Latest news with #VSEC
Yahoo
01-08-2025
- Business
- Yahoo
VSE Corp (VSEC) Q2 2025 Earnings Call Highlights: Record Revenue and Strategic Transformation
Release Date: July 31, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points VSE Corp (NASDAQ:VSEC) achieved record revenue, profitability, and margins in Q2 2025, with a 41% increase in consolidated revenues to $272 million. The company completed the sale of its fleet segment, marking its transformation into a pure play aviation aftermarket company, focusing on higher growth and margin opportunities. VSE Corp (NASDAQ:VSEC) acquired Turbine Weld Industries, expanding its engine service capabilities and deepening OEM relationships. The company secured a new $700 million credit facility, providing more financial flexibility and a lower cost of capital to support growth. VSE Corp (NASDAQ:VSEC) reported strong cash flow generation, with an improvement of approximately $28 million in free cash flow compared to Q2 2024. Negative Points The company experienced some softness in the aftermarket at the beginning of Q2 2025 due to uncertainty around tariffs. VSE Corp (NASDAQ:VSEC) is facing challenges in the USM business, leading to a strategic shift away from speculative parts trading, which may result in reduced topline revenue. The company is still working on final approvals and supply chain issues for its OEM licensed fuel control program, delaying new program launches. There is a need for continued integration efforts and synergy capture from recent acquisitions to support margin expansion. VSE Corp (NASDAQ:VSEC) faces seasonality in its margins, with typically higher margins in the first half of the year due to lower inventory costs. Q & A Highlights Warning! GuruFocus has detected 7 Warning Sign with VSEC. Q: Can you discuss the organic growth outlook for the second half of the year, particularly in commercial transport versus business aviation? A: John Cuomo, President and CEO, explained that the engine markets, both in business and general aviation (BGA) and commercial sectors, continue to be robust. The commercial market is stronger than the BGA market, with commercial growth in high single digits to low double digits, aided by organic growth. Overall, organic growth is expected to be in the mid to high single digits before any share gain. Q: What are the expected impacts of the "One VSE" initiative on margins, particularly in 2026 and 2027? A: John Cuomo noted that the integration of acquisitions is ahead of schedule, contributing to margin improvements. While they are capturing synergies, particularly from the Telstrom acquisition, they see continued opportunities for margin expansion as they integrate further. Q: How sustainable is the free cash flow, and what are the working capital considerations for the second half of the year? A: Adam Cohen, CFO, stated that they expect strong free cash flow improvement in the second half due to less working capital-intensive acquisitions and improved working capital profiles. They anticipate neutralizing the larger working capital use seen in the first half. Q: Can you elaborate on the USM business strategy shift and its expected impact on repair margins? A: John Cuomo mentioned that the USM business is transitioning from a transactional parts trading model to a more integrated approach, supporting new part distribution and repair capabilities. This strategy aims to enhance customer service and focus on margin expansion by insourcing work. Q: What is the outlook for the Honeywell fuel control program and similar opportunities? A: John Cuomo indicated that while the Honeywell fuel control program is performing well, they are focused on perfecting execution before pursuing new programs. They expect to provide a strategy update in the first quarter of next year. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Yahoo
30-07-2025
- Business
- Yahoo
VSE Corporation (NASDAQ:VSEC) Reports Strong Q2
Aviation and fleet aftermarket services provider VSE Corporation (NASDAQ:VSEC) reported Q2 CY2025 results beating Wall Street's revenue expectations , with sales up 2.3% year on year to $272.1 million. Its non-GAAP profit of $0.97 per share was 38.2% above analysts' consensus estimates. Is now the time to buy VSE Corporation? Find out in our full research report. VSE Corporation (VSEC) Q2 CY2025 Highlights: Revenue: $272.1 million vs analyst estimates of $265.2 million (2.3% year-on-year growth, 2.6% beat) Adjusted EPS: $0.97 vs analyst estimates of $0.70 (38.2% beat) Adjusted EBITDA: $43.45 million vs analyst estimates of $39 million (16% margin, 11.4% beat) Operating Margin: 8.3%, up from 2.3% in the same quarter last year Free Cash Flow was $6.30 million, up from -$21.47 million in the same quarter last year Market Capitalization: $2.93 billion Company Overview With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets. Revenue Growth Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, VSE Corporation's sales grew at a decent 8.3% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. VSE Corporation's annualized revenue growth of 22.5% over the last two years is above its five-year trend, suggesting its demand recently accelerated. We can dig further into the company's revenue dynamics by analyzing its most important segment, Aviation. Over the last two years, VSE Corporation's Aviation revenue (aftermarket parts, maintenance) averaged 46.3% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company's performance. This quarter, VSE Corporation reported modest year-on-year revenue growth of 2.3% but beat Wall Street's estimates by 3.4%. Looking ahead, sell-side analysts expect revenue to grow 5.3% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will face some demand challenges. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Operating Margin Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes. VSE Corporation was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.4% was weak for an industrials business. This result isn't too surprising given its low gross margin as a starting point. On the plus side, VSE Corporation's operating margin rose by 5.4 percentage points over the last five years, as its sales growth gave it immense operating leverage. This quarter, VSE Corporation generated an operating margin profit margin of 8.3%, up 6 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead. Earnings Per Share We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable. VSE Corporation's EPS grew at a remarkable 14.2% compounded annual growth rate over the last five years, higher than its 8.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded. We can take a deeper look into VSE Corporation's earnings to better understand the drivers of its performance. As we mentioned earlier, VSE Corporation's operating margin expanded by 5.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For VSE Corporation, its two-year annual EPS growth of 4.3% was lower than its five-year trend. We hope its growth can accelerate in the future. In Q2, VSE Corporation reported adjusted EPS at $0.97, up from $0.64 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects VSE Corporation's full-year EPS of $3.36 to grow 16%. Key Takeaways from VSE Corporation's Q2 Results We were impressed by how significantly VSE Corporation blew past analysts' EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street's estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 4% to $147 immediately after reporting. Indeed, VSE Corporation had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
29-06-2025
- Business
- Yahoo
The 5 Most Interesting Analyst Questions From VSE Corporation's Q1 Earnings Call
VSE Corporation's first quarter results were shaped by the company's completed exit from fleet services and a sharp focus on aviation aftermarket growth. Management credited strong demand for aviation maintenance and distribution, alongside the integration of recent acquisitions, as primary drivers of performance. CEO John Cuomo described the quarter as a turning point, with the divestiture of the fleet segment allowing VSE to operate as a 'pure-play provider of aviation aftermarket parts and services.' The positive market reaction reflected optimism around these strategic shifts and the company's ability to execute on improved margins and operational focus. Is now the time to buy VSEC? Find out in our full research report (it's free). Revenue: $256 million vs analyst estimates of $274.3 million (57.7% year-on-year growth, 6.7% miss) Adjusted EPS: $0.78 vs analyst estimates of $0.58 (35.3% beat) Adjusted EBITDA: $40.35 million vs analyst estimates of $32.6 million (15.8% margin, 23.8% beat) Operating Margin: 9.6%, down from 14.9% in the same quarter last year Market Capitalization: $2.64 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Ken Herbert (RBC Capital Markets) asked about the sustainability of margin improvements and the impact of integration synergies. CFO Adam Cohn responded that Q1 is typically strong due to inventory mix, and incremental synergy benefits are expected throughout the year, but guidance remains appropriately conservative. Jeff Van Sinderen (B. Riley Securities) probed on the acceleration of acquisition integrations and the timeline for completion. CEO John Cuomo explained that while some integration steps are being prioritized for faster benefit, full integration will take up to 18 months. Michael Carroll (Truist) questioned which metrics best gauge demand trends and the impact of industry cycles. Cuomo emphasized traffic data and backlog with OEMs as the most reliable indicators, noting that any slowdown would likely be gradual rather than abrupt. Louie DiPalma (William Blair) inquired about the origin and potential expansion of the Eaton partnership. Cuomo described the deal as a result of close OEM collaboration and noted that successful execution could open further opportunities with Eaton. Josh Sullivan (Benchmark) asked about expanding component repair capacity at TCI and the importance of turn times. Cuomo stated that capacity expansion is underway and highlighted that competitive turn times are central to VSE's value proposition in engine services. In upcoming quarters, the StockStory team will focus on (1) the pace and effectiveness of acquisition integrations, especially the realization of cost and revenue synergies, (2) the scaling of new OEM programs like Eaton and Honeywell Fuel Control, and (3) the company's ability to maintain margins and manage inventory in the face of macro and tariff-related uncertainty. Progress on these fronts will be key markers for monitoring VSE's execution of its aviation-focused strategy. VSE Corporation currently trades at $126.07, up from $117.87 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
13-06-2025
- Business
- Yahoo
2 Growth Stocks with All-Star Potential and 1 to Ignore
Growth boosts valuation multiples, but it doesn't always last forever. Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022. The risks that can come from buying these assets is precisely why we started StockStory - to isolate the long-term winners from the losers so you can invest with confidence. On that note, here are two growth stocks with significant upside potential and one climbing an uphill battle. One-Year Revenue Growth: +31.2% With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets. Why Do We Think Twice About VSEC? Gross margin of 12.3% reflects its high production costs Cash-burning history makes us doubt the long-term viability of its business model ROIC of 5% reflects management's challenges in identifying attractive investment opportunities At $141 per share, VSE Corporation trades at 38.3x forward P/E. Check out our free in-depth research report to learn more about why VSEC doesn't pass our bar. One-Year Revenue Growth: +21.6% Moving away from a low margin storage device management chips in one of the biggest semiconductor business model pivots of the past decade, Marvell Technology (NASDAQ: MRVL) is a fabless designer of special purpose data processing and networking chips used by data centers, communications carriers, enterprises, and autos. Why Do We Like MRVL? Market share has increased this cycle as its 18.9% annual revenue growth over the last five years was exceptional Exciting sales outlook for the upcoming 12 months calls for 31.9% growth, an acceleration from its two-year trend Additional sales over the last five years increased its profitability as the 23.5% annual growth in its earnings per share outpaced its revenue Marvell Technology is trading at $69.40 per share, or 23.5x forward P/E. Is now a good time to buy? See for yourself in our full research report, it's free. One-Year Revenue Growth: +22.4% Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE:PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States. Why Is PFSI a Top Pick? Incremental sales significantly boosted profitability as its annual earnings per share growth of 57.4% over the last two years outstripped its revenue performance Annual tangible book value per share growth of 20.5% over the past five years was outstanding, reflecting strong capital retention this cycle Capital strength is on track to rise over the next 12 months as its 20.5% projected tangible book value per share growth implies profitability will accelerate from its two-year trend PennyMac Financial Services's stock price of $98.52 implies a valuation ratio of 1.2x forward P/B. Is now the right time to buy? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-06-2025
- Business
- Yahoo
3 Inflated Stocks in Hot Water
The stocks in this article are all trading near their 52-week highs. This strength often reflects positive developments such as new product launches, favorable industry trends, or improved financial performance. While momentum can be a leading indicator, it has burned many investors as it doesn't always correlate with long-term success. Keeping that in mind, here are three stocks that are likely overheated and some you should look into instead. One-Month Return: +11.2% With roots dating back to 1959 and a strategic focus on extending the life of transportation assets, VSE Corporation (NASDAQ:VSEC) provides aftermarket parts distribution and maintenance, repair, and overhaul services for aircraft and vehicle fleets in commercial and government markets. Why Do We Think Twice About VSEC? Gross margin of 12.3% reflects its high production costs Cash burn makes us question whether it can achieve sustainable long-term growth ROIC of 5% reflects management's challenges in identifying attractive investment opportunities At $130.19 per share, VSE Corporation trades at 35.5x forward P/E. If you're considering VSEC for your portfolio, see our FREE research report to learn more. One-Month Return: +5.9% Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries. Why Are We Hesitant About RTX? Estimated sales growth of 4% for the next 12 months implies demand will slow from its two-year trend Earnings per share were flat while its revenue grew over the last five years, partly because it issued new shares Underwhelming 2.5% return on capital reflects management's difficulties in finding profitable growth opportunities RTX is trading at $136.23 per share, or 21.9x forward P/E. To fully understand why you should be careful with RTX, check out our full research report (it's free). One-Month Return: +3.6% Pioneering the shift from bulky, short-term heart monitors to sleek, wire-free patches, iRhythm Technologies (NASDAQ:IRTC) provides wearable cardiac monitoring devices and AI-powered analysis services that help physicians detect and diagnose heart rhythm disorders. Why Does IRTC Worry Us? Issuance of new shares over the last five years caused its earnings per share to fall by 5.6% annually while its revenue grew Negative free cash flow raises questions about the return timeline for its investments 124× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings iRhythm's stock price of $140.65 implies a valuation ratio of 78.5x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including IRTC in your portfolio, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
