Vestis Corp
For the period ended Mar 28, 2025. Filed May 7, 2025.
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.
Mar 28, 2025 · Filed May 7, 2025
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 2024-12-27; filed 2025-02-05.
0001967649-25-000014
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-28; filed 2025-05-07.
0001967649-25-000031
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 79 previous paragraphs and 109 current paragraphs.
37 unchanged; 25 reworded; 40 added; 17 removed; 0 previous and 7 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 (40)
Current report
Consolidated revenue of $665.2 million decreased $40.1 million, or 5.7%, for the three months ended March 28, 2025 compared to the three months ended March 29, 2024. Revenue declined by $17.5 million due to lost business in excess of new business during the period, in addition to approximately $5.8 million in lower revenue related to existing customers, $6.8 million lower revenue from direct sales, primarily related to the loss of a national account customer, $5.0 million in lower customer exit billings that did not recur, and $5.0 million in lower revenue related to other revenue categories.
Current report
Depreciation and amortization expense of $35.9 million for the three months ended March 28, 2025 increased $0.7 million, or 1.9%, compared to the three months ended March 29, 2024.
Current report
Selling, general and administrative expenses ("SG&A") increased $25.3 million, or 20.6%, for the three months ended March 28, 2025 compared to the three months ended March 29, 2024. The increase in SG&A was primarily due to an increase of $17.4 million in the Company's bad debt expense, which includes an adjustment to the Company's allowance for credit losses in the amount of $15.0 million based on updated estimates of collectability, an increase in severance charges of $8.1 million primarily related to the departure of certain former executives, increased share based compensation of $3.2 million primarily related to the acceleration of expense due to certain executive departures, and increased general and administrative wage and payroll costs of $2.2 million.
Current report
The provision for income taxes for the three months ended March 28, 2025 was recorded at an effective rate of 18.6% compared to an effective rate of 28.5% for the three months ended March 29, 2024. The Company’s effective rate for the three months ended March 28, 2025 differed from the U.S. statutory rate primarily due to our consolidated pre-tax book loss relative to the impacts of state taxes, permanent book/tax differences consisting mainly of nondeductible executive compensation and meals and entertainment, and our international operations in jurisdictions with higher income tax rates. The Company’s effective rate for the three months ended March 29, 2024 differed from the U.S. statutory rate primarily due to our consolidated pre-tax book income relative to the impacts of state taxes, permanent book/tax differences consisting mainly of nondeductible executive compensation and meals and entertainment, and our international operations in jurisdictions with higher income tax rates.
Current report
Results of Operations Six Months Ended March 28, 2025 compared with March 29, 2024
Current report
Consolidated revenue of $1,349.0 million decreased $74.3 million, or 5.2%, for the six months ended March 28, 2025 compared to the six months ended March 29, 2024. Revenue declined by $36.1 million due to lost business in excess of new business during the period, in addition to approximately $22.6 million in lower revenue related to existing customers, including one-time exit billings, net of new pricing during the period, and $15.6 million lower revenue from direct sales.
Current report
Cost of services provided decreased $21.5 million, or 2.1%, for the six months ended March 28, 2025 compared to the six months ended March 29, 2024 primarily due to decreases in wages and payroll costs of $11.6 million and merchandise costs of $8.9 million.
Current report
Depreciation and amortization expense of $72.8 million for the six months ended March 28, 2025 increased $2.2 million, or 3.2%, compared to the six months ended March 29, 2024.
Current report
Selling, general and administrative expenses ("SG&A") increased $13.9 million, or 5.4%, for the six months ended March 28, 2025 compared to the six months ended March 29, 2024. The increase in SG&A was primarily due to an increase of $19.2 million in the Company's bad debt expense, which includes an adjustment to the Company's allowance for credit losses in the amount of $15.0 million based on updated estimates of collectability, an increase in severance charges of $11.9 million primarily related to the departure of certain former executives, and increased share based compensation of $3.7 million related to the acceleration of expense due to certain executive departures. These impacts were partially offset by a decrease in selling, general and administrative wage and payroll costs of $11.2 million, a decrease of $3.8 million in equipment expense, a decrease in professional service costs of $1.5 million, and a decrease in general liability insurance expense of $1.7 million.
Current report
Interest expense, net, decreased $21.4 million for the six months ended March 28, 2025 compared to the six months ended March 29, 2024 primarily due to lower average outstanding debt during the six months ended March 28, 2025 as compared to the six months ended March 29, 2024.
Current report
Other Expense (Income) increased $10.4 million for the six months ended March 28, 2025 compared to the six months ended March 29, 2024 primarily due to a loss on sale of accounts receivable for the A/R Facility of $6.6 million, as these costs were not incurred during the three months ended March 29, 2024. Other Expense (Income) was negatively impacted by a $1.4 million decrease in income from an equity method investment due to its sale in the first quarter of fiscal year 2025.
Current report
The provision for income taxes for the six months ended March 28, 2025 was recorded at an effective rate of 17.3% compared to an effective rate of 27.5% for the six months ended March 29, 2024. The Company’s effective rate for the six months ended March 28, 2025 differed from the U.S. statutory rate primarily due to our consolidated pre-tax book loss relative to the impacts of state taxes, permanent book/tax differences consisting mainly of nondeductible executive compensation and meals and entertainment, and our international operations in jurisdictions with higher income tax rates. The Company’s effective rate for the six months ended March 29, 2024 differed from the U.S. statutory rate primarily due to our consolidated pre-tax book income relative to the impacts of state taxes, permanent book/tax differences consisting mainly of nondeductible executive compensation and meals and entertainment, and our international operations in jurisdictions with higher income tax rates.
Current report
Net loss of $27.0 million for the six months ended March 28, 2025 represented a decrease of $45.2 million, or 248.1%, compared to net income of $18.2 million for the six months ended March 29, 2024 due to the impact of changes to revenue and expenses noted above.
Current report
United States revenue of $606.1 million decreased $36.0 million, or 5.6%, for thethree months ended March 28, 2025 compared to thethree months ended March 29, 2024. Revenue declined by $15.9 million due to lost business in excess of new business during the period, in addition to approximately $13.7 million in lower revenue related to existing customers, including one-time exit billings, net of new pricing during the period, and $6.4 million lower revenue from direct sales.
Current report
Segment operating income of $18.6 million for the three months ended March 28, 2025 decreased $52.6 million, or 73.9%, compared to the three months ended March 29, 2024, primarily driven by:
Current report
•an increase of$17.4 million in the Company's bad debt expense, which includes an adjustment to the Company's allowance for credit losses in the amount of $15.0 million based on updated estimates of collectability; and
Current report
•an increase in wage and payroll costs of$4.5 million; partially offset by
Current report
•a decrease in merchandise costs of$4.1 million.
Current report
United States revenue of$1,227.8 million decreased$67.5 million, or 5.2%, for the six months ended March 28, 2025 compared to the six months ended March 29, 2024. Revenue declined by $33.2 million due to lost business in excess of new business during the period, in addition to approximately $20.2 million in lower revenue related to existing customers, including one-time exit billings, net of new pricing during the period, and $14.1 million lower revenue from direct sales.
Current report
Segment operating income of $76.6 million for the six months ended March 28, 2025 decreased $68.7 million, or 47.3%, compared to the six months ended March 29, 2024, primarily driven by:
Current report
•the decrease in revenue during the six months ended March 28, 2025, as described above; and
Current report
•an increase of$19.2 million in the Company's bad debt expense, which includes an adjustment to the Company's allowance for credit losses in the amount of $15.0 million based on updated estimates of collectability; partially offset by
Current report
•lower merchandise costs of$6.8 million;
Current report
Segment operating income margin decreased approximately 500 basis points from 11.2% for the six months ended March 29, 2024 to approximately 6.2% for the six months ended March 28, 2025.
Current report
Canada revenue of $59.2 million decreased $4.1 million, or 6.5%, for thethree months ended March 28, 2025 compared to thethree months ended March 29, 2024. Revenue declined by $1.5 million due to lost business in excess of new business during the period, in addition to approximately $2.2 million in lower revenue related to existing customers, including one-time exit billings, net of new pricing during the period, and $0.4 million lower revenue from direct sales.
Current report
Segment operating income of $2.1 million for the three months ended March 28, 2025 increased $1.1 million, or 113.1%, compared to the three months ended March 29, 2024.
Current report
Canada revenue of$121.2 million decreased$6.8 million, or 5.3%, for the six months ended March 28, 2025 compared to the six months ended March 29, 2024. Revenue declined by $2.8 million due to lost business in excess of new business during the period, in addition to approximately$2.6 million in lower revenue related to existing customers, including one-time exit billings, net of new pricing during the period, and$1.4 million lower revenue from direct sales.
Current report
Segment operating income margin decreased approximately 100 basis points from 4.3% for the six months ended March 29, 2024, to approximately 3.3% for the six months ended March 28, 2025.
Current report
Subsequent to the end of the second quarter of fiscal 2025, 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.
Current report
Additionally, the change in cash used in operating assets and liabilities of $73.9 million, when comparing the six months ended March 28, 2025 to the six months ended March 29, 2024, was primarily due to investments in inventory during the six months ended March 28, 2025 to support new customers and more effectively serve existing customers. Also, approximately$6.0 million of the increase in cash used for inventory is related to tariff pre-buy.
Current report
•proceeds from long-term borrowings, net of repayments, of $10.0 million;
Current report
•dividend payments of $13.8 million.
Current report
•payments for long-term borrowings, net of proceeds, of $64.5 million;
Current report
•dividend payments of$4.6 million; and
Current report
•debt issuance costs of$11.1 million.
Current report
Amendment to Credit Agreement
Current report
Subsequent to the end of the second quarter of fiscal 2025, on May 1, 2025, the Company entered into Amendment No. 2 to its Credit Agreement. The amendment increased the net leverage covenant 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. The net leverage covenant ratio remains at 4.50x for the first quarter of fiscal 2027 through maturity.
Current report
The amendment also provided a $15 million bad debt expense adjustment to EBITDA in the fiscal quarter ended March 28, 2025 solely for the purposes of determining compliance with the financial covenants.
Current report
The principal amounts of both the revolving credit facility commitment and term loan facility remain unchanged following the amendment.
Current report
As part of the 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.
Removed paragraphs (17)
Previous report
Consolidated revenue of $683.8 million decreased $34.1 million, or 4.8%, for the three months ended December 27, 2024 compared to the three months ended December 29, 2023. Revenue from new rental volume of approximately $52 million partially offset reductions in revenue due to lost business of $60 million, lower net pricing of $9 million from the erosion of prior year price increases that favorably impacted the first quarter of fiscal 2024, and approximately $16 million lower revenue from direct sales and one-time loss and ruin. Customer retention 1 improved from 92.6% in first quarter 2024 to 92.9% in first quarter 2025.
Previous report
Depreciation and amortization expense of$36.9 million for thethree months ended December 27, 2024 increased $1.6 million, or 4.5%, compared to the three months ended December 29, 2023.
Previous report
Selling, general and administrative expenses ("SG&A") decreased $11.4 million, or 8.6%, for the three months ended December 27, 2024 compared to the three months ended December 29, 2023. The decrease in SG&A was primarily due to reductions in wage and payroll costs of $7.8 million, travel and entertainment costs of $1.9 million, and equipment expense of $2.2 million. These decreases are primarily a result of the Company's optimization efforts executed during the last twelve months. These reductions were partially offset by an increase in marketing expense of $1.9 million tied to our rebranding efforts.
Previous report
The provision for income taxes for the three months ended December 27, 2024 was recorded at an effective rateof 45.9% compared to an effective rate of 27.1% for the three months ended December 29, 2023. The higher effective tax rate was primarily due to the impact of tax adjustments, largely share-based compensation, on the lower year-over-year earnings.
Previous report
(1) Customer retention is equal to lost annualized recurring revenue for the period reported divided by total company annualized recurring revenue for the trailing 52 weeks. This metric takes the full annualized impact of a lost customer in the period it is reported. Retention is a leading indicator, in that the financial impact from the lost business will be realized over the 12 months after the billings cease for the lost customer.
Previous report
United States revenue of $621.7 million decreased $31.5 million, or 4.8%, for the three months ended December 27, 2024 compared to the three months ended December 29, 2023. Revenue from new rental volume of approximately $47.4 million partially offset reductions in revenue due to lost business of $55.3 million, lower net pricing of $8.8 million from the erosion of prior year price increases that favorably impacted the first quarter of fiscal 2024, and $14.8 million lower revenue from direct sales and one-time loss and ruin.
Previous report
Segment operating income of $58.0 million for the three months ended December 27, 2024 decreased $16.0 million, or 21.7%, compared to the three months ended December 29, 2023, primarily driven by:
Previous report
•lower merchandise costs of $2.8 million; and
Previous report
•an increase in vehicle expenses of $3.0 million.
Previous report
Canada revenue of $62.1 million decreased $2.6 million, or 4.0%, for the three months ended December 27, 2024 compared to the three months ended December 29, 2023. The year-over-year change in foreign currency rates resulted in a $1.6 million unfavorable impact on revenue.
Previous report
•a greater use of cash for inventory from investments to support new business wins during the three months ended December 27, 2024, and beyond, as compared to a concerted effort to reduce inventory in the prior year comparable period, resulting in an approximate $30.0 million unfavorable change to operating cash flows; and
Previous report
•a $7.0 million greater use of cash for payment of accrued expenses.
Previous report
•payments of long-term borrowings ($20.0 million);
Previous report
•dividend payments ($4.6 million);
Previous report
•payments of long-term borrowings ($8.8 million);
Previous report
New Accounting Standards Updates
Previous report
See Note 1. "Nature of Business and Basis of Presentation" to the Consolidated Financial Statements for a full description of recent accounting standards updates, including the expected dates of adoption.
Reworded paragraphs (25)
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 December 27, 2024 and December 29, 2023 should be read in conjunction with our audited Consolidated and Combined Financial Statements and the notes to those statements for the fiscal year ended September 27, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on November 22, 2024.
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 March 28, 2025 and March 29, 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 September 27, 2024 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on November 22, 2024.
Previous wording
Cost of services provided decreased $7.1 million, or 1.4%, for the three months ended December 27, 2024 compared to the three months ended December 29, 2023 primarily due to decreases in merchandise cost of $3.9 million, energy costs of $4.2 million, and wages and payroll of $2.4 million. These reductions were partially offset by an increase in vehicle expenses of $2.7 million.
Current wording
Cost of services provided decreased $14.4 million, or 2.9%, for the three months ended March 28, 2025 compared to the three months ended March 29, 2024 primarily due to decreases in wages and payroll costs of $8.2 million and merchandise cost of $5.0 million.
Previous wording
Interest expense, net, decreased $8.4 million for the three months ended December 27, 2024 compared to the three months ended December 29, 2023 primarily due to lower average outstanding debt during the three months ended December 27, 2024 as compared to the three months ended December 29, 2023.
Current wording
Interest expense, net, decreased $13.0 million for the three months ended March 28, 2025 compared to the three months ended March 29, 2024 primarily due to lower average outstanding debt during the three months ended March 28, 2025 as compared to the three months ended March 29, 2024.
Previous wording
Other Expense (Income)increased $6.5 million for the three months ended December 27, 2024 compared to the three months ended December 29, 2023 primarily due to the loss on sale of accounts receivable for the A/R Facility of $3.4 million and the loss on sale of the equity method investment of $2.2 million. These costs were not incurred during the three months ended December 29, 2023.
Current wording
Other Expense (Income) increased $3.9 million for the three months ended March 28, 2025 compared to the three months ended March 29, 2024 primarily due to a loss on sale of accounts receivable for the A/R Facility of $3.2 million, as these costs were not incurred during the three months ended March 29, 2024. Other Expense (Income) was negatively impacted by a $0.6 million decrease in income from an equity method investment due to its sale in the first quarter of fiscal year 2025.
Previous wording
Net income of $0.8 million for the three months ended December 27, 2024 represented adecrease of $11.4 million or 93.2% compared to the three months ended December 29, 2023 from the impact of changes to revenue and expenses noted above.
Current wording
Net loss of $27.8 million for the three months ended March 28, 2025 represented a decrease of $33.8 million, or 566.6%, compared to net income of $6.0 million for the three months ended March 29, 2024, due to the impact of changes to revenue and expenses noted above.
Previous wording
Operating income of $30.4 million decreased 36.1% for the three months ended December 27, 2024 compared to the three months ended December 29, 2023 from the impact of changes in revenue and costs noted above.
Current wording
Operating income of $21.8 million decreased 75.9% for the six months ended March 28, 2025 compared to the six months ended March 29, 2024 from the impact of changes in revenue and costs noted above.
Previous wording
Segment operating income margin decreased approximately 400 basis points from 7.0% for the three months ended December 29, 2023, to approximately 3.1% for the three months ended December 27, 2024.
Current wording
Segment operating income margin decreased approximately 800 basis points from 11.1% for the three months ended March 29, 2024 to approximately 3.1% for the three months ended March 28, 2025.
Previous wording
•a decrease in wage and labor costs of approximately $11.1 million;
Current wording
•a decrease in wage and payroll costs of$6.6 million; and
Previous wording
•a decrease in energy costs of $4.1 million; partially offset by
Current wording
•a decrease in energy costs of$4.4 million.
Previous wording
Segment operating income margin decreased approximately 200 basis points from 11.3% for the three months ended December 29, 2023 to approximately 9.3% for the three months ended December 27, 2024.
Current wording
Segment operating income margin increased approximately 200 basis points from 1.5% for the three months ended March 29, 2024, to approximately 3.5% for the three months ended March 28, 2025.
Previous wording
Segment operating income of $1.9 million for the three months ended December 27, 2024 decreased $2.6 million, or 58.0%, compared to the three months ended December 29, 2023, primarily driven by the decrease in revenue during the three months ended December 27, 2024, as described above.
Current wording
Segment operating income of $4.0 million for the six months ended March 28, 2025 decreased $1.5 million, or 27.8%, compared to the six months ended March 29, 2024, primarily driven by the decrease in revenue during the six months ended March 28, 2025, as described above.
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 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 the remaining unpaid principal amount is due. The Term Loan B-1 interest rate for fiscal 2024 is at the Secured Overnight Financing Rate ("SOFR") plus 225 basis points and will adjust to SOFR plus 200 basis points once the Company reaches 3.30x Net Leverage as defined in the Credit Agreement.
Current 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 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. The Term Loan B-1 interest rate for fiscal 2024 is at the Secured Overnight Financing Rate ("SOFR") plus 225 basis points and will adjust to SOFR plus 200 basis points should the Company reach 3.30x Net Leverage as defined in the Credit Agreement.
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 December 27, 2024 and September 27, 2024, the total value of accounts receivable sold from the SPE to the Purchasers under the A/R Facility and derecognized from the Company's Consolidated Balance Sheet was$227.0 million and $229.0 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 March 28, 2025 and September 27, 2024, the total value of accounts receivable sold from the SPE to the Purchasers under the A/R Facility and derecognized from the Company's Consolidated Balance Sheet was$222.0 million and $229.0 million, respectively.
Previous wording
As of December 27, 2024, we had approximately $18.6 million of cash and cash equivalents and$294.7 million of availability for borrowing under our Revolving Credit Facility. As of December 27, 2024, we had $1,142.5 million of total principal debt compared to $1,162.5 million as of September 27, 2024. The servicing of this debt will be supported by cash flows from our operations.
Current wording
As of March 28, 2025, we had approximately $28.8 million of cash and cash equivalents and$264.3 million of availability for borrowing under our Revolving Credit Facility. As of March 28, 2025, we had $1,172.5 million of total principal debt compared to $1,162.5 million as of September 27, 2024. The servicing of this debt will be supported by cash flows from our operations.
Previous wording
On January 31, 2025, we announced that our Board of Directors declared a quarterly cash dividend of $0.035 per common share payable on March 18, 2025 to shareholders of record at the close of business on February 21, 2025. The amount and timing of any future dividend payment is subject to the approval of our Board of Directors.
Current wording
On January 31, 2025, our Board of Directors declared a quarterly cash dividend of $0.035 per common share that was paid on March 18, 2025 to shareholders of record at the close of business on February 21, 2025. The Company also paid a cash dividend of $0.035 per common share, or $4.6 million, on January 6, 2025 to shareholders of record at the close of business on December 13, 2024 for the dividend declared on November 21, 2024.
Previous wording
Reference to the Consolidated Statements of Cash Flows will facilitate understanding of the discussion that follows.
Current wording
Reference to the Consolidated Statements of Cash Flows will facilitate an understanding of the discussion that follows.
Previous wording
Net cash provided by operating activities was $3.8 million for the three months ended December 27, 2024 and $51.5 million for the three months ended December 29, 2023, respectively. The decrease in net cash provided by operating activities of $47.7 million was driven by cash outflows from operating assets and liabilities of $38.9 million for the three months ended December 27, 2024 compared to cash inflows of $0.7 million for the three months ended December 29, 2023. Additionally, net income for the three months ended December 27, 2024 was $0.8 million compared to net income for the three months ended December 29, 2023 of $12.3 million, as discussed in "Results of Operations" above. The year-over-year change in cash used in operating assets and liabilities of$39.6 million, was primarily due to:
Current wording
Net cash provided by operating activities was $10.4 million for the six months ended March 28, 2025 and $127.5 million for the six months ended March 29, 2024, respectively. The decrease in net cash provided by operating activities of $117.1 million was driven by the net loss for the six months ended March 28, 2025 of $27.0 million compared to net income for the six months ended March 29, 2024 of $18.2 million, as discussed in "Results of Operations" above.
Previous wording
Net cash provided by (used in) investing activities of $17.9 million for the three months ended December 27, 2024 was $34.8 million higher relative to the three months ended December 29, 2023 primarily due to $36.8 million of net proceeds from the sale of our equity investment and $2.2 million lower year-over-year purchases of property and equipment. This activity was partially offset by cash outflow of $4.6 million associated with a tuck-in acquisition completed during the three months ended December 27, 2024.
Current wording
Net cash provided by (used in) investing activities of $9.2 million for the six months ended March 28, 2025 was $39.0 million higher relative to the six months ended March 29, 2024 primarily due to $36.8 million of net proceeds from the sale of our equity investment, proceeds from the disposal of property and equipment of $5.2 million and $1.6 million lower year-over-year purchases of property and equipment. This activity was partially offset by cash outflow of $4.6 million associated with a tuck-in acquisition completed during the first quarter of fiscal 2025.
Previous wording
During the three months ended December 27, 2024, cash used in financing activities was impacted by the following:
Current wording
During the six months ended March 28, 2025, cash used in financing activities was impacted by the following:
Previous wording
•payments related to finance leases ($8.3 million); and
Current wording
•payments related to finance leases of $16.8 million; and
Previous wording
During the three months ended December 29, 2023, cash used in financing activities was impacted by the following:
Current wording
During the six months ended March 29, 2024, cash used in financing activities was impacted by the following:
Previous wording
•payments related to finance leases ($7.6 million); and
Current wording
•payments related to finance leases of $15.1 million;
Previous wording
•cash transferred to Aramark ($3.6 million).
Current wording
•cash transferred to Aramark of $6.1 million;
Previous wording
The Credit Agreement requires 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, 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
The Credit Agreement (prior to Amendment No. 2 described below, which was entered into subsequent to the end of the second quarter of fiscal 2025) requires 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, 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.
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 November 22, 2024. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of our Consolidated 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 November 22, 2024. Management believes that there have been no significant changes during thethree months ended December 27, 2024 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 September 27, 2024.
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 November 22, 2024. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of our Consolidated 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 November 22, 2024. Management believes that there have been no significant changes during thesix months ended March 28, 2025 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 September 27, 2024.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Operating income (loss) of $(8.6) million decreased from $43.1 million, or 119.9%, for the three months ended March 28, 2025 compared to the three months ended March 29, 2024 from the impact of changes in revenue and costs noted above.
Current report — wording carried from elsewhere
The following table presents an overview of our results with the amount of and percentage change between periods for the six months ended March 28, 2025 and March 29, 2024 (dollars in thousands).
Current report — wording carried from elsewhere
(1)Exclusive of depreciation and amortization
Current report — wording carried from elsewhere
Results of Operations—United States Results Six Months Ended March 28, 2025 compared with March 29, 2024
Current report — wording carried from elsewhere
The following table presents an overview of our United States reportable segment results with the amount of and percentage change between periods for thesix months ended March 28, 2025 and March 29, 2024 (dollars in thousands).
Current report — wording carried from elsewhere
Results of Operations—Canada Results Six Months Ended March 28, 2025 compared with March 29, 2024
Current report — wording carried from elsewhere
The following table presents an overview of our Canada reportable segment results with the amount of and percentage change between periods for thesix months ended March 28, 2025 and March 29, 2024 (dollars in thousands).