Vestis (VSTS) Q2 2025 earnings summary

Executive summary

• Q2 2025 revenue was $665 million, down 5.7% year-over-year, with a net loss of $27.8 million and operating loss of $8.6 million; sequential monthly revenue improved and customer retention remained strong at 92.4–92.9%.

• Adjusted EBITDA was $47.6–$48 million, including a $15 million one-time bad debt expense; excluding this, Adjusted EBITDA was $62.6–$63 million (9.4% margin).

• Net loss for the quarter was $27.8 million; adjusted net loss was $6 million.

• Leadership transition announced: Jim Barber to become CEO effective June 2, 2025, with executive departures and interim appointments.

• Customer retention remained stable at 92.4–92.9% on a rolling 12-month basis.

Financial highlights

• Gross margin was 26.3%, down 130–220 bps year-over-year, with gross profit at $175 million.

• SG&A expenses rose $25.3–$27 million year-over-year, including $15 million bad debt and $8–10 million executive transition/severance costs.

• Free cash flow for Q2 was $(6.9)–$(7) million, compared to $63 million in Q2 2024, mainly due to lower earnings and inventory investments.

• Capital expenditures were $14 million in Q2; full-year capex expected at $60 million.

• Interest expense decreased $13 million year-over-year due to lower average outstanding debt.

Outlook and guidance

• Q3 2025 revenue expected between $674–$682 million; Adjusted EBITDA at least $63 million, with guidance now provided quarterly.

• No further dividend payments; focus on deleveraging, free cash flow, and operational efficiency.

• Guidance shifted to quarterly only due to recent performance and macro uncertainty.