8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 1, 2023

VSE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	000-03676	54-0649263
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

6348 Walker Lane
Alexandria,	Virginia	22310
(Address of Principal Executive Offices)		(Zip Code)

(703) 960-4600

(Registrant's Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.05 per share	VSEC	The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

VSE CORPORATION

Item 2.02 Results of Operations and Financial Condition.

On November 1, 2023, the Company issued a press release reporting its financial results for the third quarter ended September 30, 2023. Additionally, the Company made available related materials to be discussed during the Company’s webcast and conference call referred to in such press release. A copy of the press release is being furnished as Exhibits 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference.

The information in the preceding paragraph, as well as Exhibits 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference into another filing under the Exchange Act or the Securities Act of 1933, as amended if such subsequent filing specifically references this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number
99.1	Press release dated November 1, 2023, entitled, "VSE Corporation Announces Third Quarter 2023 Results."
104	Cover Page Interactive Data File

VSE CORPORATION AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			VSE CORPORATION
			(Registrant)
Date:	November 1, 2023	By:	/s/ Stephen D. Griffin
			Stephen D. Griffin
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)

EX-99.1

VSE Corporation Announces Third Quarter 2023 Results

Record Revenue and Profitability for Aviation Segment

Raised Full-Year Revenue Guidance for Aviation Segment

Positive Cash from Operations and Free Cash Flow to Accelerate in the Fourth Quarter

ALEXANDRIA, VIRGINIA, November 1, 2023 - VSE Corporation (NASDAQ: VSEC, "VSE", or the "Company"), a leading provider of aftermarket distribution and maintenance, repair and overhaul ("MRO") services for air and land transportation assets for commercial and government markets, announced today results for the third quarter 2023.

THIRD QUARTER 2023 RESULTS1

(As compared to the Third Quarter 2022; excludes discontinued operations of Federal & Defense segment)

▪Total Revenues of $231.4 million increased 38.2%

▪GAAP Net Income of $12.1 million increased 57.3%

▪GAAP EPS (Diluted) of $0.80 increased 33.3%

▪Adjusted EBITDA of $32.3 million increased 55.6%

▪Adjusted Net Income of $13.8 million increased 74.6%

▪Adjusted EPS (Diluted) of $0.92 increased 48.4%

1 From continuing operations

MANAGEMENT COMMENTARY

“Third quarter results reflected record financial performance in our Aviation segment and continued progress and disciplined revenue growth and customer diversification in our Fleet segment,” said John Cuomo, President and CEO of VSE Corporation. “We delivered our fourth consecutive quarter of record revenue and profit in our Aviation segment, driven by strong program execution, continued market share gains, expansion of our product lines and service capabilities, and robust end-market activity. In our Fleet segment, we continue to grow and scale our commercial business with contributions from our newly opened Memphis distribution center of excellence, all while continuing to grow and support legacy fleets and customers.”

Steve Griffin, CFO of VSE Corporation, commented, “We made strong progress against our financial and operating plans, which drove improved overall margins and cash flow in the third quarter. Our secondary equity offering in July, along with improved cash generation in the third quarter, allowed us to pay down debt and execute on two inorganic strategic growth initiatives, including a transformational investment with Honeywell. Our pro forma net leverage ratio was 3.7x at the end of the third quarter and is on track to improve to below 3.5x by the end of the year, driven by an acceleration in cash generation and strong operating and earnings performance.”

STRATEGIC UPDATE

Acquisition of Honeywell Fuel Control Systems License Agreement

•In October 2023, the Aviation segment announced that it had entered into an asset purchase and perpetual license agreement with Honeywell International Inc. ("Honeywell") to exclusively manufacture and support certain of Honeywell’s fuel control systems on four key engine platforms.

•The new agreement strengthens and expands VSE Aviation's existing exclusive distributor relationship and MRO support for these Honeywell fuel control systems.

Acquisition of Desser Aerospace

•On July 3, 2023, VSE completed the acquisition of Desser Holding Company LLC (“Desser Aerospace”), a global aftermarket solutions provider of specialty distribution and MRO services.

•The acquisition expands and diversifies the Company’s Aviation segment product and MRO capabilities and provides a platform for growth into international markets.

•Desser Aerospace is expected to be fully integrated into the Aviation segment systems, processes, and organization by the end of 2024.

Federal & Defense Segment

•In September 2023, VSE announced a mutual agreement to terminate the sale of the Federal and Defense segment to Bernhard Capital Partners Management LP.

•The Company will continue to pursue the near-term divestiture of the Federal and Defense business segment's assets, and the segment will remain in discontinued operations.

BALANCE SHEET OPTIMIZATION

•In July 2023, VSE completed a follow-on equity offering of 2,846,250 shares of common stock at $48.50 per share ("Offering"), resulting in net cash proceeds of approximately $130 million.

•In July 2023, VSE executed a 3-year fixed interest rate swap (“Swap”) that hedges the variability in interest payments on $100 million of floating rate debt. As of the end of the third quarter and following the execution of the Swap, VSE has hedged an aggregate of $250 million of its variable debt.

THIRD QUARTER SEGMENT RESULTS

Aviation segment revenue increased 48% year-over-year to a record $152.4 million in the third quarter 2023. The year-over-year revenue improvement was attributable to strong program execution of new and existing distribution awards, increased MRO activity, the addition of Desser Aerospace, and robust end-market activity. Aviation distribution and repair revenue increased 46% and 54%, respectively, in the third quarter 2023, versus the prior-year period. The Aviation segment reported operating income of $21.0 million in the third quarter, compared to $10.0 million in the same period of 2022. Segment Adjusted EBITDA increased by 87% in the third quarter to $25.3 million, versus $13.6 million in the prior-year period. Adjusted EBITDA margin was 16.6%, an increase of approximately 340 basis points versus the prior-year period, driven primarily by favorable price and product mix, along with strong MRO revenue growth.

Fleet segment revenue increased 22% year-over-year to $79.0 million in the third quarter 2023. Revenue from commercial customers increased 47% on a year-over-year basis, driven by growth in e-commerce fulfillment and commercial fleet sales. Commercial revenue represented 47% of total Fleet segment revenue in the period, an approximate 800 basis point increase year-over-year. Revenue from the United States Postal Service (USPS) increased approximately 6% on a year-over-year basis, driven by growth of the installed base and increased support of legacy vehicle fleets. The Fleet segment reported operating income of $8.5 million in the third quarter, compared to $6.5 million in the same period of 2022. Segment Adjusted EBITDA increased 5% year-over-year to $9.2 million, and Adjusted EBITDA margin declined approximately 190 basis points to 11.6%, primarily impacted by customer and product mix and under-absorption of fixed costs at the newly launched distribution and e-commerce fulfillment facility.

FINANCIAL RESOURCES AND LIQUIDITY

As of September 30, 2023, the Company had $89 million in cash and unused commitment availability under its $350 million revolving credit facility maturing in 2025. As of September 30, 2023, VSE had total net debt outstanding of $440 million. Pro forma net leverage2 was approximately 3.7 times as of the end of the third quarter.

VSE anticipates the pro forma net leverage ratio to be below 3.5 times by the end of the fourth quarter 2023, following Adjusted EBITDA contribution and accelerated free cash flow generation in the fourth quarter.

In July 2023, the Company amended its credit facility with its lending syndicate in connection with the Desser Aerospace acquisition. The amendment provided for an incremental $90 million Term Loan A and a revision of certain financial covenants of the existing facility.

2 Pro forma net leverage trailing-twelve-month Adjusted EBITDA includes contributions from prior acquisitions and the recent purchase of the Honeywell fuel control license

GUIDANCE

VSE increased its full year 2023 revenue growth and its Adjusted EBITDA margin guidance for its Aviation segment, reaffirmed its revenue growth and Adjusted EBITDA margin guidance for its Fleet segment, and expects positive free cash flow to accelerate in the fourth quarter. The guidance is as follows:

•Aviation segment full year 2023 revenue growth of 30 to 35%, as compared to the prior year

•Aviation segment Adjusted EBITDA margin expected to be at the higher end of the previously provided guidance range of 14 to 16%

•Fleet segment full year 2023 revenue growth of 20 to 25%, as compared to the prior year

•Fleet segment Adjusted EBITDA margin guidance range of 11 to 13%

•The Company expects free cash flow to accelerate in the fourth quarter 2023

THIRD QUARTER RESULTS

	Three months ended September 30,						Nine months ended September 30,
(in thousands, except per share data)	2023		2022		% Change		2023		2022		% Change
Revenues	$	231,353	$	167,379	38.2	%	$	625,163	$	497,460	25.7	%
Operating income	$	25,264	$	15,109	67.2	%	$	62,677	$	37,663	66.4	%
Income from continuing operations	$	12,111	$	7,699	57.3	%	$	30,318	$	18,743	61.8	%
EPS (Diluted)	$	0.80	$	0.60	33.3	%	$	2.22	$	1.46	52.1	%

THIRD QUARTER SEGMENT RESULTS

The following is a summary of revenues and operating income (loss)for the three and nine months ended September 30, 2023 and September 30, 2022:

	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2023		2022		% Change		2023		2022		% Change
Revenues:
Aviation	$	152,355	$	102,625	48.5	%	$	390,319	$	300,934	29.7	%
Fleet	78,998		64,754		22.0	%	234,844		196,526		19.5	%
Total revenues	$	231,353	$	167,379	38.2	%	$	625,163	$	497,460	25.7	%
Operating income (loss):
Aviation	$	20,951	$	10,017	109.2	%	$	52,397	$	24,089	117.5	%
Fleet	8,531		6,539		30.5	%	22,284		18,286		21.9	%
Corporate/unallocated expenses	(4,218)		(1,447)		191.5	%	(12,004)		(4,712)		154.8	%
Operating income	$	25,264	$	15,109	67.2	%	$	62,677	$	37,663	66.4	%

The Company reported $4.7 million and $10.8 million of total capital expenditures for three and nine months ended September 30, 2023, respectively.

NON-GAAP MEASURES

In addition to the financial measures prepared in accordance with generally accepted accounting principles ("GAAP"), this earnings release also contains Non-GAAP financial measures. These measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these Non-GAAP measures is included in the supplemental schedules attached.

NON-GAAP FINANCIAL INFORMATION

Reconciliation of Adjusted Income from Continuing Operations and Adjusted EPS to Income from Continuing Operations

		Three months ended September 30,						Nine months ended September 30,
(in thousands)		2023		2022		% Change		2023		2022		% Change
Income from continuing operations		$	12,111	$	7,699	57.3	%	$	30,318	$	18,743	61.8	%
Adjustments to income from continuing operations:
	Non-recurring professional fees	300		—		—	%	300		—		—	%
	Debt issuance costs	266		—		—	%	266		—		—	%
	Acquisition, integration and restructuring costs	1,700		283		500.7	%	3,800		762		398.7	%
	Russia/Ukraine conflict	—		—		—	%	—		2,335		(100.0)	%
		14,377		7,982		80.1	%	34,684		21,840		58.8	%
	Tax impact of adjusted items	(566)		(71)		697.2	%	(1,090)		(773)		41.0	%
Adjusted income from continuing operations		$	13,811	$	7,911	74.6	%	$	33,594	$	21,067	59.5	%
Weighted average dilutive shares		15,050		12,834		17.3	%	13,639		12,816		6.4	%
Adjusted EPS (Diluted)		$	0.92	$	0.62	48.4	%	$	2.46	$	1.64	50.0	%

Reconciliation of Consolidated EBITDA and Adjusted EBITDA to Income from Continuing Operations

		Three months ended September 30,						Nine months ended September 30,
(in thousands)		2023		2022		% Change		2023		2022		% Change
Income from continuing operations		$	12,111	$	7,699	57.3	%	$	30,318	$	18,743	61.8	%
	Interest expense	8,459		4,821		75.5	%	21,805		12,305		77.2	%
	Income taxes	4,694		2,589		81.3	%	10,554		6,615		59.5	%
	Amortization of intangible assets	3,203		3,813		(16.0)	%	10,743		11,923		(9.9)	%
	Depreciation and other amortization	1,836		1,551		18.4	%	4,869		3,978		22.4	%
EBITDA		30,303		20,473		48.0	%	78,289		53,564		46.2	%
	Non-recurring professional fees	300		—		—	%	300		—		—	%
	Acquisition, integration and restructuring costs	1,700		283		500.7	%	3,800		762		398.7	%
	Russia/Ukraine conflict	—		—		—	%	—		2,335		(100.0)	%
Adjusted EBITDA		$	32,303	$	20,756	55.6	%	$	82,389	$	56,661	45.4	%

Adjusted EBITDA Summary
(in thousands)		Three months ended September 30,						Nine months ended September 30,
		2023		2022		% Change		2023		2022		% Change
	Aviation	$	25,320	$	13,570	86.6	%	$	63,453	$	36,369	74.5	%
	Fleet	9,193		8,719		5.4	%	26,894		25,251		6.5	%
	Adjusted Corporate expenses (1)	(2,210)		(1,533)		44.2	%	(7,958)		(4,959)		60.5	%
Adjusted EBITDA		$	32,303	$	20,756	55.6	%	$	82,389	$	56,661	45.4	%
(1) Includes certain adjustments not directly attributable to any of our segments.

Reconciliation of Segment EBITDA and Adjusted EBITDA to Operating Income

		Three months ended September 30,						Nine months ended September 30,
(in thousands)		2023		2022		% Change		2023		2022		% Change
Aviation
	Operating income	$	20,951	$	10,017	109.2	%	$	52,397	$	24,089	117.5	%
	Depreciation and amortization	4,329		3,413		26.8	%	11,016		9,558		15.3	%
EBITDA		25,280		13,430		88.2	%	63,413		33,647		88.5	%
	Acquisition, integration and restructuring costs	40		140		(71.4)	%	40		387		(89.7)	%
	Russia/Ukraine conflict	—		—		—	%	—		2,335		(100.0)	%
Adjusted EBITDA		$	25,320	$	13,570	86.6	%	$	63,453	$	36,369	74.5	%
Fleet
	Operating income	$	8,531	$	6,539	30.5	%	$	22,284	$	18,286	21.9	%
	Depreciation and amortization	662		2,037		(67.5)	%	4,452		6,611		(32.7)	%
EBITDA		9,193		8,576		7.2	%	26,736		24,897		7.4	%
	Acquisition, integration and restructuring costs	—		143		(100.0)	%	158		354		(55.4)	%
Adjusted EBITDA		$	9,193	$	8,719	5.4	%	$	26,894	$	25,251	6.5	%

Reconciliation of Operating Cash to Free Cash Flow

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2023		2022		2023		2022
Net cash used in operating activities	$	15,320	$	15,932	$	(49,771)	$	(4,206)
Capital expenditures	(4,658)		(4,670)		(10,795)		(7,416)
Free cash flow	$	10,662	$	11,262	$	(60,566)	$	(11,622)

Reconciliation of Debt to Net Debt

	Three months ended
(in thousands)	March 31, 2023		June 30, 2023		September 30, 2023
Principal amount of debt	$	353,998	$	377,000	$	463,500
Debt issuance costs	(2,143)		(1,890)		(2,730)
Cash and cash equivalents	(532)		(4,163)		(20,667)
Net Debt	$	351,323	$	370,947	$	440,103

Net Leverage Ratio

	Three months ended
($ in thousands)	March 31, 2023			June 30, 2023			September 30, 2023
Net Debt	$	351,323		$	370,947		$	440,103
TTM Adjusted EBITDA (1)	$	96,160		$	99,735		$	105,329
Net Leverage Ratio	3.7		x	3.7		x	4.2		x
TTM Adjusted EBITDA Proforma (2)	$	97,372		$	100,531		$	120,080
Pro forma Net Leverage Ratio	3.6		x	3.7		x	3.7		x
(1) TTM Adjusted EBITDA is defined as Adjusted EBITDA for the most recent twelve (12) month period and includes contributions from FDS. (2) TTM Pro Forma Adjusted EBITDA includes pre-acquisition portion of EBITDA for the trailing twelve months that is not included in historical results.

The non-GAAP Financial Information set forth in this document is not calculated in accordance with GAAP under SEC Regulation G. We consider Adjusted Net Income, Adjusted EPS (Diluted), EBITDA, Adjusted EBITDA, net debt and free cash flow as non-GAAP financial measures and important indicators of performance and useful metrics for management and investors to evaluate our business' ongoing operating performance on a consistent basis across reporting periods. These non-GAAP financial measures, however, should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Adjusted Net Income represents Net Income adjusted for acquisition-related costs including any earn-out adjustments, loss on sale of a business entity and certain assets, gain on sale of property, other discrete items, and related tax impact. Adjusted EPS (Diluted) is computed by dividing net income, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding. EBITDA represents net income before interest expense, income taxes, amortization of intangible assets and depreciation and other amortization. Adjusted EBITDA represents EBITDA (as defined above) adjusted for discrete items as identified above. Net debt is defined as total debt less cash and cash equivalents. Free cash flow represents operating cash flow less capital expenditures.

The Company has presented forward-looking statements regarding Adjusted EBITDA margin. This non-GAAP financial measure is derived by excluding certain amounts, expenses or income, from the corresponding financial measure determined in accordance with GAAP. The determination of the amounts that are excluded from this non-GAAP financial measure is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period in reliance on the exception provided by item 10(e)(1)(i)(B) of Regulation S-K. We are unable to present a quantitative reconciliation of forward-looking Adjusted EBITDA margin to its most directly comparable forward-looking GAAP financial measure because such information is not available, and management cannot reliably predict all of the necessary components of such GAAP measure without unreasonable effort or expense. In addition, we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the company's future financial results. This non-GAAP financial measure is a preliminary estimate and is subject to risks and uncertainties, including, among others, changes in connection with quarter-end and year-end adjustments. Any variation between the company's actual results and preliminary financial data set forth above may be material.

CONFERENCE CALL

A conference call will be held Thursday, November 2, 2023 at 8:30 A.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.

A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of VSE’s website at https://ir.vsecorp.com. To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.

To participate in the live teleconference:

Domestic Live:	(844) 826-3035
International Live:	(412) 317-5195
Audio Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1634643&tp_key=a94e85f508

To listen to a replay of the teleconference through November 16, 2023:

Domestic Replay:	(844) 512-2921
International Replay:	(412) 317-6671
Replay PIN Number:	10182410

ABOUT VSE CORPORATION

VSE is a leading provider of aftermarket distribution and repair services for land, sea and air transportation assets for government and commercial markets. Core services include MRO services, parts distribution, supply chain management and logistics, engineering support, and consulting and training services for global commercial, federal, military and defense customers. VSE also provides information technology and energy consulting services. For additional information regarding VSE’s services and products, visit www.vsecorp.com.

AVIATION

Distribution & MRO Services

VSE’s Aviation segment provides aftermarket MRO and distribution services to commercial, business and general aviation, cargo, military/defense and rotorcraft customers globally. Core services include parts distribution, component and engine accessory MRO services, rotable exchange and supply chain services.

FLEET

Distribution & Fleet Services

VSE's Fleet segmentprovides parts, inventory management, e-commerce fulfillment, logistics, supply chain support and other services to the commercial aftermarket medium- and heavy-duty truck market, the United States Postal Service (USPS), and the United States Department of Defense. Core services include parts distribution, sourcing, IT solutions, customized fleet logistics, warehousing, kitting, just-in-time supply chain management, alternative product sourcing, engineering and technical support.

Please refer to the Form 10-Q that will be filed with the Securities and Exchange Commission (SEC) on or about November 2, 2023 for more details on our third quarter 2023 results. Also, refer to VSE’s Annual Report on Form 10-K for the year ended December 31, 2022 for further information and analysis of VSE’s financial condition and results of operations. VSE encourages investors and others to review the detailed reporting and disclosures contained in VSE’s public filings for additional discussion about the status of customer programs and contract awards, risks, revenue sources and funding, dependence on material customers, and management’s discussion of short- and long-term business challenges and opportunities.

FORWARD LOOKING STATEMENTS

This document contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause VSE’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this document. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that actual results will not differ materially from these expectations. “Forward-looking” statements, as such term is defined by the SEC in its rules, regulations and releases, represent our expectations or beliefs, including, but not limited to, statements concerning our operations, economic performance, financial condition, growth and acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including, but not limited to, factors identified in our reports filed or expected to be filed with the SEC including our Annual Report on Form 10-K for the year ended December 31, 2022. All forward-looking statements made herein are qualified by these cautionary statements and risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. Readers are cautioned not to place undue reliance on these forward looking-statements, which reflect management's analysis only as of the date hereof. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

INVESTOR CONTACT

Michael Perlman

VP, Investor Relations & Communications

T: (954) 547-0480 M: (561) 281-0247

investors@vsecorp.com

VSE Corporation and Subsidiaries

Unaudited Consolidated Balance Sheets

(in thousands except share and per share amounts)

	September 30,		December 31,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	20,667	$	305
Receivables (net of allowance of $3.5 million and $2.0 million, respectively)	129,113		90,599
Unbilled receivables	6,257		7,409
Inventories	494,368		380,438
Other current assets	21,937		15,202
Current assets held-for-sale	98,021		54,925
Total current assets	770,363		548,878
Property and equipment (net of accumulated depreciation of $35.4 million and $30.7 million, respectively)	53,269		40,501
Intangible assets (net of accumulated amortization of $132.0 million and $121.3 million, respectively)	118,865		86,558
Goodwill	345,726		217,262
Operating lease right-of-use asset	25,166		21,558
Other assets	29,591		29,019
Non-current assets held-for-sale	—		56,013
Total assets	$	1,342,980	$	999,789
Liabilities and Stockholders' equity
Current liabilities:
Current portion of long-term debt	$	19,000	$	10,000
Accounts payable	137,788		128,504
Accrued expenses and other current liabilities	33,387		31,889
Dividends payable	1,575		1,282
Current liabilities held-for-sale	60,398		52,929
Total current liabilities	252,148		224,604
Long-term debt, less current portion	441,770		276,300
Deferred compensation	7,470		7,398
Long-term lease obligations under operating leases	21,961		19,154
Deferred tax liabilities	9,671		4,986
Other long-term liabilities	440		—
Non-current liabilities held-for-sale	—		17,821
Total liabilities	733,460		550,263
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 23,000,000 shares; issued and outstanding 15,747,289 and 12,816,613, respectively	787		641
Additional paid-in capital	227,083		92,620
Retained earnings	374,672		351,297
Accumulated other comprehensive loss	6,978		4,968
Total stockholders' equity	609,520		449,526
Total liabilities and stockholders' equity	$	1,342,980	$	999,789

VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Income

(in thousands except share and per share amounts)

	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Revenues:
Products	$	184,691	$	136,333	$	505,135	$	414,505
Services	46,662		31,046		120,028		82,955
Total revenues	231,353		167,379		625,163		497,460
Costs and operating expenses:
Products	160,326		121,620		442,714		372,334
Services	40,004		26,243		102,908		73,768
Selling, general and administrative expenses	2,556		594		6,121		1,772
Amortization of intangible assets	3,203		3,813		10,743		11,923
Total costs and operating expenses	206,089		152,270		562,486		459,797
Operating income	25,264		15,109		62,677		37,663
Interest expense, net	8,459		4,821		21,805		12,305
Income from continuing operations before income taxes	16,805		10,288		40,872		25,358
Provision for income taxes	4,694		2,589		10,554		6,615
Income from continuing operations	12,111		7,699		30,318		18,743
(Loss) income from discontinued operations, net of tax	(2,554)		1,720		(2,789)		4,468
Net income	$	9,557	$	9,419	$	27,529	$	23,211
Earnings (loss) per share:
Basic
Continuing operations	$	0.81	$	0.61	$	2.23	$	1.47
Discontinued operations	(0.17)		0.13		(0.20)		0.35
	$	0.64	$	0.74	$	2.03	$	1.82
Diluted
Continuing operations	$	0.80	$	0.60	$	2.22	$	1.46
Discontinued operations	(0.17)		0.13		(0.20)		0.35
	$	0.63	$	0.73	$	2.02	$	1.81
Weighted average shares outstanding:
Basic	15,001,908		12,797,727		13,585,391		12,772,731
Diluted	15,050,062		12,834,084		13,639,064		12,816,319
Dividends declared per share	$	0.10	$	0.10	$	0.30	$	0.30

VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	For the nine months ended September 30,
	2023		2022
	(a)		(a)
Cash flows from operating activities:
Net income	$	27,529	$	23,211
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	17,461		18,648
Amortization of debt issuance cost	1,028		629
Deferred taxes	(1,179)		(779)
Stock-based compensation	5,811		3,597
Provision for inventory	742		1,094
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables, net	(25,304)		(14,506)
Unbilled Receivables, net	5,409		(12,202)
Inventories, net	(60,867)		(28,309)
Other current assets and other assets	2,122		2,812
Operating lease assets and liabilities, net	(262)		(844)
Accounts payable and deferred compensation	(16,717)		(171)
Accrued expenses and other current and noncurrent liabilities	(5,544)		2,614
Net cash used in operating activities	(49,771)		(4,206)
Cash flows from investing activities:
Purchases of property and equipment	(10,795)		(7,416)
Proceeds from the payment on notes receivable	1,557		4,235
Cash paid for acquisitions, net of cash acquired	(218,674)		—
Net cash used in investing activities	(227,912)		(3,181)
Cash flows from financing activities:
Borrowings on bank credit facilities	610,188		358,051
Repayments on bank credit facilities	(435,298)		(345,554)
Proceeds from issuance of common stock	129,566		486
Earn-out obligation payments	—		(1,250)
Payment of debt financing costs	(1,448)		—
Payment of taxes for equity transactions	(1,113)		(942)
Dividends paid	(3,861)		(3,832)
Net cash provided by financing activities	298,034		6,959
Net increase (decrease) in cash and cash equivalents	20,351		(428)
Cash and cash equivalents, beginning of period	478		518
Cash and cash equivalents, end of period	$	20,829	$	90
(a) The cash flows related to discontinued operations and held-for-sale assets and liabilities have not been segregated, and remain included in the major classes of assets and liabilities. Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.

XML

Document and Entity Information Document	Nov. 01, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 01, 2023
Entity Registrant Name	VSE CORP
Entity Incorporation, State or Country Code	DE
Entity File Number	000-03676
Entity Central Index Key	0000102752
Amendment Flag	false
Entity Tax Identification Number	54-0649263
Entity Address, Address Line One	6348 Walker Lane
Entity Address, City or Town	Alexandria,
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22310
City Area Code	703
Local Phone Number	960-4600
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $.05 per share
Trading Symbol	VSEC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false