VSE Corporation (NASDAQ: VSEC), a leading provider of distribution and maintenance, repair and overhaul (MRO) services for land, sea and air transportation assets in the public and private sectors, announced October 12, 2021 that it has entered into a 5-year extension to an existing distribution agreement (the “Agreement”) valued at approximately $125 million with a global aircraft engine manufacturer (“OEM”).
Under the terms of the Agreement, VSE Aviation will remain the worldwide exclusive distributor of new fuel control systems and associated spare parts to the business and general aviation as well as rotorcraft markets for a leading global OEM. VSE expects to support more than 15,000 aircraft currently in operation worldwide with on-demand, flight-critical components on a 24/7 basis to support scheduled engine overhaul activity, line maintenance and AOG (aircraft on-ground) events. The agreement excludes Japan-based customers.
The Agreement and partnership, which was initially scheduled to terminate in 2024, has been extended through 2029. VSE currently expects total working capital investments under the extended Agreement to decline versus historical levels, with no impact to current customer support levels. Annual revenue contributions under the Agreement are anticipated to approximate the prior-year period.
“This contract extension further solidifies our successful, long-term relationship with a valued global OEM partner, one who values our technical expertise, services capabilities and depth of experience managing complex global distribution programs,” stated John Cuomo, President and CEO of VSE Corporation. “We are pleased by the opportunity to further support this OEM and look forward to leveraging our unique value proposition as a supplier of choice to our growing global base of BG&A customers.”
“At a strategic level, VSE Aviation continues to build a multi-year pipeline of higher-value contractual revenue with both new and existing partners,” stated Ben Thomas, VSE Aviation President. “The continuation of this important, decades long OEM relationship serves to strengthen our core business, while further positioning us to become the leading integrated supplier of flight-critical systems and MRO services to the global business and general aviation market.”
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