Vestis Lifts FY2026 Free Cash Flow Target by $30M as Turnaround Gains Momentum
VSTS has more than doubled off its 52-week low of $3.98 on elevated volume (2.3× avg).
Summary
Vestis returned to profitability in Q3 FY2026, raised its full-year Free Cash Flow guidance by $30 million, and showed accelerating benefits from its strategic transformation plan.
Key Events · Earnings and Guidance · VSTS
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Q3 Earnings Beat with Profitability Return
Revenue came in at $661.7M (down 1.8% YoY), while net income reached $11.0M ($0.08 diluted EPS), a sharp reversal from the $0.7M loss a year ago. Adjusted EBITDA rose 26% to $80.9M, yielding a 12.2% margin.
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Free Cash Flow Surge and Guidance Raise
Quarterly Free Cash Flow hit $47.0M, up $39M year-over-year. Full-year Free Cash Flow guidance was raised to $160M-$170M (midpoint $165M), a $30M increase, driven by transformation savings and lower capex.
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Transformation Plan Delivers Margin Expansion
Revenue Per Pound increased 2.9% YoY to $1.42, Operating Leverage Per Pound improved $0.04 to $0.18, and plant productivity rose 9%. Annualized cost savings of at least $75M are expected by the end of FY2026.
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Strong Liquidity and Debt Reduction
The company repaid $30M of debt in Q3. Total liquidity stands at $351.8M, including $57.7M in cash, and the net leverage ratio improved to 4.10x from 4.47x last quarter.
Analysis · VSTS · Trade & Services
A return to profitability highlights Vestis' strong fiscal third quarter, with net income swinging to $11 million from a year-ago loss. Adjusted EBITDA surged 26% to $80.9 million, but the standout is cash generation: Free Cash Flow reached $47 million, prompting management to raise the full-year Free Cash Flow midpoint by $30 million to $165 million—a 22% increase. Tangible progress from the strategic transformation plan is evident. Revenue Per Pound grew for the first time as a public company, operating leverage improved, and plant productivity rose 9%. With $352 million in liquidity and ongoing debt repayment, the narrative is pivoting from restructuring toward profitable growth. The raised cash flow outlook underscores management's confidence that operational improvements are sustainable.
At the time of this filing, VSTS was trading at $14.92 on NYSE in the Trade & Services sector, with a market capitalization of approximately $1.8B. The 52-week trading range was $3.98 to $16.90. This filing was assessed with positive market sentiment and an importance score of 8 out of 10.