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VSE Corp. (VSEC) Tops Q2 EPS by 26c, Revenues Beat

July 29, 2020 5:15 PM EDT

VSE Corp. (NASDAQ: VSEC) reported Q2 EPS of $0.60, $0.26 better than the analyst estimate of $0.34. Revenue for the quarter came in at $168.7 million versus the consensus estimate of $142 million.

SECOND QUARTER 2020 SUMMARY RESULTS AS COMPARED TO THE SECOND QUARTER 2019

  • Total Revenues of $168.7 million decreased 10.8%
  • Total Revenues, excluding the impact Prime Turbines divestiture, decreased 6.8%
  • GAAP Net Loss of $22.6 million decreased $32.5 million due to a non-cash impairment charge
  • Adjusted Net Income of $6.6 million decreased 35.8%
  • Total Adjusted EBITDA of $17.2 million decreased 27.1%
  • GAAP EPS (Diluted) of $(2.05)/share decreased $2.94/share
  • Adjusted EPS (Diluted) of $0.60/share decreased $0.33/share
  • Operating Cash Flow of $16.0 million increased $13.0 million
  • Free Cash Flow(1) of $14.9 million increased $17.6 million

MANAGEMENT COMMENTARY

“During the last twelve months, we positioned VSE to become a leaner, scalable, more profitable business with differentiated value propositions capable of achieving sustained growth,” stated John Cuomo, President and CEO of VSE Corporation. “While the COVID-19 pandemic presents a unique set of near-term challenges for our business, we quickly adapted to the current environment through a series of targeted divestitures, cost reductions and new business development initiatives. Our go-to-market strategy continues to gain traction, as evidenced by multiple new contract awards and successful recompetes announced in recent months. On a combined basis, we expect these collective actions will position us to generate positive adjusted net income and free cash flow for the full-year 2020.”

“We currently anticipate sequential (quarter-over-quarter) growth in Aviation segment revenue and earnings during the third quarter of 2020," continued Cuomo. "In recent quarters, we have taken decisive action to improve the efficiency of our Aviation segment. These actions include an ongoing program to integrate our business units, which will reduce our go-to-market Aviation entities from seven to two, thereby establishing market-leading business units that serve distribution and MRO customers. Additionally, this includes the exiting of three Aviation site locations, and the reduction of more than $13 million of annualized costs from the Company.”

“While the pace of recovery in our Aviation segment will be gradual and uncertain, we have created a strong foundation for growth as market conditions improve, including the continued expansion of MRO capabilities and distribution product offerings” stated Cuomo. “Before year-end 2020, we intend to name a new head of Aviation that will help to lead this business into its next phase of growth.”

“New business development remains our top management priority across each reporting segment,” continued Cuomo. “Bidding activity within our Federal & Defense segment increased on a year-over-year basis in the first half of 2020, resulting in multiple new wins and successful recompetes. During July 2020 alone, we announced more than $42 million in new bookings. In our Fleet segment, commercial revenue increased by 67.5% on a year-over-year basis. During the second quarter, we added new products and capabilities in our Aviation and Fleet segments, both of which will support revenue and earnings growth in the second half of 2020.”

“Cash and liquidity increased on both a sequential and year-over-year basis in the second quarter, while net debt declined to the lowest level in nearly two years,” continued Cuomo. “We are well capitalized to support the growth of our business, while maintaining a high level of balance sheet discipline. We remain focused on achieving increased capital efficiency through improved inventory and cash management, while balancing customer requirements to ensure the highest level of service on a global scale.”

For earnings history and earnings-related data on VSE Corp. (VSEC) click here.



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