Slide 1: Fourth Quarter and Full Year 2015 Results and 2016 Guidance
VECTRUS FOURTH QUARTER AND FULL YEAR 2015 RESULTS AND 2016 GUIDANCE KEN HUNZEKER CHIEF EXECUTIVE OFFICER AND PRESIDENT MATT KLEIN SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER MARCH 16, 2016
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Page 2 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE “ACT”): CERTAIN MATERIAL PRESENTED HEREIN INCLUDES FORWARD-LOOKING STATEMENTS INTENDED TO QUALIFY FOR THE SAFE HARBOR FROM LIABILITY ESTABLISHED BY THE ACT. THESE FORWARD-LOOKING STATEM
Slide 3: Q4 and Full Year 2015 Highlights
Q4 AND FULL YEAR 2015 HIGHLIGHTS Page 3 • Strong fourth quarter results o Revenue of $311.2 million o Core business revenue(1) increased 16% year-over-year o Operating margin of 3.6% and diluted earnings per share (EPS) of $0.55 • 2015 results consistent with or exceeding mid-point of guidance o Rev
Slide 4: CEO Overview
CEO OVERVIEW Page 4 • DoD budgetary environment o President’s GFY 2017 budget request supports readiness and increases funding for Operations and Maintenance (O&M) o The Army’s number one priority is readiness and in GFY 2017 the Army is requesting a 5% funding increase for total O&M • Global threat
Slide 5: Vectrus Update
VECTRUS UPDATE Page 5 • Re-competes remain a priority in 2016 • Robust new business pipeline for 2016 and beyond o Over $1 billion of proposals submitted and pending potential award; anticipate revenue contribution in Q3 and Q4 • Investment in IT and Network Communication service line is underway o
Slide 6: Q4 2015 Financial Results
Q4 2015 FINANCIAL RESULTS Page 6 (1) See Appendix for definitions and reconciliation. (In millions, except Operating Margin and Diluted Earnings Per Share) Q4 2015 Q4 2014 vs. 2014 Funded Orders 131.6$ 177.7$ (46.1)$ Revenue 311.2$ 285.8$ 25.4$ Operating Income 11.3$ 8.1$ 3.2$ Operating Margin 3.6%
Slide 7: Full Year 2015 Financial Results
FULL YEAR 2015 FINANCIAL RESULTS Page 7 (1) See Appendix for definitions and reconciliation. (In millions, except Operating Margin and Diluted Earnings Per Share) 2015 2014 vs. 2014 Funded Orders 1,051.4$ 1,370.6$ (319.2)$ Revenue 1,180.7$ 1,203.3$ (22.6)$ Operating Income 40.0$ 38.4$ 1.6$ Operating
Slide 8: Backlog
BACKLOG (1) Page 8 (2) (1) Total backlog represents firm orders and potential options on multi-year contracts, excluding potential orders under IDIQ contracts. • Total backlog $2.4 billion as of December 31, 2015 o Funded backlog $0.7 billion o Unfunded backlog $1.7 billion $0.7 $0.7 $0.9 $0.7 $1.9
Slide 9: 2016 Assumptions
2016 ASSUMPTIONS Page 9 • 2016 anticipated revenue composition o 84% Existing Contracts o 7% Afghanistan Contracts o 6% Re-competes o 3% New Business • Depreciation / Amortization $4.1 million • Equity-based Founder’s Grants drive non-cash expense totaling $0.8 million • Operating Margin slightly im
Slide 10: Revenue Mix
$600 $800 $1,000 $1,200 $1,400 $1,600 2013 2014 2015 2016E Re ve nu e REVENUE MIX ($M) Page 10 ($M) Afghanistan Contracts Revenue Mix (1) See Appendix for definitions and reconciliation. Afghanistan Core Business1 +12% -38% -52% +6% -47% -6% $480 $625 $513 $270 $168 $80 10% 12% 18% 9% 6% 4% 0% 2% 4%
Slide 11: 2016 Guidance Summary
2016 GUIDANCE SUMMARY Page 11 (1) See Appendix for reconciliation. (2) 2016 diluted EPS is calculated using the estimated weighted average diluted common shares outstanding for the year ending December 31, 2016 of 11.2 million. (3) 2016 Free cash flow is calculated as GAAP net cash (used in) and pro
Slide 12: Ken Hunzeker and Matt Klein
KEN HUNZEKER CHIEF EXECUTIVE OFFICER AND PRESIDENT MATT KLEIN SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER VECTRUS FOURTH QUARTER AND FULL YEAR 2015 RESULTS AND 2016 GUIDANCE
Slide 13: Appendix
ff APPENDIX \VECTRUS.
Slide 14: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Page 14 The primary financial performance measures we use to manage our business and monitor results of operations are revenue trends and operating income trends. In addition, we consider adjusted revenue, adjusted operating income, adjusted operating margin, adju
Slide 15: Reconciliation of Non-GAAP Measures (Cont.)
RECONCILIATION OF NON-GAAP MEASURES (CONT.) Page 15 (In thousands) Adjusted Operating Income (Non-GAAP Measure) 2015 2014 2015 2014 Net income 5,960$ 3,331$ 30,973$ 22,812$ Income tax expense 3,416 3,264 2,458 14,079 Interest (expense) income (1,915) (1,554) (6,531) (1,526) Operating income 11,291$
Slide 16: Reconciliation of Non-GAAP Measures (Cont.)
RECONCILIATION OF NON-GAAP MEASURES (CONT.) Page 16 (In thousands) Free Cash Flow (Non-GAAP Measure) 2015 2014 Net cash provided by operating activities 18,880$ 42,979$ Subtract: Capital expenditures (793) (3,847) Free cash flow 18,087$ 39,132$ (in thousands) Adjusted Funded Orders (Non-GAAP Measure