V2X, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included in this Quarterly Report on Form 10-Q as well as the audited Consolidated Financial Statements and notes thereto and the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. This Quarterly Report provides additional information regarding the Company, our services, industry outlook and forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements. See "Forward-Looking Statement Information" for further information. Amounts presented in and throughout this Item 2 are rounded and, as such, rounding differences could occur in period over period changes and percentages reported. Overview V2X 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. Our primary customer is the U.S. Department of War (DoW), also known as the Department of Defense under 10 U.S.C. § 111(a). 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 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. Army. Executive Summary 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 $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. Additionally, the fees under certain contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. These incentive fees or penalties are included in revenue when there is sufficient information to reasonably assess anticipated contract performance. Amounts representing contract change orders or limitations in funding on contracts are recorded only if it is probable a claim will result in additional contract revenue and the amounts can be reliably estimated. Changes in estimated revenue, cost of revenue and the related effect to operating income are recognized using cumulative adjustments, which recognize in the current period the cumulative effect of the changes on current and prior periods based on a contract's percentage of completion. Cumulative adjustments are driven by changes in contract terms, program performance, customer scope changes and changes to estimates in the reported period. 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 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. 22 Table of Contents Significant Contracts The following table reflects contracts that accounted for more than 10% of total revenue: % of Total Revenue Nine Months Ended September 26, September 27, Contract Name 2025 2024 Logistics Civil Augmentation Program (LOGCAP) V - Kuwait Task Order 10.2% 10.4% Revenue associated with a contract will fluctuate based on increases or decreases in the work being performed on the contract, award fee payment assumptions, and other contract modifications within the term of the contract resulting in changes to the total contract value. The LOGCAP V - Kuwait Task Order is currently exercised through June 30, 2026. On April 17, 2025, the U.S. 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 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 Backlog represents revenue we expect to recognize in the future as work is performed for remaining performance obligations for our contracts. Backlog includes funded amounts (funding is contractually authorized and appropriated by the customer) and unfunded amounts (amounts not currently contractually obligated by the customer). Total backlog excludes potential orders under IDIQ contracts and contracts awarded to us that are being protested by competitors with the GAO or in the COFC for which a stop work order has been received by the Company. Actual backlog values may vary due to the level of order activity related to programs, the timing of government funding authorizations or de-obligations of funding. Year-over-year comparisons could, at times, be impacted by these factors, among others. Our contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year or less option periods for the remaining contract period. The number of option periods vary by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when we are the prime contractor or of the prime contractor when we are a subcontractor. The U.S. government may also extend the term of a program by issuing extensions or bridge contracts, typically for periods of one year or less. We expect to recognize a substantial portion of our funded backlog as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience. Most of our contracts have terms that would permit recovery of all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience. The following is a summary of funded and unfunded backlog: September 26, December 31, (In millions) 2025 2024 Funded backlog $ 2,279 $ 2,251 Unfunded backlog 9,295 10,251 Total backlog $ 11,574 $ 12,502 Funded orders (different from funded backlog) represent orders for which funding was received during the period. 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. 23 Table of Contents Economic Opportunities, Challenges and Risks The U.S. government’s investment in services and capabilities in response to changing security challenges creates a complex and fluid business environment for V2X and other firms in this market. However, the U.S. continues to face substantial fiscal and economic challenges in addition to a varying political environment which could affect funding. The pace and depth of U.S. government acquisition reform and cost savings initiatives, combined with increased industry competitiveness to win long-term positions on key programs, could add pressure to revenue levels and profit margins. However, the Company expects the U.S. government will continue to place a high priority on national security and will continue to invest in affordable solutions. 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 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. The U.S. 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 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 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. See Note 9, Income Taxes , in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion relating to the OBBBA. 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. Additionally, the Administration continues to assess government-wide procurement, staffing, and support activities, including the evaluation of mission priorities, acquisition methods, contract performance, and other factors, which could result in potential actions. 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. government priority. The Company's focus is on providing integrated solutions across the mission lifecycle that encompass (i) high impact readiness; (ii) integrated supply chain management; (iii) assured communications; (iv) mission solutions, including rapid response contingency efforts; and (v) platform renewal and modernization. The Company believes its capabilities enhance mission effectiveness, extend utility, lower cost, and improve security and mission outcomes. While customers may reduce the level of services required from us, the Company does not currently anticipate the complete elimination of these services, and the Company continues to focus on contract expansion and capturing new business opportunities. However, business conditions have become more challenging and uncertain due to macroeconomic and geopolitical conditions, including inflation and rising interest rates, as well as recent international events. For example, global hostilities could create additional demand for our products and services; however, any such demand, and the timing and extent of any incremental contract activity resulting from that demand, remains uncertain. Further, given the current level of inflation and geopolitical factors, the Company is monitoring the impact of rising costs on its active and future contracts and its financial results, and actively evaluating opportunities for cost reductions and deleveraging. The Company’s earnings and profitability may vary materially depending on the total mix of contracts. To date, the Company has not experienced broad-based increases from inflation or geopolitical hostilities, including as a result of tariffs, in the costs of its fixed-price and time and materials contracts that are material to the business. However, if the geopolitical conditions worsen or if the Company experiences greater than expected inflation in its supply chain and labor costs, then profit margins, and in particular, the profit margin from fixed-price and time and materials contracts, which represent a substantial portion of its contracts, could be adversely affected. 24 Table of Contents The information provided above does not represent a complete list of trends and uncertainties that could impact the Company's business in either the near or long-term and should be considered along with the risk factors identified in Part I, "Item 1A. 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 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. Baird & Co. 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. 25 Table of Contents DISCUSSION OF FINANCIAL RESULTS 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 September 26, September 27, (In thousands, except for percentages) 2025 2024 $ % Revenue $ 1,167,137 $ 1,081,656 $ 85,481 7.9 % Cost of revenue 1,072,632 990,220 82,412 8.3 % % of revenue 91.9 % 91.5 % Selling, general, and administrative expenses 38,836 41,549 (2,713) (6.5) % % of revenue 3.3 % 3.8 % Operating income 55,669 49,887 5,782 11.6 % Operating margin 4.8 % 4.6 % Interest expense, net (19,961) (27,152) 7,191 (26.5) % Other expense, net (2,962) (3,198) 236 (7.4) % Income from operations before income taxes 32,746 19,537 13,209 67.6 % % of revenue 2.8 % 1.8 % Income tax expense 8,141 4,486 3,655 81.5 % Effective income tax rate 24.9 % 23.0 % Net income $ 24,605 $ 15,051 $ 9,554 63.5 % Revenue 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. 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. Cost of Revenue 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 $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 $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. 26 Table of Contents Nine months ended September 26, 2025, compared to nine months ended September 27, 2024 Selected financial highlights are presented in the following table: Nine Months Ended Change September 26, September 27, (In thousands, except for percentages) 2025 2024 $ % Revenue $ 3,261,390 $ 3,164,403 $ 96,987 3.1 % Cost of revenue 2,993,049 2,928,858 64,191 2.2 % % of revenue 91.8 % 92.6 % Selling, general, and administrative expenses 125,434 127,901 (2,467) (1.9) % % of revenue 3.8 % 4.0 % Operating income 142,907 107,644 35,263 32.8 % Operating margin 4.4 % 3.4 % Loss on extinguishment of debt (2,527) (1,998) (529) 26.5 % Interest expense, net (60,278) (83,533) 23,255 (27.8) % Other expense, net (7,836) (9,566) 1,730 (18.1) % Income from operations before income taxes 72,266 12,547 59,719 476.0 % % of revenue 2.2 % 0.4 % Income tax expense 17,163 2,896 14,267 492.6 % Effective income tax rate 23.7 % 23.1 % Net income $ 55,103 $ 9,651 $ 45,452 471.0 % Revenue 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 $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 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 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 $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 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. 27 Table of Contents Interest Expense, Net 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 $ % Interest income $ 1,009 $ 187 $ 822 440 % $ 1,417 $ 776 $ 641 83 % Interest expense (20,970) (27,339) 6,369 (23) % (61,695) (84,309) 22,614 (27) % Interest expense, net $ (19,961) $ (27,152) $ 7,191 (26) % $ (60,278) $ (83,533) $ 23,255 (28) % Interest income is related to interest earned on cash and cash equivalents. 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 $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 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 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. Our major source of funding for 2025 and beyond is expected to be our operating cash flow, our existing balances of cash and cash equivalents and proceeds from any issuances of debt. We believe we have sufficient liquidity to fund operations, acquisitions, capital expenditures and scheduled debt repayments. We expect to fund our ongoing working capital, capital expenditure and financing requirements and pursue additional growth through new business development and potential acquisition opportunities by using cash flows from operations, cash on hand, credit facilities, and access to capital markets. When necessary, the 2025 Revolver and MARPA Facility are available to satisfy short-term working capital requirements. 28 Table of Contents If cash flows from operations are less than expected, we may need to access the long-term or short-term capital markets. 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, (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 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 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 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 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 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 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 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. We do not currently expect to repatriate undistributed earnings of foreign subsidiaries. We expect our U.S. domestic cash resources will be sufficient to fund our U.S. operating activities and cash commitments for financing activities. Sources and Uses of Liquidity Cash, accounts receivable, unbilled receivables, and accounts payable are the principal components of the Company's working capital and are generally driven by revenue with other short-term fluctuations related to payment practices by customers, sales of accounts receivable through the MARPA Facility and the timing of billings. Our receivables reflect amounts billed to customers, as well as the revenue that was recognized in the preceding month, which is normally billed the month following each balance sheet date. Accounts receivable balances can vary significantly over time and are impacted by revenue levels and the timing of payments received from customers. Days sales outstanding (DSO) is a metric used to monitor accounts receivable levels. 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 56 and 57 days as of September 26, 2025 and December 31, 2024, respectively. 29 Table of Contents The following table sets forth net cash (used in) provided by operating activities, investing activities and financing activities: Nine Months Ended September 26, September 27, (in thousands) 2025 2024 Operating activities $ (27,484) $ 31,103 Investing activities (34,875) (27,625) Financing activities (23,879) (16,739) Foreign exchange 1 235 467 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 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 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 ." 30 Table of Contents Contractual Obligations As of September 26, 2025, commitments to make future payments under long-term contractual obligations were as follows: Payments Due by Period Less than 1 year More than 5 Years (In thousands) Total 1 - 3 Years 3 - 5 Years Leases $ 49,685 $ 3,379 $ 23,583 $ 14,352 $ 8,371 Principal payments on First Lien Credit Agreement¹ 895,271 8,998 17,995 17,995 850,283 Principal payments on 2023 Credit Agreement¹ 236,016 5,938 19,297 210,781 — Interest on First Lien and 2023 Credit Agreements 373,705 77,167 149,558 136,747 10,233 Total $ 1,554,677 $ 95,482 $ 210,433 $ 379,875 $ 868,887 ¹ Includes unused funds fee and is based on the September 26, 2025 interest rate and outstanding balance. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Management believes that the accounting estimates employed, and the resulting balances, are reasonable; however, actual results in these areas could differ from management's estimates under different assumptions or conditions. We believe that the assumptions and estimates associated with revenue recognition, goodwill impairment, intangible assets and income taxes have the greatest potential impact on our financial statements because they are inherently uncertain, involve significant judgments and include areas where different estimates reasonably could materially impact the financial statements. There have been no material changes in the critical accounting policies and estimates from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2024. New Accounting Pronouncements Refer to Part I, Item 1, Note 2 , Recent Accounting Standards Update in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding accounting pronouncements and accounting standards updates. FORWARD-LOOKING STATEMENT INFORMATION This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act), and the Private Securities Litigation Reform Act of 1995 and, as such, may involve risks and uncertainties. All statements included or incorporated by reference in this report, other than statements that are purely historical, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential,” “continue” or similar terminology. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. The forward-looking statements included or incorporated by reference in this report are subject to additional risks and uncertainties further identified and discussed in Part I, "Item 1A. Risk Factors” of our 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 are based on information available to us on the filing date of this report. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. 31 Table of Contents We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to: our ability to submit proposals for and/or win all potential opportunities in our pipeline; our ability to retain and renew our existing contracts; our ability to compete with other companies in our market; security breaches, cyber-attacks or cyber intrusions, and other disruptions to our information technology and operation; our mix of cost-plus, cost-reimbursable, firm-fixed-price and time-and-materials contracts; maintaining our reputation and relationship with the U.S. government; protests of new awards; economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or international government defense budgets, including potential changes from the U.S. 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; our ability to protect our intellectual property rights; governmental investigations, reviews, audits and cost adjustments; contingencies related to actual or alleged environmental contamination, claims and concerns; delays in completion of the U.S. government budget; our success in extending, deepening, and enhancing our technical capabilities; our success in expanding our geographic footprint or broadening our customer base; our ability to realize the full amounts reflected in our backlog; impairment of goodwill; misconduct of our employees, subcontractors, agents, prime contractors and business partners; our ability to control costs; our level of indebtedness; terms of our credit agreements; inflation and interest rate risk; geopolitical risk, including as a result of recent global hostilities and tariffs; our subcontractors' performance; economic and capital markets conditions; our ability to maintain safe work sites and equipment; our ability to retain and recruit qualified personnel; our ability to maintain good relationships with our workforce and unions; our teaming relationships with other contractors; changes in our accounting estimates; the adequacy of our insurance coverage; volatility in our stock price; changes in our tax provisions or exposure to additional income tax liabilities; risks and uncertainties relating to integrating and refining internal control systems, including enterprise resource planning and business systems, post-merger; changes in GAAP; and other factors described in Part I, "Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2024 and described from time to time in our future reports filed with the SEC.