VSE (VSEC)2024-03-07 22:57Revenue Segmentation - The Aviation segment accounted for 63% of consolidated revenues in 2023, up from 51% in 2021, indicating a significant growth trend [23]. - The Fleet segment contributed 37% to consolidated revenues in 2023, down from 49% in 2021, reflecting a shift in revenue distribution [24]. - The Aviation segment reported a 33% increase in annual revenue, totaling 191.0 million, or 29%, in 2023 compared to 2022, driven by growth in the Aviation segment (55.1 million) [120]. Financial Performance - Total revenues for 2023 reached 669,448,000 in 2022 [178]. - Net income for 2023 was 28,059,000 in 2022, reflecting a 39.5% growth [178]. - Basic earnings per share for continuing operations increased to 2.09 in 2022, a rise of 46.4% [178]. - Operating income rose by 34.8 million and the Fleet segment 36,298,000, compared to 429 million of total debt outstanding as of December 31, 2023, which may increase vulnerability to adverse economic conditions [80]. - Cash used in operating activities was 8.1 million in 2022, mainly due to higher inventory purchases [137]. - Cash used in investing activities rose by 218.6 million [138]. - Cash provided by financing activities was 5.7 million in 2022, largely due to a public offering generating 13.2 million, or 74%, in 2023, primarily due to higher debt facility borrowings and interest rates [125]. Acquisitions and Growth Strategy - The company completed the acquisition of Precision Fuel Components in February 2023 and Desser Aerospace in July 2023, enhancing its MRO services and international expansion capabilities [111]. - The company is focused on growth through acquisitions, aiming to add new products and capabilities, which presents both opportunities and risks [53]. - The company expects continued growth in the Aviation segment due to new initiatives and recent acquisitions, contributing to a favorable outlook for 2024 [118]. Operational Risks - Supply chain disruptions and geopolitical uncertainties pose risks to business operations and expenses, potentially impacting revenue and profits [51]. - Cybersecurity risks pose potential threats to operations and financial results, despite existing risk management programs [77]. - The company faces intense competition in the aviation and vehicle parts industries, which could harm its business [59]. - Global economic and political conditions may adversely affect revenues, particularly in foreign markets [62]. - Future environmental regulations may incur substantial costs, potentially affecting financial position and operations [75]. Employee and Workforce - Approximately 1,200 employees were employed as of December 31, 2023, highlighting the company's workforce size [32]. - The company emphasizes a commitment to inclusion and diversity, with initiatives such as the VSE Inclusion & Diversity Council formed in 2020 [38]. - The company has implemented a Health, Environmental and Safety Program to minimize risks of injury or illness to employees [33]. Asset Management - As of December 31, 2023, goodwill and intangible assets accounted for 28% and 9% of total assets, respectively [57]. - The company evaluates inventory carrying value periodically, considering physical condition, sales patterns, and expected future demand [155]. - Goodwill is assessed for impairment at least annually, with the fair value of reporting units significantly exceeding their carrying values as of the fourth quarter of 2023 [157]. Regulatory Environment - The company is subject to numerous government regulations, which could expose it to liabilities or work loss [69]. - The company’s Chief Information Security Officer (CISO) has over 20 years of experience in information technology and security, overseeing the company's cybersecurity risk management [87].