VSE (VSEC) TD Cowen 47th Annual Aerospace & Defense Conference summary

Business transformation and strategic direction

• Transitioned from a defense contractor to a commercial and business/general aviation aftermarket-focused company over five years, growing segment revenue from under $150 million to over $1.1 billion by 2025.

• Announced the largest and most transformational acquisition with PAG, aiming to create one of the largest global MRO footprints.

• Focus on expanding both top-line growth and consolidated margins, targeting over 20% within 24 months.

• Emphasizes a model integrating new parts, used parts, and repair capabilities to offer a unique, all-inclusive aftermarket solution.

• Proprietary solutions and technical expertise are central to the business model, with ongoing adaptation to end-user and OEM needs.

Acquisition strategy and integration

• PAG acquisition was proactively pursued, with extensive pre-diligence and an unsolicited bid, resulting in a win-win outcome.

• PAG was built through acquisitions and operates with a broker-like, problem-solving DNA, similar to the acquiring company’s approach.

• Integration is managed incrementally, focusing on maintaining agility and the unique strengths of acquired businesses.

• Integration synergies are primarily cost-based, with a clear line of sight and regular updates planned; full integration expected over 24 months.

• Additional tuck-in acquisitions are possible without disrupting ongoing integration, especially for smaller MRO shops.

Competitive landscape and market positioning

• Competes with large, well-capitalized players like Boeing, Airbus, HEICO, and AAR in distribution; competition varies by market segment.

• Maintains a strong competitive moat in business and general aviation (BGA) and rotorcraft, offering unmatched capabilities for certain platforms.

• OEM partnerships are a key differentiator, with over 80% of new business wins coming directly from OEMs.

• Focuses on being OEM-friendly, helping monetize aftermarket opportunities and manage end-user relationships.

• BGA market is seen as attractive for its steady, mid- to upper-single-digit growth and opportunity to build IP-driven moats.