VSE Corp. (NASDAQ:VSEC) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 11:00 am ET
Greetings and welcome to the VSE Corporation Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to your host, Noel Ryan, Head of Investor Relations. Thank you. You may begin.
Thank you. Welcome to VSE Corporation Second Quarter 2020 results conference call. Leading the call today are President and CEO, John Cuomo and Chief Financial Officer, Tom office the presentation we are sharing today is on our website and we encourage you to follow along accordingly. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. We are using non-GAAP financial measures in our presentation. The appropriate GAAP financial reconciliations are incorporated into our presentation where available, which is posted on our website. All percentages in today's discussion refer to year-over-year progress, except as noted. At the conclusion of our prepared remarks, we will open the line for questions.
With that, I would like to turn the call over to John Cuomo for his prepared remarks.
Thank you Noel. Welcome everyone and thank you for taking the time to join our call today. We are now halfway through the year that will long be known as one of great challenge and resilience. During a period of uncertain macroeconomic conditions and more specifically, one in which commercial air traffic fell to historic lows. Our team quickly adapted to rapidly evolving market dynamics with a series of targeted divestitures, cost reductions and new business development initiatives. Despite the market conditions, VSE delivered $0.60 of adjusted EPS and strong free cash flow of $14.9 million continuing to pay both our quarterly dividend and reduce debt within the quarter. Our VSE results first culture led to our second quarter not only being about responding to the market during a global pandemic, but one where we exceeded our internal forecast, sees new business opportunities and continue to execute on our focused strategy. As expected, our second quarter results were impacted by the ongoing effects of the COVID-19 pandemic, particularly within our Aviation segment, which reported a 31% year-over-year decline in revenue excluding the impact of the prime turbines divestiture. This decline in commercial aviation activity was partially offset by comparatively stable demand from our government customers who on a combined basis represented about 75% of total revenue in the second quarter. Turning now to slide three of the conference call presentation. Before we move into a detailed review of our second quarter results, I'd like to begin with an update on our corporate strategy and specifically the actions taken to execute on this strategy since our last quarterly update. New business development remains the top priority across all of our operating segments.
During the first half of 2020, our Federal and Defense Services