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MIRAMAR, Fla. - VSE Corporation (NASDAQ: VSEC), a $2.47 billion market cap company recognized for its aftermarket distribution and repair services, has finalized the divestiture of its Fleet business, Wheeler Fleet Solutions, to private equity firm One Equity Partners (OEP). The transaction is valued at up to $230 million and marks VSE’s transition to a specialized aviation aftermarket parts and services provider. According to InvestingPro data, VSE has demonstrated strong performance with a 52.5% return over the past year, though current analysis suggests the stock is trading above its Fair Value.
John Cuomo, President and CEO of VSE Corporation, stated that this strategic move allows the company to fully concentrate on the aviation aftermarket, aiming to leverage growth opportunities and enhance value for stakeholders. The strategy appears to be working, with InvestingPro data showing impressive revenue growth of 25.53% in the last twelve months. Cuomo also expressed gratitude to the Wheeler Fleet Solutions team for their contributions and extended best wishes for their future under OEP’s ownership.
The sale involves a $140 million cash payment at closing, a $25 million seller note, and the potential for an additional $65 million based on future earnout provisions. VSE plans to allocate the initial cash proceeds to repay existing debts under its revolving loan facility.
The legal counsel for the transaction was provided by Jones Day, while Jefferies, LLC acted as the exclusive financial advisor to VSE Corporation.
VSE, post-sale, operates primarily through its Aviation segment, delivering aftermarket parts distribution and maintenance, repair, and overhaul services for various aviation operators. The company maintains a healthy financial position with a current ratio of 3.1 and operates with a moderate debt-to-equity ratio of 0.49. Previously, the Fleet segment catered to the medium and heavy-duty fleet market with part distribution and supply chain management services. For detailed insights into VSE’s financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s exclusive Research Report, part of its coverage of over 1,400 US stocks.
One Equity Partners, the acquirer, is a middle market private equity firm with interests in the industrial, healthcare, and technology sectors across North America and Europe. OEP aims to create market-leading companies through strategic business combinations.
The press release includes forward-looking statements regarding the expected benefits of the Fleet segment sale. However, actual results may differ due to numerous factors, including the risk factors outlined in VSE’s SEC filings.
This article is based on a press release statement from VSE Corporation.
In other recent news, VSE Corporation reported strong fourth-quarter earnings for 2024, with an earnings per share (EPS) of $0.90, surpassing both RBC Capital’s estimate of $0.70 and the consensus estimate of $0.72. The company’s quarterly revenue reached $299 million, exceeding expectations of $283.69 million, and marking a 27% increase year-over-year. VSE’s Aviation segment was a significant contributor, with a 45% revenue increase and margins reported at 16.4%. Analysts at RBC Capital Markets and Truist Securities responded positively to these results, with RBC raising the price target to $140 and Truist adjusting it to $134, both maintaining favorable ratings on the stock.
VSE Corporation also provided a promising outlook for 2025, projecting Aviation EBITDA margins between 15.5% and 16.5%, and anticipating approximately 38% revenue growth in the Aviation segment. The company’s management highlighted strategic acquisitions and expansions as key drivers of their financial success. These developments have mitigated previous investor concerns, leading to increased confidence in VSE’s market strategy.
Analysts noted that VSE’s organic revenue growth is trending from high single digits to low double digits, reflecting a conservative yet optimistic forecast. VSE’s continued focus on its aviation aftermarket parts and services strategy is expected to sustain its growth trajectory.
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