A single-segment aviation aftermarket company, VSE distributes aircraft parts and performs maintenance, repair, and overhaul (MRO) work on components and engine accessories for commercial airlines, business and general aviation operators, and air cargo carriers. It has agreed to acquire Precision Aviation Group in a deal expected to close in 2026. After selling its Fleet and Federal and Defense segments, VSE now focuses entirely on aviation.
VSE closed the $2B Precision Aviation Group deal, lifting Q2 revenue 65% to $449M while long-term debt more than doubled to $915M.
VSE transformed its balance sheet and scale in a single quarter by closing the Precision Aviation Group acquisition. rose 65% to $449.1 million and more than doubled to $49.0 million, driven by $104.5 million in PAG contributions and strong repair demand. The company is now a much larger pure-play aviation aftermarket business, but carries $915 million in to fund it.
Key takeaways
rose 65% to $449.1 million, with the newly acquired Precision Aviation Group contributing $104.5 million in the quarter; repair revenue climbed 149% and distribution revenue grew 17%.
rose 117% to $49.0 million, helped by growth and the absence of a prior-year $5.9 million charge, partially offset by $12.0 million in higher intangible and $7.2 million in acquisition and integration costs.
was $28.5 million, up from $3.2 million a year earlier, while rose to $0.91 from $0.16; the quarter included a $4.5 million from replacing the prior term loan.
Section summaries
Management's Discussion and Analysis
Q2 2026 revenue rose 65% to $449M driven by acquisitions and strong repair demand; operating income more than doubled.
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increased 65% to $449.1M, with PAG contributing $104.5M; repair revenue surged 149% and distribution revenue grew 17%.
rose 117% to $49.0M, aided by growth and a prior-year $5.9M earn-out charge, partially offset by $12.0M higher intangible and $7.2M in acquisition and integration costs.
rose to $915.0 million from $371.7 million a year ago and $331.1 million in Q1 2026, as the company drew on a new $900 million term loan B and $500 million to fund the PAG acquisition.
Cash and equivalents fell to $75.4 million from $1.24 billion in Q1 2026, as the equity and offering proceeds raised in Q1 were deployed to fund the $1.7 billion in acquisition payments.
was $27.6 million, up from $11.9 million a year earlier, while was $18.7 million compared with $6.3 million in Q2 2025.
What changed
The Precision Aviation Group acquisition, flagged in the FY2025 10-K to close in Q2 2026, closed on May 5, 2026, funded by $1.3 billion in net equity proceeds and a new $900 million term loan B, reshaping the company's base and debt load.
The Q1 2026 watch item on Q2 and debt levels after the PAG close is answered: revenue reached $449.1 million with $104.5 million from PAG, and rose to $915.0 million after the term loan B drawdown.
The prior-year charge that depressed Q2 2025 did not recur, removing a $5.9 million and contributing to the 117% operating income increase.
The Fleet sale receivable, which caused a $23.3 million non-cash charge in Q3 2025 and a $29.2 million charge for the full year, was absent from this quarter's results, suggesting that matter is resolved.
What to watch
Q3 2026 organic growth rate, stripping out the $104.5 million PAG contribution, to see whether the underlying Aviation business maintains its trajectory as prior acquisitions lap.
trajectory for the remainder of FY2026, given the $62.3 million use in Q1 and the $27.6 million source in Q2, against integration needs for PAG.
movement after the $915.0 million Q2 level and the company's ability to service the new $900 million term loan B and $500 million from .
Any of following the PAG addition, given total assets reached $4.4 billion and goodwill now represents a material portion of the balance sheet.
Net fell 19% due to interest income on offering proceeds and lower pre-acquisition borrowings, partially offset by post-acquisition debt and amortizing note costs.
A $4.5M was recorded after the previous term loan was replaced with a new $900M term loan B and an upsized $500M revolving facility.
Cash used in investing activities was $1.8B, driven by $1.7B in acquisition payments mainly for PAG; financing activities provided $1.8B, including $1.3B from equity and tangible equity unit offerings.
There have been no material changes to the previously disclosed risk factors in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 ("2025 Form 10-K”). The risk factors disclosed in the Company's 2025 Form 10-K should be considered together with…
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There have been no material changes to the previously disclosed risk factors in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 ("2025 Form 10-K”). The risk factors disclosed in the Company's 2025 Form 10-K should be considered together with information included in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, and under "Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."