Core Viewpoint - A class action lawsuit has been filed against Vestis Corporation for allegedly misleading investors about customer growth and strategic initiatives [1][2]. Allegations - The complaint claims that Vestis Corporation did not disclose its inability to execute planned strategic initiatives aimed at improving customer experience and onboarding, which were expected to drive new customer growth and retention [2]. - It is alleged that these misleading statements led to investors purchasing Vestis securities at artificially inflated prices [2]. Financial Results and Market Reaction - On May 7, 2025, Vestis announced disappointing financial results for Q2 of fiscal 2025, withdrew its revenue guidance for the full year, and provided third-quarter guidance that was significantly below market expectations [3]. - The company attributed its poor performance to "lost business in excess of new business" and "lower adds over stops," indicating a decline in volume changes with existing customers [3]. - Following this announcement, Vestis' stock price plummeted from $8.71 per share on May 6, 2025, to $5.44 per share on May 7, 2025, marking a decline of approximately 37.54% in just one day [3]. Class Action Participation - Shareholders interested in participating in the class action must file a motion for lead plaintiff by August 8, 2025, with the lead plaintiff representing other class members in the litigation [4]. - Shareholders can choose to remain absent from the case while still being eligible for recovery [4]. Company Background - Robbins LLP, the firm leading the class action, specializes in shareholder rights litigation and has been active in helping shareholders recover losses and improve corporate governance since 2002 [5].

Core Viewpoint - Faruqi & Faruqi, LLP is investigating potential claims against Vestis Corporation due to allegations of violations of federal securities laws, particularly concerning misleading statements about the company's growth prospects and business performance [3][5]. Group 1: Legal Investigation and Class Action - Faruqi & Faruqi is encouraging investors who suffered losses exceeding $75,000 in Vestis between May 2, 2024, and May 6, 2025, to discuss their legal options [1]. - There is an August 8, 2025, deadline for investors to seek the role of lead plaintiff in a federal securities class action against Vestis [3]. - The complaint alleges that Vestis and its executives concealed material adverse facts regarding the company's ability to grow its business and execute strategic initiatives [5]. Group 2: Financial Performance and Stock Impact - On May 7, 2025, Vestis announced disappointing financial results for Q2 2025, withdrew its revenue guidance for the full fiscal year, and provided lower-than-expected guidance for Q3 2025 [6]. - The company attributed its poor performance to "lost business in excess of new business" and "lower adds over stops," indicating challenges in customer retention and growth [6]. - Following the announcement, Vestis' stock price plummeted from $8.71 per share on May 6, 2025, to $5.44 per share on May 7, 2025, marking a decline of approximately 37.54% in one day [6].

NEW YORK, June 09, 2025 (GLOBE NEWSWIRE) -- The following statement is being issued by Levi & Korsinsky, LLP: To: All persons or entities who purchased or otherwise acquired securities of Vestis Corporation (“Vestis” or the “Company”) (NYSE: VSTS) between May 2, 2024, to May 6, 2025, both dates inclusive. You are hereby notified that the class action lawsuit Cesar Torres v. Vestis Corporation, et al. (Case No. 1:25-cv-04844) has been commenced in the United States District Court for the Southern District of ...

Group 1 - The article discusses the challenges faced by Vestis Corporation (NYSE: VSTS), including sluggish sales and margins, despite a belief that stability was arriving in the summer of the previous year [1] - The investing group "Value In Corporate Events" provides members with opportunities to capitalize on significant corporate events such as IPOs, mergers & acquisitions, and earnings reports, covering 10 major events a month [1]

Financial Data and Key Metrics Changes - Second quarter revenue was $665 million, a decline of approximately $18 million or 2.7% from Q1, which was significantly below the expected growth [6][16] - Adjusted EBITDA was $63 million or 9.4% of revenue, a reduction of 250 basis points compared to Q1 [6][22] - Net loss for the quarter was $28 million, with a diluted loss per share of $0.21; on an adjusted basis, the net loss was $6 million with a diluted loss per share of $0.05 [22] Business Line Data and Key Metrics Changes - Revenue from rental business decreased by $11 million, while direct sales declined by $7 million [17][20] - New business contributed $17 million or 2.4% of revenue growth during the quarter, with a 35% increase in recurring revenue year over year [17][18] - Customer retention was 92.4% at the end of Q2, consistent with previous years [18] Market Data and Key Metrics Changes - The decline in revenue was attributed to lost business exceeding new business, although the gap narrowed by approximately 10% [11][18] - Revenue from existing customers declined by approximately $8 million compared to Q1, including a $4 million decrease in L and R revenue [19] Company Strategy and Development Direction - The company is focused on improving customer service and operational effectiveness, with a customer-centric approach being emphasized [12][13] - A new CEO will be stepping in to drive profitable growth and ensure a seamless transition [4][5] - The company is committed to deleveraging and disciplined capital allocation, with an amendment to the credit agreement providing additional flexibility [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q2 performance but noted positive trends in recent months, including sequential monthly revenue growth [15][29] - The company is optimistic about entering Q3 in a stronger position, expecting revenue growth and margin expansion [15][30] Other Important Information - The company has suspended annual guidance and shifted to quarterly guidance due to recent performance and macroeconomic uncertainties [28][69] - A significant investment of $30 million in inventory was made to support new customer installations [23][44] Q&A Session Summary Question: Confidence in Q3 earnings guidance - Management expressed confidence in the Q3 guidance, citing improved trends and a better understanding of financial metrics [35][36] Question: Actions on cost structure - Management indicated ongoing efforts to utilize assets efficiently while balancing investments in customer service [39][45] Question: Service issues and competitive dynamics - Management acknowledged ongoing service issues but emphasized renewed focus on improvements and customer-centric culture [50][51] Question: Cultural transformation timeline - Management stated that cultural transformation will take time and will be influenced by the new CEO [72] Question: Update on strategic advisors - Management confirmed no active activity regarding strategic advisors at this time [70] Question: Year-over-year revenue decline causes - Management attributed the decline to lost business exceeding new business, service issues, and a significant loss of a large national account [88]

Financial Data and Key Metrics Changes - Second quarter revenue was $665 million, a decline of approximately $18 million or 2.7% from Q1, which was significantly below the expected growth [6][16] - Adjusted EBITDA was $63 million or 9.4% of revenue, a reduction of 250 basis points compared to Q1, reflecting the impact of lower revenue on the company's fixed cost structure [6][22] - Net loss for the quarter was $28 million, with a diluted loss per share of $0.21, while adjusted net loss was $6 million with a diluted loss per share of $0.05 [22] Business Line Data and Key Metrics Changes - Revenue from rental business decreased by $11 million, while direct sales declined by $7 million, with the latter reflecting typical seasonality [6][17] - New business contributed $17 million or 2.4% of revenue growth during the quarter, with a 35% year-over-year increase in recurring revenue installations [17][18] - Customer retention rate was 92.4% at the end of Q2, consistent with previous years, despite a decline in revenue from existing customers by approximately $8 million [18][19] Market Data and Key Metrics Changes - The company experienced a significant decline in volume as some customers adjusted their demand seasonally, particularly in workplace supplies [8][19] - The impact of lost business was approximately $20 million, which improved by roughly 10% compared to Q1 [18] - The company noted that the decline in direct sales was primarily due to the loss of a large national account customer, which represented approximately $26 million in annual revenue [20] Company Strategy and Development Direction - The company is focused on improving customer service and operational effectiveness, with a strong emphasis on a customer-centric approach [12][13] - There is a commitment to deleveraging and disciplined capital allocation, with an amendment to the credit agreement providing additional flexibility [14][26] - The company is optimistic about entering Q3 in a stronger position, with expectations for revenue growth and margin expansion [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q2 performance but highlighted positive trends in recent months, including sequential monthly revenue growth [10][29] - The new CEO, effective June 2, 2025, is expected to drive profitable growth and ensure a seamless transition [4][5] - Management is confident in the guidance for Q3, citing improved trends and a better understanding of financial metrics [35][36] Other Important Information - The company generated $7 million in operating cash flow, but cash flow was negative due to lower profit and higher working capital investments [23] - The company has a strong liquidity position with no debt maturities until 2027 and $293 million of available liquidity [26] - The company has suspended annual guidance and shifted to quarterly guidance due to recent performance and macroeconomic uncertainties [28][68] Q&A Session Summary Question: Confidence in Q3 earnings guidance - Management expressed confidence in the Q3 guidance, noting that trends support this outlook and that they are monitoring sustainability [35][36] Question: Actions on cost structure - Management indicated ongoing efforts to better utilize assets and facilities while balancing investments to retain customers and improve service [39][45] Question: Service issues and competitive dynamics - Management acknowledged ongoing service issues but emphasized improvements in organization and customer focus to address these challenges [50][51] Question: Cultural transformation timeline - Management stated that cultural transformation will take time and is focused on accountability and effective communication within the organization [70][71] Question: Update on strategic advisors - Management confirmed there is currently no active activity regarding strategic advisors [69] Question: Year-over-year revenue decline causes - Management attributed the revenue decline to lost business exceeding new business, lower volume with existing customers, and the loss of a significant national account [86][87]

Vestis (VSTS) Q2 2025 Earnings Call May 07, 2025 09:00 AM ET Speaker0 Welcome to the Vestas Corporation Fiscal Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants have been placed on a listen only mode and the floor will be open for your questions following the presentation. I would now like to turn the call over to Michael Aurelio, Vice President, Investor Relations. Speaker1 Thank you, operator, and thank you all for joining us. With me are Philip Holliman, Interim E ...

Company Performance - Vestis reported a quarterly loss of $0.05 per share, missing the Zacks Consensus Estimate of $0.15, and compared to earnings of $0.13 per share a year ago, representing an earnings surprise of -133.33% [1] - The company posted revenues of $665.25 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.79%, and down from $705.37 million year-over-year [2] - Over the last four quarters, Vestis has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Outlook - Vestis shares have declined approximately 41.7% since the beginning of the year, contrasting with the S&P 500's decline of -3.9% [3] - The current consensus EPS estimate for the coming quarter is $0.19 on revenues of $709.93 million, and for the current fiscal year, it is $0.70 on revenues of $2.81 billion [7] Industry Context - The Uniform and Related industry, to which Vestis belongs, is currently in the top 9% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% of industries [8]

Financial Performance - Revenue for Q2 2025 was $665 million, a decrease of 6% year-over-year from $705 million in Q2 2024[5] - Gross profit for Q2 2025 was $175 million, a decrease of 13% year-over-year from $201 million in Q2 2024[5] - Adjusted EBITDA for Q2 2025 was $48 million, a decrease of 45% year-over-year from $87 million in Q2 2024[5] - Adjusted EPS for Q2 2025 was a loss of $005, compared to earnings of $013 in Q2 2024[5] - Free cash flow for Q2 2025 was negative $7 million, compared to positive $63 million in Q2 2024[5] Revenue Drivers and Trends - The year-over-year revenue decline was driven by $18 million in lost business exceeding new customer growth, $6 million in reduced volume with existing customers, $7 million in lower direct sales, and $5 million from one-time customer exit billings[8] - Revenue improved each month in Q2 2025, with continued improvement in April[8] - The company experienced a sequential revenue decline of approximately $18 million, with $11 million from rental and $7 million from direct sales[14] - Installed recurring revenue from new customers increased by 10% quarter-over-quarter and 35% year-over-year, skewed toward the second half of Q2[17] Guidance and Future Focus - Revenue guidance for Q3 2025 is $674 million to $682 million[8] - Adjusted EBITDA for Q3 2025 is expected to be at least $63 million, representing growth versus Q2[8] - The company is focused on strengthening its core business, prioritizing customer retention, and driving high-quality growth with new customers[37] - The company aims to operate within a target net leverage range of less than 30x and maintain a strong liquidity position, with $293 million of available liquidity at the end of Q2[39]

Financial Performance - Revenue for the three months ended March 28, 2025, was $665,249,000, a decrease of 5.7% compared to $705,368,000 for the same period in 2024[16] - Net loss for the three months ended March 28, 2025, was $(27,830,000), compared to a net income of $5,965,000 for the same period in 2024[18] - Operating income for the six months ended March 28, 2025, was $21,829,000, down from $90,655,000 for the same period in 2024, reflecting a decline of 76.1%[16] - Comprehensive loss for the three months ended March 28, 2025, was $(26,592,000), compared to $(484,000) for the same period in 2024[18] - Basic earnings per share for the three months ended March 28, 2025, was $(0.21), compared to $0.05 for the same period in 2024[16] - Net income for the six months ended March 28, 2025, was a loss of $26.998 million, compared to a profit of $18.233 million for the same period in 2024[30] - Total revenue for the three months ended March 28, 2025, was $665.2 million, a decrease of 5.7% compared to $705.4 million for the same period in 2024[99] - For the six months ended March 28, 2025, total revenue was $1.35 billion, a decrease of 5.2% from $1.42 billion in the same period of 2024[99] Assets and Liabilities - Total current assets increased to $817,251,000 as of March 28, 2025, compared to $787,389,000 as of September 27, 2024, representing a growth of 3.9%[21] - Total liabilities decreased slightly to $2,022,733,000 as of March 28, 2025, from $2,029,336,000 as of September 27, 2024[21] - Total equity decreased to $876,274,000 as of March 28, 2025, from $903,051,000 as of September 27, 2024[21] - Long-term borrowings, net, amounted to $1,158.995 million as of March 28, 2025, up from $1,147.733 million as of September 27, 2024[59] - The allowance for credit losses increased to $35.5 million as of March 28, 2025, from $19.8 million as of September 27, 2024, reflecting a $15.0 million adjustment based on updated collectability estimates[46] Cash Flow and Financing Activities - Cash flows from operating activities provided $10.438 million in the six months ended March 28, 2025, a significant decrease from $127.542 million in the prior year[30] - Cash and cash equivalents decreased to $28,806,000 as of March 28, 2025, down from $31,010,000 as of September 27, 2024[21] - The company reported a net cash used in financing activities of $22.439 million for the six months ended March 28, 2025, compared to $103.161 million in the prior year[30] - Cash and cash equivalents at the end of the period were $28.806 million, down from $30.659 million at the end of the previous year[30] Dividends and Shareholder Returns - The company declared dividends of $0.035 per common share during the reporting period[22] - The company declared dividends of $0.035 per common share, totaling $4.599 million for the period[30] - The company declared a quarterly cash dividend of $0.035 per common share, totaling $4.6 million, during the three months ended March 28, 2025[116] Operating Expenses - Share-based compensation expense was $13.157 million for the six months ended March 28, 2025, compared to $9.447 million in the same period of 2024[30] - Operating lease costs for the three months ended March 28, 2025, were $11.1 million, compared to $10.4 million for the same period in 2024[80] - The Company recorded $5.4 million and $10.8 million in expenses related to employee sales commissions for the three and six months ended March 28, 2025, respectively[76] - Share-based compensation expense for the three months ended March 28, 2025, totaled $8.0 million, an increase from $4.7 million in the same period in 2024[82] Segment Performance - Revenue from the United States for the three months ended March 28, 2025, was $606.1 million, down 5.6% from $642.1 million in the prior year[73] - Operating income for the United States segment decreased significantly to $18.6 million for the three months ended March 28, 2025, down from $71.2 million in the same period of 2024, representing a decline of 73.9%[99] - The total operating loss for the company was $8.6 million for the three months ended March 28, 2025, compared to an operating income of $43.1 million for the same period in 2024[99] - The total segment operating income for the six months ended March 28, 2025, was $80.6 million, down from $150.8 million in the same period of 2024, reflecting a decline of 46.5%[99] Legal and Environmental Liabilities - The company has recorded $7.1 million in environmental-related liabilities as of March 28, 2025, compared to $6.6 million as of September 27, 2024[90] - The company has $11.9 million recorded as liabilities for conditional asset retirement obligations as of March 28, 2025, slightly up from $11.8 million as of September 27, 2024[92] - A settlement agreement related to a class action lawsuit was reached for $3.1 million, which was fully provided for in the financial statements as of March 28, 2025[93] Tax and Regulatory Matters - The company's effective tax rate was 18.6% for the three months ended March 28, 2025, down from 28.5% for the same period in 2024[103] - The company has restrictions on dividends and share repurchases until certain financial covenants are met, specifically a net leverage ratio below or equal to 4.50x[117] Risk Exposure - The company is exposed to foreign currency risk due to revenues and profits being denominated in foreign currencies[189] - The company is also exposed to interest rate risk from fluctuations in interest rates on its debt obligations, particularly on its Term Loan Facilities[190]