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1. Company Snapshot

1.a. Company Description

VSE Corporation operates as a diversified aftermarket products and services company in the United States.The company operates through three segments: Aviation, Fleet, and Federal and Defense.The Aviation segment provides international parts supply and distribution, supply chain solutions, and component and engine accessory maintenance, repair, and overhaul (MRO) services.


This segment serves commercial airlines, regional airlines, cargo transporters, MRO integrators and providers, aviation manufacturers, corporate and private aircraft owners, and fixed-base operators.The Fleet segment offers parts supply, inventory management, e-commerce fulfillment, logistics, and other services to assist aftermarket commercial and federal customers with their supply chain management.This segment also provides sale of vehicle parts and supply chain services to support client truck fleets, as well as sustainment solutions and managed inventory services to government and commercial truck fleets.


The Federal and Defense segment offers aftermarket refurbishment and sustainment services to extend and maintain the life cycle of military vehicles, ships, and aircraft for the United States Department of Defense (DoD).This segment also provides foreign military sales services, engineering, logistics, maintenance, configuration management, prototyping, technology, and field support services to the DoD and other customers.In addition, this segment offers energy consulting services and IT solutions to various DoD, federal civilian agencies, and commercial clients.


The company also provides vehicle and equipment maintenance and refurbishment, logistics, engineering support, energy services, and IT and health care IT solutions, as well as consulting services.VSE Corporation was incorporated in 1959 and is headquartered in Alexandria, Virginia.

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1.b. Last Insights on VSEC

VSE Corporation's recent performance was driven by robust revenue growth, with total revenues surging 41.1% to $272.1 million in Q2 2025. The company's adjusted EBITDA increased 51.9% to $43.5 million, while adjusted net income rose to $20.1 million. A conference call to review Q3 2025 financial results and discuss events is set for October 29, 2025. According to recent announcements, the company's aviation aftermarket distribution and repair services segment continues to drive growth. VSE's strong quarterly results reflect its solid position in the market.

1.c. Company Highlights

2. VSE Corporation's Q3 2025 Earnings: A Strong Beat

VSE Corporation reported a robust third quarter in 2025, with revenue increasing 39% to $283 million, driven by the execution of new and existing distribution programs, expanded MRO capacity, and contributions from recent acquisitions. The company's consolidated adjusted EBITDA margin expanded to 16.7% of revenue, a 58% increase to $47 million. Aviation adjusted EBITDA margin also saw a significant increase, rising 51% to a record $50 million or 17.8% of revenue. The company's earnings per share (EPS) came in at $0.99, beating analyst estimates of $0.84.

Publication Date: Nov -30

📋 Highlights
  • Revenue Growth and Drivers:: Q3 2025 revenue surged 39% to $283 million due to new/expanded programs, MRO capacity, and recent acquisitions.
  • EBITDA Growth and Margins:: Consolidated adjusted EBITDA rose 58% to $47 million (16.7% of revenue), Aviation EBITDA hit record $50 million (17.8% of revenue, +51%).
  • Aero 3 Acquisition:: $350 million deal for global MRO provider with $120 million TTM revenue and >20% EBITDA margins, set to close Q4 2025.
  • Guidance Raised:: Full-year Aviation revenue growth guidance raised to 38-40%, EBITDA margin guidance to 17-17.25%.
  • Free Cash Flow and Leverage:: Q3 free cash flow reached $18 million; adjusted net leverage ratio improved to 2x, reflecting disciplined capital management.

Acquisition and Growth Prospects

The company announced the acquisition of Aero 3, a global Maintenance Repair and Overhaul service provider, for $350 million, expected to close in the fourth quarter of 2025. Aero 3 generated $120 million of revenue during the trailing 12-month period ending August 2025, with strong adjusted EBITDA margins in excess of 20%. The acquisition is expected to enhance VSE's consolidated adjusted EBITDA margin by more than 50 basis points, driving growth in 2026 and beyond. Analysts estimate next year's revenue growth at 14.8%, indicating a strong outlook for the company.

Cash Flow and Leverage

VSE generated $18 million of free cash flow in the third quarter, driven by record operating results and disciplined working capital management. The company's adjusted net leverage ratio improved to 2x at the end of the third quarter, indicating a healthy balance sheet. With an EV/EBITDA ratio of 30.43 and a P/S Ratio of 3.35, the market is pricing in a significant growth premium. The company's return on invested capital (ROIC) stands at 6.6%, while the return on equity (ROE) is 2.71%.

Valuation and Outlook

Given the company's strong growth prospects, driven by the acquisition of Aero 3 and organic growth initiatives, the current valuation multiples appear reasonable. However, with a P/E Ratio of 140.18, the market is expecting significant earnings growth in the future. As VSE continues to integrate Aero 3 and accelerate capability expansion, investors will be watching the company's ability to drive growth and improve profitability in 2026 and beyond.

3. NewsRoom

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VSE Corporation: Flying Very High

Oct -29

Source: seekingalpha.com

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VSE Corporation Prices Public Offering of Common Stock

Oct -28

Source: businesswire.com

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VSE Corporation (VSEC) Q3 2025 Earnings Call Prepared Remarks Transcript

Oct -28

Source: seekingalpha.com

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VSE Corporation Announces Public Offering of Common Stock

Oct -27

Source: businesswire.com

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VSE Corporation Announces the Acquisition of Aero 3

Oct -27

Source: businesswire.com

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VSE Corporation Announces Third Quarter 2025 Results

Oct -27

Source: businesswire.com

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VSE Corporation Reschedules Third Quarter 2025 Results Conference Call

Oct -27

Source: businesswire.com

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VSE Corporation Announces Third Quarter 2025 Results Conference Call Date

Oct -08

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.47%)

6. Segments

Aviation

Expected Growth: 10%

VSE Corporation's Aviation segment growth is driven by increasing demand for MRO services, expansion of e-commerce and air cargo, and rising defense spending. Additionally, the company's strategic acquisitions and partnerships, such as its deal with USAF, contribute to its growth. Furthermore, the growing need for aircraft maintenance and upgrade services, as well as the increasing adoption of digital technologies, also support the segment's growth.

Fleet

Expected Growth: 14%

Fleet segment from VSE Corporation exhibits 14% growth driven by increasing demand for maintenance, repair, and overhaul (MRO) services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, cost savings initiatives, and strong relationships with government and commercial customers contribute to its growth momentum.

7. Detailed Products

Supply Chain Management

VSE Corporation provides supply chain management services to the US government, including procurement, logistics, and distribution of equipment and supplies.

IT Services

VSE Corporation offers a range of IT services, including cybersecurity, cloud computing, and data analytics, to support government agencies and commercial clients.

Engineering and Technical Services

VSE Corporation provides engineering and technical services, including design, development, and testing of equipment and systems, to support government and commercial clients.

Healthcare Services

VSE Corporation offers healthcare services, including medical logistics, healthcare IT, and medical research, to support government agencies and commercial clients.

Energy and Environmental Services

VSE Corporation provides energy and environmental services, including energy management, environmental consulting, and sustainability services, to support government and commercial clients.

8. VSE Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

VSE Corporation operates in a niche market, providing services and products to the US government, which reduces the threat of substitutes. However, the company's reliance on a few major contracts makes it vulnerable to changes in government spending.

Bargaining Power Of Customers

VSE Corporation's customers are primarily government agencies, which have limited bargaining power due to the specialized nature of the company's services and products.

Bargaining Power Of Suppliers

VSE Corporation relies on a diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company's dependence on a few key suppliers for critical components increases its vulnerability to supply chain disruptions.

Threat Of New Entrants

The barriers to entry in VSE Corporation's markets are high due to the specialized nature of the company's services and products, as well as the need for security clearances and government certifications.

Intensity Of Rivalry

The markets in which VSE Corporation operates are highly competitive, with several established players competing for a limited number of contracts. The company's reliance on a few major contracts increases its vulnerability to competitive pressures.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 41.32%
Debt Cost 8.93%
Equity Weight 58.68%
Equity Cost 12.23%
WACC 10.87%
Leverage 70.42%

11. Quality Control: VSE Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Innovative Solutions and Support

A-Score: 5.3/10

Value: 4.3

Growth: 7.7

Quality: 7.2

Yield: 1.0

Momentum: 9.5

Volatility: 2.3

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Byrna Technologies

A-Score: 5.1/10

Value: 2.9

Growth: 9.2

Quality: 8.8

Yield: 0.0

Momentum: 8.5

Volatility: 1.3

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AMMO

A-Score: 4.1/10

Value: 7.8

Growth: 2.3

Quality: 4.9

Yield: 0.0

Momentum: 7.0

Volatility: 2.7

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Smith & Wesson Brands

A-Score: 4.0/10

Value: 4.1

Growth: 1.9

Quality: 4.3

Yield: 7.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

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Redwire

A-Score: 3.8/10

Value: 8.0

Growth: 4.1

Quality: 3.4

Yield: 0.0

Momentum: 6.5

Volatility: 0.7

1-Year Total Return ->

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VSE

A-Score: 3.7/10

Value: 1.2

Growth: 2.4

Quality: 4.9

Yield: 0.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

169.41$

Current Price

169.41$

Potential

-0.00%

Expected Cash-Flows