VSE Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

Discontinued Operations

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

In May 2023, we entered into a definitive agreement to sell our Federal and Defense (“FDS”) business to an affiliate of Bernhard Capital Partners Management LP. On September 27, 2023, the parties mutually agreed to terminate the agreement. Neither party paid any termination fees. We still intend to pursue divestiture of the segment with an entity that can support its growth plans. As a result of the May 2023 agreement, and because we still intend to divest the business, in accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, results of operations for FDS are reported in income from discontinued operations within the consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022, and the carrying value of the related assets and liabilities are presented within assets and liabilities held-for-sale on the consolidated balance sheets as of September 30, 2023 and December 31, 2022.

The results of operations from discontinued operations for the three and nine months ended September 30, 2023 and 2022, consist of the following (in thousands):


	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Revenues	$	61,622	$	75,108	$	195,507	$	217,979
(Loss) income from discontinued operations before income taxes	(3,580)		2,166		(4,199)		5,680
Provision for income taxes	(1,026)		446		(1,410)		1,212
Net (loss) income from discontinued operations	$	(2,554)	$	1,720	$	(2,789)	$	4,468

The assets and liabilities reported as held-for-sale consist of the following (in thousands):


		September 30,		December 31,
		2023		2022
Assets
	Cash and cash equivalents	$	162	$	173
	Receivables, net	13,282		14,340
	Unbilled receivables	26,641		30,898
	Inventories	283		270
	Other current assets	5,210		9,244
	Property and equipment, net	6,493		7,467
	Intangible assets, net	3,505		4,066
	Goodwill	31,575		31,575
	Operating lease right-of-use assets	10,870		12,854
	Other assets	—		51
	Total assets held-for-sale(a)	$	98,021	$	110,938
Liabilities
	Accounts payable	$	25,641	$	31,096
	Accrued expenses and other current liabilities	20,044		21,833
	Long-term operating lease obligations	10,373		13,186
	Deferred tax liabilities	4,340		4,635
	Total liabilities held-for-sale(a)	$	60,398	$	70,750
(a) Amounts have been classified as current for the current period consolidated balance sheet and as current and non-current in the consolidated balance sheet for the prior year period.

Selected financial information related to cash flows from discontinued operations is as follows (in thousands):


	For the nine months ended September 30,
	2023		2022
Depreciation and amortization	$	1,849	$	2,749
Purchases of property and equipment	$	98	$	293
Stock-based compensation	$	85	$	41