Latest news with #VestisCorporation
Yahoo
20-05-2025
- Business
- Yahoo
VSTS Q1 Earnings Call: Revenue Miss, Service Challenges, and Leadership Transition Shape Outlook
Uniform rental provider Vestis Corporation (NYSE:VSTS) fell short of the market's revenue expectations in Q1 CY2025, with sales falling 5.7% year on year to $665.2 million. On the other hand, the company expects next quarter's revenue to be around $678 million, close to analysts' estimates. Its non-GAAP loss of $0.05 per share was significantly below analysts' consensus estimates. Is now the time to buy VSTS? Find out in our full research report (it's free). Revenue: $665.2 million vs analyst estimates of $693 million (5.7% year-on-year decline, 4% miss) Adjusted EPS: -$0.05 vs analyst estimates of $0.15 (significant miss) Adjusted EBITDA: $47.62 million vs analyst estimates of $83.07 million (7.2% margin, 42.7% miss) Revenue Guidance for Q2 CY2025 is $678 million at the midpoint, roughly in line with what analysts were expecting EBITDA guidance for Q2 CY2025 is $63 million at the midpoint, below analyst estimates of $89.75 million Operating Margin: -1.3%, down from 6.1% in the same quarter last year Free Cash Flow was -$6.85 million, down from $63.16 million in the same quarter last year Market Capitalization: $814.4 million Vestis Corporation's first quarter results reflected operational challenges stemming from volume declines and ongoing customer service issues, as discussed by interim CEO Phillip Holloman. The company faced revenue headwinds as rental sales fell short of expectations, primarily due to lower demand from hospitality customers post-holiday and a drop in billings for lost or ruined inventory. Management also cited seasonal factors and continuing service-related credits as key contributors to underperformance. Looking ahead, Vestis leadership shifted to providing only quarterly guidance, citing both the need to realign internal forecasting and external macroeconomic uncertainty. The company expects slight sequential revenue improvement, but margins are projected to remain pressured. Holloman emphasized ongoing investments in customer service and operational efficiency, while incoming CEO Jim Barber's leadership transition is expected to influence future strategy and execution. CFO Kelly Janzen noted, 'We are encouraged by recent trends,' but acknowledged the need for continued improvements in retention and service delivery. Vestis management attributed the latest quarter's shortfall to internal operational issues and seasonal demand factors, while highlighting steps underway to stabilize performance and support future growth. Leadership transition announced: Former UPS COO Jim Barber was appointed as the incoming CEO, effective June 2025, signaling a shift in leadership focus. Customer service focus: Management acknowledged that service deficiencies, such as product shortages and cleaning quality, drove increased credits issued to customers, adversely affecting revenue. Sales team ramp-up: The frontline sales organization is now fully staffed, with productivity per sales representative rising 10% over the quarter, supporting improved new business wins. Lost versus new business: Although lost business still exceeded new wins, the gap narrowed by about 10% quarter-over-quarter, and new customer installations rose 35% year-over-year. Operational changes and cost control: The company continued plant consolidations and asset utilization initiatives, while emphasizing the need to balance cost reductions with investments to retain customers and enhance service. Management's outlook for the next quarter is shaped by ongoing investments in service and sales capacity, tempered by the need to address persistent cost pressures and internal execution risks. Customer retention improvements: The company is prioritizing service enhancements and operational reliability to reduce customer churn, which management believes is essential for stabilizing revenue. Margin recovery efforts: Efforts to improve gross margin include stricter control over service credits, optimization of facility operations, and reduced discretionary spending. CEO transition impact: The incoming CEO is expected to evaluate further strategic and operational changes, potentially increasing investment to drive a turnaround in customer service and sales effectiveness. Andy Wittmann (Baird): Asked about management's confidence that this quarter marks the bottom and whether operational service issues are being resolved. Management cited improving monthly revenue trends but acknowledged the need for sustained progress. Shlomo Rosenbaum (Stifel): Inquired about the duration and required investment of the cultural transformation to address recurring service issues. Leadership described a renewed focus on accountability and customer-centric operations, but emphasized it will take time. Luke McFadden (William Blair): Sought clarity on when new business is expected to exceed lost business. The company expressed optimism, citing increased sales team productivity but did not provide a specific timeline. Ronan Kennedy (Barclays): Asked whether revenue declines and suspended guidance were due to internal factors or broader market trends. Management confirmed most issues were internal, especially related to customer retention and service. Stephanie Moore (Jefferies): Requested details on how Vestis differentiates itself to win new customers given recent service challenges. Management highlighted that 56% of new wins came from competitors and pointed to new service tools and processes. In the upcoming quarters, the StockStory team will monitor (1) whether service initiatives succeed in reducing customer churn and credits, (2) the impact of the CEO transition on operational strategy and execution, and (3) the ability of the fully staffed sales team to convert increased pipeline activity into sustained revenue growth. Improvements in free cash flow and margin stabilization will also be key areas of focus. Vestis currently trades at a forward P/E ratio of 7.8×. Should you double down or take your chips? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Yahoo
15-05-2025
- Business
- Yahoo
Is Vestis Corp. (VSTS) the Best Young Stock to Buy According to Hedge Funds?
We recently published a list of the 11 Best Young Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Vestis Corporation (NYSE:VSTS) stands against other young stocks. NASDAQ CEO and chair Adena Friedman appeared on CNBC's 'Squawk Box' on April 24 to discuss what to make of the market volatility, as well as the IPO landscape. Friedman reported that NASDAQ achieved 12.5% overall revenue growth in the quarter, with every division posting double-digit increases. Specifically, the index business grew by 26%, which was supported by $27 billion of inflows during the quarter. Half of these inflows were directed into NASDAQ 100 index products, while the other half went into various other indexes offered by NASDAQ. Friedman also acknowledged that the economy entered the year with resilience but faced increasing uncertainty and volatility as the quarter progressed. However, she explained that such environments often drive clients to turn to NASDAQ as the market operator of choice to manage their trading volumes and capital flows. She noted that even amid market value fluctuations, NASDAQ saw inflows into its index products and strong demand for its fintech services. The discussion also indicated that while short-term market volatility can boost trading activity and liquidity, longer-term IPO prospects depend on broader economic conditions. Friedman said that IPO activity and investor behavior could change more significantly if the economy were to enter an extended recession. But for now, NASDAQ benefits from a strong start to the year and remains a preferred venue for investors to express their views. The conversation then turned to global capital flows, particularly as Chinese sovereign wealth funds may reduce investments in US venture capital and private equity firms. Friedman stated that the capital flows where returns are the strongest. She emphasized that asset owners and managers have 'fiduciary' responsibilities to their ultimate beneficiaries and will prioritize returns over the long term. Acknowledging the influence of geopolitical and political factors on investment decisions, Friedman stressed that NASDAQ's role is to provide the infrastructure that allows capital to flow efficiently regardless of shifts. We first used the Finviz stock screener to compile a list of young stocks that went public in the last 3 years. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Security guards in uniforms patrolling an area, standing for the company's safe and secure facilities. Number of Hedge Fund Holders: 48 Vestis Corporation (NYSE:VSTS) provides uniform rentals and workplace supplies in the US and Canada. The company's products include uniform options, such as shirts, pants, outerwear, gowns, scrubs, high visibility garments, particulate-free garments, and flame-resistant garments. It also offers shoes and accessories, along with workplace supplies. In 2023, Aramark broke out its Aramark Uniform Services division to become a new independent, publicly listed company that was eventually called Vestis. This company then went on to make $665.25 million in quarterly revenue in Q2 2025, which declined by 5.69% year-over-year. However, these results also revealed headwinds that impacted the company's growth trajectory. Vestis Corp.'s (NYSE:VSTS) revenue from existing customers decreased by $5.8 million, particularly. There was also a $6.8 million decrease in direct sales. Barclays analyst Manav Patnaik lowered the price target on Vestis to $5 from $10 on May 9 while maintaining an Underweight rating on the shares after the company released its Q2 2025 earnings report. Overall, VSTS ranks 10th on our list of the best young stocks to buy according to hedge funds. While we acknowledge the growth potential of VSTS, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than VSTS but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Is Vestis Corp. (VSTS) the Best Young Stock to Buy According to Hedge Funds?
We recently published a list of the 11 Best Young Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Vestis Corporation (NYSE:VSTS) stands against other young stocks. NASDAQ CEO and chair Adena Friedman appeared on CNBC's 'Squawk Box' on April 24 to discuss what to make of the market volatility, as well as the IPO landscape. Friedman reported that NASDAQ achieved 12.5% overall revenue growth in the quarter, with every division posting double-digit increases. Specifically, the index business grew by 26%, which was supported by $27 billion of inflows during the quarter. Half of these inflows were directed into NASDAQ 100 index products, while the other half went into various other indexes offered by NASDAQ. Friedman also acknowledged that the economy entered the year with resilience but faced increasing uncertainty and volatility as the quarter progressed. However, she explained that such environments often drive clients to turn to NASDAQ as the market operator of choice to manage their trading volumes and capital flows. She noted that even amid market value fluctuations, NASDAQ saw inflows into its index products and strong demand for its fintech services. The discussion also indicated that while short-term market volatility can boost trading activity and liquidity, longer-term IPO prospects depend on broader economic conditions. Friedman said that IPO activity and investor behavior could change more significantly if the economy were to enter an extended recession. But for now, NASDAQ benefits from a strong start to the year and remains a preferred venue for investors to express their views. The conversation then turned to global capital flows, particularly as Chinese sovereign wealth funds may reduce investments in US venture capital and private equity firms. Friedman stated that the capital flows where returns are the strongest. She emphasized that asset owners and managers have 'fiduciary' responsibilities to their ultimate beneficiaries and will prioritize returns over the long term. Acknowledging the influence of geopolitical and political factors on investment decisions, Friedman stressed that NASDAQ's role is to provide the infrastructure that allows capital to flow efficiently regardless of shifts. We first used the Finviz stock screener to compile a list of young stocks that went public in the last 3 years. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Security guards in uniforms patrolling an area, standing for the company's safe and secure facilities. Number of Hedge Fund Holders: 48 Vestis Corporation (NYSE:VSTS) provides uniform rentals and workplace supplies in the US and Canada. The company's products include uniform options, such as shirts, pants, outerwear, gowns, scrubs, high visibility garments, particulate-free garments, and flame-resistant garments. It also offers shoes and accessories, along with workplace supplies. In 2023, Aramark broke out its Aramark Uniform Services division to become a new independent, publicly listed company that was eventually called Vestis. This company then went on to make $665.25 million in quarterly revenue in Q2 2025, which declined by 5.69% year-over-year. However, these results also revealed headwinds that impacted the company's growth trajectory. Vestis Corp.'s (NYSE:VSTS) revenue from existing customers decreased by $5.8 million, particularly. There was also a $6.8 million decrease in direct sales. Barclays analyst Manav Patnaik lowered the price target on Vestis to $5 from $10 on May 9 while maintaining an Underweight rating on the shares after the company released its Q2 2025 earnings report. Overall, VSTS ranks 10th on our list of the best young stocks to buy according to hedge funds. While we acknowledge the growth potential of VSTS, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than VSTS but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-05-2025
- Business
- Yahoo
Vestis Reports Second Quarter 2025 Results and Updates Outlook; Amends Credit Agreement Enhancing Financial Flexibility
ATLANTA, May 06, 2025--(BUSINESS WIRE)--Vestis Corporation (NYSE: VSTS), a leading provider of uniforms and workplace supplies, today announced its results for the second quarter ended March 28, 2025 and updated its outlook. Second Quarter 2025 Results Revenue of $665 million Operating Loss of $9 million and Net Loss of $28 million Adjusted EBITDA of $48 million, inclusive of $15 million one-time bad debt expense; Adjusted EBITDA of $63 million, 9.4% of Revenue excluding bad debt expense Operating Cash Flow of $7 million and Free Cash Flow of $(7) million Amended net leverage covenant extending ratio of 5.25x for another year Eliminates dividend to further strengthen balance sheet First Half 2025 Results Revenue of $1.35 billion Operating Income of $22 million and Net Loss of $27 million Adjusted EBITDA of $129 million, inclusive of $15 million one-time bad debt expense; Adjusted EBITDA of $144 million, 10.7% of Revenue excluding bad debt Management Commentary "We are disappointed with our second quarter results, which do not reflect the true potential of our business. As Interim CEO, I've been engaging with our teammates and focusing on our operations to drive immediate action," said Phillip Holloman, Interim Executive Chairman, President and CEO. "Despite the challenges in the quarter, I'm pleased that we have continued to improve our new customer sales with both local and national accounts. The uniform and workplace supplies industry remains a highly attractive market segment, and I am energized by the significant opportunity for Vestis to deliver long-term value creation." "Since joining the company I've been partnering with our team to provide robust financial analysis and insights for our business. In January, we saw a decline in volume as some customers seasonally adjusted their demand for our products. Since then, much of that volume has recovered and we saw revenue growth each month during the quarter which has continued through April," added Kelly Janzen, Chief Financial Officer. "We are also pleased to have executed an amendment to our credit agreement which strengthens our balance sheet and provides additional financial flexibility through the end of fiscal 2026. We appreciate the partnership and support from our lenders." Second Quarter 2025 Financial Performance Second quarter fiscal 2025 revenue totaled $665.2 million, a decrease of $40.1 million year over year, and the company generated an operating loss of $8.6 million during the period, a decrease of $51.6 million when compared with operating income in the second quarter of 2024. The decline in revenue was primarily due to a $17.5 million decline from lost business in excess of new business, a $5.8 million decline in revenue related to existing customers, and a $6.8 million decrease in direct sales primarily driven by the loss of a national account customer. In addition, the second quarter of fiscal 2024 included approximately $5.0 million of revenue from one-time customer exit billings that did not repeat in fiscal 2025. Cost of services decreased $14.4 million year over year, as a result of lower volume. Selling, general and administrative ("SG&A") expenses were $147.9 million in the second quarter of fiscal 2025, which were $25.3 million higher than the same period in the prior year. The year-over-year increase in SG&A was due primarily to a one-time $15.0 million expense related to adjusting the company's bad debt reserve and approximately $10.0 million related to executive exit costs. Additionally, the prior year period included approximately $6.0 million of favorable, non-recurring cost adjustments that reduced SG&A. Excluding these items, SG&A was lower by approximately $6.0 million year-over-year on a normalized basis. Net loss was $27.8 million or $(0.21) per diluted share, versus net income of $6.0 million, or $0.05 per diluted share, in the prior year period. Adjusted net loss was $6.0 million or $(0.05) per diluted share, compared to Adjusted net income of $17.4 million or $0.13 per diluted share in the second quarter of last year. Adjusted EBITDA was $47.6 million for the second quarter of 2025 and excluding a $15.0 million one-time adjustment for bad debt expense was $62.6 million or 9.4% of revenue as compared to $87.2 million, or 12.4% of revenue in the second quarter of 2024. Net cash provided by operating activities was $6.7 million for the second quarter of 2025 and free cash flow was $(6.9) million, a decrease of $69.4 million and $70.0 million, respectively, from the comparative periods. The reduction in cash flow was primarily due to the decrease in earnings as well as investments in inventory to support new customers and more effectively serve existing customers. Approximately $6.0 million of the inventory increase was due to purchases in advance of anticipated tariffs. As of March 28, 2025, the total principal bank debt outstanding was $1.17 billion. Net leverage was 4.16x at the end of the second quarter of fiscal 2025, as compared to 3.62x at the end of fiscal 2024. Amendment to Revolving and Term Loan Credit Agreements and Elimination of Dividend Subsequent to the end of the second quarter, the Company favorably amended both its revolving credit facility and term loan facility to provide additional financial flexibility by increasing the net leverage covenant ratio through the end of fiscal 2026. Following the amendment, the net leverage covenant ratio is now 5.25x through the second quarter of fiscal 2026, after which the net leverage covenant ratio steps down to 5.00x in the third quarter of fiscal 2026, 4.75x in the fourth quarter of fiscal 2026, and 4.50x in the first quarter of fiscal 2027 and beyond. The amendment also includes an allowance for a one-time $15.0 million bad debt expense adjustment to Adjusted EBITDA in the second quarter of fiscal 2025. The company's Adjusted EBITDA for the second quarter of fiscal 2025 is $62.6 million for the purposes of determining the covenant net leverage ratio, resulting in a covenant net leverage ratio of 4.16x at the end of the second quarter of fiscal 2025. The principal amounts of both the revolving credit facility commitment and term loan facility remain unchanged following the amendment. During the second quarter, the Company borrowed $30 million on its $300 million revolving credit facility and had outstanding letters of credit of $6 million, resulting in $264 million of undrawn credit capacity available as of March 28, 2025. As part of the amendment, the Company agreed to restrict all dividends and share repurchases through the end of the first quarter of fiscal 2027, or such time that the Company achieves a net leverage ratio below 4.50x for two consecutive quarters, whichever is earlier. Revised Outlook and Third Quarter Guidance The Company expects fiscal third quarter 2025 revenue to be in the range of $674 million to $682 million and fiscal third quarter 2025 Adjusted EBITDA to be at least $63 million. In shifting to quarterly guidance, the Company is not providing full-year guidance for fiscal 2025. The Company's strategic imperatives include disciplined capital allocation with deleveraging as a priority. The Company will continue to focus on driving free cash flow conversion over the long term but will no longer be providing guidance for free cash flow. CEO Transition In a separate press release today, Vestis announced the appointment of Jim Barber as President and Chief Executive Officer and as a member of the company's Board of Directors, effective June 2, 2025. Mr. Barber succeeds Phillip Holloman, who has been serving as Interim Executive Chairman, President and Chief Executive Officer since March 18, 2025. Mr. Holloman will return to his role as Chairman of the Board following the transition. Forward Looking Non-GAAP Information This release includes certain non-GAAP financial information that is forward-looking in nature, including without limitation adjusted EBITDA. Vestis believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of forward-looking non-GAAP financial measures would require Vestis to predict the timing and likelihood of among other things future acquisitions and divestitures, restructurings, asset impairments, other charges and other factors not within Vestis' control. Neither these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP measures are not provided. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. The estimates of revenue growth for fiscal year 2025 and adjusted EBITDA for fiscal year 2025 do not attempt to forecast currency fluctuations and, accordingly, reflect an assumption of constant currency. Conference Call Information Vestis will host a webcast to discuss its fiscal second quarter 2025 results on Wednesday, May 7, 2025 at 9:00 AM ET. The webcast can be accessed live through the investor relations section of the Company's website at Additionally, a slide presentation will accompany the call and will also be available on the Company's website. A replay of the live event will be available on the Company's website shortly after the call for 90 days. About Vestis™ Vestis is a leader in the B2B uniform and workplace supplies category. Vestis provides uniform services and workplace supplies to a broad range of North American customers from Fortune 500 companies to locally owned small businesses across a broad set of end sectors. The Company's comprehensive service offering primarily includes a full-service uniform rental program, floor mats, towels, linens, managed restroom services, first aid supplies, and cleanroom and other specialty garment processing. Forward-Looking Statements This press release contains "forward-looking statements" within the meaning of the securities laws. All statements that reflect our expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance and statements regarding our strategy for growth, future product development, regulatory approvals, competitive position and expenditures. In some cases, forward-looking statements can be identified by words such as "potential," "outlook," "guidance," "anticipate," "continue," "estimate," "expect," "will," and "believe," and other words and terms of similar meaning or the negative versions of such words. These forward-looking statements are subject to risks and uncertainties that may change at any time, and actual results or outcomes may differ materially from those that we expected. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict including, but not limited to: unfavorable economic conditions; increases in fuel and energy costs; the failure to retain current customers, renew existing customer contracts and obtain new customer contracts; natural disasters, global calamities, climate change, pandemics, strikes and other adverse incidents; increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our support services contracts; a determination by our customers to reduce their outsourcing or use of preferred vendors; risks associated with suppliers from whom our products are sourced; challenge of contracts by our customers; our expansion strategy and our ability to successfully integrate the businesses we acquire and costs and timing related thereto; currency risks and other risks associated with international operations; our inability to hire and retain key or sufficient qualified personnel or increases in labor costs; continued or further unionization of our workforce; liability resulting from our participation in multiemployer-defined benefit pension plans; liability associated with noncompliance with applicable law or other governmental regulations; laws and governmental regulations including those relating to the environment, wage and hour and government contracting; increases or changes in income tax rates or tax-related laws; risks related to recent U.S. tariff announcements; new interpretations of or changes in the enforcement of the government regulatory framework; a cybersecurity incident or other disruptions in the availability of our computer systems or privacy breaches; stakeholder expectations relating to environmental, social and governance considerations; any failure by Aramark to perform its obligations under the various separation agreements entered into in connection with the separation and distribution; a determination by the IRS that the distribution or certain related transactions are taxable; and the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Vestis' filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Non-GAAP Definitions This release could include certain non-GAAP financial measures, such as Adjusted Revenue Growth (Organic), Adjusted Revenue (Organic), Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Net Debt, Net Leverage, and Trailing Twelve Months Adjusted EBITDA. Vestis utilizes these measures when monitoring and evaluating operating performance. The non-GAAP financial measures presented herein are supplemental measures of Vestis' performance that Vestis believes help investors because they enable better comparisons of Vestis' historical results and allow Vestis' investors to evaluate its performance based on the same metrics that Vestis uses to evaluate its performance and trends in its results. Vestis' presentation of these metrics has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of Vestis' results as reported under U.S. GAAP. Because of their limitations, these non-GAAP financial measures should not be considered as measures of cash available to Vestis to invest in the growth of Vestis' business or that will be available to Vestis to meet its obligations. Vestis compensates for these limitations by using these non-GAAP financial measures along with other comparative tools, together with U.S. GAAP financial measures, to assist in the evaluation of operating performance. You should not consider these measures as alternatives to revenue, operating income, operating income margin, net income, net income margin or net cash provided by operating activities determined in accordance with U.S. GAAP. Vestis believes that these non-GAAP financial measures, in addition to the corresponding U.S. GAAP financial measures, are important supplemental measures which exclude non-cash or other items that may not be indicative of or are unrelated to Vestis' core operating results and the overall health of Vestis. Non-GAAP financial measures as presented by Vestis may not be comparable to other similarly titled measures of other companies because not all companies use identical calculations. Adjusted Revenue Growth (Organic) Adjusted Revenue Growth (Organic) measures our revenue growth trends excluding the impact of acquisitions and foreign currency, and we believe it is useful for investors to understand growth through internal efforts. We define "organic revenue growth" as the growth in revenues, excluding (i) acquisitions, (ii) the impact of foreign currency exchange rate changes, and (iii) the impact of the 53rd week, when applicable. Adjusted Revenue (Organic) Adjusted Revenue (Organic) represents revenue as determined in accordance with U.S. GAAP, adjusted to exclude (i) acquisitions, (ii) the impact of foreign currency exchange rate changes, and (iii) the impact of the 53rd week, when applicable. Adjusted Operating Income Adjusted Operating Income represents Operating Income adjusted for Amortization Expense of Acquired Intangibles; Share-based Compensation Expense; Severance and Other Charges; Merger and Integration Related Charges; Management Fee; Separation Related Charges; Estimated Impact of 53rd Week, when applicable; and Gain, Losses, Settlements and Other Items impacting comparability. Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between periods. Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods. Adjusted Operating Income Margin Adjusted Operating Income Margin represents Adjusted Operating Income as a percentage of Revenue. Adjusted EBITDA Adjusted EBITDA represents Net Income adjusted for Provision for Income Taxes; Interest Expense and Other, net; and Depreciation and Amortization (EBITDA), further adjusted for Share-based Compensation Expense; Severance and Other Charges; Merger and Integration Charges; Management Fee; Separation Related Charges; Estimated Impact of 53rd Week (when applicable); Gains, Losses, Settlements; and other items impacting comparability. Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between periods. Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods. Adjusted EBITDA Margin Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Revenue. Free Cash Flow Free Cash Flow represents Net cash provided by operating activities adjusted for Purchases of Property and Equipment and Other and Disposals of property and equipment. Net Debt Net Debt represents total principal debt outstanding and finance lease obligations, less cash and cash equivalents. Net Leverage Net Leverage represents Net Debt divided by the Trailing Twelve Months Adjusted EBITDA. Trailing Twelve Months Adjusted EBITDA Trailing Twelve Months Adjusted EBITDA represents Adjusted EBITDA for the preceding four fiscal quarters. VESTIS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended March 28,2025 March 29,2024 March 28,2025 March 29,2024 Revenue $ 665,249 $ 705,368 $ 1,349,029 $ 1,423,291 Operating Expenses: Cost of services provided (exclusive of depreciation and amortization) 489,991 504,417 985,251 1,006,797 Depreciation and amortization 35,882 35,213 72,818 70,575 Selling, general and administrative expenses 147,946 122,684 269,131 255,264 Total Operating Expenses 673,819 662,314 1,327,200 1,332,636 Operating Income (Loss) (8,570 ) 43,054 21,829 90,655 Interest Expense, net 22,329 35,326 45,426 66,857 Other Expense (Income), net 3,293 (613 ) 9,055 (1,369 ) Income (Loss) Before Income Taxes (34,192 ) 8,341 (32,652 ) 25,167 Provision (Benefit) for Income Taxes (6,362 ) 2,376 (5,654 ) 6,934 Net Income (Loss) $ (27,830 ) $ 5,965 $ (26,998 ) $ 18,233 Earnings (Loss) per share: Basic $ (0.21 ) $ 0.05 $ (0.21 ) $ 0.14 Diluted $ (0.21 ) $ 0.05 $ (0.21 ) $ 0.14 Weighted Average Shares Outstanding: Basic 131,751 131,524 131,672 131,457 Diluted 131,751 131,893 131,672 131,788 VESTIS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except share and per share amounts) March 28, 2025 September 27, 2024 ASSETS Current Assets: Cash and cash equivalents $ 28,806 $ 31,010 Receivables (net of allowances: $35,530 and $19,804, respectively) 162,359 177,271 Inventories, net 199,661 164,913 Rental merchandise in service, net 394,454 396,094 Other current assets 31,971 18,101 Total current assets 817,251 787,389 Property and Equipment, at cost: Land, buildings and improvements 565,790 590,972 Equipment 1,160,055 1,168,142 1,725,845 1,759,114 Less - Accumulated depreciation (1,075,574 ) (1,088,256 ) Total property and equipment, net 650,271 670,858 Goodwill 960,033 963,844 Other Intangible Assets, net 202,203 212,773 Operating Lease Right-of-use Assets 80,774 73,530 Other Assets 188,475 223,993 Total Assets $ 2,899,007 $ 2,932,387 LIABILITIES AND EQUITY Current Liabilities: Current maturities of financing lease obligations 31,869 31,347 Current operating lease liabilities 19,693 19,886 Accounts payable 150,752 163,054 Accrued payroll and related expenses 92,394 96,768 Accrued expenses and other current liabilities 142,448 145,047 Total current liabilities 437,156 456,102 Long-Term Borrowings 1,158,995 1,147,733 Noncurrent Financing Lease Obligations 119,387 115,325 Noncurrent Operating Lease Liabilities 73,122 66,111 Deferred Income Taxes 182,939 191,465 Other Noncurrent Liabilities 51,134 52,600 Total Liabilities 2,022,733 2,029,336 Commitments and Contingencies Equity: Common stock, par value $0.01 per share, 350,000,000 authorized, 131,780,869 and 131,481,967 issued and outstanding as of March 28, 2025 and September 27, 2024 ,respectively. 1,318 1,315 Additional paid-in capital 939,440 928,082 (Accumulated deficit) retained earnings (33,654 ) 2,565 Accumulated other comprehensive loss (30,830 ) (28,911 ) Total Equity 876,274 903,051 Total Liabilities and Equity $ 2,899,007 $ 2,932,387 VESTIS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three months ended Six months ended March 28, 2025 March 29, 2024 March 28, 2025 March 29, 2024 Cash flows from operating activities: Net Income (Loss) $ (27,832 ) $ 5,965 $ (26,998 ) $ 18,233 Adjustments to reconcile Net Income (Loss) to Net cash provided by operating activities: Depreciation and amortization 35,882 35,213 72,818 70,575 Deferred income taxes (3,847 ) (3,159 ) (7,126 ) (5,735 ) Share-based compensation expense 7,977 4,731 13,157 9,447 Loss on sale of equity investment, net — — 2,150 — Asset write-down 189 772 189 772 (Gain) Loss on disposals of property and equipment (972 ) 242 (972 ) 242 Amortization of debt issuance costs 925 (196 ) 1,771 799 Loss on extinguishment of debt — 3,883 — 3,883 Changes in operating assets and liabilities: Receivables, net 25,263 (3,461 ) 12,942 (12,923 ) Inventories, net (29,586 ) 8,784 (34,578 ) 33,838 Rental merchandise in service, net 991 (1,372 ) (330 ) (1,490 ) Other current assets 6,922 (1,113 ) (10,268 ) (9,283 ) Accounts payable (7,931 ) 17,092 (5,158 ) 12,334 Accrued expenses and other current liabilities 8,542 15,739 11,073 25,242 Changes in other noncurrent liabilities (8,215 ) (4,674 ) (14,924 ) (12,025 ) Changes in other assets (2,028 ) (2,273 ) (2,511 ) (6,194 ) Other operating activities 378 (136 ) (797 ) (173 ) Net cash provided by operating activities 6,658 76,037 10,438 127,542 Cash flows from investing activities: Purchases of property and equipment and other (13,510 ) (12,876 ) (28,242 ) (29,825 ) Proceeds from disposals of property and equipment 4,854 — 5,198 — Proceeds from sale of equity investment — — ... 36,792 — Other investing activities 3 — (4,547 ) — Net cash provided by (used in) investing activities (8,653 ) (12,876 ) 9,201 (29,825 ) Cash flows from financing activities: Proceeds from long-term borrowings 40,000 798,000 40,000 798,000 Payments of long-term borrowings (10,000 ) (853,750 ) (30,000 ) (862,500 ) Payments of financing lease obligations (8,519 ) (7,536 ) (16,822 ) (15,148 ) Net cash distributions to Parent — (2,478 ) — (6,051 ) Dividend payments (9,221 ) (4,600 ) (13,822 ) (4,600 ) Debt issuance costs — (11,134 ) — (11,134 ) Other financing activities (89 ) (18 ) (1,795 ) (1,728 ) Net cash provided by (used in) financing activities 12,171 (81,516 ) (22,439 ) (103,161 ) Effect of foreign exchange rates on cash and cash equivalents 66 157 596 52 Increase (decrease) in cash and cash equivalents 10,242 (18,198 ) (2,204 ) (5,392 ) Cash and cash equivalents, beginning of period 18,564 48,857 31,010 36,051 Cash and cash equivalents, end of period $ 28,806 $ 30,659 $ 28,806 $ 30,659 VESTIS CORPORATION RECONCILIATION OF NON-GAAP MEASURES (In thousands) Consolidated Consolidated Consolidated Three Months Ended Six Months Ended Trailing Twelve Months Ended March 28, March 29, March 28, March 29, March 28, March 29, 2025 2024 2025 2024 2025 2024 Net Income (Loss) $ (27,830 ) $ 5,965 $ (26,998 ) $ 18,233 $ (24,261 ) $ 161,068 Adjustments: Depreciation and Amortization 35,882 35,213 72,818 70,575 143,024 139,572 Provision (Benefit) for Income Taxes (6,362 ) 2,376 (5,654 ) 6,934 (1,528 ) 39,710 Interest Expense 22,329 35,326 45,426 66,857 105,132 69,317 Share-Based Compensation 7,977 4,731 13,157 9,447 20,046 15,964 Severance and Other Charges 7,558 (603 ) 11,951 (170 ) 16,563 (770 ) Separation Related Charges 3,665 4,074 8,283 13,049 17,836 37,275 Gains, Losses, Settlements and Other 4,399 88 9,780 607 19,335 (57,355 ) Adjusted EBITDA (Non-GAAP) $ 47,618 $ 87,170 $ 128,763 $ 185,532 $ 296,147 $ 404,781 Bad Debt Expense Adjustment 15,000 — 15,000 — 15,000 — Operational Adjusted EBITDA (Non-GAAP) (1) $ 62,618 $ 87,170 $ 143,763 $ 185,532 $ 311,147 $ 404,781 Revenue (as reported) $ 665,249 $ 705,368 $ 1,349,029 $ 1,423,291 $ 2,731,558 $ 2,848,575 Adjusted EBITDA Margin (Non-GAAP) 7.2 % 12.4 % 9.5 % 13.0 % 10.8 % 14.2 % Operational Adjusted EBITDA Margin (Non-GAAP) 9.4 % 12.4 % 10.7 % 13.0 % 11.4 % 14.2 % VESTIS CORPORATION RECONCILIATION OF NON-GAAP MEASURES (In thousands, except per share amounts) Consolidated Consolidated Three Months Ended Six Months Ended March 28, March 29, March 28, March 29, 2025 2024 2025 2024 Net Income (Loss) $ (27,830 ) $ 5,965 $ (26,998 ) $ 18,233 Adjustments: Amortization Expense 6,568 6,502 13,333 13,003 Share-Based Compensation 7,977 4,731 13,157 9,447 Severance and Other Charges 7,558 (603 ) 11,951 (170 ) Separation Related Charges 3,665 4,074 8,283 13,049 Gains, Losses, and Settlements 1,107 701 724 1,976 Loss on Sale of Equity Investment — — 2,150 — Tax Impact of Reconciling Items Above (5,000 ) (3,955 ) (8,589 ) (9,551 ) Adjusted Net Income (Loss) (Non-GAAP) $ (5,955 ) $ 17,415 $ 14,011 $ 45,987 Basic weighted-average shares outstanding 131,751 131,524 131,672 131,457 Diluted weighted-average shares outstanding 131,751 131,893 132,338 131,788 Basic (Loss) Earnings Per Share $ (0.21 ) $ 0.05 $ (0.21 ) $ 0.14 Diluted (Loss) Earnings Per Share $ (0.21 ) $ 0.05 $ (0.21 ) $ 0.14 Adjusted Basic (Loss) Earnings Per Share $ (0.05 ) $ 0.13 $ 0.11 $ 0.35 Adjusted Diluted (Loss) Earnings Per Share $ (0.05 ) $ 0.13 $ 0.11 $ 0.35 VESTIS CORPORATION RECONCILIATION OF NON-GAAP MEASURES FREE CASH FLOW, NET DEBT, NET LEVERAGE, AND PRO FORMA NET LEVERAGE (In thousands) Three months ended Six Months Ended March 28, 2025 March 29, 2024 March 28, 2025 March 29, 2024 Net cash provided by operating activities $ 6,658 $ 76,037 $ 10,438 $ 127,542 Purchases of property and equipment and other (13,510 ) (12,876 ) (28,242 ) (29,825 ) Free Cash Flow (Non-GAAP) $ (6,852 ) $ 63,161 $ (17,804 ) $ 97,717 As of March 28, 2025 September 27, 2024 Total principal debt outstanding $ 1,172,500 $ 1,162,500 Finance lease obligations 151,256 146,672 Less: Cash and cash equivalents (28,806 ) (31,010 ) Net Debt (Non-GAAP) $ 1,294,950 $ 1,278,162 Trailing Twelve Months Adjusted EBITDA (Non-GAAP) $ 296,147 $ 352,916 Bad Debt Expense Adjustment (1) 15,000 — Trailing Twelve Months Operational Adjusted EBITDA (Non-GAAP) $ 311,147 $ 352,916 Net Leverage (Non-GAAP) (1) 4.16 3.62 (1) For the Trailing Twelve Months Ended March 28, 2025, Net Leverage includes an allowance for a one-time, $15 million Bad Debt Expense Adjustment, as permitted by the May 1, 2025 Amendment to our Credit Agreement. 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09-05-2025
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Vestis Corporation Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
There's been a major selloff in Vestis Corporation (NYSE:VSTS) shares in the week since it released its quarterly report, with the stock down 30% to US$6.27. Revenues fell 3.7% short of expectations, at US$665m. Earnings correspondingly dipped, with Vestis reporting a statutory loss of US$0.21 per share, whereas the analysts had previously modelled a profit in this period. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results. Our free stock report includes 2 warning signs investors should be aware of before investing in Vestis. Read for free now. Following last week's earnings report, Vestis' eight analysts are forecasting 2025 revenues to be US$2.71b, approximately in line with the last 12 months. Statutory losses are expected to reduce, shrinking 12% from last year to US$0.21. Before this earnings report, the analysts had been forecasting revenues of US$2.82b and earnings per share (EPS) of US$0.35 in 2025. There looks to have been a significant drop in sentiment regarding Vestis' prospects after these latest results, with a minor downgrade to revenues and the analysts now forecasting a loss instead of a profit. View our latest analysis for Vestis The average price target fell 49% to US$7.41, implicitly signalling that lower earnings per share are a leading indicator for Vestis' valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Vestis, with the most bullish analyst valuing it at US$13.40 and the most bearish at US$5.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business. Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2025 compared to the historical decline of 4.1% per annum over the past year. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 6.7% annually. So while a broad number of companies are forecast to grow, unfortunately Vestis is expected to see its revenue affected worse than other companies in the industry. The most important thing to take away is that the analysts are expecting Vestis to become unprofitable next year. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business. Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Vestis analysts - going out to 2027, and you can see them free on our platform here. We don't want to rain on the parade too much, but we did also find 2 warning signs for Vestis (1 is potentially serious!) that you need to be mindful of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
