Discontinued Operations

3 Months Ended

Mar. 31, 2026

Discontinued Operations and Disposal Groups [Abstract]

Sale of Fleet Segment

In April 2025, VSE completed the sale of its Fleet segment for a total consideration of up to $230.0 million (the “Fleet Sale”). This consideration is comprised of $136.2 million of cash, net of $4.8 million cash divested. The consideration also includes a $25.0 million seller note and a potential earn-out payment of up to $65.0 million, subject to the achievement of certain milestones. The seller note is scheduled to mature in July 2030. See Note (11) "Fair Value Measurements" for information regarding the fair value of the earn-out. The Fleet Sale is consistent with the Company's long-term strategy of transforming to a pure-play aviation business focused on higher margin and higher growth aftermarket parts distribution and MRO businesses. The Company recorded a pre-tax impairment loss on the Fleet assets held-for-sale of $33.7 million during the three months ended March 31, 2025, which is included in loss from discontinued operations, net of tax in the consolidated statements of operations.

Sale of Federal and Defense Segment

In February 2024, VSE entered into two separate agreements to sell substantially all the Federal and Defense segment's operational assets ("FDS Sale") for a cash consideration of $42.9 million. The Company recorded a pre-tax loss on the FDS Sale of $0.2 million for the three months ended March 31, 2025 related to a settlement of net working capital, which is included in loss from discontinued operations, net of tax in the consolidated statements of operations.

The components of loss from discontinued operations, net of tax for the three months ended March 31, 2025 consist of the following (in thousands):


	Three months ended March 31,
		2025
Revenues		$	75,358
Costs and operating expenses		71,829
Income from discontinued operations		3,529
Other impairment		33,708
Loss on the sale of discontinued operations		244
Loss from discontinued operations before income taxes		(30,423)
Benefit for income taxes		(7,482)
Loss from discontinued operations, net of tax		$	(22,941)

Selected financial information related to cash flows from discontinued operations is as follows (in thousands):


	Three months ended March 31,
	2025
Depreciation and amortization	$	731
Stock-based compensation (a)	$	(225)
Purchases of property and equipment	$	208
(a) Stock-based compensation benefit was recognized during the three months ended March 31, 2025 due to forfeitures in the period.

VSE CORP 10-Q