VSE (VSEC) Q1 2026 earnings summary

Executive summary

• Achieved record Q1 2026 revenue of $325 million, up 27% year-over-year, driven by strong distribution and MRO growth, new program activity, and major acquisitions including Precision Aviation Group (PAG) for $2.025 billion and NorthStar Technologies, expanding global footprint and service capabilities.

• Engine-related aftermarket activity now represents over half of total revenue, with continued strength across core platforms and expanded proprietary solutions.

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

• Secured exclusive global distribution agreement with Pratt & Whitney Canada for APU aftermarket components, expanding the aftermarket portfolio.

• Completed integration of Turbine Weld and Aero 3, further scaling engine-focused MRO capabilities.

Financial highlights

• Q1 2026 revenue was $325 million, up 27% year-over-year, with distribution revenue up 26% and MRO/repair revenue up 28%.

• Adjusted EBITDA grew 37% to $55 million (17.1% margin), and adjusted net income was $33 million; adjusted diluted EPS was $1.17, up 50% year-over-year.

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

• Operating income rose 34% to $32.7 million compared to Q1 2025.

• Cash and cash equivalents were $1.2 billion as of March 31, 2026, most used for the PAG acquisition.

Outlook and guidance

• Full-year 2026 revenue growth guidance raised to 57%-61%, with revenue expected to reach $1.1 billion, reflecting the PAG acquisition.

• Adjusted EBITDA margin outlook increased to 18.1%-18.5% for 2026.

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

• Free cash flow expected to improve over the year, driven by earnings growth and reduced working capital intensity.

• Sufficient liquidity anticipated for ongoing operations, capital expenditures, and dividends.