Vestis Reports First Quarter 2025 Results; Reaffirms FY25 Guidance; Announces Chief Financial Officer and Chief Legal Officer Transitions
First Quarter 2025 Results
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Delivered Q1 results in-line with expectations and reaffirms fiscal
2025 outlook
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Revenue of $684 million, as expected
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Operating Income of $30 million increased 2% sequentially versus Q4
2024 and Operating Margin of 4.4% was flat sequentially
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Adjusted EBITDA of $81 million, as expected, increased 0.9%
sequentially versus Q4 2024 and Adjusted EBITDA margin of 11.9% increased
10 basis points sequentially
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Voluntarily prepaid $20 million of term loan debt during the quarter
ATLANTA--(BUSINESS WIRE)--January 31, 2025--
Vestis Corporation (NYSE: VSTS), a leading provider of uniforms and workplace supplies, today announced its results for the first quarter ended December 27, 2024 and reiterated its outlook for fiscal year 2025.
Management Commentary
"We are pleased with our first quarter results, which were in-line with our expectations," said Kim Scott, President and CEO. "Our business continues to build momentum. In the second quarter, we expect to hit a significant milestone, with new volume outpacing customer losses driven by field sales productivity, national account wins, and lower customer churn. Further, select pricing actions and cost savings should benefit our bottom line. We remain on track to deliver full year results in-line with our outlook, with sequential improvement in our results throughout the year supporting a double-digit EBITDA growth rate heading into fiscal 2026."
First Quarter 2025 Financial Summary
This press release contains non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the comparable GAAP measures are presented in the tables accompanying this release.
Vestis' first quarter fiscal 2025 revenue totaled $683.8 million, as compared to $717.9 million in the first quarter of fiscal 2024. Sequentially, Vestis' first quarter fiscal 2025 revenue was approximately flat versus the fourth quarter of fiscal 2024, in-line with expectations.
First quarter fiscal 2025 adjusted EBITDA totaled $81.2 million, as compared to $98.4 million in the first quarter of fiscal 2024. Sequentially, Vestis' first quarter fiscal 2025 adjusted EBITDA increased 0.9% versus the fourth quarter of fiscal 2024, in-line with expectations. First quarter fiscal 2025 adjusted EBITDA margin increased 10 basis points sequentially.
Balance Sheet and Cash Flow
Vestis' net cash provided by operating activities for the three months ended December 27, 2024 was $3.8 million, as compared to $51.5 million for the comparable period of fiscal 2024. The decrease was driven by lower operating income and a significant impact from a timing shift of accounts receivable cash collections, which shifted into January due to timing of holidays and the quarter end date in fiscal 2025. This timing dynamic was temporary, has already been resolved, and does not impact cash flow generation on an underlying basis for the full year.
As of December 27, 2024, total principal debt outstanding was $1.14 billion, which reflects the voluntary prepayment of $20 million in the quarter, resulting in net leverage of 3.80x at the end of the first quarter of fiscal 2025, as compared to 3.62x at the end of fiscal 2024.
Declaration of Quarterly Dividend
The company's Board of Directors declared a quarterly cash dividend of $0.035 per common share payable on March 18, 2025 to shareholders of record at the close of business on February 21, 2025.
Fiscal Year 2025 Outlook
The Company continues to expect fiscal 2025 revenue to be in the range of $2.8 billion to $2.83 billion and fiscal 2025 Adjusted EBITDA to be in the range of $345 million to $360 million.
The Company's fiscal 2025 guidance is provided on a normalized 52-week fiscal year basis. Fiscal 2025 reported financials will include the impact of a 53rd week, with the extra week impacting the fourth quarter.
The Company's strategic imperatives include disciplined capital allocation with deleveraging as a priority. The Company continues to expect strong free cash flow conversion and to anticipate a ratio of free cash flow to Adjusted EBITDA of approximately 50%.
Vestis Announces Chief Financial Officer and Chief Legal Officer Transitions
The Company announced that Rick Dillon, Executive Vice President and Chief Financial Officer, will be leaving the Company as part of a transition of the Chief Financial Officer role. Mr. Dillon will remain with the Company until February 14, 2025 to assist with transitioning his role.
"We are grateful to Rick for the outstanding contributions he has made to Vestis since joining us in 2022," said Kim Scott. "He has been an invaluable partner to me, and his leadership in preparing for Vestis' separation as a standalone company and building out our public company finance capabilities will have a lasting positive impact on our company. We remain grateful for his service to the company and wish him continued success."
"I am leaving Vestis in a strong position and remain confident in the company's future and ability to capitalize on the attractive value creation opportunity yet ahead," said Rick Dillon, CFO. "We are seeing exciting green shoots and underlying momentum in our business, and I am pleased that my departure follows several quarters of delivering against our new financial commitments."
The Company also announced that Kelly Janzen will join Vestis as its Executive Vice President and Chief Financial Officer, effective February 14, 2025. Ms. Janzen brings over 25 years of experience in various financial leadership roles and has been working with Vestis as a finance consultant since October 2024. Prior to joining Vestis, Ms. Janzen was finance executive in residence at Fernweh Group and working as Chief Financial Officer for Dabico Airport Solutions from January 2024 to May 2024. Previously, she served as Senior Vice President and Chief Financial Officer of BlueLinx Corporation $(BCX)$ from April 2020 to August 2023. In addition to her experience at BlueLinx, Ms. Janzen has served as Senior Vice President and Chief Accounting Officer of WestRock $(WRK)$ from August 2017 to March 2020, Vice President and Chief Accounting Officer of Baker Hughes (NYSE: BKR) from September 2016 to July 2017, Vice President Finance and Chief Accounting Officer of McDermott International (formerly NASDAQ: MDR) from December 2014 to August 2016, and held progressive leadership roles in finance and accounting at General Electric for more than 10 years. Ms. Janzen will be based out of the Company's headquarters in Roswell, Georgia.
"We are delighted to welcome Kelly to Vestis as we transition our finance team to the next phase of value creation," said Kim Scott. "Her proven leadership and strong business process optimization experience will serve us well as we continue to advance the finance organization in support of delivering our objectives as a company."
In addition, the Company announced that Tim Donovan, Executive Vice President, Chief Legal Officer and General Counsel, will be retiring effective February 14, 2025, and Andre "Butch" Bouchard will be appointed Executive Vice President, Chief Legal Officer, General Counsel & Corporate Secretary effective February 14, 2025. Mr. Bouchard has over 30 years of public company legal experience in the industrial and energy industries. Prior to joining Vestis, Mr. Bouchard was Executive Vice President, Administration, Chief Legal Officer & Secretary at TEAM, Inc. $(TISI)$, where he held progressive legal leadership roles for more than 17 years. In addition to his experience at TEAM, Mr. Bouchard held progressive legal leadership roles at Southern Union Company (NYSE: SUG) and its subsidiaries for 14 years. Mr. Bouchard will be based out of the Company's headquarters in Roswell, Georgia.
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 first quarter 2025 results on Friday, January 31, 2025 at 8:30 AM ET. The webcast can be accessed live through the investor relations section of the Company's website at www.vestis.com. 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.
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