VSE (VSEC) 10-Q 3 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 22, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	VSE CORP
Entity Central Index Key	0000102752
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding (in shares)		10,970,123
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019

Unaudited Consolidated Balance

Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 829	$ 162
Receivables, net	64,746	60,004
Unbilled receivables, net	44,450	41,255
Inventories, net	181,069	166,392
Other current assets	18,456	13,407
Total current assets	309,550	281,220
Property and equipment, net	40,167	49,606
Intangible assets, net	152,901	94,892
Goodwill	259,212	198,622
Operating lease right-of-use assets	26,371
Other assets	15,844	14,488
Total assets	804,045	638,828
Current liabilities:
Current portion of long-term debt	9,466	9,466
Accounts payable	59,106	57,408
Current portion of earn-out obligation	10,700	0
Accrued expenses and other current liabilities	39,919	37,133
Dividends payable	876	871
Total current liabilities	120,067	104,878
Long-term debt, less current portion	265,681	151,133
Deferred compensation	20,909	17,027
Long-term lease obligations, less current portion	0	18,913
Long-term operating lease liabilities	26,845
Earn-out obligation	14,300	0
Deferred tax liabilities	18,712	18,482
Total liabilities	466,514	310,433
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 10,949,775 and 10,881,106, respectively	547	544
Additional paid-in capital	28,788	26,632
Retained earnings	308,742	301,073
Accumulated other comprehensive (loss) income	(546)	146
Total stockholders' equity	337,531	328,395
Total liabilities and stockholders' equity	$ 804,045	$ 638,828

Unaudited Consolidated Balanc_2

Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Stockholders' equity:
Common stock, par value (in dollars per share)	$ 0.05	$ 0.05
Common stock, authorized (in shares)	15,000,000	15,000,000
Common stock, issued (in shares)	10,949,775	10,949,775
Common stock, outstanding (in shares)	10,881,106	10,881,106

Unaudited Consolidated Statemen

Unaudited Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues:
Total revenues	$ 169,919	$ 176,897
Costs and operating expenses:
Selling, general and administrative expenses	1,382	819
Amortization of intangible assets	4,991	4,004
Total costs and operating expenses	158,106	165,304
Operating income	11,813	11,593
Interest expense, net	3,158	2,175
Income before income taxes	8,655	9,418
Provision for income taxes	2,052	2,366
Net income	$ 6,603	$ 7,052
Basic earnings per share (in dollars per share)	$ 0.60	$ 0.65
Basic weighted average common shares outstanding (in shares)	10,920,171	10,860,555
Diluted earnings per share (in dollars per share)	$ 0.60	$ 0.65
Diluted weighted average shares outstanding (in shares)	10,974,081	10,896,504
Dividends declared per share (in dollars per share)	$ 0.08	$ 0.07
Products
Revenues:
Total revenues	$ 88,901	$ 88,673
Costs and operating expenses:
Costs and operating expenses	76,293	74,726
Services
Revenues:
Total revenues	81,018	88,224
Costs and operating expenses:
Costs and operating expenses	$ 75,440	$ 85,755

Unaudited Consolidated Statem_2

Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 6,603	$ 7,052
Change in fair value of interest rate swap agreements, net of tax	(692)	211
Other comprehensive (loss) income, net of tax	(692)	211
Comprehensive income	$ 5,911	$ 7,263

Unaudited Consolidated Statem_3

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income	$ 6,603	$ 7,052
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,430	6,484
Deferred taxes	(564)	283
Stock-based compensation	1,640	1,263
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables, net	2,667	(978)
Unbilled receivables, net	(3,195)	13,589
Inventories, net	(7,798)	(18,895)
Other current assets and noncurrent assets	(4,990)	3,169
Accounts payable and deferred compensation	2,653	11,681
Accrued expenses and other current and noncurrent liabilities	(1,675)	(9,949)
Long-term lease obligations	0	(406)
Net cash provided by operating activities	2,771	13,293
Cash flows from investing activities:
Purchases of property and equipment	(601)	(1,053)
Proceeds from the sale of property and equipment	3	0
Cash paid for acquisitions, net of cash acquired	(112,660)	0
Net cash used in investing activities	(113,258)	(1,053)
Cash flows from financing activities:
Borrowings on loan agreement	194,598	247,669
Repayments on loan agreement	(80,183)	(256,368)
Payment of debt financing costs	(1,702)	(1,798)
Payments on capital lease obligations	0	(346)
Payments of taxes for equity transactions	(687)	(641)
Dividends paid	(872)	(759)
Net cash provided by (used in) financing activities	111,154	(12,243)
Net increase (decrease) in cash and cash equivalents	667	(3)
Cash and cash equivalents at beginning of period	162	624
Cash and cash equivalents at end of period	$ 829	$ 621

Unaudited Consolidated Statem_4

Unaudited Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance, beginning balance (in shares) at Dec. 31, 2017		10,839,000
Balance, beginning balance at Dec. 31, 2017	$ 293,095	$ 542	$ 24,470	$ 267,902	$ 181
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	7,052			7,052
Stock-based compensation (in shares)		42,000
Stock-based compensation	2,022	$ 2	2,020
Change in fair value of interest rate swap agreements, net of tax	211				211
Dividends declared	(762)			(762)
Balance, ending balance (in shares) at Mar. 31, 2018		10,881,000
Balance, ending balance at Mar. 31, 2018	$ 303,313	$ 544	26,490	275,887	392
Balance, beginning balance (in shares) at Dec. 31, 2018	10,881,106	10,886,000
Balance, beginning balance at Dec. 31, 2018	$ 328,395	$ 544	26,632	301,073	146
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,603			6,603
Stock-based compensation (in shares)		64,000
Stock-based compensation	2,159	$ 3	2,156
Change in fair value of interest rate swap agreements, net of tax	(692)				(692)
Dividends declared	$ (877)			(877)
Balance, ending balance (in shares) at Mar. 31, 2019	10,881,106	10,950,000
Balance, ending balance at Mar. 31, 2019	$ 337,531	$ 547	$ 28,788	$ 308,742	$ (546)

Unaudited Consolidated Statem_5

Unaudited Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends declared per share (in dollars per share)	$ 0.08	$ 0.07

Nature of Business and Basis of

Nature of Business and Basis of Presentation	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business and Basis of Presentation	Nature of Business and Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, such financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019 . For further information refer to the consolidated financial statements and footnotes thereto included in our 2018 Form 10-K. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include accruals for contract disallowance reserves, award fee revenues, costs to complete on fixed price contracts, recoverability of goodwill and intangible assets, and earn-out obligations. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is required to be adopted using a modified retrospective method and is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB provided an alternative transition method of adoption through ASU No. 2018-11, Targeted Improvements , which provides entities with an optional transition method to apply the transition provisions of ASU 2016-02 at the beginning of the period of adoption. On January 1, 2019, we adopted ASC 842 using the alternative transition method provided by ASU 2018-11 recording right-of-use assets and lease liabilities for our existing leases as of January 1, 2019, as well as a cumulative-effect adjustment to retained earnings of initially applying the new standard as of January 1, 2019. We have elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to lease identification, lease classification, and treatment for initial direct lease costs. We have not elected the practical expedients pertaining to the use of hindsight and land easements. The adoption of new lease standard resulted in the recharacterization of our headquarters lease, which was accounted for using the financing method under previously existing build-to-suit accounting rules, to an operating lease under ASC 842. Upon adoption of the new lease standard on January 1, 2019, we recorded a right-of-use asset of $24.3 million , property and equipment of $2.8 million , and operating lease liability of $29.6 million , with immaterial changes to other balance sheet accounts. The recharacterization resulted in a cumulative-effect adjustment to retained earnings of approximately $1.9 million , net of taxes, as of January 1, 2019. The new standard did not have a significant impact on our consolidated results of operations or cash flows.

Acquisition

Acquisition	3 Months Ended
	Mar. 31, 2019
Business Combinations [Abstract]
Acquisition	Acquisition On January 10, 2019, our wholly owned subsidiary VSE Aviation, Inc. ("VSE Aviation") acquired 100% of the equity of 1st Choice Aerospace Inc. ("1st Choice Aerospace"), a provider of maintenance, repair and overhaul ("MRO") services and products for new generation and legacy commercial aircraft. 1st Choice Aerospace has operations in Florida and Kentucky. We have retained key members of 1st Choice Aerospace's management team under three-year employment contracts with five-year non-compete covenants. The initial purchase consideration paid at closing for 1st Choice Aerospace was approximately $113 million , which included $1.1 million as an estimated net working capital adjustment. We will also be required to make earn-out payments of up to $40 million if 1st Choice Aerospace meets certain financial targets during 2019 and 2020. Approximately $1.1 million of our closing payments was deposited into an escrow account to secure the sellers' indemnification obligations. Any amount remaining in such escrow account at the end of the indemnification period less any then pending indemnification claims will be distributed to the sellers. 1st Choice Aerospace's results of operations are included in our Aviation Group in the accompanying unaudited consolidated financial statements beginning on the acquisition date of January 10, 2019. 1st Choice Aerospace had unaudited revenues of approximately $12.2 million and operating income of approximately $2.6 million before amortization of intangible assets of approximately $1.0 million and allocated corporate costs of approximately $400 thousand from the acquisition date through March 31, 2019. We are in the process of finalizing our valuation of the 1st Choice Aerospace assets acquired and liabilities assumed. The fair values assigned to our 1st Choice Aerospace earn-out obligation and intangible assets acquired were based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations that utilized established valuation techniques. The total estimated purchase price has been allocated to assets acquired (including identifiable intangible assets and goodwill) and liabilities assumed, as follows (in thousands): Description Fair Value Cash $ 396 Accounts receivable 7,409 Inventories 6,879 Prepaid expenses and other current assets 382 Property and equipment 4,044 Intangibles - customer related 55,000 Intangibles - trade name 8,000 Goodwill 60,590 Operating lease right-of-use assets 2,643 Other assets 333 Other current liabilities (5,244 ) Long-term operating lease liabilities (2,376 ) $ 138,056 Cash consideration $ 113,056 Acquisition date fair value of earn-out obligation 25,000 Total $ 138,056 The estimated value attributed to customer relationships is being amortized on a straight-line basis using weighted average useful lives of 17 years . The estimated value attributed to trade name is being amortized on a straight-line basis over nine years. The preliminary amount of goodwill recorded for our 1st Choice Aerospace acquisition was approximately $61 million , all of which is expected to be amortizable for income tax purposes. The goodwill recognized reflects the strategic advantage of expanding our sustainment services into the aviation supply chain market. We incurred approximately $254 thousand of acquisition-related expenses during the three months ended March 31, 2019 which are included in selling, general and administrative expenses. The following VSE consolidated pro forma results are prepared as if the 1st Choice Aerospace acquisition had occurred on January 1, 2018. This information is for comparative purposes only and does not necessarily reflect the results that would have occurred or may occur in the future. The unaudited consolidated pro forma results of operations are as follows (in thousands except per share amounts): Three months ended March 31, 2019 2018 Revenue $ 171,478 $ 187,419 Net Income $ 7,039 $ 7,301 Basic earnings per share $ 0.64 $ 0.67 Diluted earnings per share $ 0.64 $ 0.67

Revenue

Revenue	3 Months Ended
	Mar. 31, 2019
Revenue from Contract with Customer [Abstract]
Revenue	Revenue Disaggregated Revenue Our revenues are derived from contract services performed for United States Postal Service ("USPS"), United States Department of Defense ("DoD") agencies or federal civilian agencies and from the delivery of products to our clients. Our customers also include various other government agencies and commercial entities. A summary of revenues for our operating groups by customer for the three months ended March 31, 2019 and 2018 are as follows (in thousands): Three months ended March 31, 2019 Customer Supply Chain Management Aviation Federal Services Total USPS $ 42,683 $ — $ — $ 42,683 DoD 4,842 895 56,964 62,701 Commercial 3,980 48,475 1,104 53,559 Other government 199 — 10,777 10,976 $ 51,704 $ 49,370 $ 68,845 $ 169,919 Three months ended March 31, 2018 Customer Supply Chain Management Aviation Federal Services Total USPS $ 44,031 $ — $ — $ 44,031 DoD 8,176 1,215 78,262 87,653 Commercial 3,386 31,535 202 35,123 Other government 271 — 9,819 10,090 $ 55,864 $ 32,750 $ 88,283 $ 176,897 A summary of revenues for our operating groups by contract type for the three months ended March 31, 2019 and 2018 are as follows (in thousands): Three months ended March 31, 2019 Contract Type Supply Chain Management Aviation Federal Services Total Cost-type $ — $ 212 $ 27,840 $ 28,052 Fixed-price 51,704 23,936 19,867 95,507 Time and materials — 25,222 21,138 46,360 Total revenues $ 51,704 $ 49,370 $ 68,845 $ 169,919 Three months ended March 31, 2018 Contract Type Supply Chain Management Aviation Federal Services Total Cost-type $ — $ 397 $ 51,121 $ 51,518 Fixed-price 55,864 19,504 15,139 90,507 Time and materials — 12,849 22,023 34,872 Total revenues $ 55,864 $ 32,750 $ 88,283 $ 176,897 Contract Balances Billed receivables, unbilled receivables (contract assets), and contract liabilities are the results of revenue recognition, customer billing, and timing of payment receipts. Billed receivables, net, represent unconditional rights to consideration under the terms of the contract and include amounts billed and currently due from our customers. Unbilled receivables represent our right to consideration in exchange for goods or services that we have transferred to the customer prior to us having the right to payment for such goods or services. Contract liabilities are recorded when customers remit contractual cash payments in advance of us satisfying related performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. We present our unbilled receivables and contract liabilities on a contract-by-contract basis. If a contract liability exists, it is netted against the unbilled receivables balance for that contract. Unbilled receivables increased from $41.3 million at December 31, 2018 to $44.5 million at March 31, 2019 , primarily due to revenue recognized in excess of billings. Contract liabilities, which are included in accrued expenses and other current liabilities in our consolidated balance sheet, decreased from $5.0 million at December 31, 2018 to $4.5 million at March 31, 2019 , primarily due to revenue recognized in excess of advance payments received. For the three months ended March 31, 2019 and March 31, 2018, we recognized revenue that was previously included in the beginning balance of contract liabilities of $1.5 million and $6.5 million , respectively. Performance Obligations Our performance obligations are satisfied over time as work progresses or at a point in time. Revenues from products and services transferred to customers over time accounted for approximately 57% of our revenues for the three months ended March 31, 2019 and March 31, 2018, primarily related to revenues in our Federal Services Group and for MRO services in our Aviation Group. Revenues from products and services transferred to customers at a point in time accounted for approximately 43% of our revenues for the three months ended March 31, 2019 and March 31, 2018. The majority of our revenue recognized at a point in time is for the sale of vehicle and aircraft parts in our Supply Chain Management and Aviation groups. As of March 31, 2019 , the aggregate amount of transaction prices allocated to unsatisfied or partially unsatisfied performance obligations was $278 million . Performance obligations expected to be satisfied within one year and greater than one year are 96% and 4% , respectively. We have applied the practical expedient for certain parts sales and MRO services to exclude the amount of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which we recognize revenue in proportion to the amount we have the right to invoice for services performed. During the three months ended March 31, 2019 and March 31, 2018, revenue recognized from performance obligations satisfied in prior periods was not material.

Debt

Debt	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Debt	Debt Long-term debt consisted of the following (in thousands): March 31, December 31, 2019 2018 Bank credit facility - term loan $ 78,300 $ 80,800 Bank credit facility - revolver loans 198,848 81,934 Principal amount of long-term debt 277,148 162,734 Less debt issuance costs (2,001 ) (2,135 ) Total long-term debt 275,147 160,599 Less current portion (9,466 ) (9,466 ) Long-term debt, net of current portion $ 265,681 $ 151,133 We have a loan agreement with a group of banks to provide working capital, letters of credit and acquisition financing. The loan agreement, which was amended in January 2018 and expires in January 2023 , has a term loan facility and a revolving loan facility. The revolving loan facility provides for revolving loans and letters of credit. Financing costs associated with the loan agreement amendment of approximately $1.5 million were capitalized and are being amortized over the five -year life of the loan. The fair value of outstanding debt as of March 31, 2019 under our bank loan facilities approximates its carrying value using Level 2 inputs based on market data on companies with a corporate rating similar to ours that have recently priced credit facilities. Our required term loan payments after March 31, 2019 are as follows (in thousands): 2019 $ 7,500 2020 11,875 2021 14,375 2022 15,000 2023 29,550 Total $ 78,300 The maximum amount of credit available to us under the loan agreement for revolving loans and letters of credit as of March 31, 2019 was $300 million . Subject to the terms of the loan agreement, we may borrow and repay the revolving loan borrowings as our cash flows require or permit. We pay an unused commitment fee and fees on letters of credit that are issued. We had no letters of credit outstanding as of March 31, 2019 and $57 thousand in letters of credit outstanding as of December 31, 2018 . Under the loan agreement we may elect to increase the maximum availability of the term loan facility, the revolving loan facility, or both facilities, up to an aggregate additional amount of $100 million . We pay interest on the term loan borrowings and revolving loan borrowings at LIBOR plus a base margin or at a base rate (typically the prime rate) plus a base margin. As of March 31, 2019 , the LIBOR base margin was 1.75% and the base rate base margin was 0.50% . The base margins increase or decrease in increments as our Total Funded Debt/EBITDA Ratio increases or decreases, respectively. The loan agreement requires us to have interest rate hedges on a portion of the outstanding term loan for the first three years after the January 2018 amendment date of the agreement. We executed interest rate swap agreements in February 2019 and February 2018. The notional amount of the interest rate swap agreements was $125 million and $50 million as of March 31, 2019 and December 31, 2018 , respectively. After taking into account the impact of interest rate swap agreements, as of March 31, 2019 , interest rates on portions of our outstanding debt ranged from 4.23% to 6.00% , and the effective interest rate on our aggregate outstanding debt was 4.41% . Interest expense incurred on bank loan borrowings and interest rate hedges was approximately $2.9 million and $1.5 million for the three months ended March 31, 2019 and 2018 , respectively. The loan agreement contains collateral requirements to secure our loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions, and limitations. Restrictive covenants include a maximum Total Funded Debt/EBITDA Ratio, which decreases over time, and a minimum Fixed Charge Coverage Ratio. We were in compliance with required ratios and other terms and conditions at March 31, 2019 .

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2019
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic earnings per share ("EPS") has been computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Our calculation of diluted earnings per common share includes the dilutive effects for an assumed vesting of restricted stock awards. Three months ended March 31, 2019 2018 Basic weighted average common shares outstanding 10,920,171 10,860,555 Effect of dilutive shares 53,910 35,949 Diluted weighted average common shares outstanding 10,974,081 10,896,504

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Leases We determine at its inception whether an arrangement that provides us control over the use of an asset is a lease. We recognize at lease commencement a right-of-use ("ROU") asset and lease liability based on the present value of the future lease payments over the lease term. Substantially all of our leases are long-term operating leases for facilities with fixed payment terms between two and 15 years . Our operating lease ROU assets are recorded in operating lease right-of-use assets on our accompanying unaudited consolidated balance sheet. The current portion of operating lease liabilities are presented within accrued expenses and other current liabilities, and the non-current portion of operating lease liabilities are presented under long-term operating lease liabilities on our accompanying unaudited consolidated balance sheet. For leases with terms greater than 12 months, we record the related asset and lease liability at the present value of lease payments over the lease term. Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the term of the lease. Our lease cost for the three months ended March 31, 2019 included the following components (in thousands): 2019 Operating lease cost $ 1,625 Short-term lease cost 124 Less: sublease income (289 ) Total lease cost, net $ 1,460 Certain of our leases include options to extend the term of the lease or to terminate the lease. When it is reasonably certain that we will exercise the option, we include the impact of the option in the lease term for purposes of determining total future lease payments. Our lease agreements do not provide a readily determinable implicit rate nor is it available to us from our lessors. Instead, we estimate our incremental borrowing rate based on information available at lease commencement in order to discount lease payments to present value. The table below summarizes future minimum lease payments under operating leases, recorded on the balance sheet, as of March 31, 2019 (in thousands): Operating Leases Last nine months of 2019 $ 4,093 2020 5,384 2021 5,088 2022 5,112 2023 4,790 After 2023 14,149 Minimum lease payments 38,616 Less: imputed interest (7,534 ) Present value of minimum lease payments 31,082 Less: current maturities of lease liabilities (4,237 ) Long-term lease liabilities $ 26,845 We made cash payments of approximately $1.6 million for operating leases during the quarter ended March 31, 2019, which are included in cash flows from operating activities in our unaudited consolidated statement of cash flows. The weighted average remaining lease term and discount rate for our operating leases were approximately 7.1 years and 6.0% , respectively at March 31, 2019. As of March 31, 2019, we have additional future payments on a lease that has not yet commenced of approximately $300 thousand . This lease will commence in 2019 and has a lease term of approximately two years . Contingencies On or about April 19, 2018 Joseph Waggoner, on behalf of himself and all similarly situated individuals, filed a lawsuit against VSE and two of our subcontractors in the United State District Court, Eastern District of Texas, Texarkana Division, alleging overtime compensation entitlement at a rate of one and one-half times their regular rate of pay for all hours worked over 40 hours in a workweek. The plaintiffs are seeking to certify the case as a collective action for similarly situated individuals. The plaintiffs work under a contract between defendants and the United States Army at the Red River Army Depot in Texas. The plaintiffs assert that employees' 15-minute unpaid work breaks should have been included as "working hours" in calculating overtime. We believe it is probable that VSE will incur a loss related to this matter. We have accrued a loss provision for this matter, which represents our reasonable estimate related to a possible unfavorable settlement. While we do not believe that we will have any additional liability that is material, there can be no guaranty that the ultimate resolution will not result in an additional liability that is material. Other Matters In addition to the above-referenced legal proceeding, we may have certain claims in the normal course of business, including legal proceedings, against us and against other parties. In our opinion, the resolution of these other claims will not have a material adverse effect on our results of operations, financial position or cash flows. However, because the results of any legal proceedings cannot be predicted with certainty, the amount of loss, if any, cannot be reasonably estimated. Further, from time-to-time, government agencies investigate whether our operations are being conducted in accordance with applicable contractual and regulatory requirements. Government investigations of us, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed upon us, or could lead to suspension or debarment from future government contracting. Government investigations often take years to complete and many result in no adverse action against us. We believe, based upon current information, that the outcome of any such government disputes and investigations will not have a material adverse effect on our results of operations, financial condition or cash flows.

Business Segments and Customer

Business Segments and Customer Information	3 Months Ended
	Mar. 31, 2019
Segment Reporting [Abstract]
Business Segments and Customer Information	Business Segments and Customer Information Business Segments Management of our business operations is conducted under three reportable operating segments: Supply Chain Management Group – Our Supply Chain Management Group supplies vehicle parts primarily through a Managed Inventory Program ("MIP") and direct sales to the United States Postal Service ("USPS"), the United States Department of Defense ("DoD") and to commercial customers. Aviation Group – Our Aviation Group provides maintenance, repair and overhaul ("MRO") services, parts supply and distribution, and supply chain solutions for commercial aerospace and business and general aviation jet aircraft engines and engine accessories. Federal Services Group – Our Federal Services Group provides engineering, industrial, logistics, foreign military sales, legacy equipment sustainment services, IT and technical and consulting services primarily to DoD and other government agencies. The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by our Chief Executive Officer in deciding how to allocate resources and in assessing performance. We evaluate segment performance based on consolidated revenues and operating income. Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation. Our segment information is as follows (in thousands): Three months ended March 31, 2019 2018 Revenues: Supply Chain Management Group $ 51,704 $ 55,864 Aviation Group 49,370 32,750 Federal Services Group 68,845 88,283 Total revenues $ 169,919 $ 176,897 Operating income: Supply Chain Management Group $ 6,988 $ 7,596 Aviation Group 3,048 2,261 Federal Services Group 3,385 2,478 Corporate/unallocated expenses (1,608 ) (742 ) Operating income $ 11,813 $ 11,593 Customer Information Our revenues by customer is as follows (dollars in thousands): Three months ended March 31, Customer 2019 % 2018 % USPS $ 42,683 25.1 % $ 44,031 24.9 % U.S. Navy 20,605 12.1 % 42,585 24.1 % U.S. Army 36,719 21.6 % 42,787 24.2 % U.S. Air Force 5,377 3.2 % 2,281 1.3 % Total - DoD 62,701 36.9 % 87,653 49.6 % Commercial aviation 48,475 28.5 % 31,535 17.8 % Other commercial 5,084 3.0 % 3,588 2.0 % Total - Commercial 53,559 31.5 % 35,123 19.8 % Other government 10,976 6.5 % 10,090 5.7 % Total $ 169,919 100 % $ 176,897 100 %

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	Goodwill and Intangible Assets Changes in goodwill for the three months ended March 31, 2019 are as follows (in thousands): Supply Chain Management Federal Services Aviation Total Balance as of December 31, 2018 $ 63,190 $ 30,883 $ 104,549 $ 198,622 Increase from acquisition — — 60,590 60,590 Balance as of March 31, 2019 $ 63,190 $ 30,883 $ 165,139 $ 259,212 Intangible assets consist of the value of contract and customer-related intangible assets, acquired technologies and trade names. Amortization expense was approximately $5.0 million and $4.0 million for the three months ended March 31, 2019 and March 31, 2018 , respectively. Intangible assets, net were comprised of the following (in thousands): Cost Accumulated Amortization Accumulated Impairment Loss Net Intangible Assets March 31, 2019 Contract and customer-related $ 228,094 $ (90,169 ) $ (1,025 ) $ 136,900 Acquired technologies 12,400 (8,815 ) — 3,585 Trade names 24,670 (12,254 ) — 12,416 Total $ 265,164 $ (111,238 ) $ (1,025 ) $ 152,901 December 31, 2018 Contract and customer-related $ 173,094 $ (86,076 ) $ (1,025 ) $ 85,993 Acquired technologies 12,400 (8,533 ) — 3,867 Trade names 16,670 (11,638 ) — 5,032 Total $ 202,164 $ (106,247 ) $ (1,025 ) $ 94,892

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2019
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1–Observable inputs–quoted prices in active markets for identical assets and liabilities; Level 2–Observable inputs-other than the quoted prices in active markets for identical assets and liabilities–includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets and amounts derived from valuation models where all significant inputs are observable in active markets; and Level 3–Unobservable inputs–includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and the level they fall within the fair value hierarchy (in thousands): Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy Fair Value March 31, 2019 Fair Value December 31, 2018 Non-COLI assets held in Deferred Supplemental Compensation Plan Other assets Level 1 $ 563 $ 403 Interest rate swap agreements Accrued expenses/Other current assets Level 2 $ 727 $ 195 Earn-out obligation - short-term Current portion of earn-out obligation Level 3 $ 10,700 $ — Earn-out obligation - long-term Earn-out obligation Level 3 $ 14,300 $ — Non-COLI assets held in our deferred supplemental compensation plan consist of equity funds with fair value based on observable inputs such as quoted prices for identical assets in active markets and changes in fair value are recorded as selling, general and administrative expenses. We account for our interest rate swap agreements under the provisions of ASC 815, Derivatives and Hedging , and have determined that our swap agreements qualify as highly effective cash flow hedges. The fair value of the swap agreements, which is a liability of approximately $727 thousand , has been reported in accrued expenses at March 31, 2019 . The fair value of the swap agreements, which was an asset of approximately $195 thousand , was reported in other current assets at December 31, 2018 . The offset, net of an income tax effect of approximately $181 thousand and $49 thousand , was included in accumulated other comprehensive income in the accompanying balance sheets as of March 31, 2019 and December 31, 2018 , respectively. The amounts paid and received on the swap agreements are recorded in interest expense in the period during which the related floating-rate interest is incurred. We determine the fair value of the swap agreements based on a valuation model using primarily observable market data inputs. We utilized an income approach to determine the fair value of our 1st Choice Aerospace acquisition earn-out obligation. Significant unobservable inputs used to value the contingent consideration include projected revenue and cost of services and the discount rate. If a significant increase or decrease in the discount rate occurred in isolation, the result could be significantly higher or lower fair value measurement.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Our effective tax rate was 23.7% and 25.1% for the three months ended March 31, 2019 and 2018, respectively. Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items that are recorded in the period in which they occur. Our tax rate is affected by discrete items that may occur in any given year, but may not be consistent from year to year. The lower effective tax rate for the three months ended March 31, 2019 primarily results from the fair value increase of approximately $1.2 million to our COLI assets.

Recently Issued Accounting Pron

Recently Issued Accounting Pronouncements Not Yet Adopted	3 Months Ended
	Mar. 31, 2019
Accounting Changes and Error Corrections [Abstract]
Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We currently are assessing the impact that this standard will have on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We currently are assessing the impact that this standard will have on our consolidated financial statements.

Nature of Business and Basis _2

Nature of Business and Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, such financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2019 . For further information refer to the consolidated financial statements and footnotes thereto included in our 2018 Form 10-K.
Use of Estimates	The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include accruals for contract disallowance reserves, award fee revenues, costs to complete on fixed price contracts, recoverability of goodwill and intangible assets, and earn-out obligations.
Recently Adopted Accounting Pronouncements, Significant Accounting Policies Update, and Recently Issued Accounting Pronouncements Not Yet Adopted	Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new standard is required to be adopted using a modified retrospective method and is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. In July 2018, the FASB provided an alternative transition method of adoption through ASU No. 2018-11, Targeted Improvements , which provides entities with an optional transition method to apply the transition provisions of ASU 2016-02 at the beginning of the period of adoption. On January 1, 2019, we adopted ASC 842 using the alternative transition method provided by ASU 2018-11 recording right-of-use assets and lease liabilities for our existing leases as of January 1, 2019, as well as a cumulative-effect adjustment to retained earnings of initially applying the new standard as of January 1, 2019. We have elected the package of practical expedients permitted under the transition guidance, which does not require reassessment of prior conclusions related to lease identification, lease classification, and treatment for initial direct lease costs. We have not elected the practical expedients pertaining to the use of hindsight and land easements. The adoption of new lease standard resulted in the recharacterization of our headquarters lease, which was accounted for using the financing method under previously existing build-to-suit accounting rules, to an operating lease under ASC 842. Upon adoption of the new lease standard on January 1, 2019, we recorded a right-of-use asset of $24.3 million , property and equipment of $2.8 million , and operating lease liability of $29.6 million , with immaterial changes to other balance sheet accounts. The recharacterization resulted in a cumulative-effect adjustment to retained earnings of approximately $1.9 million , net of taxes, as of January 1, 2019. The new standard did not have a significant impact on our consolidated results of operations or cash flows. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We currently are assessing the impact that this standard will have on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We currently are assessing the impact that this standard will have on our consolidated financial statements.
Earnings Per Share	Basic earnings per share ("EPS") has been computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Our calculation of diluted earnings per common share includes the dilutive effects for an assumed vesting of restricted stock awards.
Business Segments	Business Segments Management of our business operations is conducted under three reportable operating segments: Supply Chain Management Group – Our Supply Chain Management Group supplies vehicle parts primarily through a Managed Inventory Program ("MIP") and direct sales to the United States Postal Service ("USPS"), the United States Department of Defense ("DoD") and to commercial customers. Aviation Group – Our Aviation Group provides maintenance, repair and overhaul ("MRO") services, parts supply and distribution, and supply chain solutions for commercial aerospace and business and general aviation jet aircraft engines and engine accessories. Federal Services Group – Our Federal Services Group provides engineering, industrial, logistics, foreign military sales, legacy equipment sustainment services, IT and technical and consulting services primarily to DoD and other government agencies. The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by our Chief Executive Officer in deciding how to allocate resources and in assessing performance. We evaluate segment performance based on consolidated revenues and operating income. Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation.
Fair Value Measurements	The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1–Observable inputs–quoted prices in active markets for identical assets and liabilities; Level 2–Observable inputs-other than the quoted prices in active markets for identical assets and liabilities–includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets and amounts derived from valuation models where all significant inputs are observable in active markets; and Level 3–Unobservable inputs–includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions.

Acquisition (Tables)

Acquisition (Tables)	3 Months Ended
	Mar. 31, 2019
Business Combinations [Abstract]
Schedule of Business Acquisition	The total estimated purchase price has been allocated to assets acquired (including identifiable intangible assets and goodwill) and liabilities assumed, as follows (in thousands): Description Fair Value Cash $ 396 Accounts receivable 7,409 Inventories 6,879 Prepaid expenses and other current assets 382 Property and equipment 4,044 Intangibles - customer related 55,000 Intangibles - trade name 8,000 Goodwill 60,590 Operating lease right-of-use assets 2,643 Other assets 333 Other current liabilities (5,244 ) Long-term operating lease liabilities (2,376 ) $ 138,056 Cash consideration $ 113,056 Acquisition date fair value of earn-out obligation 25,000 Total $ 138,056
Business Acquisition, Pro Forma Information	The unaudited consolidated pro forma results of operations are as follows (in thousands except per share amounts): Three months ended March 31, 2019 2018 Revenue $ 171,478 $ 187,419 Net Income $ 7,039 $ 7,301 Basic earnings per share $ 0.64 $ 0.67 Diluted earnings per share $ 0.64 $ 0.67

Revenue (Tables)

Revenue (Tables)	3 Months Ended
	Mar. 31, 2019
Revenue from Contract with Customer [Abstract]
Disaggregation of Revenue	A summary of revenues for our operating groups by customer for the three months ended March 31, 2019 and 2018 are as follows (in thousands): Three months ended March 31, 2019 Customer Supply Chain Management Aviation Federal Services Total USPS $ 42,683 $ — $ — $ 42,683 DoD 4,842 895 56,964 62,701 Commercial 3,980 48,475 1,104 53,559 Other government 199 — 10,777 10,976 $ 51,704 $ 49,370 $ 68,845 $ 169,919 Three months ended March 31, 2018 Customer Supply Chain Management Aviation Federal Services Total USPS $ 44,031 $ — $ — $ 44,031 DoD 8,176 1,215 78,262 87,653 Commercial 3,386 31,535 202 35,123 Other government 271 — 9,819 10,090 $ 55,864 $ 32,750 $ 88,283 $ 176,897 A summary of revenues for our operating groups by contract type for the three months ended March 31, 2019 and 2018 are as follows (in thousands): Three months ended March 31, 2019 Contract Type Supply Chain Management Aviation Federal Services Total Cost-type $ — $ 212 $ 27,840 $ 28,052 Fixed-price 51,704 23,936 19,867 95,507 Time and materials — 25,222 21,138 46,360 Total revenues $ 51,704 $ 49,370 $ 68,845 $ 169,919 Three months ended March 31, 2018 Contract Type Supply Chain Management Aviation Federal Services Total Cost-type $ — $ 397 $ 51,121 $ 51,518 Fixed-price 55,864 19,504 15,139 90,507 Time and materials — 12,849 22,023 34,872 Total revenues $ 55,864 $ 32,750 $ 88,283 $ 176,897

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
Schedule of Long-term Debt	Long-term debt consisted of the following (in thousands): March 31, December 31, 2019 2018 Bank credit facility - term loan $ 78,300 $ 80,800 Bank credit facility - revolver loans 198,848 81,934 Principal amount of long-term debt 277,148 162,734 Less debt issuance costs (2,001 ) (2,135 ) Total long-term debt 275,147 160,599 Less current portion (9,466 ) (9,466 ) Long-term debt, net of current portion $ 265,681 $ 151,133
Schedule of Term Loan Payments	Our required term loan payments after March 31, 2019 are as follows (in thousands): 2019 $ 7,500 2020 11,875 2021 14,375 2022 15,000 2023 29,550 Total $ 78,300

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2019
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	Our calculation of diluted earnings per common share includes the dilutive effects for an assumed vesting of restricted stock awards. Three months ended March 31, 2019 2018 Basic weighted average common shares outstanding 10,920,171 10,860,555 Effect of dilutive shares 53,910 35,949 Diluted weighted average common shares outstanding 10,974,081 10,896,504

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Components of Lease Expense	Our lease cost for the three months ended March 31, 2019 included the following components (in thousands): 2019 Operating lease cost $ 1,625 Short-term lease cost 124 Less: sublease income (289 ) Total lease cost, net $ 1,460
Maturities of Operating Lease Liabilities	The table below summarizes future minimum lease payments under operating leases, recorded on the balance sheet, as of March 31, 2019 (in thousands): Operating Leases Last nine months of 2019 $ 4,093 2020 5,384 2021 5,088 2022 5,112 2023 4,790 After 2023 14,149 Minimum lease payments 38,616 Less: imputed interest (7,534 ) Present value of minimum lease payments 31,082 Less: current maturities of lease liabilities (4,237 ) Long-term lease liabilities $ 26,845

Business Segments and Custome_2

Business Segments and Customer Information (Tables)	3 Months Ended
	Mar. 31, 2019
Segment Reporting [Abstract]
Segment Information	Our segment information is as follows (in thousands): Three months ended March 31, 2019 2018 Revenues: Supply Chain Management Group $ 51,704 $ 55,864 Aviation Group 49,370 32,750 Federal Services Group 68,845 88,283 Total revenues $ 169,919 $ 176,897 Operating income: Supply Chain Management Group $ 6,988 $ 7,596 Aviation Group 3,048 2,261 Federal Services Group 3,385 2,478 Corporate/unallocated expenses (1,608 ) (742 ) Operating income $ 11,813 $ 11,593
Revenue by Customer	Our revenues by customer is as follows (dollars in thousands): Three months ended March 31, Customer 2019 % 2018 % USPS $ 42,683 25.1 % $ 44,031 24.9 % U.S. Navy 20,605 12.1 % 42,585 24.1 % U.S. Army 36,719 21.6 % 42,787 24.2 % U.S. Air Force 5,377 3.2 % 2,281 1.3 % Total - DoD 62,701 36.9 % 87,653 49.6 % Commercial aviation 48,475 28.5 % 31,535 17.8 % Other commercial 5,084 3.0 % 3,588 2.0 % Total - Commercial 53,559 31.5 % 35,123 19.8 % Other government 10,976 6.5 % 10,090 5.7 % Total $ 169,919 100 % $ 176,897 100 %

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill by Operating Segment	Changes in goodwill for the three months ended March 31, 2019 are as follows (in thousands): Supply Chain Management Federal Services Aviation Total Balance as of December 31, 2018 $ 63,190 $ 30,883 $ 104,549 $ 198,622 Increase from acquisition — — 60,590 60,590 Balance as of March 31, 2019 $ 63,190 $ 30,883 $ 165,139 $ 259,212
Schedule of Intangible Assets	Intangible assets, net were comprised of the following (in thousands): Cost Accumulated Amortization Accumulated Impairment Loss Net Intangible Assets March 31, 2019 Contract and customer-related $ 228,094 $ (90,169 ) $ (1,025 ) $ 136,900 Acquired technologies 12,400 (8,815 ) — 3,585 Trade names 24,670 (12,254 ) — 12,416 Total $ 265,164 $ (111,238 ) $ (1,025 ) $ 152,901 December 31, 2018 Contract and customer-related $ 173,094 $ (86,076 ) $ (1,025 ) $ 85,993 Acquired technologies 12,400 (8,533 ) — 3,867 Trade names 16,670 (11,638 ) — 5,032 Total $ 202,164 $ (106,247 ) $ (1,025 ) $ 94,892

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2019
Fair Value Disclosures [Abstract]
Fair Value of Assets and Liabilities	The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 and the level they fall within the fair value hierarchy (in thousands): Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy Fair Value March 31, 2019 Fair Value December 31, 2018 Non-COLI assets held in Deferred Supplemental Compensation Plan Other assets Level 1 $ 563 $ 403 Interest rate swap agreements Accrued expenses/Other current assets Level 2 $ 727 $ 195 Earn-out obligation - short-term Current portion of earn-out obligation Level 3 $ 10,700 $ — Earn-out obligation - long-term Earn-out obligation Level 3 $ 14,300 $ —

Nature of Business and Basis _3

Nature of Business and Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Mar. 31, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Right-of-use assets		$ 26,371
Lease liabilities		$ 31,082
ASU 2016-02
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Right-of-use assets	$ 24,300
Property and equipment	2,800
Lease liabilities	29,600
Cumulative effect on retained earnings	$ 1,900

Acquisition - Narrative (Detail

Acquisition - Narrative (Details) - USD ($) $ in Thousands	Jan. 10, 2019	Mar. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill		$ 259,212	$ 259,212	$ 198,622
1st Choice Aerospace
Business Acquisition [Line Items]
Business acquisition, percentage acquired	100.00%
Cash consideration	$ 113,056
Working capital adjustment	1,100
Earn-out payments	40,000
Escrow	1,100
Revenue			12,200
Net Income			2,600
Amortization of intangible assets			1,000
Corporate costs			$ 400
Goodwill	$ 60,590
Acquisition related costs		$ 254
1st Choice Aerospace | Customer relationships
Business Acquisition [Line Items]
Weighted average useful life	17 years

Acquisition - Schedule of Busin

Acquisition - Schedule of Business Acquisition (Details) - USD ($) $ in Thousands	Jan. 10, 2019	Mar. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill		$ 259,212	$ 198,622
1st Choice Aerospace
Business Acquisition [Line Items]
Cash	$ 396
Accounts receivable	7,409
Inventories	6,879
Prepaid expenses and other current assets	382
Property and equipment	4,044
Goodwill	60,590
Operating lease right-of-use assets		2,643
Other assets	333
Other current liabilities	(5,244)
Long-term operating lease liabilities		$ (2,376)
Assets acquired and liabilities assumed, net	138,056
Cash consideration	113,056
Acquisition date fair value of earn-out obligation	25,000
Total	138,056
Customer Related | 1st Choice Aerospace
Business Acquisition [Line Items]
Intangible assets	55,000
Trade Name | 1st Choice Aerospace
Business Acquisition [Line Items]
Intangible assets	$ 8,000

Acquisition - Business Acquisit

Acquisition - Business Acquisition, Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Business Combinations [Abstract]
Revenue	$ 171,478	$ 187,419
Net Income	$ 7,039	$ 7,301
Basic earnings per share (in dollars per share)	$ 0.64	$ 0.67
Diluted earnings per share (in dollars per share)	$ 0.64	$ 0.67

Revenue - Disaggregation of Rev

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Revenues	$ 169,919	$ 176,897
Cost-type
Disaggregation of Revenue [Line Items]
Revenues	28,052	51,518
Fixed-price
Disaggregation of Revenue [Line Items]
Revenues	95,507	90,507
Time and materials
Disaggregation of Revenue [Line Items]
Revenues	46,360	34,872
USPS
Disaggregation of Revenue [Line Items]
Revenues	42,683	44,031
DoD
Disaggregation of Revenue [Line Items]
Revenues	62,701	87,653
Commercial
Disaggregation of Revenue [Line Items]
Revenues	53,559	35,123
Other government
Disaggregation of Revenue [Line Items]
Revenues	10,976	10,090
Supply Chain Management
Disaggregation of Revenue [Line Items]
Revenues	51,704	55,864
Supply Chain Management | Cost-type
Disaggregation of Revenue [Line Items]
Revenues	0	0
Supply Chain Management | Fixed-price
Disaggregation of Revenue [Line Items]
Revenues	51,704	55,864
Supply Chain Management | Time and materials
Disaggregation of Revenue [Line Items]
Revenues	0
Supply Chain Management | USPS
Disaggregation of Revenue [Line Items]
Revenues	42,683	44,031
Supply Chain Management | DoD
Disaggregation of Revenue [Line Items]
Revenues	4,842	8,176
Supply Chain Management | Commercial
Disaggregation of Revenue [Line Items]
Revenues	3,980	3,386
Supply Chain Management | Other government
Disaggregation of Revenue [Line Items]
Revenues	199	271
Aviation
Disaggregation of Revenue [Line Items]
Revenues	49,370	32,750
Aviation | Cost-type
Disaggregation of Revenue [Line Items]
Revenues	212	397
Aviation | Fixed-price
Disaggregation of Revenue [Line Items]
Revenues	23,936	19,504
Aviation | Time and materials
Disaggregation of Revenue [Line Items]
Revenues	25,222	12,849
Aviation | USPS
Disaggregation of Revenue [Line Items]
Revenues	0	0
Aviation | DoD
Disaggregation of Revenue [Line Items]
Revenues	895	1,215
Aviation | Commercial
Disaggregation of Revenue [Line Items]
Revenues	48,475	31,535
Aviation | Other government
Disaggregation of Revenue [Line Items]
Revenues	0	0
Federal Services
Disaggregation of Revenue [Line Items]
Revenues	68,845	88,283
Federal Services | Cost-type
Disaggregation of Revenue [Line Items]
Revenues	27,840	51,121
Federal Services | Fixed-price
Disaggregation of Revenue [Line Items]
Revenues	19,867	15,139
Federal Services | Time and materials
Disaggregation of Revenue [Line Items]
Revenues	21,138	22,023
Federal Services | USPS
Disaggregation of Revenue [Line Items]
Revenues	0	0
Federal Services | DoD
Disaggregation of Revenue [Line Items]
Revenues	56,964	78,262
Federal Services | Commercial
Disaggregation of Revenue [Line Items]
Revenues	1,104	202
Federal Services | Other government
Disaggregation of Revenue [Line Items]
Revenues	$ 10,777	$ 9,819

Revenue - Narrative (Details)

Revenue - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Unbilled receivables, net	$ 44,450		$ 41,255
Contract with customer, liability	4,500		$ 5,000
Contract with customer, liability, revenue recognized	1,500	$ 6,500
Revenue, remaining performance obligation	$ 278,000
Sales Revenue, Net | Product Concentration Risk | Transferred over Time
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Concentration risk, percentage	57.00%
Sales Revenue, Net | Product Concentration Risk | Transferred at Point in Time
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Concentration risk, percentage	43.00%

Revenue - Performance Obligatio

Revenue - Performance Obligations (Details)	Mar. 31, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	96.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, percentage	4.00%
Revenue, remaining performance obligation, expected timing of satisfaction, period

Debt (Details)

Debt (Details) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Debt Instrument [Line Items]
Long-term debt		$ 277,148,000		$ 162,734,000
Less debt issuance costs		(2,001,000)		(2,135,000)
Total long-term debt		275,147,000		160,599,000
Less current portion		(9,466,000)		(9,466,000)
Long-term debt, less current portion		265,681,000		151,133,000
Long-term Debt, Fiscal Year Maturity [Abstract]
Total long-term debt		$ 275,147,000		160,599,000
LIBOR
Debt Instrument [Line Items]
Base margin		1.75%
Base Rate
Debt Instrument [Line Items]
Base margin		0.50%
Amended and Restated
Debt Instrument [Line Items]
Less debt issuance costs		$ (1,500,000)
Amortization period of debt issuance costs	5 years
Increase in maximum availability		$ 100,000,000
Duration of interest rate cash flow hedge		3 years
Effective interest rate		4.41%
Interest expense, net		$ 2,900,000	$ 1,500,000
Amended and Restated | Swap
Debt Instrument [Line Items]
Derivative notional amount		125,000,000		50,000,000
Term Loan
Debt Instrument [Line Items]
Long-term debt		78,300,000		80,800,000
Total long-term debt		78,300,000
Long-term Debt, Fiscal Year Maturity [Abstract]
2019		7,500,000
2020		11,875,000
2021		14,375,000
2022		15,000,000
2023		29,550,000
Total long-term debt		78,300,000
Revolving Loans
Debt Instrument [Line Items]
Long-term debt		198,848,000		81,934,000
Revolving loans maximum borrowing capacity		300,000,000
Letters of credit outstanding		$ 0		$ 57,000
Minimum | Amended and Restated
Debt Instrument [Line Items]
Interest rate range		4.23%
Maximum | Amended and Restated
Debt Instrument [Line Items]
Interest rate range		6.00%

Earnings Per Share (Details)

Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Basic weighted average common shares outstanding (in shares)	10,920,171	10,860,555
Effect of dilutive shares (in shares)	53,910	35,949
Diluted weighted average common shares outstanding (in shares)	10,974,081	10,896,504

Commitments and Contingencies -

Commitments and Contingencies - Narrative (Details) $ in Thousands	Apr. 19, 2018subcontractor	Mar. 31, 2019USD ($)
Loss Contingencies [Line Items]
Cash payments		$ 1,600
Weighted average remaining lease term		7 years 1 month 18 days
Weighted average discount rate, percent		6.00%
Lease not yet commenced		$ 300
Lease not yet commenced, lease term		2 years
Joseph Waggoner v VSE re Overtime Compensation
Loss Contingencies [Line Items]
Number of subcontractors | subcontractor	2
Minimum
Loss Contingencies [Line Items]
Lease term		2 years
Maximum
Loss Contingencies [Line Items]
Lease term		15 years

Commitments and Contingencies_2

Commitments and Contingencies - Components of Lease Expense (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 1,625
Short-term lease cost	124
Less: sublease income	(289)
Total lease cost, net	$ 1,460

Commitments and Contingencies_3

Commitments and Contingencies - Maturities of Operating Lease Liabilities (Details) $ in Thousands	Mar. 31, 2019USD ($)
Commitments and Contingencies Disclosure [Abstract]
Last nine months of 2019	$ 4,093
2020	5,384
2021	5,088
2022	5,112
2023	4,790
After 2023	14,149
Minimum lease payments	38,616
Less: imputed interest	(7,534)
Present value of minimum lease payments	31,082
Less: current maturities of lease liabilities	(4,237)
Long-term operating lease liabilities	$ 26,845

Business Segments and Custome_3

Business Segments and Customer Information - Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019USD ($)segment	Mar. 31, 2018USD ($)
Segment Reporting [Abstract]
Number of reportable operating segments | segment	3
Segment Reporting Information [Line Items]
Revenues	$ 169,919	$ 176,897
Operating income	11,813	11,593
Supply Chain Management Group
Segment Reporting Information [Line Items]
Revenues	51,704	55,864
Aviation Group
Segment Reporting Information [Line Items]
Revenues	49,370	32,750
Federal Services
Segment Reporting Information [Line Items]
Revenues	68,845	88,283
Operating Segments | Supply Chain Management Group
Segment Reporting Information [Line Items]
Revenues	51,704	55,864
Operating income	6,988	7,596
Operating Segments | Aviation Group
Segment Reporting Information [Line Items]
Revenues	49,370	32,750
Operating income	3,048	2,261
Operating Segments | Federal Services
Segment Reporting Information [Line Items]
Revenues	68,845	88,283
Operating income	3,385	2,478
Corporate, Non-Segment
Segment Reporting Information [Line Items]
Operating income	$ (1,608)	$ (742)

Business Segments and Custome_4

Business Segments and Customer Information - Major Customers (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue, Major Customer [Line Items]
Revenues	$ 169,919	$ 176,897
USPS
Revenue, Major Customer [Line Items]
Revenues	42,683	44,031
U.S. Navy
Revenue, Major Customer [Line Items]
Revenues	20,605	42,585
U.S. Army
Revenue, Major Customer [Line Items]
Revenues	36,719	42,787
U.S. Air Force
Revenue, Major Customer [Line Items]
Revenues	5,377	2,281
Total - DoD
Revenue, Major Customer [Line Items]
Revenues	62,701	87,653
Commercial aviation
Revenue, Major Customer [Line Items]
Revenues	48,475	31,535
Other commercial
Revenue, Major Customer [Line Items]
Revenues	5,084	3,588
Total - Commercial
Revenue, Major Customer [Line Items]
Revenues	53,559	35,123
Other government
Revenue, Major Customer [Line Items]
Revenues	$ 10,976	$ 10,090
Customer Concentration Risk | Sales Revenue, Net
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	100.00%	100.00%
Customer Concentration Risk | Sales Revenue, Net | USPS
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	25.10%	24.90%
Customer Concentration Risk | Sales Revenue, Net | U.S. Navy
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	12.10%	24.10%
Customer Concentration Risk | Sales Revenue, Net | U.S. Army
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	21.60%	24.20%
Customer Concentration Risk | Sales Revenue, Net | U.S. Air Force
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	3.20%	1.30%
Customer Concentration Risk | Sales Revenue, Net | Total - DoD
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	36.90%	49.60%
Customer Concentration Risk | Sales Revenue, Net | Commercial aviation
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	28.50%	17.80%
Customer Concentration Risk | Sales Revenue, Net | Other commercial
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	3.00%	2.00%
Customer Concentration Risk | Sales Revenue, Net | Total - Commercial
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	31.50%	19.80%
Customer Concentration Risk | Sales Revenue, Net | Other government
Revenue, Major Customer [Line Items]
Percentage of revenue by customer	6.50%	5.70%

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Goodwill [Roll Forward]
Balance as of beginning of period	$ 198,622
Increase from acquisition	60,590
Balance as of end of period	259,212
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	5,000	$ 4,000
Finite-Lived Intangible Assets, Net [Abstract]
Cost	265,164		$ 202,164
Accumulated Amortization	(111,238)		(106,247)
Accumulated Impairment Loss	(1,025)		(1,025)
Net Intangible Assets	152,901		94,892
Supply Chain Management
Goodwill [Roll Forward]
Balance as of beginning of period	63,190
Increase from acquisition	0
Balance as of end of period	63,190
Federal Services
Goodwill [Roll Forward]
Balance as of beginning of period	30,883
Increase from acquisition	0
Balance as of end of period	30,883
Aviation
Goodwill [Roll Forward]
Balance as of beginning of period	104,549
Increase from acquisition	60,590
Balance as of end of period	165,139
Contract and customer-related
Finite-Lived Intangible Assets, Net [Abstract]
Cost	228,094		173,094
Accumulated Amortization	(90,169)		(86,076)
Accumulated Impairment Loss	(1,025)		(1,025)
Net Intangible Assets	136,900		85,993
Acquired technologies
Finite-Lived Intangible Assets, Net [Abstract]
Cost	12,400		12,400
Accumulated Amortization	(8,815)		(8,533)
Accumulated Impairment Loss	0		0
Net Intangible Assets	3,585		3,867
Trade names
Finite-Lived Intangible Assets, Net [Abstract]
Cost	24,670		16,670
Accumulated Amortization	(12,254)		(11,638)
Accumulated Impairment Loss	0		0
Net Intangible Assets	$ 12,416		$ 5,032

Fair Value Measurements - Finan

Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Earn-out obligation - short-term	$ 10,700	$ 0
Earn-out obligation - long-term	14,300	0
Fair Value, Measurements, Recurring | Level 1 | Other assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-COLI assets held in Deferred Supplemental Compensation Plan	563	403
Fair Value, Measurements, Recurring | Level 2 | Accrued expenses/Other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap agreements	727	195
Fair Value, Measurements, Recurring | Level 3 | Earn-out obligation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Earn-out obligation - short-term	10,700	0
Earn-out obligation - long-term	$ 14,300	$ 0

Fair Value Measurements - Narra

Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Income tax expense benefit on interest rate swap	$ 181	$ 49
Accrued expenses/Other current assets | Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swap agreements	$ 727	$ 195

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	23.70%	25.10%
COLO assets fair value increase	$ 1.2

Uncategorized Items - vsec-2019

Label	Element	Value
Accounting Standards Update 2016-02 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,943,000
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	1,943,000
Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	1,695,000
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 1,695,000