Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the VSE Corporation First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Michael Perlman, VP of Investor Relations and Communications at VSE Corporation. Mr. you, Thank begin. may Perlman, you

Michael Perlman

Officer. Thank you, results John first XXXX Chief VSE President welcome call. Leading to Financial Griffin, conference Steve are CEO; Corporation's the and quarter and and call Cuomo, today

various and statements The presentation we about and discussion our you from sharing risks may today future Today's projected due business follow accordingly. today's forward-looking expectations. those we Actual with differ risks our along results including is to contains described encourage reports on periodic are to the website forward-looking statements and in SEC. uncertainties, financial significantly in filed

Except no undertake as obligation statements. the forward-looking law, required by to we update

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

I'd like With over to John. call that, turn the to

John Cuomo

you, joining our thank call you Michael. for and today. Welcome Thank everyone

that I Before one yesterday's announcement, in a history. major to milestone review begin, would our like company we represents

supporting Let's go presentation more review sale into two VSE distribution capabilities. for call and Yesterday, and the our to streamlines of markets repositions Aviation in business This the Fleet and segment transaction business of a a slide we announced Federal Defense defining moment conference detail. the with pure-play the MRO segment. to represents three transaction as and aftermarket it

and Partners $XX consideration, earn-out payment $XX to million to an late transition support a appropriate legal of business of cash to XXXX Bernhard Defense to definitive segment sell of creation including to early is subject up agreement Bernhard the milestones. and clearances up customary transaction specifically, $XXX in close Capital to XXXX and More business cash Capital the million company The security to the including entered Federal to million a in entity is total and certain a with subject closing approvals, Partners. to to into the for the conditions expected achievement of the

to inorganic the net the provide strategic and undertaken with decision The from used to opportunities. execute balance response are Team, to concludes borrowings, in of shareholder driving The optionality, by market sheet be the strategic dynamics and to and sell transaction of reduce Management business the Board business the goal review Directors value. proceeds intended

business, us distribution, VSE a aftermarket service do repositioning, to With will This allows the three company pure-play two business. Aviation this segment XXX% become Fleet to offerings. and with First, simplify a focus, MRO things: and

strategies and focus Second, drive which deeper to Aviation will customer appeal high and and tailor accountability And to long-term capital base. segments value. a this services believe a profile, distinct and We needs. Fleet investor to creates our third, allocation compelling aftermarket shareholder meet and aftermarket growth deepen broader increase to the investment agility operational one

upon a a sponsor, defense business, have support. our will enhance private history build strategy and business one government Defense We Federal the who an rich mission-critical high-quality with and home Bernhard Partners, Capital equity and outstanding XX-year of found

Let's and and strong the now where I move to will quarter performance update by segments. provide our slide on the first Fleet an four, business Aviation

our double-digit execution market MRO, segment, driven markets in tremendous market a operational We across are and by see Aviation excellence both we with year, service combined growth off Aviation and year-over-year to continue share growth in particularly strong start Fleet revenue end and robust the and as our flight in strong tailwinds activity. Within to and gains strong segments. activity resulted demand to all

both and new facilities. repair from MRO our also expanded Kansas Miami capabilities benefited programs We in and

including systems, fuel integration distribution Pratt MRO this of quarter, strategic and second-half of of growth with Components, the Fuel within Whitney the Canada. excellence Pacific accessories of with We Precision year. the services performance completed first provider our the and in and experienced of the a ramp-up is completion XX-year expectation for agreement expansion business the Asia acquisition our that for underway programs, we During distribution geographic engine

Within are in shipping the our to scale output XXXX as January distribution our new products e-commerce with an center ERP IT Fleet increased demand management XXX,XXX business system. new both and facility with Memphis. e-commerce a opened the revenue. customers. segment, to fleet approximately daily $XX we new fulfillment launched for square our and we facility to in million warehouse aftermarket drive and customers in growing Parts new contribute The This across foot supports commercial

to The the share excellence, delay all strong with segments deliver to base. installed first in and the retirements, also due the from results. the Service benefited Postal and Aviation market in in overall operational quarter, vehicle Fleet while customers serve delivering increase Fleet gain they segment and continued vehicle Both in improved fragmented to an which and to markets legacy demand the

let's first EBITDA, in of move increase increase in net in compared to as to the five. Now We strong XX% results XX% and by income highlighted delivered increase revenue adjusted a prior slide XX% year. quarter an

with channels. and posted growth commercial revenue and aviation and Aviation general both segment and with Our segments distribution million, customer MRO $XXX revenues a quarter across record XX% year-over-year business of balanced a increase both

versus XX% EBITDA adjusted in the basis margin million XXX the increased Adjusted to the EBITDA increased EBITDA by prior. period year, adjusted segment this XX.X%. Aviation XX% versus of segment. record segment segment year by points year-over-year total in first adjusted the of $XX approximately yet represented for XX% for Aviation same quarter business EBITDA prior another company

we the as year proactively XX% segment point revenue across million in growth in of to fleet first Our XX% the same driven quarter, base. also revenue by record quarter, $XX period XXX diversify the achieved end Commercial increase first year-over-year over a increasing in represents Fleet markets. total now revenue, segment all customer fleet our basis and the XX% increased prior

X% and newly on planned EBITDA the by startup As fleet year-over-year driven basis supporting adjusted distribution costs facility. previously a communicated launched declined segment

price Finally, to in contributed the Defense compared primarily, support from in validate down revenue cost fixed results EBITDA continue Defense VSE period plus and to strategic X% continued prior to shift commercial $XX segment and as Federal contract the distribution and our year. million quarter The adjusted along Federal higher contracts same declined higher first due expirations. with MRO, capability the to strong offerings. shift margin, and quarter, of the to first growth,

the turn to call performance. for a of detailed our I Steve will now Steve? financial review over

Steve Griffin

I performance. conference versus Thanks, recovery and turn both now year demand MRO in the and end driven period. overview in of a to revenue, Aviation of first the provide awards, and business, by of presentation record seven quarter end growth activities, the by from in distribution had quarter, million markets. of Aviation another will businesses, strength call John. an commercial driven recorded strong commercial of an aviation $XXX slides new XX% to Fleet our first continued execution quarter recorded We six increased We organic general and prior increase and of markets. our

e-commerce and by million and $XX We offset income, partially respectively. supported driven States generated in the Fleet was United segment adjusted EBITDA of from by segment and Navy Federal million XX% of and growth $XX was net growth Defense Service. contracts, commercial of the contributions lower together with an Army higher the certain Postal adjusted completion fulfillment revenue XX% and by U.S. U.S. programs. fleet increase

growth commercial a flight driven eight, Distribution to Aviation in our was business and quarter we'll to improved by MRO record combination track XX% as turning and increased both activity continues it last activity. end million core facilities. levels and towards expanded Now up pre-pandemic segment from of our market versus higher year XX% grew a slide repair and respectively. new benefited capabilities both XX% the Revenue cover businesses distribution results. to first $XXX MRO

to Aviation by XX% XX.X%. EBITDA by adjusted driven and adjusted and in XXX margins quarter wins, new favorable was MRO million, profitability basis in by the program The the to price. of improvement EBITDA increased mix activity, increased implementation $XX robust while points

X% our range segment, XX% XXXX to Aviation revenue narrowing XX% our we Within full-year XX%. guidance are to from to

strong guidance XX% margin XX% our mix, adjusted increasing by activity, product to and to higher-margin customer are XX% from increased continued commercial MRO XX%, to We full-year driven EBITDA demand.

first increased to increased first by USPS and million million, the versus in period. demand. Fleet $XX driven increase with along were revenue year commercial prior Total the to fulfillment, quarter, last XX% Now sales e-commerce versus of segment slide year turning nine. commercial $XX.X higher XX% an quarter revenues the

other U.S. Postal was included adjusted of X% Service adjusted versus the EBITDA first revenue EBITDA Segment quarter points basis XXX first XXXX. decreased declined XX% channel. last the government which by versus quarter of of by million year, our $X within and margin up is approximately

higher a startup-related of newly as facility result our lower at customers. mix Tennessee a $XXX,XXX was launched profitability of Our expenses Memphis, for commercial of

recent expectations XX% full-year contributions commercial the facility revenue year-over-year, driven reaffirming For and are to our we growth the launch. XX% Memphis by XXXX, from of revenue

We expect at facility. be be also year new the continue the margins we EBITDA to at and the to to anticipate to continue first-half the stated of XX% up of between in and low-end as margins adjusted the range ramp production XX% Memphis

and completion last slide Now driven XX. the decreased in a Navy by offset of to driven quarter revenue by basis $XXX,XXX XX% X% certain programs. Army X%, down versus basis completions. Federal XXX mix turning year-over-year. by first declined EBITDA quarter the growth of US Adjusted to partially and Defense and in contracts, was first margin the on U.S. contract year, adjusted of EBITDA Federal Defense points segment year-over-year

on the of of the Bernhard Capital this focused remain Defense the and the segment now driving Partners, for announced carve-out previously of closing preparing we shareholder value Between to sale and and Federal business.

remain moved sale. of and to expect focused VSE teams see held should value You for business. the BCP the is as and for the on to discontinued longer-term drive transaction, to the winning now consummation it the operations awards Between new business

credit $XX XX. the our end under commitment and Turning cash million At availability to first we $XXX in million had slide the facility. quarter, unused of

of $XX our we successful to support $XX in we launch commercial awards second of $XX quarter, of distribution by Memphis million two distribution million these To-date, spent of million and million the quarter. growth previously $XX at million and to cash initiatives used remaining investments the estimated inventory flow operating recent to facility. paid initial our driven free expect flow the $XX have aviation the announced be execution and For cash

first million $XXX in XXXX the X.X was EBITDA times improving anticipate of of second cash the debt the before flow and At had to profitability $XX net times Net leverage net trailing approach generation. quarter, the free of outstanding leverage quarter. quarter of of end X still and in million. second-half adjusted improved end at the of XX-months the total We we through

the remarks. now final for that, turn back With will call his to John I over

John Cuomo

Steve. you, Thank

for and all the opportunities transformation, is Bernhard our for of enter with next Aviation we ahead Fleet phase for VSE's that the business As about Capital. excited our segments Federal are and we

Our enhancing growth two businesses. on driving of these profitable performance focus remains sustainable, while the operating

would prepared XX. reviewing slide on like priorities our our I by to remarks key conclude

Federal our First, two businesses, and focus will to operations to of simplify business, and the needs on Defense distinct addressing of the complete allow and the sale us the drive greater Fleet. even our core Aviation sale

transition, and hand-off the to Bernhard we customers and ensure a to smooth our successful During Capital plan Partners. for employees

on segments to Fleet distribution XXX% Second, focused Aviation reposition and supporting MRO two and customers. services the business into aftermarket

bespoke within Third, our that portions expand offering ever-changing distribution product every of addresses customers. unique We a on full-service approach of remain in aftermarket. the focused high to aviation growth, capabilities MRO need underserved our solutions-oriented

launched This growth to Vehicles. demand robust fleet U.S. commercial newly fulfillment both drive new while includes customer within to Fleet business. and legacy scaling and center our and legacy address Fourth, programs our commercial Service supports distribution supporting Postal e-commerce

flow, And proud day. cash free of am excited the I second-half the positive by how to team deliver our incredibly driven cash finally, about I'm ahead. they customers opportunities each disciplined serve has all management. accomplished what global and And XXXX

portion for ready Operator, answer our call. now we and of are the question

Operator

you. Thank

will question-and-answer be Our Truist. sir, session. a go question with [Operator Michael conducting first now We ahead. Please comes Ciarmoli from Instructions]

Michael Ciarmoli

implies little put You down, strong right? two I guess the start the Hey, in guess levels? -- good a Hey, margins, maybe John, a morning, step and growth guys. nitpicking to from really but guidance months. I the the it here still current aviation what what strong nice at really seem of, results, bit, and looking changed the EBITDA year. does like kind last increase, the Thanks guidance questions I'm for And taking up the

came you range through I you end definitely improving that markets, year does so on guidance kind end. or that, call because quarter some back and how the but guess of the to you rest what of like it down just step maybe margins to XX% And get constructed it mid for seem of kind lower of will even kind the about this the kind XXs of kind talked color in of then

John Cuomo

about want guidance, you market. talk Steve, Sure. then little about bit talk to and the I'll a

Steve Griffin

Sure.

we you bearish as we end-market estimate had the know, in say more activity. more Michael, a So, did we note quarter, first that came in I'd -- bullish of terms when we out or

I some had that, first business think through second stronger then strong the I what would a really seen And and is say, general including in MRO our quarter, to we've in strength we've continued results performance shops. aviation.

has I can the the helped in think revenue demand margin see to increase across of improvements fuel the you XX% some that near increased business.

been maybe prior some would been associated a I versus and there has mix say benefit that has product benefit, is thing Last with our expectation price.

sort has have is that been help first to the level year, the start look as quarter some and towards pricing to opportunity going off we tailwind year. second-half kind on So, the to the of optimize maybe out And to the us very year. lower the start as you That and a hence, the see really of performed to we we the still the course can forward margin of year. business play -- look of the of very over later it with performance it's do pleased expectations seeing the performance said, in

Michael Ciarmoli

want it. the about market? strength talk you Got of then, maybe John, to And maybe the

John Cuomo

Yes.

things. So, a couple a I from perspective, think that market of

out I our year robust very general is is think aviation started continuing and the strong, strong. backlog operations to the are business quite perform has strong MRO and in

recover, point we've stated continued, inflection last saw piece over really happened, would start we've that two what as margin why I say that's think business. to it. we you commercial years the we a the MRO see As in of And that's

and continue improvement weeks to that I of And that in we few saw then level is talk margin around were something and about, that a there you quarter. but is candidly peaceful, activity price, of some all I element an prices to don't discussion the which are show drove think mean, obviously ago, of that the people

Michael Ciarmoli

out maybe, quarter? of, Got that commentary Miami just up did and it. you in meaningfully some out certain areas think capabilities? picking pickup expanded And the of with the you in share kind called capabilities then Kansas, Are prepared I those contribute in

John Cuomo

launched the to initially, some I Yes. work in More that in it's We've share. haven’t Miami Kansas, say got its but material we quarter yet.

that ‘XX of to and a back more strong into ‘XX and have Kansas that to the exclusive see with our announced help some did facility, early in end to start quarter. of contribute You'll repair new gain we agreement pickup we also or share program Honeywell some avionics, but that

Michael Ciarmoli

thinking be out look will pressure investment normalized under you distribution. business, we are I obviously Got on about but you've then how mentioned the got it, and obviously, got next conversion longer guys of term quarter, guess for cash, cash for the this as cash -- one got And out like I'll inventory get you the Steve, me last sounds it. we've way.

inventory. and So, always to carrying investing going be you're

be at But conversion should XXX% longer-term better. convert how tough cash of to for sort we calibrate So, it ourselves this in or might business?

John Cuomo

point it's that something distribution $XX think to we to wheeler, much of business say going as to an stable million tied year business nature for of remember $XX facility I that anomaly, new I the the because it the so this future Yes, we forward. is very which in and repeat investment if of what need not more launch is the will would the you grow right million is is, out

for yet haven't flow imply as cash which longer-term you We conversion. guidance to given necessarily should

as will margin to are a or strong in years in business to can that expect were opportunities strong to would start distribution, indicative investment, believe basis, existing spaces generate especially as but to on the sizable gain profile get it not do on I going seek where expected the we to three we remain those the we of flow cash we we've in last say scale, in fleet business be investments forward. opportunistic the is the able be business free what we what go-forward investments, But whether of because in Aviation such grow we

Michael Ciarmoli

Perfect. Thanks, jump in the queue. back I'll guys.

John Cuomo

Mike. Thanks,

Operator

Please Our with Markets. RBC next Capital question comes Herbert go Ken from ahead.

Ken Herbert

morning, and good Hey, John Steve.

John Cuomo

Good morning, Ken.

Steve Griffin

morning. Good

Ken Herbert

to does opposite of do the progress the start seems we improvement. first see implies there? you think sort Hey, how margins quarter, And wanted an of I segment. much bit discussion like do the then relative nice on year? quarter. within Aviation about into Fleet the It sequentially through back half second margin this maybe of the guidance Fleet gradual a How to some acceleration

John Cuomo

Sure thing.

specific. pretty So, to be we tried

it today So, given XX%, expenses of we've the facility. that to is kind range, in that expect quarter were you you towards the And see that can think stated use clearly new be give it. of range, of year associated on for range, some of guidance the so end end terms back where should of should assumptions lower XX% to towards that the higher start-up the with the margin end what improvement to how we've that the the and the the about second of in on to you

is got that what behind new math just just are we've getting about really you're people, we've facility, systems, really And thinking Ken that really got new the started.

and growth, half earnings which stronger of generate training running, the drive completed, allows and back getting getting year. and So, the employees drive in a to our us scale then profile up really they'll the revenue

improvement majority drive to what's in that's margin So, of the the going the business.

back in facility general, the driving of the of see of the out of the the improvement channels terms what rates also margin half some is Memphis in year. notion in to government the improved other you're our product going But is -- is then -- underlying commercial of versus And of mix. sort

Ken Herbert

think as facility? ‘XX helpful. considering think the you're Memphis will about the be facility the on about about could How facility? and just think you perhaps? existing $XX much in run longer growth the then we facility what we the like term -- into And in if investments of out this be utilization year sort seeing the of exiting of, more And footprint how million, this where incremental do revenues, Okay, this and of the very there you investment year rate upside terms the

Steve Griffin

about about night Board as and weekend it's Yes, this Ken, with say utilization to -- talked without shifts it's and the XX% about that's considering I'd we yesterday, our well. of XX%

upside. a on aftermarket e-commerce near-term, it's when that we of most have shipped same So, is need sure make is about booked you're with tremendous day. dealing amount of and we there, focus really we We perform The the specifically scale. can to demand that the

So, important. is the the performance of quality

as So, what the my alluded and the I on we're of focusing teams can kind it, really to day kind doing prepared that remarks, the demand of is, increasing managing we're in each demand work. handle

Ken Herbert

That's GA if either your finally, there disruptions seen? that customers transport airline as or risk Fleet at your at and of great, just, aversion John, commercial as at market supply the and you aviation, concerns or I Business and lot look are of look everything very chain business, any either helpful. levels pressures And within the we've inflated? a could, to on inventory levels the the distribution then a result could be you Just by

think volumes, the some talk customers see if could then distribution about levels how would of ever aviation, your about do Aviation? to maybe on risk some that within or inventory you we at or slow things And

John Cuomo

ago. the it's conversations Show few a a at weeks interesting, of MRO I had think lot these Yes, I

not products. We're see our we focused technical customers our think heavily stocking don't the expensive, are on products specific our and products, I business higher-end for are and that. very

the little our we've some has been lower and strong a The their that so stronger allowed which aftermarket than second airline destock performance is, of our the and customers taken incumbents, thing levels. from inventory it's also business and of some to bit

demand. is issue to get appropriately to manage sure that the continue So, and the need that where making to we focus that to an were allows the supply we don't chain see as products us stocked

Ken Herbert

Well, quarter, great Alright. nice Thanks, on and the news guys. Excellent. divestiture.

John Cuomo

you. Thank Ken. that, Appreciate

Operator

question Please go next Blair. Louie from ahead. Our with DiPalma William comes

John Cuomo

Good morning, Louie.

Louie DiPalma

Good morning John, to Tarang. and Michael, Steve, you,

with defense sale, and a from aviation are divestiture that assets for For you does division the Heico special aftermarket John, include pending specific few still the defense you also vertical services acquired services in you the years any interested the ago?

John Cuomo

Yes.

Heico the business special MRO was not maintenance it business performance that with and -- of the services, Federal business. KC-XX the heavy Defense is program But was that is Heiko. team that So, and the and past part

is we markets they customers are business, business core within Aviation Defense do our our our distribution aviation. and of We are and general business most It's we continue in today to MRO support business not to business, customers and today. business, mostly and our our So, commercial in but serve aviation the expect today. existing those component do

Louie DiPalma

either for should or this increase M&A post-close? it in proceeds potential million John, $XX Great. And with Should Steve. or deal million you, for the $XXX appetite your

John Cuomo

Absolutely.

sense and we've As very discussed facility and growing new I've focused, as opportunities potential pipeline the e-commerce important scaling investments for we is that organic commercial we we've an business, makes made inorganic last is have MRO, of the in that Fleet deep we our are and that but question distribution But a and distribution have on stated, our active we do with just right see -- finding tremendous of business. the pipeline in aerospace both in with assets in business acquisitions. and previously the a pipeline that business and

Louie DiPalma

is Navy million predicated we one the important and upon one or foreign milestones paying should between that million great. mostly contract the difference military attention sales there Great, final the be to? consideration other And the in $XXX are $XX renewing

Steve Griffin

we closing milestones, but we're entity up is to this here different earn-out of be getting the that is going think We're associated as worked to of John to through ready to Yes. the happy of the state referenced. Louie, details I to I we're awards, share process the and but and think point, to not to progresses share don't more setting it. time as tied correct publicly all new at milestones going state necessarily it the with

Louie DiPalma

Thanks, and Excellent. John, Steve, everyone.

Steve Griffin

Thank Louie. Yes. you,

John Cuomo

Thanks, Louie. hear Good you. to from

Operator

Van next Our Securities. Sinderen comes B. from Please Riley with question Jeff go ahead.

John Cuomo

Jeff. Good morning,

Jeff Van Sinderen

congratulations Good then Maybe do for business, maybe as the morning, see just for you sustainable on more you growth the outlook strength new what about of well. drove me USPS bit Gen my let a trend speak a comment can And the add the little area? vehicle there? everyone,

John Cuomo

Yes, things. Sure. to coupled think the delay with be the is USPS And of the I grown to size two NGDB until strength Number of the fleet one has was the XXXX. announced delivery fleet. expected larger continue and a is

we we've and the increased, again be trend, but for will the So, new look I the from very the that we'll the business number well. what see we -- still Postal slower now Service And this it wouldn't do see expect sustainable will at to the next little look and as what installed a quarter from annuity-type expect have percentage the be base like growth clarity like bit -- say strong we customer installed but that get base to do do more be we as very but called we and pleased vehicles. we see more customer, retirements of detail much think increase we way an the at to call, we little business look on

Jeff Van Sinderen

this point? wanted of kind get then of left do Fuel Okay, at good. I integration And just a to on guess what's sense, Precision of the to

John Cuomo

and our integrated the the a January, integrating fully we've integration. is full the model acquired at so model, integration and system business end core of home as we yes, back So, discussed office

kind than has would forcing them the say So, you'll our and integrations take of quarter, the go be in integrated. systems capabilities, probably third business, work, to see of into the systems systems done first rather work XX-days learn learn learn that to we the kind how been the fully they the

Jeff Van Sinderen

it press you just around then, Are now just to don't easier in you. I any the behind somewhat particularly circle you've as guess, to think more potential aviation to decision area, about need but And get to back come that harder and we the acquisitions, terms potential FDA's thoughts seeing got on on this, deals, or wanted that? Okay.

John Cuomo

year that robust it believe than market I is ago. the was more a

company also an I element as for company there with I company buyer someone efficient uncertain a was like who certainty advantageous on and history recovery, the of at has us team, in and an it the market. deal this markets think position that past gives aviation in think transacting both today, in worked we've of strong providing and this a commercial public a a fast waiting in at

Jeff Van Sinderen

great. I'll for take the my taking Thanks offline. Okay, questions. rest

John Cuomo

Thank Speak to later. you. you

Operator

question next ahead. from go Benchmark The Our Josh Sullivan Company. with Please comes

Josh Sullivan

Hey, good morning.

John Cuomo

morning, Josh. Good

Josh Sullivan

markets lot hear I aftermarket times a commercial we do about the or PG&A what obviously, slots mean, MRO between at point? tight broadly, in like VSEC turnaround look this

John Cuomo

Because a shop much. really in our we don't mean in. smaller a But or it's more on We like work coming of whole of Yes. industry I'd say line times, the like way are might engine the with I piece not slot so visit aircraft turn same that components. you norm. think sort in of

cases our -- XX a work a is can in some of lot within timeframe. shop days, usually it's XX cases, So, days in as to a be

it's through that the in pretty them we the XX% tight, mean I say overall, pretty We're driving continuing that shops, that's what's packed seen driving we I'd opportunities growth but where are hence able be our you've some lot the of a to drive. pretty expect tight, and be. but to And exactly would facility to of were today throughput turn-times

Josh Sullivan

had schedule and what's a where just then maybe Memphis little taking more thought. maybe facility you distribution on the And a

John Cuomo

right were early probably the in a on at say We I'd pretty put in first capacity, plan place. quarter. we're aggressive realized we schedule. Last we year,

almost the got two May, the think chose new January. So, location that running actually I a last second out made door we with assessment decision actually by systems location, up to location we and -- IT product launch and the started the was quarter a chosen study, in year, hadn't of and months XX full ago, facility, launching the inventory, started

on right outstanding has it the which aggressive schedule. schedule, but So, meeting, pretty done a team we're an say job was I'd

Josh Sullivan

usage XX the And then divestiture, much over less months? the of Federal it. cash how or Got on maybe business, just last a the was

Steve Griffin

usage It's profitability of a just a big and by aviation cash not a falls balance certainly to business, heavy it's comparison not that business the mean inventory. carry look you of that and the I can which get down, per at se. overall fleet of sheet business how for the obviously quickly it sense

So, months over or as the necessarily wouldn't drag it last a think I of so. significant XX

they really in attention business, grow time partner also about growth We're we around margin can and Fleet. where two Aviation and can refocus where strong of to with BCP, now the and excited having that business higher higher efforts a kind opportunities the continue our

Josh Sullivan

And one long-term as are forward? kind you business, then of VSE the optimal the assets defining about the go Federal last the what you for one, as company the maybe just think of divestiture, John, hurdles evolution

John Cuomo

I -- Yeah, our last like of true deck, priorities. we mean highlighted on near-term our kind of page

getting an business getting think I really fully with outstanding to core divested, go critical home nice and the one is is that the the team, that that this drive. divestiture new XX-year-old a the can was that of them coating asset -- a business they

and to near-term we and differentiation. a is have can continue that's focusing do be we then how focus going two-core the on scale, to is that's on So, the businesses what focus

and what's that these probably kind -- customers of is our to drive Day the believe differentiating deep core is components Investor and and drive and being revenue sustainability investors we embedded in an and my this going and going need our I continuity to core with manage our do suppliers expansion and model, our our businesses, expect. of margin detail We'll it's and more year narrow walk and through what of whole this some career of but later you

in to continue fine-tune services, value us, what and types So, the terms proposition means to see that business. products, that deals we of continue that and on of bring with

Josh Sullivan

Great. Thank you for the time.

Steve Griffin

you. Thank

John Cuomo

Thanks, you. Josh. Good to talk to

Operator

Our comes Truist. with next Michael ahead. question go Instructions] Ciarmoli [Operator from Please

Michael Ciarmoli

million? follow-up, throughput Ken's in that you you Did just that answering So, hear thanks I Hey taking question, capacity. the right? a to is guys, John, for at I got technically clarification. were Memphis there $XXX XX% $XX facility think enough when new the do million

John Cuomo

-- $XXX conservative. million it's think the through the I can We shop. think, is I put

Michael Ciarmoli

Thank make just you sure heard very right. Okay, much. wanted I I to perfect. that

John Cuomo

Sure.

Operator

questions There at time. are no further this

our this back floor and the President I Cuomo, for closing remarks. over session. John to to CEO would like So concludes question-and-answer turn

John Cuomo

to teams with Thank you and a a day you the our VSE spend great quarter. time employees, your Have look shareholders it's and you. support. moment some Thank Thank continued with you through our here next to appreciate speaking our it. we forward for to we'll communication, defining working all today

Operator

teleconference. today's concludes This

disconnect participation. may at lines Thank your you time. You for your this

VSE (VSEC) 2 May 232023 Q1 Earnings call transcript