Vestis (VSTS) Q3 2026 earnings summary

Executive summary

• Revenue for Q3 2026 was $661.7 million, down 1.8% year-over-year, but with net income rising to $11.0 million from a net loss of $0.7 million, driven by cost reductions and operational improvements.

• Adjusted EBITDA increased 23% year-over-year to $80.9 million, with margin expanding to 12.2%.

• Revenue per pound grew 3% year-over-year to $1.42, the first increase since becoming a public company, driven by disciplined pricing and improved product mix.

• Transformation plan execution is on track, delivering $30 million in cost savings year-to-date and targeting $75 million annualized by end of fiscal 2026.

• Operational excellence initiatives led to improved plant productivity (+9%), better on-time delivery (+80 bps), and fewer customer complaints (-74 bps) compared to the prior year.

Financial highlights

• Net income for Q3 2026 was $11.0 million, compared to a net loss of $0.7 million in the prior year; adjusted net income was $24.2 million.

• Adjusted EBITDA was $80.9 million (12.2% margin), up from $64.0 million (9.5% margin) a year ago.

• Free cash flow for Q3 was $47.0 million; adjusted free cash flow was $55.5 million, up $47.5 million year-over-year.

• Cost of services decreased by $15 million year-over-year; SG&A declined by $7 million (6%).

• Available liquidity at quarter-end was $351.8 million, including $57.7 million in cash.

Outlook and guidance

• FY26 free cash flow guidance raised to $160–$170 million (midpoint $165 million), up $30 million from prior midpoint.

• FY26 adjusted EBITDA guidance increased to $310–$315 million (midpoint $312.5 million), with Q4 implied at $84–$89 million.

• FY26 revenue expected to be flat to down 2% versus normalized FY25 revenue.

• Effective tax rate expected at 25% for the year, 30% for Q4.

• Management expects volume growth to resume in 2027, with detailed plans to be shared after Q4.