VSTS · Vestis Corporation

Vestis reported a decisive turnaround in Q2 FY2026, achieving GAAP profitability for the first time since its separation from Aramark, with $2.6 million net income — a $30.4 million improvement over the prior-year quarter’s $27.8 million loss. This reversal was underpinned by disciplined execution of its strategic business transformation, which delivered $17.7 million in year-over-year reductions to adjusted operating expenses, driving Adjusted EBITDA to $74.5 million (11.3% margin), up 19% versus $62.6 million (9.4% margin) in Q2 FY2025 after excluding the $15 million covenant-related bad debt adjustment. Revenue declined modestly (-0.9%) to $659.4 million, reflecting a 1.2% drop in pounds processed, yet revenue per pound held flat year-over-year — a milestone management highlighted as the first such stability since Vestis became a standalone public company. Operational metrics confirmed traction: plant productivity rose 11%, on-time deliveries improved by 270 bps, and customer complaints fell 4%. Management attributed these gains to focused initiatives across Operational Excellence (e.g., supply chain enhancements yielding $12 million in rental merchandise in service cash flow benefit), Commercial Excellence (pricing discipline and product mix shifts), and Asset & Network Optimization (divesting two non-operating properties). The company also strengthened its balance sheet, repaying $34.0 million of debt and maintaining $344.5 million in total liquidity. Critically, Vestis raised its full-year 2026 outlook — increasing Adjusted EBITDA guidance by $10 million at the midpoint to $295–$325 million and Free Cash Flow guidance by $80 million at the midpoint to $120–$150 million — signaling confidence that sequential quarterly Adjusted EBITDA growth (~5% in Q3, 5–10% in Q4) will continue as transformation benefits compound. These results validate the credibility of the Plan’s $75 million annual savings target and position Vestis for sustained margin expansion and deleveraging.