VSEC - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the VSE Corporation Fourth Quarter and Full Year 2024 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Mr. Michael Perlman, Vice President of Investor Relations. Please go ahead.

Michael Perlman

you. Thank Corporation's Full VSE Conference XXXX Quarter Call. Fourth to Year and Results Welcome

with differ risks Cuomo, significantly to statements business uncertainties, future our from we from followed will and projected statements required sharing remarks We update results begin about our on John accordingly. Today's The we and financial statements. website discussion to financial in forward-looking various expectations. by from our obligation today forward-looking in filed SEC. is Officer. described encourage due those may by update to reports President with and Actual along Adam including today's law Financial Cohn, periodic you Chief Except no forward-looking those we our presentation undertake are the follow as a CEO, and contains

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

John Cuomo

for you segment, Services & our the transformative becoming growth. commercial the These aviation a Federal streamlining Call. acquisition VSE's Thank aftermarket us of profitability Defense actions segment. aviation XXXX Aviation drive operations company, two reinforce of aftermarket our sustained driven and and in for Quarter commitment for morning. by pure-play Year businesses strategic our to our to joining VSE, divestiture XXXX and Full Good year Fourth a today Conference was record revenue

final company. current XX% approximately aftermarkets, the is an capacity utilization. The constraints, growth. by for expected chain is jet year aftermarket continued mile to to market and million, Fleet parts aftermarket $XX a repair provider. demand week's closing, million to margin in highlight robust $XXX rising passenger forecast, in our commitment at traffic, the transformation XXXX. aviation up I is want in in sector. for set commercial and past million earn-out is in an $XX aviation to let's aftermarket Fleet's divestiture the that, business The XXXX, year our and both on a of segment the cash in supports of business aftermarket the and revenue. strategic with Before Aviation both the including at general XXXX with XXXX, The customary expected Partners. With begin XXXX. into and global conditions. us allows This parts strategic a supply recovery momentum $XXX Fleet to to of closing Solutions One and diving business update revenue for million trajectory into and aviation Wheeler consideration. The quarter is ongoing aircraft increased experiencing business, and pure-play commercial forecasted transaction the sale to Revenue with marks transaction announcement another of valued each Aviation aviation overhaul This second leading earn-out aviation Aviation last step a services pure-play segment we've additional commercial expansion market This combined close for up to The regarding growth a in seller actions segment. The indicate payment services Equity the subject maintain environment results, segment our our representing our taken X note becoming divestiture strong participate the and years sectors demonstrate services in with and passenger and driven to another expected uptick maintenance, over

programs the we experts Card forecast to in these to parts XX% as the in assumptions. outlook, total flight growth We X% between as well The fleet X% and with fractional compared remain Aviation our X% steady XX% aftermarket commercial as and XXXX operators leasing to supports projecting plan sector and growth anticipates continues industry VSE result, X.X% in than combined aviation Business VSE's in XXXX expansion aviation more to services outperform of projected in our markets segment. leveraging services hours this business business to XXXX. or for general XXXX. This products unprecedented increase our entrants range anticipate of a with for Jet As for and for XXXX coupled at market. market X% of that our ownership Therefore, will and our to with demand see forecast new market

Let's X, turn starting and an to acquisitions year-to-date with our XXXX our Aviation. strategic of overview Slide recent highlights, provide now where in will I XXXX

enhanced in their with XXXX, on in focused ahead. market. strategy, XX a for Kellstrom technical aftermarket. This In customers, well service relationships. This commercial strongly remain Turbine additional the they Integration as aftermarket distribution value-added above-market Aerospace, provider repair specializing capabilities VSE XXXX, to of Aviation. is new MRO aerospace completed to year and and This we added and brings partners. acquisition in engine-focused OEM capacity acquired capabilities our is technical growth in April OEMs our supported scaling the OEM-centric business expanding First, distribution underway to the we exposure business months. and leading solutions over and commercial Kellstrom We our Controls, the acquisition in commercial market. engine OEM the deepening acquired increasing performed December, with aviation engine key to further component distribution driving and exceptionally presence revenue expanded products XX services or well partnerships aligns Kellstrom's next expected new TCI, MRO be our

and completed XXXX, Desser's in a streamlining the systems successfully organizations the distribution VSE of and launching business processes, go-to-market under integration we strategy new U.S. Third, brand.

XXXX Desser's to Australia plan with we business in already the XXXX. ahead, Looking early in Desser integration units integrate completed remaining

and in Middle supported program this and & we Initially, to include Moving on has Center battery expanded implementations; licensed in this XX,XXX tires, OEM Avionic manage tubes product to opened since Canada's us expanded line, a launched be distribution MRO life a combined with product foot supporting site allows lines additional the products. new these our to product Pratt expected cycle Europe, XXXX distribution program new program in total program with Hamburg, new Africa and lines that distribution and future. We Excellence of support of Whitney to Germany. square East the

also OEM capabilities OEM program. to strong was expectations We plan capability manufacturing facility We initial margin following our and Control Honeywell a launched contributor our in facility Fuel acquisition in of our and transition manufacturing program new the exceeded license all our The XXXX. fully to expansion XXXX.

in continue year we Service Postal as to a information segment; United we fleet quarter. Fleet their States and began turning QX, management a usage system. supporting Now repair improved the maintenance-related of to transition low our in parts fourth was following migration seeing reaching activity new XXXX the After point a

momentum through to continue We XXXX. this expect

our Fleet we channel, e-commerce diversified scaled customer commercial segment's facility, With sales our added the brands. and Memphis base fulfillment exclusive new

revenue As outpace milestone a a we our result, level, our sale growth commercial corporate market. At to pure-play successfully transition aviation significant segment XXXX, of in the continues the to business. marking Federal completed the in Defense a our February &

and to overhead costs. South MRO reducing segment our move partners with Florida, employees co-locating we Aviation and business relocated headquarters within enhances This our Finally, corporate headquarters Florida. in Center collaboration Miramar, while corporate of Excellence our also

update XXXX move our on Let's to provide will Slide performance. full I where now an segment's business year X,

and XXXX, from distribution capabilities acquisitions. recent the acquisitions. The revenue Aviation portfolio our profitability segment record Revenue of programs both driven MRO increased balanced existing programs, expanded For throughput profitability at recent growth license execution also and record contribution and year manufacturing program full from facilities, new our distribution support was for programs by from by optimization we MRO contributions on of Aviation reported record our the delivered distribution and new and driven segment. growth, OEM strong existing

by improve of a commercial performance. driven offset fourth in customers, our the driven For revenue to decline in reduced to discuss platform. This was and turn from new both now to financial was in Adam continue primarily will XXXX. decline and to USPS our segment, details the the revenue activity to fleet in fulfillment commercial strong maintenance-related information sales sales. I quarter call resulted by repair partially e-commerce the This are in and by our system rebound part requirements. levels began to management Fleet Maintenance-related fleet activities growth expected the contributions over transition

Adam Cohn

Thank you, John.

X conference materials. the Slides provide of of I our call turn Let's overview X financial quarter and performance. an will to fourth

partially net year, XXXX. Aviation with was led $XX compared by decline our drove to consolidated increase million fourth revenue $X in this fleet per in quarter period increase $X quarter million EBITDA adjusted same offset Let's XX% in decline XX% by a million earnings a partially EBITDA was compared increased aviation a in begin XX% fleet VSE income offset million in prior XX%, $XXX growth, revenue. of in million diluted revenue, quarter, generated $XX per admin the corporate the by Adjusted the million to adjusted share. per expenses. of share $X.XX a Adjusted and of and increase fourth to an the results. $XX up

Adjusted For growth. Adjusted a net to $X count. adjusted was approximately $X.X the million the XX% full $XX Aviation record increased in income EBITDA a $XX share, billion XX% diluted versus million million. X% a net year to XXXX, million for an in XX% by offset expenses. $X.XX compared diluted increase increase year-over-year we EBITDA to or $XX consolidated recorded in Adjusted as by partially per $XXX driven XXXX. of an income fleet admin year declined increase, aviation share decline increase million contributed per million, driven $XX corporate by share to and XXXX, revenue, in up

a increase programs OEM segment's XX%, general of existing increased and the as revenue contributions acquisition. The XX% share and contributions were results where by in TCI quarter business authorized The record million strong in driven acquisition. to capabilities, increase turning from by of contributors, the the driven Aviation new distribution commercial distribution we'll and MRO expansion and avionics X, XX% MRO days revenue Kellstrom to businesses from recent quarter earnings the our of fourth up in Slide markets, OEM and to was margin MRO gains repair support aviation and XX% strong program of and new XX the Aviation and from in XXXX. fourth new more XX% Both was detail. execution record $XXX compared cover revenue respectively. Now revenue

driven revenue. license program manufacturing of strong and the in on MRO adjusted programs, increased launch acquisitions. the recent product EBITDA XX% the impact record Organic fourth by by segment in EBITDA year. Aviation XX.X% approximately revenue to XX% $XX adjusted in increased the Aviation a acquisitions, facilities, prior or new from and throughput contributions quarter as improved execution increase the OEM at compared mix, all by pricing was our to of The million quarter increased distribution Excluding of recent

segment for increase For Aviation full of all of $XXX XX year-over-year. Adjusted EBITDA basis and million XX% EBITDA increased year to increased the the million, XX.X%, XXXX, record $XXX the results an record generated points margin adjusted to segment. revenue XX%

Let's X our purpose TCI of and now to presentation guidance Slide Kellstrom and a turn margin acquisitions. slide XXXX. for Aviation to our revenue year the The you to new in our segment full through segment of Aviation our with the X, the earnings review of Slide walk bridge is impacts

in start with and business between combined we forecast and revenue. Let's aviation earlier mentioned markets XXXX. general to X% and John that grow commercial our X.X%

TCI We expect XX% contributions the segment Supporting to XX% are and of increase approximately Kellstrom this Aviation XX%. revenue growth from revenue full between XX% year acquisitions. to both full year XXXX to

dilutive XX Aviation a expected offset basis year and to operating Kellstrom is to basis and outperform to near-term forecasting expected are are repair in margin be point for basis gains, approximate to MRO organic impact the organically by double-digit XXXX. This and aviation high driven adjusted and expected XX XXX is low TCI market point EBITDA margins, have we leverage, share utilization. capability margins margins program addition, point segment improvement supported growth to XX.X%. XXXX be year growth full an to distribution full single-digit by on market growth, legacy core with optimization XX.X% The In from by dilution program between expansion.

expect synergies is amortization $XX expected $XX year be to complete. into until continue in XXXX. is benefits to projected pre-fleet for half million Synergy addition, figures full On In realizing integration will of to rate and XXXX. to million. The effective the to the expected begin we the integration activity XX% a second depreciation tax all interest $XX $XX be basis, consolidated million be XXXX is aggregate is are divestiture. All million and in to expense

$XX year. margin which Fleet reduced basis, activities declined maintenance-related quarterly to requirements. Fleet million. Now by a information declined channel, our our of in quarter. Commercial in XX% of XX% from the XX% adjusted Revenue Slide approximately turning sales resulted decreased by Fleet quarter in of and fourth segment for fourth quarter fourth part for decline EBITDA XX% commercial $XX X.X% new to Fleet to was revenue, the quarter, prior million, sequential The the sales was the the fleet USPS The approximately transition segment XX% segment decline compared which driven compared revenue revenue system platform, the Fleet total impact revenue period. last fourth represented was driven to other to management USPS therefore, primarily a or to decline results; the adjusted X EBITDA $X in $X revenue segment's quarter. volume. USPS segment a year On is million. as X% in government within fourth customers was million included in up the

year $XXX $XX sales XX% million, For by growth full improve revenue fourth USPS commercial the the channel, generated a in the heading segment XX% year, is quarter EBITDA full from of into and revenue EBITDA of declined And Fleet to our program. expected was the continue offset for X.X%. USPS began of XXXX. decline by in XXXX, Total driven to revenue adjusted in margin rebound to adjusted million the XXXX XX%.

fourth end free flow and At generated $XX cash million of working management Turning XX; operating operating disciplined capital driven of the by to cash strong we the quarter, and flow, results the million, availability in $XXX revolver was and net will results. of total X.Xx. I XX-month prior Slide million includes leverage, net turn over quarter, our $XXX John. to our which million. trailing Adjusted outstanding acquisitions, was back from debt it was the $XX fourth

John Cuomo

like I would looking XX. our Thank conclude on by Slide our XXXX you, reviewing prepared forward Adam. priorities to remarks and

our go-to-market business We simplifying sharpening our strategy. progress in have made significant and

services we entering VSE. the aviation ONE parts of final sale aftermarket the strategic announced provider With segment, Fleet of phase our and transformation pure-play are a our into as

expect transaction to transition. Partners a to close working Equity in we closely the the are We One fleet successful and quarter, second with ensure and smooth

Following of will streamlined organization ensure corporate review aviation conduct to we our go-forward support structure the comprehensive to is our our divestiture, cost strategy. a

on we first, forward partnerships driving partnerships. growth, now Turning to strengthening market committed both suppliers. We and look to to our our sharing and priorities; aviation are expanding with presence updates organic new customers

program on our integration remains OEM the Second, of license manufacturing track.

of all manufacturing We expect Honeywell year-end. to capabilities complete from the transition OEM by

recent and on to continue adding repair in are and demand. And across expanding to businesses and to this expansion Third, capturing focused the XXXX. a Kellstrom financial Desser, finally, from to incremental finally, drive our and And focused customer enhance from capacity invest MRO we capabilities we integrations on our meet and perspective, operational market are acquisitions margin accelerating TCI of growing we customer year synergies value. into support efficiencies

leverage, program to continue to through plan enhanced operating utilization. MRO margins also Aviation We optimization improve core segment and

free global XXXX. are hard In their inventory for we successes us positioning I flow thank to portion financial cash our now our for want to strong VSE optimize call. question-and-answer improvement a and dedication will team stronger foundation efforts closing, drive and work. are of our continue Their ready leverage to the We and our driving future. Operator, for in

Operator

Our Sheila Instructions] question Jefferies. Kahyaoglu [Operator first from from comes

Sheila Kahyaoglu

growth pace my growth, MRO? we Congrats. and between this XX% and cadence to of question, organic about double do high aviation think digits with implies single -- to first XX% growth John, digits sorry, it you, Maybe the How for distribution the year. that

John Cuomo

want there's the aviation We've of XX% in to us what although some year. wanted our talked business we be it business revenue great at with right we consistency little we at definitely be TCI and ourselves kind now since a about inside It's aftermarket, had debate we love USM in And that aftermarket. you VSE, and When guide of general We to we're and of of place a a on the candidly, with commercial business. And that about to of business to big acquired for Kellstrom cushion. we the XX% business give Kellstrom, bit the terms Yeah. how for question. a profile. business of margin see look pruning

then the the out with laid far when as there. That's And I'd segment, of slightly kind what like of above of it's potentially to and rates -- two USM, both that about -- the in Michael, those guidance as, be right? think you where our the I'd rates kind heavily we by the are growth segments. we're growth back-ended, evenly we it's say going So efforts and of pretty not between say year, balance on refocused markets, got split. kind We revenue. slightly

Michael Perlman

I think year. Yeah. No, consistent the whole across pretty it's

Sheila Kahyaoglu

then acquisitions. And is great. on maybe my second Okay, question

with proving initially X.X months I versus be to annual You're the TCI of the think, expected. coming a $XX over at great million $XX was in, contribution last integrator full we million contribution

outperformance? So TCI what think how revenue synergies Kellstrom prune assets with that And the drove do you'll of some off? of we the outside opportunity about

John Cuomo

mean great it's I Yeah. question. a

to capture for which we hand is that. important bit a to I think in integration, of have to heavier because really -- heavy When all It's at a got as look of both a we we was deal kind then out about integrate gave we our each TCI expect focus the different We've it. focus. synergy and has all creating a capacity us. what it, expansion. a And So working strategic that those there's slightly been business. that's opportunity of There, growth. We're that's feel it's continue OEM capacity We with owned it, a of And working partners to the pace well since about business to grow plan of front opportunities of manage look that Kellstrom, at north we different. there. exist we've with still the set in team XX% combined we've us. we element little able

a I bridge guidance, our a of in job core behind Michael levels. and that think position you XXXX we on want margin us Adam be obviously to back the can the kind we through margin to walk in did with integration have so good and it. But the to

than XXXX So growth I'd say, that's to revenue of Kellstrom. for aftermarket, focus in us, That you expect they're continue and the a in bigger engine double-digit kind can growth. the for said,

Operator

question RBC Markets. comes Ken Capital of next from Our Herbert

Kenneth Herbert

in the revenue a we maybe about John, think wanted here way. as EBITDA growth appreciate bridge Hey ask assumptions different I 'XX. to question and the

implies guidance assumptions your to comment by growth you VSEC. Can how about, breaking XXX the gains. market some out So see -- for you relative maybe call outperformance points basis of of share it, called you out that

You obviously those are agreements driving disproportionately called increased two or out there market? expanding, distribution to the for the capabilities. one that three greater outperformance MRO the relative areas business Is of

John Cuomo

mean details is XX% we part a diving organically sectors, one of kind financials looked -- be Even at I geographic fourth across in thing just the there's not no, in when of markets, programs. I the which driving across across And honest, balance to It's nice the my is a grew really quarter. the thing. favorite good of it.

what about actually all it's we're not outweighing one in is seeing actually kind the growth, it's but same today not that's positioned we're other. of So our love percentage thing the growth I where of saying areas. I'm

it's but it's Michael to a know little I So model, maybe pretty. Adam, and harder right,

Adam Cohn

distribution balanced growth evenly distributed say. we very XX% that between it's John's to in think I in saw XX% QX, And very what organic and that to is I MRO would point, range.

Kenneth Herbert

TCI you incremental post integration? as the business think core on obviously, points basis or And to maybe moving basis expansion is of some about a there the is core points take sort business further to way on as 'XX forward good and the think the the get into, XX 'XX, that Kellstrom about, the give we XX of in opportunity Perfect. margin Okay. just business or

Adam Cohn

Yeah, a question. Ken, that's good

I to to think basis way it. is points XX about points basis good XX a think

I with think going to you're see especially synergies, 'XX. realization more throughout of Kellstrom

fuel we're light manufacturing in continuing see program I full well. that you'll to as transition as to optimize So capabilities. control our realized And well we think as 'XX

as as So carryforward will get we that carrying we through fully the transition -- of we program. that this end some be the we're the year SG&A optimized there's throughout year

think go as help two I those XXXX. So expansion the elements will you into

Operator

question from comes from next Our Michael Ciarmoli Truist.

Michael Ciarmoli

Nice and know good no Can on talked blocks you've building And 'XX, John, cash some but in mention of maybe the on revenue for Adam, about we margins, about partnerships. color lots of cash new even talk I results. flow. 'XX?

might and with about still required think there how investment level presumably, some just working expect just help So on to us capital set to be and what cash.

Adam Cohn

sure. Yeah,

we obviously, program. when some the So in more provide 'XX, 'XX we'll around XXXX, fleet big elements, larger the the had about after guidance I to of we think you But Pratt transaction. think specific inventory provisioning the close

it, in we that range. $XX the call So million spelled out,

the also million range. well impact FDS the had from We in as transaction $XX

in will XXXX So and neither two XXXX. There's of in elements those a provide offsetting that. some will nice repeat to tailwind

So close Walker have the payments two we Lane real estate. to do out

in XXXX. another $X So there's a in the and million payment $X ramping then we 'XX Honeywell program million And payment are also 'XX. in

So manufacturing. you'll transition see to in we some buildup as inventory our

I couple of the growing we're in I and working earnings continuing obviously, as you Kellstrom, the core capital recent those the other capital XXXX, efficiency, there's focus is requirement business -- made, our well. And to TCI, on of So we're some to as the think we've working as optimizing then inventory intensive our think element they're two And acquisitions large elements. on especially a are business. And less working think capital the side. our actually

year. So as you're improvement get going to we the through some see natural

Michael Ciarmoli

maybe, I And when kind back then just was think Helpful. John, it. pivoting of growth, that targets, out on 'XX. laid topline Got your you 'XX

subtle I upward to slight Obviously, has you framework at high guys and changes you've the that continues single-digit of be growth? driving in market portfolio. the low I shift the double-digit organic. driven strong, And you've but noticeable any the think the broaden What's as licensing deals But that portfolio the look called got got uptick? potential. that know organic that kind for

John Cuomo

quite seeing in business. opportunities It's interesting. across is last Similar we're what our balanced the terms of to the question, like

have I like a haven't terms we'll few growth. headlines in it's And when us tackle of the But the put share. ton splashy growth. of organic during hopefully, out you of and year seen blocking actually to a So more

Our growth kind model normal of our is is And what's OEM-centric. and then OEM embedded working very happening. is, cadence again, or need problems to again, they opportunities. segments, that we're solved and capabilities and of wallet market our commercial other natural where share of it's have our we're partners, across of of with finding both additional MRO. And where and And as happening there's balanced B&GA market both quite distribution

So in a more little it's to outpace. us given bit confidence our ability

The other the commercial add, that and Mike, is from I'd Kellstrom. engine exposure TCI on side the thing from

want So growth. at when follow is and to that you the the higher of good that do market look market at, you hard credit you just pace engine stuff markets, commercial the want the natural end again, get -- we is the to

Operator

question next comes William Blair. from DiPalma Our Louie of

Louie Dipalma

the I costs, wondering the will corporate pro costs? corporate on closes, account fleet you there Congrats deal. do into for trapped And taking some some And fleet was be view margin this forma related what when when to year? the trapped that potential as deal,

Adam Cohn

that. Yeah, can take I

the that the probably end guidance said additional higher $X $X FDS we million, of million around some transaction, we're but at you costs. will give we I some we -- around So and look that to we amount give of trapped if corporate you more back announced But think still precise we'll the expecting are We're guidance. next range, doing quarter. when work to

some not year-on-year XXX expecting contributions give when just to are basis look improvement, we from margin lower forma margins, going specifics, but at think Wheeler you looking I points the pro given business. the we're plus

around forma close we that once we'll with a costs, precise update and pro transaction on up So margins. stranded come number you more

Louie Dipalma

think you that to terms sticking much remaining topic of margin the the How finish year. the OEM year synergies I you of this Solutions of should in John, uplift that there? And integration contribute Honeywell for the XXXX margins, mentioned Okay. a should

John Cuomo

to 'XX improvement it. little even implement capture Very capturing able the we're it, in -- as been because though implementing we're we've we margin

year margin implementation plan ahead and were in of capture. of last terms we So

let's So end the directional way clarity then of it at XXXX, then of the give going look be it, But the should mean, at, will fourth quarter, and that XXXX. I third remainder back you'll mirror of margins in give and look look can see to I'm kind we what to like. towards you say will the and start as the 'XX year. to

to little good that note, give a Michael, point, clarity maybe we a as market we get to it's it. the take can to of on So kind

Louie Dipalma

makes you good to fit. view the final going on put But one would if such hope situation an on that win-win share. the Boeing take if sense strategic to Boeing investors be either of put as will be will unclear with you a one to seem if happen. Aviall if investors it market way And subject Great. they excellent many the It's that something a VSE. be M&A, continue would fit Aviall, that their it But John, keeps eventually that it it to VSE -- on market is market for and do

John Cuomo

Yeah. necessarily to I don't coming asset see personally the mean think I -- I market.

But in Boeing side. all existing their a word, the at the OEM play very in positions. to recovery the them aftermarket, any With there's their of to and on whole of of we we class, lack them drive if look market fit I team our that, second to feel think when at we not right to we I for determining look can supporting market and they of to to larger and quarter to are I to kind kind market. us known continue efforts for niche. deal looks necessity assets more I would drive say and kind like think weight pipeline market regard look If differentiation general M&A we with above assets of at exiting of, the business fleet our that's with come we being all kind come a our the able comfortable our for typically and us. And they're than better market in have active the think sizes, as definitely in

Operator

B. of Riley. Our next Van question comes from Sinderen Jeff

Jeff Van Sinderen

add me my Let congratulations.

Just wanted last question around to Boeing. on up follow the there

wondering, Just assets, of potentially the you around you acquiring of after them opportunities businesses? there don't go their are could but necessarily exiting some after go maybe kind

John Cuomo

that there's I kind but you're publicly aware read that because deal, of-ish can we of asset confidential -- an you not That's deal, that's in and market. sort would larger say the asset that business only it's that's the we do deal business of it's doing are things the and our in I looking portfolio, one type same the not ourselves well everything read. a when right consider I'm it's now. at. It's market, mean of the fits say the is a I we above publicly-ish I

from only time. asset at So this the market we that's what understand, in the

of a of our So approach at a obviously, look them we've got small- some way. in a kind we medium-sized and own. partner to pretty as and that we competitor, And as it robust instances pipeline continue of deals and

Jeff Van Sinderen

And the the Fair saying progression Okay. it throughout if Wasn't ramp -- overall enough. year. that aviation were kind this clarify you just of margin to on clear would the then wanted margin year.

clarify what I but you were think that's saying, that. wanted to just

Adam Cohn

very which strong seen. We fourth ramp is you've was expect Obviously, a what for throughout quarter us on some margin do standpoint. Yeah. the year,

in that see to expect you'll well. XXXX think I as

Jeff Van Sinderen

to one one. then sale? need final Okay. you fleet close to the get kind thoughts remaining of Any hurdles on through just And the

Adam Cohn

quite closing light what normal other got that. March. in of then than we're month month here. trying to should the And We've HSR I'm are conditions in expire that remember the

second are So point. expecting closure this we at a quarter

Operator

Sullivan [Operator The comes question Company. of Benchmark Josh next from Our Instructions]

Joshua Sullivan

separately, is the guess a are should Kellstrom, many VSEC of And cycle? 'XX et aftermarket. on broader your What rates VSEC in thoughts so Just I two the actions then ramp? OEM on stabilize I How with transformative and as now TCI, we of exposed how parts. general question, guess, think cetera?

John Cuomo

question. good a it's Yeah,

I think think? that you do to do -- Michael, you want this How what answer one?

Michael Perlman

Yeah.

based positioned in uniquely of OEM confident rate proposition. sight. I terms would XXXX So production, our into value XXXX the differentiated are I in pretty in of we with our that think of say OEMs of on line we're terms

that So pivot, work pivot they're potentially trying to we they as to can offload.

change. positions think I as well So priorities that extremely us their

mentioned to we opportunities portion and are with two of earlier the that in the these terms exposure aftermarket In Kellstrom fastest-growing guess, commercial largest TCI the and their aviation engines. I of companies that,

to we working while customers of through advantage integration. with the existing opportunities So continue take existing

-- for XXXX. outlook we're for in confident So the

John Cuomo

Yeah.

good So very feel to 'XX 'XX, and I think we very, Michael's point, about.

we look and growth how still find do pivot at to from platforms you feel I'd 'XX, It's new you you OEMs. opportunities. there's say do offloading work As more where

may organic years not market this over a growth. a the decline, -- natural growth from of next come decline do three So different channels market double-digit But expect at just revenue may the point. come kind we than market the

Joshua Sullivan

be was it. the all of will it just you Got where end, in guess integrating? where capacity do comments you then capacity And that TCI, first on asset there How maybe to think acquired when you're we once in I mentioned expansion. 'XX about that to it's the done

John Cuomo

you with Yeah. will partners amazing It level. think is I was you level, invest to business, think certain invest I a OEM an that And to continue private and and asset. a to certain a as

a long-term the both have you when like opportunities creates sides do of table. different stable approach it we on both company think public I

capacity how double looking that we're well. expansion, we So for at we the total facility. at if in as look do And need us, we'll

double to it's kind of say multiyear a I'd plan So capacity.

Michael Perlman

where TCI that's in really is investment dollars lot expanding our MRO the And board. are focused, especially of XXXX and a capacity, across

Operator

like question-and-answer John turn conference back the over for Cuomo our to I would session. concludes to Mr. remarks. closing any This

John Cuomo

speaking and the Thanks for today. with forward to everybody a first report great of XXXX. Thanks time in day. you have our May quarter Look to

Operator

The conference presentation. you attending today's for has now concluded. Thank

now may You disconnect.

VSE (VSEC) 27 Feb 252024 Q4 Earnings call transcript