XML 201 R10.htm IDEA: XBRL DOCUMENT
v3.25.1

Acquisitions | 3 Months Ended
--- | ---
Mar. 31, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Acquisitions | Acquisitions Turbine Controls, Inc. ("TCI") On April 24, 2024, the Company completed the acquisition of TCI for a total consideration of $122.4 million. The total consideration consisted of cash consideration of $112.4 million, net of $1.2 million cash acquired, and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $10.0 million. The purchase price of this acquisition was funded by borrowings under the Company's revolving credit facility. TCI is a leading provider of aftermarket MRO support services for complex engine components, as well as engine and airframe accessories, across commercial and military applications. The acquisition presents an opportunity for VSE's Aviation segment to accelerate its MRO strategy, including expanding the Company's repair capability offerings and adding several new original equipment manufacturer ("OEM") relationships. The final purchase price allocation is as follows (in thousands):
Receivables |  | $ | 9,122 |
Contract assets |  | 16,193 |
Inventories |  | 5,512 |
Prepaid expenses and other current assets |  | 570 |
Other assets |  | 214 |
Property and equipment, net |  | 6,434 |
Intangible asset - customer related |  | 59,000 |
Goodwill |  | 40,201 |
Operating lease right-of-use assets |  | 7,832 |
Total assets acquired |  | 145,078 |
Accounts payable |  | (9,764) |
Accrued expense and other current liabilities |  | (5,624) |
Long-term operating lease obligations |  | (7,339) |
Total liabilities assumed |  | (22,727) |
Net assets acquired, excluding cash |  | $ | 122,351 |
Cash consideration, net of cash acquired |  | $ | 112,351 |
VSE common stock, at fair value |  | 10,000 |
Total |  | $ | 122,351 |
Goodwill resulting from the acquisition of TCI reflects the strategic advantage of expanding the Company's MRO services to new customers. The value attributed to goodwill and customer relationships is deductible for income tax purposes. The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a useful life of 10 years. The Company incurred $1.6 million of acquisition-related expenses related to the TCI acquisition during the three months ended March 31, 2024, which are included in selling, general and administrative expenses. The following unaudited pro forma financial information presents the combined results of operations for TCI and VSE Corporation for the three months ended March 31, 2025, and 2024, respectively. The unaudited consolidated pro forma results of operations are as follows (in thousands):
|  | Three months ended March 31,
|  | 2025 |  | 2024
Revenue |  | $ | 256,045 |  |  | $ | 187,054 |
Income from continuing operations |  | $ | 13,968 |  |  | $ | 4,900 |
The unaudited pro forma combined financial information presented above has been prepared from historical financial statements that have been adjusted to give effect to the acquisition of TCI as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization; interest expense and debt issuance costs on long term debt; and acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2023, nor is it indicative of future operating results. Kellstrom Aerospace Group, Inc. ("Kellstrom Aerospace") On December 3, 2024, the Company completed the acquisition of Kellstrom Aerospace for a total consideration of approximately $188.9 million, subject to post-closing adjustments, consisting of cash consideration of $168.6 million, net of $10.6 million cash acquired, and in-kind payment in the form of shares of the Company's common stock with a value equal to approximately $20.3 million. The purchase price of this acquisition was funded by the Company's October 2024 underwritten public offering and borrowings under the Company's revolving credit facility. Kellstrom Aerospace is a diversified global distributor and service provider supporting the commercial aerospace engine aftermarket. The acquisition provides an opportunity to improve the Company's position in the commercial aviation aftermarket by expanding product and capability offerings both domestically and internationally, including participation in aircraft engine maintenance events. The purchase price for Kellstrom Aerospace was allocated on a preliminary basis, among assets acquired, and liabilities assumed, at fair value based on the best available information on the acquisition date, with the excess purchase price recorded as goodwill. The fair values of the non-financial assets acquired, and liabilities assumed, were determined based on preliminary estimates, assumptions, and other information compiled by management, including independent valuations utilizing established industry valuation techniques. The Company has not yet finalized the determination of the fair values allocated to various assets and liabilities, including, but not limited to, working capital and income taxes. Therefore, the allocation of the total consideration for the acquisition to the tangible and identifiable intangible assets acquired, and liabilities assumed, is preliminary until the Company obtains final information regarding their fair values, which could potentially result in changes to the Kellstrom Aerospace opening balance sheet. Adjustments or changes to goodwill, assets or liabilities remain possible. During the first quarter of 2025, the purchase price allocation was adjusted as a result of working capital and measurement period adjustments. The adjustments were recorded as a result of new information obtained about facts and circumstances that existed as of the acquisition date. Such adjustments resulted in a $4.7 million decrease to goodwill, driven by a $2.3 million fair value step up to operating lease right-of-use assets, a $2.2 million working capital settlement which reduced net purchase consideration, and a $0.2 million decrease in deferred tax liabilities. The adjusted preliminary purchase price is as follows (in thousands):
Receivables |  | $ | 27,379 |
Contract assets |  | 2,925 |
Inventories |  | 37,686 |
Prepaid expenses and other current assets |  | 2,723 |
Property and equipment, net |  | 10,301 |
Intangible asset - customer related |  | 41,900 |
Goodwill |  | 96,024 |
Operating lease right-of-use assets |  | 14,141 |
Total assets acquired |  | 233,079 |
Accounts payable |  | (27,750) |
Accrued expense and other current liabilities |  | (6,153) |
Deferred tax liabilities |  | (10) |
Long-term operating lease obligations |  | (10,300) |
Total liabilities assumed |  | (44,213) |
Net assets acquired, excluding cash |  | $ | 188,866 |
Cash consideration, net of cash acquired |  | $ | 168,599 |
VSE common stock, at fair value |  | 20,267
Total |  | $ | 188,866 |
Goodwill resulting from the Kellstrom Aerospace acquisition reflects the strategic advantage of growing the Company's distribution and MRO capabilities in the commercial aerospace aftermarket. The value attributed to goodwill and customer relationships is not deductible for income tax purposes. The estimated value attributed to the customer relationship intangible assets is being amortized on a straight-line basis using a useful life of 8 years. Acquisition-related expenses related to the Kellstrom Aerospace acquisition totaled $0.7 million for the three months ended March 31, 2025, and are included in selling, general and administrative expenses. The following unaudited pro forma financial information presents the combined results of operations for Kellstrom Aerospace and VSE Corporation for the three months ended March 31, 2025, and 2024, respectively. The unaudited consolidated pro forma results of operations are as follows (in thousands):
|  | Three months ended March 31, |  |  |  |  |  |
|  | 2025 |  | 2024 |  |  |  |  |  |
Revenue |  | $ | 256,045 |  |  | $ | 200,758 |  |  |  |  |  |  |
Income from continuing operations (a) |  | $ | 14,559 |  |  | $ | 7,447 |  |  |  |  |  |  |
(a) The after-tax impact of acquisition expenses incurred during the three months ended March 31, 2025 were adjusted for in the current period.
The unaudited pro forma combined financial information presented above has been prepared from historical financial statements that have been adjusted to give effect to the acquisition of Kellstrom Aerospace as though it had occurred on January 1, 2023 and includes adjustments for intangible asset amortization; interest expense and debt issuance costs on long-term debt; and acquisition and other transaction costs. The unaudited pro forma financial information is not intended to reflect the actual results of operations that would have occurred if the acquisition had occurred on January 1, 2023, nor is it indicative of future operating results.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration