VSE Corp Files Q2 2024 10-Q Report

TL;DR

VSE Corp's Q2 10-Q is in. Check financials for latest performance.

AI Summary

VSE Corporation filed its 10-Q for the period ending June 30, 2024. The filing covers financial performance and operational details for the second quarter and the first half of the year. Key financial data and business segments are detailed within the report.

Why It Matters

This filing provides investors and analysts with the latest financial health and operational performance of VSE Corporation, crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Players & Entities

• VSE CORP (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240801 (date) — Filing date
• 3361 ENTERPRISE WAY MIRAMAR FL 33025 (address) — Business and mailing address

FAQ

Key Financial Figures

• $0.05 — ich registered Common Stock, par value $0.05 per share VSEC The NASDAQ Global Select

Filing Documents

• vsec-20240630.htm (10-Q) — 1059KB
• vsec-63024ex311.htm (EX-31.1) — 11KB
• vsec-63024ex312.htm (EX-31.2) — 10KB
• vsec-63024ex321.htm (EX-32.1) — 5KB
• vsec-63024ex322.htm (EX-32.2) — 5KB
• vsec-20240630_g1.jpg (GRAPHIC) — 198KB
• 0000102752-24-000072.txt ( ) — 6733KB
• vsec-20240630.xsd (EX-101.SCH) — 37KB
• vsec-20240630_cal.xml (EX-101.CAL) — 95KB
• vsec-20240630_def.xml (EX-101.DEF) — 222KB
• vsec-20240630_lab.xml (EX-101.LAB) — 556KB
• vsec-20240630_pre.xml (EX-101.PRE) — 398KB
• vsec-20240630_htm.xml (XML) — 898KB

FINANCIAL INFORMATION

PART I FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements Unaudited Consolidated Balance Sheets as of June 3 0 , 2024 and December 31, 2023 4 Unaudited Consolidated Statements of (Loss) Income for the three and six months ended June 30 , 2024 and 2023 5 Unaudited Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 3 0 , 2024 and 2023 6 Unaudited Consolidated Statements of Stockholders' Equity for the three and six months ended June 3 0 , 2024 and 2023 7 Unaudited Consolidated Statements of Cash Flows for the six months ended June 30 , 2024 and 2023 9 Notes to Unaudited Consolidated Financial Statements 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 23

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 29

Controls and Procedures

ITEM 4. Controls and Procedures 29

OTHER INFORMATION

PART II OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 30

Risk Factors

ITEM 1A. Risk Factors 30

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

ITEM 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 30

Other Information

ITEM 5. Other Information 30

Exhibits

ITEM 6. Exhibits 31

Signatures

Signatures 32 -2- Table of Contents

Forward-Looking Statements

Forward-Looking Statements This quarterly report on Form 10-Q ("Form 10-Q") contains statements that, to the extent they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and this statement is included for purposes of such safe harbor provisions. "Forward-looking" statements, as such term is defined by the Securities Exchange Commission (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, the impact of widespread health developments, the health and economic impact thereof and the governmental, commercial, consumer and other responses thereto, such as growth, acquisition and disposition 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, those identified elsewhere in this document, including in Item 1A, Risk Factors, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Di

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements VSE Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) June 30, December 31, (in thousands, except share and per share amounts) 2024 2023 Assets Current assets: Cash and cash equivalents $ 18,993 $ 7,768 Receivables (net of allowance of $ 5.0 million and $ 3.4 million, respectively) 168,238 127,958 Contract assets 28,575 8,049 Inventories 532,371 500,864 Other current assets 48,198 36,389 Current assets held-for-sale — 93,002 Total current assets 796,375 774,030 Property and equipment (net of accumulated depreciation of $ 42.6 million and $ 37.4 million, respectively) 72,571 58,076 Intangible assets (net of accumulated amortization of $ 74.0 million and $ 135.6 million, respectively) 165,389 114,130 Goodwill 390,135 351,781 Operating lease right-of-use assets 34,419 28,684 Other assets 35,409 23,637 Total assets $ 1,494,298 $ 1,350,338 Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 30,000 $ 22,500 Accounts payable 144,645 173,036 Accrued expenses and other current liabilities 49,159 36,383 Dividends payable 1,842 1,576 Current liabilities held-for-sale — 53,391 Total current liabilities 225,646 286,886 Long-term debt, less current portion 433,508 406,844 Deferred compensation 7,561 7,939 Long-term operating lease obligations 36,515 24,959 Deferred tax liabilities 4,317 6,985 Other long-term liabilities 5,435 — Total liabilities 712,982 733,613 Commitments and contingencies (Note 8) Stockholders' equity: Common stock, par value $ 0.05 per share, authorized 23,000,000 shares; issued and outstanding 18,420,008 and 15,756,918 , respectively 921 788 Additional paid-in capital 403,666 229,103 Retained earnings 371,872 384,702 Accumulated other comprehensive income 4,857 2,132 Total stockholders' equity 781,316 616,725 Total liabilities and stockholders' equity $ 1,494,298 $ 1,350,338 The accompanying notes are an integral part of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2024 Table of Contents (1) Nature of Operations and Basis of Presentation Nature of Operations VSE Corporation (collectively, with its consolidated subsidiaries), "VSE," the "Company," "us," "we," or "our" is a leading provider of aftermarket parts distribution and maintenance, repair and overhaul ("MRO") services for air and land transportation assets for commercial and government markets. We operate in two reportable segments aligned with our operating segments: Aviation and Fleet. Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K"). In our opinion, all adjustments, including normal recurring items, considered necessary for a fair presentation of results for the interim periods have been included in the accompanying unaudited consolidated financial statements. Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. In February 2024, we entered into two separate agreements to sell substantially all of the Federal and Defense segment assets. See Note (3) "Discontinued Operations" for further information. The consolidated financial statements reflect the Federal and Defense segment's results of operations as discontinued operations for all periods presented, and the related assets

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2024 Table of Contents (2) Acquisitions Turbine Controls, LLC On April 24, 2024, we completed the acquisition of TCI for a total consideration of $ 122.2 million, consisting of cash consideration of $ 113.7 million, which included $ 1.57 million as an estimated net working capital adjustment, and in-kind payment in the form of shares of the Company's common stock with a value equal to $ 10.0 million. The purchase price of this acquisition was funded by borrowings under our revolving credit facility. TCI is a leading provider of aftermarket maintenance, repair and overhaul ("MRO") support services for complex engine components, as well as engine and airframe accessories, across commercial and military applications. The acquisition presents an opportunity for VSE's Aviation segment to accelerate its MRO strategy, including expanding our repair capability offerings and adding several new OEM relationships. The purchase price for TCI was allocated on a preliminary basis, among assets acquired and liabilities assumed at fair value based on the best available information on the acquisition date, with the excess purchase price recorded as goodwill. The fair values of the non-financial assets acquired, and liabilities assumed, were determined based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations utilizing established industry valuation techniques. We have not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital and income taxes. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until we obtain final information regarding their fair values, which could potentially result in changes to the TCI opening balance sheet. The p

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2024 Table of Contents We incurred $ 0.5 million and $ 2.0 million of acquisition-related expenses related to the TCI acquisition during the three and six months ended June 30, 2024, respectively, which are included in selling, general and administrative expenses. The operating results of TCI were included in our consolidated results of operations from the date of acquisition. Our consolidated revenues and operating income include $ 23.5 million and $ 1.8 million, respectively, for the three and six months ended June 30, 2024, from the acquisition of TCI. Operating income does not include the impact of acquisition-related expenses incurred by VSE Corporation. The following unaudited pro forma financial information presents the combined results of operations for TCI and VSE Corporation for the three and six months ended June 30, 2024, and 2023, respectively. The unaudited consolidated pro forma results of operations are as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Revenue 273,070 225,469 539,280 433,012 (Loss) income from continuing operations ( 2,791 ) 8,597 10,045 15,117 The unaudited pro forma combined financial information presented above has been prepared from historical financial statements that have been adjusted to give effect to the acquisition of TCI as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization; interest expense and debt issuance costs on long-term debt; and acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2023, nor is it indicative of future operating results. Precision Fuel Components, LLC On February 1, 2023, our Aviation segment acquired Precision Fuel Components, LLC ("Precision Fuel") for

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2024 Table of Contents We completed the purchase accounting valuation for Desser Aerospace during the second quarter of 2024. The final purchase price allocation is as follows (in thousands): Receivables $ 7,383 Inventories 31,228 Other current assets 515 Property and equipment 2,527 Intangible assets 21,950 Goodwill 53,942 Operating lease right-of-use assets 6,679 Total assets acquired 124,224 Accounts payable ( 10,128 ) Accrued expenses and other current liabilities ( 5,793 ) Long-term operating lease obligations ( 5,937 ) Deferred tax liabilities ( 2,666 ) Total liabilities assumed ( 24,524 ) Net assets acquired, excluding cash $ 99,700 Cash consideration $ 101,870 Post-close adjustment ( 2,170 ) Total $ 99,700 Goodwill resulting from the acquisition of Desser Aerospace reflects the strategic advantage of expanding our specialty distribution and MRO services to new customers. The value attributed to goodwill and customer relationships is not fully deductible for income tax purposes. The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a weighted average useful life of 8.3 years. We incurred $ 0.6 million and $ 1.7 million of acquisition-related expenses related to the Desser Aerospace acquisition during the three and six ended June 30, 2023 , respectively, which are included in selling, general and administrative expenses. The following unaudited pro forma financial information presents the combined results of operations for Desser Aerospace and VSE Corporation for the three and six months ended June 30, 2024 and 2023, respectively. The unaudited consolidated pro forma results of operations are as follows (in thousands): Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 Revenue $ 265,959 229,066 $ 507,498 441,565 (Loss) Income from continuing operations $ ( 2,777 ) 11

View Full Filing

View this 10-Q filing on SEC EDGAR