vsts-20241227

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 27, 2024

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-41783

Vestis Corporation

(Exact name of registrant as specified in its charter)


Delaware			92-2573927
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1035 Alpharetta Street, Suite 2100, Roswell, Georgia			30076
(Address of Principal Executive Offices)			(Zip Code)

`(470) 226-3655

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VSTS	New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of January 31, 2025, the registrant had 131,745,115 shares of common stock outstanding.


		Page
PART I - Financial Information
Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	7
	Consolidated Statements of Cash Flows	8
	Consolidated Statements of Changes in Equity	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II - Other Information		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36


	December 27, 2024		September 27, 2024
ASSETS
Current Assets:
Cash and cash equivalents	$	18,564	$	31,010
Receivables (net of allowances: $19,888 and $19,804)	187,242		177,271
Inventories, net	170,028		164,913
Rental merchandise in service, net	395,200		396,094
Other current assets	38,555		18,101
Total current assets	809,589		787,389
Property and Equipment, at cost:
Land, buildings and improvements	580,173		590,972
Equipment	1,151,814		1,168,142
	1,731,987		1,759,114
Less - Accumulated depreciation	(1,073,922)		(1,088,256)
Total property and equipment, net	658,064		670,858
Goodwill	959,620		963,844
Other Intangible Assets, net	208,690		212,773
Operating Lease Right-of-use Assets	71,078		73,530
Other Assets	190,112		223,993
Total Assets	$	2,897,153	$	2,932,387
LIABILITIES AND EQUITY
Current Liabilities:
Current maturities of long-term borrowings	$	—	$	—
Current maturities of financing lease obligations	32,383		31,347
Current operating lease liabilities	19,535		19,886
Accounts payable	164,924		163,054
Accrued payroll and related expenses	86,636		96,768
Accrued expenses and other current liabilities	145,218		145,047
Total current liabilities	448,696		456,102
Long-Term Borrowings	1,128,444		1,147,733
Noncurrent Financing Lease Obligations	117,827		115,325
Noncurrent Operating Lease Liabilities	63,770		66,111
Deferred Income Taxes	186,689		191,465
Other Noncurrent Liabilities	52,137		52,600
Total Liabilities	1,997,563		2,029,336
Commitments and Contingencies (see Note 9)
Equity:
Common stock, par value $0.01 per share, 350,000,000 shares authorized, 131,700,887 and 131,481,967 issued and outstanding as of December 27, 2024 and September 27, 2024,respectively	1,317		1,315
Additional paid-in capital	931,554		928,082
(Accumulated deficit) retained earnings	(1,213)		2,565
Accumulated other comprehensive loss	(32,068)		(28,911)
Total Equity	899,590		903,051
Total Liabilities and Equity	$	2,897,153	$	2,932,387


	Three months ended
	December 27, 2024		December 29, 2023
Revenue	$	683,780	$	717,923
Operating Expenses:
Cost of services provided (exclusive of depreciation and amortization)	495,260		502,381
Depreciation and amortization	36,936		35,362
Selling, general and administrative expenses	121,185		132,582
Total Operating Expenses	653,381		670,325
Operating Income	30,399		47,598
Interest Expense, net	23,097		31,531
Other Expense (Income), net	5,762		(756)
Income Before Income Taxes	1,540		16,823
Provision for Income Taxes	708		4,557
Net Income	$	832	$	12,266

Earnings per share:
Basic	$	0.01	$	0.09
Diluted	$	0.01	$	0.09
Weighted Average Shares Outstanding:
Basic	131,590		131,390
Diluted	132,115		131,735


	Common Stock
	Shares Outstanding	Par Value		Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Net Parent Investment		Accumulated Other Comprehensive Loss		Total Parent’s Equity
Balance, September 27, 2024	131,482	$	1,315	$	928,082	$	2,565	$	—	$	(28,911)	$	903,051
Net Income	—	—		—		832		—		—		832
Dividends Declared ($0.035 per common share)	—	—		—		(4,610)		—		—		(4,610)
Other Comprehensive Loss (1)	—	—		—		—		—		(3,157)		(3,157)
Share-based compensation expense	—	—		5,180		—		—		—		5,180
Issuance of common stock upon exercise of stock options or awards of restricted stock units	219	2		—		—		—		—		2
Tax payments related to shares withheld for share based compensation plans	—	—		(1,708)		—		—		—		(1,708)
Balance, December 27, 2024	131,701	$	1,317	$	931,554	$	(1,213)	$	—	$	(32,068)	$	899,590


	December 27, 2024		September 27, 2024
Raw Materials	$	36,099	$	35,210
Work in Process	2,192		959
Finished Goods	131,737		128,744
Inventories, net	$	170,028	$	164,913


	September 27, 2024		Translation		December 27, 2024
United States	$	896,237	$	—	$	896,237
Canada	67,607		(4,224)		63,383
Total	$	963,844	$	(4,224)	$	959,620


	December 27, 2024						September 27, 2024
	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Customer relationship assets	$	387,351	$	(194,215)	$	193,136	$	383,887	$	(187,699)	$	196,188
Trade names	15,554		—		15,554		16,585		—		16,585
	$	402,905	$	(194,215)	$	208,690	$	400,472	$	(187,699)	$	212,773


	December 27, 2024		September 27, 2024
Senior secured term loan facility, due September 2028	$	477,500	$	497,500
Senior secured term loan facility, due February 2031	665,000		665,000
Total principal debt issued	1,142,500		1,162,500
Unamortized debt issuance costs	(12,502)		(13,164)
Unamortized discounts	(1,554)		(1,603)
Less - current portion	—		—
Long-term borrowings, net of current portion	$	1,128,444	$	1,147,733


		Three months ended
	Income Statement Location	December 27, 2024		December 29, 2023
Gasoline, diesel and natural fuel agreements	Cost of services provided (exclusive of depreciation and amortization)	$	—	$	2,120


	December 27, 2024		September 27, 2024













Weighted average remaining lease term (in years)
Operating leases	6.0		6.1
Finance leases	5.7		5.7
Weighted average discount rate
Operating leases	6.3	%	6.1	%
Finance leases	4.6	%	4.6	%


	Three months ended
	December 27, 2024		December 29, 2023
United States:
Uniforms	$	245,778	$	273,669
Workplace Supplies	375,938		379,572
Total United States	621,716		653,241

Canada:
Uniforms	$	23,197	$	26,031
Workplace Supplies	38,867		38,651
Total Canada	62,064		64,682

Total Revenue	$	683,780	$	717,923


	Operating leases		Finance leases		Total
2025 (remaining nine months)	$	17,503	$	28,902	$	46,405
2026	20,122		34,827		54,949
2027	16,622		30,180		46,802
2028	12,892		25,829		38,721
2029	8,471		21,048		29,519
Thereafter	27,851		31,014		58,865
Total future minimum lease payments	$	103,461	$	171,800	$	275,261
Less: Interest	(20,156)		(21,590)		(41,746)
Present value of lease liabilities	$	83,305	$	150,210	$	233,515


	Three months ended
	December 27, 2024		December 29, 2023
TBOs	$	1,720	$	787
RSUs	2,304		1,620
PSUs	1,156		952
DSUs	—		1,357

	$	5,180	$	4,716


	Shares Granted (in thousands)	Weighted-Average Grant-Date Fair Value (dollars per share)
TBOs	1,012	$	5.61
RSUs	415	$	16.08
PSUs	301	$	17.58
Total	1,728


Expected volatility	31.25	%
Expected dividend yield	0.87	%
Expected life (in years)	6.0
Risk-free interest rate	4.08	%


	Three months ended
Reconciliation to Income Before Income Taxes	December 27, 2024		December 29, 2023
Total Operating Income	$	30,399	$	47,598
Interest Expense, Net	(23,097)		(31,531)
Other (Expense) Income, net	(5,762)		756
Income Before Income Taxes	$	1,540	$	16,823

SEC Form 10-Q filed by Vestis Corporation