Enters into a Definitive Agreement to Acquire
Turbine Controls Inc., Enhancing VSE Aviation’s OEM Authorized
Repair Capabilities and Further Increasing its Competency in the
High-Growth Aviation MRO Market
Completes the Divestiture of Substantially All
of the Federal & Defense Segment
Initiates a Process to Explore and Evaluate
Strategic Alternatives Involving the Fleet Segment
Pre-Announces Preliminary Fourth Quarter and
Full-Year 2023 Financial Results and Provides Update on Full-Year
2024 Guidance
VSE Corporation (“VSE” or the “Company”) (NASDAQ: VSEC), a
leading provider of aftermarket distribution and repair services,
announces three significant strategic actions to transform its
portfolio and strengthen its position in the Aviation aftermarket.
The Company is also announcing preliminary fourth quarter and full
year 2023 financial results and providing an update on full year
2024 guidance. The Company plans to provide additional details and
updates during its upcoming earnings call on March 7, 2024.
MANAGEMENT COMMENTARY
“Today marks another important milestone in the execution of
VSE’s transformation,” said John Cuomo, President and CEO of VSE
Corporation. “We completed the divestiture of substantially all of
the Federal and Defense segment assets, announced a strategic
review of our Fleet segment, and entered into a definitive
agreement to acquire a market-leading highly technical OEM centric
Aviation MRO business. These actions reaffirm our commitment to
simplify our business and go-to-market strategy, as we solidify our
position as a leading provider of Aviation aftermarket distribution
and repair services.”
Mr. Cuomo continued, “I am proud to announce the agreement to
acquire Turbine Controls, Inc. (“TCI”). Their strong reputation as
an MRO leader, along with their commitment to quality and OEM
partnership is uniquely aligned with VSE’s operating and strategic
model. TCI has a long history of serving as a critical OEM partner
to the major commercial engine and accessory OEMs. Their diverse
repair capabilities across engine components and airframe
accessories, serving commercial, military, and business and general
aviation markets, will allow us to broaden our OEM Authorized MRO
capabilities, expand into new markets, and serve new customers. We
are excited to welcome the TCI team to the VSE Aviation family and
look forward to building on their history of success as a
specialized, highly technical MRO market leader.”
Mr. Cuomo concluded, “An ongoing objective of VSE is to drive
long-term value for our stakeholders, which includes continuously
evaluating our portfolio to ensure we are best positioned to
execute on our strategic objectives, and strengthen our balance
sheet. We believe an evaluation of strategic alternatives for our
Fleet segment is a prudent approach at this time. Throughout this
process, we will continue to fully support the growth of our
business, our outstanding employees, and our customer and supplier
partners.”
ACQUISITION OF TURBINE CONTROLS, INC.
VSE announced today that it has signed a definitive agreement to
acquire Turbine Controls, Inc., a leading provider of aftermarket
maintenance, repair and overhaul (“MRO”) support services for
complex engine components, as well as engine and airframe
accessories, across commercial and military applications. TCI has a
strong presence across a large installed base of engine platforms,
including several key next-generation platforms. Operating from
their MRO centers of excellence in Connecticut and Florida, TCI’s
offering of jet engine component and accessory repair services
includes rotating and static engine components; reduction, transfer
and accessory gearboxes; and pneumatic, hydraulic, fuel and oil
accessories. TCI’s 45-year history of customer excellence and
strong original equipment manufacturer (“OEM”)-focused repair
approach aligns with VSE’s OEM-partner focused strategy. VSE will
acquire TCI for a total consideration of approximately $120
million, comprising $110 million in cash and $10 million of common
shares of the Company, subject to working capital adjustments. The
acquisition is expected to close in the second quarter of 2024,
subject to customary closing conditions.
FEDERAL AND DEFENSE DIVESTITURE UPDATE
VSE also announced today that the Company has completed the sale
of substantially all of its Federal and Defense segment (“FDS”)
operating assets. The FDS divestitures were completed in two
transactions with two buyers for a total cash consideration of
$44.0 million, which included $10.0 million of estimated net
working capital adjustments (subject to post-closing adjustments).
Associated with the sale of the FDS assets, VSE will cease use of
the one remaining non-core FDS facility and complete all transition
work by the second quarter of 2024. Concurrent with the sale and to
reduce expenses and consolidate its operating footprint, VSE will
reposition its Alexandria, VA headquarters facility and relocate
its corporate headquarters later in 2024.
REVIEW OF STRATEGIC ALTERNATIVES FOR THE FLEET
SEGMENT
VSE has initiated a process to explore and evaluate strategic
alternatives involving the Company’s Fleet segment with a view to
enhance shareholder value (the “Strategic Process”). The Strategic
Process could include, among other alternatives, a possible sale of
the Fleet segment. The Company has not set a definitive timetable
for the completion of the Strategic Process, and there can be no
assurances that the process will result in a transaction. Any
potential strategic alternative will be evaluated by the Board of
Directors. The Company does not intend to discuss developments with
respect to the evaluation process unless a transaction is approved,
or disclosure becomes appropriate. Jefferies LLC has been engaged
as the financial advisor in connection with this Strategic
Process.
PRELIMINARY FOURTH QUARTER AND FULL YEAR 2023
RESULTS(1)
4Q'23 (Preliminary -
unaudited)
FY'23 (Preliminary -
unaudited)
Revenue
~$235 million
~$860 million
GAAP Net Income
~$13 million
~$43 million
GAAP EPS (Diluted)
~$0.82
~$3.04
Adjusted EBITDA(2)
~$31 million
~$114 million
Adjusted EPS(2)
~$0.85
~$3.31
Free Cash Flow(2)
~$20 million
~$(40) million
(1)
From continuing operations
(2)
Non-GAAP measures, see additional
information at the end of this release regarding non-GAAP financial
measures
FULL YEAR 2024 GUIDANCE(3)
VSE estimates full year 2024 revenue growth and Adjusted EBITDA
margin guidance for its Aviation segment. The guidance is as
follows:
- Aviation segment full year 2024 revenue growth of 24% to 28%,
as compared to the prior year.
- Aviation segment Adjusted EBITDA margin expected to be between
15% and 16%.
(3)
VSE plans to update full year 2024 revenue
growth and Adjusted EBITDA margin guidance in the second quarter
after completing the acquisition of TCI.
VSE estimates its full year 2024 revenue growth and Adjusted
EBITDA margin guidance for its Fleet segment. The new guidance is
as follows:
- Fleet segment full year 2024 revenue growth of 13% to 17%, as
compared to the prior year.
- Fleet segment Adjusted EBITDA growth of 8% to 12%, as compared
to the prior year.
ADVISORS
Jones Day served as legal counsel to VSE Corporation for all
reported transactions.
Jefferies LLC served as exclusive financial advisor to VSE
Corporation for the Federal and Defense divestitures.
RBC Capital Markets, LLC served as exclusive financial advisor
to Turbine Controls, Inc.
ABOUT VSE CORPORATION
VSE is a leading provider of aftermarket distribution and repair
services. Operating through its two key segments, VSE significantly
enhances the productivity and longevity of its customers'
high-value, business-critical assets. The Aviation segment is a
leading provider of aftermarket parts distribution and maintenance,
repair, and overhaul (MRO) services for components and engine
accessories to commercial, business, and general aviation
operators. The Fleet segment specializes in part distribution,
engineering solutions, and supply chain management services catered
to the medium and heavy-duty fleet market. For more detailed
information, please visit VSE's website at www.vsecorp.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements.
These forward-looking statements, which are included in accordance
with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, may involve known and unknown risks,
uncertainties and other factors that may cause VSE’s actual results
to vary materially from those indicated or anticipated by such
statements. These forward-looking statements include, without
limitation, the Company’s preliminary 2023 results, financial
guidance for 2024 and the anticipated benefits the acquisition of
Turbine Controls, the disposition of the Federal and Defense
business and the strategic review with respect to the Fleet
business. Many factors could cause actual results and performance
to be materially different from any future results or performance,
including, among others, the closing of our books for the fiscal
year, our ability to execute on our strategic plan and realize the
anticipated benefits of the acquisition of Turbine Controls, the
disposition of the Federal and Defense business and the strategic
review with respect to the Fleet business, and the other risk
factors described in our reports filed or expected to be filed with
the SEC. Any forward-looking statement or statement of belief
speaks only as of the date of this press release. We undertake no
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events
or changes to future operating results.
PRELIMINARY RESULTS
Our actual operating results remain subject to the completion of
our year-end closing process, which includes review by management
and our audit committee. While carrying out such procedures, we may
identify items that would require us to make adjustments to the
preliminary estimates of our operating results set forth herein. As
a result, our actual operating results could be outside of the
ranges set forth herein and such differences could be material. The
preliminary estimates of our financial results included herein have
been prepared by, and are the responsibility of, our management.
our independent registered public accountants have not completed
their audit with respect to such preliminary estimates of our
operating results. The information presented herein should not be
considered a substitute for the financial information we file with
the SEC in our Annual Report on Form 10-K for the year-ended
December 31, 2023.
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance
with U.S. Generally Accepted Accounting Principles (GAAP), this
release also contains non-GAAP financial measures. These measures
provide useful information to investors, and a reconciliation of
these measures to the most directly comparable GAAP measures and
other information relating to these non-GAAP measures is included
in the supplemental schedules attached.
The non-GAAP Financial Information set forth in this document is
not calculated in accordance with GAAP under SEC Regulation G. We
consider Adjusted Net Income, Adjusted EPS (Diluted), EBITDA,
Adjusted EBITDA, and free cash flow as non-GAAP financial measures
and important indicators of performance and useful metrics for
management and investors to evaluate our business' ongoing
operating performance on a consistent basis across reporting
periods. These non-GAAP financial measures, however, should not be
considered in isolation or as a substitute for performance measures
prepared in accordance with GAAP. Adjusted Net Income represents
Net Income adjusted for acquisition-related costs including any
earn-out adjustments, loss on sale of a business entity and certain
assets, gain on sale of property, other discrete items, and related
tax impact. Adjusted EPS (Diluted) is computed by dividing net
income, adjusted for the discrete items as identified above and the
related tax impacts, by the diluted weighted average number of
common shares outstanding. EBITDA represents net income before
interest expense, income taxes, amortization of intangible assets
and depreciation and other amortization. Adjusted EBITDA represents
EBITDA (as defined above) adjusted for discrete items as identified
above. Free cash flow represents operating cash flow less capital
expenditures.
The Company has presented forward-looking statements regarding
Adjusted EBITDA margin. This non-GAAP financial measure is derived
by excluding certain amounts, expenses or income, from the
corresponding financial measure determined in accordance with GAAP.
The determination of the amounts that are excluded from this
non-GAAP financial measure is a matter of management judgment and
depends upon, among other factors, the nature of the underlying
expense or income amounts recognized in a given period in reliance
on the exception provided by item 10(e)(1)(i)(B) of Regulation S-K.
We are unable to present a quantitative reconciliation of
forward-looking Adjusted EBITDA margin to its most directly
comparable forward-looking GAAP financial measure because such
information is not available, and management cannot reliably
predict all of the necessary components of such GAAP measure
without unreasonable effort or expense. In addition, we believe
such reconciliation would imply a degree of precision that would be
confusing or misleading to investors. The unavailable information
could have a significant impact on the company's future financial
results. This non-GAAP financial measure is a preliminary estimate
and is subject to risks and uncertainties, including, among others,
changes in connection with quarter-end and year-end adjustments.
Any variation between the company's actual results and preliminary
financial data set forth above may be material.
NON-GAAP FINANCIAL INFORMATION
Reconciliation of Approximate Adjusted Net Income and
Approximate Adjusted EPS to Approximate Net Income
Three months ended December
31,
For the years ended December
31,
($ in millions - unaudited)
2023
2022
2023
2022
Net income from continuing operations
$
12.8
$
7.9
$
43.2
$
26.7
Adjustments to net income from continuing
operations:
Non-recurring professional fees
—
—
0.3
—
Debt issuance costs
0.2
—
0.4
—
Acquisition, integration and restructuring
costs
0.6
0.5
4.4
1.3
Russia/Ukraine conflict (2)
—
—
—
2.3
13.6
8.4
48.3
30.3
Tax impact of adjusted items
(0.2
)
(0.1
)
(1.3
)
(0.9
)
Adjusted net income from continuing
operations
$
13.4
$
8.3
$
47.0
$
29.4
Weighted average dilutive shares
15.8
12.9
14.2
12.8
Adjusted EPS (Diluted)
$
0.85
$
0.64
$
3.31
$
2.30
(2)
Adjustment represents a non-cash charge
recorded to reduce the carrying amount of accounts receivable and
inventory related to the Russia/Ukraine military conflict.
Reconciliation of Approximate Consolidated EBITDA and
Approximate Adjusted EBITDA to Approximate Net Income
Three months ended December
31,
For the years ended December
31,
($ in millions - unaudited)
2023
2022
2023
2022
Net income from continuing operations
$
12.8
$
7.9
$
43.2
$
26.7
Interest expense
9.3
5.6
31.1
17.9
Income taxes
3.2
2.4
13.8
9.1
Amortization of intangible assets
3.6
3.8
14.4
15.7
Depreciation and amortization
1.9
1.3
6.7
5.3
EBITDA
30.8
21.0
109.2
74.7
Non-recurring professional fees
—
—
0.3
—
Acquisition, integration and restructuring
costs
0.6
0.5
4.4
1.3
Russia/Ukraine conflict (1)
—
—
—
2.3
Adjusted EBITDA
$
31.4
$
21.5
$
113.9
$
78.3
(1)
Adjustment represents a non-cash charge
recorded to reduce the carrying amount of accounts receivable and
inventory related to the Russia/Ukraine military conflict.
Reconciliation of Operating Cash to
Free Cash Flow
Three months ended December
31,
For the years ended December
31,
($ in millions - unaudited)
2023
2022
2023
2022
Net cash provided by (used in) operating
activities
$
27.9
$
12.3
$
(21.8
)
$
8.1
Capital expenditures
(7.9
)
(3.8
)
(18.7
)
(11.2
)
Free cash flow
$
20.1
$
8.5
$
(40.5
)
$
(3.1
)
CONFERENCE CALL
A conference call will be held Thursday, March 7, 2024 at 8:30
A.M. EST to review the Company’s financial results, discuss recent
events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation
materials will be available in the Investor Relations section of
VSE’s website at https://ir.vsecorp.com. To listen to the live
broadcast, go to the site at least 15 minutes prior to the
scheduled start time to register, download and install any
necessary audio software.
To participate in the live teleconference:
Domestic Live:
(844) 826-3035
International Live:
(412) 317-5195
Audio Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1654757&tp_key=69cc389df7
To listen to a replay of the teleconference through March 21,
2024:
Domestic Replay:
(844) 512-2921
International Replay:
(412) 317-6671
Replay PIN Number:
10186239
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240229846723/en/
Michael Perlman VP, Investor Relations & Treasury T: (954)
547-0480 M: (561) 281-0247 investors@vsecorp.com
VSE (NASDAQ:VSEC)
過去 株価チャート
から 4 2024 まで 5 2024
VSE (NASDAQ:VSEC)
過去 株価チャート
から 5 2023 まで 5 2024