Financial Data and Key Metrics Changes - Total adjusted sales grew 13% to $740 million year over year, with organic sales growth at 17% when excluding landing gear sales from the previous year [9][10] - Adjusted EBITDA increased 18% to $86.7 million, with adjusted EBITDA margins rising to 11.7% from 11.3% [9] - Adjusted diluted EPS increased by 27% to $1.08 from $0.85 in the same quarter last year [10] Business Line Data and Key Metrics Changes - Parts supply sales grew 27% to $318 million, with adjusted EBITDA of $43.8 million, up 34%, and adjusted EBITDA margin increasing to 13.8% from 13.1% [10][11] - Repair and engineering sales decreased 1% to $215 million, but organic sales growth was 8% when excluding landing gear divestiture, with adjusted EBITDA of $28.1 million, up 1% [11][12] - Integrated solutions sales increased by 10% year over year to $185 million, with adjusted EBITDA of $14.2 million, up 5% [12] Market Data and Key Metrics Changes - Adjusted sales growth to government customers increased 21%, while adjusted organic sales to commercial customers increased 15% [9] - Total commercial sales accounted for 71% of total sales, with government sales making up the remaining 29% [9] Company Strategy and Development Direction - The company is focused on driving growth through market share capture and new business, improving margins through cost efficiency, and increasing intellectual property through software investments [5][15] - The acquisition of Aerostrat is expected to enhance software capabilities and expand the reach of Trax software solutions [8][14] - The company aims to continue strengthening its offerings with targeted acquisitions to accelerate its strategy [15][16] Management's Comments on Operating Environment and Future Outlook - Management expects sales growth of 7% to 10% for Q2, with organic sales growth approaching 10% for the full fiscal year [15] - The company is encouraged by the additional assets coming to market, which is expected to drive growth in the USM business [31] - Management highlighted the importance of maintaining cash positivity while investing in inventory to support growth [37] Other Important Information - The company invested over $50 million in inventory to support future growth, particularly in parts supply [14] - Net debt leverage increased slightly from 2.72 times to 2.82 times due to organic and inorganic investments [13] Q&A Session Summary Question: What is behind the slight uptick in full-year expectations? - Management indicated that parts supply is leading the way with a strong quarter showing 27% organic growth [18] Question: Can you comment on the pipeline for new distribution agreements? - Management noted that the majority of recent wins have been from taking market share, with a different exclusive distribution model resonating well [19][20] Question: Do you expect to outgrow the market within distribution? - Management confirmed the expectation to maintain growth above market rates in distribution [24] Question: What are the cross-selling opportunities within repair and engineering? - Management stated that they are in the early stages of executing a cross-selling strategy, with a long pipeline of opportunities [26] Question: Has the trend in USM sales continued into the current quarter? - Management confirmed a meaningful growth in USM business, driven by a loosening supply of assets [31] Question: What is the margin opportunity for parts supply with more USM available? - Management indicated that while USM margins have been depressed, they expect margins to expand as more supply comes to market [32] Question: Is there an agreement with Aerostrat employees to retain key personnel? - Management confirmed an earnout agreement for key team members to incentivize retention [33] Question: What is the company's exposure to engine-related aftermarket services? - Management highlighted significant exposure, with 80% of USM parts being engine-related [41] Question: How far along is Trax in becoming a digital marketplace? - Management stated that they are actively investing in making Trax a digital marketplace, with announcements expected in the first half of 2026 [45]

Financial Data and Key Metrics Changes - Total adjusted sales grew 13% to $740 million year over year, with organic sales growth at 17% when excluding landing gear sales from the previous year [10][11] - Adjusted EBITDA increased 18% to $86.7 million, with adjusted EBITDA margins rising to 11.7% from 11.3% [10] - Adjusted diluted EPS increased by 27% to $1.08 from $0.85 in the same quarter last year [11] Business Line Data and Key Metrics Changes - Parts supply sales grew 27% to $318 million, with adjusted EBITDA of $43.8 million, up 34%, and adjusted EBITDA margin increasing to 13.8% from 13.1% [11][12] - Repair and engineering sales decreased 1% to $215 million, but organic sales growth was 8% when excluding landing gear divestiture, with adjusted EBITDA of $28.1 million, up 1% [12] - Integrated solutions sales increased by 10% year over year to $185 million, with adjusted EBITDA of $14.2 million, up 5% [13] Market Data and Key Metrics Changes - Adjusted sales growth to government customers increased 21%, while adjusted organic sales to commercial customers increased 15% [10] - Total commercial sales accounted for 71% of total sales, with government sales making up the remaining 29% [10] Company Strategy and Development Direction - The company is focused on driving growth through market share capture and new business, improving margins through cost efficiency, and increasing intellectual property through software investments [6][16] - The acquisition of Aerostrat is expected to enhance software capabilities and expand the reach of Trax software solutions [9][15] - The company aims to strengthen its offerings with targeted acquisitions to accelerate its strategy [16][17] Management's Comments on Operating Environment and Future Outlook - Management expects sales growth of 7% to 10% for Q2, with full fiscal year organic sales growth approaching 10% [16] - The company is well positioned in attractive segments of the growing aviation aftermarket, with unique distribution and repair capabilities [16] Other Important Information - The company invested over $50 million in inventory to support future growth, particularly in parts supply [15][37] - Net debt leverage increased slightly from 2.72 times to 2.82 times due to organic and inorganic investments [14] Q&A Session Summary Question: What is behind the slight uptick in full-year expectations? - Management indicated that parts supply is leading the way with a strong quarter showing 27% organic growth [19] Question: Can you comment on the pipeline for new distribution agreements? - The majority of recent wins have been from taking market share, with a different exclusive distribution model resonating well with OEMs [20][21] Question: Do you still expect to outgrow the market within distribution? - Management confirmed the expectation to maintain growth above market rates in distribution [25] Question: Can you discuss cross-selling opportunities within repair and engineering? - Management noted they are in the early stages of executing a cross-selling strategy, with a long pipeline of opportunities [26][28] Question: Has the trend in USM sales continued into the current quarter? - Management observed a meaningful growth in USM business, driven by a loosening supply of assets [31] Question: What is the margin opportunity for parts supply if more USM comes available? - Management expects margins to expand as more supply comes onto the market, although current margins are tighter than historical levels [32] Question: Is there an agreement with Aerostrat employees to ensure retention? - There is a three-year earnout associated with the acquisition to incentivize key team members to stay [33] Question: What is the company's exposure to engine-related aftermarket services? - Management stated that 80% of USM parts business is engine-related, indicating significant exposure in this area [41] Question: How far along is Trax in becoming a digital marketplace? - Management is actively investing in making Trax a digital marketplace, with expected announcements in the first half of 2026 [45]

Financial Performance - VSE achieved record revenue of $272 million in Q2 2025, a 41% increase year-over-year, driven by strong performance in aviation distribution and MRO businesses [17][21] - Adjusted EBITDA rose 52% to $43 million, with an adjusted EBITDA margin of 16%, reflecting a 110 basis point improvement from the previous year [21][17] - Adjusted net income increased by 149% to $20 million, with adjusted diluted earnings per share rising to $0.97, a 106% increase [21][19] Business Segment Performance - The Aviation segment generated $272 million in revenue, a 41% increase, with distribution revenue up 50% and MRO revenue up 27% [22][21] - Organic revenue growth in the Aviation segment was approximately 13% when excluding recent acquisitions [22] - Adjusted EBITDA for the Aviation segment increased by 48% to $47 million, representing 17.1% of revenue, driven by favorable pricing and product mix [23][21] Market Environment - The second quarter began with softness in the aftermarket due to tariff uncertainties, but activity rebounded in May and June [15] - The aviation aftermarket, particularly in the engine segment, is expected to remain strong, with engine-related MRO and distribution revenue accounting for over 50% of total aviation revenue [16][17] Company Strategy and Industry Competition - VSE completed the sale of its fleet segment, focusing on higher growth and higher margin distribution and MRO services within the aviation aftermarket [7][6] - The company is prioritizing integration of recent acquisitions to unlock efficiencies and enhance customer value, with a focus on capturing synergies [29][30] - VSE is expanding repair capabilities and increasing capacity across operations to meet strong demand [28][30] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in continued strength in the aviation aftermarket, particularly in the engine segment, and highlighted targeted investments to capitalize on growth [16][28] - The company reaffirmed its full-year 2025 Aviation segment revenue growth guidance of 35% to 40% and raised adjusted EBITDA margin guidance to 16.5% to 17% [24][25] Other Important Information - VSE secured a new $700 million credit facility, providing financial flexibility to support growth initiatives [9] - The company generated approximately $6 million in free cash flow during the quarter, an improvement of $28 million year-over-year [26][27] Q&A Session Summary Question: Can you discuss organic growth expectations for the second half of the year? - Management indicated that organic growth is expected to continue, with engine markets outperforming component markets, particularly in commercial aviation [35][36] Question: What are the synergies expected from recent acquisitions? - Management noted that significant cost synergies have already been captured, with ongoing opportunities for margin expansion as integrations progress [68][70] Question: How sustainable is the free cash flow generation? - Management highlighted a strong cash generation in the first half and anticipated continued improvement in free cash flow in the second half, driven by better working capital management [44][45] Question: What is the outlook for the Honeywell fuel control program? - Management stated that the program is performing well, but further growth opportunities will be evaluated after achieving full implementation [72][73] Question: What is the strategy for the USM business moving forward? - The company plans to shift the USM business towards a used and repair model, focusing on margin expansion rather than transactional parts trading [46][50]

Financial Performance - VSE achieved record revenue of $272 million in Q2 2025, a 41% increase year-over-year, driven by strong performance in aviation distribution and MRO businesses [16][18] - Adjusted EBITDA increased by 52% to $43 million, with an adjusted EBITDA margin of 16%, reflecting a 110 basis point improvement from the prior year [16][18] - Adjusted net income reached $20 million, with adjusted net income per diluted share of $0.97, marking increases of 149% and 106% respectively [16][19] Business Segment Performance - Aviation segment revenue also increased by 41% to $272 million, with distribution revenue up 50% and MRO revenue up 27% [20] - Organic revenue growth in the aviation segment was approximately 13% when excluding recent acquisitions [20] - The company is focusing on higher margin product lines, leading to a reduction in less profitable used serviceable material (USM) revenue by about 20% on a run rate basis [11][20] Market Environment - The aviation aftermarket showed resilience, with a rebound in activity in May and June after initial softness due to tariff uncertainties [15] - Engine-related MRO and distribution revenue now represents over 50% of total aviation revenue, indicating strong demand in this segment [15] Company Strategy and Development Direction - VSE completed the sale of its fleet segment, transitioning to a pure play aviation aftermarket company, and is now focused on higher growth and higher margin opportunities [6][25] - The company is prioritizing integration of recent acquisitions, including Turbine Weld and Kaelstrom, to unlock efficiencies and enhance customer value [26] - VSE is also capturing cost synergies from acquisitions, with $4 million in identified cost savings already being realized [12][26] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in continued strength in the aviation aftermarket, particularly in the engine segment, and anticipates revenue growth of 35% to 40% for the full year 2025 [22][15] - The company is raising its full-year adjusted EBITDA margin guidance to 16.5% to 17%, reflecting a higher margin product mix [22] Other Important Information - VSE secured a new $700 million credit facility, providing financial flexibility to support growth initiatives [7] - The company generated approximately $6 million in free cash flow during the quarter, an improvement of about $28 million compared to the previous year [24] Q&A Session Summary Question: Can you discuss organic growth expectations for the second half of the year? - Management indicated that organic growth is expected to be in the low to mid-teens, with engine markets outperforming component markets [32][34] Question: What are the synergies from recent acquisitions? - Management noted that synergies from Kaelstrom are being realized ahead of schedule, contributing to strong margins [36][62] Question: How sustainable is the free cash flow generation? - Management expects strong improvement in free cash flow in the second half of the year, driven by better working capital management [42] Question: What is the strategy for the USM business? - The company is shifting the USM business to focus on higher margin product lines and integrating it with repair capabilities [45][84] Question: What are the opportunities in the hydraulics market? - Management sees potential in the hydraulics market, emphasizing faster turnaround times and quality in supporting OEM authorized work [73] Question: What is the outlook for engine aftermarket demand? - Management believes that engine aftermarket demand will continue to outpace component demand in the near to mid-term due to supply chain constraints [77]

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]

FY25 Financial Performance - Adjusted sales increased by 20% from $2.3 billion in FY24 to $2.8 billion in FY25[10] - Adjusted EBITDA increased by 34% from $242 million in FY24 to $324 million in FY25[10] - Adjusted EPS increased by 17% from $3.33 in FY24 to $3.91 in FY25[10] - Net leverage decreased from 3.30x in FY24 to 2.72x in FY25[10] Q4 FY25 Financial Performance - Adjusted EPS increased by 32% from $0.88 in Q4 FY24 to $1.16 in Q4 FY25[14] - Adjusted sales increased by 12% from $658.8 million in Q4 FY24 to $735.8 million in Q4 FY25[14] - Adjusted operating income increased by 25% from $61.3 million in Q4 FY24 to $76.9 million in Q4 FY25[14] - Adjusted EBITDA increased by 19% from $76.4 million in Q4 FY24 to $90.9 million in Q4 FY25[14] Segment Performance in Q4 FY25 - Parts Supply sales increased by 17% from $260.3 million in Q4 FY24 to $305.5 million in Q4 FY25[14] - Integrated Solutions sales increased by 10% from $165.8 million in Q4 FY24 to $181.5 million in Q4 FY25[14]

Core Insights - The aviation industry is experiencing growth due to increased air traffic and supply chain disruptions, benefiting companies like AerSale Corporation (ASLE) and Air Lease Corp. (AL) [1][2] - ASLE specializes in aftermarket services and parts, while AL focuses on leasing new aircraft, both of which are in demand due to current market conditions [2][3] Summary of AerSale Corporation (ASLE) - Recent Achievements: ASLE's Q1 2025 revenues for Used Serviceable Material (USM) and engine leasing increased by 44.1% and 143.4% year over year, indicating strong demand [4] - Strategic Acquisition: In January 2025, ASLE acquired a parts portfolio from Sanad Group, enhancing its inventory for popular aircraft models [5] - Financial Stability: As of March 31, 2025, ASLE had $11 million in cash, $1 million in current debt, and $4 million in long-term debt, reflecting a strong solvency position [6] - Share Repurchase: In March 2025, ASLE signed an agreement to repurchase $45 million in shares from Leonard Green & Partners, L.P. [7] Summary of Air Lease Corp. (AL) - Recent Achievements: AL reported an 11.3% year-over-year revenue increase and a net income surge of 274.5% in Q1 2025, with a fleet net book value of $28.6 billion [8][9] - Order Pipeline: AL has contractual commitments for 260 new aircraft from Airbus and Boeing, valued at $16.6 billion, enhancing its long-term revenue prospects [9] - Financial Stability: As of March 31, 2025, AL's cash and cash equivalents were $0.46 billion, with long-term debt at $19.89 billion, indicating a solid solvency position for future investments [10] Comparative Analysis - Stock Performance: ASLE has underperformed with a 12.5% decline over the past three months, while AL has increased by 26% [16] - Valuation Metrics: ASLE trades at a forward earnings multiple of 10.68X, higher than AL's 9.06X, suggesting a less attractive valuation for ASLE [17] - Return on Equity: AL demonstrates a better Return on Equity (ROE) compared to ASLE, indicating more efficient profit generation [21] Final Insights - Both ASLE and AL are positioned to benefit from long-term aviation sector tailwinds, but their near-term prospects differ significantly [22] - AL's consistent growth, strong order backlog, and higher ROE make it a more attractive investment compared to ASLE, which faces declining EPS estimates and a premium valuation [23][24] - AL holds a Zacks Rank 2 (Buy), while ASLE has a Zacks Rank 5 (Strong Sell), indicating a preference for AL among investors [25]

Core Insights - Two stocks are highlighted for investors: ENGIE - Sponsored ADR and AerSale, both with strong buy rankings and positive momentum characteristics [1][3] Company Summaries ENGIE - Sponsored ADR - ENGIE operates in the power, natural gas, and energy services sectors, holding a Zacks Rank 1 (Strong Buy) [1] - The Zacks Consensus Estimate for ENGIE's current year earnings has increased by 10.6% over the last 60 days [1] - ENGIE's shares have gained 24.8% over the last three months, contrasting with the S&P 500's decline of 14.3% [2] - The company has a Momentum Score of A [2] AerSale - AerSale provides integrated, diversified aviation aftermarket products and services aimed at helping aircraft owners and operators save on operation, maintenance, and monetization [3] - AerSale also holds a Zacks Rank 1 (Strong Buy), with the Zacks Consensus Estimate for its current year earnings increasing by 62.5% over the last 60 days [3] - The company's shares have gained 11.1% over the last three months, while the S&P 500 has declined by 14.3% [4] - AerSale has a Momentum Score of B [4]

Financial Data and Key Metrics Changes - VSE Corporation generated $299 million in revenue for Q4 2024, a 27% increase year-over-year, driven by a 48% increase in aviation revenue, partially offset by a 12% decline in fleet revenue [23][24] - Adjusted EBITDA for Q4 increased 26% to $40 million, with adjusted net income at $18 million and adjusted diluted earnings per share at $0.90 [23][24] - For the full year 2024, consolidated revenue reached approximately $1.1 billion, up 26% from 2023, with adjusted EBITDA increasing 20% to $136 million [24][25] Business Line Data and Key Metrics Changes - The Aviation segment reported record revenue of $786 million for 2024, a 45% increase year-over-year, with adjusted EBITDA rising 47% to $129 million [30][31] - The Fleet segment experienced a revenue decline of 30% from the USPS program, but commercial sales grew by 18% [38][39] - Aviation revenue in Q4 was $227 million, with distribution and MRO businesses increasing by 32% and 87% respectively [26][27] Market Data and Key Metrics Changes - The aviation aftermarket is expected to grow between 6.5% and 8% in 2025, with commercial aftermarket growth anticipated at 8% to 10% [11][32] - Business aviation is projected to see a growth of 5% to 6% in 2025, supported by increased flight hours and new market entrants [11][12] Company Strategy and Development Direction - VSE is transitioning to a pure-play aviation aftermarket company, having divested its Federal & Defense Services segment and Fleet segment [7][19] - The company aims to drive organic growth, expand market presence, and strengthen partnerships with customers and suppliers [41][45] - Integration of recent acquisitions, including Kellstrom Aerospace and Turbine Controls, is a priority to enhance operational efficiencies and customer value [14][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the aviation market's growth trajectory, driven by increased global passenger traffic and demand for maintenance services [10][11] - The company anticipates continued improvement in USPS revenue and overall fleet segment performance in 2025 [21][39] - Management highlighted a balanced growth across geographic sectors and market segments, indicating a robust operational position [64][66] Other Important Information - The sale of the Fleet segment is valued at up to $230 million, with expected closure in Q2 2025 [8][19] - The company relocated its corporate headquarters to South Florida to enhance collaboration and reduce overhead costs [19] Q&A Session Summary Question: What is the expected pace of growth between distribution and MRO? - Management indicated that growth is expected to be evenly split between distribution and MRO, with no significant back-end loading anticipated [50][52] Question: What drove TCI's outperformance? - TCI's growth was attributed to capacity creation and strong OEM partnerships, with expectations for continued growth [56][58] Question: How will cash flow be managed in 2025? - Management noted that 2025 will benefit from the absence of significant provisioning seen in 2024, leading to improved cash flow [73][76] Question: What are the expectations for margin improvement post-acquisition? - Management expects margin improvement to be realized throughout 2025, with synergies from recent acquisitions contributing to this [68][90] Question: What are the remaining hurdles to close the fleet sale? - The company anticipates normal HSR review processes to conclude in March, with light closing conditions expected [106]