On November 29, 2023, Vestis Corp (VSTS, Financial) released its 8-K filing, announcing its financial results for the fourth quarter and the fiscal year ended September 29, 2023. The company, a leading provider of uniforms and workplace supplies, has shown a commendable performance with a 5% increase in annual revenue, amounting to $2.8 billion, and a significant 50.5% rise in net income to $213 million, which includes a gain from the sale of an investment.
Fiscal Year 2023 Financial Highlights
Vestis Corp (VSTS, Financial) reported a robust fiscal year with a 5.1% increase in revenue and a 13.4% increase in operating income, which amounted to $218 million. The adjusted operating income saw an 11% rise to $294 million. The company's adjusted EBITDA stood at $404 million, marking an 8.3% growth, with an improved adjusted EBITDA margin of 14.3%. These figures reflect the company's strategic growth priorities, including cross-selling to existing customers, high-quality new growth, and effective pricing actions.
Q4 2023 Financial Highlights
The fourth quarter continued the positive trend with a 4.8% revenue growth, reaching $715.9 million. Operating income nearly doubled to $57.8 million, an 89.5% increase, with the operating margin expanding by 361 basis points to 8.1%. Adjusted operating income for the quarter rose by 17% to $84.5 million, and the adjusted EBITDA increased by 13.5% to $112.8 million.
Balance Sheet and Cash Flow
Vestis Corp (VSTS, Financial) strengthened its financial position with net cash provided by operating activities reaching $257 million for fiscal year 2023, up from $232.8 million the previous year. Free cash flow also improved to $190.3 million. As of September 29, 2023, the company had $36.1 million in cash and cash equivalents and a total debt of $1.5 billion, with a net leverage ratio of 3.95x. The company also reported $300 million in undrawn capacity under its revolving credit facility.
Dividend Declaration and Fiscal Year 2024 Outlook
The Board of Directors declared a quarterly cash dividend of $0.035 per common share, payable on January 4, 2024, to shareholders of record as of December 15, 2023. Looking ahead, Vestis Corp (VSTS, Financial) expects revenue growth in the range of 4.0 to 4.5% for fiscal year 2024, maintaining an adjusted EBITDA margin of at least 14.3%. The company aims for disciplined capital allocation with a focus on de-levering and anticipates a free cash flow conversion of net income of not less than 100%.
Management Commentary
“2023 was a year of milestones for Vestis as we delivered strong financial performance through the hard work and commitment of our ~20,000 teammates and successfully completed our spin-off from Aramark into a separate publicly traded company,” said Vestis President and Chief Executive Officer Kim Scott. “We are energized as we enter 2024 with great momentum and a clear pathway to value creation for all of our stakeholders.”
Vestis Corp (VSTS, Financial) has demonstrated a solid financial performance in fiscal year 2023, with significant growth in revenue and net income. The company's strategic initiatives and efficient operations have yielded positive results, and the declaration of a quarterly dividend reflects confidence in its financial health. With a strong outlook for fiscal year 2024, Vestis Corp (VSTS) is positioned to continue its trajectory of growth and value creation for its stakeholders.
Explore the complete 8-K earnings release (here) from Vestis Corp for further details.
