Vestis (VSTS) Financials

Vestis Corp (NYSE: VSTS) has displayed mixed financial results over the past four years, with key trends observed through the quarterly financial statements ending Q3 2025.

Positive trends:

• Operating revenue has remained relatively stable, with Q3 2025 reporting $673.8 million, close to levels in prior quarters over the past year.
• Despite slight net losses recently, the company consistently generated significant operating income historically, e.g., Q3 2024 operating income was $37.5 million and Q1 2025 posted $30.4 million.
• Strong cash flow from operations in recent quarters, with $22.9 million in Q3 2025, showing an improvement from a lower $6.7 million in Q2 2025 which may indicate better working capital management.
• Stable interest and investment income expenses, roughly around -$22 million in Q3 2025, improving slightly from prior quarters which helps bottom-line stability.
• Total equity has remained fairly stable around $880-900 million, supporting a sound capital base despite market pressures.
• The company has demonstrated disciplined capital expenditure with purchases of property, plant, and equipment roughly in the $13-15 million range per quarter, alongside active divestitures supporting asset optimization.

Neutral observations:

• Gross profit margins fluctuated due to variable cost of revenue recognition and reported amounts, e.g. inconsistencies in cost of revenue reported across quarters suggest potential accounting adjustments or product mix effects.
• Depreciation and amortization expenses remain high but consistent, reflecting the capital-intensive nature of Vestis's operations and aging asset base.
• The company pays a steady quarterly dividend of $0.035 per share, signaling commitment to shareholder returns despite recent losses.

Negative factors:

• The company recorded a net loss for Q3 2025 of approximately $0.7 million, a sharp decline from profits in prior quarters and years, signaling profitability challenges in the near term.
• The balance sheet shows a significant increase in long-term debt from approximately $1.45 billion in early 2023 to about $1.16 billion by Q3 2025, combined with large repayments and issuances causing financing activity swings, which could pressure interest coverage ratios.
• Operating expenses, particularly other operating expenses and SG&A, remain elevated and increased sharply in some recent quarters, eroding operating income margins.
• Volatile cash flow from financing activities, including large repayments and issuances of debt, as well as significant dividend payments, may constrain liquidity and financial flexibility.
• Inventories have fluctuated, peaking at nearly $200 million and declining to about $187 million in Q3 2025, raising concerns about inventory management and potential write-down risks.

Summary: Vestis has shown resilience in maintaining steady revenue and generating operational cash flow amid a challenging environment. However, the recent downward trend in net income and ongoing elevated expenses, combined with notable debt activities, suggest the company is navigating near-term profitability pressures and financial leverage risks. Investors should watch for improvements in profitability and expense control, as well as the company's ability to manage debt levels as indicators for future performance.