Apr 15, 2019
By Wayne Heilman
Vectrus stock surged to record levels Monday after the Colorado Springs-based defense contractor landed a $1.38 billion Army contract to provide logistics services to regional commands in the Middle East and Asia.
The company’s stock jumped to more than $40 a share, its highest price since Vectrus was spun off as a separate company from Exelis in 2014. Later Monday, the stock drifted back to $39 — up $9.26 or 31.1 percent — and recorded its biggest trading volume in 2½ years. The closing price was the company’s highest in nearly a year and up more than 80 percent this year. The stock gained another 73 cents in after-hours trading.
The award is the second largest of four totaling $3.5 billion made Friday under the Logistics Civil Augmentation Program (LOGCAP) 5 contract. All awards are for five years with five one-year options with a ceiling of $82 billion. Kellogg Brown & Root Services Inc. landed the largest contract at nearly $2 billion for work in Afghanistan, North America and Europe. Fluor Intercontinental Inc. and PAE-Parsons Global Logistics Services received contracts totaling $171.8 million for work in Africa and Latin and South America, respectively. Vectrus issued a news release confirming it won the contract and affirming its financial forecast for 2019. That’s because the company has a bridge contract for similar work that was extended last month until March 2020. The work can be extended another six months, in case the awards are protested by one of the two losing bidders, which included AECOM and DynCorp International Inc., an incumbent on the previous contract.
Joseph DiNardi, managing director of the transportation and logistics sector for Stifel Financial Corp., called the award “a significant win for the company and an impressive turnaround executed by management. Once Vectrus starts ramping up on the newly contracted work, which may not be until mid-2020, it should see substantial revenue growth (more than 30 percent), based on the revenue production of the commands it has won.”
DeNardi estimated the contract could eventually boost Vectrus’ annual revenue by up to $600 million, or 42 percent, and increase its profits by at least 25 percent and perhaps more than 70 percent.
The company’s largest contract — the Kuwait-Base Operations and Security Support Services (K-BOSSS) contract — will be folded in the LOGCAP 5 contract. The K-BOSSS contract generated more than 40 percent of the nearly $1.3 billion in revenue Vectrus reported last year. The Army in March added a year to that contract, valued at $548 million.
Vectrus lost the K-BOSSS contract in 2016 to another bidder. The company successfully protested that award, and the Army instead combined that work with the larger LOGCAP contract. The initial loss of the K-BOSSS contract prompted Vectrus to replace its CEO and lay off 64 employees from its Colorado Springs headquarters staff.
Since then, Vectrus restructured its operations to better compete for military contracts and last year landed $350 million in new work that will generate revenue in some cases through 2027. The LOGCAP contract is a key part of the company’s goal to double its revenue during the next five years to $2.5 billion and double its profit margin to 7 percent by combining its strengths in logistics and information technology.
Mar 29, 2019
By Jane Edwards
Executive Mosaic is pleased to announce that Chuck Prow, president and CEO of Vectrus, has been inducted into the 2019 edition of Wash100 — Executive Mosaic’s annual selection of influential leaders in the government contracting arena — for securing major contracts and expanding Vectrus’ position with numerous federal agencies.
This latest honor marks the fifth time Prow has received a Wash100 Award.
Vectrus won several contracts in 2018, including a $60 million task order under the Global Contingency Services Multiple Award Contract II in support of the Guantanamo Bay Naval Station in Cuba.
“This base operations support services task order builds on our existing IT and engineering work with the Navy, which includes providing a full range of network support services to the U.S. Navy’s afloat force and electromagnetic effects engineering,” Prow said.
Vectrus secured firm-fixed-price contracts in the first half of 2018 including an $84 million contract for maintenance services at Sheppard Air Force Base in Texas. Prow explained the new contract helps Vectrus expand its position as an Air Force prime contractor with programs such as the Thule Air Base maintenance contract and the Air Force contract augmentation program.
Under a five-year, $43 million contract, Vectrus will provide maintenance support for a U.S. Army base in Stuttgart, Germany. Prow said the firm-fixed-price contracts expand the scope of work that the company performs within the U.S. European Command.
The company also received a potential $108 million contract in February 2018 to manage U.S. Army dining facilities in Kuwait. Prow said the DFAC 3.0 contract would help expand the company’s base business.
In November 2018, Vectrus reported $308 million in revenue during the third quarter of 2018, reflecting a 14 percent rise from the previous year.
“Additionally, with 65 percent of 2018 new business wins based on contract value coming from the Air Force and Navy, we are also making great progress in diversifying our portfolio and expanding market share with clients that have not historically been large contributors to revenue,” Prow said.
“We see additional opportunities to further expand our footprint with existing clients in the Department of Defense and intelligence community, as well as new clients in the federal civilian market,” he said.
Executive Mosaic congratulates Chuck Prow and the Vectrus team for receiving this award.
About the Wash100
The Wash100 award, now in its sixth year, recognizes the most influential executives in the GovCon industry as selected by the Executive Mosaic team in tandem with online nominations from the GovCon community. Representing the best of the private and public sector, the winners demonstrate superior leadership, innovation, reliability, achievement and vision.
Visit the Wash100 site to learn about the other 99 winners of the 2019 Wash100 Award. On the site, you can submit your 10 votes for the GovCon executives of consequence that you believe will have the most significant impact in 2019.
Feb 25, 2019
By Wayne Heilman
Colorado Springs-based defense contractor Vectrus Inc. reported record 2018 revenue Tuesday as it awaits the Army’s decision on a contract that generates 40 percent of its revenue.
Revenue was up 14.8 percent from 2017 to $1.28 billion, helped by $350 million in new multiyear contract winsthat will generate revenue in some cases through 2027, the company said. Profits for the same period declined 40.7 percent to $35.3 million, or $3.10 a share, largely as a result of nearly $23 million in tax benefits from the tax cut enacted in late 2017.
Fourth-quarter revenue rose 11.4 percent to $329.6 million, while profits fell more than 75 percent to $10.1 million, or 89 cents a share, also resulting from big gains last year from the tax cut.
“We reported strong fourth quarter and full-year 2018 financial results,” Vectrus CEO Chuck Prow said Tuesday in a news release. “During 2018, we positioned Vectrus as a higher value, growth-oriented platform through several new wins, significantly expanding our client and geographic footprint.” The company expanded its work with the Air Force and Navy through new contracts.
Prow said Vectrus is “well positioned” for selection April 12 as one of up to six winning bidders on the Army’s $82 billion Logistics Civil Augmentation Program (LOGCAP) 5 contract as well as work under the contract for Central Command, which includes the Middle East. That’s because the company already provides logistics services under the Kuwait-Base, Operations and Security Support Service (K-BOSSS) contract and more contracts it has won in Kuwait, Jordan and United Arab Emirates.
The K-BOSSS contract generated more than 40 percent of Vectrus revenue last year, and the Army already has said it plans to extend the contract from March 29 through March 28, 2020. The government also has an option for a six-month extension through Sept. 28, 2020. Since the extension and option still are pending, the amounts have not been disclosed.
Prow said Vectrus remains “on track” to make its five-year goal of doubling revenue to $2.5 billion and nearly doubling its profit margin to 7 percent by combining its strengths in logistics and information technology.
The fourth-quarter and full-year revenue numbers both beat forecasts from the three analysts who follow the company’s stock, while the profit totals fell a bit short of those forecasts. The full-year revenue also beat the company’s most recent forecast, while the profit total was near the top of its forecast.
Vectrus told stockholders to expect revenue this year of $1.3 billion to $1.33 billion and profit of $35.3 million, or $3.07 a share, to $40.4 million, or $3.51 a share.
