul. 01, 2022 | 363,478 | $ 118 | 91,464 | 281,081 | (9,185) |
Balance (in shares) at Dec. 31, 2022 | 30,470 | ||||
Balance at Dec. 31, 2022 | 997,079 | $ 305 | 748,877 | 253,424 | (5,527) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (17,480) | (17,480) | |||
Foreign currency translation adjustments | 1,806 | 1,806 | |||
Unrealized gain (loss) on cash flow hedge | (2,199) | (2,199) | |||
Employee stock awards and stock options (in shares) | 535 | ||||
Employee stock awards and stock options | 5 | $ 5 | |||
Taxes withheld on stock compensation awards | (12,806) | (12,806) | |||
Stock-based compensation | 12,066 | 12,066 | |||
Balance (in shares) at Mar. 31, 2023 | 31,005 | ||||
Balance at Mar. 31, 2023 | 978,471 | $ 310 | 748,137 | 235,944 | (5,920) |
Balance (in shares) at Dec. 31, 2022 | 30,470 | ||||
Balance at Dec. 31, 2022 | 997,079 | $ 305 | 748,877 | 253,424 | (5,527) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | (15,681) | ||||
Foreign currency translation adjustments | 2,080 | ||||
Unrealized gain (loss) on cash flow hedge | 4,015 | ||||
Balance (in shares) at Jun. 30, 2023 | 31,081 | ||||
Balance at Jun. 30, 2023 | 992,718 | $ 311 | 754,096 | 237,743 | 568 |
Balance (in shares) at Mar. 31, 2023 | 31,005 | ||||
Balance at Mar. 31, 2023 | 978,471 | $ 310 | 748,137 | 235,944 | (5,920) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income (loss) | 1,799 | 1,799 | |||
Foreign currency translation adjustments | 274 | 274 | |||
Unrealized gain (loss) on cash flow hedge | 6,214 | 6,214 | |||
Employee stock awards and stock options (in shares) | 76 | ||||
Employee stock awards and stock options | 1 | $ 1 | |||
Taxes withheld on stock compensation awards | (1,812) | (1,812) | |||
Stock-based compensation | 7,771 | 7,771 | |||
Balance (in shares) at Jun. 30, 2023 | 31,081 | ||||
Balance at Jun. 30, 2023 | $ 992,718 | $ 311 | $ 754,096 | $ 237,743 | $ 568 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business V2X, Inc., an Indiana Corporation, formerly known as Vectrus, Inc. (Vectrus), is a leading provider of critical mission solutions and support to defense clients globally. The Company operates as one segment and delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. On March 7, 2022, Vectrus entered into an Agreement and Plan of Merger (the Merger Agreement) with Vertex Aerospace Services Holding Corp., a Delaware corporation (Vertex), Andor Merger Sub Inc., a Delaware corporation (Merger Sub Inc.) and Andor Merger Sub LLC, a Delaware limited liability company (Merger Sub LLC). On July 5, 2022 (the Closing Date), Vectrus completed its merger (Merger) thereby forming V2X, Inc. For a description of the Merger, see Note 3, Merger . Unless the context otherwise requires or unless stated otherwise, references in these notes to "V2X", "we," "us," "our," “combined company”, "the Company" and "our Company" refer to V2X, Inc. and all of its consolidated subsidiaries (including, subsequent to the Merger, Vertex and its consolidated subsidiaries), taken together as a whole. Equity Investments In 2011, the Company entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, the Company entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, the Company entered into a joint venture agreement with Kuwait Resources House for Human Resources Management and Services Company . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by V2X and others around the world. The Company accounts for investments in HDSS, J&J, and ServCore under the equity method and has the ability to exercise significant influence but does not hold a controlling interest. The Company's proportionate 25%, 50%, and 40% shares, respectively, of income or losses from HDSS, J&J, and ServCore are recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Income (Loss). The Company's investment in these joint ventures is recorded in other non-current assets in the Condensed Consolidated Balance Sheets. When cash distributions are received by the Company from its equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Condensed Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Condensed Consolidated Statements of Cash Flows. As of June 30, 2023 and December 31, 2022 the Company's joint venture investment balance was $6.3 million and $7.0 million, respectively. The Company's proportionate share of income from the HDSS, J&J, and ServCore joint ventures was $2.0 million and $3.8 million for the three and six months ended June 30, 2023 , respectively, and not material for the first and second quarters of 2022. Basis of Presentation The Company's quarterly financial periods end on the Friday closest to the last day of the calendar quarter (June 30, 2023 for the second quarter of 2023 and July 1, 2022 for the second quarter of 2022), except for the last quarter of the fiscal year, which ends on December 31. For ease of presentation, the quarterly financial statements included herein are described as three months ended. The unaudited interim Condensed Consolidated Financial Statements of V2X have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
Recent Accounting Standards Upd
Recent Accounting Standards Update | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Standards Update | RECENT AC COUNTING STANDARDS UPDATE There have been no accounting standards issued or adopted during the first or second quarters of 2023 that are expected to have a material impact on the Company's financial statements. |
Merger
Merger | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Merger | MERGER In accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations , the Company accounted for the below transaction using the acquisition method. The Company conducted valuations of certain acquired assets and liabilities for inclusion in its Condensed Consolidated Balance Sheets as of the date of the Merger. Assets that normally would not be recorded in ordinary operations, such as intangibles related to contractual relationships, were recorded at their estimated fair values. The excess purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. On the Closing Date, Vectrus completed its previously announced Merger with Vertex, forming V2X by acquiring all of the outstanding shares of Vertex. On the Closing Date, Vertex and its consolidated subsidiaries became wholly-owned subsidiaries of the Company. The combined V2X entity from the Merger is a larger and more diversified Company with the ability to compete for more integrated business opportunities and generate revenue across geographies, clients, and contract types in supporting the mission of its customers. Purchase Price Allocation The Merger is accounted for as a business combination. As such, the assets acquired and liabilities assumed are accounted for at fair value, with the excess of the purchase price over the fair value of the net identifiable assets acquired and liabilities assumed recorded as goodwill. The Closing Date fair value of the consideration transferred totaled $634.0 million, which was comprised of the following: (In thousands, except share and per share amounts) Purchase Price Shares of V2X common stock issued 18,591,866 Market price per share of V2X as of Closing Date $ 33.92 Fair value of common shares issued $ 630,636 Fair value of cash consideration 3,315 Total consideration transferred $ 633,951 The following table summarizes the final fair values of the assets acquired and liabilities assumed in the Merger as of the Closing Date. As of June 30, 2023, the Company considered these amounts to be final. (In thousands) Fair Value Cash and cash equivalents $ 196,993 Receivables 331,300 Prepaid expenses 50,838 Property, plant, and equipment 55,678 Intangible assets 480,000 Other non-current assets 17,104 Right-of-use assets 21,062 Accounts payable (121,515) Debt (1,352,303) Compensation and other employee benefits (45,968) Other current and non-current liabilities (334,469) Total identifiable net assets (701,280) Goodwill 1,335,231 Total purchase consideration $ 633,951 As a result of the Merger, the Company recognized $1,335.2 million of goodwill. The goodwill recognized is attributable to operational and general and administrative cost synergies, expanded market opportunities and other benefits that do not qualify for separate recognition. None of the goodwill is expected to be deductible for tax purposes. Intangible assets related to backlog and customer contracts arising from the Merger were also recognized. The fair value of backlog was $316.0 million, and the fair value of the customer contracts was $164.0 million with amortization periods of 4.5 years and 14.0 years, respectively. The receivables of $331.3 million represent fair value and are considered fully collectible. As part of the Merger, V2X acquired certain contracts, including a Transition Services Agreement (TSA) with Crestview Aerospace LLC (Crestview), which was previously divested to American Industrial Partners Capital Fund VI, L.P. (AIP). For the three and six months ended June 30, 2023, the Company recorded $0.7 million and $1.4 million of income related to the TSA with Crestview, respectively, which was recorded as a reduction in cost of revenue. AIP indirectly held approximately 59.5% of V 2X common stock through Vertex Aerospace Holdco LLC as of June 30, 2023. The following unaudited information shows the combined actual results of operations for the three and six months ended June 30, 2023 and pro forma results for the three and six months ended July 1, 2022 as if the Merger had occurred on January 1, 2021. The unaudited pro forma information reflects the effects of applying the Company's accounting policies and certain pro forma adjustments to the combined historical financial information of Vertex. The pro forma adjustments include: a) incremental amortization expense associated with identified intangible assets; b) incremental interest expense resulting from fair value adjustments applied to the Vertex debt that was assumed; and c) a reduction of revenues and operating expenses associated with fair value adjustments made to acquire assets and assumed liabilities, such as contract assets and contract liabilities. This unaudited pro forma information is presented for informational purposes only and may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (Unaudited, in thousands) Actual Pro forma Actual Pro forma Revenue $ 977,852 $ 887,377 $ 1,921,312 $ 1,730,118 Net income (loss) $ 1,799 $ 4,004 $ (15,681) $ 15,897 |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE Performance Obligations Performance obligations represent firm orders by the customer and excludes potential orders under indefinite delivery and indefinite quantity (IDIQ) contracts, unexercised contract options and contracts awarded to us that are being protested by competitors with the U.S. Government Accountability Office (GAO) or in the U.S. Court of Federal Claims (COFC). The level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles. Year-over-year comparisons could, at times, be impacted by these factors, among others. Contracts are often modified to account for changes in contract specifications and requirements. If the modification either creates new enforceable rights and obligations or changes the existing enforceable rights and obligations, the modification will be treated as a separate contract. Contract modifications, except for those to exercise option years, have historically not been distinct from the existing contract and have been accounted for as if they were part of that existing contract. The Company's performance obligations are satisfied over time as services are provided throughout the contract term. Revenue is recognized over time using the input method (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Over-time recognition is reinforced by the fact that the Company's customers simultaneously receive and consume the benefits of its services as they are performed. For most U.S. government contracts, this continuous transfer of control to the customer is supported by contract terms that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. This continuous transfer of control requires that progress towards completion of performance obligations is tracked in order to measure and recognize revenue. The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year (or less) option periods. The number of option periods varies by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when the Company is the prime contractor or of the prime contractor when the Company is a subcontractor. The Company expects to recognize a substantial portion of its performance obligations as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience or for cause. Substantially all of the Company's contracts have terms that would permit recovery of all or a portion of the Company's incurred costs and fees for work performed in the event of a termination for convenience. Performance obligations as of June 30, 2023 and December 31, 2022 are presented in the following table: June 30, December 31, (In millions) 2023 2022 Performance Obligations $ 3,696 $ 2,997 As of June 30, 2023, the Company expects to recognize approximately 43% and 57% of these performance obligations as revenue in 2023 and 2024, respectively. Contract Estimates The impact of adjustments in contract estimates on the Company's operating income can be reflected in either revenue or cost of revenue. Cumulative catch-up adjustments for the three and six months ended June 30, 2023 increased operating income by $9.1 million and $22.2 million, respectively. For the three and six months ended July 1, 2022, the adjustments increased operating income by $6.8 million and $7.4 million, respectively. For the three and six months ended June 30, 2023, the cumulative catch-up adjustments to operating income increased revenue by $9.6 million and $23.5 million, respectively. For the three and six months ended July 1, 2022, the cumulative catch-up adjustments to operating income increased revenue by $6.8 million and $7.4 million, respectively. Revenue by Category Generally, the sales price elements for the Company's contracts are cost-plus, cost-reimbursable or firm-fixed-price, all of which are commonly identified with a single contract. On a cost-plus contract, the Company is paid allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement, up to funding levels predetermined by the Company's customers. On cost-plus contracts, the Company does not bear the risks of unexpected cost overruns, provided that incurred costs do not exceed the predetermined funded amounts. Most of the Company's cost-plus contracts also contain a firm-fixed-price element. Cost-plus contracts with award and incentive fee provisions are primary variable contract fee arrangements. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees are based on the relationship between total allowable and target cost. Most of the Company's contracts include a cost-reimbursable element to capture costs of consumable materials required for the program. Typically, these costs do not bear fees. On a time-and-materials contract, the Company is reimbursed for labor at fixed hourly rates and generally reimbursed separately for allowable materials, costs and expenses at cost. For this contract type, the Company bears the risk that labor costs and allocable indirect expenses are greater than the fixed hourly rate defined within the contract. On a firm-fixed-price contract, the Company agrees to perform the contractual statement of work for a predetermined contract price. A firm-fixed-price contract typically offers higher profit margin potential than a cost-plus contract, which is commensurate with the greater levels of risk assumed on a firm-fixed-price contract. Although a firm-fixed-price contract generally permits retention of profits if the total actual contract costs are less than the estimated contract costs, the Company bears the risk that increased or unexpected costs may reduce profit or cause the Company to sustain losses on the contract. Although the overall scope of work required under the contract may not change, profit may be adjusted as experience is gained and as efficiencies are realized or costs are incurred. The following tables present various revenue disaggregations. Revenue by contract type is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Cost-plus and cost-reimbursable $ 507,282 $ 355,559 42.7 % $ 1,019,217 $ 666,653 52.9 % Firm-fixed-price 438,684 128,348 241.8 % 834,891 256,352 225.7 % Time-and-materials 31,886 14,159 125.2 % 67,204 31,532 113.1 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by geographic region in which the contract is performed is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change United States $ 578,514 $ 158,719 264.5 % $ 1,127,284 $ 325,454 246.4 % Middle East 279,083 250,222 11.5 % 560,204 485,313 15.4 % Asia 65,533 46,386 41.3 % 129,850 62,592 107.5 % Europe 54,722 42,739 28.0 % 103,974 81,178 28.1 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by contract relationship is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Prime contractor $ 916,060 $ 468,453 95.5 % $ 1,795,239 $ 895,546 100.5 % Subcontractor 61,792 29,613 108.7 % 126,073 58,991 113.7 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by customer is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Army $ 393,499 $ 326,756 20.4 % $ 784,002 $ 606,869 29.2 % Navy 293,198 64,885 351.9 % 585,888 140,102 318.2 % Air Force 154,001 68,457 125.0 % 283,982 129,930 118.6 % Other 137,154 37,968 261.2 % 267,440 77,636 244.5 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Contract Balances The timing of revenue recognition, billings, and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, the Company may receive advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to ensure that both parties are in conformance with the primary contract terms. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. As of June 30, 2023 and December 31, 2022, the Company had contract assets of $570.8 million and $487.8 million, respectively. Contract assets primarily consist of unbilled receivables which represent rights to consideration for work completed but not billed as of the reporting date. The balance of unbilled receivables consists of costs and fees that are: (i) billable immediately; (ii) billable on contract completion; or (iii) billable upon other specified events, such as the resolution of a request for equitable adjustment. Refer to Note Receivables for additional information regarding the composition of the Company's receivable balances. As of June 30, 2023 and December 31, 2022, contract liabilities, included in other accrued liabilities in the Condensed Consolidated Balance Sheets, were $62.6 million and $76.4 million, respectively. |
Receivables
Receivables | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Receivables | RECEIVABLES Receivables were comprised of the following: (In thousands) June 30, 2023 December 31, 2022 Billed receivables $ 164,677 $ 227,718 Unbilled receivables (contract assets) 570,785 487,758 Other 11,100 13,106 Total receivables $ 746,562 $ 728,582 As of June 30, 2023 and December 31, 2022, substantially all billed receivables are due from the U.S. government, either directly as prime contractor to the U.S. government or as subcontractor to another prime contractor to the U.S. government. Because the Company's billed receivables are with the U.S. government, the Company does not believe it has a material credit risk exposure. Unbilled receivables are contract assets that represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date. The Company expects to bill customers for the majority of the June 30, 2023 contract assets during 2023. Changes in the balance of unbilled receivables are primarily due to the timing differences between performance and customers' payments. SALE OF RECEIVABLES On June 27, 2023, the Company entered into a Master Accounts Receivable Purchase Agreement (MARPA Facility) with MUFG Bank, Ltd. (MUFG) for the sale of certain designated eligible receivables with the U.S. government. Under the MARPA Facility, the Company can sell eligible receivables up to a maximum amount of $150.0 million. The receivables sold under the MARPA Facility are without recourse for any U.S. government credit risk. The Company accounts for these receivable transfers under the MARPA Facility as sales under ASC Topic 860, Transfers and Servicing , and removes the sold receivables from its balance sheet. The fair value of the sold receivables approximated their book value due to their short-term nature. The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of June 30, 2023. Proceeds from the sale of receivables are reflected as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. MARPA Facility activity consisted of sales of $113.0 million of receivables representing an increase to cash flows provided by operating activities for the six months ended June 30, 2023. Cash collected, but not remitted to MUFG, of $69.7 million is included in other accrued liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2023. As of June 30, 2023, remaining receivables sold were $43.3 million. During the three months ended June 30, 2023, the Company incurred purchase discount fees, net of servicing fees, of $0.2 million, which are presented in other expense, net on the Condensed Consolidated Statements of Income (Loss). |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Senior Secured Credit Facilities In September 2014, Vectrus and its wholly-owned subsidiary, Vectrus Systems Corporation (VSC), entered into a senior secured credit agreement. The credit agreement was subsequently amended on December 24, 2020 and January 24, 2022 and is collectively referred to as the Prior Credit Agreement. The credit agreement consisted of a term loan (Amended Term Loan) and a $270.0 million revolving credit facility (Amended Revolver). On the Closing Date, the outstanding debt from the Amended Term Loan and the Amended Revolver, $50.2 million and $40.0 million, respectively, was repaid and related guarantees and liens were discharged and released. Repayment was made using proceeds from the Vertex First Lien Credit Agreement described below. On the Closing Date, certain of the Company's subsidiaries, including VSC (and together with VSC, the Company Guarantor Subsidiaries), that became direct or indirect subsidiaries of Vertex Aerospace Service Corp., a Delaware corporation and wholly-owned indirect subsidiary of Vertex (Vertex Borrower), have provided guarantees of the indebtedness under each of: i. the First Lien Credit Agreement, dated as of December 6, 2021 (as amended by the Amendment No. 1 to First Lien Credit Agreement, dated as of the Closing Date, and as further amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex First Lien Credit Agreement), by and among Vertex Borrower, as borrower, Vertex Aerospace Intermediate LLC, a Delaware limited liability company, direct parent entity of Vertex Borrower and wholly-owned indirect subsidiary of Vertex (Vertex Holdings), the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent; ii. the Second Lien Credit Agreement, dated as of December 6, 2021 (as amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex Second Lien Credit Agreement), Vertex Borrower, as borrower, Vertex Holdings, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent; and iii. the ABL Credit Agreement, dated as of June 29, 2018 (as amended by the First Amendment to ABL Credit Agreement, dated as of May 17, 2019, as further amended by the Second Amendment to ABL Credit Agreement, dated as of May 17, 2021, and as further amended by the Third Amendment to ABL Credit Agreement, dated as of December 6, 2021, as further amended by the Fourth Amendment to ABL Credit Agreement, dated as of the Closing Date, and as further amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex ABL Credit Agreement), by and among Vertex Borrower, Vertex Holdings, certain other subsidiaries of Vertex Borrower from time to time party thereto as co-borrowers, the lenders from time to time party thereto and Ally Bank, as administrative agent (in such capacity, the ABL Agent). On February 28, 2023, Vertex Borrower entered into a credit agreement (the 2023 Credit Agreement) among the lenders identified therein and Bank of America, N.A., as administrative agent, collateral agent, swingline lender and letter of credit issuer. The 2023 Credit Agreement provides for $750.0 million in senior secured financing, with a first lien on substantially all the Borrower’s assets, consisting of a $500.0 million five-year Revolving Credit Facility (2023 Revolver) and a five-year $250.0 million Term Loan. The proceeds of these Credit Facilities were used to, among other things, (i) repay the First Lien Incremental Term Tranche (as defined below), (ii) repay the entire outstanding amount of the Second Lien Credit Agreement, and (iii) repay the entire outstanding ABL Credit Facility. Vertex First Lien Credit Agreement The Vertex First Lien Credit Agreement provides for senior secured first lien term loans in an aggregate principal amount of $1,185.0 million, consisting of a $925.0 million term loan “B” tranche, (the First Lien Initial Term Tranche) and a $260.0 million incremental term loan “B” tranche (the First Lien Incremental Term Tranche and, together with the First Lien Initial Term Tranche, collectively, the First Lien Term Facility). The entire amount of the proceeds from the (i) First Lien Initial Term Tranche were previously used to finance the acquisition of certain subsidiaries of Raytheon Company, a Delaware corporation, and related transaction costs (the Sky Acquisition in December 2021). As provided in the Merger Agreement, the proceeds of the First Incremental Term Tranche were used by the Vertex Borrower to redeem all of the shares of previously issued preferred stock on the Closing Date (but prior to the Merger). The remaining First Lien Incremental Term Tranche proceeds were used to repay in full all outstanding indebtedness under the Prior Credit Agreement, and other transaction costs. Approximately $54.0 million of cash remained after funding the preferred stock redemption, repayment of the Prior Credit Agreement and other transaction costs. On February 28, 2023, the outstanding balance of the First Incremental Term Tranche of $258.7 million was repaid. The balance of unamortized deferred financing costs related to the First Incremental Term Tranche of $11.9 million was recorded as a loss on extinguishment of debt in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2023. The remaining loans under the First Lien Term Facility (consisting solely of the Initial Term Loan Tranche) amortize in an amount equal to approximately $2.3 million per quarter for the fiscal quarters ending June 30, 2023, through September 30, 2028, with the balance of $864.9 million due on December 6, 2028. The Vertex Borrower’s obligations under the First Lien Term Facility, which were assumed in the Merger, are guaranteed by Vertex Holdings and Vertex Borrower’s wholly-owned domestic subsidiaries (including the Company Guarantor Subsidiaries, collectively, the Guarantors), subject to customary exceptions and limitations. The Vertex Borrower’s obligations under the First Lien Term Facility and the Guarantors’ obligations under the related guarantees are secured by a first-lien on substantially all of the Vertex Borrower’s and the Guarantors’ assets which exists on a pari passu basis with the lien held by the 2023 Credit Agreement lenders. The borrowings under the First Lien Initial Term Tranche bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the greater of (a) the federal funds rate plus 0.50%, (b) the prime lending rate, or (c) an adjusted Eurodollar rate plus 1.00%, plus a margin of 2.50% to 2.75% per annum, or a Eurodollar rate, determined by reference to SOFR, plus a margin of 3.50% to 3.75% per annum, in each case, depending on the consolidated first lien net leverage ratio of the Vertex Borrower and its subsidiaries. As of June 30, 2023, the effective interest rate for the First Lien Initial Term Tranche was 9.73%. The Vertex First Lien Credit Agreement contains customary representations and warranties and affirmative covenants. The Vertex First Lien Credit Agreement also includes negative covenants that limit, among other things, additional indebtedness, additional liens, sales of assets, dividends, investments and advances, prepayments of debt and mergers and acquisitions. The Vertex First Lien Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the First Lien Term Facility to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Vertex Borrower may be required immediately to repay all amounts outstanding under the Vertex First Lien Credit Agreement. As of June 30, 2023, the carrying value of the First Lien Credit Agreement was $913.4 million, excluding deferred discount and unamortized deferred financing costs of $39.0 million. The estimated fair value of the First Lien Credit Agreement as of June 30, 2023 was $914.6 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2). Vertex Second Lien Credit Agreement The Vertex Second Lien Credit Agreement provided for senior secured second lien term loans in an aggregate principal amount of $185.0 million (the Second Lien Term Facility). The entire amount of the proceeds from the Second Lien Term Facility were previously used to finance the Sky Acquisition in December 2021. The Company voluntarily prepaid $25.0 million of the Second Lien Term Facility on December 30, 2022 (the Voluntary Prepayment). On February 28, 2023, the remaining Second Lien Term Facility balance of $160.0 million was repaid (the 2023 Payoff) and related guarantees and liens were discharged and released. The balance of unamortized deferred financing costs related to the Second Lien Term Facility of $7.1 million was recorded as a loss on extinguishment of debt in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2023. Under the terms of the Vertex Second Lien Credit Agreement, the Vertex Borrower was required to remit a prepayment premium of $1.6 million with the 2023 Payoff which was recorded as a loss on extinguishment of debt in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2023. Vertex ABL Credit Agreement The Vertex ABL Credit Agreement provided for a senior secured revolving loan facility (the ABL Facility) of up to an aggregate amount of $200.0 million (the loans thereunder, the ABL Loans). The Vertex ABL Credit Agreement also provided for (i) a $30.0 million sublimit of availability for letters of credit, and (ii) a $10.0 million sublimit for short-term borrowings on a swingline basis. On February 28, 2023, the outstanding ABL Facility borrowings of $67.5 million were repaid and related guarantees and liens were discharged and released. The balance of unamortized deferred financing costs related to the Vertex ABL Credit Agreement of $1.5 million was recorded as a loss on extinguishment of debt in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2023. 2023 Credit Agreement The 2023 Credit Agreement provides for $750.0 million in senior secured financing, with a first lien on substantially all the Borrower’s assets and consists of (a) the 2023 Revolver (which includes (i) a $50.0 million sublimit of availability for letters of credit, and (ii) a $50.0 million sublimit for short-term borrowings on a swingline basis) and (b) a five-year $250.0 million Term Loan. The Term Loan portion of the 2023 Credit Agreement amortizes at approximately $1.6 million per quarter for the fiscal quarters ending June 30, 2023 through March 31, 2025, increasing to $3.1 million per quarter for the fiscal quarters ending June 30, 2025 through December 31, 2027, with the balance of $203.1 million due on February 28, 2028. The Vertex Borrower’s obligations under the 2023 Credit Agreement are guaranteed by the Guarantors, subject to customary exceptions and limitations. The Vertex Borrower’s obligations under the 2023 Credit Agreement and the Guarantors’ obligations under the related guarantees are secured by a first priority-lien on substantially all of the Vertex Borrower’s and the Guarantors’ assets (subject to customary exceptions and limitations) which exists on a pari passu basis with the lien held by the First Lien Credit Agreement lenders. The borrowings under the 2023 Credit Agreement bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the greater of (a) the federal funds rate plus 0.50%, (b) the prime lending rate, or (c) an adjusted Eurodollar rate plus 1.00%, plus a margin of 1.00% to 2.25% per annum, or a Eurodollar rate, determined by reference to SOFR, plus a margin of 2.00% to 3.25% per annum, in each case, depending on the consolidated total net leverage ratio of the Vertex Borrower and its subsidiaries. As of June 30, 2023, the effective interest rates for the 2023 Revolver and Term Loan portion of the 2023 Credit Agreement were 8.47% and 8.65%, respectively. Unutilized commitments under the 2023 Revolver are subject to a per annum fee ranging from 0.25% to 0.50% depending on the consolidated total net leverage ratio of the Vertex Borrower and its subsidiaries. The Vertex Borrower is also required to pay a letter of credit fronting fee to each letter of credit issuer equal to 0.125% per annum of the amount available to be drawn under each such letter of credit (or such other amount as may be mutually agreed by the Vertex Borrowers and the applicable letter of credit issuer), as well as a fee to all lenders equal to the applicable margin to SOFR of Revolving Credit loans times the average daily amount available to be drawn under all outstanding letters of credit. The 2023 Credit Agreement contains customary representations and warranties, which must be accurate for the Vertex Borrower to borrow under the 2023 Credit Agreement, and affirmative covenants. The 2023 Credit Agreement also includes negative covenants that limit, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions. The 2023 Credit Agreement contains financial covenants requiring (a) the consolidated total net leverage ratio not to exceed 5.00 to 1.00 for the reporting periods ending on or after June 30, 2023, and on or prior to June 30, 2024, with further step downs thereafter, and (b) the consolidated interest coverage ratio be at least 2.00 to 1.00 commencing with the reporting period ending on June 30, 2023. The 2023 Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the 2023 Credit Agreement to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the 2023 Credit Agreement. As of June 30, 2023, there were $85.0 million of outstanding borrowings and $16.1 million of outstanding letters of credit under the 2023 Revolver. Availability under the 2023 Revolver was $398.9 million as of June 30, 2023. Unamortized deferred financing costs related to the 2023 Revolver of $4.7 million are included in other non-current assets in the Condensed Consolidated Balance Sheets. As of June 30, 2023, the fair value of the 2023 Revolver approximated the carrying value because the debt bears a floating interest rate. As of June 30, 2023, the carrying value of the Term Loan portion of the 2023 Credit Agreement was $248.4 million, excluding unamortized deferred financing costs of $2.3 million. The estimated fair value of the Term Loan portion of the 2023 Credit Agreement as of June 30, 2023 was $248.1 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2). The aggregate scheduled maturities of the First Lien Credit Agreement and 2023 Credit Agreement as of June 30, 2023 are as follows: (In thousands) Payments due 2023 (remainder of the year) $ 7,750 2024 15,500 2025 20,188 2026 21,750 2027 21,750 After 2027 1,159,937 Total $ 1,246,875 |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS During the periods covered by this report, the Company has made no changes to its policies or strategies for the use of derivative instruments and there has been no change in related accounting methods. Derivative instruments, which are designated as cash flow hedges, gains and losses are initially reported as a component of accumulated other comprehensive income (loss) and subsequently recognized in earnings with the corresponding hedged item. Interest Rate Derivative Instruments The Company is exposed to the risk that the earnings and cash flows could be adversely impacted due to fluctuations in interest rates. To mitigate this risk, the Company entered into $350.0 million of interest rate swap contracts during the first six months of 2023. These contracts had a notional value of $348.4 million as of June 30, 2023. These contracts are designated and qualify as effective cash flow hedges. The following table summarizes the amount at fair value and location of the derivative instruments for interest rate hedges in the Condensed Consolidated Balance Sheets as of June 30, 2023: (In thousands) Fair Value (level 2) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other current assets $ 5,381 Interest rate swap designated as cash flow hedge Other non-current assets $ 269 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 339 Interest rate swap designated as cash flow hedge Accumulated other comprehensive income $ 5,311 There were no interest rate swaps designated as cash flow hedges for the period ended December 31, 2022. The Company regularly assesses the creditworthiness of the counterparty. As of June 30, 2023, the counterparty to the interest rate swaps had performed in accordance with its contractual obligations. Both the counterparty credit risk and the Company's credit risk were considered in the fair value determination. Net interest rate derivative gains of $1.2 million were recognized in interest expense, net, in the Condensed Consolidated Statements of Income (Loss) during the three and six months ended June 30, 2023. Net interest rate derivative losses of $0.4 million were recognized in the Condensed Consolidated Statements of Income (Loss) during the first six months of 2022. The Company expects $5.4 million of existing interest rate swap gains reported in accumulated other comprehensive income as of June 30, 2023 to be recognized in earnings within the next 12 months. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES General From time to time, the Company is involved in various investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, including government investigations and claims, which are incidental to the operation of its business. Some of these proceedings seek remedies relating to employment matters, matters in connection with the Company's contracts and matters arising under laws relating to the protection of the environment. Additionally, U.S. government customers periodically advise the Company of claims and penalties concerning certain potential disallowed costs. When such findings are presented, V2X and the U.S. government representatives engage in discussions to enable V2X to evaluate the merits of these claims as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect probable losses related to the matters raised by U.S. government representatives. Such assessments, along with any assessments regarding provisions for legal proceedings, are reviewed on a quarterly basis for sufficiency based on the latest information available to us. The Company estimated and accrued $28.6 million and $27.6 million as of June 30, 2023 and December 31, 2022, respectively, in other accrued liabilities in the Condensed Consolidated Balance Sheets for legal proceedings and for claims with respect to its U.S. government contracts as discussed below, including years where the U.S. government has not completed its incurred cost audits. Although the ultimate outcome of any legal matter or claim cannot be predicted with certainty, based on present information, including the assessment of the merits of a particular claim, the Company does not expect that any asserted or unasserted legal or contractual claims or proceedings, individually or in the aggregate, including the lawsuit discussed below, will have a material adverse effect on its cash flows, results of operations or financial condition. U.S. Government Contracts, Investigations and Claims The Company has U.S. government contracts that are funded incrementally on a year-to-year basis. Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could have a material adverse effect on the Company's financial condition or results of operations. Furthermore, contracts with the U.S. government may be terminated or suspended by the U.S. government at any time, with or without cause. Such contract suspensions or terminations could result in non-reimbursable expenses or charges or otherwise adversely affecting the Company's financial condition and results of operations. Departments and agencies of the U.S. government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments or compensatory or treble damages. U.S. government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on the Company because of its reliance on U.S. government contracts. U.S. government agencies, including the Defense Contract Audit Agency, the Defense Contract Management Agency and others, routinely audit and review the Company's performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Accordingly, costs billed or billable to U.S. government customers are subject to potential adjustment upon audit by such agencies. The U.S. government agencies also review the adequacy of compliance with government standards for business systems, including accounting, earned value management, estimating, materials management and accounting, purchasing, and property management systems. In the performance of its contracts, the Company routinely requests contract modifications that require additional funding from U.S. government customers. Most often, these requests are due to customer-directed changes in the scope of work. While the Company is entitled to recovery of these costs under its contracts, the administrative process with the U.S. government customer may be protracted. Based on the circumstances, the Company periodically files requests for equitable adjustments (REAs) that are sometimes converted into claims. In some cases, these requests are disputed by the U.S. government customer. The Company believes its outstanding modifications, REAs and other claims will be resolved without material adverse impact to its results of operations, financial condition or cash flows. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION The Company maintains an equity incentive plan, the 2014 Omnibus Incentive Plan, as amended and restated effective as of October 27, 2022 (the 2014 Omnibus Plan), to govern awards granted to V2X employees and directors, including nonqualified stock options (NQOs), restricted stock units (RSUs), total shareholder return (TSR) awards, performance share units (PSUs) and other awards. The Company accounts for NQOs, stock-settled RSUs and PSUs as equity-based compensation awards. TSR awards, described below, are accounted for as liability-based compensation awards. Liability-based awards are revalued at the end of each reporting period to reflect changes in fair value. Stock-based compensation expense and the associated tax benefits impacting the Company's Condensed Consolidated Statements of Income (Loss) were as follows: Three Months Ended Six Months Ended (In thousands) June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 Compensation costs for equity-based awards $ 7,771 $ 1,575 $ 19,837 $ 4,676 Compensation costs for liability-based awards 304 592 609 50 Total compensation costs, pre-tax $ 8,075 $ 2,167 $ 20,446 $ 4,725 Future tax benefit $ 1,756 $ 466 $ 4,445 $ 1,017 Compensation costs for equity-based awards for the six months ended June 30, 2023 , included $10.8 million related to RSUs issued in connection with the Merger. As of June 30, 2023, total unrecognized compensation costs related to equity-based awards and liability-based awards were $28.0 million and $1.4 million, respectively, which are expected to be recognized ratably over a weighted average period of 1.75 years and 1.37 years, respectively. Total unrecognized compensation costs included $15.6 million of expense related to RSUs granted in connection with the Merger. The following table provides a summary of the activities for NQOs, RSUs and PSUs for the six months ended June 30, 2023: NQOs RSUs PSUs (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 2023 42 $ 22.86 1,628 $ 35.47 — $ — Granted — $ — 301 $ 39.70 265 $ 35.66 Exercised — $ — — $ — — $ — Vested — $ — (957) $ 41.95 — $ — Forfeited or expired — $ — (6) $ 40.59 — $ — Outstanding at June 30, 2023 42 $ 22.86 966 $ 36.82 265 $ 35.66 Restricted Stock Units On July 5, 2022, pursuant to the terms of the Merger Agreement, the Company issued an additional 1,346,089 RSUs, with a grant date fair value of $33.92 per share, to certain employees of Vertex. The RSUs have been or will be settled in shares of the Company's common stock, with 517,918 RSUs vesting on the six-month anniversary following the grant date and a quarter of the remaining 828,171 RSUs vesting or having vested on each of four six-month anniversary dates following the grant date. The fair value of each RSU grant to employees and directors was determined based on the closing price of V2X common stock on the date of grant. Stock compensation expense will be recognized ratably over the vesting period of the awards. RSUs awarded to employees, excluding the RSU awards awarded under the Merger Agreement, discussed above, vest in one-third increments on each of the three anniversary dates following the grant date subject to continued employment. Director RSUs are granted on the date of an annual meeting of shareholders and vest on the business day immediately prior to the next annual meeting or the one-year anniversary of the grant date, if earlier. The fair value of each RSU grant was determined based on the closing price of V2X common stock on the date of grant. Stock compensation expense will be recognized ratably over the requisite service period of the RSU awards. As of June 30, 2023, there was $21.8 million of unrecognized RSU related compensation expense. Total Shareholder Return Awards TSR awards are performance-based cash awards that are subject to a three-year performance period. Any payments earned are made in cash following completion of the performance period according to the achievement of specified performance goals. As a result of the Merger and pursuant to the terms of the TSR awards, performance achievement fair value was measured at July 4, 2022 at $4.6 million and the aggregate future award payouts were fixed at that value. There were no cash-based TSR awards granted in the first or second quarters of 2023. As of June 30, 2023, there was $1.4 million of unrecognized TSR related compensation expense. Performance Share Units During the first and second quarters of 2023, the Company granted two types of performance-based awards with market conditions. The first award will vest and the stock will be issued at the end of a three-year period based on the attainment of certain total shareholder return performance measures relative to Aerospace and Defense companies in the S&P 1500 Index and the employee's continued service through the vesting date. The number of shares ultimately awarded, if any, can range up to 200% of the specified target awards. If performance is below the threshold level of performance, no shares will be issued. The second award will vest and stock will be issued at the end of a three-year period based on achievement of certain stock price targets, shareholder return performance measures relative to certain Aerospace and Defense companies in the S&P 1500 Index and the employee's continued service through the vest date. The numbers of shares ultimately awarded, if any, can range up to the specified target awards. As of June 30, 2023, there was $6.2 million of unrecognized PSU related compensation expense. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Effective Tax Rate Income tax expense during interim periods is based on an estimated annual effective income tax rate, plus discrete items that may occur in any given interim periods. The computation of the estimated effective income tax rate at each interim period requires certain estimates and judgment including, but not limited to, forecasted operating income for the year, projections of the income earned and taxed in various jurisdictions, newly enacted tax rate and legislative changes, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. For the three months ended June 30, 2023 and July 1, 2022, the Company recorded an income tax provision of $0.2 million and $2.6 million, respectively, representing effective income tax rates of 10.5% and 19.8%, respectively. For the six months ended June 30, 2023 and July 1, 2022, the Company recorded an income tax benefit of $5.5 million and a provision of $3.3 million, respectively, representing effective income tax rates of 26.1% and 19.8%, respectively. The effective income tax rates vary from the federal statutory rate of 21.0% mainly due to state and foreign taxes, disallowed compensation deduction under Internal Revenue Code Section 162(m), available deductions not reflected in book income, and income tax credits. Uncertain Tax Positions As of June 30, 2023 and December 31, 2022, unrecognized tax benefits from uncertain tax positions were $8.4 million and $8.6 million, respectively. The decrease in uncertain tax positions was principally the result of the release of a position for lapse of statute of limitation. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Share | EARNINGS (LOSS) PER SHARE Basic earnings per share (EPS) is computed by dividing net income, or loss, by the weighted average number of common shares outstanding for the period. Diluted EPS reflects potential dilution that could occur if securities to issue common stock were exercised or converted into common stock. Diluted EPS includes the dilutive effect of stock-based compensation outstanding after application of the treasury stock method. Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, (In thousands, except per share data) 2023 2022 2023 2022 Net income (loss) $ 1,799 $ 10,472 $ (15,681) $ 13,327 Weighted average common shares outstanding 31,033 11,826 30,981 11,793 Add: Dilutive impact of stock options 18 18 — 22 Add: Dilutive impact of restricted stock units 554 110 — 102 Diluted weighted average common shares outstanding 31,605 11,954 30,981 11,917 Earnings (loss) per share Basic $ 0.06 $ 0.89 $ (0.51) $ 1.13 Diluted $ 0.06 $ 0.88 $ (0.51) $ 1.12 The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, (In thousands) 2023 2022 2023 2022 Anti-dilutive restricted stock units 2 25 2 15 |
Post-Employment Benefit Plans
Post-Employment Benefit Plans | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Post-Employment Benefit Plans | POST-EMPLOYMENT BENEFIT PLANS Deferred Employee Compensation The Company sponsors two non-qualified deferred compensation plans. Under these plans, participants are eligible to defer a portion of their compensation on a tax deferred basis. Plan investments and obligations were recorded in other non-current assets and other non-current liabilities, respectively, in the Condensed Consolidated Balance Sheets, representing the fair value related to the deferred compensation plans. Adjustments to the fair value of the plan investments and obligations are recorded in selling, general, and administrative expenses. The plans assets and liabilities were $2.8 million and $1.5 million as of June 30, 2023 and December 31, 2022, respectively. Multi-Employer Pension Plans |
Sale of Receivables
Sale of Receivables | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Sale of Receivables | RECEIVABLES Receivables were comprised of the following: (In thousands) June 30, 2023 December 31, 2022 Billed receivables $ 164,677 $ 227,718 Unbilled receivables (contract assets) 570,785 487,758 Other 11,100 13,106 Total receivables $ 746,562 $ 728,582 As of June 30, 2023 and December 31, 2022, substantially all billed receivables are due from the U.S. government, either directly as prime contractor to the U.S. government or as subcontractor to another prime contractor to the U.S. government. Because the Company's billed receivables are with the U.S. government, the Company does not believe it has a material credit risk exposure. Unbilled receivables are contract assets that represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date. The Company expects to bill customers for the majority of the June 30, 2023 contract assets during 2023. Changes in the balance of unbilled receivables are primarily due to the timing differences between performance and customers' payments. SALE OF RECEIVABLES On June 27, 2023, the Company entered into a Master Accounts Receivable Purchase Agreement (MARPA Facility) with MUFG Bank, Ltd. (MUFG) for the sale of certain designated eligible receivables with the U.S. government. Under the MARPA Facility, the Company can sell eligible receivables up to a maximum amount of $150.0 million. The receivables sold under the MARPA Facility are without recourse for any U.S. government credit risk. The Company accounts for these receivable transfers under the MARPA Facility as sales under ASC Topic 860, Transfers and Servicing , and removes the sold receivables from its balance sheet. The fair value of the sold receivables approximated their book value due to their short-term nature. The Company does not retain an ongoing financial interest in the transferred receivables other than cash collection and administrative services. The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of June 30, 2023. Proceeds from the sale of receivables are reflected as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows. MARPA Facility activity consisted of sales of $113.0 million of receivables representing an increase to cash flows provided by operating activities for the six months ended June 30, 2023. Cash collected, but not remitted to MUFG, of $69.7 million is included in other accrued liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2023. As of June 30, 2023, remaining receivables sold were $43.3 million. During the three months ended June 30, 2023, the Company incurred purchase discount fees, net of servicing fees, of $0.2 million, which are presented in other expense, net on the Condensed Consolidated Statements of Income (Loss). |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Our Business and Basis of Presentation | Business V2X, Inc., an Indiana Corporation, formerly known as Vectrus, Inc. (Vectrus), is a leading provider of critical mission solutions and support to defense clients globally. The Company operates as one segment and delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. On March 7, 2022, Vectrus entered into an Agreement and Plan of Merger (the Merger Agreement) with Vertex Aerospace Services Holding Corp., a Delaware corporation (Vertex), Andor Merger Sub Inc., a Delaware corporation (Merger Sub Inc.) and Andor Merger Sub LLC, a Delaware limited liability company (Merger Sub LLC). On July 5, 2022 (the Closing Date), Vectrus completed its merger (Merger) thereby forming V2X, Inc. For a description of the Merger, see Note 3, Merger . Unless the context otherwise requires or unless stated otherwise, references in these notes to "V2X", "we," "us," "our," “combined company”, "the Company" and "our Company" refer to V2X, Inc. and all of its consolidated subsidiaries (including, subsequent to the Merger, Vertex and its consolidated subsidiaries), taken together as a whole. Basis of Presentation The Company's quarterly financial periods end on the Friday closest to the last day of the calendar quarter (June 30, 2023 for the second quarter of 2023 and July 1, 2022 for the second quarter of 2022), except for the last quarter of the fiscal year, which ends on December 31. For ease of presentation, the quarterly financial statements included herein are described as three months ended. The unaudited interim Condensed Consolidated Financial Statements of V2X have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. |
Equity Investments | Equity Investments In 2011, the Company entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, the Company entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, the Company entered into a joint venture agreement with Kuwait Resources House for Human Resources Management and Services Company . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by V2X and others around the world. The Company accounts for investments in HDSS, J&J, and ServCore under the equity method and has the ability to exercise significant influence but does not hold a controlling interest. The Company's proportionate 25%, 50%, and 40% shares, respectively, of income or losses from HDSS, J&J, and ServCore are recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Income (Loss). The Company's investment in these joint ventures is recorded in other non-current assets in the Condensed Consolidated Balance Sheets. When cash distributions are received by the Company from its equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Condensed Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Condensed Consolidated Statements of Cash Flows. As of June 30, 2023 and December 31, 2022 the Company's joint venture investment balance was $6.3 million and $7.0 million, respectively. The Company's proportionate share of income from the HDSS, J&J, and ServCore joint ventures was $2.0 million and $3.8 million for the three and six months ended June 30, 2023 , respectively, and not material for the first and second quarters of 2022. |
Merger (Tables)
Merger (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value of the Consideration Transferred | The Closing Date fair value of the consideration transferred totaled $634.0 million, which was comprised of the following: (In thousands, except share and per share amounts) Purchase Price Shares of V2X common stock issued 18,591,866 Market price per share of V2X as of Closing Date $ 33.92 Fair value of common shares issued $ 630,636 Fair value of cash consideration 3,315 Total consideration transferred $ 633,951 |
Purchase Price Allocation | The following table summarizes the final fair values of the assets acquired and liabilities assumed in the Merger as of the Closing Date. As of June 30, 2023, the Company considered these amounts to be final. (In thousands) Fair Value Cash and cash equivalents $ 196,993 Receivables 331,300 Prepaid expenses 50,838 Property, plant, and equipment 55,678 Intangible assets 480,000 Other non-current assets 17,104 Right-of-use assets 21,062 Accounts payable (121,515) Debt (1,352,303) Compensation and other employee benefits (45,968) Other current and non-current liabilities (334,469) Total identifiable net assets (701,280) Goodwill 1,335,231 Total purchase consideration $ 633,951 |
Schedule of Pro Forma Information | This unaudited pro forma information is presented for informational purposes only and may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. Three Months Ended Six Months Ended June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 (Unaudited, in thousands) Actual Pro forma Actual Pro forma Revenue $ 977,852 $ 887,377 $ 1,921,312 $ 1,730,118 Net income (loss) $ 1,799 $ 4,004 $ (15,681) $ 15,897 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Remaining Performance Obligation | Performance obligations as of June 30, 2023 and December 31, 2022 are presented in the following table: June 30, December 31, (In millions) 2023 2022 Performance Obligations $ 3,696 $ 2,997 |
Disaggregation of Revenue | The following tables present various revenue disaggregations. Revenue by contract type is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Cost-plus and cost-reimbursable $ 507,282 $ 355,559 42.7 % $ 1,019,217 $ 666,653 52.9 % Firm-fixed-price 438,684 128,348 241.8 % 834,891 256,352 225.7 % Time-and-materials 31,886 14,159 125.2 % 67,204 31,532 113.1 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by geographic region in which the contract is performed is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change United States $ 578,514 $ 158,719 264.5 % $ 1,127,284 $ 325,454 246.4 % Middle East 279,083 250,222 11.5 % 560,204 485,313 15.4 % Asia 65,533 46,386 41.3 % 129,850 62,592 107.5 % Europe 54,722 42,739 28.0 % 103,974 81,178 28.1 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by contract relationship is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Prime contractor $ 916,060 $ 468,453 95.5 % $ 1,795,239 $ 895,546 100.5 % Subcontractor 61,792 29,613 108.7 % 126,073 58,991 113.7 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 Revenue by customer is as follows: Three Months Ended Six Months Ended June 30, July 1, % June 30, July 1, % (In thousands) 2023 2022 Change 2023 2022 Change Army $ 393,499 $ 326,756 20.4 % $ 784,002 $ 606,869 29.2 % Navy 293,198 64,885 351.9 % 585,888 140,102 318.2 % Air Force 154,001 68,457 125.0 % 283,982 129,930 118.6 % Other 137,154 37,968 261.2 % 267,440 77,636 244.5 % Total revenue $ 977,852 $ 498,066 $ 1,921,312 $ 954,537 |
Receivables (Tables)
Receivables (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Receivables [Abstract] | |
Schedule of Receivables | Receivables were comprised of the following: (In thousands) June 30, 2023 December 31, 2022 Billed receivables $ 164,677 $ 227,718 Unbilled receivables (contract assets) 570,785 487,758 Other 11,100 13,106 Total receivables $ 746,562 $ 728,582 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | The aggregate scheduled maturities of the First Lien Credit Agreement and 2023 Credit Agreement as of June 30, 2023 are as follows: (In thousands) Payments due 2023 (remainder of the year) $ 7,750 2024 15,500 2025 20,188 2026 21,750 2027 21,750 After 2027 1,159,937 Total $ 1,246,875 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following table summarizes the amount at fair value and location of the derivative instruments for interest rate hedges in the Condensed Consolidated Balance Sheets as of June 30, 2023: (In thousands) Fair Value (level 2) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other current assets $ 5,381 Interest rate swap designated as cash flow hedge Other non-current assets $ 269 Interest rate swap designated as cash flow hedge Other non-current liabilities $ 339 Interest rate swap designated as cash flow hedge Accumulated other comprehensive income $ 5,311 There were no interest rate swaps designated as cash flow hedges for the period ended December 31, 2022. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Impact of Stock-Based Compensation in Consolidation and Combined Statements of Income | Stock-based compensation expense and the associated tax benefits impacting the Company's Condensed Consolidated Statements of Income (Loss) were as follows: Three Months Ended Six Months Ended (In thousands) June 30, 2023 July 1, 2022 June 30, 2023 July 1, 2022 Compensation costs for equity-based awards $ 7,771 $ 1,575 $ 19,837 $ 4,676 Compensation costs for liability-based awards 304 592 609 50 Total compensation costs, pre-tax $ 8,075 $ 2,167 $ 20,446 $ 4,725 Future tax benefit $ 1,756 $ 466 $ 4,445 $ 1,017 |
Schedule of Non-Qualified Stock Options, Activity | The following table provides a summary of the activities for NQOs, RSUs and PSUs for the six months ended June 30, 2023: NQOs RSUs PSUs (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Grant Date Fair Value Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 2023 42 $ 22.86 1,628 $ 35.47 — $ — Granted — $ — 301 $ 39.70 265 $ 35.66 Exercised — $ — — $ — — $ — Vested — $ — (957) $ 41.95 — $ — Forfeited or expired — $ — (6) $ 40.59 — $ — Outstanding at June 30, 2023 42 $ 22.86 966 $ 36.82 265 $ 35.66 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares Outstanding | Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, (In thousands, except per share data) 2023 2022 2023 2022 Net income (loss) $ 1,799 $ 10,472 $ (15,681) $ 13,327 Weighted average common shares outstanding 31,033 11,826 30,981 11,793 Add: Dilutive impact of stock options 18 18 — 22 Add: Dilutive impact of restricted stock units 554 110 — 102 Diluted weighted average common shares outstanding 31,605 11,954 30,981 11,917 Earnings (loss) per share Basic $ 0.06 $ 0.89 $ (0.51) $ 1.13 Diluted $ 0.06 $ 0.88 $ (0.51) $ 1.12 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Three Months Ended Six Months Ended June 30, July 1, June 30, July 1, (In thousands) 2023 2022 2023 2022 Anti-dilutive restricted stock units 2 25 2 15 |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) operatingSegment | Dec. 31, 2022 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Number of operating segments | operatingSegment | 1 | ||
Joint venture investment balance | $ 6.3 | $ 6.3 | $ 7 |
Distribution from joint ventures | $ 2 | $ 3.8 | |
High Desert Support Services, LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 25% | 25% | |
J&J Maintenance | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 50% | 50% | |
Servcore Resources and Services Solutions, LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 40% | 40% |
Merger - Additional Information
Merger - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 05, 2022 | Jun. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 1,656,965,000 | $ 1,656,965,000 | $ 1,653,822,000 | |
V2X | American Industrial Partners Capital Fund VI, L.P. | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Ownership percentage | 59.50% | 59.50% | ||
Crestview Aerospace | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Revenues | $ 700,000 | $ 1,400,000 | ||
Vertex Aerospace Services Holding Corp. | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Total purchase consideration | $ 633,951,000 | |||
Goodwill | 1,335,231,000 | |||
Goodwill expected to be deductible for tax purposes | 0 | |||
Intangible assets | 480,000,000 | |||
Receivables | 331,300,000 | |||
Customer contracts | Vertex Aerospace Services Holding Corp. | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 164,000,000 | |||
Weighted average remaining useful life | 14 years | |||
Backlog | Vertex Aerospace Services Holding Corp. | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets | $ 316,000,000 | |||
Weighted average remaining useful life | 4 years 6 months |
Merger - Schedule of Fair Value
Merger - Schedule of Fair Value of the Consideration Transferred (Details) - Vertex Aerospace Services Holding Corp. $ / shares in Units, $ in Thousands | Jul. 05, 2022 USD ($) $ / shares shares |
Business Acquisition [Line Items] | |
Stock price (in dollars per share) | $ / shares | $ 33.92 |
Fair value of cash consideration | $ 3,315 |
Total consideration transferred | $ 633,951 |
Common Stock Issued | |
Business Acquisition [Line Items] | |
Shares of V2X common stock issued (in shares) | shares | 18,591,866 |
Fair value of common shares issued | $ 630,636 |
Merger - Schedule of Purchase P
Merger - Schedule of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jul. 05, 2022 | Jun. 30, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,656,965 | $ 1,653,822 | |
Vertex Aerospace Services Holding Corp. | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 196,993 | ||
Receivables | 331,300 | ||
Prepaid expenses | 50,838 | ||
Property, plant, and equipment | 55,678 | ||
Intangible assets | 480,000 | ||
Other non-current assets | 17,104 | ||
Right-of-use assets | 21,062 | ||
Accounts payable | (121,515) | ||
Debt | (1,352,303) | ||
Compensation and other employee benefits | (45,968) | ||
Other current and non-current liabilities | (334,469) | ||
Total identifiable net assets | (701,280) | ||
Goodwill | 1,335,231 | ||
Total purchase consideration | $ 633,951 |
Merger - Schedule of Pro Forma
Merger - Schedule of Pro Forma Information (Details) - Vertex Aerospace Services Holding Corp. - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Business Acquisition [Line Items] | ||||
Pro forma, revenue | $ 977,852 | $ 887,377 | $ 1,921,312 | $ 1,730,118 |
Pro forma, income | $ 1,799 | $ 4,004 | $ (15,681) | $ 15,897 |
Revenue - Revenue Performance O
Revenue - Revenue Performance Obligations (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Contract term | 1 year | |
Renewal option, term | 1 year | |
Performance Obligations | $ 3,696 | $ 2,997 |
Revenue - Revenue Performance_2
Revenue - Revenue Performance Obligations (Percentage and Remaining Period of Time) (Details) | Jun. 30, 2023 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 43% |
Revenue, expected performance obligation, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 57% |
Revenue, expected performance obligation, period | 1 year |
Revenue - Revenue Contract Esti
Revenue - Revenue Contract Estimates (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Revenue from Contract with Customer [Abstract] | ||||
Favorable adjustments to operating income | $ 9.1 | $ 6.8 | $ 22.2 | $ 7.4 |
Favorable adjustments to revenue | $ 9.6 | $ 6.8 | $ 23.5 | $ 7.4 |
Revenue - Revenue by Contract T
Revenue - Revenue by Contract Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 977,852 | $ 498,066 | $ 1,921,312 | $ 954,537 |
Cost-plus and cost-reimbursable | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 507,282 | 355,559 | $ 1,019,217 | 666,653 |
Revenue, percent change | 42.70% | 52.90% | ||
Firm-fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 438,684 | 128,348 | $ 834,891 | 256,352 |
Revenue, percent change | 241.80% | 225.70% | ||
Time-and-materials | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 31,886 | $ 14,159 | $ 67,204 | $ 31,532 |
Revenue, percent change | 125.20% | 113.10% |
Revenue - Revenue by Geographic
Revenue - Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 977,852 | $ 498,066 | $ 1,921,312 | $ 954,537 |
Middle East | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 279,083 | 250,222 | $ 560,204 | 485,313 |
Revenue, percent change | 11.50% | 15.40% | ||
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 578,514 | 158,719 | $ 1,127,284 | 325,454 |
Revenue, percent change | 264.50% | 246.40% | ||
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 54,722 | 42,739 | $ 103,974 | 81,178 |
Revenue, percent change | 28% | 28.10% | ||
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 65,533 | $ 46,386 | $ 129,850 | $ 62,592 |
Revenue, percent change | 41.30% | 107.50% |
Revenue - Revenue by Contract R
Revenue - Revenue by Contract Relationship (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 977,852 | $ 498,066 | $ 1,921,312 | $ 954,537 |
Prime contractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 916,060 | 468,453 | $ 1,795,239 | 895,546 |
Revenue, percent change | 95.50% | 100.50% | ||
Subcontractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 61,792 | $ 29,613 | $ 126,073 | $ 58,991 |
Revenue, percent change | 108.70% | 113.70% |
Revenue - Revenue by Customer (
Revenue - Revenue by Customer (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 977,852 | $ 498,066 | $ 1,921,312 | $ 954,537 |
Army | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 393,499 | 326,756 | $ 784,002 | 606,869 |
Revenue, percent change | 20.40% | 29.20% | ||
Air Force | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 154,001 | 68,457 | $ 283,982 | 129,930 |
Revenue, percent change | 125% | 118.60% | ||
Navy | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 293,198 | 64,885 | $ 585,888 | 140,102 |
Revenue, percent change | 351.90% | 318.20% | ||
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 137,154 | $ 37,968 | $ 267,440 | $ 77,636 |
Revenue, percent change | 261.20% | 244.50% |
Revenue - Revenue Contract Bala
Revenue - Revenue Contract Balances (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 570.8 | $ 487.8 |
Contract liabilities | $ 62.6 | $ 76.4 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Billed receivables | $ 164,677 | $ 227,718 |
Unbilled receivables (contract assets) | 570,785 | 487,758 |
Other | 11,100 | 13,106 |
Total receivables | $ 746,562 | $ 728,582 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | ||||
Feb. 28, 2023 | Dec. 30, 2022 | Jul. 05, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Debt Instrument [Line Items] | |||||
Prepayment premium on early redemption of debt | $ 1,600 | $ 0 | |||
Letters of credit | 2023 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Outstanding borrowings | $ 16,100 | ||||
Secured Debt | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 925,000 | ||||
Debt voluntary repayment | $ 258,700 | ||||
Interest expense | 11,900 | ||||
Interest rate | 9.73% | ||||
Secured Debt | First Lien Incremental Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Face amount | 260,000 | ||||
Secured Debt | Vertex Second Lien Term Facility | |||||
Debt Instrument [Line Items] | |||||
Debt voluntary repayment | 160,000 | $ 25,000 | |||
Interest expense | 7,100 | ||||
Total | 185,000 | ||||
Prepayment premium on early redemption of debt | $ 1,600 | ||||
Secured Debt | Vertex First Lien Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Face amount | 1,185,000 | ||||
Proceeds from sale of debt | 54,000 | ||||
Quarterly amortization | 2,300 | ||||
Total | $ 913,400 | ||||
Deferred debt issuance costs | (39,000) | ||||
Fair value | 914,600 | ||||
Secured Debt | Vertex First Lien Term Facility | |||||
Debt Instrument [Line Items] | |||||
Face amount | $ 864,900 | ||||
Secured Debt | Fed Funds Effective Rate Overnight Index Swap Rate | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 0.50% | ||||
Secured Debt | Eurodollar | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 1% | 1% | |||
Secured Debt | Eurodollar | Minimum | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 2.50% | ||||
Secured Debt | Eurodollar | Maximum | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 2.75% | ||||
Secured Debt | Secured Overnight Financing Rate | Minimum | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 3.50% | ||||
Secured Debt | Secured Overnight Financing Rate | Maximum | First Lien Initial Term Tranche | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 3.75% | ||||
Line of Credit | 2023 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Outstanding borrowings | 85,000 | ||||
Deferred debt issuance costs | (4,700) | ||||
Remaining borrowing capacity | 398,900 | ||||
Covenant terms, ratio of total indebtedness to combined EBITDA | 5 | ||||
Covenant terms, ratio of EBITDA to interest expense, net, | 2 | ||||
Senior secured credit facilities | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 750,000 | $ 270,000 | |||
Senior secured credit facilities | Minimum | |||||
Debt Instrument [Line Items] | |||||
Quarterly amortization | 1,600 | ||||
Senior secured credit facilities | Maximum | |||||
Debt Instrument [Line Items] | |||||
Quarterly amortization | $ 3,100 | ||||
Senior secured credit facilities | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 8.47% | ||||
Senior secured credit facilities | Secured Debt | Fed Funds Effective Rate Overnight Index Swap Rate | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 0.50% | ||||
Senior secured credit facilities | Secured Debt | Eurodollar | Minimum | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 1% | ||||
Senior secured credit facilities | Secured Debt | Eurodollar | Maximum | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 2.25% | ||||
Senior secured credit facilities | Secured Debt | Secured Overnight Financing Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 2% | ||||
Senior secured credit facilities | Secured Debt | Secured Overnight Financing Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate | 3.25% | ||||
Amended revolver | |||||
Debt Instrument [Line Items] | |||||
Outstanding borrowings | $ 40,000 | ||||
Term facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 250,000 | ||||
Outstanding borrowings | 50,200 | ||||
Debt instrument, term | 5 years | ||||
Face amount | $ 203,100 | ||||
Term facility | 2023 Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Face amount | 248,400 | ||||
Deferred debt issuance costs | 2,300 | ||||
Fair value | $ 248,100 | ||||
Term facility | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 8.65% | ||||
Term facility | Short-term debt | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | 50,000 | ||||
Term Facility And Amended Revolver | |||||
Debt Instrument [Line Items] | |||||
Total | $ 1,246,875 | ||||
Revolver | |||||
Debt Instrument [Line Items] | |||||
Outstanding borrowings | $ 500,000 | ||||
Debt instrument, term | 5 years | ||||
Revolver | Letters of credit | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 50,000 | ||||
Revolver | Letters of credit | Vertex ABL Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 30,000 | ||||
Revolver | Short-term debt | Vertex ABL Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | 10,000 | ||||
Debt voluntary repayment | 67,500 | ||||
Interest expense | $ 1,500 | ||||
Revolver | Line of Credit | Vertex ABL Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Credit facility, maximum borrowing capacity | $ 200,000 | ||||
Fronting fee | 0.125% | ||||
Revolver | Line of Credit | Minimum | 2023 Credit Agreement | Equal To Or Less Than 50% | |||||
Debt Instrument [Line Items] | |||||
Commitment fee percentage | 0.25% | ||||
Revolver | Line of Credit | Maximum | 2023 Credit Agreement | Equal To Or Less Than 50% | |||||
Debt Instrument [Line Items] | |||||
Commitment fee percentage | 0.50% |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) - Term Facility And Amended Revolver $ in Thousands | Jun. 30, 2023 USD ($) |
Payments due | |
2023 (remainder of the year) | $ 7,750 |
2024 | 15,500 |
2025 | 20,188 |
2026 | 21,750 |
2027 | 21,750 |
After 2027 | 1,159,937 |
Total | $ 1,246,875 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - Cash Flow Hedging - Interest Rate Swap - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Jul. 01, 2022 | |
Derivative [Line Items] | |||
Derivative contracts entered into during period | $ 350 | ||
Derivative, notional amount | $ 348.4 | 348.4 | |
Designated as hedging instrument | |||
Derivative [Line Items] | |||
Gain (loss) on derivative instruments, net, pretax | $ 1.2 | 1.2 | $ (0.4) |
Gains reclassified to earnings within the next 12 months | $ 5.4 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Hedges in the Condensed Consolidated Balance Sheets (Details) - Cash Flow Hedging - Designated as hedging instrument - Interest Rate Swap $ in Thousands | Jun. 30, 2023 USD ($) |
Other current assets | |
Derivative [Line Items] | |
Interest rate swap designated as cash flow hedge, liability | $ 5,381 |
Accumulated other comprehensive income | |
Derivative [Line Items] | |
Interest rate swap designated as cash flow hedge, liability | 339 |
Other Noncurrent Assets | |
Derivative [Line Items] | |
Interest rate swap designated as cash flow hedge, liability | 269 |
Accumulated Other Comprehensive (Loss) Income | |
Derivative [Line Items] | |
Interest rate swap designated as cash flow hedge, liability | $ 5,311 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Contract compliance | ||
Loss Contingencies [Line Items] | ||
Contracts loss contingency accrual | $ 28.6 | $ 27.6 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Impact of Stock-Based Compensation in Condensed Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | $ 8,075 | $ 2,167 | $ 20,446 | $ 4,725 |
Future tax benefit | 1,756 | 466 | 4,445 | 1,017 |
Compensation costs for equity-based awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | 7,771 | 1,575 | 19,837 | 4,676 |
Compensation costs for liability-based awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | $ 304 | $ 592 | $ 609 | $ 50 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jul. 05, 2022 date $ / shares shares | Jul. 04, 2022 USD ($) | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Jul. 01, 2022 USD ($) | Apr. 01, 2022 USD ($) | Jun. 30, 2023 USD ($) award $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 7,771 | $ 12,066 | $ 1,575 | $ 3,100 | |||
Number of performance-based awards | award | 2 | ||||||
Percentage of shareholder return award target | 200% | ||||||
Share-Based Payment Arrangement, Nonemployee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Total Shareholder Return Awards (TSR) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | 1,400 | $ 1,400 | |||||
Vesting period | 3 years | ||||||
Total Shareholder Return Awards (TSR) | Key Employees | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance achievement fair value | $ 4,600 | ||||||
RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | 21,800 | $ 21,800 | |||||
Granted (in shares) | shares | 1,346,089 | 301,000 | |||||
Granted (in dollars per share) | $ / shares | $ 33.92 | $ 39.70 | |||||
RSUs | Vertex Aerospace Services Holding Corp. | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | 15,600 | $ 15,600 | |||||
RSUs | Share-based Compensation Award, Tranche One | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | shares | 517,918 | ||||||
Vesting period | 6 months | ||||||
RSUs | Share-based Compensation Award, Tranche One | Share-Based Payment Arrangement, Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
RSUs | Share-based Compensation Award, Tranche Two | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted (in shares) | shares | 828,171 | ||||||
Vesting period | 6 months | ||||||
Number of vesting dates | date | 4 | ||||||
RSUs | Share-based Compensation Award, Tranche Two | Share-Based Payment Arrangement, Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
RSUs | Share-based Compensation Award, Tranche Three | Share-Based Payment Arrangement, Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting increments | 33.33% | ||||||
PSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | 6,200 | $ 6,200 | |||||
Granted (in shares) | shares | 265,000 | ||||||
Granted (in dollars per share) | $ / shares | $ 35.66 | ||||||
Vesting period | 3 years | ||||||
Equity Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | 28,000 | $ 28,000 | |||||
Unrecognized compensation costs, period for recognition | 1 year 9 months | ||||||
Equity Based Awards | RSUs | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 10,800 | ||||||
Liability Based Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation costs | $ 1,400 | $ 1,400 | |||||
Unrecognized compensation costs, period for recognition | 1 year 4 months 13 days |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Non-Qualified Stock Options, Activity (Details) - $ / shares | 6 Months Ended | |
Jul. 05, 2022 | Jun. 30, 2023 | |
NQOs | ||
NQOs, Shares | ||
Outstanding at beginning of period (in shares) | 42,000 | |
Outstanding at end of period (in shares) | 42,000 | |
NQOs, Weighted Average Exercise Price Per Share | ||
Outstanding at beginning of period (in dollars per share) | $ 22.86 | |
Outstanding at end of period (in dollars per share) | $ 22.86 | |
RSUs | ||
RSUs, Shares | ||
Outstanding at beginning of period (in shares) | 1,628,000 | |
Granted (in shares) | 1,346,089 | 301,000 |
Vested (in shares) | (957,000) | |
Forfeited or expired (in shares) | (6,000) | |
Outstanding at end of period (in shares) | 966,000 | |
RSUs, Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 35.47 | |
Granted (in dollars per share) | $ 33.92 | 39.70 |
Vested (in dollars per share) | 41.95 | |
Forfeited or expired (in dollars per share) | 40.59 | |
Outstanding at beginning of period (in dollars per share) | $ 36.82 | |
PSUs | ||
RSUs, Shares | ||
Outstanding at beginning of period (in shares) | 0 | |
Granted (in shares) | 265,000 | |
Outstanding at end of period (in shares) | 265,000 | |
RSUs, Weighted Average Grant Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 35.66 | |
Outstanding at beginning of period (in dollars per share) | $ 35.66 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||||
Income tax provision | $ 210 | $ 2,586 | $ (5,527) | $ 3,287 | |
Effective income tax rate | 10.50% | 19.80% | 26.10% | 19.80% | |
Unrecognized tax benefits | $ 8,400 | $ 8,400 | $ 8,600 |
Earnings (Loss) Per Share - Rec
Earnings (Loss) Per Share - Reconciliation of Basic and Diluted Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jul. 01, 2022 | Apr. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Earnings Per Share [Abstract] | ||||||
Net income (loss) | $ 1,799 | $ (17,480) | $ 10,472 | $ 2,855 | $ (15,681) | $ 13,327 |
Weighted average common shares outstanding (in shares) | 31,033 | 11,826 | 30,981 | 11,793 | ||
Add: Dilutive impact of stock options (in shares) | 18 | 18 | 0 | 22 | ||
Add: Dilutive impact of restricted stock units (in shares) | 554 | 110 | 0 | 102 | ||
Diluted weighted average common shares outstanding (in shares) | 31,605 | 11,954 | 30,981 | 11,917 | ||
Earnings (loss) per share | ||||||
Basic (in dollars per share) | $ 0.06 | $ 0.89 | $ (0.51) | $ 1.13 | ||
Diluted (in dollars per share) | $ 0.06 | $ 0.88 | $ (0.51) | $ 1.12 |
Earnings (Loss) Per Share - Ant
Earnings (Loss) Per Share - Anti-dilutive Options (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jul. 01, 2022 | Jun. 30, 2023 | Jul. 01, 2022 | |
Anti-dilutive restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock options (in shares) | 2 | 25 | 2 | 15 |
Post-Employment Benefit Plans (
Post-Employment Benefit Plans (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Jul. 01, 2022 USD ($) | Jun. 30, 2023 USD ($) plan | Jul. 01, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Retirement Benefits [Abstract] | |||||
Number of compensation plans | plan | 2 | ||||
Plan assets and liabilities | $ 2.8 | $ 2.8 | $ 1.5 | ||
Expense recognized | $ 4.9 | $ 0.3 | $ 8.2 | $ 0.5 |
Sale of Receivables (Details)
Sale of Receivables (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 27, 2023 | |
Receivables [Abstract] | |||
Availability under receivables purchase agreement | $ 43.3 | $ 43.3 | $ 150 |
Sales of receivables | 113 | ||
Cash collected but not remitted under receivables agreement | 69.7 | $ 69.7 | |
Purchase discount fees | $ 0.2 |