Slide 1: Third Quarter 2023 Results Conference Call
VSEcorp.com Third Quarter 2023 Results Conference Call November 2, 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: Q3 Business Update
Q3 Business Update Strong Program Execution and Market Share Gains Driving Exceptional Financial Performance Aviation Fleet +48% Revenue Growth +22% Revenue Growth • Record sales results driven by strong execution on • Revenue driven by growth across all revenue new and existing distribution program
Slide 4: Strategic Update
Strategic Update Strategic Repositioning of the Business with Increased Aftermarket Exposure Increased Exposure to Aviation Aftermarket Repositioning the Portfolio Desser Aerospace Acquisition Honeywell Fuel Control Acquisition Federal & Defense Segment Sale Update ▪ Announcement: July 2023, VSE ▪ A
Slide 5: Q3 2023 Overview
Q3 2023 Overview > Total Revenue: $231M, +38% Y/Y Total VSE* > Net Income: $12M, +57% Y/Y > Adjusted EBITDA: $32M, +56% Y/Y > Revenue: $152M +48% Y/Y Aviation > Operating Income: $21M, +109% Y/Y > Adjusted EBITDA: $25M, +87% Y/Y > Revenue: $79M, +22% Y/Y Fleet > Operating Income: $9M, +30% Y/Y > Adj
Slide 6: VSE Financial Summary
VSE Financial Summary Revenue Quarter-to-Date Year-to-Date ▪ Aviation +48% and Fleet +22% 3Q'23 3Q’22 vs. vs. ▪ Aviation: Record revenue growth 3Q’22 YTD'23 YTD’22 YTD’22 ($ in millions except EPS) driven by strong program execution, an expansion of product offerings and Revenue $231.4 $167.4 +38% $
Slide 7: Consolidated Performance Bridge
Consolidated Performance Bridge Revenue Operating Adj. Adj. EBITDA ▪ Aviation segment revenue and profit growth Income EBITDA Margin % supported by strong program execution, 3Q’22 QTD $167.4 $15.1 $20.8 12.4% expansion in distribution product offerings Aviation +49.8 +11.0 +11.7 +2.6 pts and MRO cap
Slide 8: Aviation Segment
Aviation Segment Y/Y Comparisons: Quarter-to-Date Year-to-Date ▪ Revenue increased 48% to $152M in 3Q’23, 3Q'23 3Q'22 vs. 3Q'22 driven by growth in distribution programs, 3Q'23 3Q'22 vs. 3Q'22 increases in MRO activity, and the addition ($ in millions) of Desser Aerospace Revenue $152.4 $102.6 +48%
Slide 9: Fleet Segment
Fleet Segment Quarter-to-Date Year-to-Date Y/Y Comparisons: ▪ Revenue increased 22% to $79M in 3Q’23, ($ in millions) 3Q'23 3Q'22 vs 3Q’22 3Q'23 3Q'22 vs 3Q’22 driven by solid growth in e-commerce fulfillment, commercial fleet sales, and Revenue $79.0 $64.8 +22% $234.8 $196.5 +19% USPS sales Adjuste
Slide 10: Balance Sheet Optionality
Balance Sheet Optionality Quarter-to-Date ▪ Cash and unused commitment availability of $89M 3Q’23 2Q’23 1Q’23 ▪ Capital allocation priorities include financing bolt-on ($ in millions) acquisitions and working capital needs for strategic $15.3 $(16.4) $(48.7) investments to support growth prospects O
Slide 11: Entering Next Phase of VSE's Transformation
Entering Next Phase of VSE’s Transformation > Continue to pursue the near-term sale of FDS segment assets FDS Sale / > Reposition VSE into two segments – Aviation and Fleet Reposition Business > Focus on aftermarket distribution and MRO services supporting aviation and fleet customers > Transition a
Slide 12: Appendix
VSE CORPORATION P APPENDIX
Slide 13: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations EBITDA and Adjusted EBITDA ($ in thousands, except per share data) 1Q2022 2Q2022 3Q2022 1Q2023 2Q2023 3Q2023 Net income $ 6,289 $ 4,755 $ 7,699 $ 8,120 $ 10,089 $ 12,111 Interest expense, net 3,610 3,872 4,821 5,980 7,366 8,459 Income taxes 2,118 1,908 2,589 2,678 3,
Slide 14: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Adjusted Net Income and Adjusted EPS (Diluted) ($ in thousands, except per share data) 1Q2022 2Q2022 3Q2022 1Q2023 2Q2023 3Q2023 Income from continuing operations $ 6,289 $ 4,755 $ 7,699 $ 8,120 $ 10,089 $ 12,111 Adjustments: Acquisition, integration and restructurin
Slide 15: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Segment EBITDA and Adjusted EBITDA ($ in thousands) 1Q2022 2Q2022 3Q2022 1Q 2023 2Q 2023 3Q 2023 Aviation Operating income $ 7,622 $ 6,450 $ 10,017 $ 15,663 $ 15,783 $ 20,951 Depreciation and amortization 3,035 3,110 3,413 3,254 3,432 4,329 EBITDA 10,657 9,560 13,430
Slide 16: 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-23 30-Jun-23 30-Sep-23 Net cash (used in) provided by operating activities $ (48,674) $ (16,374) $ 15,320 Capital expenditures (2,840) (3,297) (4,658) Fr