VVX

The following discussion of our financial condition and results of operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included in this Quarterly Report on Form 10-Q as well as the audited Consolidated Financial Statements and notes thereto and the information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. This Quarterly Report provides additional information regarding the Company, our services, industry outlook and forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements. See "Forward-Looking Statement Information" for further information. Amounts presented in and throughout this Item 2 are rounded and, as such, rounding differences could occur in period over period changes and percentages reported. Overview V2X is a leading provider of critical mission solutions primarily to defense customers globally. The Company operates as one segment and offers a broad suite of capabilities including multi-domain high impact readiness, integrated supply chain management, assured communications, mission solutions, and platform renewal and modernization to national security, defense, civilian and international customers. Our primary customer is the U.S. Department of War (DoW), also known as the Department of Defense under 10 U.S.C. § 111(a). For the six months ended July 3, 2026 and June 27, 2025, the Company had total revenue of $2.5 billion and $2.1 billion, respectively, the substantial majority of which was derived from U.S. government customers. For the six months ended July 3, 2026 and June 27, 2025, we generated approximately 34% and 43%, respectively, of our total revenue from the U.S. Army. Executive Summary Our revenue increased by $178.3 million, or 16.5%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025. Revenue increased primarily due to program ramp ups in global training and aerospace along with $101.6 million attributed to discrete activities to support a national security mission. Revenue from our programs in the U.S., Asia, and the Middle East increased by $165.1 million, $9.8 million, and $4.2 million, respectively, partially offset by a decrease in revenue from our programs in Europe of $0.8 million during the three months ended July 3, 2026 as compared to the three months ended June 27, 2025. Operating income for the three and six months ended July 3, 2026 was $53.8 million and $97.9 million, respectively, an increase of $0.9 million and $10.7 million, or 1.6% and 12.2%, respectively, compared to the three and six months ended June 27, 2025. Operating income increased primarily due to the ramp up of several programs, partially offset by increased Selling, General and Administrative expenses (SG&A) and corporate expenses. During the performance of long-term contracts, estimated final contract prices and costs are reviewed periodically, and revisions are made as required, which are recorded as changes in revenue and cost of revenue in the periods in which they are determined. Additionally, the fees under certain contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. These incentive fees or penalties are included in revenue when there is sufficient information to reasonably assess anticipated contract performance. Amounts representing contract change orders or limitations in funding on contracts are recorded only if it is probable a claim will result in additional contract revenue and the amounts can be reliably estimated. Changes in estimated revenue, cost of revenue and the related effect to operating income are recognized using cumulative adjustments, which recognize in the current period the cumulative effect of the changes on current and prior periods based on a contract's percentage of completion. Cumulative 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. Further details related to consolidated financial results for the three and six months ended July 3, 2026, compared to the three and six months ended June 27, 2025, are contained in the "Discussion of Financial Results" section in this Quarterly Report on Form 10-Q. 22 Table of Contents Significant Contracts The following table reflects contracts that accounted for more than 10% of total revenue: % of Total Revenue Six Months Ended July 3, June 27, Contract Name 2026 2025 Logistics Civil Augmentation Program (LOGCAP) V - Kuwait Task Order 7.3% 10.9% Revenue associated with a contract will fluctuate based on increases or decreases in the work being performed on the contract, award fee payment assumptions, and other contract modifications within the term of the contract resulting in changes to the total contract value. The LOGCAP V - Kuwait Task Order was exercised through June 30, 2026 and provides services to support the Geographical Combatant Commands and Army Service Component Commands throughout the full range of military operations in the Kuwait region. On May 12, 2026, the U.S. Department of the Army notified the Company of its decision to reduce the scope of work being performed under this task order and to extend the contract with respect to the revised scope for an additional six months to December 31, 2026. The LOGCAP V - Kuwait Task Order contributed $182.4 million and $229.1 million of revenue for the six months ended July 3, 2026 and June 27, 2025, respectively. As a result of this modification, the Company reduced its backlog by $414.6 million. The Company continues to work with the U.S. Department of the Army to support them in the region, including through the current extension of the original task order for $22.6 million until the end of 2026, as well as through other contract vehicles. Management does not currently expect the reduction in scope of the LOGCAP V - Kuwait Task Order to have a material adverse effect on the Company's financial condition or results of operations, including revenue due to other programs ramp up as reflected in "Discussion of Financial Results" section. Backlog Backlog represents revenue we expect to recognize in the future as work is performed for remaining performance obligations for our contracts. Backlog includes funded amounts (funding is contractually authorized and appropriated by the customer) and unfunded amounts (amounts not currently contractually obligated by the customer, including unexercised options when the exercise of those options is considered probable). Total backlog excludes potential orders under IDIQ contracts and contracts awarded to us that are being protested by competitors with the GAO or in the COFC for which a stop work order has been received by the Company. Actual backlog values may vary due to the level of order activity related to programs, the timing of government funding authorizations or de-obligations of funding. Year-over-year comparisons could, at times, be impacted by these factors, among others. Our contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year or less option periods for the remaining contract period. The number of option periods vary by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when we are the prime contractor or of the prime contractor when we are a subcontractor. The U.S. government may also extend the term of a program by issuing extensions or bridge contracts, typically for periods of one year or less. We expect to recognize a substantial portion of our funded backlog 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. Most of our contracts have terms that would permit recovery of all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience. The following is a summary of funded and unfunded backlog: As of July 3, December 31, (In millions) 2026 2025 Funded backlog $ 2,520 $ 2,303 Unfunded backlog 10,207 8,813 Total backlog $ 12,727 $ 11,116 Funded orders (different from funded backlog) represent orders for which funding was received during the period. We received funded orders of $2.7 billion during the six months ended July 3, 2026, which was an increase of $540.2 million compared to the six months ended June 27, 2025. 23 Table of Contents Economic Opportunities, Challenges and Risks The U.S. government’s investment in services and capabilities in response to changing security challenges creates a complex and fluid business environment for V2X and other firms in this market. The U.S. continues to face substantial fiscal and economic challenges in addition to a varying political environment which could affect funding. The pace and depth of U.S. government acquisition reform and cost savings initiatives, combined with increased industry competitiveness to win long-term positions on key programs, could add pressure to revenue levels and profit margins. However, the Company expects the U.S. government will continue to place a high priority on national security and will continue to invest in affordable solutions. V2X believes that its capabilities should help its clients increase efficiency, reduce costs, improve readiness, and strengthen national security and, as a result, continue to allow for long-term profitable growth in the business. Further, the DoW budget remains the largest defense budget in the world and management believes the Company's addressable portion of the DoW budget offers substantial opportunity for growth. The U.S. government's Fiscal Year (FY) begins on October 1 and ends on September 30. On February 3, 2026, the President signed into law, H.R. 7148, the "Consolidated Appropriations Act, 2026," to end a partial government shutdown and fund the DoW and other federal agencies through FY 2026. The defense funding bill includes approximately $839 billion in appropriations. The OBBBA was signed into law by the President on July 4th, 2025, and allocates approximately $150 billion in mandatory funds to support defense and national security priorities that are available to be obligated through September 30, 2029. See Note 9, Income Taxes, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion relating to the OBBBA. On April 21, 2026, the DoW released the President's FY 2027 defense budget which requests $1.45 trillion in total budgetary resources. While the FY 2027 budget request reflects a significant increase from FY 2026 levels, it has not yet been passed as law and we anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, Congress, the debt ceiling, the global security environment, inflationary pressures, and other macroeconomic conditions. The result may shift funding priorities, which could have material impacts on our programs and defense spending broadly. Additionally, the Administration continues to assess government-wide procurement, staffing, and support activities, including the evaluation of mission priorities, acquisition methods, contract performance, and other factors, which could result in potential actions. Those actions remain uncertain and could result in impacts to our current and future financial performance and business prospects. While it is difficult to predict the specific course of future defense budgets, V2X believes the core functions the Company performs are mission-essential and spending to maintain readiness, improve performance, increase service life, lower cost, and modernize capabilities will continue to be a U.S. government priority. The Company's focus is on providing integrated solutions across the mission lifecycle that encompass (i) high impact readiness; (ii) integrated supply chain management; (iii) assured communications; (iv) mission solutions, including rapid response contingency efforts; and (v) platform renewal and modernization. The Company believes its capabilities enhance mission effectiveness, extend utility, lower cost, and improve security and mission outcomes. While customers may reduce the level of services required from us, the Company does not currently anticipate the complete elimination of these services, and the Company continues to focus on contract expansion and capturing new business opportunities. However, business conditions have become more challenging and uncertain due to macroeconomic and geopolitical conditions, including inflation and rising interest rates, as well as recent international events. For example, global hostilities could create additional demand for our products and services; however, any such demand, and the timing and extent of any incremental contract activity resulting from that demand, remains uncertain. Additionally, global hostilities could also impact our ability to deliver our products and services to customers. Further, we continue to closely monitor impacts to our business and operations in the Middle East, and the region at large due to the conflict in Iran. In addition, given the current level of inflation and geopolitical factors, the Company is monitoring the impact of rising costs on its active and future contracts and its financial results, and actively evaluating opportunities for cost reductions and deleveraging. The Company’s earnings and profitability may vary materially depending on the total mix of contracts. To date, the Company has not experienced broad-based increases from inflation or geopolitical hostilities, including as a result of tariffs, in the costs of its fixed-price and time and materials contracts that are material to the business. However, if the geopolitical conditions worsen or if the Company experiences greater than expected inflation in its supply chain and labor costs, then profit margins, and in particular, the profit margin from fixed-price and time and materials contracts, which represent a substantial portion of its contracts, could be adversely affected. The information provided above does not represent a complete list of trends and uncertainties that could impact the Company's business in either the near or long-term and should be considered along with the risk factors identified in Part I, "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, and updated, as necessary, on subsequent Quarterly Reports on Form 10-Q, and the matters identified under the caption “Forward-Looking Statement Information" herein. 24 Table of Contents Secondary Public Offerings On May 7, 2026, we entered into an underwriting agreement (the May 2026 Underwriting Agreement), by and among the Company, Vertex Aerospace Holdco LLC (the Selling Shareholder), and Morgan Stanley & Co. LLC, as the sole underwriter (the May 2026 Underwriter), relating to the public offering (the May 2026 Offering) of 2,004,569 shares of common stock by the Selling Shareholder. The May 2026 Offering closed on May 11, 2026. The Company did not sell any securities in the May 2026 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder. Following the May 2026 Offering, the Selling Shareholder no longer owns any shares of common stock. An entity affiliated with the Selling Shareholder continued to beneficially own 375,420 shares, or approximately 1.2%, of the Company’s outstanding common stock immediately after giving effect to the May 2026 Offering. On May 15, 2025, we entered into an underwriting agreement (the May 2025 Underwriting Agreement), by and among the Company, the Selling Shareholder and RBC Capital Markets, LLC, as underwriter (the Underwriter), relating to the public offering (the May 2025 Offering) of 2,000,000 shares of common stock by the Selling Shareholder and up to 300,000 additional shares of common stock at the Underwriter’s option at any time on or before the 30th day after the date of the prospectus supplement dated May 15, 2025 (the May 2025 Option). The May 2025 Offering closed on May 19, 2025. The Selling Shareholder elected not to exercise the May 2025 Option. The Company did not sell any securities in the May 2025 Offering and did not receive any proceeds from the sale of the shares offered by the Selling Shareholder. DISCUSSION OF FINANCIAL RESULTS Three months ended July 3, 2026 compared to three months ended June 27, 2025 Selected financial highlights are presented in the following table: Three Months Ended Change July 3, June 27, (In thousands, except for percentages) 2026 2025 $ % Revenue $ 1,256,643 $ 1,078,330 $ 178,313 16.5 % Cost of revenue 1,147,139 982,597 164,542 16.7 % % of revenue 91.3 % 91.1 % Selling, general, and administrative expenses 55,694 42,793 12,901 30.1 % % of revenue 4.4 % 4.0 % Operating income 53,810 52,940 870 1.6 % Operating margin 4.3 % 4.9 % Loss on extinguishment of debt (1,739) (313) (1,426) 455.6 % Interest expense, net (16,705) (20,598) 3,893 (18.9) % Other expense, net (2,137) (2,579) 442 (17.1) % Income from operations before income taxes 33,229 29,450 3,779 12.8 % % of revenue 2.6 % 2.7 % Income tax expense 7,689 7,059 630 8.9 % Effective income tax rate 23.1 % 24.0 % Net income $ 25,540 $ 22,391 $ 3,149 14.1 % Revenue Revenue increased by $178.3 million, or 16.5%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025 primarily driven by program ramp ups in global training and aerospace along with $101.6 million attributed to discrete activities to support a national security mission. Revenue from our programs in the U.S., Asia, and the Middle East increased by $165.1 million, $9.8 million, and $4.2 million, respectively, partially offset by a decrease of $0.8 million in revenue from our programs in Europe. Cost of Revenue Cost of revenue increased by $164.5 million, or 16.7%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025, consistent with the increase in revenue. 25 Table of Contents Selling, General, & Administrative Expenses SG&A expenses increased by $12.9 million, or 30.1%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025, primarily driven by higher operating costs associated with revenue growth, non-recurring integration initiatives, and expenses incurred to evaluate potential merger and acquisition opportunities as part of the Company's capital allocation strategy. Operating Income Operating income increased $0.9 million, or 1.6%, for the three months ended July 3, 2026 as compared to the three months ended June 27, 2025. Operating income as a percentage of revenue was 4.3% for the three months ended July 3, 2026, compared to 4.9% for the three months ended June 27, 2025. The increase in operating income was primarily driven by the ramp up of several programs, as described above, partially offset by increased SG&A and corporate expenses. Aggregate cumulative adjustments increased operating income by $1.8 million for the three months ended July 3, 2026 and $1.4 million for the three months ended June 27, 2025. The aggregate cumulative adjustments for the three months ended July 3, 2026 and June 27, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period. Loss on Extinguishment of Debt The Company recorded a $1.7 million loss on extinguishment of debt for the three months ended July 3, 2026 and a $0.3 million loss on extinguishment of debt for the three months ended June 27, 2025. For further discussion see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements. Six months ended July 3, 2026, compared to six months ended June 27, 2025 Selected financial highlights are presented in the following table: Six Months Ended Change July 3, June 27, (In thousands, except for percentages) 2026 2025 $ % Revenue $ 2,510,771 $ 2,094,253 $ 416,518 19.9 % Cost of revenue 2,295,449 1,920,417 375,032 19.5 % % of revenue 91.4 % 91.7 % Selling, general, and administrative expenses 117,422 86,598 30,824 35.6 % % of revenue 4.7 % 4.1 % Operating income 97,900 87,238 10,662 12.2 % Operating margin 3.9 % 4.2 % Loss on extinguishment of debt (1,739) (2,527) 788 (31.2) % Interest expense, net (34,830) (40,317) 5,487 (13.6) % Other expense, net (4,583) (4,874) 291 (6.0) % Income from operations before income taxes 56,748 39,520 17,228 43.6 % % of revenue 2.3 % 1.9 % Income tax expense 12,283 9,022 3,261 36.1 % Effective income tax rate 21.6 % 22.8 % Net income $ 44,465 $ 30,498 $ 13,967 45.8 % Revenue Revenue increased $416.5 million, or 19.9%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025 primarily driven by program ramp ups in global training and aerospace along with $200.9 million attributed to discrete activities to support a national security mission. Revenue from our programs located in the U.S., Asia, Europe, and the Middle East increased by $398.3 million, $9.9 million, $8.1 million, and $0.2 million, respectively. Cost of Revenue Cost of revenue increased $375.0 million, or 19.5%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025, consistent with the increase in revenue. 26 Table of Contents Selling, General, & Administrative Expenses SG&A expenses increased $30.8 million, or 35.6%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025, primarily driven by higher operating costs associated with revenue growth, non-recurring integration initiatives, and expenses incurred to evaluate potential merger and acquisition opportunities as part of the Company's capital allocation strategy. Operating Income Operating income increased $10.7 million, or 12.2%, for the six months ended July 3, 2026 as compared to the six months ended June 27, 2025. Operating income as a percentage of revenue was 3.9% for the six months ended July 3, 2026, compared to 4.2% for the six months ended June 27, 2025. The increase in operating income was primarily driven by the ramp up of several programs, as described above, partially offset by increased SG&A and corporate expenses. Aggregate cumulative adjustments increased operating income by $0.7 million and $5.6 million for the six months ended July 3, 2026 and June 27, 2025, respectively. The aggregate cumulative adjustments for the six months ended July 3, 2026 and June 27, 2025 related to changes in contract terms, program performance, customer changes in scope of work and changes to estimates in the reported period. Loss on Extinguishment of Debt The Company recorded a $1.7 million loss on extinguishment of debt for the six months ended July 3, 2026 and a $2.5 million loss on extinguishment of debt for the six months ended June 27, 2025. For further discussion see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements. Interest Expense, Net Interest expense, net for the three and six months ended July 3, 2026 and June 27, 2025 was as follows: Three Months Ended Change Six Months Ended Change July 3, June 27, July 3, June 27, (In thousands, except for percentages) 2026 2025 $ % 2026 2025 $ % Interest income $ 2,582 $ 171 $ 2,411 1,410 % $ 3,679 $ 408 $ 3,271 802 % Interest expense (19,287) (20,769) 1,482 (7) % (38,509) (40,725) 2,216 (5) % Interest expense, net $ (16,705) $ (20,598) $ 3,893 (19) % $ (34,830) $ (40,317) $ 5,487 (14) % Interest income is related to interest earned on cash and cash equivalents. Interest expense is related to borrowings under our senior secured credit facilities, with the amortization of debt issuance costs, and derivative instruments used to hedge a portion of exposure to interest rate risk. Interest expense, net decreased $5.5 million for the six months ended July 3, 2026 compared to the six months ended June 27, 2025 primarily due to a decrease in our debt balance and increase in interest income. For further discussion of these amendments see Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Other Expense, Net During the three and six months ended July 3, 2026, we incurred purchase discount fees, net of servicing fees, of $2.2 million and $4.6 million, respectively, related to the sale of accounts receivable through the MARPA Facility. During the three and six months ended June 27, 2025, we incurred purchase discount fees, net of servicing fees, of $2.6 million and $5.1 million, respectively, related to the sale of accounts receivable through the MARPA Facility. For a discussion of the MARPA Facility, see Note 12, Sale of Receivables, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Income Tax Expense We recorded income tax expense of $7.7 million and $7.1 million for the three months ended July 3, 2026 and June 27, 2025, respectively, representing effective income tax rates of 23.1% and 24.0%, respectively. For the six months ended July 3, 2026 and June 27, 2025, we recorded income tax expense of $12.3 million and $9.0 million, respectively, representing effective income tax rates of 21.6% and 22.8%, respectively. The effective income tax rates vary from the federal statutory rate of 21.0% mainly due to state and foreign taxes, Net CFC Tested Income (NCTI), disallowed compensation deduction under Internal Revenue Code Section 162(m), offset by foreign derived intangible income deduction, available deductions not included in book income and income tax credits. 27 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Liquidity We are not aware of any known trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, a material decrease in our liquidity. In addition, other than items discussed, there are no known material trends, favorable or unfavorable, in our capital resources and no expected material changes in the mix of such resources. Our major source of funding for 2026 and beyond is expected to be our operating cash flow, our existing balances of cash and cash equivalents and proceeds from any issuances of debt. We believe we have sufficient liquidity to fund operations, acquisitions, capital expenditures and scheduled debt repayments. We expect to fund our ongoing working capital, capital expenditure and financing requirements and pursue additional growth through new business development and potential acquisition opportunities by using cash flows from operations, cash on hand, credit facilities, and access to capital markets. When necessary, our revolving credit facility and MARPA Facility are available to satisfy short-term working capital requirements. See Note 5, Debt, and Note 12, Sale of Receivable, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion. If cash flows from operations are less than expected, we may need to access the long-term or short-term capital markets. Although we believe our current financing arrangements will permit financing of our operations on acceptable terms and conditions, access to and the availability of financing on acceptable terms and conditions in the future will be impacted by many factors, including but not limited to: (i) our credit ratings, (ii) the liquidity of the overall capital markets, (iii) the current state of the economy, and (iv) uncertainties in the U.S. government defense budget and their ability to fund contracts, including those uncertainties arising from a potential U.S. government shutdown. We cannot provide assurance that such financing will be available on acceptable terms or that such financing will be available at all. On January 2, 2025, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $899.8 million (the New Term Loans), in which the New Term Loans replace or refinance in full all the existing term loans outstanding under the First Lien Term Tranche in effect immediately prior to the amendment (the Existing Term Loans). See Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion. On March 31, 2025, the 2023 Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $237.5 million (the 2025 Term Loans), which replace or refinance in full all the existing term loans outstanding under the 2023 Credit Agreement in effect immediately prior to the amendment. The 2023 Credit Agreement was further amended to provide a new tranche of revolving credit commitments in an aggregate original principal amount of $500.0 million (the 2025 Revolver), which replace or refinance in full all the existing revolving credit loans and commitments outstanding under the 2023 Credit Agreement in effect immediately prior to the amendment. See Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion. On May 29, 2026, the First Lien Credit Agreement was amended to provide, among other things, a new tranche of term loans in an aggregate original principal amount of $868.5 million (the New Term Loans), in which the New Term Loans replace or refinance in full all the existing term loans outstanding under the First Lien Term Tranche in effect immediately prior to the amendment (the Existing Term Loans). The loans under the First Lien Credit Agreement, as amended (the First Lien Credit Agreement), amortize in an amount equal to approximately $2.2 million per quarter through September 30, 2030, with the balance of $829.4 million due on December 6, 2030. The replacement of the Existing Term Loans with the New Term Loans resulted in a loss on extinguishment of debt of $1.7 million in the Condensed Consolidated Statement of Income for the six months ended July 3, 2026. See Note 5, Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion. As of July 3, 2026, the carrying value of the First Lien Credit Agreement was $866.4 million, excluding deferred discount and unamortized deferred financing costs of $20.9 million. The estimated fair value of the First Lien Credit Agreement as of July 3, 2026 was $864.2 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2). As of July 3, 2026, there were no outstanding borrowings and $14.9 million of outstanding letters of credit under the 2025 Revolver. Availability under the 2025 Revolver was $485.1 million as of July 3, 2026. Unamortized deferred financing costs related to the 2025 Revolver of $3.5 million are included in other non-current assets in the Condensed Consolidated Balance Sheets. As of July 3, 2026, the fair value of the 2025 Revolver approximated the carrying value because the debt bears a floating interest rate. As of July 3, 2026, the carrying value of the 2025 Term Loans was $220.1 million, excluding unamortized deferred financing costs of $1.5 million. The estimated fair value of the 2025 Term Loans as of July 3, 2026 was $220.2 million. The fair value is based on observable inputs of interest rates that are currently available to us for debt with similar terms and maturities for non-public debt (Level 2). See Note 5. Debt, in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further discussion. 28 Table of Contents The cash presented on the Condensed Consolidated Balance Sheets consists of cash held by our wholly owned U.S. and international subsidiaries. Approximately $57.1 million of our $214.3 million in cash, cash equivalents and restricted cash as of July 3, 2026 is held by foreign subsidiaries and is not available to fund U.S. operations unless repatriated. We do not currently expect to repatriate undistributed earnings of foreign subsidiaries. We expect our U.S. domestic cash resources will be sufficient to fund our U.S. operating activities and cash commitments for financing activities. Sources and Uses of Liquidity Cash, accounts receivable, unbilled receivables, and accounts payable are the principal components of the Company's working capital and are generally driven by revenue with other short-term fluctuations related to payment practices by customers, sales of accounts receivable through the MARPA Facility and the timing of billings. Our receivables reflect amounts billed to customers, as well as the revenue that was recognized in the preceding month, which is normally billed the month following each balance sheet date. On May 28, 2026, the Government of Greenland drew $4.3 million on a letter of credit held by the Company related to prior year tax claims, which the Company has appealed. The Company has recorded this withdrawal by the Government of Greenland as receivables on the Company's Condensed Consolidated Balance Sheets as management currently believes that there is reasonable likelihood of this amount being recoverable. Accounts receivable balances can vary significantly over time and are impacted by revenue levels and the timing of payments received from customers. Days sales outstanding (DSO) is a metric used to monitor accounts receivable levels. We determine our DSO by calculating the number of days necessary to exhaust our ending accounts receivable balance based on our most recent historical revenue. DSO was 56 and 57 days as of July 3, 2026 and December 31, 2025, respectively. The following table sets forth net cash used in operating activities, investing activities and financing activities: Six Months Ended July 3, June 27, (in thousands) 2026 2025 Operating activities $ (108,360) $ (66,931) Investing activities (3,374) (5,090) Financing activities (43,777) (10,618) Foreign exchange1 830 4,775 Net change in cash, cash equivalents and restricted cash $ (154,681) $ (77,864) 1 Impact on cash balances due to changes in foreign exchange rates. Net cash used in operating activities for the six months ended July 3, 2026 consisted of net cash outflows from the sale of receivables through the MARPA Facility of $142.9 million and net cash outflows in working capital accounts of $85.0 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $74.4 million, net income of $44.5 million, and net cash inflows in other long-term assets and liabilities of $0.6 million. Net cash used in operating activities for the six months ended June 27, 2025 consisted of net cash outflows in working capital accounts of $161.7 million and net cash outflows in other long-term assets and liabilities of $7.8 million, partially offset by non-cash net income adjusting items (primarily consisting of depreciation and amortization) of $63.0 million, net income of $30.5 million and cash inflows from the sale of receivables through the MARPA Facility of $9.0 million. Net cash used in investing activities for the six months ended July 3, 2026 consisted of $3.4 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations. Net cash used in investing activities for the six months ended June 27, 2025 consisted of $5.1 million of net capital expenditures for the purchase of software and hardware, vehicles and equipment related to ongoing operations. Net cash used in financing activities for the six months ended July 3, 2026 primarily consisted of repayments of long-term debt of $37.4 million, payments for employee withholding taxes on stock-based compensation of $5.3 million and payments for debt issuance costs of $1.2 million. Net cash used in financing activities for the six months ended June 27, 2025 consisted of revolver repayments of $319.0 million, payments for debt issuance costs of $3.9 million, repayments of long-term debt of $3.8 million and payments for employee withholding taxes on stock-based compensation of $3.0 million, partially offset by proceeds from the revolver of $319.0 million. Capital Resources As of July 3, 2026, we held cash, cash equivalents and restricted cash of $214.3 million, which included approximately $57.1 million held by foreign subsidiaries, and had $485.1 million of available borrowing capacity under the 2025 Revolver. We believe that our cash, cash equivalents and restricted cash as of July 3, 2026, as supplemented by operating cash flows, the 2025 Revolver, and the MARPA Facility will be sufficient to fund our anticipated operating costs, capital expenditures, and current debt repayment obligations for at least the next 12 months. 29 Table of Contents Contractual Obligations As of July 3, 2026, commitments to make future payments under long-term contractual obligations were as follows: Payments Due by Period Less than 1 year More than 5 Years (In thousands) Total 1 - 3 Years 3 - 5 Years Leases $ 42,331 $ 6,582 $ 20,002 $ 11,383 $ 4,364 Principal payments on First Lien Credit Agreement¹ 866,351 8,685 17,370 840,296 — Principal payments on 2023 Credit Agreement¹ 220,078 7,422 23,750 188,906 — Interest on First Lien and 2023 Credit Agreements 266,169 63,408 124,762 77,999 — Total $ 1,394,929 $ 86,097 $ 185,884 $ 1,118,584 $ 4,364 ¹ Includes unused funds fee and is based on the July 3, 2026 interest rate and outstanding balance. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. Management believes that the accounting estimates employed, and the resulting balances, are reasonable; however, actual results in these areas could differ from management's estimates under different assumptions or conditions. We believe that the assumptions and estimates associated with revenue recognition and income taxes have the greatest potential impact on our financial statements because they are inherently uncertain, involve significant judgments and include areas where different estimates reasonably could materially impact the financial statements. There have been no material changes in the critical accounting policies and estimates from those discussed in our Annual Report on Form 10-K for the year ended December 31, 2025. New Accounting Pronouncements Refer to Part I, Item 1, Note 2, Recent Accounting Standards Update in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information regarding accounting pronouncements and accounting standards updates. FORWARD-LOOKING STATEMENT INFORMATION This Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Section 27A of the Securities Act of 1933, as amended (the Securities Act), and the Private Securities Litigation Reform Act of 1995 and, as such, may involve risks and uncertainties. All statements included or incorporated by reference in this report, other than statements that are purely historical, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential,” “continue” or similar terminology. These statements are based on the beliefs and assumptions of our management based on information currently available to management. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. The forward-looking statements included or incorporated by reference in this report are subject to additional risks and uncertainties further identified and discussed in Part I, "Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, and updated, as necessary, on subsequent quarterly reports on Form 10-Q and are based on information available to us on the filing date of this report. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. New risks and uncertainties arise from time to time, and we cannot predict those events or how they may affect us. 30 Table of Contents We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to: our ability to submit proposals for and/or win all potential opportunities in our pipeline; our ability to retain and renew our existing contracts; our ability to compete with other companies in our market; security breaches, cyber-attacks or cyber intrusions, and other disruptions to our information technology and operation; our mix of cost-plus, cost-reimbursable, firm-fixed-price and time-and-materials contracts; maintaining our reputation and relationship with the U.S. government; protests of new awards; economic, political and social conditions in the countries in which we conduct our businesses; changes in U.S. or international government defense budgets, including potential changes or uncertainty arising from the U.S. president and administration; government regulations and compliance therewith, including changes to the DoW procurement process; changes in technology; our ability to protect our intellectual property rights; governmental investigations, reviews, audits and cost adjustments; contingencies related to actual or alleged environmental contamination, claims and concerns; delays in completion of the U.S. government budget; our success in extending, deepening, and enhancing our technical capabilities; our success in expanding our geographic footprint or broadening our customer base; our ability to realize the full amounts reflected in our backlog; impairment of goodwill; misconduct of our employees, subcontractors, agents, prime contractors and business partners; our ability to control costs; our level of indebtedness; terms of our credit agreements; inflation and interest rate risk; geopolitical risk, including as a result of recent global hostilities and tariffs; our suppliers' performance; economic and capital markets conditions; our ability to maintain safe work sites and equipment; our ability to retain and recruit qualified personnel; our ability to maintain good relationships with our workforce and unions; our teaming relationships with other contractors; changes in our accounting estimates; the adequacy of our insurance coverage; volatility in our stock price; changes in our tax provisions; our expectation with respect to the resolution of certain tax claims or exposure to additional income tax liabilities; risks and uncertainties relating to integrating and refining internal control systems, including enterprise resource planning and business systems; changes in GAAP; and other factors described in Part I, "Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2025 and described from time to time in our future reports filed with the SEC.