June Model Shadow Stock Portfolio Update

The Model Shadow Stock Portfolio is reviewed quarterly to determine stock sales and additions, a practice put in place since the portfolio’s inception in 1993. The quarterly portfolio review cycle is tied to the standard reporting cycle of most publicly traded firms in the U.S. Companies are examined for violating the earnings, valuation, size and age rules of the Model Shadow Stock Portfolio. Click here to see the current purchase and sell rules for the portfolio.

The primary Model Shadow Stock Portfolio selection criteria target the intersection of the smallest 10% of domestic stocks as measured by market capitalization and the “cheapest” 10% of domestic stocks as measured by the price-to-book-value (P/B) ratio. These decile breakpoints are determined by examining domestic companies that are listed on the New York Stock Exchange (NYSE).

After conducting the quarterly review of the Model Shadow Stock Portfolio, Flexsteel Industries Inc. (FLXS) was removed from the tracking portfolio and Penn Virginia Corp. (PVAC) was added to the tracking portfolio during regular trading hours on Monday, June 15.

Sell Alert

Flexsteel Industries, Inc. (FLXS)

Flexsteel Industries was removed because of the Model Shadow Stock Portfolio’s negative earnings rule. On April 28, 2020, the company reported an adjusted fiscal third-quarter loss of $0.66 per share, while trailing 12-month earnings remained negative.

Flexsteel is a manufacturer, importer, marketer and distributor of residential and commercial furniture products in the U.S. Product offerings include a wide variety of upholstered furniture such as sofas, loveseats, chairs, reclining and rocker-reclining chairs, swivel rockers, sofa beds, convertible bedding units, occasional tables, desks, dining tables and chairs and bedroom furniture. A featured component in most of the upholstered furniture is a unique steel drop-in seat spring from which the name “Flexsteel” is derived.

The company has serviced the hospitality, health care, senior living, government and commercial office markets, but previously announced a comprehensive restructuring plan and decided to exit its recreational vehicle, commercial office and hospitality businesses. Flexsteel will focus on three business platforms going forward: home furnishings, e-commerce and workspace solutions.

The firm’s profitability has suffered from restructuring costs as well as the impact of tariffs imposed on imports. Recently e-commerce sales have increased, but not enough to overcome the coronavirus pandemic’s impact on sales in its remaining channels.

It is the policy of the Model Shadow Stock Portfolio to sell a stock once its trailing 12-month adjusted earnings go negative and the company reports a quarterly loss in a subsequent quarter while trailing earnings are still negative.

Quarterly Addition

Penn Virginia Corp. (PVAC)

Penn Virginia is an independent oil and gas company. The company is engaged in the onshore exploration, development and production of crude oil, natural gas liquids (NGLs) and natural gas. The company’s operations consist primarily of drilling unconventional horizontal development wells and operating its producing wells in the Eagle Ford Shale field in South Texas. The company’s primary oil and gas assets are located in Gonzales and Lavaca Counties in South Texas.

Based on Penn Virginia’s closing price of $12.61 on June 12, we suggest paying no more than $40.64. To calculate the maximum buy price based on the maximum desired price-to-book-value ratio, multiply the current book value per share ($45.16 for Penn Virginia) by the maximum price-to-book ratio to be considered for the Model Shadow Stock Portfolio (currently 0.9). The calculation is: $45.16 × 0.9 = $40.64.

As of June 12, eight stocks met the initial selection criteria for the Model Shadow Stock Portfolio, down from 27 stocks one month ago. A rising stock market combined with more companies reporting negative quarterly earnings during the latest earnings reporting cycle resulted in dramatic decline in qualifying companies. AAII members can see and research which companies are currently passing the initial selection criteria in the Shadow Stock Ideas table on AAII.com. The list of new Shadow Stock Ideas is updated daily—Tuesday through Saturday.

Of the eight Shadow Stock ideas at the end of the month, two are held in the Model Shadow Stock tracking portfolio: the latest addition Penn Virginia and Strattec Security Corp. (STRT).

The next quarterly review of the Model Shadow Stock Portfolio will take place following the end of August 2020. Any changes to the portfolio will be announced at the time they are made in a special Model Shadow Stock Portfolio Update email (sign up at www.aaii.com/email).

Performance Update

The stock market continued its strong rebound May, with the S&P 500 index posting a total return of 4.8%, trimming its year-to-date loss to 5.0%. The Model Shadow Stock Portfolio gained 7.6% during May but remains down 37.5% year to date. The S&P 500 equally weighted index gained 4.7% during the month and is down 12.2% year to date. The S&P MidCap 400 index was up 7.3% during May and is now down 13.9% for the year, while the Russell 2000 index gained 6.5% during the month and is down 16.0% year to date. The Vanguard Small-Cap Index fund (NAESX) was up 7.7% during the month and has a year-to-date performance of negative 13.7%, while the DFA U.S. Micro Cap fund (DFSCX) was up 4.4% during May and is down 22.8% for the year through the end of May.

The performance of growth- versus value-oriented stocks continues to be slanted toward growth stocks.

In the large-cap segment, growth stocks were up 6.0% for the month, giving them a positive 3.7% gain year to date for 2020. Large-cap value stocks were up 3.2% during May and are now down 14.7% year to date.

In the mid-cap segment, growth stocks are down 6.5% for the year, after gaining 8.9% during May. Mid-cap value stocks are down 21.9% for the year, after gaining 5.3% during the month.

Small-cap growth stocks are down 6.7% year to date, while small-cap value stocks are down 25.7%. Small-cap growth stocks gained 9.5% during May, while small-cap value stocks gained 2.9% during the month.

All of the S&P 500 sector groups were up during May, with the information technology sector leading the pack with a 7.1% gain during May. There are now three sectors up for the year: information technology (+7.3%), consumer discretionary (+2.1%), health care (+1.6%) and communication services (+0.2%). Sectors that are lagging this year include energy (–34.5%), financials (–23.4%) and industrials (–16.3%).

Since its inception in 1993, the AAII Model Shadow Stock Portfolio has a compound annual average return of 12.1% versus the Vanguard 500 Index fund’s gain of 9.3% per year on average over the same period. Over the same period, the Vanguard Small-Cap Index fund posted an average annual gain of 9.3%.

Model Shadow Stock Portfolio News

Mesa Air Group (MESA) reported earnings per share of $0.05 for the second quarter of 2020, which compared year over year to earnings per share of $0.38. Second-quarter 2020 earnings per share beat the I/B/E/S consensus estimate of a loss per share of $0.006. Total operating revenues for the quarter increased by 1.6% year over year.

Covenant Transportation Group (CVTI) was the strongest stock in the Model Shadow Stock Portfolio with its 41.9% gain for May. Covenant Transportation is a provider of expedited long haul freight transportation for customers throughout the U.S. As noted in the news section below, while Covenant Transportation reported a loss per share of $0.10 for the quarter, the results were stronger than expected by the market.

Mesa Air was the weakest stock in the Model Shadow Stock Portfolio, dropping 28.5% during May. Mesa Air is a regional air carrier suffering from less travel during the coronavirus pandemic. As noted in the news section, flights per day fell by about 70% in April when compared to results before the onset of the coronavirus pandemic. Flights per day for May improved over April by 23% but were still below pre-pandemic results by about 63%. To help cover the loss of revenue, Mesa Air expects to receive a total of $92.5 million under the CARES Act starting in April and lasting through September.

Here are some news highlights from May for the holdings in the Model Shadow Stock Portfolio:

Bassett Furniture Industries Inc. (BSET) announced that it continues to reopen its stores as restrictions put in place due to the coronavirus pandemic are being rolled back. Almost all of the company’s stores are expected to be open by May 18. However, due to the level of the disruption brought by the pandemic, Bassett Furniture will permanently reduce its workforce by 25% throughout its retail, wholesale and logistics operations and will permanently close its upholstery manufacturing operations in Grand Prairie, Texas, with that production shifting to another facility in North Carolina.

Beazer Homes USA Inc. (BZH) registered with the U.S. Securities and Exchange Commission (SEC) for a shelf offering of up to $500 million in new shares of the company’s stock.

Big 5 Sporting Goods Corp. (BGFV) reported a net loss of $0.22 per share for the first quarter of 2020, which compared year over year to earnings of $0.08 per share. The company said that the drop in profit was in line with guidance provided in late February but subsequently withdrawn in March. Net sales for the first quarter decreased by 11.3% year over year to $217.7 million.

Same-store sales decreased by 10.8% during the quarter, compared to a 4.6% increase in the same period one year ago. Customer transactions decreased by almost 20% as the average transaction increased by almost 10%, driven by the effects of the coronavirus pandemic. Same-store sales were also affected by a warm and dry winter season across many of the company’s key markets.

In response to the pandemic, about half of Big 5 Sporting Goods’ stores were temporarily closed at the end of March as the company’s second quarter began. By the end of May, all stores were open again in some capacity, with less than 10% operating for curbside business only, per local regulations. Same-store sales for the second quarter through the end of May were down year over year by 19%, though sales were improving on a weekly basis as May began.

In addition to other cost-cutting measures, including an almost total reduction in advertising, Big 5 Sporting Goods announced that it suspended its regular quarterly dividend until further notice.

Container Store Group Inc. (TCS) reported preliminary consolidated net sales of $241.3 million for the fourth quarter of 2019, down by 4.7% compared to fourth-quarter 2018. Final results for the fourth quarter and 2019 fiscal year were still being finalized with the release of preliminary figures, due to the impact of the coronavirus pandemic. The company expects to file audited results late under the SEC’s extended filing deadline.

Same-store sales are expected to decrease year over year by 3.6% for the quarter. The custom closets product category is expected to increase by 1.5% over the same period, while the company’s “other” product category is expected to decrease by 9.0%. During the last three weeks of March—the last weeks of fourth-quarter 2019—Container Store Group reported a strong increase in e-commerce business that has continued into the first quarter of fiscal 2020, with online customer orders nearly quadrupling when compared year over year.

At the time of Container Store Group’s fourth-quarter conference call in mid-May, the majority of the company’s stores were open again with a shift to curbside pickup and limited in-store operations. The company is operating with a largely reduced workforce for stores, which also required that it furlough a portion of its corporate employees.

About 76% of retail sales orders taken in stores have been preserved online during the first quarter of 2020, compared to first-quarter 2019. The company said customers are showing an increased interest in storage and organization as they spend more time in their homes and reorganize their physical surroundings.

Covenant Transportation Group (CVTI) reported an adjusted loss per share for the first quarter of 2020 of $0.09, compared to adjusted earnings per share of $0.27 for the first quarter of 2019. The adjusted loss per share beat the I/B/E/S consensus estimate of a loss per share of $0.10 by 12%. Total revenue of $213.6 million decreased by 2.6% over the same period.

Freight revenue of $192.3 million, excluding revenue from fuel surcharges, decreased year over year by 1.8%. The decrease in freight revenue was primarily driven by a 4.3% average operating fleet reduction. An increase in average freight revenue per tractor by 2.7% partially offset the decline in the total operating fleet. Total operating expenses, net of fuel surcharges, increased by 0.4 cents per mile compared to the 2019 quarter.

Covenant Transportation currently is not providing guidance for the 2020 fiscal year due to the circumstances surrounding the coronavirus pandemic. CEO David Parker said that the company is “well-prepared” in the near term as productivity, the economy and business levels return to normal. The company is encouraged by improvements since April but expects volatility month to month over the remainder of the year.

CPI Aerostructures Inc. (CVU) announced that it received orders totaling $14 million from Boeing Co. (BA) for structural assemblies used on the A-10 Thunderbolt II, as part of a previously announced contract for up to $48 million. Including these new orders, CPI Aerostructures has now received about $20 million in funding from Boeing for the production and program startup costs. First delivery is expected to be in late 2020 and the period under current funding is expected to extend into 2022.

Separately, CPI Aerostructures announced that it received an initial order from Northrop Grumman Corp. (NOC) to supply structural components, assemblies and supporting risk reduction activities for Grumman’s proposal to the U.S. Navy for the Next Generation Jammer-Low Band system. The program is expected to extend through 2025 with delivery commencing in the first quarter of 2021.

Cumulus Media Inc. (CMLS) reported a net loss per share of $0.36 for the first quarter of 2020, compared to earnings per share of $0.02 in the same period one year ago. The net loss per share missed the I/B/E/S consensus estimate of earnings per share of $0.05. Net revenue of $227.9 million decreased by 14.8% year over year.

Total broadcast radio revenue decreased by 16.5% year over year to $187.6 million, while digital revenue of $21 million increased by 30% over the same period. On a same-station basis, total broadcast revenue fell by 13.3% and digital revenue increased by 35.8%. The largest impact on quarterly revenue decline was the cancellation of the NCAA Basketball Tournament in March, which Cumulus Media subsidiary Westwood One holds exclusive national rights to broadcast by radio.

Cumulus Media said that it acted expeditiously to reduce costs and preserve cash to weather the financial impact of the coronavirus pandemic. Cancellations are expected to meaningfully impact second-quarter results, though the company said radio listenership is increasing again as drivers return amid rolled back pandemic restrictions.

Separately, Cumulus Media announced that it adopted a short-term shareholder rights plan to prevent any person or group from acquiring a stake of at least 10% in the company, or 20% in the case of a passive institutional investor.

Delta Apparel Inc. (DLA) announced a two-year extension of the employment contract with its chairman and CEO Robert Humphreys. His employment will now expire at the end of the company’s 2022 fiscal year.

Separately, Delta Apparel announced that sales from the company’s direct-to-garment digital print and fulfillment business increased by 25% during April, compared to the same period one year ago. Half of the volume growth for the month was attributed to onboarding new customers to the digital platform.

Flexsteel Industries Inc. (FLXS) announced that it will permanently close manufacturing facilities in Dubuque, Iowa, and Starkville, Mississippi, as the company exits the vehicle seating and hospitality product lines. Flexsteel said it made the decision due to the rapidly declining demand and changing market conditions for these products, driven by the coronavirus pandemic. These exits and plant closures are expected to be completed by the end of the second quarter of the company’s 2021 fiscal year. The financial impact will be determined in the fourth quarter of fiscal 2020.

Hallador Energy Co. (HNRG) reported a net loss of $3.7 million, or a loss of $0.12 per share, for the first quarter of 2020, compared to net income of $7 million in the first quarter of 2019. The loss of $0.12 per share missed the single analyst estimate recorded by I/B/E/S of earnings per share of $0.02. Over the same period, tons of coal sold fell from 2.1 million to 1.5 million.

Hallador Energy said during its quarterly conference call that $3.9 million in net losses for the quarter were due to fuel hedges and interest rate swaps—non-cash items. Free cash flow for the first quarter of 2020 was $6.8 million, which compared year over year to $14.7 million. CEO Brent Bilsland said that export prices for thermal coal (burned to create steam in energy production) collapsed during the second half of 2019, pressuring domestic pricing, and that natural gas prices marked their lowest levels in 21 years during the first quarter of 2020.

With the addition of a drop in energy usage across most of the U.S. and the developed world due to the coronavirus pandemic, Hallador Energy has taken proactive steps to ensure its financial liquidity. The company idled and permanently closed its Carlisle mine, amended its credit facility, suspended its dividend and received a $10 million loan through the Paycheck Protection Program. Looking forward, Hallador Energy said it still has a strong level of contracted sales through 2022, totaling 15.4 million tons of coal.

Hibbett Sports Inc. (HIBB) reported adjusted earnings per share for the first quarter of 2021 of $0.31, compared to adjusted earnings per share of $1.61 in the same quarter one year ago. Adjusted earnings per share for the quarter beat the I/B/E/S consensus estimate of $0.19 per share by about 65%. Net sales over the same period decreased by 21% to $269.8 million.

Comparable-store sales decreased year over year by 19.5%, while e-commerce sales grew by 110.5% and represented 22.3% of total net sales for the quarter. The decline in overall sales was primarily due to a large number of the company’s stores that were closed entirely or limited to fulfilling e-commerce orders and curbside pickup, which began in March. Hibbett Sports and City Gear stores began to reopen to customer traffic toward the end of April, as permitted by government regulations.

Hibbett Sports ended the first quarter of fiscal 2021 with $106.2 million of available cash and cash equivalents on its unaudited consolidated balance sheet. As of the beginning of May, the company had $50 million of debt outstanding and $25 million available under its $75 million secured credit facility. The company is not providing guidance for fiscal 2021 at this time.

Kimball Electronics Inc. (KE) reported earnings per share of $0.25 for the third quarter of 2020, which fell by 45.7% year over year. Earnings per share beat the single analyst estimate recorded by I/B/E/S of $0.18 by 38.9%. Net sales over the same period fell by 6% to $294 million.

Kimball Electronics said that due to the variety of critical medical device assemblies that it manufactures, its facilities were classified as essential businesses during the quarter amid the coronavirus pandemic. Despite this status, the company reported a double-digit decline in medical sales during the quarter. Extensive shutdowns of automotive plants that use Kimball Electronics’ products also affected sales; however, the company said the severity of that impact will be seen in the fourth quarter.

Looking forward, Kimball Electronics said it is encouraged by an increase in demand from existing medical customers for respiratory care and patient-monitoring products. This demand is expected to last through the first half of fiscal 2021. Automotive orders are expected to return to a new normal as output in China returns to pre-pandemic levels, domestic manufacturers return to production and demand increases for new parts related to electric vehicles.

Separately, Kimball Electronics entered into a one-year credit agreement, wherein it has access to a revolving credit facility of up to $30 million through May 2021.

Mesa Air Group (MESA) reported earnings per share of $0.05 for the second quarter of 2020, which compared year over year to earnings of $0.38 per share. Second-quarter 2020 earnings per share beat the I/B/E/S consensus estimate of a loss per share of $0.006. Total operating revenues for the quarter increased by 1.6% year over year.

Mesa Air said that flights per day fell by about 70% in April compared to results before the onset of the coronavirus pandemic. Flights per day for May improved over April by 23% but were still below pre-pandemic results by about 63%. To help cover the loss of revenue, Mesa Air expects to receive a total of $92.5 million under the CARES Act between April and September of this year.

Mesa Air said in its quarterly conference call that it is working with United Airlines Holdings Inc. (UAL) to maximize their partnership under the circumstances surrounding the commercial aviation market. Mesa Air expects to maintain a partnership with American Airlines Group Inc. (AAL), though that contract is under negotiation. In the long term, Mesa Air believes its low overhead will position it to offer a significant cost advantage to contractors when the market recovers. Mesa Air also expects to enter the cargo market by the end of the fiscal year.

New Home Company Inc. (NWHM) reported a net loss per share of $0.42 for the first quarter of 2020, compared to a net loss per share of $0.10 in the first quarter of 2019. Adjusted net loss for the quarter was $0.05 per share. Total revenues of $132 million for the quarter increased by 11.1% year over year.

Net orders for the first quarter were up by 18% year over year on a higher monthly absorption rate. However, home sales revenue was down over the same period by 3.5% to $95.7 million. The decrease in home sales revenue was driven by a drop in average selling price by 11% due to projects in Southern California delivering a higher mix of affordable and first move-up homes and fewer deliveries from the company’s higher-priced community in Scottsdale, Arizona.

Sales were primarily affected by the coronavirus pandemic in March, the impact of which carried into April. As an essential business, however, New Home Company has been able to execute on its backlog of orders as sales efforts move online. Taking advantage of its stock price, New Home Company said it repurchased a total of $2.2 million in shares during the quarter.

Olympus Steel Inc. (ZEUS) reported earnings per share of $0.05 for the first quarter of 2020, compared to earnings per share of $0.18 in the same period one year ago. Earnings per share missed the I/B/E/S consensus estimate of $0.075. Sales for the quarter were down year over year by 20.6%.

The company said it is taking decisive steps to align its production and workforce levels with current market demand. Each of Olympus Steel’s segments produced positive earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter, with the specialty metals and pipe and tube segments showing resiliency. The company said results showcased the benefits of cost reductions that were put in place during the second half of 2019.

Separately, Olympic Steel declared a regular quarterly dividend of $0.02 per share, in line with the previous declaration. The dividend was payable June 15 to shareholders of record as of June 1.

Perion Network Ltd. (PERI) reported that earnings per share of $0.05 were flat year over year and that total revenues over the same period increased by 23% to $66.1 million. Earnings per share beat the I/B/E/S consensus estimate of $0.027 by 85%.

The increase in total revenues was primarily a result of a 20% increase in revenue from the ad search and “other” segment, which was due to an increased number of unique searches and new publishers. Revenues for the advertising segment increased by 28% as a result of the consolidation of Content IQ, acquired in January 2020. Ad search and other revenue represented 64% of the first quarter of 2020 revenue, with advertising contributing 36%.

CEO Doron Gerstel said that Perion Network’s overall diversification strategy across its main pillars of business—digital advertising, search, social display and video—allows the company to capitalize on the volatility affecting the digital media space. The company is expecting to remain profitable for the remainder of fiscal 2020 and has implemented additional cost savings expected to yield more than $10 million.

RCI Hospitality Holdings (RICK) reported adjusted earnings per share of $0.47 for the second quarter of 2020, which fell year over year by 25.4%. Adjusted earnings per share beat the single estimate recorded by I/B/E/S of a loss per share of $0.06. Over the same period, consolidated revenues fell by 9.8% to $40.4 million.

Revenues fell year over year primarily due to the impact of the coronavirus pandemic. Revenue of $31.4 million from the nightclubs segment declined by 15.3%, while revenue from the Bombshells restaurant segment of $8.8 million increased by 17%. Before the implementation of stay-at-home and social distancing guidelines imposed by federal, state and local governments, revenues for the first 10 weeks of the second quarter increased 11.8% on a consolidated basis, 5.0% for nightclubs (38 locations) and 45.4% for Bombshells (10 locations).

On reopening its facilities, RCI Hospitality said that revenues seem favorable despite reductions in occupancy capacity. At the time of the company’s quarterly earnings release, more than 700 full- and part-time staff were reemployed after the company furloughed over 1,900 employees. RCI Hospitality believes it has enough resources to fund operations through the end of fiscal 2020.

REX American Resources Corp. (REX) reported a net loss per share of $1.21 for the first quarter of 2020, which compared year over year to earnings per share of $0.45. The loss per share for the quarter missed the single estimate recorded by I/B/E/S for earnings per share of $0.51. Net sales over the same period fell by 20.4% to $104.6 million.

The year-over-year decline in net sales was primarily due to a decrease in ethanol gallons sold and overall lower production due to the temporary idling of some production facilities. The loss per share reflected these factors in addition to an 11.3% year-over-year increase in corn prices.

REX American Resources said that it expects to also record a loss for the second quarter underway, though the loss is expected to be less than that recorded for the first quarter. The company hopes to have all of its plants operational by the fall of 2020 and it noted that corn plantings are ahead of where they were one year ago.

Rocky Brands Inc. (RCKY) declared a quarterly dividend of $0.14 per share, in line with the previous declaration. The dividend is payable June 16 to shareholders of record as of June 2.

Strattec Security Corp. (STRT) announced that it temporarily suspended the payment of its quarterly dividend for the “foreseeable future,” as the company takes action to preserve its financial position during the coronavirus pandemic. The company has taken other steps as well, including reducing pay for executives and salaried employees, reducing working hours and reducing its overall workforce.

Vishay Precision Group Inc. (VPG) reported adjusted earnings per share of $0.29 for the first quarter of 2020, down year over year by 52.5%. Adjusted earnings per share beat the I/B/E/S consensus estimate of $0.145. Revenue over the same period declined by 11.5% to $67.7 million.

Foil technology segment revenues decreased by 17.7% to $30.5 million during the quarter, driven by a drop in orders of precision resistor products in all of Vishay Precision’s business regions. Weighing and control system segment revenues declined by 1% to $22.5 million. Force sensors segment revenue decreased by 12.2% to $14.7 million.

At the time of Vishay Precision’s quarterly conference call, all of its manufacturing facilities were fully operating with an exception for its facility in India. CEO Ziv Shoshani said that the company’s broad and diverse set of end markets provides Vishay Precision with resilience in its revenue streams. Orders grew year over year and the company reported positive book-to-bill in the first quarter of 2020.

VSE Corp. (VSEC) reported adjusted earnings per share of $0.89 for the first quarter of 2020, which rose by 30.9% year over year. Total revenue increased by 4.4% over the same period to $177.4 million. During the quarter, VSE Corp. reorganized its structure: The aviation group was renamed the aviation segment; the supply chain management group was renamed the fleet segment; and the federal services group was renamed the federal & defense segment.

Each of VSE Corp.’s segments accounted for about a third of total revenue for the first quarter. Aviation segment revenue increased by 18%, driven by strong performance and market share gains for both aftermarket distribution products and maintenance, repair and overhaul services. Fleet segment revenue increased by 3%, driven by new commercial market customers. Growth in both of these segments offset an anticipated decline in federal & defense segment revenue, which fell by 4%.

VSE Corp. said that it expects to retain much of its business amid the coronavirus pandemic due to its ties to federal and state governments. The federal & defense and fleet segments are supported by historically stable, multi-year government contracts and long-term customer relationships. Both segments represented a combined 70% of total revenue in 2019.

VSE Corp. also declared a regular quarterly dividend of $0.09, in line with the previous declaration. The dividend is payable July 29 to shareholders of record as of July 15. The stock will trade ex-dividend on Tuesday, July 14.