Vectrus, Inc. (NYSE:VEC) Q1 2020 Earnings Conference Call - Final Transcript

May 12, 2020 • 04:30 pm ET

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Vectrus, Inc. (NYSE:VEC) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Thank you for joining us today for the Vectrus First Quarter 2020 Earnings Conference Call and Webcast. Today's call is being recorded. My name is Robert, and I'll be the operator for today's call. [Operator Instructions]

And now, I'll pass the call over to your host, Mike Smith, Vice President of Investor Relations and Corporate Development at Vectrus. Thank you. You may begin.

Executive
Michael J. Smith

Thank you. Good afternoon, everyone. Welcome to the Vectrus First Quarter 2020 Earnings Conference Call. Joining us today are Chuck Prow, President and Chief Executive Officer; and Susan Lynch, Senior Vice President and Chief Financial Officer. Slides for today's presentation are available on our Investor Relations website, investors.vectrus.com.

Please turn to Slide 2. During today's presentation, management will be making forward-looking statements pursuant to the safe harbor provisions of the federal securities laws. Please review our safe harbor statements in our press release and presentation materials for a description of some of the factors that may cause actual results to differ materially from the results contemplated by these forward-looking statements. The company assumes no obligation to update its forward-looking statements.

Additionally, I'd like to point out that we will be discussing and reporting adjusted non-GAAP metrics including adjusted operating income and margin, adjusted EBITDA and margin, adjusted net income and adjusted diluted earnings per share. The definition of these non-GAAP measures can be found in our presentation materials, press release and Form 10-Q.

At this time, I'd like to turn the call over to Chuck Prow.

Executive
Charles Prow

Thank you, Mike, and good afternoon, everyone. Thank you for joining us on the call today. This quarter, we, in every business around the globe, have been adjusting to the COVID-19 pandemic and keeping our employees, clients and partners safe. Vectrus provides critical infrastructure support services globally for a variety of national security missions. This core competency, combined with our backlog of long-term contracts with the U.S. government, creates operating and financial resiliency with predictable free cash flow. This is foundational to our business model.

We are proud of the contributions our teams are making to support our men and women on the front line at such a difficult time. At the same time, we are not distracted from our opportunity to transform Vectrus into a leader in the emerging converged infrastructure market and as such, our strategic priorities remain unchanged and achievable.

Please turn to Slide 3, and let's touch on our first quarter results. We began the year as expected, with continued top line growth. Revenue grew 8% in Q1, which is supported by a solid organic growth of 4% and a minimal impact from COVID-19. This growth came from a $14.6 million expansion on our existing programs as well as an $11.2 million contribution from our acquisition of Advantor.

Our client portfolio and revenue base continues to diversify as we expand our market share with the Army, the Navy and the Air Force. We also improved our profitability in the quarter through continued focus on program delivery excellence.

Adjusted