Exhibit



(in thousands, except per share data)
	Three months ended June 30,						Six months ended June 30,
	2019		2018		% Change		2019		2018		% Change
Revenues	$	189,111	$	170,394	11.0	%	$	359,030	$	347,291	3.4	%
Operating income	$	16,416	$	13,855	18.5	%	$	28,229	$	25,448	10.9	%
Net income	$	9,898	$	8,751	13.1	%	$	16,501	$	15,803	4.4	%
EPS (Diluted)	$	0.89	$	0.80	11.3	%	$	1.50	$	1.45	3.4	%

VSE reported improved operating results for the second quarter, with strong increases in both revenue and operating income. Our acquisition of 1st Choice Aerospace in January 2019 and execution of new organic aerospace programs in international markets drove the revenue growth for the business. Although revenue from our Federal Services and Supply Chain Management Groups were essentially flat from second quarter 2018 to 2019, revenue for both groups increased from first quarter to second quarter of 2019. The operating income improvements were driven by increased profits in our Aviation Group and our Federal Services Group, from both new organic revenue and revenue from our new 1st Choice Aerospace subsidiary.

“We are focused on our customer value proposition, building and executing our plans for revenue and profit growth and expanding customer markets, products and service capabilities for all of our operating groups,” said John Cuomo, VSE’s recently appointed CEO and President. "We remain keenly focused on operational excellence and returning value to our stockholders. Our revenue and operating income improved for the second quarter, reflecting an increase in our Aviation Group sales, improved operating profit from our Federal Services Group, and cost management initiatives across the business. We are pleased with the contributions of our 1st Choice Aerospace acquisition, which is exceeding financial and strategic expectations. While our second quarter Supply Chain Management Group revenue was essentially flat compared to the prior year, we gained increases in parts and services revenue from new commercial customers as we continue to expand our customer base. Our Federal Services Group’s results showed operating income growth through customer mix, margin, and performance improvement.”

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. We consider EBITDA a non-GAAP financial measure and an important indicator of performance and useful metric for management and investors to evaluate our business' ongoing operating performance on a consistent basis across reporting periods. EBITDA, however, should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. EBITDA represents net income before interest expense, income taxes, amortization of intangible assets and depreciation and other amortization. Adjusted EBITDA represents EBITDA (as defined above) adjusted for our 1st Choice Aerospace acquisition-related and CEO succession costs.



(in thousands)		Three Month Results ended June 30,						Six Month Results ended June 30,
		2019		2018		% Change		2019		2018		% Change
Net Income		$	9,898	$	8,751	13.1	%	$	16,501	$	15,803	4.4	%
	Interest Expense	3,398		2,182		55.7	%	6,556		4,357		50.5	%
	Income Taxes	3,120		2,922		6.8	%	5,172		5,288		(2.2	)%
	Amortization of Intangible Assets	4,980		4,004		24.4	%	9,971		8,008		24.5	%
	Depreciation and Other Amortization	1,227		2,235		(45.1	)%	3,666		4,715		(22.2	)%
EBITDA		22,623		20,094		12.6	%	41,866		38,171		9.7	%
	Acquisition Related and CEO Succession Costs	505		—		—	%	1,626		—		—	%
Adjusted EBITDA		$	23,128	$	20,094	15.1	%	$	43,492	$	38,171	13.9	%



	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
Revenues:
Supply Chain Management Group	$	53,805		$	54,263		$	105,509		$	110,127
Aviation Group	54,997			35,804			104,367			68,554
Federal Services Group	80,309			80,327			149,154			168,610
Total revenues	$	189,111		$	170,394		$	359,030		$	347,291

Operating Income:
Supply Chain Management Group	$	7,557		$	8,168		$	14,545		$	15,764
Aviation Group	5,204			2,846			8,252			5,107
Federal Services Group	5,059			3,606			8,444			6,084
Corporate/unallocated expenses	(1,404		)	(765		)	(3,012		)	(1,507		)
Operating income	$	16,416		$	13,855		$	28,229		$	25,448

Revenues for our Supply Chain Management Group were substantially unchanged for the second quarter of 2019 and decreased approximately $4.6 million or 4.2% for the first six months of 2019 compared to the same periods of 2018. The revenue decline was primarily due to decreased sales to Department of Defense customers of approximately $1.1 million for the quarter and approximately $4.4 million for the six months.

Revenues for our Aviation Group increased approximately $19.2 million, or 53.6% for the first quarter and approximately $35.8 million or 52.2% for the first six months of 2019, compared to the same periods of 2018. The revenue increase was primarily driven by the addition of revenues from our 1st Choice Aerospace acquisition in early January 2019 and from organic growth in international markets.

Operating income increased approximately $2.4 million or 82.9% for the second quarter and approximately $3.1 million or 61.6% for the six months. The increases in operating income were attributable primarily to the increases in revenues from our 1st Choice Aerospace acquisition and from parts distribution sales in our international markets.

Revenues for our Federal Services Group were substantially unchanged for the second quarter of 2019 and decreased approximately $19.5 million or 11.5% for the first six months of 2019 as compared to the same periods of 2018. For the first six months of 2019, our revenue from two large contracts declined by approximately $38 million due to decreased customer demand. These declines were partially offset by increased revenue in other programs and new business.

VSE maintains, extends and enhances legacy and next-generation systems and assets for our federal, defense and commercial clients by delivering innovative solutions for fleet vehicle, ship, and aircraft sustainment, supply chain management, platform modernization, mission enhancement, and program management since 1959. VSE also provides 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 the Form 10-Q that will be filed with the Securities and Exchange Commission (SEC) on or about July 31, 2019 for more details on our 2019 second-quarter results. Also, refer to VSE’s Annual Report on Form 10-K for the year ended December 31, 2018 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.



	June 30,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	760		$	162
Receivables, net	74,012			60,004
Unbilled receivables, net	45,961			41,255
Inventories, net	197,213			166,392
Other current assets	15,232			13,407
Total current assets	333,178			281,220

Property and equipment, net	44,216			49,606
Intangible assets, net	147,921			94,892
Goodwill	259,212			198,622
Operating lease right-of-use assets	25,256			—
Other assets	16,992			14,488
Total assets	$	826,775		$	638,828

Liabilities and Stockholders' equity
Current liabilities:
Current portion of long-term debt	$	10,091		$	9,466
Accounts payable	74,310			57,408
Current portion of earn-out obligation	10,700			—
Accrued expenses and other current liabilities	39,428			37,133
Dividends payable	987			871
Total current liabilities	135,516			104,878

Long-term debt, less current portion	268,985			151,133
Deferred compensation	17,201			17,027
Long-term lease obligations, less current portion	—			18,913
Long-term operating lease liabilities	25,716			—
Earn-out obligation	14,300			—
Deferred tax liabilities	18,720			18,482
Total liabilities	480,438			310,433

Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 10,970,123 and 10,886,036, respectively	549			544
Additional paid-in capital	29,411			26,632
Retained earnings	317,652			301,073
Accumulated other comprehensive (loss) income	(1,275		)	146
Total stockholders' equity	346,337			328,395
Total liabilities and stockholders' equity	$	826,775		$	638,828



	For the three months ended June 30,				For the six months ended June 30,
	2019		2018		2019		2018
Revenues:
Products	$	93,875	$	90,119	$	182,776	$	178,792
Services	95,236		80,275		176,254		168,499
Total revenues	189,111		170,394		359,030		347,291

Costs and operating expenses:
Products	79,380		75,834		155,673		150,560
Services	87,347		75,971		162,787		161,726
Selling, general and administrative expenses	988		730		2,370		1,549
Amortization of intangible assets	4,980		4,004		9,971		8,008
Total costs and operating expenses	172,695		156,539		330,801		321,843

Operating income	16,416		13,855		28,229		25,448

Interest expense, net	3,398		2,182		6,556		4,357

Income before income taxes	13,018		11,673		21,673		21,091

Provision for income taxes	3,120		2,922		5,172		5,288

Net income	$	9,898	$	8,751	$	16,501	$	15,803

Basic earnings per share	$	0.90	$	0.80	$	1.51	$	1.45

Basic weighted average shares outstanding	10,969,899		10,881,106		10,945,172		10,870,887

Diluted earnings per share	$	0.89	$	0.80	$	1.50	$	1.45

Diluted weighted average shares outstanding	11,072,745		10,918,927		11,023,685		10,907,777

Dividends declared per share	$	0.09	$	0.08	$	0.17	$	0.15



	For the six months ended June 30,
	2019			2018
Cash flows from operating activities:
Net income	$	16,501		$	15,803
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,637			12,723
Deferred taxes	(312		)	(888		)
Stock-based compensation	1,982			1,676
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables, net	(6,599		)	1,131
Unbilled receivables, net	(4,706		)	9,604
Inventories, net	(23,942		)	(34,352		)
Other current assets and noncurrent assets	(3,914		)	4,227
Accounts payable and deferred compensation	14,149			(6,164		)
Accrued expenses and other current and noncurrent liabilities	(2,744		)	(6,568		)
Long-term lease obligations	—			(816		)

Net cash provided by (used in) operating activities	4,052			(3,624		)

Cash flows from investing activities:
Purchases of property and equipment	(6,303		)	(1,880		)
Proceeds from the sale of property and equipment	4			46
Cash paid for acquisitions, net of cash acquired	(112,660		)	—

Net cash used in investing activities	(118,959		)	(1,834		)

Cash flows from financing activities:
Borrowings on loan agreement	300,726			359,554
Repayments on loan agreement	(182,516		)	(349,534		)
Payment of debt financing costs	—			(1,692		)
Payments on capital lease obligations	—			(707		)
Payments of taxes for equity transactions	(955		)	(641		)
Dividends paid	(1,750		)	(1,522		)

Net cash provided by financing activities	115,505			5,458

Net increase in cash and cash equivalents	598			—
Cash and cash equivalents at beginning of period	162			624
Cash and cash equivalents at end of period	$	760		$	624


•	Revenues were $189.1 million, up 11.0% as compared to the second quarter 2018.


•	Operating income was $16.4 million, up 18.5% as compared to the second quarter of 2018.


•	Net income was $9.9 million, up 13.1% as compared to the second quarter of 2018.


•	Earnings per share (diluted) was $0.89, up 11.3% as compared to the second quarter of 2018.


•	Adjusted EBITDA (non-GAAP, as described below) was $23.1 million, up 15.1% as compared to the second quarter of 2018.