Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 02, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-36341 | |
Entity Registrant Name | V2X, Inc. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 38-3924636 | |
Entity Address, Address Line One | 2424 Garden of the Gods Road | |
Entity Address, City or Town | Colorado Springs | |
Entity Address, State or Province | CO | |
Entity Address, Postal Zip Code | 80919 | |
City Area Code | (719) | |
Local Phone Number | 591-3600 | |
Title of 12(b) Security | Common Stock, Par Value $0.01 Per Share | |
Trading Symbol | VVX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,466,038 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001601548 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 958,156 | $ 459,408 | $ 1,912,693 | $ 1,364,257 |
Cost of revenue | 861,073 | 418,900 | 1,733,654 | 1,235,209 |
Selling, general, and administrative expenses | 92,596 | 27,618 | 154,295 | 77,045 |
Operating income | 4,487 | 12,890 | 24,744 | 52,003 |
Interest expense, net | (27,265) | (1,955) | (30,908) | (6,140) |
(Loss) income from operations before income taxes | (22,778) | 10,935 | (6,164) | 45,863 |
Income tax (benefit) expense | (5,739) | 677 | (2,453) | 7,623 |
Net (loss) income | $ (17,039) | $ 10,258 | $ (3,711) | $ 38,240 |
(Loss) earnings per share | ||||
Basic (in dollars per share) | $ (0.57) | $ 0.87 | $ (0.21) | $ 3.27 |
Diluted (in dollars per share) | $ (0.56) | $ 0.87 | $ (0.21) | $ 3.23 |
Weighted average common shares outstanding - basic (in shares) | 29,830 | 11,726 | 17,806 | 11,696 |
Weighted average common shares outstanding - basic (in shares) | 30,172 | 11,849 | 18,020 | 11,830 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Net (loss) income | $ (17,039) | $ 10,258 | $ (3,711) | $ 38,240 |
Changes in derivative instruments: | ||||
Tax (expense) benefit | 0 | (3) | 272 | (30) |
Net change in derivative instruments | 0 | 177 | 969 | 179 |
Foreign currency translation adjustments, net of tax | (2,136) | (3,093) | (6,390) | (5,019) |
Other comprehensive income (loss) net of tax | (2,136) | (2,916) | (5,421) | (4,840) |
Total comprehensive (loss) income | (19,175) | 7,342 | (9,132) | 33,400 |
Interest Rate Swap | ||||
Changes in derivative instruments: | ||||
Net change in fair value of cash flow hedges | 0 | 242 | 666 | 766 |
Foreign Currency Forward Contracts | ||||
Changes in derivative instruments: | ||||
Net change in fair value of cash flow hedges | $ 0 | $ (62) | $ 31 | $ (557) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 144,061 | $ 38,513 |
Restricted cash | 3,312 | 0 |
Receivables | 690,943 | 348,605 |
Prepaid expenses | 74,483 | 21,160 |
Other current assets | 12,398 | 15,062 |
Total current assets | 925,197 | 423,340 |
Property, plant, and equipment, net | 75,960 | 23,758 |
Goodwill | 1,537,710 | 321,734 |
Intangible assets, net | 559,985 | 66,582 |
Right-of-use assets | 51,968 | 43,651 |
Other non-current assets | 17,632 | 10,394 |
Total non-current assets | 2,243,255 | 466,119 |
Total Assets | 3,168,452 | 889,459 |
Current liabilities | ||
Accounts payable | 385,936 | 212,533 |
Compensation and other employee benefits | 147,870 | 80,284 |
Short-term debt | 11,850 | 10,400 |
Other accrued liabilities | 172,027 | 55,031 |
Total current liabilities | 717,683 | 358,248 |
Long-term debt, net | 1,286,985 | 94,246 |
Deferred tax liability | 50,249 | 32,214 |
Operating lease liability | 40,234 | 34,536 |
Other non-current liabilities | 84,918 | 20,128 |
Total non-current liabilities | 1,462,386 | 181,124 |
Total liabilities | 2,180,069 | 539,372 |
Commitments and contingencies (Note 10) | ||
Shareholders' Equity | ||
Preferred stock; $0.01 par value; 10,000 shares authorized; No shares issued and outstanding | 0 | 0 |
Common stock; $0.01 par value; 100,000 shares authorized; 30,460 and 11,738 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 305 | 117 |
Additional paid in capital | 735,357 | 88,116 |
Retained earnings | 264,042 | 267,754 |
Accumulated other comprehensive loss | (11,321) | (5,900) |
Total shareholders' equity | 988,383 | 350,087 |
Total Liabilities and Shareholders' Equity | $ 3,168,452 | $ 889,459 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Shareholders' Equity | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 30,460,000 | 11,738,000 |
Common stock, shares outstanding (in shares) | 30,460,000 | 11,738,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Oct. 01, 2021 | |
Operating activities | ||
Net (loss) income | $ (3,711) | $ 38,240 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation expense | 8,663 | 4,788 |
Amortization of intangible assets | 28,597 | 7,521 |
Loss on disposal of property, plant, and equipment | 59 | 65 |
Stock-based compensation | 18,800 | 6,927 |
Amortization of debt issuance costs | 3,903 | 689 |
Changes in assets and liabilities: | ||
Receivables | (1,676) | (22,835) |
Prepaid expenses | (3,442) | (15,625) |
Other assets | 1,119 | (118) |
Accounts payable | 50,210 | 55,653 |
Deferred taxes | (151) | 780 |
Compensation and other employee benefits | 21,200 | (5,737) |
Other liabilities | (23,803) | (16,970) |
Net cash provided by operating activities | 99,768 | 53,378 |
Investing activities | ||
Purchases of capital assets | (8,231) | (7,650) |
Proceeds from the disposition of assets | 20 | 16 |
Acquisition of business, net of cash acquired | 194,431 | 262 |
Contribution to joint venture | 0 | (2,496) |
Net cash provided by (used in) investing activities | 186,220 | (9,868) |
Financing activities | ||
Repayments of long-term debt | (58,363) | (6,000) |
Proceeds from revolver | 392,000 | 352,000 |
Repayments of revolver | (495,000) | (397,000) |
Proceeds from exercise of stock options | 370 | 114 |
Payment of debt issuance costs | (2,324) | (17) |
Payments of employee withholding taxes on share-based compensation | (1,934) | (2,317) |
Net cash used in financing activities | (165,251) | (53,220) |
Exchange rate effect on cash | (11,877) | (2,784) |
Net change in cash, cash equivalents and restricted cash | 108,860 | (12,494) |
Cash, cash equivalents and restricted cash - beginning of year | 38,513 | 68,727 |
Cash, cash equivalents and restricted cash - end of period | 147,373 | 56,232 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 27,035 | 4,706 |
Income taxes paid | 10,344 | 9,068 |
Purchase of capital assets on account | 438 | 480 |
Common stock issued for business acquisition | $ 630,636 | $ 0 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes to Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock Issued | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Balance (in shares) at Dec. 31, 2020 | 11,625 | ||||
Balance at Dec. 31, 2020 | $ 304,938 | $ 116 | $ 82,823 | $ 222,026 | $ (27) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 12,048 | 12,048 | |||
Foreign currency translation adjustments | (2,356) | (2,356) | |||
Unrealized gain (loss) on cash flow hedge | (77) | (77) | |||
Employee stock awards and stock options (in shares) | 75 | ||||
Employee stock awards and stock options | 114 | $ 1 | 113 | ||
Taxes withheld on stock compensation awards | (2,184) | (2,184) | |||
Stock-based compensation | 1,983 | 1,983 | |||
Balance (in shares) at Apr. 02, 2021 | 11,700 | ||||
Balance at Apr. 02, 2021 | 314,466 | $ 117 | 82,735 | 234,074 | (2,460) |
Balance (in shares) at Dec. 31, 2020 | 11,625 | ||||
Balance at Dec. 31, 2020 | 304,938 | $ 116 | 82,823 | 222,026 | (27) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 38,240 | ||||
Foreign currency translation adjustments | (5,019) | ||||
Unrealized gain (loss) on cash flow hedge | 179 | ||||
Balance (in shares) at Oct. 01, 2021 | 11,727 | ||||
Balance at Oct. 01, 2021 | 341,801 | $ 117 | 86,285 | 260,266 | (4,867) |
Balance (in shares) at Apr. 02, 2021 | 11,700 | ||||
Balance at Apr. 02, 2021 | 314,466 | $ 117 | 82,735 | 234,074 | (2,460) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 15,934 | 15,934 | |||
Foreign currency translation adjustments | 430 | 430 | |||
Unrealized gain (loss) on cash flow hedge | 79 | 79 | |||
Employee stock awards and stock options (in shares) | 24 | ||||
Taxes withheld on stock compensation awards | (88) | (88) | |||
Stock-based compensation | 2,003 | 2,003 | |||
Balance (in shares) at Jul. 02, 2021 | 11,724 | ||||
Balance at Jul. 02, 2021 | 332,824 | $ 117 | 84,650 | 250,008 | (1,951) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 10,258 | ||||
Foreign currency translation adjustments | (3,093) | (3,093) | |||
Unrealized gain (loss) on cash flow hedge | 177 | 177 | |||
Employee stock awards and stock options (in shares) | 3 | ||||
Conversion of liability-based stock compensation awards to equity-based stock compensation awards | 405 | 405 | |||
Taxes withheld on stock compensation awards | (45) | (45) | |||
Stock-based compensation | 1,680 | 1,680 | |||
Balance (in shares) at Oct. 01, 2021 | 11,727 | ||||
Balance at Oct. 01, 2021 | 341,801 | $ 117 | 86,285 | 260,266 | (4,867) |
Balance (in shares) at Dec. 31, 2021 | 11,738 | ||||
Balance at Dec. 31, 2021 | 350,087 | $ 117 | 88,116 | 267,754 | (5,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 2,855 | 2,855 | |||
Foreign currency translation adjustments | (616) | (616) | |||
Unrealized gain (loss) on cash flow hedge | 374 | 374 | |||
Employee stock awards and stock options (in shares) | 67 | ||||
Employee stock awards and stock options | 1 | $ 1 | |||
Taxes withheld on stock compensation awards | (1,626) | (1,626) | |||
Stock-based compensation | 3,100 | 3,100 | |||
Balance (in shares) at Apr. 01, 2022 | 11,805 | ||||
Balance at Apr. 01, 2022 | 354,175 | $ 118 | 89,590 | 270,609 | (6,142) |
Balance (in shares) at Dec. 31, 2021 | 11,738 | ||||
Balance at Dec. 31, 2021 | 350,087 | $ 117 | 88,116 | 267,754 | (5,900) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (3,711) | ||||
Foreign currency translation adjustments | (6,390) | ||||
Unrealized gain (loss) on cash flow hedge | 969 | ||||
Balance (in shares) at Sep. 30, 2022 | 30,460 | ||||
Balance at Sep. 30, 2022 | 988,383 | $ 305 | 735,357 | 264,042 | (11,321) |
Balance (in shares) at Apr. 01, 2022 | 11,805 | ||||
Balance at Apr. 01, 2022 | 354,175 | $ 118 | 89,590 | 270,609 | (6,142) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | 10,472 | 10,472 | |||
Foreign currency translation adjustments | (3,637) | (3,637) | |||
Unrealized gain (loss) on cash flow hedge | 594 | 594 | |||
Employee stock awards and stock options (in shares) | 41 | ||||
Employee stock awards and stock options | 369 | 369 | |||
Taxes withheld on stock compensation awards | (70) | (70) | |||
Stock-based compensation | 1,575 | 1,575 | |||
Balance (in shares) at Jul. 01, 2022 | 11,846 | ||||
Balance at Jul. 01, 2022 | 363,478 | $ 118 | 91,464 | 281,081 | (9,185) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (17,039) | (17,039) | |||
Foreign currency translation adjustments | (2,136) | (2,136) | |||
Unrealized gain (loss) on cash flow hedge | 0 | ||||
Employee stock awards and stock options (in shares) | 22 | ||||
Issuance of common stock in connection with a business combination (in shares) | 18,592 | ||||
Issuance of common stock in connection with a business combination | 630,636 | $ 187 | 630,449 | ||
Taxes withheld on stock compensation awards | (237) | (237) | |||
Stock-based compensation | 13,681 | 13,681 | |||
Balance (in shares) at Sep. 30, 2022 | 30,460 | ||||
Balance at Sep. 30, 2022 | $ 988,383 | $ 305 | $ 735,357 | $ 264,042 | $ (11,321) |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business and Basis of Presentation Our Business V2X, Inc., an Indiana Corporation, formerly known as Vectrus, Inc. (Vectrus), is a leading provider of critical mission solutions and support to defense clients globally. The Company operates as one segment and delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. Vectrus was incorporated in the State of Indiana in February 2014. On September 27, 2014, Exelis Inc, an Indiana corporation, spun-off (the Spin-off) Vectrus and Vectrus became an independent, publicly traded company. References in these notes to "Exelis" or "Former Parent" refer to Exelis Inc. and its consolidated subsidiaries (other than Vectrus). Exelis was acquired by a predecessor entity of L3Harris Technologies, Inc. in May 2015. On March 7, 2022, Vectrus entered into an Agreement and Plan of Merger (the Merger Agreement) with Vertex Aerospace Services Holding Corp., a Delaware corporation (Vertex), Andor Merger Sub Inc., a Delaware corporation (Merger Sub Inc.) and Andor Merger Sub LLC, a Delaware limited liability company (Merger Sub LLC). On July 5, 2022 (the Closing Date), Vectrus completed its merger (Merger) thereby forming V2X, Inc. For a description of the Merger, see Note 3, Merger . Unless the context otherwise requires or unless stated otherwise, references in these notes to "V2X", "we," "us," "our," “combined company”, "the Company" and "our Company" refer to V2X, Inc. and all of its consolidated subsidiaries (including, subsequent to the Merger, Vertex and its consolidated subsidiaries), taken together as a whole. Equity Investments In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, we entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, we entered into a joint venture agreement with Kuwait Resources House for Human Resources Management a nd Services Company . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC. (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by V2X and other contractors around the world. We account for our investments in HDSS, J&J, and ServCore under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest in these entities. We record our proportionate share of income or losses from HDSS, J&J, and ServCore in selling, general and administrative (SG&A) expenses in the Condensed Consolidated Statements of Income. Our investment in these joint ventures is recorded in other non-current assets in the Condensed Consolidated Balance Sheets. When we receive cash distributions from our equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Condensed Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Condensed Consolidated Statements of Cash Flows. During the nine months ended September 30, 2022, we received a net cash distribution of $0.8 million from our joint ventures. As of September 30, 2022 and December 31, 2021 our joint venture investment balance was $6.0 million and $5.4 million, respectively. Our proportionate share of income from the HDSS, J&J, and ServCore joint ventures was $1.4 million for the first three quarters of both 2022 and 2021. Basis of Presentation Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter (September 30, 2022 for the third quarter of 2022 and October 1, 2021 for the third quarter of 2021), except for the last quarter of the fiscal year, which ends on December 31. For ease of presentation, the quarterly financial statements included herein are described as "three months ended." The unaudited interim Condensed Consolidated Financial Statements of V2X have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. have been omitted. These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position and operating results. Revenue and net income for any interim period are not necessarily indicative of future or annual results. Restricted Cash The Company had restricted cash of $3.3 million related to collateral security for two outstanding letters of credit at September 30, 2022 and no restricted cash as of December 31, 2021. Reconciliation of cash, cash equivalents and restricted cash as of September 30, 2022 is presented in the following table: (In thousands) September 30, 2022 Cash and cash equivalents $ 144,061 Restricted cash 3,312 Total cash, cash equivalents and restricted cash $ 147,373 |
Recent Accounting Standards Upd
Recent Accounting Standards Update | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Standards Update | RECENT AC COUNTING STANDARDS UPDATE Accounting Standards That Were Adopted In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). The amendment requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contract. The amendment also provides certain practical expedients when applying the guidance. ASU No. 2021-08 is effective for interim and annual periods beginning after December 15, 2022, on a prospective basis, with early adoption permitted. Early adoption is to be applied to all business combinations that occur during the fiscal year that the amendment is adopted. We adopted this standard in the third quarter of 2022 and applied the guidance to our Merger . In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). |
Merger
Merger | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Merger | MERGER On July 5, 2022, the Closing Date, Vectrus completed its previously announced Merger with Vertex, forming V2X, a global leader in aerospace and defense technologies, by acquiring all of the outstanding shares of Vertex. On the Closing Date, Vertex and its consolidated subsidiaries became wholly-owned subsidiaries of the Company. The combined V2X entity from the Merger is a larger and more diversified Company with the ability to compete for more integrated business opportunities and generate revenue across geographies, clients, and contract types in supporting the mission of our customers. The operating results of Vertex subsequent to the Closing Date are included in the Company's consolidated results of operations. Vertex and its consolidated subsidiaries recognized revenue of $451.6 million, operating income of $0.6 million and net loss of $12.6 million for the period from the Closing Date until September 30, 2022. The Company recognized $28.2 million and $41.3 million of acquisition-related costs that were expensed as incurred during the three and nine months ended September 30, 2022, respectively. These costs are included in SG&A expense in the Condensed Consolidated Statements of Income. Purchase Price Allocation The Merger is accounted for as a business combination. As such, the assets acquired and liabilities assumed are accounted for at fair value, with the excess of the purchase price over the fair value of the net identifiable assets acquired and liabilities assumed recorded as goodwill. The Closing Date fair value of the consideration transferred totaled $634.0 million, which was comprised of the following: ($ in thousands, except share and per share amounts) Purchase Price Shares of V2X common stock issued 18,591,866 Market price per share of V2X as of Closing Date $ 33.92 Fair value of common shares issued $ 630,636 Fair value of cash consideration 3,315 Total consideration transferred $ 633,951 The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the Merger as of the Closing Date. The estimated fair value of Vertex’s assets acquired and liabilities assumed at the acquisition date are determined based on preliminary valuations and analyses. As of September 30, 2022, we considered these amounts to be preliminary because we are still in the process of gathering and reviewing information to support the valuations of certain contractual and operational factors underlying the customer related intangible assets, details surrounding tax matters and assumptions underlying certain existing or potential reserves, such as those for legal matters. The final determination could result in material adjustments. (In thousands) Preliminary Fair Value Cash and cash equivalents $ 197,747 Receivables 336,169 Prepaid expenses 49,531 Property, plant, and equipment, net 53,618 Intangibles assets, net 522,000 Other assets 18,670 Accounts payable (122,269) Net debt (1,352,304) Accrued payroll (49,282) Other liabilities (235,905) Total identifiable net assets (582,025) Goodwill 1,215,976 Total purchase consideration $ 633,951 As a result of the Merger, the Company recognized $1,216.0 million of goodwill. The goodwill recognized is attributable to operational and general and administrative cost synergies, expanded market opportunities and other benefits that do not qualify for separate recognition. None of the goodwill is expected to be deductible for tax purposes. In addition, $522.0 million was recognized for customer related amortizable intangible assets with a weighted average life of 7.4 years. As part of the Merger, V2X acquired certain contracts, including a Transition Services Agreement (TSA) with Crestview Aerospace LLC (Crestview), which was previously divested to American Industrial Partners Capital Fund VI, L.P. (AIP). As of September 30, 2022, the Company recorded $0.9 million of income related to the TSA with Crestview, which was recorded as a reduction in cost of sales. AIP currently holds approximately 62% of V2X common stock. The following unaudited pro forma information shows the combined results of our operations for the three and nine months ended September 30, 2022 and 2021 as if the Merger had occurred on January 1, 2021. The unaudited pro forma information reflects the effects of applying our accounting policies and certain pro forma adjustments to the combined historical financial information of Vertex. The pro forma adjustments include: a) incremental amortization expense associated with identified intangible assets; b) incremental interest expense resulting from fair value adjustments applied to the Vertex debt that we assumed; and c) a reduction of revenues and operating expenses associated with fair value adjustments made to acquire assets and assumed liabilities, such as contract cost assets and contract liabilities. This unaudited pro forma information is presented for informational purposes only and may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, In thousands 2022 2021 2022 2021 Pro forma Revenue $ 961,281 $ 876,267 $ 2,691,399 $ 2,555,502 Pro forma Net Income (Loss) $ 9,576 $ 19,476 $ 5,583 $ (4,645) |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | REVENUE Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. To determine the proper revenue recognition method, consideration is given as to whether a single contract should be accounted for as more than one performance obligation. For most of our contracts, the customer contracts with us to perform an integrated set of tasks and deliverables as a single service solution, whereby each service is not separately identifiable from other promises in the contract and therefore is not distinct. As a result, when this integrated set of tasks exists, the contract is accounted for as one performance obligation. The vast majority of our contracts have a single performance obligation. Unexercised contract options and indefinite delivery and indefinite quantity (IDIQ) contracts are considered to be separate performance obligations when the option or IDIQ task order is exercised or awarded. Contracts are often modified to account for changes in contract specifications and requirements. If the modification either creates new enforceable rights and obligations or changes the existing enforceable rights and obligations, the modification will be treated as a separate contract. Our contract modifications, except for those to exercise option years, have historically not been distinct from the existing contract and have been accounted for as if they were part of that existing contract. The Company's performance obligations are satisfied over time as services are provided throughout the contract term. We recognize revenue over time using the input method (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Our over time recognition is reinforced by the fact that our customers simultaneously receive and consume the benefits of our services as they are performed. For most U.S. government contracts, this continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. This continuous transfer of control requires that we track progress towards completion of performance obligations in order to measure and recognize revenue. The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year or less option periods. The number of option periods varies 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. We expect to recognize a substantial portion of our performance obligations as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience or for cause. Substantially all of our contracts have terms that would permit us to recover all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience. Remaining performance obligations as of September 30, 2022 and December 31, 2021 are presented in the following table: September 30, December 31, (In millions) 2022 2021 Performance Obligations $ 3,362 $ 1,398 As of September 30, 2022, we expect to recognize approximately 26% of the remaining performance obligations as revenue in 2022 and the remaining 74% d uring 2023. Contract Estimates Accounting for contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For contracts, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of 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 services being performed; the cost and availability of materials; the performance of subcontractors; and negotiations with the customer on contract modifications. When the estimates of total costs to be incurred on a contract exceed total estimates of the transaction price, a provision for the entire loss is determined at a contract level and is recognized in the period in which the loss was determined. The impact of adjustments in contract estimates on our operating income can be reflected in either revenue or cost of revenue. Cumulative catch-up adjustments are driven by changes in contract terms, program performance, customer scope changes, and changes to estimates in the reported period. These changes can increase or decrease operating income depending on the dynamics of each contract. Cumulative catch-up adjustments for the three and nine months ended September 30, 2022 decreased operating income by $1.5 million and increased operating income $5.9 million , respectively. For the three and nine months ended October 1, 2021, the adjustments increased operating income by $2.6 million and decreased operating income by $0.4 million , respectively. For the three and nine months ended September 30, 2022, the cumulative catch-up adjustments to operating income decreased revenue by $1.7 million and increased revenue by $6.1 million, respectively. For the three and nine months ended October 1, 2021, the cumulative catch-up adjustments to operating income increased revenue by $3.0 million and $1.4 million, respectively. Revenue by Category Generally, the sales price elements for our contracts are cost-plus, cost-reimbursable or firm-fixed-price. We commonly have elements of cost-plus, cost-reimbursable and firm-fixed-price contracts on a single contract. On a cost-plus type contract, we are paid our allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement, up to funding levels predetermined by our customers. On cost-plus type contracts, we do not bear the risks of unexpected cost overruns, provided that we do not incur costs that exceed the predetermined funded amounts. Most of our cost-plus contracts also contain a firm-fixed price element. Cost-plus type contracts with award and incentive fee provisions are our primary variable contract fee arrangement. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees provide for a fee based on the relationship between total allowable and target cost. On most of our contracts, a cost-reimbursable element captures consumable materials required for the contract. Typically, these costs do not bear fees. On a firm-fixed-price type contract, we agree to perform the contractual statement of work for a predetermined contract price. A firm-fixed-price type contract typically offers higher profit margin potential than a cost-plus type contract, which is commensurate with the greater levels of risk we assume on a firm-fixed-price type contract. Although a firm-fixed-price type contract generally permits us to retain profits if the total actual contract costs are less than the estimated contract costs, we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract. Although the overall scope of work required under the contract may not change, profit may be adjusted as experience is gained and as efficiencies are realized or costs are incurred. On a time-and-materials type contract, we are reimbursed for labor at fixed hourly rates and generally reimbursed separately for allowable materials, costs, and expenses at cost. For this contract type, we bear the risk when our labor costs and allocable indirect expenses exceed the fixed hourly rate specified within the contract. Revenue by contract type for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Cost-plus and cost-reimbursable $ 505,743 $ 338,007 49.6 % $ 1,172,397 $ 972,426 20.6 % Firm-fixed-price 416,618 105,619 294.5 % 672,970 345,792 94.6 % Time and material 35,795 15,782 126.8 % 67,326 46,039 46.2 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by geographic region in which the contract is performed for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change United States $ 582,817 $ 139,357 318.2 % $ 908,271 $ 435,717 108.5 % Middle East 261,997 263,257 (0.5) % 747,310 761,758 (1.9) % Europe 62,669 34,902 79.6 % 143,847 111,604 28.9 % Asia 50,673 21,892 131.5 % 113,265 55,178 105.3 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by contract relationship for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Prime contractor $ 886,415 $ 429,370 106.4 % $ 1,781,961 $ 1,272,671 40.0 % Subcontractor 71,741 30,038 138.8 % 130,732 91,586 42.7 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by customer for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Army $ 352,923 $ 304,341 16.0 % $ 959,792 $ 869,690 10.4 % Air Force 165,085 63,569 159.7 % 295,015 207,565 42.1 % Navy 270,071 52,556 413.9 % 410,173 165,391 148.0 % Other 170,077 38,942 336.7 % 247,713 121,611 103.7 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Contract Balances The timing of revenue recognition, billings, and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities). Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to fund current operating expenses under the contract. These assets and liabilities are reported on the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. As of September 30, 2022 and December 31, 2021, we had contract assets of $490.1 million and $240.0 million, respectively. Contract assets primarily consist of unbilled receivables, which represent rights to consideration for work completed but not billed as of the reporting date. The balance of unbilled receivables consists of costs and fees that are: (i) billable immediately; (ii) billable on contract completion; or (iii) billable upon other specified events, such as the resolution of a request for equitable adjustment (REA). For additional information regarding the composition of our receivables, see Note 5, Receivables. |
Receivables
Receivables | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Receivables | RECEIVABLES Receivables were comprised of the following: (In thousands) September 30, 2022 December 31, 2021 Billed receivables $ 190,358 $ 104,074 Unbilled receivables (contract assets) 490,101 239,979 Other 10,484 4,552 Total receivables $ 690,943 $ 348,605 As of September 30, 2022 and December 31, 2021, substantially all billed receivables are due from the U.S. government, either directly as prime contractor to the U.S. government or as subcontractor to another prime contractor to the U.S. government. Because the Company's billed receivables are with the U.S. government, the Company does not believe it has material credit risk exposure. Unbilled receivables are contract assets that represent revenue recognized on long-term contracts in excess of amounts billed as of the balance sheet date. We expect to bill customers for the majority of the September 30, 2022 contract assets during 2022. C hanges in the balance of receivables are primarily due to the timing differences between our performance and customers' payments. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS As of September 30, 2022 and December 31, 2021 the carrying amount of goodwill was $1,537.7 million and $321.7 million respectively. The $1,216.0 million increase for the nine months ended September 30, 2022 relates to the Merger. For a description of the Merger, see Note 3, Merger . The Company tests goodwill for impairment on the first day of the Company's fourth fiscal quarter each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Identifiable intangible assets consist of the following: September 30, 2022 December 31, 2021 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract backlogs $ 441,300 $ (39,621) $ 401,679 $ 77,300 $ (14,988) $ 62,312 Customer contracts 165,200 (7,353) 157,847 7,200 (3,572) 3,628 Trade names and other 1,249 (790) 459 1,249 (607) 642 Balance $ 607,749 $ (47,764) $ 559,985 $ 85,749 $ (19,167) $ 66,582 Identifiable intangible asset amortization expense was $24.2 million and $28.6 million for the three and nine months ended September 30, 2022, respectively. Intangible asset amortization for the three and nine months ended October 1, 2021 was $2.6 million and $7.5 million, respectively. As of September 30, 2022, the remaining average intangible asset amortization period was 7.43 years . Future estimated amortization expense is as follows (in thousands): Period Amortization 2022 (remainder of the year) $ 25,165 2023 $ 100,661 2024 $ 99,554 2025 $ 98,757 2026 $ 98,286 After 2026 $ 137,562 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Senior Secured Credit Facilities In September 2014, Vectrus and its wholly-owned subsidiary, Vectrus Systems Corporation (VSC), entered into a senior secured credit agreement. The credit agreement was subsequently amended on December 24, 2020 and January 24, 2022 and is collectively referred to as the Prior Credit Agreement. The credit agreement consisted of a term loan (Amended Term Loan) and a $270.0 million revolving credit facility (Amended Revolver). On the Closing Date, the outstanding debt from the Amended Term Loan and the Amended Revolver, $50.2 million and $40.0 million, respectively, was repaid and related guarantees and liens were discharged and released. Repayment was made using proceeds from the Vertex First Lien Credit Agreement described below. As of December 31, 2021, the balance outstanding under the Amended Term Loan and the Amended Revolver, was $55.4 million and $50.0 million, respectively On the Closing Date, certain of our subsidiaries, including VSC (and together with VSC, the Company Guarantor Subsidiaries), that became direct or indirect subsidiaries of Vertex Aerospace Service Corp., a Delaware corporation and wholly-owned indirect subsidiary of Vertex (Vertex Borrower), have provided guarantees of the indebtedness under each of: (i) the First Lien Credit Agreement, dated as of December 6, 2021 (as amended by the Amendment No. 1 to First Lien Credit Agreement, dated as of the Closing Date, and as further amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex First Lien Credit Agreement), by and among Vertex Borrower, as borrower, Vertex Aerospace Intermediate LLC, a Delaware limited liability company, direct parent entity of Vertex Borrower and wholly-owned indirect subsidiary of Vertex (Vertex Holdings), the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent; (ii) the Second Lien Credit Agreement, dated as of December 6, 2021 (as amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex Second Lien Credit Agreement), Vertex Borrower, as borrower, Vertex Holdings, the lenders from time to time party thereto and Royal Bank of Canada, as administrative agent; and (iii) the ABL Credit Agreement, dated as of June 29, 2018 (as amended by the First Amendment to ABL Credit Agreement, dated as of May 17, 2019, as further amended by the Second Amendment to ABL Credit Agreement, dated as of May 17, 2021, and as further amended by the Third Amendment to ABL Credit Agreement, dated as of December 6, 2021, as further amended by the Fourth Amendment to ABL Credit Agreement, dated as of the Closing Date, and as further amended, restated, amended and restated, supplemented and otherwise modified from time to time, the Vertex ABL Credit Agreement), by and among Vertex Borrower, Vertex Holdings, certain other subsidiaries of Vertex Borrower from time to time party thereto as co-borrowers, the lenders from time to time party thereto and Ally Bank, as administrative agent (in such capacity, the ABL Agent). Vertex First Lien Credit Agreement. The Vertex First Lien Credit Agreement provides for senior secured first lien term loans in an aggregate principal amount of $1,185.0 million, consisting of a $925.0 million term loan “B” tranche, (the First Lien Initial Term Tranche) and a $260.0 million incremental term loan “B” tranche (the First Lien Incremental Term Tranche and, together with the First Lien Initial Term Tranche, collectively, the First Lien Term Facility). The entire amount of the proceeds from the (i) First Lien Initial Term Tranche were previously used to finance the acquisition of certain subsidiaries of Raytheon Company, a Delaware corporation, and related transaction costs (the Sky Acquisition in December 2021). As provided in the Merger Agreement, the proceeds of the First Incremental Term Tranche were used by the Vertex Borrower to redeem all of the shares of previously issued preferred stock on the Closing Date (but prior to the Merger). The remaining First Lien Incremental Term Tranche proceeds were used to repay in full all outstanding indebtedness under the Prior Credit Agreement, and other transaction costs. Approximately $54.0 million of cash remained after funding the preferred stock redemption, repayment of the Prior Credit Agreement and other transaction costs. The loans under the First Lien Term Facility will be payable in full on December 6, 2028. The First Lien Term Facility amortizes in an amount equal to approximately $3.0 million per quarter for the fiscal quarters ending September 30, 2022, through September 30, 2028, with the balance of $1,108.6 million due on December 6, 2028. The Vertex Borrower’s obligations under the First Lien Term Facility, which were assumed in the Merger, are guaranteed by Vertex Holdings and Vertex Borrower’s wholly-owned domestic subsidiaries (including the Company Guarantor Subsidiaries, collectively, the First Lien Guarantors), subject to customary exceptions and limitations. The Vertex Borrower’s obligations under the First Lien Term Facility and the First Lien Guarantors’ obligations under the related guarantees are secured by (i) a first priority-lien on substantially all of the Vertex Borrower’s and the First Lien Guarantors’ assets other than the ABL Priority Collateral, as defined below (subject to customary exceptions and limitations), and (ii) a second-priority lien on substantially all of the Vertex Borrower’s and the First Lien Guarantors’ accounts receivable, inventory and certain other assets arising therefrom or related thereto (collectively, the ABL Priority Collateral) (subject to customary exceptions and limitations). The borrowings under the First Lien Initial Term Tranche bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the federal funds rate, plus a margin of 2.50% to 3.75% per annum, or a Eurodollar rate, determined by reference to LIBOR, plus a margin of 3.50% to 3.75% per annum, in each case, depending on the consolidated first lien net leverage ratio of the Vertex Borrower and its subsidiaries. As of September 30, 2022, the effective interest rate for the First Lien Initial Term Tranche was 7.63%. The borrowings under the First Lien Incremental Term Tranche bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the federal funds rate, plus a margin of 3.00% per annum, or a term benchmark rate, determined by reference to Term SOFR, plus a margin of 4.00% per annum. As of September 30, 2022, the effective interest rate for the First Lien Incremental Term Tranche was 7.90% The Vertex First Lien Credit Agreement contains customary representations and warranties and affirmative covenants. The Vertex First Lien Credit Agreement also includes negative covenants that limit, among other things, additional indebtedness, additional liens, sales of assets, dividends, investments and advances, prepayments of debt and mergers and acquisitions. The Vertex First Lien Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the First Lien Term Facility to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Vertex Borrower may be required immediately to repay all amounts outstanding under the Vertex First Lien Credit Agreement. As of September 30, 2022, the carrying value of the First Lien Credit Agreement was $1,122.8 million, net of deferred discount and unamortized deferred financing costs of $56.9 million. The estimated fair value of the First Lien Credit Agreement as of September 30, 2022 was $1,138.4 million . The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt. Vertex Second Lien Credit Agreement. The Vertex Second Lien Credit Agreement provides for senior secured second lien term loans in an aggregate principal amount of $185.0 million (the Second Lien Term Facility). The entire amount of the proceeds from the Second Lien Term Facility were previously used to finance the Sky Acquisition in December 2021. The loans under the Second Lien Term Facility will be payable in full on December 6, 2029. The Vertex Borrower’s obligations under the Second Lien Term Facility are guaranteed by Vertex Holdings and the Vertex Borrower’s wholly-owned domestic subsidiaries (including the Company Guarantor Subsidiaries, collectively, the Second Lien Guarantors), subject to customary exceptions and limitations. The Vertex Borrower’s obligations under the Second Lien Term Facility and the Second Lien Guarantors’ obligations under the related guarantees are secured by (i) a second priority-lien on substantially all of the Vertex Borrower’s and Second Lien Guarantors’ assets other than the ABL Priority Collateral (subject to customary exceptions and limitations), and (b) a third-priority lien on substantially all of the Vertex Borrower’s and Second Lien Guarantors’ assets ABL Priority Collateral (subject to customary exceptions and limitations). The borrowings under the Second Lien Term Facility bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the federal funds rate, plus a margin of 6.50% per annum, or a Eurodollar rate, determined by reference to LIBOR, plus a margin of 7.50% per annum. As of September 30, 2022, the effective interest rate for Second Lien Term Facility was 11.28%. The Vertex Second Lien Credit Agreement contains customary representations and warranties and affirmative covenants. The Vertex Second Lien Credit Agreement also includes negative covenants that limit, among other things, additional indebtedness, additional liens, sales of assets, dividends, investments and advances, prepayments of debt and mergers and acquisitions. The Vertex Second Lien Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the First Lien Term Facility to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Vertex Borrower may be required immediately to repay all amounts outstanding under the Vertex Second Lien Credit Agreement. As of September 30, 2022, the carrying value of the Second Lien Credit Agreement was $176.0 million, net of a deferred discount of $9.0 million. The estimated fair value of the Second Lien Credit Agreement as of September 30, 2022 was $173.0 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. Vertex ABL Credit Agreement The Vertex ABL Credit Agreement provides for a senior secured revolving loan facility (the ABL Facility) of up to an aggregate amount of $200.0 million (the loans thereunder, the ABL Loans). The Vertex ABL Credit Agreement also provides for (i) a $30.0 million sublimit of availability for letters of credit, and (ii) a $10.0 million sublimit for short-term borrowings on a swingline basis. The commitments under the ABL Facility expire on June 29, 2026, and any ABL Loans then outstanding will be payable in full at that time. Availability under the ABL Facility is subject to a borrowing base (the Borrowing Base), which is based on 85% of eligible accounts receivable, eligible government account receivable and eligible government subcontract accounts receivable, plus 50% of eligible unbilled accounts receivable, plus the lesser of (x) 65% of the book value of eligible inventory, and (y) 85% of the net orderly liquidation value of eligible inventory of the Vertex Borrower, Vertex Holdings and most of the Vertex Borrower’s wholly-owned domestic subsidiaries (including the Company Guarantor Subsidiaries, collectively, the ABL Guarantors), after adjusting for customary reserves that are subject to the ABL Agent’s discretion. The aggregate amount of the ABL Loans made and letters of credit issued under the ABL Facility shall at no time exceed the lesser of the aggregate commitments under the ABL Facility (currently $200.0 million) or the Borrowing Base. To the extent that the Vertex Borrower’s and ABL Guarantors’ eligible accounts receivable, eligible government account receivable, eligible government subcontract accounts receivable, eligible unbilled accounts receivable, and eligible inventory, decline, the Borrowing Base will decrease, and the availability under the ABL Facility may decrease below $200.0 million. Any ABL Loans requested are subject to a number of customary conditions, including accuracy of representations and warranties and no default. The proceeds from the ABL Loans may be used to finance the working capital needs and general corporate purposes of the Vertex Borrower and its subsidiaries. The Vertex Borrower’s obligations under the ABL Term Facility are guaranteed by the ABL Guarantors, subject to customary exceptions and limitations. The Vertex Borrower’s obligations under the ABL Facility and the ABL Subsidiary Guarantors’ obligations under the related guarantees are secured by (a) a first priority-lien on substantially all of the Vertex Borrower’s and the ABL Guarantors’ ABL Priority Collateral (subject to customary exceptions and limitations), and (b) a third priority-lien on substantially all of the Vertex Borrower’s and the ABL Guarantors’ assets other than the ABL Priority Collateral (subject to customary exceptions and limitations). The borrowings under the ABL Facility bear interest at rates that, at the Vertex Borrower’s option, can be either a base rate, determined by reference to the federal funds rate, plus a margin of 0.75% to 1.25% per annum, or a term benchmark rate, determined by reference to Term SOFR, plus a margin of 1.75% to 2.25% per annum, in each case, depending on the aggregate availability under the ABL Facility. Unutilized commitments under the ABL Facility are subject to a per annum fee of (x) 0.375% if the total outstandings were equal to or less than 50% of the aggregate commitments, or (y) 0.25% if such total outstandings were more than 50% of the aggregate commitments. The Vertex Borrower is also required to pay a letter of credit fronting fee to each letter of credit issuer equal to 0.125% per annum of the amount available to be drawn under each such letter of credit (or such other amount as may be mutually agreed by the Vertex Borrowers and the applicable letter of credit issuer), as well as a fee to all lenders equal to the applicable margin for Term SOFR ABL Loans times the average daily amount available to be drawn under all outstanding letters of credit. The Vertex ABL Credit Agreement contains customary representations and warranties, that must be accurate in order for the Vertex Borrower to borrow under the ABL Facility, and affirmative covenants. The Vertex ABL Credit Agreement also includes negative covenants that limit, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions. The Vertex ABL Credit Agreement also includes a financial covenant that requires the fixed charge coverage ratio to be at least 1.00 to 1.00 as of the end of any period of four fiscal quarters while aggregate availability is less than the greater of (i) $10.0 million and (ii) 10% of the aggregate borrowing base. The Vertex ABL Credit Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, failure of any guaranty or security document supporting the ABL Facility to be in full force and effect, and a change of control. If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the Vertex ABL Credit Agreement. As of September 30, 2022, there was no outstanding balance under the ABL Credit Facility and $14.0 million outstanding for letters of credit. Unamortized deferred financing fees related to the ABL Credit Agreement of $1.7 million are included in Other Non-Current Assets in the Condensed Consolidated Balance Sheets. As of September 30, 2022, the fair value of the ABL Credit Agreement approximated the carrying value because the debt bears a floating interest rate. The aggregate scheduled maturities of the First Lien Credit Agreement, Second Lien Credit Agreement and ABL Credit Agreement as of September 30, 2022, are as follows: (In thousands) Payments Due 2022 (remainder of the year) $ 2,962 2023 11,850 2024 11,850 2025 11,850 2026 11,850 After 2026 1,314,363 Total $ 1,364,725 As of September 30, 2022, we were in compliance with all covenants related to the First Lien Term Facility, the Second Lien Term Facility and the ABL Facility. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS During the periods covered by this report, we have made no changes to our policies or strategies for the use of derivative instruments and there has been no change in our related accounting methods. For our derivative instruments, which are designated as cash flow hedges, gains and losses are initially reported as a component of accumulated other comprehensive loss and subsequently recognized in earnings with the corresponding hedged item. Interest Rate Derivative Instruments On June 29, 2022, in conjunction with our planned extinguishment of the related hedged debt interest expense, we terminated our remaining interest rate swaps that were designated and qualified as effective cash flow hedges. Interest rate swap losses in accumulated other comprehensive loss upon termination were immaterial. The following table summarizes the amount at fair value and balance sheet caption of the derivative instruments used for our interest rate hedges in the Condensed Consolidated Balance Sheets as of December 31, 2021: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 666 Net interest rate derivative losses of $0.4 million and $0.8 million were recognized in interest expense, net, in our Condensed Consolidated Statements of Income during the first nine months of 2022 and 2021, respectively. Foreign Currency Derivative Instruments The Company had no outstanding foreign currency forward contracts at September 30, 2022 and had outstanding forward contracts with a current liability value of less than $0.1 million at December 31, 2021. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Leases | LEASES We determine whether an arrangement contains a lease at inception. We have operating leases for office space, apartments, vehicles, and machinery and equipment. Our operating leases have lease terms of less than one year to ten years. We do not separate lease components from non-lease components (e.g., common area maintenance, property taxes and insurance) but account for both components in a contract as a single lease component. The components of lease expense are as follows: Three Months Ended Nine Months Ended (In thousands) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Operating lease expense $ 4,390 $ 3,307 $ 11,671 $ 7,372 Variable lease expense 130 184 389 599 Short-term lease expense 21,862 16,630 59,993 47,367 Total lease expense $ 26,382 $ 20,121 $ 72,053 $ 55,338 Supplemental balance sheet information related to our operating leases is as follows: (In thousands) September 30, 2022 December 31, 2021 Right-of-use assets $ 51,968 $ 43,651 Current lease liabilities (recorded in Other accrued liabilities) $ 15,302 $ 11,983 Long-term lease liabilities (recorded in Operating lease liability) 40,234 34,536 Total operating lease liabilities $ 55,536 $ 46,519 During the first nine months of 2022, we recognized additional right-of-use assets of $3.6 million from newly executed operating leases and $15.2 million from the Merger. The weighted average remaining lease term and discount rate for our operating leases at September 30, 2022 was 5.2 years and 4.1%, respectively. Maturities of lease liabilities at September 30, 2022 were as follows: (In thousands) Payments Due 2022 (remainder of the year) $ 4,295 2023 16,959 2024 12,251 2025 7,526 2026 6,094 After 2026 15,128 Total minimum lease payments 62,253 Less: Imputed interest (6,717) Total operating lease liabilities $ 55,536 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES General From time to time, we are involved in legal proceedings that are incidental to the operation of our business. Some of these proceedings seek remedies relating to employment matters, matters in connection with our contracts and matters arising under laws relating to the protection of the environment. Additionally, U.S. government customers periodically advise the Company of claims and penalties concerning certain potential disallowed costs. When such findings are presented, V2X and the U.S. government representatives engage in discussions to enable V2X to evaluate the merits of these claims as well as to assess the amounts being claimed. Where appropriate, provisions are made to reflect probable losses related to the matters raised by the U.S. government representatives. Such assessments, along with any assessments regarding provisions for legal proceedings, are reviewed on a quarterly basis for sufficiency based on the most recent information available to us. We have estimated and accrued $39.6 million and $9.6 million as of September 30, 2022 and December 31, 2021, respectively, in "Other accrued liabilities" in the Condensed Consolidated Balance Sheets for legal proceedings and for claims with respect to our U.S. government contracts as discussed below, including years where the U.S. government has not completed its incurred cost audits. Although the ultimate outcome of any legal matter or claim cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claim, we do not expect that any asserted or unasserted legal or contractual claims or proceedings, individually or in the aggregate, including the lawsuit discussed below, will have a material adverse effect on our cash flow, results of operations or financial condition. U.S. Government Contracts, Investigations and Claims We have U.S. government contracts that are funded incrementally on a year-to-year basis. Changes in U.S. government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could have a material adverse effect on our financial condition or results of operations. Furthermore, our contracts with the U.S. government may be terminated or suspended by the U.S. government at any time, with or without cause. Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect our financial condition and results of operations. Departments and agencies of the U.S. government have the authority to investigate various transactions and operations of the Company, and the results of such investigations may lead to administrative, civil or criminal proceedings, the ultimate outcome of which could be fines, penalties, repayments, or compensatory or treble damages. U.S. government regulations provide that certain findings against a contractor may lead to suspension or debarment from future U.S. government contracts or the loss of export privileges for a company or an operating division or subdivision. Suspension or debarment could have a material adverse effect on the Company because of its reliance on U.S. government contracts. U.S. government agencies, including the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency (DCMA) and others, routinely audit and review our performance on U.S. government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Accordingly, costs billed or billable to U.S. government customers are subject to potential adjustment upon audit by such agencies. The U.S. government agencies also review the adequacy of our compliance with U.S. government standards for our business systems, including our accounting, earned value management, estimating, materials management and accounting, purchasing, and property management systems. In the performance of our contracts, we routinely request contract modifications that require additional funding from U.S. government customers. Most often, these requests are due to customer-directed changes in the scope of work. While we are entitled to recovery of these costs under our contracts, the administrative process with our U.S. government customer may be protracted. Based on the circumstances, we periodically file REAs that are sometimes converted into claims. In some cases, these requests are disputed by our U.S. government customer. We believe our outstanding modifications, REAs and other claims will be resolved without material adverse impact to our results of operations, financial condition or cash flows. As a result of final indirect rate negotiations between the U.S. government and our Former Parent, we were subject to adjustments to costs previously allocated by our Former Parent to our business from 2007 through 2014. On July 7, 2022, we accepted an offer by the U.S. government to settle this legal matter involving our payment of an insignificant amount, thereby bringing closure to the matter. With respect to our Former Parent, we believe we are fully indemnified under our distribution agreement and have notified our Former Parent of the closure of our appeal of the U.S. government's decision in this matter. COVID-19 Pandemic On March 11, 2020, the World Health Organization designated the outbreak of COVID-19 as a global pandemic. COVID-19 has negatively impacted public health and the global economy, disrupted global supply chains, and created volatility in financial markets. Furthermore, in September 2021, the Biden Administration issued an executive order mandating a COVID-19 vaccination requirement for federal contractors, except in certain limited circumstances. Since then, multiple courts have enjoined the executive order’s implementation, although the court decisions are not uniform in their application or the states to which the injunction applies. The federal government has indicated that it will not, for the time being, enforce the vaccination mandate. The extent of the ultimate impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our programs in the expected timeframe, will depend on future developments, including any potential subsequent waves or variants of COVID-19, the effectiveness, distribution and acceptance of COVID-19 vaccines, the ultimate impact on financial markets and the global economy, new government regulations for defense contractors (including vaccination mandates) and other related actions taken by the U.S. government, state and local government officials, and international governments to prevent disease spread, all of which remain uncertain and cannot be predicted. For the three and nine months ended September 30, 2022, the impact of COVID-19 was immaterial to our financial results. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION The Company maintains an equity incentive plan, the 2014 Omnibus Incentive Plan, as amended and restated effective as of May 13, 2016 (the 2014 Omnibus Plan), to govern awards granted to V2X employees and directors, including nonqualified stock options (NQOs), restricted stock units (RSUs), total shareholder return (TSR) awards and other awards. We account for NQOs and stock-settled RSUs as equity-based compensation awards. TSR awards, described below, and cash-settled RSUs are accounted for as liability-based compensation awards. Stock-based compensation expense and the associated tax benefits impacting our Condensed Consolidated Statements of Income were as follows: Three Months Ended Nine Months Ended (In thousands) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Compensation costs for equity-based awards $ 13,681 $ 1,680 $ 18,357 $ 5,666 Compensation costs for liability-based awards 393 324 443 1,261 Total compensation costs, pre-tax $ 14,074 $ 2,004 $ 18,800 $ 6,927 Future tax benefit $ 3,029 $ 435 $ 4,046 $ 1,504 Liability-based awards are revalued at the end of each reporting period to reflect changes in fair value. As of September 30, 2022, total unrecognized compensation costs related to equity-based awards and liability-based awards were $39.9 million and $2.4 million, respectively, which are expected to be recognized ratably over a weighted average period of 1.44 years and 1.98 years, respe ctively. The following table provides a summary of the activities for NQOs and RSUs for the nine months ended September 30, 2022 : NQOs RSUs (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 2022 59 $ 23.19 245 $ 51.18 Granted — $ — 236 $ 35.83 Replacement awards — $ — 1,346 $ 33.92 Exercised (16) $ 24.43 — $ — Vested — $ — (158) $ 42.29 Forfeited or expired — $ — (27) $ 38.84 Outstanding at September 30, 2022 43 $ 22.76 1,642 $ 35.51 During the nine months ended September 30, 2022, we granted long-term incentive awards to employees consisting of 213,299 RSUs with a weighted average grant date fair value per share of $36.01 and to our directors consisting of 22,309 RSUs with a weighted average grant date fair value per share of $34.07. On July 5, 2022, pursuant to the terms of the Merger Agreement, the Company issued an additional 1,346,089 RSUs, with a grant date fair value of $33.92 per share, to certain employees of Vertex. The RSUs will be settled in shares of the Company's common stock, with 517,918 RSUs vesting on the six-month anniversary following the grant date and a quarter of the remaining 828,171 RSUs vesting on each of four six-month anniversary dates following the grant date. The fair value of each RSU grant to employees and directors was determined based on the closing price of V2X common stock on the date of grant. Stock compensation expense will be recognized ratably over the vesting period of the awards. For employee RSUs, excluding the RSUs granted under the terms of the Merger Agreement, one-third of the award vests on each of the three anniversary dates following the grant date. Director RSUs were granted on May 13, 2022 with 3,229 vesting on the Closing Date and the balance scheduled to vest on May 12, 2023. The fair value of each RSU grant to employees and directors was determined based on the closing price of V2X common stock on the date of grant. Stock compensation expense will be recognized ratably over the vesting period of the awards. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Effective Tax Rate Income tax expense during interim periods is based on an estimated annual effective income tax rate, plus discrete items that may occur in any given interim periods. The computation of the estimated effective income tax rate at each interim period requires certain estimates and judgment including, but not limited to, forecasted operating income for the year, projections of the income earned and taxed in various jurisdictions, newly enacted tax rate and legislative changes, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. For the three months ended September 30, 2022, we recorded an income tax benefit of $5.7 million and for the three months ended October 1, 2021 an income tax provision of $0.7 million, representing effective income tax rates of 25.2% and 6.2%, respectively. For the nine months ended September 30, 2022, we recorded an income tax benefit of $2.5 million and for the nine months ended October 1, 2021 an income tax provision of $7.6 million, representing effective income tax rates of 39.8% and 16.6%, respectively. The effective income tax rates vary from the federal statutory rate of 21% mainly due to state and foreign taxes, non-deductibility of transaction costs from the recent Merger, disallowed compensation deduction under Internal Revenue Code Section 162(m), and available deductions not reflected in book income, and income tax credits. The higher effective tax rate for the nine ended September 30, 2022, was primarily due to non-deductible costs related to the transaction described in Note 3, Merger. The Merger qualified as a nontaxable, type “A” reorganization within the meaning of the IRC Section 368(a)(1)(A). The historical tax basis of the assets and liabilities, net operating losses, and other tax attributes of Vertex, including tax deductible goodwill existing as of the Closing Date from prior acquisitions of the legacy Vertex will be carried over to V2X. No additional tax-deductible goodwill was created in connection with the Merger. Since ASC 740-10-25-3(d) prohibits recognition of a deferred tax liability relating to temporary differences for goodwill, no deferred tax liability on goodwill resulting from this Merger was recorded. In accordance with ASC 805-740-25-3, based on initial purchase accounting calculations, a net deferred tax liability of $26.9 million for the opening book versus tax basis differences was reported per valuation of assets and liabilities as of the Closing Date. Uncertain Tax Provisions As of September 30, 2022 and December 31, 2021, unrecognized tax benefits from uncertain tax positions were $10.8 million and $9.3 million, respectively. The increase in the uncertain tax positions was principally the result of the additional Foreign Derived Intangible Income (FDII) deduction as the Company reserves a portion of the FDII benefit claimed or expected to be claimed on its income tax return filings. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects potential dilution that could occur if securities to issue common stock were exercised or converted into common stock. Diluted EPS includes the dilutive effect of stock-based compensation outstanding after application of the treasury stock method. Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, (In thousands, except per share data) 2022 2021 2022 2021 Net income (loss) $ (17,039) $ 10,258 $ (3,711) $ 38,240 Weighted average common shares outstanding 29,830 11,726 17,806 11,696 Add: Dilutive impact of stock options 15 34 20 38 Add: Dilutive impact of restricted stock units 327 89 194 96 Diluted weighted average common shares outstanding 30,172 11,849 18,020 11,830 (Loss) earnings per share Basic $ (0.57) $ 0.87 $ (0.21) $ 3.27 Diluted $ (0.56) $ 0.87 $ (0.21) $ 3.23 The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, (In thousands) 2022 2021 2022 2021 Anti-dilutive restricted stock units 14 3 17 3 |
Deferred Employee Compensation
Deferred Employee Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Deferred Employee Compensation | DEFERRED EMPLOYEE COMPENSATION During the first quarter of 2021, the Company established a non-qualified deferred compensation plan under which participants are eligible to defer a portion of their compensation on a tax deferred basis. The assets in the plan are held in a rabbi trust. Plan investments and obligations were recorded in other non-current assets and other non-current liabilities, respectively, in the Condensed Consolidated Balance Sheets, representing the fair value related to the deferred compensation plan. Adjustments to the fair value of the plan investments and obligations are recorded in SG&A expenses. The plan assets and liabilities were $1.3 million and $0.5 million as of September 30, 2022 and December 31, 2021, respectively. |
Multi-Employer Pension Plan
Multi-Employer Pension Plan | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Multiemployer Pension Plan | MULTI-EMPLOYER PENSION PLAN Certain Company employees who perform work on contracts within the continental United States participate in a multiemployer pension plan of which the Company is not the sponsor. Expense recognized for this plan was $2.3 million and $2.8 million for |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Our Business and Basis of Presentation | Our Business V2X, Inc., an Indiana Corporation, formerly known as Vectrus, Inc. (Vectrus), is a leading provider of critical mission solutions and support to defense clients globally. The Company operates as one segment and delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training and technology markets to national security, defense, civilian and international clients. Vectrus was incorporated in the State of Indiana in February 2014. On September 27, 2014, Exelis Inc, an Indiana corporation, spun-off (the Spin-off) Vectrus and Vectrus became an independent, publicly traded company. References in these notes to "Exelis" or "Former Parent" refer to Exelis Inc. and its consolidated subsidiaries (other than Vectrus). Exelis was acquired by a predecessor entity of L3Harris Technologies, Inc. in May 2015. On March 7, 2022, Vectrus entered into an Agreement and Plan of Merger (the Merger Agreement) with Vertex Aerospace Services Holding Corp., a Delaware corporation (Vertex), Andor Merger Sub Inc., a Delaware corporation (Merger Sub Inc.) and Andor Merger Sub LLC, a Delaware limited liability company (Merger Sub LLC). On July 5, 2022 (the Closing Date), Vectrus completed its merger (Merger) thereby forming V2X, Inc. For a description of the Merger, see Note 3, Merger . Unless the context otherwise requires or unless stated otherwise, references in these notes to "V2X", "we," "us," "our," “combined company”, "the Company" and "our Company" refer to V2X, Inc. and all of its consolidated subsidiaries (including, subsequent to the Merger, Vertex and its consolidated subsidiaries), taken together as a whole. Basis of Presentation Our quarterly financial periods end on the Friday closest to the last day of the calendar quarter (September 30, 2022 for the third quarter of 2022 and October 1, 2021 for the third quarter of 2021), except for the last quarter of the fiscal year, which ends on December 31. For ease of presentation, the quarterly financial statements included herein are described as "three months ended." The unaudited interim Condensed Consolidated Financial Statements of V2X have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the U.S. have been omitted. These unaudited interim Condensed Consolidated Financial Statements |
Equity Investments | Equity Investments In 2011, we entered into a joint venture agreement with Shaw Environmental & Infrastructure, Inc., which is now APTIM Federal Services LLC. Pursuant to the joint venture agreement, High Desert Support Services, LLC (HDSS) was established to pursue and perform work on the Ft. Irwin Installation Support Services Contract, which was awarded to HDSS in October 2012. In 2018, we entered into a joint venture agreement with J&J Maintenance. Pursuant to the joint venture agreement, J&J Facilities Support, LLC (J&J) was established to pursue and perform work on various U.S. government contracts. In 2020, we entered into a joint venture agreement with Kuwait Resources House for Human Resources Management a nd Services Company . Pursuant to the joint venture agreement, ServCore Resources and Services Solutions, LLC. (ServCore) was established to operate and manage labor and life support services outside of the continental United States at designated locations serviced by V2X and other contractors around the world. We account for our investments in HDSS, J&J, and ServCore under the equity method as we have the ability to exercise significant influence, but do not hold a controlling interest in these entities. We record our proportionate share of income or losses from HDSS, J&J, and ServCore in selling, general and administrative (SG&A) expenses in the Condensed Consolidated Statements of Income. Our investment in these joint ventures is recorded in other non-current assets in the Condensed Consolidated Balance Sheets. When we receive cash distributions from our equity method investments, the cash distribution is compared to cumulative earnings and cumulative cash distributions. Cash distributions received are recorded as a return on investment in operating cash flows within the Condensed Consolidated Statements of Cash Flows to the extent cumulative cash distributions are less than cumulative earnings. Any cash distributions in excess of cumulative earnings are recorded as a return of investment in investing cash flows within the Condensed Consolidated Statements of Cash Flows. During the nine months ended September 30, 2022, we received a net cash distribution of $0.8 million from our joint ventures. As of September 30, 2022 and December 31, 2021 our joint venture investment balance was $6.0 million and $5.4 million, respectively. Our proportionate share of income from the HDSS, J&J, and ServCore joint ventures was $1.4 million for the first three quarters of both 2022 and 2021. |
Accounting Standards That Were Adopted | Accounting Standards That Were Adopted In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08). The amendment requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contract. The amendment also provides certain practical expedients when applying the guidance. ASU No. 2021-08 is effective for interim and annual periods beginning after December 15, 2022, on a prospective basis, with early adoption permitted. Early adoption is to be applied to all business combinations that occur during the fiscal year that the amendment is adopted. We adopted this standard in the third quarter of 2022 and applied the guidance to our Merger . In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASU 2020-04). |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash and Cash Equivalents | econciliation of cash, cash equivalents and restricted cash as of September 30, 2022 is presented in the following table: (In thousands) September 30, 2022 Cash and cash equivalents $ 144,061 Restricted cash 3,312 Total cash, cash equivalents and restricted cash $ 147,373 |
Schedule of Restrictions on Cash and Cash Equivalents | econciliation of cash, cash equivalents and restricted cash as of September 30, 2022 is presented in the following table: (In thousands) September 30, 2022 Cash and cash equivalents $ 144,061 Restricted cash 3,312 Total cash, cash equivalents and restricted cash $ 147,373 |
Merger (Tables)
Merger (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Fair Value of the Consideration Transferred and Preliminary Purchase Price Allocation | The Closing Date fair value of the consideration transferred totaled $634.0 million, which was comprised of the following: ($ in thousands, except share and per share amounts) Purchase Price Shares of V2X common stock issued 18,591,866 Market price per share of V2X as of Closing Date $ 33.92 Fair value of common shares issued $ 630,636 Fair value of cash consideration 3,315 Total consideration transferred $ 633,951 |
Schedule of Preliminary Purchase Price Allocation | The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the Merger as of the Closing Date. The estimated fair value of Vertex’s assets acquired and liabilities assumed at the acquisition date are determined based on preliminary valuations and analyses. As of September 30, 2022, we considered these amounts to be preliminary because we are still in the process of gathering and reviewing information to support the valuations of certain contractual and operational factors underlying the customer related intangible assets, details surrounding tax matters and assumptions underlying certain existing or potential reserves, such as those for legal matters. The final determination could result in material adjustments. (In thousands) Preliminary Fair Value Cash and cash equivalents $ 197,747 Receivables 336,169 Prepaid expenses 49,531 Property, plant, and equipment, net 53,618 Intangibles assets, net 522,000 Other assets 18,670 Accounts payable (122,269) Net debt (1,352,304) Accrued payroll (49,282) Other liabilities (235,905) Total identifiable net assets (582,025) Goodwill 1,215,976 Total purchase consideration $ 633,951 |
Schedule of Pro Forma Information | This unaudited pro forma information is presented for informational purposes only and may not necessarily reflect the actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, In thousands 2022 2021 2022 2021 Pro forma Revenue $ 961,281 $ 876,267 $ 2,691,399 $ 2,555,502 Pro forma Net Income (Loss) $ 9,576 $ 19,476 $ 5,583 $ (4,645) |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Remaining Performance Obligation | Remaining performance obligations as of September 30, 2022 and December 31, 2021 are presented in the following table: September 30, December 31, (In millions) 2022 2021 Performance Obligations $ 3,362 $ 1,398 |
Disaggregation of Revenue | Revenue by contract type for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Cost-plus and cost-reimbursable $ 505,743 $ 338,007 49.6 % $ 1,172,397 $ 972,426 20.6 % Firm-fixed-price 416,618 105,619 294.5 % 672,970 345,792 94.6 % Time and material 35,795 15,782 126.8 % 67,326 46,039 46.2 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by geographic region in which the contract is performed for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change United States $ 582,817 $ 139,357 318.2 % $ 908,271 $ 435,717 108.5 % Middle East 261,997 263,257 (0.5) % 747,310 761,758 (1.9) % Europe 62,669 34,902 79.6 % 143,847 111,604 28.9 % Asia 50,673 21,892 131.5 % 113,265 55,178 105.3 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by contract relationship for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Prime contractor $ 886,415 $ 429,370 106.4 % $ 1,781,961 $ 1,272,671 40.0 % Subcontractor 71,741 30,038 138.8 % 130,732 91,586 42.7 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 Revenue by customer for the three and nine months ended September 30, 2022 and October 1, 2021 is as follows: Three Months Ended Nine Months Ended September 30, October 1, % September 30, October 1, % (In thousands) 2022 2021 Change 2022 2021 Change Army $ 352,923 $ 304,341 16.0 % $ 959,792 $ 869,690 10.4 % Air Force 165,085 63,569 159.7 % 295,015 207,565 42.1 % Navy 270,071 52,556 413.9 % 410,173 165,391 148.0 % Other 170,077 38,942 336.7 % 247,713 121,611 103.7 % Total revenue $ 958,156 $ 459,408 $ 1,912,693 $ 1,364,257 |
Receivables (Tables)
Receivables (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Schedule of Receivables | Receivables were comprised of the following: (In thousands) September 30, 2022 December 31, 2021 Billed receivables $ 190,358 $ 104,074 Unbilled receivables (contract assets) 490,101 239,979 Other 10,484 4,552 Total receivables $ 690,943 $ 348,605 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Identifiable Intangible Assets | Identifiable intangible assets consist of the following: September 30, 2022 December 31, 2021 (In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Contract backlogs $ 441,300 $ (39,621) $ 401,679 $ 77,300 $ (14,988) $ 62,312 Customer contracts 165,200 (7,353) 157,847 7,200 (3,572) 3,628 Trade names and other 1,249 (790) 459 1,249 (607) 642 Balance $ 607,749 $ (47,764) $ 559,985 $ 85,749 $ (19,167) $ 66,582 |
Schedule of Amortization Expense | Future estimated amortization expense is as follows (in thousands): Period Amortization 2022 (remainder of the year) $ 25,165 2023 $ 100,661 2024 $ 99,554 2025 $ 98,757 2026 $ 98,286 After 2026 $ 137,562 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | The aggregate scheduled maturities of the First Lien Credit Agreement, Second Lien Credit Agreement and ABL Credit Agreement as of September 30, 2022, are as follows: (In thousands) Payments Due 2022 (remainder of the year) $ 2,962 2023 11,850 2024 11,850 2025 11,850 2026 11,850 After 2026 1,314,363 Total $ 1,364,725 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The following table summarizes the amount at fair value and balance sheet caption of the derivative instruments used for our interest rate hedges in the Condensed Consolidated Balance Sheets as of December 31, 2021: Fair Value (In thousands) Balance sheet caption Amount Interest rate swap designated as cash flow hedge Other accrued liabilities $ 666 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Components of lease expense | Three Months Ended Nine Months Ended (In thousands) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Operating lease expense $ 4,390 $ 3,307 $ 11,671 $ 7,372 Variable lease expense 130 184 389 599 Short-term lease expense 21,862 16,630 59,993 47,367 Total lease expense $ 26,382 $ 20,121 $ 72,053 $ 55,338 |
Balance sheet information related to leases | Supplemental balance sheet information related to our operating leases is as follows: (In thousands) September 30, 2022 December 31, 2021 Right-of-use assets $ 51,968 $ 43,651 Current lease liabilities (recorded in Other accrued liabilities) $ 15,302 $ 11,983 Long-term lease liabilities (recorded in Operating lease liability) 40,234 34,536 Total operating lease liabilities $ 55,536 $ 46,519 |
Maturity of lease liabilities | (In thousands) Payments Due 2022 (remainder of the year) $ 4,295 2023 16,959 2024 12,251 2025 7,526 2026 6,094 After 2026 15,128 Total minimum lease payments 62,253 Less: Imputed interest (6,717) Total operating lease liabilities $ 55,536 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Impact of Stock-Based Compensation in Consolidation and Combined Statements of Income | Stock-based compensation expense and the associated tax benefits impacting our Condensed Consolidated Statements of Income were as follows: Three Months Ended Nine Months Ended (In thousands) September 30, 2022 October 1, 2021 September 30, 2022 October 1, 2021 Compensation costs for equity-based awards $ 13,681 $ 1,680 $ 18,357 $ 5,666 Compensation costs for liability-based awards 393 324 443 1,261 Total compensation costs, pre-tax $ 14,074 $ 2,004 $ 18,800 $ 6,927 Future tax benefit $ 3,029 $ 435 $ 4,046 $ 1,504 |
Schedule of Non-Qualified Stock Options, Activity | The following table provides a summary of the activities for NQOs and RSUs for the nine months ended September 30, 2022 : NQOs RSUs (In thousands, except per share data) Shares Weighted Average Exercise Price Per Share Shares Weighted Average Grant Date Fair Value Per Share Outstanding at January 1, 2022 59 $ 23.19 245 $ 51.18 Granted — $ — 236 $ 35.83 Replacement awards — $ — 1,346 $ 33.92 Exercised (16) $ 24.43 — $ — Vested — $ — (158) $ 42.29 Forfeited or expired — $ — (27) $ 38.84 Outstanding at September 30, 2022 43 $ 22.76 1,642 $ 35.51 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares Outstanding | Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, (In thousands, except per share data) 2022 2021 2022 2021 Net income (loss) $ (17,039) $ 10,258 $ (3,711) $ 38,240 Weighted average common shares outstanding 29,830 11,726 17,806 11,696 Add: Dilutive impact of stock options 15 34 20 38 Add: Dilutive impact of restricted stock units 327 89 194 96 Diluted weighted average common shares outstanding 30,172 11,849 18,020 11,830 (Loss) earnings per share Basic $ (0.57) $ 0.87 $ (0.21) $ 3.27 Diluted $ (0.56) $ 0.87 $ (0.21) $ 3.23 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the weighted average of anti-dilutive securities excluded from the diluted earnings per share calculation. Three Months Ended Nine Months Ended September 30, October 1, September 30, October 1, (In thousands) 2022 2021 2022 2021 Anti-dilutive restricted stock units 14 3 17 3 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details) | 9 Months Ended | ||
Sep. 30, 2022 USD ($) operatingSegment letters_of_credit | Oct. 01, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of operating segments | operatingSegment | 1 | ||
Contribution to joint ventures | $ 800,000 | ||
Joint venture investment balance | 6,000,000 | $ 5,400,000 | |
Share of income from joint ventures | 1,400,000 | $ 1,400,000 | |
Restricted cash | $ 3,312,000 | $ 0 | |
Number of letters of credit outstanding | letters_of_credit | 2 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Oct. 01, 2021 | Dec. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 144,061,000 | $ 38,513,000 | ||
Restricted cash | 3,312,000 | 0 | ||
Total cash, cash equivalents and restricted cash | $ 147,373,000 | $ 38,513,000 | $ 56,232,000 | $ 68,727,000 |
Merger - Additional Information
Merger - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 21 Months Ended | ||
Jul. 05, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||||
Goodwill | $ 1,537,710,000 | $ 1,537,710,000 | $ 1,537,710,000 | $ 321,734,000 | |
American Industrial Partners Capital Fund VI, L.P. | V2X | |||||
Business Acquisition [Line Items] | |||||
Ownership percentage | 62% | 62% | 62% | ||
Crestview Aerospace | |||||
Business Acquisition [Line Items] | |||||
TSA related income | $ 900,000 | ||||
Vertex Aerospace Services Holding Corp. | |||||
Business Acquisition [Line Items] | |||||
Pro forma information, revenue of acquiree | $ 451,600,000 | ||||
Pro forma information, operating income of acquiree | 600,000 | ||||
Pro forma information, net earnings (loss) of acquiree | (12,600,000) | ||||
Acquisition-related costs | $ 28,200,000 | $ 41,300,000 | |||
Consideration transferred | $ 633,951,000 | ||||
Goodwill | 1,215,976,000 | ||||
Tax deductible goodwill | 0 | ||||
Intangibles assets, net | $ 522,000,000 | ||||
Weighted average amortization period | 7 years 4 months 24 days |
Merger - Schedule of Fair Value
Merger - Schedule of Fair Value of the Consideration Transferred (Details) - Vertex Aerospace Services Holding Corp. $ / shares in Units, $ in Thousands | Jul. 05, 2022 USD ($) $ / shares shares |
Business Acquisition [Line Items] | |
Market price per share of V2X as of Closing Date (in dollars per share) | $ / shares | $ 33.92 |
Fair value of cash consideration | $ 3,315 |
Total consideration transferred | $ 633,951 |
Common Stock Issued | |
Business Acquisition [Line Items] | |
Shares of V2X common stock issued (in shares) | shares | 18,591,866 |
Fair value of common shares issued | $ 630,636 |
Merger - Schedule of Preliminar
Merger - Schedule of Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Jul. 05, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,537,710 | $ 321,734 | |
Vertex Aerospace Services Holding Corp. | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 197,747 | ||
Receivables | 336,169 | ||
Prepaid expenses | 49,531 | ||
Property, plant, and equipment, net | 53,618 | ||
Intangibles assets, net | 522,000 | ||
Other assets | 18,670 | ||
Accounts payable | (122,269) | ||
Net debt | (1,352,304) | ||
Accrued payroll | (49,282) | ||
Other liabilities | (235,905) | ||
Total identifiable net assets | (582,025) | ||
Goodwill | 1,215,976 | ||
Consideration transferred | $ 633,951 |
Merger - Schedule of Pro Forma
Merger - Schedule of Pro Forma Information (Details) - Vertex Aerospace Services Holding Corp. - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Business Acquisition [Line Items] | ||||
Pro forma Revenue | $ 961,281 | $ 876,267 | $ 2,691,399 | $ 2,555,502 |
Pro forma Net Income (Loss) | $ 9,576 | $ 19,476 | $ 5,583 | $ (4,645) |
Revenue - Revenue Performance O
Revenue - Revenue Performance Obligations (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Performance obligations timing | The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year or less option periods | |
Performance Obligations | $ 3,362 | $ 1,398 |
Revenue - Revenue Performance_2
Revenue - Revenue Performance Obligations (Percentage and Remaining Period of Time) (Details) | Sep. 30, 2022 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 26% |
Revenue, expected performance obligation, period | 3 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 74% |
Revenue, expected performance obligation, period | 1 year |
Revenue - Revenue Contract Esti
Revenue - Revenue Contract Estimates (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Revenue from Contract with Customer [Abstract] | ||||
Increase (decrease) in adjustments to operating income | $ (1.5) | $ 2.6 | $ 5.9 | $ (0.4) |
Increase (decrease) in adjustment to revenue | $ (1.7) | $ 3 | $ 6.1 | $ 1.4 |
Revenue - Revenue by Contract T
Revenue - Revenue by Contract Type (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 958,156 | $ 459,408 | $ 1,912,693 | $ 1,364,257 |
Cost-plus and cost-reimbursable | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 505,743 | 338,007 | $ 1,172,397 | 972,426 |
Revenue, percent change | 49.60% | 20.60% | ||
Firm-fixed-price | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 416,618 | 105,619 | $ 672,970 | 345,792 |
Revenue, percent change | 294.50% | 94.60% | ||
Time and material | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 35,795 | $ 15,782 | $ 67,326 | $ 46,039 |
Revenue, percent change | 126.80% | 46.20% |
Revenue - Revenue by Geographic
Revenue - Revenue by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 958,156 | $ 459,408 | $ 1,912,693 | $ 1,364,257 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 582,817 | 139,357 | $ 908,271 | 435,717 |
Revenue, percent change | 318.20% | 108.50% | ||
Middle East | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 261,997 | 263,257 | $ 747,310 | 761,758 |
Revenue, percent change | (0.50%) | (1.90%) | ||
Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 62,669 | 34,902 | $ 143,847 | 111,604 |
Revenue, percent change | 79.60% | 28.90% | ||
Asia | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 50,673 | $ 21,892 | $ 113,265 | $ 55,178 |
Revenue, percent change | 131.50% | 105.30% |
Revenue - Revenue by Contract R
Revenue - Revenue by Contract Relationship (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 958,156 | $ 459,408 | $ 1,912,693 | $ 1,364,257 |
Prime contractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 886,415 | 429,370 | $ 1,781,961 | 1,272,671 |
Revenue, percent change | 106.40% | 40% | ||
Subcontractor | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 71,741 | $ 30,038 | $ 130,732 | $ 91,586 |
Revenue, percent change | 138.80% | 42.70% |
Revenue - Revenue by Customer (
Revenue - Revenue by Customer (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 958,156 | $ 459,408 | $ 1,912,693 | $ 1,364,257 |
Army | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 352,923 | 304,341 | $ 959,792 | 869,690 |
Revenue, percent change | 16% | 10.40% | ||
Air Force | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 165,085 | 63,569 | $ 295,015 | 207,565 |
Revenue, percent change | 159.70% | 42.10% | ||
Navy | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 270,071 | 52,556 | $ 410,173 | 165,391 |
Revenue, percent change | 413.90% | 148% | ||
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 170,077 | $ 38,942 | $ 247,713 | $ 121,611 |
Revenue, percent change | 336.70% | 103.70% |
Revenue - Revenue Contract Bala
Revenue - Revenue Contract Balances (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 490.1 | $ 240 |
Contract liabilities | $ 80.7 | $ 5.5 |
Receivables - Schedule of Recei
Receivables - Schedule of Receivables (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Receivables [Abstract] | ||
Billed receivables | $ 190,358 | $ 104,074 |
Unbilled receivables (contract assets) | 490,101 | 239,979 |
Other | 10,484 | 4,552 |
Total receivables | $ 690,943 | $ 348,605 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 1,537,710 | $ 1,537,710 | $ 321,734 | ||
Goodwill increase | 1,216,000 | ||||
Amortization expense | $ 24,200 | $ 2,600 | $ 28,597 | $ 7,521 | |
Remaining average life intangible assets | 7 years 5 months 4 days |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Identifiable Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 607,749 | $ 85,749 |
Accumulated Amortization | (47,764) | (19,167) |
Net Carrying Amount | 559,985 | 66,582 |
Contract backlogs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 441,300 | 77,300 |
Accumulated Amortization | (39,621) | (14,988) |
Net Carrying Amount | 401,679 | 62,312 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 165,200 | 7,200 |
Accumulated Amortization | (7,353) | (3,572) |
Net Carrying Amount | 157,847 | 3,628 |
Trade names and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,249 | 1,249 |
Accumulated Amortization | (790) | (607) |
Net Carrying Amount | $ 459 | $ 642 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Amortization Expense (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2022 (remainder of the year) | $ 25,165 |
2023 | 100,661 |
2024 | 99,554 |
2025 | 98,757 |
2026 | 98,286 |
After 2026 | $ 137,562 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Thousands | Jul. 05, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Vertex First Lien Credit Agreement | Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | $ 1,185,000 | ||
Cash remaining after funding | 54,000 | ||
Amortization per quarter | 3,000 | ||
Long-term debt | $ 1,122,800 | ||
Deferred discount and unamortized deferred financing costs | 56,900 | ||
Long-term debt, fair value | $ 1,138,400 | ||
First Lien Initial Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | 925,000 | ||
Interest rate | 7.63% | ||
First Lien Incremental Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | 260,000 | ||
Interest rate | 7.90% | ||
Vertex First Lien Term Facility | Secured Debt | |||
Debt Instrument [Line Items] | |||
Principal amount | 1,108,600 | ||
Vertex Second Lien Term Facility | Secured Debt | |||
Debt Instrument [Line Items] | |||
Interest rate | 11.28% | ||
Long-term debt | $ 185,000 | $ 176,000 | |
Deferred discount and unamortized deferred financing costs | 9,000 | ||
Long-term debt, fair value | 173,000 | ||
Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | 14,000 | ||
Debt issuance costs, net | 1,700 | ||
Vertex ABL Credit Agreement | Letters of credit | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | 0 | ||
London Interbank Offered Rate (LIBOR) | Vertex Second Lien Term Facility | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 7.50% | ||
London Interbank Offered Rate (LIBOR) | Minimum | First Lien Initial Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 3.50% | ||
London Interbank Offered Rate (LIBOR) | Maximum | First Lien Initial Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 3.75% | ||
Fed Funds Effective Rate Overnight Index Swap Rate | First Lien Incremental Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 3% | ||
Fed Funds Effective Rate Overnight Index Swap Rate | Vertex Second Lien Term Facility | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 6.50% | ||
Fed Funds Effective Rate Overnight Index Swap Rate | Minimum | First Lien Initial Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 2.50% | ||
Fed Funds Effective Rate Overnight Index Swap Rate | Maximum | First Lien Initial Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 3.75% | ||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | First Lien Incremental Term Tranche | Secured Debt | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 4% | ||
Senior secured credit facilities | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | 270,000 | ||
Term facility | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | 50,200 | $ 55,400 | |
Amended revolver | |||
Debt Instrument [Line Items] | |||
Outstanding borrowings | 40,000 | $ 50,000 | |
Term Facility And Amended Revolver | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 1,364,725 | ||
Revolver | Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 200,000 | ||
Fronting fee | 0.125% | ||
Fixed coverage charge ratio | 1 | ||
Aggregate availability | $ 10,000 | ||
Percentage of aggregate borrowing base | 10% | ||
Revolver | Vertex ABL Credit Agreement | Line of Credit | Equal To Or Less Than 50% | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage | 0.375% | ||
Percent of aggregate commitments | 50% | ||
Revolver | Vertex ABL Credit Agreement | Line of Credit | More Than 50% | |||
Debt Instrument [Line Items] | |||
Commitment fee percentage | 0.25% | ||
Percent of aggregate commitments | 50% | ||
Revolver | Vertex ABL Credit Agreement | Letters of credit | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 30,000 | ||
Revolver | Vertex ABL Credit Agreement | Short-Term Debt | |||
Debt Instrument [Line Items] | |||
Credit facility, maximum borrowing capacity | $ 10,000 | ||
Debt instrument, borrowing base, percentage of eligible receivables | 85% | ||
Debt instrument, borrowing base, percentage of eligible unbilled receivables | 50% | ||
Debt instrument, borrowing base, percentage of eligible inventory | 65% | ||
Debt instrument, borrowing base, percentage of eligible inventory, liquidation value | 85% | ||
Revolver | Fed Funds Effective Rate Overnight Index Swap Rate | Minimum | Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 0.75% | ||
Revolver | Fed Funds Effective Rate Overnight Index Swap Rate | Maximum | Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 1.25% | ||
Revolver | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 1.75% | ||
Revolver | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | Vertex ABL Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Spread on variable rate | 2.25% |
Debt - Schedule of Maturities (
Debt - Schedule of Maturities (Details) - Term Facility And Amended Revolver $ in Thousands | Sep. 30, 2022 USD ($) |
Payments Due | |
2022 (remainder of the year) | $ 2,962 |
2023 | 11,850 |
2024 | 11,850 |
2025 | 11,850 |
2026 | 11,850 |
After 2026 | 1,314,363 |
Total | $ 1,364,725 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Hedges in the Condensed Consolidated Balance Sheets (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Cash Flow Hedging | Designated as hedging instrument | Interest Rate Swap | Other accrued liabilities | |
Derivative [Line Items] | |
Interest rate swap designated as cash flow hedge, liability | $ 666 |
Derivative Instruments - Additi
Derivative Instruments - Additional Information (Details) - Cash Flow Hedging - Designated as hedging instrument - USD ($) | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Dec. 31, 2021 | |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Loss on derivative instruments, net | $ 400,000 | $ 800,000 | |
Foreign Currency Forward Contracts | |||
Derivative [Line Items] | |||
Derivative, notional amount | $ 0 | $ 100,000 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Right-of-use assets resulting from new operating lease liabilities | $ 3.6 |
Right-of-use assets resulting from merger | $ 15.2 |
Weighted average remaining lease term | 5 years 2 months 12 days |
Weighted average remaining discount rate | 4.10% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating lease terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating lease terms | 10 years |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Leases [Abstract] | ||||
Operating lease expense | $ 4,390 | $ 3,307 | $ 11,671 | $ 7,372 |
Variable lease expense | 130 | 184 | 389 | 599 |
Short-term lease expense | 21,862 | 16,630 | 59,993 | 47,367 |
Total lease expense | $ 26,382 | $ 20,121 | $ 72,053 | $ 55,338 |
Leases - Balance Sheet Informat
Leases - Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Right-of-use assets | $ 51,968 | $ 43,651 |
Current lease liabilities (recorded in Other accrued liabilities) | $ 15,302 | $ 11,983 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued liabilities | Other accrued liabilities |
Long-term lease liabilities (recorded in Operating lease liability) | $ 40,234 | $ 34,536 |
Total operating lease liabilities | $ 55,536 | $ 46,519 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2022 (remainder of the year) | $ 4,295 | |
2023 | 16,959 | |
2024 | 12,251 | |
2025 | 7,526 | |
2026 | 6,094 | |
After 2026 | 15,128 | |
Total minimum lease payments | 62,253 | |
Less: Imputed interest | (6,717) | |
Total operating lease liabilities | $ 55,536 | $ 46,519 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Contract compliance | ||
Loss Contingencies [Line Items] | ||
Contracts loss contingency accrual | $ 39.6 | $ 9.6 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Impact of Stock-Based Compensation in Condensed Consolidated Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | $ 14,074 | $ 2,004 | $ 18,800 | $ 6,927 |
Future tax benefit | 3,029 | 435 | 4,046 | 1,504 |
Compensation costs for equity-based awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | 13,681 | 1,680 | 18,357 | 5,666 |
Compensation costs for liability-based awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Compensation cost for awards | $ 393 | $ 324 | $ 443 | $ 1,261 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |||
Jul. 05, 2022 | May 13, 2022 | Mar. 07, 2022 | Sep. 30, 2022 | |
Vertex Aerospace Services Holding Corp. | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Market price per share of V2X as of Closing Date (in dollars per share) | $ 33.92 | |||
Total Shareholder Return Awards (TSR) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs | $ 2.4 | |||
Vesting period | 3 years | |||
Aggregate award target value | $ 4.6 | |||
Anti-dilutive restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 236,000 | |||
Granted (in dollars per share) | $ 35.83 | |||
Vested (in shares) | (158,000) | |||
Anti-dilutive restricted stock units | Vertex Aerospace Services Holding Corp. | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,346,089 | |||
Market price per share of V2X as of Closing Date (in dollars per share) | $ 33.92 | |||
Anti-dilutive restricted stock units | Share-Based Payment Arrangement, Employee | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 213,299 | |||
Granted (in dollars per share) | $ 36.01 | |||
Anti-dilutive restricted stock units | Share-Based Payment Arrangement, Nonemployee | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 3,229 | 22,309 | ||
Granted (in dollars per share) | $ 34.07 | |||
Anti-dilutive restricted stock units | Share-based Compensation Award, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting increments | 33.33% | |||
Anti-dilutive restricted stock units | Share-based Compensation Award, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting increments | 33.33% | |||
Anti-dilutive restricted stock units | Share-based Compensation Award, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting increments | 33.33% | |||
Anti-dilutive restricted stock units | Six-Month Anniversary Following Grant Date | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vested (in shares) | (517,918) | |||
Anti-dilutive restricted stock units | Each Of Four Six-Month Anniversary Dates Following Grant Date | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vested (in shares) | (828,171) | |||
Equity Based Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs | $ 39.9 | |||
Unrecognized compensation costs, period for recognition | 1 year 5 months 8 days | |||
Liability Based Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs | $ 2.4 | |||
Unrecognized compensation costs, period for recognition | 1 year 11 months 23 days |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Non-Qualified Stock Options, Activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
NQOs | |
NQOs, Shares | |
Outstanding at beginning of period (in shares) | shares | 59,000 |
Exercised (in shares) | shares | (16,000) |
Outstanding at end of period (in shares) | shares | 43,000 |
NQOs, Weighted Average Exercise Price Per Share | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 23.19 |
Exercised (in dollars per share) | $ / shares | 24.43 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 22.76 |
RSUs | |
RSUs, Shares | |
Outstanding at beginning of period (in shares) | shares | 245,000 |
Granted (in shares) | shares | 236,000 |
Replacement awards (in shares) | shares | 1,346,000 |
Vested (in shares) | shares | (158,000) |
Forfeited or expired (in shares) | shares | (27,000) |
Outstanding at end of period (in shares) | shares | 1,642,000 |
RSUs, Weighted Average Grant Date Fair Value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 51.18 |
Granted (in dollars per share) | $ / shares | 35.83 |
Replacement awards (in dollars per share) | $ / shares | 33.92 |
Vested (in dollars per share) | $ / shares | 42.29 |
Forfeited or expired (in dollars per share) | $ / shares | 38.84 |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 35.51 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | Jul. 05, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||||||
Income tax provision (benefit) | $ 5,739 | $ (677) | $ 2,453 | $ (7,623) | ||
Effective income tax rate | 25.20% | 6.20% | 39.80% | 16.60% | ||
Deferred tax liability | $ 26,900 | |||||
Unrecognized tax benefits | $ 10,800 | $ 10,800 | $ 9,300 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Basic and Diluted Weighted Average Shares Outstanding (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jul. 01, 2022 | Apr. 01, 2022 | Oct. 01, 2021 | Jul. 02, 2021 | Apr. 02, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Earnings Per Share [Abstract] | ||||||||
Net income (loss) | $ (17,039) | $ 10,472 | $ 2,855 | $ 10,258 | $ 15,934 | $ 12,048 | $ (3,711) | $ 38,240 |
Weighted average common shares outstanding (in shares) | 29,830 | 11,726 | 17,806 | 11,696 | ||||
Add: Dilutive impact of stock options (in shares) | 15 | 34 | 20 | 38 | ||||
Add: Dilutive impact of restricted stock units (in shares) | 327 | 89 | 194 | 96 | ||||
Diluted weighted average common shares outstanding (in shares) | 30,172 | 11,849 | 18,020 | 11,830 | ||||
(Loss) earnings per share | ||||||||
Basic (in dollars per share) | $ (0.57) | $ 0.87 | $ (0.21) | $ 3.27 | ||||
Diluted (in dollars per share) | $ (0.56) | $ 0.87 | $ (0.21) | $ 3.23 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Options (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Anti-dilutive restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive stock options (in shares) | 14 | 3 | 17 | 3 |
Deferred Employee Compensation
Deferred Employee Compensation (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Retirement Benefits [Abstract] | ||
Plan assets and liabilities | $ 1.3 | $ 0.5 |
Multi-Employer Pension Plan (De
Multi-Employer Pension Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Oct. 01, 2021 | Sep. 30, 2022 | Oct. 01, 2021 | |
Retirement Benefits [Abstract] | ||||
Expense recognized | $ 2.3 | $ 0.2 | $ 2.8 | $ 0.8 |