VEC - Vectrus (VEC) - What Can Award From Naval Air Warfare Center Weapons Division Mean?

New Award. Vectrus division Zenetex has been named as one of nine awardees of a $93 million ID/IQ contracted by The Naval Air Warfare Center Weapons Division, China Lake, California. These contracts provide research and development, engineering, integration, test, cybersecurity, upgrade, and sustainment for various tactical threat systems in support of improving aircrew lethality and survivability for the Navy.New Opportunities. Significantly, the contract moves Zenetex up the value chain in terms of tasks it can handle, assuming Zenetex is awarded some of the ID/IQs. We believe this is significant as expansion of the skill set will enable not only Zenetex but Vectrus as a whole to bid on an expanded set of opportunities.New Client. Just as important, in our view, is The Naval Air Warfare Center Weapons Division is a new client for Vectrus. While the Company has seen its Navy business grow to 12% of revenue in 2Q21, adding another contracting entity is a feather in Vectrus' cap.Projections. After speaking with management we are tweaking our adjusted EBITDA estimate but leaving our revenue and EPS projections unchanged. We are reducing our estimate of non-recurring costs in our adjusted EBITDA calculation. Net net, the change reduces our Q3 adjusted EBITDA estimate to $19.1 million from $20.7 million and our Q4 estimate to $21.1 million from $22.7 million. For the full year, we are projecting revenue of $1,780.8 million, EPS of $4.06, adjusted EPS of $4.95, and adjusted EBITDA of $87.3 million.Maintaining Outperform. We are maintaining our Outperform rating and $62 twelve month price target. The strong first half results set the table for an excellent 2021, in our view. With the recent acquisitions, Vectrus now plays in a larger pool and market trends support growth in the converged infrastructure market. Read More >>