Slide 1: First Quarter 2021 Results Conference Call
F i rst Q u a r te r 2 0 2 1 Re s u l t s C o n fe re n c e C a l l April 2021
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: Executive Summary
EXECUTIVE SUMMARY First Quarter 2021 Business Transformation Update First Quarter 2021 as of April 29, 2021 Key Performance Highlights Aviation Segment: Transformational New Agreement Execution on Growth Strategy Announced $1 billion 15-year engine accessories distribution agreement win in April 202
Slide 4: $1 Billion Engine Accessories Agreement
$1 BILLION ENGINE ACCESSORIES AGREEMENT 15-year agreement anticipated to generate ~$60 million annually upon full implementation Agreement Overview Key Strategic Benefits At $60 million annually, represents ~35%+ increase in 2020 VSE Aviation revenue Leveraging our unique value proposition across bo
Slide 5: VSE Financial Summary
VSE FINANCIAL SUMMARY ($ in millions except 1Q’21 1Q’20 4Q’20 vs vs EPS) 1Q’20 4Q’20 ▪ 1Q’21 revenue of $165M decreased (3)% y/y (1) Revenue $165.0 $177.4 $150.0 (7)% 10% ▪ Q/Q revenue growth across all segments: Aviation +15%, Adjusted EBITDA $15.6 $22.7 $17.3 (31)% (10)% Federal & Defense +15%, Fl
Slide 6: Consolidated Performance Bridge
CONSOLIDATED PERFORMANCE BRIDGE Adj. EBITDA Revenue Adj. EBITDA Margin % Q/Q comparisons: 4Q’20 $150.0 $17.3 11.5% ▪ Aviation segment revenue and profit increased, with three quarters of sequential Aviation $5.8 $0.9 +0.1 pts growth supported by execution of market share gains and recovery in busine
Slide 7: Aviation Segment
AVIATION SEGMENT ($ in millions) 1Q’21 vs 1Q’20 vs 4Q’20 Revenue $44.4 (24)% +15% ▪ 1Q’21 Aviation revenue increased +15% sequentially, led by Revenue, less divestitures (1) $44.4 (12)% +15% growth in Distribution business Adjusted EBITDA $2.2 (72)% +61% Adjusted EBITDA % 5% (8.6) pts +1.5 pts ▪ Exc
Slide 8: Fleet Segment
FLEET SEGMENT ($ in millions) 1Q’21 vs 1Q’20 vs 4Q’20 Revenue $54.7 +3% +1% Adjusted EBITDA $8.1 (16)% (5)% ▪ 1Q’21 revenue increased +1% sequentially, driven by commercial fleet revenue growth Adjusted EBITDA % 14.8% (3.3) pts (1) pts Operating Income $5.7 (17)% (7)% ▪ Y/Y revenue increases support
Slide 9: Federal & Defense Segment
FEDERAL & DEFENSE SEGMENT ($ in millions) 1Q’21 vs 1Q’20 vs 4Q’20 Revenue $65.9 -% +15% ▪ 1Q’21 revenue increased +15% sequentially, led by strong Adjusted EBITDA $5.8 +2% (32)% revenue performance on U.S. Department of Justice program and HSS acquisition Adjusted EBITDA % 8.8% +0.2 pts (6) pts Oper
Slide 10: Balance Sheet Optionality
BALANCE SHEET OPTIONALITY ($ in millions) 1Q’21 1Q’20 4Q’20 Net Debt $253 $273 $251 Free Cash Flow $(38.5) $6.0 $(0.9) Net leverage ratio 3.7X 2.9X 3.3X Unused Commitments $167 $176 $175 ▪ 1Q'21 capital allocation priorities include investments for new Aviation segment program launches. Inventory in
Slide 11: 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 Strateg
Slide 12: Appendix
10 7 | VSE APPENDIX CORPORATION
Slide 13: VSE Executive Team
VSE EXECUTIVE TEAM Background & Responsibilities Background & Responsibilities • 19+ years of aerospace distribution and • 10+ 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 14: 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 60+ Years Aftermarket 3 Distinct ~2,200 Services End Markets Employ
Slide 15: Diversified Revenue Mix
DIVERSIFIED REVENUE MIX AVIATION FLEET FEDERAL & DEFENSE Distribution & MRO Services Distribution & Fleet Services Logistics & Sustainment Services » Aftermarket repair and distribution » Aftermarket support, parts supply, » Aftermarket maintenance, repair and services to commercial, cargo, inventor
Slide 16: Balanced Aftermarket Business Segments
BALANCED AFTERMARKET BUSINESS SEGMENTS 100% aftermarket services supporting critical link between OEMs & end-users Diverse End Markets Deliver Tailwinds for Growth ( $ and % TTM 3/31/21 Revenue) Federal & Defense Logistics & Sustainment Services $254.1M 39% Aviation Distribution & MRO Services $151.
Slide 17: 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 18: Keys to Success for VSE in 2021
KEYS TO SUCCESS FOR VSE IN 2021 AVIATION ▪ Continue to outpace market recovery and expand operating margins ▪ Execute on recently awarded distribution agreements ▪ Expand MRO capabilities and partnerships to capture incremental share FLEET ▪ Drive above-market commercial growth from fleet customers,
Slide 19: 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 20: 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 21: 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 22: GAAP to Non-GAAP Reconciliations: Adjusted Net Income
GAAP TO NON-GAAP RECONCILIATIONS Adjusted Net Income and Adjusted EPS (Diluted) In thousands (except per share data) 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 Net income (loss) $ 3,332 $ (22,624) $ 8,108 $ 6,013 $ 5,111 Adjustments to Net Income (Loss): Acquisition related costs — — — — 310 Executive trans
Slide 23: GAAP to Non-GAAP Reconciliations: EBITDA
GAAP TO NON-GAAP RECONCILIATIONS EBITDA and Adjusted EBITDA In thousands (except per share data) 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 Net income (loss) $ 3,332 $ (22,624) $ 8,108 $ 6,013 $ 5,111 Interest expense, net 3,486 3,072 3,530 3,408 3,030 Income taxes 2,916 (2,358) 2,547 2,493 1,462 Amortizati
Slide 24: GAAP to Non-GAAP Reconciliations: Segment EBITDA
GAAP TO NON-GAAP RECONCILIATIONS Segment EBITDA and Adjusted EBITDA In thousands 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 Aviation Operating Income (Loss) $ (1,880) $ (34,387) $ 1,586 $ (833) $ (332) Depreciation and Amortization 3,066 2,472 2,493 2,667 2,554 EBITDA 1,186 (31,915) 4,079 1,834 2,222 Execut
Slide 25: GAAP to Non-GAAP Reconciliations: Balance Sheet
GAAP TO NON-GAAP RECONCILIATIONS Balance Sheet Reconciliation of Operating Cash Flow to Free Cash Flows Three Months Ended In thousands 31-Mar-20 30-Jun-20 30-Sep-20 31-Dec-20 31-Mar-21 Net cash provide by operating activities $ 6,758 $ 16,050 $ 12,427 $ 526 $ (36,367) Capital expenditures (724) (1,