V2X, Inc. Price & Performance (VVX)

You can find a reconciliation of these measures to the most comparable measure calculated and presented in accordance with GAAP on our slide presentation and in our earnings release filed with the SEC. Both of which are available on the Investor Relations section of our website. At this time, I would like to turn the call over to Jeremy. Thank you, Mike, and good afternoon, everyone.

Thank you for joining us today. Before we get started, I'd like to recognize the over 16,000 B2X employees for all their contributions and in particular their strong performance. During the fourth quarter that resulted in record quarterly revenue, adjusted EBITDA, and cash flow. We thank you for all that you've done and continue to do for our nation, and our company. Please turn to Slide three. In today's call, I'm going to recap the fourth quarter and full year results and then discuss our positioning and alignment to national security priorities. Our momentum continued into the fourth quarter with revenue increasing 11% year over year to $1,160,000,000 This was driven by positive growth in all our geographies and noteworthy 27% increase in the O2 Pacific region. For the full year, revenue grew 9% to $4,300,000,000 exceeding the top end of our guidance. Adjusted EBITDA for the fourth quarter and full year was $86,200,000 and $310,000,000 representing 56% year over year growth. Adjusted EPS for the fourth quarter and full year was $1.33 and $4.34 representing 916% year over year growth. Importantly, our focus on debt reduction and cash generation yielded impressive results. With net debt improving $210,000,000 year over year, This achievement equates to a 2.6 times net leverage ratio, which provides significant flexibility.

And optionality for V2X Total backlog at the end of the year was $12,500,000,000 representing a 1.2 times book to bill ratio in the quarter. Our focus on growth is demonstrating results. With V2X securing contract wins at over $5,500,000,000 in 2024. This was a record for the company. And builds an excellent foundation from which we can continue to drive revenue, cash flow and value for our shareholders. Additionally, we are pleased to announce the arrival of Roger Mason, our Chief Growth Officer. Roger brings a wealth of experience, and will continue to build on our track record of growth This move positions V2X exceptionally well for the years to come. In summary, 2024 was a great year for V2X. Achieving several milestones and new records for the company. Now I'd like to spend a few minutes and talk about our positioning and how V2X helps customers increase efficiency, reduce costs modernize capabilities improve readiness and strengthen national security. The fact that we are with our customer at every phase of mission execution primarily as a prime contractor gives us great intimacy and knowledge of what is happening, and insight into evolving requirements. Combination of our unique mission insight, full lifecycle capabilities and eighty year reputation as a trusted partner The differentiated and yielding results through recent wins and growth in key theaters.

For example, India and the Pacific region, V2X is supporting increased mission requirements as DoD continues to identify China as a pacing challenge and is further investing to strengthen our deterrence, Our positioning in the region and our team's strong performance drove revenue growth of 24% in 2024. We expect continued growth building on the requirement for readiness based on the and demand signals. Turning to The U. S, we continue to ramp up the $3,700,000,000 Orfighter Training Readiness Solutions program. This program is critical to national security readiness. Has to ensure every soldier has the tools required to conduct realistic exercises and training. As the administration has stated, improving lethality, warfighting and readiness Our priorities We believe V2X is well positioned to meet these priorities.

Additionally, in further support of readiness, V2X was recently awarded two contracts, valued at $270,000,000 in aggregate to keep aircraft for the Drug Enforcement Administration and the Federal Bureau of Investigation fully mission ready and able to meet evolving operational demands. I would also like to call out our growth position in the Arctic. And how under contract valued up to $3,950,000,000 with The U. S. Based V2X is supporting the DoD strategic initiatives and interest in the region by delivering solutions that will enable our customer to meet new challenges as the region is becoming a venue for strategic competition. Finally, the situation in The Middle East continues to evolve. B2X is uniquely positioned in the region with deep mission intimacy and operational expertise to continue delivering best of breed cost effective solutions that enable successful outcomes. In summary, B2X is positioned in key theaters with the ability to deliver comprehensive end to end capabilities throughout the entire mission lifecycle. This provides us with the opportunity to be part of strategic initiatives for the U. S. Government as they protect the homeland and focus on deterrence. Please turn to Slide four. Not only does V2X have the global scale and capability to support national security priorities, We have a track record of enhancing outcomes and increasing value for customers through innovation, modernization and improved operational performance.

This is squarely aligned with the focus area of the new administration and the DoD. The current challenges our customers face are very real with having to prepare for today while planning for the threats of tomorrow. All while facing approximately $240,000,000,000 of already deferred maintenance on its equipment and facilities. This deferred maintenance must be addressed in order to maintain readiness.

Believe V2X is extremely well positioned to help the DoD solve these challenges. For example, we are delivering innovative solutions and mission ready technologies by leveraging our operational know how and technology expertise. This includes our smart warehouse solution, which can improve space utilization by 90 increased storage capacity by 77% and importantly, yield a 69% reduction in operating costs. The net benefit to the DoD is not just cost savings and footprint rationalization, but also significantly improving visibility of unaccounted inventory and assets. And enhancing readiness. When we think about the DoD's $1,200,000,000,000 of asset base, spanning over 700,000 facilities, we believe there is a tremendous opportunity for audit assurance and value creation. For our customers.

Additionally, our platform modernization and rapid prototyping solutions are bringing upgraded technology to platforms with significant cost and scheduled benefits. This includes the very recent example V2X is delivering rapid response prototyping, production and sustainment of counter unmanned aerial systems and air defense solutions that solve complex and evolving battlefield threats We are also seeing demand signals and opportunities to utilize this system in the end of the Lastly, our utilization of technology, predictive and preventive maintenance data analytics, and continuous improvement have resulted in B2X generating over 65,000,000 of savings through optimized operational performance, to the DoD on several cost plus programs. These deliberate and purposeful efforts provide customers with additional funding to while maintaining the highest level of mission readiness and performance. This performance makes V2X a trusted partner of choice for missions of consequence. As you can see, B2X is shoulder to shoulder with our customers, with a proven track record of bringing cost effective and value added solutions. Please turn to Slide five. Later this year, V2X will celebrate its eightieth anniversary. This is a major milestone and an important trait of our business. For eighty years, V2X has played a critical role, so supporting our customers' most important missions around the globe.

This includes helping establish the distant early warning line radar network back in the 1950s, which was located above the Arctic Circle and was critical to enhancing our readiness and national security during the Cold War. We have continued to grow since that time, investing and expanding our capabilities. This has and is enabling V2X to do more and offer technology based solutions that prevail on the battlefield. And in real mission environments. For example, today we are leveraging our global expertise in spectrum engineering, information technology, cyber and network communications to deliver a private and secure mission ready communications solution in the remote regions of the Indo Pacific. This V2X technology is assuring connectivity and readiness for our warfighters. From the Arctic to Asia, and all around globe, B2X's comprehensive full lifecycle solutions and relatively fresh brand that's backed by a long legacy is allowing us to bring new technologies innovation and force modifying solutions to our customers.

Turning to the right hand side of the slide, I'd quickly like to call out our our 2024 revenue diversification across defense, intelligence and commercial markets We thought it's important to note that only 5% of our revenue is derived from federal civilian primarily served on border security, drug enforcement, and human space flight. Moving to our mix of contracts, As you can see, approximately 60% of our 2024 revenue is generated from cost plus programs. And 40% from fixed price. Continue to work with our customers to convert appropriate contracts and programs to fix fixed price. We welcome the recent emphasis on outcome based contracting and believe our institutional knowledge presents a compelling opportunity for V2X and our customers. Please turn to Slide six. In the prior slides, I discussed why we believe V2X is well positioned continued growth and performance.

Our strategy is very clear. It is to deliver full lifecycle capabilities in support of national security and improve security and mission outcomes. Our focus on readiness of the warfighter via training, equipping, deploying, supporting and modernizing we believe is well aligned to the current administration and future needs of the DoD. When it comes to government efficiencies, we have described how B2X is already executing and supporting these initiatives. And we believe we can do more. For example, V2X keeps over 1,600 aircraft flying, and ready for their next mission. Today, the DoD currently has over 13,000 aircraft in its inventory, excluding unmanned vehicles. We believe V2X has the opportunity to gain additional market share by helping the DoD improve readiness, and mission capable rates of the fleet while creating additional cost savings through outsourcing.

Additionally, V2X is utilizing technology and internal investing through R and D to modernize assets and platforms, extending their lives. And enabling our customers to close the gap on the $240,000,000,000 of deferred maintenance. In terms of overall budgetary environment, B2X has demonstrated performance throughout various economic and political cycles. This is due to our strategic focus on supporting critical and enduring missions. At the global level, the overall threat environment remains elevated with tensions persisting if not escalating. This is why the DoD is focused on reestablishment of deterrence. That matter positions us exceptionally well to continue delivering end to end full lifecycle solutions to support evolving requirements. What we do is 20 fourseven, three sixty five supporting missions of content It's something we are extremely proud of and something that cannot be easily replicated. To wrap up, our twenty twenty four results demonstrate the value of V2X brings to our customers, our positioning in key theaters, alignment to missions of high consequence and our ability to execute on our commitments. We are excited about the future. The trend and leading indicators in our business remain strong. With a $12,500,000,000 backlog limited recompetes, a robust pipeline of new opportunities We look forward to the opportunity V2X has to increase our percentage of a large addressable market and bring more mission requirements.

Now I'd like to turn the call over to Sean for a review of the financials. [indiscernible] Thank you, Jeremy. Thanks everyone for joining us this afternoon. Please turn to Slide seven. We are pleased to announce an impressive close to the year with strong fourth quarter performance, across all financial metrics. To provide double digit top line growth exceptional cash generation. Are extremely proud of what the team accomplished in 2024, which resulted in V2X meeting or exceeding all financial commitments. Revenue in 2024 increased 9% on a year over year basis to $4,320,000,000 exceeding the top end of our guidance range by approximately $47,000,000 Growth reflects the continued demand of our services and solutions in both on contract growth In the phasing of new awards, This is reflective of the capabilities V2X brings with notable new awards to include the F5 Adversary Program, a NATO missile defense program, a production award for the Gateway Mission router, a Navy Pacific Communications Award a foreign military sales contract for aviation and training support as well as a sole source award provide next generation chem bio threat detection. Adjusted EBITDA for the year was $310,000,000 increasing 6% year over year and delivering a margin of 7.2%.

Interest expense for the year was $107,900,000 Cash interest expense was $100,500,000 improving $13,000,000 or 11% year over year, reflective of our proactive repricing activities, debt pay down and cash flow generation. Adjusted diluted EPS Weighted average shares. Full year adjusted net cash provided by operating activities was $161,000,000 This represents 116% adjusted net income conversion and the strong cash generation capabilities of V2X. Please turn to Slide eight where I'll discuss our fourth quarter results. Revenue for the quarter was $1,160,000,000 increasing 11% year over year and setting yet another record for the company. Adjusted EBITDA was $86,200,000 also a record for the company, with a margin of 7.4%. Interest expense for the quarter was $24,400,000 Cash interest expense was $22,700,000 improving $3,600,000 or 14% year over year. Adjusted diluted EPS was $1.33 growing 9% on a year over year basis. Adjusted net cash provided by operating activities was $168,000,000 turn to Slide nine. Our commitment to achieve a net leverage ratio at or below three times was a company wide priority. I'm pleased to report that we demonstrated excellent performance on this front delivering a net leverage ratio of 2.6 times at the end of the fourth quarter.

Our continued focus on cash generation and debt reduction resulted in net debt improving $210,000,000 year over year to $874,000,000 Our liquidity position is strong with a zero balance on our $500,000,000 revolver at the end of the quarter. As can be seen in our financial results, by focusing on enhancing the capital structure and the cost of our credit facilities combined with debt pay down is improving cash flow and earnings. This strong performance allowed us to reprice our $900,000,000 first lien term loan the repricing further improves our annual interest margin by 50 basis points, representing 135 basis points of savings achieved since October 2023. This outcome is a testament to the strength of our business and will generate additional value in 2025 and beyond. As you can see on the chart, we have made substantial progress This demonstrates the strong and reoccurring cash flow characteristics of the business. Furthermore, it underscores our commitment to thoughtful allocation of capital. We turn to Slide 10. Book to bill in the quarter was approximately 1.2 times. Total backlog was $12,500,000,000 at quarter end which represents approximately three times revenue coverage at the midpoint of our 2025 guidance. We believe this provides solid revenue visibility especially when taking into account the backlog only includes the initial $225,000,000 of funding for the Warfighter Training and Readiness Program.

As a reminder, we expect to incrementally book activities associated with this contract as they are transitioned. Further enhancing revenue visibility, at our 2025 midpoint, we expect a modest 4% contribution from recompetes. The trends in our business remain positive and we believe our strategy to deliver full lifecycle solutions that increase efficiency, reduce costs modernize capabilities, improve readiness and strengthened national security provide substantial opportunities for future growth and value creation. For 2025, we are establishing a guidance range that we would characterize as appropriately proven. With that, in 2025, we expect revenue to build on a very successful Revenue is expected to be $4,375,000,000 representing approximately 3% growth at the midpoint. Revenue within 2025 incorporated to the previously disclosed completion and T1A programs, which contributed approximately $80,000,000 to revenue in 2024, with mature margins. Adjusted EBITDA is estimated at $3.00 $5,000,000 to $320,000,000 Adjusted EBITDA contemplates the phase in of new awards the completion of the previously discussed programs and modest internal investments. Adjusted diluted earnings per share guidance is $4.45 to $4.85 representing 7% growth at midpoint. Regarding the cadence, we expect revenue and adjusted EBITDA to ramp sequentially throughout the year This reflects the phase in of already announced new business.

We expect adjusted net cash provided by operating activities to be $150,000,000 to $170,000,000 We believe cash flow should be in line with our normal seasonal pattern with cash generation occurring in the second half of the year. Cash interest expense [indiscernible] with other expense of $12,000,000 approximately $30,000,000 Now we'd like to open the call for your questions. [indiscernible] Thank you. We will now begin the question and answer session.

If you're using a speakerphone, And the first question will come from Peter O'Mint with Baird. Please go ahead. Yes. Good afternoon, Jeremy, Sean, Mike. Nice results.

Jeremy, I wanted to see if I could just double click on a comment that you made about kind of outcome based contracting and kind of how you see this evolving with given your mix of cost plus contracting is how quickly can you start to convert if you can convert that to any of it fixed price or more favorable? And just maybe how you see this evolving because it seems like certainly guys have the knowledge and experience if you wanted to flip it over to from a fixed price perspective? Yes. I mean, I think we have proof points from prior years where we have successfully converted to fixed price and demonstrated additional savings for the customer. And we continue to approach them all the time on some of these mature programs that we think are great candidates be flipped over to fixed price and allow us to get more performance based contract out of that and save them money. Is there a percentage of contracts that come up on an annual basis where there's an opportunity to look at it? Or how should we think about just the opportunity here? Look, we continually put white papers in front of customers.

We continually talk to them about the opportunities set to help them get to a more performance based contracting outcome for them. It will improve readiness. I think it will save the customer money. And improve overall efficiency for them as we look downstream. So again, this is not something that's new. It's just something that I think aligns pretty well with this current administration to focus on outcomes. Yes, for sure. And then just a quick one on on your just your guidance, look contemplated regarding impacts from the CR? Is the CR, do you have baked in that it gets resolved or how are you thinking about that? Sean, chime in this as well. But I think if you look at the kind of work we do, majority of is going to be pretty immune to the CR given that it is not new work, If these are mostly existing contracts that we are either taking market share or getting renewals on what we're doing already.

Exactly, Peter. I'd say, we have modest impacts as as Jeremy said, typically in a CR environment. And so our guide contemplates, I'll say, business as usual. We obviously expect the CR to be resolved. And move forward with a number of things. But if we think about the opportunities that are in front of us, most of the year is, of course, conversion of our backlog. With modest recompete as we said in the prepared remarks and new business. So I think we feel good from a a range standpoint that we're aligned around.

Terrific. And just Sean, just could I get a clarification on the Waters the Warfighter Training Readiness contract. Could you give that amount again and how you think it phase in the back half of the year?

Yes, exactly. So when we think year over year Peter, think of it as adding about $120,000,000 to the top line. Predominantly in Q3 and Q4. So back half loaded as there's a contracted transitions that we are assume that is the bulk of the activities. We are executing task orders today. They're fairly modest in size. Excellent news is that we're seeing an increase in that ops tempo of those task orders being put in front of us that we're then bidding and responding to. So like I said, it's back end loaded. It's about $120,000,000 or so incremental to 2024.

Terrific. Thanks again. I'll jump back in queue. Nice results. Thanks, Jaden. Appreciate it. The next question will come from Andre Madrid with BTIG.

Go ahead.

Hey, good afternoon everyone. Thanks for taking my question. Now if we could kind of zoom in on the end of Pacific, I know you mentioned 27% growth in the region sales. Maybe just a point of clarification, that doesn't include IndoPay comes to specifically, right? That falls under U. S. Sales. And then I guess further on top of that, I know you mentioned VSpace in The Philippines, but what are some of the other moving pieces in the region that we should be looking out for? Yes. So just to clarify, it does include IndoPaycom? In terms of those results based on the geography. Just as The Middle East from a for in terms of how we report, The Middle East incorporates CENTCOM. So Indo Paycom and the activities we support there are bucketed in Asia Pacific. [indiscernible] the other part of your question, when we think about 2025, there are exercises that get undertaken every other year And so when we think about those things, this year, we expect a level of opportunity. I would admit, it is these things come up quickly, typically. And so we'll see how those play out. This year from a Chinese sequencing standpoint.

Obviously, folks are off assessing the budgetary environment, the funding that may be required for those things of that nature, Andre. [indiscernible] I think presence is everything. And as I think this administration has said, looking at the Indo PACOM region and us having a a solid footprint in that region and a contract vehicle in that region that's to them, I think is why we we get a lot of confidence around the future for B2X in that area. Got it. Got it. Very helpful. And if I could squeeze in just one more. I mean, if you look at the implied EBITDA margin for the year, it's a step down over 24%. I mean, is could you maybe just move us through the puts and takes there? Is all of it due to the loss of KC-ten and T1a or the factors included, just trying to size that up and really assess what are the moving pieces there?

Yes, perfect. Thanks for the question. So predominantly those headwinds from mature programs that have concluded because those assets have been retired is what's contributing to it. In terms of the change. And then the new work that we listed off a number things in the prepared remarks always start out at a lower margin. The growth in the year is going to be back back half weighted and therefore I do it expect margins in the second half to be higher than they are in the first half.

And we should hopefully build on those things as we go forward. I will say some of the work doesn't mature extremely quickly from a margin contribution standpoint, right? Some of the work on platforms that we have may take some time and I would measure that in excess of a year, not necessarily quarter to quarter on some of those programs. And that's why as some of these platforms have retired, they are kind of at their peak when we're no longer executing that work. And so we have to build that capability back up. But that's exactly why you see the profile is And I would say it's a great example of performance based contracting. In case of new contract award, it takes some time to absorb that program, figure out the operational side of it. And then once they get comfortable and have some track record, They do a wonderful job of optimizing readiness and supporting the customer in really ensuring our overall understanding of the program as we get to move through.

So it just takes a little bit of time. And so you think about shifting the curve from a very mature program to a a program we just several that we just rattled off.

Still get there and very comfortable with that. Because they are back in it in terms of execution.

That's extremely helpful color. I'll leave it there. Thanks, Jeremy, Sean. Thanks, Sandler. The next question will come from Ken Herbert with RBC Capital Markets. Please go ahead. Pardon me, Mr. Herbert, is your line muted?

Yes. Hi. Thank you. Good afternoon, Jeremy, Sean and Mike. I wanted to first ask, if you look at if you look at the 9% growth and outperformance of guidance in 2020, is there a way maybe Jeremy or Sean to think about how much of that came from sort of new contract wins versus sort of on contract growth and maybe the tech insertion? And trying to see if you can help us by quantifying sort of where the maybe really what drove the upside in 'twenty four as we think about maybe a springboard as we think about applicability into 2025? Yes. Hey, Ken.

So it was predominantly on contract growth. Let me give some color a little bit. So we talked about a book to bill that's about $1,200,000 in the quarter. The bulk of those awards were on contract growth related. And as we've talked previous that tends to turn into revenue more quickly. And so that's what we saw as we as we exited 2024 from a contribution and what accelerated some of that growth. And I would say, you mentioned Tech Insert I think when I look at what we're doing in terms of maturing some of the technologies and where they are in terms of either early LRIC production or early development phase. They will continue to mature and become ever increasing opportunities for us as we move downstream. I know it's one of the areas that Roger is focused on as the new Chief Growth Officer, which is inserting differentiation into our offerings.

Because if we have the opportunity to do that with the engineering organization that we have, Okay. Very helpful. I mean, I can appreciate some of the some of the KC-ten and the T1A sort of headwinds. But is there any reason to think beyond maybe some risks around timing in terms of just where we are with the CR and fiscal 'twenty five and 'twenty six request. But any reason to think we couldn't see or you wouldn't deliver on sort of similar on contract growth in 2025? I mean, I'm not trying to get too far ahead of the obviously what looks like a cautiously optimistic revenue guide, but it certainly seems like you'll have some levers to pull as the budget situation stabilizes.

I'd say this, Ken.

I think we did open up the range a little bit on the guide from what we did a year ago. To account for should that occur. We'll see how some things play out. The teams do a wonderful job Jeremy mentioned conversion of things to performance based contracting. Our teams around the globe are consistently putting things in front of customers to drive additional value to the customers. Save money, save improved operational performance for both the customers as well as us.

And so those things when they occur, they tend to occur pretty quickly. So we don't always have perfect visibility into them and they're dictated by a whole range of activities. That can arise. So we tried to address it in the range that that we gave for some variability that we may see. We'll see. It's obviously very early. And I would say, we talked a lot about geographic footprint.

Think the diversification of the portfolio around the globe and the contracts we have for our customer in terms of accessibility puts us in a very good position to deal with the ever changing environment.

That's great. And if I could just finally, in the last few months or basically since the new administration or since the election maybe and then the new administration came in, it may be early, but have you seen any change in sort of sense of urgency around say funding for projects in Indo Paycom or any indication that you might see that become early signs a higher priority for the new administration in terms of addressing of the some of the requirements that we see there?

I think one, what we're seeing is that we're aligned with [indiscernible] In terms of where we're located. We have not look, we've seen awards happen, which is great. So we haven't seen any slowdown in that. We've mentioned them in the script. I think you're seeing that we are in terms of how we've tried to portray the business, I'm extremely excited about how we are aligned with their priorities whether it's in Paycom, whether it's in up in the Arctic Region, whether it's even in The U. S. In terms of readiness, in terms of the aircraft in terms of putting forward a deterrent strategy, I think we're exceptionally well aligned with that. And so I look at with regards to what we have in terms of the pipeline and the ability to process that pipeline that is, I believe, very much aligned with their overall priorities. I think the very positive there, Toby, is exactly what Jeremy said. SART-ten, which is the the things that we've expected to be awarded the funding activities that we've expected have been consistent the early days of this administration and as we start off the year. So we haven't seen perturbations or changes from I'll say, a customer engagement or ops tempo standpoint from from that vantage point?

Perfect. Thanks, Sean. Thanks, Jeremy. Sure. Thank you.

Your next question will come from Joe Gomes with Noble Capital. Please go ahead.

Good afternoon. Thanks for taking the questions.

To start out, one of the things you discussed a little bit here a little bit more in the past was foreign military sales and that they had been gaining some traction Just wondering if you can give us kind of more of an update. Are you seeing anything new, exciting that is in the near term that you're pretty positive about?

Yes. I mean, we obviously have a sales channel that does very well on the FMS front. We have contract under in The Middle East that's under contract. We do continue to see opportunities. I will tell you the FMS side does not pace the same way that U. S. Procurements do. And so we are although excited about the opportunity, we are very realistic about pace for which they actually occur. And so and again, it goes anywhere from you think about it into the Pacific all the way back to The Middle East, We have opportunities. We're pursuing these opportunities. We're just cautious about pacing of those awards. They take a little longer and a little more complicated.

Very, very comfortable with our strategic position.

Okay, great for that.

And then, I mean, you guys talked about your recompete, I think it's less than 5% or 4% for this year. Are there any large or significant to you We compete that could be coming up on contracts obviously that you don't currently have that you would be very excited about getting in on that bidding. Yes.

I think that's the majority Like I told you before, very little of what we do is what I would call a new starter.

I think new starts are mostly what we would see what we're doing over in India where building a capability that is solid following a need for a customer in that would fall sometimes in the new category. But again, I think the vast majority of our pipeline is about us governing additional market share. For work that already exists. And yes, have quite a few bids on the street that are substantial in size and we look at pipeline that Roger and his team were quoting. And again, it reflects nice mix of both very large and very strategic opportunities for us.

And I think exactly to that point, Joe, because of the modest amount of recompetes that we have up, it's allowing us to make sure that we're addressing and opening our aperture and perhaps for additional addressable market during this period and the team is doing a great job of aligning those things and that we can continue to build on that, gain that momentum going out into the out years.

Okay. And then one more if I may. One of the data points that historically given on the pipeline is the amount of bids submitted in the next twelve months pipeline. I was wondering if you could give us what those data points are as of the end of the year? [indiscernible] Jeremy announced, Roger has joined us. He's going through a thorough pipe pipeline review and assessing it with his team to understand exactly where everything is. So I think you'll hear us I know you'll hear us talk about it on future calls, Joe. But I think at this time as the team's progressing, we'll refrain from quantifying anything other than I think Jeremy, we've talked about increasing our bid volume as we go through the year. Kind of tied back to what we said previously here, which is taking advantage of the opportunity that's in front of us and having a higher ops tempo from a bid standpoint. Point going forward. Yes. Everything that I've seen so far for 2025 has velocity of bids going through B2X.

Higher than 2024. And that is the primary key metric for me. Which is we have a large industrial market. We're relatively small.

In that market. And so the idea here is it's great differentiation and use our key positions that we have around the globe to put more opportunities out on the field.

Okay, great. Thanks for that. I'll get back in queue.

Your next question will come from Trevor Walsh with Citizens JMP.

Please go ahead.

Hi, team. Thanks for taking the questions.

Jeremy and or Sean really, appreciate the color that you gave at the beginning in the prepared remarks around the messaging aligning with the administration's I guess approach with Doge and the like. I'm just curious around the potential for 8% budget cuts kind of across the DoD that's been thrown out there. You guys have been doing this for a long time. Just curious how you might see whether it's 8% or some other number, if there's just a kind of broad kind of based set of priorities to kind of cut does that basically look like a X percent haircut kind of across all programs? Is it kind of is it geography specific? Is it certain programs that just get like how do we get to that sort of number in terms of how you guys have seen maybe similar types of environments play out just when DoD is kind of just generally trying to cut costs?

Yes, I would be speculating at best if I knew how they were going to do that. And I think the entire industry would be speculating at best. I will say the enduring nature of what we do in terms of support These are for enduring missions and they're part of this overall strategy of the U. S. Government.

Again, I wouldn't I would be just speculating if told you how they were going to go about doing this.

I think Trevor The way that I think we look at it from a a risk standpoint or whatever might be more aligned with what could be policy changes that could influence outcomes. Either positively or negatively relative to where we sit today, right? As opposed to having gone through sequestration in a and other stuff that [indiscernible] as opposed to broad cuts that impact a certain percentage of every program. They're probably more likely to be impacted by policy changes that the administration says because that's where they end up putting dollars. I think as Jeremy said, we are an enduring missions place that have been longstanding for this country and this nation. As Jeremy said, it would be speculative to say where they're going. I have not seen in the type of work that we do where it's just, hey, take a 10% cut here. Got it. That's super helpful. Sean, maybe again for you.

Congrats and great work on getting the net leverage kind of below the target level.

Was just curious to see I know we had talked about before when you there's not necessarily going to be a new goalpost for where that metric might go, but I know you did make comments previously that it would give you some optionality around kind of what you can do with capital. Any ideas or thoughts, especially just given the new dynamic new administration, etcetera, about where you might deploy some of those resources, given you sort of get that goal.

Sure. Yes, no, I want to make sure that I say again and thank the team for all of their efforts in achieving our objectives We are very focused on doing the things we said we're going to do. And the team did an exceptional job as we closed 24. Now relative to okay, what's next, which is the heart of your question, I think Jeremy has said before, it provides us with optionality. We're very happy with where we sit today. But I think there's opportunities and sifting through. It's not like we put things on a shelf and weren't looking at things just because we had a leverage ratio that may not have been conducive to those things. It's just part of the DNA and the stuff that that the company does regularly and we've established that appropriate cadence to be looking at at those opportunities. We don't have anything to announce, of course, But I think in terms of looking at what the art of the possible is in areas that we think we can be meaningful contributors is stuff that we'll pursue throughout 2025.

Yes.

I mean, I think I've been very clear about this.

Optionality includes us looking at it from the lens of what's going to generate the most shareholder value and that'll continue to be our focus. Those options that are reporting to us are going to be solely squared squarely on shareholder value. Great. Thanks, Paul. I'll get back in queue. Thanks, Trevor. Your next question will come from Mariana Perez Mora.

Bank of America. Please go ahead.

Good afternoon, everyone. Thank you for taking the question.

So my question is a follow-up to these like reshuffling of defense spending. As part of HETRA requirements, training and readiness and sustainment, all those activities are core. And they were not up for revision. How much do you think you are like [indiscernible] safe environment, business as usual environment, how much is actually or how soon we could see upside from training opportunities like the one you got on like WTRS recent contract last year?

The WTRS program has the opportunity to be the contract of choice for people that are looking to that we recall PDLs or task orders that continue to flow to this contract vehicle because it has been as for the customer said, they want to have the opportunity to make it easy for customers to procure training resources. And there's pages of task orders that we're looking at right now and the team is very busy and doing an exceptional job Whether that whether there's other training opportunities out there, we'll continue to look at. The core competency of ours, and we'll continue to look at those opportunities as we build our pipeline. I think the important to characterize it a little bit those things again, they tend to turn very quick. When we think about on contract growth that this business is very skilled at doing. We're turning some of those task orders and admittedly they're modest in size today, but there are there is a volume of them and we turn those around to the customer from a pricing and all that good sort of stuff. We turn those around in days. The team does that. It's just second nature to the team.

And so they can be put on contract.

To the your question is around, well, when could we see upside? The bulk of these activities, as I said, will transition in the second second half of the year. Could some things happen earlier? They could. We've not seen that yet. But the vehicle, the mechanics everything is in place such that it is a frictionless transaction. Between us and our customer to execute on the mission.

The team has done an exceptional job standing up the program, getting it to that point of Sean just said, where it is an engine that it just allows the customer to come to us with these task orders and the team does a great job turning these task orders around in a very timely basis.

Great. Thank you. That's great color. And then what are other key metrics in your like U. S. [indiscernible] Or any other milestones we should be looking at?

Yes, I think it's the ramp of a lot of the things that we've talked about, right? So we the F5 award that we got last year has completed its transition. It is often executing. And obviously, we have regular touch points with all of our programs to ensure that they are executing successfully. The Waters activity we talked about, we mentioned a GMR award that we got. We've said previously that that kind of went from an LRIP phase to a full rate production [indiscernible] production capabilities for those things. It's again just part of our DNA in terms of how we execute on programs. There's not one particular thing that we put more over weeks than another to be honest with you Mariana, it's it's stuff that we do on a weekly basis to support our programs and delivering to the much.

All right. Thank you so much for the color.

Sure.

This concludes our question and answer session. I would like to turn the conference back over to Mr. Jeremy Westinger for any closing remarks. Please go ahead, sir.

Thank you for the time today, and I appreciate everybody that listened in. I do want to echo with Sean that I want to thank the team.

And the employees of B2X. They delivered so many commitments [indiscernible] can't be any more proud of them than I am. It works so very hard and we're looking forward to 2025. So thank you for that and have a good day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.