Vestis Corporation
Q3 2026 Earnings
Market Reaction
Did VSTS Beat Earnings? Q3 2026 Results
Vestis Corporation delivered a sharply mixed fiscal third-quarter 2026 report, posting adjusted earnings per share of $0.18 against a consensus estimate of $0.10, a beat of 81.45%, even as revenue of $661.66 million fell short of the $669.02 million analysts had expected and slipped 1.8% from a year ago. The profit outperformance traced directly to the company's ongoing transformation plan, which has already captured roughly $30 million of an anticipated $50 million in in-year cost savings, helping push Adjusted EBITDA to $80.85 million at a 12.2% margin, up 23% from the prior year's $65.80 million. The revenue shortfall reflected a deliberate pruning of unprofitable linen volume and a 4.5% drop in pounds processed, partially cushioned by improved pricing. Net income swung to $11.05 million from a year-ago loss of $676,000, while free cash flow surged $39 million year-over-year to $47 million, enabling $30 million in debt repayment. Looking ahead, Vestis raised its fiscal 2026 free cash flow outlook to $160 million to $170 million and narrowed Adjusted EBITDA guidance to $310 million to $315 million, signaling growing confidence in its recovery trajectory despite lingering analyst skepticism.
- Revenue Per Pound increased 2.9% year-over-year to $1.42, first year-over-year increase as a public company
- Cost Per Pound remained flat year-over-year at $1.24
- Operating Leverage Per Pound improved $0.04 year-over-year to $0.18
- Plant productivity improved 9% year-over-year
- On-time deliveries improved 80 basis points
- Customer complaints reduced 74 basis points
- Adjusted Operating Expenses declined $27.2 million or 4.5% year-over-year
- Cost of services declined $15.4 million from improved merchandise and delivery costs
- Intentional shedding of low-profit linen volume contributing to improving product mix
- Canadian segment delivered year-over-year revenue growth
“During the fiscal third quarter, we continued to deliver against our commitments for the year, advancing our strategic transformation through disciplined operational and commercial execution. Operationally, we continued to see improvements in plant productivity and on-time delivery while lowering our overall operating expenses. Commercially, our pricing and segmentation initiatives gained traction as we exited more unprofitable volume, and for the first time as a public company, Revenue Per Pound increased while Cost Per Pound remained flat on a year-over-year basis. Together, these efforts delivered a second consecutive quarter of improved Adjusted EBITDA and Operating Leverage.”
Vestis CEO, on the earnings call
Forward Guidance & Outlook
Vestis updated its fiscal 2026 outlook. Revenue is expected to be flat to down 2% versus normalized fiscal 2025 revenue of $2.683 billion (excluding the additional operating week in fiscal 2025). Adjusted EBITDA guidance was narrowed and increased slightly to a range of $310.0 million to $315.0 million with a midpoint of $312.5 million, implying Q4 Adjusted EBITDA of $84.0 million to $89.0 million. Free Cash Flow outlook was raised by $30 million at the midpoint to a range of $160.0 million to $170.0 million. The company expects $60 million to $70 million of annual cash capital expenditures and $35 million to $40 million in cash paid for transformation expenses including severance. The company also expects approximately $10 million in annual SG&A savings from a new corporate support outsourcing arrangement beginning in fiscal 2027.
VSTS YoY Financials
VSTS Revenue by Segment
VSTS Revenue by Geography
Figures from SEC filings and company reports. Not investment advice.