Vestis Corp. (VSTS) F3Q First Take Revenue shortfall mitigated by margin outperformance

Equity Research 11 August 2026 | 5:18AM PDT

Vestis Corp. (VSTS): F3Q First Take: Revenue shortfall mitigated by margin outperformance

We expect investors to have a mixed reaction to Vestis’ F3Q 2026 earnings release, George K. Tong, CFA | with EBITDA and EPS coming above consensus estimates, offset by a shortfall in Goldman Sachs & Co. LLC revenue vs Street expectations. Revenue decreased 1.8% y/y in F3Q, worsening from Alex Lakritz a 0.9% decline in F2Q, reflecting lower volumes. Total volume declined 4.5% y/y, | Goldman Sachs & Co. LLC partially offset by an increase in revenue per pound. EBITDA margins of 12.2% expanded 270 bps y/y driven by cost controls from the company’s strategic business Sami Nasir, CFA | Goldman Sachs & Co. LLC transformation. VSTS reaffirmed its F2026 guidance for revenue to be down 0-2% on a same-day basis and increased its outlook for EBITDA margins fractionally from 11.7% to 11.8% at the midpoint. VSTS noted improvements in plant productivity and on-time delivery, accompanied by exits of more unprofitable volume. On the earnings call, we expect investors to focus on factors contributing to the widening decline in revenue and volume performance, further plans to exit unprofitable volumes, changes in customer purchasing behaviors, pricing expectations going forward, and how the pending CTAS/UNF deal could alter the competitive landscape.

Exhibit 1: F3Q Actuals vs GS and FactSet Estimates $ in millions, except per share data

F3Q Actuals GS Estimates FactSet Consensus Revenue $661.7 $671.7 $668.9 y/y growth (1.8%) (0.3%) (0.7%)

Adjusted EBITDA $80.9 $79.3 $78.7 Adj EBITDA margins 12.2% 11.8% 11.8%

Adjusted EPS $0.18 $0.10 $0.10

Source: FactSet, Company data, Goldman Sachs Global Investment Research

Actuals vs GS and estimates. Revenue of $661.7mn decreased 1.8% y/y in F3Q, worse than our estimate of down 0.3% and FactSet consensus of down 0.7%. The revenue decline widened from 0.9% y/y in F2Q. Top-line performance in F3Q reflected a 4.5% y/y decline in total volume as measured by pounds processed, and a 2.9% increase in revenue per pound. EBITDA margins expanded 270 bps y/y to 12.2% on lower costs of service and SG&A improvements from the company’s strategic business transformation, and came above our estimate and consensus of 11.8%. EPS of $0.18 beat our forecast and consensus of $0.10.

Guidance vs Street. Vestis maintained its F2026 guidance for revenue to be flat-to-down 2% on a same-day basis and raised its guidance for EBITDA from $295-325mn to $310-315mn, implying margins of 11.8% at the midpoint (11.7%

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Goldman Sachs Vestis Corp. (VSTS)

prior), and for free cash flow from $120-150mn to $160-170mn. Management’s guidance points to stable consensus estimates for revenue and positive consensus estimate revisions for EBITDA. Prior to the F3Q print, we forecast F2026 revenue of $2,660mn representing a 2.8% decline (1.0% same-day decline) and EBITDA of $311mn with 11.7% margins, compared to FactSet consensus for revenue of $2,666mn representing a 2.5% decline and EBITDA of $310mn with 11.6% margins.

Valuation. Our 12-month price target of $8.20 is based on 6.50x our NTM +1YR EBITDA estimate of $347mn, NTM net debt of $1,161mn and NTM shares outstanding of 134mn. Our target multiple comes below the Business Services peer group median of 8.6x lower revenue growth, EBITDA margins and EPS growth, as well as higher financial leverage.

Risks. Key risks to the upside include an improved macro environment, market share gains, new business growth acceleration, effective cross-selling and pricing upside.

VSTS 12m Price Target: $8.20 Price: $13.87 Downside: 40.9%

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