Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____

Commission File Number: 000-03676

VSE CORPORATION

(Exact Name of Registrant as Specified in its Charter)



Delaware				54-0649263
(State or Other Jurisdiction of				(I.R.S. Employer
Incorporation or Organization)				Identification No.)



6348 Walker Lane
Alexandria,	Virginia	22310
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code: (703) 960-4600

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.05 per share	VSEC	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares of Common Stock outstanding as of July 22, 2020: 11,043,246



	TABLE OF CONTENTS


		Page
PART I

ITEM 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	5

	Unaudited Consolidated Statements of (Loss) Income for the three and six months ended June 30, 2020 and 2019	6

	Unaudited Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2020 and 2019	7

	Unaudited Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2020 and 2019	8

	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	10

	Notes to Unaudited Consolidated Financial Statements	11

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risks	38

ITEM 4.	Controls and Procedures	38

PART II

ITEM 1.	Legal Proceedings	38

ITEM 1A.	Risk Factors	38

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

ITEM 6.	Exhibits	40

Signatures		41

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VSE Corporation and Subsidiaries

Forward Looking Statements

This quarterly report on Form 10-Q (“Form 10-Q”) contains statements that, to the extent they are not recitations of historical fact, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of such safe harbor provisions.

“Forward-looking” statements, as such term is defined by the Securities Exchange Commission (the “SEC”) in its rules, regulations and releases, represent our expectations or beliefs, including, but not limited to, statements concerning our operations, economic performance, financial condition, the impact of widespread health developments, such as the ongoing COVID-19 outbreak, the health and economic impact thereof and the governmental, commercial, consumer and other responses thereto, growth and acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including, but not limited to, those identified elsewhere in this document, including in Item 1A, Risk Factors, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 9, 2020 (“2019 Form 10-K). All forward-looking statements made herein are qualified by these cautionary statements and risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized.

Readers are cautioned not to place undue reliance on these forward looking-statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that occur or arise after the date hereof.

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PART I. Financial Information

Item 1. Financial Statements

VSE Corporation and Subsidiaries

Unaudited Consolidated Balance Sheets

(in thousands except share and per share amounts)



	June 30,			December 31,
	2020			2019
Assets
Current assets:
Cash and cash equivalents	$	213		$	734
Receivables, net	58,615			70,630
Unbilled receivables, net	41,859			46,279
Inventories, net	223,134			218,627
Other current assets	30,257			19,071
Total current assets	354,078			355,341

Property and equipment, net	36,987			43,465
Intangible assets, net	111,912			132,175
Goodwill	238,126			276,450
Operating lease - right-of-use assets	21,395			20,943
Other assets	25,064			17,490
Total assets	$	787,562		$	845,864

Liabilities and Stockholders' equity
Current liabilities:
Current portion of long-term debt	$	18,504		$	16,883
Accounts payable	76,183			68,099
Current portion of earn-out obligation	3,600			31,700
Accrued expenses and other current liabilities	47,472			46,514
Dividends payable	994			987
Total current liabilities	146,753			164,183

Long-term debt, less current portion	241,612			253,128
Deferred compensation	20,535			18,146
Long-term operating lease obligations	24,272			24,441
Earn-out obligation, less current portion	—			5,000
Deferred tax liabilities	11,436			17,865
Total liabilities	444,608			482,763

Commitments and contingencies (Note 7)

Stockholders' equity:
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 11,043,246 and 10,970,123, respectively	552			549
Additional paid-in capital	31,494			29,411
Retained earnings	312,965			334,246
Accumulated other comprehensive loss	(2,057		)	(1,105		)
Total stockholders' equity	342,954			363,101
Total liabilities and stockholders' equity	$	787,562		$	845,864

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of (Loss) Income

(in thousands except share and per share amounts)



	For the three months ended June 30,					For the six months ended June 30,
	2020			2019		2020			2019
Revenues:
Products	$	85,747		$	76,959	$	162,089		$	150,700
Services	82,968			112,152		184,044			208,330
Total revenues	168,715			189,111		346,133			359,030

Costs and operating expenses:
Products	76,522			65,255		142,049			128,112
Services	73,932			101,472		164,690			190,348
Selling, general and administrative expenses	1,295			988		1,543			2,370
Amortization of intangible assets	4,464			4,980		9,187			9,971
Total costs and operating expenses	156,213			172,695		317,469			330,801

	12,502			16,416		28,664			28,229

Loss on sale of a business entity and certain assets	(678		)	—		(8,214		)	—
Gain on sale of property	—			—		1,108			—
Goodwill and intangible asset impairment	(33,734		)	—		(33,734		)	—

Operating (loss) income	(21,910		)	16,416		(12,176		)	28,229

Interest expense, net	3,072			3,398		6,558			6,556

(Loss) income before income taxes	(24,982		)	13,018		(18,734		)	21,673

Provision for income taxes	(2,358		)	3,120		558			5,172

Net (loss) income	$	(22,624	)	$	9,898	$	(19,292	)	$	16,501

Basic (loss) earnings per share	$	(2.05	)	$	0.91	$	(1.75	)	$	1.51

Basic weighted average shares outstanding	11,041,235			10,969,899		11,020,720			10,945,172

Diluted (loss) earnings per share	$	(2.05	)	$	0.89	$	(1.75	)	$	1.50

Diluted weighted average shares outstanding	11,041,235			11,072,745		11,020,720			11,023,685

Dividends declared per share	$	0.09		$	0.09	$	0.18		$	0.17

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Comprehensive (Loss) Income

(in thousands)



	For the three months ended June 30,						For the six months ended June 30,
	2020			2019			2020			2019
Net (loss) income	$	(22,624	)	$	9,898		$	(19,292	)	$	16,501

Change in fair value of interest rate swap agreements, net of tax	(79		)	(729		)	(952		)	(1,421		)

Other comprehensive loss, net of tax	(79		)	(729		)	(952		)	(1,421		)

Comprehensive (loss) income	$	(22,703	)	$	9,169		$	(20,244	)	$	15,080

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity

(in thousands except per share data)



	Three months ended June 30, 2020
				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Common Stock
	Shares	Amount
Balance at March 31, 2020	11,029	$	551	$	31,244	$	336,584		$	(1,978	)	$	366,401
Net loss	—	—		—		(22,624		)	—			(22,624		)
Stock-based compensation	14	1		250		—			—			251
Other comprehensive loss, net of tax	—	—		—		—			(79		)	(79		)
Dividends declared ($0.09 per share)	—	—		—		(995		)	—			(995		)
Balance at June 30, 2020	11,043	$	552	$	31,494	$	312,965		$	(2,057	)	$	342,954



	Three months ended June 30, 2019
				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Common Stock
	Shares	Amount
Balance at March 31, 2019	10,950	$	547	$	28,788	$	308,742		$	(546	)	$	337,531
Net income	—	—		—		9,898			—			9,898
Stock-based compensation	20	2		623		—			—			625
Other comprehensive loss, net of tax	—	—		—		—			(729		)	(729		)
Dividends declared ($0.09 per share)	—	—		—		(988		)	—			(988		)
Balance at June 30, 2019	10,970	$	549	$	29,411	$	317,652		$	(1,275	)	$	346,337

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity (continued)

(in thousands except per share data)



	Six months ended June 30, 2020
				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Common Stock
	Shares	Amount
Balance at December 31, 2019	10,970	$	549	$	29,411	$	334,246		$	(1,105	)	$	363,101
Net loss	—	—		—		(19,292		)	—			(19,292		)
Stock-based compensation	73	3		2,083		—			—			2,086
Other comprehensive loss, net of tax	—	—		—		—			(952		)	(952		)
Dividends declared ($0.18 per share)	—	—		—		(1,989		)	—			(1,989		)
Balance at June 30, 2020	11,043	$	552	$	31,494	$	312,965		$	(2,057	)	$	342,954



	Six months ended June 30, 2019
				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity
	Common Stock
	Shares	Amount
Balance at December 31, 2018	10,886	$	544	$	26,632	$	301,073		$	146		$	328,395
Cumulative effect of adoption of ASU 2016-02, net of tax	—	—		—		1,944			—			1,944
Net income	—	—		—		16,501			—			16,501
Stock-based compensation	84	5		2,779		—			—			2,784
Other comprehensive loss, net of tax	—	—		—		—			(1,421		)	(1,421		)
Dividends declared ($0.17 per share)	—	—		—		(1,866		)	—			(1,866		)
Balance at June 30, 2019	10,970	$	549	$	29,411	$	317,652		$	(1,275	)	$	346,337

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE Corporation and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(in thousands)



	For the six months ended June 30,
	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(19,292	)	$	16,501
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,403			13,637
Deferred taxes	(2,980		)	(312		)
Stock-based compensation	1,313			1,982
Loss on sale of a business entity and certain assets	8,214			—
Gain on sale of property and equipment	(1,000		)	—
Goodwill and intangible asset impairment	33,734			—
Earn-out obligation fair value adjustment	(1,399		)	—
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables	4,588			(6,599		)
Unbilled receivables	193			(4,706		)
Inventories	(19,884		)	(23,942		)
Other current assets and noncurrent assets	(8,320		)	(3,914		)
Accounts payable and deferred compensation	11,512			14,149
Accrued expenses and other current and noncurrent liabilities	3,726			(2,744		)

Net cash provided by operating activities	22,808			4,052

Cash flows from investing activities:
Purchases of property and equipment	(1,828		)	(6,303		)
Proceeds from the sale of property and equipment	2,424			4
Proceeds from the sale of a business entity and certain assets	20,753			—
Cash paid for acquisitions, net of cash acquired	—			(112,660		)

Net cash provided by (used in) investing activities	21,349			(118,959		)

Cash flows from financing activities:
Borrowings on loan agreement	235,118			300,726
Repayments on loan agreement	(244,843		)	(182,516		)
Earn-out obligation payments	(31,701		)	—
Payment of debt financing costs	(636		)	—
Payments of taxes for equity transactions	(635		)	(955		)
Dividends paid	(1,981		)	(1,750		)

Net cash (used in) provided by financing activities	(44,678		)	115,505

Net (decrease) increase in cash and cash equivalents	(521		)	598
Cash and cash equivalents at beginning of period	734			162
Cash and cash equivalents at end of period	$	213		$	760



Supplemental disclosure of noncash investing and financing activities:
Notes receivable from the sale of a business entity and certain assets	$	13,482	$	—

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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(1) Basis of Presentation

Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2019 Form 10-K. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include accruals for contract disallowance reserves, award fee revenues, costs to complete on fixed price contracts, recoverability of goodwill and intangible assets, and earn-out obligations.

Coronavirus (COVID-19) Pandemic

On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus disease, known as COVID-19, as a global pandemic. The pandemic and the containment and mitigation efforts by governments to attempt to control its spread created uncertainties and disruptions in the economic and financial markets. The impact of COVID-19 on us is evolving and its future effects are highly uncertain and unpredictable. We are closely monitoring the effects and risks of COVID-19 to assess its impact on our business, financial condition and results of operations. In April 2020, we completed a cost reduction plan which included a reduction in workforce. We maintain a robust continuity plan to adequately respond to situations such as the COVID-19 pandemic, including a framework for remote work arrangements, in order to effectively maintain operations, including financial reporting systems, internal controls over financial reporting and disclosure controls and procedures.

Reclassifications

Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation which include reclassification of products and services revenue and the renaming of our three operating segments as further described in Note (8) "Business Segments and Customer Information." These reclassifications had no effect on the reported results of operations.

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosures related to transfers and the valuation process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-13 in the first quarter of 2020. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows.

In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-15 in the first quarter of 2020 and applied the standard prospectively. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and certain other instruments, including trade receivables and contract assets. The new standard replaces the current incurred loss model for measurement of credit losses on financial assets with a forward-looking expected loss model based on historical experience, current conditions, and reasonable and supportable forecasts. The new standard is effective for reporting periods beginning after December 15, 2019. We adopted the standard in the first quarter

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VSE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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of 2020 using the modified-retrospective approach, which requires the standard to be applied on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the period in which the guidance is effective. Upon adoption, we did not record an adjustment to opening retained earnings as of January 1, 2020 because the adoption did not have a material impact on our financial position, results of operations or cash flows.

(2) Acquisition

On January 10, 2019, our wholly owned subsidiary VSE Aviation, Inc. ("VSE Aviation") acquired 100% of the equity of 1st Choice Aerospace Inc. ("1st Choice Aerospace"), a provider of maintenance, repair and overhaul ("MRO") services and products for new generation and legacy commercial aircraft. 1st Choice Aerospace has operations in Florida and Kentucky. We retained key members of 1st Choice Aerospace's management team under three-year employment contracts with five-year non-compete covenants.

We may be required to make earn-out payments of up to $40 million if 1st Choice Aerospace meets certain financial targets during 2019 and 2020. In January 2020, after obtaining the sellers' consent to our proposed amount of the earn-out payment for the 2019 performance year, we made a payment of approximately $31.7 million to satisfy the 2019 performance year obligation. Included in earn-out obligation on our June 30, 2020 balance sheet is approximately $3.6 million classified as the current portion of earn-out obligation, which represents the fair value of such earn-out obligation for the 2020 performance year. Changes in the fair value of the earn-out obligations are recognized in earnings in the period of change through settlement.

(3) Divestiture

Prime Turbines Sale

On January 28, 2020, VSE’s subsidiary VSE Aviation, Inc. entered into two definitive agreements to sell (1) Prime Turbines LLC ("Prime Turbines") and (2) certain related inventory assets to PTB Holdings USA, LLC ("PTB"). The transaction was completed on February 26, 2020 with cash proceeds of $20.0 million, including final working capital adjustments, and a note receivable of $8.3 million received as consideration.

Prime Turbines is a provider of turboprop aircraft engine repair, maintenance and overhaul, including for Pratt & Whitney Canada PT6A and PT6T series engines. Prime Turbines was included in our Aviation segment.

The divestiture of Prime Turbines will not have a material impact on our operations and financial results, and therefore does not qualify for reporting as a discontinued operation.

As a result of the sale of the business and inventory, we derecognized the assets and liabilities of Prime Turbines and recorded a $7.5 million non-cash loss in the first quarter of 2020 which is reflected within loss on sale of a business entity and certain assets in the consolidated statements of income. The note receivable from PTB of $5.4 million and $1.4 million is included in other assets, and other current assets in our consolidated balance sheets as of June 30, 2020, respectively, which represents the present value of the consideration to be received with an imputed interest rate discount.

CT Aerospace Asset Sale

On June 26, 2020, VSE's subsidiary VSE Aviation, Inc. entered into an asset purchase agreement to sell CT Aerospace, LLC ("CT Aerospace") inventory and certain assets to Legacy Turbines, LLC ("Legacy Turbines") for $6.9 million, with a note receivable received as consideration. As a result of the sale, the we recorded a $678 thousand non-cash loss during the three months ended June 30, 2020 which is reflected within loss on sale of a business entity and certain assets in the consolidated statements of income. The note receivable from Legacy Turbines of $6.7 million, net of a variable discount of $275 thousand, is included in other assets in our consolidated balance sheets as of June 30, 2020.

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VSE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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(4) Revenue

Disaggregated Revenue

Our revenues are derived from contract services performed for the United States Department of Defense ("DoD") agencies or federal civilian agencies and from the delivery of products to our customers. Our customers also include various other government agencies and commercial clients.

A summary of revenues for our operating segments by customer for the three and six months ended June 30, 2020 are as follows (in thousands):



	Three months ended June 30, 2020
	Aviation		Fleet		Federal and Defense		Total
DoD	$	837	$	5,095	$	58,955	$	64,887
Other government	214		57,602		5,850		63,666
Commercial	31,170		8,525		467		40,162
	$	32,221	$	71,222	$	65,272	$	168,715



	Six months ended June 30, 2020
	Aviation		Fleet		Federal and Defense		Total
DoD	$	837	$	9,662	$	118,522	$	129,021
Other government	244		97,417		11,995		109,656
Commercial	89,220		17,347		889		107,456
	$	90,301	$	124,426	$	131,406	$	346,133

A summary of revenues for our operating segments by customer for the three and six months ended June 30, 2019 are as follows (in thousands):



	Three months ended June 30, 2019
	Aviation		Fleet		Federal and Defense		Total
DoD	$	260	$	6,461	$	68,359	$	75,080
Other government	651		42,254		11,950		54,855
Commercial	54,086		5,090		—		59,176
	$	54,997	$	53,805	$	80,309	$	189,111



	Six months ended June 30, 2019
	Aviation		Fleet		Federal and Defense		Total
DoD	$	1,155	$	11,303	$	125,323	$	137,781
Other government	651		85,136		22,727		108,514
Commercial	102,561		9,070		1,104		112,735
	$	104,367	$	105,509	$	149,154	$	359,030

We changed our disaggregated revenue by type presentation below in the first quarter of 2020 to better align with our operating segments. Revenues from our Aviation and Fleet segment are derived from repair and distribution services primarily through shorter term purchase orders from customers. Our Federal and Defense segment's revenue results from services provided on longer term contracts, including cost plus, fixed price and time and materials contract types. This change provides a clearer picture of the nature

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VSE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

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of each segment's contractual arrangements, how revenues derived from those contracts are affected by economic factors, and underlying performance trends impacting each segment. Additionally, the presentation is more in-line with how each segments' results are evaluated by our Chief Executive Officer in deciding how to allocate resources and evaluate performance.

The change in disaggregated revenue presentation did not result in any changes in our reported segments and had no effect on the reported results of operations.

A summary of revenues by type and operating segment for the three and six months ended June 30, 2020 is as follows (in thousands):



	Three months ended June 30, 2020
	Aviation		Fleet		Federal and Defense		Total
Repair	$	16,848	$	—	$	—	$	16,848
Distribution	15,373		71,222		—		86,595
Cost Plus Contract	—		—		23,307		23,307
Fixed Price Contract	—		—		36,079		36,079
T&M Contract	—		—		5,886		5,886
Total	$	32,221	$	71,222	$	65,272	$	168,715



	Six months ended June 30, 2020
	Aviation		Fleet		Federal and Defense		Total
Repair	$	49,656	$	—	$	—	$	49,656
Distribution	40,645		124,426		—		165,071
Cost Plus Contract	—		—		42,988		42,988
Fixed Price Contract	—		—		74,995		74,995
T&M Contract	—		—		13,423		13,423
Total	$	90,301	$	124,426	$	131,406	$	346,133

A summary of revenues by type and operating segment for the three and six months ended June 30, 2019 is as follows (in thousands):



	Three months ended June 30, 2019
	Aviation		Fleet		Federal and Defense		Total
Repair	$	29,560	$	—	$	—	$	29,560
Distribution	25,437		53,805		—		79,242
Cost Plus Contract	—		—		33,496		33,496
Fixed Price Contract	—		—		19,153		19,153
T&M Contract	—		—		27,660		27,660
Total	$	54,997	$	53,805	$	80,309	$	189,111

-14-

VSE CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

Table of Contents



	Six months ended June 30, 2019
	Aviation		Fleet		Federal and Defense		Total
Repair	$	54,994	$	—	$	—	$	54,994
Distribution	49,373		105,509		—		154,882
Cost Plus Contract	—		—		61,336		61,336
Fixed Price Contract	—		—		39,020		39,020
T&M Contract	—		—