Vestis Stock Earnings Reports

Vestis reported solid progress in Q2 FY2026, delivering its first year-over-year adjusted EBITDA growth in over two years and the first improvement in operating leverage since becoming public. Revenue was $659M, down ~0.9% year-over-year driven by a 1.2% volume decline (6M pounds) but with revenue per pound stable at $1.37. Adjusted EBITDA was $74.5M (11.3% margin) and covenant‑adjusted results show a ~19% YoY improvement driven by a $0.02 reduction in cost per pound. Net income turned positive at $2.6M vs. a prior-year loss. Free cash flow and operating cash flow were strong ($45.6M free cash flow; $58.3M operating cash flow), helped by working capital, rental merchandise management, and tighter collections; adjusted free cash flow was $57M. Net debt was $1.25B with ample liquidity (~$344M) and no maturities until 2028. Management sold two nonoperating properties for $6.5M and is marketing additional assets to repay debt. The company raised full-year guidance: adjusted EBITDA now $295M–$325M (midpoint $310M) and free cash flow $120M–$150M (previously $50M–$60M), citing ~$50M in in-year transformation benefits and expecting continued sequential EBITDA growth into Q3 and Q4. Operational highlights: on-time delivery improved 270 bps, plant productivity +11%, customer complaints down 4%, and sales productivity gains. Commercial initiatives focus on pricing floors, product mix, customer segmentation and exiting low-return business to improve revenue quality; management expects a return to top-line growth in Q4 as these efforts scale. Key near-term risks include execution on transformation, market/competitive dynamics (including industry consolidation), and FTC/merger-related noise in the market.