Vestis (VSTS) Q4 2024 earnings summary

Executive summary

• Fiscal 2024 revenue was $2.81 billion, down 0.7% year-over-year, with Q4 revenue at $684 million, down 4.4%; adjusted EBITDA for the year was $353 million (12.6% margin), exceeding guidance but down 12.6% from prior year.

• Net income dropped 90.2% to $21 million for the year; Q4 saw a net loss of $2.3 million.

• Free cash flow for FY24 was $165 million, up 13.2%, with conversion at 47%.

• Commercial momentum is building, with strong national account wins, SME growth, and significant improvements in route sales and customer retention.

• Strategic focus on high-margin growth, operational efficiency, and disciplined capital allocation, including retaining advisors in response to acquisition proposals.

Financial highlights

• Q4 revenue declined 4.4% year-over-year, mainly due to lost business and tough pricing comparisons, despite 7% growth from new and existing customers.

• Adjusted EBITDA for Q4 was $81 million (11.8% margin), down $32 million year-over-year; full-year adjusted EBITDA was $353 million.

• Net debt reduced by over $319 million during the year, ending at $1.28 billion and a net leverage ratio of 3.6x, down from 3.95x in FY23.

• U.S. revenue was $2.56 billion (down 0.8%), Canada $250 million (flat); Workplace Supplies grew 0.9%, Uniforms declined 2.9%.

• Free cash flow excludes $233 million from A/R securitization and $35 million from AUSJ JV sale post-year-end.

Outlook and guidance

• Fiscal 2025 revenue expected at $2.8–$2.83 billion and adjusted EBITDA at $345–$360 million, with margin of 12.3%–12.7%.

• Core revenue growth (excluding one-time items) projected at 1%–2%, with adjusted EBITDA margin expansion of 40 bps.

• Free cash flow conversion targeted at ~50% of adjusted EBITDA.

• Revenue and EBITDA growth expected to accelerate in the back half of 2025 as pricing and volume momentum build.

• Guidance based on a normalized 52-week year; reported results will include a 53rd week in Q4.