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By Wayne Heilman, The Gazette, May 09, 2017-After retaining two key contracts and winning an extension to its largest contract, Colorado Springs-based defense contractor Vectrus Inc. Tuesday raised its revenue and profit forecasts for the year even as it reported better-than-expected first quarter financial results.
While revenue for the January-to-March period declined 6.6 percent from a year ago to $290.1 million, the total was still $2 million higher than the forecast of the only analyst following the company's stock, Brian Ruttenbur of Drexel Hamilton LLC. Most of the revenue decline resulted from work winding down in Afghanistan, Vectrus said Tuesday in a press release. First-quarter profits edged up 1.2 percent to $6.67 million, or 60 cents a share, from $6.59 million, or 61 cents a share, during the first quarter of 2016, beating Rittenbur's forecast by 14 cents.
"We are off to a fast start in 2017, with a much improved operation and financial outlook," Vectrus CEO Chuck Prow said in the release. "I am pleased to announce that we won all of our re-compete contracts scheduled to award in 2017," which included an operations support contract at Maxwell Air Force Base and another contract for operations maintenance and supply in Europe totaling nearly $400 million, boosting the company's contract backlog to a record $2.9 billion. The company also received a $521.6 million, one-year extension to its largest contract, the Kuwait Base Operations and Security Support Services contract.
Based on the improved first-quarter results, Vectrus boosted its revenue forecast for all of 2017 by $80 million to between $990 million and $1.09 billion, and increased its profit forecast by at least $1.7 million to between $18.7 million, or $1.68 a share, and $22.3 million, or $2 a share. The company also said it would generate $2 million more in cash. The forecast doesn't include a $97 million contract Vectrus won last month for operations at Keesler Air Force Base since the award has been protested.
"Last quarter, we rolled out the foundation of new strategy," Prow said in the release. "Albeit very early in our strategic execution, recent contract wins and extensions reinforce the market receptivity to our approach."
The company has submitted bids on $1.5 billion in new contracts and anticipates bidding on contracts totaling $4 billion during the next 12 months, including $1.5 billion to be awarded by year's end.
The results and upgraded forecast represent a turnaround for Vectrus, which lost two of its largest contracts last fall that eventually prompted former CEO Ken Hunzeker CQ to suddenly retire in December CQ and be immediately replaced by Prow, who pledged a bigger emphasis on business development. Vectrus protested the loss of both contracts and the Army eventually awarded Vectrus the extension on its Kuwait contract with an option to extend the work another year CQ while it restructures the work for an eventual rebidding process. Vectrus stock price Tuesday CQ hit is highest level since losing the contracts.