What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-03 compared with 2025-08-04 · 134 added, 105 removed, 239 unchanged (50% of the section changed)

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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.

Our primary customer is the DoD.

For both the six months ended June 27, 2025 and June 28, 2024, the Company had total revenue of $2.1 billion, the substantial majority of which was derived from U.S.

Our primary customer is the U.S.

Department of War (DoW), also known as the Department of Defense under 10 U.S.C.

For the nine months ended September 26, 2025 and September 27, 2024, the Company had total revenue of $3.3 billion and $3.2 billion, respectively, the substantial majority of which was derived from U.S.

government customers.

For both the six months ended June 27, 2025 and June 28, 2024, we generated approximately 43% of our total revenue from the U.S.

For the nine months ended September 26, 2025 and September 27, 2024, we generated approximately 41% and 42%, respectively, of our total revenue from the U.S.

Executive Summary

Our revenue increased $6.1 million, or 0.6%, for the three months ended June 27, 2025 as compared to the three months ended June 28, 2024.

Revenue increased primarily due to the conclusion of a non-recurring contractual commitment.

Our revenue increased $85.5 million, or 8%, for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024.

Revenue increased primarily due to the ramp up of several programs.

Revenue from our programs in the U.S.

and Europe increased by $53.4 million and $1.3 million, respectively, partially offset by a decrease in revenue from our programs in the Middle East and Asia of $40.7 million and $7.9 million, respectively, during the three months ended June 27, 2025 as compared to the three months ended June 28, 2024.

Operating income for the three and six months ended June 27, 2025 was $52.9 million and $87.2 million, respectively, an increase of $25.5 million and $29.5 million, or 93.0% and 51.0%, respectively, compared to the three and six months ended June 28, 2024.

Operating income increased primarily due to the conclusion of a non-recurring contractual commitment, decreased Selling, General, & Administrative (SG&A) expenses, changes in aggregate cumulative adjustments and favorable contract mix.

and Europe increased by $79.8 million and $9.1 million, respectively, partially offset by a decrease in revenue from our programs in the Middle East and Asia of $1.9 million and $1.5 million, respectively, during the three months ended September 26, 2025 as compared to the three months ended September 27, 2024.

Operating income for the three and nine months ended September 26, 2025 was $55.7 million and $142.9 million, respectively, an increase of $5.8 million and $35.3 million, or 12% and 33%, respectively, compared to the three and nine months ended September 27, 2024.

Operating income increased primarily due to the ramp up of several programs, the conclusion of a non-recurring contractual commitment, decreased Selling, General, & Administrative (SG&A) expenses, and favorable contract mix.

During the performance of long-term contracts, estimated final contract prices and costs are reviewed periodically, and revisions are made as required, which are recorded as changes in revenue and cost of revenue in the periods in which they are determined.

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These changes can increase or decrease operating income depending on the dynamics of each contract.

Further details related to consolidated financial results for the three and six months ended June 27, 2025, compared to the three and six months ended June 28, 2024, are contained in the "Discussion of Financial Results" section.

Further details related to consolidated financial results for the three and nine months ended September 26, 2025, compared to the three and nine months ended September 27, 2024, are contained in the " Discussion of Financial Results " section.

Significant Contracts

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% of Total Revenue

Six Months Ended

June 27, June 28,

Nine Months Ended

September 26, September 27,

Contract Name 2025 2024

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Department of the Army announced that it will extend the current period of performance for the various task orders under the LOGCAP V, including the Kuwait Task Order, which is scheduled to extend through June 2030.

The Kuwait Task Ord er provides services to support the Geographical Combatant Commands and Army Service Component Commands throughout the full range of military operations in the Kuwait region.

The LOGCAP V - Kuwait Task Order contributed $229.1 million a nd $218.5 million of revenue for the six months ended June 27, 2025 and June 28, 2024 , respectively.

The Kuwait Task Order provides services to support the Geographical Combatant Commands and Army Service Component Commands throughout the full range of military operations in the Kuwait region.

The LOGCAP V - Kuwait Task Order contributed $333.9 million and $328.8 million of revenue for the nine months ended September 26, 2025 and September 27, 2024, respectively.

Backlog represents revenue we expect to recognize in the future as work is performed for remaining performance obligations for our contracts.

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The following is a summary of funded and unfunded backlog:

June 27, December 31,

September 26, December 31,

(In millions) 2025 2024

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Funded orders (different from funded backlog) represent orders for which funding was received during the period.

We received funded orders of $2.2 billion during the six months ended June 27, 2025, which was an increase of $0.1 billion compared to the six months ended June 28, 2024.

We received funded orders of $3.3 billion during the nine months ended September 26, 2025, which was a decrease of $0.1 billion compared to the nine months ended September 27, 2024.

Economic Opportunities, Challenges and Risks

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V2X believes that its capabilities should help its clients increase efficiency, reduce costs, improve readiness, and strengthen national security and, as a result, continue to allow for long-term profitable growth in the business.

Further, the DoD budget remains the largest in the world and management believes the Company's addressable portion of the DoD budget offers substantial opportunity for growth.

Further, the DoW budget remains the largest in the world and management believes the Company's addressable portion of the DoW budget offers substantial opportunity for growth.

government's Fiscal Year (FY) begins on October 1 and ends on September 30.

On March 15, 2025, the President signed into law the Full-Year Continuing Appropriations and Extensions Act 2025 to continue funding the government through FY 2025.

The FY 2025 Continuing Resolution (CR) is generally similar to the FY 2024 funding levels but includes a $6 billion increase in defense spending and certain reductions in non-defense spending compared to FY 2024.

The DoD FY 2025 base budget equals approximately $831 billion with the spending increase.

Additionally, the FY 2025 CR provides the DoD with the flexibility to allocate funding, including authority to start new programs, assuming certain requirements are met.

However, government operations under the FY 2025 CR could have potential impacts on the timing and award of new programs and contracts.

The Administration recently submitted the FY 2026 budget request to Congress, kicking off the defense authorization and appropriations legislative process.

The DoD FY 2026 budget request is approximately $962 billion, including both discretionary appropriations and mandatory funding contained in the One Big Beautiful Bill Act (OBBBA).

The DoW FY 2026 budget request is approximately $962 billion, including both discretionary appropriations and mandatory funding contained in the One Big Beautiful Bill Act (OBBBA).

The OBBBA was signed into law by the President on July 4th, 2025, and allocates approximately $150 billion in appropriations to support defense and national security priorities.

Of the $150 billion in OBBBA appropriations, approximately $113 billion is mandatory funding aligned to the FY 2026 DoD budget.

Of the $150 billion in OBBBA appropriations, approximately $113 billion is mandatory funding aligned to the FY 2026 DoW budget.

Congress will need to approve or revise the FY 2026 budget request through enactment of appropriations and other legislation, which would require final approval from the President to become law.

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We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, Congress, the debt ceiling, the global security environment, inflationary pressures, and other macroeconomic conditions.

The FY 2026 appropriations for the U.S.

government were not enacted by September 30, 2025, resulting in a U.S.

federal government shutdown that began on October 1, 2025, and continues through the date of this filing.

The result may shift funding priorities, which could have material impacts on our programs and defense spending broadly.

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Those actions remain uncertain and could result in impacts to our current and future financial performance and business prospects.

Per federal guidelines, we are continuing to perform work on existing contracts that have been funded with appropriations from prior years.

While not currently the case, we may be expected to operate for some period of time on certain U.S.

government contracts even if the U.S.

government customer is unable to make timely payments.

To date, the Company has not experienced a material impact from the government shutdown.

However, if the U.S.

federal government shutdown continues for an extended period it could result in significant consequences for our company, employees, customers, suppliers and our industry and could result in material impacts to our financial position, results of operations, bookings, backlog, and/or collections and cash flows.

While it is difficult to predict the specific course of future defense budgets, V2X believes the core functions the Company performs are mission-essential and spending to maintain readiness, improve performance, increase service life, lower cost, and modernize capabilities will continue to be a U.S.

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Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and updated, as necessary, on subsequent Quarterly Reports on Form 10-Q, and the matters identified under the caption “Forward-Looking Statement Information" herein.

Secondary Public Offering

On May 15, 2025, we entered into an underwriting agreement (the Underwriting Agreement), by and among the Company, Vertex Aerospace Holdco LLC (the Selling Shareholder) and RBC Capital Markets, LLC, as underwriter (the Underwriter), relating to the public offering (the Offering) of 2,000,000 shares of common stock by the Selling Shareholder and up to 300,000 additional shares of common stock at the Underwriter’s option at any time on or before the 30th day after the date of the prospectus supplement dated May 15, 2025 (the Option).

The Offering closed on May 19, 2025.

The Selling Shareholder elected not to exercise the Option.

The Company did not sell any securities in the Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

During the three months ended June 27, 2025, we incurred costs of $0.2 million in connection with the Offering.

These costs are included within selling, general, and administrative expenses on our Condensed Consolidated Statement of Income (Loss).

Secondary Public Offerings

On May 15, 2025, we entered into an underwriting agreement (the May 2025 Underwriting Agreement), by and among the Company, Vertex Aerospace Holdco LLC (the Selling Shareholder) and RBC Capital Markets, LLC, as underwriter (the Underwriter), relating to the public offering (the May 2025 Offering) of 2,000,000 shares of common stock by the Selling Shareholder and up to 300,000 additional shares of common stock at the Underwriter’s option at any time on or before the 30th day after the date of the prospectus supplement dated May 15, 2025 (the May 2025 Option).

The May 2025 Offering closed on May 19, 2025.

The Selling Shareholder elected not to exercise the May 2025 Option.

The Company did not sell any securities in the May 2025 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

On August 8, 2025, we entered into an underwriting agreement (the August 2025 Underwriting Agreement), by and among the Company, the Selling Shareholder and the Underwriter, relating to the public offering (the August 2025 Offering) of 2,000,000 shares of common stock by the Selling Shareholder.

The August 2025 Offering closed on August 11, 2025.

In connection with the August 2025 Offering, we purchased from the Underwriter 200,000 shares of common stock that were subject to the August 2025 Offering at a price per share equal to the price per share paid by the Underwriter to the Selling Shareholder in the August 2025 Offering.

We did not sell any securities in the August 2025 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

In addition, on September 11, 2025, the Selling Shareholder sold 1,700,000 shares of common stock pursuant to Rule 144 of the Securities Act (the September 2025 Rule 144 Sale).

As a result of the reduced percentage ownership of 25.7% resulting from the September 2025 Rule 144 Sale and in accordance with the terms of the V2X Shareholders Agreement dated July 22, 2022 between the Selling Shareholder and the Company (the Shareholders Agreement), one director designated by the Selling Shareholder and certain of its affiliates is obligated to resign from the Board of Directors (the Board) of the Company effective no later than the Company's 2026 Annual Meeting of Shareholders (the 2026 Annual Meeting).

We did not sell any securities in the September 2025 Rule 144 Sale and did not receive any proceeds from the sale of the shares sold by the Selling Shareholder.

On September 4, 2024, we entered into an underwriting agreement (the 2024 Underwriting Agreement), by and among the Company, the Selling Shareholder and Goldman Sachs & Co.

LLC, Morgan Stanley & Co.

LLC and Robert W.

Incorporated, as representatives to several underwriters named therein (the 2024 Underwriters), relating to the public offering of 2,000,000 shares of common stock by the Selling Shareholder (the 2024 Secondary Offering) and up to 300,000 additional shares of common stock (the Option Shares) by the Selling Shareholder at the 2024 Underwriters’ option at any time on or before the 30th day after the date of the 2024 Underwriting Agreement (the Option, and together with the 2024 Secondary Offering, the 2024 Offering).

The 2024 Secondary Offering closed on September 6, 2024.

The Company did not sell any securities in the 2024 Secondary Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder.

On September 11, 2024, the 2024 Underwriters notified the Company and the Selling Shareholder that they had elected to exercise the Option in full.

The offering of the Option Shares closed on September 12, 2024.

All of the Option Shares were sold by the Selling Shareholder.

The Company did not receive any of the proceeds from the sale of the Option Shares by the Selling Shareholder in the offering.

During the three and nine months ended September 26, 2025, we incurred costs of $0.1 million and $0.3 million, respectively, in connection with the secondary offerings.

During both the three and nine months ended September 27, 2024, we incurred costs of $0.6 million in connection with the 2024 Offering.

These are accounting and legal fees, and the costs are included within selling, general, and administrative expenses on our Condensed Consolidated Statement of Income.

DISCUSSION OF FINANCIAL RESULTS

Three months ended June 27, 2025, compared to three months ended June 28, 2024

Three months ended September 26, 2025, compared to three months ended September 27, 2024

Selected financial highlights are presented in the following table:

Three Months Ended Change

June 27, June 28,

September 26, September 27,

(In thousands, except for percentages) 2025 2024 $ %

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Operating margin 4.8 % 4.6 %

Loss on extinguishment of debt (313) (1,998) 1,685 (84.3) %

Interest expense, net (19,961) (27,152) 7,191 (26.5) %

Other expense, net (2,962) (3,198) 236 (7.4) %

Income (loss) from operations before income taxes 29,450 (8,114) 37,564 (463.0) %

Income from operations before income taxes 32,746 19,537 13,209 67.6 %

% of revenue 2.8 % 1.8 %

Income tax expense (benefit) 7,059 (1,570) 8,629 (549.6) %

Income tax expense 8,141 4,486 3,655 81.5 %

Effective income tax rate 24.9 % 23.0 %

Net income (loss) $ 22,391 $ (6,544) $ 28,935 (442.2) %

Revenue increased $6.1 million, or 0.6%, for the three months ended June 27, 2025 as compared to the three months ended June 28, 2024 primarily due to the conclusion of a non-recurring contractual commitment.

Net income $ 24,605 $ 15,051 $ 9,554 63.5 %

Revenue increased $85.5 million, or 7.9%, for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024 primarily driven by the ramp up of several programs.

Revenue from our programs in the U.S.

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Cost of Revenue

Cost of revenue decreased $15.8 million, or 1.6%, for the three months ended June 27, 2025 as compared to the three months ended June 28, 2024, primarily driven by favorable contract mix.

Cost of revenue increased $82.4 million, or 8.3%, for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024, primarily driven by the increase in revenue.

Selling, General, & Administrative Expenses

SG&A expenses decreased $3.6 million, or 7.8%, for the three months ended June 27, 2025 as compared to the three months ended June 28, 2024, primarily due to lower integration-related costs and timing of expenses.

SG&A expenses decreased $2.7 million, or 6.5%, for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024, primarily due to lower integration-related costs.

Operating Income

Operating income increased $25.5 million, or 93.0%, for the three months ended June 27, 2025 as compared to the three months ended June 28, 2024.

Operating income as a percentage of revenue was 4.9% for the three months ended June 27, 2025, compared to 2.6% for the three months ended June 28, 2024, primarily driven by the conclusion of a non-recurring contractual commitment, decreased SG&A expenses and favorable contract mix.

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

The aggregate cumulative adjustments for the three months ended June 27, 2025 and June 28, 2024 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Loss on Extinguishment of Debt

The Company recorded a $0.3 million loss on extinguishment of debt for the three months ended June 27, 2025 and a $2.0 million loss on extinguishment of debt for the three months ended June 28, 2024.

For further discussion see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements.

Six months ended June 27, 2025, compared to six months ended June 28, 2024

Operating income increased $5.8 million, or 11.6%, for the three months ended September 26, 2025 as compared to the three months ended September 27, 2024.

Operating income as a percentage of revenue was 4.8% for the three months ended September 26, 2025, compared to 4.6% for the three months ended September 27, 2024, primarily driven by the ramp up of several programs and decreased SG&A expenses.

Aggregate cumulative adjustments increased operating income by $2.5 million and $17.3 million for the three months ended September 26, 2025 and September 27, 2024, respectively.

The aggregate cumulative adjustments for the three months ended September 26, 2025 and September 27, 2024 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Nine months ended September 26, 2025, compared to nine months ended September 27, 2024

Selected financial highlights are presented in the following table:

Six Months Ended Change

June 27, June 28,

Nine Months Ended Change

September 26, September 27,

(In thousands, except for percentages) 2025 2024 $ %

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Other expense, net (7,836) (9,566) 1,730 (18.1) %

Income (loss) from operations before income taxes 39,520 (6,990) 46,510 (665.4) %

Income from operations before income taxes 72,266 12,547 59,719 476.0 %

% of revenue 2.2 % 0.4 %

Income tax expense (benefit) 9,022 (1,590) 10,612 (667.4) %

Income tax expense 17,163 2,896 14,267 492.6 %

Effective income tax rate 23.7 % 23.1 %

Net income (loss) $ 30,498 $ (5,400) $ 35,898 (664.8) %

Revenue increased $11.5 million, or 0.6%, for the six months ended June 27, 2025 as compared to the six months ended June 28, 2024 primarily due to the conclusion of a non-recurring contractual commitment.

Net income $ 55,103 $ 9,651 $ 45,452 471.0 %

Revenue increased $97.0 million, or 3.1%, for the nine months ended September 26, 2025 as compared to the nine months ended September 27, 2024, primarily driven by the ramp up of several programs.

Revenue from programs located in the U.S.

increased by $86.2 million, partially offset by a decrease in revenue from programs located in the Middle East, Europe and Asia of $65.7 million, $8.3 million and $0.7 million, respectively.

increased by $166.0 million, partially offset by a decrease in revenue from programs located in the Middle East and Asia of $67.6 million and $2.2 million, respectively.

Cost of Revenue

Cost of revenue decreased $18.2 million, or 0.9%, for the six months ended June 27, 2025 as compared to the six months ended June 28, 2024, primarily driven by favorable contract mix.

Cost of revenue increased $64.2 million, or 2.2%, for the nine months ended September 26, 2025 as compared to the nine months ended September 27, 2024, primarily driven by the increase in revenue.

Selling, General, & Administrative Expenses

SG&A expenses increased $0.2 million, or 0.3%, for the six months ended June 27, 2025 as compared to the six months ended June 28, 2024.

SG&A expenses decreased $2.5 million, or 1.9%, for the nine months ended September 26, 2025 as compared to the nine months ended September 27, 2024, primarily due to lower integration-related costs, partially offset by the timing of expenses.

Operating Income

Operating income increased $29.5 million, or 51.0%, for the six months ended June 27, 2025 as compared to the six months ended June 28, 2024.

Operating income as a percentage of revenue was 4.2% for the six months ended June 27, 2025, compared to 2.8% for the six months ended June 28, 2024.

The increase in operating income was primarily driven by the conclusion of a non-recurring contractual commitment, changes in aggregate cumulative adjustments and favorable contract mix.

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

The aggregate cumulative adjustments for the six months ended June 27, 2025 and June 28, 2024 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Operating income increased $35.3 million, or 32.8%, for the nine months ended September 26, 2025 as compared to the nine months ended September 27, 2024.

Operating income as a percentage of revenue was 4.4% for the nine months ended September 26, 2025, compared to 3.4% for the nine months ended September 27, 2024.

The increase in operating income was primarily driven by the ramp up of several programs, the conclusion of a non-recurring contractual commitment, decreased SG&A expenses, and favorable contract mix.

Aggregate cumulative adjustments increased operating income by $8.1 million and $18.5 million for the nine months ended September 26, 2025 and September 27, 2024, respectively.

The aggregate cumulative adjustments for the nine months ended September 26, 2025 and September 27, 2024 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

Loss on Extinguishment of Debt

The Company recorded a $2.5 million loss on extinguishment of debt for the six months ended June 27, 2025 and a $2.0 million loss on extinguishment of debt for the six months ended June 28, 2024.

The Company recorded a $2.5 million loss on extinguishment of debt for the nine months ended September 26, 2025 and a $2.0 million loss on extinguishment of debt for the nine months ended September 27, 2024.

For further discussion see Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements.

Interest Expense, Net

Interest expense, net for the three and six months ended June 27, 2025 and June 28, 2024 was as follows:

Three Months Ended Change Six Months Ended Change

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

Interest expense, net for the three and nine months ended September 26, 2025 and September 27, 2024 was as follows:

Three Months Ended Change Nine Months Ended Change

September 26, September 27, September 26, September 27,

(In thousands, except for percentages) 2025 2024 $ % 2025 2024 $ %

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Interest expense is related to borrowings under our senior secured credit facilities, with the amortization of debt issuance costs, and derivative instruments used to hedge a portion of exposure to interest rate risk.

Interest expense, net decreased $16.1 million for the six months ended June 27, 2025 compared to the six months ended June 28, 2024 primarily due to a decrease in our debt balance and reduced interest rates resulting from both the January 2, 2025 amendment to the First Lien Credit Agreement and the March 31, 2025 amendment to the 2023 Credit Agreement.

Interest expense, net decreased $23.3 million for the nine months ended September 26, 2025 compared to the nine months ended September 27, 2024 primarily due to a decrease in our debt balance and reduced interest rates resulting from both the January 2, 2025 amendment to the First Lien Credit Agreement and the March 31, 2025 amendment to the 2023 Credit Agreement.

For further discussion of these amendments see Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements.

Other Expense, Net

During the three and six months ended June 27, 2025, we incurred purchase discount fees, net of servicing fees, of $2.6 million and $5.1 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

During the three and six months ended June 28, 2024, we incurred purchase discount fees and other expenses of $2.6 million and $4.2 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

In addition, during the three and six months ended June 28, 2024, we incurred a $2.2 million impairment charge on a non-operating, long-lived asset, primarily due to a decreased fair market value.

During the three and six months ended June 27, 2025, there were no impairment charges on non-operating, long-lived assets.

Income Tax Expense (Benefit)

We recorded income tax expense of $7.1 million and income tax benefits of $1.6 million for the three months ended June 27, 2025 and June 28, 2024, respectively.

Our effective income tax rates for the three months ended June 27, 2025 and June 28, 2024, were 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, representing effective income tax rates of 22.8% and 22.7%, respectively.

During the three and nine months ended September 26, 2025, we incurred purchase discount fees, net of servicing fees, of $3.0 million and $8.1 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

During the three and nine months ended September 27, 2024, we incurred purchase discount fees, net of servicing fees, of $3.2 million and $7.4 million, respectively, related to the sale of accounts receivable through the MARPA Facility.

In addition, during the nine months ended September 27, 2024, we incurred a $2.2 million impairment charge on a non-operating, long-lived asset, primarily due to a decreased fair market value.

During the three and nine months ended September 26, 2025, there were no impairment charges on non-operating, long-lived assets.

Income Tax Expense

We recorded income tax expense of $8.1 million and $4.5 million for the three months ended September 26, 2025 and September 27, 2024, respectively.

Our effective income tax rates for the three months ended September 26, 2025 and September 27, 2024, were 24.9% and 23.0%, respectively.

For the nine months ended September 26, 2025 and September 27, 2024, the Company recorded income tax expense of $17.2 million and $2.9 million, representing effective income tax rates of 23.7% and 23.1%, 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.

LIQUIDITY AND CAPITAL RESOURCES

We are not aware of any known trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, a material decrease in our liquidity.

The FY 2026 appropriations for the U.S.

government were not enacted by September 30, 2025, resulting in a U.S.

federal government shutdown that began on October 1, 2025, and continues through the date of this filing.

We are monitoring potential impacts, which could include consequences to collections and cash flows if the shutdown extends for a prolonged period of time.

See "Economic Opportunities, Challenges and Risks ” for further information.

Outside of the aforementioned, we are not aware of any known trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, a material decrease in our liquidity.

In addition, other than items discussed, there are no known material trends, favorable or unfavorable, in our capital resources and no expected material changes in the mix of such resources.

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Although we believe our current financing arrangements will permit financing of our operations on acceptable terms and conditions, access to and the availability of financing on acceptable terms and conditions in the future will be impacted by many factors, including but not limited to:

(i) our credit ratings, (ii) the liquidity of the overall capital markets, and (iii) the current state of the economy.

(i) our credit ratings, (ii) the liquidity of the overall capital markets, (iii) the current state of the economy, and (iv) uncertainties in the U.S.

government defense budget and their ability to fund contracts, including those uncertainties arising from a prolonged U.S.

government shutdown.

We cannot provide assurance that such financing will be available on acceptable terms or that such financing will be available at all.

On January 2, 2025, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $899.8 million (the New Term Loans), in which the New Term Loans replace or refinance in full all the existing term loans outstanding under the First Lien Term Tranche as in effect immediately prior to the amendment (the Existing Term Loans).

On January 2, 2025, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $899.8 million (the New Term Loans), in which the New Term Loans replace or refinance in full all the existing term loans outstanding under the First Lien Term Tranche in effect immediately prior to the amendment (the Existing Term Loans).

See Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

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.

See Note 5, Debt , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

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.

As of September 26, 2025, the carrying value of the First Lien Credit Agreement was $895.3 million, excluding deferred discount and unamortized deferred financing costs of $25.2 million.

The estimated fair value of the First Lien Credit Agreement as of September 26, 2025 was $895.3 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).

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.

As of September 26, 2025, there were no outstanding borrowings and $24.1 million of outstanding letters of credit under the 2025 Revolver.

Availability under the 2025 Revolver was $475.9 million as of September 26, 2025.

Unamortized deferred financing costs related to the 2025 Revolver of $4.3 million are included in other non-current assets in the Condensed Consolidated Balance Sheets.

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.

As of September 26, 2025, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of September 26, 2025, the carrying value of the 2025 Term Loans was $236.0 million, excluding unamortized deferred financing costs of $1.8 million.

The estimated fair value of the 2025 Term Loans as of September 26, 2025 was $235.4 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 cash presented on the Condensed Consolidated Balance Sheets consists of U.S.

and international cash from wholly owned subsidiaries.

Approximately $34.3 million of our $190.5 million in cash, cash equivalents and restricted cash as of June 27, 2025 is held by foreign subsidiaries and is not available to fund U.S.

The cash presented on the Condensed Consolidated Balance Sheets consists of cash held by our wholly owned U.S.

and international subsidiaries.

Approximately $33.9 million of our $182.3 million in cash, cash equivalents and restricted cash as of September 26, 2025 is held by foreign subsidiaries and is not available to fund U.S.

operations unless repatriated.

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We determine our DSO by calculating the number of days necessary to exhaust our ending accounts receivable balance based on our most recent historical revenue.

DSO was 60 and 57 days as of June 27, 2025 and December 31, 2024, respectively.

DSO was 56 and 57 days as of September 26, 2025 and December 31, 2024, respectively.

The following table sets forth net cash (used in) provided by operating activities, investing activities and financing activities:

Six Months Ended

June 27, June 28,

Nine Months Ended

September 26, September 27,

(in thousands) 2025 2024

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Foreign exchange 1

4,775 (2,416)

Net change in cash, cash equivalents and restricted cash $ (86,003) $ (12,794)

1 Impact on cash balances due to changes in foreign exchange rates.

Net cash used in operating activities for the six months ended June 27, 2025 consisted of net cash outflows in working capital accounts of $161.7 million and net cash outflows in other long-term assets and liabilities of $7.8 million, partially offset by cash inflows from non-cash net income items of $63.0 million, net income of $30.5 million and cash inflows from the sale of receivables through the MARPA Facility of $9.0 million.

Net cash used in operating activities for the six months ended June 28, 2024 , primarily consisted of net cash outflows in working capital accounts of $198.9 million, net cash outflows in other long-term assets and liabilities of $26.6 million and net loss of $5.4 million, partially offset by cash inflows from the sale of receivables through the MARPA Facility of $121.9 million and cash inflows from non-cash net income items of $77.5 million.

Net cash used in investing activities for the six months ended June 27, 2025 consisted of $5.1 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in investing activities for the six months ended June 28, 2024 consisted of $16.9 million for the acquisition of businesses and $8.5 million of capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in financing activities during the six months ended June 27, 2025 consisted of revolver repayments of $319.0 million, payments for debt issuance costs of $3.9 million, repayments of long-term debt of $3.8 million and payments for employee withholding taxes on stock-based compensation of $3.0 million, partially offset by proceeds from the revolver of $319.0 million.

Net cash provided by financing activities during the six months ended June 28, 2024 consisted of proceeds from the revolver of $648.8 million , partially offset by revolver repayments of $602.8 million , payments for employee withholding taxes on stock-based compensation of $5.8 million , repayments of long-term debt of $7.7 million, and payments for debt issuance costs of $1.2 million .

Net cash used in operating activities of $27.5 million for the nine months ended September 26, 2025 consisted of net cash outflows in working capital accounts of $180.6 million and other long-term assets and liabilities of $10.9 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $91.9 million, net proceeds from the sale of receivables through the MARPA Facility of $17.0 million, and net income of $55.1 million.

Net cash provided by operating activities of $31.1 million for the nine months ended September 27, 2024, consisted of non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $110.8 million, proceeds from the sale of receivables through the MARPA Facility of $70.7 million, and net income of $9.7 million, partially offset by net cash outflows in working capital accounts of $119.7 million and other long-term assets and liabilities of $40.3 million.

Net cash used in investing activities for the nine months ended September 26, 2025 consisted of $27.5 million for the acquisition of a business and $7.4 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in investing activities for the nine months ended September 27, 2024 consisted of $16.9 million for the acquisition of businesses and $10.7 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations.

Net cash used in financing activities during the nine months ended September 26, 2025 primarily consisted of revolver repayments of $459.0 million, purchases of treasury stock of $10.0 million, repayments of long-term debt of $7.5 million, payments for debt issuance costs of $3.9 million, and payments for employee withholding taxes on stock-based compensation of $3.0 million, partially offset by proceeds from the revolver of $459.0 million.

Net cash used in financing activities during the nine months ended September 27, 2024 primarily consisted of revolver repayments of $1.0 billion, payments for employee withholding taxes on share-based compensation of $8.0 million, repayments of long-term debt of $7.7 million, and payments for debt issuance costs of $1.2 million, partially offset by proceeds from the revolver of $1.0 billion.

Capital Resources

As of June 27, 2025, we held cash, cash equivalents and restricted cash of $190.5 million, which included $34.3 million held by foreign subsidiaries, and had $476.2 million of available borrowing capacity under the 2025 Revolver.

We believe that our cash, cash equivalents and restricted cash as of June 27, 2025, as supplemented by operating cash flows, the 2025 Revolver, and the MARPA Facility will be sufficient to fund our anticipated operating costs, capital expenditures, and current debt repayment obligations for at least the next 12 months.

As of September 26, 2025, we held cash, cash equivalents and restricted cash of $182.3 million, which included approximately $33.9 million held by foreign subsidiaries, and had $475.9 million of available borrowing capacity under the 2025 Revolver.

We believe that our cash, cash equivalents and restricted cash as of September 26, 2025, as supplemented by operating cash flows, the 2025 Revolver, and the MARPA Facility will be sufficient to fund our anticipated operating costs, capital expenditures, and current debt repayment obligations for at least the next 12 months.

Further discussion on the U.S.

federal government shutdown is contained in " Liquidity ."

Contractual Obligations

As of June 27, 2025, commitments to make future payments under long-term contractual obligations were as follows:

As of September 26, 2025, commitments to make future payments under long-term contractual obligations were as follows:

Payments Due by Period

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Total $ 1,554,677 $ 95,482 $ 210,433 $ 379,875 $ 868,887

¹ Includes unused funds fee and is based on the June 27, 2025 interest rate and outstanding balance.

¹ Includes unused funds fee and is based on the September 26, 2025 interest rate and outstanding balance.

CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

30 unchanged sentences

or international government defense budgets, including potential changes from the U.S.

president and administration;

government regulations and compliance therewith, including changes to the DoD procurement process;

president and administration and impacts from the current U.S.

government shutdown;

government regulations and compliance therewith, including changes to the DoW procurement process;

changes in technology;

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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 2. Management’s Discussion and Analysis