Vestis (US:VSTS)2025-05-07 14:02Financial 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]