VSE Corporation Announces Second Quarter 2020 Results
ALEXANDRIA, Va., July 29, 2020 - VSE Corporation (NASDAQ: VSEC, “VSE”, or the “Company”), a leading provider of aftermarket distribution and maintenance, repair and overhaul (MRO) services for land, sea and air transportation assets for government and commercial markets, today announced results for the second quarter 2020.
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
(1) Cash provided by operating activities less capital expenditures
For the three months ended June 30, 2020, the Company reported total revenue of $168.7 million, versus $189.1 million for the same period ended 2019. Total revenue in the second quarter 2020, excluding contributions from Prime Turbines, an Aviation segment subsidiary sold in February 2020, was $168.7 million, versus $181.1 million in the same period of 2019. The Company reported adjusted net income of $6.6 million or $0.60 per adjusted diluted share, compared to $10.3 million or $0.93 per adjusted diluted share in the prior-year period. Adjusted EBITDA declined to $17.2 million in second quarter 2020, versus $23.7 million for the same period in 2019. The Company generated $14.9 million in free cash flow during the second quarter 2020, versus $(2.7) million in the prior-year period. VSE reduced total debt outstanding by $13.2 million during the second quarter 2020.
Aviation segment revenue, excluding Prime Turbines, declined 31% on a year-over-year basis in the second quarter 2020. Revenue passenger miles at major airline customers declined materially on a year-over-year basis due to the impact of the COVID-19 pandemic, resulting in lower demand for aftermarket supply and MRO services during the second quarter. Federal & Defense segment revenue declined 18.7% on a year-over-year basis primarily due to the completion of DoD program work in January 2020. Fleet segment revenue increased 32.4% on a year-over-year basis due primarily to a large, non-recurring order for COVID-19 related personal protective equipment (PPE) supplies from a government customer.
During the three months ended June 30, 2020, VSE recognized (1) a non-cash impairment charge of $30.9 million as the fair value of its Aviation reporting unit was below its carrying value due to the current decline in global aviation demand for aftermarket distribution and MRO services associated with the pandemic; and (2) a non-cash impairment charge of $2.8 million for intangible assets related to CT Aerospace assets. This resulted in a $33.7 million goodwill and intangible asset non-cash impairment charge for the three and six months ended June 30, 2020.
VSE continued to execute on a multi-year strategy during the second quarter that includes new business development initiatives across each of its aftermarket supply chain and MRO end-markets, the divestiture of non-core, lower-margin businesses, the integration of acquired assets, increased balance sheet discipline and targeted cost reductions to enhance the overall efficiency of the organization.
New business development. All business segments reported new business development successes during the second quarter. The Federal & Defense segment won both new contract awards and recompete awards. During the first half of 2020, Federal & Defense segment won more than $116 million in new customer awards, versus