Financial Performance Highlights - Second quarter 2025 revenue reached $272 million, a 41% increase driven by growth in Aviation distribution and MRO businesses, as well as contributions from recent acquisitions[11] - Adjusted EBITDA for the second quarter 2025 was $43 million, representing 16% of revenue, a 52% increase due to distribution program execution, increased MRO activity, strong OEM licensed manufacturing program performance, and acquisitions[11] - Adjusted Net Income for the second quarter 2025 was $20 million, and Adjusted diluted earnings per share was $0.97, representing increases of 149% and 106% respectively[11] Business Developments - The company completed the sale of the Fleet segment, repositioning itself as a pure-play Aviation Aftermarket business[6] - Turbine Weld Industries ("Turbine Weld") was acquired, expanding MRO engine component capabilities[6] - A new 5-year authorized services center agreement was signed with Eaton to support aftermarket MRO for Eaton hydraulics across the Americas[6] Balance Sheet and Capital Structure - Adjusted Net Leverage was 2.2x, including the Fleet sale and acquisition of Turbine Weld[11, 23] - Net Debt outstanding was $362 million, while cash and revolver availability was $333 million[23] - Second quarter 2025 Free Cash Flow was $6 million, driven by disciplined working capital management and record profitability[23] FY 2025 Guidance - Revenue Guidance: Reaffirming 35% to 40% year-over-year growth[20] - Aviation Adjusted EBITDA Margin Guidance: Increasing to 16.5% to 17%, the high-end of previously provided range[20]

[Q2 2025 Earnings Overview](index=1&type=section&id=Q2%202025%20Earnings%20Overview) VSE Corporation reported record Q2 2025 revenue and profitability, driven by its aviation-focused strategy and successful strategic actions [Financial Highlights](index=1&type=section&id=Financial%20Highlights) VSE Corporation achieved record Q2 2025 revenue of $272.1 million and Adjusted EBITDA of $43.5 million, driven by strong year-over-year growth Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 | % Change YoY | | :--- | :--- | :--- | | Total Revenues | $272.1 million | +41.1% | | GAAP Net Income | $13.6 million | NM | | GAAP EPS (Diluted) | $0.66 | NM | | Adjusted EBITDA | $43.5 million | +51.9% | | Adjusted Net Income | $20.1 million | +149.1% | | Adjusted EPS (Diluted) | $0.97 | +106.4% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed record Q2 performance to a successful aviation-focused strategy, including divestitures and acquisitions, with a future focus on free cash flow - The CEO highlighted the company's aviation-focused strategy, which is driving **record revenue and profitability**[2](index=2&type=chunk) - Key strategic moves in the quarter included the divestiture of the Fleet segment and the acquisition of Turbine Weld Industries, a specialized MRO service provider[2](index=2&type=chunk) - The CFO stated a forward-looking focus on driving improved free cash flow generation and optimizing the cost structure for the streamlined aviation platform[2](index=2&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) VSE demonstrated strong Q2 2025 financial performance with significant revenue and profit growth in its Aviation segment, improved liquidity, and raised full-year guidance [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) For the second quarter of 2025, VSE's revenues from continuing operations increased 41.1% to $272.1 million compared to the prior year, with operating income rising 765.2% to $22.5 million Consolidated Results (Continuing Operations) | (in thousands, except EPS) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $272,139 | $192,828 | 41.1% | | Operating income | $22,513 | $2,602 | 765.2% | | Net income (loss) | $13,638 | $(5,288) | NM | | EPS (Diluted) | $0.66 | $(0.31) | NM | [Segment Performance](index=1&type=section&id=Segment%20Performance) Following the divestiture of the Fleet segment, the company operates as a single Aviation segment, achieving record revenue of $272.1 million in Q2 2025, up 41.1% YoY - Aviation segment revenue grew **41.1% YoY to a record $272.1 million**, with distribution revenue up **50.4%** and MRO revenue up **27.3%**[3](index=3&type=chunk) Aviation Segment Profitability (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Operating Income | $35,072 | $24,468 | 43.3% | | Adjusted EBITDA | $46,522 | $31,488 | 47.7% | | Adjusted EBITDA Margin | 17.1% | 16.3% | +80 bps | [Financial Position and Liquidity](index=2&type=section&id=Financial%20Position%20and%20Liquidity) VSE generated positive cash flow in Q2 2025, with $12 million from operations and $6 million in free cash flow, ending the quarter with strong liquidity and reduced net debt - The company generated **$12 million of operating cash flow** and **$6 million of free cash flow** in Q2 2025[5](index=5&type=chunk) Liquidity and Debt Position (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Cash & Unused Credit Availability | $333 million | | Total Net Debt | $362 million | | Adjusted Net Leverage | ~2.2x | [2025 Full-Year Guidance](index=2&type=section&id=2025%20Full-Year%20Guidance) VSE reaffirmed its full-year 2025 revenue growth forecast of 35% to 40% and raised its Aviation segment's Adjusted EBITDA margin guidance to 16.5% to 17% - Full-year 2025 revenue growth guidance is reaffirmed at **35% to 40% year-over-year**[6](index=6&type=chunk) - Aviation segment full-year 2025 Adjusted EBITDA margin guidance was increased to a new range of **16.5% to 17%**[6](index=6&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) Key non-GAAP reconciliations highlight VSE's improved adjusted profitability, positive free cash flow generation, and reduced net leverage in Q2 2025 [Reconciliation of Net Income to Adjusted Net Income & Adjusted EPS](index=4&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20%26%20Adjusted%20EPS) The company's Adjusted Net Income from continuing operations for Q2 2025 was $20.1 million, a 149.1% increase from Q2 2024, after various adjustments Adjusted Net Income Reconciliation (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $13,638 | $(5,288) | | Adjustments (Acquisition, Divestiture, Earn-out, etc.) | $8,655 | $17,817 | | Tax impact of adjusted items | $(2,159) | $(4,445) | | **Adjusted net income from continuing operations** | **$20,134** | **$8,084** | [Reconciliation of Net Income to EBITDA & Adjusted EBITDA](index=4&type=section&id=Reconciliation%20of%20Net%20Income%20to%20EBITDA%20%26%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 increased 51.9% year-over-year to $43.5 million, calculated by adjusting GAAP net income for interest, taxes, D&A, and other items Adjusted EBITDA Reconciliation (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $13,638 | $(5,288) | | Interest, Taxes, D&A | $18,509 | $13,972 | | **EBITDA** | **$32,147** | **$8,684** | | Other Adjustments (Stock Comp, Earn-out, etc.) | $11,305 | $19,928 | | **Adjusted EBITDA** | **$43,452** | **$28,612** | [Reconciliation of Free Cash Flow](index=5&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) The company generated $6.3 million in free cash flow in Q2 2025, a significant improvement from a negative free cash flow of $21.5 million in the same period last year Free Cash Flow (Q2 2025 vs Q2 2024) | (in thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $11,891 | $(17,528) | | Capital expenditures | $(5,589) | $(3,945) | | **Free cash flow** | **$6,302** | **$(21,473)** | [Net Debt and Leverage Ratio](index=6&type=section&id=Net%20Debt%20and%20Leverage%20Ratio) As of June 30, 2025, VSE's net debt stood at $362.3 million, a decrease from $401.1 million at the end of 2024, improving the Adjusted Net Leverage Ratio to 2.2x Net Debt and Leverage | (in thousands, except ratio) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Net Debt | $362,250 | $401,143 | | Adjusted Net Leverage Ratio | 2.2x | 2.5x | [Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Consolidated%20Financial%20Statements%20%28Unaudited%29) The unaudited financial statements reflect VSE's financial position and performance, including the impact of the Fleet segment divestiture on assets and liabilities [Consolidated Balance Sheets](index=10&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, VSE's total assets were $1,602.0 million, decreasing from $1,742.6 million at year-end 2024, primarily due to the Fleet segment divestiture Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $753,619 | $965,347 | | Total assets | $1,602,027 | $1,742,630 | | Total current liabilities | $202,045 | $298,500 | | Total liabilities | $622,500 | $754,444 | | Total stockholders' equity | $979,527 | $988,186 | [Consolidated Statements of Operations](index=11&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, VSE generated total revenues of $272.1 million, leading to an operating income of $22.5 million and a consolidated net income of $3.2 million Key Income Statement Items (Q2 2025, in thousands) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $272,139 | $192,828 | | Operating income | $22,513 | $2,602 | | Net income (loss) from continuing operations | $13,638 | $(5,288) | | (Loss) income from discontinued operations | $(10,441) | $2,511 | | **Net income (loss)** | **$3,197** | **$(2,777)** | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities was $34.7 million, with investing activities providing $82.6 million, resulting in a net decrease in cash of $12.1 million Cash Flow Summary (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(34,741) | $(96,588) | | Net cash provided by (used in) investing activities | $82,613 | $(81,820) | | Net cash (used in) provided by financing activities | $(59,996) | $189,471 | | **Net (decrease) increase in cash** | **$(12,124)** | **$11,063** | [Additional Information](index=8&type=section&id=Additional%20Information) This section provides supplementary details including investor conference call information, a company overview, and cautionary forward-looking statements [Conference Call Information](index=8&type=section&id=Conference%20Call%20Information) VSE will host a conference call on Thursday, July 31, 2025, at 8:30 A.M. ET to review its second-quarter financial results, with webcast and presentation materials available online - A conference call to discuss Q2 2025 results is scheduled for **Thursday, July 31, 2025, at 8:30 A.M. ET**[22](index=22&type=chunk) [About VSE Corporation](index=8&type=section&id=About%20VSE%20Corporation) VSE Corporation is a leading provider of aftermarket distribution and MRO services for the commercial and business & general aviation markets, specializing in engine components and airframe accessories - VSE is a leading provider of Aviation distribution and repair services for the commercial and business & general aviation (BG&A) aftermarkets[24](index=24&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This earnings release contains forward-looking statements subject to various risks and uncertainties, reflecting management's current expectations, and actual results may differ materially - The document includes forward-looking statements involving known and unknown risks that may cause actual results to differ materially from expectations[26](index=26&type=chunk)

Core Insights - The industrials sector has been a top performer in 2025, with the Industrial Select Sector SPDR Fund (XLI) returning nearly 9% year-to-date, significantly outperforming the S&P 500 [1] - The Trump administration's focus on boosting domestic manufacturing is contributing to a positive outlook for industrial companies [1] Company Summaries Nordson Corporation (NASDAQ: NDSN) - Nordson's stock has a 12-month price forecast of $253.17, indicating a potential upside of 19.24% from the current price of $212.31 [3][6] - The company reported adjusted earnings per share of $2.42, exceeding analyst expectations by $0.06, with revenue increasing by 5% year-over-year to $683 million [4] - Nordson's strong performance is supported by a 5% growth in backlog and positive forecasts for the third quarter, with expected adjusted EPS between $2.55 and $2.75 [5] VSE Corporation (NASDAQ: VSEC) - VSE's stock forecast suggests a 12-month price target of $125.17, reflecting a downside of 4.72% from the current price of $131.37 [8] - The company has transitioned to focus solely on aviation, recently acquiring Turbine Weld Industries to enhance its maintenance, repair, and overhaul services [9][10] - VSE's shares have surged 40% year-to-date, driven by strategic repositioning in the high-demand aviation sector [8] Cimpress plc (NASDAQ: CMPR) - Cimpress has a 12-month stock price forecast of $62.50, indicating a potential upside of 40.29% from the current price of $44.55 [12] - The company is shifting towards "elevated products" such as apparel and packaging, which aligns with recent sales growth trends [13] - Despite a nearly 38% decline year-to-date, Cimpress has seen a 9% increase in the last month, suggesting potential recovery [12]

Core Insights - The article promotes a premium service called "Value in Corporate Events" that focuses on major corporate events such as earnings reports, mergers and acquisitions (M&A), and initial public offerings (IPOs) [1] - The service aims to provide actionable investment ideas and covers approximately 10 significant events each month to identify the best opportunities for investors [1] Company and Industry Summary - The investing group "Value In Corporate Events" is positioned as a leader in providing insights and opportunities related to corporate events [1] - The service includes coverage of various corporate situations and names upon request, indicating a tailored approach to investment analysis [1]

Investment Rating - The report suggests a positive outlook for the aerospace and defense sectors, highlighting specific companies for investment opportunities [6]. Core Insights - The report indicates that technology giants may increase capital expenditures for data centers due to tariff pressures and uncertainties [2]. - The U.S. plans to modernize its national air traffic control system, which may benefit companies involved in aerospace and defense [22]. - The report notes a steady increase in the demand for industrial robots, particularly in the automotive sector, despite a slight decline in overall installations [35]. Summary by Sections Global Market Review - The S&P 500 and Dow Jones Industrial Average showed strong upward momentum, followed by some profit-taking, indicating a mixed market sentiment [9][10]. Infrastructure - The New England Independent System Operator expects an 11% increase in annual electricity consumption due to the electrification of heating systems and the adoption of electric vehicles [20]. - PJM is accelerating the construction of 11.8 GW of power projects to enhance electricity supply [20]. Energy - U.S. natural gas spot prices have adjusted, while futures prices are trending upward, with overall consumption remaining stable [5]. - International oil prices have decreased, and commercial crude oil and gasoline inventories have declined [5]. Aerospace - The U.S. aircraft engine and parts manufacturing price index remained stable, with a year-on-year increase of 2% [3][24]. - Global revenue passenger kilometers (RPK) increased by 3.3% year-on-year in March 2025, indicating a recovery in air travel demand [30]. Defense - NATO continues to strengthen its eastern flank defense capabilities, with significant military exercises planned in Estonia and Lithuania [33]. - The U.S. government approved a potential sale of AIM-9X Block II tactical missiles to Norway, supporting NATO allies [33]. Robotics - The report highlights that 541,302 industrial robots were installed in 2023, a slight decrease from the previous year, with the automotive sector regaining its position as the largest customer [35]. - The U.S. mechanical manufacturing price index showed a minor increase of 0.2% month-on-month [39]. Investment Recommendations - Companies such as Howmet Aerospace, Loar Holdings, and Safran are recommended for their potential benefits from the recovery in aerospace and defense spending [6]. - The report suggests monitoring companies like WMB and KMI, which are expected to benefit from the growing demand for natural gas infrastructure [6].

Financial Performance - Total revenues for Q1 2025 reached $256.045 million, a 57.7% increase from $162.383 million in Q1 2024[16] - Operating income for Q1 2025 was $24.504 million, compared to $15.643 million in Q1 2024, reflecting a 56.6% increase[16] - Net income from continuing operations for Q1 2025 was $13.968 million, up from $5.542 million in Q1 2024, representing a 151.5% increase[16] - Earnings per share from continuing operations for Q1 2025 was $0.68, compared to $0.35 in Q1 2024, an increase of 94.3%[16] - Comprehensive loss for Q1 2025 was $10.427 million, compared to a comprehensive loss of $4.107 million in Q1 2024[19] - The Company reported quarterly revenue of $256.0 million for the three months ended March 31, 2025, representing a 58% increase year-over-year[77] - Repair revenue increased by $41.1 million, or 76%, while aviation distribution revenue rose by $52.5 million, or 49%, compared to the same period in the prior year[79] - Operating income increased for the three months ended March 31, 2025, primarily driven by revenue growth and a favorable shift in sales mix and pricing[83] Cash Flow and Liquidity - Cash flows used in operating activities for Q1 2025 were $46.632 million, an improvement from $79.060 million in Q1 2024[24] - The Company’s cash and cash equivalents at the end of Q1 2025 were $10.508 million, slightly down from $10.569 million at the end of Q1 2024[24] - Cash used in operating activities decreased by $32.4 million for the three months ended March 31, 2025, primarily due to an increase in net income from continuing operations and improved receivable collections[91] - Cash provided by financing activities decreased by $20.1 million for the three months ended March 31, 2025, primarily reflecting lower net borrowings under the Company's credit agreement[93] - The Company believes its cash on hand, operating cash flows, and available credit will provide sufficient liquidity for business operations over the next twelve months[88] Acquisitions and Investments - The company completed the acquisition of Turbine Controls, Inc. for a total consideration of $122.4 million, enhancing its MRO capabilities[33] - The acquisition of Kellstrom Aerospace was completed for approximately $188.9 million, funded by a public offering and revolving credit facility[36] - The adjusted preliminary purchase price allocation for Kellstrom Aerospace includes total assets acquired of $233,079 thousand and total liabilities assumed of $44,213 thousand[39] - Goodwill from the Kellstrom Aerospace acquisition was recorded at $96,024 thousand, reflecting strategic advantages in distribution and MRO capabilities[40] - The acquisition of Turbine Weld Industries, LLC was completed on May 1, 2025, for a total consideration of approximately $50 million in cash[72] Debt and Interest Expenses - As of March 31, 2025, total debt was $465,006 thousand, with a weighted average interest rate of 6.67%[49] - The Company had $270.0 million outstanding under the term loan and $197.0 million under the revolving facility as of March 31, 2025[87] - Interest expense decreased for the three months ended March 31, 2025, due to a decrease in the Company's debt facility borrowings and a lower average interest rate[84] - The Company’s interest expense, net, decreased by 14% to $7.9 million for the three months ended March 31, 2025[79] Segment Performance - The Company recorded a pre-tax loss of $12.7 million related to the sale of the Federal and Defense segment in Q1 2024[43] - The Fleet segment was sold for total consideration of up to $230 million, with a pre-tax impairment loss of $33.7 million recorded in Q1 2025[44] - For Q1 2025, the pro forma revenue for Kellstrom Aerospace and VSE Corporation was $256,045 thousand, up from $200,758 thousand in Q1 2024[41] Taxation - The effective tax rate for continuing operations was 15.7% for the three months ended March 31, 2025, compared to 14.1% for the same period in 2024[70] - The effective tax rate for continued operations was 15.7% for the three months ended March 31, 2025, compared to 14.1% for the same period in 2024[85] Other Financial Metrics - The Company incurred $1.6 million in acquisition-related expenses for the TCI acquisition during Q1 2024, included in selling, general and administrative expenses[35] - The Company incurred $0.5 million of acquisition-related expenses during the three months ended March 31, 2025[73] - Amortization of intangible assets related to acquisitions was $6.1 million for the three months ended March 31, 2025, compared to $3.4 million for the same period in the prior year[82] - Total assets as of March 31, 2025, were $1,732.98 million, a slight decrease from $1,742.63 million as of December 31, 2024[63] - Goodwill decreased to $423.576 million as of March 31, 2025, due to measurement period adjustments related to the Kellstrom Aerospace acquisition[64] - Cash dividends paid totaled $2.1 million or $0.10 per share during the three months ending March 31, 2025[94]

Financial Performance - In Q1 2025, consolidated revenues increased by 58% to $256 million, driven by strong performance in core aviation distribution and MRO businesses, as well as contributions from recent acquisitions [19][21] - Adjusted EBITDA rose by 60% to $40 million, representing 15.8% of revenue, supported by strong end market activity and solid execution on distribution program awards [20][22] - Adjusted net income reached $16 million, with adjusted net income per diluted share increasing by 12,573% to $0.78 [20][22] Business Segment Performance - The aviation segment generated $256 million in revenue, a 58% increase year-over-year, with distribution revenue up by 49% and MRO revenue up by 76% [22][23] - Organic aviation segment revenue increased by approximately 12% compared to the prior year, excluding the impact of recent acquisitions [23] Market Environment - Despite global market uncertainties, demand remains solid, supported by strong global passenger traffic trends [15][16] - The company expects commercial aftermarket growth in the range of 8% to 10% for 2025, and 5% to 6% for products and services supporting business and general aviation customers [17] Company Strategy and Development Direction - The company completed the sale of its fleet segment, focusing on higher growth and margin opportunities in the aviation aftermarket [8][9] - An acquisition of Turbine Weld Industries was announced, enhancing the company's position in the business and general aviation engine aftermarket [9][10] - A new five-year authorized service center agreement with Eaton was signed, enhancing aftermarket repair capabilities [10] Management Commentary on Operating Environment and Future Outlook - Management remains cautiously optimistic about aircraft utilization holding strong throughout the year, supporting robust aftermarket demand [15][16] - The company is monitoring tariff impacts closely and does not expect any significant revisions to its 2025 revenue or margin guidance [19] Other Important Information - A new $700 million credit facility was established, providing increased flexibility and lower cost of capital [11][29] - The company is conducting a comprehensive review of its corporate structure and cost base to align with its aviation-focused strategy [31] Q&A Session Summary Question: Margin outlook and opportunities for the second half of the year - Management indicated that Q1 typically has the strongest margins and expects continued benefits from integration synergies throughout the year [39][42] Question: Sensitivity of business jets relative to commercial transport amid potential economic slowdown - Management believes backlog and engine overhauls will continue regardless of market conditions, with potential pressure on non-engine related repairs [44][45] Question: Acceleration of integration of recent acquisitions - Management is learning to shift integrations to drive synergies faster but does not expect to complete all integrations before 2026 [48][49] Question: Metrics to gauge demand trends - Management emphasized traffic data as the strongest indicator and is closely monitoring booking backlogs [56][60] Question: Cash flow expectations and investments - Management expects strong free cash flow in the second half of the year, with strategic inventory purchases impacting Q1 cash flow [63][67] Question: Origin and future opportunities with Eaton - The Eaton deal aligns with the company's OEM-centric strategy, and management sees it as a starting point for further collaboration [77][78] Question: Future M&A activity - Management indicated a disciplined approach to M&A, with a strong pipeline of smaller deals and potential transformational opportunities [82][84] Question: Component repair capacity timeline - Management stated that capacity improvements will occur in phases, with a focus on increasing operational efficiency [92][93]

Financial Data and Key Metrics Changes - In Q1 2025, consolidated revenues increased by 58% to $256 million, driven by strong performance in core aviation distribution and MRO businesses, as well as contributions from recent acquisitions [18][20] - Adjusted EBITDA rose by 60% to $40 million, representing 15.8% of revenue, reflecting strong end market activity and execution on distribution program awards [19][20] - Adjusted net income reached $16 million, with adjusted net income per diluted share increasing by 12,573% to $0.78 [19][20] Business Line Data and Key Metrics Changes - The aviation segment generated $256 million in revenue, a 58% increase year-over-year, with distribution revenue up by 49% and MRO revenue up by 76% [21][22] - Organic aviation segment revenue increased by approximately 12% in Q1 compared to the prior year [22] Market Data and Key Metrics Changes - Despite global market uncertainties, demand remains solid, supported by strong global passenger traffic trends [14] - The company expects commercial aftermarket growth in the range of 8% to 10% for 2025, and 5% to 6% for products and services supporting business and general aviation customers [15] Company Strategy and Development Direction - The company completed the sale of its fleet segment, marking a significant step in its multi-year strategic transformation to focus on aviation aftermarket parts and services [6][7] - The acquisition of Turbine Weld Industries enhances the company's position in the aviation engine aftermarket and supports collaboration with OEM partners [7][8] - The company aims to capture synergies from recent acquisitions to support margin expansion throughout 2025 and into 2026 [30] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about aircraft utilization and robust aftermarket demand, despite potential macroeconomic pressures [14][15] - The company does not expect any tariff-related impacts that would require revising its previously issued 2025 revenue or margin guidance [17] Other Important Information - A new $700 million credit facility was established, providing increased flexibility and lower cost of capital [10][27] - The company is conducting a comprehensive review of its corporate and business unit cost structure to align with its aviation-focused strategy [30] Q&A Session Summary Question: Margin outlook and opportunities for the back half of the year - Management indicated that Q1 typically has the strongest margins and expects continued benefits from integration synergies throughout the year [36][38] Question: Sensitivity of business jets relative to commercial transport - Management believes that backlog and engine overhauls will continue regardless of market conditions, with potential pressure more likely on non-engine related repairs [40][41] Question: Acceleration of integration of recent acquisitions - Management is learning where to shift integrations to drive synergies faster, but expects the earliest completion of integrations to be around 18 months [44][45] Question: Metrics to gauge demand trends - Management considers traffic data and booking backlogs as strong indicators of market health, with a cautious approach to potential capacity cuts [49][50] Question: Progress of the Honeywell fuel control OEM solutions acquisition - Management expects to start looking for new opportunities in 2026, with ongoing efforts to secure engineering approvals [68][69] Question: Future M&A volume expectations - Management maintains a disciplined approach to M&A, with a strong pipeline of smaller deals and a few transformational opportunities [70][71]

Financial Performance - First quarter revenue reached $256 million, a 58% increase year-over-year, driven by contributions from Aviation distribution and MRO businesses, as well as the TCI and Kellstrom acquisitions[12] - Adjusted EBITDA was $40 million, representing 15.8% of revenue, a 60% increase year-over-year, driven by distribution programs, increased MRO activity, OEM licensed manufacturing, and acquisitions[12] - Adjusted Net Income was $16 million, and Adjusted diluted earnings per share reached $0.78, increasing 125% and 73% respectively[12] - Adjusted Net Leverage reduced to 2.2x in the first quarter, pro forma for the sale of Fleet segment[12] Strategic Developments - The company completed the sale of the Fleet segment, repositioning itself as a pure-play Aviation Aftermarket business[6] - Turbine Weld Industries was acquired, expanding MRO engine component capabilities[6] - A new 5-year authorized services center agreement was signed with Eaton, supporting aftermarket MRO for Eaton hydraulics across the Americas[6] - The company completed Term Loan A and Revolving Credit Facility refinancing, providing a lower interest rate, greater flexibility, and increased capacity[6] Future Outlook - The company reaffirms its aviation guidance, expecting organic growth driven by market share gains, distribution program growth, and MRO capability expansion[21] - Kellstrom and TCI acquisitions are expected to contribute to 2025 revenue growth[21] - Net Debt outstanding was $459 million, and Cash and Revolver availability was $158 million[29]

Financial Performance - Total revenues for Q1 2025 reached $256.0 million, an increase of 57.7% compared to Q1 2024[4] - GAAP net income for Q1 2025 was $14.0 million, reflecting a 152.0% increase year-over-year[4] - Adjusted EBITDA for Q1 2025 was $40.4 million, up 60.0% from the previous year[4] - Operating income for Q1 2025 was $24,504,000, a 56.5% increase from $15,643,000 in Q1 2024[33] - Net income from continuing operations was $13,968,000, compared to $5,542,000 in Q1 2024, marking a 151.5% increase[33] - Adjusted EPS (Diluted) for continuing operations was $0.67, up from $0.35 in the previous year[33] Revenue Breakdown - Product revenues increased to $160,551,000, up 48.6% from $108,023,000 year-over-year[33] - Service revenues rose to $95,494,000, representing a 75.8% increase compared to $54,360,000 in the same quarter last year[33] - The aviation segment reported a revenue increase of 58% year-over-year, driven by strong end-market activity and contributions from recent acquisitions[7] - Full-year 2025 revenue growth is projected to be between 35% to 40% compared to the prior year[10] Cash Flow and Liquidity - As of March 31, 2025, VSE had $158 million in cash and a total net debt of $459 million, with an adjusted net leverage ratio of approximately 2.2x post-Fleet sale[8][21] - Cash and cash equivalents decreased to $5,711,000 from $29,505,000 at the end of 2024[32] - Current liabilities decreased to $248,299,000 from $298,500,000 at the end of 2024, indicating improved liquidity[32] - Net cash used in operating activities decreased to $46,632,000 in Q1 2025 from $79,060,000 in Q1 2024, showing an improvement of 41.0%[34] - Cash flows from investing activities resulted in a net cash outflow of $129,000 in Q1 2025, compared to a net cash inflow of $33,408,000 in Q1 2024[34] - Net cash provided by financing activities was $28,239,000 in Q1 2025, down from $48,291,000 in Q1 2024, reflecting a decrease of 41.5%[34] - Cash and cash equivalents at the end of Q1 2025 were $10,508,000, slightly down from $10,569,000 at the end of Q1 2024[34] Expenses and Losses - The company reported a net loss of $8,973,000 for Q1 2025, compared to a net loss of $6,611,000 in Q1 2024[33] - Depreciation and amortization expenses increased to $9,905,000 in Q1 2025 from $5,945,000 in Q1 2024, reflecting a rise of 66.1%[34] - Impairment and loss on sale of business segments amounted to $33,952,000 in Q1 2025, up from $16,867,000 in Q1 2024, indicating a significant increase of 101.5%[34] - Net loss for Q1 2025 was $8,973,000, compared to a net loss of $6,611,000 in Q1 2024, representing an increase in loss of approximately 35.8%[34] Strategic Actions - VSE completed the divestiture of its Fleet segment for up to $230 million, marking a strategic transformation into a pure-play aviation aftermarket provider[5] - The acquisition of Turbine Weld was finalized for approximately $50 million, enhancing VSE's MRO capabilities[6] - VSE signed a 5-year authorized service agreement with Eaton to provide repair and overhaul services for hydraulic components in large commercial aircraft[9] Dividends and Borrowings - Dividends paid increased to $2,060,000 in Q1 2025 from $1,577,000 in Q1 2024, representing an increase of 30.6%[34] - Borrowings on bank credit facilities in Q1 2025 totaled $74,489,000, compared to $211,082,000 in Q1 2024, indicating a decrease of 64.7%[34] Asset Management - Total assets as of March 31, 2025, were $1,732,982,000, slightly down from $1,742,630,000 at the end of 2024[32] - Changes in operating assets and liabilities included a decrease in receivables of $19,393,000 in Q1 2025, compared to a decrease of $24,604,000 in Q1 2024[34]