VSE (VSEC) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 2026 revenue of $324.6 million, up 27% year-over-year, driven by strong distribution and MRO growth, new program activity, and recent acquisitions.

• Completed the $2.025 billion acquisition of Precision Aviation Group (PAG), expanding global MRO and distribution capabilities and customer base.

• Acquired NorthStar Technologies, enhancing engine aftermarket services and OEM integration.

• Strategic shift to a pure-play aviation business following divestitures of Fleet and Federal & Defense segments.

• Completed integration of Turbine Weld, further scaling engine-focused MRO capabilities.

Financial highlights

• Q1 2026 revenue was $324.6 million, up 27% year-over-year, with distribution revenue up 26% and MRO/repair revenue up 28%.

• Adjusted EBITDA grew 37% to $55.4 million (17.1% margin); adjusted net income was $33 million; adjusted diluted EPS was $1.17, up 50%.

• Net income from continuing operations was $29.1 million, up 108% year-over-year; GAAP diluted EPS was $1.04.

• Cash and cash equivalents were $1.24 billion as of March 31, 2026, most used for the PAG acquisition; total debt was $366 million.

• Free cash flow for Q1 2026 was negative $69 million, reflecting inventory build, acquisitions, and strategic investments.

Outlook and guidance

• Full-year 2026 revenue guidance updated to $1.1 billion, reflecting 57%-61% growth including PAG acquisition.

• Adjusted EBITDA margin guidance raised to 18.1%-18.5% for 2026.

• Organic growth expected in high single-digit to low double-digit range.

• Interest expense projected at $37-$40 million; D&A at $98-$103 million; effective tax rate at 25%.

• Pro forma adjusted net leverage expected below 3x post-acquisition, with a path to below 2.5x by year-end.