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Investing.com -- VSE Corporation (NASDAQ:VSEC) shares dropped 3.6% in after-hours trading Monday despite reporting third-quarter earnings that exceeded analyst expectations, as investors focused on the company’s plans to acquire Aero 3 for $350 million and launch a public stock offering to fund the deal.
The aviation aftermarket services provider reported adjusted earnings of $0.99 per share for the third quarter, surpassing the analyst consensus of $0.84. Revenue reached $282.9 million, exceeding estimates of $276.67 million and representing a 38.9% increase compared to the same period last year.
"VSE delivered another quarter of record performance, reflecting the strength of our aviation aftermarket platform and disciplined execution of our 2025 operating plan," said John Cuomo, President and CEO of VSE Corporation. "Our team continues to deliver on our strategic objectives, integrating recent acquisitions, capturing synergies, advancing OEM-licensed manufacturing, expanding MRO capabilities, and growing our organic pipeline."
The company’s adjusted EBITDA rose 58.4% to $47.4 million, with adjusted net income more than doubling to $20.5 million compared to the third quarter of 2024. VSE also raised its full-year 2025 guidance, now expecting revenue growth of 38% to 40%, up from previous guidance of 35% to 40%.
Alongside its earnings, VSE announced plans to acquire GenNx/AeroRepair IntermediateCo Inc. (Aero 3) for $350 million. Aero 3 is a global provider of wheel and brake maintenance, repair, and overhaul services with nine facilities across the U.S., Canada, and the U.K.
To fund the acquisition, VSE has commenced an underwritten public offering of common stock, with the net proceeds intended to cover all or part of the cash consideration for the Aero 3 purchase.
The company generated $24.1 million in operating cash flow and $18 million in free cash flow during the quarter, with an adjusted net leverage ratio of approximately 2.0x at quarter-end.
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