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]

[Amendment No. 2 to Credit Agreement](index=1&type=section&id=Amendment%20No.%202%20to%20Credit%20Agreement) This amendment, dated May 1, 2025, modifies the Credit Agreement from September 29, 2023, between VESTIS CORPORATION, its Canadian subsidiary, lenders, and JPMorgan Chase Bank, N.A., becoming effective upon specific conditions [Introduction and Effectiveness](index=1&type=section&id=Introduction%20and%20Effectiveness) This document, dated May 1, 2025, amends the Credit Agreement between VESTIS CORPORATION, its Canadian subsidiary, lenders, and JPMorgan Chase Bank, N.A., outlining terms and effectiveness conditions - The amendment, dated **May 1, 2025**, modifies the Credit Agreement originally established on **September 29, 2023**[1](index=1&type=chunk) - The parties include **VESTIS CORPORATION** (U.S. Borrower), **CANADIAN LINEN AND UNIFORM SERVICE CORP.** (Canadian Borrower), subsidiary guarantors, lenders, and **JPMorgan Chase Bank, N.A.** as agent[1](index=1&type=chunk) - The amendment becomes effective upon satisfaction of conditions including execution by required parties, receipt of an Officers' Certificate, payment of fees, accurate representations, and absence of default[3](index=3&type=chunk)[4](index=4&type=chunk)[5](index=5&type=chunk) - The amendment and Credit Agreement are governed by the laws of the **State of New York**[9](index=9&type=chunk) [Credit Agreement](index=15&type=section&id=Credit%20Agreement) This agreement, dated September 29, 2023, establishes credit facilities for VESTIS CORPORATION and its Canadian subsidiary, detailing definitions, credit mechanics, representations, conditions, covenants, and default provisions [Preamble](index=21&type=section&id=Preamble) The Credit Agreement, dated September 29, 2023, outlines initial credit facilities for VESTIS CORPORATION and its Canadian subsidiary, including Term A-1, Term A-2, and Revolving Commitments, with proceeds primarily for intercompany loan repayment and general corporate purposes Initial Credit Facilities | Facility | Borrower | Amount (USD) | | :--- | :--- | :--- | | Term A-1 Facility | U.S. Borrower | $800 million | | Term A-2 Facility | U.S. Borrower | $700 million | | Initial Revolving Commitments | Borrowers | $300 million | - Initial Term Loan proceeds funded a **$1.486 billion** intercompany loan to AUCA Group for repaying a note owed to Aramark Services, Inc., and covering related expenses[68](index=68&type=chunk) - Initial Revolving Loan proceeds are designated for **general corporate purposes**[68](index=68&type=chunk) [ARTICLE I: DEFINITIONS](index=21&type=section&id=ARTICLE%20I%20DEFINITIONS) This article defines all capitalized terms within the Credit Agreement, encompassing financial, legal, and operational terms, including loan types, key financial metrics, events, and interest rate benchmarks - A **Change of Control** is defined as the acquisition of **40% or more** of the U.S. Borrower's Voting Stock by any person or group[153](index=153&type=chunk) - EBITDA definition allows add-backs to Consolidated Net Income, including taxes, interest, D&A, restructuring charges, and projected cost savings up to **20% of EBITDA**[200](index=200&type=chunk)[201](index=201&type=chunk) - Key leverage ratios defined for covenants include **Consolidated First Lien Net Leverage Ratio**, **Consolidated Secured Net Leverage Ratio**, and **Consolidated Total Net Leverage Ratio**[166](index=166&type=chunk)[170](index=170&type=chunk)[173](index=173&type=chunk) - The **Maximum Incremental Amount** for new facilities is the sum of a fixed basket (greater of **$375 million** or **100% of EBITDA**), voluntary prepayments, and an unlimited amount subject to a pro forma **Consolidated First Lien Net Leverage Ratio of 4.00 to 1.00**[296](index=296&type=chunk) [ARTICLE II: THE CREDITS](index=90&type=section&id=ARTICLE%20II%20THE%20CREDITS) This article details credit facility mechanics, including lender commitments, borrowing procedures, repayment schedules for Term A-2 and Term B-1 loans, optional and mandatory prepayments, fees, interest calculations, and provisions for incremental facilities and defaulting lenders Term Loan Repayment Schedule | Loan Facility | Quarterly Amortization | Commencement | Final Maturity Date | | :--- | :--- | :--- | :--- | | Term A-2 Loans | 1.25% of original principal | December 2023 | September 29, 2028 | | Term B-1 Loans | 0.25% of original principal | June 2024 | February 22, 2031 | - Mandatory prepayments are required from a percentage of **Excess Cash Flow (ECF)**, ranging from **0% to 50%** based on the **Consolidated Secured Net Leverage Ratio**[199](index=199&type=chunk)[533](index=533&type=chunk) - A prepayment premium of **1.0%** applies to any Repricing Transaction involving Term B-1 Loans if within **six months** of Amendment No. 1 Effective Date[530](index=530&type=chunk) - The agreement allows for **New Term Commitments** and **New Revolving Commitments** up to the **Maximum Incremental Amount**, subject to no existing default and pro forma compliance with financial covenants[606](index=606&type=chunk) [ARTICLE III: REPRESENTATIONS AND WARRANTIES](index=125&type=section&id=ARTICLE%20III%20REPRESENTATIONS%20AND%20WARRANTIES) This article details Loan Parties' representations and warranties, confirming legal and financial standing, including organization, authority, compliance with laws, solvency, validity of security interests, and absence of Material Adverse Effect since February 22, 2023 - The Loan Parties represent no **Material Adverse Effect** has occurred since **February 22, 2023**[627](index=627&type=chunk) - The company represents it is **solvent** on a consolidated basis post-Transactions, with assets exceeding liabilities and ability to pay debts as they mature[647](index=647&type=chunk) - The Loan Parties represent Collateral Documents create **valid and perfected first-priority liens** on the Collateral, securing obligations[652](index=652&type=chunk) - The company represents policies are implemented to ensure compliance with **Anti-Corruption Laws** and **Sanctions**, prohibiting loan proceeds use in violation[657](index=657&type=chunk) [ARTICLE IV: CONDITIONS](index=130&type=section&id=ARTICLE%20IV%20CONDITIONS) This article outlines conditions for credit agreement effectiveness and subsequent extensions, requiring executed loan documents, legal opinions, financial statements, fee payments, and continued accuracy of representations and warranties, plus absence of default - Initial effectiveness required Agent's receipt of executed Loan Documents, favorable legal opinions, financial statements, closing certificates, and all required fees[661](index=661&type=chunk)[663](index=663&type=chunk)[664](index=664&type=chunk)[666](index=666&type=chunk) - A key effectiveness condition was evidence of Loan Parties' obligations and liens under the **RemainCo Credit Agreement** being released upon Intermediate Distributions[670](index=670&type=chunk) - Each subsequent borrowing or letter of credit issuance requires all representations and warranties to be true and correct, and no continuing Default or Event of Default[673](index=673&type=chunk) [ARTICLE V: AFFIRMATIVE COVENANTS](index=133&type=section&id=ARTICLE%20V%20AFFIRMATIVE%20COVENANTS) This article details Loan Parties' ongoing obligations, including timely delivery of financial statements and compliance certificates, notice of material events, maintaining corporate existence, paying taxes, legal compliance, permitted use of loan proceeds, and granting security interests in new assets and subsidiaries - The U.S. Borrower must deliver audited annual financial statements within **90 days** of fiscal year-end (**120 days for FY2024**) and unaudited quarterly statements within **45 days** of quarter-end[677](index=677&type=chunk) - The U.S. Borrower must promptly notify the Agent of any **Event of Default** or **Default**[683](index=683&type=chunk) - Loan proceeds must be used only for specified purposes, not violating margin regulations, **anti-corruption laws**, or **sanctions**[691](index=691&type=chunk)[694](index=694&type=chunk) - The U.S. Borrower must cause new Domestic Subsidiaries (unless excluded) to become **Loan Guarantors** and grant liens on their property within **60 days** of becoming a subsidiary[697](index=697&type=chunk) [ARTICLE VI: NEGATIVE COVENANTS](index=140&type=section&id=ARTICLE%20VI%20NEGATIVE%20COVENANTS) This article imposes restrictions on Loan Parties, including limitations on indebtedness, liens, restricted payments, affiliate transactions, and asset disposals, and outlines amended financial covenants requiring a maximum Consolidated Total Net Leverage Ratio and minimum Interest Coverage Ratio - The company is generally prohibited from incurring additional debt unless its pro forma **Consolidated Total Net Leverage Ratio** is at or below **4.50 to 1.00**, subject to exceptions[710](index=710&type=chunk) - The company and subsidiary guarantors are prohibited from creating or incurring any liens on their assets, other than **Permitted Liens**[725](index=725&type=chunk) - **Restricted Payments** (dividends, share repurchases, junior debt prepayments) are limited but permitted under various baskets, including one based on an **Applicable Amount** and another allowing unlimited payments if pro forma **Consolidated Total Net Leverage Ratio** is below **3.50 to 1.00**[735](index=735&type=chunk)[736](index=736&type=chunk)[737](index=737&type=chunk) Amended Financial Covenants (Section 6.10) | Covenant | Requirement | Test Period | | :--- | :--- | :--- | | Consolidated Total Net Leverage Ratio | ≤ 5.00 to 1.00 | Fiscal quarter ending July 3, 2026 | | Consolidated Total Net Leverage Ratio | ≤ 4.75 to 1.00 | Fiscal quarter ending October 2, 2026 | | Consolidated Total Net Leverage Ratio | ≤ 4.50 to 1.00 | Fiscal quarters ending on or after October 2, 2026 | | Interest Coverage Ratio | ≥ 2.00 to 1.00 | Each Test Period | [ARTICLE VII: EVENTS OF DEFAULT](index=160&type=section&id=ARTICLE%20VII%20EVENTS%20OF%20DEFAULT) This article defines events constituting a default, including payment failures, covenant violations, misrepresentation, cross-default on material indebtedness, bankruptcy, and change of control, granting lenders the right to accelerate loans upon occurrence - **Events of Default** include non-payment of principal or interest, breach of covenants, misrepresentation, cross-default on other **Material Indebtedness**, bankruptcy, and a **Change of Control**[760](index=760&type=chunk)[761](index=761&type=chunk)[763](index=763&type=chunk) - A breach of financial covenants in **Section 6.10** will not constitute an **Event of Default** for **Term B-1 Loans** until revolving and Term A-2 facility lenders exercise remedies[760](index=760&type=chunk) - Upon an **Event of Default**, the Agent, at **Required Lenders'** request, may terminate commitments and declare all outstanding loans and obligations immediately due and payable[765](index=765&type=chunk) [ARTICLE VIII: THE AGENT](index=163&type=section&id=ARTICLE%20VIII%20THE%20AGENT) This article outlines the role, powers, and protections of the Administrative Agent, JPMorgan Chase Bank, N.A., establishing its administrative authority, limiting its liability, and detailing its right to rely on information, resign, and appoint a successor - Lenders and Issuing Banks irrevocably appoint **JPMorgan Chase Bank, N.A.** as the administrative and collateral agent[768](index=768&type=chunk) - The Agent's duties are primarily mechanical and administrative, not fiduciary, and it is protected from liability except for **gross negligence**, **bad faith**, or **willful misconduct**[770](index=770&type=chunk)[771](index=771&type=chunk)[779](index=779&type=chunk) - The Agent may resign with **30 days' notice**, allowing **Required Lenders** to appoint a successor, subject to U.S. Borrower's approval if no Event of Default exists[783](index=783&type=chunk) [ARTICLE IX: MISCELLANEOUS](index=171&type=section&id=ARTICLE%20IX%20MISCELLANEOUS) This article contains standard legal and operational clauses, including notice procedures, waiver and amendment rules, borrower indemnification obligations, loan assignment processes, New York governing law and jurisdiction, jury trial waiver, and confidentiality obligations - Amendments generally require **Required Lenders'** consent, but changes to fundamental economic terms require consent of each directly affected Lender[812](index=812&type=chunk) - Borrowers must pay all reasonable out-of-pocket expenses of the Agent and indemnify Credit Parties against financing-related losses, except those from indemnitee's **gross negligence** or **willful misconduct**[821](index=821&type=chunk)[823](index=823&type=chunk) - Lenders can assign loans to eligible institutions with U.S. Borrower's (unless default exists) and Agent's consent; U.S. Borrower and subsidiaries may purchase Term Loans via auctions or open market under specific conditions[830](index=830&type=chunk)[842](index=842&type=chunk) - The agreement is governed by **New York State law**, and all parties waive their right to a **jury trial** in any Loan Document-related legal proceeding[855](index=855&type=chunk)[862](index=862&type=chunk) [ARTICLE X: LOAN GUARANTY](index=193&type=section&id=ARTICLE%20X%20LOAN%20GUARANTY) This article establishes the joint and several, absolute, and unconditional guarantee by each Loan Guarantor of all Secured Obligations, including the U.S. Borrower's guarantee of Foreign Borrowers' obligations, detailing the nature of the guarantee and conditions for guarantor release - Each **Loan Guarantor** provides a **joint and several**, **absolute**, and **unconditional guarantee** for all **Secured Obligations**[886](index=886&type=chunk) - The U.S. Borrower also acts as a guarantor for **Foreign Borrowers'** obligations[887](index=887&type=chunk) - The guarantee is one of **payment**, not collection, and guarantors waive most defenses, including requiring the Agent to first pursue the primary borrower or collateral[889](index=889&type=chunk)[893](index=893&type=chunk) - A **Subsidiary Guarantor** is automatically released upon ceasing to be a Domestic Subsidiary, being designated an **Unrestricted Subsidiary**, or becoming an **Immaterial Subsidiary** (subject to aggregate limits)[902](index=902&type=chunk)

Company Overview - Vestis Corporation (NYSE: VSTS) has reported stable and predictable revenue growth and has been operating in the same industry for over 75 years, indicating a strong foundation and potential for future growth [1] Industry Insights - The accumulated know-how from over 75 years of operation is expected to accelerate revenue growth in the future, showcasing the importance of experience in the industry [1] Investment Strategy - The focus is on small and medium-cap companies in Europe, the United States, and South America, with an emphasis on mature industries such as mining, oil and gas, and real estate [1] - The investment strategy includes M&A deals, deep value investments, and dividend investing, targeting an internal rate of return of approximately 5%-7% [1]

Core Viewpoint - Vestis (VSTS) has experienced significant selling pressure, declining 17.2% over the past four weeks, but is now positioned for a potential trend reversal as it is in oversold territory, with analysts expecting better earnings than previously predicted [1]. Group 1: Stock Performance and Technical Indicators - VSTS shares have been under heavy selling pressure, indicated by an RSI reading of 23.35, suggesting that the stock may soon reverse its trend [5]. - The Relative Strength Index (RSI) is a momentum oscillator that helps identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - Stocks oscillate between overbought and oversold states, and the RSI can help investors identify potential entry points for a rebound [3]. Group 2: Earnings Estimates and Analyst Consensus - There is strong agreement among sell-side analysts regarding an increase in earnings estimates for VSTS, with the consensus EPS estimate rising by 6.1% over the last 30 days [6]. - An upward trend in earnings estimate revisions is generally associated with price appreciation in the near term [6]. - VSTS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate trends and EPS surprises, indicating a strong potential for a turnaround [7].

Financial Performance - Revenue for the three months ended December 27, 2024, was $683,780, a decrease of 4.7% compared to $717,923 for the same period in 2023[17]. - Operating income decreased to $30,399, down 36.1% from $47,598 in the prior year[17]. - Net income for the quarter was $832, a significant decline of 93.2% from $12,266 in the same quarter last year[17]. - Earnings per share (EPS) for the quarter was $0.01, compared to $0.09 in the previous year, reflecting a decrease of 88.9%[17]. - Total revenue for the three months ended December 27, 2024, was $683.8 million, a decrease of 4.7% from $717.9 million in the same period in 2023[62]. - Operating income for the same period was $30.40 million, down 36.1% from $47.60 million in the prior year[89]. - Net income for the three months ended December 27, 2024, was $0.8 million, down $11.4 million or 93.2% from $12.3 million in the same period of 2023[126]. Assets and Liabilities - Total current assets increased to $809,589, up 2.6% from $787,389 as of September 27, 2024[15]. - Total liabilities decreased to $1,997,563, down 1.6% from $2,029,336 in the previous quarter[15]. - The company had long-term borrowings, net of current portion, of $1.128 billion as of December 27, 2024, down from $1.148 billion as of September 27, 2024[54]. - The company had $105.0 million of employee sales commissions recorded as assets as of December 27, 2024[65]. - As of December 27, 2024, total principal debt was $1,142.5 million, down from $1,162.5 million as of September 27, 2024[137]. Cash Flow and Investments - Cash and cash equivalents at the end of the period were $18,564, a decrease of 40.0% from $31,010 at the beginning of the period[21]. - Net cash provided by operating activities was $3.8 million for the three months ended December 27, 2024, a decrease of $47.7 million from $51.5 million in the prior year[139]. - Cash flows from investing activities for the three months ended December 27, 2024, were $17.9 million, an increase of $34.8 million compared to the prior year, primarily due to $36.8 million from the sale of equity investments[141]. - Operating cash flows experienced an unfavorable change of approximately $30.0 million due to increased cash use for inventory compared to the previous year[140]. Dividends and Shareholder Returns - The company declared dividends of $0.035 per common share, totaling $4,610 for the quarter[23]. - The company declared a quarterly cash dividend of $4.6 million, or $0.035 per common share, payable on January 6, 2025[104]. Segment Performance - Revenue from the United States for the three months ended December 27, 2024, was $621.7 million, down from $653.2 million in the prior year, representing a decline of 4.8%[62]. - Total segment operating income for the United States was $58.03 million, down 21.7% from $74.08 million in the prior year[89]. - Segment revenue in Canada was $62.1 million, down $2.6 million or 4.0%, impacted by unfavorable foreign currency rates[132]. - Segment operating income in Canada decreased by 58.0% to $1.9 million, with a margin decline from 7.0% to 3.1%[133]. Operational Costs and Expenses - The company recorded severance charges of $4.3 million for the three months ended December 27, 2024, compared to $0.4 million for the same period in 2023[50]. - Operating lease costs for the three months ended December 27, 2024, were $10.989 million, compared to $10.371 million for the same period in 2023[69]. - Share-based compensation expense for the three months ended December 27, 2024, totaled $5,180,000, up from $4,716,000 in the same period last year, indicating an increase of 9.8%[72]. Risk Factors - The company is exposed to foreign currency risk from revenues and profits denominated in foreign currencies, with no financial instruments currently used to manage this risk[153]. - Interest rate risk exists due to fluctuations in interest rates on debt obligations, which could increase servicing costs and reduce profitability[154]. - The company is also exposed to commodity price risk, particularly related to gasoline, diesel, and natural gas, and seeks to manage this through operations and commodity derivative agreements[156].

Core Viewpoint - Vestis (VSTS) has experienced significant selling pressure, resulting in a 17% decline over the past four weeks, but analysts anticipate improved earnings in the near future [1] Group 1: Technical Analysis - The Relative Strength Index (RSI) is a key technical indicator used to determine if a stock is oversold, with a reading below 30 typically indicating oversold conditions [2] - VSTS has an RSI reading of 22.78, suggesting that the heavy selling may be exhausting, indicating a potential bounce back towards equilibrium [5] Group 2: Fundamental Analysis - There is a consensus among sell-side analysts that earnings estimates for VSTS have increased by 3.4% over the last 30 days, which often correlates with price appreciation [6] - VSTS holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [7]

Group 1 - The article discusses Vestis Corp. (NYSE: VSTS) and its recent positive improvements, indicating a potential turnaround in the business [1] - The author has previously rated VSTS as a hold, expressing the need for more evidence of the company's recovery [1] - The author emphasizes a diverse investment approach, incorporating fundamental, technical, and momentum investing strategies [1] Group 2 - The article serves as a platform for tracking investment ideas and connecting with like-minded investors [1]

Group 1 - Vestis (VSTS) reported quarterly earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, but down from $0.22 per share a year ago, representing an earnings surprise of 16.67% [1] - The company posted revenues of $683.78 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.43%, and down from $717.92 million year-over-year [2] - Vestis has surpassed consensus EPS estimates two times over the last four quarters and has topped consensus revenue estimates just once during the same period [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - Vestis shares have increased approximately 3.9% since the beginning of the year, outperforming the S&P 500's gain of 3.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $696.59 million, and for the current fiscal year, it is $0.66 on revenues of $2.84 billion [7] Group 3 - The Zacks Industry Rank for Uniform and Related is currently in the top 7% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Vestis is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6]

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].

Vestis Corporation - Vestis Corporation, spun off from Aramark in late 2023, is equal in size to UniFirst but less than a third of Cintas, making it a potential merger or buyout target [1] - The uniform industry remains fragmented despite years of consolidation, with Cintas as a potential buyer [1] - Several buyout firms have expressed interest in Vestis, but no firm offers are on the table [1] - Insiders have been actively buying Vestis shares in 2024, with nine insiders making 14 purchases, bringing their total holding to over 13% [9] - Institutional ownership of Vestis reached nearly 98% by late December 2024 [9] - Vestis pays a healthy dividend, less than 25% of its earnings, and has a solid balance sheet [20] OPKO Health - OPKO Health has numerous catalysts that could drive its share price up in 2025, including potential approvals for its key therapy, acquisitions, and normalization of its diagnostic business [11] - Analysts are optimistic about OPKO Health, with a consensus "Buy" rating and a projected 90% upside [11] - Insider activity in OPKO Health includes 24 purchases by seven insiders in 2024, making it the second most bought stock for the year [4] - However, the company has issued shares to raise capital, increasing the share count by more than 32%, and the $100 million share repurchase authorization may not be sufficient to offset the dilution [4] Greif, Inc - Greif, Inc is an industrial packaging company with a volatile share price but a solid bottom near $60, reinforced by insider buying at the low end of the range [12] - Insiders buying Greif shares include the CEO, CFO, and several directors [12] - Analysts view Greif as a deep value stock, with a consensus "Moderate Buy" rating and a potential upside of 10% to 20% [13] - Greif pays a dividend yield of 3.57% and has a price target of $78.67 [12] Institutional Activity - Institutions have been net buyers of shares in CQ1, Q2, and Q3 2024, with the largest shareholder being activist hedge fund Corvex Management, which owns more than 13% of the stock [2] - Institutional ownership of Greif is around 50%, with activity in 2024 aligning with buying at the low end and selling at the high end of the range [16] - Institutional activity in Q4 2024 is bullish, suggesting a potential rebound in the stock price [16] Industry Insights - The uniform industry remains fragmented, with Cintas as the industry leader and a potential buyer for Vestis [1] - Cintas is an example of a company capable of sustaining dividend payments, share buybacks, and self-funding growth [10] - Insider activity is significant in companies like Vestis, OPKO Health, and Greif, signaling higher-than-average conviction in the share price outlook [19]