Vestis (VSTS) - 2025 Q1 - Quarterly Results

Financial Performance - Vestis reported first quarter fiscal 2025 revenue of $683.8 million, a decrease of 4.7% compared to$ 717.9 million in the first quarter of fiscal 2024[4]. - Adjusted EBITDA for the first quarter fiscal 2025 was $81.2 million, down 17.4% from$ 98.4 million in the same period last year, but increased 0.9% sequentially from the fourth quarter of fiscal 2024[5]. - The company achieved an operating income of $30 million, reflecting a 2% sequential increase compared to the fourth quarter of fiscal 2024, with an operating margin of 4.4% remaining flat[6]. - Reported revenue for the three months ended December 27, 2024, was$ 621.7 million, a decrease of 4.8% compared to $653.2 million for the same period in 2023[38]. - Adjusted revenue (organic) for the same period was$ 621.7 million, reflecting a decline of 4.8% year-over-year[38]. - Operating income (as reported) decreased to $58.0 million from$ 74.1 million, representing a decline of 21.8%[38]. - Adjusted operating income (non-GAAP) was $63.4 million, down from$ 80.3 million, indicating a decrease of 21.0%[38]. - Adjusted EBITDA (non-GAAP) for the quarter was $90.6 million, compared to$ 106.3 million in the prior year, a decline of 14.8%[38]. - Net income (as reported) for the quarter was $0.8 million, significantly lower than$ 12.3 million in the same quarter last year[38]. - Adjusted net income (non-GAAP) was $18.1 million, down from$ 28.6 million, reflecting a decrease of 36.5%[38]. - Basic earnings per share for the quarter was $0.01, compared to$ 0.09 in the prior year[38]. - Adjusted diluted earnings per share was $0.14, down from$ 0.22 year-over-year[38]. - The company reported an adjusted operating income margin of 10.2% for the quarter, compared to 12.3% in the same period last year[38]. Cash Flow and Debt - Net cash provided by operating activities decreased to $3.8 million from$ 51.5 million in the comparable period of fiscal 2024, primarily due to lower operating income and timing shifts in accounts receivable collections[6]. - Total principal debt outstanding as of December 27, 2024, was $1.14 billion, resulting in a net leverage ratio of 3.80x, up from 3.62x at the end of fiscal 2024[7]. - Net cash used in financing activities increased from$ 21,645 million in December 2023 to $34,610 million in December 2024, an increase of approximately 60%[25]. - The company reported a significant increase in cash flows from investing activities, from a net cash outflow of$ 16,949 million in December 2023 to a net cash inflow of $17,854 million in December 2024[25]. Guidance and Future Outlook - The company reaffirmed its fiscal 2025 revenue guidance in the range of$ 2.8 billion to $2.83 billion and adjusted EBITDA guidance of$ 345 million to $360 million[9]. - Vestis anticipates a free cash flow to adjusted EBITDA ratio of approximately 50% for fiscal 2025[10]. - Vestis expects to achieve sequential improvement in results throughout the year, supporting a double-digit EBITDA growth rate heading into fiscal 2026[3]. Leadership Changes - The company is undergoing a transition in its finance leadership, with Rick Dillon leaving and Kelly Janzen appointed as the new CFO effective February 14, 2025[11]. Asset and Equity Changes - Total assets decreased from$ 2,932,387 million in September 2024 to $2,897,153 million in December 2024, a decline of approximately 1.2%[23]. - Total current liabilities decreased slightly from$ 456,102 million in September 2024 to $448,696 million in December 2024, a reduction of about 1.0%[23]. - Long-term borrowings decreased from$ 1,147,733 million in September 2024 to $1,128,444 million in December 2024, a decline of approximately 1.7%[23]. - Total equity decreased from$ 903,051 million in September 2024 to $899,590 million in December 2024, a decrease of about 0.5%[23]. - The company’s accumulated deficit in retained earnings changed from$ 2,565 million in September 2024 to $(1,213) million in December 2024, indicating a shift to a deficit position[23]. Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures for evaluating operational performance, which may not be directly comparable to other companies[26].