News

ALEXANDRIA, Va.–(BUSINESS WIRE)– VSE Corporation (“VSE” or the “Company”) (NASDAQ: VSEC), a leading provider of aftermarket distribution and repair services, announced October 15, 2024 that the Company has signed a definitive agreement to acquire Kellstrom Aerospace Group, Inc. (“Kellstrom”), a portfolio company of AE Industrial Partners, LP and a diversified global distributor and service provider supporting the commercial aerospace engine aftermarket. The transaction is subject to customary closing conditions, including regulatory review, and is expected to close in the fourth quarter of 2024.

 

MANAGEMENT COMMENTARY

“The agreement to acquire Kellstrom represents a significant milestone for VSE Aviation,” stated John Cuomo, President and CEO of VSE Corporation. “This acquisition improves our position in the commercial aviation aftermarket, reinforces our OEM-focused strategy, expands our aftermarket product and capability offerings, and broadens our global footprint. The acquisition also significantly increases our participation in aircraft engine maintenance events, which represents the largest and fastest-growing segment of the commercial aftermarket today. Like VSE, Kellstrom’s core differentiator is its outstanding team delivering the highest level of service and commercial value to customers.”

 

“We are delighted to welcome the Kellstrom team to the VSE Aviation family later this year,” said Ben Thomas, President of VSE Aviation. “Kellstrom’s portfolio of engine-focused products and MRO services, coupled with its technical advisory capabilities and OEM-centric approach, makes this acquisition highly complementary to VSE Aviation’s business. This acquisition is expected to yield significant sales and operating synergies, allowing us to leverage combined strengths, optimize resources, and drive accelerated growth in the aviation aftermarket.”

 

“Kellstrom is excited to be joining the VSE team,” said Oscar Torres, President and CEO of Kellstrom Aerospace. “This combination is expected to significantly expand the products and services we offer our customers around the world. We are confident that by joining forces with VSE Aviation, we will enhance the long-term value we bring to our customers and supplier partners in the commercial aerospace aftermarket.”

 

ACQUISITION OVERVIEW AND STRATEGIC RATIONALE

Kellstrom is a leading full-service aftermarket solutions provider of value-added distribution and technical services for the commercial aerospace engine aftermarket. Differentiated by a highly technical, high-touch global sales and product line management organization, Kellstrom supports over 30 OEMs and approximately 800 customers, including airlines, air cargo operators, lessors, OEMs, and MROs across 75 countries.

 

Kellstrom is directly aligned with VSE Aviation’s growth strategy:

• Increases Exposure to Commercial Aerospace Engine Aftermarket: Kellstrom’s business is focused on the commercial aerospace engine aftermarket, providing a strong combination of new customers, distribution products, MRO capabilities, and technical services that drive growth in the largest and fastest-growing sector of the aviation aftermarket.
• Aligns with VSE Aviation’s Core OEM-Centric Strategy: Over 95% of Kellstrom’s distribution revenue is generated from exclusive, long-standing relationships with world-leading OEMs.
• Expands International Reach:Approximately 50% of Kellstrom’s revenue is generated from outside of North America including the high growth APAC region.
• Presents Significant Synergies with Full Integration Planned: Kellstrom is strongly aligned with VSE Aviation’s technical OEM-focused distribution business and provides complementary product and repair capabilities to the recently acquired Turbine Controls, Inc. business.

 

AGREEMENT TERMS AND TIMELINE

• Total consideration of approximately $200 million, comprised of approximately $185 million in cash and approximately $15 million of shares of common stock of the Company, subject to working capital adjustments.
• The transaction is subject to customary closing conditions, including regulatory review, and is expected to close in the fourth quarter of 2024.

 

ACQUISITION FINANCIAL AND INTEGRATION SUMMARY

• Kellstrom generated approximately $175 million of revenue during the trailing twelve months through August 2024.
• Synergy and Integration
  • Expect to generate synergies of approximately $4 million.
  • Near-term path to 15%+ Adjusted EBITDA margins⁽¹⁾ for Kellstrom resulting from integration synergies and business optimization.

 

ACQUISITION FINANCING SUMMARY

• The acquisition is expected to be funded by anticipated proceeds from an equity financing and borrowings under the Company’s existing credit facility.
• Upon closing of the acquisition and anticipated financings, Pro Forma Net Leverage Ratio⁽¹⁾ as of 3Q 2024 is expected to be less than 3.5x.

 

ADVISORS

Jones Day served as legal counsel and Jefferies, LLC acted as exclusive financial advisor to VSE Corporation with respect to the Kellstrom acquisition. Kirkland & Ellis LLP served as legal counsel and Perella Weinberg Partners served as exclusive financial advisor to Kellstrom.

 

Michael Perlman
Vice President of Investor Relations and Treasury
Phone: (954) 547-0480
Email: investors@vsecorp.com

Source: VSE Corporation

Released October 15, 2024

 

DAVIE, FL – September 23, 2024 – Kellstrom Aerospace, a global leader in commercial aftermarket aviation lifecycle solutions, is proud to announce a significant agreement with All Nippon Airways (ANA), a global leading airline. The agreement will leverage Kellstrom Aerospace’s cutting-edge inventory management solutions in support of ANA’s operations.

 

The agreement enables ANA to maximize value from of its inventory by working with Kellstrom and its innovative, service-led supply chain programs. Leveraging Kellstrom’s extensive expertise in aviation lifecycle solutions, ANA aims to streamline its operations and further strengthen its management base.

“We are excited about this agreement with ANA, one of the most respected airlines in the world, as we leverage our inventory management expertise to the mutual benefit of both companies,” said Michael Garcia, VP of Commercial at Kellstrom Aerospace. “This initiative aligns with our mission to provide tailored solutions that meet the unique needs of global airlines and MROs, and we look forward to working with ANA and continuing to build our business relationship.”

Kellstrom Aerospace, renowned for its lifecycle cost management and extensive inventory of OEM and aftermarket parts, will work closely with ANA to optimize value from its inventory.  This announcement highlights Kellstrom’s continued commitment to the world’s Leading Airlines and MROs, like ANA, to provide innovative and integrated supply chain solutions while driving significant improvements in working capital management and operational performance. 

 

About Kellstrom Aerospace

Kellstrom Commercial Aerospace, Inc. dba Kellstrom Aerospace is one of the largest commercial aftermarket distribution channel partners to leading OEMs, airlines, leasing companies, financial institutions, air transport operators and MRO’s worldwide. Differentiated by its operational heritage, on-hand relevant inventory and parts management emphasis, Kellstrom Aerospace provides immediate access to one of the world’s largest and most comprehensive inventories of new aircraft parts for engine and airframe heavy maintenance, phase checks and line maintenance.

Kellstrom Aerospace offers an unparalleled level of cost-effective supply chain solutions, including OEM parts distribution and OEM services, commercial aftermarket parts provisioning and sunset fleet services, technical services, consignment management, repair management, overhauled rotable component programs, whole aircraft/engine asset leasing and trading, and fleet provisioning programs based on real world experience. Kellstrom Aerospace provides 24/7 AOG and Just-In-Time (JIT) support covering all service offerings to over 2,000 customers in 90 countries. For more information on Kellstrom Aerospace, please visit: www.kellstromaerospace.com.

 

DAVIE, FL – December 5, 2023 – A leader in Aviation Life-Cycle Cost Management Solutions, Kellstrom Aerospace Group announced that it has named John McKirdy as Chief Commercial Officer. Under his new role, McKirdy will leverage his extensive experience and proven track record of providing cost-effective aviation aftermarket services and solutions to afford Kellstrom’s customers greater visibility and access to its unique mix of products and services.

 

“Kellstrom Aerospace Group has expanded its suite of commercial aviation aftermarket solutions and has experienced tremendous growth in the past several years. Organizing the sales organization under John’s leadership will increase our ability to meet and exceed our customers’ expectations,” said Oscar Torres, Kellstrom Group’s CEO. “Centralizing customer touch points to promote Kellstrom’s complete value proposition is key to our growth and customer focus strategy.”

 

“The professionalism, commitment and strength of the people within our organization is world class and one I am very privileged to lead at this pivotal time in the growth of our company,” said John McKirdy. “Our Team recognizes that in the current and future marketplace, the Kellstrom Group has tremendous opportunity to enhance customer value with our suite of aviation solutions. Continuing our journey to broaden our presence globally through effective and efficient sales activity and operational excellence is to key to our customers’ success and remains a focus of our organization.”

 

McKirdy most recently served as SVP, Technical Services Group for Kellstrom. Prior to that, he has held various executive and senior commercial and operations roles at Wencor Group, Chromalloy, and Air Canada. McKirdy has an MBA from The John Molson School of Business Concordia University, Montreal Canada.

 

About Kellstrom Aerospace

Kellstrom Aerospace is one of the largest supply chain partners to leading OEMs, airlines, leasing companies, financial institutions, air transport operators and MROs worldwide. Differentiated by its operational heritage, on-hand relevant inventory and parts management emphasis, Kellstrom Aerospace provides instant access to one of the world’s largest and most comprehensive inventories of new and pre-owned aircraft parts for engine and airframe heavy maintenance, phase checks and line maintenance.

 

Kellstrom Aerospace offers an unparalleled level of cost-effective supply chain solutions, including OEM parts distribution & OEM services, pre-owned parts distribution, commercial aftermarket parts provisioning and sunset fleet services, technical services, consignment management, repair management, overhauled rotable component programs, whole aircraft/engine asset leasing & trading, and fleet provisioning programs based on real world experience. Kellstrom Aerospace provides 24/7 AOG and JIT support covering all service offerings. For more news and information on Kellstrom Aerospace, please visit: www.kellstromaerospace.com.

 

About Vortex Aviation

Vortex provides knowledgeable engine maintenance expertise to the aviation industry supporting the repair, troubleshooting, and maintenance of today’s modern turbine engines with effective solutions that reduce customers’ maintenance costs and help keep their aircraft flying. Vortex Aviation’s global core competencies include worldwide AOG repair & maintenance. Its four strategically located hospital shops provide targeted quick turn repair solutions for modern next-generation and classic turbine engines used by the global, commercial, and regional jet aircraft markets. Vortex’s full-time staff consists of OEM-trained technicians at certified repair stations in Fort Lauderdale and Chicago, United States, as well as in Dublin and Shannon, Ireland. These operations have extensive background with major airlines, MRO’s, military, and government agencies. For more information on Vortex Aviation, visit www.vortexaviation.com.

 

About The Aircraft Group

The Aircraft Group stands out as a globally recognized leader in commercial aviation asset and transaction management, acknowledged for being the premier provider of aircraft consulting services. Possessing specialized technical and business skills, The Aircraft Group caters to a diverse client base. With a wealth of experience navigating through various regulatory environments, including the US FAA, EASA, Irish CAA, JCAB, and Transport Canada, the organization extends a wide array of services encompassing the purchase, sale, and leasing of commercial aircraft.

 

Headquartered in Phoenix, AZ, The Aircraft Group's asset management services benefit from support provided by a team of inspectors and technical specialists stationed in Europe and South America, establishing a truly global reach. With a focused approach and a suite of comprehensive services, the commitment of The Aircraft Group lies in ensuring the success of its clients in effectively managing all facets of their aircraft dealings.

 

DAVIE, FL – August 30, 2023–Kellstrom Aerospace a global leader in commercial aftermarket aviation lifecycle solutions, announced a significant expansion to its used serviceable material (USM) product offering through several recent investments and partnerships which will result in additional material to support the needs of its airline and MRO customers.

The recent investments and partnerships have increased Kellstrom’s inventory of CF6-80C2, CFM56-7B, CFM56-5B, B737NG and A321 engine and airframe components. These assets are being disassembled to support the supply chain challenges facing the commercial aftermarket.

"These recent airframe and engine investments and teardowns reflect our dedication to providing exceptional aftermarket solutions to our program customers," said Michael Garcia, VP of Commercial at Kellstrom Aerospace.

By leveraging these teardowns, the company has strengthened its material support capabilities, enhancing its ability to serve program customers with superior aviation aftermarket solutions through parts supply, exchanges, or consignment inventory.

These strategic acquisitions further strengthen Kellstrom’s position as a trusted supplier of quality parts and reinforce its commitment to meeting the diverse requirements of the global aviation industry.

About Kellstrom Aerospace
Kellstrom Commercial Aerospace, Inc. dba Kellstrom Aerospace is one of the largest commercial aftermarket distribution channel partners to leading OEMs, airlines, leasing companies, financial institutions, air transport operators and MRO’s worldwide. Differentiated by its operational heritage, on-hand relevant inventory and parts management emphasis, Kellstrom Aerospace provides immediate access to one of the world’s largest and most comprehensive inventories of new aircraft parts for engine and airframe heavy maintenance, phase checks and line maintenance.

Kellstrom Aerospace offers an unparalleled level of cost-effective supply chain solutions, including OEM parts distribution and OEM services, commercial aftermarket parts provisioning and sunset fleet services, technical services, consignment management, repair management, overhauled rotable component programs, whole aircraft/engine asset leasing and trading, and fleet provisioning programs based on real world experience. Kellstrom Aerospace provides 24/7 AOG and Just-In-Time (JIT) support covering all service offerings to over 2,000 customers in 90 countries. For more information on Kellstrom Aerospace, please visit: www.kellstromaerospace.com.

 

DAVIE, FL – February 21, 2023 – Kellstrom Aerospace, a leader in aviation life-cycle cost management solutions, announces that Daniel Adamski, EVP Distribution, will be joining the ‘Breaking the Chain’ panel discussion at PBEXPO 2023. Adamski, Air Canada, United Airlines, and others will be discussing the digital innovations that can complement the global supply chain and create more resilient and efficient processes.

 

“Kellstrom continues to make significant investments in our global inventory positions, alongside investments in our technology solutions,” states Adamski.  “Among the largest global providers of commercial aftermarket lifecycle solutions, Kellstrom Aerospace is leading the industry in customer reach, and we are enhancing our existing network with technology insertion including digital sales channels.” 

 

Kellstrom’s investments in technology include migration onto the AvSight Platform, the industry’s leading cloud-based ERP solution, as well as launching an Outlet Sales Channel for select inventory on the PartsBase aviation e-Commerce solution, PartStore. Adamski added, “We want to provide our global customer base with   the most convenient solutions possible to access Kellstrom’s Outlet Channel Inventory such that all Outlet Channel parts are priced and ready to ship from stock on a 24/7/365 basis.  Customers can shop our Outlet Channel inventory and place orders, without having to wait for a quote.” 

 

PBEXPO 2023 is the largest free networking event in the aviation and aerospace industries and is set to attract over 5,000 attendees, including representatives from 13 major airlines.

 

The show will be held at the Miami Beach Convention Center in Miami Florida on March 9^th and 10^th – registration can be made via the website, pbexpo.org, or through this link: https://bit.ly/pbexpo-press.

 

About Kellstrom Aerospace 

Kellstrom Commercial Aerospace, Inc. dba Kellstrom Aerospace is one of the largest commercial aftermarket distribution channel partners to leading OEMs, airlines, leasing companies, financial institutions, air transport operators and MRO’s worldwide. Differentiated by its operational heritage, on-hand relevant inventory and parts management emphasis, Kellstrom Aerospace provides immediate access to one of the world’s largest and most comprehensive inventories of new aircraft parts for engine and airframe heavy maintenance, phase checks and line maintenance. 

 

Kellstrom Aerospace offers an unparalleled level of cost-effective supply chain solutions, including OEM parts distribution and OEM services, commercial aftermarket parts provisioning and sunset fleet services, technical services, consignment management, repair management, overhauled rotable component programs, whole aircraft/engine asset leasing and trading, and fleet provisioning programs based on real world experience. Kellstrom Aerospace provides 24/7 AOG and Just-In-Time (JIT) support covering all service offerings to over 2,000 airline and MRO customers in 90 countries. For more news and information on Kellstrom Aerospace, please visit: www.kellstromaerospace.com. 

 

About PartsBase 

PartsBase is the world’s most active online community of aviation buyers and sellers. ​The PartsBase technology suite provides industry-leading tools, services, and specialized solutions to advance supply-chain efficiencies for businesses and professionals across the aviation, aerospace, and defense industries.​ For more information on PartsBase, please visit www.partsbase.com.

 

About AvSight 

Trusted by top aviation suppliers and MRO’s, AvSight is aviation’s most innovative complete software platform. This revolutionary cloud-based solution was designed by industry veterans specifically to meet the needs of aviation aftermarket suppliers and MRO facilities. AvSight combines inventory management, quotes, repairs, sales orders, and accounting into one seamless flexible application. For more information on AvSight, visit avsight.net or visit AvSight at PBExpo Booth 3050.

 

DAVIE, FL – February 7, 2023 – Kellstrom Aerospace (CAGE 5AA19) , a global commercial aftermarket OEM Distribution leader providing a comprehensive range of aircraft lifecycle solutions, is proud to announce the appointment as worldwide aviation commercial aftermarket distributor of Global Filtration, Inc. (CAGE 099V1) for commercial aerospace filtration products eligible for installation on a broad range of aircraft.

 

DAVIE, FL – January 24, 2023 – Kellstrom Aerospace (CAGE 5AA19) , a global commercial aftermarket OEM Distribution leader providing a comprehensive range of aircraft lifecycle solutions, is proud to announce the renewal and expansion of our global, exclusive commercial aftermarket distribution agreements with five (5) business units of AMETEK Aerospace & Defense including AMETEK Sensors and Fluid Management Systems (SFMS), Hughes Treitler, Rotron, Airtechnology Group, and FMH Aerospace  for another five (5) years. Additionally, a five (5) year global, exclusive distribution agreement has been signed with Pacific Design Technologies (PDT) expanding the partnership to six (6) business units of AMETEK Aerospace & Defense.

 

Kellstrom Aerospace and AMETEK Aerospace and Defense have shared a global aftermarket partnership which has consistently grown in scope and size for more than twenty years.  AMETEK Aerospace & Defense is the market leader with a broad array of high quality OEM products and aftermarket solutions ranging from engine and airframe temperature, pressure & fluid sensors, heat exchangers and surface coolers, high-performance fans, heaters, fluid and gas transfer hoses and advanced liquid cooling and pumping solutions.  All come line fit on an expansive list of Boeing, Airbus, Embraer, Bombardier, Gulfstream, and other aircraft and on many engines manufactured by GE, CFMI and Pratt & Whitney.  AMETEK Aerospace & Defense products offer the highest quality, reliability representing the latest generation technologies and provide global customers an outstanding choice for their sensing and thermal management solutions.

 

“We are delighted to announce the latest chapter in our long-standing partnership with AMETEK Aerospace & Defense, and we are very excited for the opportunity to continue to support our global customer base with world class service and high-quality AMETEK Aerospace & Defense products and savings solutions,” said Daniel Adamski, Executive Vice President - Distribution at Kellstrom Aerospace.   

 

“Kellstrom Aerospace has been an outstanding aftermarket channel partner for AMETEK Aerospace & Defense businesses for over twenty years and an effective conduit for commercial aftermarket growth with broad support capabilities on a global level.  We are happy to enter the next phase of our commercial aftermarket partnership and very optimistic about the future of our collaboration,” said Sheraz Ahmed, VP & General Manager AMETEK Aerospace & Defense.

 

About Kellstrom Aerospace

Kellstrom Commercial Aerospace, Inc. dba Kellstrom Aerospace is one of the largest commercial aftermarket distribution channel partners to leading OEMs, airlines, leasing companies, financial institutions, air transport operators and MROs worldwide. Differentiated by its operational heritage, on-hand relevant inventory and parts management emphasis, Kellstrom Aerospace provides immediate access to one of the world’s largest and most comprehensive inventories of 

new aircraft parts for engine and airframe heavy maintenance, phase checks and line maintenance.

Kellstrom Aerospace offers an unparalleled level of cost-effective supply chain solutions, including OEM parts distribution and OEM services, commercial aftermarket parts provisioning and sunset fleet services, technical services, consignment management, repair management, overhauled rotable component programs, whole aircraft/engine asset leasing and trading, and fleet provisioning programs based on real world experience. Kellstrom Aerospace provides 24/7 AOG and Just-In-Time (JIT) support covering all service offerings to over 2,000 customers in 90 countries. For more news and information on Kellstrom Aerospace, please visit: www.kellstromaerospace.com.

 

About AMETEK Aerospace & Defense:  

AMETEK is a leading global manufacturer of electronic instruments and electromechanical devices with 2021 sales of $5.5 billion. The AMETEK Growth Model integrates the Four Growth Strategies - Operational Excellence, New Product Development, Global and Market Expansion, and Strategic Acquisitions - with a disciplined focus on cash generation and capital deployment. AMETEK's objective is double-digit percentage growth in earnings per share over the business cycle and a superior return on total capital. The common stock of AMETEK is a component of the S&P 500.