Slide 1: Third Quarter 2022 Results Conference Call
VSEC Third Quarter 2022 Results Conference Call October 2022
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements This presentation 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 Exchang
Slide 3: 3Q 2022 Overview
3Q 2022 OVERVIEW Year-over-year Revenue Growth Across All Reporting Segments > Total Revenue: $242.5 million, +21% Y/Y; growth in all segments TOTAL VSE > Adjusted EBITDA: $24.0 million, +12% Y/Y > Revenue: +40% Y/Y, second straight $100+ million quarter AVIATION > Adjusted EBITDA +86% Y/Y to 13.2%
Slide 4: Update on Key Strategic Priorities
UPDATE ON KEY STRATEGIC PRIORITIES Focused on new business development with a customer-centric value proposition Building Sustainable Revenue Growing Adjusted EBITDA Optimizing Legacy Programs > Aviation: Announced four new distribution > Aviation: Record Adjusted EBITDA through > Aviation: Awarded
Slide 5: VSE Financial Summary
VSE FINANCIAL SUMMARY Quarter-to-Date Year-to-Date Revenue +21% Y/Y 3Q'22 3Q’21 vs. YTD'22 YTD’21 vs. • Revenue growth Y/Y in all business ($ in millions except EPS) 3Q'21 YTD'21 segments driven by strong demand and Revenue $242.5 $200.6 +21% $715.4 $540.7 +32% execution: Aviation +40%, Fleet +7%, A
Slide 6: Consolidated Performance Bridge
CONSOLIDATED PERFORMANCE BRIDGE Adj. EBITDA Y/Y Comparisons: Revenue Adj. EBITDA Margin % 3Q’21 QTD $200.6 $21.4 10.7% • Aviation segment revenue and profit increase Aviation 29.5 6.3 +1.4 pts driven by program execution, end-market demand Fleet 4.5 1.0 +0.2 pts recovery and revenue growth within bo
Slide 7: Aviation Segment
AVIATION SEGMENT Y/Y Comparisons: Quarter-to-Date Year-to-Date • Revenue +40% led by organic growth from recent 3Q'22 3Q'21 vs. 3Q'21 distribution awards and contributions from ($ in millions) 3Q'22 3Q'21 vs. 3Q'21 Global Parts acquisition in July 2021 Revenue $102.6 $73.1 +40% $300.9 $165.0 +82% •
Slide 8: Fleet Segment
FLEET SEGMENT Y/Y Comparisons: Quarter-to-Date Year-to-Date • Revenue +7% driven by growth in ($ in millions) 3Q'22 3Q'21 vs 3Q’21 3Q'22 3Q'21 vs 3Q’21 commercial and e-commerce sales Revenue $64.8 $60.3 +7% $196.5 $173.1 +14% • Commercial revenue growth +23% as Adjusted EBITDA $8.7 $7.7 +13% $25.3
Slide 9: Federal & Defense Segment
FEDERAL & DEFENSE SEGMENT Quarter-to-Date Year-to-Date Y/Y Comparisons: • Revenue increased +12% driven by U.S. Navy ($ in millions) 3Q'22 3Q'21 vs 3Q’21 3Q'22 3Q'21 vs 3Q’21 growth offset by U.S. Army contract completion Revenue $75.1 $67.2 +12% $218.0 $202.6 +8% • Revenue on the Naval Sea Systems
Slide 10: Balance Sheet Optionality
BALANCE SHEET OPTIONALITY Third Quarter Highlights: • $11.3M free cash flow driven by revenue growth in all business ($ in millions) 3Q’22 2Q’22 1Q’22 segments and successful execution of recent Aviation distribution awards; Net Leverage Ratio of 3.4x Net Debt $298 $308 $303 • Maintaining focus on i
Slide 11: Appendix
YVWSE APPENDIX CORPORATION
Slide 12: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS Adjusted Net Income and Adjusted EPS (Diluted) (in thousands, except per share data) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 Net income (loss) $ 5,111 $ (12,366) $ 9,021 $ 6,200 $ 6,244 $ 7,548 $ 9,419 Adjustments to net income (loss): Acquisition, integrati
Slide 13: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS EBITDA and Adjusted EBITDA (in thousands, except per share data) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 Net income (loss) $ 5,111 $ (12,366) $ 9,021 $ 6,200 $ 6,244 $ 7,548 $ 9,419 Interest expense, net 3,030 2,666 2,780 3,593 3,609 3,872 4,818 Income taxes
Slide 14: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS Segment EBITDA and Adjusted EBITDA (in thousands) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 Aviation Operating income (loss) $ (332) $ (22,272) $ 3,719 $ 4,512 $ 7,622 $ 6,450 $ 10,017 Depreciation and amortization 2,554 2,554 3,062 2,898 3,035 3,110 3,413 EBI
Slide 15: GAAP to Non-GAAP Reconciliations
GAAP TO NON-GAAP RECONCILIATIONS Balance Sheet Reconciliation of Operating Cash Flow to Free Cash Flows Three Months Ended (in thousands) 31-Mar-21 30-Jun-21 30-Sep-21 31-Dec-21 31-Mar-22 30-Jun-22 30-Sep-22 Net cash (used in) provided by operating activities $ (36,367) $ (17,601) $ 23,445 $ 12,921
Slide 16: Investment Highlights
INVESTMENT HIGHLIGHTS Pure-play independent aftermarket service provider with strong organic & inorganic growth opportunities Global provider of aftermarket distribution, maintenance, repair, and overhaul (“MRO”), and other services 63+ Years Aftermarket 3 Distinct ~2,000 Services End Markets Employ
Slide 17: VSE Executive Team
VSE EXECUTIVE TEAM Background & Responsibilities Background & Responsibilities • 21+ years of aerospace distribution and • 12+ years of senior finance leadership, services market industry experience most recently as CFO for GE Aviation Engine Services • Appointed Chief Executive Officer and Presiden
Slide 18: Aviation Segment Overview
AVIATION SEGMENT OVERVIEW Refocused Strategy: Higher growth, higher-margin commercial and B&GA distribution and MRO Key Capabilities Growth Drivers Representative Customers MRO Capability Development Commercial and business & general aviation proprietary • New MRO offerings to support range of com
Slide 19: Fleet Segment Overview
FLEET SEGMENT OVERVIEW Refocused Strategy: High growth Class 4-8 commercial distribution and e-commerce Key Capabilities Growth Drivers Representative Customers High-duty cycle, Class 4-8 (medium Commercial Customer Diversification to heavy) vehicle parts distribution • Expansion of commercial cus
Slide 20: Federal & Defense Segment Overview
FEDERAL & DEFENSE SEGMENT OVERVIEW Refocused Strategy: Higher margin, differentiated supply chain, MRO and technical services Key Capabilities Growth Drivers Representative Customers Transportation asset MRO Market Expansion services • Increase military aviation services with products, supply chai
Slide 21: Unique Value Proposition
UNIQUE VALUE PROPOSITION Differentiation drives market share gains, long-term sustainable revenue & margin expansion Pure-Play Aftermarket Transportation Asset Experience Uniquely positioned in the market as Support for land, sea, and air transportation assets independent parts and services provider
Slide 22: Investment Opportunity
INVESTMENT OPPORTUNITY Unique, pure-play independent aftermarket services company poised for growth WELL-BALANCED BUSINESS SEGMENTS MISSION-CRITICAL STRONG CUSTOMER AFTERMARKET SERVICES RELATIONSHIPS FRAGMENTED CULTURAL TRANSFORMATION END-MARKETS DRIVING GROWTH NEW EXPERIENCED MANAGEMENT TEAM Strate