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VSE Investor Overview & 10-Year Retrospective
FY 2014
Christine Kaineg, VSE Investor Relations
703-329-3263 or [email protected]
1
A Proven Industry Leader
Fleet Sustainment
Service life extension and performance enhancement of aging mission critical fleets, including vehicles, ships and aircraft
Supply Chain Management
• Total life cycle end-to-end product movement including complete logistics visibility and asset tracking. Warehouse management with extensive facilities expertise and large scale inventory control procedures.
Maintenance, Repair and Overhaul
• One of the nation's leading providers of maintenance, reset, overhaul and modernization support, ensuring land, sea and air systems are capable of performing their operational missions throughout their lifecycle.
Energy, IT and Consulting Services Professional competencies in strategic planning, clean energy solutions, policy analysis, performance metrics, project management, enterprise architecture, data mining, public protection/security, and technical and software engineering
2
3
Market Segment Overview
Supply Chain Management
• Logistics
• Field Support
• Warehouse Management
• Program Management
• Demand Forecasting
• Source/Procurement
• Customer Inventory Management
Maintenance, Repair & Overhaul
• Engineering
• Design Management
• Research & Development
• Program Management
• Foreign Military Sales (FMS)
• Reverse Engineering
IT and Consulting Services
• IT Services
• Management Consulting
• Process Improvement
• Medical Logistics
• Energy and Environment Consulting Services
Diverse Groups & Subsidiaries
Federal Services Group Maintenance, Repair and Overhaul, Equipment and Vehicle Repair/Reset; Foreign Military Sales; Ship Transfer, Modernization and Repair; Aircraft Maintenance, Corrosion Control; Engineering; Advanced Technologies; Transportation Coordination; Procurement/Sourcing; Warehouse Management; Government Seized and Forfeited Property; Munitions & Ordnance Engineering; Facility Decontamination; Prognostics/Diagnostics Energetics
Grid Modernization, Energy Efficiency, Clean Energy, Energy Policy, and Infrastructure Protection and Resilience
VSE Aviation, Inc. Maintenance, repair and overhaul and parts supply for corporate and regional jet aircraft engines and engine accessories. Includes Prime Turbines, CT Aerospace, Kansas Aviation and Air Parts & Supply Co.
Wheeler Bros., Inc. Supply Chain Management, Procurement Legacy System Repair Parts; Reverse Engineering; Material Planning and Sourcing; Logistics Visibility and Asset Tracking; Warehouse Management
Akimeka Information Technology Services and Solutions– Medical Logistics; Medical Command & Control; E-health; Information Assurance; Recovery Case; Public Safety; Web-Based Technologies; Enterprise Architecture; Data Migration, Management Mining and Warehousing
4
$280.1
$364.0
$603.2
$937.4
$974.2
$811.0
$580.8
$546.8
$471.6
$424.1
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 20145
Won Iraq/Afghanistan War Support Contracts
(CECOM R2 and Tanker Coating)
Revenue & Key Events Timeline
Iraq/Afghanistan War support contract bookings
reach nearly $1B (CECOM R2)
U.S. enters recession leading to
financial & budget crisis . Withdrawal
from middle east begins to accelerate.
Acquisition of WBI (June 2011)
Acquisition of VSE Aviation, Inc. (Jan 2015)
Acquisition of Akimeka, LLC (Aug 2010)
Acquisition of ICRC (June 2007)
Acquisition of G&B (2008)
2005-2014 Revenue CAGR = 4.2%
NASDAQ CAGR: 8.07%
6
Range: Feb 1, 2014 – Feb 1, 2015
Source: E*TRADE Financial
VSE Stock Price Peer Comparison
VSEC Stock Performance
Customer Revenue Breakdown
94%
5%
1%
2006
Defense
Federal Civil
Commercial
7
$280.1
$364.0
$603.2
$937.4
$974.2
$811.0
$580.8
$546.8
$471.6
$424.1
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2005-2014 REVENUE CAGR = 4.2%
8
Revenue & Key Internal Events
Penetrated Army Reserve stateside
vehicle “re-set” market”
Won first NAVSEA FMS re-compete
Acquired G&B Solutions
Acquired Akimeka
Acquired Wheeler Bros., Inc.
Won Rapid Response (R2) Contract
9
2014 Financial Summary
Source: 2014 VSE Annual Report
10
2014 Financial Summary
Source: 2014 VSE Annual Report
All per share data has been adjusted for stock splits
11
2014 Financial Summary
Source: 2014 VSE Annual Report
All per share data has been adjusted for stock splits
12
2014 Financial Summary
Source: 2014 VSE Annual Report
ROE is calculated as Net Income divided by Beginning of Year Shareholders Equity
All per share data has been adjusted for stock splits
13
14
Summary Income Statement
In thousands, except share and per share amounts
FY 2014 FY 2013For years ending December 31 $ $
Revenues 424,071 471,638
Contract Costs 383,001 424,250
Selling, General and Administrative 4,140 3,285
Gross Profit 41,070 47,388
32,947 38,314
Net Income 19,365
Interest Expense Income (net) 3,983 5,789
22,852
Income Before Taxes
Basic Earnings Per Share 3.62 4.29
Diluted Earnings Per Share 3.61 4.28
Discontinued Operations - -
15
Summary Balance Sheet
In thousands, except share and per share amounts
164,261
29,141
186,803
Total Liabilities and Stockholders' Equity 355,330 380,529
Goodwill and Intangibles (net)
TOTAL LIABILITY & EQUITY FY 2014 FY 2013
STOCKHOLDERS' EQUITY FY 2014 FY 2013
$ $
$ $
Total Stockholders' Equity 205,489
Total Liabilities 149,841 193,726
Long Term Lease Obligations 24,584 25,721
52,669 56,418
Bank Debt 23,563 64,487
LIABILITIES FY 2014 FY 2013
$ $
49,363 39,315
Total Assets 355,330 380,529
52,911 57,738
Inventories
Receivables (net) 59,391 78,387
Cash and Cash Equivalents 263 220
ASSETS FY 2014 FY 2013
$ $
Property and Equipment (net)
Other
Accounts Payable & Accrued Expenses
Other 49,025 25,061
174,309
30,560
16
Selected Quarterly Data
In thousands, except share and per share amounts
17
Stock Trends
Year End Stock Price & Annual Range
18
2005-2014 STOCK PRICE CAGR = 12.1 %
NASDAQ CAGR: 8.07%
Chart shows annual high/low stock price range All per share data has been adjusted for stock splits
19
VSE Corporation Proprietary Information
“Proud of Our Past. Excited About the Future.”
VSE Investor Relations: Christine Kaineg
6348 Walker Lane
Alexandria, Virginia 22310
Phone: (703) 329-3263
Email: [email protected]
20
CEO, President, and COO
M.A. Gauthier
IT, Energy & Management Consulting Segment
Energetics
N. Margolis
Akimeka
J. T. Harris
CFO
T.R. Loftus
Executive Vice President
Contracts & Procurement C.R. Douglas
Vice President
Human Resources
T. Bailey Vice President
General Counsel Corporate Secretary
T. M. Kiernan Vice President
Operational Structure
(Corporate Level)
Federal Services Group
M.A. Gauthier
Includes:
Global Maritime Services
J.R. Brown
Global Land Services
J.M. Coritz
VSE International Corp.
J.M. Coritz/J.R. Brown
Supply Chain Segment
Wheeler Bros., Inc. C. Wheeler
VSE Aviation, Inc.
P. Goffredi
21
EPS growing from $1.29 to $3.61 CAGR = 10.8%
VSE 10-Year Financial Data
22
2005 – 2014 CAGRs:
Revenue CAGR = 4.2%
Net Income CAGR = 12.1%
Shareholders Equity CAGR = 23.3%
VSE Trajectory 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Revenue ($M) $280.1 $364.0 $603.2 $937.4 $974.2 $811.0 $580.8 $546.8 $471.6 $424.1
Net Income ($M) $6.2 $7.8 $14.1 $19.0 $24.0 $23.7 $20.5 $21.3 $22.8 $19.4
Net Margin 2.2% 2.1% 2.3% 2.0% 2.5% 2.9% 3.5% 3.9% 4.8% 4.6%
Shareholders' Equity (BOY) $23M $30M $38M $56M $76M $101M $124M $144M $164M $187M
VSE Return on Equity (ROE) 26.8% 25.8% 36.9% 33.8% 31.6% 23.4% 16.6% 14.8% 13.9% 10.4%
Long Term Debt ($M) $0M $0M $0M $0M $0M $11M $145M $116M $65M $23M
Split adjusted Earnings Per Share $1.33 $1.64 $2.85 $3.75 $4.68 $4.56 $3.93 $4.03 $4.29 $3.62
Diluted Earnings Per Share $1.29 $1.61 $2.82 $3.74 $4.67 $4.53 $3.90 $4.01 $4.28 $3.61
Dividends $0.115 $0.135 $0.155 $0.175 $0.195 $0.23 $0.27 $0.31 $0.35 $0.39
$280.1
$364.0
$603.2
$937.4
$974.2
$811.0
$580.8
$546.8
$471.6
$424.1
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
$1,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 201423
Mergers, Divestitures & Acquisitions
Acquired
Acquired Acquired
Divested
Acquired
Jan. 2015
Acquired
Merged
2.2% 2.1%
2.3%
2.0%
2.5%
2.9%
3.5%
3.9%
4.8%
4.6%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Net Margin
24
2005-2014 NET MARGIN CAGR = 7.6%
P/E Range w/ Year End P/E
25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
High P/E 15.91 15.80 23.86 13.24 10.46 11.77 8.44 6.73 12.17 20.70
Low P/E 7.94 6.08 11.68 6.05 4.16 5.84 5.35 5.18 5.17 11.33
Year End P/E Ratio 15.85 10.31 17.15 10.45 9.62 7.23 6.18 6.27 11.20 18.22
15.85
10.31
17.15
10.459.62
7.23
6.18 6.27
11.20
18.22
0.00
5.00
10.00
15.00
20.00
25.00
30.00
All per share data has been adjusted for stock splits
Debt (End of Year)
26
Enterprise Value
27
VSE Snapshot
28 Chart depicts split adjusted annual dividends per share