VSE Investor Overview & 10-Year Retrospective FY 2014 - PowerPoint PPT Presentation

VSE Investor Overview & 10-Year Retrospective FY 2014 Christine Kaineg, VSE Investor Relations 703-329-3263 or crkaineg@vsecorp.com 1

Lines of Business Logistics Service life extension and performance enhancement of aging mission critical fleets, including vehicles, ships and aircraft on commercial and federal markets. Supply Chain Management Maintenance, Repair and (~70% of Revenue) Overhaul (~20% of Revenue) • Total life cycle end ‐ to ‐ end product • One of the nation's leading providers of movement including complete logistics maintenance, reset, overhaul and visibility and asset tracking. Warehouse modernization support, ensuring land, management with extensive facilities sea and air systems are capable of expertise and large scale inventory performing their operational missions control procedures. throughout their lifecycle. Energy, IT & Management Consulting Services (~10% of Revenue) Professional competencies in strategic planning, clean energy solutions, policy analysis, performance metrics, project management, enterprise architecture, data mining, public protection/security, and technical and software engineering 2

Market Segment Overview Supply Chain IT and Consulting Aviation Services Federal Services Management Services • Logistics • Logistics • Logistics • IT Services • Field Support • Maintenance, Repair • Sustainment • Management and Overhaul Consulting • Warehouse • Engineering Management • Parts Supply • Process Improvement • Platform • Program • Warehouse Modernization • Medical Logistics Management Management • Research & • Energy and • Demand Forecasting Development Environment Consulting Services • Source/Procurement • Program Management • Customer Inventory Management • Foreign Military Sales (FMS) • Reverse Engineering 3

Diverse Groups & Subsidiaries Wheeler Bros., Inc. Supply Chain Management, Procurement Legacy System Repair Parts; Reverse Engineering; Material Planning and Sourcing; Logistics Visibility and Asset VSE Aviation, Inc. Tracking; Warehouse Management Federal Services Group Maintenance, repair and overhaul and Maintenance, Repair and Overhaul, parts supply for corporate and regional Equipment and Vehicle Repair/Reset; jet aircraft engines and engine Foreign Military Sales; Ship Transfer, accessories. Includes Prime Turbines, CT Modernization and Repair; Aircraft Aerospace, Kansas Aviation and Air Parts Maintenance, Corrosion Control; & Supply Co. Engineering; Advanced Technologies; Transportation Coordination; Procurement/Sourcing; Warehouse Management; Government Seized and Akimeka Forfeited Property; Munitions & Information Technology Services and Ordnance Engineering; Facility Solutions– Medical Logistics; Medical Decontamination; Command & Control; E ‐ health; Prognostics/Diagnostics Information Assurance; Recovery Case; Energetics Public Safety; Web ‐ Based Technologies; Enterprise Architecture; Data Migration, Grid Modernization, Energy Efficiency, Management Mining and Warehousing Clean Energy, Energy Policy, and Infrastructure Protection and Resilience 4

VSE 10-Year Financial Data VSE Trajectory 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenue ($M) $280.1 $364.0 $603.2 $937.4 $974.2 $811.0 $580.8 $546.8 $471.6 $424.1 Net Income ($M) $6.2 $7.8 $14.1 $19.0 $24.0 $23.7 $20.5 $21.3 $22.8 $19.4 Net Margin 2.2% 2.1% 2.3% 2.0% 2.5% 2.9% 3.5% 3.9% 4.8% 4.6% Shareholders' Equity (BOY) $23M $30M $38M $56M $76M $101M $124M $144M $164M $187M VSE Return on Equity (ROE) 26.8% 25.8% 36.9% 33.8% 31.6% 23.4% 16.6% 14.8% 13.9% 10.4% Long Term Debt ($M) $0M $0M $0M $0M $0M $11M $145M $116M $65M $23M Split adjusted Earnings Per Share $1.33 $1.64 $2.85 $3.75 $4.68 $4.56 $3.93 $4.03 $4.29 $3.62 Diluted Earnings Per Share $1.29 $1.61 $2.82 $3.74 $4.67 $4.53 $3.90 $4.01 $4.28 $3.61 Dividends $0.115 $0.135 $0.155 $0.175 $0.195 $0.23 $0.27 $0.31 $0.35 $0.39 2005 – 2014 CAGRs: Revenue CAGR = 4.2% Net Income CAGR = 12.1% Shareholders Equity CAGR = 23.3% EPS growing from $1.29 to $3.61 CAGR = 10.8% 5

Mergers, Divestitures & Acquisitions $1,000.0 $974.2 $937.4 $900.0 $811.0 $800.0 Acquired $700.0 Acquired Merged $600.0 $580.8 $603.2 $546.8 $500.0 Acquired $471.6 Acquired $424.1 $400.0 Divested $364.0 Acquired $300.0 Jan. 2015 $280.1 $200.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6

7 Debt (End of Year)

Enterprise Value 8

Shareholders’ Equity 9

VSE Snapshot 10 Chart depicts split adjusted annual dividends per share

Revenue & Key Events Timeline $1,000.0 Iraq/Afghanistan War support contract bookings $974.2 2005-2014 Revenue CAGR = 4.2% reach nearly $1B (CECOM R2) NASDAQ CAGR: 8.07% $937.4 $900.0 Acquisition of G&B (2008) Acquisition of Akimeka, LLC (Aug 2010) $811.0 $800.0 $700.0 U.S. enters recession leading to financial & budget crisis . Withdrawal from middle east begins to accelerate. $600.0 $580.8 $603.2 $546.8 Acquisition of WBI (June 2011) $500.0 $471.6 Acquisition of ICRC (June 2007) $424.1 $400.0 $364.0 Acquisition of VSE Aviation, Inc. (Jan 2015) $300.0 Won Iraq/Afghanistan War Support Contracts $280.1 (CECOM R2 and Tanker Coating) $200.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 11

Revenue & Profit by Lines of Business Revenue Profit by Capability 12

2014 Financial Summary Source: 2014 VSE Annual Report 13

2014 Financial Summary Source: 2014 VSE Annual Report 14 All per share data has been adjusted for stock splits

2014 Financial Summary Source: 2014 VSE Annual Report 15 All per share data has been adjusted for stock splits

2014 Financial Summary Source: 2014 VSE Annual Report ROE is calculated as Net Income divided by Beginning of Year Shareholders Equity 16 All per share data has been adjusted for stock splits

“Proud of Our Past. Excited About the Future.” VSE Investor Relations: Christine Kaineg 6348 Walker Lane Alexandria, Virginia 22310 Phone: (703) 329-3263 Email: crkaineg@vsecorp.com 17 VSE Corporation Proprietary Information

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Summary Income Statement FY 2014 FY 2013 For years ending December 31 $ $ Revenues 424,071 471,638 Contract Costs 383,001 424,250 Gross Profit 41,070 47,388 Selling, General and Administrative 4,140 3,285 Discontinued Operations ‐ ‐ Interest Expense Income (net) 3,983 5,789 Income Before Taxes 32,947 38,314 Net Income 19,365 22,852 Basic Earnings Per Share 3.62 4.29 Diluted Earnings Per Share 3.61 4.28 In thousands, except share and per share amounts 19

Summary Balance Sheet ASSETS FY 2014 FY 2013 $ $ Cash and Cash Equivalents 263 220 Receivables (net) 59,391 78,387 Goodwill and Intangibles (net) 164,261 174,309 Inventories 49,363 39,315 Property and Equipment (net) 52,911 57,738 Other 29,141 30,560 Total Assets 355,330 380,529 LIABILITIES FY 2014 FY 2013 $ $ Accounts Payable & Accrued Expenses 52,669 56,418 Bank Debt 23,563 64,487 Long Term Lease Obligations 24,584 25,721 Other 49,025 25,061 Total Liabilities 149,841 193,726 STOCKHOLDERS' EQUITY FY 2014 FY 2013 $ $ Total Stockholders' Equity 205,489 186,803 TOTAL LIABILITY & EQUITY FY 2014 FY 2013 $ $ Total Liabilities and Stockholders' Equity 355,330 380,529 20 In thousands, except share and per share amounts

Selected Quarterly Data In thousands, except share and per share amounts 21

Stock Trends 22

Year End Stock Price & Annual Range 2005-2014 STOCK PRICE CAGR = 12.1 % NASDAQ CAGR: 8.07% Chart shows annual high/low stock price range 23 All per share data has been adjusted for stock splits

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Operational Structure (Corporate Level) CEO, President, and COO M.A. Gauthier CFO General Counsel Corporate Secretary T.R. Loftus Executive Vice President T. M. Kiernan Vice President Contracts & Human Resources Procurement T. Bailey C.R. Douglas Vice President Vice President IT, Energy & Management Federal Services Group Supply Chain Segment Consulting Segment J.R. Brown Wheeler Bros., Inc. Includes: Energetics C. Wheeler Global Maritime Services N. Margolis J.R. Brown VSE Aviation, Inc. ELD/SED: J.M. Coritz Akimeka P. Goffredi FSS/CED: J.C. Pettit J. T. Harris VSE International Corp. H.W. Jones 25

Net Margin 6.0% 2005-2014 NET MARGIN CAGR = 7.6% 5.0% 4.8% 4.6% 4.0% 3.9% 3.5% 3.0% 2.9% 2.5% 2.3% 2.2% 2.1% 2.0% 2.0% 1.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 26

P/E Range w/ Year End P/E 30.00 25.00 20.00 18.22 17.15 15.85 15.00 11.20 10.45 10.31 10.00 9.62 7.23 6.27 6.18 5.00 0.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 High P/E 15.91 15.80 23.86 13.24 10.46 11.77 8.44 6.73 12.17 20.70 Low P/E 7.94 6.08 11.68 6.05 4.16 5.84 5.35 5.18 5.17 11.33 Year End P/E Ratio 15.85 10.31 17.15 10.45 9.62 7.23 6.18 6.27 11.20 18.22 27 All per share data has been adjusted for stock splits