VEC - Earnings call transcript Q4 2018

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Operator

Thank you for joining us for the Vectrus Fourth Quarter and Full Year 2018 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Jane and I'll be the operator for today's call. [Operator Instructions] And now, I'll pass the call over to your host, Mike Smith, Vice President of Investor Relations and Corporate Development at Vectrus.

Mike Smith

Thank you. everyone. afternoon, Good Vectrus Conference the and Year Full Welcome Fourth Earnings Call. XXXX to Quarter

today President slide Chief Joining Officer; Chuck investors.vectrus.com. available are us Prow, Relations Investor Klein, for presentation website, Vice on Slides our and turn and Senior President Officer. and to Financial Please today's are X. Matt Executive Chief

to press laws. factors to release the materially obligation that of may statements call provisions Prow. of over this Harbor During management time, be will Safe cause actual forward-looking for Harbor At materials assume today's presentation statements. the Safe the making results these federal and the contemplated to no Chuck Please statements. I forward-looking securities We a presentation, in differ by would some our our forward-looking turn statements pursuant of results review the to our update to from like description

Chuck Prow

you today. We us solid public you, everyone. joining reaching several on Mike. company X. slide for to important milestones. call Thank the had in turn XXXX afternoon, Good year Thank a Please

year we five to with improvements had From that double strong financial we on of $X.X with both track EBITDA in achieve and digit a perspective, our in fourth margins. earnings the revenue share. of per quarter remain year end a X% diluted billion results Importantly, year-over-year revenue showed goals adjusted

XX year-over-year, phasing business all margin in points EBITDA basis new expanded Additionally, wins. several

XXXX With the for and several to per to diluted reached year, public with increased share. the For and increased we XX%. earnings year diluted XX% the operating revenue milestones adjusted share record company, full earnings adjusted per full compared revenue, margin

ability XX% on with won to major margin XX our especially points. basis Vectrus I of was increased attribute represents will generate margin strong, focus expand income. positive given strategy. phasing generation team continue EBITDA $X our which flexibility pleased is financial focus throughout to and net in approximately cash us We which XXXX. year-over-year conversion grew million continues profile predictable afford In in new ended that We from compared to financial ability margin strong net net $XXX of the emphasis XXXX, our to in team's XXX% on million cash flow. business EBITDA with our position debt, our am the cash operations execute XXXX to expanding and our cash to by A long-term

core. XXXX with We XX% in spent our which establishing a foundation the and revenue have our diversification solid continues time as Force This our for Air increased demonstrative in momentum considerable show Vectrus portfolio strategy almost is strengthening to year-over-year.

Additionally, the the community. in SENTEL of in to XXXX access clients intelligence acquisition provided new

solid see core traction our this significant business. new for expansion are with We opportunity of client seeing and

improvement our management We've initiatives regional and enhances lowers under by which initiated global We a progress program US our to XXXX Enterprise in successfully presence, Europe we are also Vectrus client great in geographic costs. revenue center and service our established a in single year-over-year. diversification which Vectrus XXXX, wide implementing system. leverages and combine support the performance an is Enterprise In made Enterprise grew successful and achieving XX% enterprise wide

We competitive have create differentiation. and which other delivery, client we efficiency also believe will initiatives improve several underway

CENTCOM on XX April, submitted or remained to the V, area are seat LOGCAP Regarding responsibility award bids and notifications win vehicle AOR. positioned of contract are expected a well XXXX. the Vectrus and

the expected Kuwait, region service through Jordan contract CENTCOM two also Emirates. is solidify is DoD wins It Arab incumbency in important the the to Vectrus that United to enduring new during CENTCOM in note and position and LOGCAP portion our AOR largest XXXX, construct. workload we continue additional a to under major reminder, provider comp V of the with a on As the the

to the provide received and our assessment responsibility winning Vectrus area from DoD. mission related that we to believe on client to again the assurance to performance ratings K-BOSSS V incorporated an continue across that significant report receive LOGCAP we contractor the On recently announce all be We LOGCAP will continuity areas. latest of which highest I'm army CENTCOM our once the order as competition. contract proud into note, V enduring the possible task evaluated

through Additionally, XXXX to to intent March US by January, XXXX. additional with the subsequent an of September until an quarter in option notified fourth we option of K-BOSSS its exercise six-month government extend the were period of to

activities work of These at Our billion contract a of XXXX. of in expanded billion. existing resulted awards backlog significant scope growth in resulted new in end business $X bookings in is have $X.X total related which the and represented your

is their Our employees approximately for the not clients and confidence opportunities. K-BOSSS our X.Xx their to unique XXXX XXXX the our guidance. to visibility provides include attribute value and total in large turn does global I representing our extension spend Please past X. their for our of business Please thank note significant to and backlog associated team backlog to midpoint like few that another with about minutes I'd of revenue potential like approximately talking business strategy our execution business of XXXX. the X,XXX continued missions. support Slide next any in of our our March

value with a to emerging and addressable that significant the core core Vectrus to executing market. opportunity position the in the the our innovate value. market to platform. of higher have portfolio our the capabilities converged, We believe into grow in Vectrus a expanding more converge We diverse, more to And combined transform strategies and enhancing grow made and more presents continue and strength of strides emerging, adding great foundation, three infrastructure capable

platform. our of technology solutions campaigns. rapidly changed execution clients change we solutions facilities and technological new growth to progress on which Air balanced, Navy converge made today's our new as growth is successfully strategy capabilities business scope refer our short, foundation a and enabled and with value On IT the wins, transforming our community infrastructure advancement clients, we enhancing new into new future. to has highly from The by In due differentiated moving both Expanding higher our market. significant and address we capabilities insertion increase expect discrete, the integrated intelligent the and we of to acquisition. of contracts, to business clients integrating exciting and Force, year, portfolio first development and new and embraces solutions, growth the both lead are the The our of solutions in clients. with Vectrus cost as introduction the well pipeline During call, existing new as our the to this fully our clients to of pressures, and more in

to Clients type are operated mission In to the more federal continue the for or and performance. management and purchased service offerings we more converged market, in new IT our are rarely to Services like as sensor. move purchasing client as facilities has infrastructures Vectrus' clients, As and strategic government the addition for Vectrus we this One and to of integrated and are expansion. we our to drive integrated becoming value. net O&M or and IT or together. business we the continue of in through better type we is enabled, an on adding converged traditional will move at Vectrus historically technology funding with will to quick fashion, performance cost solutions non buying our more digitized from our we take value core to have inserted infrastructures. The market purchase to development The are access types infrastructures position technology future into price market. move and existing final that processes, adding on business capability to the Whether ways. execution fixed spend into that clients' or services facility steps insert improve will advisory operational behavior to both contract value drive we more result be comment and Vectrus transition greater increasing

Additionally, on we platform Please foundation of operational the a IT composition while hand portfolio and providers we seen provider competency. the where DoD to of international of right services, and and markets made support and operations, for technology be have prime services can Slide O&M in X. with community. looking results the access digital chain the to supply infrastructure turn will the and engineering Vectrus intelligence both large slide, government, unique contractors, from have logistics leading related mission That a side and based and is strengthening substantial and digital the primarily to that federal progress facility further building adjacent US

global all in and operating environments. secured Our core in Vectrus competency is

competitors in XX countries, global versus differentiated as geographic operating requirements. performance many given the presence as is our capabilities and Our complex well

to business competitors Irrespective compete sources. dozen total of are facilities in our are primary to markets of XXXX, demonstrated wins. enduring strong in we've generally against been our size, our services able terms XX% so new competition competitors and example, or these see In sizes. aligned revenue comprise in and varying viable which For funding of effectively a and logistics of we

the of billion For budget over Support. an Department Operations $XX major today active that of has require annual military Defense installations reference, XXX for

require Additionally, and modernization programs, $XX sustainment, have budget annual these an in of restoration DoD facilities billion. which excess

we from Regarding network and communication our providing that mission revenues IT of focus the our support. services, centric come XX% on

intelligence important are sensor agile insertion management capabilities improve to development, electromagnetic robotics reliability also and perimeter the communications, and and include network and effects, fusion, capabilities software border cognitive, and new supported the spectrum of artificial we security, Today, missions. Our of cyber and integration resiliency surveillance. our piloting

from of growth margin and by are Our doing. technology toward we services important technology insertion is which of market differentiator contracts for well key future we will price expansion, market. capabilities changing This on a fixed future IT will we and migration at require amount and greater solutions. component as our This are to migrate can a our driven be traditional way the converge insertion core innovation facilities to apply the which our

XX% XXXX in nature. example, new $XXX is in of million fixed For business of priced which approximately we won

chart consists our made progress current XXXX, As portfolio and in of XX% this can expanding pie is from slide contract our work. which fixed the from mix change you five, significant client footprint. price the middle of a see the we great type

clients As can community. is XX% this outside new from army. as XX pie of now the chart see slide intelligence Notably the percentage XXXX five, revenue higher approximately bottom the you where of and such from our in points the from includes were comes on we clients of

and good in XX% X. mentioned Finally, the over both European continue with presence previously, turn Please in year. progress revenues as prior US, make geographic diversifying Slide to our to a increase we

pipeline business to development, Over believe well rates Vectrus and the growth XXXX. helped and our investments across as board business have position in which in the We have client as significant past Vectrus to two these resulted made initiative and on our years, contract new investments execute we achieve higher in win diversification. internal

is opportunities Our current billion we pipeline to $X almost months, billion which bid plan up almost opportunities year. over time of $X had and new XX business includes $X.X we of at last from this is next billion the

Additionally, we billion bid currently have awaiting $X.X. award. submitted of

larger all win increased Just and quick is path. to to reiterate, growth rates, we continue opportunities total, new Vectrus. pipeline to this our and a In excellent with business a see

On of IDIQ contracts was ceiling the will throughout enable our on contract predecessor billion I that XXXX. technology the The highlight position in Xs Test in Xs with we contract including services I a Vectrus I won US procure Test the world. slide XXXX, information September September Test multiple has the new contract vehicles of Xs and of And award replaces period army Army's options top vehicle. $XX.X X, note through we some awarded a of contract Of to of performance XXXX. the the

vehicle. to past contract army and who that forward compete to a center Vectrus orders IT Slide which is X. in to operating strong we vehicle capabilities the turn for this does largest under new not overseas this includes task leveraging Importantly, look the our cyber have Please

previously strategy our results and is is campaigns. yielding Vectrus diversification mentioned, As tied growth to demonstrable

client. market deliberate Air campaign share. lay tailored specific establishing value, US build and attack Force client continue to to and differentiated campaigns XX% a which approach an year-over-year with market Our almost has In important a plan growth advance our or revenue XXXX, growth out in to positioning, we center goal by strategic this in resulted take specific a

We our at on Air support to the serving wins. Force are builds and proud which services Force award Base notably our $XX Keesler Air recent Base and contract Air client of million Sheppard contract Maxwell provide progress Force our

of Air worth open billion Vectrus Now with wins, based and a a almost support is $X.X full successful operation Education Training provider services Command. to contract and largest the

facilities we in and Air We provider nine presence great have and Air a expanding done Force of a trusted Force logistic services our are with the countries. job currently the to

has currently we positive US the results see a and campaign are Navy. campaign can yielded with executing similar you As targeted this

are provide fourth $XX Station our the at with Bay. task a We two-year and support were in seeing Navy million Naval services awarded progress early quarter campaign Guantanamo order to

US and quarter, successful and its Importantly, successful support been and for CXI our offset based XX our recompete to under to RSF performance enhance look Please innovation strategic Vectrus management examples end-to-end win improving approximately forward Naval team, program applying addition of XXXX, have subsequent further supported to to engineering growth in underway plan, Navy's are systems systems continue add our important Station XXXX. In margin win, will were force. beginning order to and points opportunities are we inception we $XXX to over with level. our our existing which the successful Vectrus winning basis client. Vectrus expanding currently implemented have of Vectrus future Slide this and initiatives, to afloat turn margins. business to business we EBITDA we other that next-generation in awards fleet further demonstrate provide of since improvement through and footprint, to Enterprise believe Guantanamo In Navy in Enterprise new and course five-year our This the X. projects is identified will the we XXXX aggregate, how Bay we opportunity contract fourth are we program's engineering task recompete Navy our in million which This

Additionally, technology efficiency platform operational growing X% and a strategy Argus, margin. client data portfolio to produce management based differentiate component our and and in several solutions we include map which This on XXXX, time Mission close EBITDA gaps that mix security helps solutions single a on IT are of Support management. screen. a video client energy technology achieve and In introduced solutions and operational Vectrus as and sensor, solution aggregate focused

commercial Additionally, one on for access technologies onboarding infuse successfully system of key we process our automation introduce management rapid order and to operational work contracts. of

Finally, in and Vectrus our product, or is we a label a excellent generation water capabilities. coding converged as as white-label progress This which solution thermal a service. made infrastructure and advancing white power includes service our purification

will continue development, through to in-house our We through ventures advance or joint M&A. solution and partnerships

over a and are regarding well is turn the an our under V. of the CENTCOM in on incumbency drive client we LOGCAP positioned V, for the largest to chart, award remains large and that DoD time. Vectrus a CENTCOM see on Please we LOGCAP can the X, to service Vectrus portion of provider to with anticipate you workload mix the major AOR solutions portion As margin Slide expected improvement

performance our on possible score work the this Additionally, continues at levels. to highest client

expected major approximately which contract revenue are largest CENTCOM XX% enduring Our V. program current the XXXX of representing workload be K-BOSSS will a our our under of portion LOGCAP

certain to troop enduring we CENTCOM, on As incumbent there XXXX, by significant extend the a near base include DoD benefit is in overseas, exercise in AOR. notified an being additional areas could largest option our operations with the of XX September XXXX until the in we believe level of potentially realigned army option contingency XXXX. US which March January, its government reduction intent its within the an contract were six-month to through and of to

to under million are expected mission XXXX. V largest approximately treated ten-year require will of expected six awards believe will of currently contract awards; billion XX contract. April, combatant and LOGCAP contract continuity K-BOSSS own contract CENTCOM of DoD of service made be and revenue a in evaluation Afghanistan assurance IDIQ SEDAR was to region, the with V as the for is annual to Bids its six would Retaining LOGCAP be award be AOR. we $XXX and each up on IDIQ Vectrus significant $XX reminder of Middle a area global Vectrus will CENTCOM winning DoD. commands, LOGCAP support Associated award V the in As With the The the East, an They while provide AOR that the to provider responsibility. are one

the who over go to our results. to through Now call I'd turn Matt financial like will

Matt Klein

in to Thank compared fourth strong XXXX. fourth million margin X.X%. fourth Please quarter to per fourth was up afternoon, $XXX was results. or at XX% turn the strong Operating X.X% you, the In $X.XX. of were XXXX XXXX and of quarter XXXX diluted margin was the We full revenue quarter Good earnings EBITDA XX. share year Slide $XX Chuck. everyone. million, and reported of quarter

the revenue year X.X% million earnings $X.XX. $X,XXX EBITDA per For full was X.X%. were and was compared XXXX, as XXXX. to XX% for million, an margin share or margin $XXX of XXXX Operating diluted was increase

can right-hand you the the in our side of demonstrates as our nature upper business. see historical the chart of slide, revenue Importantly, on predictable the

our levels accelerate margins historical versus expected are Additionally, Vectrus scale. expanding Enterprise are with to and EBITDA and initiatives

Our growth $X.X total related $X contract approximately initiatives to million new business propel billion. efforts our $XXX resulted with in backlog year during help Vectrus. billion the These in to representing bookings,

with pipeline translates achieve XXX% increased to As cash confident strong $XX.X flow which compared We in and cash additional ability into realized year-over-year new income. continue million, the up Chuck mentioned, new a rates, are XX% we finishing contract conversion year wins significant net from at to in in XXXX our to business win operations XXXX.

on As is generate to hand the bottom of our strong slide you of our can important characteristic see chart flow on cash the an right XX, ability side business.

of generating and in in our able the debt. net off conversion XXX% XXXX year SENTEL and and acquire over generation we're compared strong million cash We acquisition to end income beyond. pay net with to XXXX, completely Through continue to expect $X cash the

Today, financial the was the continue discussing capital turn strategy. on million XX, I'll quarter of quarter Our from XX. to million, due our fourth $XX.X to programs be our prudently as of on results The Middle for XXXX, programs. to from Please that $XX.X to European three efforts December million $X.X In up support XXXX. increase XX% and growth fourth revenue deploying favorability million or financial of and and we ended US compared revenue programs million, year position months focus Slide is on XXXX. $XXX $XX the in East remains strong

was margin, $X.X basis representing of in to orX.X%, During for quarter as the of XXXX. XX% million fourth contributed XXXX the to XX% or revenue. quarter or XX, million $XX.X million K-BOSSS Net fourth XX by of increase the fourth X.X% income ended XXXX $X.X the year or compared million reoccur was of to in $XX.X or revenue not was prior Net Operating increase of million quarter, million $XXX of total points quarter compared offset increase by to change the to in This three to $XX.X increase deduction XX, partially the an was fourth cost $X.X accelerated in SENTEL. an in months December of of future. is the period. the an December for that ended impacted for revenue, the compared an $XX.X million income addition of an due XXXX. the SG&A related quarter million income tax to expected is favorably quarter XXXX EBITDA

XXXX compared was in for fourth of income benefits quarter income Adjusted new impacted Diluted to $X.X share diluted to of to the were the federal earnings million, the XX% tax income the quarter net rate. quarter $X.XX in share fourth net adjusted of by compared tax of per rate the XXXX excluding one-time XXXX tax quarter tax million, of per $XX.X revaluing in aforementioned the a direct $X.X from liabilities for XXXX. the for the previous deferred of $X.XX earnings XXXX fourth by fourth was a result Additionally, million. code XX% federal change net favorably of tax

quarter and to by fourth of $X.XX and mentioned impacted for were $X.XX period As in same Adjusted share XXXX $X.XX XXXX earlier, share $X.XX quarter per fourth tax benefits compared respectively. earnings XXXX. one-time the of were per of favorably XXXX the of diluted

of XXXX. Revenue ended the results year Now on of reflected from million. to $XXX million, our million. XX% of in XX, I'd the as The XXX was $X, In increase an XX. Middle compared at is mainly to programs programs East attributed discuss like increase of programs million or European to for table slide the the the of $XX.X financial revenue our $XX.X December US bottom our XXXX $XXX.X increases million,

XX, income a Operating EBITDA as of $X.X year respectively. period revenue up increased Net XXXX XXXX EBITDA contributed or in in up the December million for XXXX million due million million $XXX XXXX. of revenue an the During offset year total due to X.X% addition was X.X% was year in Full to period to $XX.X compared for XX% of $X.X and $XX.X XX, to SENTEL impact XX% year This to million, revenue. period compared compared XXXX XXXX. is compared million were % as the XXXX Net income XXXX. operating $XX.X Fully favorable income operating change was the the for percentage increase XX.X% $XX.X to ended revenue adjustments partially income year, or the in was to of of the K-BOSSS million X.X% XXXX when million for for $XX.X or SG&A to for and revenue, same compared X.X% was XXXX. $X.X by XXXX. ended of December to XXXX same cost XXXX, million, same for when the percentage

cash XX% was up period XXXX. XXXX net increase provided for diluted Adjusted one-time $X.XX from The discussed, million period previously in by one-time XXXX. income As of earnings per tax favorably tax were was in tax to XXXX. same of share activities excluding to $X.X the XXXX $XX.X $XX.X associated net XXXX, were Year-end benefits $X.XX the $XX.X up Diluted XXXX for net benefit which were year earnings compared the $X.XX of to and in an per operating by XX income income full per reform. million million diluted was XXX%. cash impacted net same Adjusted share is with million XXXX. compared share earnings when from in $X.XX, the conversion in compared

below covenant from the December XXXX well $X end leverage was X.XXx year down the our our the XXXX. Total X.Xx. is debt period of ratio which million same of of As level at is million, in XX, $XX

cash Our of net resulting was $X $XX in debt. million balance million

on turn we to focus deploying XX. capital Our financial and to growth efforts continue support position slide that on strong, our Please remains path. prudently

total quarter billion; fourth $X million. XXXX, was was of funded backlog backlog the For $XXX

Our Please new in our beyond in current client recompete expansion business providing wins, total March successful value note awards scope visibility. and on partnerships associated contracts performance resulted include through that future awarded K-BOSSS addition existing has XXXX. revenue solid to backlog backlog does not with

on discussed six-month its notified to until March As we an intent the And option the XX, period XX, government by additional to XX, January K-BOSSS September XXXX. XXXX. US XXXX, contract of through were option exercise an extend

once million add would backlog. of backlog on expect and the multi-year backlog $XXX new represents options includes over both to extension funded We contracts. that and orders K-BOSSS unfunded value and Total finalized, potential firm

the contractor awards an assumptions. where sole guidance is the the of contract right are backlog we multi-year under I Slide to the are at prime orders period option and new XXXX contract and exercise to government contracts potential discuss under protest. and Please turn excludes Total discretion when or delivery quantity indefinite that Our indefinite US will contracts XX subcontractor. are

billion to with billion For XXXX, the of midpoint we to $X.X $X.XXX billion. range expect be $X.XX a of revenue in

similar at business revenue and executed. quarter expect new And build revenue through wins as year, becomes In terms recent cadence, the of of be level first the in first contract to to we to fully XXXX are projects specific quarter XXXX. in phased quarterly the of

XX% We come existing have contracts. heading to solid expected at into XXXX revenue of from our the as visibility midpoint guidance is

enterprise supply not through X%. with changes the associated advancement entire Operating margin contemplate range be X.X% the margin range management be $XX.X Vectrus. of award. guidance of the Net and earnings with Our expected year midpoint diluted the continued will midpoint per a on the of range to V a or X.X% earnings from range modifications XXXX estimated The extension the to XXXX for X.X% to come with in an to scope of LOGCAP activities of $XX.X the $XX revenue be the X.X% outstanding. be margin Diluted is the and to weighted Part diluted by improvement million. of assumes in K-BOSSS to in $X.XX, be range any in share expected our $X.XX. $XX.X chain million share $XX million to cash EBITDA is net is EPS does assumes expected will range X.X%. of XXXX million. of shares to is to $X.XX diluted of of million expected income provided per operating of a progress average midpoint is in

noted capital it Regarding XX% to to $X.X capital currently and we rate $X.X The project million, are expected by to of our are capital expenditures, amortization application be coming by driven tax from driven in in forecasted note in contract clients. over mandatory is requirement. higher be expenditures expected our capital are or expenditures for $X.X the was services full be levels. expenditures the expenditures recouped $X price the and modernization contract than XXXX It into that when and few were associated $XX were new capital XXXX is requirements related, which important and be should the will required are costs that with million debt is to $X.X for contracts that XXXX approximately expense of program of remainder XXXX. our XXXX estimated the reinvestment by year million million Capital Interest million. historical all XXXX. in at Depreciation contract. elevated our part the payments delivery considered headquarters performance a and facilities million

remarks. closing back Chuck some for I'd Now to the like pass to call

Chuck Prow

to we included $X.X EBITDA Thank billion growth, you, to and in diluted performance Matt. margin. To the a EPS $XXX cash our we revenue five-year flow XXXX, generation and summarize, Vectrus new solid is had backlog. and In million of awards track achieve goal revenue had on X% double-digit of strong which contract

execution continued foundation. to business enhance we to strong our within maintained activities we and have our Additionally, include momentum strategic

our diversifying portfolio. adding We value have revenue through And solutions. sufficient and continue and pipeline enterprise to Vectrus growing we are to

is for I'll are a finally, positioned and XXXX our backlog LOGCAP supported solid With guidance for We well questions. V it pipeline. back turn that by opportunity and

Operator

comes [Operator Instructions] Hamilton. of with line first question from the Our question. Please David with proceed your Williams Drexel

DavidWilliams

allow last And afternoon. good questions. Hey, of me thanks couple for

on congrats may How overseas impact to the I talk reduce bit your progress moving thinking nice longer you base you certainly could a see the discussion that how First see does the right little contract? are quarter very term. And and that if East guys along contingency overall about there. K-BOSSS to the that's affect in the Middle the .So a wanted congrats to little ongoing offering footprint. in and maybe of your business and kind

ChuckProw

are calling it you to to today, you and How for right. is again. That's talk good thanks in doing

in the are support throughout that we So bases basis. matter that and East Turkey the for Middle general enduring

call tempo So we'll to revenue we revenue just particularly Turkey see at Incirlik, expect is Matt in that up I reflected bit but and that base guidance it declines described. it's are the seeing stable general in in a a base,

MattKlein

Yes.

year. that operations in to We we base give operation would mod about a that averaged something an select. Just an expect the that AOR have on that outside change dramatically contract don't in normal Spain of XXXX to but anchor be you $XX Turkey, million inherent on resolve

DavidWilliams

level option And the still kind changes calls Matt I at at of a see the way can in right if that the last on if came we're organic think through it is to kind the that contract state? growth in have off ranges steady you current nothing of about year. remain mentioned the Is it's think -- you

MattKlein

Sure.

the change In existing the XXXX contract results that perspective. contract, is XX] close of a kind me with on forward from discussion in of or seeing let revenue to we're change one if around Turkey the So contracts first [XXXX walk use we're or is expectations, that headwinds working things scope some you you XXXX the outs. of

year-over-year. in that an pressure The contract contribute our of year-over-year close that's other putting item in And in $XX outs and million closeout some also scope year mid-part next our last changes de that contract we had negative a IT about change. -scopes

XXXX have won we're $XX so we dollar They that contribute our significant we to million positive in and about different about contracts wins will have in XXXX then the related in we or pipeline phased incremental at times On the in side, XX expecting during million contract lastly, now. XXXX.

you or XXXX. kind just in that that revenue number, a to of that's the we XXXX XXXX going won And contracts either on expect were same win estimate an give XXXX. we or about and $XXX reference won about million have some in in XXXX of million into new earn won that We $XXX to earned in we

DavidWilliams

just the gaps wanting there to holes need that Is in you business. fill get to handle a and to there order of that? about -- the specific any a Thanks out you of for bit in take how and opportunities point then any And you just would are expand willing be maybe front, leverage step of what think you're just the comfort you leverage M&A of M&A transactions to about thinking maybe kind this level do terms think color. for point at on a see better

ChuckProw

very would can several at right to have acquire we're set. based for to debt actively to sake, continuing see several occasions as our so. debt M&A we now about to and of scale I not grow in to a EBITDA our net that to times then opportunities do enhance ranges a we continue the said acquire X.X stated from opportunities, Well, client is marketplace. going on as flexibility, going is we're upon We've lot as will our And X many much we again and we're to look go strategy; at that you to as are looking capability

MattKlein

Yes.

have another turn Let us add some us our covenants quarter flexibility. holiday gives that We would acquisition that some at an give color do me Xx. current are too,

type SENTEL down. XXXX an within I strategy we think the that aligns perfectly buy potentially kind asset pay that acquisitions that. said We and then would with it what quickly our encountered in Chuck to fit of

long. So reach if for be very Xx our in that we if current covenant, we there won't

we consider covenant different outside of have attribute. be deals would financing to a the larger Now just

DavidWilliams

me that or right, at any that Is pool, as filling the you you a there? lastly are of issues this have seeing the good, point Okay, open? about that. then may very maybe you appreciate constraint position I think kind you for not issues And any labor guess having

ChuckProw

remembers, tightening, the I with very market is in good is ability overseas continue the that of be our to retention labor and our With open pleased position. to though deal the revenue. a our backfill existing of revenue workforce

that true is it I keep level. feel their to very So but the our at staff maximum labor is our market tightening confident with contract ability

Operator

question. of DeNardi with line proceed with your Our next Stifel. comes question the Please Joe from

UnidentifiedAnalyst

on This guys. Joe. is Hey, John for

growth the pretty just is you and what's already it, easy said you for may all, of curious kind organic the in question quarter? it's have First

ChuckProw

for growth So in less under total but SENTEL. is quarter the X.X% growth X%, organic year. little the XX% overall is The the defined year and by full full was in is in organic a

UnidentifiedAnalyst

Okay.

you the mean bit going looks what you're you in guys $X.X is now thoughts going about. were that growth around for after give billion and that's more your growth talk us kind driving growth? reiterated to here long-term XXXX quarter. into moderate there right can or to XXXX something long-term is the have than you long-term that to your a point Can guidance pipeline this of we but be thinking little I that So growth you and can kind be of that seeing Vectrus'

ChuckProw

about our continue rate We campaigns win we're pipeline. pipeline from executing that not feel strong positive very within see the results only perspective. a I but to

to and our is very look John grow and continue marketplace for feel by the well that's going or that win path We're rates. opportunities to organically. evidenced receiving pipeline I as the going we're M&A that targeted strategy again So

MattKlein

John, LOGCAP been on re-procuring say, that. teams And would and focused have we also -our really I

that's and So so we has some That the or do award --XX last once XX our things. to expect that capacity behind gives more been in an and us focus us April. other months some

UnidentifiedAnalyst

I their minds Okay. seeing you there on the When LOGCAP the steady I CENTCOM. some at out opportunity is that's on the be don't one that as think LOGCAP on footprint framing been is you opportunity you up-tempo time winning questions, of color coming asking we're mind goes if basically think Is Pentagon V? about how thing V? should it or been have if in also investors think a work that going how really keep to I CENTCOM it retain that this look growth investors at the can of

ChuckProw

can predecessor is You base essence contingency future enduring its which say of the the includes And is LOGCAP never LOGCAP V footprint. contracts. different contract the predict V that very like will LOGCAP. that I than

region the pleased base enduring in very largest by even in very the say that nature individual there may those we bases sustainment the footprint have I'm when they of So operations to that enduring, to curtail. being are begin mode

the enduring predict at you the the is but in a to again can't a very AOR. base look future, So way important CENTCOM footprint presence

UnidentifiedAnalyst

I'll How then color think me give update Thank and lastly an this Can performance we should And you if on and of queue. would in Okay. give AMDX be the back past the any on award the timing jump us the could walk-up? you. of fantastic. that

ChuckProw

Yes.

of remains our strong. performance past very all, First

procurement year, underway the the it's by The and and slip tend in mission performance things very can still the are our and pleased relationship and early is first foremost. of so we an bit. a procurement to right this although We with to our award expect end client

remains performance high. So very

and very our to again for with strong prospect Our remain the remains we client regard intimacy recompete. very confident

Operator

from with Our question. with of the line Joe NOBLE question next comes your Gomes proceed Capital. Please

JoeGomes

guys. afternoon, Good

win just go or in able detail couple times today the the be bit more might where if you future? and there? were and could in where you guys you about in a bit past little talked rates wondering and a a Where you color You provide I was little improvements to think you are

MattKlein

to certain that I a around Yes, facilities clients work buying campaigns, okay. has and understand pattern IT I can the performing for them each-- each different attributes logistics focus to start, but are campaigns agency. so important our and client for important think is and really

Force so last has in as I in remarks we So outstanding. our said the our say Air really, would effort been year or prepared

pleased real So we're with that effort.

advancing way years. campaign also better a is --some next Navy we very and improved Our expect in in couple results some the positive

and time our think these couple Beyond great. takes and strategies it years I a of little to I work through of processes that been pricing and results to think last our really the bit on have our mature

JoeGomes

is as how guys to Okay, of thanks that on on doing as think little much growing it just you if more a guys the some might provide get intelligence fast to to? color that. the can you I how you you is can. in And be you now business and are work you able detail of community wondered and big big a

ChuckProw

very that out we first if we individual it's, very detail will military. you break to work business. do So clients complimentary don't X% the our you I in under the of intelligence the it's but It's tell market. in We provide is work that to a community addressable large will, the

in of investing coming performance the infancy that about our kind are the you we the the confident of be I both future. capability feel taker will, one feel if strongly past going a but intelligence that very in to attacking the DoD given are we and it perspective We're years. over our is that marketplace share of We a areas community talent from a market for and with campaign, highly

Operator

Drexel follow-up questions. with a of Williams from with question David have line You your proceed the Please Hamilton.

DavidWilliams

Hey, guys.

is if kind see thinking impacts me a to and in trajectory understand you to me wondered K-BOSSS could or -- LOGCAP guess the Just revenue of help I K-BOSSS but being how LOGCAP rolling that the and little about kind excuse contract awarded of that April.

and year? in LOGCAP next of quarters how just is stepped It slip doesn't on contract the necessarily were that that you that over through the and out right. how couple maybe Assuming contract at the guess pick or up K-BOSSS K-BOSSS would the I

that be some there'll will So begin. before time

ChuckProw

an on option. year to as indicated one Yes in month for six we with of an additional K-BOSSS extension expect to the that receive remarks XXXX prepared we March

the So will occur our a or a of a early approach body to XXXX. of XXXX remainder potential transition or about Again sometime happen will six-month anticipation for self option. that on else XXXX transition is with that March throughout new our the and to to either and

to planning that with occur same transition the relationship year for fully expect So the next toward end period. K-BOSSS the of we

DavidWilliams

do other largely any great. are coming that Okay, you this And up have year? companies

ChuckProw

just we in the Deck the is On largest that prior described question. recompete

Operator

the another with from proceed. have Stifel. Joe of follow-up line Please We DeNardi

JoeDeNardi

for taking again Thanks question my here.

one about What is when the customer what here injecting the the technology technology think you saying and where are aspects about merged base contract? in all follow-up into kind aspect to the timeline and they're the move mission? the into most your push into to Just them from interested it the they are kind this go to integrated that where what's is base larger for operations to of now of and are

ChuckProw

time I to deal of field I range The clients. is it world receptive to the and good a demanding. spend my way talking in the around from will this frame

methods. our drive no So clients labor realize can longer cost and that they purely based down resiliency by improve

and open And are and better, cases the in innovate with in cheaper to we at greater that very cost perform so fact resiliency. ways same find demanding they faster, lower and many mission

that a provide this pleased are capabilities to that lower a for greater and they trend this where As point. in End going been clients they're has while realize again very you to I'm of I is the Q&A And infrastructure cost and all the at see mean may they know, receptivity. now are commercial markets our way

Operator

thank at everyone this there Ladies and for This no questions you teleconference. at I further as this to And gentleman, disconnect your appears your today's time. like line are may time. participation. would concludes

Mike Smith	IR
Chuck Prow	President and CEO
Matt Klein	SVP and CFO
David Williams	Drexel Hamilton
Joe DeNardi	Stifel
Joe Gomes	NOBLE Capital Markets, Inc.

V2X (VVX) 26 Feb 192018 Q4 Earnings call transcript