10-Q · May 12, 2026
Vestis Corporation reported a slight revenue decline of 0.9% year-over-year in Q2 2026, totaling $659.4 million, while achieving a positive EPS of $0.02 compared to the previous year's loss. Significant cost savings in…
Earnings analysis · 10-Q
VSTS earnings analysis
Filed August 11, 2026 · Our reading of the company's report
The latest report
Vestis delivered a mixed third quarter: revenue fell 1.8% year over year to $661.7 million and volumes declined 4.5%, but operating income rose 49.2% to $37.2 million as cost reductions lifted operating margin to…
Read full summary
Vestis delivered a mixed third quarter: revenue fell 1.8% year over year to $661.7 million and volumes declined 4.5%, but operating income rose 49.2% to $37.2 million as cost reductions lifted operating margin to approximately 5.6%. EPS improved to $0.08 and free cash flow reached $47.0 million, while nine-month operating cash flow increased to $160.9 million and debt declined to $1,097.5 million. The key offset is continued volume contraction and execution risk around the transformation plan, which carries estimated costs of $35 million-$40 million.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.08
What stood out
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Revenue remained pressured by lower volumes
Q3 revenue was $661.7 million, down $12.1 million or 1.8% year over year, but increased approximately 0.4% from $659 million in Q2 fiscal 2026. Net volumes declined 4.5% year over year, partly reflecting targeted reductions in unprofitable volume.
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Margins and operating income improved materially
Gross margin increased to approximately 28.0% from 26.3% in the prior quarter and 27.0% a year earlier. Operating margin rose to approximately 5.6% from 4.1% sequentially and 3.7% year over year, a 49.2% increase in operating income to $37.2 million.
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Returned to positive quarterly earnings
Diluted EPS was $0.08, versus $0.02 in Q2 fiscal 2026 and a $(0.01) loss in the prior-year quarter. Net income improved to $11.0 million from a $0.7 million loss year over year.
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U.S. profitability offset Canada weakness
The United States segment generated $600.7 million of revenue and $55.5 million of operating income, with operating margin expanding 260 basis points to 9.2%. Canada revenue increased 0.7% to $60.9 million, although operating income declined 6.7% to $2.3 million.
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Cash generation strengthened sharply
Free cash flow was $47.0 million in Q3, compared with $46 million in Q2 and $8 million in the prior-year quarter. Nine-month operating cash flow was $160.9 million versus $33.3 million a year earlier, supported by a $79.0 million favorable change in operating assets and liabilities.
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Debt reduction improved liquidity
Total principal debt declined to $1,097.5 million from $1,168.5 million at October 3, 2025, while cash was $57.7 million and revolver availability was $294.2 million. The company paid $168.0 million of long-term borrowings during the first nine months.
What to watch
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Volume and uniform revenue contraction
Consolidated revenue declined 1.8% year over year to $661.7 million, with net volumes down 4.5% and uniform revenue down $18.3 million. Targeted removal of unprofitable volume may improve economics but creates continued top-line and customer-retention risk.
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Transformation execution and cost risk
The transformation plan requires estimated costs of $35 million-$40 million, including $23.2 million of third-party consulting costs and $8.0 million of severance costs through nine months. Management cautions that actual charges may differ materially from estimates and unanticipated costs may arise.
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Leverage and covenant constraints
The company had $1,097.5 million of total principal debt and must maintain a maximum net leverage ratio of 5.00x for the quarter ended July 3, 2026, tightening to 4.75x in Q4 and 4.50x thereafter. Dividends and share repurchases remain restricted until specified leverage and compliance conditions are met.
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No material formal risk-factor changes
The filing states there were no material changes to the risk factors disclosed in the October 3, 2025 10-K and the April 3, 2026 10-Q. Accordingly, no new formal risk-factor update was identified in this filing.
Management's outlook
No numeric revenue or EPS guidance was provided in the 10-Q; outlook commentary relates to the transformation plan, which is expected to generate at least $75 million of annual operating cost savings by the end of fiscal 2026, with estimated plan costs of $35 million-$40 million and substantial completion expected by the end of fiscal 2027. Fiscal 2026 revenue, Adjusted EBITDA and FCF guidance was provided separately in the August 11, 2026 8-K/earnings release.
Earlier filings 4
10-Q · February 10, 2026
Vestis reported quarterly revenue of $663.388 million, down $20.392 million (‑2.98%) versus the prior-year quarter, and recorded an operating loss reduction to $16.578 million (operating margin 2.50%). The company swung…
10-K · December 2, 2025
Vestis (VSTS) is a large, recurring-revenue uniform rentals and workplace supplies provider that reported fiscal 2025 revenue of approximately $2.7 billion, operating income of $64.4 million (2.4% of revenue) and a net…
10-K · November 22, 2024
Vestis Corporation reported total revenue of approximately $2.8 billion for fiscal year 2024, with a notable reliance on its rental business, comprising 94% of revenues. Despite challenges with decreasing margins and…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.