The following is a summary of the Vestis Corporation (VSTS) Q4 2024 Earnings Call Transcript:

Financial Performance:

• Fourth quarter revenue was $684 million with full year revenue for fiscal 2024 at $2.8 billion.

• Fourth quarter adjusted EBITDA was $81 million, exceeding expectations.

• Full year adjusted EBITDA was $353 million, indicating a margin of 12.6% which is above guidance range.

• Strong free cash flow was reported in line with conversion targets, supporting strategic priorities such as deleveraging which ended the year with a 3.6 times net leverage ratio.

Business Progress:

• Focused on building commercial momentum, driving efficiencies across operations, and elevating customers' experience.

• Achieved national account wins and pipeline success, focusing on growth with national accounts and expanding sales capabilities for small to medium enterprise customer base.

• Route sales increased by approximately 50% in fiscal 2024 adding over 100 basis points of in-year revenue growth at high margin flow through.

• Implemented new operational initiatives such as an on-time delivery notification system and a standard operating procedure for plant operations to manage product shortages.

Opportunities:

• Potential for major national food services company account to become one of the largest customers, enhancing the future revenue base.

• Implementation of comprehensive sales force training and operational process improvements to generate higher productivity and better customer retention rates.

• Introductions of new operation efficiencies and cost takeout initiatives to further improve the financial stance in upcoming fiscal years.

Risks:

• Challenges in the escalation of route sales and maintaining incrementally high customer retention rates could impact future profitability.

• Potential risks associated with integrating national account sales into current operations while ensuring service quality and customer satisfaction during the transition periods.

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