Slide 1: VSEC Fourth Quarter and Full-Year 2022 Results Conference Call
VSEcorp.com VSEC Fourth Quarter and Full-Year 2022 Results Conference Call March 2023
Slide 2: Forward-Looking Statements and 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: 2022 Overview
2022 Overview Record-setting year with growth in revenue and profitability > Total Revenue: $949.8M, +26% Y/Y Total VSE > Net Income: $28.1M, +252% Y/Y > Adjusted EBITDA: $92.1M, +27% Y/Y; record year > Revenue: $408.1M +65% Y/Y; record year Aviation > Operating Income: $36.4, NM(1) Y/Y > Adjusted E
Slide 4: Key Strategic Priorities Update
Key Strategic Priorities Update Continued focus on new business development and program execution to drive growth Building Sustainable Revenue Growing Profit Optimizing Legacy Programs > Aviation: Acquired Precision Fuel > Aviation: Launched expansion to Pratt & Components, provider of MRO services
Slide 5: VSE Financial Summary
VSE Financial Summary 4Q Quarter-to-Date Year-to-Date Revenue vs. vs. +11% 4Q’22 Y/Y ($ in millions except 4Q'22 4Q’21 4Q'21 2022 2021 2021 +26% 2022 Y/Y EPS) Revenue growth driven by strong Revenue $234.3 $210.2 +11% $949.8 $750.9 +26% Aviation execution and Fleet Net Income $4.8 $6.2 (22)% $28
Slide 6: Consolidated Performance Bridge
Consolidated Performance Bridge Operating Adj. Adj. EBITDA Revenue Income EBITDA Margin % 4Q’21 QTD $210.2 $10.7 $17.8 8.5% Aviation segment revenue and profit growth Aviation 24.4 7.8 8.0 +2.5 pts supported by successful program execution, Fleet 4.3 0.3 0.3 (0.1) pts improved end-market demand, a
Slide 7: Aviation Segment
Aviation Segment Y/Y Comparisons: Quarter-to-Date Year-to-Date Revenue +29% 4Q’22 Y/Y and +65% 2022 Y/Y led by organic growth from distribution 4Q'22 4Q'21 vs. 4Q'21 2022 2021 vs. 2021 ($ in millions) awards, contributions from Global Parts along with an increases in MRO revenue Revenue $107.2 $82
Slide 8: Fleet Segment
Fleet Segment Y/Y Comparisons: Quarter-to-Date Year-to-Date 4Q'22 4Q'21 vs 4Q’21 2022 2021 vs 2021 Revenue +7% 4Q’22 Y/Y and +12% ($ in millions) 2022 Y/Y driven by growth in Revenue $64.8 $60.5 +7% $261.3 $233.5 +12% commercial and e-commerce sales Operating income $5.6 $5.3 +6% $23.9 $20.4 +17%
Slide 9: Federal & Defense Segment
Federal & Defense Segment Quarter-to-Date Year-to-Date Y/Y Comparisons: 4Q'22 4Q'21 vs 4Q’21 2022 2021 vs 2021 Revenue decreased (7)% 4Q’22 Y/Y and ($ in millions) increased +4% 2022 Y/Y, driven by U.S. Navy Revenue $62.3 $66.9 (7)% $280.3 $269.5 +4% growth, offset by U.S. Army contract completion
Slide 10: Balance Sheet Optionality
Balance Sheet Optionality Quarter-to-Date Year-to-Date Operating and free cash flow in 4Q’22 includes the ($ in millions) 4Q'22 4Q’21 2022 2021 acquisition of $10M in inventory to support expanded Pratt & Whitney distribution agreement in the Asia Operating Cash $12.3 $12.9 $8.1 $(17.6) Pacific re
Slide 11: Appendix
VSE CORPORATION = APPENDIX
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 4Q2022 Net income (loss) $ 5,111 $ (12,366) $ 9,021 $ 6,200 $ 6,244 $ 7,548 $ 9,419 $ 4,848 Adjustments to net income (loss): 310 236
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 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
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
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 31-Dec-22 Net cash (used in) provided by operating activities $ (36,367) $ (17,601) $ 23,445
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 12+ years of senior finance leadership, and services market industry most recently as CFO for GE Aviation experience Engine Services Appointed Chief Executive Officer and Appoin
Slide 18: Aviation Segment Overview
Aviation Segment Overview Refocused Strategy: Higher growth, higher-margin commercial and B&GA distribution and MRO Growth Drivers Representative Customers Key Capabilities MRO Capability Development New MRO offerings to support range of components and engine accessory repairs Commercial and bus
Slide 19: Fleet Segment Overview
Fleet Segment Overview Refocused Strategy: High growth Class 4-8 commercial distribution and e-commerce Growth Drivers Representative Customers Key Capabilities Commercial Customer Diversification Expansion of commercial customer base High-duty cycle, Class 4-8 (medium to to support new medium t
Slide 20: Federal & Defense Segment Overview
Federal & Defense Segment Overview Refocused Strategy: Higher margin, differentiated supply chain, MRO and technical services Growth Drivers Representative Customers Key Capabilities Market Expansion Increase military aviation services with Transportation asset MRO services 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 to independent parts and services provi
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