SEC Form 10-Q filed by VSE Corporation

7/31/25 5:02:19 PM ET

$VSEC

Military/Government/Technical

Consumer Discretionary

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vsec-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _____

Commission File Number: 000-03676

VSE CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware			54-0649263
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

3361 Enterprise Way

Miramar,

Florida

33025

(Address of Principal Executive Offices)

(Zip Code)

Registrant's Telephone Number, Including Area Code: (954) 430-6600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.05 per share

VSEC

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Number of shares of Common Stock outstanding as of July 25, 2025: 20,676,320


	TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of June 30, 202 5 and December 31, 20 24	4

	Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 202 5 and 20 24	5

	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 202 5 and 20 24	6

	Unaudited Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 202 5 and 20 24	7

	Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 202 5 and 20 24	9

	Notes to Unaudited Consolidated Financial Statements	10

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26

ITEM 4.	Controls and Procedures	26

PART II	OTHER INFORMATION

ITEM 1.	Legal Proceedings	27

ITEM 1A.	Risk Factors	27

ITEM 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	27

ITEM 5.	Other Information	27

ITEM 6.	Exhibits	28

Signatures		29

-2-


	June 30,		December 31,
(in thousands, except share and per share amounts)	2025		2024
Assets
Current assets:
Cash and cash equivalents	$	16,906	$	29,505
Receivables (net of allowance of $4.8 million and $4.1 million, respectively)	183,208		158,104
Contract assets	34,043		29,960
Inventories	463,216		434,059
Prepaid expenses and other current assets	56,246		30,899
Current assets held-for-sale	—		282,820
Total current assets	753,619		965,347
Property and equipment (net of accumulated depreciation of $27.1 million and $21.3 million, respectively)	80,243		71,041
Intangible assets (net of accumulated amortization of $86.8 million and $82.7 million, respectively)	208,536		197,157
Goodwill	428,665		428,263
Operating lease right-of-use assets	43,748		43,225
Note receivable	25,000		—
Earn-out receivable	23,300		—
Other assets	38,916		37,597
Total assets	$	1,602,027	$	1,742,630
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	7,500	$	30,000
Accounts payable	140,465		145,492
Accrued expenses and other current liabilities	52,012		52,749
Dividends payable	2,068		2,059
Current liabilities held-for-sale	—		68,200
Total current liabilities	202,045		298,500
Long-term debt, less current portion	371,656		400,173
Deferred compensation	7,540		7,262
Long-term operating lease obligations	38,259		39,498

Other long-term liabilities	3,000		9,011
Total liabilities	622,500		754,444
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, par value $0.05 per share, authorized 44,000,000 shares; issued and outstanding 20,676,320 and 20,590,496, respectively	1,034		1,030
Additional paid-in capital	595,001		591,600
Retained earnings	382,572		392,484
Accumulated other comprehensive income	920		3,072
Total stockholders' equity	979,527		988,186
Total liabilities and stockholders' equity	$	1,602,027	$	1,742,630


	Three months ended June 30,				Six months ended June 30,
(in thousands, except share and per share amounts)	2025		2024		2025		2024
Revenues:
Products	$	173,603	$	115,448	$	334,154	$	223,471
Services	98,536		77,380		194,030		131,740
Total revenues	272,139		192,828		528,184		355,211

Costs and operating expenses:
Products	144,828		96,624		281,695		189,285
Services	89,795		72,636		176,024		120,440
Selling, general and administrative expenses	8,516		3,780		10,827		6,705
Lease abandonment costs	—		12,857		—		12,857
Amortization of intangible assets	6,487		4,329		12,621		7,679
Total costs and operating expenses	249,626		190,226		481,167		336,966
Operating income	22,513		2,602		47,017		18,245

Interest expense, net	6,445		9,826		14,384		19,016
Income (loss) from continuing operations before income taxes	16,068		(7,224)		32,633		(771)
Provision (benefit) for income taxes	2,430		(1,936)		5,027		(1,025)
Net income (loss) from continuing operations	13,638		(5,288)		27,606		254
(Loss) income from discontinued operations, net of tax	(10,441)		2,511		(33,382)		(9,642)
Net income (loss)	$	3,197	$	(2,777)	$	(5,776)	$	(9,388)

Earnings (loss) per share:
Basic
Continuing operations	$	0.66	$	(0.31)	$	1.34	$	0.02
Discontinued operations	(0.51)		0.15		(1.62)		(0.59)
	$	0.15	$	(0.16)	$	(0.28)	$	(0.57)
Diluted
Continuing operations	$	0.66	$	(0.31)	$	1.33	$	0.01
Discontinued operations	(0.50)		0.15		(1.61)		(0.58)
	$	0.16	$	(0.16)	$	(0.28)	$	(0.57)

Weighted average shares outstanding:
Basic	20,670,239		17,152,661		20,644,215		16,468,288
Diluted	20,731,397		17,202,115		20,735,979		16,571,033

Dividends declared per share	$	0.10	$	0.10	$	0.20	$	0.20


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2025		2024		2025		2024
Net income (loss)	$	3,197	$	(2,777)	$	(5,776)	$	(9,388)
Other comprehensive (loss) income, net of tax:
Change in fair value of interest rate swap agreements, net of tax	(698)		221		(2,152)		2,725
Total other comprehensive (loss) income, net of tax	(698)		221		(2,152)		2,725
Comprehensive income (loss)	$	2,499	$	(2,556)	$	(7,928)	$	(6,663)


	Three months ended June 30, 2025
				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Common Stock
(in thousands, except per share data)	Shares	Amount
Balance at March 31, 2025	20,670	$	1,033	$	591,650	$	381,443	$	1,618	$	975,744
Net income	—	—		—		3,197		—		3,197


Stock-based compensation	7	1		3,351		—		—		3,352
Other comprehensive loss, net of tax	—	—		—		—		(698)		(698)
Dividends declared ($0.10 per share)	—	—		—		(2,068)		—		(2,068)
Balance at June 30, 2025	20,677	$	1,034	$	595,001	$	382,572	$	920	$	979,527


	Three months ended June 30, 2024
				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Common Stock
(in thousands, except per share data)	Shares	Amount
Balance at March 31, 2024	15,834	$	792	$	230,805	$	376,505	$	4,636	$	612,738
Net loss	—	—		—		(2,777)		—		(2,777)
Issuance of common stock	2,430	122		161,571		—		—		161,693
Stock issuance in connection with acquisition	127	6		9,994		—		—		10,000
Stock-based compensation	29	1		1,296		—		—		1,297
Other comprehensive income, net of tax	—	—		—		—		221		221
Dividends declared ($0.10 per share)	—	—		—		(1,856)		—		(1,856)
Balance at June 30, 2024	18,420	$	921	$	403,666	$	371,872	$	4,857	$	781,316


	Six months ended June 30, 2025
				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Common Stock
(in thousands, except per share data)	Shares	Amount
Balance at December 31, 2024	20,591	$	1,030	$	591,600	$	392,484	$	3,072	$	988,186


Net loss	—	—		—		(5,776)		—		(5,776)


Stock-based compensation	86	4		3,401		—		—		3,405
Other comprehensive loss, net of tax	—	—		—		—		(2,152)		(2,152)
Dividends declared ($0.20 per share)	—	—		—		(4,136)		—		(4,136)
Balance at June 30, 2025	20,677	$	1,034	$	595,001	$	382,572	$	920	$	979,527


	Six months ended June 30, 2024
				Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total Stockholders' Equity
	Common Stock
(in thousands, except per share data)	Shares	Amount
Balance at December 31, 2023	15,757	$	788	$	229,103	$	384,702	$	2,132	$	616,725
Net loss	—	—		—		(9,388)		—		(9,388)
Issuance of common stock	2,430	122		161,571		—		—		161,693
Stock issuance in connection with acquisition	127	6		9,994		—		—		10,000
Stock-based compensation	106	5		2,998		—		—		3,003
Other comprehensive income, net of tax	—	—		—		—		2,725		2,725
Dividends declared ($0.20 per share)	—	—		—		(3,442)		—		(3,442)
Balance at June 30, 2024	18,420	$	921	$	403,666	$	371,872	$	4,857	$	781,316



Receivables	$	9,122
Contract assets	16,193
Inventories	5,512
Prepaid expenses and other current assets	570
Other assets	214
Property and equipment, net	6,434
Intangible asset - customer related	59,000
Goodwill	40,201
Operating lease right-of-use assets	7,832
Total assets acquired	145,078
Accounts payable	(9,764)
Accrued expense and other current liabilities	(5,624)
Long-term operating lease obligations	(7,339)
Total liabilities assumed	(22,727)
Net assets acquired, excluding cash	$	122,351

Cash consideration, net of cash acquired	$	112,351
VSE common stock, at fair value	10,000
Total	$	122,351



Receivables	$	27,379
Contract assets	2,925
Inventories	37,686
Prepaid expenses and other current assets	2,723
Property and equipment, net	10,301
Intangible asset - customer related	41,900
Goodwill	87,771
Operating lease right-of-use assets	14,141
Deferred tax assets	8,243
Total assets acquired	233,069
Accounts payable	(27,750)
Accrued expense and other current liabilities	(6,153)

Long-term operating lease obligations	(10,300)
Total liabilities assumed	(44,203)
Net assets acquired, excluding cash	$	188,866

Cash consideration, net of cash acquired	$	168,599
VSE common stock, at fair value	20,267
Total	$	188,866


	For the three months ended June 30,				For the six months ended June 30,
	2025		2024		2025		2024
Revenues	$	—	$	73,131	$	75,358	$	178,556
Costs and operating expenses	36		69,601		71,865		174,853
(Loss) income from discontinued operations	(36)		3,530		3,493		3,703
Other impairment	—		—		33,708		4,204
Loss on the sale of discontinued operations	13,251		—		13,495		12,663
Total (loss) income before income taxes	(13,287)		3,530		(43,710)		(13,164)
(Benefit) provision for income taxes	(2,846)		1,019		(10,328)		(3,522)
(Loss) income from discontinued operations, net of tax	$	(10,441)	$	2,511	$	(33,382)	$	(9,642)


	June 30,		December 31,
	2025		2024
Bank credit facility - term loan	$	300,000	$	277,500
Bank credit facility - revolving facility	83,000		155,000
Principal amount of long-term debt	383,000		432,500
Less: debt issuance costs	(3,844)		(2,327)
Total debt	379,156		430,173
Less: current portion	(7,500)		(30,000)
Long-term debt, less current portion	$	371,656	$	400,173


Year Ending	Term Loan		Revolving Facility		Total
Remainder of 2025	$	3,750	$	—	$	3,750
2026	7,500		—		7,500
2027	11,250		—		11,250
2028	20,625		—		20,625
2029	22,500		—		22,500
2030	234,375		83,000		317,375
Total	$	300,000	$	83,000	$	383,000


Year ending	Amount
Remainder of 2025	$	13,374
2026	26,749
2027	25,002
2028	24,169
2029	24,106
2030	23,666
Thereafter	71,470
Total	$	208,536


Amounts Recorded at Fair Value	Financial Statement Classification	Fair Value Hierarchy	Fair Value June 30, 2025		Fair Value December 31, 2024
Non-COLI assets held in Deferred Supplemental Compensation Plan(a)	Other assets	Level 1	$	659	$	629
Interest rate swaps	Other assets	Level 2	$	1,225	$	4,093
Earn-out receivable	Earn-out receivable	Level 3	$	23,300	$	—
(a) Non-Company Owned Life Insurance ("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.


	Carrying Amount
Balance as of December 31, 2024	$	428,263
Acquisitions	13,342
Measurement period adjustments	(12,940)
Balance as of June 30, 2025	$	428,665


	Cost		Accumulated Amortization		Net Intangible Assets
June 30, 2025
Customer-related	$	295,350	$	(86,814)	$	208,536

December 31, 2024
Customer-related	$	271,350	$	(74,193)	$	197,157
Trade names	8,500		(8,500)		—
Total	$	279,850	$	(82,693)	$	197,157


	Earn-out Receivable
Balance as of December 31, 2024	$	—
Sale date fair value of earn-out	29,200
Subsequent fair value adjustments	(5,900)
Balance as of June 30, 2025	$	23,300


(a) Exhibits
Exhibit 3.1						Certificate of Amendment of the Restated Certificate of Incorporation of VSE Corporation dated as of May 8, 2025
Exhibit 10.1						Credit Agreement, dated as of May 2, 2025, by and among the Company as the borrower, each subsidiary of the Company from time to time party thereto as guarantors, the lenders from time to time party thereto and Citizens Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (Commission File No. 000-03676) filed on May 7, 2025)
Exhibit 31.1						Section 302 CEO Certification
Exhibit 31.2						Section 302 CFO Certification
Exhibit 32.1						Section 906 CEO Certification
Exhibit 32.2						Section 906 CFO Certification
Exhibit 101.INS						Inline XBRL Instance Document
Exhibit 101.SCH						Inline XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
Exhibit 101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE						Inline XBRL Taxonomy Extension Presentation Document
Exhibit 104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


			VSE CORPORATION

Date:	July 31, 2025	By:	/s/ John A. Cuomo
			John A. Cuomo
			Director, Chief Executive Officer and President
			(Principal Executive Officer)


Date:	July 31, 2025	By:	/s/ Adam R. Cohn
			Adam R. Cohn
			Chief Financial Officer
			(Principal Financial Officer)


Date:	July 31, 2025	By:	/s/ Tarang Sharma
			Tarang Sharma
			Chief Accounting Officer
			(Principal Accounting Officer)

Date	Price Target	Rating	Analyst
8/14/2024	$100.00	Buy	Jefferies
6/28/2024	$101.00	Buy	Stifel
5/2/2023	$50.00 → $55.00	Sector Perform → Outperform	RBC Capital Mkts
5/18/2022	$65.00 → $48.00	Outperform → Sector Perform	RBC Capital Mkts
3/11/2022	$70.00 → $65.00	Outperform	RBC Capital
11/19/2021	$65.00 → $70.00	Outperform	RBC Capital
11/12/2021	$62.00 → $72.00	Buy	Canaccord Genuity
10/29/2021	$60.00 → $65.00	Outperform	RBC Capital

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