Exhibit 99.1
 
 
VSE Reports Financial Results for Third Quarter 2015
Third Quarter Revenue and Profit Improve

Alexandria, Virginia, October 28, 2015 - VSE Corporation (Nasdaq: VSEC) reported the following unaudited consolidated financial results for its third fiscal quarter ended September 30, 2015. 

(in thousands, except per share data)
  
   
Third Quarter Results
    
Nine Month Results
  
   
2015
    
2014
    
% Change
    
2015
    
2014
    
% Change
  
Revenues
  
$
137,396
    
$
101,749
      
35.0
%
  
$
389,313
    
$
329,120
      
18.3
%
Operating income
  
$
13,243
    
$
7,183
      
84.4
%
  
$
35,423
    
$
29,243
      
21.1
%
Net income
  
$
6,474
    
$
3,883
      
66.7
%
  
$
17,173
    
$
15,202
      
13.0
%
EPS (Diluted)
  
$
1.20
    
$
0.72
      
66.7
%
  
$
3.19
    
$
2.83
      
12.7
%

"Our improved operating results this quarter are a result of the execution of our long term strategy to expand our logistics services and product offerings to a more diverse customer base," said Maurice "Mo" Gauthier, VSE CEO. "The successful performance of our Supply Chain Management Group and the inclusion of our aviation maintenance, repair and overhaul (MRO) and parts supply and distribution businesses acquired on January 28, 2015 (Aviation Group) are the primary drivers behind our revenue and profit growth in 2015. We have also increased bookings in our Federal Government markets in September to provide further momentum going forward. Overall, we have experienced modest organic revenue growth on a quarterly basis compared to the same quarter of the previous year."

Revenues were $137 million in the third quarter of 2015 compared to $102 million in the third quarter of 2014. For the first nine months, revenues were $389 million in 2015 compared to $329 million in 2014.  The increases were primarily due to the addition of commercial revenue from our Aviation Group and increases from our Supply Chain Management Group.

Operating income was $13.2 million for the third quarter of 2015 compared to $7.2 million in the third quarter of 2014. For the first nine months, operating income was $35 million in 2015 compared to $29 million in 2014. The increases in operating income were primarily attributable to the increases in our revenues. Differences in the amount of expense related to adjustments to earn-out obligations associated with our Wheeler Bros., Inc. and Aviation Group acquisitions also contributed to the operating income increases. Earn-out obligation expense for 2015 was approximately $508 thousand for the third quarter and $1 million for the nine months, compared to approximately $2 million for the third quarter and $2.8 million for the nine months for 2014.

Net income was $6.5 million for the third quarter of 2015, or $1.20 per diluted share, compared to $3.9 million, or $0.72 per diluted share for the third quarter of 2014. Net income was $17.2 million for the first nine months of 2015, or $3.19 per diluted share, compared to $15.2 million, or $2.83 per diluted share for the first nine months of 2014.

Net cash provided by operating activities was $18.5 million for the first nine months of 2015, compared to $3.9 million for the first six months of 2015. The $14.6 million of cash from operating activities in the third quarter was used primarily to make our final earn-out payment of approximately $10 million related to our Wheeler Bros., Inc. acquisition and an earn-out payment of $5 million related to our Aviation Group acquisition.

Our disclosure relative to bookings and funded contract backlog include only our Federal Services and IT, Energy and Management Consulting groups. Bookings were $184 million for the first nine months of 2015 compared to revenue of $157 million for the same period. Funded contract backlog at September 30, 2015 was $214 million, compared to $176 million at June 30, 2015 and $192 million at September 30, 2014.

 
Non-GAAP Financial Reconciliation (Unaudited)
                        
                         
For the third quarter and nine-month periods ended September 30, 2015
                        
(in thousands)
                        
   
Third Quarter Results
    
Nine Month Results
  
   
2015
    
2014
    
% Change
    
2015
    
2014
    
% Change
  
Net Income
  
$
6,474
    
$
3,883
      
67
%
  
$
17,173
    
$
15,202
      
13
%
Interest Expense
    
2,441
      
871
      
180
%
    
7,001
      
3,158
      
122
%
Income Taxes
    
4,328
      
2,425
      
78
%
    
11,249
      
9,985
      
13
%
Depreciation and Amortization (1)
    
6,437
      
4,720
      
36
%
    
19,215
      
14,274
      
35
%
EBITDA
    
19,680
      
11,899
      
65
%
    
54,638
      
42,619
      
28
%
Earn Out Adjustments Expense
    
508
      
1,971
      
-74
%
    
1,035
      
2,758
      
-62
%
Acquisition Transaction Costs
    
75
      
277
      
-73
%
    
488
      
277
      
76
%
Adjusted EBITDA
  
$
20,263
    
$
14,147
      
43
%
  
$
56,161
    
$
45,654
      
23
%
                                                 
                                                 
(1) Amortization Expense from Acquisitions Included Above
  
$
4,162
    
$
2,628
      
58
%
  
$
12,280
    
$
7,885
      
56
%

EBITDA was $19.7 million for the third quarter and $54.6 million for the first nine months of 2015, compared to $11.9 million for the third quarter and $42.6 for the first nine months of 2014. Adjusted EBITDA was approximately $20.3 million for the third quarter and approximately $56.2 for the first nine months of 2015, compared to approximately $14.1 million for the third quarter and approximately $45.7 million for the first nine months of 2014.

Third Quarter Operational Highlights
·
Revenues from our Supply Chain Management Group, which provides supply chain support for truck fleets, increased by 13% for the first nine months of 2015 as compared to the same period of 2014.
·
Our combined Federal Services and IT, Management and Consulting groups had increased bookings in the third quarter, resulting in a book to bill of approximately 1.2 for the first nine months of 2015. The book to bill is a ratio of the bookings of $184 million divided by the revenues of $157 million for the nine-month period.
·
Our Federal Services Group was recently awarded a Firm Fixed Price (FFP) task order under its SeaPort-e contract vehicle to provide technical, maintenance and test support to the U.S. Marine Corps Systems Command in Quantico, VA. This task order has a period of performance that includes a six-month base period and four one-year options with a total value of $37 million. This award represents an increase in contract value, scope, and capabilities to work currently performed by VSE.
·
In September, our Federal Services Group received several delivery orders totaling more than $27.9 million to continue work under its Foreign Military Sales (FMS) Naval Ship Transfer and Repair (N*STAR) contract through the Naval Sea Systems Command (NAVSEA) International Fleet Support Program.
·
Our Energetics subsidiary was awarded two subcontracts through the U.S. Department of Energy (DOE) National Nuclear Security Administration (NNSA) Technical, Engineering & Programmatic Support Services Blanket Purchase Agreement. The two task order awards consist of technical and program management support for DOE Office of International Affairs and for the DOE Office of Energy Policy and Systems Analysis. The task orders have a three-year period of performance and a total combined estimated value to Energetics of $7 million.

About VSE                                                                                                                              
Established in 1959, VSE is a diversified logistics and services company with experience in solving issues of global significance with integrity, agility, and value. VSE is dedicated to making our federal and commercial clients successful by delivering innovative solutions for vehicle, ship, and aircraft sustainment, supply chain management, platform modernization, mission enhancement, program management, energy, IT, and consulting services. For additional information regarding VSE services and products, please see the Company's web site at www.vsecorp.com or contact Christine Kaineg, VSE Investor Relations, at (703) 329-3263.

Please refer to VSE's Annual Report on Form 10-K for the year ended December 31, 2014 and subsequent reports filed with the Securities and Exchange Commission ("SEC") for further information and analysis of VSE's financial condition and results of operations. VSE encourages investors and others to review the detailed reporting and disclosures contained in VSE's public filings for additional discussion about the status of specific customer programs and contract awards, risks, revenue sources and funding, dependence on material customers, and management's discussion of short and long term business challenges and opportunities.

Non-GAAP Financial Information
This earnings release contains financial measures above under the caption "Non-GAAP Financial Information" that are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP") under SEC Regulation G, including EBITDA and Adjusted EBITDA. EBITDA represents net income before net interest, income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA, as defined above, adjusted for earn-out expenses and other transaction costs associated with acquisitions. VSE prepares adjusted financial measures to eliminate the impact of items it does not consider indicative of ongoing operating performance due to their inherent unusual, extraordinary or non-recurring nature.

We have included a discussion on EBITDA and Adjusted EBITDA in this press release, which are non-GAAP financial measures. We believe that these supplemental performance measures provide another basis for comparing period to period results by excluding potential differences caused by non-operational and unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measures of financial performance under GAAP and should not be considered as an alternative to any other performance measure derived in accordance with GAAP. This information is not audited.

Safe Harbor
This news release contains statements that to the extent they are not recitations of historical fact, constitute "forward looking statements" under federal securities laws. All such statements are intended to be subject to the safe harbor protection provided by applicable securities laws. For discussions identifying some important factors that could cause actual VSE results to differ materially from those anticipated in the forward looking statements in this news release, see VSE's public filings with the SEC.

VSE Financial News Contact: Christine Kaineg -- (703) 329-3263.





VSE Corporation and Subsidiaries
        
         
Unaudited Consolidated Balance Sheets
        
(in thousands except share and per share amounts)
        
   
September 30,
    
December 31,
  
   
2015
    
2014
  
Assets
        
Current assets:
        
Cash and cash equivalents
  
$
194
    
$
263
  
Receivables
    
75,762
      
59,391
  
Inventories
    
113,728
      
49,363
  
Deferred tax assets
    
4,897
      
1,834
  
Other current assets
    
10,635
      
11,517
  
          Total current assets
    
205,216
      
122,368
  
 
                
Property and equipment, net
    
65,237
      
52,911
  
Intangible assets, net
    
153,640
      
72,209
  
Goodwill
    
184,384
      
92,052
  
Other assets
    
16,212
      
15,790
  
          Total assets
  
$
624,689
    
$
355,330
  
 
                
Liabilities and Stockholders' Equity
                
Current liabilities:
                
Current portion of long-term debt
  
$
16,620
    
$
24,837
  
Accounts payable
    
36,677
      
29,424
  
Current portion of earn-out obligation
    
9,038
      
9,455
  
Accrued expenses and other current liabilities
    
26,101
      
23,245
  
Dividends payable
    
-
      
536
  
          Total current liabilities
    
88,436
      
87,497
  
 
                
Long-term debt, less current portion
    
228,214
      
23,563
  
Deferred compensation
    
10,905
      
12,563
  
Long-term lease obligations, less current portion
    
23,635
      
24,584
  
Earn-out obligation, less current portion
    
12,576
      
-
  
Deferred income taxes
    
38,767
      
1,634
  
          Total liabilities
    
402,533
      
149,841
  
 
                
Commitments and contingencies
                
 
                
Stockholders' equity:
                
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 5,374,863 and 5,358,261 respectively
    
269
      
268
  
Additional paid-in capital
    
21,597
      
20,348
  
Retained earnings
    
200,916
      
184,873
  
Accumulated other comprehensive loss
    
(626
)
    
-
  
    Total stockholders' equity
    
222,156
      
205,489
  
    Total liabilities and stockholders' equity
  
$
624,689
    
$
355,330
  



 
VSE Corporation and Subsidiaries              
             
Unaudited Consolidated Statements of Income
              
(in thousands except share and per share amounts)
              
                 
   
For the three months
    
For the nine months
  
   
ended September 30,
    
ended September 30,
  
   
2015
    
2014
    
2015
    
2014
  
                 
Revenues:
                
  Products
  
$
83,644
    
$
44,567
    
$
233,603
    
$
127,550
  
  Services
    
53,752
      
57,182
      
155,710
      
201,570
  
    Total revenues
    
137,396
      
101,749
      
389,313
      
329,120
  
                                 
Contract costs:
                                
  Products
    
72,371
      
36,440
      
200,531
      
103,223
  
  Services
    
51,281
      
56,948
      
150,741
      
194,257
  
    Total contract costs
    
123,652
      
93,388
      
351,272
      
297,480
  
                                 
Selling, general and administrative expenses
    
501
      
1,178
      
2,618
      
2,397
  
                                 
Operating income
    
13,243
      
7,183
      
35,423
      
29,243
  
                                 
Interest expense, net
    
2,441
      
871
      
7,001
      
3,158
  
                                 
Income before income taxes
    
10,802
      
6,312
      
28,422
      
26,085
  
                                 
Provision for income taxes
    
4,328
      
2,425
      
11,249
      
9,985
  
                                 
Income from continuing operations
    
6,474
      
3,887
      
17,173
      
16,100
  
                                 
Loss from discontinued operations, net of tax
    
-
      
(4
)
    
-
      
(898
)
                                 
Net income
  
$
6,474
    
$
3,883
    
$
17,173
    
$
15,202
  
                                 
Basic earnings per share:
                                
  Income from continuing operations
  
$
1.20
    
$
0.73
    
$
3.20
    
$
3.01
  
  Loss income from discontinued operations
    
-
      
-
      
-
      
(0.17
)
Net income
  
$
1.20
    
$
0.73
    
$
3.20
    
$
2.84
  
                                 
Basic weighted average shares outstanding
    
5,374,863
      
5,355,968
      
5,373,159
      
5,353,065
  
                                 
Diluted earnings per share:
                                
  Income from continuing operations
  
$
1.20
    
$
0.72
    
$
3.19
    
$
3.00
  
  Loss from discontinued operations
    
-
      
-
      
-
      
(0.17
)
Net income
  
$
1.20
    
$
0.72
    
$
3.19
    
$
2.83
  
                                 
Diluted weighted average shares outstanding
    
5,396,174
      
5,371,995
      
5,389,129
      
5,368,224
  
                                 
Dividends declared per share
  
$
-
    
$
-
    
$
0.21
    
$
0.19
  

 VSE Corporation and Subsidiaries        
         
Unaudited Consolidated Statements of Cash Flows
        
(in thousands)
        
   
For the nine months
  
   
ended September 30,
  
   
2015
    
2014
  
Cash flows from operating activities:
        
  Net income
  
$
17,173
    
$
15,202
  
  Adjustments to reconcile net income to net cash provided by operating
                
    activities:
      Depreciation and amortization
    
19,215
      
14,274
  
      Deferred taxes
    
(1,400
)
    
2,551
  
      Stock-based compensation
    
1,698
      
1,610
  
      Earn-out obligation adjustment
    
1,035
      
2,758
  
Changes in operating assets and liabilities, net of impact of acquisition:
                
      Receivables, net
    
(5,267
)
    
14,548
  
      Inventories
    
(8,821
)
    
(7,672
)
      Other current assets and noncurrent assets
    
4,110
      
(2,560
)
      Accounts payable and deferred compensation
    
(3,235
)
    
2,429
  
      Accrued expenses  and other current liabilities
    
(1,811
)
    
(2,587
)
      Earn-out obligation
    
(3,269
)
    
-
  
      Long-term lease obligations
    
(926
)
    
(835
)
                 
       Net cash provided by operating activities
    
18,502
      
39,718
  
                 
Cash flows from investing activities:
                
  Purchases of property and equipment
    
(7,819
)
    
(2,725
)
  Proceeds from the sale of property and equipment
    
273
      
-
  
  Cash paid for acquisitions, net of cash acquired
    
(191,181
)
    
-
  
                 
       Net cash used in investing activities
    
(198,727
)
    
(2,725
)
                 
Cash flows from financing activities:
                
   Borrowings on loan arrangement
    
435,377
      
210,552
  
   Repayments on loan arrangement
    
(238,071
)
    
(243,023
)
   Earn-out obligation payments
    
(11,713
)
    
(1,972
)
   Payment of debt financing costs
    
(2,699
)
    
-
  
   Payments on capital lease obligations
    
(730
)
    
(629
)
   Payments of taxes for equity transactions
    
(342
)
    
(314
)
   Dividends paid
    
(1,666
)
    
(1,499
)
                 
       Net cash provided by (used in) financing activities
    
180,156
      
(36,885
)
                 
Net (decrease) increase in cash and cash equivalents
    
(69
)
    
108
  
  Cash and cash equivalents at beginning of period
    
263
      
220
  
  Cash and cash equivalents at end of period
  
$
194
    
$
328