Vestis Corporation Q1 FY2026 earnings call

• Operational Excellence: On-time delivery improved 300 basis points, plant productivity up 7%, customer complaints down 12% YoY, and average weekly lost business in Q1 declined 15% from Q4. Cost per pound improved $0.02 vs fiscal Q1 2025, with expectations of continued improvement.
• Commercial Excellence: Advanced decision support tools, introduced market development representatives to strengthen local customer engagement, aiming for stronger product mix, strategic pricing, and better customer penetration.
• Network and Asset Optimization: Undertook market studies, marketed non-core properties for sale to optimize asset footprint, with proceeds to be used for debt repayment.

Revenue for the first quarter was $663,400,000, a decline of $20,400,000 (3%) versus 2025. Rental revenue declined $17,900,000 and direct sales declined $2,700,000, offset by a $200,000 benefit from foreign exchange. Volume was flat in pounds processed, but product mix shifted to more costly products like towels and aprons, lowering revenue per pound by $0.04 (3%), which equated to the year-over-year revenue decline. Adjusted EBITDA was $70,000,000, improving sequentially from fiscal Q4 2025.

• Fiscal 2026 revenue expected to be flat to down 2% vs 2025 on a 52-week basis.
• Adjusted EBITDA for full-year 2026 expected in range of $285,000,000 to $315,000,000 with 5% successive quarterly improvements starting Q2.
• Fiscal 2026 free cash flow expected in range of $50,000,000 to $60,000,000, assuming consistent capital expenditures.

Q: For the revenue per pound decline due to mix and legacy practices, how to trend for the year and key drivers?

A: Expect revenue per pound to trend flat to down 2% full-year vs 2025, with key drivers including shifting mix, strategic pricing.

Q: On sequential EBITDA growth assumptions, how to play out and assumptions?

A: Adjusted EBITDA expected to have 5% sequential QoQ improvement, driven by cost per pound improvement and commercial initiatives.

Q: Macro standpoint or customer demand?

A: No shifting in vertical concentration, volume consistent in pounds, difference is mix shifting.

Q: Calibration of transformation progress and next 12 months operation change?

A: Early innings in transformation, focus on cost per pound and revenue per pound improvement, with Bill Seward noting focus on service levels tracking with cost improvements.

Q: Plant productivity metric, relation to cost per pound and efficiency gains?

A: Plant productivity improved 7% per operating hour, with technology and visibility driving efficiency gains, and cost per pound expected to improve with continued optimization.

Q: Cost saving realization cadence and unbranded market growth?

A: $40,000,000 in-year cost savings in 2026, phasing in from Q2-Q4, with unbranded market penetration still at 40% non-programmers, market development representatives focused on growth.