VSEC - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to the VSE Corporation Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Noel Ryan, you may begin.

Noel Ryan

Thank you, operator. third results Corporation's call. VSC to quarter conference XXXX Welcome and are Cuomo; Griffin. Leading today President CEO, Steve the call Officer, our John Financial and Chief presentation website, on to today are along we follow encourage you The our accordingly. we sharing and is business forward-looking future financial expectations. Today's discussion about and contains statements due risks the may results described periodic filed with statements in from risks and in today's those our Actual various projected uncertainties, SEC. significantly forward-looking differ to including the reports forward-looking no as statements. required our by to Except undertake obligation we update law,

for non-GAAP where We our our The is using today's At where in I the turn call like that, are financial incorporated conclusion presentation. progress, the noted. in to the would on we appropriate measures are discussion remarks. reconciliations to his into posted year-over-year refer except prepared website. line percentages GAAP for available, financial And John All questions. our Cuomo over to prepared with our presentation remarks, of will open which

John Cuomo

Welcome, you and Noel. Thank thank today. the for time join call you, everyone, to our taking

on of fourth strong quarterly our a materials. had the VSE representing quarter, third run X begin XXXX. of rate since revenue Slide quarter conference the call Let's highest

total quarter three the total XX% the nonrecurring for Excluding net increased supported across adjusted by income XX% by increased prior period. reporting by quarter versus growth the revenue year-over-year, XX% by segments. items, Adjusted for year year-over-year all increased EBITDA year-over-year, while

and through growth a growth from has completed and recently higher-margin new aftermarket acquisitions. proposition business e-commerce program and strategies business quarter, our continued the growth of will our margin the platforms distribution created generate of base positioning our MRO expansion new opportunities to execution, our in into program long-term future. recurring which for continued new leverage the wins, business, capabilities, unique verticals to drive VSE addition MRO strong in on contributions execute extensions, revenue We the while contract during that value above-market third

driven global than more posted record consecutive XXX% by has increased execution million, revenue driven program segment, aviation higher year revenue acquisition. our while new quarters $XX.X the and a now materially on year-over-year quarter within growth, both both Specifically, and parts versus trended adjusted organic from aviation Aviation consistent EBITDA prior margins to sequential contributions higher-value EBITDA inorganic of five with our have prior improvement, adjusted and opportunities. levels, margin-enhancing focus by and

Third aviation of share to second nearly aviation the mainly company XXX% year significant the area global more due quarter the positive was distribution revenue opportunity market, above gains an prior for acquisition. the long-term organic parts and XX% than of XXXX, general and the within quarter business our above impacts and

revenue period, improved level. versus MRO the remains below airline X% While activity pre-pandemic prior MRO year

continues MRO a market in portion aviation the recover, become to mix. overall revenue to further of this revenues margin see improvement we As as aviation expect larger

month, MRO the agreement, our this aviation Earlier to engine higher As date. leading tip remain execution the accessories to contract revenue in Under products flight and $X discussed rotorcraft that contractual platform on full and agreement and this aviation and MRO MRO the a global we in aviation extension for largest and to distributor team execute spare in a of accessories at extension this valued summary, business and business. supplier June, with VSE strong and to result This another will provides general terms on revenue aircraft focused leading multi-year and of BG&A and general continuing billion services million $XX builds pipeline entered approach services XXXX announced continues In approximately of build and the million. VSE further to VSE's manufacturer, agreement. $XX the of value upon become Aviation a support recent associated the OEM. tail a OEM. XXXX. a of while distribution implementation aviation represents had leading both demand the by business contract systems our long-term we VSE into services, us relationship combination that to established market our VSE parts plan, $XXX the and million control parts to customer and new continues with breadth services distribution brand. in fuel segment service The support aviation general year, builds will that global capabilities under products calls, to major and to of distribution Similar engine requirements a to one business our positions customers, XX program, and build BG&A five-year of commenced encompasses to systems we markets critical of a a In worldwide engine global this a the integrated of upon support distribution

by largest margin I'm particularly still the relentless have on the us, customer, execute the ahead. and EBITDA their segment our see work we expansion. to ahead of aviation program continue the as proud runway years the focus to new growth of what actions accomplished, on now we in has drive While above-market to and revenue, incredibly wins I ample is focused team

fleet a review segment. of Turning to now our

XX% third in related the on on XX% business. QX, period. the basis third COVID year-over-year fleet Commercial revenue year-over-year increased sequentially margin in of representing prior nonrecurrent in a by equipment quarter. commercial driven adjusted X% EBITDA improved our personal by a XX the basis points in Fleet in increased basis revenue in revenue the continued total fulfillment e-commerce a year quarter, order protective Excluding period, growth

with HAECO increased new Defense quarter, supported contribution the XX% driven as growth basis, Federal a a had of a combination completed third segment during acquisition. Federal organic up business year-over-year solid by development & quarter backlog year-over-year the revenue by Services X% and recently Our business activities. on Special

macro the some on the I call thoughts allow Steve, to environment. turn me Before over to share

plan we any internal forecast we for the reducing the or not the outlook business while margin program inflation, market. disruption with and our or above our this chain current distribution closing, MRO revenue to and are risk executed supply In time, mitigating. and development Continued new quarter, our of are businesses higher-margin business customer At remainder during year. cost and an prioritize execution actively underserved each at third of continuing

We have and at a strong margins. provide pipeline of contract extensions streams expect we wins development program will revenue new business and attractive new announced that long-term recurring activity

in year a investments was flow cash new improvement as resulting working significant XXXX, capital to XXXX in inventory, ahead of look While free the program in these of benefits to investment realize expect we year upfront levels. versus current we

of complementary our acquisitions remaining debt will expect XXXX, With the a mindful number I'll towards year-end a now EBITDA evaluate of a leverage, which and reduction. of while given move net financials. of to generation smaller, continue turn improved call We by review to we that, over Steve X.Xx combination for

John Cuomo

the a in across third quarter. excluding adjusted of third $XXX.X third now related X and X million for from XXXX. conference of in overview of We the all PPE On revenue year-over-year segment in in our fleet to turn segments revenue three third order period, John. increased pandemic of materials Thanks, quarter, year on an the quarter Slides reporting an an in basis, increase the We'll our XX% impact basis the of performance. call nonrecurring the reported a quarter prior

year-over-year higher wins, of segment on a growth basis. was was fleet growth segment Our grew and The adjusted quarter, wins XXXX. global quarter. XX% increase revenue inorganic of revenue. an for program million was USPS fulfillment the our year-over-year EBITDA new e-commerce a gains and spurred $XX.X from completed as and combination straight the by fifth slightly and well of of aviation organic XXX% in federal segment commercial by generated fleet parts in a driven combination growth We share acquisition by July the contributions The third driven as

as we EBITDA $XX profitability, margin to in sequentially. Our segment year-over-year the was Operating third less on saw expenditures flow, continue under both total the rate quarter. improve capital just and million aviation was basis adjusted a cash XX%,

XX%. particularly aviation We year, increased a margins scale. repair and next up this year-over-year in quarter versus a XX% quarter Turning increased than XX% as our of recover. increased implement and repair basis expand sequentially, be to Aviation integrated to year-over-year businesses margin to Aviation a year-over-year second and XXX% the customers. growing recovery XXXX. general our solutions X. adjusted revenue XXX Slide on XXX% third and segment across distribution the priority for EBITDA a we was grew more Both and EBITDA growth and with parts year-over-year is over has throughout levels, been Distribution anticipate acquisition further drive of new wins. market programs slower top more repair, we business segment continues basis, repair improved business EBITDA to contract our outperforming by demand pre-pandemic while distribution excluding global primarily the end above back as while revenue, adjusted points driven new base than

XXXX. improved versus diversification $X.X line and revenue EBITDA Slide XXX prior the X. to Segment driven segment markets. XX% scale X% revenue, down revenue itself revenue XXXX. nonrecurring our in Commercial of basis quarter recent declined commercial segment to the accounted a by combination impact the period, basis year the in of in of mix Turning revenues million quarter XX% year-over-year, versus its USPS quarter expanded segment declines excluding organic and revenue. the adjusted XX of the growth diversifies Adjusted order year in EBITDA sales period, XX% Fleet margins but third of This were PPE XXXX second third points of sequentially efforts. on the for higher was the positions and DoD was versus commercial continued by with million a prior offset as versus work, of XX.X% $XX.X however, points to quarter, in investments the XX% gain increased increased

the margin the Services revenue and wins, on program X.X%. Slide Federal third in Defense to Services and the contract EBITDA business Army to XXXX. XX% a bidding of Special segment Federal with XXXX and were basis, million U.S. new Federal rates the increased backlog Turning and from expiration increased EBITDA offset versus in wins. quarter, contributions by funded due increased a of HAECO segment adjusted driven the was development X% X. adjusted by year-over-year acquisition quarter $X.X

$XXX Turning million cash availability commitment facility million includes X. $XXX our end, accordion million to provision, credit quarter to approvals. customary and existing a company's unused had third lender in The facility. subject credit commitment Slide under we $XXX At

XX, operator, net acquisition. of XX-month the and our million of and two EBITDA that, of net EBITDA incremental Reported leverage X.Xx ready prior $XXX VSE million. mentioned total working contribution our from in which from XXXX. EBITDA the John trailing will $XX.X inventory, program to had excludes call. as we new portion net the was by to now recent debt outstanding we in acquisitions Xx for or are date deliver Adjusted earlier, was year-end question-and-answer September of revenue of investments expect With below the period As result at and capital recent leverage for

Operator

from Instructions] Ken Markets. with our first your with [Operator Herbert RBC question Please And proceed is questions. Capital

Kenneth Herbert

within distribution But the as be very top first MRO. jet color geographically, that aviation more any helpful? just to jet any provide I segment wanted lot aviation we on I - transport of in out would versus the maybe the segment business John, distribution commercial the ask, on growth think talked line, about versus within to mix about the can more business you on strong a know side of to in particular, ways or the side, parse you the relative some growth the

John Cuomo

don't when commercial. years more business ago, general skewed We XX% of side general came market XX% the board business XX the last The business that distribution break shared two on in Yes, the the business kind aviation, revenue sure. definitely has about months. aviation, first I on But out channel. over specifically I was by

as do So supported of that aviation, all contributions ramp-up then program business business and the associated customers. accessories of And parts that all from are and program general aviation the they or acquisition commercial not support in in contributions the from the our the and business well. engine revenue global general are from that that earnings program ramp-up

the business end we're skew commercial. towards heavily back So BG&A get as of we distribution seeing versus the to XXXX,

On the that mix side, repair had still in we've consistently the it's past. similar a

Kenneth Herbert

aviation margins of some opportunity about EBITDA rest ramp? the the the Okay. And low progression That's like to mid-teens adjusted of year wins through what EBITDA we segment How do XXXX? margins in sort helpful. incremental perhaps into think of of the And it looks new of the the look like and this contract should quarter. within were the

Steve Griffin

Yes, sure, Ken.

X.X points up over So versus versus points the X and the business for the in - prior adjusted year EBITDA quarter up the was quarter. the margin XX%, X prior

that what introductions. we would the historically which expect to as in We've wins we've should program experience the the communicated is been program you recovery all business that expect continue from that. historically to communicated So with this where new growth business had is mid-teens, fit sequential in the be new we and

EBITDA So in communications around line margin historic with rate. the sort of

So to as day, the transition how continued are we at end I the the of as should indicator we've to think repair All segment what 'XX, as rate being rate. the talked mid-teens we'll the you to in EBITDA about that recovery an improvement subject important expect in get aviation business, as the back which of recovers. the margin business to incredibly is

Kenneth Herbert

about But are disruptions potential inflation. yet you take mitigate I'm John, you And are made distribution you're supply your helpful. on the concern you steps chains? to when impact comment, business any maybe with the distribution seeing there partners seeing down their OEM And/or or and significant areas any any on weren't side? curious, having the chain I road I That's your supply think from - question. any final cost real risk the from to of that Okay. just know one

John Cuomo

a Yes. as are question. our just labor areas of in in I great And of both and business. we - clarify inflation of our some as comments, areas to some kind it's know, in costs well my seeing

commercial what in see specifically the capital over we've XX sure been for we're it making to as been place last And recovery is there. to us continue compression see and that more inventory actions negatively mitigate the have done like in how the to a the we've working in terms We having you've that impact going risk of taking that see lead of business. going you're that push assumption is my could and out, put distribution times seen markets the XX-plus last to we we in use and to years aerospace, see lot months specifically

that a more bit we've be So opportunistic well. well been actually, a on to hopefully, and manage to little purchases inventory aggressive little bit as prepared

content business, we fixed-price other a is park long-term The say nature. - thing bit our lot in little heavy without have very it's proprietary contracts, more very we a have I'd a transactional aviation in a of

the business. So customer, it allow to does our directly fleet us similar cost to that to push

on now, inflationary So probably price manage and we've that is really have where in at as how do supply with been product, able the and can. create and the we're capitalize we've as fleet new but margins customer we It's that seen because it both with solving where we pushing that times the well to business cost, most the the logistics of for looking right customer. both chain and pressure business both opportunities down we relationships to how do to we're expand inventory on terms problems to mitigate risk we unique

Operator

your question. Please Michael is with proceed next Truist. Our from with question Ciarmoli

Michael Ciarmoli

Steve, the guess, parts guys? you $X growth $XX we Nice in global maybe give rate mean, maybe those months contribution to had, results. you revenue from of I assume organic should just aviation? I X million clarity. million Can

Steve Griffin

Yes.

global sequential the so growth So total worth were parts global compare rate, in the organic was up a to XQ it's business from little contribution. revenue revenue the sort $XX over of It of contributed business, standpoint. about - excluding in was if growth of to just two quarter. terms aviation, months a XX% you The million XQ it

well. global team excluding good as from results obviously, and the growth, So global

Michael Ciarmoli

obviously, parts, some And that did of was all repair? the distribution? all into Or that flow

Steve Griffin

within of of million. $XX majority it repair - number immaterial that The is

Michael Ciarmoli

called contribution, had different? It June. if the up mean, down out distribution anything big on step I pretty a look, I like million there looks if $XX XQ I think year-over-year. you slides, a XXX% was you mean, So that's from I

I is mean, down distribution there it distribution-was business? revenue think would I the significantly? did you global anything core in that XX.X% ex in like seem parts,

Steve Griffin

that. $XX think don't the in quarter. I No. say No. I Distribution would that million was

million contribution the. $XX from So

Michael Ciarmoli

Got in the Okay. quarter. million it. Got it. $XX

Okay. Yes. Got it.

up So XXX%. distribution revenue

Yes, That Okay. sense. it. makes got Got it.

and question back supply materials. Ken's Okay. the And chain on to just maybe on - then raw

much at lead some inventory, for in just build starting up said pretty these Looking new John, inventory--how new and the look this you quarter was of ramping time. programs. I to And at you're the significant contracts think, investment extending

buffer I building about you're presumably, So forward? some there. we how mean going think do inventory levels the

Steve Griffin

Yes. I sort cash to answers mean flow. as I'll of give you relates the it financial

inventory the about good today. feel we're in we So that position

to purchases. be would of continuing we inventory for with we deal, & associated previously million announced know, the you Canada inventory are $XX As new stock which Pratt Whitney

of part used that of cash year. million the as quarter, the stocking flow. In generated start we of free are to program. quite $XX we build-out bit worth we Obviously, So the a

So be a And of the business. we we've negative, I feel the good, the obviously. have free year-over-year terms improvement, to on of but level flow trajectory in by investment the in year, end of sort a think, we'll communicated, cash

the and that. in relates maybe stocking lead handle to it of inventory let John, times, levels, you terms As I'll

John Cuomo

Yes. I'd off be to flow going take say, that year. Mike, our us we're plan do to that will of free positive nothing next cash

So on shift opportunity without plans, free the new But change it yes, out our market won't great that will comes but invest our we may current cash some further, knowing based that. flow organic forecast. in XXXX if

Michael Ciarmoli

maybe to dialed I inventory you've environment, there ground to you've and mean, and I good terms to pricing line they mean, think growth contribution, tailwind bit a probably on. their get aircraft some their hands of through going margin value we of out margin? a or How got I mean, a couple whatever couple you you pricing can do for add right be a probably get of either of a mean, can top in could the that probably customers do on the now. up pay that's think need think And tailwind? do of I maybe about here. John, been cycles off incremental to points amount assuming

John Cuomo

And think I inventory is XXXX? think believe that prices slow power I shift But the still recovery now right not side, it's I we're seeing supply and general be sometime there's business a commercial was no still in we're as there. the - business there's in be Absolutely. say margins pricing expand to why there'll transparent I large on though statements aviation space, the can And - the there's that in in marketplace and the the yet. not in side, would steady. there, of some I on still would the our about commercial and where the opportunity impact that's I think, pretty we issues remainder and out year. really chain many for seeing our fleet in maybe of I'd the where say business potentially earlier amount

Michael Ciarmoli

to relative been we've I And chain think, about, aviation. talking supply

You inventories, broader thinking there of serve just light jumping that up business? times, lead we're you hearing of chain brought and fleet, kind anything auto? markets the mean, trucks I side out everything the supply about in on on

John Cuomo

on in building less I'm so that business one that - a whole proud market And in pleased business diversification and that our strategy diversification team strategy. customer. can for performing was mean growth single I is reliant and the remember, very And how business. about that to 'XX Yes. really that's see And our all commercial and is very the small. customer 'XX you commercial

commercial contracts So have space where short inventory. the we're on a it's of long-term not ton like we

But we than and because So with other customer two. some on to opportunistic issues issues overstock actually problems. relationships and and seeing I'd our logistics we've absolutely more build inflation, solving new cost that chain the segment that say you are correct been we're are relationships supply very products

Operator

with question question. William from proceed Palma next your our De And Blair. Louis with is Please

Louis De Palma

morning, John, Noel. Good Stephen.

faster. For reason to business something much towards commercial, John, more skewed aviation the repair slower your Or simple business else? business main that just is towards recovered Is has whereas aviation more than of repair the and business distribution skewed the been reason? is that mix has is recover there the distribution because is

John Cuomo

well, and if above business our in not they and capabilities general and repair have segment, to, they're are do close recovering aviation very levels. pre-pandemic quite We

business MRO is it's recovery the pre-pandemic commercial slow below Our steady. levels, still and and steady, slow but is and

Louis De Palma

in it rapid slight stabilizes fleet achieves? as Are as stabilization relates decline. your discussed your we fleet? and stabilization modest point growth reached you a Have of Some EBITDA business, EBITDA a your to And a we improvement. EBITDA a business which the point experiences at or for USPS margin commercial fleet sequential maybe overall subsegment

John Cuomo

don't you there can but can say bottom, now want expect I'd that the is this you exactly we're and we're steady say improvements. to yet say where close, I

committed, operating We can we are return feel margins. and business to we confident mid-teens to the very that get

a of We that the fleet are support continuing invest center around commercial our e-commerce support initiatives to XXXX, back to business. stood to of business our excellence in half we up

continue invest that make we sure building to We of excellence. are centers to

that in, in We have an go early conversion ERP will system XXXX.

So I'd USPS. say that summarize one that the customer, reason the is which in that

Our is as operating margin the next to bounce stabilized customer off, a keep months. see that slight get XX you may is down that levels from USPS is in are to flat if slightly that number over we the the goal The as And income possible. slightly strong. until to contribution

to yet. but add? any color you exactly So I'd not close, want say there Steve, we're

Steve Griffin

think I covers that No, it. adequately

Louis De Palma

Monday, you PAE PAE. announced as one it your that final one of closest of Would one On And competitors, comps one. Great. is your Amentum division? Federal your larger for view acquiring

Steve Griffin

bit a more mean little the on do I got they're technical consulting our - They of side as services play federal work a as and technical well balance in work definitely we definitely a and and we've portfolio. comp than MRO defense competitor. a

- absolutely them a a look So right the they comp as more they at competitor. the and skew side, side but than we are left on

Operator

next Please question. Moeller And your question from with is Canaccord. Austin with our proceed

Austin Moeller

sort is on federal of is ballpark There's one question first of least that Have cost-plus the in from segment. backlog. types the margin funded you as from mix John. between differential morning, more contracts. here to defense XX% The Good increase - the fixed-price it or just here move to what to and the the other? on clearly you contracts change the firm strategy two been My at indicated a

John Cuomo

But what will haven't. single-digit perform a single performed high will digits, pushing shared margin hopefully We has that business the rate. the shared we've segment. say, in And at we to is, a what rate have business double-digit as I historically low the margin total

So with can math finish that, on I kind think of kind mix. of you the the

definitely So as it in higher-margin is business we our well technical - services more into are and as moving both consulting verticals, work. MRO and distribution

Steve Griffin

for just know, you And Yes. to Austin.

back going of overall price midst year, like the segment. done in the and the fixed high of year, So XXs. low the work was this was of we're XX% level to like of somewhere XXXX, XXXX, in business total Last it XX% federal defense

quarter XX%. was was XX%, last it around and quarter, This

fixed-price overall has the margin significant shift improvement towards that the So last a of seen the in contract that been the you've months. driver XX segment over

Austin Moeller

that's Good. helpful. Okay. very Yes,

that news do segment, Now U.S. of has that? seeing to recent you because the soon? obviously travel aircraft MRO aircraft Or on that international demand an started reopened work Europe. seen the or wide-body other commercial in you've aviation just the already uptick anticipate on you Have for

John Cuomo

We have not.

enthusiasm not a that right But that not of backlog. in at the different necessarily this definitely York about show. MRO and New I have just week There energy now over is - We was in market. Europe seen is last level enthusiasm

the component on yet. haven't do - seen with but it space, kind side the We announcement. So we've seen seen bump materially real impact our XXXX, haven't expect recent the on repair of of on to a improvements in we will regard again, relatively MRO wide-body consistent heavy commercial based in positively it I month-over-month but inputs

Austin Moeller

lot business business aviation build side, demand of rising. on and on Okay. there's jet higher being jet OEM Great. segment, rates about materially And been the news a the

And it's or so either level. if levels XXXX rates you to XX% travel than look of XX% higher at in XXXX traffic, business jet terms

So very general business aviation obviously, guys bullish and market. you are the on

of think a do trend? the think change Or is temporary been in So structural long-term you market? there's do this sort a you

Steve Griffin

structural long-term change. a been it's think I

And market. - as great a the it's would seeing market years. in like question market in of We're market wheels think like been kind I've never for obviously bit pop little - I was you because about real settle and this got a new you've And then in up. of a saw the a down. there it this players it was a XX

You've aircraft the got historically. lowest levels used at aircraft and parked

that access like pretty in of are aircraft. terms to much You've capacity at got like people the Netjets and

be we we see this products to trend, terms So and business. expect margin something approach to distribution is tip of MRO and opportunity revenue to capabilities long-term continued and tail a our the that for both sustaining a in be

Austin Moeller

that Awesome. definitely Well, sounds very exciting.

and back the it pass on I'll So congrats guys. quarter,

Operator

And Jeff next our Riley. question is with from your question. Please with B. proceed Van Sinderen

Jeff Van Sinderen

of my bunch answered. A granular questions were

second weighting any fall QX? would changed on And if this that might then provide now? so, And that multipart sequentially previously, crack and overall a be one, what can revenues I thought you take feasible color that's if from contemplating also, EBITDA kind year? half. and of to and thoughts. in QX anticipate we'll So grow QX then for or was first will EBITDA half you margins maybe broader to at XX% some in Wondering a believe the expectation for of XX% you're

Steve Griffin

Sure.

without you going February quarter. answer good around was year so you. give think you fourth Jeff, I the So We're the to to January, back it a that can't I give I split. start and - from originally giving necessarily I of the or fourth hear an expectation XX-XX we guidance on at quarter, know just can't communicated the not answer the

say the what think, is I within I by we're but aviation the pleased would performance segment.

business expectation recovering. So internally modeled around you've that seen a strong sequentially EBITDA revenue recovery. an We've and

we Back the FDS EBITDA year, of So expected was line headwind. of biggest the that with We've results XXXX be basis, business. pleased communicated XXXX, of sort what it's a would and beginning year. stronger we're I'd of versus expectations, on a that going seen driver the and half the bit a year-over-year be say to our to a in from that at our be strong back with of the margin trend, rate we

of north XX% EBITDA were we year, last rate. Now margin

I we're think just XX%. year-to-date a above basis, on

contracts some from within cost-plus seen to we've portfolio. fixed price So that move

kind as of year-over-year, a around performance. we're our And business's sticking of overall, pressure. guidance the so to pleased But with we're bit result, a

to think already. for - the to still sort fourth of say, haven't guidance, it relates As other fleet but John the planning question than given quarter, I we we answered specific

I those that work. continuing are business for some on order task to task order risk the think fixed FDS to by of where the take go identify price to is opportunities

fourth compare for be. it drive out So upon to model us predicated the I'd business. to mentioned, a should and can recovery recovery should you within from where might all standpoint, think get to repair sense continue say I full of we're the year you level at last what you a quarter and you and as some now you Aviation, the year, expect

Jeff Van Sinderen

as Any Okay. around that, forward faster looking XXXX, thoughts a Any And organically I since on it's know understand than to to EBITDA able sales? it's I thoughts a that? then of couple only out. But - of of grow to and follow-up early. months kind being sort

Steve Griffin

to competitors, And opportunity we've we've the necessarily investments made talked the think business. going I want as you're where to much versus we market as as like be leverage the recovered. take places to is cost a out significant able place see we mean, I this Yes. most into where about our the overall didn't grow aviation,

into hence, should next as leverage EBITDA margin you year. be and head drive therefore, to we us overall drive So improvement able expect to

force the Federal towards we've dynamics. in from segment, the also well we've But given as investments One but support haven't got as scaling communicated facilities made Defense commercial, within sort sales well there as growth. we've fleet, two and both necessarily mentioned, John as margin, of mix new shift guidance. there's that as is opportunity the perspective to in which Within fleet lower we a segment as an

So different in there's two as continue year. hurting that we dynamics, look next into helping that one to one

Operator

& Please next your question. our McGinnis Chris with is with And question proceed from Sidoti Company.

Chris McGinnis

profile added maybe talk had difference, a might recently from just the Can it difference around prior just there what I just maybe announced. contract of margin - you question the you five-year the associated how new much be a about contract, guess, and then that? to a I with you

John Cuomo

also, level VSE contract tremendous the Steve, there's I hope legacy has long-term our not a that to in and as take board Yes. you Obviously, here of been the of a contract market the as revenue saw have to both you Steve our myself, the think we'll competitively situation opportunity have we we specifically since that with little harm Head we with program. exception is, of on opportunity favorable and a only been on more earlier and is this we these areas so I've Aviation we Chris, margin on What can advantage on to I transparency well did try But from and seen guys board, that calls. drive that a of been terms. than disclosures us. get where mean, think

expiration. is what say or it would than before. better legacy the it's each of on getting to So was as And close I is side business good contract the that as

really able past. out a to place that's in value drive than have have sophisticated We programs higher team the we those of strong and in

that it on of and quantitative So now more right to qualitative I'd program. like kind keep

Operator

[Operator Instructions] Truist. next Our is question proceed Cerioli with Please Michael question. from your with

Michael Ciarmoli

And John, give. your labor. tightness to were in mean, side of of know then as percentage? this the vaccinated any deadline federal vaccination base I employee you're don't of? December you're I X, within should you there? on specific of employees can about in I the But be we on we how terms if contract business aware kind which of labor to - that of are look aviation give anything share going seeing terms know color topic think you do or going just your the you at not of

John Cuomo

Sure.

that the are We're macroeconomic all not from face immune not immune impacts conditions. We from businesses.

Our - operate in segments we do from distinct three an operating perspective. very

So the and team defense and we're our through now. federal that mandate impacts working only,

where outcome we're we're be or to in not the probably So QX. able the a data share will position what until

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the and But yes, flip nimble, attrition. pretty an powerful are really So market a going other attract the entrepreneurial that's of we we customers. area advantage businesses, that yes, able scale to agile on for attrition business we're from something it's are side, excited in And stress. taking part build to of seeing are some and the top of talent to be

feeling for is updated So supply of cycles. federal your chain, But next out the continue and right talk now, through we've what is and defense day unique. pulling we'll changes. definitely it it's definitely it that to keep This control on if got that's the front, But - the guys team, we're have balance a and hair about multiple enthusiastic under times definitely you something anything been about day building. interesting labor we one

Operator

question-and-answer turn CEO, And we the remarks. now session. Cuomo, have reached the for the end John to of I'll call closing over

John Cuomo

I Thanks, for everybody, to fourth earnings. time today. Have and our with great continued the in when forward speaking you report look appreciate Great. your day. we interest quarter a VSE,

Operator

And today's Thank lines this and you this may disconnect time. participation. you conference, for your your concludes at

VSE (VSEC) 31 Oct 212021 Q3 Earnings call transcript