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Item 1. Financial Statements

2025-08-04 compared with 2025-05-05 · 150 added, 131 removed, 423 unchanged (40% of the section changed)

FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three Months Ended

March 28, March 29,

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands, except per share data) 2025 2024 2025 2024

6 unchanged sentences

Other expense, net ( 2,579 ) ( 4,735 ) ( 4,874 ) ( 6,368 )

Income from operations before income taxes 10,070 1,124

Income (loss) from operations before income taxes 29,450 ( 8,114 ) 39,520 ( 6,990 )

Income tax expense (benefit) 7,059 ( 1,570 ) 9,022 ( 1,590 )

Net income $ 8,107 $ 1,144

Earnings per share

Net income (loss) $ 22,391 $ ( 6,544 ) $ 30,498 $ ( 5,400 )

Earnings (loss) per share

Basic $ 0.71 $ ( 0.21 ) $ 0.96 $ ( 0.17 )

3 unchanged sentences

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Three Months Ended

March 28, March 29,

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands) 2025 2024 2025 2024

Net income $ 8,107 $ 1,144

Other comprehensive income, net of tax

Net income (loss) $ 22,391 $ ( 6,544 ) $ 30,498 $ ( 5,400 )

Other comprehensive income (loss), net of tax

Changes in derivative instruments:

Change in fair value of interest rate swaps ( 3,509 ) 4,921

Tax benefit 815 1,018

Net change in fair value of interest rate swaps ( 1,663 ) 541 ( 5,172 ) 5,462

Tax benefit (expense) 386 ( 2,320 ) 1,201 ( 1,302 )

Net change in derivative instruments ( 1,277 ) ( 1,779 ) ( 3,971 ) 4,160

Foreign currency translation adjustments, net of tax expense of $( 1,324 ) and $( 588 )

Foreign currency translation adjustments, net of tax (expense) benefit of $( 1,635 ), $ 1,612 , $( 2,959 ) and $ 1,024

5,404 161 9,780 ( 3,270 )

Other comprehensive income, net of tax 1,682 2,508

Total comprehensive income $ 9,789 $ 3,652

Other comprehensive income (loss), net of tax 4,127 ( 1,618 ) 5,809 890

Total comprehensive income (loss) $ 26,518 $ ( 8,162 ) $ 36,307 $ ( 4,510 )

The accompanying notes are an integral part of these financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

March 28, December 31,

June 27, December 31,

(In thousands, except per share data) 2025 2024

33 unchanged sentences

100,000,000 shares authorized;

31,684,495 and 31,560,490 shares issued and outstanding as of March 28, 2025 and December 31, 2024, respectively

31,709,357 and 31,560,490 shares issued and outstanding as of June 27, 2025 and December 31, 2024, respectively

Additional paid in capital 773,002 769,719

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

March 28, March 29,

Six Months Ended

June 27, June 28,

(In thousands) 2025 2024

Operating activities

Net income $ 8,107 $ 1,144

Adjustments to reconcile net income to net cash used in operating activities:

Net income (loss) $ 30,498 $ ( 5,400 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation expense 8,175 11,870

1 unchanged sentence

Amortization of cloud computing arrangements 2,453 886

Impairment of non-operating long-lived asset — 2,192

Loss on disposal of property, plant, and equipment 325 269

43 unchanged sentences

Balance at March 29, 2024 31,453 $ 315 $ 761,605 $ 231,995 $ ( 179 ) $ 993,736

Net loss — — — ( 6,544 ) — ( 6,544 )

Foreign currency translation adjustments — — — — 161 161

Unrealized loss on cash flow hedge — — — — ( 1,779 ) ( 1,779 )

Employee stock awards and stock options 27 — 146 — — 146

Taxes withheld on stock compensation awards — — ( 65 ) — — ( 65 )

Stock-based compensation — — 6,296 — — 6,296

Balance at June 28, 2024 31,480 $ 315 $ 767,982 $ 225,451 $ ( 1,797 ) $ 991,951

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES TO SHAREHOLDERS' EQUITY (UNAUDITED)

Common Stock Issued Additional Paid-in Capital Accumulated Other Comprehensive Loss

9 unchanged sentences

Balance at March 28, 2025 31,684 $ 317 $ 769,594 $ 273,642 $ ( 7,736 ) $ 1,035,817

Net income — — — 22,391 — 22,391

Foreign currency translation adjustments — — — — 5,404 5,404

Unrealized loss on cash flow hedge — — — — ( 1,277 ) ( 1,277 )

Employee stock awards and stock options 25 — — — — —

Taxes withheld on restricted stock unit compensation awards — — ( 321 ) — — ( 321 )

Stock-based compensation — — 3,729 — — 3,729

Balance at June 27, 2025 31,709 $ 317 $ 773,002 $ 296,033 $ ( 3,609 ) $ 1,065,743

The accompanying notes are an integral part of these financial statements.

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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

V2X, Inc., an Indiana Corporation formed in February 2014, is a leading provider of critical mission solutions primarily to defense customers globally.

V2X, Inc., an Indiana Corporation formed in February 2014, is a leading provider of critical mission solutions primarily to defense clients globally.

The Company operates as one segment and offers a broad suite of capabilities including multi-domain high impact readiness, integrated supply chain management, mission solutions, and platform renewal and modernization to national security, defense, civilian and international customers.

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Equity Investments

In 2011, the Company entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC.

In 2011, the Company entered into a joint venture agreement with APTIM Federal Services LLC (formerly Shaw Environmental & Infrastructure, Inc.).

Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft.

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The Company accounts for its investments in HDSS, J&J, ServCore and Inuksuk under the equity method and has the ability to exercise significant influence over, but does not hold a controlling interest in, these entities.

The Company's proportionate 25 %, 50 %, 40 %, and 49 % shares, respectively, of income or losses from HDSS, J&J, ServCore, and Inuksuk are recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

The Company's proportionate 25 %, 50 %, 40 % and 49 % shares, respectively, of income or losses from HDSS, J&J, ServCore and Inuksuk are recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Income (Loss).

These investments are recorded in other non-current assets in the Condensed Consolidated Balance Sheets.

2 unchanged sentences

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 March 28, 2025 and December 31, 2024, the Company's combined investment balance was $ 7.4 million and $ 8.6 million, respectively.

The Company's proportionate share of income from equity method investments was $ 0.8 million and $ 2.6 million for the three months ended March 28, 2025 and March 29, 2024 , respectively.

As of June 27, 2025 and December 31, 2024, the Company's combined investment balance was $ 8.5 million and $ 8.6 million, respectively.

The Company's proportionate share of income from equity method investments was $ 2.1 million and $ 2.9 million for the three and six months ended June 27, 2025, respectively, and $ 4.4 million and $ 7.0 million for the three and six months ended June 28, 2024 , respectively.

Basis of Presentation

The Company's quarterly financial periods end on the Friday closest to the last day of the calendar quarter (March 28, 2025 for the first quarter of 2025 and March 29, 2024 for the first quarter of 2024), except for the last quarter of the fiscal year, which ends on December 31.

The Company's quarterly financial periods end on the Friday closest to the last day of the calendar quarter (June 27, 2025 for the second quarter of 2025 and June 28, 2024 for the second quarter of 2024), 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.

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Restricted Cash

As of March 28, 2025, the Company had total cash, cash equivalents, and restricted cash of $ 169.1 million which included $ 3.0 million of restricted cash.

As of June 27, 2025, the Company had total cash, cash equivalents, and restricted cash of $ 190.5 million which included $ 3.0 million of restricted cash.

The Company's restricted cash was $ 3.1 million as of December 31, 2024.

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The CCA implementation costs are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised.

Amortization expense of CCA implementation costs is included in cost of revenue on the Company's Condensed Consolidated Statements of Income.

Amortization expense of CCA implementation costs is included in cost of revenue on the Company's Condensed Consolidated Statements of Income (Loss).

The CCA implementation costs are included within operating activities on the Company's Condensed Consolidated Statements of Cash Flows.

As of March 28, 2025 and December 31, 2024, the Company had total capitalized CCA implementation costs, net of accumulated amortization, of $ 28.0 million and $ 29.2 million, respectively, included in prepaid expenses and other current assets and other non-current assets on the Company's Condensed Consolidated Balance Sheet.

As of June 27, 2025 and December 31, 2024, the Company had total capitalized CCA implementation costs, net of accumulated amortization, of $ 26.8 million and $ 29.2 million, respectively, included in prepaid expenses and other current assets and other non-current assets on the Company's Condensed Consolidated Balance Sheet.

Prepaid Expenses and Other Current Assets

The components of prepaid expenses and other current assets are as follows:

March 28, December 31,

June 27, December 31,

(In thousands) 2025 2024

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Government Accountability Office (GAO) or in the U.S.

Court of Federal Claims (COFC).

Court of Federal Claims (COFC) for which a stop work order has been received by the Company.

The level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles.

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Remaining performance obligations are presented in the following table:

March 28, December 31,

June 27, December 31,

(In millions) 2025 2024

Performance Obligations $ 3,901 $ 3,483

As of March 28, 2025, the Company expects to recognize approximately 71 % of the remaining performance obligations as revenue in 2025 and the majority of the remainder of the balance as revenue in 2026 and 2027.

As of June 27, 2025, the Company expects to recognize approximately 48 % of the remaining performance obligations as revenue in 2025 and the majority of the remainder of the balance as revenue in 2026 and 2027.

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 adjustments for the three months ended March 28, 2025 and March 29, 2024 increased operating income by $ 4.2 million and $ 0.5 million, respectively.

For the three months ended March 28, 2025 and March 29, 2024, the net adjustments to operating income increased revenue by $ 14.8 million and $ 3.4 million, respectively.

Cumulative adjustments for the three months ended June 27, 2025 and June 28, 2024 increased operating income by $ 1.4 million and $ 0.7 million, respectively.

Cumulative adjustments for the six months ended June 27, 2025 and June 28, 2024 increased operating income by $ 5.6 million and $ 1.2 million, respectively.

For the three and six months ended June 27, 2025, the net adjustments to operating income increased revenue by $ 4.9 million and $ 19.7 million, respectively.

For the three and six months ended June 28, 2024, the net adjustments to operating income increased revenue by $ 6.0 million and $ 9.4 million, respectively.

Revenue by Category

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Revenue by contract type is as follows:

Three Months Ended

March 28, March 29, %

(In thousands) 2025 2024 Change

Three Months Ended Six Months Ended

June 27, June 28, % June 27, June 28, %

(In thousands) 2025 2024 Change 2025 2024 Change

Cost-plus and cost-reimbursable $ 647,582 $ 615,837 5.2 % $ 1,270,653 $ 1,200,659 5.8 %

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Revenue by geographic region in which the contract is performed is as follows:

Three Months Ended

March 28, March 29, %

(In thousands) 2025 2024 Change

Three Months Ended Six Months Ended

June 27, June 28, % June 27, June 28, %

(In thousands) 2025 2024 Change 2025 2024 Change

United States $ 632,357 $ 578,881 9.2 % $ 1,209,815 $ 1,123,608 7.7 %

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Revenue by contract relationship is as follows:

Three Months Ended

March 28, March 29, %

(In thousands) 2025 2024 Change

Three Months Ended Six Months Ended

June 27, June 28, % June 27, June 28, %

(In thousands) 2025 2024 Change 2025 2024 Change

Prime contractor $ 1,008,340 $ 1,006,121 0.2 % $ 1,972,086 $ 1,951,276 1.1 %

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Revenue by customer is as follows:

Three Months Ended

March 28, March 29, %

(In thousands) 2025 2024 Change

Three Months Ended Six Months Ended

June 27, June 28, % June 27, June 28, %

(In thousands) 2025 2024 Change 2025 2024 Change

Army $ 457,443 $ 456,690 0.2 % $ 899,579 $ 890,120 1.1 %

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As of January 1, 2024, the Company had contract assets of $ 561.9 million.

As of March 28, 2025 and December 31, 2024, the Company had contract assets of $ 595.7 million and $ 620.5 million, respectively.

As of June 27, 2025 and December 31, 2024, the Company had contract assets of $ 587.5 million and $ 620.5 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.

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As of January 1, 2024, the Company had contract liabilities of $ 109.6 million.

As of March 28, 2025 and December 31, 2024, contract liabilities, included in other accrued liabilities in the Condensed Consolidated Balance Sheets, were $ 95.4 million and $ 98.7 million, respectively.

As of June 27, 2025 and December 31, 2024, contract liabilities, included in other accrued liabilities in the Condensed Consolidated Balance Sheets, were $ 98.2 million and $ 98.7 million, respectively.

Receivables were comprised of the following:

March 28, December 31,

June 27, December 31,

(In thousands) 2025 2024

3 unchanged sentences

Total receivables $ 738,899 $ 710,068

As of March 28, 2025 and December 31, 2024, substantially all billed receivables are due from the U.S.

As of June 27, 2025 and December 31, 2024, substantially all billed receivables were due from the U.S.

government, either directly as prime contractor to the U.S.

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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 most of the March 28, 2025 contract assets during 2025.

The Company expects to bill customers for most of the June 27, 2025 contract assets during 2025.

Changes in the balance of receivables are primarily due to the timing differences between performance and customers' payments.

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The loans under the First Lien Credit Agreement, as amended (the First Lien Credit Agreement), amortize in an amount equal to approximately $ 2.2 million per quarter through September 30, 2030, with the balance of $ 848.0 million due on December 6, 2030.

The replacement of the Existing Term Loans with the New Term Loans resulted in a loss on extinguishment of debt of $ 2.2 million in the Condensed Consolidated Statement of Income for the three months ended March 28, 2025.

Vertex Aerospace Services LLC (V2X Borrower) obligations under the First Lien Credit Agreement are guaranteed by Vertex Intermediate LLC and V2X Borrower’s wholly-owned domestic subsidiaries (collectively, the Guarantors), subject to customary exceptions and limitations.

The replacement of the Existing Term Loans with the New Term Loans resulted in a loss on extinguishment of debt of $ 2.2 million in the Condensed Consolidated Statement of Income (Loss) for the six months ended June 27, 2025.

On May 30, 2024, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans to replace or refinance in full all the existing term loans outstanding under the First Lien Initial Term Tranche, resulting in a loss on extinguishment of debt of $ 2.0 million in the Condensed Consolidated Statement of Income (Loss) for the three and six months ended June 28, 2024.

V2X LLC (formerly known as Vertex Aerospace Services LLC) (V2X Borrower) obligations under the First Lien Credit Agreement are guaranteed by V2X Intermediate LLC (formerly known as Vertex Aerospace Intermediate LLC) and V2X Borrower’s wholly-owned domestic subsidiaries (collectively, the Guarantors), subject to customary exceptions and limitations.

The V2X Borrower’s obligations under the First Lien Credit Agreement and the Guarantors’ obligations under the related guarantees are secured by a first priority lien on substantially all the V2X 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 Credit Agreement bear interest at rates that, at the V2X 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 Secured Overnight Financing Rate (SOFR) rate plus 1.00 %, plus a margin of 1.25 % per annum, or SOFR, plus a margin of 2.25 % per annum.

As of March 28, 2025, the effective interest rate for the First Lien Credit Agreement was 7.11 %.

As of June 27, 2025, the effective interest rate for the First Lien Credit Agreement was 7.11 %.

The First Lien Credit Agreement contains customary representations and warranties and affirmative covenants.

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If an event of default occurs and is continuing, the V2X Borrower may be required immediately to repay all amounts outstanding under the First Lien Credit Agreement.

As of March 28, 2025, the carrying value of the First Lien Credit Agreement was $ 899.8 million, excluding deferred discount and unamortized deferred financing costs of $ 27.7 million.

The estimated fair value of the First Lien Credit Agreement as of March 28, 2025 was $ 887.4 million.

As of June 27, 2025, the carrying value of the First Lien Credit Agreement was $ 897.5 million, excluding deferred discount and unamortized deferred financing costs of $ 26.4 million.

The estimated fair value of the First Lien Credit Agreement as of June 27, 2025 was $ 894.2 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).

2023 Credit Agreement

The 2023 Credit Agreement provides for $ 750.0 million in senior secured financing, with a first lien on substantially all the V2X Borrower’s assets and consists of (a) a $ 500.0 million five-year revolving credit facility (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 (2023 Term Loan).

The 2023 Term Loan 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.

On March 31, 2025, the 2023 Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $ 237.5 million (the 2025 Term Loans), which replace or refinance in full all the existing term loans outstanding under the 2023 Credit Agreement as in effect immediately prior to the amendment.

The 2023 Credit Agreement was further amended to provide a new tranche of revolving credit commitments in an aggregate original principal amount of $ 500.0 million (the 2025 Revolver), which replace or refinance in full all the existing revolving credit loans and commitments outstanding under the 2023 Credit Agreement as in effect immediately prior to the amendment.

The 2025 Term Loans amortize at approximately $ 1.5 million per quarter for the fiscal quarters ending June 30, 2025 through March 31, 2027, increasing to $ 3.0 million per quarter for the fiscal quarters ending June 30, 2027 through December 31, 2029, with the balance of $ 193.0 million due on March 31, 2030.

The amendment to the 2023 Credit Agreement resulted in a loss on extinguishment of debt of $ 0.3 million in the Condensed Consolidated Statement of Income (Loss) for the three and six months ended June 27, 2025.

The V2X Borrower’s obligations under the 2023 Credit Agreement are guaranteed by the Guarantors, subject to customary exceptions and limitations.

1 unchanged sentence

The borrowings under the 2023 Credit Agreement bear interest at rates that, at the V2X 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 SOFR rate plus 1.00 %, plus a margin of 0.50 % to 1.50 % per annum, or SOFR, plus a margin of 1.50 % to 2.50 % per annum, in each case, depending on the consolidated total net leverage ratio of the V2X Borrower and its subsidiaries.

As of March 28, 2025, the effective interest rate for the 2023 Term Loan was 7.13 %.

As of June 27, 2025, the effective interest rate for the 2025 Term Loans was 6.49 %.

Unutilized commitments under the 2025 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 V2X Borrower and its subsidiaries.

1 unchanged sentence

The 2023 Credit Agreement contains customary representations and warranties, which must be accurate for the V2X 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, and 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 a step down to 4.75 to 1.00 for periods ending on or after July 1, 2024, and on or prior to December 31, 2025, 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 V2X Borrower may be required immediately to repay all amounts outstanding under the 2023 Credit Agreement.

As of March 28, 2025, there were no outstanding borrowings and $ 22.3 million of outstanding letters of credit under the 2023 Revolver.

Availability under the 2023 Revolver was $ 477.7 million as of March 28, 2025.

As of June 27, 2025, there were no outstanding borrowings and $ 23.8 million of outstanding letters of credit under the 2025 Revolver.

Availability under the 2025 Revolver was $ 476.2 million as of June 27, 2025.

Unamortized deferred financing costs related to the 2025 Revolver of $ 4.5 million are included in other non-current assets in the Condensed Consolidated Balance Sheets.

As of March 28, 2025, the fair value of the 2023 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of March 28, 2025, the carrying value of the 2023 Term Loan was $ 239.1 million, excluding unamortized deferred financing costs of $ 1.5 million.

The estimated fair value of the 2023 Term Loan as of March 28, 2025 was $ 235.8 million.

As of June 27, 2025, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of June 27, 2025, the carrying value of the 2025 Term Loans was $ 237.5 million, excluding unamortized deferred financing costs of $ 1.9 million.

The estimated fair value of the 2025 Term Loans as of June 27, 2025 was $ 236.6 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).

The aggregate scheduled maturities of the First Lien Credit Agreement and 2023 Credit Agreement as of March 28, 2025 are as follows:

The aggregate scheduled maturities of the First Lien Credit Agreement and 2023 Credit Agreement as of June 27, 2025 are as follows:

(In thousands) Payments due

2 unchanged sentences

Total $ 1,135,020

As of March 28, 2025, the Company was in compliance with all covenants related to the First Lien Credit Agreement and the 2023 Credit Agreement .

As of June 27, 2025, the Company was in compliance with all covenants related to the First Lien Credit Agreement and the 2023 Credit Agreement.

DERIVATIVE INSTRUMENTS

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Interest Rate Derivative Instruments

The Company is exposed to the risk that earnings and cash flows could be adversely impacted due to fluctuations in interest rates.

To mitigate this risk, the Company has entered into $ 450.0 million of interest rate swap contracts as of March 28, 2025.

As of both March 28, 2025 and December 31, 2024, these contracts had notional values $ 439.1 million, respectively.

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 $ 450.0 million of interest rate swap contracts as of June 27, 2025.

As of June 27, 2025 and December 31, 2024, these contracts had notional values of $ 437.5 million and $ 439.1 million, respectively.

These contracts are designated and qualify as effective cash flow hedges.

1 unchanged sentence

Fair Value (level 2)

March 28, December 31,

June 27, December 31,

(In thousands) Balance sheet caption 2025 2024

4 unchanged sentences

The Company regularly assesses the creditworthiness of the counterparty.

As of March 28, 2025, the counterparty to the interest rate swaps had performed in accordance with its contractual obligations.

Both the counterparty and the Company's credit risk were considered in the fair value determination.

Net interest rate derivative gains of $ 0.7 million and $ 1.5 million were recognized in interest expense, net, in the Condensed Consolidated Statements of Income during the three months ended March 28, 2025 and March 29, 2024, respectively.

The Company expects $ 1.1 million of existing interest rate swap gains reported in accumulated other comprehensive loss as of March 28, 2025 to be recognized in earnings within the next 12 months.

As of June 27, 2025, 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 $ 0.8 million and $ 1.5 million were recognized in interest expense, net, in the Condensed Consolidated Statements of Income (Loss) during the three and six months ended June 27, 2025, respectively.

Net interest rate derivative gains of $ 1.4 million and $ 2.9 million were recognized in interest expense, net, in the Condensed Consolidated Statements of Income (Loss) during the three and six months ended June 28, 2024, respectively .

The Company expects $ 0.8 million of existing interest rate swap gains reported in accumulated other comprehensive loss as of June 27, 2025 to be recognized in earnings within the next 12 months.

COMMITMENTS AND CONTINGENCIES

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Such assessments, along with any assessments regarding provisions for other legal proceedings, are reviewed on a quarterly basis for sufficiency based on the latest information available to us.

The Company estimated and accrued $ 13.6 million and $ 13.1 million as of March 28, 2025 and December 31, 2024, respectively, in other accrued liabilities in the Condensed Consolidated Balance Sheets for legal proceedings and for claims with respect to its U.S.

The Company estimated and accrued $ 12.1 million and $ 13.1 million as of June 27, 2025 and December 31, 2024, 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.

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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 maintains an equity incentive plan, the 2014 Omnibus Incentive Plan, as amended and restated effective as of May 8, 2025 (the 2014 Omnibus Plan), to govern awards granted to V2X employees and directors, including nonqualified stock options (NQOs), restricted stock units (RSUs), 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 were as follows:

Three Months Ended

March 28, March 29,

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

June 27, June 28, June 27, June 28,

(In thousands) 2025 2024 2025 2024

Compensation costs for equity-based awards $ 3,729 $ 6,296 $ 6,181 $ 11,279

Compensation costs for liability-based awards — 166

Compensation costs for other awards — 349 — 515

Total compensation costs, pre-tax $ 3,729 $ 6,645 $ 6,181 $ 11,794

Future tax benefit $ 888 $ 1,585 $ 1,471 $ 2,813

As of March 28, 2025, total unrecognized compensation costs related to equity-based awards were $ 27.6 million, which are expected to be recognized ratably over a weighted average period of 1.60 years.

There were no unrecognized compensation costs for liability-based awards as of March 28, 2025.

The following table provides a summary of the activities for NQOs, RSUs and PSUs for the three months ended March 28, 2025:

As of June 27, 2025, total unrecognized compensation costs related to equity-based awards we re $ 24.0 million , which are expected to be recognized ratably over a weighted average period of 1.47 years .

The following table provides a summary of the activities for NQOs, RSUs and PSUs for the six months ended June 27, 2025:

NQOs RSUs PSUs

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Forfeited or expired — $ — ( 34 ) $ 45.31 ( 11 ) $ 27.42

Outstanding at March 28, 2025 32 $ 21.73 472 $ 46.52 387 $ 45.27

Outstanding at June 27, 2025 32 $ 21.73 438 $ 46.69 387 $ 45.41

Restricted Stock Units

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Stock compensation expense will be recognized ratably over the requisite service period of the RSU awards.

As of March 28, 2025, there was $ 17.3 million of unrecognized RSU related compensation expense.

As of June 27, 2025, there was $ 14.7 million of unrecognized RSU related compensation expense.

Performance Share Units

During the three months ended March 28, 2025, the Company granted performance-based awards that include two performance components, including TSR performance and Adjusted Earnings Per Share performance.

During the six months ended June 27, 2025, the Company granted performance-based awards that include two performance components, including TSR performance and Adjusted Earnings Per Share performance.

The performance-based awards will vest and the stock will be issued at the end of a three-year period assuming and based on i) the attainment of total shareholder return performance measures relative to certain Aerospace and Defense companies in the S&P 1500 Index, ii) Company performance against an annual adjusted EPS target established each year and iii) the employee's continued service through the vesting date.

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The fair value is based on the average of the results.

As of March 28, 2025, there was $ 10.3 million of unrecognized PSU related compensation expense.

As of June 27, 2025, there was $ 9.3 million of unrecognized PSU related compensation expense.

Effective Tax Rate

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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 March 28, 2025 and March 29, 2024, the Company recorded income tax expense of $ 2.0 million and income tax benefits which were not material, respectively.

The Company's effective income tax rates for the three months ended March 28, 2025 and March 29, 2024 were 19.5 % and ( 1.8 )%, respectively.

For the three months ended June 27, 2025 and June 28, 2024, the Company recorded income tax expense of $ 7.1 million and income tax benefits of $ 1.6 million, respectively, representing effective income tax rates of 24.0 % and 19.3 %, respectively.

For the six months ended June 27, 2025 and June 28, 2024, the Company recorded income tax expense of $ 9.0 million and income tax benefits of $ 1.6 million, respectively, representing effective income tax rates of 22.8 % and 22.7 %, 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), offset by available deductions not reflected in book income and income tax credits.

Uncertain Tax Positions

As of both March 28, 2025 and December 31, 2024, unrecognized tax benefits from uncertain tax positions were $ 3.6 million.

As of both June 27, 2025 and December 31, 2024, unrecognized tax benefits from uncertain tax positions were $ 3.6 million.

The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025.

The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research expensing and increases the business interest expense limitation.

While the Company is currently evaluating the impact of the OBBBA on its financial position, based on the enacted law, the Company expects to accelerate certain deductions post-enactment in 2025 and later years to minimize cash tax payments.

EARNINGS PER SHARE

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Diluted EPS includes the dilutive effect of stock-based compensation outstanding after application of the treasury stock method.

Three Months Ended

March 28, March 29,

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands, except per share data) 2025 2024 2025 2024

Net income $ 8,107 $ 1,144

Net income (loss) $ 22,391 $ ( 6,544 ) $ 30,498 $ ( 5,400 )

Weighted average common shares outstanding 31,693 31,470 31,643 31,411

Dilutive impact of stock options 18 — 18 —

Dilutive impact of restricted stock units and performance share units 412 425

Dilutive impact of restricted stock units 172 — 225 —

Diluted weighted average common shares outstanding 31,883 31,470 31,886 31,411

Earnings per share

Earnings (loss) per share

Basic $ 0.71 $ ( 0.21 ) $ 0.96 $ ( 0.17 )

1 unchanged sentence

The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted EPS calculation.

Three Months Ended

March 28, March 29,

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands) 2025 2024 2025 2024

Anti-dilutive restricted stock units and performance share units 104 11 45 58

Total 104 11 45 58

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.

The Company sponsors non-qualified deferred compensation plans, under which 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 operating expenses.

The plans assets and liabilities were $ 5.3 million and $ 5.2 million as of March 28, 2025 and December 31, 2024, respectively.

Adjustments to the fair value of plan investments and obligations are recorded in selling, general, and administrative expenses.

The plan assets and liabilities were $ 5.3 million and $ 5.2 million as of June 27, 2025 and December 31, 2024, respectively.

Multi-Employer Pension Plans

C ertain Company employees who perform work on contracts within the continental United States participate in multi-employer pension plans of which the Company is not the sponsor.

Company expenses related to these plans were $ 4.0 million and $ 5.0 million for the three months ended March 28, 2025 and March 29, 2024, respectively.

Certain Company employees who perform work on contracts within the continental United States participate in multi-employer pension plans of which the Company is not the sponsor.

Company expenses related to these plans were $ 4.9 million and $ 8.9 million for the three and six months ended June 27, 2025, respectively, and $ 4.4 million and $ 9.4 million for the three and six months ended June 28, 2024, respectively.

SALE OF RECEIVABLES

6 unchanged sentences

As of and for the

Three Months Ended

March 28, March 29,

Six Months Ended

June 27, June 28,

(In thousands) 2025 2024

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Remaining sold receivables $ 149,954 $ 147,741

1 For the three months ended March 28, 2025, the Company recorded a net cash inflow from sale of receivables of $ 28.2 million from operating activities.

2 Includes the cash collected on behalf of, but not yet remitted to, MUFG as of March 28, 2025.

1 For the six months ended June 27, 2025, the Company recorded a net cash inflow from sale of receivables of $ 9.0 million from operating activities.

2 Includes the cash collected on behalf of, but not yet remitted to, MUFG as of June 27, 2025.

This balance is included in other accrued liabilities as of the balance sheet date.

During the three months ended March 28, 2025 and March 29, 2024, the Company incurred purchase discount fees, net of servicing fees, of $ 2.5 million and $ 1.6 million, respectively, which are presented in other expense, net on the Condensed Consolidated Statements of Income and are reflected as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

During both the three months ended June 27, 2025 and June 28, 2024, the Company incurred purchase discount fees, net of servicing fees, of $ 2.6 million, which are presented in other expense, net on the Condensed Consolidated Statements of Income (Loss).

During six months ended June 27, 2025 and June 28, 2024, the Company incurred purchase discount fees, net of servicing fees, of $ 5.1 million and $ 4.2 million, respectively, which are presented in other expense, net on the Condensed Consolidated Statements of Income (Loss) and are reflected as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

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 March 28, 2025.

The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of June 27, 2025.

Proceeds from the sale of receivables are reflected as cash flows from operating activities on the Condensed Consolidated Statements of Cash Flows.

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V2X performs services worldwide, with the substantial majority of revenue derived from the U.S.

The CODM for the Company is the President and Chief Executive Officer.

The CODM uses consolidated profit metrics, including net income and operating income, as reported on the Condensed Consolidated Statements of Income, to allocate resources and assess financial performance.

Our CODM reviews significant expenses as reported in the Condensed Consolidated Statements of Income in addition to depreciation and amortization information, which is summarized below for the three months ended March 28, 2025 and March 29, 2024:

Three Months Ended

March 28, March 29,

The chief operating decision maker (CODM) for the Company is the President and Chief Executive Officer.

The CODM uses consolidated profit metrics, including net income and operating income, as reported on the Condensed Consolidated Statements of Income (Loss), to allocate resources and assess financial performance.

Our CODM reviews significant expenses as reported in the Condensed Consolidated Statements of Income (Loss) in addition to depreciation and amortization information, which is summarized below for the three and six months ended June 27, 2025 and June 28, 2024:

Three Months Ended Six Months Ended

June 27, June 28, June 27, June 28,

(In thousands) 2025 2024 2025 2024

2 unchanged sentences

SUBSEQUENT EVENTS

Amendment No.

1 to 2023 Credit Agreement

On March 31, 2025, Vertex Aerospace Intermediate LLC, a Delaware limited liability company (Holdings), and V2X Borrower, an indirect, wholly owned subsidiary of V2X, Inc., and certain wholly-owned subsidiaries of V2X Borrower party thereto entered into Amendment No.

1 to the 2023 Credit Agreement, dated as of March 31, 2025 (the Amendment), with Bank of America, N.A., as administrative agent, collateral agent, swingline lender and letter of credit issuer, and the other financial institutions and lenders party thereto, which amended the 2023 Credit Agreement, originally dated as of February 28, 2023, by and among V2X Borrower, Holdings, Bank of America, N.A., as administrative agent, collateral agent, swingline lender and L/C issuer, and the other financial institutions party thereto from time to time (as amended prior to March 31, 2025, the 2023 Credit Agreement).

The Amendment provides for, among other things, a new tranche of term loans under the 2023 Credit Agreement in an aggregate original principal amount of $ 237.5 million (the 2023 Credit Agreement New Term Loans), which replace or refinance in full all of the existing term loans outstanding under the 2023 Credit Agreement (as in effect immediately prior to the Amendment), as further set forth in the Amendment.

The Amendment further provides for a new tranche of revolving credit commitments under the 2023 Credit Agreement in an aggregate original principal amount of $ 500.0 million (the New Revolving Credit Commitments), which New Revolving Credit Commitments replace or refinance in full all of the existing revolving credit loans and commitments outstanding under the 2023 Credit Agreement (as in effect immediately prior to the Amendment), as further set forth in the Amendment.

The 2023 Credit Agreement New Term Loans and the New Revolving Credit Commitments mature on March 31, 2030.

The 2023 Credit Agreement New Term Loans and the loans under the New Revolving Credit Commitments shall initially bear interest at a rate per annum equal to (x) the SOFR plus a margin of 2.00 % per annum (subject to a SOFR floor of 0.00 %) or (y) a base rate (which will be the highest of (i) the prime rate, (ii) 0.5 % per annum above the federal funds effective rate and (iii) one-month SOFR plus 1.00 % per annum) plus a margin of 1.00 % per annum.

The 2023 Credit Agreement New Term Loans are subject to quarterly amortization in an amount of 2.5 % per annum, increasing to 5.0 % per annum, commencing with the fiscal quarter ending June 30, 2027.

Voluntary prepayments of the 2023 Credit Agreement New Term Loans are permitted, in whole or in part, with prior notice, without premium or penalty (except SOFR breakage costs).

The United States Air Force (USAF) awarded V2X the T-6 Contractor Operated and Maintained Base Supply (COMBS) IV contract valued at $ 4.3 billion.

The period of performance is August 1, 2025 through July 31, 2034 in support of USAF, United States Navy, and United States Army T-6A/B/D Texan II Aircraft.

The current funding obligated to the contract is $ 5.3 million.

The services V2X will provide under the T-6 COMBS contract include a full spectrum of Supply Chain Management services to support safe, flyable aircraft to meet users’ daily flight schedule and depot requirements consistent with U.S Department of Defense (DoD) and commercial sector best practices in procuring, producing, and delivering products and services to customers.

T-6 operating locations include Columbus Air Force Base (AFB), MS, Laughlin AFB, TX, Randolph AFB, TX, Sheppard AFB, TX, and Vance AFB, OK.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements