3 unchanged sentences
Consolidated Balance Sheets as of December 31, 202 5 and 20 24
−Removed: Consolidated Statements of Income for the years ended December 31, 202 4 , 202 3 and 20 2 2
+Added: Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 and 202 3
Consolidated Statements of Comprehensive Income for the years ended December 31, 202 5 , 202 4 and 202 3
6 unchanged sentences
Opinion on the financial statements
−Removed: We have audited the accompanying consolidated balance sheets of VSE Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule included under Item 15.2 (collectively referred to as the “consolidated financial statements”).
+Added: We have audited the accompanying consolidated balance sheets of VSE Corporation (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedules included under Item 15.2 (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 3, 2025 expressed an unqualified opinion.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 27, 2026 expressed an unqualified opinion.
Basis for opinion
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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Assessment of the write-down of slow moving inventory at certain locations within the Aviation segment
−Removed: As described further in note 1 to the consolidated financial statements, the Company records inventory within its Aviation Segment at the lower of cost or net realizable value.
+Added: Assessment of the write-down of slow moving inventory at certain locations
+Added: As described further in note 1 to the consolidated financial statements, the Company records inventory at the lower of cost or net realizable value.
The Company periodically evaluates the carrying value of inventory which requires the write-down of slow-moving inventory for excess or obsolescence based on certain inputs and assumptions used to determine the net realizable value.
These assumptions include the recovery rates applied to slow moving inventory.
−Removed: Changes in these assumptions could have a significant impact on the valuation of the inventory for the Aviation Segment.
−Removed: The principal considerations for our determination that the assessment of the write-down of slow moving inventory at certain locations within the Aviation Segment are the magnitude of the inventory balance and that the inputs and assumptions used in determining the write-down are subject to significant management judgement.
+Added: Changes in these assumptions could have a significant impact on the valuation of the inventory.
+Added: The principal consideration for our determination that the write-down of slow moving inventories at certain locations is a critical audit matter are the magnitude of the inventory balance and that the inputs and assumptions used in determining the write-down are subject to significant management judgement.
The inputs and assumptions used in determining the write-down of slow-moving inventory includes the recovery rates applied to slow moving inventory, the identification of specific inventories associated with aircraft with declining usage trends and the impact of exclusive distribution agreements.
The assessment of these inputs required a high degree of auditor judgement in evaluating the recovery rates for slow moving inventory.
−Removed: Our audit procedures related to the write-down of slow moving inventories at certain locations, within the Aviation Segment, included the following, among others.
−Removed: • We tested the design and operating effectiveness of controls relating to the Company’s inventory process, including controls over the Company’s evaluation of the impact on the estimate of net realizable value based on the number of days transpiring from the date the inventory was originally received, sales of the inventory, specific inventories identified to relate to aircraft with declining usage and the approval and evaluation of distribution agreements.
−Removed: • We assessed the recovery rates applied to slow moving inventory.
+Added: Our audit procedures related to the write-down of slow moving inventories at certain locations, included the following, among others.
+Added: • We tested the design and operating effectiveness of controls relating to the Company’s estimate of the write-down of slow moving inventories, including review of significant inputs and assumptions.
+Added: • We assessed the reasonableness of recovery rates applied to slow moving inventory based on historical aging.
• We assessed the identification of specific inventory with declining usage trends by evaluating external industry information.
• We conducted sensitivity analysis around the reserve assumptions applied to aged inventory.
+Added: • We performed a look back analysis over historical inventory and reserve balances to evaluate changes year over year.
/s/ GRANT THORNTON LLP
1 unchanged sentence
Charlotte, North Carolina
−Removed: March 3, 2025
+Added: February 27, 2026
VSE CORPORATION AND SUBSIDIARIES
6 unchanged sentences
Contract assets
+Added: 41,468 29,960
Inventories 553,834 434,059
8 unchanged sentences
50,151 43,225
+Added: Note receivable
Other assets 29,755 37,597
25 unchanged sentences
VSE CORPORATION AND SUBSIDIARIES
−Removed: Consolidated Statements of Income
+Added: Consolidated Statements of Operations
For the years ended December 31,
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Selling, general and administrative expenses 13,340 13,629 7,123
+Added: Earn-out receivable fair value adjustments
Lease abandonment and termination costs
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$ 11,703 $ 15,324 $ 39,134
−Removed: Other comprehensive income (loss), net of tax:
+Added: Other comprehensive (loss) income, net of tax:
Change in fair value of interest rate swap agreements, net of tax ( 2,560 ) 940 ( 2,836 )
−Removed: Total other comprehensive income (loss), net of tax
+Added: Total other comprehensive (loss) income, net of tax
( 2,560 ) 940 ( 2,836 )
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Capital Retained
−Removed: Earnings Accumulated Other Comprehensive Income (Loss)
+Added: Earnings Accumulated Other Comprehensive Income
Stockholders'
3 unchanged sentences
Net income — — — 39,134 — 39,134
+Added: Issuance of common stock 2,846 142 128,968 — — 129,110
Stock-based compensation 94 5 7,515 — — 7,520
−Removed: Other comprehensive income, net of tax — — — — 5,144 5,144
+Added: Other comprehensive loss, net of tax — — — — ( 2,836 ) ( 2,836 )
Dividends declared ($ 0.40 per share)
3 unchanged sentences
Issuance of common stock 4,412 221 324,960 — — 325,181
+Added: Stock issuance in connection with acquisitions 300 15 30,252 — — 30,267
Stock-based compensation 122 6 7,285 — — 7,291
−Removed: Other comprehensive loss, net of tax — — — — ( 2,836 ) ( 2,836 )
+Added: Other comprehensive income, net of tax — — — — 940 940
Dividends declared ($ 0.40 per share)
3 unchanged sentences
Issuance of common stock 2,706 135 440,968 — — 441,103
−Removed: Stock issuance in connection with acquisitions 300 15 30,252 30,267
Stock-based compensation 101 5 8,915 — — 8,920
−Removed: Other comprehensive income, net of tax — — — — 940 940
+Added: Other comprehensive loss, net of tax — — — — ( 2,560 ) ( 2,560 )
Dividends declared ($ 0.40 per share)
9 unchanged sentences
Net income $ 11,703 $ 15,324 $ 39,134
−Removed: Adjustments to reconcile net income to net cash (used in) provided by operating activities:
+Added: Adjustments to reconcile net income to net cash provided by (used in)
+Added: operating activities:
Depreciation and amortization 39,924 28,762 23,416
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Specific provision for inventory — — 742
−Removed: Impairment and loss on sale of business segment
+Added: Impairment and loss on sale of business segments
+Added: 47,046 19,403 —
Loss on sale of property and equipment
Lease abandonment and termination costs
+Added: Earn-out receivable adjustments
+Added: Interest income on note receivable
+Added: ( 2,041 ) — —
Changes in operating assets and liabilities, net of impact of acquisitions:
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Accrued expenses and other current and noncurrent liabilities ( 8,069 ) 5,955 ( 4,452 )
−Removed: Net cash (used in) provided by operating activities
+Added: Net cash provided by (used in) operating activities
26,990 ( 31,037 ) ( 21,829 )
1 unchanged sentence
Purchases of property and equipment ( 21,281 ) ( 20,704 ) ( 18,666 )
−Removed: Proceeds from the sale of business segment
+Added: Proceeds from the sale of business segments, net of cash divested
+Added: 138,973 40,157 —
Proceeds from payments on notes receivable — — 1,557
6 unchanged sentences
Proceeds from issuance of common stock 442,167 325,999 130,020
−Removed: Earn-out obligation payments — — ( 1,250 )
Payment of debt financing costs ( 2,584 ) — ( 2,890 )
1 unchanged sentence
Dividends paid ( 8,263 ) ( 7,060 ) ( 5,436 )
−Removed: Net cash provided by (used in) financing activities
+Added: Net cash provided by financing activities
289,790 315,806 264,971
−Removed: Net increase (decrease) in cash and cash equivalents
+Added: Net increase in cash and cash equivalents
40,328 21,100 7,452
3 unchanged sentences
$ 69,358 $ 29,030 $ 7,930
+Added: (a) The cash flows related to discontinued operations and held-for-sale assets and liabilities have not been segregated and remain included in the major classes of assets and liabilities.
+Added: Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.
+Added: See Note (3) "Discontinued Operations".
+Added: The accompanying notes are an integral part of these financial statements.
+Added: VSE CORPORATION AND SUBSIDIARIES
+Added: Consolidated Statements of Cash Flows (continued)
+Added: For the years ended December 31,
+Added: (in thousands)
+Added: 2025 2024 2023
+Added: Supplemental disclosure of noncash investing and financing activities:
+Added: Note receivable from the sale of business segment
+Added: $ 25,000 $ — $ —
Supplemental disclosures of cash flow information:
3 unchanged sentences
$ 11,900 $ 8,200 $ 9,900
−Removed: (a) The cash flows related to discontinued operations and held-for-sale assets and liabilities have not been segregated and remain included in the major classes of assets and liabilities.
−Removed: Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations.
+Added: 2,938 1,962 1,990
+Added: United Kingdom
+Added: 1,059 1,555 —
+Added: 217 232 2,107
+Added: Total cash paid for income taxes
+Added: $ 16,114 $ 11,949 $ 13,997
The accompanying notes are an integral part of these financial statements.
3 unchanged sentences
Nature of Business
−Removed: VSE is a diversified aftermarket products and services company serving commercial and government markets.
−Removed: Our operations include aircraft and airframe parts supply and distribution, supply chain and inventory management services;
−Removed: MRO services of aircraft components and engine accessories;
−Removed: vehicle fleet sustainment programs;
−Removed: and vehicle fleet parts supply and distribution.
−Removed: We operate in two reportable segments aligned with our operating segments:
−Removed: Aviation and Fleet.
+Added: VSE Corporation, through its subsidiaries (collectively, "VSE" or the "Company") is a diversified aftermarket products and services company serving commercial and government markets.
+Added: The Company's operations include aircraft and airframe parts supply and distribution and MRO services of aircraft components and engine accessories.
+Added: The Company operates as one reportable segment aligned with the Company's operating segment:
Basis of Presentation
−Removed: The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and include the assets, liabilities, results of operations and cash flows our parent company and our wholly owned subsidiaries.
+Added: The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and include the assets, liabilities, results of operations and cash flows of the parent company and the Company's wholly owned subsidiaries.
All intercompany balances and transactions have been eliminated in consolidation.
−Removed: In February 2024, we entered into two separate agreements to sell substantially all of the Federal and Defense segment assets.
+Added: In April 2025, VSE completed the sale of all of the issued and outstanding shares of common stock of its Fleet segment.
See Note (3) "Discontinued Operations" for further information.
−Removed: The consolidated financial statements reflect the Federal and Defense segment's results of operations as discontinued operations, and the related assets and liabilities as held-for-sale for all periods presented.
−Removed: Certain reclassifications have been made to the prior period financial information to reflect discontinued operations presentation.
+Added: The consolidated financial statements present the results of operations for the Fleet segment as discontinued operations for all periods presented, and the related assets and liabilities as held-for-sale as of December 31, 2024.
+Added: In February 2024, VSE completed the sale of substantially all of the Federal and Defense segment assets.
+Added: See Note (3) "Discontinued Operations" for further information.
+Added: The consolidated financial statements present the results of operations for the Federal and Defense segment as discontinued operations for all periods presented.
+Added: Certain reclassifications, including reclassifications for discontinued operations, have been made to the prior period financial information.
Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate solely to continuing operations and exclude all discontinued operations.
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The preparation of financial statements in conformity with U.S.
−Removed: GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
+Added: GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
1 unchanged sentence
Stock-Based Compensation
−Removed: We issue stock-based awards as compensation to employees and directors.
+Added: The Company issues stock-based awards as compensation to employees and directors.
Stock-based awards include stock-settled bonus awards, time-vested stock awards and performance share awards.
−Removed: We recognize stock-based compensation expense over the underlying award’s requisite service period, as measured using the award’s grant date fair value.
−Removed: Our policy is to recognize forfeitures as they occur.
−Removed: For performance share awards, we assess the probability of achieving the performance conditions at each reporting period end and adjust compensation expense based on the number of shares we expect to ultimately issue.
+Added: The Company recognizes stock-based compensation expense over the underlying award’s requisite service period, as measured using the award’s grant date fair value.
+Added: The Company's policy is to recognize forfeitures as they occur.
+Added: For performance share awards, the Company assesses the probability of achieving the performance conditions at each reporting period end and adjusts compensation expense based on the number of shares it expects to ultimately issue.
Earnings Per Share
1 unchanged sentence
Shares issued during the period are weighted for the portion of the period that they were outstanding.
−Removed: Our calculation of diluted earnings per common share includes the dilutive effects for the assumed vesting of outstanding stock-based awards.
+Added: The Company's calculation of diluted earnings per common share includes the dilutive effects for the assumed vesting of outstanding stock-based awards.
The antidilutive common stock equivalents excluded from the diluted per share calculation are not material.
6 unchanged sentences
Cash and Cash Equivalents
−Removed: We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.
−Removed: Due to the short maturity of these instruments, the carrying values on our consolidated balance sheets approximate fair value.
−Removed: Although certain cash balances exceed insurance limits of the Federal Deposit Insurance Corporation, we do not limit our credit exposure to any one financial institution and utilize financial institutions with high credit quality.
−Removed: As of December 31, 2024, we held approximately $ 5.9 million of cash in foreign bank accounts, primarily in connection with our acquisitions of Desser Holding Company, LLC ("Desser Aerospace") and Kellstrom Aerospace.
−Removed: Refer to Note (2) "Acquisitions," for details regarding our acquisitions.
+Added: The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
+Added: Due to the short maturity of these instruments, the carrying values on the Company's consolidated balance sheets approximate fair value.
+Added: Although certain cash balances exceed insurance limits of the Federal Deposit Insurance Corporation, the Company does not limit its credit exposure to any one financial institution and utilizes financial institutions with high credit quality.
+Added: As of December 31, 2025, the Company held approximately $ 6.3 million of cash in foreign bank accounts.
Property and Equipment
Property and equipment is recorded at cost, net of accumulated depreciation and amortization.
−Removed: Depreciation and amortization is generally provided on the straight-line method over the estimated useful lives of the various assets.
+Added: Depreciation and amortization is generally calculated on a straight-line basis over the estimated useful lives of the various assets.
Property and equipment is generally depreciated over the following estimated useful lives:
1 unchanged sentence
and buildings and land improvements from 15 to 20 years.
−Removed: Amortization of leasehold improvements is provided by the straight-line method over the lesser of their useful life or the remaining term of the lease.
−Removed: We determine at inception whether an arrangement that provides us control over the use of an asset is a lease.
−Removed: Substantially all of our leases are long-term operating leases for facilities with fixed payment terms.
−Removed: We recognize a right-of-use ("ROU") asset and a lease liability upon commencement of our operating leases.
−Removed: The initial lease liability is equal to the future fixed minimum lease payments discounted using our incremental borrowing rate, on a secured basis.
−Removed: The lease term includes option renewal periods and early termination payments when it is reasonably certain that we will exercise those rights.
+Added: Amortization of leasehold improvements is calculated on a straight-line basis over the lesser of their useful life or the remaining term of the lease.
+Added: The Company determines at inception whether an arrangement that provides the Company control over the use of an asset is a lease.
+Added: Substantially all of the Company's leases are long-term operating leases for facilities with fixed payment terms.
+Added: The Company recognizes a right-of-use ("ROU") asset and a lease liability upon commencement of operating leases.
+Added: The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company's incremental borrowing rate, on a secured basis.
+Added: The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights.
The initial measurement of the ROU asset is equal to the initial lease liability plus any initial indirect costs and prepayments, less any lease incentives.
−Removed: We recognize lease costs on a straight-line basis over the remaining lease term, except for variable lease payments that are expensed in the period in which the obligation for those payments is incurred.
+Added: The Company's lease arrangements do not contain any material residual guarantees, variable payment provisions, or restrictive covenants.
+Added: Finance leases are not material to the Company's consolidated financial statements.
+Added: The Company recognizes lease costs on a straight-line basis over the remaining lease term, except for variable lease payments that are expensed in the period in which the obligation for those payments is incurred.
Leases with an initial term of 12 months or less with purchase options or extension options that are not reasonably certain to be exercised are not recorded on the balance sheet.
−Removed: Operating lease cost is included in costs and operating expenses on our consolidated statement of income.
+Added: Operating lease cost is included in costs and operating expenses on the Company's consolidated statements of operations.
Concentrations of Credit Risk
−Removed: Financial instruments that potentially subject us to concentration of credit risk consist primarily of our trade receivables.
−Removed: Our trade receivables consist of amounts due from various commercial entities and government clients.
−Removed: We believe that concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the customer base and their dispersion across many different geographic regions.
−Removed: The credit risk, with respect to contracts with the government, is limited due to the creditworthiness of the respective governmental entity.
−Removed: We perform ongoing credit evaluations and monitoring of the financial condition of all our customers.
−Removed: We maintain an allowance for credit losses based upon several factors, including historical collection experience, current aging status of the customer accounts and financial condition of our customers.
+Added: Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables.
+Added: Trade receivables consist of amounts due from various commercial entities and government clients.
+Added: The Company believes that concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the customer base and their dispersion across many different geographic regions.
+Added: The credit risk, with respect to contracts with the government, is limited due to the creditworthiness of the respective governmental entities.
+Added: The Company performs ongoing credit evaluations and monitoring of the financial condition of all customers.
+Added: The Company maintains an allowance for credit losses based upon several factors, including historical collection experience, current aging status of the customer accounts and financial condition of customers.
Revenue Recognition
−Removed: We account for revenue in accordance with ASC 606.
+Added: The Company accounts for revenue in accordance with ASC 606.
The unit of account in ASC 606 is a performance obligation.
−Removed: At the inception of each contract with a customer, we determine our performance obligations under the contract and the contract's
−Removed: transaction price.
+Added: At the inception of each contract with a customer, the Company determines its performance obligations under the contract and
+Added: the contract's transaction price.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account.
A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied.
−Removed: The majority of our contracts have a single performance obligation as the promise to transfer the respective goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct.
+Added: The majority of the Company's contracts have a single performance obligation as the promise to transfer the respective goods or services is not separately identifiable from other promises in the contracts and is, therefore, not distinct.
For product sales, each product sold to a customer typically represents a distinct performance obligation.
−Removed: Our performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to our customers.
−Removed: Substantially all our Fleet segment revenues from the sale of vehicle parts to customers are recognized at the point in time of the transfer of control to the customer.
−Removed: Sales returns and allowances for vehicle parts are not significant.
−Removed: Our Aviation segment revenues result from the sale of aircraft parts and performance of MRO services for private and commercial aircraft owners, other aviation MRO providers, and aviation original equipment manufacturers.
−Removed: Our Aviation segment recognizes revenues for the sale of aircraft parts at a point in time when control is transferred to the customer, which usually occurs when the parts are shipped.
−Removed: Our Aviation segment recognizes revenues for MRO services over time as the services are transferred to the customer.
+Added: Performance obligations are satisfied over time as work progresses or at a point in time based on transfer of control of products and services to customers.
+Added: The Company's revenues result from the sale of aircraft parts and performance of MRO services for private and commercial aircraft owners, other aviation MRO providers, and aviation original equipment manufacturers.
+Added: The Company recognizes revenues for the sale of aircraft parts at a point in time when control is transferred to the customer, which usually occurs when the parts are shipped.
+Added: The Company recognizes revenues for MRO services over time as the services are transferred to the customer.
MRO services revenue recognized is measured based on the cost-to-cost input method, as costs incurred reflect the work completed, and therefore the services transferred to date.
2 unchanged sentences
Receivables are recorded at amounts earned less an allowance.
−Removed: We review our receivables regularly to determine if there are any potentially uncollectible accounts.
+Added: The Company reviews receivables regularly to determine if there are any potentially uncollectible accounts.
Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer.
The amounts may not exceed their estimated net realizable value.
−Removed: Contract assets are classified as current based on our contract operating cycle.
−Removed: Contract liabilities include customer advances and billings in excess of revenue recognized and are included within accrued expenses and other current liabilities in our consolidated balance sheets.
+Added: Contract assets are classified as current based on the Company's contract operating cycle.
+Added: Contract liabilities include customer advances and billings in excess of revenue recognized and are included within accrued expenses and other current liabilities in the Company's consolidated balance sheets.
Allowance for Credit Losses
−Removed: We establish allowances for credit losses on our accounts receivable and contract assets.
−Removed: To measure expected credit losses, we have disaggregated pools of receivable balances by segment.
−Removed: Within each segment, receivables exhibit similar risk characteristics.
−Removed: In determining the amount of the allowance for credit losses, we consider historical collectability based on past due status.
−Removed: We also consider current market conditions and forecasts of future economic conditions to inform potential adjustments to historical loss data.
−Removed: In addition, we also record allowances for credit losses for specific receivables that are deemed to have a higher risk profile than the rest of the respective pool of receivables, such as concerns about a specific customer's inability to meet its financial obligation to us.
+Added: The Company establishes allowances for credit losses on accounts receivable and contract assets.
+Added: To measure expected credit losses, the Company has disaggregated pools of receivable balances which exhibit similar risk characteristics.
+Added: In determining the amount of the allowance for credit losses, the Company considers historical collectability based on past due status.
+Added: The Company also considers current market conditions and forecasts of future economic conditions to inform potential adjustments to historical loss data.
+Added: In addition, the Company also records allowances for credit losses for specific receivables that are deemed to have a higher risk profile than the rest of the respective pool of receivables, such as concerns about a specific customer's inability to meet its financial obligation.
The adequacy of these allowances is assessed quarterly through consideration of factors on a collective basis where similar characteristics exist and on an individual basis.
Inventories are stated at the lower of cost or net realizable value using the FIFO method.
−Removed: Inventories consist primarily of finished goods replacement parts for our Fleet and Aviation segments, and also include related purchasing, storage, and handling costs.
−Removed: Inventories for our Aviation segment consist primarily of aftermarket parts for distribution, and general aviation engine accessories and parts, and also include related purchasing, overhaul labor, storage, and handling costs.
−Removed: We periodically evaluate the carrying value of inventory, considering factors such as its physical condition, sales patterns and demand in order to estimate the amount necessary to write down any slow moving, obsolete or damaged inventory.
+Added: Inventories consist primarily of aftermarket parts for distribution, and general aviation engine accessories and parts, and also include related purchasing, overhaul labor, storage, and handling costs.
+Added: The Company periodically evaluates the carrying value of inventory, considering factors such as its physical condition, sales patterns and demand in order to estimate the amount necessary to write down any slow moving, obsolete or damaged inventory.
These estimates could vary significantly from actual amounts based upon future economic conditions, customer inventory levels or competitive factors that were not foreseen or did not exist when the estimated write-downs were made.
Deferred Compensation Plans
−Removed: We provide for certain key management employees to be incentivized and rewarded based on overall company performance through the VSE Corporation Deferred Supplemental Compensation Plan (the "DSC Plan").
−Removed: We recognized DSC Plan expenses of $ 0.3 million, $ 0.4 million, and $ 0.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: We invest in corporate owned life insurance ("COLI") products and in mutual funds that are held in a Rabbi Trust to fund the DSC Plan obligations.
+Added: The Company provides for certain key management employees to be incentivized and rewarded based on overall company performance through the Company's Deferred Supplemental Compensation Plan (the "DSC Plan").
+Added: DSC Plan expenses were $ 0.4 million, $ 0.3 million, and $ 0.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.
+Added: The Company invests in corporate owned life insurance ("COLI") products and in mutual funds that are held in a Rabbi Trust to fund the DSC Plan obligations.
The COLI investments are recorded at cash surrender value and the mutual fund investments are recorded at fair value.
The DSC Plan assets are included in other assets on the accompanying consolidated balance sheets.
−Removed: Our DSC Plan assets were $ 12.0 million and $ 11.0 million as of December 31, 2024 and December 31, 2023, respectively.
−Removed: Gains and losses recognized on the changes in fair value of the investments are recorded as selling, general and administrative expenses on the accompanying consolidated statements of income.
−Removed: We recorded net gains of $ 0.6 million for the years ended December 31, 2024 and 2023 and $ 22 thousand for the year ended December 31, 2022.
+Added: DSC Plan assets were $ 13.2 million and $ 12.0 million as of December 31, 2025 and December 31, 2024, respectively.
+Added: Gains and losses recognized on the changes in fair value of the investments are recorded as selling, general and administrative expenses on
+Added: the accompanying consolidated statements of operations.
+Added: The Company recorded net gains of $ 0.7 million, $ 0.6 million, and $ 0.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Derivative Instruments
6 unchanged sentences
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
−Removed: The carrying value of net deferred tax assets is based on assumptions regarding our ability to generate sufficient future taxable income to utilize these deferred tax assets.
+Added: The carrying value of net deferred tax assets is based on assumptions regarding the Company's ability to generate sufficient future taxable income to utilize these deferred tax assets.
Business Combinations
−Removed: We allocate the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values, with any excess recorded as goodwill.
−Removed: The operating results of acquired businesses are included in our results of operations beginning as of their effective acquisition dates.
+Added: The Company allocates the purchase price of acquired entities to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values, with any excess recorded as goodwill.
+Added: The operating results of acquired businesses are included in the Company's results of operations beginning as of their effective acquisition dates.
For contingent consideration arrangements, a liability is recognized at fair value as of the acquisition date with subsequent fair value adjustments recorded in operations.
1 unchanged sentence
Goodwill is tested for potential impairment at the reporting unit level annually at the beginning of the fourth quarter, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
−Removed: When testing goodwill for impairment, we may initially qualitatively assess whether it is necessary to perform a quantitative goodwill impairment test, which is only required if we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount.
−Removed: In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we considered the totality of all relevant events and circumstances that affect the fair value or carrying amount of a reporting unit in accordance with ASC 350-20-35-3C.
−Removed: In the event we deem a quantitative impairment test necessary, we estimate and compare the fair value of each reporting unit to its respective carrying value including goodwill.
−Removed: The fair value of our reporting units is determined using a combination of the income approach and the market approach, which involves the use of estimates and assumptions, including projected future operating results and cash flows, the cost of capital, and financial measures derived from observable market data of comparable public companies.
+Added: When testing goodwill for impairment, the Company may initially qualitatively assess whether it is necessary to perform a quantitative goodwill impairment test, which is only required if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
+Added: In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company considered the totality of all relevant events and circumstances that affect the fair value or carrying amount of a reporting unit in accordance with ASC 350-20-35-3C.
+Added: In the event the Company deems a quantitative impairment test necessary, the Company estimates and compares the reporting unit fair value to its respective carrying value including goodwill.
+Added: Reporting unit fair value is determined using a combination of the income approach and the market approach, which involves the use of estimates and assumptions, including projected future operating results and cash flows, the cost of capital, and financial measures derived from observable market data of comparable public companies.
If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit’s fair value and the reporting unit’s carrying value.
+Added: Based on the annual goodwill impairment test performed during the fourth quarter of 2025, the Company's qualitative impairment test determined that it was more likely than not that the reporting unit fair value exceeded carrying value.
Impairment of Long-Lived Assets
−Removed: We review our long-lived assets, including amortizable intangible assets, operating lease right-of-use assets, and property and equipment, for impairment whenever events or changes in facts and circumstances indicate that their carrying values may not be fully recoverable and the carrying amount of the asset exceeds its estimated future undiscounted cash flows.
−Removed: When the carrying
−Removed: amount of the asset exceeds its estimated future undiscounted cash flows, an impairment loss is recognized to reduce the asset’s carrying amount to its estimated fair value based on the present value of its estimated future cash flows.
+Added: The Company reviews its long-lived assets, including amortizable intangible assets, operating lease right-of-use assets, and property and equipment, for impairment whenever events or changes in facts and circumstances indicate that their carrying values may not be fully recoverable and the carrying amount of the asset exceeds its estimated future undiscounted cash flows.
+Added: When the carrying amount of the asset exceeds its estimated future undiscounted cash flows, an impairment loss is recognized to reduce the asset’s carrying amount to its estimated fair value based on the present value of its estimated future cash flows.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
−Removed: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.
−Removed: We adopted the standard in the fourth quarter of 2024 and applied the disclosure retrospectively to all prior periods presented in the financial statements.
−Removed: The adoption of ASU 2023-07 did not have an impact on our consolidated financial position, results of operations or cash flows.
−Removed: See Note (14) "Business Segments and Customer Information" for further information.
−Removed: Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):
1 unchanged sentence
ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.
−Removed: We are currently evaluating the disclosure impact of this ASU, however, the standard will not have an impact on our consolidated financial position, results of operations or cash flows.
+Added: The Company adopted the standard during 2025 and applied the disclosure retrospectively to all prior periods presented in the financial statements.
+Added: The adoption of ASU 2023-09 did not have an impact on the Company's consolidated financial position, results of operations or cash flows.
+Added: See Note (11) "Income Taxes" for further information.
+Added: Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):
1 unchanged sentence
ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
−Removed: We are currently evaluating the impact that adoption of ASU 2024-03 may have on our consolidated financial statements and disclosures.
+Added: The adoption will not have an impact on the Company's consolidated financial position, results of operations or cash flows.
+Added: The Company is currently evaluating the impact that adoption of ASU 2024-03 will have on its disclosures.
(2) Acquisitions
−Removed: Turbine Controls, Inc.
−Removed: On April 24, 2024, we completed the acquisition of TCI for a total consideration of $ 122.4 million, consisting of net cash consideration of $ 112.4 million, which included $ 1.5 million as a net working capital adjustment, and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $ 10.0 million.
−Removed: The purchase price of this acquisition was funded by borrowings under our revolving credit facility.
−Removed: TCI is a leading provider of aftermarket MRO support services for complex engine components, as well as engine and airframe accessories, across commercial and military applications.
−Removed: The acquisition presents an opportunity for VSE's Aviation segment to accelerate its MRO strategy, including expanding our repair capability offerings and adding several new OEM relationships.
−Removed: The purchase price for TCI was allocated on a preliminary basis, among assets acquired and liabilities assumed at fair value based on the best available information on the acquisition date, with the excess purchase price recorded as goodwill.
−Removed: The fair values of the non-financial assets acquired, and liabilities assumed, were determined based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations utilizing established industry valuation techniques.
−Removed: We have not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, income taxes.
−Removed: Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until we obtain final information regarding their fair values, which could potentially result in changes to the TCI opening balance sheet.
−Removed: During the year ended December 31, 2024, we adjusted the purchase price allocation as a result of working capital and measurement period adjustments.
−Removed: The adjustments were recorded as a result of new information obtained about facts and circumstances that existed as of the acquisition date and resulted in immaterial impacts to accrued expense and other current liabilities, goodwill, and cash consideration, net of cash acquired.
−Removed: The adjusted preliminary purchase price allocation is as follows (in thousands):
+Added: On December 23, 2025, the Company completed the previously announced 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.
+Added: The acquisition was funded with proceeds from the Company's October 2025 underwritten public offering, see Note (15) "Capital Stock" for further information.
+Added: Aero 3 is a diversified global MRO service provider and distributor supporting the wheel and brake aftermarket.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Adjustments or changes to goodwill, assets or liabilities remain possible.
+Added: The preliminary purchase price allocation is as follows (in thousands):
Receivables $ 12,244
2 unchanged sentences
Prepaid expenses and other current assets
−Removed: Other assets 214
Property and equipment, net 4,704
−Removed: Intangible asset - customer related 59,000
+Added: Intangible assets - customer related
Goodwill 214,519
Operating lease right-of-use assets 5,163
+Added: Other assets 4,159
Total assets acquired 391,761
2 unchanged sentences
Long-term operating lease obligations ( 3,664 )
+Added: Deferred tax liabilities
+Added: Other long-term liabilities
Total liabilities assumed ( 45,362 )
Net assets acquired, excluding cash $ 346,399
−Removed: Cash consideration, net of cash acquired $ 112,351
−Removed: VSE common stock, at fair value
−Removed: Total $ 122,351
−Removed: Goodwill resulting from the acquisition of TCI reflects the strategic advantage of expanding our MRO services to new customers.
−Removed: The value attributed to goodwill and customer relationships is deductible for income tax purposes.
−Removed: The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a useful life of 10 years.
−Removed: The operating results of TCI were included in our consolidated results of operations from the date of acquisition.
−Removed: Our consolidated revenues and operating income for the year ended December 31, 2024 include $ 84.4 million and $ 7.1 million, respectively, from the acquisition of TCI.
−Removed: Operating income does not include the impact of acquisition-related expenses incurred by VSE Corporation.
−Removed: Acquisition-related expenses related to the TCI acquisition totaled $ 2.2 million for the year ended December 31, 2024, and are included in selling, general and administrative expenses.
−Removed: The following unaudited pro forma financial information presents the combined results of operations for TCI and VSE Corporation for the years ended December 31, 2024, and 2023, respectively.
+Added: 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.
+Added: The value attributed to goodwill and customer relationships is not deductible for income tax purposes.
+Added: The estimated value attributed to the customer relationship intangible assets is being amortized over a weighted average useful life of 12.1 years.
+Added: The operating results of Aero 3 were included in the Company's consolidated results of operations from the date of acquisition.
+Added: Aero 3's consolidated revenues and operating income included in the Company's consolidated statements of operations for the year ended December 31, 2025 were not material.
+Added: Acquisition-related expenses totaled $ 4.0 million for the year ended December 31, 2025 and are included in selling, general and administrative expenses.
+Added: The following unaudited pro forma financial information presents the combined results of operations for Aero 3 and VSE Corporation for the years ended December 31, 2025, and 2024, respectively.
The unaudited consolidated pro forma results of operations are as follows (in thousands):
3 unchanged sentences
$ 66,489 $ 29,217
−Removed: 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 TCI as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization;
+Added: 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.
−Removed: 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, 2023, nor is it indicative of future operating results.
+Added: The unaudited pro forma financial information is presented for illustrative purposes only and 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.
+Added: PT6 Fuel Pumps License Agreement
+Added: On December 18, 2025, the Company entered into an Asset Purchase and License Agreement with an original equipment manufacturer 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.
+Added: The purchase price is expected to be mainly paid in 2026 and funded through the Company's sources of liquidity.
+Added: As of December 31, 2025, the liability associated with the purchase price is recorded within accrued expenses and other current liabilities on the Company's consolidated balance sheets.
+Added: The acquisition was accounted for as a business combination under ASC 805, Business Combinations .
+Added: The acquisition is not material to the Company's consolidated financial statements.
+Added: The preliminary allocation of the purchase price 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.
+Added: Goodwill resulting from the acquisition reflects the strategic advantage of expanding existing distribution and MRO capabilities supporting certain PT6 fuel pumps.
+Added: The value attributed to goodwill and customer relationships is deductible for income tax purposes.
+Added: 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.
+Added: 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.
+Added: Adjustments or changes to goodwill, assets or liabilities remain possible.
+Added: Acquisition-related expenses incurred during the year ended December 31, 2025 were not material.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
+Added: Turbine Weld Industries, LLC ("Turbine Weld")
+Added: 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.
+Added: The acquisition purchase price was funded by borrowings under the Company's revolving credit facility.
+Added: Turbine Weld is a specialized MRO service provider of complex technical and proprietary engine components for business and general aviation platforms.
+Added: The acquisition strengthens the Company’s MRO portfolio of services by broadening technical capabilities and expanding the repair portfolio.
+Added: The acquisition is not material to the Company's consolidated financial statements.
+Added: The preliminary allocation of the purchase price 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.
+Added: Goodwill resulting from the acquisition of Turbine Weld reflects the strategic advantage of expanding the Company's MRO services to new customers.
+Added: The value attributed to goodwill and customer relationships is deductible for income tax purposes.
+Added: 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.
+Added: 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 Turbine Weld opening balance sheet.
+Added: Adjustments or changes to goodwill, assets or liabilities remain possible.
+Added: Acquisition-related expenses totaled $ 1.5 million for the year ended December 31, 2025, which are included in selling, general and administrative expenses.
+Added: The pro-forma impact of the acquisition is not material to the Company’s results of operations.
Kellstrom Aerospace Group, Inc.
−Removed: On December 3, 2024, we completed the acquisition of Kellstrom Aerospace for a total consideration of approximately $ 191.0 million, subject to post-closing adjustments, consisting of net cash consideration of $ 170.8 million and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $ 20.3 million.
−Removed: The purchase price of this acquisition was funded by our October 2024 underwritten public offering and borrowings under our revolving credit facility.
+Added: ("Kellstrom Aerospace")
+Added: On December 3, 2024, the Company completed the acquisition of Kellstrom Aerospace for a total consideration of approximately $ 188.9 million, consisting of cash consideration of $ 168.6 million, net of $ 10.6 million cash acquired, and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $ 20.3 million.
+Added: The cash consideration was funded by proceeds from the Company's October 2024 underwritten public offering and borrowings under the Company's revolving credit facility.
Kellstrom Aerospace is a diversified global distributor and service provider supporting the commercial aerospace engine aftermarket.
−Removed: The acquisition provides an opportunity to improve our position in the commercial aviation aftermarket by expanding product and capability offerings both domestically and internationally, including our participation in aircraft engine maintenance events.
−Removed: The purchase price for Kellstrom Aerospace was allocated on a preliminary basis, among assets acquired, and liabilities assumed, at fair value based on the best available information on the acquisition date, with the excess purchase price recorded as goodwill.
−Removed: The fair values of the non-financial assets acquired, and liabilities assumed, were determined based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations utilizing established industry valuation techniques.
−Removed: We have 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.
−Removed: Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until we obtain final information regarding their fair values, which could potentially result in changes to the Kellstrom Aerospace opening balance sheet.
−Removed: Adjustments or changes to goodwill, assets or liabilities remain possible.
−Removed: The preliminary purchase price is as follows (in thousands):
+Added: The acquisition provides an opportunity to improve the Company's position in the commercial aviation aftermarket by expanding product and capability offerings both domestically and internationally, including participation in aircraft engine maintenance events.
+Added: During the year ended December 31, 2025, the purchase price allocation was adjusted as a result of working capital and to reflect measurement period adjustments based on new information obtained about facts and circumstances that existed as of the acquisition date.
+Added: Such adjustments resulted in a $ 16.8 million decrease to goodwill, primarily driven by a $ 7.8 million increase
+Added: to deferred tax assets, a $ 4.9 million increase to inventories, a $ 2.3 million fair value step up to operating lease right-of-use assets, and a $ 2.2 million working capital settlement which reduced net purchase consideration.
+Added: The final purchase price allocation is as follows (in thousands):
Receivables $ 27,379
6 unchanged sentences
Operating lease right-of-use assets 14,141
+Added: Deferred tax assets
Total assets acquired 233,319
1 unchanged sentence
Accrued expense and other current liabilities ( 6,403 )
−Removed: Deferred tax liabilities ( 201 )
Long-term operating lease obligations ( 10,300 )
4 unchanged sentences
Total $ 188,866
−Removed: Goodwill resulting from the acquisition reflects the strategic advantage of growing our distribution and MRO capabilities in the commercial aerospace aftermarket.
+Added: Goodwill resulting from the acquisition reflects the strategic advantage of growing the Company's distribution and MRO capabilities in the commercial aerospace aftermarket.
The value attributed to goodwill and customer relationships is not deductible for income tax purposes.
−Removed: The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a useful life of 8 years.
−Removed: The operating results of Kellstrom Aerospace were included in our consolidated results of operations from the date of acquisition.
−Removed: Our consolidated revenues and operating income for the year ended December 31, 2024 include $ 17.0 million and $ 1.2 million, respectively, from the acquisition of Kellstrom Aerospace.
−Removed: Kellstrom Aerospace's operating income does not include the impact of acquisition-related expenses incurred by VSE Corporation.
−Removed: Acquisition-related expenses related to the
−Removed: Kellstrom Aerospace acquisition totaled $ 2.7 million for the year ended December 31, 2024, and are included in selling, general and administrative expenses.
+Added: The estimated value attributed to the customer relationship intangible assets is being amortized over a period of 8 years.
+Added: The operating results of Kellstrom Aerospace were included in the Company's consolidated results of operations from the date of acquisition.
+Added: Acquisition-related expenses totaled $ 0.7 million and $ 2.7 million for the years ended December 31, 2025 and 2024, respectively, and are included in selling, general and administrative expenses.
The following unaudited pro forma financial information presents the combined results of operations for Kellstrom Aerospace and VSE Corporation for the years ended December 31, 2024, and 2023, respectively.
7 unchanged sentences
and acquisition and other transaction costs.
−Removed: 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, 2023, nor is it indicative of future operating results.
−Removed: Precision Fuel Components, LLC ("Precision Fuel")
−Removed: On February 1, 2023, our Aviation segment acquired Precision Fuel Components, LLC for a purchase price of $ 11.7 million.
−Removed: Precision Fuel's operating results are included in our Aviation segment beginning on the acquisition date.
−Removed: The acquisition was not material to our consolidated financial statements.
−Removed: During the year ended December 31, 2023, we incurred $ 0.2 million of acquisition-related expenses related to the acquisition of Precision Fuel, which are included in selling, general and administrative expenses.
−Removed: Desser Holding Company, LLC
−Removed: On July 3, 2023, we completed the acquisition of Desser Aerospace, a global aftermarket solutions provider of specialty distribution and MRO services.
−Removed: We purchased Desser Aerospace for cash consideration of $ 131.5 million.
−Removed: Concurrent with the closing of the transaction, we immediately sold, in a separate transaction, Desser Aerospace’s propriety solutions businesses to Loar Group Inc.
−Removed: (“Loar”) for a cash consideration of $ 31.8 million.
−Removed: During the year ended December 31, 2024, we adjusted the purchase price allocation as a result of certain measurement period adjustments to acquired assets and liabilities assumed due to updated valuation reports received from our external valuation specialist, revisions to internal estimates, and new information obtained about facts and circumstances that existed as of the acquisition date.
−Removed: The measurement period adjustments included:
−Removed: a decrease in deferred tax liabilities of $ 1.6 million and an increase in inventories of $ 0.1 million.
−Removed: These adjustments resulted in a decrease to goodwill of $ 1.7 million.
−Removed: We completed the purchase accounting valuation for Desser Aerospace during the second quarter of 2024.
−Removed: The final purchase price is as follows (in thousands):
+Added: The unaudited pro forma financial information is presented for illustrative purposes only and is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2023, nor is it indicative of future operating results.
+Added: Turbine Controls, Inc.
+Added: On April 24, 2024, the Company completed the acquisition of TCI for a total consideration of $ 122.4 million.
+Added: The total consideration consisted of cash consideration of $ 112.4 million, net of $ 1.2 million cash acquired, and an in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $ 10.0 million.
+Added: The cash consideration was funded by borrowings under the Company's revolving credit facility.
+Added: TCI is a leading provider of aftermarket MRO support services for complex engine components, as well as engine and airframe accessories, across commercial and military applications.
+Added: The acquisition presents an opportunity for the Company to accelerate its MRO strategy, including expanding the Company's repair capability offerings and adding several new OEM relationships.
+Added: The final purchase price allocation is as follows (in thousands):
+Added: Receivables $ 9,122
+Added: Contract assets 16,193
Inventories 5,512
Prepaid expenses and other current assets
−Removed: Property and equipment 2,527
−Removed: Intangible assets
+Added: Property and equipment, net 6,434
+Added: Intangible asset - customer related 59,000
Goodwill 40,201
Operating lease right-of-use assets 7,832
+Added: Other assets 214
Total assets acquired 145,078
Accounts payable ( 9,764 )
−Removed: Accrued expenses and other current liabilities ( 5,793 )
+Added: Accrued expense and other current liabilities ( 5,624 )
Long-term operating lease obligations ( 7,339 )
−Removed: Deferred tax liabilities
Total liabilities assumed ( 22,727 )
1 unchanged sentence
Cash consideration, net of cash acquired $ 112,351
−Removed: Post-close adjustment
−Removed: Goodwill resulting from the acquisition of Desser Aerospace reflects the strategic advantage of expanding our specialty distribution and MRO services to new customers.
−Removed: The value attributed to goodwill and customer relationships is not fully deductible for income tax purposes.
−Removed: The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a weighted average useful life of 8.3 years.
−Removed: We incurred $ 3.2 million of acquisition-related expenses related to the Desser Aerospace acquisition during the year ended December 31, 2023, which are included in selling, general and administrative expenses.
−Removed: The following unaudited pro forma financial information presents the combined results of operations for Desser Aerospace and VSE Corporation for the years ended December 31, 2024, and 2023, respectively.
+Added: VSE common stock, at fair value
+Added: Total $ 122,351
+Added: Goodwill resulting from the acquisition of TCI reflects the strategic advantage of expanding the Company's MRO services to new customers.
+Added: The value attributed to goodwill and customer relationships is deductible for income tax purposes.
+Added: The estimated value attributed to the customer relationship intangible assets is being amortized over a period of 10 years.
+Added: Acquisition-related expenses totaled $ 2.2 million for the year ended December 31, 2024, and are included in selling, general and administrative expenses.
+Added: The following unaudited pro forma financial information presents the combined results of operations for TCI and VSE Corporation for the years ended December 31, 2024, and 2023, respectively.
The unaudited consolidated pro forma results of operations are as follows (in thousands):
3 unchanged sentences
$ 20,130 $ 10,394
−Removed: 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 Desser Aerospace as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization;
+Added: 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 TCI as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization;
interest expense and debt issuance costs on long-term debt;
acquisition and other transaction costs.
−Removed: and certain costs allocated from the former parent.
−Removed: 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, 2023, nor is it indicative of future operating results.
+Added: The unaudited pro forma financial information is presented for illustrative purposes only and is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2023, nor is it indicative of future operating results.
Honeywell Fuel Control Systems ("Honeywell FCS Acquisition")
−Removed: On September 27, 2023, our Aviation segment entered into an Asset Purchase and License Agreement with Honeywell International Inc.
+Added: On September 27, 2023, the Company entered into an Asset Purchase and License Agreement with Honeywell International Inc.
("Honeywell"), for a purchase price of $ 105.0 million, to exclusively manufacture, sell, market, distribute, and repair certain Honeywell fuel control systems.
−Removed: The purchase price of this acquisition was funded by borrowings under our
−Removed: revolving credit facility.
+Added: The purchase price of this acquisition was funded by borrowings under the Company's revolving credit facility.
This agreement expands existing distribution and MRO capabilities supporting certain Honeywell fuel control systems and associated subcomponents.
The acquisition was accounted for as a business combination under ASC 805, Business Combinations .
−Removed: During the year ended December 31, 2024, we adjusted the purchase price allocation as a result of a measurement period adjustment to acquired assets due to updated valuation reports received from Honeywell.
−Removed: The measurement period adjustment resulted in a decrease in prepaid expenses and other current assets of $ 0.5 million, with a corresponding increase to goodwill.
−Removed: We completed the purchase accounting valuation for the Honeywell FCS Acquisition during the third quarter of 2024.
The final purchase price allocation is as follows (in thousands):
5 unchanged sentences
Total consideration
−Removed: (a) Represents prepaid inventory consisting of finished goods acquired but not in our physical possession as of the acquisition date.
+Added: (a) Represents prepaid inventory consisting of finished goods acquired but not in the Company's physical possession as of the acquisition date.
Goodwill resulting from the acquisition reflects the expected synergies from the acquisition.
The value attributed to goodwill and customer relationship is deductible for income tax purposes.
−Removed: The estimated value attributed to the customer relationship intangible asset is being amortized on a straight-line basis using a useful life of 10 years.
−Removed: We incurred $ 0.3 million of acquisition-related expenses related to the Honeywell FCS Acquisition during the year ended December 31, 2023, which are included in selling, general and administrative expenses.
+Added: The estimated value attributed to the customer relationship intangible asset is being amortized over a period of 10 years.
+Added: The Company incurred $ 0.3 million of acquisition-related expenses during the year ended December 31, 2023, which are included in selling, general and administrative expenses.
The pro-forma impact of the acquisition is not material to the Company’s results of operations.
+Added: Desser Holding Company, LLC ("Desser Aerospace")
+Added: On July 3, 2023, the Company completed the acquisition of Desser Aerospace, a global aftermarket solutions provider of specialty distribution and MRO services for cash consideration of $ 131.5 million.
+Added: Concurrent with the closing of the transaction, the Company immediately sold, in a separate transaction, Desser Aerospace’s propriety solutions businesses to Loar Group Inc.
+Added: (“Loar”) for a cash consideration of $ 31.8 million.
+Added: The final purchase price allocation is as follows (in thousands):
+Added: Inventories 31,228
+Added: Prepaid expenses and other current assets
+Added: Property and equipment 2,527
+Added: Intangible assets
+Added: Goodwill 53,942
+Added: Operating lease right-of-use-assets 6,679
+Added: Total assets acquired
+Added: Accounts payable ( 10,128 )
+Added: Accrued expenses and other current liabilities ( 5,793 )
+Added: Long-term operating lease obligations
+Added: Deferred tax liabilities
+Added: Total liabilities assumed
+Added: Net assets acquired, excluding cash $ 99,700
+Added: Cash consideration, net of cash acquired
+Added: Post-close adjustment
+Added: Goodwill resulting from the acquisition of Desser Aerospace reflects the strategic advantage of expanding the Company's specialty distribution and MRO services to new customers.
+Added: The value attributed to goodwill and customer relationships is not fully deductible for income tax purposes.
+Added: The estimated value attributed to the customer relationship intangible assets is being amortized over a weighted average useful life of 8.3 years.
+Added: The Company incurred $ 3.2 million of acquisition-related expenses during the year ended December 31, 2023, which are included in selling, general and administrative expenses.
+Added: The following unaudited pro forma financial information presents the combined results of operations for Desser Aerospace and VSE Corporation for the year ended December 31, 2023.
+Added: The unaudited consolidated pro forma results of operations are as follows (in thousands):
+Added: For the year ended December 31,
+Added: Income from continuing operations
+Added: 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 Desser Aerospace as though it had occurred on January 1, 2022 and includes adjustments for intangible asset amortization;
+Added: interest expense and debt issuance costs on long-term debt;
+Added: acquisition and other transaction costs;
+Added: and certain costs allocated from the former parent.
+Added: The unaudited pro forma financial information is presented for illustrative purposes only and is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2022, nor is it indicative of future operating results.
+Added: Precision Fuel Components, LLC ("Precision Fuel")
+Added: On February 1, 2023, the Company acquired Precision Fuel Components, LLC for a purchase price of $ 11.7 million.
+Added: The acquisition was not material to the Company's consolidated financial statements.
+Added: During the year ended December 31, 2023, the Company incurred $ 0.2 million of acquisition-related expenses, which are included in selling, general and administrative expenses.
(3) Discontinued Operations
−Removed: In February 2024, we entered into two separate agreements to sell substantially all of the Federal and Defense segment assets for a cash consideration of $ 43.0 million, including amounts in escrow, subject to post-closing adjustments.
−Removed: The FDS Sale is consistent with our long-term strategic growth strategy focused on higher margin and higher growth aftermarket parts distribution and MRO businesses.
−Removed: We recorded a pre-tax loss on the FDS Sale of $ 15.2 million and transaction fees of $ 2.5 million during the year ended December 31, 2024, which are included in (loss) income from discontinued operations, net of tax in the consolidated statements of income.
−Removed: The results of operations for the Federal and Defense segment are reported in (loss) income from discontinued operations, net of tax within the consolidated statements of income for the years ended December 31, 2024, 2023, and 2022, and the related assets and liabilities are presented within assets and liabilities held-for-sale on the consolidated balance sheets as of December 31, 2023.
+Added: Sale of Fleet Segment
+Added: On April 1, 2025, VSE completed the sale of its Fleet segment for a total consideration of up to $ 230 million (the “Fleet Sale”).
+Added: This consideration is comprised of $ 136.2 million of cash, net of $ 4.8 million cash divested.
+Added: The consideration also includes a $ 25 million seller note and a potential earn-out payment of up to $ 65 million, subject to the achievement of certain milestones.
+Added: The seller note is scheduled to mature in July 2030.
+Added: See Note (17) "Fair Value Measurements" for information regarding the fair value of the earn-out.
+Added: The Fleet Sale is consistent with the Company's long-term strategy of transforming to a pure-play aviation business focused on higher margin and higher growth aftermarket parts distribution and MRO businesses.
+Added: During the year ended December 31, 2025, the Company recorded a total pre-tax loss of $ 46.8 million, inclusive of $ 3.8 million of transaction fees.
+Added: The loss was comprised of a pre-tax impairment charge on the Fleet assets held-for-sale of $ 33.7 million and a pre-tax loss on the Fleet Sale of $ 13.1 million, which was primarily attributable to a $ 8.3 million adjustment of a deferred tax liability related to the pre-tax impairment from the first quarter of 2025 and the impact of working capital adjustments of $ 4.8 million.
+Added: The total loss is included in (loss) income from discontinued operations, net of tax in the consolidated statements of operations.
+Added: In the fourth quarter of the year ended December 31, 2025, the Company recognized an additional $ 8.7 million income tax provision as a result of a change in the tax treatment of the sale transaction from an asset sale to a stock sale.
+Added: Sale of Federal and Defense Segment
+Added: In February 2024, VSE entered into two separate agreements to sell substantially all the Federal and Defense segment's operational assets ("FDS Sale") for cash consideration of $ 42.9 million.
+Added: The FDS Sale is consistent with the Company's long-term strategic growth strategy of transforming to a pure-play aviation business focused on higher margin and higher growth aftermarket parts distribution and MRO businesses.
+Added: The Company recorded a pre-tax loss on the FDS Sale of $ 0.2 million during the year ended December 31, 2025 related to the settlement of net working capital, and a pre-tax loss of $ 15.2 million and transaction fees of $ 2.5 million for the year ended December 31, 2024.
+Added: All such losses and transaction fees are included in (loss) income from discontinued operations, net of tax in the consolidated statements of operations.
The components of (loss) income from discontinued operations, net of tax consist of the following (in thousands):
3 unchanged sentences
Costs and operating expenses 71,865 305,890 536,740
−Removed: (Loss) income from discontinued operations before income taxes
+Added: Income from discontinued operations
3,493 14,255 32,194
−Removed: Other FDS impairment 4,204 — —
+Added: Other impairment
+Added: 33,708 4,204 —
Loss on the sale of discontinued operations 13,338 15,199 —
8 unchanged sentences
Receivables, net 39,459
−Removed: Contract assets
Inventories 142,259
5 unchanged sentences
Other assets 2,559
−Removed: Total assets held-for-sale (a)
+Added: Total assets held-for-sale
Accounts payable $ 42,099
2 unchanged sentences
Deferred tax liabilities 8,010
−Removed: Total liabilities held-for-sale (a)
−Removed: (a) Amounts were classified as current for the prior period consolidated balance sheet.
−Removed: Certain assets and liabilities previously reported as held-for-sale were excluded from the FDS sale and were reclassified in 2024 as held and used, at their respective fair values, on the consolidated balance sheets.
−Removed: The reclassification related to our Alexandria, VA headquarters office space and consisted of an operating lease right-of-use-asset of $ 7.1 million, property and equipment of $ 2.6 million, and an operating lease obligation of $ 11.0 million.
−Removed: In 2024, we vacated the headquarters office space, resulting in a write down of the associated lease right-of-use asset and property and equipment, and then subsequently terminated the lease for the vacated headquarters office space.
−Removed: See Note (12) "Leases" for further information.
−Removed: The FDS Sale resulted in the divestiture of certain government contracts requiring novation.
−Removed: Until the novation process is finalized, we continue to receive cash collections related to these contracts, which are due to the purchaser.
−Removed: As of December 31, 2024, we have recorded a $ 0.3 million liability for these collections within accrued expenses and other current liabilities on our consolidated balance sheets.
+Added: Total liabilities held-for-sale
Selected financial information related to cash flows from discontinued operations is as follows (in thousands):
2 unchanged sentences
Depreciation and amortization $ 731 $ 2,951 $ 7,314
+Added: Stock-based compensation (a)
+Added: $ ( 225 ) $ 202 $ 1,006
Purchases of property and equipment $ 208 $ 2,343 $ 2,280
−Removed: Stock-based compensation $ — $ 139 $ 63
+Added: (a) Stock-based compensation benefit was recognized during the year ended December 31, 2025 due to forfeitures in the period.
(4) Revenue Recognition
Disaggregated Revenue
−Removed: Our revenues are derived from the delivery of products and services performed for commercial and government customers.
−Removed: A summary of revenues by customer for each of our operating segments is as follows (in thousands):
−Removed: Year Ended December 31, 2024 Aviation Fleet Total
−Removed: Commercial $ 779,008 $ 178,509 $ 957,517
−Removed: Other government 7,248 115,367 122,615
−Removed: Total $ 786,256 $ 293,876 $ 1,080,132
−Removed: Year Ended December 31, 2023
−Removed: Commercial $ 539,592 $ 150,835 $ 690,427
−Removed: DoD — 209 209
−Removed: Other government 4,428 165,424 169,852
−Removed: Total $ 544,020 $ 316,468 $ 860,488
+Added: The Company's revenues are derived from the delivery of products to and services performed for its commercial and government customers.
+Added: A summary of revenues by customer is as follows (in thousands):
Year ended December 31,
+Added: 2025 2024 2023
Commercial $ 1,108,091 $ 779,008 $ 539,592
−Removed: DoD — 3,286 3,286
−Removed: Other government 4,957 153,888 158,845
−Removed: Total $ 408,112 $ 261,336 $ 669,448
−Removed: A summary of revenues by type for each of our operating segments is as follows (in thousands):
−Removed: Year Ended December 31, 2024 Aviation Fleet Total
−Removed: Repair $ 293,063 $ — $ 293,063
−Removed: Distribution 493,193 293,876 787,069
−Removed: Total $ 786,256 $ 293,876 $ 1,080,132
−Removed: Year Ended December 31, 2023
−Removed: Repair $ 157,154 $ — $ 157,154
−Removed: Distribution 386,866 316,468 703,334
+Added: 4,184 7,248 $ 4,428
Total $ 1,112,275 $ 786,256 $ 544,020
+Added: A summary of revenues by type is as follows (in thousands):
Year ended December 31,
+Added: 2025 2024 (a)
Repair $ 408,350 $ 303,456 $ 167,453
1 unchanged sentence
Total $ 1,112,275 $ 786,256 $ 544,020
+Added: (a) Certain revenue amounts in the prior year have been reclassified to conform to current presentation of revenue type categories.
Contract Balances
10 unchanged sentences
(a) Net of allowance of $ 7.2 million and $ 4.1 million as of December 31, 2025 and 2024, respectively.
−Removed: The increase in contract assets during fiscal 2024 is primarily in connection with the acquisition of TCI during the current period.
−Removed: Refer to Note (2) "Acquisitions" for further information.
−Removed: During fiscal 2024 and 2023, respectively, we recognized $ 2.1 million and $ 0.9 million of revenue that was previously included in the beginning balance of contract liabilities.
+Added: During fiscal 2025 and 2024, respectively, the Company recognized $ 3.5 million and $ 2.1 million of revenue that was previously included in the beginning balance of contract liabilities.
(5) Property and Equipment
3 unchanged sentences
Computer equipment 12,478 9,678
−Removed: Furniture, fixtures, and equipment (a)
+Added: Furniture, fixtures, and equipment
65,813 46,096
5 unchanged sentences
Total property and equipment, net $ 91,098 $ 71,041
−Removed: (a) Certain amounts from prior year have been reclassified to conform with current year presentation.
Depreciation and amortization expense for the years ended December 31, 2025, 2024 and 2023 was $ 13.2 million, $ 8.2 million, and $ 4.4 million, respectively.
(6) Goodwill and Other Intangible Assets
−Removed: Changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2024 and 2023 were as follows (in thousands):
−Removed: Fleet Aviation
+Added: Changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 were as follows (in thousands):
Balance as of December 31, 2023 $ 288,591
Goodwill acquired 140,804
+Added: Measurement period adjustments ( 1,132 )
Balance as of December 31, 2024 $ 428,263
2 unchanged sentences
Balance as of December 31, 2025 $ 641,242
−Removed: Goodwill increased during the year ended December 31, 2024 in connection with acquisitions completed during the period as discussed in Note (2) "Acquisitions." There were no impairments of goodwill during the years ended December 31, 2024, 2023 and 2022.
−Removed: Other Intangible Assets
+Added: Goodwill acquired during fiscal 2025 and 2024 pertains to the acquisitions completed during those respective periods.
+Added: Measurement period adjustments in fiscal 2025 and 2024 represent adjustments to the allocation of the purchase consideration of the respective acquisitions.
+Added: Refer to Note (2) "Acquisitions" for discussion of acquisitions.
+Added: There were no impairments of goodwill during the years ended December 31, 2025, 2024 and 2023.
+Added: Intangible Assets
Intangible assets consisted of the following (in thousands):
1 unchanged sentence
December 31, 2025
−Removed: Contract and customer-related $ 272,590 $ ( 75,309 ) $ 197,281
−Removed: Trade names 8,670 ( 8,670 ) —
−Removed: Total $ 281,260 $ ( 83,979 ) $ 197,281
+Added: Customer-related
+Added: $ 396,150 $ ( 100,188 ) $ 295,962
December 31, 2024
−Removed: Contract and customer-related $ 241,090 $ ( 127,022 ) $ 114,068
+Added: Customer-related
+Added: $ 271,350 $ ( 74,193 ) $ 197,157
Trade names 8,500 ( 8,500 ) —
Total $ 279,850 $ ( 82,693 ) $ 197,157
−Removed: The gross carrying amount of contract and customer-related intangibles increased during the year ended December 31, 2024 in connection with acquisitions completed during the year as discussed in Note (2) "Acquisitions." This increase was partially offset by intangible assets with a cost of $ 69.4 million being fully amortized and no longer reflected in the intangible asset values as of December 31, 2024.
+Added: The gross carrying amount of customer-related intangibles increased during the year ended December 31, 2025 in connection with acquisitions completed during the year as discussed in Note (2) "Acquisitions." This increase was partially offset by intangible assets with a cost of $ 8.5 million being fully amortized and no longer reflected in the intangible asset values as of December 31, 2025.
There were no impairment losses during the years ended December 31, 2025, 2024 and 2023.
4 unchanged sentences
Thereafter 131,395
−Removed: Total $ 197,281
Long-term debt consisted of the following (in thousands):
9 unchanged sentences
Long-term debt, net of current portion $ 285,304 $ 400,173
−Removed: We have a credit agreement with a bank group from which we borrow amounts under the agreement to provide working capital support, fund letters of credit, and finance acquisitions.
−Removed: The credit agreement includes term and revolving facilities.
−Removed: The revolving facility provides for revolving loans and letters of credit.
−Removed: Borrowings under our term loan and revolving facility mature in October 2026.
−Removed: The maximum amount of credit available under the credit agreement for revolving loans and letters of credit is $ 350 million.
−Removed: We may elect to increase the maximum availability of the term loan facility, the revolving facility, or both facilities up to an aggregate additional amount of $ 25 million subject to lender approvals.
−Removed: The credit agreement also provides for letters of credit aggregating up to $ 25 million.
−Removed: Borrowings under our credit agreement bear interest at a variable rate of interest based on Term SOFR or a base rate, plus in each case an applicable margin (based on our Total Funded Debt to EBITDA Ratio).
−Removed: The base rate for any day is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate plus .50 %;
−Removed: (ii) the Prime Rate and (iii) the sum of Term SOFR for a one-month interest period, plus the difference between the additional Term SOFR interest margin for SOFR rate loans and the additional base rate interest margin for base rate loans.
−Removed: The applicable margins for SOFR loans ranges from 1.50 % to 3.75 % and .50 % to 2.75 % for base rate loans.
−Removed: We also pay a commitment fee with respect to undrawn amounts under the revolving loan facility ranging from .25 % to .50 % (based on our Total Funded Debt to EBITDA Ratio) and fees on letters of credit that are issued.
−Removed: As of December 31, 2024, the interest rate on our outstanding term loan and weighted average interest rate on our aggregate outstanding revolving facility was 7.40 % and 7.21 %, respectively.
−Removed: We had letters of credit outstanding of $ 0.8 million as of December 31, 2024 and 2023.
+Added: On May 2, 2025, the Company entered into a new credit agreement providing for a $ 300 million term loan facility and a $ 400 million revolving credit facility, both maturing on May 2, 2030.
+Added: The revolving credit facility includes a $ 30 million sub facility available for the issuance of letters of credit.
+Added: The new credit agreement replaced the Company's existing term loan and revolving credit facility.
+Added: Proceeds from the term loan were utilized to pay transaction-related fees and expenses and to repay, in full, all amounts outstanding under the prior credit agreement.
+Added: Borrowings under the new credit agreement accrue interest at either the term SOFR or ABR, plus in each case an applicable margin (based on the Company's Total Net Leverage Ratio).
+Added: The ABR for any day is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 0.50 %;
+Added: (ii) the Prime Rate and (iii) the daily SOFR rate plus 1 %.
+Added: The applicable margin for term SOFR loans ranges from 1.25 % to 2.25 % and for ABR loans from 0.25 % to 1.25 %.
+Added: The Company also pays a commitment fee with respect to undrawn amounts under the revolving credit facility ranging from 0.20 % to 0.30 % (based on the Company's Total Net Leverage Ratio) and fees on letters of credit that are issued.
+Added: The Company incurred $ 2.6 million of fees in connection with the new credit agreement, of which $ 2.3 million were capitalized as deferred debt issuance costs and are being amortized to interest expense over the remaining term of the agreement.
+Added: As of December 31, 2025, the interest rate on the Company's outstanding term loan was 5.22 %.
+Added: Letters of credit outstanding totaled $ 0.6 million and $ 0.8 million as of December 31, 2025 and 2024, respectively.
+Added: During the year ended December 31, 2025, the Company repaid all outstanding borrowings under the revolving credit facility, primarily using proceeds from the Fleet Sale and the Company's October 2025 underwritten public offering.
+Added: See Note (3) "Discontinued Operations" and Note (15) "Capital Stock", respectively, for additional information.
Future required term loan and revolving facility payments as of December 31, 2025 are as follows (in thousands):
2 unchanged sentences
2027 11,250 — 11,250
−Removed: Total $ 277,500 $ 155,000 $ 432,500
−Removed: The credit agreement contains collateral requirements to secure our loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions, and limitations.
−Removed: Restrictive covenants include a maximum Total Funded Debt to EBITDA Ratio and a minimum Fixed Charge Coverage Ratio.
−Removed: We were in compliance with required ratios and other terms and conditions as of December 31, 2024.
+Added: 2028 20,625 — 20,625
+Added: 2029 22,500 — 22,500
+Added: 2030 234,375 — 234,375
+Added: $ 296,250 $ — $ 296,250
+Added: The credit agreement contains collateral requirements to secure the Company's loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions, and limitations.
+Added: Restrictive covenants include a maximum Total Net Leverage Ratio and a minimum Interest Coverage Ratio.
+Added: The Company was in compliance with required ratios and other terms and conditions as of December 31, 2025.
(8) Derivative Instruments and Hedging Activities
−Removed: We are party to fixed interest rate swap instruments that are designated and accounted for as cash flow hedges to manage risks associated with interest rate fluctuations on a portion of our floating rate debt.
−Removed: Our derivative instruments designated as cash flow hedges as of December 31, 2024 were (in thousands):
+Added: The Company is party to fixed interest rate swap instruments that are designated and accounted for as cash flow hedges to manage risks associated with interest rate fluctuations on a portion of the Company's floating rate debt.
+Added: The Company's derivative instruments designated as cash flow hedges as of December 31, 2025 were (in thousands):
Notional Amount Paid Fixed Rate Receive Variable Rate Settlement and Termination
4 unchanged sentences
These derivative instruments are recorded on the consolidated balance sheets at fair value.
−Removed: Unrealized changes in the fair value on cash flow hedges are recognized in other comprehensive income (loss) and the amounts are reclassified from accumulated other comprehensive income (loss) into earnings in a manner that matches the timing of the earnings impact of the hedged transactions.
−Removed: For the years ended December 31, 2024 and 2023, we reclassified $ 4.3 million and $ 3.8 million, respectively, from accumulated other comprehensive income to interest expense, net.
−Removed: We estimate that we will reclassify $ 1.5 million of unrealized gains from accumulated other comprehensive income into earnings in the twelve months following December 31, 2024.
−Removed: See Note (17) "Fair Value Measurements" for the fair value of the interest rate swaps.
+Added: Unrealized changes in the fair value on cash flow hedges are recognized in other comprehensive (loss) income and the amounts are reclassified from accumulated other comprehensive income into earnings in a manner that matches the timing of the earnings impact of the hedged transactions.
+Added: For the years ended December 31, 2025, 2024, and 2023, the Company reclassified $ 1.9 million, $ 4.3 million, and $ 3.8 million, respectively, from accumulated other comprehensive income to interest expense, net.
+Added: The Company estimates that it will reclassify $ 0.3 million of unrealized gains from accumulated other comprehensive income into earnings in the twelve months following December 31, 2025.
+Added: See Note (17) "Fair Value Measurements" for the fair value of these swaps.
(9) Accrued Expenses and Other Current Liabilities
9 unchanged sentences
Accrued income taxes 2,121 813
−Removed: Total $ 62,195 $ 36,383
−Removed: (a) Certain amounts from prior year have been reclassified to conform with current year presentation.
+Added: Accrued purchase consideration
+Added: Interest rate swap liability
+Added: 11,889 10,880
+Added: $ 73,161 $ 52,749
(10) Stock-Based Compensation Plans
−Removed: The VSE Corporation 2006 Restricted Stock Plan, as amended (the "2006 Plan"), provides VSE's employees and directors the opportunity to receive various types of stock-based compensation and cash awards.
−Removed: The total number of shares authorized for issuance under this plan was 1,875,000 and, as of December 31, 2024, 448,083 shares remained available for issuance.
−Removed: As of December 31, 2024, we have outstanding stock-settled bonus awards, time-vested stock awards, and performance share awards under this plan.
−Removed: Stock-settled bonus awards are a fixed dollar-denominated award.
−Removed: On the first anniversary of the grant date, the total fixed dollar value of the award is converted into shares based on our closing stock price on the date of conversion.
−Removed: Vesting occurs over a three-year service period in three equal tranches.
−Removed: Beginning with the 2023 stock-settled bonus awards, the first vesting occurs one year after the award is converted into shares.
−Removed: For awards granted prior to 2023, the first vesting occurs one year after the grant date.
−Removed: On each vesting date, 100 % of the vested award is paid in stock.
−Removed: Expense is recognized on a straight-line basis over the requisite service period for each tranche, which results in an accelerated pattern for an award.
−Removed: Time-vested stock awards generally vest over a three-year service period in equal installments on each anniversary of the grant date.
−Removed: Our directors receive a grant of stock annually as part of their compensation and the stock vests immediately upon grant.
−Removed: We grant performance share awards to certain employees under the 2006 Plan.
−Removed: Performance share awards are rights to receive shares of our stock on the satisfaction of service requirements and performance conditions.
−Removed: These awards vest ratably in equal
−Removed: installments over a three-year period on the anniversary of each grant date, subject to meeting the minimum service requirements and the achievement of certain annual or cumulative financial metrics of our performance, with the number of shares ultimately issued, if any, ranging up to 200 % of the specified target shares beginning in 2023.
−Removed: If performance is below the minimum threshold level of performance, no shares will be issued.
−Removed: For all performance share awards granted, the annual and cumulative financial metrics are based on our achievement of adjusted EBITDA.
−Removed: During fiscal 2021, we established the Employee Stock Purchase Plan ("ESPP") to allow eligible employees to purchase shares of our VSE common stock at a discount of up to 15 % of the fair market value on specified dates.
−Removed: For ESPP offerings in the year ended December 31, 2024, the purchase price was 12 % off the lesser of the fair market value on the date of the offering and the fair market value on the date of purchase, thereby resulting in stock compensation expense of $ 0.1 million.
−Removed: As of December 31, 2024, 500,000 shares of VSE common stock are authorized for issuance under the ESPP.
+Added: The VSE Corporation 2006 Restricted Stock Plan, as amended (the "2006 Plan"), provides for the issuance of equity-based and cash-based compensation awards to the Company's employees and non-employee directors.
+Added: The types of awards issued under the 2006 Plan include stock-settled bonus awards, time-vested stock awards, and performance share awards.
+Added: The total number of shares authorized for issuance under the 2006 Plan was 2,675,000 , of which 1,114,532 shares remained available for issuance as of December 31, 2025.
+Added: Stock-settled bonus awards are fixed dollar-denominated awards.
+Added: On the first anniversary of the grant date, the total fixed dollar value of the award is converted into shares based on the Company's closing stock price on the date of conversion.
+Added: These awards vest over a three-year service period in three equal tranches.
+Added: Beginning with the 2023 stock-settled bonus awards, the first tranche vests one year following the conversion of the award into shares.
+Added: On each vesting date, 100 % of the vested award is settled in shares.
+Added: Compensation expense is recognized on a straight-line basis over the requisite service period for each tranche, resulting in an accelerated pattern for the overall award.
+Added: Time-vested stock awards generally vest in equal annual installments over a three-year service period beginning on the first anniversary of the grant date.
+Added: Directors receive annual stock grants as part of their compensation, which vest immediately upon grant.
+Added: The Company grants performance share awards to certain employees under the 2006 Plan.
+Added: These awards represent the right to receive shares upon the satisfaction of specified service requirements and performance conditions.
+Added: Performance share awards vest ratably in equal annual installments over a three-year period on the anniversary of each grant date, subject to meeting minimum service requirements and achievement of certain annual or cumulative financial metrics of the Company's performance.
+Added: The number of shares ultimately issuable ranges from 0 % to 200 % of the specified target shares, based on the level of performance achieved.
+Added: If performance falls below the minimum threshold, no shares will be issued.
+Added: For all performance share awards granted, the annual and cumulative financial metrics are based on the Company's achievement of a specified adjusted EBITDA target.
+Added: In 2021, the Company established the VSE Employee Stock Purchase Plan ("ESPP") to allow eligible employees to purchase shares of the Company's common stock at a discount of up to 15 % of fair market value on specified dates.
+Added: For ESPP offerings during the years ended December 31, 2025, 2024 and 2023, the purchase price was at a discount of 12 % off the lesser of the fair market value on the offering date or the purchase date.
+Added: As a result, the Company recognized stock-based compensation expense of $ 0.1 million in each of these years.
+Added: As of December 31, 2025, 500,000 shares of common stock were authorized for issuance under the ESPP, of which 419,996 shares remained available for issuance.
Expense and Related Tax Benefits Recognized
−Removed: Stock-based compensation expense is recognized within products and services costs within our consolidated statements of income.
−Removed: Stock-based compensation expense and related tax benefits recognized under the 2006 Plan were as follows (in thousands):
+Added: Stock-based compensation expense is included within products and services costs on the consolidated statements of operations.
+Added: The total s tock-based compensation expense and related tax benefits recognized related to stock-based compensation were as follows (in thousands):
For the years ended December 31,
5 unchanged sentences
6,386 4,151 3,407
−Removed: Total $ 8,208 $ 7,612 $ 4,342
−Removed: Tax benefit recognized from stock-based compensation $ 2,048 $ 1,899 $ 1,083
+Added: $ 12,892 $ 8,007 $ 6,745
+Added: Tax benefits recognized
+Added: $ 3,217 $ 1,998 $ 1,683
Stock-Settled Bonus Awards
−Removed: In March 2024, the employees eligible for the 2023 awards, 2022 awards, and the 2021 awards received a total of 9,972 shares of common stock.
+Added: In March 2025, employees eligible for the 2024 awards, 2023 awards, and the 2022 awards received a total of 3,298 shares of common stock.
The grant-date fair value of these awards for the years ended December 31, 2025, 2024 and 2023 was $ 113.97 , $ 75.12 , and $ 42.23 per share, respectively.
−Removed: The total compensation cost related to non-vested stock-settled bonus awards not yet recognized was approximately $ 1.0 million with a weighted average amortization period of 2.2 years as of December 31, 2024.
+Added: Total stock-based compensation expense related to non-vested stock-settled bonus awards not yet recognized was approximately $ 1.4 million with a weighted average amortization period of 2.2 years as of December 31, 2025.
The total fair value of stock-settled bonus awards that vested in the years ended December 31, 2025, 2024 and 2023 was $ 0.4 million, $ 0.7 million, and $ 1.2 million, respectively.
8 unchanged sentences
Unvested as of December 31, 2025 123,780 $ 95.03
−Removed: The grant date fair value of time-vested stock awards is based on the closing market price of our common stock on the grant date.
+Added: The grant date fair value of time-vested stock awards is based on the closing market price of the Company's common stock on grant date.
The weighted average grant date fair value of the time-vested stock awards granted for the years ended December 31, 2025, 2024 and 2023 was $ 115.64 , $ 79.30 , and $ 45.78 , respectively.
−Removed: As of December 31, 2024 there was $ 5.5 million of unrecognized compensation cost related to time-vested stock awards, which is expected to be recognized over a weighted-average period of 2.1 years.
+Added: As of December 31, 2025 there was $ 7.3 million of unrecognized stock-based compensation expense related to time-vested stock awards, which is expected to be
+Added: recognized over a weighted-average period of 1.9 years.
The total fair value of time-vested stock awards that vested in the years ended December 31, 2025, 2024 and 2023 was $ 6.6 million, $ 3.7 million, and $ 1.2 million, respectively.
7 unchanged sentences
Forfeited ( 7,408 ) $ 65.47
+Added: Performance award achievement adjustments (a)
+Added: 12,117 $ 77.76
Unvested as of December 31, 2025 82,784 $ 82.57
+Added: (a) Represents the difference between the target shares granted and the actual shares awarded based upon the attainment of performance goals for the Company.
The actual number of shares to be issued upon vesting range between 0 - 200 % of the target number of shares granted.
3 unchanged sentences
(11) Income Taxes
−Removed: We are subject to U.S.
−Removed: federal income tax as well as income tax in multiple state and local jurisdictions.
−Removed: With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examinations for the years before 2020 for federal and state income taxes in the U.S.
−Removed: We file consolidated federal income tax returns that include all of our U.S.
+Added: The Company is subject to U.S.
+Added: federal income tax as well as income tax in multiple state, local and foreign jurisdictions.
+Added: With few exceptions, the statute of limitations for these jurisdictions is no longer open for audit or examinations for the years before 2021 for federal and state income taxes in the U.S and various foreign jurisdictions.
+Added: The Company files consolidated federal income tax returns that include all of its U.S.
subsidiaries.
24 unchanged sentences
2025 2024 2023
−Removed: Tax at statutory federal income tax rate $ 9,761 $ 11,952 $ 7,499
+Added: US federal statutory tax rate
+Added: $ 14,498 21.0 % $ 5,000 21.0 % $ 4,003 21.0 %
Increases (decreases) in tax resulting from:
−Removed: State taxes, net of federal tax benefit 1,738 2,019 1,459
−Removed: Permanent differences, net ( 634 ) ( 193 ) 287
−Removed: Tax credits ( 454 ) ( 461 ) ( 418 )
−Removed: Prior year true-up adjustment ( 931 ) 269 ( 45 )
−Removed: Valuation allowance 378 77 324
−Removed: Other provision adjustments 124 98 ( 54 )
−Removed: Provision for income taxes $ 9,982 $ 13,761 $ 9,052
+Added: State and local income taxes, net of federal income tax effect (a)
+Added: 756 1.1 % 451 1.9 % 402 2.1 %
+Added: Foreign tax effects
+Added: 798 1.2 % — — % — — %
+Added: Other foreign jurisdictions
+Added: ( 41 ) — % 373 1.6 % 144 0.8 %
+Added: Effect of cross-border tax laws
+Added: Foreign-derived intangible income
+Added: ( 3,753 ) ( 5.4 ) % ( 1,892 ) ( 8.0 ) % ( 615 ) ( 3.2 ) %
+Added: ( 52 ) ( 0.1 ) % ( 80 ) ( 0.3 ) % ( 32 ) ( 0.2 ) %
+Added: Changes in valuation allowances
+Added: 502 0.7 % 4 — % ( 1 ) — %
+Added: Nontaxable or nondeductible items
+Added: Excess stock tax benefit
+Added: ( 1,421 ) ( 2.1 ) % ( 772 ) ( 3.2 ) % — — %
+Added: Section 162(m) executive compensation
+Added: 3,809 5.5 % 1,444 6.1 % 554 2.9 %
+Added: Transaction costs
+Added: 1,053 1.5 % 489 2.0 % 477 2.5 %
+Added: Corporate-owned life insurance
+Added: — — % ( 283 ) ( 1.2 ) % ( 409 ) ( 2.1 ) %
+Added: ( 132 ) ( 0.2 ) % 116 0.5 % 43 0.2 %
+Added: Other adjustments
+Added: Other adjustments
+Added: ( 471 ) ( 0.7 ) % ( 443 ) ( 1.9 ) % ( 71 ) ( 0.4 ) %
Effective tax rate
$ 15,546 22.5 % $ 4,407 18.5 % $ 4,495 23.6 %
+Added: (a) State Taxes in CA, FL, KS, and VA made up the majority (greater than 50%) of the tax effect in this category.
+Added: State income tax expense includes the effects of changes in valuation allowances related to state net operating losses, the impact of state conformity to federal income tax provisions, and the benefit of state income tax credits.
+Added: During the year ended December 31, 2025, the Company recorded unrecognized tax benefits of approximately $ 3.1 million in connection with a recent acquisition.
+Added: Because the identified tax exposures, including interest and penalties, are fully indemnified, recognition is not expected to materially affect the Company’s effective tax rate.
The tax effect of temporary differences representing deferred tax assets and liabilities was as follows (in thousands):
22 unchanged sentences
Total gross deferred tax liabilities ( 69,896 ) ( 42,962 )
−Removed: Net deferred tax assets (liabilities) (b)
+Added: Net deferred tax (liabilities) assets (b)
$ ( 12,394 ) $ 8,129
−Removed: (a) A valuation allowance was provided against US capital loss in connection with the stock sale of Prime Turbines, certain state net operating loss, tax credit, and foreign tax loss deferred tax assets arising from carryforwards of unused tax benefits.
−Removed: (b) Deferred tax assets are included within other assets in our consolidated balance sheets.
−Removed: As of December 31, 2024, we had various tax losses and tax credits that may be applied against future taxable income.
+Added: (a) A valuation allowance was provided against US capital losses in connection with a recent stock sale, certain state net operating losses, tax credits, and foreign tax loss deferred tax assets arising from carryforwards of unused tax benefits.
+Added: (b) Deferred tax assets are included within other assets in the Company's consolidated balance sheets as of December 31, 2024.
+Added: As of December 31, 2025, the Company had various tax losses and tax credits that may be applied against future taxable income.
The majority of such tax attributes will expire in 2026 through 2046;
2 unchanged sentences
While the US has not yet adopted the Pillar Two rules, many countries took steps to incorporate Pillar Two model rule concepts into their domestic laws in 2023.
−Removed: Considering that we do not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, we do not expect these rules will significantly increase our global tax costs.
−Removed: We will continue to monitor US and global legislative action related to Pillar Two for future potential impacts.
−Removed: Our operating lease cost was as follows for the years ended December 31, (in thousands):
+Added: Considering that the Company does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, the Company does not expect these rules will significantly increase global tax costs.
+Added: The Company will continue to monitor US and global legislative action related to Pillar Two for future potential impacts.
+Added: The Company's operating lease cost was as follows for the years ended December 31, (in thousands):
2025 2024 2023
2 unchanged sentences
(a) Excludes short-term lease expense, which is not material.
−Removed: Our lease arrangements do not contain any material residual guarantees, variable payment provisions, or restrictive covenants.
−Removed: The table below summarizes future minimum lease payments under operating leases, recorded on the balance sheet, as of December 31, 2024 (in thousands):
+Added: The table below summarizes future minimum lease payments under operating leases as of December 31, 2025 (in thousands):
Year ending December 31,
−Removed: 2025 $ 10,178
Thereafter 25,109
−Removed: Minimum lease payments 73,396
+Added: Total future minimum lease payments
imputed interest ( 15,627 )
2 unchanged sentences
Long-term lease liabilities $ 43,693
−Removed: (a) The current portion of lease liabilities are presented within accrued expenses and other current liabilities on our consolidated balance sheets.
+Added: (a) The current portion of lease liabilities are presented within accrued expenses and other current liabilities on the Company's consolidated balance sheets.
Refer to Note (9) "Accrued Expenses and Other Current Liabilities."
5 unchanged sentences
Lease Abandonment and Termination
−Removed: In connection with the FDS sale as described in Note (3) "Discontinued Operations", we implemented changes that resulted in one-time charges primarily related to the lease abandonment and termination of our headquarters office space.
−Removed: On June 28, 2024, we ceased use of our 95,000 sq.
−Removed: leased office space in Alexandria, VA.
−Removed: We relocated our VA-based corporate staff to a 4,000 sq.
−Removed: office space in Vienna, VA under a new short-term lease.
−Removed: We recognized one-time lease abandonment costs of $ 12.9 million, which comprised of a reduction in our operating lease right-of-use assets of $ 6.7 million, exit costs of $ 3.7 million, and a non-cash write-off of certain property and equipment of $ 2.5 million.
−Removed: These one-time costs are included within lease abandonment and termination costs on our consolidated statements of income.
−Removed: On September 4, 2024, we entered into an agreement to immediately terminate the Alexandria, VA, office space lease in exchange for $ 12.0 million, payable in two equal installments due in January 2025 and January 2026.
−Removed: As a result, we recognized a lease termination gain of $ 0.7 million, which comprised of a $ 1.1 million net liability reduction, partially offset by a $ 0.4 million decrease in our remaining operating lease right-of-use asset.
−Removed: The lease termination gain is included within lease abandonment and termination costs on our consolidated statements of income.
−Removed: As of December 31, 2024, $ 6.0 million of the $ 12.0 million due as a result of the lease termination is classified within accrued expenses and other current liabilities, while the remaining $ 6.0 million is classified within other long-term liabilities.
+Added: In connection with the FDS sale as described in Note (3) "Discontinued Operations," the Company implemented post-sale changes, including the abandonment and termination of its former headquarters office space.
+Added: The Company ceased use of the office space and formally terminated the related lease in 2024.
+Added: These actions resulted in net lease abandonment and termination charges of $ 12.2 million during the year ended December 31, 2024.
+Added: As of December 31, 2025, the Company had a remaining lease termination obligation of $ 6.0 million, due in January 2026, which is included within accrued expenses and other current liabilities on the consolidated balance sheets.
(13) Commitments and Contingencies
−Removed: We may have certain claims in the normal course of business, including legal proceedings, against us and against other parties.
−Removed: In our opinion, the resolution of these claims will not have a material adverse effect on our results of operations, financial position, or cash flows.
+Added: The Company may have certain claims in the normal course of business, including legal proceedings, against the Company and against other parties.
+Added: Legal liabilities are recorded when it is probable that the outcome in a proceeding will be unfavorable and the related loss amount can be reasonably estimated.
+Added: In the Company's opinion, the resolution of these claims will not have a material adverse effect on the Company's results of operations, financial position, or cash flows.
However, because the results of any legal proceedings cannot be predicted with certainty, the amount of loss, if any, cannot be reasonably estimated.
−Removed: Further, from time-to-time, government agencies audit or investigate whether our operations are being conducted in accordance with applicable contractual and regulatory requirements.
+Added: Further, from time-to-time, government agencies audit or investigate whether the Company's operations are being conducted in accordance with applicable contractual and regulatory requirements.
Government audits or investigations, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties imposed, or could lead to suspension or debarment from future government contracting.
Government investigations often take years to complete and many result in no adverse action.
−Removed: We believe, based upon current information, that the outcome of any such government disputes, audits and investigations will not have a material adverse effect on our results of operations, financial condition, or cash flows.
−Removed: (14) Business Segments and Customer Information
+Added: The Company believes, based upon current information, that the outcome of any such government disputes, audits and investigations will not have a material adverse effect on the Company's results of operations, financial condition, or cash flows.
+Added: (14) Business Segment and Customer Information
Segment Information
−Removed: The sale of the Federal and Defense segment allows us to focus on a long-term strategic growth strategy focused on higher margin and higher growth aftermarket parts distribution and MRO businesses.
−Removed: Following the sale of the Federal and Defense segment, management of our business operations is conducted under two reportable operating segments:
−Removed: Our Aviation segment provides aftermarket MRO and distribution services to commercial, business and general aviation, cargo, military and defense, and rotorcraft customers globally.
−Removed: Core services include parts distribution, MRO services including fuel controls, avionics, pneumatics, hydraulics, wheel and brake, and rotable exchange and supply chain services.
−Removed: Our Fleet segment provides parts, inventory management, e-commerce fulfillment, logistics, supply chain support and other services to support the commercial aftermarket medium- and heavy-duty truck market, and the USPS.
−Removed: Core services include vehicle parts distribution, sourcing, IT solutions, customized fleet logistics, warehousing, kitting, just-in-time supply chain management, alternative product sourcing, and engineering and technical support.
−Removed: The operating segments reported below are our segments for which separate financial information is available and for which segment results are evaluated regularly by our President and Chief Executive Officer, who is our Chief Operating Decision Maker ("CODM"), in deciding how to allocate resources and in assessing performance.
−Removed: Our CODM evaluates segment performance based on consolidated revenues and operating income and considers budget-to-actual, sequential period and prior period variances on a monthly basis when making decisions about allocating capital and personnel to the segments.
−Removed: Segment costs, depreciation and amortization, and allocated corporate costs are viewed as significant segment expenses as part of the CODM’s evaluation.
−Removed: Net sales of our business segments exclude inter-segment sales as these activities are eliminated in consolidation.
−Removed: Corporate expenses are primarily selling, general and administrative expenses not allocated to segments.
−Removed: Corporate assets are primarily cash, property and equipment and investments held in separate trust.
−Removed: Our segment information is as follows (in thousands):
−Removed: Year Ended December 31, 2024
−Removed: Aviation Fleet Corporate /
−Removed: unallocated expenses Consolidated
−Removed: Revenues $ 786,256 $ 293,876 $ — $ 1,080,132
−Removed: Costs and operating expenses:
−Removed: Segment costs (a)
−Removed: 640,895 266,689 36,831 944,415
−Removed: Depreciation and amortization 25,500 2,957 155 28,612
−Removed: Allocated corporate cost (b)
−Removed: 18,474 7,212 — 25,686
−Removed: Total costs and operating expenses 684,869 276,858 36,986 998,713
−Removed: Operating income (loss) (c)
−Removed: $ 101,387 $ 17,018 $ ( 36,986 ) $ 81,419
−Removed: Capital Expenditures (d)
+Added: Following the sales of the Company's Fleet and Federal and Defense segments, the Company manages its business as a single reportable and operating segment focused on higher margin and higher growth aftermarket parts distribution and MRO activities.
+Added: The Company's single operating segment provides aftermarket MRO and distribution services to commercial, business and general aviation, cargo, military and defense, and rotorcraft customers globally.
+Added: Core services include parts distribution, MRO services including engine components and accessories, fuel controls, avionics, pneumatics, hydraulics, wheel and brake, as well as rotable exchange and supply chain services.
+Added: The operating segment presented below represents the Company's only segment for which discrete financial information is available and is the basis on which operating results are regularly reviewed by the Company's President and Chief Executive Officer, who serves as the Chief Operating Decision Maker ("CODM"), for purposes of resource allocation and performance assessment.
+Added: The CODM evaluates segment performance based on consolidated net income as the measure of segment profit or loss and considers budget-to-actual results, sequential period and prior period comparisons on a monthly basis when making decisions regarding capital and personnel allocation.
+Added: The expenses presented below represent significant segment expenses that are regularly provided to and considered by the CODM in evaluating segment performance.
+Added: Segment assets are reported on the consolidated balance sheets as total assets.
+Added: The Company's segment information is as follows (in thousands):
+Added: For the years ended December 31,
2025 2024 2023
−Removed: Total Assets $ 1,409,426 $ 282,820 $ 42,374 $ 1,734,620
−Removed: Year Ended December 31, 2023
−Removed: Aviation Fleet Corporate /
−Removed: unallocated expenses Consolidated
Revenues $ 1,112,275 $ 786,256 $ 544,020
2 unchanged sentences
900,759 641,298 431,412
−Removed: Depreciation and amortization 16,080 5,300 ( 253 ) 21,127
−Removed: Allocated corporate cost (b)
+Added: Depreciation and amortization (b)
39,160 25,500 16,080
−Removed: Total costs and operating expenses 472,852 285,211 14,429 772,492
−Removed: Operating income (loss) (c)
+Added: Allocated corporate cost (c)
24,020 18,071 12,411
−Removed: Capital Expenditures (d)
+Added: Unallocated corporate costs (d)
58,741 42,631 33,972
−Removed: Total Assets (e)
+Added: Total costs and operating expenses
1,022,680 727,500 493,875
−Removed: For the Year Ended December 31, 2022
−Removed: Aviation Fleet Corporate /
−Removed: unallocated expenses Consolidated
−Removed: Revenues $ 408,112 $ 261,336 $ — $ 669,448
−Removed: Costs and operating expenses:
−Removed: Segment costs (a)
+Added: Operating income
89,595 58,756 50,145
−Removed: Depreciation and amortization 13,174 8,783 ( 931 ) 21,026
−Removed: Allocated corporate cost (b)
+Added: Interest expense, net 20,556 34,947 31,085
+Added: Provision for income taxes
15,546 4,407 4,495
−Removed: Total costs and operating expenses 371,696 237,425 6,723 615,844
−Removed: Operating income (loss) (c)
+Added: (Loss) income from discontinued operations, net of tax
( 41,790 ) ( 4,078 ) 24,569
−Removed: Capital Expenditures (d)
$ 11,703 $ 15,324 $ 39,134
−Removed: (a) Segment costs consist of material, labor, overhead, and selling, general, and administrative costs not separately disclosed within this footnote.
−Removed: (b) Primarily includes costs for information technology, human resources, accounting, and legal support services.
−Removed: (c) Certain corporate costs previously allocated to the Federal and Defense business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations.
−Removed: (d) Amounts differ from consolidated statements of cash flows due to inclusion of capital expenditures for which payment has not yet been remitted.
−Removed: (e) Corporate assets in 2023 include $ 93,002 of assets held-for-sale.
−Removed: Customer Information
−Removed: Our revenues are derived from the delivery of products and services performed for commercial and government customers.
−Removed: Revenues from the USPS, reported within our Fleet segment, represented 11 %, 19 %, and 23 % of consolidated revenues for 2024, 2023 and 2022, respectively.
−Removed: Our customers also include various other commercial entities and government agencies.
+Added: (a) Segment costs consist of material, labor, overhead, and selling, general, and administrative costs attributable to the Aviation segment.
+Added: (b) This line item includes only depreciation and amortization attributable to the Aviation segment.
+Added: (c) Primarily includes costs for information technology, human resources, accounting, and legal support services allocated to the Aviation segment.
+Added: (d) Primarily includes earn-out receivable fair value adjustments and corporate costs for acquisition, integration and restructuring activities.
+Added: Customer and Geographical Information
+Added: The Company's revenues are derived from the delivery of products and services performed for commercial and government customers.
+Added: Customers also include various other commercial entities and government agencies.
See Note (4) "Revenue Recognition" for revenue by customer.
−Removed: We do not measure revenue or profit by product or service lines, either for internal management or external financial reporting purposes, because it would be impractical to do so.
−Removed: Products offered and services performed are determined by contract requirements and the types of products and services provided for one contract bear no relation to similar products and services provided on another contract.
−Removed: Products and services provided vary when new contracts begin, or current contracts expire.
−Removed: In many cases, more than one product or service is provided under a contract.
−Removed: Accordingly, cost and revenue tracking are designed to best serve contract requirements and segregating costs and revenues by product or service lines in situations for which it is not required would be difficult and costly to both us and our customers.
−Removed: Geographical Information
+Added: Revenues from a group of affiliated customers under common ownership represented 20 %, 21 %, and 14 % of consolidated revenues for the years ended December 31, 2025, 2024 and 2023, respectively.
Revenue by geography is based on the billing address of the customer.
−Removed: Our revenue by geographic area is as follows (in thousands):
+Added: Revenue by geographic area is as follows (in thousands):
For the years ended December 31,
1 unchanged sentence
United States $ 629,665 $ 492,297 $ 340,915
+Added: 149,034 107,305 72,448
Other Countries (a)
1 unchanged sentence
Total revenue $ 1,112,275 $ 786,256 $ 544,020
−Removed: (a) No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.
+Added: (a) No individual country, other than disclosed above, exceeded 10% of the Company's total revenue for any period presented.
(15) Capital Stock
−Removed: Our common stock has a par value of $ 0.05 per share.
+Added: The Company's common stock has a par value of $ 0.05 per share.
Proceeds from common stock issuances that are greater than $ 0.05 per share are credited to additional paid in capital.
−Removed: Holders of common stock are entitled to one vote per common share held on all matters voted on by our stockholders.
+Added: Holders of common stock are entitled to one vote per common share held on all matters voted on by the Company's stockholders.
Stockholders of record are entitled to the amount of dividends declared per common share held.
−Removed: In May 2024, we entered into an underwriting agreement with certain underwriters relating to the issuance and sale of up to 2,429,577 shares of the Company's common stock at a public offering price of $ 71.00 per share.
−Removed: On May 17, 2024, the Company issued 2,429,577 shares, which included the exercise by the underwriters of their option to purchase additional shares, pursuant to the underwriting agreement.
−Removed: Net proceeds of $ 162.0 million were received by the Company, which were used to repay outstanding borrowings under our revolving credit facility, including amounts borrowed to pay the purchase price of the acquisition of TCI and for general corporate purposes.
−Removed: We incurred legal and accounting fees of $ 0.4 million associated with the May 2024 public offering.
−Removed: In October 2024, we entered into an underwriting agreement with certain underwriters relating to the issuance and sale of 1,724,137 shares of the Company's common stock at a public offering price of $ 87.00 per share.
−Removed: Under the terms of the agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 258,620 shares of common stock.
−Removed: The offering closed on October 17, 2024, resulting in the issuance of 1,982,757 shares, which included the exercise by the underwriters of their option to purchase additional shares, pursuant to the underwriting agreement, for which we received net proceeds of $ 163.8 million, net of issuance costs.
−Removed: Additionally, we incurred legal and accounting fees of $ 0.3 million associated with the October 2024 public offering.
−Removed: The net proceeds were used to finance a portion of the cash consideration for the Kellstrom Aerospace acquisition and general corporate purposes, including repaying outstanding borrowings under our revolving facility.
+Added: In October 2025, the Company entered into an underwriting agreement with certain underwriters relating to the issuance and sale of 2,352,941 shares of the Company's common stock at a public offering price of $ 170.00 per share.
+Added: Under the terms of the agreement, the Company granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 352,941 shares of common stock.
+Added: The offering closed on October 29, 2025, resulting in the issuance of 2,705,882 shares, which included the exercise by the underwriters of their option to purchase additional shares for which the Company received proceeds of $ 441.6 million, net of issuance costs.
+Added: Additionally, the Company incurred transaction-related legal and accounting fees of $ 0.5 million.
+Added: The net proceeds were used to fund the cash consideration for the Aero 3 acquisition and general corporate purposes, including repaying outstanding borrowings under the Company's revolving facility.
+Added: In May 2024, the Company entered into an underwriting agreement with certain underwriters relating to the issuance and sale of 2,429,577 shares of the Company's common stock at a public offering price of $ 71.00 per share.
+Added: Net proceeds of $ 162.0 million were received by the Company, which were used to repay outstanding borrowings under the Company's revolving credit facility, including amounts borrowed to pay the purchase price of the acquisition of TCI and for general corporate purposes.
+Added: In October 2024, the Company entered into an underwriting agreement with certain underwriters relating to the issuance and sale of 1,982,757 shares at a public offering price of $ 87.00 per share, for which the Company received net proceeds of $ 163.8 million.
+Added: The net proceeds were used to fund a portion of the cash consideration for the Kellstrom Aerospace acquisition and general corporate purposes, including repaying outstanding borrowings under the Company's revolving facility.
(16) 401(k) Plan
−Removed: We maintain a defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, that covers substantially all our employees.
−Removed: Under the provisions of our 401(k) plan, employees' eligible contributions are matched at rates specified in the plan documents.
−Removed: Our expense associated with this plan was approximately $ 2.0 million, $ 1.6 million, and $ 1.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.
+Added: The Company maintains a defined contribution plan under Section 401(k) of the Internal Revenue Code of 1986, as amended, that covers substantially all employees.
+Added: Under the provisions of the 401(k) plan, employees' eligible contributions are matched at rates specified in the plan documents.
+Added: The Company's 401(k) Plan expense was approximately $ 2.4 million, $ 1.3 million, and $ 1.0 million for the years ended December 31, 2025, 2024, and 2023, respectively.
(17) Fair Value Measurements
−Removed: We utilize fair value measurement guidance prescribed by GAAP to value our financial instruments.
+Added: The Company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments.
The accounting standard for fair value measurements establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
2 unchanged sentences
and unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions (Level 3).
−Removed: The carrying amounts of cash and cash equivalents, receivables, accounts payable and amounts included in prepaid expenses and other current assets and accrued expenses and other current liabilities that meet the definition of a financial instrument approximate fair value due to their relatively short maturity.
−Removed: The carrying value of our outstanding debt obligations approximates its fair value.
−Removed: The fair value of long-term debt is calculated using Level 2 inputs based on interest rates available for debt with terms and maturities similar to our existing debt arrangements.
−Removed: Non-financial assets acquired and liabilities assumed in business combinations were measured at fair value using income, market and cost valuation methodologies.
−Removed: See Note (2), "Acquisitions." The fair value measurements were estimated using significant inputs that are not observable in the market and thus represent a Level 3 measurement.
−Removed: The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis and the level they fall within the fair value hierarchy (in thousands):
+Added: The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis (in thousands):
As of December 31,
−Removed: Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy 2024 2023
+Added: Financial Statement Classification Fair Value Hierarchy 2025 2024
Non-COLI assets held in Deferred Supplemental Compensation Plan (a)
Other assets Level 1 $ 704 $ 629
−Removed: Interest rate swaps Other assets Level 2 $ 4,093 $ 2,840
−Removed: (a) Non-COLI assets held in our deferred supplemental compensation plan consist of equity funds with fair value based on observable inputs such as quoted prices for identical assets in active markets and changes in fair value are recorded as selling, general and administrative expenses.
+Added: Interest rate swaps - current
+Added: Accrued expenses and other current liabilities
+Added: Level 2 $ 553 $ —
+Added: Interest rate swaps - long-term
+Added: Other assets Level 2 $ 1,235 $ 4,093
+Added: (a) Non-COLI assets held in the Company's deferred supplemental compensation plan consist of equity funds with fair value based on observable inputs such as quoted prices for identical assets in active markets and changes in fair value are recorded as selling, general and administrative expenses.
+Added: The carrying amounts of cash and cash equivalents, receivables, accounts payable and amounts included in prepaid expenses and other current assets and accrued expenses and other current liabilities that meet the definition of a financial instrument approximate fair value due to their relatively short maturity.
+Added: The carrying value of the note receivable approximates fair value as the stated interest income effectively offsets the time value of money, resulting in minimal discounting impact.
+Added: The carrying value of the Company's outstanding debt obligations approximates its fair value.
+Added: The fair value of the note receivable and long-term debt are calculated using Level 2 inputs based on interest rates available for debt with terms and maturities similar to the Company's existing debt arrangements.
+Added: Non-financial assets acquired and liabilities assumed in business combinations were measured at fair value using income, market and cost valuation methodologies.
+Added: See Note (2), "Acquisitions." The fair value measurements were estimated using significant inputs that are not observable in the market and thus represent a Level 3 measurement.
+Added: In connection with the sale of the Fleet segment in April 2025, the total consideration to be received by the Company included a potential earn-out payment of up to $ 65 million, subject to the achievement of certain milestones by the divested business during 2025.
+Added: Pursuant to the sale agreement, half of the earn-out amount, if any, is due to the Company by December 31, 2026, with the second half due by June 30, 2027.
+Added: The earn-out receivable is measured at fair value using unobservable inputs and thus represents a Level 3 measurement.
+Added: The fair value is remeasured at each reporting period, with all fair value changes subsequent to the initial sale-date measurement recorded within earn-out receivable fair value adjustments in the consolidated statements of operations.
+Added: The following table presents the changes in the fair value of the earn-out receivable:
+Added: Balance as of December 31, 2024 $ —
+Added: Sale date fair value of earn-out receivable
+Added: Subsequent fair value adjustments ( 29,200 )
+Added: Balance as of December 31, 2025
+Added: The fair value of the earn-out receivable was estimated using a modified Black-Scholes model and other methods, which accounted for the probabilities of various outcomes.
+Added: The sale date fair value of the earn-out receivable was utilized in calculating the Company's impairment loss on Fleet assets classified as held-for-sale recorded in 2025 as discussed in Note (3) "Discontinued Operations." During the year ended December 31, 2025, the Company recorded a fair value adjustment resulting in a full write-down of the earn-out receivable due to updated estimates used in the valuation.
+Added: Based on updated forecasts, which incorporated actual performance to date of the divested entity subsequent to the sale, and the required milestones under the sale agreement, the Company does not expect that the earn-out performance threshold will be achieved.
(18) Restructuring Costs
−Removed: During the year ended December 31, 2024, we incurred $ 4.2 million of corporate restructuring expenses , which are included in selling, general and administrative expenses, primarily related to the cancellation of contracts and leasing agreements associated with the FDS Sale.
−Removed: As of December 31, 2024, approximately $ 0.8 million of these costs are included within accrued expenses and other current liabilities on our consolidated balance sheets.
−Removed: Our corporate restructuring activities related to the FDS Sale are substantially complete, and we do not expect to incur additional material costs associated with these activities .
−Removed: (19) Subsequent Event
−Removed: On February 17, 2025, we signed a definitive agreement to sell all of the issued and outstanding shares of common stock of our Fleet segment for a total consideration of up to $ 230 million (the “Fleet Sale”).
−Removed: This consideration assumes a $ 140 million cash payment at the closing of the Fleet Sale, a $ 25 million seller note, and an earn-out payment of up to $ 65 million, subject to the achievement of certain milestones.
−Removed: The Fleet Sale is expected to close in the second quarter of 2025 and is subject to customary closing conditions and approvals.
−Removed: We currently intend to use the net proceeds from the Fleet Sale to reduce existing borrowings under the credit agreement.
+Added: During the year ended December 31, 2024, the Company incurred $ 4.2 million of corporate restructuring expenses , which are included in selling, general and administrative expenses in the consolidated statement of operations, primarily related to the cancellation of contracts and leasing agreements associated with the FDS Sale.
+Added: Corporate restructuring expenses during the year ended December 31, 2025 were not material.
+Added: The Company's corporate restructuring activities related to the FDS and Fleet Sales are substantially complete, and the Company does not expect to incur additional material costs associated with these activities .
+Added: (19) Subsequent Events
+Added: On January 29, 2026, the Company entered into a stock purchase agreement ("the Purchase Agreement") to acquire Precision Aviation Group ("PAG"), a portfolio company of GenNx360 Capital Partners, for total upfront consideration of approximately $ 2.025 billion in cash and equity (the “PAG Acquisition”).
+Added: In addition, the Purchase Agreement provides for up to $ 125 million in additional contingent earn-out consideration, payable in cash or equity consideration at the Company's sole discretion, based on PAG's 2026 adjusted EBITDA performance.
+Added: The Acquisition is subject to customary closing conditions and approvals and is expected to close in the second quarter of 2026.
+Added: In connection with and pursuant to the Purchase Agreement, concurrently with the signing of the Purchase Agreement, the Company entered into a debt commitment letter (the “Debt Commitment Letter”) with one or more financial institutions (collectively, the “Commitment Parties”).
+Added: Subject to the terms of the Debt Commitment Letter, the Commitment Parties have committed to provide new senior secured financing, which currently consists of, (i) a term loan B facility (the “New Term Loan B Facility”), (ii) an upsize of the Company's existing revolving facility (as amended, the “New Revolving Facility”), and (iii) an upsize of the Company's $ 300.0 million senior secured term loan A facility from $ 296.25 million (as amended, the “New Term Loan A Facility”).
+Added: Following the satisfaction of certain conditions under the Debt Commitment Letter, certain commitments within the Debt Commitment Letter to provide a bridge loan facility and a backstop facility were reduced to $ 0 , and the New Term Loan A Facility and the New Term Loan B Facility commitments may also be reduced.
+Added: In February 2026, the Company initiated concurrent public offerings of (i) 4,587,766 shares of its common stock at a public offering price of $ 188.00 per share (the “Common Stock Offering”) and (ii) 9,200,000 5.750 % tangible equity units, each with a stated value of $ 50.00 (the “Units Offering,” and together with the Common Stock Offering, the “Offerings”).
+Added: The Common Stock Offering closed on February 4, 2026, and the Units Offering closed on February 5, 2026.
+Added: The net proceeds of approximately $ 1.3 billion received by the Company are expected to be used to finance a portion of the cash consideration for the PAG Acquisition.
+Added: If for any reason the PAG Acquisition is not consummated, the Company intends to use the net proceeds from the Offerings, after payment of any cash redemption amount and repurchase price, for general corporate purposes, which may include repayment of outstanding indebtedness.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.