VSTS - Earnings call transcript Q3 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Vestis Corporation Fiscal Third Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Michael Aurelio, Senior Director, Investor Relations. Please go ahead, sir.

Michael Aurelio

Thank you, Connie, and good morning, everyone. Corporation Quarter Vestis Earnings the to Fiscal XXXX Third Call. Welcome

President here Dillon. Kim today me and are Rick With CFO, our CEO, our Scott; and

a section. to website on under shortly will the this are completion Investor replay available call. a the discussed after section available the Also, on the access call Relations vestis.com on website the materials Investor As call the of of reminder, the Relations telephonic Vestis be of today's

remind actual to our differ other the you this we Reform could reports of begin, and beliefs, like from to Before and statements. Such within and materially indicated remarks of by would contain estimates, undertake any may in meaning Act include that prospects. and filed update Such variety the We statements or risks, and risks expectations, statements duty them. other Private forth that periodic uncertainties, forward-looking factors results set to management's Exchange implied These Commission. such Securities I call Litigation future do are about plans, current a not of subject with are the XXXX. cause Securities factors to those

call I over With turn Kim. to would that, like to the

Kimberly Scott

they shareholders, our Good operate. we each quarter by serving I'd work communities like for day our thanking teammates in morning. to to the Vestis customers, our fiscal you do joining XXXX in Thank hard the begin for support third earnings call. and XX,XXX which dedicated

results, credibility the commitments, delivering external and of market. our convey consistently and In third as messages: by our the metrics, my key against establishing business affirmation X quarter stable to understand evidenced communications, importance our want We I is in our guidance. of discussion today, retention

the We are operations leadership improving on way of in by making efficiencies. new organizational delivery of progress

XXX XX.X%, EBITDA in margin fiscal results Touching expectations, third with on the higher end full 'XX line basis of costs. EBITDA trending reaffirming the sequentially Notably, versus range. points our year basis report Adjusted decline. decline were and I'm are excluding quarter margin versus pleased that EBITDA are #X. quarter margin both of guidance incremental revenue of year point adjusted prior XXX our second a of the flat approximate we X% was points the $XX adjusted with to our public XX.X% of toward and impact million company QX or sequential EBITDA despite

third pull-forward to Revenue quarter the impact effects fourth note that the to a was the quarter portion expected X.X% timing upside originally important It's for quarter. related of of down from that to the in items was we year-over-year.

focused remain approximately in customers gains from new points services. additional and basis on basis wins QX route is We accelerating XXX new cross-selling of points We've of and seen products growth which from existing volume business. sales, XXX

new and With business believe of the our we new addition can our new leadership we delayered structure, wins. sales further accelerate

'XX. This base retention for improvement rates have XXX recurring validation our basis on to moderate versus are plan decision pricing is term. in the in customer our a good In retention a our line the fiscal Our protect year. 'XX, basis right seen and fiscal for we decision have the point improved year-to-date revenue to year-to-date was long that with

which the 'XX. the loss fiscal in volume 'XX rate our of includes national full fourth rates, previously impacted losses fiscal account fiscal large presented As which and, retention quarter rollover year a disclosed, 'XX the impact particular, X in headwind

'XX renewals we in successfully to fiscal I'm good and our of pleased customers largest have with to national share that our renewed account several continue have year-to-date. performance

retention order rates our enhance to improve in to Our is ahead service further year objective in the time. to over continue levels

to and XXXX To of that plans execute and which to budget, consistent our against and our with in fully end and mobilized want includes finalize results team, point our full delivering establishing Sales. deliver quarter, to vet in Officer the we We our We Chief with of Head Operating strength, credibility our a plans commitment. importance on #X. year our the market. fourth Moving are great new the understand end,

will we fiscal not half that our which will our expect While new will our today, XXXX expectations we guidance discuss business second from provide we or the for results be for grow. base

resulting to my pleased million savings net $X to I'm exciting some hires organizational as third X structure Board point. X new to appointment the Vestis, on well cost to members. as that's about talk in our simplification of additional Moving a

Officer Chain the Solutions as most September. sales experience Head at be spent leadership industrial President his significant Vestis, Sales. Chief UPS. career of at industry, the served as will our at joining Bill Pete Pete of as beginning recently of most including Seward Rego joined leader with Operating Supply Bill as of within years to Cintas. a brings laundry sales XX has Field

our under through directly sales leadership to field sales With report rather operations. organization, the shifting are than Pete Pete's team to addition to up field we

a leadership operations route in million to in will collapsing optimize million in our Aligned which leadership have the our cost realize delayering generate to approximately rates These National appointments, annualized a $X us to and allows Account to out. This roles increase structure utilization; efficiencies. customers. even plant reorganization a center sales net improve field include that enable team and changes annualized gross excellence million our strategic and strategic will us organization oversee and deliver $X of and and to $X will accelerate to to to beneficial made growth operational savings. self-fund closer strategy, of approximately density This with us approximately investments per these growth our key dedicated allow growth we revenue be get number more to deal; rapidly of

of has brings financial our you investment Vestis' valuable Board know a to engaged we Officer highly strong community of the Investment Corvex, expertise Founder our skills to shareholder. Many Board the and set and Lastly, perspectives Chief and X Keith Keith highly to investment of strong likely already and room. welcomed members Board. our new in largest and already Meister, a

have Board dialogue a long-term welcome and Vestis' We to are constructive to enjoyed excited to creation. value pathway our very Keith about

joined Goetz Board. brings and previously Board including roles, and Chief and Marketing of also of industry our Cintas Vestis relevant and strong COO Bill Accounts experience sales Directors. Markets, to executive wealth expertise XX Strategic Officer. years a marketing leadership has spent the Bill various Bill and of in at President Global

we've I'd experience. to Now improve changes made we service our working are the customers' discuss enhance to to continuously like operational

past reminder, our a have As year. remained consistent over the service levels

accept of pricing. believe enhanced levels expected cases, we customers order service in some However, our to levels in higher

levels laser-focused service what we improving have differentiated on above build and our our truly we for beyond delivered historically are experience customers. as We a

better provide We are improve to mobilized operations our fully to service.

and improved wearers. address plants new and launching to are to on-time procedures our delivery, shortages, quicken the across We for new install time

customers quarter, a updates pickup system delivery customer receive so can we introduced documentation In exciting and of product notification new third the real-time and delivery.

experience enhance we customer team a experience. continuously to created Lastly, customer the dedicated

call approximately to to working an to pay debt. hold our amount that the Rick, us balance enables $XXX remains meaningfully a few these to of by make lower us down outstanding over into turn net end, million to requires securitization capital I will million to business have utilize allows receivable a to reduce net want priority. entered allow our proceeds facility transaction sheet last This we quarter approximately to accounts us I Before on Subsequent of our us debt. $XXX the points. and Deleveraging

term been had On the quarter a pro debt the loan forma X.Xx, net have would repaid leverage debt of basis, quarter. of billion, we and would have the net and on third quarter third facility to been end million prior $X.XX $XXX closed

a stand-alone great entity. the balance strengthen that assets AR Rick latent as and forma sheet. a on is can example the monetize the will of further This to sheet facility pro of some balance impact our we discuss

are are line pleased conclude, want with our our to that that emphasize quarter third To results in I commitments. we

retention metrics improved margins toward high Our end. reiterating guide and year-to-date, EBITDA the we trending with our are have

commitments and against we our discussing as full fourth taking until mobilized a 'XX be We such, quarter to measured won't our tracking and deliver to and communications, are November. external approach year FY and

and Board, that perspective continuously our And have lastly, new that will terms service base levels. reiterate And streamlining great which organization, in key be we results half for our our to business our of adding second we expect we reorganizing improving hires, want our made and the to I from progress adding will grow.

With to that, I'd over Rick. the call like turn to

Ricky Dillon

more close with Thanks, Kim, on and and third expectations fourth results quarter. our good will everyone. then the and guidance for start I quarter the morning, with details

revenue lost pricing the Revenue Slide So on X.X% million was impact in of start $XXX bridge the by The with decreased third of quarter. let's business by volume growth and quarter year-over-year. offset XX.

the of expanding and our XXX Volume including through quarter. recurring growth provided points customer customers in cross-selling, basis approximately revenue, new from existing penetration growth

route with existing to customers XXX second basis contributed sales customers new and XXX contributed the basis Consistent quarter, points. of points growth,

We we new to business, the win from an continue increase new gross in sales. seeing contribution are dollar and

from approximately consists losses versus losses sales third than XX% from the this growth. known fiscal 'XX. losses third year-over-year, from XX% being X% as fiscal lost business approximately customers our Sales impact X% year. reduced quarter new by up points The 'XX exited year-over-year of down customer revenue and customer more offsetting we volume during were headcount despite Customer of XXX quarter basis fiscal

was this retention fiscal it will less in business improvement that 'XX, in want As a lower differently, bigger emphasize than prior carryover XXXX XXXX. in Said rate 'XX. we is expect losses a Kim hole retention XXXX. will in fiscal noted, drive we to year This point from be lost year-to-date an we saw XXXX and expect begin than in our of rate headwind we I that important over

This points as 'XX. reflects of off-cycle and the fourth progress line regularly to Pricing actions the of by pricing and year quarter pricing, annual top of XX June increases the partially contributed first the moderated offset erosion price of growth. XXXX prior quarter impact scheduled through basis we in-year

revenue were sales disclosed. $X large the quarter national sale driven Direct the previously year-over-year, million by entirely account the lost from direct down third almost in

year-over-year Excluding supplies was was direct year-over-year. down sales, flat business the X.X% workplace uniform and

were million business Moving pricing adjusted in than operating of sequentially was EBITDA on on and fiscal in quarter. 'XX, approximately more 'XX. quarter new offset flat the XX third to the The $XX $XX business the flow-through second Adjusted million of by the of impact from EBITDA. on quarter fiscal to and and leverage quarter lost third down the Slide

wins approximately approximately we offsetting which $XX the costs reflects the The exit margin million impact Year-to-date, volume quarter. customer on on business net approximately on and new amortization decremental lost incremental new was incremental during of sales garment billings margin billings have lost XX%, exit XX% new and The sales commissions was in of final sales. business.

full labor expect by costs Incremental public approximately Benefits expected incremental in the $XX were million public network well were as approximately $X optimization and now company $XX costs our compensation costs the million. costs increase lower as million in from and We year quarter offset year-over-year. logistics company efforts year-to-date. incentive of

The was consistent for EBITDA margin quarter, quarter. with the second XX.X% the

However, margins basis costs. declined basis company public absorption incremental of XXX the points year-over-year, XXX including points of

to We $XX the and cash in $XXX on costs. cash $XX operations quarter third turning approximately cash and of approximately So onetime flow the million million XX. generated sheet million balance in in spend-related Slide from net year-to-date,

inventory our to management operating reuse focus and and reduction the a having garment in facilities initiatives, operations as planning centers on inventories on we support year-to-date in distribution our continue growth. focus right $XX We and sales through inventory million driving

adjusted of quarter third net third last cash approximately income year-to-date. of XXX% in was of the $XX CapEx $XXX excess during in of year's and million million ahead and spending. EBITDA. was flow XX% 'XX, the flow Free free With million conversion quarter slightly year-to-date cash of $XX

this end. cash was in I want of the that flow does quarter the to not million costs spin-related AR free the subsequent approximately securitization, to onetime include reiterate $XX and impact includes which

strengthening Turning deleveraging. our balance to and to Slide XX. sheet We're committed

We cash million, channel principal in approximately reduction. Year-to-date, to of voluntary voluntary made available continue which to we $XX payments. payments includes have loan million $XX

will and from We debt. net we announced with X.XXx. an facility outstanding accounts loan entered the securitization this matures into option million quarter a today a third the ratio with term debt-to-EBITDA of use ended receivable repay $XXX facility in for extension. to XXXX The proceeds facility We

cash in latent early us our The from needed our to giving by interrupting cycle. normal the portion results a operating not on accounts conversion while this our to reduction receivable of balance a capital in facility creates This by cash a business unlocking support working liquidity event outstanding sheet. access asset

basis the savings allow also cost us lower on to plus XXX points, of improving net term net proceeds The which our in facility The basis our positive our loans. transaction The from ratios. the meaningful million. this existing make will to annualized debt debt-to-EBITDA $XXX is cash leverage equity points SOFR debt, reductions XXX over is and than interest outstanding currently is

is sheet, on nature The the available this there reduce that and under transaction debt liquidity obligation credit does of existing it is our no such not our facility. balance

pleased start to the since forma report total of been million On billion the year, I'm to a and have of debt prior end of had would of debt term would pro that pay on compares start $X.XX the $X.XX our our net the net a forma $XXX million $X.X basis, net billion of we representing more the current to leverage and have pro repaid down $XXX QX net debt the year. closed facility quarter. been QX debt loan than billion debt X.Xx of to

operating and managing operations have independent our cash effective done confident our to sheet that We balance our targeted public our our ability job This our X.X company. strong an X.Xx. significant flow first year during of the finance highlights paydown to leverage to to and the generates remain generate cash get in debt as business both teams in

our quarter on to the expect fiscal Slide XX. and by discussing I what conclude outlook to want fourth XXXX in

expect are margin EBITDA to revenue for We now adjusted the guidance. guidance reaffirming of end towards higher and the year our be

trends to QX. continue expect the operating QX underlying from We in

QX, some As large the pull-forward losses that final $X revenue $X QX. in exit were expected Kim some a sales account billings, benefits won't national from noted, represents EBITDA of from there items million which in of we exiting; we direct QX previously reoccurring are offsetting known QX, in of repeat onetime million to including: in

million EBITDA approximately as sequentially we Taken together, off million these and falls that move in X represent $X QX. of revenue into $X

Additionally, team sales quarter investment growth. QX from in our from of dollars mid-third with we and late expect as QX to higher QX sequentially actions price support QX, the a erosion sales we settling of few impact pricing expense our reflecting increase million to

X $X items approximately move sequential Collectively, from into million these we will move QX. EBITDA million QX as step as from in QX. represent down we These into approximately $X drive will EBITDA sequential QX expect impact of we items

underlying reflect do the change the or These we onetime not the see where in items health trends. of current business

concludes joining now for and prepared line thank us. And the and would we for will everyone This for Kim our I Operator? remarks today, open like to questions.

Operator

Wittmann our first And Instructions] [Operator Andy Baird. question comes from with

Andrew J. Wittmann

main and to I and the the kind drill to into, it's I detail. actually customer I explore specifically wanted I Slide because revenue bridge, bit losses around more XX wanted guess, that you a the in here this, of point emphasized think little

it the in that big from so 'XX as is the is hole losses idea And as was for not 'XX.

about thinking I about that of I to that, And one thinking want I'm way confirm this correctly. guess

about would X million back $XX million impact. $XX you million quarters be 'XX, loss. had If from half basically from in known of be revenue revenue resulting revenue That would $XX that quarter in of hit the losses 'XX of per

say got loss million X in-year over million to $XX $XX about per of quarters or year losses That you revenue of quarter. would compare where you've this

customer quarter. losses? that difference million from yes, basically, between arms revenue So and of million the versus million our difference known in loss. thinking -- quarters, getting difference loss one $XX the Is of That per that about X way or around quarter $XX $XX revenue per of

Ricky Dillon

Yes.

the -- I reported think That's the I but about losses differential about versus 'XX redo would terms and math about what for doing of that 'XX. think we've that's way on in-year losses is math, thinking versus taking I a of way it. it exactly then year-to-date how known could -- thinking that didn't without good that in it the your

Andrew J. Wittmann

just then, relates strategy it been a after in is has And Pricing pricing guess I those as stabilized new feels like Okay. more bit the it business -- to Kim, has getting effect. been The in little now strategy effect. losses. customer

better you might positively? Your organic visibility able little inflect retention a it are give to Does bit to when stabilizing. as be rates growth

have and to some filter just your just first is if on to is customer probably process even at next fiscal timing, quarter what was of wondering second But what growth least next quarter last you're recognizing into from of year year was I year. through losses thought think I these that kind next organic wondering that think quarter third quarter of can of I in your Is you view return next what thinking? or that year.

Kimberly Scott

you 'XX beginning 'XX, want Andy. But that are that obviously. have So so to still I the don't FY tell will there into about some at correctly those, FY 'XX move need to thinking the this of losses lap we will in you to will be point from that to quarters carryover I FY specifically

we look our recognize sales that in can drive we that's early growth of to we sales our sales to of representatives quarters to rollover need to from accelerate rate that team need some XXX to from the of that team accelerate coming need at into the need 'XX, absorb in first rapidly that's you 'XX. And our coming coming points run losses still order we growth from because and and part basis more would organic accelerate,

related we're be want can rates less you But careful should 'XX. thinking to in about to coming your now also not see into that the tell that are year retention you that definitely what we stabilize. to you I correct new to seeing rollover of talk specifically a is losses headwind I

Operator

Andrew Steinerman from take we'll JPMorgan. And question our next from

Andrew Steinerman

price your erosion when the to then, the you about moderation quarter. guide fourth heard quarter remarks. used price prepared And I implied compared third talking of Kim, used in word word the you Rick,

being the realizing price price when we're than quarter, realized So versus we I actually just now, in particularly talking in just the are fourth we about negative, Or are third which we quarter understand, about thinking just reported? past? positive, want about talking net to lower

Ricky Dillon

Sure. comments, of versus referring QX impact QX. I'm to My in the price

late we would noted last we that just we we call, As talked moderate. QX. moderated pricing actions And took in

As We those gets do the have pricing in QX, QX, little of when QX. impact and to positive QX realization in bit actions a we're impact. decline settled you compare out in pricing speaking sequentially the in to the terms but just less

Andrew Steinerman

have sounds like pricing sequentially. it say realizing year-over-year, also you net pricing realized you're it positive you when like sounds but that, Rick, realized

Ricky Dillon

year, I -- through pricing realizing I'm fourth quarter. recall, year you saying year-over-year, significant also year-over-year actions. call will of that QX, last I as as relative move off-cycle net through if erosion that for in to had we pricing. we prior that I'm sequentially, primarily pricing I the fourth quarter -- out the we to in QX Thus, net those QX relative of move have QX. impacting spoke

rate But we will the Kim's impacting land impact for results. price X%, the about for of pricing it is X% at is which a our continue normalized us. and comments, take in to year And to between and

Operator

from And our we'll from take Shlomo next question Stifel. Rosenbaum

Shlomo Rosenbaum

Just it. about it it's from on Kim, up X went looks understand can XX but year-over-year a down like It to bit little by XX.X% the to talk revenue recurring basis context Slide the sequentially XX.X%, you trying of customer retention? points.

what's Is to through going at? type can should How retention? seasonal sequentially? be on about of the there the we look metric retention Is comment this -- year? retention down in just on the you thinking going Is a

Ricky Dillon

of calculation. and the I'll that's in the and calculation the it's Sure. aspects why can the quarterly look just volatility retention that. some there When take -- And of discrete based nature at actually quarter. on each retention, quarterly be you our

from that's perspective. why at so year-to-date look this And we a

see year-to-date basis excess focused improvement on. And -- in of really -- is roughly we're that you what XXX XXX year-over-year points

and that. that so And like we trend pleased with improved we're

does number quarterly that have little so a volatility. And

account of prior of also also last just a would of the large about very QX impact national talked is the and reflective I on the you year included pricing question. note that

and to took and significant see the you of some You QX, pricing QX. we've in been speaking basically QX impacts in

year-to-date. pleased we're with pricing we're impact, so a where moderated pricing we anticipating are We've but very not

Shlomo Rosenbaum

recoursed little Is you a it Okay. about Vestis? And to talk can securitization that AR bit facility?

Ricky Dillon

the the receivable and receivables a bankruptcy to sold remote to those into and So a the sold. receivables. rights bank They're often are entity

is the cash collected, that cash. enjoys And purchaser so as

like can aspect off, allows DSO ongoing facility it receivables the as and What us is paid receivables enjoy and about to of flow. are early acceleration we permanent of of the those our replace our without $XXX them, this gives million operating impacting we cash us

Shlomo Rosenbaum

if becomes there wrong on There's a to or uncollectible, receivable big something client that like if no something goes recourse with Vestis right? the

I'm works. Does just that go that guys to out have trying go You back back figure to you? it? to and how replace

Ricky Dillon

There is no recourse.

Operator

Instructions] our next from Stephanie We'll Jefferies. question [Operator from Moore take

Stephanie Benjamin Moore

prior for retention. question, follow I'll that I Actually, asked was the on on question my just think up first

So understood to quarter you that can some have volatility quarter.

think have Presumably, year an decent But idea you probably we fiscal for XXXX? us a about can give retention should of almost you end the said idea. where should you've here,

that the And lap of retention normalized is what start then think we of level environment? what about in as should some is we to were kind more losses targeted these a presumably

Ricky Dillon

that So what from that year year-to-date, have falling. sit is zone. into we pricing. came retention significant Without this the is the like is in we're we quarter, where what to before a about about fourth be of into And in we've where don't expecting the forecast what like we we looks headwind getting talked retention XX.X% actually

QX large account count, the on risk for different national today, X here not and that is monitoring of focused are any sit meaningfully headwinds aware fourth at this we to that we're as daily. that and we're And Those retention quarter.

Stephanie Benjamin Moore

retention? then And what targeted would normalized a be

Ricky Dillon

in XX.X% number pre you point When the was before, retention for business. that that, actually go talked we for was point out range. this that was And the back if last -- years, we will about talked I business retention high has been those XX%. for there out actually the a

there how we're on than focused really believe we opportunity better do huge XX.X%. there's We and

does that ability retention not what the and on price impact So to Kim but excellence the have. service also from take we the our discussion that of had only on customers

Kimberly Scott

today. we have to we add at the just centers When And future Stephanie, market opportunity, that. I'll look

mark. that performing XX% well are above today We the locations have

why much putting know achievable So be are for that's the experience we we we're enhancing around focus and that the better than really and concerted is experience today, customer to this it absolutely customers.

that benchmarks But internal on line we've really are, we achieve proven we great ourselves performing that we do when those to ahead. I years that because put wouldn't our the time a we we So Vestis have today is these levels. will think are for to opportunity levels. want can at something a that in higher believe, locations

that So we're time up really to in aiming years. needle move coming retention over the significantly

We've now, that we've experience some now hit we've right on And on been those move direction. Right an we team focused taken can stabilizing. very the decisive elevating the the got decisions sure entire watermarks. to make we in the customer focused for so needle

Stephanie Benjamin Moore

And going Got organic understand growth a I'm sense. forward, giving any it. about to follow-up think so that, that. then as of as not and that color we No, a just on I 'XX makes lot asking specifically I think you're on not

an forward. opportunity kind going said, is retention you but improvement improving given further where for too, of as is But

board Given super, kind is we pricing think understand. environment, not probably really the super of things the which I across all for robust

which as So you pretty think business pretty are single-digit it a pull, steady at new like high new quarter, range. sounds levers wins wins, about good quarter to you remain business can the

It of good sales sounds like a the done organization. you've pretty re-org

the conversion of acceleration level drive the an new think some So you operational to start bit can wins? about kind you new wins, of the which timing talk improvements pipeline see new business in win and you of the in a can

Kimberly Scott

Yes.

taking growing basis in points that of mentioned about route existing from XXX and our are with seeing XXX customers. remarks, prepared points coming wallet from logos we service penetrating of basis about team of points new we're representatives coming growth, basis XXX growth new sales and our and frontline our converting as So share so

to So business, rate we the you business. single best pull and stabilizing did that that And on is we've than to focused focus before. for making on that's sure customers been on hold continue organic and heavily first because the lever step growth lost to is to why growth just to more easiest outpaces lost

focus our base. is so let's protect And right now our

Let's customer what make are protect experience delivering and that have, outstanding lot of lever that's can we around sure putting we energy already that we so a #X. an

get great protect that those are in customers and done let's Let's house. our that already

and The start XXX team, around restructuring strong proven do a new that can But that industry do per tremendous become put very you minute head. on to logos you positive of in close of convert revenue top leadership accretive converting our amount sales more we've we a growth. basis who because points frontline also as rate that, is that, also believe our dollars team sales bringing and can at referenced, better effort

metric that lot that And rate as about higher a revenue with being seeing head. are us, talked per I've important lower we of from headcount. an for actually mentioned, dollars team And Rick sales

when productivity they we X up they that so to rapid more in, show levels can we're that folks those teammates, revenue are sure we know year we're and X team. and cohort drive dollars for So of new setting now success And for productive. bring becoming making what them focused on right is continue immediately that that year

think there's I business So lost improve rate to continue to that. with opportunity the

points improving the and rate at also professionalized force. can business basis XXX know we that a XXX drive up be would that but a a sales and positive basis points sales line with the capable more holding outcome, the loss force we and more Just productive

best I levers. the So those the are think, really --

cleanroom who pipeline, our the been leader leader a put working appointed have to our the deals energy in a national large organization. those a national fact, to has robust pipeline is building new broadly who relates around very a team to amount accounts internal national proven races move account it we and of also our And account very we pipeline. in When pipeline. tremendous the And working the for on oversee she's to already off deals some through

from about accounts. see also positive and very national we leadership to we're So going feel Aaron's what

everyone, I And strategy want do our to lastly is volume. remind centered around just

And national have those large us many I've that we assets accounts fixed capacity operating about tranches through times. idle so large our that for tremendous creates spoken winning leverage because pushing and of volume so

incredibly from we're are important volume so through progress to about that wins feel account national so system team. to good we the also the and seeing And push us

Operator

next And question our we'll take from Barclays. Patnaik from Manav

John Ronan Kennedy

any on which This your activity dynamics? Kennedy step from are change is seeing business you is of Manav. industry described customers, more ask of recent by of increased as Ronan driven one dynamic if Can bid by for kind of scrutiny cost a I heightened public new comps

you're And the is and of where market. having within acknowledged you kind process? pressure driving gaps? on to pricing just phenomenon broader renewal of renewing, and that that stepback your with pricing on coupled are that Is dynamic the erosion So and service deliberate during commentary being instances volume the address pricing

Kimberly Scott

Ronan, can the part wasn't your you -- able question. of first So to I hear

So think, say question I scrutiny the your there's that question? you about, I heard from pricing. Is our competition more customers and around was heightened

John Ronan Kennedy

Yes, resulting that primarily pressure one account service comps to compounding increased of bid moderation referred challenged with there more erosion a renewals? gaps in -- activity acknowledged pricing volume kind standpoint from coupled had and instances where your and pricing scrutiny is Is public environment of deliberate of improve to a of from pricing. of national of your

Kimberly Scott

X So components. no, I would separate those

than with think do we account our with SMEs. we about differently pricing very So customers national

as account customers contracts, terms you quite customer sure and I'm are all and by the bespoken surgical that customer. pricing as to X-year X- national by as customized increase have are they So know, conditions very typically well price

those the competing customers come those you volume large at macro account very X up pieces of one years, large and all to have may episodically. come of national are level we X those for Every up. so And

and preserve pricing to ways up business it we our come than for different different very make from talking the very or business When are competitor. That win they and all about our a competitive a rebates decisions and is that and process. and incremental can that pricing we renewal, is volume the it is SMEs, we dynamic do related completely

So not Ronan. would them would I I those differently. X way, about think in co-mingle any quite

there come as attractive model. national But so large customers our highly of they're is first up volumes to for in are answer a question, pieces lot competitive the account I of mentioned, because activity when renewal yes, these

John Ronan Kennedy

be I think you rate cash out and efforts an optimization management, then the Got run previously benefits in to the initiatives update then around rate it. your events. operations? merchandise highlighted reuse that? annualized of would can and your And provide you And then also benefit on fill savings from efficient just

Kimberly Scott

Yes.

because we from we progress around pleased glad are still are deal the we're operations. a are great outstanding we that progress and building asked I'm logistics I've the optimization that to see So team. very making spoken with you efficient very muscle pleased. question about inside continuing that and

sure we're progress. this that mentioned I of have as events relates the we number in So of measuring it making accelerating optimization to previously were we terms

between seeing out It do we'll miles empty in of this headcount in when we and depots year. shuttles coming footprint, system. reduction in as events seeing of about consumption. do XX that, a of we the which results cross-docks and And wash we're And reducing facilities consolidation We're those fuel results call or them.

on are continue we the we seeing there. logistics great front and progress So accelerate to

That used same rate is also our fill team leading initiative.

existing we're inventory. not as our of benefit working related also reuse related million efforts. stock progress which you capital good balance very build also the rooms, allows seeing really are inventory avoid we some to in and are And $XX saw good sheet a to some preserve garments on already seeing result of amortization to us allows of to in by that it costs cash our that those us having results so And to

actually see $X of We feel took in, of million out productivity we we this about initiatives. of all the I million result $X also million $X good a reinvested the it. So cost as well. restructure that we but mentioned really will as

a well. that are have whole tracking productivity of initiatives really cost-out we portfolio and So

Operator

And Instructions] to Mulrooney we'll William go [Operator Blair. Tim from next

Timothy Mulrooney

questions. a just of couple So

surprisingly, is X first on, not retention. The

customer that on looks you've a the in to quarter. bit bridges from headwind the the provided in based like points little the was increased it the in-year slides, points then and X first X losses quarter, second So about that in

the that same So through customer your that help retention can headwind -- be time, larger you getting me metrics as improving? while at understand you how the are move can year, through

you gap? guess, customer is but higher materially help I bridge me year is, Can move question you getting through how the your that my customer are basically, as losses retention better? your getting

Kimberly Scott

that? Rick, want you take to

Ricky Dillon

the would impact through see losses, calculation. lap you impact, So think separate actual as about less year, retention you'll I that the think when those. because you will When in-year you see progress to from from the carryover impact, from we about and impact in-year the losses start you more

year. in And of it the we progress beginning through the happens the in-year impact as losses, It's a loss year. the

impact So we known as grow should see you see taper. of progress, naturally and see of in-year the losses and losses kind impact of the we we'll

Timothy Mulrooney

Okay.

wasn't factor? pricing. related doesn't I year. just because pricing the have it's through accumulates it if answer it retention sure was cumulative basically a to sounds like the But So

Ricky Dillon

Correct.

Timothy Mulrooney

X right strengthen over the more gone months place to in to general load Okay. service know is shortages. loading improve few area like focus me. efforts telematics those last I and real delivery to efficacy on with effort those Curious a processes retention just how on-time the rates. has And from and now help improve

change too those in this point? Have service at you KPIs seen early any levels? to improve it yet key Or material is

Kimberly Scott

Yes.

So about to talking metrics we've on in too diligently step working we're this. yet processes just great done because implementing a lot last new but the of change been early It's over these progress. around work we've making quarter, start

year, We've place all an and in already delivery that we pilot [indiscernible] for across by our our locations, have notification on-time is aim system in to of fiscal which customers outstanding. launched multiple

documenting the delivering And your are real-time just had delivered we're is home. a and you like to service. many verifying this much that product So the of your know letting customers companies delivery your great door a we notification, dock, your step we bumped at front hope that and

change be our industry a of introduction us this real-time think the communicating for to is like step we customers. this for with So kind

drive will accountability because know and So going we customers communicating real-time also feel be we're our for our with good our that very to teammates drivers that basis. they that, on a

And drive that help delivery. will so around assurances

have challenge facility product. on SOP, short shortages, procedure robust to we're operating reason related an a how falling for is standard to some if very in a We or manage inventory developed there also

behaviors put some have their at with out And of that Greenville, have. everyone best-in-class couple couple a address the days, our process manage across operating standard We in of We the into found spent And our in how procedure. they spent way is South the type responding ground it standardizing our facility. -- and that urgency taken Greenville practice, we'll mapping that to of we best a them so actually in days shortages. Carolina that be at myself, any might whole shortage on fact, with same we've network of product

our we we've responsibility for you heard logistics of who optimization, and all the leadership the inventory. on tactical and taken of what moved call leader, with mentioned me is initiatives Lastly driving though, this he's importantly great just under really most having success he's ownership now

ensuring time So and and another bringing is available this buffer on whole product that delivery. have that, on-time shortages level enough And on for metrics delivering a and stock we're the ordering to that and execution all time of data-based plants he's and of we're and area sophistication customers.

opportunities. we So early mobilizing around these you days spoke outstanding since last terms with we made of on the the metrics progress in feel but about we've quarter

Operator

Tong from to Goldman And we'll George go next Sachs.

Keen Fai Tong

taking on-time to touched some You improve ensuring now, gave customer examples of you and including quality, some delivery. addressing steps service shortages and on you're

take long satisfaction to talk about for organization doing would so? your how practices playbook the you these your to across spread and Can it

Kimberly Scott

Yes.

we So are very mobilized.

the delivery, to end have base on-time entire entire the that customer around both communication network year. in launched through assurances our of we place around We intend fiscal have our and the delivery playbook across by

network. be will that across happening our So

new We to adding will improve the that to communication customer, time, George. of levels continue over

something So on. stop never this that will working we is

X great give anything that to need and communications is all you else? up X-star additional Do rating other process. a add Did the of have the you but drive we we communicating SEO delivery, us customers metrics? kinds Phase touch and you enhanced Google to through points believe can experience? a Can

a by there's of the this, but build year, system. on to end lot across anticipate launched be of the So opportunity it fiscal will entire we our

successfully multiple piloted in have it locations We already.

implemented The should of I standard cultural takes this will operating is shortages being for also tell very you time. as is change But well that some tested be now and soon. procedure

what to are that we on a As every doing procedure, day holding that you procedure operating standard comply train sure accountable said making location and then teammates. in we people XX,XXX across every to people

will this institutionalized our take first with culture time always and DNA to excellence. be it and the for So putting serving part and become our of customer to of

we are on a timetable on want because culture. it don't this. working just to part who and of to stop to part This going we're I become So put is our never going of

Keen Fai Tong

pricing preserve And improves? increases accelerate to That's the outlook moderated quarters? your price can Got service of do quarter this when which it. next retention as helpful. worked. believe you provide rate, you Can latest for your growth you And quality couple pricing

Ricky Dillon

earlier, in impact So year to without land between expect in pricing. as in to of pricing 'XX, forward guiding I we going X% moderated full pricing in-year we X% said pricing terms of and and

As we 'XX. we doing year, customer-driven that we specific expect do talked We to half pricing of activities, incremental our last call, pricing. we into very and continue are continue back some surgical, and in this that did normalized expect the to to annual of

Operator

next Davies, Redburn our Oliver question take we'll from And Atlantic.

Oliver Davies

in the year. cross-selling a level seen of acceleration this you've nice So

continuing on how kind well-staffed So and secondly, you then that can And of can employees comment see the turnover are you just there? how into talk you of you just you sales think acceleration about do year? next

Kimberly Scott

Yes.

So I'll representatives. route service start with our

are We that at We And bolting of existing with and cross-sell. services may that XXX revenue. we've very of team. points basis products seem when the that that very they're attractive incremental shared customers already growth and margin seen wallet get pleased the you from while not we're work to the doing that look it's share capturing to on from you high,

pleased. very we're So

in that some our representatives, We hit route watermarks service we seen the have modeled. instances, also

And for high team customers. to had wallet we so our grab aspirations share plan, strategic massive this from existing of

customers, we some XX% and had and shared to for our those with only might are RSRs of very share with high XX% capturing wallet that seeing customers. we of were recall existing levels watermarks we You those penetrated hit

attractive that have continue And they're immediately. good amortization very so that those sales to so are feel can very no of we that lot cross-selling attractive A very accelerate we're very team to low and the we sells. with products

very continue of We'll drive or initiative. X,XXX that it been this who to about and have our excited really teammates we're making So so proud I'm happen.

and frontline sell teammates versus we We versus that and teammates, mentioned rates, wins new seeing of and on I higher you lower to a year rates. up relates -- prior it those business about asked XX% new new As the on think at logos we're sales, year headcount. prior productivity also that are those is

definitely seeing team with that well. up we're productivity So as

Operator

call. CEO, would now today's to turn concludes over President closing Kim I for and Q&A This portion like remarks. the the Scott, of floor to

Kimberly Scott

is committed Well, business joining our in Vestis for closing, with team I to all value you is thank market. would tremendous commitments just to before the deliver us. I call today. our on opportunity and creation continuing great that want And energized we're to a like reiterate of to our to

us today. you thank for So joining

Operator

Corporation This your day. at Vestis Conference Third and XXXX disconnect line Please today's Quarter have a Call. wonderful this concludes Fiscal Earnings time,

Vestis (VSTS) 7 Aug 242024 Q3 Earnings call transcript