VSE (VSEC) 10-Q 2 May 23 2023 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2023	Apr. 21, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	000-03676
Entity Registrant Name	VSE CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	54-0649263
Entity Address, Address Line One	6348 Walker Lane
Entity Address, City or Town	Alexandria,
Entity Address, State or Province	VA
Entity Address, Postal Zip Code	22310
City Area Code	703
Local Phone Number	960-4600
Title of 12(b) Security	Common Stock, par value $0.05 per share
Trading Symbol	VSEC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		12,885,937
Entity Central Index Key	0000102752
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

Unaudited Consolidated Balance

Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 532	$ 478
Receivables (net of allowance of $2.4 million and $2.1 million, respectively)	113,512	103,193
Unbilled receivables	35,884	38,307
Inventories	416,667	380,707
Other current assets	24,169	26,193
Total current assets	590,764	548,878
Noncurrent assets:
Property and equipment (net of accumulated depreciation of $75.5 million and $73.2 million, respectively)	49,533	47,969
Intangible assets (net of accumulated amortization of $128.7 million and $124.3 million, respectively)	90,064	90,624
Goodwill	253,580	248,837
Operating lease - right-of-use assets	33,284	34,412
Other assets	27,178	29,069
Total assets	1,044,403	999,789
Current liabilities:
Current portion of long-term debt	10,000	10,000
Accounts payable	141,851	159,600
Accrued expenses and other current liabilities	44,302	53,722
Dividends payable	1,289	1,282
Total current liabilities	197,442	224,604
Noncurrent liabilities:
Long-term debt, less current portion	341,855	276,300
Deferred compensation	7,551	7,398
Long-term operating lease obligations	30,743	32,340
Deferred tax liabilities	9,497	9,621
Total liabilities	587,088	550,263
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 23,000,000 shares; issued and outstanding 12,885,937 and 12,816,613, respectively	644	641
Additional paid-in capital	94,577	92,620
Retained earnings	359,124	351,297
Accumulated other comprehensive income	2,970	4,968
Total stockholders' equity	457,315	449,526
Total liabilities and stockholders' equity	$ 1,044,403	$ 999,789

Unaudited Consolidated Balanc_2

Unaudited Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Stockholders' equity:
Allowance for credit loss	$ 2,400	$ 2,100
Accumulated depreciation	(75,500)	(73,200)
Accumulated amortization	$ (128,697)	$ (124,337)
Common stock, par value (in dollars per share)	$ 0.05	$ 0.05
Common stock, authorized (in shares)	23,000,000	23,000,000
Common stock, issued (in shares)	12,885,937	12,816,613
Common stock, outstanding (in shares)	12,885,937	12,816,613

Unaudited Consolidated Statemen

Unaudited Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Total revenues	$ 255,433	$ 231,239
Costs and operating expenses:
Selling, general and administrative expenses	2,098	906
Amortization of intangible assets	4,360	4,736
Total costs and operating expenses	237,500	219,325
Operating income	17,933	11,914
Interest expense, net	5,977	3,609
Income before income taxes	11,956	8,305
Provision for income taxes	2,839	2,061
Net income	$ 9,117	$ 6,244
Basic earnings per share (in dollars per share)	$ 0.71	$ 0.49
Basic weighted average shares outstanding (in shares)	12,844,458	12,741,394
Diluted earnings per share (in dollars per share)	$ 0.71	$ 0.49
Diluted weighted average shares outstanding (in shares)	12,926,424	12,803,279
Dividends declared per share (in dollars per share)	$ 0.10	$ 0.10
Products
Revenues:
Total revenues	$ 159,066	$ 137,231
Costs and operating expenses:
Costs and operating expenses	139,011	122,455
Services
Revenues:
Total revenues	96,367	94,008
Costs and operating expenses:
Costs and operating expenses	$ 92,031	$ 91,228

Unaudited Consolidated Statem_2

Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income	$ 9,117	$ 6,244
Change in fair value of interest rate swap agreements, net of tax	(1,998)	176
Other comprehensive (loss) income, net of tax	(1,998)	176
Comprehensive income	$ 7,119	$ 6,420

Unaudited Consolidated Statem_3

Unaudited Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income
Balance, beginning balance (in shares) at Dec. 31, 2021		12,727,000
Balance, beginning balance at Dec. 31, 2021	$ 417,333	$ 636	$ 88,515	$ 328,358	$ (176)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,244			6,244
Stock-based compensation (in shares)		42,000
Stock-based compensation	1,317	$ 2	1,315
Other comprehensive income (loss), net of tax	176				176
Dividends declared	(1,278)			(1,278)
Balance, ending balance (in shares) at Mar. 31, 2022		12,769,000
Balance, ending balance at Mar. 31, 2022	$ 423,792	$ 638	89,830	333,324	0
Balance, beginning balance (in shares) at Dec. 31, 2022	12,816,613	12,817,000
Balance, beginning balance at Dec. 31, 2022	$ 449,526	$ 641	92,620	351,297	4,968
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	9,117			9,117
Stock-based compensation (in shares)		69,000
Stock-based compensation	1,960	$ 3	1,957
Other comprehensive income (loss), net of tax	(1,998)				(1,998)
Dividends declared	$ (1,290)			(1,290)
Balance, ending balance (in shares) at Mar. 31, 2023	12,885,937	12,886,000
Balance, ending balance at Mar. 31, 2023	$ 457,315	$ 644	$ 94,577	$ 359,124	$ 2,970

Unaudited Consolidated Statem_4

Unaudited Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Dividends declared per share (in dollars per share)	$ 0.10	$ 0.10

Unaudited Consolidated Statem_5

Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net income	$ 9,117	$ 6,244
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,247	6,337
Amortization of debt issuance cost	213	210
Deferred taxes	540	1,177
Stock-based compensation	2,081	1,308
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables, net	(9,801)	(7,371)
Unbilled Receivables, net	2,423	671
Inventories, net	(33,230)	(9,321)
Other current assets and other assets	1,409	4,892
Operating lease assets and liabilities, net	(68)	178
Accounts payable and deferred compensation	(18,257)	(20,997)
Accrued expenses and other current and noncurrent liabilities	(9,484)	(1,146)
Net cash used in operating activities	(48,674)	(18,174)
Cash flows from investing activities:
Purchases of property and equipment	(2,840)	(1,269)
Proceeds from the payment on notes receivable	0	2,662
Cash paid for acquisitions, net of cash acquired	(11,754)	0
Net cash (used in) provided by investing activities	(14,594)	1,393
Cash flows from financing activities:
Borrowings on loan agreement	176,751	112,071
Repayments on loan agreement	(111,363)	(93,005)
Proceeds from issuance of common stock	248	0
Earn-out obligation payments	0	(500)
Payment of taxes for equity transactions	(1,031)	(530)
Dividends paid	(1,283)	(1,275)
Net cash provided by financing activities	63,322	16,761
Net increase (decrease) in cash and cash equivalents	54	(20)
Cash and cash equivalents at beginning of year	478	518
Cash and cash equivalents at end of year	$ 532	$ 498

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Nature of Operations and Basis of Presentation	Nature of Operations and Basis of Presentation Nature of Operations VSE Corporation (“VSE,” the “Company,” “we,” “us,” or “our”) is a diversified aftermarket products and services company providing repair services, parts distribution, logistics, supply chain management and consulting services for land, sea and air transportation assets to commercial and government markets. Our operations are conducted under three operating segments: Aviation, Fleet, and Federal and Defense. Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K"). In our opinion, all adjustments, including normal recurring items, considered necessary for a fair presentation of results for the interim periods have been included in the accompanying unaudited consolidated financial statements. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023. Certain reclassifications have been made to the prior period financial information in order to conform to the current period's presentation, which include reclassifications within the disaggregated revenue disclosure of revenue by type as further described in Note (3) "Revenue." These reclassifications had no effect on the reported results of operations. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP 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 fair value measurements, inventory provisions, collectability of receivables, estimated profitability of long-term contracts, valuation allowances on deferred tax assets, fair value of goodwill and other intangible assets and contingencies.

Acquisitions

Acquisitions	3 Months Ended
	Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]
Acquisitions	AcquisitionsOn February 1, 2023, our Aviation segment acquired Precision Fuel Components, LLC ("Precision Fuel") for a preliminary cash purchase price of $11.8 million, subject to post-closing adjustments. Precision Fuel is a market-leading provider of maintenance, repair and overhaul ("MRO") services for engine accessory and fuel systems supporting the business and general aviation ("B&GA") market. The acquisition is intended to expand the Aviation segment's repair capabilities across a diverse base of global rotorcraft, fixed wing, and B&GA customers and complement our existing service capabilities. Precision Fuel operating results are included in the accompanying consolidated financial statements beginning on the acquisition date. The acquisition was not material to our consolidated financial statements. The allocation of the preliminary purchase price resulted in net tangible assets of $3.1 million, goodwill of $4.7 million, and contract and customer-related intangible asset of $3.8 million, which is being amortized over a period of five years. During the three months ended March 31, 2023, we incurred $0.2 million of acquisition-related expenses, which are included in selling, general and administrative expenses.

Revenue

Revenue	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Revenue	Revenue Disaggregation of Revenues Our revenues are derived from the delivery of products to our customers and from services performed for commercial customers, the United States Department of Defense ("DoD"), and various other government agencies. A summary of revenues by customer for our each of our operating segments for the three months ended March 31, 2023 and 2022 is as follows (in thousands): Three months ended March 31, 2023 Aviation Fleet Federal and Defense Total Commercial $ 112,060 $ 32,544 $ 154 $ 144,758 DoD — — 54,579 54,579 Other government 1,175 42,808 12,113 56,096 Total $ 113,235 $ 75,352 $ 66,846 $ 255,433 Three months ended March 31, 2022 Aviation Fleet Federal and Defense Total Commercial $ 91,912 $ 27,856 $ 92 $ 119,860 DoD — 1,729 50,395 52,124 Other government 1,378 37,445 20,432 59,255 Total $ 93,290 $ 67,030 $ 70,919 $ 231,239 A summary of revenues by type for our each of our operating segments for the three months ended March 31, 2023 and 2022 is as follows (in thousands): Three months ended March 31, 2023 Aviation Fleet Federal and Defense Total Repair $ 32,054 $ — $ — $ 32,054 Distribution 81,181 75,352 — 156,533 Cost Plus Contract — — 33,901 33,901 Fixed Price Contract — — 24,682 24,682 T&M Contract — — 8,263 8,263 Total $ 113,235 $ 75,352 $ 66,846 $ 255,433 Three months ended March 31, 2022 Aviation Fleet Federal and Defense (1) Total Repair $ 22,363 $ — $ — $ 22,363 Distribution 70,927 67,030 — 137,957 Cost Plus Contract — — 30,577 30,577 Fixed Price Contract — — 24,482 24,482 T&M Contract — — 15,860 15,860 Total $ 93,290 $ 67,030 $ 70,919 $ 231,239 (1) In the fourth quarter of fiscal 2022, we reclassified revenues associated with a certain program within our Federal and Defense Segment from T&M to Fixed Price contract type. Prior year amounts have been reclassified to conform with current year presentation. Contract Balances Contract balances were as follows (in thousands): March 31, December 31, Financial Statement Classification 2023 2022 Contract assets Unbilled receivables 35,884 38,307 Contract liabilities Accrued expenses and other current liabilities 7,953 6,402 For the three months ended March 31, 2023 and 2022, we recognized revenue that was previously included in the beginning balance of contract liabilities of $1.4 million and $2.1 million, respectively. Performance Obligations As of March 31, 2023, the aggregate amount of transaction prices allocated to unsatisfied or partially unsatisfied performance obligations was $185 million. The performance obligations expected to be satisfied within one year and greater than one year are 94% and 6%, 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, 2023 and 2022, revenue recognized from performance obligations satisfied in prior periods was not material.

Debt

Debt	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Debt	Debt Long-term debt consisted of the following (in thousands): March 31, December 31, 2023 2022 Bank credit facility - term loan $ 97,500 $ 100,000 Bank credit facility - revolver loans 256,498 188,610 Principal amount of long-term debt 353,998 288,610 Less debt issuance costs (2,143) (2,310) Total long-term debt 351,855 286,300 Less current portion (10,000) (10,000) Long-term debt, less current portion $ 341,855 $ 276,300 Borrowings under our term and revolving credit facilities mature in October 2025. As of March 31, 2023, the interest rate on our outstanding term debt and weighted average interest rate on our aggregate outstanding revolver debt was 7.51% and 7.69%, respectively. Interest expense incurred on bank credit facilities was approximately $6.4 million and $3.4 million for the three months ended March 31, 2023 and 2022, respectively. We had letters of credit outstanding of $0.7 million and $1.0 million as of March 31, 2023 and December 31, 2022, respectively. Future required term and revolver loan payments as of March 31, 2023 are as follows (in thousands): Year Ending Term Loan Revolver Loan Total Remainder of 2023 $ 7,500 $ — $ 7,500 2024 10,000 — 10,000 2025 80,000 256,498 336,498 Total $ 97,500 $ 256,498 $ 353,998

Derivative Instruments and Hedg

Derivative Instruments and Hedging Activities	3 Months Ended
	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Instruments and Hedging Activities	Derivative Instruments and Hedging Activities Our derivative instruments designated as cash flow hedges as of March 31, 2023 were (in thousands): Notional Amount Paid Fixed Rate Receive Variable Rate Settlement and Termination Interest rate swaps $150,000 2.8% 1-month term SOFR Monthly through October 31, 2027

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share Basic earnings per share ("EPS") is 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 the assumed vesting of outstanding stock-based awards. There were no antidilutive common stock equivalents excluded from the diluted per share calculation. The weighted-average number of shares outstanding used to compute basic and diluted EPS were as follows: Three months ended March 31, 2023 2022 Basic weighted average common shares outstanding 12,844,458 12,741,394 Effect of dilutive shares 81,966 61,885 Diluted weighted average common shares outstanding 12,926,424 12,803,279

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Contingencies 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 claims will not have a material adverse effect on our results of operations, financial position or cash flows. Further, from time-to-time, government agencies audit or investigate whether our operations are being conducted in accordance with applicable contractual and regulatory requirements. Government audits or 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, audits 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, 2023
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: Aviation Our Aviation segment provides aftermarket repair and distribution services to commercial, business and general aviation, cargo, military and defense, and rotorcraft customers globally. Core services include parts distribution, engine accessory maintenance, MRO services, rotable exchange and supply chain services. Fleet Our Fleet segment provides parts, inventory management, e-commerce fulfillment, logistics, supply chain support and other services to support the commercial aftermarket medium- and heavy-duty truck market, the United States Postal Service ("USPS"), and the DoD. Core services include vehicle parts distribution, sourcing, IT solutions, customized fleet logistics, warehousing, kitting, just-in-time supply chain management, alternative product sourcing, and engineering and technical support. Federal and Defense Our Federal and Defense segment provides aftermarket MRO and logistics and sustainment services to improve operational readiness and extend the life cycle of military vehicles, ships and aircraft for the DoD, federal agencies and international defense customers. Core services include base operations support; procurement; supply chain management; vehicle, maritime and aircraft sustainment services; IT services and energy consulting. We evaluate segment performance based on consolidated revenues and operating income. Net sales of our business segments exclude inter-segment sales as these activities are eliminated in consolidation. Corporate expenses are primarily selling, general and administrative expenses not allocated to segments. Our segment information is as follows (in thousands): Three months ended March 31, 2023 2022 Revenues: Aviation $ 113,235 $ 93,290 Fleet 75,352 67,030 Federal and Defense 66,846 70,919 Total revenues $ 255,433 $ 231,239 Operating income (loss): Aviation $ 15,663 $ 7,622 Fleet 5,899 6,381 Federal and Defense (580) (688) Corporate/unallocated expenses (3,049) (1,401) Operating income $ 17,933 $ 11,914

Goodwill and Intangible Assets

Goodwill and Intangible Assets	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Intangible Assets	Goodwill and Intangible Assets Goodwill Changes in the carrying amount of goodwill by segment for the three months ended March 31, 2023 were as follows (in thousands): Aviation Fleet Federal and Defense Total Balance as of December 31, 2022 $ 154,072 $ 63,190 $ 31,575 $ 248,837 Acquisitions 4,743 — — 4,743 Balance as of March 31, 2023 $ 158,815 $ 63,190 $ 31,575 $ 253,580 Goodwill increased during the three months ended March 31, 2023 in connection with the acquisition during the period as discussed in Note (2) "Acquisitions." Intangible Assets Intangible assets consisted of the following (in thousands): Gross carrying value Accumulated amortization Net carrying value March 31, 2023 Contract and customer-related $ 210,091 $ (120,953) $ 89,138 Trade names 8,670 (7,744) 926 Total $ 218,761 $ (128,697) $ 90,064 December 31, 2022 Contract and customer-related $ 206,291 $ (116,881) $ 89,410 Trade names 8,670 (7,456) 1,214 Total $ 214,961 $ (124,337) $ 90,624 The gross carrying amount of contract and customer-related intangibles increased during the three months ended March 31, 2023 in connection with the acquisition during the period as discussed in Note (2) "Acquisitions." As of March 31, 2023, the estimated future annual amortization expense related to intangible assets is as follows (in thousands): Year Ending Remainder of 2023 $ 9,976 2024 10,819 2025 9,775 2026 8,950 2027 7,204 Thereafter 43,340 Total $ 90,064

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 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, 2023 Fair Value December 31, 2022 Non-COLI assets held in Deferred Supplemental Compensation Plan (1) Other assets Level 1 $ 559 $ 539 Interest rate swaps Other assets Level 2 $ 3,957 $ 6,620 (1) Non-Company Owned Life Insurance ("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. The carrying amounts of cash and cash equivalents, receivables, accounts payable and amounts included in other current assets and accrued expenses and other current liabilities that meet the definition of a financial instrument approximate fair value due to their relatively short maturity. The carrying value of our outstanding debt obligations approximates its fair value. The fair value of long-term debt is calculated using Level 2 inputs based on interest rates available for debt with terms and maturities similar to our existing debt arrangements.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes 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. Our effective tax rate was 23.7% and 24.8% for the three months ended March 31, 2023 and 2022, respectively. The effective tax rate was lower for the three months ended March 31, 2023 compared to the same period of prior year primarily due to (1) book income in connection with the fair market value increase in our COLI plan in the period ended March 31, 2023 that was reversed for tax purposes as opposed to book expense in the same period in 2022, and (2) higher tax deduction projected for foreign derived intangible income ("FDII") in 2023.

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn May 1, 2023, we entered into a definitive agreement to sell our Federal and Defense Segment to Bernhard Capital Partners, for total consideration of up to $100 million, consisting of $50 million in cash proceeds and an earn-out of up to $50 million subject to the achievement of certain milestones. The sale allows us to advance our focus on long-term strategic growth areas. The transaction is expected to close in late 2023 to early 2024 and is subject to customary closing conditions and approvals.

Nature of Operations and Basi_2

Nature of Operations and Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Basis of Presentation	Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K"). In our opinion, all adjustments, including normal recurring items, considered necessary for a fair presentation of results for the interim periods have been included in the accompanying unaudited consolidated financial statements. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2023.
Use of Estimates	The preparation of financial statements in conformity with U.S. GAAP 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 fair value measurements, inventory provisions, collectability of receivables, estimated profitability of long-term contracts, valuation allowances on deferred tax assets, fair value of goodwill and other intangible assets and contingencies.
Earnings Per Share	Basic earnings per share ("EPS") is 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 the assumed vesting of outstanding stock-based awards.
Business Segments	Management of our business operations is conducted under three reportable operating segments: Aviation Our Aviation segment provides aftermarket repair and distribution services to commercial, business and general aviation, cargo, military and defense, and rotorcraft customers globally. Core services include parts distribution, engine accessory maintenance, MRO services, rotable exchange and supply chain services. Fleet Our Fleet segment provides parts, inventory management, e-commerce fulfillment, logistics, supply chain support and other services to support the commercial aftermarket medium- and heavy-duty truck market, the United States Postal Service ("USPS"), and the DoD. Core services include vehicle parts distribution, sourcing, IT solutions, customized fleet logistics, warehousing, kitting, just-in-time supply chain management, alternative product sourcing, and engineering and technical support. Federal and Defense Our Federal and Defense segment provides aftermarket MRO and logistics and sustainment services to improve operational readiness and extend the life cycle of military vehicles, ships and aircraft for the DoD, federal agencies and international defense customers. Core services include base operations support; procurement; supply chain management; vehicle, maritime and aircraft sustainment services; IT services and energy consulting.

Revenue (Tables)

Revenue (Tables)	3 Months Ended
	Mar. 31, 2023
Revenue from Contract with Customer [Abstract]
Disaggregation of Revenue	A summary of revenues by customer for our each of our operating segments for the three months ended March 31, 2023 and 2022 is as follows (in thousands): Three months ended March 31, 2023 Aviation Fleet Federal and Defense Total Commercial $ 112,060 $ 32,544 $ 154 $ 144,758 DoD — — 54,579 54,579 Other government 1,175 42,808 12,113 56,096 Total $ 113,235 $ 75,352 $ 66,846 $ 255,433 Three months ended March 31, 2022 Aviation Fleet Federal and Defense Total Commercial $ 91,912 $ 27,856 $ 92 $ 119,860 DoD — 1,729 50,395 52,124 Other government 1,378 37,445 20,432 59,255 Total $ 93,290 $ 67,030 $ 70,919 $ 231,239 A summary of revenues by type for our each of our operating segments for the three months ended March 31, 2023 and 2022 is as follows (in thousands): Three months ended March 31, 2023 Aviation Fleet Federal and Defense Total Repair $ 32,054 $ — $ — $ 32,054 Distribution 81,181 75,352 — 156,533 Cost Plus Contract — — 33,901 33,901 Fixed Price Contract — — 24,682 24,682 T&M Contract — — 8,263 8,263 Total $ 113,235 $ 75,352 $ 66,846 $ 255,433 Three months ended March 31, 2022 Aviation Fleet Federal and Defense (1) Total Repair $ 22,363 $ — $ — $ 22,363 Distribution 70,927 67,030 — 137,957 Cost Plus Contract — — 30,577 30,577 Fixed Price Contract — — 24,482 24,482 T&M Contract — — 15,860 15,860 Total $ 93,290 $ 67,030 $ 70,919 $ 231,239 (1) In the fourth quarter of fiscal 2022, we reclassified revenues associated with a certain program within our Federal and Defense Segment from T&M to Fixed Price contract type. Prior year amounts have been reclassified to conform with current year presentation. Contract balances were as follows (in thousands): March 31, December 31, Financial Statement Classification 2023 2022 Contract assets Unbilled receivables 35,884 38,307 Contract liabilities Accrued expenses and other current liabilities 7,953 6,402

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2023
Debt Disclosure [Abstract]
Schedule of Long-term Debt	Long-term debt consisted of the following (in thousands): March 31, December 31, 2023 2022 Bank credit facility - term loan $ 97,500 $ 100,000 Bank credit facility - revolver loans 256,498 188,610 Principal amount of long-term debt 353,998 288,610 Less debt issuance costs (2,143) (2,310) Total long-term debt 351,855 286,300 Less current portion (10,000) (10,000) Long-term debt, less current portion $ 341,855 $ 276,300
Schedule of Term Loan Payments	Future required term and revolver loan payments as of March 31, 2023 are as follows (in thousands): Year Ending Term Loan Revolver Loan Total Remainder of 2023 $ 7,500 $ — $ 7,500 2024 10,000 — 10,000 2025 80,000 256,498 336,498 Total $ 97,500 $ 256,498 $ 353,998

Derivative Instruments and He_2

Derivative Instruments and Hedging Activities (Tables)	3 Months Ended
	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of Derivative Instruments	Our derivative instruments designated as cash flow hedges as of March 31, 2023 were (in thousands): Notional Amount Paid Fixed Rate Receive Variable Rate Settlement and Termination Interest rate swaps $150,000 2.8% 1-month term SOFR Monthly through October 31, 2027

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The weighted-average number of shares outstanding used to compute basic and diluted EPS were as follows: Three months ended March 31, 2023 2022 Basic weighted average common shares outstanding 12,844,458 12,741,394 Effect of dilutive shares 81,966 61,885 Diluted weighted average common shares outstanding 12,926,424 12,803,279

Business Segments and Custome_2

Business Segments and Customer Information (Tables)	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Segment Information	Our segment information is as follows (in thousands): Three months ended March 31, 2023 2022 Revenues: Aviation $ 113,235 $ 93,290 Fleet 75,352 67,030 Federal and Defense 66,846 70,919 Total revenues $ 255,433 $ 231,239 Operating income (loss): Aviation $ 15,663 $ 7,622 Fleet 5,899 6,381 Federal and Defense (580) (688) Corporate/unallocated expenses (3,049) (1,401) Operating income $ 17,933 $ 11,914

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill by Operating Segment	Changes in the carrying amount of goodwill by segment for the three months ended March 31, 2023 were as follows (in thousands): Aviation Fleet Federal and Defense Total Balance as of December 31, 2022 $ 154,072 $ 63,190 $ 31,575 $ 248,837 Acquisitions 4,743 — — 4,743 Balance as of March 31, 2023 $ 158,815 $ 63,190 $ 31,575 $ 253,580
Schedule of Intangible Assets	Intangible assets consisted of the following (in thousands): Gross carrying value Accumulated amortization Net carrying value March 31, 2023 Contract and customer-related $ 210,091 $ (120,953) $ 89,138 Trade names 8,670 (7,744) 926 Total $ 218,761 $ (128,697) $ 90,064 December 31, 2022 Contract and customer-related $ 206,291 $ (116,881) $ 89,410 Trade names 8,670 (7,456) 1,214 Total $ 214,961 $ (124,337) $ 90,624
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense	As of March 31, 2023, the estimated future annual amortization expense related to intangible assets is as follows (in thousands): Year Ending Remainder of 2023 $ 9,976 2024 10,819 2025 9,775 2026 8,950 2027 7,204 Thereafter 43,340 Total $ 90,064

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2023
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, 2023 and December 31, 2022 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, 2023 Fair Value December 31, 2022 Non-COLI assets held in Deferred Supplemental Compensation Plan (1) Other assets Level 1 $ 559 $ 539 Interest rate swaps Other assets Level 2 $ 3,957 $ 6,620 (1) Non-Company Owned Life Insurance ("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.

Nature of Operations and Basi_3

Nature of Operations and Basis of Presentation (Details)	3 Months Ended
	Mar. 31, 2023 segment
Accounting Policies [Abstract]
Number of operating segments	3

Acquisitions - Narrative (Detai

Acquisitions - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Feb. 01, 2023	Mar. 31, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Goodwill		$ 253,580	$ 248,837
Precision Fuel
Business Acquisition [Line Items]
Purchase price	$ 11,800
Goodwill	4,700
Acquisition related expenses		$ 200
Precision Fuel | Customer Relationships
Business Acquisition [Line Items]
Intangible assets	3,800
Precision Fuel | Net Tangible Assets, Excluding Customer Relationships
Business Acquisition [Line Items]
Intangible assets	$ 3,100

Revenue - Disaggregation of Rev

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Revenues	$ 255,433	$ 231,239
Unbilled receivables	35,884		$ 38,307
Contract liabilities	7,953		$ 6,402
Repair
Disaggregation of Revenue [Line Items]
Revenues	32,054	22,363
Distribution
Disaggregation of Revenue [Line Items]
Revenues	156,533	137,957
Cost Plus Contract
Disaggregation of Revenue [Line Items]
Revenues	33,901	30,577
Fixed Price Contract
Disaggregation of Revenue [Line Items]
Revenues	24,682	24,482
T&M Contract
Disaggregation of Revenue [Line Items]
Revenues	8,263	15,860
Commercial
Disaggregation of Revenue [Line Items]
Revenues	144,758	119,860
DoD
Disaggregation of Revenue [Line Items]
Revenues	54,579	52,124
Other government
Disaggregation of Revenue [Line Items]
Revenues	56,096	59,255
Aviation
Disaggregation of Revenue [Line Items]
Revenues	113,235	93,290
Aviation | Repair
Disaggregation of Revenue [Line Items]
Revenues	32,054	22,363
Aviation | Distribution
Disaggregation of Revenue [Line Items]
Revenues	81,181	70,927
Aviation | Cost Plus Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Aviation | Fixed Price Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Aviation | T&M Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Aviation | Commercial
Disaggregation of Revenue [Line Items]
Revenues	112,060	91,912
Aviation | DoD
Disaggregation of Revenue [Line Items]
Revenues	0	0
Aviation | Other government
Disaggregation of Revenue [Line Items]
Revenues	1,175	1,378
Fleet
Disaggregation of Revenue [Line Items]
Revenues	75,352	67,030
Fleet | Repair
Disaggregation of Revenue [Line Items]
Revenues	0	0
Fleet | Distribution
Disaggregation of Revenue [Line Items]
Revenues	75,352	67,030
Fleet | Cost Plus Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Fleet | Fixed Price Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Fleet | T&M Contract
Disaggregation of Revenue [Line Items]
Revenues	0	0
Fleet | Commercial
Disaggregation of Revenue [Line Items]
Revenues	32,544	27,856
Fleet | DoD
Disaggregation of Revenue [Line Items]
Revenues	0	1,729
Fleet | Other government
Disaggregation of Revenue [Line Items]
Revenues	42,808	37,445
Federal and Defense
Disaggregation of Revenue [Line Items]
Revenues	66,846	70,919
Federal and Defense | Repair
Disaggregation of Revenue [Line Items]
Revenues	0	0
Federal and Defense | Distribution
Disaggregation of Revenue [Line Items]
Revenues	0	0
Federal and Defense | Cost Plus Contract
Disaggregation of Revenue [Line Items]
Revenues	33,901	30,577
Federal and Defense | Fixed Price Contract
Disaggregation of Revenue [Line Items]
Revenues	24,682	24,482
Federal and Defense | T&M Contract
Disaggregation of Revenue [Line Items]
Revenues	8,263	15,860
Federal and Defense | Commercial
Disaggregation of Revenue [Line Items]
Revenues	154	92
Federal and Defense | DoD
Disaggregation of Revenue [Line Items]
Revenues	54,579	50,395
Federal and Defense | Other government
Disaggregation of Revenue [Line Items]
Revenues	$ 12,113	$ 20,432

Revenue - Narrative (Details)

Revenue - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Allowance for credit loss	$ 2.4	$ 2.1
Contract liabilities	1.4		$ 2.1
Revenue, remaining performance obligation	$ 185

Revenue - Performance Obligatio

Revenue - Performance Obligations (Details)	Mar. 31, 2023
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, remaining performance obligation, percentage	94%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period
Revenue, remaining performance obligation, percentage	6%

Debt - Long-term debt (Details)

Debt - Long-term debt (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Long-term debt	$ 353,998	$ 288,610
Less debt issuance costs	(2,143)	(2,310)
Total long-term debt	351,855	286,300
Less current portion	(10,000)	(10,000)
Long-term debt, less current portion	341,855	276,300
Term Loan
Debt Instrument [Line Items]
Long-term debt	97,500	100,000
Revolver Loan
Debt Instrument [Line Items]
Long-term debt	$ 256,498	$ 188,610

Debt - Narrative (Details)

Debt - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Loans Payable And Revolving Credit Facility
Debt Instrument [Line Items]
Interest rate range	7.51%
Interest expense, net	$ 6,400,000	$ 3,400,000
Revolver Loan
Debt Instrument [Line Items]
Interest rate range	7.69%
Letters of credit outstanding	$ 700,000		$ 1,000,000

Debt - Loan Payments (Details)

Debt - Loan Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Long-term Debt, Fiscal Year Maturity [Abstract]
2023	$ 7,500
2024	10,000
2025	336,498
Long-term debt	353,998	$ 288,610
Long-term debt	353,998	288,610
Term Loan
Long-term Debt, Fiscal Year Maturity [Abstract]
2023	7,500
2024	10,000
2025	80,000
Long-term debt	97,500
Long-term debt	97,500
Revolver Loan
Long-term Debt, Fiscal Year Maturity [Abstract]
2023	0
2024	0
2025	256,498
Long-term debt	256,498	188,610
Long-term debt	$ 256,498	$ 188,610

Derivative Instruments and He_3

Derivative Instruments and Hedging Activities (Details) - Cash Flow Hedging $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amount	$ 2,600
Interest Rate Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional Amount	150,000
Reclassification	$ 600
Paid Fixed Rate	2.80%

Earnings Per Share (Details)

Earnings Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Basic weighted average common shares outstanding (in shares)	12,844,458	12,741,394
Effect of dilutive shares (in shares)	81,966	61,885
Diluted weighted average common shares outstanding (in shares)	12,926,424	12,803,279

Business Segments and Custome_3

Business Segments and Customer Information - Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) segment	Mar. 31, 2022 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment	3
Number of reportable segments | segment	3
Segment Reporting Information [Line Items]
Revenues	$ 255,433	$ 231,239
Operating income (loss)	17,933	11,914
Corporate/unallocated expenses
Segment Reporting Information [Line Items]
Operating income (loss)	(3,049)	(1,401)
Aviation
Segment Reporting Information [Line Items]
Revenues	113,235	93,290
Aviation | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	15,663	7,622
Fleet
Segment Reporting Information [Line Items]
Revenues	75,352	67,030
Fleet | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	5,899	6,381
Federal and Defense
Segment Reporting Information [Line Items]
Revenues	66,846	70,919
Federal and Defense | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	$ (580)	$ (688)

Goodwill and Intangible Asset_2

Goodwill and Intangible Assets - Goodwill Roll Forward (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Goodwill [Roll Forward]
Balance as of beginning of period	$ 248,837
Acquisitions	4,743
Balance as of end of period	253,580
Aviation
Goodwill [Roll Forward]
Balance as of beginning of period	154,072
Acquisitions	4,743
Balance as of end of period	158,815
Fleet
Goodwill [Roll Forward]
Balance as of beginning of period	63,190
Acquisitions	0
Balance as of end of period	63,190
Federal and Defense
Goodwill [Roll Forward]
Balance as of beginning of period	31,575
Acquisitions	0
Balance as of end of period	$ 31,575

Goodwill and Intangible Asset_3

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	$ 218,761	$ 214,961
Accumulated amortization	(128,697)	(124,337)
Net carrying value	90,064	90,624
Contract and customer-related
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	210,091	206,291
Accumulated amortization	(120,953)	(116,881)
Net carrying value	89,138	89,410
Trade names
Finite-Lived Intangible Assets [Line Items]
Gross carrying value	8,670	8,670
Accumulated amortization	(7,744)	(7,456)
Net carrying value	$ 926	$ 1,214

Goodwill and Intangible Asset_4

Goodwill and Intangible Assets - Future Expected Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 9,976
2024	10,819
2025	9,775
2026	8,950
2027	7,204
Thereafter	43,340
Net carrying value	$ 90,064	$ 90,624

Fair Value Measurements - Finan

Fair Value Measurements - Financial Assets and Liabilities (Details) - Fair Value, Measurements, Recurring - Other assets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Non-COLI assets held in Deferred Supplemental Compensation Plan(1)	$ 559	$ 539
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest rate swaps	$ 3,957	$ 6,620

Income Taxes (Details)

Income Taxes (Details)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	23.70%	24.80%

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Federal and Defense $ in Millions	May 01, 2023 USD ($)
Subsequent Event [Line Items]
Disposal Group, Including Discontinued Operation, Consideration	$ 100
Proceeds from sale of business	50
Disposal Group, Including Discontinued Operation, Consideration To Be Received	$ 50