Slide 1: Third Quarter 2022 Results Conference Call
VSEC Third Quarter 2022 Results Conference Call October 2022
Slide 2: Forward-Looking Statements
R A I S E T H E B A R 2 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 Exchange A
Slide 3: 3Q 2022 Overview
R A I S E T H E B A R 3 3Q 2022 OVERVIEW Year-over-year Revenue Growth Across All Reporting Segments TOTAL VSE > Total Revenue: $242.5 million, +21% Y/Y; growth in all segments > Adjusted EBITDA: $24.0 million, +12% Y/Y AVIATION > Revenue: +40% Y/Y, second straight $100+ million quarter > Adjusted E
Slide 4: Update on Key Strategic Priorities
R A I S E T H E B A R 4 UPDATE ON KEY STRATEGIC PRIORITIES Focused on new business development with a customer-centric value proposition Building Sustainable Revenue > Aviation: Announced four new distribution agreements valued at approximately $350 million; expanding geographic presence and leverag
Slide 5: VSE Financial Summary
R A I S E T H E B A R 5 VSE FINANCIAL SUMMARY ($ in millions except EPS) Quarter-to-Date 3Q'22 3Q’21 vs. 3Q'21 Revenue $242.5 $200.6 +21% Adjusted EBITDA $24.0 $21.4 +12% Adjusted EBITDA % 9.9% 10.7% (0.8) pts Operating Income $17.3 $13.9 +24% Net Income $9.4 $9.0 +4% Adjusted Net Income $9.8 $9.7 —
Slide 6: Consolidated Performance Bridge
R A I S E T H E B A R 6 CONSOLIDATED PERFORMANCE BRIDGE Y/Y Comparisons: • Aviation segment revenue and profit increase driven by program execution, end-market demand recovery and revenue growth within both MRO and distribution capabilities • Fleet segment revenue and EBITDA growth supported by high
Slide 7: Aviation Segment
R A I S E T H E B A R 7 AVIATION SEGMENT ($ in millions) Quarter-to-Date 3Q'22 3Q'21 vs. 3Q'21 Revenue $102.6 $73.1 +40% Adjusted EBITDA $13.6 $7.3 +86% Adjusted EBITDA % 13.2% 10.0% +3.2 pts Operating income (loss) $10.0 $3.7 +169% Revenue by Type: Distribution $73.6 $54.4 +35% Repair (MRO) $29.0 $
Slide 8: Fleet Segment
R A I S E T H E B A R 8 FLEET SEGMENT ($ in millions) Quarter-to-Date 3Q'22 3Q'21 vs 3Q’21 Revenue $64.8 $60.3 +7% Adjusted EBITDA $8.7 $7.7 +13% Adjusted EBITDA % 13.5% 12.8% +0.7 pts Operating income $6.5 $5.4 +21% Revenue by Type: Other Government $39.2 $36.8 +6% DoD $0.2 $2.7 (93)% Commercial $2
Slide 9: Federal & Defense Segment
R A I S E T H E B A R 9 FEDERAL & DEFENSE SEGMENT ($ in millions) Quarter-to-Date 3Q'22 3Q'21 vs 3Q’21 Revenue $75.1 $67.2 +12% Adjusted EBITDA $2.8 $6.5 (57)% Adjusted EBITDA % 3.7% 9.7% (6.0)pts Operating income $1.9 $5.4 (64)% Contract Backlog: Bookings $94 $64 +47% Backlog $199 $218 (9)% Y/Y Com
Slide 10: Balance Sheet Optionality
R A I S E T H E B A R Third Quarter Highlights: • $11.3M free cash flow driven by revenue growth in all business segments and successful execution of recent Aviation distribution awards; Net Leverage Ratio of 3.4x • Maintaining focus on improving net leverage in 2022 through positive free cash flow
Slide 11: Appendix
0, VG | APPENDIX CORPORATION
Slide 12: GAAP to Non-GAAP Reconciliations: Adjusted Net Income and EPS
R A I S E T H E B A R 12 GAAP TO NON-GAAP RECONCILIATIONS Adjusted Net Income and Adjusted EPS (Diluted) Calculation uses an estimated statutory tax rate on non-GAAP tax deductible adjustments. (in thousands, except per share data) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 Net income (loss) $
Slide 13: GAAP to Non-GAAP Reconciliations: EBITDA and Adjusted EBITDA
R A I S E T H E B A R 13 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
Slide 14: GAAP to Non-GAAP Reconciliations: Segment EBITDA
R A I S E T H E B A R 14 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,
Slide 15: GAAP to Non-GAAP Reconciliations: Balance Sheet
R A I S E T H E B A R 15 GAAP TO NON-GAAP RECONCILIATIONS Balance Sheet (1) TTM Adjusted EBITDA is defined as Adjusted EBITDA for the most recent twelve (12) month period 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-2
Slide 16: Investment Highlights
R A I S E T H E B A R 16 INVESTMENT HIGHLIGHTS 3 Distinct End Markets $35M Adj. Net Income ~2,000 Employees $926M Revenue 63+ Years Aftermarket Services Pure-play independent aftermarket service provider with strong organic & inorganic growth opportunities $87M Adj. EBITDA Global provider of afterma
Slide 17: VSE Senior Leadership
R A I S E T H E B A R VSE Senior Leadership 17 VSE EXECUTIVE TEAM John Cuomo President and CEO • 21+ years of aerospace distribution and services market industry experience • Appointed Chief Executive Officer and President of VSE Corporation in 2019 • Previously served as Vice President and General
Slide 18: Aviation Segment Overview
R A I S E T H E B A R Representative Customers 18 AVIATION SEGMENT OVERVIEW MRO Capability Development • New MRO offerings to support range of components and engine accessory repairs including: fuel and hydraulics, engine components and accessories, interiors, auxiliary power units, and avionics Dis
Slide 19: Fleet Segment Overview
R A I S E T H E B A R 19 FLEET SEGMENT OVERVIEW Commercial Customer Diversification • Expansion of commercial customer base to support new medium to large, high-duty cycle fleet customers Wallet Share Expansion • Product expansion to existing just-in-time clients E-commerce • Customized technology p
Slide 20: Federal & Defense Segment Overview
R A I S E T H E B A R 20 FEDERAL & DEFENSE SEGMENT OVERVIEW Market Expansion • Increase military aviation services with products, supply chain and repair services Capability Development • Broaden DoD logistics and supply chain offering to support underserved market demand International Growth • Util
Slide 21: Unique Value Proposition
R A I S E T H E B A R 21 UNIQUE VALUE PROPOSITION Differentiation drives market share gains, long-term sustainable revenue & margin expansion End-User and OEM-Centric Ability to offer bespoke solutions to support critical link between end-users and Original Equipment Manufacturers (“OEMs”) Agility L
Slide 22: Investment Opportunity
R A I S E T H E B A R 22 INVESTMENT OPPORTUNITY Unique, pure-play independent aftermarket services company poised for growth Strategic Market Positioning, Strong Growth Strategy, Proven Execution Experience MISSION-CRITICAL AFTERMARKET SERVICES CULTURAL TRANSFORMATION DRIVING GROWTH STRONG CUSTOMER