VSE Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenues reached $541.0 million for the third quarter of 2026, a 91.2% increase year-over-year compared to $282.9 million in Q3 2025.
• GAAP net income from continuing operations was $47.3 million, up 1,216.2% from $3.6 million in the prior-year period.
• GAAP net income margin increased approximately 750 basis points to 8.7%.
• GAAP diluted EPS was $1.49, representing a 776.5% increase from $0.17.
• Adjusted EBITDA was $107.2 million, a 126.3% increase from $47.4 million, with an Adjusted EBITDA margin of 19.8% (up ~310 basis points).
• Adjusted net income was $63.8 million, up 128.4% from $27.9 million.
• Adjusted diluted EPS was $2.01, an increase of 48.9% from $1.35.
• Operating cash flow for the quarter was $56.0 million, and free cash flow was $46.6 million.
• Cash and cash equivalents totaled $65.8 million as of September 30, 2026.
• Total outstanding principal borrowings were $978.8 million, with net debt of $894.2 million.
• The Adjusted net leverage ratio was approximately 2.3x.
• For the nine months ended September 30, 2026, total revenues were $1.315 billion (up 62.1% from $811.1 million), and GAAP net income was $104.8 million (up 236.1% from $31.2 million).

Guidance and Future Outlook:

• Full-year 2026 revenue growth guidance was raised to 65%–66.5%, up from the previous outlook of 61%–64%.
• Full-year 2026 Adjusted EBITDA margin guidance was raised to 18.9%–19.1%, up from the previous outlook of 18.7%–19.0%.
• Management expects strong fourth-quarter free cash flow to support continued deleveraging while maintaining flexibility for organic growth and disciplined acquisitions.
• The company anticipates delivering above-market growth, further margin expansion, and stronger free cash flow generation.
• Management highlighted a deep pipeline of organic growth opportunities and meaningful expected acquisition synergies.

Business Segments and Product Lines:

• Repair revenue increased 197.6% year-over-year, while distribution revenue increased 26.7%.
• Organic revenue growth was approximately 17%, driven by strength in the commercial aviation engine aftermarket.
• Acquisitions contributed approximately 74 percentage points of revenue growth, driven by a full quarter impact from Precision Aviation Group (PAG) and other acquisitions.
• On August 31, 2026, VSE acquired Atech Turbine Components, expanding its proprietary engine repair portfolio with approvals for over 300 part numbers, including sole-source repairs for flight-critical components.
• The company is advancing integration between VSE and PAG businesses, pursuing joint commercial opportunities, and bringing more repair work in-house.
• The Atech acquisition deepens relationships with Pratt & Whitney Canada and broadens aftermarket solutions for OEM partners.

Market and Competitive Landscape:

• Broad-based demand, led by engine aftermarket activity in repair and distribution, drove strong core business performance.
• The company leverages strong OEM relationships and a diversified end market portfolio.
• The combined VSE and PAG platform is positioned to expand addressable markets and deepen OEM partnerships.

Risks and Challenges:

• Forward-looking statements identify risks including global economic and political conditions, supply chain delays, and competition from existing and new competitors.
• Risks include losses related to inventory and facility investments, workforce management challenges, and significant expenses associated with acquisitions.
• Potential challenges involve the successful integration of PAG and Atech, achieving expected synergies, and mitigating impacts from inflation and tariffs.
• Other risks include litigation, cybersecurity threats, compliance with government regulations, and the company's outstanding indebtedness.

Management Commentary and Tone:

• CEO John Cuomo described the quarter as "exceptional," citing record revenue and profitability, strong cash generation, and outstanding execution.
• CFO Adam Cohn highlighted the earnings power and cash generation of the combined platform, noting a solid leverage position following recent acquisitions.
• Management expressed confidence in the remainder of the year, citing continued strength in OEM and customer demand.
• The tone reflects optimism regarding the engine-focused repair and parts portfolio and the ability to deliver significant long-term shareholder value.

Other Key Points:

• The acquisition of Atech Turbine Components was completed on August 31, 2026, with plans to expand its capacity and technical capabilities.
• The company generated $56.0 million in operating cash flow and $46.6 million in free cash flow for the quarter.
• The company ended the quarter with $479.2 million in unused commitments under its revolving credit facility.
• A conference call is scheduled for November 5, 2026, at 8:30 A.M. ET to review results and conduct a Q&A session.
• The Form 10-Q for the period will be filed with the SEC on or about November 5, 2026.