Vestis Corp

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 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.

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 nine months ended July 3, 2026 and June 27, 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

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 wording

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, have had an impact, and could in the future materially 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 recent increases in energy costs, we implemented an energy surcharge, starting in the second fiscal quarter of 2026, to help mitigate the impact on our operating results.

Previous wording

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 wording

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. In addition, while we have attempted to pass increased costs on to our customers, where permissible, including through our recent energy surcharge, there can be no assurance that we will be able to fully recover our costs or continue to do so in the future.

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 $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.

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 $35 million to $40 million, with approximately $15 million related to third-party consulting and support, and up to $25 million in severance and related costs. During the third quarter of fiscal 2026, the Company recognized $6.1 million of third-party consulting fees and $1.6 million of severance costs related to the Company's business transformation. For the nine months ended July 3, 2026, the Company recognized $23.2 million of third-party consulting fees and $8.0 million of severance costs related to the business transformation.

Previous 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.

Current wording

Cost of services provided decreased $15.4 million, or 3.1%, for the three months ended July 3, 2026 compared to the three months ended June 27, 2025. The decrease was primarily driven by a $9.4 million decline in merchandise costs, a $3.9 million reduction in plant operating cost and lower delivery costs of $1.5 million.

Previous 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.

Current wording

Selling, general and administrative expenses ("SG&A") decreased $7.4 million, or 6.1%, for the three months ended July 3, 2026 compared to the three months ended June 27, 2025. The decrease in SG&A was primarily driven by headcount reductions and other cost savings measures resulting from the Plan (including an $11.8 million decrease in salaries, wages and related employee costs), a $2.0 million decrease in separation-related charges, and a $2.7 million decrease in advertising and related costs, which were partially offset by $6.1 million of third-party consulting costs related to the Company's business transformation, a $5.4 million increase in share-based compensation and a $1.2 million increase in severance related costs,

Previous 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.

Current wording

Operating income of $37.2 million increased by $12.3 million, or 49.2%, for the three months ended July 3, 2026 compared to the three months ended June 27, 2025 from the impact of changes in revenue and costs noted above.

Previous 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.

Current wording

Interest expense, net, decreased $2.4 million for the three months ended July 3, 2026 compared to the three months ended June 27, 2025 primarily due to lower borrowings.

Previous wording

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 wording

Other expense, net of other income (which consists primarily of A/R Facility fees), decreased $0.4 million for the three months ended July 3, 2026 compared to the three months ended June 27, 2025.

Previous 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.

Current wording

The provision for income taxes for the three months ended July 3, 2026 was recorded at an effective rate of 23.0% compared to an effective rate of 9.7% for the three months ended June 27, 2025. The higher effective tax rate was due to the impact of changes in year over year earnings and discrete items such as provision to return impacts recognized in each period.

Previous wording

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 wording

Net income of $11.0 million for the three months ended July 3, 2026 represented an improvement of $11.7 million, or 1734.0%, compared to a net loss of $0.7 million for the three months ended June 27, 2025, primarily due to the reduced operating expenses as noted above.

Previous wording

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 wording

The following table presents an overview of our results along with the amount of and percentage change between periods for the nine months ended July 3, 2026 and June 27, 2025 (dollars in thousands).

Previous 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.

Current wording

Consolidated revenue of $1,984.5 million decreased $38.3 million, or 1.9%, for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025. The decline in revenue compared to the prior year reflects a $47.9 million decline in uniforms offset by a $9.6 million increase in workplace supplies. Net volumes decreased 2.0% versus prior year, partially offset by strategic pricing improvements. Volume declines resulted, in part, from targeted reductions in unprofitable sales volume resulting from the Plan. Consolidated revenue was positively impacted by $2.9 million from the impact of foreign exchange on currency related to our Canadian operations.

Previous wording

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 wording

Cost of services provided decreased $22.7 million, or 1.5%, for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025. The decrease was primarily driven by a $19.5 million decline in merchandise costs and a $7.1 million reduction in delivery costs. These decreases were partially offset by an $5.0 million increase in plant operating costs.

Previous wording

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 wording

Selling, general and administrative expenses ("SG&A") decreased $44.0 million, or 11.2%, for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025. The decrease in SG&A was primarily driven by a $17.2 million decrease in the Company's bad debt expense and headcount reductions and other cost savings measures resulting from the Plan (including a $25.4 million decrease in salaries, wages and related employee costs), an $11.4 million decrease in advertising and related costs, an $8.5 million decrease in separation-related charges, a $4.4 million decrease in severance related costs, and a $2.0 million decrease in share-based compensation. These decreases were partially offset by $23.2 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 during the second quarter of fiscal 2025 based on updated estimates of collectability. The remaining improvement in bad debt expense of $2.2 million was attributable to improvements in accounts receivable related to certain working capital initiatives. Share-based compensation for the nine months ended June 27, 2025 was impacted by the acceleration of awards associated with the departure of certain executives during the period.

Previous wording

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 wording

Operating income of $80.6 million increased by $33.8 million, or 72.3% for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025 from the impact of changes in revenue and costs noted above.

Previous wording

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 wording

Interest expense, net, decreased $4.5 million for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025 primarily due to lower borrowings.

Previous 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.

Current wording

Other expense, net of other income, decreased $1.2 million for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025, due, in part, to a decrease in A/R Facility fees of $1.4 million.

Previous wording

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 wording

The provision for income taxes for the nine months ended July 3, 2026 was recorded at an effective rate of 12.6% compared to an effective rate of 17.1% for the nine months ended June 27, 2025. The lower 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.

Previous 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.

Current wording

Net income of $7.3 million for the nine months ended July 3, 2026 represented an improvement of $34.9 million, or 126.2%, compared to a net loss of $27.7 million for the nine months ended June 27, 2025, due to the impact of changes to revenue and expenses noted above.

Previous wording

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 wording

United States revenue of $600.7 million decreased $12.6 million, or 2.0%, for thethree months ended July 3, 2026 compared to thethree months ended June 27, 2025 on lower overall volumes resulting, in part, from targeted reductions in unprofitable sales volume resulting from the Plan. The decline in revenue was driven by a $17.9 million decline in uniform revenue, offset by a $5.3 million increase in workplace supplies.

Previous 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.

Current wording

Segment operating income of $55.5 million for the three months ended July 3, 2026 increased $14.9 million, or 36.5%, compared to the three months ended June 27, 2025, primarily driven by reduced operating expenses, partially offset by a decrease in revenue during the three months ended July 3, 2026, as described above.

Previous wording

Results of Operations—United States Results Six Months Ended April 3, 2026 compared with March 28, 2025

Current wording

Results of Operations—United States Results Nine Months Ended July 3, 2026 compared with June 27, 2025

Previous wording

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 wording

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 nine months ended July 3, 2026 and June 27, 2025 (dollars in thousands).

Previous wording

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 wording

United States revenue of $1,802.6 million decreased $38.5 million, or 2.1%, for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025 on lower overall volumes resulting, in part, from targeted reductions in unprofitable sales volume resulting from the Plan. The decline in revenue compared to the prior year reflects a $46.4 million decline in uniforms offset by a $7.9 million increase in workplace supplies.

Previous wording

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 wording

Segment operating income of$141.5 million for thenine months ended July 3, 2026 increased$24.3 million, or 20.7%, compared to thenine months ended June 27, 2025, primarily driven by reduced operating expenses, partially offset bya decrease in revenue during the nine months ended July 3, 2026, as described above.

Previous wording

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 wording

Canada revenue of $60.9 million increased $0.4 million, or 0.7%, for thethree months ended July 3, 2026 compared to thethree months ended June 27, 2025. The increase in revenue compared to the prior year primarily reflects a $0.8 million increase in workplace supplies driven by strength in strategic pricing resulting from the Plan.

Previous 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.

Current wording

Segment operating income margin decreased approximately 30 basis points from 4.2% for the three months ended June 27, 2025, to approximately 3.9% for the three months ended July 3, 2026.

Previous wording

Results of Operations—Canada Results Six Months Ended April 3, 2026 compared with March 28, 2025

Current wording

Results of Operations—Canada Results Nine Months Ended July 3, 2026 compared with June 27, 2025

Previous wording

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 wording

The following table presents an overview of our Canada reportable segment results along with the amount of and percentage change between periods for the nine months ended July 3, 2026 and June 27, 2025 (dollars in thousands).

Previous wording

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 wording

Canada revenue of $181.9 million increased $0.2 million, or 0.1%, for the nine months ended July 3, 2026 compared to the nine months ended June 27, 2025, net of a positive impact from the impact of foreign exchange on currency of $2.9 million. The increase in revenue compared to the prior year reflects a $1.7 million increase in workplace supplies and a $1.5 million decrease in uniforms driven by strength in strategic pricing resulting from the Plan.

Previous wording

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 wording

Segment operating income margin decreased approximately 10 basis points from 3.6% for thenine months ended June 27, 2025, to approximately 3.5% for thenine months ended July 3, 2026.

Previous 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.

Current wording

As part of our capital structure, we entered into a senior secured credit agreement on September 29, 2023, which was amended in February 2024 and May 2025 (as amended, the “Credit Agreement”), which currently consists of (i) a term loan A-2 tranche due September 2028 in the amount of $700 million ("Term Loan A-2"), (ii) an $800 million Term Loan B-1 due February 2031 ("Term Loan B-1"), and (iii) a $300 million revolving credit facility. 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. Under the Credit Agreement, we have 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 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.

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 months ended July 3, 2026 and June 27, 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 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.

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% and 2.33% during the three months ended July 3, 2026, and June 27, 2025, respectively.

Previous 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.

Current 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 July 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$212.3 million and $202.5 million, respectively.

Previous 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.

Current wording

As of July 3, 2026, we had approximately $57.7 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 July 3, 2026. The availability under the revolver is net of letters of credit of $5.8 million. As of July 3, 2026, we had $1,097.5 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 $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).

Current wording

Net cash provided by operating activities was $160.9 million for the nine months ended July 3, 2026 and $33.3 million for the nine months ended June 27, 2025. The increase in net cash provided by operating activities of $127.6 million was due, in part, to the change in operating assets and liabilities of $79.0 million, when comparing the nine months ended July 3, 2026 to the nine months ended June 27, 2025, as well as to the improvement in net income for the nine months ended July 3, 2026 compared with the nine months ended June 27, 2025. The net income for the nine months ended July 3, 2026 was $7.3 million compared to a net loss of $27.7 million for the nine months ended June 27, 2025 (see "Results of Operations" above).

Previous 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.

Current wording

Net cash used in investing activities was $33.5 million for the nine months ended July 3, 2026 compared to net cash used in investing activities of $5.5 million for the nine months ended June 27, 2025. The increase of $27.9 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 $3.1 million lower year-over-year purchases of property and equipment and lower acquisition-related investments of $4.1 million.

Previous wording

During the six months ended April 3, 2026, cash used in financing activities was primarily impacted by the following:

Current wording

During the nine months ended July 3, 2026, cash used in financing activities was primarily impacted by the following: