VSE (VSEC) - 2024 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2024 were $241.5 million, a 28.1$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$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$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$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]