Exhibit

“Revenue from our Federal Services Group increased 36% for the first nine months of 2017, primarily attributable to our Navy Foreign Military Sales (FMS) program and our U.S. Army clients" said Maurice “Mo” Gauthier, VSE CEO. "Our Supply Chain Management Group also has contributed to our revenue increases year-to-date, driven by growth of parts sales for the DoD and commercial vehicle fleets. Our commercial client base now includes companies in food distribution, oil field services, waste management, linen and uniform, commercial long haul shipping, bus transportation, and other clients that have vehicle fleets required to meet mission critical delivery or service schedules. Our Aviation Group had a challenging third quarter. We have launched initiatives to expand our geographic distribution footprint and strengthen our international business development efforts to boost revenues in this group."



(in thousands, except per share data)
	Three months ended September 30,						Nine months ended September 30,
	2017		2016		% Change		2017		2016		% Change
Revenues	$	174,164	$	172,780	0.8	%	$	565,318	$	476,889	18.5	%
Operating income	$	12,237	$	13,623	(10.2	)%	$	41,438	$	38,243	8.4	%
Net income	$	6,639	$	7,088	(6.3	)%	$	21,739	$	19,609	10.9	%
EPS (Diluted)	$	0.61	$	0.65	(6.2	)%	$	2.00	$	1.81	10.5	%

Revenues were $174.2 million in the third quarter of 2017 compared to $172.8 million in the third quarter of 2016. For the first nine months, revenues were $565.3 million in 2017 compared to $476.9 million in 2016. These increases were primarily due to increased revenue from our Federal Services Group. Increased revenues from our Supply Chain Management Group also contributed to revenue growth for the first nine months of 2017.

Operating income was $12.2 million for the third quarter of 2017 compared to $13.6 million in the third quarter of 2016. For the first nine months, operating income was $41.4 million in 2017 compared to $38.2 million in 2016, primarily attributable to revenue increases in our Federal Services Group. Our 2017 operating results were adversely affected by one contract in our Federal Services Group that reduced operating income by approximately $1.2 million for the third quarter and $1.6 million for the first nine months of 2017. We expect no further loss on this contract prior to its expected completion in the fourth quarter of 2017.

Net income was $6.6 million for the third quarter of 2017, or $0.61 per diluted share, compared to $7.1 million, or $0.65 per diluted share for the third quarter of 2016. Net income was $21.7 million for the first nine months of 2017, or $2.00 per diluted share, compared to $19.6 million, or $1.81 per diluted share for the first nine months of 2016.

The non-GAAP Financial Information (unaudited) set forth below is not calculated in accordance with U.S. generally accepted accounting principles (GAAP) under SEC Regulation G. These non-GAAP financial measures consist of EBITDA and Adjusted EBITDA. We consider these non-GAAP financial measures as important indicators of performance and useful metrics for management and investors to evaluate our business' ongoing operating performance on a consistent basis across reporting periods. These adjusted financial measures are intended to highlight non-operational, unusual or non-recurring items. They should not, however, be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

Non-GAAP Financial Information (unaudited)




(in thousands)		Three Month Results						Nine Month Results
		2017		2016		% Change		2017		2016			% Change
Net Income		$	6,639	$	7,088	(6	)%	$	21,739	$	19,609		11	%
	Interest Expense	2,347		2,509		(6	)%	7,158		7,406			(3	)%
	Income Taxes	3,251		4,026		(19	)%	12,541		11,228			12	%
	Amortization of Intangible Assets	4,005		4,022		0	%	12,013		12,063			0	%
	Depreciation and Other Amortization	2,375		2,558		(7	)%	7,571		7,452			2	%
EBITDA		18,617		20,203		(8	)%	61,022		57,758			6	%
	Earn-Out Adjustments Income	—		—		—		—		(1,329		)	—
Adjusted EBITDA		$	18,617	$	20,203	(8	)%	$	61,022	$	56,429		8	%

Established in 1959, VSE is a diversified products and services company providing logistics solutions 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, and program management, and providing 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 Form 10-Q that will be filed with the Securities and Exchange Commission (SEC) on or about October 27, 2017 for more details on our 2017 third quarter results. Also, refer to VSE’s Annual Report on Form 10-K for the year ended December 31, 2016 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 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.

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.



	September 30, 2017		December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	472	$	428
Receivables, net	72,874		101,218
Inventories, net	135,525		136,340
Other current assets	24,376		20,477
Total current assets	233,247		258,463

Property and equipment, net	56,857		62,061
Intangible assets, net	114,913		126,926
Goodwill	198,622		198,622
Other assets	15,405		15,767
Total assets	$	619,044	$	661,839

Liabilities and Stockholders' equity
Current liabilities:
Current portion of long-term debt	$	25,710	$	21,023
Accounts payable	48,560		93,999
Accrued expenses and other current liabilities	47,852		32,772
Dividends payable	—		648
Total current liabilities	122,122		148,442

Long-term debt, less current portion	155,083		193,621
Deferred compensation	15,749		12,751
Long-term lease obligations, less current portion	20,917		21,959
Deferred tax liabilities	27,981		29,872
Total liabilities	341,852		406,645

Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 10,838,435 and 10,798,927, respectively	542		540
Additional paid-in capital	24,455		22,876
Retained earnings	252,061		231,733
Accumulated other comprehensive loss	134		45
Total stockholders' equity	277,192		255,194
Total liabilities and stockholders' equity	$	619,044	$	661,839



	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
Revenues:
Products	$	82,314	$	87,060	$	260,585	$	254,325
Services	91,850		85,720		304,733		222,564
Total revenues	174,164		172,780		565,318		476,889

Costs and operating expenses:
Products	68,678		70,884		217,606		207,001
Services	88,989		83,599		293,083		215,409
Selling, general and administrative expenses	255		652		1,178		4,173
Amortization of intangible assets	4,005		4,022		12,013		12,063
Total costs and operating expenses	161,927		159,157		523,880		438,646

Operating income	12,237		13,623		41,438		38,243

Interest expense, net	2,347		2,509		7,158		7,406

Income before income taxes	9,890		11,114		34,280		30,837

Provision for income taxes	3,251		4,026		12,541		11,228

Net income	$	6,639	$	7,088	$	21,739	$	19,609

Basic earnings per share	$	0.61	$	0.66	$	2.01	$	1.82

Basic weighted average shares outstanding	10,838,435		10,798,684		10,833,237		10,792,046

Diluted earnings per share	$	0.61	$	0.65	$	2.00	$	1.81

Diluted weighted average shares outstanding	10,856,675		10,826,007		10,855,983		10,819,697

Dividends declared per share	$	—	$	—	$	0.130	$	0.115



	For the nine months ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	21,739		$	19,609
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,584			19,515
Deferred taxes	(1,947		)	(3,047		)
Stock-based compensation	1,935			1,747
Earn-out obligation adjustment	—			(1,329		)
Changes in operating assets and liabilities:
Receivables, net	28,344			(7,636		)
Inventories, net	815			(19,812		)
Other current assets and noncurrent assets	(3,392		)	(8,015		)
Accounts payable and deferred compensation	(42,441		)	19,651
Accrued expenses and other current liabilities	15,916			8,639
Long-term lease obligations	(1,042		)	(930		)

Net cash provided by operating activities	39,511			28,392

Cash flows from investing activities:
Purchases of property and equipment	(2,387		)	(5,438		)
Proceeds from the sale of property and equipment	689			74
Cash paid for acquisitions, net of cash acquired	—			(63		)

Net cash used in investing activities	(1,698		)	(5,427		)

Cash flows from financing activities:
Borrowings on loan agreement	258,657			231,139
Repayments on loan agreement	(292,913		)	(232,608		)
Earn-out obligation payments	—			(18,515		)
Payments on capital lease obligations	(954		)	(835		)
Payments of taxes for equity transactions	(500		)	(499		)
Dividends paid	(2,059		)	(1,834		)

Net cash used in financing activities	(37,769		)	(23,152		)

Net increase (decrease) in cash and cash equivalents	44			(187		)
Cash and cash equivalents at beginning of period	428			740
Cash and cash equivalents at end of period	$	472		$	553


•	Our Federal Services Group was awarded several delivery orders during the third quarter of 2017 under our Foreign Military Sales (FMS) support contract by the Naval Sea Systems Command (NAVSEA) International Fleet Support Program Office totaling approximately $93 million, as previously reported.


•	Revenue from our equipment sustainment, refurbishment, logistics support, and parts supply services for our U.S. Army clients for the first nine months of 2017 increased 55% year over year.


•	Our Supply Chain Management Group has increased parts sales to DoD and other government agencies by 83%, and revenue from commercial customers has increased 25% for the first nine months of 2017.


•	Bookings in our Federal Services Group were $398 million for the first nine months of 2017 compared to revenue for this group of $306 million. Funded contract backlog at September 30, 2017 was $403 million, compared to $386 million at June 30, 2017 and $400 million at September 30, 2016.