Financial Performance - Revenue for Fiscal Q3 2025 was $673.8 million, a decrease of 3.5% compared to $698.2 million in Fiscal Q3 2024[15] - Gross profit decreased by 10.1% year-over-year, from $202.5 million in Fiscal Q3 2024 to $182.1 million in Fiscal Q3 2025[15] - Gross margin decreased by 197 basis points year-over-year, from 29.0% in Fiscal Q3 2024 to 27.0% in Fiscal Q3 2025[15] - Adjusted EBITDA decreased by 26.3% year-over-year, from $86.9 million in Fiscal Q3 2024 to $64.0 million in Fiscal Q3 2025[15] - Adjusted EBITDA margin decreased by 295 basis points year-over-year, from 12.4% in Fiscal Q3 2024 to 9.5% in Fiscal Q3 2025[15] - Free cash flow decreased by 71.1% year-over-year, from $27.7 million in Fiscal Q3 2024 to $8.0 million in Fiscal Q3 2025[15] Revenue Disaggregation - Consolidated uniforms revenue decreased by 6.7%, from $279.004 million in Fiscal Q3 2024 to $260.427 million in Fiscal Q3 2025[48] - Consolidated workplace supplies revenue decreased by 1.4%, from $419.244 million in Fiscal Q3 2024 to $413.372 million in Fiscal Q3 2025[48] - Rental revenue decreased by 2.7%, and direct sales revenue decreased by 14.2%[13] Liquidity and Debt - Total available liquidity was $290 million, including $24 million cash on hand[14] - Net debt was $1.3 billion[38] - Net leverage ratio was 4.50x[14, 38]

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]

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]