Core Viewpoint - VSE (VSEC) shares have increased by 3.6% over the past four weeks, closing at $100.26, with a mean price target of $126.20 indicating a potential upside of 25.9% according to Wall Street analysts [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $14.86, where the lowest estimate is $100 (0.3% decline) and the highest is $135 (34.7% increase) [2] - A low standard deviation suggests a strong agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [7] Earnings Estimates and Analyst Optimism - Analysts show strong agreement in revising VSEC's earnings estimates higher, which correlates with potential stock price increases [9] - The Zacks Consensus Estimate for the current year has risen by 0.8% over the past month, with two estimates increasing and no negative revisions [10] Zacks Rank and Investment Potential - VSEC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, indicating a strong potential upside [11] Caution on Price Targets - While price targets are often sought after, they can mislead investors, and decisions should not be made solely based on them [5][8]

Company Overview - VSE Corporation (VSEC) has completed the acquisition of Kellstrom Aerospace Group, Inc. for approximately $185 million in cash and 172,414 common shares, enhancing its position in the commercial aerospace engine aftermarket [1][2] - The acquisition aligns with VSE's strategic plan to expand its product and service offerings in the aerospace sector, particularly in the growing commercial aerospace aftermarket [2][4] Strategic Implications - The integration of Kellstrom Aerospace is expected to create significant value for both customers and suppliers, leveraging Kellstrom's strong track record in supporting global OEM partners [3][4] - The combined capabilities of VSE Aviation and Kellstrom will allow the company to offer more comprehensive solutions, capitalizing on emerging growth opportunities in the aviation aftermarket [4] Financial Performance - VSEC's shares have increased by 77.9% year to date, significantly outperforming the Zacks Engineering - R and D Services industry's growth of 16.1% [5] - The aviation segment now generates over 70% of VSE's total revenues, with strong demand in the commercial aerospace aftermarket driven by high passenger traffic [6][8] Market Outlook - VSE expects strong demand in the commercial aftermarket to continue into 2025, projecting near double-digit revenue growth supported by high passenger volumes and challenges in OEM production [8] - The general aviation aftermarket is also anticipated to experience low to mid-single-digit growth in 2025, indicating a positive outlook for the sector [8]

Third Quarter 2024 Results Conference Call November 6, 2024 vsecorp.com Introduction Forward-Looking Statements These statements speak only as of the date of this presentation and the Company undertakes no ongoing obligation, other than that imposed by law, to update these statements. These statements appear in a number of places in this presentation, and relate to, among other things, the Company's intent, belief or current expectations with respect to: its future financial condition, results of operations ...

Revenue Projections - Estimated consolidated revenue for Q3 2024 is projected to be between $268 million and $275 million, and for the nine months ended September 30, 2024, between $776 million and $783 million[5]. - Aviation segment revenue for Q3 2024 is expected to increase by 32-34% compared to the prior year period, while Fleet segment revenue is anticipated to decrease by 10-15%[5]. - Estimated operating income for Q3 2024 is projected to be between $22 million and $24 million, and for the nine months ended September 30, 2024, between $52 million and $54 million[5]. - Estimated Adjusted EBITDA for Q3 2024 is expected to be between $31 million and $34 million, and for the nine months ended September 30, 2024, between $95 million and $98 million[5]. - Adjusted EBITDA Margin for the Aviation segment in Q3 2024 is expected to be between 15.0% and 16.5%, while for the Fleet segment, it is expected to be between 4.5% and 6.0%[5]. - The company anticipates full-year growth in the Aviation segment to exceed previous guidance, while the Fleet segment is expected to decline year-over-year[5]. Debt and Cash Flow - Estimated Total Debt as of September 30, 2024, is approximately $453 million, with estimated Net Debt of approximately $442 million[5]. - The company expects to report positive free cash flow in Q3 2024, with an increase in free cash flow anticipated in Q4 2024[5]. Acquisitions - The company has signed a definitive agreement to acquire Kellstrom Aerospace Group, Inc.[15]. Risks - The company faces various risks including supply chain disruptions, competition, and integration challenges related to acquisitions[9].

Core Viewpoint - VSE Corporation (VSEC) has announced its agreement to acquire Kellstrom Aerospace for approximately $200 million, which aligns with its strategic plan to enhance its aviation segment and expand its global reach in the commercial aerospace engine aftermarket [1]. Group 1: Acquisition Details - The acquisition includes $185 million in cash and $15 million in VSE stock, expected to close in the fourth quarter of 2024 [1]. - Kellstrom Aerospace's focus on commercial aerospace engines complements VSE's existing operations, with over 95% of Kellstrom's revenue coming from long-standing relationships with original equipment manufacturers (OEMs) [2]. Group 2: Strategic Benefits - The partnership will allow VSE to gain exposure to the aircraft engine maintenance market, servicing more than 30 OEMs and 800 customers worldwide, enhancing its product portfolio and technical services [2]. - Kellstrom generates about half of its revenue from international markets, particularly in high-growth regions like Asia-Pacific, providing VSE with greater market access and growth opportunities [3]. Group 3: Financial Outlook - VSE expects to achieve operational synergies of $4 million by integrating Kellstrom's operations, leading to a near-term path to more than 15% adjusted EBITDA margins [3]. - The acquisition will be funded through equity financing and VSE's existing credit facility, with a projected net leverage ratio remaining below 3.5x [4]. - Preliminary third-quarter 2024 results indicate VSE's revenues between $268 million and $275 million, with adjusted EBITDA in the range of $31-$34 million, reflecting a robust quarter for its Aviation segment [4]. Group 4: Market Performance - VSEC shares have gained 39.3% year to date, outperforming the Zacks Engineering - R and D Services industry's 30.4% rise, positioning VSE as a stronger competitor in the aviation aftermarket [6].

Financial Performance - Total revenues for Q2 2024 reached $265.96 million, a 29.5% increase from $205.22 million in Q2 2023[10]. - Product revenues increased to $188.58 million, up 13.6% from $165.99 million year-over-year[10]. - Service revenues surged to $77.38 million, a 97.2% increase compared to $39.23 million in the same quarter last year[10]. - Operating income for Q2 2024 was $6.13 million, down 70.3% from $20.64 million in Q2 2023[10]. - Net loss for Q2 2024 was $2.78 million, compared to a net income of $8.86 million in Q2 2023[10]. - The company reported a loss from continuing operations of $2.8 million for the three months ended June 30, 2024, compared to income of $8.6 million for the same period in 2023[30]. - For the six months ended June 30, 2024, revenues were $133.885 million, a decrease from $134.506 million in the same period of 2023, representing a decline of approximately 0.5%[41]. - The total loss before income taxes for the six months ended June 30, 2024, was $25.228 million, compared to a loss of $621 thousand in the same period of 2023[41]. - For the six months ended June 30, 2024, operating income decreased to $8.8 million, down 36% from $13.8 million in the prior year[90]. Cash and Assets - Cash and cash equivalents increased to $18.99 million as of June 30, 2024, up from $7.77 million at the end of 2023[9]. - Total assets grew to $1.49 billion, an increase from $1.35 billion at the end of 2023[9]. - Current liabilities decreased to $225.65 million from $286.89 million at the end of 2023[9]. - Long-term debt increased to $433.51 million, up from $406.84 million at the end of 2023[9]. - VSE Corporation's total stockholders' equity increased to $781,316,000 as of June 30, 2024, up from $469,137,000 at the same time last year[13]. - The company reported a total of $93.002 million in assets held-for-sale as of June 30, 2024[43]. - The company’s billed and billable receivables increased to $168.238 million as of June 30, 2024, up from $127.958 million at the end of 2023[51]. - Contract assets, specifically unbilled receivables, rose to $28.575 million as of June 30, 2024, compared to $8.049 million at the end of 2023[51]. Dividends and Stock - The company declared dividends of $0.10 per share for both Q2 2024 and Q2 2023[10]. - The company declared dividends of $3,176,000 during the six months ended June 30, 2024, compared to $2,571,000 in the prior year[20]. - The company issued common stock amounting to $161,693,000 during the six months ended June 30, 2024, compared to $456,000 in the prior year[20]. - Basic earnings per share (EPS) for the three months ended June 30, 2024, was calculated using 17,152,661 shares, compared to 12,886,100 shares for the same period in 2023, indicating a significant increase in shares outstanding[55]. Acquisitions - The company completed the acquisition of Turbine Controls, LLC for a total consideration of $122.2 million, funded by borrowings under its revolving credit facility[26]. - The acquisition of Turbine Controls contributed $23.5 million in revenue and $1.8 million in operating income for the three months ended June 30, 2024[29]. - The acquisition of Desser Aerospace was completed for a cash consideration of $133.7 million, with a subsequent sale of certain businesses for $31.8 million[32]. - The company completed the acquisition of Honeywell Fuel Control Systems for a purchase price of $105.0 million, expanding distribution and MRO capabilities[36]. - The preliminary purchase price allocation for the Honeywell acquisition included $74.1 million in goodwill, with total assets acquired valued at $105.0 million[38]. Expenses and Liabilities - The company experienced a significant increase in depreciation and amortization expenses, totaling $12,868,000 for the six months ended June 30, 2024, compared to $12,011,000 in the prior year[20]. - The company recorded a pre-tax loss of $12.7 million on the sale of discontinued operations, along with transaction fees of $2.5 million during Q1 2024[40]. - The company recognized one-time lease abandonment costs of $12.9 million during Q2 2024, which included a reduction in operating lease right-of-use assets of $6.7 million and exit costs of $3.7 million[68]. - Interest expense increased by 33% in Q2 2024 compared to Q2 2023, primarily due to higher debt facility borrowings[83]. - The company reported a total of $292,500 thousand in term loan payments due by the end of 2026, with an additional $174,000 thousand in revolving facility payments, totaling $466,500 thousand[53]. Segment Performance - The Aviation segment generated net sales of $192,828 thousand for the three months ended June 30, 2024, compared to $124,729 thousand in the same period of 2023, representing a growth of approximately 54.7%[60]. - The Fleet segment reported net sales of $265,959 thousand for the three months ended June 30, 2024, up from $205,223 thousand in the same period of 2023, marking an increase of about 29.5%[60]. - Revenue for the Aviation segment reached $192.8 million in Q2 2024, a 55% increase year-over-year, driven by strong demand and contributions from recent acquisitions[76]. - The Fleet segment's revenue was negatively impacted by a decline in activity from the United States Postal Service, but commercial revenues accounted for 64% of total Fleet segment revenue in Q2 2024, up from 47% in the prior year[78]. - Revenues for the Fleet segment decreased by 9% to $73.1 million for the three months ended June 30, 2024, compared to $80.5 million for the same period in the prior year, primarily due to a decline in activity by other government customers[90].

Revenue Performance - Total revenues for Q2 2024 reached $266.0 million, a 29.6% increase compared to Q2 2023[1] - Aviation segment revenue grew 55% year-over-year to a record $192.8 million, driven by strong execution and contributions from recent acquisitions[4] - Product revenues increased to $188,579,000, up 13.6% from $165,997,000 year-over-year[25] - Service revenues surged to $77,380,000, compared to $39,226,000 in the same quarter last year, marking a 97.2% increase[25] - Total revenues for Q2 2024 reached $265,959,000, a 29.5% increase from $205,223,000 in Q2 2023[25] Profitability Metrics - Adjusted EBITDA for the Aviation segment increased by 61% to $31.0 million, with an adjusted EBITDA margin of 16.1%, up 70 basis points from the prior year[4] - Adjusted EBITDA for Q2 2024 was $31,312, an 18.4% increase compared to $26,450 in Q2 2023[14] - Operating income decreased to $6,132,000, down 70.3% from $20,637,000 year-over-year[25] - Adjusted net income from continuing operations for Q2 2024 was $11,034, a 4.5% increase from $10,558 in Q2 2023[11] - Adjusted EPS (Diluted) decreased to $0.64 in Q2 2024 from $0.82 in Q2 2023, representing a decline of 22.0%[11] Cash Flow and Debt Management - Free cash flow for Q2 2024 was $(21,473), compared to $(19,714) in Q2 2023, indicating a worsening cash flow situation[16] - Net debt increased to $444,515 as of June 30, 2024, up from $421,576 at the end of 2023[17] - The net leverage ratio improved slightly to 3.5x as of June 30, 2024, down from 3.7x at the end of 2023[18] - Interest expense for Q2 2024 was $9,826, a 33.4% increase from $7,366 in Q2 2023[13] - Net cash used in operating activities for the first half of 2024 was $96,588,000, compared to $65,091,000 in the same period last year[26] Asset and Liability Changes - Cash and cash equivalents of $18,993,000 as of June 30, 2024, compared to $7,768,000 on December 31, 2023, indicating a significant increase[24] - Receivables increased to $168,238,000 from $127,958,000, reflecting a growth of approximately 31.5%[24] - Contract assets rose to $28,575,000 from $8,049,000, marking an increase of over 255%[24] - Inventories increased to $532,371,000 from $500,864,000, showing a growth of about 6.3%[24] - Total current assets amounted to $796,375,000, up from $774,030,000, representing an increase of approximately 2.0%[24] - Current liabilities decreased to $225,646,000 from $286,886,000, a reduction of about 21.4%[24] - Long-term debt, less current portion, increased to $433,508,000 from $406,844,000, reflecting a rise of approximately 6.5%[24] - Total assets grew to $1,494,298,000 from $1,350,338,000, indicating an increase of about 10.6%[24] - Stockholders' equity increased to $781,316,000 from $616,725,000, representing a growth of approximately 26.7%[24] Strategic Initiatives - The company completed a follow-on equity offering in May 2024, raising approximately $162.0 million to reduce debt and support future acquisitions[4] - VSE is reaffirming full-year 2024 revenue growth guidance for the Aviation segment at 34% to 38% and Adjusted EBITDA margin guidance at 15.5% to 16.5%[7] - The Kansas facility expansion for the new OEM licensed manufacturing fuel control program is on track to be operational by the end of 2024[2] - The integration of Desser Aerospace is in process and expected to be completed within the next twelve months[2] - The company plans to relocate its corporate headquarters to one of its Aviation segment's operating facilities later in 2024[4] Cost and Expense Analysis - Total costs and operating expenses rose to $259,827,000, up 40.7% from $184,586,000 in Q2 2023[25] - Net loss from continuing operations for Q2 2024 was $(2,777), a significant decline of 127.5% from $10,089 in Q2 2023[13] - The company reported a significant increase in acquisition, integration, and restructuring costs, which rose by 170.2% to $1,689 in Q2 2024 from $625 in Q2 2023[13] - Capital expenditures for Q2 2024 were $(3,945), compared to $(3,297) in Q2 2023, reflecting increased investment[16] Regulatory and Reporting - The Company plans to file its Form 10-Q with the SEC on or about August 1, 2024, for further details on its financial results[22]

VSE Corporation (NASDAQ:VSEC) Q1 2024 Results Conference Call May 9, 2024 8:30 AM ET Company Participants Michael Perlman - Vice President, Investor Relations and Treasury John Cuomo - President & Chief Executive Officer Steve Griffin - Chief Financial Officer Tarang Sharma - Vice President, Controller and Head of Corporate Development Conference Call Participants Ken Herbert - RBC Capital Markets Jeff Van Sinderen - B. Riley Louie DiPalma - William Blair Josh Sullivan - The Benchmark Company Michael Ciarmo ...

Financial Performance - Total revenues for Q1 2024 were $241.5 million, a 28.1% increase from $188.6 million in Q1 2023[14] - Net income from continuing operations for Q1 2024 was $12.1 million, compared to $8.1 million in Q1 2023, reflecting a 49.1% increase[14] - The company reported a net loss of $6.6 million for Q1 2024, down from a net income of $9.1 million in Q1 2023[14] - Operating income for Q1 2024 was $24.2 million, up 44.1% from $16.8 million in Q1 2023[14] - Revenues for the three months ended March 31, 2024, increased by 28% to $241.5 million, driven by a $49.1 million increase in the Aviation segment and a $3.8 million increase in the Fleet segment[92] - The Aviation segment reported revenues of $162.4 million for the three months ended March 31, 2024, representing a 43% year-over-year increase, with repair revenue up 58% and distribution revenue up 38%[87] - The Fleet segment's revenues increased by 5% to $79.2 million, with commercial customer revenue growing by 37%, partially offset by a 19% decline in revenue from other government customers[100] - Operating income for the consolidated results increased by 44% to $24.2 million for the three months ended March 31, 2024, compared to $16.8 million in the prior year[92] Assets and Liabilities - Cash and cash equivalents increased to $10.6 million as of March 31, 2024, from $7.8 million at the end of 2023[13] - Total current assets decreased to $743.1 million as of March 31, 2024, from $774.0 million at the end of 2023[13] - The company’s long-term debt increased to $451.6 million as of March 31, 2024, compared to $406.8 million at the end of 2023[13] - The company’s total assets decreased to $1.34 billion as of March 31, 2024, from $1.35 billion at the end of 2023[13] - Long-term debt as of March 31, 2024, totaled $481.622 million, an increase from $429.344 million at the end of 2023, representing a 12.2% rise[57] Acquisitions and Impairments - The company completed the acquisition of Desser Aerospace for a preliminary cash consideration of $133.7 million, with a subsequent sale of part of its business for $31.8 million[33] - The acquisition of Precision Fuel Components, LLC was made for $11.7 million, with related acquisition expenses of $0.2 million incurred during the first quarter of 2023[29][30] - The company completed the acquisition of Turbine Controls, Inc. for approximately $120.0 million, consisting of $110.0 million in cash and $10.0 million in shares of common stock[78] - The acquisition of Honeywell Fuel Control Systems was completed for a purchase price of $105.0 million, funded by borrowings under the revolving credit facility[40] - The company experienced a significant impairment and loss on the sale of a business segment amounting to $16.9 million in Q1 2024[21] - The company recorded a pre-tax loss of $12.7 million on the sale of the Federal and Defense segment's operational assets, with transaction fees amounting to $2.5 million for the three months ended March 31, 2024[46] Cash Flow and Dividends - Cash used in operating activities increased by $30.4 million to $79.1 million for the three months ended March 31, 2024, primarily due to greater cash use for inventory purchases[106] - Cash provided by investing activities increased by $48.0 million for the three months ended March 31, 2024, compared to the same period of the prior year, primarily due to $41.1 million from the sale of the Federal and Defense segment[107] - Cash provided by financing activities decreased by $15.0 million for the three months ended March 31, 2024, mainly due to lower proceeds from net borrowings[108] - Cash dividends paid totaled $1.6 million or $0.10 per share during the three months ending March 31, 2024[109] - The company declared dividends of $0.10 per share for both Q1 2024 and Q1 2023[14] Shareholder Value and Strategic Alternatives - The company is exploring strategic alternatives for its Fleet segment to enhance shareholder value, which may include a potential sale[84] - The company has not purchased any of its equity securities during the period covered by this report[126] Tax and Accounting - The effective tax rate for continuing operations decreased to 19.3% for the three months ended March 31, 2024, compared to 24.8% for the same period in 2023, primarily due to excess stock compensation deductions[96] - There have been no significant changes in critical accounting estimates during the three months ended March 31, 2024[115] - The company continues to evaluate the need for additional internal controls over financial reporting following the acquisition[120] Market Risks - There have been no material changes to market risks from those discussed in the most recently filed Annual Report on Form 10-K[114] - The company has employed interest rate hedges to mitigate risks associated with future interest rate movements[113]

```markdown [Q1 2024 Performance Overview](index=1&type=section&id=Q1%202024%20Performance%20Overview) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) VSE Corporation reported strong growth in the first quarter of 2024, with total revenues from continuing operations increasing by 28.1% year-over-year to $241.5 million, GAAP Net Income rising by 49.0% to $12.1 million, and Adjusted EBITDA growing by 36.7% to $32.3 million, reflecting robust performance, particularly in the Aviation segment | Metric | Q1 2024 | % Change (YoY) | | :--- | :--- | :--- | | Total Revenues | $241.5 million | +28.1% | | GAAP Net Income | $12.1 million | +49.0% | | GAAP EPS (Diluted) | $0.76 | +20.6% | | Adjusted EBITDA | $32.3 million | +36.7% | | Adjusted Net Income | $13.9 million | +50.2% | | Adjusted EPS (Diluted) | $0.87 | +22.5% | [Management Commentary](index=1&type=section&id=Management%20Commentary) The CEO highlighted record financial results driven by the Aviation segment's 43% revenue growth and record 17% Adjusted EBITDA margins, supported by new distribution and MRO agreements, while the Fleet segment's growth in commercial and e-commerce was offset by a temporary decrease in USPS maintenance activity, with a strategic focus for 2024 on program implementation and execution - The Aviation segment delivered record results, with **43% revenue growth** and record **Adjusted EBITDA margins of 17%** in Q1 2024[2](index=2&type=chunk) - The Fleet segment experienced strong growth in commercial and e-commerce customers, which was offset by a near-term decrease in maintenance activity from the United States Postal Service (USPS)[2](index=2&type=chunk) - The company's 2024 focus is on program implementation and execution, including the expansion of an agreement with Pratt & Whitney Canada for the EMEA region and integrating newly acquired businesses[2](index=2&type=chunk) [Strategic Update](index=1&type=section&id=Strategic%20Update) VSE is advancing its strategic focus on the aviation aftermarket, acquiring Turbine Controls, Inc. (TCI) for approximately $120 million in April 2024 to enhance MRO capabilities, successfully executing new programs, and completing the divestiture of its Federal and Defense segment for $44 million to sharpen its focus on core operations - Completed the acquisition of Turbine Controls, Inc. (TCI) for approximately **$120 million** (**$110M cash**, **$10M stock**) to expand OEM-authorized repair capabilities and increase exposure to the commercial aviation market[5](index=5&type=chunk) - New aviation programs are progressing well: the Pratt & Whitney Canada EMEA program began shipments, and the Honeywell Fuel Controls program is outpacing expectations[5](index=5&type=chunk)[6](index=6&type=chunk) - Completed the sale of the Federal and Defense segment for **$44.0 million** in cash, resulting in a Q1 recognized loss of **$18.7 million** (net of tax) but aligning with the strategy to focus on core aftermarket services[11](index=11&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) [Aviation Segment](index=2&type=section&id=Aviation%20Segment) The Aviation segment delivered record performance in Q1 2024, with revenue increasing 43% year-over-year to $162.4 million, reflecting 20% organic growth driven by strong execution of distribution awards, increased MRO activity, and contributions from acquisitions, while Segment Adjusted EBITDA grew 46% to $27.7 million, with margins expanding 30 basis points to 17.0% due to favorable mix and MRO growth | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $162.4 M | $113.2 M | +43% | | Organic Revenue Growth | ~20% | N/A | N/A | | Operating Income | $22.3 M | $15.7 M | +42% | | Adjusted EBITDA | $27.7 M | $18.9 M | +46% | | Adjusted EBITDA Margin | 17.0% | 16.7% | +30 bps | [Fleet Segment](index=2&type=section&id=Fleet%20Segment) The Fleet segment's revenue grew 5% year-over-year to $79.2 million in Q1 2024, with a 37% increase in revenue from commercial customers partially offset by a 19% decline from the USPS due to a temporary reduction in maintenance activity during their system transition, resulting in Adjusted EBITDA decreasing 7% to $7.5 million and margins contracting 130 basis points to 9.5% due to customer and product mix shifts | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $79.2 M | $75.4 M | +5% | | Commercial Revenue | 56% of total | N/A | +37% YoY | | USPS Revenue | 44% of total | N/A | -19% YoY | | Operating Income | $6.6 M | $5.9 M | +12% | | Adjusted EBITDA | $7.5 M | $8.1 M | -7% | | Adjusted EBITDA Margin | 9.5% | 10.8% | -130 bps | [Financial Condition and Outlook](index=2&type=section&id=Financial%20Condition%20and%20Outlook) [Financial Resources and Liquidity](index=2&type=section&id=Financial%20Resources%20and%20Liquidity) As of March 31, 2024, VSE had $175 million in available liquidity under its revolving credit facility, with total net debt at $471 million and a pro forma net leverage ratio of approximately 3.7x EBITDA, expected to rise to about 4.1x post-TCI acquisition, with a target to reduce it to below 4.0x by year-end through free cash flow generation - As of March 31, 2024, the company had **$175 million** in cash and unused credit facility availability[9](index=9&type=chunk) - Total net debt was **$471 million**, with a pro forma net leverage of **3.7x EBITDA** at the end of Q1[9](index=9&type=chunk) - Post-acquisition of TCI, pro forma net leverage is expected to be **~4.1x**, with a goal to deleverage to **below 4.0x** by the end of 2024[10](index=10&type=chunk) [Full-Year 2024 Guidance](index=3&type=section&id=Full-Year%202024%20Guidance) VSE updated its full-year 2024 guidance, raising expectations for the Aviation segment with revenue growth guidance increased to 34-38% and Adjusted EBITDA margin guidance to 15.5-16.5%, while lowering Fleet segment guidance to 0-5% revenue growth and 6-8% margin, primarily due to a temporary decline in USPS activity | Aviation Segment FY2024 Guidance | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Revenue Growth (YoY) | 34% to 38% | 24% to 28% | | Adjusted EBITDA Margin | 15.5% to 16.5% | 15% to 16% | | Fleet Segment FY2024 Guidance | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Revenue Growth (YoY) | 0% to 5% | 13% to 17% | | Adjusted EBITDA Margin | 6% to 8% | Not specified | - The Fleet guidance revision is driven by an expected **30-35% full-year decline** in USPS revenue due to their system migration, which is anticipated to be offset by a **~40% increase** in commercial revenue[12](index=12&type=chunk) [Financial Statements and Reconciliations](index=4&type=section&id=Financial%20Statements%20and%20Reconciliations) [Consolidated Financial Results](index=4&type=section&id=Consolidated%20Financial%20Results) This section presents the unaudited consolidated financial statements for VSE Corporation as of and for the three months ended March 31, 2024, including the Consolidated Statements of Income, Balance Sheets, and Cash Flows, providing a detailed view of the company's financial performance and position [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2024, VSE's total revenues from continuing operations grew 28.1% to $241.5 million, operating income increased 44.1% to $24.2 million, and net income from continuing operations was $12.1 million, or $0.76 per diluted share, though a consolidated net loss of $6.6 million was reported due to an $18.7 million loss from discontinued operations related to the FDS sale | (in thousands, except per share data) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $241,539 | $188,587 | +28.1% | | Operating Income | $24,174 | $16,778 | +44.1% | | Net Income from Continuing Operations | $12,100 | $8,120 | +49.0% | | Diluted EPS from Continuing Operations | $0.76 | $0.63 | +20.6% | | Net (Loss) Income | $(6,611) | $9,117 | N/A | [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, VSE's total assets were $1.34 billion, a slight decrease from $1.35 billion at year-end 2023 primarily due to the divestiture of the FDS segment, with total liabilities decreasing to $724.2 million from $733.6 million, and key asset components including $521.2 million in inventories and $351.1 million in goodwill | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $743,096 | $774,030 | | Total Assets | $1,336,924 | $1,350,338 | | Total Current Liabilities | $223,050 | $286,886 | | Total Liabilities | $724,186 | $733,613 | | Total Stockholders' Equity | $612,738 | $616,725 | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first three months of 2024, VSE used $79.1 million in cash from operating activities, largely due to changes in working capital, while investing activities provided $33.4 million, driven by $41.1 million proceeds from the FDS segment sale, and financing activities provided $48.3 million, resulting in a net cash increase of $2.6 million for the period | (in thousands) | Three months ended March 31, 2024 | | :--- | :--- | | Net cash used in operating activities | $(79,060) | | Net cash provided by investing activities | $33,408 | | Net cash provided by financing activities | $48,291 | | Net increase in cash and cash equivalents | $2,639 | [Segment Financial Results (Table)](index=4&type=section&id=Segment%20Financial%20Results%20%28Table%29) This table provides a detailed breakdown of revenues and operating income for the Aviation and Fleet segments for the first quarter of 2024 compared to the same period in 2023, highlighting the significant revenue and profit growth in the Aviation segment that drove the company's overall performance | (in thousands) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | **Revenues:** | | | | | Aviation | $162,383 | $113,235 | +43.4% | | Fleet | $79,156 | $75,352 | +5.0% | | **Total revenues** | **$241,539** | **$188,587** | **+28.1%** | | **Operating income:** | | | | | Aviation | $22,310 | $15,664 | +42.4% | | Fleet | $6,617 | $5,899 | +12.2% | [Non-GAAP Financial Measures and Reconciliations](index=5&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section provides reconciliations of GAAP financial measures to non-GAAP measures, which management believes are important indicators of ongoing performance, showing Adjusted Net Income of $13.9 million (up 50.2% YoY) and Adjusted EBITDA of $32.3 million (up 36.7% YoY) for Q1 2024, with tables detailing adjustments for items like acquisition costs and restructuring charges | (in thousands) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net income from continuing operations | $12,100 | $8,120 | +49.0% | | **Adjusted net income from continuing operations** | **$13,862** | **$9,227** | **+50.2%** | | **Adjusted EPS (Diluted)** | **$0.87** | **$0.71** | **+22.5%** | | (in thousands) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Net income from continuing operations | $12,100 | $8,120 | +49.0% | | EBITDA | $29,969 | $22,164 | +35.2% | | **Adjusted EBITDA** | **$32,317** | **$23,639** | **+36.7%** | | (in thousands) | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Aviation Adj. EBITDA | $27,678 | $18,918 | +46.3% | | Fleet Adj. EBITDA | $7,536 | $8,144 | -7.5% | [Other Information](index=8&type=section&id=Other%20Information) [Conference Call Information](index=8&type=section&id=Conference%20Call%20Information) VSE scheduled a conference call for Thursday, May 9, 2024, at 8:30 A.M. ET to discuss its first-quarter financial results, with details for accessing the live webcast and teleconference, as well as replay information, provided in the announcement - A conference call to review Q1 2024 financial results was scheduled for Thursday, May 9, 2024, at 8:30 A.M. ET[26](index=26&type=chunk) - Webcast and presentation materials are available on the Investor Relations section of VSE's website[27](index=27&type=chunk) [About VSE Corporation](index=8&type=section&id=About%20VSE%20Corporation) VSE Corporation is a leading provider of aftermarket distribution and repair services, operating through its Aviation segment, which offers parts distribution and MRO services for various aircraft operators, and its Fleet segment, which provides parts, engineering, and supply chain services for the medium and heavy-duty fleet market - VSE operates through two key segments: Aviation (aftermarket parts distribution and MRO) and Fleet (parts distribution and supply chain services for medium/heavy-duty fleets)[29](index=29&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This section contains a standard safe harbor statement, advising that the report includes forward-looking statements involving risks and uncertainties, cautioning readers that actual results may differ materially from those projected and that the company does not undertake any obligation to update these statements - The document contains forward-looking statements subject to known and unknown risks, as per the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[31](index=31&type=chunk) - Readers are cautioned not to place undue reliance on these statements, which are based on management's analysis only as of the date of the report[31](index=31&type=chunk) ```