Thank you, Devin. Welcome to VSE Corporation's First Quarter 2024 Results Conference Call. We will begin with remarks from John Cuomo, President and CEO. Also on the call this morning are Steve Griffin, Chief Financial Officer; and Tarang Sharma, VP, Controller and Head of Corporate Development. 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 those 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 and posted on our website. All percentages in today's discussion refer to year-over-year progress, except where 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.

Good morning. Thank you for being a part of today's first quarter conference call. Today, we share not only the exceptional performance of our first quarter, but also the remarkable strides our teams are making in executing our operational and strategic plans. As I mark my fifth year with VSE, it's truly exciting to witness our story and vision translating into such strong results. Let's begin on Slide 3, where I will provide an update on our Q1 performance. In the first quarter, we delivered company-wide revenue growth of 28%. This included both record revenue and record profitability for our Aviation segment. The strong aviation revenue growth was driven by balanced results from both our distribution and MRO revenue channels. Distribution revenue growth was driven by the expansion of existing OEM partnerships and strong execution of both new and existing programs. MRO revenue growth was driven by market share gains and expanded repair capabilities and product offerings, supported by strong end-market activity. The Aviation segment's record profitability and 17% adjusted EBITDA margins were driven by contributions from new distribution programs, MRO market share gains, and our new fuel control program. During the quarter, fleet segment revenue was up 5%, driven by increased sales volume from e-commerce customers and fulfillment partners, supported by disciplined volume expansion at our Memphis distribution center and expanded product offerings, supporting new and existing customers within our commercial sales channel. This growth was partially offset by a decline in revenue from the United States Postal Service, driven by their implementation of a new fleet management information system, which has resulted in a temporary slowdown in maintenance-related activities and, therefore, parts usage. Now let's move to Slide 3, where I will provide an update on our strategic initiatives and program implementation. First, in April, we announced the closing of our previously announced acquisition of Turbine Controls, or TCI, a leading provider of aviation aftermarket maintenance, repair, and overhaul services, specifically supporting complex engine components and engine and airframe accessories. The acquisition of TCI is a strategic win for VSE and highly complementary to our existing MRO business. TCI's 45-year track record of excellence in customer service, industry-leading MRO capabilities, and focus on OEM partnerships is 100% aligned with VSE's commitment and long-term strategy to provide world-class OEM support. Their partnership with industry-leading Tier 1 OEMs provides both near- and long-term growth opportunities. We welcome them to the VSE family and look forward to immediate contributions from the team. Second, I'd like to provide an update on aviation program execution and recent acquisitions. In the fourth quarter, we announced the expansion of our Private Whitney Canada distribution agreement to now support Europe, the Middle East, and Africa. The program launch remains on track with the recent opening of a new distribution facility in Hamburg, Germany, and the initial shipments to local customers have happened in the first quarter. Next, the launch of our new fuel control program, also announced in the fourth quarter, is outpacing early expectations and is expected to drive incremental margin opportunities. This is a new revenue channel and capability for VSE. The leadership team managing this program continues to deliver outstanding work as they transition this program from Honeywell and work closely with the engine OEMs and aftermarket customers on the program implementation. Additionally, the expansion of our existing Kansas facility will become the future center of excellence for this fuel control program and is on track to be operational before year-end. The integration of Desser Aerospace is in process and remains on track to be completed over the next 12 months, and it's expected to drive additional revenue and margin expansion. In addition to the execution and implementation work above, during the quarter, we were awarded new business by entering a renewal and significant expansion of a 10-year $175 million agreement supporting an engine accessories OEM. Finally, in February, we entered into multiple agreements to sell the Federal and Defense segment assets. This transition work is on schedule to be completed in the second quarter. Before I turn the call over to Steve for an update on our financial performance, I'd like to address our leadership team transition. Steve Griffin, our CFO, will be leaving VSE to pursue an opportunity outside of the aerospace industry. He will remain with the company through the end of the month and then serve as a consultant and advisor to ensure a seamless transition of his responsibilities. I want to take a moment to express my personal gratitude to Steve. He has been a partner to me in every sense of the word during this first transition of the VSE transformation story. His contributions, exceptional leadership, and strong business and market expertise have been invaluable to me. I wish him, his wife, and their three children all the best as they move to Boston and embark on their next journey. Tarang Sharma, VSE's current Vice President and Controller and Head of Corporate Development, has been appointed interim CFO effective May 27. Tarang joined VSE in 2015 and has been instrumental in all aspects of our business transformation. Tarang has been by my side since day one when I joined five years ago. The VSE Board and I have full confidence in Tarang and his ability to lead VSE's financial operations. With that, I now turn the call over to you, Steve, to discuss our financial performance.

Thank you, John. Working with you and the VSE leadership team and the support of the partners and shareholders of VSE has been an honor, and I'm extremely proud to have been a part of such a talented team that was able to accomplish this strategic pivot of a 60-year-old business. It's a difficult personal decision for me to leave VSE. I'll be joining another public company in the healthcare industry based in the Boston area to be closer to my family, but I look forward to following the company's future successes, and I'm confident that Tarang, Michael, and the entire finance team are ready to support the next phase of growth. Now let's turn to Slides 5 and 6 of the conference call materials, where I'll provide an overview of our first quarter financial performance. VSE generated $242 million of revenue in the quarter, an increase of 28%, led by an increase in aviation revenues of 43% and fleet revenues of 5%. Adjusted EBITDA of $32 million increased 37% or $9 million compared to the first quarter of 2023. Aviation drove this growth, up $9 million compared to the same period in the prior year. Adjusted net income increased 51% to $14 million, and adjusted diluted earnings per share increased 23% to $0.87 per share. Now turning to Slide 7, we'll cover our Aviation segment's first quarter results in more detail. Revenue increased 43% compared to the first quarter of 2023 to a record $162 million. Both distribution and MRO businesses were strong contributors, up 38% and 58% respectively. The 38% increase in distribution revenue was driven by strong execution of legacy OEM programs, the ramp-up of new OEM programs, including the Pratt EMEA and Pratt Asia Pacific programs, and contributions from the Desser acquisition. The 58% increase in MRO revenue was driven by the addition of new repair capabilities, market share gains, improved throughput across our MRO facilities, and contributions from the Desser acquisition. Excluding recent acquisitions, Aviation segment revenue increased by approximately 20% compared to the prior year. Aviation adjusted EBITDA increased by 46% in the quarter to $28 million, while adjusted EBITDA margins increased by 30 basis points to 17%, both record results. This record profitability level was driven by operating leverage and productivity from new distribution programs, MRO market share gains, and the cost savings generated from the fuel control licensing program. Margins were partially offset by increased costs for our new European distribution facility and facility expansions in Kansas, supporting the future fuel control program. For the full year 2024, we are increasing our revenue growth and adjusted EBITDA margin expectations for the Aviation segment. Full year 2024 revenue growth is now expected to be between 34% and 38%, up from 24% to 28%. This higher range reflects the expected contributions from the recent TCI acquisition, which is anticipated to contribute between $55 million and $60 million of revenue in VSE's fiscal year. We are also increasing our 2024 full year adjusted EBITDA margins, which were previously expected to be between 15% and 16% and are now expected to be between 15.5% and 16.5% as we realized stronger-than-anticipated cost synergies from recent acquisitions, including the fuel control program. Now turning to Slide 8 for our fleet segment's first quarter results. In the first quarter, fleet segment revenue increased 5% to $79 million, driven by solid growth in e-commerce fulfillment and commercial fleet sales, partially offset by lower USPS revenue. Commercial revenue was $45 million in the first quarter, an increase of 37% compared to the prior year. Commercial revenue now represents 56% of total fleet segment sales compared to 43% in the prior year period. USPS revenue declined approximately 19% compared to the first quarter of last year, which is included within our other government channel. When we started this year, we anticipated a low double-digit decline in USPS revenue. However, their recent decision to migrate all locations to a new fleet management system in 2024 has resulted in a temporary impact due to lower repair activities at the USPS sites. Of the approximately 300 vehicle maintenance facilities in the U.S., roughly 100 went live in the new system in the first quarter, and we expect approximately 100 more in each of the next second and third quarters. As fewer transactions and maintenance activities are temporarily occurring at the sites upon go-live, we are forecasting lower sales during the second and third quarter with recovery beginning in the fourth quarter. We remain well positioned to support all USPS vehicle types. We have not seen a decline in market share, and we believe this is temporary. This work and therefore, revenue will recover, and we remain committed to supporting all of their vehicles and facilities during this transition and the recovery to come. Moving on to fleet profitability. Segment adjusted EBITDA decreased 7% to $8 million, driven by the decline in USPS sales volume. The adjusted EBITDA margin was down 130 basis points to 10%, driven by an increased mix of commercial customers. For the full year 2024, we are revising our fleet segment revenue growth to 0% to 5% compared to the prior year. Full year 2024 USPS revenue is now anticipated to be down 30% to 35%, and we expect second and third quarter revenue to be down 40% to 45% year-over-year with recovery beginning in the fourth quarter. This will be offset by a 40% increase in commercial sales for the full year. We are also updating the fleet segment's profitability guidance, providing an adjusted EBITDA margin range of 6% to 8%, driven by the decline in USPS revenue and an increased mix of commercial customers, with the second and third quarters towards the lower end of this range. This year, we will remain focused on driving year-over-year revenue growth as we scale our Memphis e-commerce distribution facility, add new customers to the commercial fleet list, and increase our market share and product offerings on the new vehicle platforms being introduced by the USPS while managing through their ERP conversion. Turning to Slide 9. In the first quarter, we used $79 million of operating cash flow, primarily driven by the initial provisioning of inventory, supporting the Pratt & Whitney Canada European Distribution award, the timing of outflows for recent inventory purchases, and the effects of the sale of our Federal and Defense segment. Total net debt outstanding at quarter end was $471 million. Pro forma net leverage, which includes the trailing 12-month results from prior acquisitions, was 3.7x. Following the completion of the TCI acquisition in April, our pro forma net leverage ratio increased to approximately 4.1x. Pro forma net leverage is expected to be below 4x by the end of this year, driven by free cash flow generation in the second half of the year. With that, I will now turn it back over to John.

Thank you, Steve. I would like to conclude our prepared remarks by reviewing our 2024 priorities on Slide 10. As previously communicated, 2024 is a year of execution. Let's begin with our Aviation segment. First, our Pro Euro program implementation is accelerating, and our new Hamburg, Germany distribution center is open and shipping products. We are preparing for what's next for that facility with additional product lines to be added, beginning with tires from our Desser acquisition in the third quarter of 2024. Second, our primary focus is the launch and transition of our newly acquired fuel controls program, where we became the licensed manufacturer for over 340 unique fuel controls, spanning 120 platforms, serving both the business and general aviation and rotorcraft markets. This transition is outpacing early expectations and is expected to contribute an additional $7 million of EBITDA this year and $14 million in 2025. And third, the integration of Desser Aerospace. This integration is in process and includes a full system, process, go-to-market and organizational integration. We expect the integration to be completed over the next 12 months. We are also excited to begin planning integration activities for our recently announced TCI acquisition. Moving to our fleet segment. We remain focused on our organic growth and customer diversification strategy and plan to drive commercial growth as we continue to scale our new distribution and e-commerce fulfillment center. Regarding the USPS, we will continue to support both legacy and new vehicles while managing this temporary disruption in activity brought on by their new system conversion. We are and will continue to be ready for their recovery later this year. In summary, we are very proud to report company-wide revenue growth of 28% to start the year. This included both record revenue and record profitability for our Aviation segment. We remain focused on executing our growth and strategic initiatives to support delivering another year of above-market revenue growth and improved profitability within our Aviation segment. We are committed to scaling our commercial fleet business and managing through the near-term and temporary challenges within the USPS. In addition, a key focus for the remainder of the year is strong balance sheet management and generating solid second half free cash flow. Finally, we remain committed to driving our strategic transformation forward. This includes finalizing the divestiture transitions for the Federal and Defense segment, repositioning our corporate headquarters, and evaluating strategic options for the Fleet segment. Thank you again, Steve, and thank you to the amazing VSE team for what they do each day to support all of our stakeholders and for a great start to 2024. Operator, we are now ready for the question-and-answer portion of the call.

Our first question comes from Ken Herbert with RBC Capital Markets.

Well, maybe really nice margins in the Aviation segment. Can you just talk about the cadence from here relative to the full year guide because it implies somewhat of a bit of a step down through the remainder of the year? And I'm just wondering if there's anything specific we should keep in mind regarding the segment and the margin progression or maybe just one quarter and how much conservatism could be built into the expectations for segment margins there?

Yes, I appreciate the question, Ken. I mean, it does bounce around quarter by quarter. And if you look at last year, we do tend to start at the higher end for the first quarter. There are some pricing initiatives at the OEM level that we're able to take advantage of in terms of when inventory is purchased and when it actually hits the market. So I do think that this makes sense relative to how the business has performed seasonally as compared to prior years. But I want to reemphasize that the start to the year and the increase in the margin guidance for this business demonstrates it has a strong runway to go and certainly continues to exceed our expectations from multiple different contributing factors.

And it sounds like just based on the commentary on where leverage could get to by the end of the year below 4x that cash generation this year should accelerate in the second half of the year, but maybe how do we think about the full year free cash flow expectations?

Yes, I think you're right. We're going to continue to guide to strong second-half free cash flow dynamics, again, similar to last year as to the margin question. The first half of the year obviously has the cash outflow for the larger program that we're launching in Europe, and then we'll start to drive some very strong free cash flow in the second half of the year, and that will be what drives leverage down.

And just finally, John, you've obviously got a lot of plates up in the air and a lot of initiatives you're pursuing now. And then of course, you layer on top of it a CFO search. How do you think about those new investment opportunities? And I just wanted to preface this by there's still substantial disruption in the aviation marketplace. There still could be unique opportunities to present themselves. How do you plan to balance your time around, obviously, execution and maximizing the investments relative to potential new opportunities that could emerge?

Yes. That's a great question. I would say our core DNA of the business is solid execution. Ben Thomas, who is the President of our Aviation business, is an extremely strong competent leader in terms of execution. So he is managing the day-to-day in the aviation business and running all of the execution projects. When I look at acquisitions, there are some that have a real strong need for integration upfront and some that can operate a little bit more like a stand-alone because the synergies are less, but the opportunity is to grow or greater. We felt that with TCI. So it's an outstanding business. It's an A+ asset that has great growth opportunities and doesn't need a lot of day one influence and integration work from us. So I'd say where we kind of will continue to look at opportunities is really looking at the capacity of the team and saying, where do we have capacity to support new opportunities? And if not, are there opportunities like TCI, where they can essentially operate as a stand-alone until we're ready and still be able to take advantage of what's around in the market. I see the same thing that you do. There's a lot of disruptions. We do think there will be a tremendous amount of deal activity in the back end of this year and early next year. So we remain very open to the opportunities. But as always, the level of discipline that we'll approach will be very prudent.

Our next question comes from Jeff Van Sinderen with RBC Capital Securities.

It's with B. Riley. Steve, I'm disappointed to see you leave, but I wish you the best in your future endeavors. Can we revisit the USPS situation? Is there anything else you can share about what they're doing now with their new management system and how that's impacting maintenance? Additionally, could you discuss what you're observing as they begin to transition to their new platform and any changes in expectations related to that?

Yes, I appreciate the question. Obviously, it's a disruption to the business in the near term. When you go through an ERP transition, there's always some bumps, and you do always expect some level of disruption, and we had initially guided the forecast down. Obviously, we are taking guidance down further based on further disruptions. You can look at it as almost like a kitchen crashing in a restaurant in terms of how the operational flow is complicated at this point in time. The positive is this is not a traditional PO purchase order model. We have inventory on consignment at more than 300 postal service locations, and we're very embedded in their systems and processes, which is why it's a more complicated process as they implement their new ERP system. Once all the kinks are worked out, we do expect maintenance activity to improve, and therefore, part usage to improve. And what we have is essentially a requirements contract. So kind of once we have a part on contract, if they need it, they're purchasing it from us. So obviously, the requirements have decreased as they're going through the implementation. They have made the decision to go full forward rather than fixing and making sure the sites work really well before they bring new sites live. They are still bringing sites live, which is why that we have the near-term impact. So our anticipation is they'll finish the integrations, and then the work and the processes will start to improve towards the back end of the year. And with that, you'll start to see the recovery in the revenue recovery that goes along with that.

Could you share your initial thoughts on the integration process of the TCI acquisition and the expected timeline for it?

Yes. So aligned with the question that Ken just asked, it's an asset that's a real strong kind of A+ asset. I'd say there's a little bit of work we're doing, but not a tremendous amount of near-term integration. So the bigger opportunities we look at are sitting with some of their large OEM partners who have problems that they need to have solved and what we call backshop work that we can do for them and making sure we've got the capacity to support that work, and we've got the capabilities to support that work. So we're spending much more time on how to grow that business because it's such a strong business. It's fun. We acquired the business three weeks ago. And in the first week, they received a supplier or key supplier work from Collins. So nice to see very strong relationships, and the goal is just to leverage those and grow. That's really where the near-term focus will be for TCI.

Our next question comes from Louie DiPalma with William Blair.

Steve, you were instrumental in VSE's transformation as both a CFO and also with your Desser Aerospace industry knowledge, and a pleasure to work with, and your new company is lucky to have you. And Tarang, congrats on your new role. John, you mentioned how the $175 million new 10-year agreement was an expansion. Did the scope change upon renewal? And in general, for renewals right now, are you pushing to add distribution capabilities to the OEMs in Europe via the new Hamburg facility and also Asia? And have, like, the Pratt & Whitney Canada anchor facilities in those regions led to more business development activity?

Yes. So a couple of questions in there. First, yes. We don't have a lot of contracts up for recompete this year. So that's one of the very few. This is actually a very quiet year in terms of renewals, which is not a bad thing. So we were very pleased to see early renewal on that program, and that is an expanded scope of work. If you think back, I've been here for about five years. We had COVID kind of in the middle of it. As we've signed these programs three or five years ago that are now coming up for renewal, we've really proven ourselves with these OEM partners and customers in the market. So not only do we feel very confident in our ability to get these renewals across the finish line, but we feel pretty confident in our ability to expand scope. It's a great opportunity for share gain. With regard to our expanded facility in Hamburg, that was an agreement that we signed in the fourth quarter of last year. I think in record time, we have a lease signed outside of the U.S. facility stood up and are shipping within under 100 days. So we want to make sure that program is stable. It's a very, very fluid program in terms of the number of aircraft on ground products that we ship out the door. So we want to make sure that performance remains very high before we add products. But we are seeing definitely more opportunities in the European region, and you'll continue to see that. It's a big growth focus for us as we get into 2025. But with the Desser acquisition, which just has a U.K. distribution site. And because of Brexit, it's a little bit more constrained at this point. We will be putting some of that product with those OEMs in that facility towards the back end of the year and see a lot more both business in general aviation and commercial opportunities to come, just beginning in Europe.

From an aftermarket industry perspective, Boeing's production has significantly increased. Do you continue to see aftermarket demand as particularly strong right now? Has it lessened compared to last year, which was also very robust, and in general, do you continue to find a lot of visibility regarding long-term demand?

Yes. Aftermarket demand occurs when customers call the day before they need a part or after they have already needed it for an order. This results in less backlog compared to OEM businesses. There are numerous data points available, and I prefer to be somewhat conservative regarding how far we project into the future. I believe this market is unique, and we can envision a robust market continuing into 2025, similar to what we are experiencing today. Overall, while there are some fluctuations, the market remains as strong as it was last year. Cargo is slightly down compared to commercial, but commercial demand remains very strong and possibly even stronger than last year. Overall, we view 2023 as a strong year, expect 2024 to continue that trend, and anticipate a strong commercial year in 2025 as well.

And does your exposure with Pratt & Whitney Canada, obviously a big customer. Does it remain skewed more towards business and general aviation? And over time, do you expect your commercial aviation exposure to grow?

Pratt & Whitney Canada primarily operates in the business of general aviation and rotorcraft, with some involvement in regional work. However, their engine portfolio does not cater to commercial use. The commercial work is mainly handled by Pratt U.S. and Hartford. TCI is a significant partner with Pratt for their specific projects, meaning that Pratt Canada will not have any commercial aspect to it.

I believe TCI has significantly more commercial exposure. Should future acquisitions provide you with the chance to expand that commercial work?

Yes. I mean what was attractive to us in TCI was, number one, we start with culture and strategy. They're OEM-centric and what they do and their culture of excellence in how they support their end user customer is at the highest levels. So that was the most attractive part to us. But then as I look at the balance of our business in terms of diversification between business and general aviation and commercial distribution and MRO, they are more MRO focused, and they are more commercial focused, which is a shift that our business because of the large distribution programs, the business and general aviation we've signed, our business is skewed a little bit more that way. So this helps provide a really nice balance the other way, both in terms of customer base as well as revenue channel.

Our next question comes from Josh Sullivan with The Benchmark Company.

John, you executed on several large strategic pieces here in aviation, relatively short time, Desser TCI, et cetera. You did mention there that you think the aftermarket is still attractive and will be for the next several years. But the organic underlying growth rate in aviation this year, any changes by bucket in MRO, distribution, services or by Bizjet or commercial?

No. I mean, actually, what is really nice and that was kind of work into the script last night again is the balance of the business. We break our business down, and we have our daily flash reports into our business reviews, which really nice is how much green there is on these pages when we do business reviews. Obviously, there's some puts and takes, like I mentioned a minute ago, some of the cargo stuff is a little down. But when I look inside of each of the business units inside of Aviation, there's just so much strong performance and nice balanced growth across the board. We're not really seeing a slowdown in the business in general aviation market either. Is it as robust of a growth rate as we saw 18 months ago? No, but it's still a very, very healthy and growing market. So right now, we're seeing, with the exception of cargo, a fair amount of balance in terms of growth across both customer base and revenue channels and capabilities.

And then just as far as the transition with Honeywell and the fuel control side, where are you outpacing expectations? You mentioned there in the comments? And then has it taken any more resources than maybe you thought it wouldn't?

Yes. I am really excited about the team we have assembled because this represents a new capability for us. We had previously mentioned that there would be some costs before we see revenue and earnings as we begin to ramp up due to the need to bring in a new team. I cannot emphasize enough the strength and quality of the team that Ben Thomas has selected to lead this business. The transition is progressing slowly and methodically, as it should, and is either on track or ahead of schedule. Our relationships with both the OEM we are transitioning from and our current OEM partners are extremely strong, and our financial performance is currently exceeding our expectations.

And then just to be clear on the U.S. Postal Service's new system. Once we're back to fourth quarter or, I guess, maybe beyond that one, back to normal rates, is there any change in the margin profile you expect?

No, it's a great question. We are still monitoring their new vehicle deployment and what it entails. There isn't a significant amount of new vehicles being rolled out in the next 12 to 18 months. Our primary focus is on recovering and getting the systems operational again. We will do everything we can to support this process. Customers frequently navigate ERP transitions, which come with challenges. In this case, the complexity is slightly greater due to the number of locations involved. The silver lining of this complexity is how integrated we are in their operations. Therefore, we need to be patient, support them, and wait for the recovery.

And I guess I'll just end on the commercial side, some nice growth there in fleet. Any new comments on the Memphis facility ramp-up or any new endeavors there?

Yes, I'm actually feeling even more optimistic about the opportunities and the ramp-up. We have a new leader in place who is doing an outstanding job, and it really begins with talent in our business. We launched that site with several of our fulfillment partners, which means we place our inventory on other websites, not just our own. I'm excited not only about the continued growth with our current partners but also about the potential revenue from a significant new partner in the third quarter, about which we will provide more details soon. We see tremendous potential for positive growth as we continue to expand and scale that business.

Our next question comes from the line of Michael Ciarmoli with Truist Securities.

John or Steve, to clarify, I can imagine a scenario where your previous organic growth in aviation, which was 24% to 28%, may decrease slightly. Have you made any adjustments to the organic growth assumptions? I know you mentioned that TCI would be $55 million to $60 million. It seems like cargo is a bit weaker. We’ve noticed that some reports indicate a slight softness in the Bizjet aftermarket, but I’m trying to gauge if there have been any changes in the underlying organic growth in aviation.

No, nothing has changed. So we can but I would say nothing has changed on our expectations. If you just look at the first quarter, up 20% organically. And when we compare that to what we put out at the Investor Day last year in November, that's stronger than what we anticipated.

And then just point of clarity on fleet. You talked about down 40%. Was that just postal assuming in not the whole segment, right, for 2Q and 3Q?

Correct. It's just postal. And it's down 40% to 45% in the second and third quarter, respectively, associated with fiscal live.

And then, John, just back to aviation, you called it out share gains from MRO. I mean, obviously, there's tight capacity in the marketplace. Can you dig a little deeper there? I mean, are there certain repair capabilities that you're taking share from? Is some of this coming from just M&A and disruption in the marketplace? Is there more runway there for you guys to pick up share? And maybe even, I guess, not only the capabilities but what specific market segments?

Yes, there are a few key points to address. First, I encourage my team to appreciate the current successful times. We're performing well, and the market is strong. We're capturing market share in several ways. Firstly, regarding our original equipment manufacturer (OEM) work, we have gained new capabilities with OEM authorized avionics, particularly for the 737 MAX, which is a significant advantage for us. This can be viewed as a new partnership with an OEM allowing us to support this program, which is expected to grow substantially. Our revenue from this is just starting, and we see vast opportunities ahead. When examining our facilities, such as our fuel, hydraulics, pneumatic, and avionics shops, we see gains in various areas with different customers. Additionally, our collaboration with Southwest on their 737 retirement is creating further opportunities. We are assisting in the teardown of these aircraft and helping them monetize the parts, many of which require repairs, thus increasing the workload for our repair shops. Overall, we are experiencing growth in multiple areas; it's not limited to a single platform or program. Our general aviation business is also performing well. While the growth may not be as dynamic as two years ago, it's stabilizing at a high level and we see sporadic growth. Given the limited capacity in the market, we believe there is still considerable potential for us to meet customer demand and expand our capacity.

Last one I had. I mean, you put up some really good EBITDA margins in the Aviation segment in the quarter. And I think you called out that there were some higher costs there. Can you kind of quantify some of those costs, I guess, startup costs, and others and maybe what was that drag? And does that continue? Or does that give you a kind of opportunity to even push these margins higher once you get past some of those initial costs?

Yes. Maybe I'll start, and then I'll hand it over to Tarang. I'd say the costs are not material enough to call out and specify in terms of numerical values, Mike. But what I'd say is think with the reason why we do call it out is it does represent an opportunity for further margin expansion in the years ahead as we gain full scale in '25 and '26. We previously communicated that margin rates should continue to go higher and inflect higher. Tarang, is there anything else you want to add in terms of market mix on the year?

Yes. I certainly want to add the question associated with the variability of our margin and us starting out the quarter at a high margin rate. One of the things that's kind of built in here is the CPI margins are slightly lower than our margin run rate. So you'll see that impact as we continue on throughout the year.

And I'll give you the qualitative answer. It's all going to depend on mix. So within our business, we've obviously got some extremely high margin work and then some lower margin work. Now on the positive end, as I look at some of the opportunities that we have out there, some MRO growth that I see ahead, it's in the higher-margin area. The second thing that I would highlight is that our Honeywell fuel controls program is more of a margin driver than a revenue driver, and as that continues to ramp, we'll continue to see opportunities there.

Is there an opportunity for TCI margins to become in line with the segment average or historical? Or will that be kind of permanently a bit lower?

I think maybe we'll give it some time to kind of understand the business a bit better and maybe answer that in a future time.

There are no further questions at this time. I'd like to turn the floor back over to Mr. Cuomo for closing comments.

Thank you all for your continued support of VSE. We very much appreciate it and look forward to speaking with you in July during our second quarter earnings call. Have a great rest of your day.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.