08-05-2025
Vestis Corp (VSTS) Q2 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...
Q : Can you comment on your confidence that the current earnings level marks the bottom, given the service issues and revenue growth deceleration? A : Philip Homan, Interim Executive Chairman, President, and CEO, expressed confidence in the guidance for the next quarter, supported by sustainable trends. Kelly Janzen, CFO, added that the decline was largely seasonal, and recent trends show positive revenue growth, reinforcing their confidence.
Net loss for the quarter was $28 million, with a diluted loss per share of $0.21, highlighting ongoing financial challenges.
Revenue from existing customers declined by approximately $8 million in Q2 compared to Q1, including a $4 million decrease in LNR revenue.
Adjusted EBITDA margin decreased to 9.4% from 11.9% in Q1, reflecting the impact of lower revenue on a relatively fixed cost structure.
Successfully executed an amendment to the credit agreement, providing additional financial flexibility through the end of fiscal 2026.
Field sales and national account teams installed 35% more recurring revenue year over year and 10% more than in the first quarter.
Frontline sales team is fully staffed, with average productivity per sales representative increasing by approximately 10% over the second quarter.
New business contributed 2.4% of revenue growth, with strong performance in frontline sales and national accounts.
Jim Barber, former COO of UPS, will join as President and CEO, bringing proven leadership and a track record of driving profitable growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Guidance for Q3: Revenue expected between $674 million to $682 million; adjusted EBITDA at least $63 million.
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Q: Are there any further actions planned on the cost structure, and can you provide insights on free cash flow guidance? A: Kelly Janzen, CFO, mentioned that while they are not providing cash flow guidance, they expect free cash flow to be around $80 million annually after normalizing inventory investments. Philip Homan noted ongoing efforts to optimize plant operations and emphasized the need to balance cost reduction with customer service investments.
Q: What steps are being taken to address service issues, and why are there volume concerns compared to competitors like Cintas? A: Philip Homan highlighted a renewed focus on improving service by organizing resources and enhancing customer-centric culture. Kelly Janzen explained that product mix differences, particularly in linen and hospitality sectors, contributed to volume fluctuations, unlike competitors.
Q: When do you expect new business to exceed lost business, and how is the demand environment amid macroeconomic uncertainties? A: Kelly Janzen is optimistic about narrowing the gap between new and lost business, driven by increased sales momentum. Philip Homan noted no significant demand changes from customers, indicating continued strength in the industrial laundry rental market.
Q: Can you elaborate on the decision to suspend annual guidance and the status of strategic evaluations? A: Kelly Janzen stated that the shift to quarterly guidance reflects a need to realign forecasting amid potential macroeconomic impacts. Philip Homan confirmed no active strategic evaluations are ongoing, focusing instead on cultural transformation and operational improvements.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
