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Vestis posts higher revenue per pound and lifts free cash flow outlook
The uniform and workplace supplies company said revenue per pound rose to $1.42, while it raised full-year free cash flow guidance to $160 million to $170 million.
Vestis (NYSE: VSTS) reported fiscal third-quarter results on August 11, highlighting what it called a turning point in its uniform and workplace supply business after years focused on building scale rather than profitability.
Adjusted EBITDA rose to about $81 million, up roughly $15 million or 23% year over year, and the company reported its first year-over-year increase in revenue per pound since separating from Aramark. Revenue per pound reached $1.42 in the quarter, up $0.04 year over year, and management attributed the change to disciplined pricing, improved customer segmentation, and a shift away from lower-margin linen volume.
Vestis also reduced lower-quality volume, letting go of about 22 million pounds processed at an average revenue per pound of $0.55. It reported a 6% year-over-year decline in linen volume on a pounds-processed basis, while cost of services fell about $15 million and SG&A fell roughly $7 million, or about 6%, year over year.
The company posted net income of $11 million, up from a $0.7 million loss a year earlier, and raised its full-year free cash flow guidance to a range of $160 million to $170 million, from $120 million to $150 million previously. Total quarterly revenue was about $662 million, down 1.8% year over year, and net debt stood at $1.2 billion at quarter-end, with $1.1 billion of principal bank debt outstanding.