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 from Q4 2025.

• The quarter marked the launch of a multi-year transformation plan focused on operational and commercial excellence and asset optimization, targeting at least $75 million in annual cost savings by year-end 2026.

• Operational metrics improved: plant productivity up 7%, on-time delivery up 3%, and customer complaints down 12% year-over-year.

• Adjusted EPS was $0.10 per diluted share, compared to $0.14 in the prior year; net loss per share was $(0.05).

• 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 sequentially from Q4 2025.

• Cost per pound improved by $0.02 year-over-year, offsetting $10 million of the $20 million revenue decline.

• SG&A expenses fell 0.8% to $120.3 million, with $14 million (12%) year-over-year reduction when adjusted for transformation costs.

• Operating cash flow was $38 million, free cash flow $28.3 million, and adjusted free cash flow $42.9 million, all up significantly year-over-year due to working capital improvements.

Outlook and guidance

• Fiscal 2026 revenue expected to be flat to down 2% versus 2025; Adjusted EBITDA guidance reaffirmed at $285–$315 million.

• Sequential quarterly Adjusted EBITDA improvements of ~5% anticipated starting Q2.

• Free cash flow guidance for 2026 is $50–$60 million, with working capital expected to be flat for the year.

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

• Transformation plan completion targeted for fiscal 2027.