Vestis Corporation (VSTS) Q2 2024 Earnings Report

Vestis reported Q2 2024 revenue of $705.37 million, up 0.9% year-over-year (2.8% on an underlying basis excluding last year’s energy fee headwind). The quarter featured operating leverage from new business and pricing, but was tempered by higher rollover losses from FY23 and deliberate pricing moderation aimed at improving customer retention. Management highlighted improving frontline sales productivity but indicated the ramp to planned revenue growth remains below internal targets, contributing to a revised full-year outlook. Adjusted EBITDA was $87.0 million, a ~6% year-over-year decline, with an adjusted EBITDA margin of roughly 12% (management cited 12.4% in the call). GAAP EBITDA margin was about 11.1%. Sector-wide dynamics center on recurring revenue retention, cross-selling opportunities, and leveraging fixed assets (route density) to drive value over time.

Financial health remains solid on a cash-flow basis: operating cash flow was $76 million in the quarter, with free cash flow of $63 million. Inventory optimization aided cash generation (year-to-date inventory reduction of about $34 million). Net debt stood at $1.59 billion with a net-debt-to-EBITDA ratio of 3.82x. Vestis refinanced its debt into a 7-year facility (maturing 2031) and signaled a path to deleveraging toward a 1.5–2.5x target by end-FY2026; management projects ending FY24 closer to ~4x.

Strategically, Vestis is prioritizing improvements in sales productivity, national accounts, and service capability to lift retention and lifetime value. Management reiterated a cautious stance on near-term pricing, choosing to moderate price increases to reduce churn while service processes are enhanced. The long-term thesis remains intact: accelerate growth via cross-sell, optimize operations (logistics, route efficiency), and strengthen balance sheet. Investors should monitor: retention trends, progression of new-business ramp, price-realization timing, and the evolution of leverage as the back-half end markets and cost actions materialize.