Vestis (VSTS) Q4 2025 earnings summary

Executive summary

• Launched a multi-year business transformation plan focused on commercial and operational excellence, asset/network optimization, and sustainable, profitable growth by 2027, with third-party advisors engaged.

• Addressed past issues including overemphasis on revenue growth at the expense of quality, customer attrition, and an unbalanced product mix favoring low-margin supplies.

• Transformation plan includes new tools for customer segmentation, pricing, satisfaction, organizational streamlining, and targeted investments in facilities.

• Leadership expects improved profitability and operational rigor beginning in 2026.

• FY2025 ended with revenue of $2.73B, net loss of $40M, and adjusted EBITDA of $257M.

Financial highlights

• FY2025 revenue declined 2.5% to $2.73B; Q4 revenue was $712M, with normalized Q4 revenue (excluding extra week) at $660M, down 3.5% year-over-year.

• Q4 adjusted EBITDA was $65M (9.1% margin); full-year adjusted EBITDA was $257.4M, down 27.1% year-over-year.

• Q4 gross margin was 25.1%, down 366 bps year-over-year; adjusted gross profit for FY2025 was $724.8M (26.5% margin).

• Q4 net loss was $13M; adjusted net income was $4M.

• Q4 operating cash flow was $31M; free cash flow for FY2025 was $5.8M; liquidity at year-end was $298M.

Outlook and guidance

• Fiscal 2026 revenue expected to be flat to down 2% versus normalized 2025; adjusted EBITDA guidance is $285M–$315M.

• Free cash flow for 2026 projected at $50M–$60M; CapEx to remain consistent with 2025.

• Transformation plan to deliver at least $75M in run-rate cost savings by end of 2026; plan costs estimated at $25M–$30M, to be completed by end of 2027.

• Q1 2026 adjusted EBITDA expected to be 7–10% above Q4 2025 normalized level, with sequential improvement each quarter.