Vestis (VSTS) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was $663.4 million, down 3% year-over-year, with a net loss of $6.4 million and adjusted EBITDA of $70.4 million (10.6% margin), reflecting sequential improvement and the launch of a strategic transformation plan targeting $75 million in annual cost savings by year-end 2026.

• Operational improvements included a 7% increase in plant productivity, a 3% rise in on-time deliveries, and a 12% reduction in customer complaints year-over-year.

• Commercial initiatives advanced decision support tools, strategic pricing, and local customer engagement, with new Market Development Representatives introduced.

• Asset optimization included marketing non-core properties for sale, with proceeds intended for debt repayment.

• No dividends were paid, and restrictions on dividends and share repurchases remain until leverage targets are met.

Financial highlights

• Revenue declined by $20.4 million year-over-year, with rental revenue down $17.9 million and direct sales down $2.7 million; adjusted EBITDA margin was 10.6%, down from 11.9% in Q1 2025 but up 150 bps sequentially.

• Net loss was $6.4 million compared to net income of $0.8 million in Q1 2025; adjusted EPS was $0.10 per diluted share.

• Cost per pound improved by $0.02 year-over-year, equating to $10 million in adjusted EBITDA savings.

• Free cash flow was $28.3 million, with $12.7 million benefit from working capital improvements; adjusted free cash flow excluding transformation costs was $42.9 million.

• Net debt at quarter-end was $1.29 billion, with $316.7 million in available liquidity and no maturities until 2028.

Outlook and guidance

• Fiscal 2026 revenue is expected to be flat to down 2% versus 2025, with adjusted EBITDA guidance reaffirmed at $285–$315 million and free cash flow guidance at $50–$60 million.

• Sequential quarterly adjusted EBITDA improvements of about 5% are anticipated starting Q2.

• Effective tax rate for 2026 projected at 25–30%.