VVX 10-K & 10-Q changes, risk factors and insider trading

In evaluating our Company and business, you should carefully consider the risks and uncertainties described below, together with information disclosed elsewhere in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this Annual Report, and other documents we file with the SEC. The risks described below relate to our business, governmental regulations, indebtedness, financial condition and markets, and our securities. Also, the risks and uncertainties described below are those that we have identified as material but are not the only risks and uncertainties we face. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may materially harm our business, financial condition or operating results and result in a decline in our stock price.

•Our profitability or performance could suffer if we are unable to recruitrecruit, retain and retaindevelop qualified personnel or if we are unable to maintain adequate staffing levels forto meet our contracts.contract requirements.

•A significant portion of our workforce is represented by labor unions,unions and conducting business internationally, and our business could be harmed in the event of a prolonged work stoppage.

•Our earnings and margins depend, in part, on subcontractorsupplier performance.

•Misconduct of our employees, subcontractors,suppliers, agents, prime contractors or business partners could cause us to sustain financial or criminal penalties, lose customers and could have a material adverse impact on our business and reputation, adversely affecting our ability to obtain new contracts.

•We depend on our teaming arrangements and relationships with other contractors. If we are not able to maintain these relationships, or if these parties fail to satisfy their obligations to us or the customer, our revenue, profitability and growth prospects could be adversely affected.

•Environmental, health and safetyEHS issues could have a material adverse effect on our business, financial position or results of operations.

•The DoDDoW continues to modify its business practices, which could have a material effect on its overall procurement processes and adversely impact our current programs and potential new awards.

•In connection with the Merger, we assumed significantly more indebtedness than V2X's prior indebtedness. Our level of indebtedness and our ability to make payments on or service our indebtedness could adversely affect our business, financial condition, results of operations, cash flow and liquidity.

•If our significant shareholders who received shares of our common stock in the July 5, 2022 (the Closing Date) merger between Vectrus, Inc. (Vectrus) and Vertex Aerospace Services Holding Corp. (Vertex) (Merger) sell their shares, the price of our common stock could be materially affected.

In addition, we face rigorous competition and pricing pressures for any additional contract awards from the U.S. government. Some of our existing contracts must be recompeted (Recompetes) when the original period of performance ends. Recompetes represent opportunities for competitors to take market share away from us. Recompetes also represent opportunities for our customers to obtain more favorable terms from us.us that may present finance and performance risk. We may be required to qualify or continue to qualify under multiple award contracts, and it may be more difficult for us to pursue or win future task orders. If we are unable to consistently win new contract awards, or successfully capture recompetesRecompetes for our existing contracts, our business and prospects will be adversely affected, and our actual results may differ materially and adversely from those anticipated.

Our profitability or performance could suffer if we are unable to recruitrecruit, retain and retaindevelop qualified personnel or if we are unable to maintain adequate staffing levels forto meet our contracts.contract requirements.

Due to the specialized nature of our business, our future performance and rate of growth is highly dependent upon the continued services of our personnel and executive officers,leadership, the development of additional management personnel and the hiring of new qualifiedskilled technical, marketing, sales, and management personnel for our operations. Recruitment of qualified personnel is highly competitive, and we may not be successfulsucceed in attracting or retaining qualified personnel. In recent years, the industry-wide market for qualified employeespersonnel becamewe even more competitive than in previous years.need. We also must manage leadership development and succession planning throughout our business.business to ensure continuity. The loss of key employees, coupled with an inability to attract new, qualified employees or adequately onboard or train employees, or the delay in hiring key personnel could significantly impact our ability to perform under our contracts and could have an adverse effect on our business, results of operations and financial condition.

In addition, our profitability is affected by how efficientlyeffectively we deploy and utilize our workforce,workforce. includingThis ourincludes ability to transitiontransitioning employees from completed contracts to new assignments;assignments, to hire and assimilateassimilating new employees;hires, to hiredeploying personnel in ora timely deploymanner, expatriates to foreign countries; to managemanaging attrition and a subcontractor workforce;resources, and to devotededicating time and resources to training, business development, professional development and other non-chargeable activities.

Our U.S. government services contracts generally are of a finite duration ofthat five years and usuallymay range between three and ten years.years depending on a multitude of factors. The termination, expiration or non-renewal of our existing U.S. government contracts could result in a loss of anticipated future revenue attributable to that program, which could have an adverse impact on our operations.

The U.S. government may stop work or terminate any of our government contracts, in whole or in part, at any time at its convenience with little or no notice.notice in accordance with federal acquisition regulations. The U.S. government may also terminate our contracts for default if we fail to meet our obligations under a contract. If any of our contracts were terminated for convenience, we generally would be entitled to receive payment for work completed and allowable termination or cancellation costs.costs incurred on or prior to the termination effective date. If any of our government contracts were terminated for default, generally the customer would pay us only for the work that has been accepted. Moreover, the customer can require us to pay the difference between the original contract price and the cost to re-procure the contract deliverables, net of the work accepted from the original contract. In addition, the U.S. government can also hold us liable for damages resulting from the default.

The expiration, non-renewal or early termination of any government contracts, whether for convenience or default, would adversely affect our current programs and reduce our revenue, earnings and cash flows. A termination for default may also negatively affect our reputation, performance ratings and our ability to win new government contracts, particularly for contracts covering the same or similar types of services.services, affect our ability to receive extensions on current contracts and complete the full period of performance of such contracts, and may lead to increased litigation costs associated with challenging such early termination.

Revenue from our largest contract, the Kuwait Task Order under the LOGCAP V contract vehicle, which is expected to extend through June 2030, amounted to approximately $450.3$441.6 million, or 10.4%9.9% of our revenue for the year ended December 31, 2024.2025. Performance on the Kuwait Task Order began in July 2021. The award iswas approximately $1.7$2.9 billion with an estimated period of performance completion in December 2026.

We expect the Kuwait Task Order under LOGCAP V will continue to have a significant contribution to our revenue. The loss or material reduction of any of these contracts could have a material adverse effect on our revenue, results of operations and cash flows. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Significant Contracts" in this Annual Report on Form 10-K.

We continuously utilize, develop, install and maintain a number of information technology systemssystems, including related processes and procedures, both for us and for our customers. Additionally, we utilize and rely on external systems maintained by our service providers, including using a managed service provider (MSP) to administer our systems and servers. We also contract with Software-as-a-Service (SaaS) providers to provide core company services such as for enterprise resource planning (ERP), human capital management, and contract lifecycle management. These activities may involve substantial risks to our ongoing business processes including, but not limited to, accurate and timely customer invoicing, employee payroll processing, supplier and vendor payment processing, supply chain management and financial reporting. Our IT governance framework currently in place may be inadequate to fully protect against our exposure to cybersecurity threats and other operational disruptions. If these implementation activities are not executed successfully or if we encounter significant delays in our implementation efforts, we could experience interruptions to our business operations and processes.

We continue to implement a new ERP system, integrate a number of other IT systems into one and expect to continue to otherwise upgrade and expand our IT system capabilities,capabilities. includingIf SAPwe S/4HANA.fail Weto maintain current and updated systems, we may experience difficulties in our business operations, or difficulties in operating our business under the ERP, either of which could disrupt our operations, including our ability to timely ship and track product orders, our ability to accurately bill our customers, project inventory requirements, manage our supply chain, and otherwise adequately service our customers, and lead to increased costs and other difficulties. In the event we experience significant disruptions as a result of the ERP implementation or otherwise, we may not be able to fix our systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the efficiency of our entire operations and have a material adverse effect on our operating results and cash flows.

Even if we are qualified to work on a government contract, we may not be able to pursue certain work or be awarded the contract because of existing government policies or preferences designed to assist small businesses and other designated classifications of business. Accordingly, larger or new competitors, alliances among competitors, or competitors designated as small business contractors may emerge that may adversely affect our ability to compete. If we are unable to compete successfully against our current or future competitors, we may experience declines in revenue and market share, which could negatively impact our financial position, results of operations, or cash flows.

We recognize revenue from our contracts primarily over time using the input method (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress towards completion. This methodology requires estimates of total contract revenue, total costs at completion, and fees earned on the contract. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; and the performance of subcontractors. This estimation process, particularly due to the nature of the services being performed, is complex and involves a significant amount of judgment. Adjustments to original estimates are often required as work progresses, experience is gained, and additional information becomes known, even though the scope of the work required under the contract may not change. We recognize any adjustment as a result of a change in estimates as additional information becomes known. Changes in the underlying assumptions, circumstances or estimates could result in adjustments that may adversely affect our future financial results.

Because many fixed-price contracts are long-term and may also involve new technologies, unforeseen events, such as significant inflation, technological difficulties, cost fluctuations, problems with suppliers, and cost overruns can result in the contractual price becoming less favorable or even unprofitable to us. Revenue derived from firm-fixed-price contracts represented approximately 39%36% of our total revenue for the year ended December 31, 2024.2025. We monitor the impact of rising costs on our active and future government contracts given the current pace of inflationinflation, changes in economic conditions, customer practices, and other geopolitical factors. To date, the Company has not experienced broad-based material increases from inflation or geopolitical hostilities or factors in the costs of its firm-fixed-price, cost-plus and time-and-materials contracts. However, if the geopolitical conditions change or 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 firm-fixed-price, cost-plus and time-and-materials contracts, which represent a substantial portion of its contracts, could be adversely affected.

When making proposals on firm-fixed-price contracts, we rely heavily on our estimates of costscosts, andcustomers' clearly defining their requirements, timing for completing the associated projects, supplier quotes as well as assumptions regarding technical issues. In each case, our failure to accurately estimate costs or the resources needed to perform our contracts or to effectively manage and control our costs or vendors could result in reduced profits or losses. If we incur costs in excess of initial estimates or funding on a contract, we generally seek reimbursement for those costs through requests for equitable adjustments (REAs) or claims to the Contracting Officer, the denial of which may be appealed by some customers to the Armed Services Board of Contracting Appeals, and make assumptions on what we expect to recover in our financial statements, but we may not be able to negotiate full recovery for these costs. In addition, pursuit of theseany REAs and claims can require significant time and additional costs, including legal fees and expenses, and there is no guarantee that such actions would ultimately be successful.

Our contracts and revenue primarily depend upon the U.S. DoDDoW budget, which is subject to the congressional budget authorization and appropriations process and is difficult to predict. The U.S. Congress usually appropriates funds for a given program on an October 1 to September 30 fiscal year basis, even though contract periods of performance may extend over many years. Consequently, at the beginning of a major program, the contract is usually partially funded, and additional monies are committed to the contract by the procuring agency only as appropriations are made by Congress in future fiscal years. Impacts on DoDDoW budgets are a function of many factors beyond our control, including, but not limited to, changes in U.S. procurement policies, budget considerations, the federal debt ceiling, current and future economic conditions, presidential administration and congressional priorities, government shutdowns, such as the 2025 U.S. federal government shutdown, continuing resolutions, changing national security and defense requirements, geopolitical developments and actual fiscal year congressional appropriations for defense budgets. TheFor Januarya discussion on the 2025 presidentialU.S. federal government shutdown, see Management's Discussion and administrationAnalysis transitionof Financial Condition and Results of Operations - Economic Opportunities, Challenges and Risks in theItem United7 Statesof maythis introduceAnnual furtherReport uncertaintieson toForm congressional spending and budgetary priorities that may materially affect our business.10-K. Any of these factors could result in a significant redirection of current and future DoDDoW budgets and impact our future operations and cash flows. Such factors may have a direct bearing on our new business opportunities as well as on whether the U.S. government will exercise its options for services under existing contracts, thus affecting the timing and volume of our business.

The U.S. government also conducts periodic reviews of U.S. defense strategies and priorities, which may shift DoDDoW budgetary priorities, reduce DoDDoW spending or delay contract or task order awards for defense-related programs. A reduction in U.S. government defense spending, changing defense spending priorities or delays in contract or task order awards could potentially reduce our future revenue, earnings and cash flow and have a material impact on our business.

We derive 96% of our revenue from work performed under U.S. government contracts, primarily the DoD,DoW, either as a prime contractor or as a subcontractor to other contractors engaged in work for the U.S. government. For the year ended December 31, 2024,2025, we generated approximately 43%41% of our total revenue from the U.S. Army. Our reputation and relationship with the U.S. government, and in particular with the branches and agencies of the DoD,DoW, are key factors in maintaining and growing this revenue. Negative press reports or publicity, which could pertain to employee or subcontractor misconduct, alleged violations of labor trafficking laws, conflicts of interest, termination of a contract or task order, poor contract performance, deficiencies in services, reports or other deliverables, information security breaches, business system disapprovals, or other aspects of our business, regardless of accuracy, could harm our reputation. If our reputation is negatively affected, we may lose our ability to conduct business in a foreign country (e.g., loss of business license), lose a required security clearance, or if we are suspended or debarred from contracting with government agencies or any branch of the DoD,DoW, our revenue and growth prospects could be adversely impacted.

Cybersecurity risks are significant and continue to evolve. They include, among others, phishing attempts, ransomware, malware and zero-day attacks attempting to gain unauthorized access to systems or data. Other electronic security events could lead to disruptions in mission critical systems, unauthorized release of personal identifiable information, confidential or otherwise protected unclassified information and corruption of data. In addition to security risks listed, we are also subject to other systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, natural disasters, power shortages, terrorist attacks or other events. Our systems reside within cloud service environments which presents various risks, including platform and software as a service providers’ inability to identify or quantify, in a timely manner, specific problems that affect the business functions which impact V2X.

Integration and sustainment of existing or new information technology systems, carry a high risk of delays or integration failures. Such delays, failures, or impacts from security events or disruptions described above, could result in loss of revenues, product development delays, compromise, corruption or loss of confidential, proprietary or sensitive information (including personal information or controlled unclassified information), remediation costs, indemnity obligations and other potential liabilities, regulatory or government action, breach of contract claims, contract termination, class action or individual lawsuits from affected parties, negative media attention, reputational damage, and loss of confidence from our government clients. Any of the foregoing could materially and adversely affect our business, financial condition or operations, and our insurance and other risk mitigation mechanisms may not be sufficient to recover the costs.

Our project sites often put our employees and others in close proximity with mechanized equipment, moving vehicles, and highly regulated materials. Additionally,Furthermore, global pandemics could introduce additional risks to our worksites requiring additional policies and procedures. Although we have safety procedures in place, if we fail to implement them, or if the procedures we implement are ineffective or insufficient, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation. As a result, our failure to maintain adequate safety standards and equipment, as well as the nature of the environment in which we conduct business, could result in employee exposures, injuries, or deaths, environmental disasters, reduced profitability, or the loss of projects or customers, any of which could have a material adverse impact on our business, financial condition, results of operations and reputation.

Some of our services, including those using subcontractors, are performed in high to moderate risk locations, including but not limited to the Middle East and certain parts of Europe, Asia and South America, where the country, region or surrounding areas may have unstable governments, or in areas of military conflict, or hostile and unstable environments, including war zones, or at military installations. Political or economic instability, international security concerns and geopolitical conflict or global hostilities in countries where we provide services and products may increase the risk of an incident resulting in damage or destruction to our work or living sites or our inability to meet contractual obligations or resulting in injury or loss of life to our employees, subcontractors or other third parties. Our insurance coverage may not be adequate to cover these claims and liabilities and we may be forced to bear substantial costs arising from those claims. The impact of these factors is difficult to predict, but any one or more of them could adversely affect our financial position, results of operations or cash flows.

A significant portion of our workforce is represented by labor unions,unions and conducting business internationally, and our business could be harmed in the event of a prolonged work stoppage.

As of December 31, 2024,2025, approximately 4,5004,800 of our employees, or approximately 28%30% of our employee base were unionized. We have 4560 collective bargaining agreements with labor unions. We cannot predict how stable our union relationships will be or whether we will be able to successfully renew or negotiate these labor contracts, or enter into new agreements, on terms that are acceptable to us. In addition, the presence of unions may limit our flexibility in managing our workforce.workforce needs. Labor actions, including strikes, work stoppagesstoppages, or even the threat of work stoppages by our union employees or implementation of a work stoppage contingency plan, and our failure to obtain favorable labor contract terms during negotiations, may disrupt our operations, negatively impact our ability to provide services to our customers on a timely basis, and result in higher labor costs, which could in turn negatively impact our reputation, results of operations and financial condition.

•Terrorist activity by various groups or security threats in the areasregions in which we operate;

•Conducting business in places where local laws, business practices and customs aremay be unfamiliar or unknown; and

Our earnings and margins depend, in part, on subcontractorsupplier performance.

We rely on third-party suppliers, including subcontractors and vendors, to perform some of the services that we provide to our customers and to provide and produce materials and integrated components that are used to perform some of the services that we provide to our customers. Disruptions or performance problems caused by our suppliers could have an adverse effect on our ability as a prime contractor or higher tier subcontractor to meet our commitments to customers. We may have disputes with our subcontractorssuppliers arising from, among other things, the quality and timeliness of products they produce for us, work performed by the subcontractor,supplier, customer concerns about the subcontractor,supplier, our failure to extend existing task orders or issue new task orders under a subcontract, proper invoicing, cost reasonableness, allocability, allowability, adjustments to the scope of the subcontractor’ssupplier’s work, or the subcontractor’ssupplier’s failure to comply with applicable law or regulations. Uncertain economic conditions heighten the risk of financial stress of our subcontractors,suppliers, which could adversely impact their ability to meet their contractual requirements to us. If any of our subcontractorssuppliers fail to timely meet their contractual obligations or have regulatory compliance or other problems, our ability to fulfill our obligations may be jeopardized. Significant losses could arise in future periods and subcontractorsupplier performance deficiencies could result in our termination for default.

Misconduct of our employees, subcontractors,suppliers, agents, prime contractors or business partners could cause us to sustain financial or criminal penalties, lose customers and could have a material adverse impact on our business and reputation, adversely affecting our ability to obtain new contracts.

Misconduct, fraud or other improper activities by our employees, subcontractors,suppliers, agents, prime contractors or business partners could have a material adverse impact on our business and reputation. Such misconduct could include the failure to comply with federal, state, local or foreign government procurement regulations, regulations regarding the protection of classified or personal information, legislation regarding the pricing of labor and other costs in government contracts, regulations pertaining to the internal controls over financial reporting, laws and regulations relating to environmental matters, bribery of foreign government officials, lobbying or similar activities, boycotts, antitrust and any other applicable laws or regulations. Misconduct involving data security lapses or inadequate cybersecurity protections resulting in the compromise of personal information or the improper use of our customer’s sensitive or classified information could result in remediation costs, regulatory sanctions against us and serious harm to our reputation. Although we have implemented internal policies, procedures, controls and training that are designed to prevent and detect these activities, these precautions may not prevent all misconduct and as a result, we could face unknown risks or losses. Misconduct by any of our employees, subcontractors, agents, prime contractors or business partners or our failure to comply with applicable laws or regulations or with applicable internal policies, procedures and controls could create a deficiency in internal controls over financial reporting, subject us to fines and penalties, loss of security clearance, loss of current and future customer contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely affect our business, our reputation and our future financial results.

We design and develop technologically advanced and innovative products and services that are applied by our customers in various multi-domain environments. The needs of our customers change and evolve regularlyregularly, andparticularly in particularlight byof complex and rapidly evolving technologies, such as advanced forms of AI. AI may be enabledutilized by,across orvarious functional areas, integrated into,into some of our business operationsoperations, or may be used in the development of our solutions or products. If we deploy AI solutions that have unintended consequences or are more controversial than we anticipate, our customers may seek redress and we may experience reputational harm which could affect our business or financial results. Our use of AI solutions could be subject to regulatory action or legal liability.

The forward-looking statements included or incorporated by reference in this report are subject to additional risks and uncertainties further discussed under Item 1A. “Risk Factors” 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.

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 or uncertainty arising from the JanuaryU.S. 2025 presidentialpresident and administration transition in the United States; government regulations and compliance therewith, including changes to the DoDDoW 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 agreementagreements; inflation and interest rate risk; geopolitical risk, including as a result of recent global hostilities and tariffs; our subcontractors'suppliers' 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 ERP and business systems, post-mergersystems; changes in GAAP; and other factors described in Item 1A,1A. “Risk Factors,”Factors and elsewhere in this report and described from time to time in our future reports filed with the SEC.

V2X is a leading provider of critical mission solutions primarily to defense clientscustomers globally. The Company operates as one segment and providesoffers a comprehensivebroad suite of capabilities including multi-domain high impact readiness, integrated solutionssupply chain management, assured communications, mission solutions, and criticalplatform service offerings across the operationsrenewal and logistics, aerospace, training and technology marketsmodernization to national security, defense, civiliancivilian, and international clients.customers.

Our primary customer is the U.S. DoD.DoW. For the years ended December 31, 2024,2025, 20232024 and 2022,2023, wethe Company had total revenue of $4.3$4.5 billion, $4.0$4.3 billion and $2.9$4.0 billion, respectively, the substantial majority of which was derived from U.S. government customers. For the years ended December 31, 2024,2025, 20232024 and 2022,2023, we generated approximately 43%,41%, 41%43% and 46%,41%, respectively, of our total revenue from the U.S. Army.

Our revenue increased by $359.0$157.9 million, or 9.1%,3.7%, for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. Revenue increased primarily due to organicthe growthramp onup legacyof programsseveral and new program performance.programs. Revenue from our programs in the Middle East, the U.S., and Asia,U.S. increased by $205.8$220.6 million, $102.6 million, and $62.6 million, respectively, partially offset by a decrease in revenue from our programs in the Middle East, Asia, and Europe of $12.0$48.1 million, $13.9 million, and $0.7 million, respectively, for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024.

Operating income for the year ended December 31, 20242025 was $159.2$194.3 million, an increase of $34.8$35.1 million or 28.0%,22.0%, compared to the year ended December 31, 2023.2024. Operating income increased primarily due to increasesthe inramp revenue,up alongof withseveral changesprograms, inthe aggregateconclusion cumulativeof adjustmentsa andnon-recurring contractual commitment, decreased selling,Selling, generalGeneral, and& administrativeAdministrative (SG&A) expenses.expenses, and favorable contract mix.

We recorded an income tax expense of $4.2$23.0 million and an income tax benefit of $1.9$4.2 million for the years ended December 31, 20242025 and 2023,2024, respectively, which represent effective income tax rates of 10.7%22.8% and 7.9%,10.7%, respectively. See Note 13,12, Income Taxes, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further information.

Further details related to consolidated financial results for the year ended December 31, 2025, compared to the year ended December 31, 2024, are contained in the Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Discussion of Financial Results section in this Annual Report on Form 10-K. Details related to consolidated financial results for the year ended December 31, 2024, compared to the year ended December 31, 2023,2023 are contained in the "Discussion of Financial Results" section. Details related to consolidated financial results for the year ended December 31, 2023, compared to the year ended December 31, 2022 are contained in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationOperations - Discussion of Financial Results" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,2024, electronically filed with the SEC on EDGAR on MarchFebruary 5,24, 2024.2025.

The LOGCAP V - Kuwait Task Order is currently exercised through June 30, 2026. On April 17, 2025, withthe oneU.S. additionalDepartment twelve-monthof optionthe andArmy oneannounced six-monththat optionit will extend the current period of performance for the various task orders under the LOGCAP V, including the Kuwait Task Order, which could be extended through DecemberJune 31, 2026.2030. The taskLOGCAP orderV - 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 $450.3$441.6 million and $474.3$450.3 million of revenue for the years ended December 31, 20242025 and 2023,2024, respectively.

TotalBacklog backlogrepresents includesrevenue we expect to recognize in the future as work is performed for remaining performance obligations,obligations consistingfor ofour bothcontracts. Backlog includes funded backlogamounts (firm orders for which funding is contractually authorized and appropriated by the customer) and unfunded backlogamounts (firm orders for which funding isamounts not currently contractually obligated by the customer and unexercised contract options). Total backlog excludes potential orders under IDIQ contracts and contracts awarded to us that are being protested by competitors with the U.S. Government Accountability Office (GAO) or in the U.S. Court of Federal Claims (COFC). Thefor valuewhich ofa stop work order has been received by the backlog is based on anticipated revenue levels over the anticipated life of the contract.Company. Actual backlog values may bevary greaterdue orto less than anticipated. Total backlog is converted into revenue as work is performed. Thethe level of order activity related to programs can be affected byprograms, the timing of government funding authorizations andor theirde-obligations projectof evaluation cycles.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 ofor bridge contracts, typically for periods of one year or less.

Funded orders (different from funded backlog) represent orders for which funding was received during the period. We received funded orders of $3.8$4.5 billion during the year ended December 31, 2024,2025, which was aan decreaseincrease of $0.4$0.7 billion compared to the year ended December 31, 2023.2024. The decreaseincrease was due to timing of awards.

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

WeWhile the Administration has announced their proposal for a significant increase in defense spending in FY 2027, we anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, the new Administration and Congress, the debt ceiling, the global security environment, inflationary pressures, and other macroeconomic conditions. The result may be shiftingshift 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.

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,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. In 2024 the Company's cost-plus and cost reimbursable contracts as a percentage of total contract mix and revenue have increased as compared to the year ended 2023. 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 hostilitieshostilities, 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.

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 under the caption “Risk Factors” identified in Part 1, "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 20242025 and the matters identified under the caption “Forward-Looking Statement Information" herein.

2025 Secondary Public Offerings

On SeptemberMay 4,15, 2024 and November 12, 2024,2025, we entered into an underwriting agreementsagreement (the May 2025 Underwriting AgreementsAgreement), by and among the Company, Vertex Aerospace Holdco LLC (the Selling StockholderShareholder) and GoldmanRBC SachsCapital & Co.Markets, LLC, Morgan Stanley & Co. LLC and Robert W. Baird & Co. Incorporated, as representatives to several underwriters named thereinunderwriter (the UnderwritersUnderwriter), relating to the public offering of(the aMay total2025 Offering) of 4,500,0002,000,000 shares of common stock by the Selling Stockholder (the Secondary Offerings)Shareholder and up to a total of 675,000300,000 additional shares of common stock (the Option Shares) by the Selling Stockholder at the Underwriters’Underwriter’s option at any time on or before the 30th day after the date of the applicableprospectus Underwritingsupplement Agreementdated May 15, 2025 (the Options,May and2025 together with the Secondary Offerings, the OfferingsOption). The SecondaryMay Offerings2025 Offering closed on SeptemberMay 6,19, 20242025. andThe NovemberSelling 14,Shareholder 2024,elected respectively.not to exercise the May 2025 Option. The Company did not sell any securities in the SecondaryMay Offerings2025 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Stockholder.Shareholder.

On September 11, 2024, the 2024 Underwriters notified the Company and the Selling StockholderShareholder that they had elected to exercise the Option with respect to the September 2024 Secondary Offering for 300,000 Option Shares. The offering of these Option Shares closed on September 12, 2024. All of these Option Shares were sold by the Selling Stockholder.Shareholder. The Company did not receive any of the proceeds from the sale of these Option Shares by the Selling Stockholder.Shareholder.

During the yearyears ended December 31, 2025 and 2024, we incurred costs of $0.5 million and $0.7 millionmillion, respectively, in connection with the Offerings.secondary offerings. These are accounting and legal fees, and the costs are included within selling, general, and administrative expenses on our Consolidated StatementStatements of Income (Loss).

Revenue increased by $359.0$157.9 million, or 9.1%,3.7%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. Revenue increased primarily due to organicthe growthramp forup legacyof programsseveral and new program performance.programs. Revenue from our programs in the Middle East, the U.S., and Asia,U.S. increased by $205.8$220.6 million, $102.6 million, and $62.6 million, respectively, partially offset by a decrease in revenue from our programs in the Middle East, Asia, and Europe of $12.0$48.1 million.million, $13.9 million, and $0.7 million, respectively.

Cost of revenue increased by 350.9$127.5 million, or 9.7%,3.2%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023,2024, primarily due to increasesthe increase in revenue and changes in contract mix.revenue.

Operating income increased by $34.8$35.1 million, or 28.0%,22.0%, for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024. Operating income as a percentage of revenue was 4.3% for the year ended December 31, 2025, compared to 3.7% for the year ended December 31, 2024,2024. comparedThe increase in operating income was primarily due to 3.1%the forramp up of several programs, the yearconclusion endedof Decembera 31,non-recurring 2023,contractual primarily driven by changes in aggregate cumulative adjustments, along withcommitment, decreased SG&A expenses.expenses, and favorable contract mix.

The Company recorded a $2.5 million loss on extinguishment of debt for the year ended December 31, 2025 and a $2.0 million loss on extinguishment of debt for the year ended December 31, 2024 and a $22.3 million loss on extinguishment of debt for the year ended December 31, 2023.2024. For further discussion see Note 10,9, Debt, in the Notes to Consolidated Financial Statements.Statements included in this Annual Report on Form 10-K.

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 $14.5$28.0 million for the year ended December 31, 20242025 compared to the year ended December 31, 20232024 primarily due to both a decrease in our debt balance and ourreduced interest raterates swapresulting contracts.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 9, Debt, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

DuringFor the yearyears ended December 31, 2025 and 2024, weother incurredexpense, net is primarily comprised of purchase discount feesfees, net of servicing fees, of $11.2 million and other expenses of $10.5 millionmillion, respectively, related to the sale of accounts receivable through the Master Accounts Receivable Purchase Agreement (MARPA Facility). For a discussion of the MARPA Facility, see Note 18,17, Sale of Receivables, in the Notes to Consolidated Financial Statements.Statements Inincluded addition,in duringthis theAnnual year ended December 31, 2024, we incurred a $2.2 million impairment chargeReport on aForm non-operating, long-lived asset, primarily due to a decreased fair market value, and a $2.2 million net gain from acquisitions.10-K.

Income Tax Expense (Benefit)

We recorded income tax expense of $4.2$23.0 million and income tax benefit of $1.9$4.2 million for the years ended December 31, 20242025 and 2023,2024, respectively, which represented effective income tax expense rates of 10.7%22.8% and 7.9%,10.7%, for the respective years. The difference between the effective income tax rate and U.S. statutory rate for the year ended December 31, 2025 was primarily due to state taxes, foreign taxes and nondeductible expenses, partially offset by the release of prior year uncertain tax positions and tax credits. The difference between the effective income tax rate and the U.S. statutory rate for the year ended December 31, 2024 was due to increased non-deductible compensation, global intangible low taxed income (GILTI), foreign tax expenses,expenses and state income tax expense which were partially offset by the release of prior year uncertain tax positions, non-taxable income, taxes on gain from acquisitions, and credits. The effective income tax rate for the year ended December 31, 2023 was due to increased non-deductible compensation, foreign tax expenses, and state income tax expenses which were partially offset by the release of prior year uncertain tax positions and credits. For additional information, see Note 12, Income Taxes, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

Our major sources of funding for 20252026 and beyond willare 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, its credit facilities, and access to capital markets. When necessary, our revolving credit facility and MARPA Facility are available to satisfy short-term working capital requirements. See Note 10,9, Debt, and Note 18,17, Sale of Receivable, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion.

If cash flows from operations are less than expected, the Companywe 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, and (iii) the current state of the economy.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 MayJanuary 30,2, 2024,2025 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 $906.6$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). See Note 10,9, Debt, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion.

As of December 31, 2024,2025, the carrying value of the NewFirst TermLien LoansCredit Agreement was $899.8$890.8 million, excluding deferred discount and unamortized deferred financing costs of $29.8$23.9 million. The estimated fair value of the NewFirst TermLien LoansCredit Agreement as of December 31, 20242025 was $900.9$896.3 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 December 31, 2024, under the 2023 Revolver2025, there were no outstanding borrowings and $17.5$21.5 million of outstanding letters of credit.credit under the 2025 Revolver. Availability under the 2025 Revolver was $478.5 million as of December 31, 2025. Unamortized deferred financing costs related to the 20232025 Revolver of $3.2$4.0 million are included in other non-current assets in the Consolidated Balance Sheets.Sheets as of December 31, 2025. As of December 31, 2024,2025, the fair value of the 20232025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of December 31, 2024,2025, the carrying value of the 2025 Term Loan portion of the 2023 Credit AgreementLoans was $239.1$233.0 million, excluding unamortized deferred financing costs of $1.6$1.7 million. The estimated fair value of the 2025 Term Loan portion of the 2023 Credit AgreementLoans as of December 31, 20242025 was $239.7$233.9 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). For additional discussion of the Company’s indebtedness, see Note 10,9, Debt, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

The cash presented on the Consolidated Balance Sheets consists of cash held by our wholly owned U.S. and international cash from wholly-owned subsidiaries. Approximately $35.7$39.9 million of our $268.3$369.0 million in cash, cash equivalents and restricted cash as of December 31, 20242025 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.

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. The Company determines its DSO by calculating the number of days necessary to exhaust its ending accounts receivable balance based on its most recent historical revenue. DSO was 57 and 58 days as of both December 31, 20242025 and 2023, respectively.2024.

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

Net cash provided by operating activities for the year ended December 31, 20242025 consisted of cash inflows from non-cash net income adjusting items (primarily consisting of $149.4depreciation and amortization) of $139.5 million, cashnet inflowsincome of $77.9 million, and net proceeds from the sale of receivables through the MARPA Facility of $146.2 million, and net income of $34.7$57.8 million, partially offset by net cash outflows in working capital accounts of $70.3 million and other long-term assets and liabilities of $54.2 million and net cash outflows in working capital accounts of $21.9$23.0 million.

Net cash provided by operating activities for the year ended December 31, 20232024 consisted of cashnon-cash inflows from non-cashnet income adjusting items (primarily consisting of $169.8 milliondepreciation and cashamortization) inflowsof $149.4 million, net proceeds from the sale of receivables through the MARPA Facility of $72.7$146.2 million, and net income of $34.7 million, partially offset by a net loss of $22.6 million, cash outflows forin other non-currentlong-term assets and liabilities of $25.8$54.2 million,million and cash outflows for working capital requirementsaccounts of $6.1$21.9 million.

Net cash used in financing activities duringfor the year ended December 31, 20242025 primarily consisted of revolver repayments of $1.3$662.5 billion,million, purchases of treasury stock of $30.0 million, repayments of long-term debt of $15.3$15.0 million, payments for debt issuance costs of $3.9 million, and payments for employee withholding taxes on share-basedstock-based compensation of $8.1 million, and payments for debt issuance costs of $1.2$3.1 million, partially offset by proceeds from the revolver of $1.3$662.5 billion.million.

Net cash used in financing activities duringfor the year ended December 31, 20232024 primarily consisted of revolver repayments of $1.3 billion, repayments of long-term debt of $432.6$15.3 million, payment of debt issuance costs of $8.8 million, prepayment penalty of $1.6 million, and payments of $18.0 million for employee withholding taxes on share-basedstock-based compensation,compensation of $8.1 million, and payments for debt issuance cost of $1.2 million, partially offset by proceeds from long-termthe debtrevolver of $250.0$1.3 million.billion.

As of December 31, 2024,2025, we held cash, cash equivalents and restricted cash of $268.3$369.0 million, which included $35.7approximately $39.9 million held by foreign subsidiariessubsidiaries, and had $482.5$478.5 million of available borrowing capacity under the 20232025 Revolver, which expires on February 25, 2028.Revolver. We believe that our cash, cash equivalents and restricted cash as of December 31, 2024,2025, as supplemented by operating cash flows, the 20232025 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.

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 employedemployed, and the resulting balancesbalances, are reasonable; however, actual results in these areas could differ from management's estimates under different assumptions or conditions.

Significant accounting policies used in the preparation of the Consolidated Financial Statements are discussed in Note 1, Description of Business and Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. We believe that the assumptions and estimates associated with revenue recognition, business combinations, goodwill impairment, intangible assetsrecognition 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. We discuss below significant critical accounting policies. 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.

There have been no material changes from the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025, except for the following change related to our large contracts from our prior disclosure included in our Quarterly Report on Form 10-Q for the quarter ended April 3, 2026:

Revenue from our largest contract, the Kuwait Task Order under the LOGCAP V contract vehicle amounted to approximately $441.6 million, or 9.9% of our revenue for the year ended December 31, 2025. On AprilMay 14,12, 2026, the U.S. Department of the Army notified the Company of its intentdecision to modifyreduce the scope of work being performed under this task order beyondand to extend the currentcontract performancewith periodrespect to the revised scope for an additional six months. As a result of Junethis 30, 2026, which could result in a reduction in work being performed undermodification, the taskCompany order.reduced its backlog by $414.6 million. For further discussion, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Significant Contracts in this Quarterly Report on Form 10-Q.

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 threesix months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025, the Company had total revenue of $1.3$2.5 billion and $1.0$2.1 billion, respectively, the substantial majority of which was derived from U.S. government customers. For the threesix months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025, we generated approximately 35%34% and 44%,43%, respectively, of our total revenue from the U.S. Army.

Our revenue increased by $238.2$178.3 million, or 23%,16.5%, for the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025. Revenue increased primarily due to program ramp ups in global training and missionaerospace readiness.along with $101.6 million attributed to discrete activities to support a national security mission. Revenue from our programs in the U.S., Europe,Asia, and Asiathe Middle East increased by $233.1$165.1 million, $9.0$9.8 million, and $0.1$4.2 million, respectively, partially offset by a decrease in revenue from our programs in the Middle EastEurope of $4.0$0.8 million during the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025.

Operating income for the three and six months ended AprilJuly 3, 2026 was $44.1$53.8 million and $97.9 million, respectively, an increase of $9.8$0.9 million and $10.7 million, or 29%,1.6% and 12.2%, respectively, compared to the three and six months ended MarchJune 28,27, 2025. Operating income increased primarily due to the ramp up of several programs, partially offset by increased Selling, General and Administrative expenses (SG&A) and corporate expenses.

Further details related to consolidated financial results for the three and six months ended AprilJuly 3, 2026, compared to the three and six months ended MarchJune 28,27, 2025, are contained in the "Discussion of Financial Results" section in this Quarterly Report on Form 10-Q.

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 customercustomer, including unexercised options when the exercise of those options is considered probable). 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.

Funded orders (different from funded backlog) represent orders for which funding was received during the period. We received funded orders of $1.2$2.7 billion during the threesix months ended AprilJuly 3, 2026, which was an increase of $256.9$540.2 million compared to the threesix months ended MarchJune 28,27, 2025.

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. 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 defense budget 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. TheOn February 3, 2026, the President signed into law, H.R. 7148, the "Consolidated Appropriations Act, 2026," to end a partial government shutdown and fund the DoW and other federal agencies through FY 20262026. baseThe budgetdefense requestfunding isbill includes approximately $848$839 billion, which does not include the mandatory funding containedbillion in the OBBBA.appropriations. The OBBBA was signed into law by the President on July 4th, 2025, and allocates approximately $150 billion in mandatory funds to support defense and national security priorities.priorities Ofthat theare $150 billion in OBBBA appropriations, approximately $113 billion was alignedavailable to thebe FYobligated 2026through DoWSeptember budget.30, 2029. 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.

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. Additionally, global hostilities could also impact our ability to deliver our products and services to customers. Further, we continue to closely monitor impacts to our business and operations in the Middle East, and the region at large due to the conflict in Iran. Further,In addition, 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.

Three months ended AprilJuly 3, 2026 compared to three months ended MarchJune 28,27, 2025

Revenue increased by $238.2$178.3 million, or 23.4%,16.5%, for the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025 primarily driven by program ramp ups in global training and missionaerospace readiness.along with $101.6 million attributed to discrete activities to support a national security mission. Revenue from our programs in the U.S., Europe,Asia, and Asiathe Middle East increased by $233.1$165.1 million, $9.0$9.8 million, and $0.1$4.2 million, respectively, partially offset by a decrease of $4.0$0.8 million in revenue from our programs in the Middle East.Europe.

Cost of revenue increased by $210.5$164.5 million, or 22.4%,16.7%, for the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025, consistent with the increase in revenue.

SG&A expenses increased by $17.9$12.9 million, or 40.9%,30.1%, for the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025, consistentprimarily driven by higher operating costs associated with revenue growth, asnon-recurring wellintegration initiatives, and expenses incurred to evaluate potential merger and acquisition opportunities as reflectingpart certainof non-recurringthe growthCompany's andcapital integrationallocation initiatives.strategy.

Operating income increased $9.8$0.9 million, or 28.5%,1.6%, for the three months ended AprilJuly 3, 2026 as compared to the three months ended MarchJune 28,27, 2025. Operating income as a percentage of revenue was 3.5%4.3% for the three months ended AprilJuly 3, 2026, compared to 3.4%4.9% for the three months ended MarchJune 28,27, 2025. The increase in operating income was primarily driven by the ramp up of several programs, as described above, partially offset by increased SG&A and corporate expenses.

Aggregate cumulative adjustments decreasedincreased operating income by $1.1$1.8 million for the three months ended AprilJuly 3, 2026 and increased operating income by $4.2$1.4 million for the three months ended MarchJune 28,27, 2025. The aggregate cumulative adjustments for the three months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period.

The Company recorded a $2.2$1.7 million loss on extinguishment of debt for the three months ended MarchJuly 28,3, 2026 and a $0.3 million loss on extinguishment of debt for the three months ended June 27, 2025. For further discussion see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements.

Interest expense, net for the three and six months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025 was as follows:

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 $1.6$5.5 million for the threesix months ended AprilJuly 3, 2026 compared to the threesix months ended MarchJune 28,27, 2025 primarily due to a decrease in our debt balance.balance and increase in interest income. For further discussion of these amendments see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

During the three and six months ended AprilJuly 3, 20262026, we incurred purchase discount fees, net of servicing fees, of $2.2 million and March$4.6 28,million, respectively, related to the sale of accounts receivable through the MARPA Facility. During the three and six months ended June 27, 2025, we incurred purchase discount fees, net of servicing fees, of $2.4$2.6 million and $2.5$5.1 million, respectively, related to the sale of accounts receivable through the MARPA Facility. For a discussion of the MARPA Facility, see Note 12, Sale of Receivables, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

We recorded income tax expense of $4.6$7.7 million and $2.0$7.1 million for the three months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025, respectively.respectively, Ourrepresenting effective income tax raterates forof both23.1% and 24.0%, respectively. For the threesix months ended AprilJuly 3, 2026 and MarchJune 28,27, 2025, waswe 19.5%.recorded income tax expense of $12.3 million and $9.0 million, respectively, representing effective income tax rates of 21.6% and 22.8%, respectively. The effective income tax rates vary from the federal statutory rate of 21.0% mainly due to state and foreign taxes, Net CFC Tested Income (NCTI), disallowed compensation deduction under Internal Revenue Code Section 162(m), offset by foreign derived intangible income deduction, available deductions not included in book income and income tax credits.

As of AprilJuly 3, 2026, the carrying value of the First Lien Credit Agreement was $868.5$866.4 million, excluding deferred discount and unamortized deferred financing costs of $22.6$20.9 million. The estimated fair value of the First Lien Credit Agreement as of AprilJuly 3, 2026 was $867.4$864.2 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2).

As of AprilJuly 3, 2026, there were no outstanding borrowings and $21.0$14.9 million of outstanding letters of credit under the 2025 Revolver. Availability under the 2025 Revolver was $479.0$485.1 million as of AprilJuly 3, 2026. Unamortized deferred financing costs related to the 2025 Revolver of $3.8$3.5 million are included in other non-current assets in the Condensed Consolidated Balance Sheets. As of AprilJuly 3, 2026, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate.

As of AprilJuly 3, 2026, the carrying value of the 2025 Term Loans was $231.6$220.1 million, excluding unamortized deferred financing costs of $1.6$1.5 million. The estimated fair value of the 2025 Term Loans as of AprilJuly 3, 2026 was $231.3$220.2 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2). See Note 5. Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion.

The cash presented on the Condensed Consolidated Balance Sheets consists of cash held by our wholly owned U.S. and international subsidiaries. Approximately $53.0$57.1 million of our $208.7$214.3 million in cash, cash equivalents and restricted cash as of AprilJuly 3, 2026 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.

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. On May 28, 2026, the Government of Greenland drew $4.3 million on a letter of credit held by the Company related to prior year tax claims, which the Company has appealed. The Company has recorded this withdrawal by the Government of Greenland as receivables on the Company's Condensed Consolidated Balance Sheets as management currently believes that there is reasonable likelihood of this amount being recoverable.

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 both AprilJuly 3, 2026 and December 31, 2025.2025, respectively.

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

Net cash used in operating activities for the threesix months ended AprilJuly 3, 2026 consisted of net cash outflows from the sale of receivables through the MARPA Facility of $102.0$142.9 million,million and net cash outflows in working capital accounts of $74.5 million and net cash outflows in other long-term assets and liabilities of $7.3$85.0 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $34.9$74.4 million andmillion, net income of $18.9$44.5 million, and net cash inflows in other long-term assets and liabilities of $0.6 million.

Net cash used in operating activities for the threesix months ended MarchJune 28,27, 2025 consisted of net cash outflows in working capital accounts of $159.6$161.7 million and net cash outflows in other long-term assets and liabilities of $3.5$7.8 million, partially offset by cash inflows from non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $31.4$63.0 million, net income of $30.5 million and cash inflows from the sale of receivables through the MARPA Facility of $28.2 million, and net income of $8.1$9.0 million.

Net cash used in investing activities for the threesix months ended AprilJuly 3, 2026 consisted of $2.3$3.4 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 threesix months ended MarchJune 28,27, 2025 consisted of $2.6$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 financing activities for the threesix months ended AprilJuly 3, 2026 primarily consisted of repayments of long-term debt of $23.7$37.4 million andmillion, payments for employee withholding taxes on stock-based compensation of 4.8$5.3 million and payments for debt issuance costs of $1.2 million.

Net cash used in financing activities for the threesix months ended MarchJune 28,27, 2025 consisted of revolver repayments of $141.0$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 $2.7 million, and payments for debt issuance costs of $1.2$3.0 million, partially offset by proceeds from the revolver of $141.0$319.0 million.

As of AprilJuly 3, 2026, we held cash, cash equivalents and restricted cash of $208.7$214.3 million, which included approximately $53.0$57.1 million held by foreign subsidiaries, and had $479.0$485.1 million of available borrowing capacity under the 2025 Revolver. We believe that our cash, cash equivalents and restricted cash as of AprilJuly 3, 2026, 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 AprilJuly 3, 2026, commitments to make future payments under long-term contractual obligations were as follows:

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 or uncertainty arising from the U.S. president and administration; 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 suppliers' 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; our expectation with respect to the resolution of certain tax claims 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; 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, 2025 and described from time to time in our future reports filed with the SEC.