Slide 1: Fourth Quarter and Full-Year 2022 Results Conference Call
V S E c o r p .c o m VSEC Fourth Quarter and Full-Year 2022 Results Conference Call March 2023
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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 Act. All such statements
Slide 3: 2022 Overview
2022 Overview Record-setting year with growth in revenue and profitability Total VSE > Total Revenue: $949.8M, +26% Y/Y > Net Income: $28.1M, +252% Y/Y > Adjusted EBITDA: $92.1M, +27% Y/Y; record year Aviation > Revenue: $408.1M +65% Y/Y; record year > Operating Income: $36.4, NM(1) Y/Y > Adjusted E
Slide 4: Key Strategic Priorities Update
Key Strategic Priorities Update Continued focus on new business development and program execution to drive growth Well-positioned strategic priorities set the foundation for strong performance and continued growth Building Sustainable Revenue > Aviation: Acquired Precision Fuel Components, provider
Slide 5: VSE Financial Summary
VSE Financial Summary 2022 Revenue +26%, Adjusted EBITDA +27%, Adjusted Net Income +34% year-over-year; Aviation and Fleet key growth drivers for 2022 and 2023 ($ in millions except EPS) 4Q Quarter-to-Date 4Q'22 4Q’21 vs. 4Q'21 Revenue $234.3 $210.2 +11% Net Income $4.8 $6.2 (22)% Adjusted EBITDA $2
Slide 6: Consolidated Performance Bridge
Consolidated Performance Bridge Strong progress in building long-term revenue; Aviation and Fleet segments propel EBITDA growth ▪ Aviation segment revenue and profit growth supported by successful program execution, improved end-market demand, and expansion in both distribution and MRO capabilities
Slide 7: Aviation Segment
Aviation Segment Above-market revenue growth and strong margin expansion in 2022; Well-positioned for 2023 with new distribution programs and expanded MRO capabilities to drive diversified, sustainable growth ($ in millions) Quarter-to-Date 4Q'22 4Q'21 vs. 4Q'21 Revenue $107.2 $82.8 +29% Operating i
Slide 8: Fleet Segment
Fleet Segment Execution of commercial revenue diversification strategy continues to deliver above-market growth and Adjusted EBITDA expansion ($ in millions) Quarter-to-Date 4Q'22 4Q'21 vs 4Q’21 Revenue $64.8 $60.5 +7% Operating income $5.6 $5.3 +6% Adjusted EBITDA $7.9 $7.6 +4% Adjusted EBITDA % 12
Slide 9: Federal & Defense Segment
Federal & Defense Segment New business development focus includes growth in 2023 pipeline and backlog to support 2024 revenue growth and margin expansion ($ in millions) Quarter-to-Date 4Q'22 4Q'21 vs 4Q’21 Revenue $62.3 $66.9 (7)% Operating income (loss) $(4.6) $2.5 (285)% Adjusted EBITDA $0.8 $3.6
Slide 10: Balance Sheet Optionality
Balance Sheet Optionality Reduced net leverage in 2022 through increased EBITDA and disciplined cash management ▪ Operating and free cash flow in 4Q’22 includes the acquisition of $10M in inventory to support expanded Pratt & Whitney distribution agreement in the Asia Pacific region ▪ Capital alloca
Slide 11: Appendix
VSE CORPORATION E APPENDIX
Slide 12: GAAP to Non-GAAP Reconciliations: Adjusted Net Income and Adjusted EPS
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 4Q2022 Net income (loss) $ 5,111 $ (12,366)
Slide 13: GAAP to Non-GAAP Reconciliations: EBITDA and Adjusted EBITDA
GAAP to Non-GAAP Reconciliations EBITDA and Adjusted EBITDA (in thousands, except per share data) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 4Q2022 Net income (loss) $ 5,111 $ (12,366) $ 9,021 $ 6,200 $ 6,244 $ 7,548 $ 9,419 $ 4,848 Interest expense, net 3,030 2,666 2,780 3,593 3,609 3,872 4,8
Slide 14: GAAP to Non-GAAP Reconciliations: Segment EBITDA and Adjusted EBITDA
GAAP to Non-GAAP Reconciliations Segment EBITDA and Adjusted EBITDA (in thousands) 1Q2021 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 4Q2022 Aviation Operating income (loss) $ (332) $ (22,272) $ 3,719 $ 4,512 $ 7,622 $ 6,450 $ 10,017 $ 12,327 Depreciation and amortization 2,554 2,554 3,062 2,898 3,035
Slide 15: GAAP to Non-GAAP Reconciliations: Balance Sheet
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-21 31-Mar-22 30-Jun-22 30-
Slide 16: Investment Highlights
V S E c o r p .c o m Pure-play independent aftermarket service provider with strong organic & inorganic growth opportunities Investment Highlights 3 Distinct End Markets $37M Adj. Net Income ~2,000 Employees $950M Revenue 63+ Years Aftermarket Services $92M Adj. EBITDA Global provider of aftermarket
Slide 17: VSE Executive Team
V S E c o r p .c o m VSE Executive Team VSE Senior Leadership 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 Mana
Slide 18: Aviation Segment Overview
Aviation Segment Overview Refocused Strategy: Higher growth, higher-margin commercial and B&GA distribution and MRO MRO Capability Development ▪ New MRO offerings to support range of components and engine accessory repairs including: fuel and hydraulics, engine components and accessories, interiors,
Slide 19: Fleet Segment Overview
Fleet Segment Overview Refocused Strategy: High growth Class 4-8 commercial distribution and e-commerce 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 j
Slide 20: Federal & Defense Segment Overview
Federal & Defense Segment Overview Refocused Strategy: Higher margin, differentiated supply chain, MRO and technical services Market Expansion ▪ Increase military aviation services with products, supply chain and repair services Capability Development ▪ Broaden DoD logistics and supply chain offerin
Slide 21: Unique Value Proposition
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 Lean operating model and d
Slide 22: Investment Opportunity
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 Relationships New Experie