On July 31, 2024, VSE Corp (VSEC, Financial) released its 8-K filing for the second quarter of 2024. VSE Corp is a diversified aftermarket products and services company providing repair services, parts distribution, logistics, supply chain management, and consulting services for land, sea, and air transportation assets to commercial and government markets. The company's operations include supply chain management solutions, parts supply and distribution, and maintenance, repair, and overhaul (MRO) services for vehicle fleet, aviation, maritime, and other customers. Its reportable segments are Aviation and Fleet, with the majority of revenue generated from the Aviation segment.
Performance Overview
VSE Corp (VSEC, Financial) reported total revenues of $266.0 million for Q2 2024, marking a 29.6% increase compared to the same period last year. However, the company posted a GAAP net loss of $2.8 million, a significant decline of 127.5% year-over-year. The GAAP EPS (Diluted) was $(0.16), down 120.5% from the previous year. Adjusted EBITDA rose by 18.4% to $31.3 million, while Adjusted Net Income increased by 4.5% to $11.0 million. Adjusted EPS (Diluted) was $0.64, a decrease of 22.0%.
Segment Performance
The Aviation segment achieved record revenue of $192.8 million, a 55% increase year-over-year. This growth was driven by strong performance in existing distribution programs, new distribution awards, expanded MRO capabilities, and recent acquisitions. The segment's Adjusted EBITDA increased by 61% to $31.0 million, with an Adjusted EBITDA margin of 16.1%, up 70 basis points from the previous year.
Conversely, the Fleet segment saw a 9% decline in revenue to $73.1 million, primarily due to a 37% drop in USPS revenue as the USPS transitions to a new Fleet Management Information System (FMIS). However, revenue from commercial customers grew by 22%, driven by e-commerce fulfillment and commercial fleet sales. The segment's Adjusted EBITDA fell by 65.7% to $3.3 million, with an Adjusted EBITDA margin of 4.5%, down 740 basis points year-over-year.
Financial Achievements and Challenges
Despite the net loss, VSE Corp (VSEC, Financial) made significant strides in strengthening its balance sheet. The company reduced its net leverage ratio to 3.2 times Adjusted EBITDA, within its target range of 3.0 to 3.5 times, following a successful equity offering in May 2024. The company also reported $194 million in cash and unused commitment availability under its $350 million revolving credit facility as of June 30, 2024.
The VSE team delivered another milestone quarter marked by record revenue and profitability for our Aviation segment coupled with solid execution against our 2024 strategic transformation priorities," said John Cuomo, President and CEO of VSE Corporation.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Total Revenues | $266.0 million | $205.2 million | 29.6% |
| GAAP Net (Loss) Income | $(2.8) million | $10.1 million | (127.7)% |
| GAAP EPS (Diluted) | $(0.16) | $0.78 | (120.5)% |
| Adjusted EBITDA | $31.3 million | $26.5 million | 18.4% |
| Adjusted Net Income | $11.0 million | $10.6 million | 4.5% |
| Adjusted EPS (Diluted) | $0.64 | $0.82 | (22.0)% |
Balance Sheet and Cash Flow
As of June 30, 2024, VSE Corp (VSEC, Financial) had $194 million in cash and unused commitment availability under its $350 million revolving credit facility. The company reported a total net debt outstanding of $445 million, with a pro forma net leverage ratio of approximately 3.2 times Adjusted EBITDA.
Strategic Initiatives
VSE Corp (VSEC, Financial) continues to focus on strategic initiatives, including scaling its new European Distribution Center of Excellence in Hamburg, Germany, supporting the Pratt & Whitney Canada EMEA program, and launching a new OEM licensed manufacturing program. The company also completed the acquisition of TCI in April 2024, which has exceeded initial performance expectations.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from VSE Corp for further details.
