Vestis Corp Q1 FY2025 earnings call

• Q1 results were in line with expectations, with revenue and EBITDA similar to the fourth quarter of FY '24.
• Revenue was impacted by unfavorable Canadian dollar exchange rates. Excluding one-time items, normalized constant-currency revenue declined 2.8%.
• EBITDA margin was 11.9%, down YOY but up sequentially. Cash flow was affected by seasonality and timing of collections.
• Personnel changes: Chief Legal Officer Tim Donovan retiring, Busch Bouchard to be CLO; CFO Rick Dillon leaving, Kelly Janssen joining as new CFO.
• Key drivers for FY 2025: strong new volume wins across SME field sales and national accounts, growth with existing customers, resumption of frontline sales hiring, and improved customer retention (92.9% in Q1).

Vestis Corporation's fiscal first quarter 2025 revenue was $684 million, flat sequentially from the fourth quarter of 2024. On a constant-currency basis, revenue was down 4.7% year-over-year, with a 2.8% normalized constant-currency decline when excluding one-time customer exit billings and the large direct sales customer loss. Adjusted EBITDA was $81.2 million, with an EBITDA margin of 11.9%, down 180 basis points year-over-year but up 10 basis points sequentially. Revenue contribution from volume growth (including recurring revenue from new and existing customers) was significant, with new customer growth contributing ~600 basis points and existing customer growth ~140 basis points, while route sales revenue was up over 50% year-over-year.

• Reaffirmed full-year FY '2025 guidance for revenue ($2.8 billion to $2.83 billion) and adjusted EBITDA ($345 million to $360 million).
• Expect sequential improvement in revenue and EBITDA through the year, with Q2 typically the lowest growth quarter.
• Anticipate net positive pricing in the back half of the year as comps lap, with full-year net positive pricing expected.

Q: Andy Wittmann asked about pricing ramp cadence and cost efficiency areas.

A: Kim Scott said pricing will be net positive for the full year by holding price with existing customers through improved service and frontline training. On costs, logistics optimization, merchandise reuse, workforce optimization in field and back-office G&A are key areas, with full benefits to flow in later quarters.

Q: Andrew Steinerman inquired about NPS scores.

A: NPS is measured annually; daily service-related requests are managed, with improvement seen in on-time delivery and shortages reducing service requests.

Q: Shlomo Rosenbaum asked about revenue growth drivers and hiring.

A: Pricing is normal annual activity, volume growth via national account wins, SME sales team growth, and retention. Hiring is resuming with a professionalized selling environment.

Q: George Tong asked about customer service progress.

A: Real-time delivery notifications improve on-time performance, and standard operating procedures reduce shortages, with positive customer response.