VSE Corporation Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Discontinued Operations

Discontinued Operations

3 Months Ended

Mar. 31, 2025

Discontinued Operations and Disposal Groups [Abstract]

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 FDS Sale is consistent with the Company's long-term strategic growth strategy focused on higher margin and higher growth aftermarket parts distribution and MRO businesses. 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 and a pre-tax loss of $12.7 million and transaction fees of $2.5 million for the three months ended March 31, 2024. All such losses and transaction fees are included in loss from discontinued operations, net of tax in the consolidated statements of operations.

Sale of Fleet Segment

In February 2025, VSE signed a definitive agreement to sell all issued and outstanding shares of common stock of its Fleet segment. As stated within Note (13) "Subsequent Events", the transaction was completed in April 2025 for a total consideration of up to $230 million (the “Fleet Sale”). This consideration is comprised of a $140 million cash payment at closing, a $25 million seller note, and an earn-out payment of up to $65 million, subject to the achievement of certain milestones. 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.

The components of loss from discontinued operations, net of tax for the three months ended March 31, 2025 and 2024, consist of the following (in thousands):


	Three months ended March 31,
		2025		2024
Revenues		$	75,358	$	105,425
Costs and operating expenses		71,829		105,252
Income from discontinued operations		3,529		173
Other impairment		33,708		4,204
Loss on the sale of discontinued operations		244		12,663
Total loss before income taxes		(30,423)		(16,694)
Benefit for income taxes		(7,482)		(4,541)
Loss from discontinued operations, net of tax		$	(22,941)	$	(12,153)

The assets and liabilities reported as held-for-sale consist of the following (in thousands):


		March 31,		December 31,
		2025		2024
Assets
	Cash and cash equivalents	$	4,797	$	(475)
	Receivables, net	47,424		39,459
	Inventories	141,223		142,259
	Prepaid expenses and other current assets	10,218		11,057
	Property and equipment, net	14,113		14,546
	Intangible assets, net	93		124
	Goodwill	29,482		63,190
	Operating lease right-of-use assets	9,595		10,101
	Other assets	2,566		2,559
	Total assets held-for-sale	$	259,511	$	282,820
Liabilities
	Accounts payable	$	36,546	$	42,099
	Accrued expenses and other current liabilities	8,402		9,446
	Long-term operating lease obligations	8,086		8,645
	Deferred tax liabilities	—		8,010
	Total liabilities held-for-sale	$	53,034	$	68,200

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


	Three months ended March 31,
	2025		2024
Depreciation and amortization	$	731	$	835
Stock-based compensation (a)	$	(225)	$	222
Purchases of property and equipment	$	208	$	1,303
(a) Stock-based compensation benefit was recognized during the three months ended March 31, 2025 due to forfeitures in the period.