Vestis Corporation

Revenue was approximately $662 million in fiscal Q3 2026, down about $12 million or 1.8% year over year. Adjusted EBITDA was $80.9 million, versus $64 million in the prior year, and adjusted EBITDA margin was 12.2% versus 9.5% last year; on a covenant-adjusted basis, EBITDA rose about $15 million or 23% year over year and margin expanded from 9.8% to 12.2%. Revenue per pound was $1.42, up $0.04 year over year and $0.05 sequentially, while pounds processed declined 4.5% year over year. Net income was $11 million, compared with a net loss of $0.7 million a year ago. The company generated $65 million of operating cash flow and $47 million of free cash flow in the quarter; adjusted free cash flow was $56 million. For fiscal 2026, Vestis raised free cash flow guidance to $160 million-$170 million, expects revenue to be flat to down 2% versus normalized fiscal 2025 revenue, and lifted adjusted EBITDA guidance to $310 million-$315 million. Q4 adjusted EBITDA is implied at $84 million-$89 million, and management said Q4 revenue should still show year-over-year growth versus the prior year quarter after normalizing for the 53rd week.

Jim Barber framed the quarter as proof that Vestis' transformation is working, citing consistent execution, better pricing discipline and stronger operating leverage. He said the company is moving from a broad playbook to a more customized market-center strategy, with quadrant-based network optimization becoming the next major priority for fiscal 2027. His tone was confident and upbeat, but he repeatedly stressed that 2027 guidance is still being built and that the company wants to finish the quarter-by-quarter work before quantifying the next phase.

Adam Bowen highlighted the financial improvement in revenue quality, margin and cash conversion. He said cost of services fell about $15 million year over year, SG&A declined about $7 million, adjusted operating expenses were down $27 million or 4.5%, and cost per pound stayed flat at $1.24 even as revenue per pound rose $0.04. He also pointed to stronger cash generation, with $65 million of operating cash flow, $47 million of free cash flow, net debt of $1.2 billion, approximately $352 million of liquidity, and guidance for $160 million-$170 million of free cash flow for the full year, supported by working-capital improvements and lower transformation drag.

Analysts focused on the path for top-line growth, the durability of the Q4 EBITDA run rate, the reasons for the free-cash-flow raise, and how much further low-quality volume exits and pricing actions could go. Management said Q4 revenue should still be down about 1.5% year over year on a normalized basis but would be better than Q3 and that the company plans to grow volume in 2027, though details will come later. On FCF, Bowen said the raise was driven by better working capital and collections, with DSO at its lowest since the company went public. On pricing and volume, Barber said the company is still underpricing in parts of the field/non-national segment, that MDR productivity is strong, and that only about 30% of the MDR model is fully deployed so far.