VSE Corporation Announces Fourth Quarter and Full Year 2025 Results
MIRAMAR, Fla.--( BUSINESS WIRE)--VSE Corporation (NASDAQ: VSEC; “VSE”, or the “Company”), a leading provider of aviation aftermarket distribution and repair services, announced today results for the fourth quarter and full year 2025.
FOURTH QUARTER 2025 RESULTS (1)
(As compared to the Fourth Quarter 2024)
FULL-YEAR 2025 RESULTS (1)
(As compared to the Full-Year 2024)
(1) From continuing operations
(2) Non-GAAP measure. See additional information at the end of this release regarding non-GAAP financial measures
MANAGEMENT COMMENTARY
“2025 was an exceptional and transformational year for VSE,” said John Cuomo, President and Chief Executive Officer of VSE Corporation. “We completed our evolution to a pure-play aviation aftermarket company, delivered record Aviation revenue and profitability, surpassed $1 billion in Aviation revenue for the first time in our history, and strengthened our balance sheet. These results reflect disciplined execution and validate the strategy we have been advancing over the past several years."
“During the year, we sharpened our portfolio through the divestiture of our Fleet segment, expanded our engine and component capabilities through highly complementary acquisitions, advanced key OEM programs, increased MRO capacity, and accelerated integration activities across the platform. Each of these actions enhances our operating leverage, deepens our proprietary capabilities, and strengthens our competitive positioning in the global aviation aftermarket," Mr. Cuomo continued.
“Importantly, we enter 2026 with strong momentum. Our aviation-only platform is scaled and positioned to drive sustained organic growth, margin expansion, and improved cash generation. With continued operating plan execution, a focused emphasis on organic growth opportunities, completion of key business integrations, and the anticipated closing of the transformational Precision Aviation Group acquisition, we believe 2026 will represent another step-change year for VSE as we further expand our capabilities and create long-term shareholder value,” concluded Mr. Cuomo.
“Our 2025 performance was driven by above-market revenue growth, expanding margins, and strong cash generation,” said Adam Cohn, Chief Financial Officer of VSE Corporation. “We generated $27 million of operating cash flow and $6 million of free cash flow for the full year, reflecting disciplined working capital management, portfolio optimization, and synergy realization from recent acquisitions. We ended the year with an adjusted net leverage ratio of approximately 1.1x, underscoring the strength of our balance sheet and the earnings power of our aviation platform. As we move forward with the anticipated closing of the Precision Aviation Group acquisition, we remain committed to prudent capital allocation, conservative leverage, and maintaining ample financial flexibility to support continued growth.”
RECENT DEVELOPMENTS
PRECISION AVIATION GROUP ACQUISITION
(2) Non-GAAP measure. See additional information at the end of this release regarding non-GAAP financial measures
EXCLUSIVE PROPRIETARY OEM LICENSING AGREEMENT
EXCLUSIVE LIFE-OF-PROGRAM DISTRIBUTION PROGRAM
2025 BUSINESS HIGHLIGHTS
FOURTH QUARTER SEGMENT RESULTS
Aviation segment revenue increased 32% year-over-year to a record $301.2 million in the fourth quarter of 2025. The year-over-year revenue growth was attributable to strong program execution on new and existing business awards, the addition of new product line and repair capabilities, an expansion of MRO capacity to support new acquisitions, and contributions from recent acquisitions. The fourth quarter segment revenue included five business days of Aero 3 results. Aviation distribution and repair revenue increased 37% and 24% respectively, in the fourth quarter versus the prior-year period. The Aviation segment reported operating income of $43.5 million in the fourth quarter, compared to $29.2 million in the same period of 2024. Segment Adjusted EBITDA increased by 43% in the fourth quarter to $55.2 million, versus $38.6 million in the prior-year period, driven by strong execution on distribution and MRO programs, expanded capacity at MRO facilities, increased in-sourcing, sales from the higher-margin OEM-licensed manufacturing program, and the realization of synergies from recent acquisitions. Adjusted EBITDA margin in the fourth quarter was 18.3%, an increase of approximately 140 basis points compared to the prior year period results.
FINANCIAL RESOURCES AND LIQUIDITY
The Company generated $38 million of operating cash flow and $31 million of free cash flow for the fourth quarter of 2025. For the full year 2025, the Company generated $27 million of operating cash flow and $6 million of free cash flow. As of December 31, 2025, the Company had $469 million in cash and unused commitment availability under its revolving credit facility maturing in May 2030. As of December 31, 2025, VSE had total net debt outstanding of $223 million. The Adjusted Net Leverage Ratio was approximately 1.1x as of the end of the fourth quarter.
2026 CONSOLIDATED GUIDANCE (EXCLUDING PAG)
REVENUE
VSE expects consolidated full year 2026 revenue growth of approximately 19% to 23% compared to the prior year. The revenue outlook includes contributions from the Aero 3 and Turbine Weld acquisitions.
ADJUSTED EBITDA MARGIN
Consolidated full year 2026 Adjusted EBITDA margin is expected to be between 16.8% and 17.3%, reflecting contributions from the Aero 3 and Turbine Weld acquisitions, as well as anticipated organic margin expansion.
Full year 2026 revenue and Adjusted EBITDA margin guidance excludes the recently announced PAG acquisition. The Company expects to update its full year 2026 guidance following the closing of the PAG acquisition, which is anticipated to occur in the second quarter of 2026.
FOURTH QUARTER AND FULL YEAR RESULTS
Three months ended December 31,
For the years ended December 31,
($ in thousands, except per share amounts)
2025
2024
% Change
2025
2024
% Change
Revenues
$
301,182
$
227,403
32.4
%
$
1,112,275
$
786,256
41.5
%
Operating income
$
32,491
$
20,439
59.0
%
$
89,595
$
58,756
52.5
%
Net income from continuing operations
$
22,296
$
10,406
114.3
%
$
53,493
$
19,402
175.7
%
EPS (Diluted)
$
0.98
$
0.51
92.2
%
$
2.52
$
1.08
133.3
%
SEGMENT RESULTS
Following the divestiture of the Fleet segment, the Company operates under a single reportable operating segment. The reconciliation below provides transitional disclosure of Aviation's results for the three and twelve months ended December 31, 2025 and 2024 to support comparability with prior period disclosures.
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
% Change
2025
2024
% Change
Revenues:
Aviation
$
301,182
$
227,403
32.4
%
$
1,112,275
$
786,256
41.5
%
Operating income:
Operating income
$
32,491
$
20,439
59.0
%
$
89,595
$
58,756
52.5
%
Unallocated corporate costs
11,009
8,734
26.0
%
58,741
42,631
37.8
%
Aviation
$
43,500
$
29,173
49.1
%
$
148,336
$
101,387
46.3
%
NON-GAAP MEASURES
In addition to the financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), this earnings release also contains non-GAAP financial measures. These measures provide useful information to investors, and a reconciliation 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.
NON-GAAP FINANCIAL INFORMATION
Adjusted Net Income from Continuing Operations and Adjusted EPS
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
% Change
2025
2024
% Change
Net income from continuing operations
$
22,296
$
10,406
114.3
%
$
53,493
$
19,402
175.7
%
Adjustments to net income from continuing operations:
Acquisition, integration and restructuring costs
6,131
2,746
123.3
%
11,560
7,711
49.9
%
Severance costs
—
—
—
%
—
58
(100.0
)%
Lease abandonment and termination costs (1)
—
100
(100.0
)%
—
12,345
(100.0
)%
Divestiture-related restructuring costs
25
192
(87.0
)%
316
4,231
(92.5
)%
Earn-out receivable fair value adjustments
—
—
—
%
29,200
—
—
%
Debt issuance costs
—
—
—
%
491
—
—
%
Interest income on note receivable
(699
)
—
—
%
(2,041
)
—
—
%
27,753
13,444
106.4
%
93,019
43,747
112.6
%
Tax impact of adjusted items
(1,362
)
(758
)
79.7
%
(9,862
)
(6,074
)
62.4
%
Adjusted net income from continuing operations
$
26,391
$
12,686
108.0
%
$
83,157
$
37,673
120.7
%
Weighted average dilutive shares
22,710
20,249
12.2
%
21,239
17,975
18.2
%
GAAP EPS (Diluted)
$
0.98
$
0.51
92.2
%
$
2.52
$
1.08
133.3
%
Adjusted EPS (Diluted)
$
1.16
$
0.63
84.1
%
$
3.92
$
2.10
86.7
%
(1) Includes consulting costs incurred in conjunction with lease termination.
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
% Change
2025
2024
% Change
Net income from continuing operations
$
22,296
$
10,406
114.3
%
$
53,493
$
19,402
175.7
%
Interest expense, net
1,833
6,944
(73.6
)%
20,556
34,947
(41.2
)%
Provision for income taxes
8,362
3,089
170.7
%
15,546
4,407
252.8
%
Amortization of intangible assets
6,687
5,168
29.4
%
25,995
17,625
47.5
%
Depreciation and amortization
3,507
2,461
42.5
%
13,198
8,187
61.2
%
EBITDA
42,685
28,068
52.1
%
128,788
84,568
52.3
%
Acquisition, integration and restructuring costs
6,131
2,746
123.3
%
11,560
7,711
49.9
%
Severance costs
—
—
—
%
—
58
(100.0
)%
Lease abandonment and termination costs (1)
—
100
(100.0
)%
—
12,345
(100.0
)%
Divestiture-related restructuring costs
25
192
(87.0
)%
316
4,231
(92.5
)%
Earn-out receivable fair value adjustments
—
—
—
%
29,200
—
—
%
Stock-based compensation
2,927
2,202
32.9
%
13,060
8,114
61.0
%
Adjusted EBITDA
$
51,768
$
33,308
55.4
%
$
182,924
$
117,027
56.3
%
(1) Includes consulting costs incurred in conjunction with lease termination.
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
% Change
2025
2024
% Change
Aviation
$
55,204
$
38,571
43.1
%
$
195,407
$
131,787
48.3
%
Adjusted unallocated corporate costs (1)
(3,436
)
(5,263
)
(34.7
)%
(12,483
)
(14,760
)
(15.4
)%
Adjusted EBITDA
$
51,768
$
33,308
55.4
%
$
182,924
$
117,027
56.3
%
(1) Includes certain adjustments not directly attributable to the Aviation segment.
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
% Change
2025
2024
% Change
Aviation
Operating income
$
43,500
$
29,173
49.1
%
$
148,336
$
101,387
46.3
%
Depreciation and amortization
10,186
7,581
34.4
%
39,160
25,500
53.6
%
EBITDA
53,686
36,754
46.1
%
187,496
126,887
47.8
%
Acquisition, integration and restructuring costs
343
520
(34.0
)%
2,733
1,579
73.1
%
Severance costs
—
—
—
%
—
58
(100.0
)%
Stock-based compensation
1,175
1,297
(9.4
)%
5,178
3,263
58.7
%
Adjusted EBITDA
$
55,204
$
38,571
43.1
%
$
195,407
$
131,787
48.3
%
Three months ended December 31,
For the years ended December 31,
(in thousands)
2025
2024
% Change
2025
2024
% Change
Corporate
Unallocated corporate costs
$
11,009
$
8,734
26.0
%
$
58,741
$
42,631
37.8
%
Depreciation and amortization
(8
)
(48
)
(83.3
)%
(33
)
(312
)
(89.4
)%
EBITDA
11,001
8,686
26.7
%
58,708
42,319
38.7
%
Acquisition, integration and restructuring costs
(5,788
)
(2,226
)
160.0
%
(8,827
)
(6,132
)
43.9
%
Lease abandonment and termination costs (1)
—
(100
)
(100.0
)%
—
(12,345
)
(100.0
)%
Divestiture-related restructuring costs
(25
)
(192
)
(87.0
)%
(316
)
(4,231
)
(92.5
)%
Earn-out receivable fair value adjustments
—
—
—
%
(29,200
)
—
—
%
Stock-based compensation
(1,752
)
(905
)
93.6
%
(7,882
)
(4,851
)
62.5
%
Adjusted unallocated corporate costs
$
3,436
$
5,263
(34.7
)%
$
12,483
$
14,760
(15.4
)%
(1) Includes consulting costs incurred in conjunction with lease termination.
Three months ended December 31,
For the years ended December 31,
($ in thousands)
2025
2024
2025
2024
Net cash provided by (used in) operating activities
$
37,642
$
55,375
$
26,990
$
(31,037
)
Capital expenditures
(6,768
)
(3,265
)
(21,281
)
(20,704
)
Free cash flow
$
30,874
$
52,110
$
5,709
$
(51,741
)
(a) The Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.
For the years ended December 31,
($ in thousands)
2025
2024
Principal amount of debt
$
296,250
$
432,500
Debt issuance costs
(3,446
)
(2,327
)
Cash and cash equivalents
(69,358
)
(29,030
)
Net debt
$
223,446
$
401,143
Net Leverage Ratio
For the years ended December 31,
($ in thousands)
2025
2024
Net debt
$
223,446
$
401,143
TTM Adjusted EBITDA (1)
$
182,924
$
136,294
Net Leverage Ratio
1.2 x
2.9 x
TTM Acquisition Adjusted EBITDA (2)
$
209,128
$
158,752
Adjusted Net Leverage Ratio
1.1 x
2.5 x
(1) TTM Adjusted EBITDA is defined as Adjusted EBITDA for the most recent twelve (12) month period. TTM Adjusted EBITDA and Cash and cash equivalents for the period ended December 31, 2024 only do not include any adjustment to reclassify amounts from the Fleet segment.
(2) TTM Acquisition Adjusted EBITDA includes pre-acquisition portion of EBITDA for the trailing twelve months that is not included in historical results.
The non-GAAP Financial Information set forth in this document is not calculated in accordance with GAAP under SEC Regulation G. The Company considers Adjusted Net Income, Adjusted EPS (Diluted), EBITDA, Adjusted EBITDA, Acquisition Adjusted EBITDA, TTM Adjusted EBITDA, Segment Adjusted EBITDA, TTM Acquisition Adjusted EBITDA, Adjusted unallocated corporate costs, net debt, adjusted net leverage ratio, free cash flow, PAG adjusted revenue and PAG adjusted EBITDA as non-GAAP financial measures and important indicators of performance and useful metrics for management and investors to evaluate the 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. 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. Adjusted unallocated corporate costs represents Unallocated corporate costs before depreciation and other amortization, adjusted for non-cash stock-based compensation and discrete items as identified above. 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. Adjusted Net leverage ratio is calculated as net debt divided by trailing twelve month Acquisition Adjusted EBITDA. PAG adjusted revenue includes pre-acquisition revenue from companies acquired by PAG during full year period ended December 31, 2025. PAG adjusted EBITDA margin represents estimated operating income before depreciation and amortization expenses and includes the pre-acquisition portion of EBITDA from companies acquired by PAG, that is not included in historical results, and excludes certain non-recurring items, as a percentage of revenue. PAG adjusted EBITDA and PAG adjusted EBITDA margin do not represent pro forma financial information prepared in accordance with Article 11 of Regulation S-X.
The Company has presented forward-looking statements regarding Adjusted EBITDA margin, PAG adjusted revenue and PAG adjusted EBITDA margin. These non-GAAP financial measures are derived by excluding certain amounts, expenses or income, from the corresponding financial measure determined in accordance with GAAP. The determination of the amounts that are excluded from these non-GAAP financial measure are a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period in reliance on the exception provided by item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable to present a quantitative reconciliation of forward-looking Adjusted EBITDA margin, PAG adjusted revenue and PAG adjusted EBITDA margin to their most directly comparable forward-looking GAAP financial measures because such information is not available, and management cannot reliably predict all of the necessary components of such GAAP measures without unreasonable effort or expense. In addition, the Company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The unavailable information could have a significant impact on the Company's future financial results. These non-GAAP financial measures are preliminary estimates and are subject to risks and uncertainties, including, among others, changes in connection with quarter-end and year-end adjustments. Any variation between the Company's or PAG's actual results and preliminary financial data set forth above may be material.
CONFERENCE CALL
A conference call will be held Thursday, February 26, 2026 at 8:30 A.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.
An audio webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of VSE’s website at https://ir.vsecorp.com. To listen to the live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register, download and install any necessary audio software. A replay of the audio webcast will be available at the same location following the conclusion of the call.
ABOUT VSE CORPORATION
VSE is a leading provider of aviation distribution and repair services for the commercial and business and general aviation (B&GA) aftermarkets. Headquartered in Miramar, Florida, VSE is focused on significantly enhancing the productivity and longevity of its customers' high-value, business-critical assets. VSE’s aftermarket parts distribution and maintenance, repair, and overhaul (MRO) services support engine component and engine and airframe accessory part distribution and repair services for commercial and B&GA operators. For more detailed information, please visit VSE's website at www.vsecorp.com.
Please refer to the Form 10-K that will be filed with the Securities and Exchange Commission (SEC) on or about February 27, 2026 for more details on our fourth quarter and full year 2025 results. VSE encourages investors and others to review the detailed reporting and disclosures contained in VSE’s public filings for additional discussion about the status of customer programs and contract awards, risks, revenue sources and funding, dependence on material customers, and management’s discussion of short- and long-term business challenges and opportunities.
FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause VSE’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this document. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company can give no assurance that actual results will not differ materially from these expectations. “Forward-looking” statements, as such term is defined by the SEC in its rules, regulations and releases, represent the Company's expectations or beliefs, including, but not limited to, statements concerning the Company's operations, economic performance, financial condition, growth and acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond the Company's control, and actual results may differ materially depending on a variety of important factors, including, but not limited to, factors identified in the Company's reports filed or expected to be filed with the SEC including the Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent filings made with the SEC. All forward-looking statements made herein are qualified by these cautionary statements and risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. Readers are cautioned not to place undue reliance on these forward looking-statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.