v3.26.1
Acquisitions
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
Fiscal 2026

Precision Aviation Group, Inc. ("PAG")

On May 5, 2026, the Company completed the acquisition of PAG for total consideration of approximately $2.02 billion (the "PAG Acquisition"). PAG is a leading global provider of aviation aftermarket MRO and supply chain services delivering technical expertise across engines, components, avionics, and proprietary repair solutions. The acquisition enhances the Company's global reach, technical capabilities, and integrated MRO services and distribution offerings to a diverse customer base across commercial, business and general aviation, rotorcraft, original equipment manufacturer ("OEM"), and defense markets.
The preliminary purchase price consideration is as follows (in thousands):

Cash paid (a)
$1,770,370 
Less: Cash acquired(22,215)
Cash consideration paid, net of cash acquired$1,748,155 
Equity consideration, at fair value (b)
238,002 
Contingent earn-out consideration, at acquisition date fair value (c)
33,850 
Total purchase consideration$2,020,007 
(a) Reflects cash paid to the seller, subject to working capital adjustments.
(b) Reflects an in-kind payment in the form of 1,415,752 shares of newly issued equity of a VSE subsidiary, exchangeable for shares of the Company's common stock following an initial lock-up period. The shares were fair valued based upon the closing stock price of the Company as of May 4, 2026.
(c) Reflects contingent earn-out consideration with an acquisition-date fair value of $33.9 million. The contingent earn-out provides for up to $125.0 million in additional consideration, payable in cash or equity at the Company's sole discretion, based on PAG's 2026 adjusted EBITDA performance. See Note (11) "Fair Value Measurements" for further information related to the contingent earn-out consideration.

The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital, intangible assets and income taxes. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the PAG opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible.

The preliminary purchase price allocation is as follows (in thousands):
Receivables$73,338 
Contract assets14,689 
Inventories199,968 
Prepaid expenses and other current assets
10,391 
Property and equipment, net66,387 
Intangible asset - customer related650,000 
Goodwill1,167,042 
Operating lease right-of-use assets34,281 
Other assets16 
     Total assets acquired 2,216,112 
Accounts payable(53,077)
Accrued expenses and other current liabilities(27,880)
Long-term operating lease obligations(27,644)
Deferred tax liabilities(82,928)
Other long-term liabilities(4,576)
     Total liabilities assumed(196,105)
Net assets acquired, excluding cash$2,020,007 

Goodwill resulting from the acquisition reflects the strategic advantage of expanding the Company's integrated service offerings across a diverse customer group. The estimated value attributed to the customer relationship intangible asset is being amortized over a period of 12 years. The value attributed to goodwill and customer relationships is not deductible for income tax purposes.

The operating results of PAG were included in the Company's consolidated results of operations from the date of acquisition. The Company's consolidated revenues and net income from continuing operations for the three and six months ended June 30, 2026 include $104.5 million and $6.4 million, respectively, from the acquisition of PAG. Net income from continuing operations does not include the impact of acquisition-related expenses incurred by the Company. Acquisition-related expenses related to the PAG
Acquisition totaled $8.0 million and $12.5 million for the three and six months ended June 30, 2026, respectively, and are included in selling, general and administrative expenses.

The following table presents unaudited pro forma combined financial information for PAG and VSE Corporation for the three and six months ended June 30, 2026 and June 30, 2025, as if the acquisition of PAG had occurred on January 1, 2025 (in thousands):

Three months ended June 30,Six months ended June 30,
2026202520262025
Revenue
$505,310 $418,683 $984,631 $805,380 
Net income from continuing operations$35,035 $20,356 $70,451 $27,442 

The unaudited pro forma combined financial information presented above has been prepared from historical financial statements and includes adjustments for intangible asset amortization; interest expense and debt issuance costs on long term debt; and acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2025, nor is it indicative of future operating results.

NorthStar Technologies, LLC ("NorthStar")

On April 1, 2026, the Company completed the acquisition of NorthStar for a total cash consideration, subject to working capital adjustments, of $10.1 million, net of cash acquired of $0.3 million. The acquisition was funded through cash on hand. NorthStar is a provider of MRO services, third-party logistics, and kitting services supporting the engine aftermarket. The acquisition expands the Company’s engine service capabilities within business and general aviation and strengthens its OEM-focused strategy by enhancing integration within an engine OEM’s aftermarket supply chain and supporting growing demand for engine teardown and labor-intensive services. The acquisition is not material to the Company's consolidated financial statements.

The preliminary allocation of the purchase price is comprised of net tangible assets, excluding cash acquired, of $2.1 million, goodwill of $4.6 million, and a customer-related intangible asset of $3.4 million, which is being amortized over a period of 10 years. Goodwill resulting from the acquisition reflects the strategic advantage of expanding the Company's MRO services supporting the business and general aviation engine aftermarket. The value attributed to goodwill and customer relationships is deductible for income tax purposes. The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible.

Acquisition-related expenses incurred for the three and six months ended June 30, 2026 were not material.

Fiscal 2025

Aero 3, Inc. ("Aero 3")

On December 23, 2025, the Company completed the acquisition of GenNx/AeroRepair IntermediateCo Inc., the parent company of Aero 3, Inc., for a total cash consideration, subject to working capital adjustments, of $346.4 million, net of cash acquired of $1.4 million. The acquisition was funded with proceeds from the Company's October 2025 underwritten public equity offering. Aero 3 is a diversified global MRO service provider and distributor supporting the wheel and brake aftermarket. The acquisition expands the Company's global aftermarket capabilities by broadening MRO, distribution, and proprietary product offerings to support commercial, business and general aviation operators while aligning with the Company's OEM-centric strategy.

The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital and income taxes. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the Aero 3 opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible.

During the six months ended June 30, 2026, the purchase price allocation was adjusted as a result of working capital and measurement period adjustments. The adjustments were recorded as a result of new information obtained about facts and
circumstances that existed as of the acquisition date. Such adjustments resulted in a $2.4 million decrease to goodwill, driven primarily by a $1.8 million decrease to income tax liabilities recorded within accrued expenses and other current liabilities and a $1.2 million decrease to deferred tax liabilities. The net decrease to goodwill was partially offset by other immaterial adjustments to contract assets, inventories, property and equipment, net, and accrued expenses and other current liabilities.

The adjusted preliminary purchase price allocation is as follows (in thousands):
Receivables$12,244 
Contract assets1,324 
Inventories54,626 
Prepaid expenses and other current assets
880 
Property and equipment, net4,404 
Intangible assets - customer related94,000 
Goodwill212,075 
Operating lease right-of-use assets5,163 
Other assets4,159 
     Total assets acquired 388,875 
Accounts payable(9,262)
Accrued expenses and other current liabilities(4,570)
Long-term operating lease obligations(3,664)
Deferred tax liabilities(20,009)
Other long-term liabilities
(4,971)
     Total liabilities assumed(42,476)
Net assets acquired, excluding cash$346,399 

Goodwill resulting from the acquisition reflects the strategic advantage of expanding the Company's MRO services, parts distribution and proprietary solution capabilities to support the wheel and brake aftermarket. The value attributed to goodwill and customer relationships is not deductible for income tax purposes. The estimated value attributed to the customer relationship intangible assets is being amortized over a weighted average useful life of 12.1 years.

Acquisition-related expenses incurred for the three and six months ended June 30, 2026 were not material.

The following unaudited pro forma financial information presents the combined results of operations for Aero 3 and VSE Corporation for the three and six months ended June 30, 2025. The unaudited consolidated pro forma results of operations are as follows (in thousands):

Three months ended June 30,Six months ended June 30,
20252025
Revenue
$300,094 $579,975 
Net income from continuing operations$16,820 $32,219 

The unaudited pro forma combined financial information presented above has been prepared from historical financial statements that have been adjusted to give effect to the acquisition of Aero 3 as though it had occurred on January 1, 2024 and includes adjustments for intangible asset amortization; interest expense and debt issuance costs on long term debt; and acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2024, nor is it indicative of future operating results.
PT6 Fuel Pumps License Agreement

On December 18, 2025, the Company entered into an Asset Purchase and License Agreement with an OEM for a purchase price of $10.8 million to exclusively manufacture, sell, market, distribute, and repair certain fuel pumps for use on the Pratt & Whitney PT6 engine series. The purchase price was funded through the Company's cash on hand. As of June 30, 2026, the remaining liability associated with the purchase price was $2.2 million, which is recorded within accrued expenses and other current liabilities on the Company's consolidated balance sheets. The acquisition was accounted for as a business combination under ASC 805, Business Combinations. The acquisition is not material to the Company's consolidated financial statements.

The preliminary allocation of the purchase price is comprised of net tangible assets of $2.1 million, goodwill of $1.9 million, and a customer-related intangible asset of $6.8 million, which is being amortized over a period of 16 years. Goodwill resulting from the acquisition reflects the strategic advantage of expanding existing distribution and MRO capabilities supporting certain PT6 fuel pumps. The value attributed to goodwill and customer relationships is deductible for income tax purposes. The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible.

Acquisition-related expenses incurred and the pro-forma impact of the acquisition are not material to the Company’s results of operations.

Turbine Weld Industries, LLC ("Turbine Weld")

On May 1, 2025, the Company acquired Turbine Weld for a total cash consideration of $49.9 million, net of cash acquired of $0.9 million. The acquisition purchase price was funded by borrowings under the Company's prior revolving credit facility. Turbine Weld is a specialized MRO service provider of complex technical and proprietary engine components for business and general aviation platforms. The acquisition strengthens the Company’s MRO portfolio of services by broadening technical capabilities and expanding the repair portfolio. The acquisition is not material to the Company's consolidated financial statements.

The final allocation of the purchase price is comprised of net tangible assets, excluding cash acquired, of $12.6 million, goodwill of $13.3 million, and a customer-related intangible asset of $24.0 million, which is being amortized over a period of 10 years. Goodwill resulting from the acquisition of Turbine Weld reflects the strategic advantage of expanding the Company's MRO services to new customers. The value attributed to goodwill and customer relationships is deductible for income tax purposes.
Acquisition-related expenses incurred totaled $1.0 million and $1.5 million for the three and six months ended June 30, 2025, respectively, which are included in selling, general and administrative expenses.