Vectrus CEO Charles Prow Recent Remarks on LOGCAP V Activities

Vectrus CEO Charles Prow recent gave an earnings call to various investors/analysts. I have extracted some of his remarks concerning LOGCAP activities.

Charles Prow: We are closely managing the phase-in of LOGCAP V and currently anticipate being at full operational capacity in Iraq this summer. In terms of INDOPACOM, the phase-in process remains elongated due to base access restrictions associated with COVID-19. We anticipate phasing in later this year with full operational capability in early 2022.

JG: Okay, great. And then kind of more on the big picture here, Chuck. We’re seeing, as you mentioned in the prepared remarks, the Biden administration attempting to withdraw from Afghanistan. How concerned are you with some of the other Middle East locations that you are on, specifically CENTCOM that the administration may start to take a look at that and want to start to wind some of that down?

Charles Prow: We have not seen nor heard. Both these are publicly and/or through our client channels of major architectural changes outside of Afghanistan. As I mentioned in the prepared remarks, Afghanistan is kind of a low single digit geography for us. It’s also worth noting that much of that work in Afghanistan is communications or comms related, and the exact amount of adjustment to that workload is still a bit unclear, but what we provided and we believe is a very conservative estimate. The last point that I’ll make is, is really we’ve seen the Biden administration really put a lot of attention to what they call their pivot to Asia. And as you know with our position in INDOPACOM, both with LOGCAP and other contracts, we feel well positioned for that shift as well.

JD: Hi. Good afternoon. Chuck, now that you all have been operating or have some better transparency into LOGCAP, could you talk about the revenue opportunity you think that exists there once you get to full run rate, even if it’s within a range?

Charles Prow: Sure. We were very, very pleased with the way that in the rate and pace that we were able to phase into or are phasing into, I should say, Iraq. We feel that we have a much better understanding now on the workloads that will remain in Kuwait and the rest of the Middle East. And then as you know, we’ve not even begun yet to do phase-in activities on Kwajalein. So that’s a bit of a long winded way of saying that we feel very confident at the spending levels against the LOGCAP contract. And the last point that I’ll make and I’ve made on prior calls is we are really, really pleased with the amount of activity that we see in INDOPACOM for non-Kwajalein related tasks. Those tasks are continuing to be visible, and in fact are becoming a bit more substantive from a site perspective as well.

JD: Okay. And then maybe just contractually, Chuck, to the extent that the United States tries to establish a bigger presence in the INDOPACOM region, what ability you would play in that process?

Charles Prow: Well, that will happen in a number of different ways. To the extent that that growth or that expansion would come through the LOGCAP vehicle, we offer the awardee for INDOPACOM and thus have kind of exclusive. We have sole source price for anything that is — what is considered to be urgent and compelling, vis-à-vis the LOGCAP award. We have been very pleased with the interaction we’ve had with the Navy, vis-à-vis the LOGCAP vehicle as well. And there are other emerging contracts, which is a recently released RFP for the Philippines BOS contract as well, which, given our increased scale, we should be able to play very aggressively for that award as well. The last point is, and I can’t go into a lot of detail, but you can look at the press with regard to various exercises that are occurring in the INDOPACOM area of operation now. And to the extent that those are LOGCAP supported, you can play that into our growth thoughts in INDOPACOM as well.