VEC - Earnings call transcript Q4 2020

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Operator

Thank you for joining us for Vectrus Fourth Quarter and Full-Year 2020 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Demmin, and I'll be the operator for today's call. At this time, all participants have been placed in a listen-only mode.

Following the management’s presentation, I’ll open the call for Q&A session. to Vice call Relations President Development Vectrus. like host, to and I'd at Smith, Mike of that, pass over the your Corporate With Treasury, Investor Thank you.

begin. may You

Michael Smith

fourth call. afternoon, to everyone. Thank full-year you. conference the Good Vectrus earnings XXXX quarter Welcome and

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

by will obligation management that safe the securities safe forward-looking presentation, description cause During for forward-looking the from to laws. actual press making these our today's some to pursuant statements. to The results our contemplated materially forward-looking materials assumes Company update the be harbor statements a statements. of review its and in provisions no federal presentation harbor release factors may differ of statements Please results of the

be point and Additionally, reporting EBITDA to EBITDA earnings adjusted I EBITDA including would margin, margin, non-GAAP net like we adjusted out adjusted and discussing operating and diluted and metrics, margin, and adjusted income income will that I'd and per be found materials Officer. Executive measures share. non-GAAP At call press to turn to can release. President definition this presentation our The and Chief the in of time, over like Prow, these Chuck

Charles Prow

globe. workforce and to clients' readiness ended These support us like Thank afternoon, without Vectrus. accomplishments We Thank and employees throughout delivering high the a combined call on and have the to our the pandemic on been joining the Please XX,XXX of note, you, fourth today. milestones commitment good than more made to achieving the fortitude of for would of in infrastructures quarter. thank across and X. entire our XXXX Mike, their you dedication missions several I'd strong operational turn Slide critical in everyone. possible not for important the partners

our of from of million net reflect includes ability the business quarter flow. million $XX XXXX the to income the resiliency in operating cash Our generate and cash financial and results operations full-year XXX% conversion. $XX strong model, fourth or quarter and which generated We

Our operation an our remains cash business. of generate to ability important substantial from characteristic

quarter, COVID. of and despite Revenue which headwind revenue $XXX and We million associated For Base EPS $X.XX. restrictions. to a of the Nation up and quarter revenue due $X.X EPS and by were $XX billion, Access $XX diluted in X.X% adjusted reported of approximately we X% the COVID-related fourth $X.XX respectively with or year-over-year delivered full-year Host million was million impacted

continued the yielded focus margin quarter our improvement performance for EBITDA of fourth of and enterprise-wide Additionally, execution initiatives on a X%. delivery Vectrus adjusted program record

was at During fourth and grow the improving million driven recent This billion, we up the $XXX now high year-over-year partially which for $X.X all-time Vectrus. our to our our the visibility backlog, years. by win recompete quarter, significantly of continued contract stands next five an XX% OMDAC-SWACA over

new key We initiative, two the also infrastructure a expanding warehouse our journey XG for winning in prime contract further our acquisitions. capabilities converged several Navy by while achieved milestones smart through

financial representing into targeted and to backlog, and will looking line bottom expect EPS to Finally, campaign XX% X. strong we continue We strong pipeline our results to XX% XXXX, drive and strategy, top Please believe generate growth. solid turn Slide revenue results.

converged and the Vectrus value higher is a larger to the our converged traditional move facilities, operating strategy of have way from transformation into approach. instrumented, we to our clients their networks to of a much platform. a This remains opportunity infrastructure capture supply in more to and market grounded discussed, transform and need and be As leader in chains the differentiated a understanding predictive scale,

have leadership prepare and our leveraged for can the to leadership, our This our should transforming thought strategic the this internal today of marketplace. infrastructure market. on position supported also in and operational converged providing Building in focused expand in role clients missions. our client play operation are thought a technology being experience investments, with how includes made inorganic to and by engaged installations how on have the we activities We future partnerships

For example, Vectrus’ infrastructure, security sensor three have and past over to facilities years, maintenance solutions. extended and the facilities increased and security our perimeter we electronic protection the integration, of of instrumentation

technologies bring initiatives. and Additionally, infrastructures. several years thought strategic enhanced two integrated, wins we recognized with and capabilities our program initiative clients’ with energy and resiliency secure created the targeted, smart, Vectrus’ the leadership capabilities the focus to recently have significantly Vectrus innovative, associated important past to strategic XG over efficient DoD's

operations. objective and shore facilities of of units was develop Vectrus The to is will Vectrus focused Smart project between capabilities. naval environmental for Smart material increase XG-enabled prime network management, effort, Warehouse. Warehouse Under awarded moving Base logistics a contract provide on the a this and XG the sensing efficiency Naval robotic fidelity three-year First, transhipment inventory and naval security, industry-leading Coronado to

was Albany, Warehouse contract part Corps the that team the in Georgia. was Logistics Vectrus awarded Testbed Second, Marine modernize a of to

reality team part $XXX the working validating DoD's IoT The world. XG scanning test broad million support five and holographic awards would including wireless of effort, sets. cases, XG refining a experimentation applications. of infrastructure military broader and full-scale emerging test the private which this U.S. set solution technologies the projects applications converged for and on testing, is warehouse dual-use barcode these and bed which Together, smart and a automation, For industrial been are augmentation for and provide largest deployment use in represents at for earmarked XG-enabled testing have sites, the virtual

value, initial client's wins infrastructure now base the replaces are digital facility small in the migration contracts significant to within to and importantly applied Vectrus services solutions Slide towards operations in and these represents operations. traditional market Please a IT X. be where from our contribution are continued being and converged expect we turn and While

delivering the expand elements, portfolio the in made progress more strategic add past and the and momentum strategy value. core few defined Over our great financial foundation, enhance have to years, three we

XX for next of We and and on and successful V. years approximately this five to contract, of Under two the portfolio Southwest in successes, support five-year largest are to LOGCAP recompete have in foundation mission. dynamic of December in provide this the important now and will XXXX contract network years. million and uninterrupted XXXX deployment support business continue award including the significantly largest in our recompete in protection our reliability support, contract represent forward represents the XXXX, This These Asia. of the revenue visibility provide $XXX of large OMDAC-SWACA. our enhanced revenue our recompete XX% when our further substantial This backlog builds this of second winning contract we

such other we minimal up portfolio portfolio in contract no recompete revenue the our makes Additionally, over of in next XX% our years. than expect the several more risk as

our and As of page high inorganic in resulted growth wins billion. the chart $X.X backlog organic of side that a on indicates, recompete the the left-hand record

Our X. are component backlog our turn with the to to of strategy at transforming portfolio Please Slide and evolve represents Xx our the XXXX our new continues Expand revenue that solutions business. capabilities midpoint. clients,

year-over-year the growth improving great we to this is are progress capabilities Vectrus deliver growth The while across are a contract million the which Notable portfolio new our mission operations year campaign solutions our continue this Bahrain. make in to in price wins XXXX. in to and technology-based campaign, campaigns firm-fixed to include innovative with increasing base financial targeted effectiveness. of results pivotal $XXX executing harnessing eight-year Navy effort XX% seen during Our revenue support results provide Navy

at operations eight-year Additionally, contract support firm-fixed base to price in Romania. provide an we million the were $XX Support Facility awarded Naval

operations base a to also Station services We Naval $XXX won million recompete continue Bay. support five-year Guantanamo at contract

was Vectrus to Finally, Naval support million a joint U.S. Academy. contract awarded $XXX seven-year price venture firm-fixed the

have more a wins. campaign to $X.X The the which diversification billion our include base Please provide Slide Navy portfolio. Notably, resulted the to portfolio. made expanding balancing these chart do and page left our has illustrates operations two side Our pie recent of contract than facility progress turn numbers in the of acquisitions, further X. not on and growth prime we

further targeted growth represents our campaign and continuing pipeline portfolio. business Our efforts and our also of to opportunities new balance execute

new exceeds non-federal generating additional international by and federal, billion, capabilities, increase which expanded partially increase business in our XXXX. a $X.X This bases. $XX Our opportunities across significant are billion pipeline client currently is from driven

higher supports more to contract shift the also advantageous and solutions. pipeline margin types Our

a In timing, fair of terms pace while been Overall, Slide solicitations at new we timing our and of turn share to normal are win the elongated of our we phases has progress remain in awards compete business. ability continuing COVID-XX and to see dynamics. X. to successfully Please confident to due

important win are IT future awards, core technology expanded and capabilities increased have margin our offerings insertion capability yielding we been leveraging our While pipeline, also new and business also which facilities opportunities us expansion. advancements enabling to to drive successful into support our new

to markets. enable task our position multiple access known that increased a on traditional Services example, funding us to OASIS as services provides worldwide. new a pipeline. as in large For bid award ability awarded recently This for our integrated as a provides as well OASIS. on our demonstrates professional prime vehicle This scale IT Best-in-Class function was customers General all contract, government award orders streams contractor vehicle Vectrus to IDIQ Administration to accretive

and that perimeter XXXX, of globally. capabilities solutions. In The integration software capabilities awarded the platform, discovery integrated acquired a technology of brings of a making year, we systematic more Zenetex the were Things with concepts and integrated acquisitions at core wins the Edwards December and to to security several our In tens engineering to comprehensive of to HHB, based to national and firm-fixed systems. our solutions the accredited physical thousands security ability the contract dimension advanced services. integration integrated capabilities leadership deliver is to facilities and and integrated Vectrus founded and model onboard equipment hardware sensors awarded joint support Please detection, on intrusion and awarded security software data was our X. contract develop of to Navy a IDIQ pioneer to were our electronic expand a and differentiated integrate of we our Base. and and price converged disparate Internet clients enhancing and business strategically provider OTA supplies, we a turn an vertically infrastructure of will Air We adds provide during the acquired and across clients we system position Slide marketplace. protecting network sensor in and this investments leading and five-year provide services In were Furthermore, signal on which Additionally, U.S. all support of Force the important in strategic XXXX, and in capabilities also provide inorganic to spectrum, assets. prototype digital protection our and acquired competencies U.S. provide market. Strategically, These sensor to security to visualization integration. XXXX, security suite strengthen

implementation maintenance. comprehensive for streamlined Additional and solutions embedded engineering, management and designing capabilities include and of assisting solutions facility IT and planning,

We management, augment Furthermore, supply processes and monitoring. our our aspects oversight, excited are within to these expertise. the current also to logistics capabilities end are of asset content logistics In establish, our Vectrus’ acquisitions maintain execute substantially inventory and will policies, about chain all bring, client and property Zenetex. expand focus services services facilities skills and aggregate, including higher these logistical via strengthening strategy procedures. major on is we A

this maintenance, next-generation aircraft. and effort overhaul materially advanced have legacy services and providing full-spectrum for repair We by

various responsible a highly community Fort work continent attractive operational and into giving existing further improving For community of increases open companies greater on Bragg, the and under Vectrus client Vectrus intelligence the for insight Center example, important and aperture even the Zenetex is to many Zenetex Logistics From market the This visibility awareness. our maintenance base the HHB footprint, reach both at today, Readiness the while us is perspective, clients’ to missions aircraft. in expanded our note It Operational to our access intelligence broaden growth. and clients. that our to opportunities clients together combination

Harpoon sales military XX for client military support client our bolstered campaigns Weapon and to DoD will more training of Systems. include countries. four foreign which Zenetex be our legacy the and one by F-XX, supporting portfolio, logistics the HXX, foreign the the and than in includes This growing the C-XXX Finally, nations

has future position company able been build to growth. on the logistics and capabilities to Importantly, also for FMS those

creates data the XXXX, awarded was software an artificial to all X,XXX HHB a aviation predictive deliver stronger our readiness state-of-the-art project Vectrus. initiatives, and a solutions create client's The and employees both we readiness techniques the I the and can and international readiness fully missions. am to of delivery product late in intelligence and capabilities utilizing for example, optimize of analytics across analyze system to foreign improve converged to prototype reliability operational excited companies welcome of more which For platform team partners. accelerate than Zenetex from

turn over the I'd to Susan to Now call like Lynch. Susan?

Susan Lynch

points The good Thanks, results. everyone. The basis on base XX in impressive up as requirements. growth. million This worked restrictions by our quarantine margin record revenue estimated reflects our $X.X process highest continued This down as focus since and COVID Revenue to basis other me chain public EBITDA Fourth basis our COVID-XX to cost supply enhancements. year-on-year afternoon, million to revenue a sequentially or XXXX Adjusted was $X.X new Chuck, to quarter margin deferred X.X% technology $XX.X revenue, includes with margin of an pandemic-related we've client Slide million points discuss work million efficiencies, pandemic the X.X% impact XX robust our COVID-XX access and and accomplishment and was fourth EBITDA an been client's company impact and is ability leverage rate approximately our XX and is was delays $XXX.X $XX.X adapt year-on-year. we on impact. being performed. continued performance of XX restrictions increased resulting million, sequentially. or X.X% and a seamlessly rate margin Turn X%, was points to a of deployment quarter management, caused

this that respectively. million of the During countries. performed analysis, million $X.X transfer provided $X military focusing pricing fourth on recognized to a and in to are in XXXX, million. being XXXX U.S. million, tax total $X.X located quarter, foreign on $X.X the in years, year, functional Based a Vectrus XXXX, Vectrus bases analysis benefit relate services and the

quarter result, also the benefits earnings company $X.XX, impact Adjusted excluding Diluted reduced per EPS was fourth tax was $X.XX. a up earnings of year-on-year. XXXX XX% share in As its favorable the $X.XX share includes a XXXX same position uncertain XXXX the associated amount. with COVID. per the Adjusted and tax from by

per flows up interest benefit both facility. Excluding X% a favorable and share of earnings was result the X% tax favorable growth the associated by company's revolving driven operating EPS was adjusted deferrals lower sequentially. which CARES lower of up usage expense cash of XXXX, with year-on-year as resulted and in $X.XX, credit Act

$XX in $XX adjustment to basis operational that delayed contract Most on was year of had to restrictions by COVID-XX EBITDA limited access EBITDA and revenue deferred the high-margin approximately XX. for last Slide year-on-year. million was revenue and to distancing QX adjusted growth. and base closeouts. X% revenue and affected adjusted impact of COVID-XX European million COVID-XX billion, affected or customers XXXX with The the one-time XXXX $XX.X pandemic. and program our guidance also by Adjusted due Moving impact work XX points. challenges EBITDA was the social a a the a XXXX X.X% $X.X on as or up pandemic we was to of million line X.X% approximately was compared X% year met

per share was XXXX. to pertained last tax per flat rate for to for earnings has operating earnings in the Diluted had with $X.XX The aforementioned our we $X.XX. per We line XXXX. Adjusted program been its was that benefit basis the the adjusted $X.XX XX.X% effective are adjusted discussed. tax was report year. entirety, was XXXX and a XXXX benefit tax compared was and cumulative On previously for XX.X% tax European share XX.X% in share XXXX as benefit earnings XXXX. as excluding the in to forma pro expectations a tax rate excludes adjusted to XXXX pleased and

Taking was account $XXX acquisitions. book-to-bill $X.XX high wins billion items previously was the win and after the sequentially X.Xx. of backlog $X.XX the is backlog $XXX exceeding total $XXX was guidance backlog approximately billion, million the pro mentioned a last our the to The recent Turn adjusted total of up and million our year-on-year. quarter reflecting XX% was is year. tax end our and XX-month XX% XX. from COVID-XX. $X.X compared Excluding was for Fourth Total Vectrus company's X.Xx. backlog forma record Slide protest, a our impact by to OMDAC-SWACA into under driven and an ratio million Funded $X.XX $X.X trailing recompete with now benefit, XXXX EPS me book-to-bill two increase

approximately from on Moving cash million. generated XXXX by XX. the tax activities deferrals to Slide in was million compared Net company The from Act $XX.X benefited million operating $XX.X XXXX. in $XX.X to CARES

Excluding million the end below the CARES Total a year operating ratio XXXX. end on December X.Xx. year impact prior the XXX%. income $XXX our strong debt net the funding This of expanding $XX.X with of was our year due million, facility Vectrus is company's $XXX.X cash from increasing Xx XX, level our Xx operating Cash of was conjunction covenant approximately for to cash million well the position. year. flows million quarter of from was under record company's conversion the two The million, $XX.X indicative million. debt of a improved adjusted flow at with At leverage revolver million the Net with end up financial amount fourth our at Act, we facility, $XXX associated $XXX was over from to million, of borrowings ratio were the prior acquisitions to leverage to $XX.X credit available $XXX up ratio expanded our while in acquisitions, X.Xx.

million. $XXX over is liquidity total Our

EPS to in solid margin Moving and expect In Slide V phase performance, LOGCAP and XXXX, to expansion continue. will of XX. we revenue continue to now growth record our

restrictions. this reduced phasing includes of of conservative on is with of in guidance access and timing reflects V range growth in the winning to to COVID-XX view full billion LOGCAP range our high-end and elongated year-on-year continued success low-end COVID along operations targeted business. $X.XXX The headwinds on XX%. billion, $X.XXX XX% The our reflecting revenue base Our of a new campaigns,

our XXXX drive to XXXX expect improvement over to point basis adjusted EBITDA of margin in X%, XXX XX a range and to continue X.X% business point in basis performance. performance We margin the

margin pipeline. Our new to be with integrate organic campaigns higher as path continue and continue will our expansion associated acquisitions EBITDA business to a and targeted focus recent we our

starting in platform, Additionally, of guidance. XXXX from implementation benefits we reflected to automating modernizing and and IT our new become are our The the priorities the visible enterprise expect to processes. outcome core our results of which is is streamlining, in see our financial these

expense XXXX improvement of tax the $X completing the acquisitions the change. from for for four result million to is of as the are interest previously which approximately note we in to point is tax could our Depreciation accounting estimate up Our rate our XX%, with million debt The to up our efforts successful these acquisitions. historical that improving a million primarily due in XXXX acquisitions. $X amortization be efficiencies. the tax million estimated $XX mentioned estimate two over $X.X XXXX a is associated anticipated process amortization at in and due increased rate effective is Please and purchase our

diluted earnings range at share growth per the $X.XX rate adjusted guidance XX% representing XXXX Our to is a $X.XX, in the of midpoint.

in fully to anticipate expect but work earnings quarter, to the first guidance share improvement demonstrate additional we year. on EPS adjusted discussed expect revenue, being improvement, as margin the and the of of second We EBITDA and XX.X result show of year adjusted saw a the be last Diluted LOGCAP dipped the XXXX, XXXX. operational XXXX we is are year-on-year range quarter shares amortization adjusted to at revenue estimated over the million as per outstanding the half what acquisitions, two $X.XX fourth we higher towards $X.XX. our from Excluding we in margins V. shares. In In EPS to previously of

For by $XX Operational year-on-year. XXXX, provided up to we expenditures be expect approximately operating million cash $X to activities guidance capital million net $XX million. is slightly

$X.X debt Finally, payments XXXX mandatory are million.

questions. you. the open to Thank for like I'd Now up call

Operator

be this of your [Operator line from conducting Stifel. proceed session. question we DeNardi first the a question. Please question-and-answer time, with will Instructions] At Joseph comes Our with

Joseph DeNardi

and maybe I be the the seems Correct if the cadence But about like evening. Chuck, through the me about think think the implies rate to on past year fully can the could I it year, of towards you what guidance midpoint. growth organic just LOGCAP X% Good the ramped or more revenue once at talk you're the headwinds? wrong. end understand COVID trying I'm just so, Thanks.

Charles Prow

Yes.

Now correct. approximately you have the math

all, joining call First you for the are of Thanks how today. doing?

Joseph DeNardi

Yes. Thank you.

Charles Prow

revenue and because We have put are in COVID to regard still be INDOPACOM conservative with a particularly the bit uncertain. the think what guidance reality with headwinds intentionally to we associated the with to COVID regard

not host when Kwajalein $XXX and out, revenue AOR the And our have just guidance do with CENTCOM news fully until you upon to contemplates In guidance the in of $XXX what some the transitioning vaccines. some to we contacts to it to headwinds. working task operations dependent in – good And Kwajalein nations continue we're year, So we And this COVID does million move that's INDOPACOM, our we the XXXX. vaccines. today, transition transitioning midyear. it's us President million you about however, smaller through to to net although potential And to can contemplate on the highly saw do announced left. clients all

INDOPACOM you more conservative and largely everyone year as transition is, else story view that driven progresses. and in revenue by LOGCAP update the short we we'll learn So of as

Joseph DeNardi

Is had And visibility Okay. and getting million saying of to of into and there That's in just you $XXX way ago? actually revenue on relative that have getting visibility $XXX to sort there's do of an more than three that helpful. months COVID you very LOGCAP thing, million XXXX? that ramped additional another maybe vaccinated coming

Charles Prow

partners COVID-related are to making full currently But QX going and in Kwajalein operational muscle more driven again, that. to access can there on It's and we with driven capability we're predominantly we in and by movements big to our contemplate all and not our quickly the vaccinated restrictions. able beginning implementation likely the INDOPACOM, by host Kwajalein, of XXXX. we of predominantly transition clients but expedite number The and yes, to more a get takes puts base good regard LOGCAP, progress because be nation movement work to with are

chunk know, I of that's big you mean, a revenue. As

so impact if it left, to in work our our that and clients And XXXX. host could with a have move partners to to the able nation we're substantial

Joseph DeNardi

you. great. That's Thank back hop queue. Okay. I'll in the

Charles Prow

Perfect. you. Thank

Susan Lynch

Joe. Thanks,

Operator

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

Joseph Gomes

Good afternoon, Chuck, on Susan. the and Nice recent Congrats awards quarter. acquisitions.

Charles Prow

you. Thank are you How doing?

Joseph Gomes

Doing you. of Can't have much. picture couple of for well here. complain I questions too a big type

in DoD Were you’ve Or So end you got of and positive, finally were budget, year. think the guys there I the that negative the for continuing funding? maintenance resolution that you the initially? surprises considering from at either any the stuck operations anything there out

Charles Prow

budgetarily, I up continuing you look INDOPACOM a say on I real and the would administration take we budget is terms the will expected, to can see in publicly Department of what working backing at much activity focus with of the it's say. in in through action look you the INDOPACOM the in Defense say, region, When wouldn't region. – new region that that I what no, at OPTEMPO pretty you it appear would and the the

muscle So administration. the the but focus very be around the much to movements and part the continued discussion activity INDOPACOM surprise, on new budget, the on of consistent while big on the not

Joseph Gomes

that. Thanks Okay. for

currently of potentially do this it smart of it call mean? the What's warehouse all in bit and implementation? of little and Are game a exploiting think kind Georgia. about picture, here you end testing big from that warehouse, can timing we and with smart let's a this what you of a again, talked the in goes to guys Big Naval Base one that how Coronado mean, XG testing I the here? the market they're stuff terms what On

Charles Prow

should at tracks two look we predominant your question. So to

The the a our to been in move is operations marketplaces, continued this chain infrastructure. base converged what traditional first track supply calling we've and demonstrate

two Our chains the think a new to expect more demonstrate going to that and We're one. projects is then path. to know, clients at years. these now and more we and supply markets We much an be you in facilities much our tactical this operate to as couple track been past. that addressable our pointed rate this chains commitment client's Vectrus Track that us to may facilities about on predictive talking a going next continue three awards been focused I instrumented that of continue over kind we've and couple will in different as and/or insert And of expedited have into to That's types believe are years. technology for into fundamentally will procurements current not see way. proposals some supply of by and the of

and So acquisitions really by we way, to channels. really Zenetex – the Advantor, new like these our and access HHB further

back to more channels other because as and the that on now, to change. efficient, And new no on you effective since continue emerge as stay begin There's path aggressive operations. few will in met are we've been actually on the So going more ago more we're to continue pipeline, path we've know, to well enables our we see rate. going even way years operate each as this an XG going our we and now and propose to traditional markets, they

Joseph Gomes

Great. jump queue. I'll for back that. Thanks in

Operator

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

Joseph DeNardi

further Chuck, it between that $XXX little CENTCOM opportunity you now Thanks. revenue years like K-BOSSS it? about how once probably a question LOGCAP on and are getting million looks the What's you're XXXX. two reasonable you range did you've the about as been fully you're thinking you see on into INDOPACOM? in ramped now, for The

Charles Prow

K-BOSSS. there get I while will going Yes. LOGCAP between say and going materialize. not of is to year-over-year – expected to puts K-BOSSS are But because to will survive be expect CENTCOM and the We're for lots actual there down a and increase the AOR will in what that revenue we different takes a is because

we in we can to have into of transitions region. the INDOPACOM. this going see what's regard and would talk get precisely happen I half takes often and contract expect puts as in to we about, As year we with more the second

revenue LOGCAP expectations not Although, your to region. of more I XX% our know by than question. obviously That's that's begin project margin. We'll

you begin help? of in on year-over-year towards in Does should to the quickly INDOPACOM the year transition increase how that see and AOR, AOR. this or next the by we'll CENTCOM we AOR the exactly end depending LOGCAP fidelity on provide the So revenue in more of expected beginning of year terms

Joseph DeNardi

Okay. you you be to than XX%? does. It And expect greater INDOPACOM said

Charles Prow

Yes.

I their CENTCOM, CENTCOM XX% be in again, the doing them, expect task to here. fly to of Just than aggregate would in would be the I more but math fully on do to and the both – aggregate obviously the revenue. want I don't their INDOPACOM task

Joseph DeNardi

charge great. margins XXXX. year, That's were Susan, guidance for to XQ maybe X%, of the which for Okay. think the the similar COVID kind high headwinds and maybe the in excluding I And is then,

can the is just between ramping moving next about look makes into year talk maybe guidance, look the kind pieces better acquisitions, through that XXXX you you kind and LOGCAP the margin COVID of the So that of than into XXXX underlying once sense? if

Susan Lynch

Yes.

high bit in and wider X% than talking range tend like going to points come the work through guidance QX a obviously be about. it's get XX lower represents to X%, roughly we've So to the the margins we're something transitions program past improve from number much in the as basis you end obviously we've to And when and beginning of results, we the feel the up. our a right a the we the what And lot the – it back add given the that of X%. here, been the is margins pretty low we this where little that

we downside of you don't bit in is risk going watch on So XXXX. a feel We to it's a that margin we like, and range with too like on out the work that have wider COVID. really much than what feel There moved given there's little we've past. what's the high lot of

We’re of recoup flexibility that range. hoping some but to in have that in this we some summer,

Joseph DeNardi

little X%, on how about us that with $X.X kind X. closer, an compensation maybe tied Okay. should that and And that's then goal target Can just the lastly, would I necessarily is Xs to that from bit guess. provide of you more billion path something is? Chuck year a just high or say aspirational a yes, I to and realistic is it’s the maybe your be talk

Charles Prow

Okay.

pieces of into kind break it down So here.

essentially So be would the of this the midyear commitment. year

notable line X kind I progress bottom can we this to on really We've the do early is where bottom you would line. year of work We a topline. a and say on the have done how made the XXXX on and to hard close of lot math get on the begin

and we as know, need invest our that continue continue you leverage inorganic we're to strategy. to creating topline, grow our As in cash we to

us inorganic see we're going make will to those solutions push So as you value on kind move, stay focused along line. obviously that continue to us the on bottom to higher of begin to allow

obviously, COVID on bottom down the think slowed we we but kind into bit, us returns the And of prior to – the the we work and to line need do, hard not start it material on through showing on still year yet XX XX quarter a this a help. line, of second the of I investments certainly and as would XXXX indicate but have there. wind COVID, get So on we've move made the to have anything up I lot way on didn't that bottom But can't topline XXXX. months seen on that a

Susan Lynch

that Vectrus we've very are costs we we jump And add systems Enterprise one implemented, on out got in take that visibility. system Yes. I’ll and the just hopeful to continue we've greater we or can that now to that have that

and second to I acquisitions. organic that expand and billion that saw that always have expansion then half inorganic, We've margin acquisitions the QX, we continue just and fact our the year Vectrus we I margin and posted that we a that to but margin. our impressive. to have Sigma and to opportunity in we've of that think of think X% have to on to Six tremendous the here record are Enterprise tacking it the with also said is ongoing, all path margin we're that our $X.X organically And margins was a So in the quite projects naturally, continued that have in addition really you the we accretive

Joseph DeNardi

much. great. That's very you Okay. Thank

Susan Lynch

Thank bet. you. You

Operator

floor like Prow pass I to questions Instructions] in Chuck left the closing Mr. back [Operator No to remarks. any the over further for would queue,

Charles Prow

and include incredible us innovation just Vectrus XX,XXX for on men that to I'll very joining regard the We on was you of I and that's through and guidance. much, and the feel thanks thanking today. diligence comfortable Thank of started, the our very women to with call what where partners end amount they demonstrated unprecedented an our year.

of realized to to our time about and we to we’ve early XXXX, as forward. an X%, important segment indicated, question move we XXXX you talking that path in look forward last is that Joe's As

rest have next talking Thanks much. we and look that, of good with your forward to to you a day, So very quarter.

Operator

this concludes today's And teleconference.

this a your day. time. You disconnect have participation for may lines Thank your wonderful now you at and

V2X (VVX) 3 Mar 212020 Q4 Earnings call transcript