Vestis Corp
For the period ended Apr 3, 2026. Filed May 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 3, 2026 · Filed May 12, 2026
VSTS$14.20+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-01-02; filed 2026-02-10.
0001628280-26-006647
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-03; filed 2026-05-12.
0001628280-26-033871
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 106 current paragraphs.
41 unchanged; 34 reworded; 22 added; 11 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 4 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Global events, including ongoing geopolitical events, have adversely affected global economies, disrupted global supply chains and labor force participation, and created significant volatility and disruption of financial markets. While we do not have direct operations in regions currently experiencing conflict, including the Middle East and Eastern Europe, instability in these regions has contributed to increased volatility in global energy markets and broader economic uncertainty. For example, the ongoing tensions between the United States, Israel and Iran have resulted in disruptions to international shipping through the Strait of Hormuz, a waterway where approximately 20% of the world’s oil supply transits daily. These conditions have resulted in inflationary pressures, particularly in labor and energy costs, as well as fluctuations in foreign currency exchange rates. Elevated energy prices, including fuel and utility costs, could have a material impact, and may continue in the future to adversely impact our cost of operations given our route-based service model and processing facilities. In addition, these global macroeconomic conditions may impact our customer spending decisions. In response to increased energy costs during the second fiscal quarter of 2026, we have implemented an energy surcharge to help mitigate the impact on our operating results.
Current report
The extent to which these macroeconomic conditions and geopolitical developments will impact our operational and financial performance will depend on future developments, including the duration and severity of geopolitical instability, such as any ongoing or future closures of the Strait of Hormuz or other reductions or disruptions in global energy supply; governmental responses to inflation and trade policies; and our ability to mitigate cost increases through pricing actions and operational efficiencies. Many of these factors are outside of our control and remain highly uncertain.
Current report
Consolidated revenue of $659.4 million decreased $5.8 million, or 0.9%, for the three months ended April 3, 2026 compared to the three months ended March 28, 2025. The decline in revenue compared to the prior year reflects a $10.5 million decline in uniforms offset by a $4.7 million increase in workplace supplies resulting from sales product mix shifting which occurred prior to the commencement of the Plan. Consolidated revenue was positively impacted by $2.7 million from the impact of foreign exchange on currency related to our Canadian business.
Current report
Depreciation and amortization expense of $34.6 million for the three months ended April 3, 2026 decreased $1.3 million, or 3.7%, compared to the three months ended March 28, 2025.
Current report
Other expense, net of other income (which consists primarily of A/R Facility fees), decreased $0.1 million for the three months ended April 3, 2026 compared to the three months ended March 28, 2025.
Current report
Net income of $2.6 million for the three months ended April 3, 2026 represented an improvement of $30.4 million, or 109.3%, compared to a net loss of $27.8 million for the three months ended March 28, 2025, primarily due to the reduced operating expenses as noted above.
Current report
Results of Operations Six Months Ended April 3, 2026 compared with March 28, 2025
Current report
Depreciation and amortization expense of $68.9 million for the six months ended April 3, 2026 decreased $3.9 million, or 5.4%, compared to the six months ended March 28, 2025.
Current report
Selling, general and administrative expenses ("SG&A") decreased $36.5 million, or 13.6%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025. The decrease in SG&A was primarily driven by headcount reductions and other cost savings measures, a $17.7 million decrease in the Company's bad debt expense, a $6.5 million decrease in separation-related charges, a $7.4 million decrease in share-based compensation, and a $5.8 million decrease in severance related costs. These decreases were partially offset by $17.1 million of third-party consulting costs related to the Company's business transformation. The decrease in the bad debt allowance was primarily due to a $15 million charge to the Company's allowance for credit losses in the three months ended March 28, 2025 based on updated estimates of collectability. The remaining improvement in bad debt expense of $2.7 million was attributable to improvements in accounts receivable related to certain working capital initiatives. Share-based compensation for the six months ended March 28, 2025 was impacted by the acceleration of awards associated with the departure of certain executives during the period.
Current report
Operating income of $43.4 million increased by $21.5 million, or 98.6%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025 from the impact of changes in revenue and costs noted above.
Current report
Interest expense, net, decreased $2.2 million for the six months ended April 3, 2026 compared to the six months ended March 28, 2025 primarily due to lower borrowings and lower interest rates.
Current report
The provision for income taxes for the six months ended April 3, 2026 was recorded at an effective rate of 37.3% compared to an effective rate of 17.3% for the six months ended March 28, 2025. The higher effective tax rate was primarily driven by changes in year-over-year earnings, as well as the impact of permanent tax items, federal tax credits, and discrete tax items recognized in each period.
Current report
United States revenue of $598.9 million decreased $7.2 million, or 1.2%, for thethree months ended April 3, 2026 compared to thethree months ended March 28, 2025 on lower overall volumes. The decline in revenue was driven by a $10.4 million decline in uniform revenue, offset by a $3.2 million increase in workplace supplies, resulting from sales product mix shifting which occurred prior to the commencement of the Plan.
Current report
United States revenue of $1,201.8 million decreased $26.0 million, or 2.1%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025. The decline in revenue compared to the prior year reflects a $28.5 million decline in uniforms and a $2.6 million increase in workplace supplies, resulting from sales product mix shifting which occurred prior to the commencement of the Plan.
Current report
Segment operating income of$86.0 million for thesix months ended April 3, 2026 increased$9.4 million, or 12.3%, compared to thesix months ended March 28, 2025, primarily driven by reduced operating expenses, partially offset bya decrease in revenue during the six months ended April 3, 2026, as described above.
Current report
Segment operating income margin increased approximately 90 basis points from 6.2% for thesix months ended March 28, 2025 to approximately 7.2% for thesix months ended April 3, 2026.
Current report
Canada revenue of $60.5 million increased $1.4 million, or 2.3%, for thethree months ended April 3, 2026 compared to thethree months ended March 28, 2025, which includes a positive impact from the impact of foreign exchange on currency of $2.7 million. The increase in revenue compared to the prior year primarily reflects a $1.4 million increase in workplace supplies.
Current report
Segment operating income of $1.9 million for the three months ended April 3, 2026 decreased $0.1 million, or 6.3%, compared to the three months ended March 28, 2025.
Current report
Canada revenue of $121.0 million decreased $0.2 million, or 0.2%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025, net of a positive impact from the impact of foreign exchange on currency of $2.9 million. The decline in revenue compared to the prior year reflects a $1.1 million decline in uniforms and a $0.9 million increase in workplace supplies.
Current report
Segment operating income of$4.1 million for thesix months ended April 3, 2026 increased$0.1 million, or 2.9%, compared to thesix months ended March 28, 2025.
Current report
Segment operating income margin increased approximately 10 basis points from 3.3% for thesix months ended March 28, 2025, to approximately 3.4% for thesix months ended April 3, 2026.
Current report
•dividend payments of$13.8 million.
Removed paragraphs (11)
Previous report
Global events, including ongoing geopolitical events, have adversely affected global economies, disrupted global supply chains and labor force participation, and created significant volatility and disruption of financial markets. While we do not have direct operations in Russia and Ukraine or in Israel, conflicts in those regions further disrupted global supply chains and heightened volatility and disruption of global financial markets. The ongoing volatility and disruption of financial markets caused by these global events, as well as other current global economic factors, triggered inflation in labor and energy costs and has driven significant changes in foreign currencies. The impact on our longer-term operational and financial performance will depend on future developments, including our response and governmental response to inflation, tariffs, the duration and severity of the ongoing volatility and disruption of global financial markets and our ability to effectively hire and retain personnel. Some of these future developments are outside of our control and are highly uncertain.
Previous report
Depreciation and amortization expense of $34.3 million for the three months ended January 2, 2026 decreased $2.6 million, or 7.0%, compared to the three months ended December 27, 2024.
Previous report
United States revenue of $602.9 million decreased $18.8 million, or 3.0%, for thethree months ended January 2, 2026 compared to thethree months ended December 27, 2024. The decline in revenue compared to the prior year reflects an $18.1 million decline in uniforms and a $0.7 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms.
Previous report
Canada revenue of $60.5 million decreased $1.6 million, or 2.5%, for thethree months ended January 2, 2026 compared to thethree months ended December 27, 2024. The decline in revenue compared to the prior year reflects a $1.1 million decline in uniforms and a $0.5 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms. Canada revenue was positively impacted by $0.2 million from the impact of foreign exchange on currency.
Previous report
Segment operating income of $2.2 million for the three months ended January 2, 2026 increased $0.2 million, or 13.0%, compared to the three months ended December 27, 2024.
Previous report
On May 1, 2025, the Company amended its Credit Agreement. As part of the amendment, the Company agreed to restrict all dividends and share repurchases until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as the Company is then in compliance with the financial covenants and (ii) when the Company achieves a net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.
Previous report
the net loss for the three months ended January 2, 2026 of $6.4 million compared to net income for the three months ended December 27, 2024 of $0.8 million, as discussed in "Results of Operations" above.
Previous report
•dividend payments of$4.6 million.
Previous report
Fiscal 2025 Amendment to Credit Agreement
Previous report
This amendment also provided a $15 million bad debt expense adjustment to Adjusted EBITDA in the fiscal quarter ended March 28, 2025 for the purposes of determining compliance with the financial covenants.
Previous report
The principal amounts of both the revolving credit facility commitment and term loan facility remain unchanged following this amendment.
Reworded paragraphs (34)
Previous wording
The following discussion and analysis of Vestis Corporation’s (“Vestis”, the “Company”, “our”, “we” or “us”) financial condition and results of operations for the three months ended January 2, 2026 and December 27, 2024 should be read in conjunction with our audited Consolidated and Combined Financial Statements and the notes to those statements for the fiscal year ended October 3, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on December 2, 2025.
Current wording
The following discussion and analysis of Vestis Corporation’s (“Vestis”, the “Company”, “our”, “we” or “us”) financial condition and results of operations for the three and six months ended April 3, 2026 and March 28, 2025 should be read in conjunction with our audited Consolidated and Combined Financial Statements and the notes to those statements for the fiscal year ended October 3, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on December 2, 2025.
Previous wording
•Operational Excellence. Implementing a standardized operating framework across its facilities and business units and streamlining the Company’s organizational structure in order to improve operating leverage, simplify execution, modernize core processes and systems and create a more scalable and efficient cost structure.
Current wording
•Operational Excellence. Implementing a standardized operating framework across our facilities and business units and streamlining the Company’s organizational structure in order to improve operating leverage, simplify execution, modernize core processes and systems and create a more scalable and efficient cost structure.
Previous wording
Plan implementation began during the first quarter of fiscal 2026 and is expected to generate annual operating cost savings of at least $75 million by the end of fiscal 2026 and to also enhance revenue. Currently, we anticipate that the Plan will be substantially complete by the end of fiscal 2027 and we estimate costs of the Plan to be in the range of $25 million to $30 million, with approximately $20 million related to third-party consulting and support, and up to $10 million in severance and related costs. During the first quarter of fiscal 2026, the Company recognized $7.8 million of third-party consulting fees and $5.5 million of severance costs related to the transformation.
Current wording
Plan implementation began during the first quarter of fiscal 2026 and is expected to generate annual operating cost savings of at least $75 million by the end of fiscal 2026 and to also enhance revenue. Currently, we anticipate that the Plan will be substantially complete by the end of fiscal 2027 and we estimate costs of the Plan to be in the range of $30 million to $35 million, with approximately $25 million related to third-party consulting and support, and up to $10 million in severance and related costs. During the second quarter of fiscal 2026, the Company recognized $9.3 million of third-party consulting fees and $1.0 million of severance costs related to the Company's business transformation. For the six months ended April 3, 2026, the Company recognized $17.1 million of third-party consulting fees and $6.5 million of severance costs related to the business transformation.
Previous wording
Cost of services provided decreased $3.0 million, or 0.6%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decrease was primarily driven by a $5.0 million decline in merchandise costs and a $1.3 million reduction in delivery costs. These decreases were partially offset by a $3.7 million increase in plant operating costs.
Current wording
Cost of services provided decreased $4.2 million, or 0.9%, for the three months ended April 3, 2026 compared to the three months ended March 28, 2025. The decrease was primarily driven by a $5.1 million decline in merchandise costs and a $4.3 million reduction in delivery costs. These decreases were offset by a $5.2 million increase in plant operating costs.
Previous wording
Selling, general and administrative expenses ("SG&A") decreased $0.9 million, or 0.8%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decrease in SG&A was primarily driven by headcount reductions and other cost savings measures, a $3.3 million decrease in separation-related charges, as well as a $2.8 million decrease in share-based compensation, which were partially offset by transformation costs of $7.8 million.
Current wording
Selling, general and administrative expenses ("SG&A") decreased $35.6 million, or 24.1%, for the three months ended April 3, 2026 compared to the three months ended March 28, 2025. The decrease in SG&A was primarily driven by headcount reductions and other cost savings measures resulting from the Plan, a $16.2 million decrease in the Company's bad debt expense, a $3.3 million decrease in separation-related charges, a $4.6 million decrease in share-based compensation, and a $7 million decrease in severance related costs, which were partially offset by $9.3 million of third-party consulting costs related to the Company's business transformation. The decrease in the bad debt allowance was primarily due to a $15 million charge to the Company's allowance for credit losses in the three months ended March 28, 2025 based on updated estimates of collectability. The remaining improvement in bad debt expense of $1.2 million was attributable to improvements in accounts receivable related to certain working capital initiatives.
Previous wording
Operating income of $16.6 million decreased from $30.4 million, or 45.5%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 from the impact of changes in revenue and costs noted above.
Current wording
Operating income of $26.8 million increased by $35.3 million, or 412.5%, for the three months ended April 3, 2026 compared to the three months ended March 28, 2025 from the impact of changes in revenue and costs noted above.
Previous wording
Interest expense, net, decreased $0.9 million for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 primarily due to lower interest rates.
Current wording
Interest expense, net, decreased $1.3 million for the three months ended April 3, 2026 compared to the three months ended March 28, 2025 primarily due to lower borrowings and lower interest rates.
Previous wording
The provision for income taxes for the three months ended January 2, 2026 was recorded at an effective rate of 25.3% compared to an effective rate of 45.9% for the three months ended December 27, 2024. The lower effective tax rate was due to the impact of tax adjustments, largely share-based compensation and changes in year over year earnings.
Current wording
The provision for income taxes for the three months ended April 3, 2026 was recorded at an effective rate of (3.4)% compared to an effective rate of 18.6% for the three months ended March 28, 2025. The lower effective tax rate was due to the impact of changes in year over year earnings.
Previous wording
Consolidated revenue of $663.4 million decreased $20.4 million, or 3.0%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decline in revenue compared to the prior year reflects a $19.2 million decline in uniforms and a $1.2 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms. Consolidated revenue was positively impacted by $0.2 million from the impact of foreign exchange on currency related to our Canadian operations.
Current wording
Consolidated revenue of $1,322.8 million decreased $26.2 million, or 1.9%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025. The decline in revenue compared to the prior year reflects a $29.7 million decline in uniforms offset by a $3.5 million increase in workplace supplies, resulting from sales product mix shifting which occurred prior to the commencement of the Plan on 0.8% lower overall volume levels measured as pounds processed in our plants. Consolidated revenue was positively impacted by $2.9 million from the impact of foreign exchange on currency related to our Canadian operations.
Previous wording
Other expense, net of other income, decreased $0.7 million for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 primarily due to a decrease in A/R Facility fees of $0.5 million.
Current wording
Other expense, net of other income, decreased $0.8 million for the six months ended April 3, 2026 compared to the six months ended March 28, 2025, due, in part, to a decrease in A/R Facility fees of $0.4 million.
Previous wording
Net loss of $6.4 million for the three months ended January 2, 2026 represented a decrease of $7.2 million, or 868.1%, compared to net income of $0.8 million for the three months ended December 27, 2024, due to the impact of changes to revenue and expenses noted above.
Current wording
Net loss of $3.8 million for the six months ended April 3, 2026 represented an improvement of $23.2 million, or 85.9%, compared to a net loss of $27.0 million for the six months ended March 28, 2025, due to the impact of changes to revenue and expenses noted above.
Previous wording
Segment operating income of $36.2 million for the three months ended January 2, 2026 decreased $21.8 million, or 37.6%, compared to the three months ended December 27, 2024, primarily driven bythe decrease in revenue during the three months ended January 2, 2026, as described above.
Current wording
Segment operating income of $49.8 million for the three months ended April 3, 2026 increased $31.2 million, or 168.3%, compared to the three months ended March 28, 2025, primarily driven by reduced operating expenses, partially offset by a decrease in revenue during the three months ended April 3, 2026, as described above.
Previous wording
Segment operating income margin increased approximately 50 basis points from 3.1% for the three months ended December 27, 2024, to approximately 3.6% for the three months ended January 2, 2026.
Current wording
Segment operating income margin increased approximately 530 basis points from 3.1% for the three months ended March 28, 2025 to approximately 8.3% for the three months ended April 3, 2026.
Previous wording
Segment operating income margin decreased approximately 330 basis points from 9.3% for the three months ended December 27, 2024 to approximately 6.0% for the three months ended January 2, 2026.
Current wording
Segment operating income margin decreased approximately 30 basis points from 3.5% for the three months ended March 28, 2025, to approximately 3.2% for the three months ended April 3, 2026.
Previous wording
As part of our capital structure, we entered into a Credit Agreement on September 29, 2023 (the "Credit Agreement"). The Credit Agreement included senior secured term loan facilities consisting of term loan A-1 tranche due September 2025 in the amount of $800 million ("Term Loan A-1"), term loan A-2 tranche due September 2028 in the amount of $700 million ("Term Loan A-2") and a revolving credit facility. On February 22, 2024, we entered into Amendment No. 1 to our Credit Agreement and refinanced our Term Loan A-1 ("Term Loan A-1") with an $800 million Term Loan B-1 due February 2031 ("Term Loan B-1"). The Term Loan B-1 requires$2.0 million of principal payments each quarter until the maturity date, at which point the remaining unpaid principal amount is due.
Current wording
As part of our capital structure, we entered into a senior secured credit agreement (as amended by the First Amendment and the Second Amendment described below, the “Credit Agreement”) on September 29, 2023, which initially consisted of (i) a term loan A-1 tranche due September 2025 in the amount of $800 million (“Term Loan A-1”), (ii) a term loan A-2 tranche due September 2028 in the amount of $700 million ("Term Loan A-2") and (iii) a $300 million revolving credit facility. On February 22, 2024, we entered into an amendment to our credit agreement (the “First Amendment”) and refinanced our Term Loan A-1 with an $800 million Term Loan B-1 due February 2031 ("Term Loan B-1"). The Term Loan B-1 requires $2.0 million of principal payments each quarter until the maturity date, at which point the remaining unpaid principal amount is due. On May 1, 2025, we entered into an amendment to our credit agreement (the “Second Amendment”). As part of the Second Amendment, we agreed to restrict all dividends and share repurchases until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as we are then in compliance with the financial covenants and (ii) when we achieve a consolidated total net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.
Previous wording
The Term Loan B-1 interest rate is at the Secured Overnight Financing Rate ("SOFR") plus a margin that is between 2.0% and 2.25%, depending on the Company's Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement. The applicable margin on Term Loan B-1 was 2.25% during the three months ended January 2, 2026 and December 27, 2024, and will adjust to SOFR plus 200 basis points once the Company reaches a 3.30x Net Leverage as defined in the Credit Agreement.
Current wording
The Term Loan B-1 interest rate is at the Secured Overnight Financing Rate (“SOFR”) plus a margin that is between 2.0% and 2.25%, depending on our consolidated total net leverage ratio, as defined in the Credit Agreement. The applicable margin on Term Loan B-1 was 2.25% during the three and six months ended April 3, 2026 and March 28, 2025, and will adjust to SOFR plus 200 basis points once we achieve a 3.30x consolidated total net leverage ratio, as defined in the Credit Agreement.
Previous wording
The Term Loan A-2 interest rate is SOFR plus a Credit Spread Adjustment of 10 basis points and a margin that is between 1.5%% and 2.50%, depending on the Company's Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement. The applicable margin on Term Loan A-2 was 2.50% and 2.33% during the three months ended January 2, 2026 and December 27, 2024, respectively.
Current wording
The Term Loan A-2 interest rate is SOFR plus a Credit Spread Adjustment of 10 basis points and a margin that is between 1.5% and 2.50%, depending on our consolidated total net leverage ratio, as defined in the Credit Agreement. The applicable margin on Term Loan A-2 was 2.50% during the three and six months ended April 3, 2026, and was 2.25% during the three and six months ended March 28, 2025.
Previous wording
On August 2, 2024, Vestis Services, LLC (“Vestis Services”) and certain other subsidiaries of the Company entered into a three-year$250.0 million accounts receivable securitization facility (the “A/R Facility”). Under the A/R Facility, Vestis Services and certain other wholly-owned subsidiaries of the Company transfer accounts receivable and certain related assets to VS Financing, LLC, a bankruptcy remote special purpose entity formed as a wholly-owned subsidiary of Vestis Services ("SPE"), who in turn, may sell the receivables to one or more financial institutions ("Purchasers"). The net proceeds of the A/R Facility were used to repay a portion of the outstanding borrowings under the existing term loans. The A/R Facility is scheduled to terminate on August 2, 2027, unless terminated earlier pursuant to its terms. As of January 2, 2026 and October 3, 2025, the total value of accounts receivable sold from the SPE to the Purchasers under the A/R Facility and derecognized from the Company's Condensed Consolidated Balance Sheet was$217.2 million and $202.5 million, respectively.
Current wording
A/R Facility, Vestis Services and certain other wholly-owned subsidiaries of the Company transfer accounts receivable and certain related assets to VS Financing, LLC, a bankruptcy remote special purpose entity formed as a wholly-owned subsidiary of Vestis Services ("SPE"), who in turn, may sell the receivables to one or more financial institutions ("Purchasers"). The net proceeds of the A/R Facility were used to repay a portion of the outstanding borrowings under the existing term loans. The A/R Facility is scheduled to terminate on August 2, 2027, unless terminated earlier pursuant to its terms. As of April 3, 2026 and October 3, 2025, the total value of accounts receivable sold from the SPE to the Purchasers under the A/R Facility and derecognized from the Company's Condensed Consolidated Balance Sheet was$211.3 million and $202.5 million, respectively.
Previous wording
As of January 2, 2026, we had approximately $41.5 million of cash and cash equivalents and$275.2 million of availability under our revolving credit facility. As of January 2, 2026, we had $1,161.5 million of total principal debt compared to $1,168.5 million as of October 3, 2025. The servicing of this debt will be supported by cash flows from our operations.
Current wording
As of April 3, 2026, we had approximately $50.3 million of cash and cash equivalents and no borrowings outstanding on the revolving credit facility. Maximum availability under our revolving credit facility is $300 million, of which$294.2 million was available for borrowing as of April 3, 2026. The availability under the revolver is net of letters of credit of $5.8 million. As of April 3, 2026, we had $1,127.5 million of total principal debt compared to $1,168.5 million as of October 3, 2025. The servicing of this debt will be supported by cash flows from our operations.
Previous wording
Net cash provided by operating activities was $37.7 million for the three months ended January 2, 2026 and $3.8 million for the three months ended December 27, 2024. The increase in net cash provided by operating activities of $33.9 million was due, in part, to the change in operating assets and liabilities of $41.0 million, when comparing the three months ended January 2, 2026 to the three months ended December 27, 2024, partially offset by
Current wording
Net cash provided by operating activities was $95.9 million for the six months ended April 3, 2026 and $10.4 million for the six months ended March 28, 2025. The increase in net cash provided by operating activities of $85.5 million was due, in part, to the change in operating assets and liabilities of $65.2 million, when comparing the six months ended April 3, 2026 to the six months ended March 28, 2025, as well as to the lower net loss for the six months ended April 3, 2026 compared with the six months ended March 28, 2025. The net loss for the six months ended April 3, 2026 was $3.8 million compared to a net loss of $27.0 million for the six months ended March 28, 2025 (see "Results of Operations" above).
Previous wording
The change in operating assets and liabilities was, in part, due to improved management and collections of accounts receivable, increased utilization of the A/R Facility, strategic shifts in inventory management and changes in accounts payable and accrued expenses (that reflect reduced operational spending, partly related to decreased revenue and partly related to certain cost reduction initiatives).
Current wording
The change in operating assets and liabilities was, in part, due to improved management and collections of accounts receivable, increased utilization of the A/R Facility, strategic shifts in inventory management and changes in accounts payable and accrued expenses (that reflect, among other things, reduced operational spending, partly related to decreased revenue and partly related to certain cost reduction initiatives).
Previous wording
Net cash used in investing activities was $9.1 million for the three months ended January 2, 2026 compared to net cash provided by investing activities of $17.9 million for the three months ended December 27, 2024. The decrease of $27.0 million was primarily due to net proceeds from the sale of an equity investment during the first quarter of fiscal 2025 of $36.8 million, partially offset by $5.3 million lower year-over-year purchases of property and equipment and lower acquisition-related investments of $4.6 million. The acquisition-related investment in the first quarter of fiscal 2025 was related to a tuck-in acquisition.
Current wording
Net cash used in investing activities was $15.3 million for the six months ended April 3, 2026 compared to net cash provided by investing activities of $9.2 million for the six months ended March 28, 2025. The decrease of $24.5 million was primarily due to net proceeds from the sale of an equity investment during the first quarter of fiscal 2025 of $36.8 million, partially offset by $6.2 million lower year-over-year purchases of property and equipment and lower acquisition-related investments of $4.6 million. During the three months ended April 3, 2026, the Company sold two properties for $6.5 million, one of which was previously identified as held-for-sale. The acquisition-related investment in the first quarter of fiscal 2025 was related to a tuck-in acquisition.
Previous wording
During the three months ended January 2, 2026, cash used in financing activities was primarily impacted by the following:
Current wording
During the six months ended April 3, 2026, cash used in financing activities was primarily impacted by the following:
Previous wording
•proceeds from long-term borrowings of $48.0 million;
Current wording
•proceeds from long-term borrowings of $75.0 million;
Previous wording
•payments oflong-term borrowings of $55.0 million; and
Current wording
•payments oflong-term borrowings of $116.0 million; and
Previous wording
•payments related to finance leases of $9.2 million.
Current wording
•payments related to finance leases of $18.7 million.
Previous wording
During the three months ended December 27, 2024, cash used in financing activities was primarily impacted by the following:
Current wording
During the six months ended March 28, 2025, cash used in financing activities was primarily impacted by the following:
Previous wording
•payments for long-term borrowings of $20.0 million;
Current wording
•payments for long-term borrowings of $30.0 million;
Previous wording
•payments related to finance leases of $8.3 million; and
Current wording
•payments related to finance leases of $16.8 million; and
Previous wording
Prior to our May 1, 2025 amendment, which is described below, our Credit Agreement required us to maintain a maximum Consolidated Total Net Leverage Ratio, defined as consolidated total indebtedness in excess of unrestricted cash divided by Covenant Adjusted EBITDA (as defined in the Credit Agreement), not to exceed 5.25x for any fiscal quarter ending prior to March 31, 2025, and not to exceed 4.50x for any fiscal quarter ending on or after March 31, 2025, subject to certain exceptions. Consolidated total indebtedness is defined in the Credit Agreement as total indebtedness consisting of debt for borrowed money, finance leases, disqualified and preferred stock and advances under any receivables facility. Covenant Adjusted EBITDA is defined in the Credit Agreement as consolidated net income increased by interest expense, taxes, depreciation and amortization expense, initial public company costs, restructuring charges, write-offs and noncash charges, non-controlling interest expense, net cost savings in connection with any acquisition, disposition, or other permitted investment under the Credit Agreement, share-based compensation expense, non-recurring or unusual gains and losses, reimbursable insurance costs, cash expenses related to earn outs, and insured losses.
Current wording
For example, the Credit Agreement requires that we maintain a maximum consolidated total net leverage ratio. The Second Amendment increased the maximum consolidated total net leverage ratio under the Credit Agreement from 4.50x to (i) 5.25x for any fiscal quarter ending prior to July 3, 2026, (ii) 5.00x for the fiscal quarter ending July 3, 2026, and (iii) 4.75x for the fiscal quarter ending October 2, 2026. Pursuant to the Credit Agreement, the maximum consolidated total net leverage ratio will remain at 4.50x for the first quarter of fiscal 2027 through maturity. Consolidated total net leverage ratio is defined under the Credit Agreement as consolidated total indebtedness over unrestricted cash divided by Adjusted EBITDA (as defined in the Credit Agreement). Consolidated total indebtedness is defined in the Credit Agreement as total indebtedness consisting of debt for borrowed money, finance leases, disqualified and preferred stock and advances under any receivables facility. Covenant Adjusted EBITDA is defined in the Credit Agreement as consolidated net income increased by interest expense, taxes, depreciation and amortization expense, initial public company costs, restructuring charges, write-offs and noncash charges, non-controlling interest expense, net cost savings in connection with any acquisition, disposition, or other permitted investment under the Credit Agreement, share-based compensation expense, non-recurring or unusual gains and losses, reimbursable insurance costs, cash expenses related to earn outs, and insured losses.
Previous wording
As part of this amendment, the Company agreed to limit the aggregate size of its A/R Facility and any other receivables facilities to $250 million and restrict all dividends and share repurchases, in each case until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as the Company is then in compliance with the financial covenants and (ii) when the Company achieves a net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.
Current wording
As part of the Second Amendment, we also agreed to limit the aggregate size of our A/R Facility and any other receivables facilities to $250 million and restrict all dividends and share repurchases, in each case until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as the Company is then in compliance with the financial covenants and (ii) when we achieve a maximum consolidated total net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.
Previous wording
The Credit Agreement establishes a minimum Interest Coverage Ratio, defined as Covenant Adjusted EBITDA divided by consolidated interest expense. The minimum Interest Coverage Ratio is required to be at least 2.00x for the term of the Credit Agreement.
Current wording
In addition, the Credit Agreement also established a minimum interest coverage ratio, defined as Adjusted EBITDA (as defined in the Credit Agreement) divided by consolidated interest expense. The minimum interest coverage ratio is required to be at least 2.00x for the term of the Credit Agreement.
Previous wording
At January 2, 2026, we were in compliance with all covenants under the Credit Agreement.
Current wording
As of April 3, 2026, the Company was in compliance with all covenants under the Credit Agreement.
Previous wording
Our significant accounting policies are described in the notes to the audited Consolidated and Combined Financial Statements included in our Annual Report on form 10-K, filed with the SEC on December 2, 2025. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of the Financial Statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the SEC on December 2, 2025. Management believes that there have been no significant changes during thethree months ended January 2, 2026 to the items that we disclosed as our critical accounting policies and estimates in our Annual Report on Form 10-K for the fiscal year ended October 3, 2025.
Current wording
Our significant accounting policies are described in the notes to the audited Consolidated and Combined Financial Statements included in our Annual Report on form 10-K, filed with the SEC on December 2, 2025. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of the Financial Statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the SEC on December 2, 2025. Management believes that there have been no significant changes during thesix months ended April 3, 2026 to the items that we disclosed as our critical accounting policies and estimates in our Annual Report on Form 10-K for the fiscal year ended October 3, 2025.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
The following table presents an overview of our results along with the amount of and percentage change between periods for the six months ended April 3, 2026 and March 28, 2025 (dollars in thousands).
Current report — wording carried from elsewhere
(1)Exclusive of depreciation and amortization
Current report — wording carried from elsewhere
Cost of services provided decreased $7.3 million, or 0.7%, for the six months ended April 3, 2026 compared to the six months ended March 28, 2025. The decrease was primarily driven by a $10.2 million decline in merchandise costs and a $5.6 million reduction in delivery costs. These decreases were partially offset by an $8.9 million increase in plant operating costs.
Current report — wording carried from elsewhere
Results of Operations—United States Results Six Months Ended April 3, 2026 compared with March 28, 2025
Current report — wording carried from elsewhere
The following table presents an overview of our United States reportable segment results along with the amount of and percentage change between periods for the six months ended April 3, 2026 and March 28, 2025 (dollars in thousands).
Current report — wording carried from elsewhere
Results of Operations—Canada Results Six Months Ended April 3, 2026 compared with March 28, 2025
Current report — wording carried from elsewhere
The following table presents an overview of our Canada reportable segment results along with the amount of and percentage change between periods for the six months ended April 3, 2026 and March 28, 2025 (dollars in thousands).
Current report — wording carried from elsewhere
On August 2, 2024, Vestis Services, LLC (“Vestis Services”) and certain other subsidiaries of the Company entered into a three-year$250.0 million accounts receivable securitization facility (the “A/R Facility”). Under the
Current report — wording carried from elsewhere
•proceeds from long-term borrowings of $40.0 million;
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On May 1, 2025, the Company entered into Amendment No. 2 to its Credit Agreement. This amendment increased the Consolidated Total Net Leverage Ratio from 4.50x to (i) 5.25x for any fiscal quarter ending prior to July 3, 2026, (ii) 5.00x for the fiscal quarter ending July 3, 2026 and (iii) 4.75x for the fiscal quarter ending October 2, 2026. Pursuant to this amendment, the Consolidated Total Net Leverage Ratio will remain at 4.50x for the first quarter of fiscal 2027 through maturity.