By Wayne Heilman email@example.com
Vectrus finished last year with small increases in revenue and profits despite delays in contract work resulting from COVID-19 pandemic-related restrictions that kept some of its employees off of overseas military bases.
And the future looks much brighter for the Colorado Springs-based military contractor, which nearly doubled its contract backlog to a record $5.1 billion, including retaining its second-largest contract when it was rebid. Much of the backlog gain came from keeping a five-year contract valued at $882 million to operate, maintain and secure the Army’s communications network in southwest Asia and from the Department of Defense resolving protests from losing bidders on a $1.38 billion logistics contract Vectrus won in 2019.
As a result, Vectrus told stockholders it expects both revenue and earnings to grow more than 20% this year to revenue of between $1.65 billion and $1.72 billion and profits of between $3.48 and $4.08 a share. Some of the boost will come from two acquisitions the company completed late last year that will bring in $200 million in revenue.
Vectrus bought HHB Systems, a Virginia-based defense contractor specializing in systems engineering and technical assistance, and Zenetex, another Virginia defense contractor that specializes in providing management and technology services for federal and defense industry clients. Both companies focus on intelligence agency work, and Zenetex also generates substantial revenue from foreign military work.
“We ended 2020 on a high note, achieving several important milestones ,” Vectrus CEO Chuck Prow said in a news release. “Our 2020 results reflect the operating and financial resiliency of our business model, the dedication of our team to our clients’ missions, and the advancements we’re making” in combining both logistics and information technology work for its military customers.
Vectrus reported that revenue rose less than 1% to nearly $1.4 billion in 2020, but profits grew 11.4% to nearly $37 million, or $3.14 a share, despite $63 million in revenue delayed by base access issues . During the fourth quarter, the company’s revenue fell 2.7% to $355.3 million as a result of $25.9 million in COVID-related revenue delays, but tax breaks from COVID relief legislation helped profits surge 57.7% to $16.8 million, or $1.42 a share.