VSE (NasdaqGS:VSEC) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Company ParticipantsAdam Cohn - CFOJohn Cuomo - President and CEOJonathan Siegmann - Managing Director and Equity ResearchMichael Perlman - VP of Investor Relations and CommunicationsConference Call ParticipantsJeff Van Sinderen - Senior Research AnalystJohn Godyn - Research AnalystKen Herbert - Managing Director and Senior Aerospace and Defense AnalystLouie DiPalma - Research AnalystLouis Raffetto - Senior VP and Equity Research Analys ...

VSE (NasdaqGS:VSEC) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Company ParticipantsAdam Cohn - CFOJohn Cuomo - President and CEOJonathan Siegmann - Managing Director and Equity ResearchMichael Perlman - VP of Investor Relations and CommunicationsConference Call ParticipantsJeff Van Sinderen - Senior Research AnalystJohn Godyn - Research AnalystKen Herbert - Managing Director and Senior Aerospace and Defense AnalystLouie DiPalma - Research AnalystLouis Raffetto - Senior VP and Equity Research Analys ...

VSE (NasdaqGS:VSEC) Q4 2025 Earnings call February 26, 2026 08:30 AM ET Speaker10Good day. Thank you for standing by. Welcome to the VSE Corporation Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your quest ...

Core Viewpoint - VSE's acquisition of Precision Aviation Group (PAG) is seen as transformational, shifting the company's business mix towards higher free cash flow and enhanced repair capabilities [4][7]. Company Strategy - VSE aims to create a differentiated aviation aftermarket platform by integrating distribution, repair services, and intellectual property-driven revenue streams [4][8]. - The company is focused on bridging gaps in the aviation aftermarket by combining new parts, used parts, and repair services into a unified model [3][9]. Financial Projections - VSE expects post-acquisition leverage to be around 2.5x to 3x, with a conservative estimate of $15 million in cost synergies [5][15]. - The company targets adjusted EBITDA margins of over 20% by late 2027 to 2028, with a goal of achieving 30% to 35% EBITDA-to-free-cash-flow conversion and becoming free cash flow positive in 2025 [6][16]. Market Growth and Segmentation - VSE's revenue is expected to grow across four categories: commercial engines, commercial non-engines, business and general aviation (BGA) engines, and BGA non-engines, with growth rates varying from 5% to mid-double digits [10][11]. - The total aviation aftermarket is estimated at approximately $150 billion, with VSE targeting both service competitors and OEMs [11]. Integration and Synergies - VSE plans a phased, low-risk integration approach for PAG, focusing on validating operations early and integrating in smaller segments [19][20]. - The company acknowledges that the $15 million synergy estimate may be conservative, with potential for higher synergies from various initiatives [18][19]. Historical Performance - VSE has achieved approximately 15% organic growth over the past three years, with a compound annual growth rate (CAGR) of around 30% [12]. - The company has improved its margins from around 11.5% six years ago to "well north of 15%" currently [13].

Group 1 - The company is positioned as an aerospace compounder with significant potential for mergers and acquisitions (M&A), particularly highlighted by the recent PAG deal which is expected to substantially increase revenue [1] - The CEO has identified gaps in the aviation aftermarket, emphasizing the need for integrated services that combine new parts, used parts, and repairs, which are often not effectively addressed by competitors [2][3]

Core Viewpoint - VSE Corporation has initiated concurrent public offerings totaling $650 million in common stock and $350 million in tangible equity units to finance the acquisition of Precision Aviation Group, Inc. [1][2] Group 1: Offerings Details - The offerings consist of $650 million of common stock and $350 million of tangible equity units, with an option for underwriters to purchase an additional 15% of the shares [1] - Each Unit includes a prepaid stock purchase contract and a senior amortizing note due February 1, 2029, with quarterly cash installments for interest and principal repayment [3] - The common stock and Units offerings are independent and not contingent on the completion of the PAG Acquisition or any debt financing [4] Group 2: Use of Proceeds - The net proceeds from the offerings will primarily fund the acquisition of Precision Aviation Group, Inc. [2] - If the PAG Acquisition does not occur, the proceeds will be used for general corporate purposes, including potential redemption of the Units [4] Group 3: Company Overview - VSE Corporation is a leading provider of aviation aftermarket distribution and repair services, focusing on enhancing the productivity and longevity of high-value assets [7] - The company supports engine component and airframe accessory part distribution and repair services for commercial and business aviation operators [8]

Core Viewpoint - VSE Corporation has announced a definitive agreement to acquire Precision Aviation Group (PAG) for approximately $2.025 billion, which is expected to significantly enhance VSE's aviation aftermarket strategy and profitability over the coming years [2][6]. Deal Rationale: Scale, Footprint, and Capabilities - The acquisition is projected to increase VSE's revenue by about 50% on a pro forma basis and aims for more than 20% consolidated adjusted EBITDA margins in the next few years as integration and synergies are realized [3][6]. - Management anticipates approximately $15 million in annualized synergies from the acquisition, driven by procurement, network optimization, and cross-selling opportunities [6]. - The combination of VSE and PAG is described as complementary, with minimal overlap in capabilities, enhancing VSE's global footprint and improving customer service metrics such as turnaround times and supply chain responsiveness [3][5]. Operational Expansion - Post-acquisition, the combined company will operate 60 locations globally, which includes 47 repair facilities and 11 distribution centers of excellence [4]. - PAG is recognized as a global provider of aviation aftermarket MRO services, distribution, and supply chain solutions across various aviation sectors, including commercial, business, general aviation, rotorcraft, and defense [5]. Financial Details - The deal structure includes $1.75 billion in cash, approximately $275 million in equity to GenNx360, and up to $125 million in earnout, valuing PAG at about 13.5 times projected 2025 adjusted EBITDA [6]. - PAG is expected to contribute approximately $615 million in pro forma revenue for 2025, with adjusted EBITDA margins exceeding 20% [6].

VSE Corporation Conference Call Summary Company Overview - **Company**: VSE Corporation - **Acquisition Target**: Precision Aviation Group (PAG) - **Transaction Value**: Approximately $2.025 billion, consisting of $1.75 billion in cash and $275 million in equity consideration [17][18] Key Points from the Conference Call Acquisition Details - VSE Corporation has signed a definitive agreement to acquire PAG, which is expected to increase VSE's revenue by about 50% on a pro forma basis [4][6] - The acquisition aims to create a higher-margin aviation aftermarket platform, with expectations of over 20% consolidated adjusted EBITDA margins in the coming years [4][11] - The deal is anticipated to be immediately accretive to VSE's adjusted EBITDA margin [18] Strategic Rationale - The acquisition broadens VSE's global footprint, enhancing customer proximity and supply chain responsiveness [5] - It expands VSE's parts, repair, and proprietary capabilities, creating one of the most diverse aftermarket capability sets in the market [5][10] - PAG supports over 10,000 active customers across various aviation sectors, improving resilience through market cycles [5][9] Financial Performance - VSE's aviation segment revenue has grown approximately 30% CAGR from $225 million in 2019 to about $1.1 billion in 2025 [7] - Consolidated adjusted EBITDA margins expanded over 400 basis points to approximately 16.3% in 2025 [7] - Preliminary fourth quarter and full year 2025 revenue is expected to be in the range of $290-$304 million and $1.101-$1.115 billion, respectively [19] Integration and Synergies - VSE and PAG are expected to realize over $15 million in annualized synergies through operational and corporate support integration [16] - The integration strategy will focus on optimizing consolidated offerings, cross-selling, and improving operational efficiencies [16][28] - The integration is planned to kick off in January 2027, allowing PAG to continue its operational excellence until then [49] Market Position and Growth Opportunities - The combined company will employ approximately 2,600 people across 60 locations in eight countries [10] - The end market exposure post-acquisition is expected to be approximately 50% business and general aviation, 45% commercial, and 5% military [11] - VSE aims to leverage PAG's capabilities to enhance its proprietary solutions, which currently represent under 10% of PAG's revenue [39][57] Future Outlook - VSE anticipates continued growth in proprietary solutions and plans to partner with OEMs to address supply chain constraints [39] - The focus will be on smaller tuck-in acquisitions to enhance capabilities rather than large transformational deals [46] - The integration plan will be shared in detail during an investor day scheduled for early January [42] Additional Insights - PAG operates 29 locations worldwide and completes over 175,000 repairs annually, generating approximately $615 million in adjusted revenue for the full year ended December 31, 2025 [9] - The acquisition is seen as a transformational step for VSE, enhancing its capabilities and market position as a critical partner to aviation operators globally [20][60]

Acquisition Announcement VSE to Acquire Precision Aviation Group vsecorp.com January 29, 2026 vsecorp.com Safe Harbor Statement Forward-Looking Statements This presentation contains statements that, to the extent they are not recitations of historical fact, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. All such statements are intended to be covered by the safe harbor provisions ...

Core Insights - AerSale Corporation has opened a new Aerostructures MRO facility in Hialeah Gardens, Florida, which replaces its previous operation in Medley, Florida, marking a significant expansion in capabilities and capacity [1][5] Facility Expansion - The new facility spans just under 90,000 square feet, approximately three times larger than the previous location, significantly increasing throughput while maintaining high-quality structural repair standards [2][12] - The facility is equipped with advanced infrastructure, including a new heating oven, paint booth, and sanding booth, capable of accommodating larger widebody structures such as Boeing 777 and Airbus A330 components, as well as GE90 and Rolls-Royce Trent engine nacelles and thrust reversers [3][12][14] Strategic Location - The Hialeah Gardens facility is strategically located between Miami International Airport and Fort Lauderdale-Hollywood International Airport, providing logistical advantages for airlines, operators, and lessors in the Americas and beyond [4] Commitment to Investment - The opening of the new facility reflects AerSale's commitment to investing in infrastructure, technology, and capabilities that deliver value to customers in the global aviation aftermarket [5]