VSE Corporation (NASDAQ: VSEC; “VSE”, or the “Company”), a
leading provider of aftermarket distribution and maintenance,
repair and overhaul (“MRO”) services for air, land and sea
transportation assets for commercial and government markets,
announced today it has closed its previously announced acquisition
of Desser Holding Company LLC (“Desser Aerospace”), a global
aftermarket solutions provider of specialty distribution and MRO
services. Concurrent with the purchase of Desser Aerospace, VSE
sold Desser Aerospace’s Proprietary Solutions businesses to the
Loar Group Inc. (“Loar”), a diversified manufacturer and supplier
specializing in aerospace and defense.
MANAGEMENT COMMENTARY
“We are excited to officially welcome the talented Desser
Aerospace team to our VSE Aviation business,” stated John Cuomo,
President and CEO of VSE Corporation. “The acquisition marks an
important step on our path to increase the Company’s exposure to
the high-growth, higher-margin aviation distribution and MRO
markets. By combining Desser Aerospace’s distribution and repair
capabilities with VSE Aviation’s aftermarket business, we have
broadened our product and service portfolio and created a platform
for geographic expansion into international markets.”
"VSE Aviation and Desser Aerospace have long been committed to
providing market-leading, technical solutions that enhance the
value and performance of their customers’ aircraft," said Ben
Thomas, President of VSE Aviation. "We're excited to bring these
two teams together as we look to create one organization focused on
supporting the unique needs of our combined customer bases."
AGREEMENT TERMS
VSE acquired Desser Aerospace for a total cash consideration of
$124 million, subject to customary working capital adjustments. In
a separate transaction, the Company concurrently sold Desser
Aerospace’s Proprietary Solutions businesses, including Seginus
Aerospace, AOG Aviation Spares, and DAC Engineered Products to
Loar, for a total cash consideration of $30 million. The total net
cash outlay for the assets VSE acquired is $94 million.
The Company amended its existing credit facility with its
lending syndicate in connection with the acquisition. The amendment
provided for an incremental $90 million Term Loan A and a revision
of certain financial covenants of the existing credit facility.
Upon closing, the Company funded $90 million of the purchase
price with the proceeds from Term Loan A and a $4 million drawdown
on its existing credit facility.
ADVISORS
Jones Day served as legal counsel to VSE Corporation. Jefferies
LLC served as financial advisor to Desser Holding Company LLC.
ABOUT VSE CORPORATION
VSE is a leading provider of aftermarket distribution and repair
services for air, land and sea transportation assets for commercial
and government markets. Core services include MRO services, parts
distribution, supply chain management and logistics, engineering
support, and consulting and training services for global
commercial, federal, military and defense customers. VSE also
provides information technology and energy consulting services. For
additional information regarding VSE’s services and products, visit
www.vsecorp.com.
ABOUT DESSER HOLDING COMPANY LLC
Founded in 1920, Desser Aerospace is a leading independent
distributor of specialty aviation tires, tubes, brakes, and
batteries and a provider of component Maintenance, Repair and
Overhaul (MRO) services. Desser Aerospace operates locations in
California, Tennessee, the United Kingdom and Australia, serving a
diverse and attractive customer base across all aviation industry
segments, including commercial aviation, business and general
aviation and military aftermarket customers.
ABOUT LOAR GROUP INC.
Loar Group Inc. is a diversified manufacturer and supplier with
established relationships across leading aerospace and defense OEMs
and Tier One customers worldwide. The company’s mandate is to
create a strategic global alliance of companies specializing in the
design and manufacture of aerospace and defense components. Loar
provides its partners and customers with innovative, cost-effective
engineering and manufacturing capabilities and responsive,
dependable service, leading to profitable and sustainable long-term
relationships.
FORWARD-LOOKING STATEMENTS
This press release contains statements relating to future
business opportunities and conditions, the anticipated benefits of
the Desser Holding Company LLC (“Desser Aerospace”) acquisition and
the expected contributions of the Desser Aerospace’s business to
the Company’s future financial results. These forward-looking
statements, which are included in accordance with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
may involve known and unknown risks, uncertainties and other
factors that may cause VSE’s actual results and performance in
future periods to be materially different from any future results
or performance suggested by the forward-looking statements in this
document. Although we believe the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
we can give no assurance that actual results will not differ
materially from these expectations. “Forward-looking” statements,
as such term is defined by the SEC in its rules, regulations and
releases, represent our expectations or beliefs, including, but not
limited to, statements concerning our operations, economic
performance, financial condition, the impact of widespread health
developments, such as any ongoing impacts of the COVID-19 pandemic
and commercial, consumer and other responses thereto, growth and
acquisition strategies, investments and future operational plans.
Without limiting the generality of the foregoing, words such as
“may,” “will,” “expect,” “believe,” “anticipate,” “intend,”
“forecast,” “seek,” “plan,” “predict,” “project,” “could,”
“estimate,” “might,” “continue,” “seeking” or the negative or other
variations thereof or comparable terminology are intended to
identify forward-looking statements. These statements, by their
nature, involve substantial risks and uncertainties, certain of
which are beyond our control, and actual results may differ
materially depending on a variety of important factors, including,
but not limited to, our ability to execute upon our strategic
repositioning of the Company; failure to realize the benefits
expected from the proposed transactions, including projected
synergies, risk related to the performance of the aviation
aftermarket, global economic and political conditions, prolonged
periods of inflation and our ability to mitigate the impact
thereof, our dependence on third-party package delivery companies,
risks related to technology security and cyber-attack, risks
related to our outstanding indebtedness, and the other factors
identified in our reports filed with the SEC including our Annual
Report on Form 10-K for the year ended December 31, 2022. All
forward-looking statements made herein are qualified by these
cautionary statements and risk factors and there can be no
assurance that the actual results, events or developments
referenced herein will occur or be realized. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which reflect management’s analysis only as of the date hereof. We
undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results.
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version on businesswire.com: https://www.businesswire.com/news/home/20230630890304/en/
INVESTOR CONTACT Michael Perlman VP, Investor Relations
& Communications (954) 547-0480 investors@vsecorp.com
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