Slide 1: Vectrus and Vertex to Combine to Create a Global Leader in Mission-Essential Solutions
Vectrus and Vertex to Combine to Create a Global Leader in Mission-Essential Solutions March 7, 2022
Slide 2: Disclaimers
Disclaimers FORWARD-LOOKING STATEMENTS Certain material presented in this presentation includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, Vectrus may be unable to obtain
Slide 3: Call Participants
Call Participants Chuck Prow Susan Lynch Ed Boyington President and Senior Vice President and President and Chief Executive Officer Chief Financial Officer Chief Executive Officer of Vectrus of Vectrus of Vertex vectrus.com vectrus.com TRUE TOYOUR TRUE TO YOUR MISSION MISSION / / 3
Slide 4: Creating a Global Leader in Mission-Essential Solutions
Creating a Global Leader in Mission-Essential Solutions 2021 Pro Forma Benefits of the Strategic Combination ▪ Talented Global Workforce with Strong Cultural Fit Through ~$3.4B Shared Mission ~$11.3B ▪ Provides Greater Scale and Market Leadership in the Converged Revenue Backlog Environment ▪ Improv
Slide 5: Provides Greater Scale and Reach
Provides Greater Scale and Reach ~$3.4 billion revenue 330+ locations 120+ years leader in mission-critical solutions & support expansive global footprint combined of successful mission support Revenue (2021 Pro Forma) ~$3.4B ~$1.8B Category 1 Category + 2 Backlog ~$11.3B ~$5.0B Vectrus Locations Ve
Slide 6: Enhanced Geographic, Client and Contract Diversity
Enhanced Geographic, Client and Contract Diversity 2021 Pro Forma Revenue + OCONUS 11% CONUS OCONUS Geographic 32% 42% CONUS Mix OCONUS CONUS 58% 68% 89% Army Other Other 12% 18% Other 30% 9% Army Client 64% Army 41% Air Force Mix Air Force Navy 19% 12% 30% Air Force Navy 28% 15% Navy 22% Fixed Pric
Slide 7: Platform to Support Accelerated Growth
Platform to Support Accelerated Growth Revenue Synergy Opportunities Total Potential Contract Pipeline of >$60B Through 2026 Across Four Core Markets >$60B Operations and Logistics Aerospace Training Technology Vectrus Vertex Additional potential New company pipeline + Meaningful Incremental Revenue
Slide 8: Transaction Summary
Transaction Summary • Vectrus to issue stock to Vertex shareholders in an all-stock merger • Vectrus shareholders will own ~38% and Vertex shareholders will own ~62% of the Transaction combined company Structure • Transaction values Vertex at ~$2.1 billion or ~9.5x 2021 EV/EBITDA, net of ~$160 milli
Slide 9: Attractive Financial Profile
Attractive Financial Profile (2021 Pro Forma) Revenue Adjusted EBITDA and Margin Highlights ~$283M1 ▪ Significantly increases ~$3.4B Synergies scale, improving combined revenue to ~$3.4B ~370bps EBITDA Margin Expansion ▪ Meaningfully enhances ~$1.8B margin profile to >8% with significant room for fu
Slide 10: Efficient Capital Structure Provides Flexibility
Efficient Capital Structure Provides Flexibility Pro Forma Net Leverage ~3.8x Strong cash flow generation Maintain low CapEx <3.0x business model Target long-term net leverage of 2.0 – 3.0x At Close Year End 2023 vectrus.com vectrus.com TRUE TOYOUR TRUE TO YOUR MISSION MISSION / / 10
Slide 11: Clearly Identified Cost Synergies and Attractive Tax Attributes
Clearly Identified Cost Synergies and Attractive Tax Attributes Expected to Achieve ~$20 million in Annual Pre-tax Cost Synergies Tax Attributes • Vertex has ~$1.1 billion of tax attributes Supply Chain & Contract from previously completed Corporate Costs Efficiencies transactions • Represents ~$78
Slide 12: Vectrus is a Leading Global Provider of National Security Solutions
Vectrus is a Leading Global Provider of National Security Solutions Key Metrics (FY 2021A) Facilities Support Provides total facility and base operations support for the U.S. Army, Air Force, Navy, Marines and national security agencies Revenue $ 1,784M Supply Chain and Logistics Services Adjusted E
Slide 13: Vertex's Capability-Rich Portfolio is Highly Strategic to Vectrus
Vertex’s Capability-Rich Portfolio is Highly Strategic to Vectrus Key Metrics (FY 2021A) Sensor and Platform Integration Technology insertion and upgrades into complex airborne and ground systems platforms Revenue $ 1,596M Engineering and Logistics Solutions Adjusted EBITDA Margin 11.3% Design, deve
Slide 14: Converged Environment is Transforming the Missions and Markets We Support
Converged Environment is Transforming the Missions and Markets We Support Transforming Mission Support Market Forces are Driving Migration to the Converged Environment Capabilities • The Federal technical services sector is transforming and the addressable market is expanding Facilities IT Network •
Slide 15: Converged Environment is Transforming the Missions and Markets We Support
Converged Environment is Transforming the Missions and Markets We Support Combination Creates Leading Provider Enabling Converged Environment vectrus.com vectrus.com TRUE TOYOUR TRUE TO YOUR MISSION MISSION / / 15
Slide 16: Combination of Complementary Cultures, Proud Histories and Passion for our Clients' Missions
Combination of Complementary Cultures, Proud Histories and Passion for our Clients’ Missions
Slide 17: Complementary Cultures and Mission-Focused Workforce
Complementary Cultures and Mission-Focused Workforce Client-Focused Culture Built on Shared Mission DE&I Commitments Integrity Respect Maintaining a work environment where diversity, equity and inclusion are central to our culture Committing to upholding the Valuing different ideas, opinions, highes
Slide 18: Creating Value for All Stakeholders
Creating Value for All Stakeholders • Shared mission, vision and values Employees • Expanded and improved career opportunities at a larger, more diversified company • Positioned to deliver more integrated and comprehensive solutions Clients • Cost reductions result in meaningful savings to the clien
Slide 19: Q4 and FY 2021 Results
Q4 and FY 2021 Results
Slide 20: Vectrus FY 2021 Highlights
Vectrus FY 2021 Highlights • FY Revenue of $1,784M (+27.8% y/y), • Growth in INDOPACOM continues — organic growth +9.5% INDOPACOM now represents ~3% of total revenue, up from 1% last year • Strong operating cash flow — Expansion in INDOPACOM with multiple generation of $61.3 million tasks ramping in
Slide 21: FY 2021 Financial Results
FY 2021 Financial Results Operating Margin & Revenue ($M) Diluted EPS Adj. Diluted EPS1,2 Adj. EBITDA Margin1 $1,783.7 $3.86 $4.77 4.7% $3.14 $1,395.5 4.0% $3.36 3.5% 3.1% FY'20 FY'21 FY'20 FY'21 FY'20 FY'21 FY'20 FY'21 1 See appendix for reconciliation of non-GAAP measures. 2 Definition of metric u
Slide 22: Q4'21 Financial Results
Q4’21 Financial Results Operating Margin & Revenue ($M) Diluted EPS Adj. Diluted EPS1,2 Adj. EBITDA Margin1 $1.42 $419.4 5.0% 3.9% $1.25 $355.3 3.6% $0.63 $0.90 2.4% Q4'20 Q4'21 Q4'20 Q4'21 Q4'20 Q4'21 Q4'20 Q4'21 1 See appendix for reconciliation of non-GAAP measures. 2 Definition of metric updated
Slide 23: Cash Flow and Liquidity
Cash Flow and Liquidity ($M) 2020 2021 YTD Net Cash Provided by (Used in) Operating Activities $64.1 $61.3 Cash 1 $66.9 $38.5 • YTD Net Cash Flow from Operations of $61.3 million; prior year included $13.2 Receivables $315.0 $348.6 million CARES Act benefit; excluding prior year CARES Act Debt $179.
Slide 24: 2022 Guidance
2022 Guidance 2022 ($M, except per share data) 2022 Mid-Point FY’22 Revenue Guidance Revenue $1,820 - $1,860 $1,840 1% Operating Income Margin (%) 3.4% - 3.6% 3.5% 5% Adjusted EBITDA Margin1 (%) 4.5% - 4.7% 4.6% Existing Backlog Earnings Per Share $3.72 – $4.08 $3.90 Recompete New Business Adjusted
Slide 25: Reconciliation Tables
Reconciliation Tables
Slide 26: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This presentation includes certain non-GAAP financial measures, including EBITDA and Pro forma Adjusted EBITDA. These financial measures are not prepared in accordance with accounting principles generally accepted in the United States and may be different from non
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjusted Net Income, Adjusted Diluted Earnings Per Share (Non-GAAP Measures) LOGCAP V Pre- Amortization of Three Months Ended Three Months Ended M&A, Integration, and Operational Legal Acquired Intangible Prior Years' December 31, 2021 ($K, except per share data)
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjusted Net Income, Adjusted Diluted Earnings Per Share (Non-GAAP Measures) LOGCAP V Pre- Amortization of Three Months Ended Three Months Ended M&A, Integration, and Operational Legal Acquired Intangible Prior Years' December 31, 2020 ($K, except per share data)
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjusted Net Income, Adjusted Diluted Earnings Per Share (Non-GAAP Measures) LOGCAP V Pre- Amortization of Twelve Months Ended Twelve Months Ended M&A, Integration, and Operational Legal Acquired Intangible Prior Years' December 31, 2021 ($K, except per share data
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Adjusted Net Income, Adjusted Diluted Earnings Per Share (Non-GAAP Measures) LOGCAP V Pre- Amortization of Twelve Months Ended Twelve Months Ended M&A, Integration, and Operational Legal Acquired Intangible Prior Years' December 31, 2020 ($K, except per share data