VSE : Earnings Presentation for the First Quarter 2026

Published: 2026-05-06 07:52:10 ET VSEC

Published on 05/06/2026 at 07:52 am EDT

First Quarter 2026 Results Conference Call

May 6, 2026

vsecorp.com

VSE Completes Acquisition of Precision Aviation Group ("PAG")

COMBINED BUSINESS - VSE + PAG

61

Global Locations

48

Repair

Facilities

11

Distribution

Centers

8

Countrie●s

TRANSACTION SUMMARY

The combined company offers a broader global footprint, expanded suite of solutions, deeper technical capabilities, and an integrated offering through MRO and distribution serving a diverse customer base across commercial, business and general aviation, rotorcraft, OEM, and defense markets

VSE acquired PAG from GenNx360 Capital Partners for $2.025B ($1.75B cash + ~$275M equity), with up to $125M in additional contingent earnout based on PAG's 2026 performance

Deal funded via February 2026 follow-on equity and tangible equity unit offerings and a new $900M Term Loan B, replacing the existing Term Loan A

>$15M Annualized Synergies Expected

★

★

>20% Adj. EBITDA

Margin Target

★

Immediately Accretive to VSE Margins

★

Improved Free Cash Flow Profile

★

Synergy capture plan to commence immediately

Pg. 3

VSE Completes Acquisition of NorthStar Technologies LLC ("NorthStar")

NorthStar is a provider of MRO and third-party

logistics supporting the engine aftermarket. The

acquisition expands VSE's engine service capabilities in the business and general aviation market and deepens integration within OEM aftermarket supply chains.

The business operates under a capital-light model with strong demand visibility and is resilient across market cycles, supporting both active fleets and increasing teardown and retirement activity.

Adds teardown, kitting, and additional technical

capabilities across multiple engine platforms

Capital-light model with strong demand visibility

and resilience across market cycles, supporting both active fleets and increasing teardown and retirement activity

Deepens integration within OEM aftermarket

supply chains and partners

First Quarter 2026 Highlights

1

Exclusive, life-of-program APU distribution agreement with Pratt & Whitney Canada

2,500+ SKUs; expands OEM-aligned aftermarket portfolio and lifecycle for three APUs

supporting more than 15 different commercial, regional and business aviation aircraft platforms

2

Expanded airline-focused asset management program

CFM56 acquisitions from major U.S. airline partner, supporting organic growth and leveraging in-house MRO capabilities

3

Completed Turbine Weld integration

ERP, IT systems, back-office functions and synergy capture fully aligned and executed

4

Executed capital structure enhancements supporting PAG acquisition

Follow-on equity and tangible equity unit offerings, Term Loan B refinancing, and upsized

revolver

Consolidated First Quarter 2026 Financial Performance Highlights

1Q'26

$325M

1Q'26 Revenue

$55M (17.1%)

1Q'26 Adj. EBITDA $ (Margin %)(1)

$1.17

1Q'26 Adj. Diluted EPS(1)

Led by strong growth in Distribution, with continued expansion in MRO and contributions from recent acquisitions

Up 102% and 50% year-over-year, respectively

(excludes discontinued operations)

Consolidated First Quarter 2026 Results

1Q'25 vs. 1Q'26

Revenue

Revenue by Sales Channel

+27%

Revenue Growth

+26%

+28%

+37%

1Q'25 1Q'26

1Q'25 1Q'26

1Q'25 1Q'26

Operating Income Adj. EBITDA(1) Adj. EPS(1)

Adj. EBITDA Growth(1)

+50%

Adj. EPS Growth(1)

$40M

17.1%

15.8%

1Q'25 1Q'26 1Q'25 1Q'26 1Q'25 1Q'26

(excludes discontinued operations) Note: The change in revenue by channel and margin may be different than reported due to rounding

Balance Sheet Review as of March 31, 2026

1.1x

2.0x

2.2x

<2.5x

<3.0x

2Q'25

3Q'25

4Q'25

1Q'26

Pro Forma

Q4'26

PAG Acquisition

Updates 2026 Guidance to Include PAG; Reaffirms Core Outlook

Higher revenue growth and EBITDA margin driven by PAG; Underlying business expectations unchanged

Revenue Consolidated Adjusted EBITDA %

Includes PAG Acquisition Includes PAG Acquisition

+57-61%

+19-23%

~$1.1B

18.1-18.5%

16.8-17.3%

16.4%

Prior

Guidance

Updated

Guidance

Prior Guidance

Updated Guidance

PAG, Aero 3, and Turbine Weld acquisitions expected to

contribute to 2026 revenue growth

Organic growth expected in the high-single-digit to low-double-digit range in 2026

PAG, Aero 3, and Turbine Weld acquisitions expected to be accretive to VSE's full year consolidated Adjusted EBITDA margin

Organic margin expansion driven by integration synergies, operating leverage, program optimization, and increased MRO utilization

Refinancing Update - New Term Loan B and Upsized Revolver

$900M New Term Loan B + $500M Revolver (Undrawn at Close)

Prior Debt Facilities

New Debt Facilities

Revolver

Revolver

$400M

Term Loan A

$300M

Undrawn

TEU Amortizing Notes

Term Loan B

2026 Priorities

1

Execute acquisition integrations and accelerate synergy realization

2

Implement newly awarded distribution and OEM programs across core platforms

3

Expand engine focused MRO capacity to capture incremental demand

4

Advance and convert the organic growth pipeline

5

Enhance systems and processes to enable scale and future integrations

6

Advance integration planning for PAG acquisition, with immediate synergy capture execution

Appendix

vsecorp.com

2026 Updated Guidance Modeling Items

Additional FY'26 Modeling Items

Interest Expense, Net (1)

Depreciation & Amortization

~$37-$40 million

~$98-$103 million

Tax Rate ~25%

Stock-based Compensation

~$18-$19 million

Capital Expenditures as a percentage of sales ~2-2.5%

(1) Excludes interest income on note receivable.

FY 2026 Guidance

In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), this earnings presentation also contains non-GAAP financial measures. These

measures provide useful information to investors.

VSE considers Adjusted Net Income, Adjusted EPS (Diluted), EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Acquisition Adjusted EBITDA, TTM Adjusted EBITDA, TTM Acquisition Adjusted EBITDA, net debt, net leverage ratio, adjusted net leverage ratio, and free cash flow as non-GAAP financial measures and important indicators of performance and useful metrics for management and investors to evaluate VSE's business' ongoing operating performance on a consistent basis across reporting periods. These non-GAAP financial measures, however, should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP. Adjusted Net Income represents Net Income adjusted for acquisition-related costs, other discrete items, and related tax impact. Management believes these acquisition-related costs and other discrete items provide useful information about nonrecurring costs and benefits to help users meaningfully evaluate and compare the Company's quarterly and year-to-date performance against prior periods. Adjusted EPS (Diluted) is computed by dividing net income, adjusted for the discrete items as identified above and the related tax impacts, by the diluted weighted average number of common shares outstanding. EBITDA represents net income before interest expense, income taxes, amortization of intangible assets and depreciation and other amortization.

Management believes EBITDA provides useful information about the Company's operating performance as it isolates non-cash depreciation and amortization charges as well as interest expense and income taxes, which are non-operating items. Adjusted EBITDA represents EBITDA (as defined above) adjusted for non-cash stock-based compensation and discrete items as identified above. Adjusted EBITDA margin represents estimated operating income before depreciation and amortization expenses as a percentage of revenue. Acquisition Adjusted EBITDA represents Adjusted EBITDA plus the pre-acquisition portion of EBITDA for the trailing twelve months. TTM Adjusted EBITDA represents Adjusted EBITDA as defined above for the trailing twelve months. TTM Acquisition Adjusted EBITDA includes pre-acquisition portion of EBITDA for the trailing twelve months that is not included in historical results. Net debt is defined as principal amount of debt less debt issuance costs and less cash and cash equivalents. Free cash flow represents operating cash flow less capital expenditures. Capital expenditures includes purchases of property and equipment. Net leverage ratio is calculated as net debt divided by TTM Adjusted EBITDA. Adjusted Net leverage ratio is calculated as net debt divided by TTM Acquisition Adjusted EBITDA.

Additionally, VSE Adjusted EBITDA margin is presented as a forward-looking non-GAAP financial measure based solely on information available to VSE as of the date of this earnings presentation and may differ materially from VSE's actual operating results as a result of developments that occur after the date of this earnings release. The determination of the amounts that are excluded from this non-GAAP financial measure is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense, income amounts or anticipated synergies recognized in a given period. VSE is unable to present a quantitative reconciliation of forward-looking VSE Adjusted EBITDA to net income because certain information regarding the Company's provision for income taxes is not available, and management cannot reliably predict all of the necessary components of net income at this time without unreasonable effort or expense. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The unavailable information could have significant impact on the Company's future financial results. Reconciliations of these measures to the most directly comparable GAAP measures and other information relating to these non-GAAP measures is included in the supplemental schedules attached. These non-GAAP measures, however, have limitations as analytical tools and should not be considered in isolation or as a substitute for performance prepared in accordance with GAAP.

GAAP to Non-GAAP Reconciliations

EBITDA and Adjusted EBITDA

($ in thousands, except per share data) Three months ended March 31,

2026 2025 % Change

Net income from continuing operations

$ 29,055

$ 13,968

108.0%

Interest expense, net

(1,402)

7,939

NM

Provision for income taxes

5,095

2,597

96.2%

Amortization of intangible assets

9,050

6,134

47.5%

Depreciation and other amortization

3,697

3,040

21.6%

EBITDA

45,495

33,678

35.1%

Acquisition, integration and restructuring costs

5,325

2,865

85.9%

Divestiture-related restructuring costs

68

63

7.9%

Stock-based compensation

4,542

3,747

21.2%

Adjusted EBITDA

$ 55,430

$ 40,353

37.4%

(excludes discontinued operations) NM - Not Meaningful

GAAP to Non-GAAP Reconciliations

Adjusted Net Income and Adjusted EPS (Diluted)

Three months ended March 31,

($ in thousands, except per share data)

2026

2025

% Change

Net Income from continuing operations

$ 29,055

$ 13,968

108.0%

Adjustments to net income from continuing

operations:

Acquisition, integration and restructuring costs

5,325

2,865

85.9%

Divestiture-related restructuring costs

68

63

7.9%

Interest income on note receivable

(694)

-

-%

33,754

16,896

99.8%

Tax impact on adjusted items

(1,172)

(731)

60.3%

Adjusted Income from continuing operations

$ 32,582

$ 16,165

101.6%

Weighted Average Diluted Shares

27,834

20,740

34.2%

GAAP EPS (Diluted)

$ 1.04

$ 0.67

55.2%

Adjusted EPS (Diluted)

$ 1.17

$ 0.78

50.0%

GAAP to Non-GAAP Reconciliations

Balance Sheet

Reconciliation of Operating Cash Flow to Free Cash Flows

($ in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025

Net cash (used in) provided by operating activities

$ (62,264)

$ 37,642

$ 24,089

$ 11,891

Capital expenditures

(6,457)

(6,768)

(6,049)

(5,589)

Free Cash Flow

$ (68,721)

$ 30,874

$ 18,040

$ 6,302

Reconciliation of Debt to Net Debt

($ in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025

Principal amount of debt

$ 366,342

$ 296,250

$ 359,741

$ 383,000

Debt issuance costs

(5,367)

(3,446)

(3,645)

(3,844)

Cash and cash equivalents

(1,239,407)

(69,358)

(8,784)

(16,906)

Net Debt

$ (878,432)

$ 223,446

$ 347,312

$ 362,250

Net Leverage Ratio

($ in thousands) March 31, 2026 December 31, 2025 September 30, 2025 June 30, 2025

Net Debt

$ (878,432)

$ 223,446

$ 347,312

$ 362,250

TTM Adjusted EBITDA (1)

$ 198,001

$ 182,924

$ 164,463

$ 147,003

Net Leverage Ratio (2)

NM

1.2x

2.1x

2.5x

TTM Acquisition Adjusted EBITDA (3)

$ 217,995

$ 209,128

$ 171,564

$ 162,287

Adjusted Net Leverage Ratio (2)

NM

1.1x

2.0x

2.2x

TTM Adjusted EBITDA is defined as Adjusted EBITDA for the most recent twelve (12) month period.

Net Leverage Ratio and Adjusted Net Leverage Ratio as of March 31, 2026 are not meaningful due to cash and cash equivalents exceeding debt.

TTM Acquisition Adjusted EBITDA includes pre-acquisition portion of EBITDA for the trailing twelve months that is not included in historical results.

vsecorp.com

Disclaimer

VSE Corporation published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 06, 2026 at 11:51 UTC.