vsec-20250930

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 September 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 October 24, 2025: 20,686,361


	TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Unaudited Consolidated Balance Sheets as of September 30, 202 5 and December 31, 202 4	4

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

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

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

	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 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	23

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27

ITEM 4.	Controls and Procedures	27

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	28

ITEM 5.	Other Information	28

ITEM 6.	Exhibits	29

Signatures		30

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Forward-Looking Statements

This quarterly report on Form 10-Q (“Form 10-Q”) contains statements that, to the extent they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All such statements are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and this statement is included for purposes of such safe harbor provisions.

“Forward-looking” statements, as such term is defined by the Securities and Exchange Commission (the “SEC”) in its rules, regulations and releases, represent the Company's expectations or beliefs, including, but not limited to, statements concerning the Company's operations, economic performance, financial condition, growth, acquisition and disposition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond the Company's control, and actual results may differ materially depending on a variety of important factors, including, but not limited to, those identified elsewhere in this document, including in Item 1A, Risk Factors, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on March 3, 2025 (“2024 Form 10-K") and in Item 1A. Risk Factors of this report. All forward-looking statements made herein are qualified by these cautionary statements and risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that occur or arise after the date hereof.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VSE CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)


	September 30,		December 31,
(in thousands, except share and per share amounts)	2025		2024
Assets
Current assets:
Cash and cash equivalents	$	8,784	$	29,505
Receivables (net of allowance of $5.4 million and $4.1 million, respectively)	176,399		158,104
Contract assets	34,027		29,960
Inventories	464,315		434,059
Prepaid expenses and other current assets	38,755		30,899
Current assets held-for-sale	—		282,820
Total current assets	722,280		965,347
Property and equipment (net of accumulated depreciation of $30.8 million and $21.3 million, respectively)	82,986		71,041
Intangible assets (net of accumulated amortization of $93.5 million and $82.7 million, respectively)	201,849		197,157
Goodwill	428,705		428,263
Operating lease right-of-use assets	42,975		43,225
Note receivable	26,342		—

Other assets	55,310		37,597
Total assets	$	1,560,447	$	1,742,630
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	7,500	$	30,000
Accounts payable	112,425		145,492
Accrued expenses and other current liabilities	61,357		52,749
Dividends payable	2,069		2,059
Current liabilities held-for-sale	—		68,200
Total current liabilities	183,351		298,500
Long-term debt, less current portion	348,596		400,173
Deferred compensation	7,331		7,262
Long-term operating lease obligations	37,609		39,498

Other long-term liabilities	220		9,011
Total liabilities	577,107		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 20,686,361 and 20,590,496, respectively	1,034		1,030
Additional paid-in capital	597,210		591,600
Retained earnings	384,416		392,484
Accumulated other comprehensive income	680		3,072
Total stockholders' equity	983,340		988,186
Total liabilities and stockholders' equity	$	1,560,447	$	1,742,630

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
(in thousands, except share and per share amounts)	2025		2024		2025		2024
Revenues:
Products	$	176,035	$	118,363	$	510,189	$	341,834
Services	106,874		85,279		300,904		217,019
Total revenues	282,909		203,642		811,093		558,853

Costs and operating expenses:
Products	147,682		99,887		429,377		289,172
Services	94,486		77,015		270,510		197,455
Selling, general and administrative expenses	667		2,542		5,594		9,247
Earn-out receivable fair value adjustments	23,300		—		29,200		—
Lease abandonment and termination (benefits) costs	—		(652)		—		12,205
Amortization of intangible assets	6,687		4,778		19,308		12,457
Total costs and operating expenses	272,822		183,570		753,989		520,536
Operating income	10,087		20,072		57,104		38,317

Interest expense, net	4,339		8,987		18,723		28,003
Income from continuing operations before income taxes	5,748		11,085		38,381		10,314
Provision for income taxes	2,157		2,343		7,184		1,318
Net income from continuing operations	3,591		8,742		31,197		8,996
Income (loss) from discontinued operations, net of tax	321		2,908		(33,061)		(6,734)
Net income (loss)	$	3,912	$	11,650	$	(1,864)	$	2,262

Earnings (loss) per share:
Basic
Continuing operations	$	0.17	$	0.47	$	1.51	$	0.52
Discontinued operations	0.02		0.16		(1.60)		(0.39)
	$	0.19	$	0.63	$	(0.09)	$	0.13
Diluted
Continuing operations	$	0.17	$	0.47	$	1.50	$	0.52
Discontinued operations	0.02		0.16		(1.59)		(0.39)
	$	0.19	$	0.63	$	(0.09)	$	0.13

Weighted average shares outstanding:
Basic	20,681,203		18,425,643		20,656,680		17,125,502
Diluted	20,756,508		18,479,123		20,742,957		17,211,825

Dividends declared per share	$	0.10	$	0.10	$	0.30	$	0.30

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2025		2024		2025		2024
Net income (loss)	$	3,912	$	11,650	$	(1,864)	$	2,262
Other comprehensive loss, net of tax:
Change in fair value of interest rate swap agreements, net of tax	(240)		(4,645)		(2,392)		(1,920)
Total other comprehensive loss, net of tax	(240)		(4,645)		(2,392)		(1,920)
Comprehensive income (loss)	$	3,672	$	7,005	$	(4,256)	$	342

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Unaudited)


	Three months ended September 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 June 30, 2025	20,677	$	1,034	$	595,001	$	382,572	$	920	$	979,527
Net income	—	—		—		3,912		—		3,912


Stock-based compensation	9	—		2,209		—		—		2,209
Other comprehensive loss, net of tax	—	—		—		—		(240)		(240)
Dividends declared ($0.10 per share)	—	—		—		(2,068)		—		(2,068)
Balance at September 30, 2025	20,686	$	1,034	$	597,210	$	384,416	$	680	$	983,340


	Three months ended September 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 June 30, 2024	18,420	$	921	$	403,666	$	371,872	$	4,857	$	781,316
Net income	—	—		—		11,650		—		11,650

Stock-based compensation	9	—		1,317		—		—		1,317
Other comprehensive loss, net of tax	—	—		—		—		(4,645)		(4,645)
Dividends declared ($0.10 per share)	—	—		—		(1,842)		—		(1,842)
Balance at September 30, 2024	18,429	$	921	$	404,983	$	381,680	$	212	$	787,796

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (continued)

(Unaudited)


	Nine months ended September 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	—	—		—		(1,864)		—		(1,864)


Stock-based compensation	95	4		5,610		—		—		5,614
Other comprehensive loss, net of tax	—	—		—		—		(2,392)		(2,392)
Dividends declared ($0.30 per share)	—	—		—		(6,204)		—		(6,204)
Balance at September 30, 2025	20,686	$	1,034	$	597,210	$	384,416	$	680	$	983,340


	Nine months ended September 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 income	—	—		—		2,262		—		2,262
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	115	5		4,315		—		—		4,320
Other comprehensive loss, net of tax	—	—		—		—		(1,920)		(1,920)
Dividends declared ($0.30 per share)	—	—		—		(5,284)		—		(5,284)
Balance at September 30, 2024	18,429	$	921	$	404,983	$	381,680	$	212	$	787,796

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)


	Nine months ended September 30,
(in thousands)	2025		2024
	(a)		(a)
Cash flows from operating activities:
Net (loss) income	$	(1,864)	$	2,262
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	29,730		20,411
Amortization of debt issuance cost	1,266		997
Deferred taxes	(19,117)		(9,840)
Stock-based compensation	9,908		6,497

Impairment and loss on sale of business segments	47,046		16,867
Loss on sale of property and equipment	10		421
Lease abandonment and termination costs	—		12,205
Earn-out receivable fair value adjustments	29,200		—
Interest income on note receivable	(1,342)		—
Changes in operating assets and liabilities, net of impact of acquisitions:
Receivables	(23,243)		(32,720)
Contract assets	(2,954)		5,267
Inventories	(26,522)		(26,808)
Prepaid expenses and other current assets and other assets	(8,991)		(8,232)
Operating lease assets and liabilities, net	837		(10,442)
Accounts payable and deferred compensation	(42,067)		(67,860)
Accrued expenses and other liabilities	(2,549)		4,563
Net cash used in operating activities	(10,652)		(86,412)
Cash flows from investing activities:
Purchases of property and equipment	(14,513)		(17,439)

Proceeds from the sale of business segments, net of cash divested	138,816		42,118

Cash paid for acquisitions, net of cash acquired	(47,745)		(112,206)
Net cash provided by (used in) investing activities	76,558		(87,527)
Cash flows from financing activities:
Borrowings on bank credit facilities	648,066		527,165
Repayments on bank credit facilities	(720,825)		(507,165)
Proceeds from issuance of common stock	463		161,693
Payment of debt financing costs	(2,584)		—
Payment of taxes for equity transactions	(5,077)		(2,758)
Dividends paid	(6,195)		(5,019)
Net cash (used in) provided by financing activities	(86,152)		173,916
Net decrease in cash and cash equivalents	(20,246)		(23)
Cash and cash equivalents, beginning of period	29,030		7,930
Cash and cash equivalents, end of period	$	8,784	$	7,907

Supplemental disclosure of noncash investing and financing activities:
Note receivable from the sale of business segment	$	25,000	$	—
(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. Accordingly, the Consolidated Statements of Cash Flows include the results of continuing and discontinued operations. See Note (3) "Discontinued Operations".

The accompanying notes are an integral part of these consolidated financial statements.

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VSE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

September 30, 2025

Table of Contents

(1) Nature of Operations and Basis of Presentation

Nature of Operations

VSE Corporation (collectively, with its consolidated subsidiaries), "VSE," or the "Company," is a leading provider of aftermarket parts distribution and maintenance, repair and overhaul ("MRO") services for air transportation assets for commercial and government markets. The Company operates in one reportable segment aligned with the Company's operating segment: Aviation.

Basis of Presentation

The Company's accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"). In the Company's opinion, all adjustments, including normal recurring items, considered necessary for a fair presentation of results for the interim periods have been included in the accompanying unaudited consolidated financial statements. Operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025.

In April 2025, VSE completed the previously announced sale of all of the issued and outstanding shares of common stock of its Fleet segment. See Note (3) "Discontinued Operations" for further information. 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.

In February 2024, VSE completed the sale of substantially all of the Federal and Defense segment assets. See Note (3) "Discontinued Operations" for further information. The consolidated financial statements present the results of operations for the Federal and Defense segment as discontinued operations for all periods presented.

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.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities 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. Significant estimates affecting the financial statements include fair value measurements, inventory provisions, collectability of receivables, valuation allowances on deferred tax assets, fair value of goodwill and other intangible assets and contingencies.

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(2) Acquisitions

2025 Acquisition

Turbine Weld Industries, LLC ("Turbine Weld")

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

The preliminary allocation of the purchase price resulted in net tangible assets, excluding cash acquired, of $12.6 million, goodwill of $13.3 million, and a customer-related intangible asset of $24.0 million, which is being amortized over a period of 10 years. Goodwill resulting from the acquisition of Turbine Weld reflects the strategic advantage of expanding the Company's MRO services to new customers. The value attributed to goodwill and customer relationships is deductible for income tax purposes. The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, income taxes. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the Turbine Weld opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible.

Acquisition-related expenses related to the Turbine Weld acquisition were not material during the three months ended September 30, 2025. The Company incurred $1.5 million in acquisition-related expenses related to the Turbine Weld acquisition during the nine months ended September 30, 2025, 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.

2024 Acquisitions

Turbine Controls, Inc. ("TCI")

On April 24, 2024, the Company completed the acquisition of TCI for a total consideration of $122.4 million. The total consideration consisted of cash consideration of $112.4 million, net of $1.2 million cash acquired, and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $10.0 million. The purchase price of this acquisition was funded by borrowings under the Company's previous revolving credit facility. 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. 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.

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The final purchase price allocation is as follows (in thousands):



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

SEC Form 10-Q filed by VSE Corporation