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Vestis Reports Fourth Quarter and Fiscal Year 2023 Results

Vestis completes spin-off from Aramark and declares quarterly dividend

Fiscal 2023 results

  • Revenue of $2.8 billion increased 5% year-over-year
  • Operating income of $218 million and operating margin of 7.7%
  • Adjusted operating income of $294 million and adjusted operating margin of 10.4%
  • Net income of $213 million including gain on sale of an investment
  • Adjusted EBITDA of $404 million and adjusted EBITDA margin of 14.3%

Vestis (NYSE: VSTS), a leading provider of uniforms and workplace supplies, today announced its results for the fourth quarter and fiscal year ended September 29, 2023, and its outlook for fiscal year 2024.

Management Commentary

“2023 was a year of milestones for Vestis as we delivered strong financial performance through the hard work and commitment of our ~20,000 teammates and successfully completed our spin-off from Aramark into a separate publicly traded company,” said Vestis President and Chief Executive Officer Kim Scott. “We are energized as we enter 2024 with great momentum and a clear pathway to value creation for all of our stakeholders.”

Fiscal Year 2023 Financial Highlights

This press release contains non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the comparable GAAP measures are presented in the tables accompanying this release.

($ in millions)

Consolidated

 

Fiscal 2023

 

Fiscal 2022

 

Change

Revenue

$

2,825.3

 

$

2,687.0

 

5.1

%

Operating Income

$

217.9

 

$

192.2

 

13.4

%

Adjusted Operating Income

$

293.6

 

$

264.6

 

11.0

%

Net Income

$

213.2

 

$

141.7

 

50.5

%

Adjusted EBITDA

$

403.9

 

$

373.0

 

8.3

%

Adjusted EBITDA Margin

 

14.3

%

 

13.9

%

42

bps

($ in millions)

U.S. Segment

Canada Segment

 

Fiscal

2023

 

Fiscal

2022

 

 

Change

 

Fiscal

2023

 

Fiscal

2022

 

 

Change

Revenue

$

2,575.4

 

$

2,447.0

 

5.2

%

$

249.9

 

$

240.0

 

4.1

%

Operating Income

$

303.8

 

$

243.0

 

25.0

%

$

13.7

 

$

18.0

 

(23.9

)%

Operating Income Margin

 

11.8

%

 

9.9

%

187

bps

 

5.5

%

 

7.5

%

(202

)bps

Adjusted Operating Income

$

318.5

 

$

286.3

 

11.2

%

$

21.4

 

$

25.6

 

(16.4

)%

Adjusted Operating Income Margin

 

12.4

%

 

11.7

%

67

bps

 

8.6

%

 

10.7

%

(211

)bps

Adjusted EBITDA

$

418.0

 

$

383.1

 

9.1

%

$

31.8

 

$

36.7

 

(13.4

)%

Adjusted EBITDA Margin

 

16.2

%

 

15.7

%

57

bps

 

12.7

%

 

15.3

%

(256

)bps

Vestis’ fiscal year 2023 revenue growth of 5.1% represented strong performance against the Company’s strategic growth priorities comprised of cross-selling existing customers, high quality new growth and pricing actions. Excluding the unfavorable impact from changes in foreign currency, Vestis’ growth rate was 5.7%.

Full year adjusted operating income growth of 11.0% was a result of the team’s focus on delivering efficient operations and leveraging idle plant and route capacity to capture growth in areas that provide greater density across the Company’s network.

Q4 2023 Financial Highlights

($ in millions)

Consolidated

 

Q4 2023

 

Q4 2022

 

Change

Revenue

$

715.9

 

$

683.2

 

4.8

%

Operating Income

$

57.8

 

$

30.5

 

89.5

%

Operating Income Margin

 

8.1

%

 

4.5

%

361

bps

Adjusted Operating Income

$

84.5

 

$

72.2

 

17.0

%

Adjusted Operating Income

Margin

 

11.8

%

 

10.6

%

123

bps

Net Income

$

94.0

 

$

23.2

 

305.2

%

Adjusted EBITDA

$

112.8

 

$

99.4

 

13.5

%

Adjusted EBITDA Margin

 

15.8

%

 

14.5

%

121

bps

($ in millions)

U.S. Segment

Canada Segment

Q4

2023

Q4

2022

 

Change

Q4

2023

Q4

2022

 

Change

Revenue

$

654.3

 

$

623.2

 

5.0

%

$

61.6

 

$

60.0

 

2.7

%

Operating Income

$

87.7

 

$

45.8

 

91.5

%

$

3.5

 

$

2.8

 

25.0

%

Operating Income Margin

 

13.4

%

 

7.3

%

605

bps

 

5.7

%

 

4.7

%

101

bps

Adjusted Operating Income

$

91.4

 

$

78.9

 

15.8

%

$

5.4

 

$

4.7

 

14.9

%

Adjusted Operating Income

Margin

 

14.0

%

 

12.7

%

131

bps

 

8.8

%

 

7.8

%

94

bps

Adjusted EBITDA

$

116.7

 

$

103.3

 

13.0

%

$

8.3

 

$

7.4

 

12.2

%

Adjusted EBITDA Margin

 

17.8

%

 

16.6

%

126

bps

 

13.5

%

 

12.3

%

114

bps

Fourth quarter 2023 revenue growth of 4.8% was aligned with the Company’s strategy to grow with existing customers through workplace supplies while taking pricing actions to help offset the inflationary environment. Excluding the unfavorable impact from changes in foreign currency, Vestis’ growth rate was 5.0%.

Adjusted operating income increased 17.0% driven by operating leverage from revenue growth which more than offset higher labor, energy and public company preparedness costs.

Balance Sheet and Cash Flow

  • Net cash provided by operating activities of $257.0 million for fiscal year 2023 compared to $232.8 million for fiscal year 2022
  • Free cash flow of $190.3 million for fiscal year 2023 compared to $163.7 million for fiscal year 2022
  • As of September 29, 2023, cash and cash equivalents totaled $36.1 million
  • As of September 29, 2023, total debt outstanding was $1.5 billion, with net leverage at 3.95x
  • The Company has $300 million in undrawn capacity under its revolving credit facility

Declaration of Quarterly Dividend

The Company’s Board of Directors declared a quarterly cash dividend of $0.035 per common share payable on January 4, 2024 to shareholders of record at the close of business on December 15, 2023.

Fiscal Year 2024 Outlook

The Company expects to deliver revenue growth in the range of 4.0 to 4.5% through a continued focus on providing service excellence to our customers and delivering high-quality growth.

As a result of solid progress against our strategic plan, in fiscal 2024 we expect our adjusted EBITDA margin to be maintained at not less than the fiscal 2023 level (14.3%), with approximately 50 to 60 basis points of margin expansion offsetting approximately $15 to $18 million in incremental public company costs in the period.

Our strategic imperatives include disciplined capital allocation with de-levering as a priority, and we expect not less than 100% free cash flow conversion of net income.

Forward Looking Non-GAAP Information

This release includes certain non-GAAP financial information that is forward-looking in nature, including without limitation adjusted EBITDA margin. Vestis believes that a quantitative reconciliation of such forward-looking information to the most comparable financial measure calculated and presented in accordance with GAAP cannot be made available without unreasonable efforts. A reconciliation of these non-GAAP financial measures would require Vestis to predict the timing and likelihood of among other things future acquisitions and divestitures, restructurings, asset impairments, other charges and other factors not within Vestis’ control. Neither these forward-looking measures, nor their probable significance, can be quantified with a reasonable degree of accuracy. Accordingly, the most directly comparable forward-looking GAAP measures are not provided. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures. The estimates of revenue growth for fiscal year 2024 and adjusted EBITDA margin for fiscal year 2024 do not attempt to forecast currency fluctuations and, accordingly, reflect an assumption of constant currency.

Conference Call Information

Vestis will host a webcast to discuss its fourth quarter and fiscal year 2023 results on Wednesday, November 29, 2023 at 9:00 AM ET. The webcast can be accessed live through the investor relations section of the Company’s website at www.vestis.com. Additionally, a slide presentation will accompany the call and will also be available on the Company’s website. A replay of the live event will be available on the Company’s website shortly after the call for 90 days.

The live event can also be accessed by dialing (800) 274-8461 and entering conference ID VSTSQ423. For International participants, the event can be accessed by dialing (203) 518-9814 and entering conference ID VSTSQ423.

About Vestis™

Vestis is a leader in the B2B uniform and workplace supplies category. Vestis provides uniform services and workplace supplies to a broad range of North American customers from Fortune 500 companies to locally owned small businesses across a broad set of end sectors. The Company’s comprehensive service offering primarily includes a full-service uniform rental program, floor mats, towels, linens, managed restroom services, first aid supplies, and cleanroom and other specialty garment processing.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the securities laws. All statements that reflect our expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts relating to discussions of future operations and financial performance and statements regarding our strategy for growth, future product development, regulatory approvals, competitive position and expenditures. In some cases, forward-looking statements can be identified by words such as “2024 outlook,” “aim,” “anticipate,” “are or remain or continue to be confident,” “have confidence,” “estimate,” “expect,” “will be,” “will continue,” “will likely result,” “project,” “intend,” “plan,” “believe,” “see,” “look to” and other words and terms of similar meaning or the negative versions of such words. These forward-looking statements are subject to risks and uncertainties that may change at any time, and actual results or outcomes may differ materially from those that we expected. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict including, but not limited to: unfavorable economic conditions; increases in fuel and energy costs; the failure to retain current customers, renew existing customer contracts and obtain new customer contracts; natural disasters, global calamities, climate change, pandemics, strikes and other adverse incidents; increased operating costs and obstacles to cost recovery due to the pricing and cancellation terms of our support services contracts; a determination by our customers to reduce their outsourcing or use of preferred vendors; risks associated with suppliers from whom our products are sourced; challenge of contracts by our customers; our expansion strategy and our ability to successfully integrate the businesses we acquire and costs and timing related thereto; currency risks and other risks associated with international operations; our inability to hire and retain key or sufficient qualified personnel or increases in labor costs; continued or further unionization of our workforce; liability resulting from our participation in multiemployer-defined benefit pension plans; liability associated with noncompliance with applicable law or other governmental regulations; laws and governmental regulations including those relating to the environment, wage and hour and government contracting; increases or changes in income tax rates or tax-related laws; new interpretations of or changes in the enforcement of the government regulatory framework; a cybersecurity incident or other disruptions in the availability of our computer systems or privacy breaches; stakeholder expectations relating to environmental, social and governance considerations; the expected benefits of the separation from Aramark and the risk that conditions to the separation will not be satisfied; the risk of increased costs from lost synergies; retention of existing management team members as a result of the separation from Aramark; reaction of customers, employees and other parties to the separation from Aramark, and the impact of the separation on our business; our leverage and ability to meet debt obligations; any failure by Aramark to perform its obligations under the various separation agreements entered into in connection with the separation and distribution; a determination by the IRS that the distribution or certain related transactions are taxable; and the and the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control. The above list of factors is not exhaustive or necessarily in order of importance. For additional information on identifying factors that may cause actual results to vary materially from those stated in forward-looking statements, see Vestis’ filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise such statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

VESTIS CORPORATION

COMBINED STATEMENTS OF INCOME

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

Fiscal Year Ended

 

September 29, 2023

 

September 30, 2022

 

September 29, 2023

 

September 30, 2022

Revenue

$

715,901

 

 

$

683,173

 

 

$

2,825,286

 

 

$

2,687,005

Operating Expenses:

 

 

 

 

 

 

 

Cost of services provided (exclusive of depreciation and

amortization)

 

490,072

 

 

 

511,464

 

 

 

1,970,215

 

 

 

1,909,676

Depreciation and amortization

 

34,792

 

 

 

33,749

 

 

 

136,504

 

 

 

134,352

Selling, general and administrative expenses

 

133,262

 

 

 

107,382

 

 

 

500,658

 

 

 

450,734

Total Operating Expenses

 

658,126

 

 

 

652,595

 

 

 

2,607,377

 

 

 

2,494,762

Operating Income

 

57,775

 

 

 

30,578

 

 

 

217,909

 

 

 

192,243

Gain on Sale of Equity Investment, net

 

(51,831

)

 

 

 

 

 

(51,831

)

 

 

Interest Expense and Other, net

 

278

 

 

 

(524

)

 

 

10

 

 

 

2,284

Income Before Income Taxes

 

109,328

 

 

 

31,102

 

 

 

269,730

 

 

 

189,959

Provision for Income Taxes

 

15,356

 

 

 

7,889

 

 

 

56,572

 

 

 

48,280

Net Income

$

93,972

 

 

$

23,213

 

 

$

213,158

 

 

$

141,679

VESTIS CORPORATION

CONDENSED COMBINED BALANCE SHEETS

(Unaudited)

(In thousands)

 

 

September 29, 2023

 

September 30, 2022

ASSETS

 

 

 

Current Assets:

 

 

 

Cash and cash equivalents

$

36,051

 

 

$

23,736

 

Receivables (net of allowances: 2023 - $25,066; 2022 - $29,100)

 

392,916

 

 

 

368,714

 

Inventories, net

 

174,719

 

 

 

183,439

 

Rental merchandise in service, net

 

399,035

 

 

 

393,140

 

Other current assets

 

17,244

 

 

 

18,252

 

Total current assets

 

1,019,965

 

 

 

987,281

 

Property and Equipment, at cost:

 

 

 

Land, buildings and improvements

 

585,797

 

 

 

579,915

 

Equipment

 

1,110,812

 

 

 

1,027,224

 

 

 

1,696,609

 

 

 

1,607,139

 

Less - Accumulated depreciation

 

(1,032,078

)

 

 

(957,540

)

Total property and equipment, net

 

664,531

 

 

 

649,599

 

Goodwill

 

963,543

 

 

 

963,375

 

Other Intangible Assets, net

 

238,608

 

 

 

264,264

 

Operating Lease Right-of-use Assets

 

57,890

 

 

 

72,567

 

Other Assets

 

212,587

 

 

 

195,926

 

Total Assets

$

3,157,124

 

 

$

3,133,012

 

LIABILITIES AND PARENT’S EQUITY

 

 

 

Current Liabilities:

 

 

 

Current maturities of long-term borrowings

$

26,250

 

 

$

 

Current maturities of financing lease obligations

 

27,659

 

 

 

20,482

 

Current operating lease liabilities

 

19,935

 

 

 

20,899

 

Accounts payable

 

134,498

 

 

 

167,125

 

Accrued payroll and related expenses

 

113,771

 

 

 

119,032

 

Accrued expenses and other current liabilities

 

73,412

 

 

 

74,657

 

Total current liabilities

 

395,525

 

 

 

402,195

 

Long-Term Borrowings

 

1,462,693

 

 

 

 

Noncurrent Financing Lease Obligations

 

105,217

 

 

 

86,783

 

Noncurrent Operating Lease Liabilities

 

46,084

 

 

 

54,017

 

Deferred Income Taxes

 

217,647

 

 

 

201,826

 

Other Noncurrent Liabilities

 

52,598

 

 

 

52,379

 

Total Liabilities

 

2,279,764

 

 

 

797,200

 

Parent’s Equity:

 

 

 

Net parent investment

 

908,533

 

 

 

2,367,492

 

Accumulated other comprehensive loss

 

(31,173

)

 

 

(31,680

)

Total parent’s equity

 

877,360

 

 

 

2,335,812

 

Total Liabilities and Parent’s Equity

$

3,157,124

 

 

$

3,133,012

 

VESTIS CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

Fiscal Year Ended

 

September 29, 2023

 

September 30, 2022

Cash flows from operating activities:

 

 

 

Net Income

$

213,158

 

 

$

141,679

 

Adjustments to reconcile Net Income to Net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

136,504

 

 

 

134,352

 

Gain on sale of equity investment, net

 

(51,831

)

 

 

 

Deferred income taxes

 

14,370

 

 

 

20,603

 

Share-based compensation expense

 

14,467

 

 

 

17,398

 

Asset write-downs

 

7,698

 

 

 

 

Personal protective equipment charges

 

 

 

 

26,183

 

Changes in operating assets and liabilities:

 

 

 

Receivables, net

 

(23,612

)

 

 

(53,860

)

Inventories, net

 

8,929

 

 

 

(631

)

Rental merchandise in service, net

 

(5,334

)

 

 

(42,226

)

Other current assets

 

1,050

 

 

 

(2,586

)

Accounts payable

 

(32,888

)

 

 

31,398

 

Accrued expenses

 

(7,928

)

 

 

(31,456

)

Changes in other noncurrent liabilities

 

(944

)

 

 

(2,183

)

Changes in other assets

 

(8,813

)

 

 

(4,140

)

Other operating activities

 

(7,849

)

 

 

(1,684

)

Net cash provided by operating activities

 

256,977

 

 

 

232,847

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment and other

 

(77,870

)

 

 

(76,449

)

Disposals of property and equipment

 

11,180

 

 

 

7,316

 

Acquisition of certain businesses, net of cash acquired

 

 

 

 

(17,200

)

Proceeds from sale of equity investment

 

51,869

 

 

 

 

Other investing activities

 

75

 

 

 

200

 

Net cash used in investing activities

 

(14,746

)

 

 

(86,133

)

Cash flows from financing activities:

 

 

 

Proceeds from long-term borrowings

 

1,500,000

 

 

 

 

Payments of financing lease obligations

 

(27,601

)

 

 

(28,041

)

Debt issuance costs

 

(13,749

)

 

 

 

Net cash distributions to Parent

 

(1,688,919

)

 

 

(134,502

)

Net cash used in financing activities

 

(230,269

)

 

 

(162,543

)

Effect of foreign exchange rates on cash and cash equivalents

 

353

 

 

 

(1,541

)

Increase (Decrease) in cash and cash equivalents

 

12,315

 

 

 

(17,370

)

Cash and cash equivalents, beginning of period

 

23,736

 

 

 

41,106

 

Cash and cash equivalents, end of period

$

36,051

 

 

$

23,736

 

Non-GAAP Definitions

This release could include certain non-GAAP financial measures, such as Adjusted Revenue Growth (Organic), Adjusted Revenue (Organic), Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Net Debt. Vestis utilizes these measures when monitoring and evaluating operating performance. The non-GAAP financial measures presented herein are supplemental measures of Vestis’ performance that Vestis believes help investors because they enable better comparisons of Vestis’ historical results and allow Vestis’ investors to evaluate its performance based on the same metrics that Vestis uses to evaluate its performance and trends in its results. Vestis’ presentation of these metrics has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of Vestis’ results as reported under U.S. GAAP. Because of their limitations, these non-GAAP financial measures should not be considered as measures of cash available to Vestis to invest in the growth of Vestis’ business or that will be available to Vestis to meet its obligations. Vestis compensates for these limitations by using these non-GAAP financial measures along with other comparative tools, together with U.S. GAAP financial measures, to assist in the evaluation of operating performance. You should not consider these measures as alternatives to revenue, operating income, operating income margin, net income, net income margin or net cash provided by operating activities determined in accordance with U.S. GAAP. Vestis believes that these non-GAAP financial measures, in addition to the corresponding U.S. GAAP financial measures, are important supplemental measures which exclude non-cash or other items that may not be indicative of or are unrelated to Vestis’ core operating results and the overall health of Vestis. Non-GAAP financial measures as presented by Vestis may not be comparable to other similarly titled measures of other companies because not all companies use identical calculations.

Adjusted Revenue Growth (Organic)

Adjusted Revenue Growth (Organic) measures our revenue growth trends excluding the impact of acquisitions and foreign currency, and we believe it is useful for investors to understand growth through internal efforts. We define “organic revenue growth” as the growth in revenues, excluding (i) acquisitions and (ii) the impact of foreign currency exchange rate changes, (iii) the impact of the 53rd week, when applicable.

Adjusted Revenue (Organic)

Adjusted Revenue (Organic) represents revenue as determined in accordance with U.S. GAAP, adjusted to exclude (i) acquisitions and (ii) the impact of foreign currency exchange rate changes, (iii) the impact of the 53rd week, when applicable.

Adjusted Operating Income

Adjusted Operating Income represents Operating Income adjusted for Amortization Expense of Acquired Intangibles; Share-based Compensation Expense; Severance and Other Charges; Merger and Integration Related Charges; Management Fees; Separation Related Charges; Estimated Impact of 53rd Week, when applicable; and Gain, Losses, Settlements and Other Items impacting comparability. Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between periods. Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods.

Adjusted Operating Income Margin

Adjusted Operating Income Margin represents Adjusted Operating Income as a percentage of Revenue.

Adjusted EBITDA

Adjusted EBITDA represents Net Income adjusted for Provision for Income Taxes; Interest Expense and Other, net; and Depreciation and Amortization (EBTIDA), further adjusted for Share-based Compensation Expense; Severance and Other Charges; Merger and Integration Charges; Management Fees; Separation Related Charges; Estimated Impact of 53rd Week (when applicable); Gains, Losses, Settlements; and other items impacting comparability. Adjusted results are presented in order to reflect the results in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between periods. Similar adjustments have been recorded in earlier periods and similar types of adjustments can reasonably be expected to be recorded in future periods.

Adjusted EBITDA Margin

Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of Revenue.

Free Cash Flow

Free Cash Flow represents Net cash provided by operating activities adjusted for Purchases of Property and Equipment and Other and Disposals of property and equipment.

Net Debt

Net Debt represents total principal debt outstanding and finance lease obligations, less cash and cash equivalents.

VESTIS CORPORATION

RECONCILIATION OF NON-GAAP MEASURES

Consolidated

(In millions)

 

 

 

Three Months Ended

 

Year Ended

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

April 1,

 

July 1,

 

September 30,

 

September

30,

 

December

30,

 

March 31,

 

June 30,

 

September

29,

 

September

29,

 

 

2021

 

2022

 

2022

 

2022

 

2022

 

2022

 

2023

 

2023

 

2023

 

2023

Revenue (as reported)

 

$

661.1

 

 

$

663.0

 

 

$

679.7

 

 

$

683.2

 

 

$

2,687.0

 

 

$

700.7

 

 

$

699.3

 

 

$

709.4

 

 

$

715.9

 

 

$

2,825.3

 

Effect of Currency Translation

 

 

 

 

 

 

 

 

 

 

 

 

5.0

 

 

 

4.4

 

 

 

3.3

 

 

 

1.7

 

 

 

14.4

 

Adjusted Revenue (Organic)

 

 

 

 

 

 

 

 

 

 

 

$

705.7

 

 

$

703.7

 

 

$

712.7

 

 

$

717.6

 

 

$

2,839.7

 

Revenue Growth (as reported)

 

 

 

 

 

 

 

 

 

 

 

 

5.99

%

 

 

5.48

%

 

 

4.37

%

 

 

4.79

%

 

 

5.15

%

Adjusted Revenue Growth (Organic)

 

 

 

 

 

 

 

 

 

 

 

 

6.75

%

 

 

6.14

%

 

 

4.86

%

 

 

5.04

%

 

 

5.68

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

50.3

 

 

$

54.4

 

 

$

57.0

 

 

$

30.5

 

 

$

192.2

 

 

$

44.4

 

 

$

49.4

 

 

$

66.3

 

 

$

57.8

 

 

$

217.9

 

Amortization Expense

 

 

6.4

 

 

 

6.5

 

 

 

6.5

 

 

 

6.5

 

 

 

25.9

 

 

 

6.5

 

 

 

6.5

 

 

 

6.5

 

 

 

6.5

 

 

 

26.0

 

Share-Based Compensation

 

 

4.3

 

 

 

4.2

 

 

 

4.4

 

 

 

4.5

 

 

 

17.4

 

 

 

4.5

 

 

 

3.5

 

 

 

3.6

 

 

 

2.9

 

 

 

14.5

 

Severance and Other Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.5

 

 

 

(0.8

)

 

 

0.2

 

 

 

4.9

 

Separation Related Charges

 

 

 

 

 

 

 

 

1.9

 

 

 

2.2

 

 

 

4.1

 

 

 

3.5

 

 

 

3.4

 

 

 

6.0

 

 

 

18.2

 

 

 

31.1

 

Management Fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain, Losses, and Settlements

 

 

 

 

 

(2.9

)

 

 

(0.6

)

 

 

28.5

 

 

 

25.0

 

 

 

5.8

 

 

 

(2.6

)

 

 

(2.9

)

 

 

(1.1

)

 

 

(0.8

)

Total Operating Income Adjustments

 

$

10.7

 

 

$

7.8

 

 

$

12.2

 

 

$

41.7

 

 

$

72.4

 

 

$

20.3

 

 

$

16.3

 

 

$

12.4

 

 

$

26.7

 

 

$

75.7

 

Adjusted Operating Income (Non-GAAP)

 

$

61.0

 

 

$

62.2

 

 

$

69.2

 

 

$

72.2

 

 

$

264.6

 

 

$

64.7

 

 

$

65.7

 

 

$

78.7

 

 

$

84.5

 

 

$

293.6

 

Depreciation Expense

 

 

26.9

 

 

 

27.1

 

 

 

27.2

 

 

 

27.2

 

 

 

108.4

 

 

 

27.3

 

 

 

27.1

 

 

 

27.6

 

 

 

28.3

 

 

 

110.3

 

Adjusted EBITDA (Non-GAAP)

 

$

87.9

 

 

$

89.3

 

 

$

96.4

 

 

$

99.4

 

 

$

373.0

 

 

$

92.0

 

 

$

92.8

 

 

$

106.3

 

 

$

112.8

 

 

$

403.9

 

Operating Income Margin (as reported)

 

 

7.61

%

 

 

8.21

%

 

 

8.39

%

 

 

4.46

%

 

 

7.15

%

 

 

6.34

%

 

 

7.06

%

 

 

9.35

%

 

 

8.07

%

 

 

7.71

%

Adjusted Operating Income Margin (Non-

GAAP)

 

 

9.23

%

 

 

9.38

%

 

 

10.18

%

 

 

10.57

%

 

 

9.85

%

 

 

9.23

%

 

 

9.40

%

 

 

11.09

%

 

 

11.80

%

 

 

10.39

%

Adjusted EBITDA Margin (Non-GAAP)

 

 

13.30

%

 

 

13.47

%

 

 

14.18

%

 

 

14.55

%

 

 

13.88

%

 

 

13.13

%

 

 

13.27

%

 

 

14.98

%

 

 

15.76

%

 

 

14.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (as reported)

 

$

35.1

 

 

$

40.7

 

 

$

42.6

 

 

$

23.2

 

 

$

141.6

 

 

$

33.4

 

 

$

36.9

 

 

$

48.9

 

 

$

94.0

 

 

$

213.2

 

Provision for Income Taxes

 

 

12.1

 

 

 

13.8

 

 

 

14.5

 

 

 

7.9

 

 

 

48.3

 

 

 

11.1

 

 

 

12.7

 

 

 

17.4

 

 

 

15.4

 

 

 

56.6

 

Interest Expense and Other, net

 

 

3.1

 

 

 

(0.1

)

 

 

(0.1

)

 

 

(0.6

)

 

 

2.3

 

 

 

(0.1

)

 

 

(0.2

)

 

 

 

 

 

0.2

 

 

 

(0.1

)

Depreciation Expense

 

 

26.9

 

 

 

27.1

 

 

 

27.2

 

 

 

27.2

 

 

 

108.4

 

 

 

27.3

 

 

 

27.1

 

 

 

27.6

 

 

 

28.3

 

 

 

110.3

 

Operating Income Adjustments

(Above)

 

 

10.7

 

 

 

7.8

 

 

 

12.2

 

 

 

41.7

 

 

 

72.4

 

 

 

20.3

 

 

 

16.3

 

 

 

12.4

 

 

 

26.7

 

 

 

75.7

 

Gain on Sale of Equity Investment, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(51.8

)

 

 

(51.8

)

Adjusted EBITDA (Non-GAAP)

 

$

87.9

 

 

$

89.3

 

��

$

96.4

 

 

$

99.4

 

 

$

373.0

 

 

$

92.0

 

 

$

92.8

 

 

$

106.3

 

 

$

112.8

 

 

$

403.9

 

VESTIS CORPORATION

RECONCILIATION OF NON-GAAP MEASURES

United States Segment

(In millions)

 

 

 

Three Months Ended

 

Year Ended

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

April 1,

 

July 1,

 

September

30,

 

September 30,

 

December 30,

 

March 31,

 

June 30,

 

September

29,

 

September

29,

 

 

2021

 

2022

 

2022

 

2022

 

2022

 

2022

 

2023

 

2023

 

2023

 

2023

Revenue (as reported)

 

$

601.3

 

 

$

604.4

 

 

$

618.1

 

 

$

623.2

 

 

$

2,447.0

 

 

$

637.7

 

 

$

636.9

 

 

$

646.5

 

 

$

654.3

 

 

$

2,575.4

 

Effect of Currency Translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Revenue (Organic)

 

 

 

 

 

 

 

 

 

 

 

$

637.7

 

 

$

636.9

 

 

$

646.5

 

 

$

654.3

 

 

$

2,575.4

 

Revenue Growth (as reported)

 

 

 

 

 

 

 

 

 

 

 

 

6.05

%

 

 

5.38

%

 

 

4.59

%

 

 

4.99

%

 

 

5.25

%

Adjusted Revenue Growth (Organic)

 

 

 

 

 

 

 

 

 

 

 

 

6.05

%

 

 

5.38

%

 

 

4.59

%

 

 

4.99

%

 

 

5.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

61.3

 

 

$

65.4

 

 

$

70.5

 

 

$

45.8

 

 

$

243.0

 

 

$

63.8

 

 

$

68.3

 

 

$

84.0

 

 

$

87.7

 

 

$

303.8

 

Amortization Expense

 

 

6.3

 

 

 

6.4

 

 

 

6.4

 

 

 

6.4

 

 

 

25.5

 

 

 

6.4

 

 

 

6.4

 

 

 

6.4

 

 

 

6.4

 

 

 

25.6

 

Share-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and Other Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.7

 

 

 

(0.8

)

 

 

0.2

 

 

 

5.1

 

Separation Related Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management Fee

 

 

(1.8

)

 

 

(1.8

)

 

 

(1.8

)

 

 

(1.8

)

 

 

(7.2

)

 

 

(1.9

)

 

 

(1.9

)

 

 

(1.9

)

 

 

(1.8

)

 

 

(7.5

)

Gain, Losses, and Settlements

 

 

 

 

 

(2.9

)

 

 

(0.6

)

 

 

28.5

 

 

 

25.0

 

 

 

0.7

 

 

 

(5.2

)

 

 

(2.9

)

 

 

(1.1

)

 

 

(8.5

)

Total Operating Income Adjustments

 

$

4.5

 

 

$

1.7

 

 

$

4.0

 

 

$

33.1

 

 

$

43.3

 

 

$

5.2

 

 

$

5.0

 

 

$

0.8

 

 

$

3.7

 

 

$

14.7

 

Adjusted Operating Income (Non-GAAP)

 

$

65.8

 

 

$

67.1

 

 

$

74.5

 

 

$

78.9

 

 

$

286.3

 

 

$

69.0

 

 

$

73.3

 

 

$

84.8

 

 

$

91.4

 

 

$

318.5

 

Depreciation Expense

 

 

23.9

 

 

 

24.2

 

 

 

24.3

 

 

 

24.4

 

 

 

96.8

 

 

 

24.7

 

 

 

24.5

 

 

 

25.0

 

 

 

25.3

 

 

 

99.5

 

Adjusted EBITDA (Non-GAAP)

 

$

89.7

 

 

$

91.3

 

 

$

98.8

 

 

$

103.3

 

 

$

383.1

 

 

$

93.7

 

 

$

97.8

 

 

$

109.8

 

 

$

116.7

 

 

$

418.0

 

Operating Income Margin (as reported)

 

 

10.19

%

 

 

10.82

%

 

 

11.41

%

 

 

7.35

%

 

 

9.93

%

 

 

10.00

%

 

 

10.72

%

 

 

12.99

%

 

 

13.40

%

 

 

11.80

%

Adjusted Operating Income Margin (Non-

GAAP)

 

 

10.94

%

 

 

11.10

%

 

 

12.05

%

 

 

12.66

%

 

 

11.70

%

 

 

10.82

%

 

 

11.51

%

 

 

13.12

%

 

 

13.97

%

 

 

12.37

%

Adjusted EBITDA Margin (Non-GAAP)

 

 

14.92

%

 

 

15.11

%

 

 

15.98

%

 

 

16.58

%

 

 

15.66

%

 

 

14.69

%

 

 

15.36

%

 

 

16.98

%

 

 

17.84

%

 

 

16.23

%

VESTIS CORPORATION

RECONCILIATION OF NON-GAAP MEASURES

Canada Segment

(In millions)

 

 

 

Three Months Ended

 

Year Ended

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

April 1,

 

July 1,

 

September

30,

 

September

30,

 

December 30,

 

March 31,

 

June 30,

 

September

29,

 

September

29,

 

 

2021

 

2022

 

2022

 

2022

 

2022

 

2022

 

2023

 

2023

 

2023

 

2023

Revenue (as reported)

 

$

59.8

 

 

$

58.6

 

 

$

61.6

 

 

$

60.0

 

 

$

240.0

 

 

$

63.0

 

 

$

62.4

 

 

$

62.9

 

 

$

61.6

 

 

$

249.9

 

Effect of Currency Translation

 

 

 

 

 

 

 

 

 

 

 

 

5.0

 

 

 

4.4

 

 

 

3.3

 

 

 

1.7

 

 

 

14.4

 

Adjusted Revenue (Organic)

 

 

 

 

 

 

 

 

 

 

 

$

68.0

 

 

$

66.8

 

 

$

66.2

 

 

$

63.3

 

 

$

264.3

 

Revenue Growth (as reported)

 

 

 

 

 

 

 

 

 

 

 

 

5.35

%

 

 

6.48

%

 

 

2.11

%

 

 

2.67

%

 

 

4.13

%

Adjusted Revenue Growth (Organic)

 

 

 

 

 

 

 

 

 

 

 

 

13.71

%

 

 

13.99

%

 

 

7.47

%

 

 

5.50

%

 

 

10.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (as reported)

 

$

4.8

 

 

$

5.1

 

 

$

5.3

 

 

$

2.8

 

 

$

18.0

 

 

$

5.4

 

 

$

1.5

 

 

$

3.3

 

 

$

3.5

 

 

$

13.7

 

Amortization Expense

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.4

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.4

 

Share-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Severance and Other Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

(0.2

)

Separation Related Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Management Fee

 

 

1.8

 

 

 

1.8

 

 

 

1.8

 

 

 

1.8

 

 

 

7.2

 

 

 

1.9

 

 

 

1.9

 

 

 

1.9

 

 

 

1.8

 

 

 

7.5

 

Gain, Losses, and Settlements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Income Adjustments

 

$

1.9

 

 

$

1.9

 

 

$

1.9

 

 

$

1.9

 

 

$

7.6

 

 

$

2.0

 

 

$

1.8

 

 

$

2.0

 

 

$

1.9

 

 

$

7.7

 

Adjusted Operating Income (Non-GAAP)

 

$

6.7

 

 

$

7.0

 

 

$

7.2

 

 

$

4.7

 

 

$

25.6

 

 

$

7.4

 

 

$

3.3

 

 

$

5.3

 

 

$

5.4

 

 

$

21.4

 

Depreciation Expense

 

 

2.8

 

 

 

2.8

 

 

 

2.8

 

 

 

2.7

 

 

 

11.1

 

 

 

2.5

 

 

 

2.5

 

 

 

2.5

 

 

 

2.9

 

 

 

10.4

 

Adjusted EBITDA (Non-GAAP)

 

$

9.5

 

 

$

9.8

 

 

$

10.0

 

 

$

7.4

 

 

$

36.7

 

 

$

9.9

 

 

$

5.8

 

 

$

7.8

 

 

$

8.3

 

 

$

31.8

 

Operating Income Margin (as reported)

 

 

8.03

%

 

 

8.70

%

 

 

8.60

%

 

 

4.67

%

 

 

7.50

%

 

 

8.57

%

 

 

2.40

%

 

 

5.25

%

 

 

5.68

%

 

 

5.48

%

Adjusted Operating Income Margin (Non-

GAAP)

 

 

11.20

%

 

 

11.95

%

 

 

11.69

%

 

 

7.83

%

 

 

10.67

%

 

 

11.75

%

 

 

5.29

%

 

 

8.43

%

 

 

8.77

%

 

 

8.56

%

Adjusted EBITDA Margin (Non-GAAP)

 

 

15.89

%

 

 

16.72

%

 

 

16.23

%

 

 

12.33

%

 

 

15.29

%

 

 

15.71

%

 

 

9.29

%

 

 

12.40

%

 

 

13.47

%

 

 

12.73

%

VESTIS CORPORATION

RECONCILIATION OF NON-GAAP MEASURES

Corporate

(In millions)

 

 

 

Three Months Ended

 

Year Ended

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

April 1,

 

July 1,

 

September

30,

 

September

30,

 

December 30,

 

March 31,

 

June 30,

 

September

29,

 

September

29,

 

 

2021

 

2022

 

2022

 

2022

 

2022

 

2022

 

2023

 

2023

 

2023

 

2023

Operating Income (as reported)

 

$

(15.8

)

 

$

(16.1

)

 

$

(18.8

)

 

$

(18.1

)

 

$

(68.8

)

 

$

(24.8

)

 

$

(20.4

)

 

$

(21.0

)

 

$

(33.4

)

 

$

(99.6

)

Amortization Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-Based Compensation

 

 

4.3

 

 

 

4.2

 

 

 

4.4

 

 

 

4.5

 

 

 

17.4

 

 

 

4.5

 

 

 

3.5

 

 

 

3.6

 

 

 

2.9

 

 

 

14.5

 

Severance and Other Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Separation Related Charges

 

 

 

 

 

 

 

 

1.9

 

 

 

2.2

 

 

 

4.1

 

 

 

3.5

 

 

 

3.4

 

 

 

6.0

 

 

 

18.2

 

 

 

31.1

 

Management Fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain, Losses, and Settlements

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.1

 

 

 

2.6

 

 

 

 

 

 

 

 

 

7.7

 

Total Operating Income Adjustments

 

$

4.3

 

 

$

4.2

 

 

$

6.3

 

 

$

6.7

 

 

$

21.5

 

 

$

13.1

 

 

$

9.5

 

 

$

9.6

 

 

$

21.1

 

 

$

53.3

 

Adjusted Operating Income (Non-GAAP)

 

$

(11.5

)

 

$

(11.9

)

 

$

(12.5

)

 

$

(11.4

)

 

$

(47.3

)

 

$

(11.7

)

 

$

(10.9

)

 

$

(11.4

)

 

$

(12.3

)

 

$

(46.3

)

Depreciation Expense

 

 

0.2

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.5

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.1

 

 

 

0.4

 

Adjusted EBITDA (Non-GAAP)

 

$

(11.3

)

 

$

(11.8

)

 

$

(12.4

)

 

$

(11.3

)

 

$

(46.8

)

 

$

(11.6

)

 

$

(10.8

)

 

$

(11.3

)

 

$

(12.2

)

 

$

(45.9

)

VESTIS CORPORATION

RECONCILIATION OF NON-GAAP MEASURES

FREE CASH FLOW AND NET DEBT

(In millions)

 

 

Fiscal Year Ended

 

Fiscal Year Ended

 

September 29, 2023

 

September 30, 2022

Net cash provided by operating activities

$

257.0

 

 

$

232.8

 

Purchases of property and equipment and other

 

(77.9

)

 

 

(76.4

)

Disposals of property and equipment

 

11.2

 

 

 

7.3

 

Free Cash Flow (Non-GAAP)

$

190.3

 

 

$

163.7

 

 

Fiscal Year Ended

 

September 29, 2023

Total principal debt outstanding

$

1,500.0

Finance lease obligations

 

132.9

Less: Cash and cash equivalents

 

36.1

Net Debt

$

1,596.8

 

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