(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | o | Accelerated filer | o | |||||||||||||||||
x | Smaller reporting company | |||||||||||||||||||
Emerging growth company |
Page | ||||||||
March 29, 2024 | September 29, 2023 | ||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Receivables (net of allowances: $ | |||||||||||
Inventories, net | |||||||||||
Rental merchandise in service, net | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and Equipment, at cost: | |||||||||||
Land, buildings and improvements | |||||||||||
Equipment | |||||||||||
Less - Accumulated depreciation | ( | ( | |||||||||
Total property and equipment, net | |||||||||||
Goodwill | |||||||||||
Other Intangible Assets, net | |||||||||||
Operating Lease Right-of-use Assets | |||||||||||
Other Assets | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Current maturities of long-term borrowings | $ | $ | |||||||||
Current maturities of financing lease obligations | |||||||||||
Current operating lease liabilities | |||||||||||
Accounts payable | |||||||||||
Accrued payroll and related expenses | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-Term Borrowings | |||||||||||
Noncurrent Financing Lease Obligations | |||||||||||
Noncurrent Operating Lease Liabilities | |||||||||||
Deferred Income Taxes | |||||||||||
Other Noncurrent Liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and Contingencies (see Note 9) | |||||||||||
Equity: | |||||||||||
Common stock, par value $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Net parent investment | — | ||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Equity | |||||||||||
Total Liabilities and Equity | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | ||||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of services provided (exclusive of depreciation and amortization) | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Total Operating Expenses | |||||||||||||||||||||||
Operating Income | |||||||||||||||||||||||
Interest Expense and Other, net | ( | ( | |||||||||||||||||||||
Income Before Income Taxes | |||||||||||||||||||||||
Provision for Income Taxes | |||||||||||||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted Average Shares Outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three months ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net Income | $ | $ | |||||||||
Other Comprehensive Income, net of tax: | |||||||||||
Foreign currency translation adjustments | ( | ||||||||||
Other Comprehensive Loss (income), net of tax | ( | ||||||||||
Comprehensive (Loss) income | $ | ( | $ |
Six months ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net Income | $ | $ | |||||||||
Other Comprehensive Income, net of tax: | |||||||||||
Foreign currency translation adjustments | |||||||||||
Other Comprehensive Income, net of tax | |||||||||||
Comprehensive Income | $ | $ |
Six months ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net Income | $ | $ | |||||||||
Adjustments to reconcile Net Income to Net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | ( | ||||||||||
Share-based compensation expense | |||||||||||
Asset write-down | |||||||||||
Loss on disposals of property and equipment | |||||||||||
Amortization of debt issuance costs | |||||||||||
Loss on extinguishment of debt | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Receivables, net | ( | ( | |||||||||
Inventories, net | ( | ||||||||||
Rental merchandise in service, net | ( | ||||||||||
Other current assets | ( | ||||||||||
Accounts payable | ( | ||||||||||
Accrued expenses | ( | ||||||||||
Changes in other noncurrent liabilities | ( | ( | |||||||||
Changes in other assets | ( | ( | |||||||||
Other operating activities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment and other | ( | ( | |||||||||
Disposals of property and equipment | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from long-term borrowings | |||||||||||
Payments of long-term borrowings | ( | ||||||||||
Payments of financing lease obligations | ( | ( | |||||||||
Net cash distributions (to) from Parent | ( | ( | |||||||||
Dividend payments | ( | ||||||||||
Debt issuance costs | ( | ||||||||||
Other financing activities | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of foreign exchange rates on cash and cash equivalents | |||||||||||
(Decrease) increase in cash and cash equivalents | ( | ( | |||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | Additional Paid-In Capital | Retained Earnings | Net Parent Investment | Accumulated Other Comprehensive Loss | Total Parent’s Equity | |||||||||||||||||||||||||||||||||||
Balance, September 29, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Separation-related adjustments | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of common stock in connection with the Separation and reclassification of net parent investment(1) | — | ( | — | ||||||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Other Comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options or awards of restricted stock units | — | — | — | ||||||||||||||||||||||||||||||||||||||
Tax payments related to shares withheld for share based compensation plans | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Balance, December 29, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Separation-related adjustments | — | $ | — | $ | — | $ | — | $ | ( | $ | — | $ | ( | ||||||||||||||||||||||||||||
Issuance of common stock in connection with the Separation and reclassification of net parent investment | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Dividends Declared ($ | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Other Comprehensive Loss | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of stock options or awards of restricted stock units | — | — | — | ||||||||||||||||||||||||||||||||||||||
Tax payments related to shares withheld for share based compensation plans | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||
Balance, March 29, 2024 | $ | $ | $ | $ | $ | ( | $ |
Common Stock | |||||||||||||||||||||||||||||||||||||||||
Shares Outstanding | Par Value | Additional Paid-In Capital | Retained Earnings | Net Parent Investment | Accumulated Other Comprehensive Loss | Total Parent’s Equity | |||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Net Transfers from Parent | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Other Comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance, December 30, 2022 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
Net Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Net Transfers to Parent | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
Other Comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | $ | $ | ( | $ |
March 29, 2024 | September 29, 2023 | ||||||||||
Raw Materials | $ | $ | |||||||||
Work in Process | |||||||||||
Finished Goods | |||||||||||
$ | $ |
September 29, 2023 | Translation | March 29, 2024 | |||||||||||||||
United States | $ | $ | $ | ||||||||||||||
Canada | |||||||||||||||||
Total | $ | $ | $ |
March 29, 2024 | September 29, 2023 | ||||||||||||||||||||||||||||||||||
Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | ||||||||||||||||||||||||||||||
Customer relationship assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Trade names | — | — | |||||||||||||||||||||||||||||||||
$ | $ | ( | $ | $ | $ | ( | $ |
March 29, 2024 | September 29, 2023 | ||||||||||
Senior secured term loan facility, due September 2025 | $ | $ | |||||||||
Senior secured term loan facility, due September 2028 | |||||||||||
Senior secured term loan facility, due February 2031 | |||||||||||
Total principal debt issued | |||||||||||
Unamortized debt issuance costs | ( | ( | |||||||||
Discounts | ( | ||||||||||
Less - current portion | ( | ( | |||||||||
Long-term borrowings, net of current portion | $ | $ |
Three months ended | |||||||||||||||||
Income Statement Location | March 29, 2024 | March 31, 2023 | |||||||||||||||
Gasoline, diesel and natural fuel agreements | Cost of services provided (exclusive of depreciation and amortization) | $ | ( | $ |
Six months ended | |||||||||||||||||
Income Statement Location | March 29, 2024 | March 31, 2023 | |||||||||||||||
Gasoline, diesel and natural fuel agreements | Cost of services provided (exclusive of depreciation and amortization) | $ | ( | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | ||||||||||||||||||||
United States: | |||||||||||||||||||||||
Uniforms | $ | $ | $ | $ | |||||||||||||||||||
Workplace Supplies | |||||||||||||||||||||||
Total United States | |||||||||||||||||||||||
Canada: | |||||||||||||||||||||||
Uniforms | $ | $ | $ | $ | |||||||||||||||||||
Workplace Supplies | |||||||||||||||||||||||
Total Canada | |||||||||||||||||||||||
Total Revenue | $ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | ||||||||||||||||||||
Lease costs: | |||||||||||||||||||||||
Operating lease costs | $ | $ | $ | $ | |||||||||||||||||||
Finance lease costs | $ | $ | $ | $ |
Six months ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows from operating leases | $ | $ | |||||||||
Operating cash flows from finance leases | |||||||||||
Financing cash flows from finance leases | |||||||||||
Lease assets obtained in exchange for lease obligations: | |||||||||||
Operating leases | $ | $ | |||||||||
Finance leases |
March 29, 2024 | September 29, 2023 | ||||||||||
Weighted average remaining lease term (in years) | |||||||||||
Operating leases | |||||||||||
Finance leases | |||||||||||
Weighted average discount rate | |||||||||||
Operating leases | % | % | |||||||||
Finance leases | % | % |
Operating leases | Finance leases | Total | |||||||||||||||
2024 (remaining six months) | $ | $ | $ | ||||||||||||||
2025 | |||||||||||||||||
2026 | |||||||||||||||||
2027 | |||||||||||||||||
2028 | |||||||||||||||||
Thereafter | |||||||||||||||||
Total future minimum lease payments | $ | $ | $ | ||||||||||||||
Less: Interest | ( | ( | ( | ||||||||||||||
Present value of lease liabilities | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | ||||||||||||||||||||
TBOs | $ | $ | $ | $ | |||||||||||||||||||
RSUs | |||||||||||||||||||||||
PSUs | |||||||||||||||||||||||
DSUs | |||||||||||||||||||||||
ESPP | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Shares Granted (in thousands) | Weighted-Average Grant-Date Fair Value (dollars per share) | ||||||||||
TBOs | $ | ||||||||||
RSUs | $ | ||||||||||
PSUs | $ | ||||||||||
DSUs | $ | ||||||||||
Total |
Three months ended | Six months ended | ||||||||||||||||||||||
Revenue | March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Canada | |||||||||||||||||||||||
Total Revenue | $ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
Operating Income | March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | |||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Canada | |||||||||||||||||||||||
Total Segment Operating Income | |||||||||||||||||||||||
Corporate | ( | ( | ( | ( | |||||||||||||||||||
Total Operating Income | $ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
Reconciliation to Income Before Income Taxes | March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | |||||||||||||||||||
Total Operating Income | $ | $ | $ | $ | |||||||||||||||||||
Interest Expense and Other, net | ( | ( | |||||||||||||||||||||
Income Before Income Taxes | $ | $ | $ | $ |
Three months ended | Six months ended | ||||||||||||||||||||||
March 29, 2024 | March 31, 2023 | March 29, 2024 | March 31, 2023 | ||||||||||||||||||||
Earnings: | |||||||||||||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||||||||||
Shares: | |||||||||||||||||||||||
Basic weighted-average shares outstanding | |||||||||||||||||||||||
Effect of dilutive securities | |||||||||||||||||||||||
Diluted weighted-average shares outstanding | |||||||||||||||||||||||
Basic Earnings Per Share | $ | $ | $ | $ | |||||||||||||||||||
Diluted Earnings Per Share | $ | $ | $ | $ | |||||||||||||||||||
Antidilutive securities(1) |
Three months ended March 29, 2024 | |||||||||||||||||
Foreign Currency Translation | Pension-related | Total Accumulated Other Comprehensive Loss | |||||||||||||||
Balance as of December 29, 2023 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive loss | ( | ( | |||||||||||||||
Balance as of March 29, 2024 | $ | ( | $ | ( | $ | ( |
Six months ended March 29, 2024 | |||||||||||||||||
Foreign Currency Translation | Pension-related | Total Accumulated Other Comprehensive Loss | |||||||||||||||
Balance as of September 29, 2023 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income | |||||||||||||||||
Balance as of March 29, 2024 | $ | ( | $ | ( | $ | ( |
Three months ended March 31, 2023 | |||||||||||||||||
Foreign Currency Translation | Pension-related | Total Accumulated Other Comprehensive Loss | |||||||||||||||
Balance as of December 30, 2022 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income | |||||||||||||||||
Balance as of March 31, 2023 | $ | ( | $ | ( | $ | ( |
Six months ended March 31, 2023 | |||||||||||||||||
Foreign Currency Translation | Pension-related | Total Accumulated Other Comprehensive Loss | |||||||||||||||
Balance as of September 30, 2022 | $ | ( | $ | ( | $ | ( | |||||||||||
Other comprehensive income | |||||||||||||||||
Balance as of March 31, 2023 | $ | ( | $ | ( | $ | ( |
Three Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Revenue | $ | 705,368 | $ | 699,305 | $ | 6,063 | 0.9 | % | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of services provided(1) | 504,417 | 499,462 | 4,955 | 1.0 | % | ||||||||||||||||||
Depreciation and amortization | 35,213 | 33,621 | 1,592 | 4.7 | % | ||||||||||||||||||
Selling, general and administrative expenses | 122,684 | 116,828 | 5,856 | 5.0 | % | ||||||||||||||||||
Total Operating Expenses | 662,314 | 649,911 | 12,403 | 1.9 | % | ||||||||||||||||||
Operating Income | 43,054 | 49,394 | (6,340) | (12.8 | %) | ||||||||||||||||||
Interest Expense and Other, net | (34,713) | 161 | (34,874) | (21,660.9 | %) | ||||||||||||||||||
Income Before Income Taxes | 8,341 | 49,555 | (41,214) | (83.2 | %) | ||||||||||||||||||
Provision for Income Taxes | 2,376 | 12,700 | (10,324) | (81.3 | %) | ||||||||||||||||||
Net Income | $ | 5,965 | $ | 36,855 | $ | (30,890) | (83.8 | %) |
Six Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Revenue | $ | 1,423,291 | $ | 1,400,002 | $ | 23,289 | 1.7 | % | |||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Cost of services provided(1) | 1,006,797 | 995,576 | 11,221 | 1.1 | % | ||||||||||||||||||
Depreciation and amortization | 70,575 | 67,507 | 3,068 | 4.5 | % | ||||||||||||||||||
Selling, general and administrative expenses | 255,264 | 243,151 | 12,113 | 5.0 | % | ||||||||||||||||||
Total Operating Expenses | 1,332,636 | 1,306,234 | 26,402 | 2.0 | % | ||||||||||||||||||
Operating Income | 90,655 | 93,768 | (3,113) | (3.3 | %) | ||||||||||||||||||
Interest Expense and Other, net | (65,488) | 351 | (65,839) | (18,757.5 | %) | ||||||||||||||||||
Income Before Income Taxes | 25,167 | 94,119 | (68,952) | (73.3 | %) | ||||||||||||||||||
Provision for Income Taxes | 6,934 | 23,796 | (16,862) | (70.9 | %) | ||||||||||||||||||
Net Income | $ | 18,233 | $ | 70,323 | $ | (52,090) | (74.1 | %) |
Three Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Segment Revenue | $ | 642,056 | $ | 636,918 | $ | 5,138 | 0.8 | % | |||||||||||||||
Segment Operating Income | 71,200 | 68,174 | 3,026 | 4.4 | % | ||||||||||||||||||
Segment Operating Income % | 11.1 | % | 10.7 | % |
Six Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Segment Revenue | $ | 1,295,296 | $ | 1,274,663 | $ | 20,633 | 1.6 | % | |||||||||||||||
Segment Operating Income | 145,276 | 132,011 | 13,265 | 10.0 | % | ||||||||||||||||||
Segment Operating Income % | 11.2 | % | 10.4 | % |
Three Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Segment Revenue | $ | 63,312 | $ | 62,387 | $ | 925 | 1.5 | % | |||||||||||||||
Segment Operating Income | 975 | 1,531 | (556) | (36.3) | % | ||||||||||||||||||
Segment Operating Income % | 1.5 | % | 2.5 | % |
Six Months Ended | Change | Change | |||||||||||||||||||||
March 29, 2024 | March 31, 2023 | $ | % | ||||||||||||||||||||
Segment Revenue | $ | 127,995 | $ | 125,339 | $ | 2,656 | 2.1 | % | |||||||||||||||
Segment Operating Income | 5,530 | 6,889 | (1,359) | (19.7) | % | ||||||||||||||||||
Segment Operating Income % | 4.3 | % | 5.5 | % |
Six Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net cash provided by operating activities | $ | 127,542 | $ | 68,765 | |||||||
Net cash used in investing activities | (29,825) | (21,693) | |||||||||
Net cash used in financing activities | (103,161) | (60,793) |
Exhibit No. | Description | ||||
10.1 | Amendment No. 1, dated as of February 22, 2024, among Vestis Corporation, as U.S. Borrower, Canadian Linen and Uniform Service Corp., as Canadian Borrower, each Subsidiary of Vestis Corporation party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 22, 2024; File No. 001-41783) | ||||
10.2+ | |||||
10.3+ | |||||
10.4+ | |||||
10.5+ | |||||
31.1* | |||||
31.2* | |||||
32.1* | |||||
101 | The following financial information from Vestis' Quarterly Report on Form 10-Q for the period ended March 29, 2024 formatted in inline XBRL: (i) Consolidated and Combined Balance Sheets as of March 29, 2024 and September 29, 2023; (ii) Consolidated and Combined Statements of Income for the three and six months ended March 29, 2024 and March 31, 2023; (iii) Consolidated and Combined Statements of Comprehensive Income for the three and six months ended March 29, 2024 and March 31, 2023; (iv) Consolidated and Combined Statements of Cash Flows for the six months ended March 29, 2024 and March 31, 2023; (v) Consolidated and Combined Statements of Changes in Equity for the three and six months ended March 29, 2024 and March 31, 2023; and (vi) Notes to consolidated and combined financial statements | ||||
104 | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q; included in Exhibit 101 Inline XBRL document set |
Vestis Corporation | ||||||||
By: | /s/ RICK DILLON | |||||||
Name: | Rick Dillon | |||||||
Title: | Executive Vice President and Chief Financial Officer (principal financial officer) |
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CONSOLIDATED AND COMBINED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Sep. 29, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Receivables allowances | $ 19,966 | $ 25,066 |
Common stock par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 350,000,000 | 350,000,000 |
Common stock issued (in shares) | 131,450,628 | |
Common stock outstanding (in shares) | 131,450,628 |
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||||
Revenue | $ 705,368 | $ 699,305 | $ 1,423,291 | $ 1,400,002 |
Operating Expenses: | ||||
Cost of services provided (exclusive of depreciation and amortization) | 504,417 | 499,462 | 1,006,797 | 995,576 |
Depreciation and amortization | 35,213 | 33,621 | 70,575 | 67,507 |
Selling, general and administrative expenses | 122,684 | 116,828 | 255,264 | 243,151 |
Total Operating Expenses | 662,314 | 649,911 | 1,332,636 | 1,306,234 |
Operating Income | 43,054 | 49,394 | 90,655 | 93,768 |
Interest Expense and Other, net | (34,713) | 161 | (65,488) | 351 |
Income Before Income Taxes | 8,341 | 49,555 | 25,167 | 94,119 |
Provision for Income Taxes | 2,376 | 12,700 | 6,934 | 23,796 |
Net Income | $ 5,965 | $ 36,855 | $ 18,233 | $ 70,323 |
Earnings per share: | ||||
Basic (in usd per share) | $ 0.05 | $ 0.28 | $ 0.14 | $ 0.54 |
Diluted (in usd per share) | $ 0.05 | $ 0.28 | $ 0.14 | $ 0.54 |
Weighted Average Shares Outstanding: | ||||
Basic (in shares) | 131,524 | 130,725 | 131,457 | 130,725 |
Diluted (in shares) | 131,893 | 130,725 | 131,788 | 130,725 |
CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||||
Net Income | $ 5,965 | $ 36,855 | $ 18,233 | $ 70,323 |
Other Comprehensive Income, net of tax: | ||||
Foreign currency translation adjustments | (6,449) | 40 | 191 | 5,788 |
Other Comprehensive Loss (income), net of tax | (6,449) | 40 | 191 | 5,788 |
Comprehensive (Loss) income | $ (484) | $ 36,895 | $ 18,424 | $ 76,111 |
CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (Parenthetical) shares in Thousands |
6 Months Ended |
---|---|
Mar. 29, 2024
shares
| |
Common Stock | Distributed | |
Shareholders received conversion ratio (in shares) | 130,700 |
Common Stock | Aramark donor advised fund | |
Shareholders received conversion ratio (in shares) | 500 |
NATURE OF BUSINESS AND BASIS OF PRESENTATION |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NATURE OF BUSINESS AND BASIS OF PRESENTATION | NATURE OF BUSINESS AND BASIS OF PRESENTATION: Vestis Corporation ("Vestis", the "Company", “we” or “us”) is a leading provider of uniforms and workplace supplies across the United States and Canada. The Company provides uniforms, mats, towels, linens, restroom supplies, first-aid supplies and safety products. The Company’s customer base participates in a wide variety of industries, including manufacturing, hospitality, retail, government, automotive, healthcare, food processing and pharmaceuticals. The Company serves customers ranging from small, family-owned operations with a single location to large corporations and national franchises with multiple locations. The Company’s customers value the uniforms and workplace supplies it delivers as its services and products can help them reduce operating costs, enhance their brand image, maintain a safe and clean workplace and focus on their core business. The Company leverages its broad footprint and its supply chain, delivery fleet and route logistics capabilities to serve customers on a recurring basis, typically weekly, and primarily through multi-year contracts. In addition, the Company offers customized uniforms through direct sales agreements, typically for large, regional or national companies. The Company manages and evaluates its business activities based on geography and, as a result, determined that its United States and Canada businesses are its operating segments. The Company’s operating segments are also its reportable segments. The United States and Canada reportable segments both provide a range of uniforms and workplace supplies programs. The Company’s uniforms business (“Uniforms”) generates revenue from the rental, servicing and direct sale of uniforms to customers, including the design, sourcing, manufacturing, customization, personalization, delivery, laundering, sanitization, repair and replacement of uniforms. The uniform options include shirts, pants, outerwear, gowns, scrubs, high visibility garments, particulate-free garments and flame-resistant garments, along with shoes and accessories. The Company’s workplace supplies business (“Workplace Supplies”) generates revenue from the rental and servicing of workplace supplies, including managed restroom supply services, first-aid supplies and safety products, floor mats, towels and linens. On September 30, 2023 (the "Distribution Date"), Aramark completed the previously announced spin-off of Vestis (the “Separation”). The Separation was completed through a distribution of the Company's common stock to holders of record of Aramark’s common stock as of the close of business on September 20, 2023 (the “Distribution”), which resulted in the issuance of approximately 131.2 million shares of common stock, which includes 0.5 million shares contributed to an Aramark donor advised fund for charitable contributions. Aramark stockholders of record received one share of Vestis common stock for every two shares of common stock, par value $0.01, of Aramark. As a result of the Separation, the Company became an independent public company. Our common stock is listed under the symbol “VSTS” on the NYSE. In connection with the Separation, the Company entered into or adopted several agreements that provide a framework for the relationship between the Company and Aramark. See Note 13. "Related Parties" for more information on these agreements. During the three and six months ended March 29, 2024, certain additional Separation-related adjustments were recorded which included a net decrease in total equity of $3.1 million and net increase in total equity of $6.4 million, respectively. For the three and six months ended March 29, 2024, these items consisted of: (a) cash transfers paid to Aramark of $2.5 million and $6.1 million, respectively, to settle transactions related to the Separation, and (b) adjustments to the Company's deferred income tax liabilities totaling a $0.6 million decrease and a $12.7 million net increase, respectively. Basis of Presentation The Consolidated and Combined Financial Statements (the "Financial Statements") were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. The Financial Statements reflect the historical results of operations, comprehensive income and cash flows for the three and six months ended March 29, 2024 and March 31, 2023 and the financial position as of March 29, 2024 and September 29, 2023 for the Company and are denominated in United States (“U.S.”) dollars. Prior to the Separation, the Company’s business functioned together with other Aramark businesses. The assets, liabilities, revenue and expenses of the Company prior to the Separation have been reflected as Combined Financial Statements on a historical cost basis, as included in the consolidated financial statements of Aramark, using the historical accounting policies applied by Aramark. Prior to the Separation, separate financial statements had not been prepared for the Company, and it has not operated as a standalone business from Aramark. The historical results of operations, financial position and cash flows of the Company prior to the Separation presented in these Combined Financial Statements may not be indicative of what they would have been had the Company actually been an independent standalone public company. Transactions between the Company and Aramark for the three and six months ended March 31, 2023 have been included in the Combined Financial Statements and are considered related party transactions (see Note 13. "Related Parties"). After the Separation, Vestis became a standalone public company and the Consolidated Financial Statements were prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These Consolidated and Combined Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented. All intercompany transactions and balances within the Company have been eliminated. It is suggested that these Consolidated and Combined Financial Statements be read in conjunction with the Combined Financial Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2023. There have been no material changes in the accounting policies followed by the Company during the current fiscal year. New Accounting Standards Updates Adopted Standards (from most to least recent date of issuance) In September 2022, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") to enhance the transparency of supplier finance programs, which may be referred to as reverse factoring, payables finance or structured payables arrangements. The guidance requires that a buyer in a supplier finance program disclose the program’s nature, activity and potential magnitude. The guidance was effective for the Company in the first quarter of fiscal 2024. The Company adopted the ASU prospectively and adoption of this guidance did not have an impact on the Consolidated Financial Statements. In October 2021, the FASB issued an ASU which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers as if it had originated the contracts. The guidance was effective for the Company in the first quarter of fiscal 2024. The Company adopted the ASU prospectively and adoption of this guidance did not have a material impact on the Consolidated Financial Statements. Standards Not Yet Adopted (from most to least recent date of issuance) In December 2023, the FASB issued an ASU which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning October 4, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures. In November 2023, the FASB issued an ASU which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for the Company's annual periods beginning September 28, 2024, and interim periods beginning October 4, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the Consolidated and Combined Financial Statements or are not expected to have a material impact on the Consolidated and Combined Financial Statements. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the Consolidated and Combined Financial Statements and accompanying notes. The Company utilizes key estimates in preparing the financial statements including environmental estimates, goodwill, intangibles, insurance reserves, income taxes and long-lived assets. These estimates are based on historical information, current trends and information available from other sources. Actual results could materially differ from those estimates. Fair Value of Financial Assets and Financial Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows: •Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets •Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument •Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement Recurring Fair Value Measurements The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, financing leases, derivatives and borrowings. Management believes that the carrying value of cash and cash equivalents, accounts receivable, accounts payable, financing leases and borrowings are representative of their respective fair values. All derivatives are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter (refer to Note 5. "Derivative Instruments" for additional information). Nonrecurring Fair Value Measurements The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, indefinite-lived intangible assets and goodwill. The Company reviews the carrying amounts of such assets at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurement of the assets are considered to be Level 3 measurements. Inventories Inventories are valued at the lower of cost (principally the first-in, first-out method) or net realizable value. The Company records valuation adjustments to its inventories if the cost of inventory on hand exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future demand and market conditions and analysis of historical experience. As of March 29, 2024 and September 29, 2023, the Company’s reserve for inventory was approximately $17.8 million and $18.7 million, respectively. The inventory reserve is determined based on history and projected customer consumption and specific identification. The components of inventories are as follows (in thousands):
Rental merchandise in service Rental merchandise in service represents personalized work apparel, linens and other rental items in service. Rental merchandise in service is valued at cost less amortization, calculated using the straight-line method. Rental merchandise in service is amortized over its useful life, which primarily range from to four years. The amortization rates are based on the Company’s specific experience and wear tests performed by the Company. These factors are critical to determining the amount of rental merchandise in service and related "Cost of services provided (exclusive of depreciation and amortization)" that are presented in the Consolidated and Combined Financial Statements. Material differences may result in the amount and timing of operating income if management makes significant changes to these estimates. During the three and six months ended March 29, 2024, the Company recorded $81.2 million and $162.0 million, respectively, of amortization related to rental merchandise in service within “Cost of services provided (exclusive of depreciation and amortization)” on the Consolidated Statements of Income. During the three and six months ended March 31, 2023, the Company recorded $92.2 million and $169.9 million, respectively, of amortization related to rental merchandise in service within “Cost of services provided (exclusive of depreciation and amortization)” on the Combined Statements of Income. Supplemental Cash Flow Information During the three and six months ended March 29, 2024, the Company paid interest related to principal debt of $22.7 million and $52.1 million, respectively. During the three and six months ended March 31, 2023, the Company did not have payments of interest as the Company did not have principal debt. During the three and six months ended March 29, 2024, the Company paid cash for income taxes of $14.9 million and $15.4 million, respectively. During the three and six months ended March 31, 2023, the Company paid cash for income taxes of $0.2 million and $0.3 million, respectively.
|
SEVERANCE |
6 Months Ended |
---|---|
Mar. 29, 2024 | |
Restructuring and Related Activities [Abstract] | |
SEVERANCE | SEVERANCE: In fiscal 2023, the Company approved headcount reductions to streamline and improve the efficiency and effectiveness of operational and administrative functions. Severance charges of $6.6 million were recorded for the three and six months ended March 31, 2023. No material severance charges were incurred for the three and six months ended March 29, 2024. As of March 29, 2024 and September 29, 2023, the Company had an accrual of approximately $1.1 million and $3.4 million, respectively, related to unpaid severance obligations.
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GOODWILL AND OTHER INTANGIBLE ASSETS |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS: Goodwill represents the excess of the fair value of consideration paid for an acquired entity over the fair value of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized and is subject to an impairment test that is conducted annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists, using discounted cash flows. Changes in total goodwill for our reporting units during the six months ended March 29, 2024 are as follows (in thousands):
Other intangible assets consist of (in thousands):
Amortization of intangible assets for the three and six months ended March 29, 2024 was approximately $6.5 million and $13.0 million, respectively. Amortization of intangible assets for the three and six months ended March 31, 2023 was approximately $6.5 million and $13.0 million, respectively.
|
BORROWINGS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BORROWINGS | BORROWINGS: Long-term borrowings, net, are summarized in the following table (in thousands):
On February 22, 2024 the Company entered into Amendment No. 1 to its Credit Agreement dated September 29, 2023 (the "Credit Agreement") and refinanced its $800 million Term Loan A-1 due September 2025 ("Term Loan A-1") with an $800 million Term Loan B-1 due February 2031 ("Term Loan B-1"). The Term Loan B-1 requires $2.0 million of principal payments each quarter until the maturity date, at which the remaining unpaid principal amount is due. The Term Loan B-1 interest rate for fiscal 2024 is at the Secured Overnight Financing Rate ("SOFR") plus 225 basis points and will adjust to SOFR plus 200 basis points once the Company reaches 3.30x Net Leverage as defined in the Credit Agreement. The Company recorded approximately $11.1 million of debt issuance costs related to Term Loan B-1 for the three months ended March 29, 2024, which are presented as a reduction of debt in the Consolidated Balance Sheet and are amortized as a component of interest expense over the term of the related debt using the effective interest method. The Company also incurred an original issue discount of $2.0 million upon the issuance of the Term Loan B-1 which is presented as a reduction of debt in the Consolidated Balance Sheet and is amortized as a component of interest expense over the term of the related debt using the effective interest method. In conjunction with Amendment No. 1 to the Credit Agreement and the repayment for Term Loan A-1, the Company recorded a $3.9 million non-cash loss for the write-off of unamortized debt issuance costs to "Interest Expense and Other, net" on the Consolidated Statements of Income during the three and six months ended March 29, 2024. During the three and six month period ended March 29, 2024, the Company prepaid a principal amount of $45.0 million of its $700 million Term Loan A-2 due September 2028. The weighted-average interest rate for our senior secured term loan facilities was 7.71% for the six months ended March 29, 2024. The carrying amounts of the Company’s senior secured term loan facilities approximate their fair value as the interest rates are variable and reflective of market rates. As of March 29, 2024, there was $5.3 million of letters of credit outstanding leaving $294.7 million available for borrowing under the Company's revolving credit facility. At March 29, 2024, the Company was in compliance with all covenants under its credit facilities.
|
DERIVATIVE INSTRUMENTS |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS: Prior to the Separation, Aramark entered into contractual derivative arrangements to manage changes in market conditions related to exposure to fluctuating gasoline, diesel and natural gas fuel prices at the Company. These derivative arrangements transferred in-kind to the Company upon the execution of the Separation and Distribution Agreement between the Company and Aramark, which was effective upon the Separation on September 30, 2023. Derivative instruments utilized during the period include pay fixed/receive floating gasoline and diesel fuel agreements based on the Department of Energy weekly retail on-highway index, and pay fixed/receive floating natural gas fuel agreements based on the Henry Hub New York Mercantile Exchange index in order to limit the Company's exposure to price fluctuations for gasoline, diesel, and natural gas fuel mainly for the Company’s operations. All derivative instruments are recognized as either assets or liabilities on the Consolidated Balance Sheet as of March 29, 2024. The counterparties to the contractual derivative agreements are all major international financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company continually monitors its positions and the credit ratings of its counterparties, and does not anticipate nonperformance by the counterparties. The Company did not enter into any new derivative arrangements for the three or six months ended March 29, 2024. The corresponding impact on earnings related to the contractual derivative arrangements have been recorded within the Consolidated Statement of Income for the three and six months ended March 29, 2024. Additionally, prior to the Separation the impact on earnings related to the contractual derivative arrangements were allocated to the Company and recorded within the Combined Statement of Income for the three and six months ended March 31, 2023. Derivatives not Designated in Hedging Relationships As of March 29, 2024, the Company had gasoline and diesel contracts for approximately 1.0 million gallons and natural gas contracts for approximately 0.2 Metric Million British Thermal Units outstanding through June of fiscal 2024. The Company does not record its gasoline, diesel and natural gas fuel agreements as hedges for accounting purposes. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of $0.9 million for the three months ended March 29, 2024 and a loss of $1.5 million for the three months ended March 31, 2023. The impact on earnings related to the change in fair value of these unsettled contracts was a gain of $0.1 million for the six months ended March 29, 2024 and a loss of $1.3 million for the six months ended March 31, 2023. As of March 29, 2024, the Company had $0.2 million of gasoline, diesel and natural gas fuel agreements recorded within "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet. The following table summarizes the location of realized and unrealized (gain) loss for the Company’s derivatives not designated as hedging instruments in the Consolidated and Combined Statements of Income (in thousands):
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REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | REVENUE RECOGNITION: Disaggregation of Revenue The following table presents revenue disaggregated by revenue source (in thousands):
Revenue Recognition Policy The Company generates and recognizes approximately 94% of its total revenue from route servicing contracts on both Uniforms, which the Company generally manufactures, and Workplace Supplies, such as mats, towels, and linens that are procured from third-party suppliers. Revenue from these contracts represent a single-performance obligation and are recognized over time as services are performed based on the nature of services provided and contractual rates (output method). The Company generates its remaining revenue primarily from the direct sale of uniforms to customers, with such revenue being recognized when the Company’s performance obligation is satisfied, typically upon the transfer of control of the promised product to the customer. Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for the services or products described above and is presented net of sales and other taxes we collect on behalf of governmental authorities. Certain customer route servicing contracts include terms and conditions that include components of variable consideration, which are typically in the form of consideration paid to a customer based on performance metrics specified within the contract. Some contracts provide for customer discounts or rebates that can be earned through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When assessing if variable consideration should be limited, the Company evaluates the likelihood of whether uncontrollable circumstances could result in a significant reversal of revenue. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the three or six months ended March 29, 2024 or three or six months ended March 31, 2023. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts and rebates within “Accrued expenses and other current liabilities” on the Consolidated and Combined Balance Sheets. Variable consideration can also include consideration paid to a customer at the beginning of a contract. This type of variable consideration is capitalized as an asset (in “Other Assets” on the Consolidated and Combined Balance Sheets) and is amortized over the life of the contract as a reduction to revenue in accordance with the accounting guidance for revenue recognition. Contract Balances The Company defers sales commissions earned by its sales force that are considered to be incremental and recoverable costs of obtaining a contract. The deferred costs are amortized using the portfolio approach on a straight-line basis over the average period of benefit, approximately nine years, and are assessed for impairment on a periodic basis. Determination of the amortization period and the subsequent assessment for impairment of the contract cost asset requires judgment. The Company expenses sales commissions as incurred if the amortization period is one year or less. As of March 29, 2024 and September 29, 2023, the Company has $105.0 million and $104.4 million, respectively, of employee sales commissions recorded as assets within “Other Assets” on the Company’s Consolidated and Combined Balance Sheets. During the three and six months ended March 29, 2024, the Company recorded $5.3 million and $10.5 million, respectively, of expense related to employee sales commissions within “Selling, general and administrative expenses” on the Consolidated Statements of Income. During the three and six months ended March 31, 2023, the Company recorded $4.9 million and $9.9 million, respectively, of expense related to employee sales commissions within “Selling, general and administrative expenses” on the Combined Statements of Income.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES: The Company has lease arrangements primarily related to real estate, vehicles and equipment. Finance leases primarily relate to vehicles. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”). Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances. The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The Company uses a portfolio approach to determine the incremental borrowing rate based on the geographic location of the lease and the remaining lease term. The incremental borrowing rate is calculated using a base line rate plus an applicable margin. The following table summarizes operating lease costs, consisting of fixed lease costs, variable lease costs and short-term lease costs. Additionally, the table summarizes finance lease costs, consisting of amortization of right-of-use asset and interest on lease liabilities (in thousands):
Supplemental cash flow information related to leases for the period reported is as follows (in thousands):
Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows (in thousands):
Future minimum lease payments under non-cancelable leases as of March 29, 2024 are as follows (in thousands):
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LEASES | LEASES: The Company has lease arrangements primarily related to real estate, vehicles and equipment. Finance leases primarily relate to vehicles. The Company assesses whether an arrangement is a lease, or contains a lease, upon inception of the related contract. A right-of-use asset and corresponding lease liability are not recorded for leases with an initial term of 12 months or less (“short-term leases”). Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance costs and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized in the period in which the expenses are incurred. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain they will be exercised or not, respectively. Options to extend lease terms that are reasonably certain of exercise are recognized as part of the operating lease right-of-use asset and operating lease liability balances. The Company is required to discount its future minimum lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. The Company uses a portfolio approach to determine the incremental borrowing rate based on the geographic location of the lease and the remaining lease term. The incremental borrowing rate is calculated using a base line rate plus an applicable margin. The following table summarizes operating lease costs, consisting of fixed lease costs, variable lease costs and short-term lease costs. Additionally, the table summarizes finance lease costs, consisting of amortization of right-of-use asset and interest on lease liabilities (in thousands):
Supplemental cash flow information related to leases for the period reported is as follows (in thousands):
Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows (in thousands):
Future minimum lease payments under non-cancelable leases as of March 29, 2024 are as follows (in thousands):
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SHARE-BASED COMPENSATION |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION: The following table summarizes the share-based compensation expense and related information for Time-Based Options (“TBOs”), Time-Based Restricted Stock Units (“RSUs”), Performance Stock Units (“PSUs”), Deferred Stock Units ("DSUs") and Employee Stock Purchase Plan (“ESPP”) classified as “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income (in thousands).
During the second quarter of fiscal 2024, the Company granted 54,800 RSUs with a weighted-average grant-date fair value per unit of $18.98 that vest one year from the grant date. The below table summarizes the number of shares granted and the weighted-average grant-date fair value per unit during the six months ended March 29, 2024:
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COMMITMENTS AND CONTINGENCIES |
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Mar. 29, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES: From time to time, the Company and its subsidiaries are a party to various legal actions, proceedings and investigations involving claims incidental to the conduct of their business or otherwise related to the Company, including actions by customers, employees, government entities and third parties, including under federal, state, international, national, provincial and local employment laws, wage and hour laws, discrimination laws, immigration laws, human health and safety laws, import and export controls and customs laws, environmental laws, false claims or whistleblower statutes, tax codes, antitrust and competition laws, customer protection statutes, procurement regulations, intellectual property laws, supply chain laws, the Foreign Corrupt Practices Act and other anti-corruption laws, lobbying laws, motor carrier safety laws, data privacy and security laws, or alleging negligence and/or breaches of contractual and other obligations. Based on information currently available, advice of counsel, available insurance coverage, established reserves and other resources, except as set forth below, the Company does not believe that any such actions are likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or cash flows. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or cash flows. The Company is involved with environmental investigation and remediation activities at certain sites that it currently or formerly owned or operated or to which it sent waste for disposal (including sites which were previously owned and/or operated by businesses acquired by the Company or sites to which such businesses sent waste for disposal). The Company initially provides for estimated costs of environmental-related activities relating to its past operations and third-party sites for which commitments or clean-up plans have been developed and when such costs can be reasonably estimated based on industry standards and professional judgment. These estimated costs, which are mostly undiscounted, are determined based on currently available facts regarding each site. If the reasonably estimable costs can only be identified as a range and no specific amount within that range can be determined more likely, the minimum of the range is used. The Company continuously assesses its potential liability for investigation and remediation-related activities and adjusts its environmental-related accruals as information becomes available upon which more accurate costs can be reasonably estimated. As of March 29, 2024 and September 29, 2023, the Company has $7.6 million and $6.8 million, respectively, recorded as liabilities within “Accrued expenses and other current liabilities” and $16.2 million and $17.3 million, respectively, recorded as liabilities within “Other Noncurrent Liabilities” on the Company’s Consolidated and Combined Balance Sheets. The Company records the fair value of a liability for an asset retirement obligation both as an asset and a liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. The Company has identified certain conditional asset retirement obligations at various current and closed facilities. These obligations relate primarily to asbestos abatement, underground storage tank closures and restoration of leased properties to the original condition. Using investigative, remediation and disposal methods that are currently available to the Company, the estimated costs of these obligations were accrued. As of March 29, 2024 and September 29, 2023, the Company has $12.7 million and $12.3 million, respectively, recorded as liabilities within “Other Noncurrent Liabilities” on the Company’s Consolidated and Combined Balance Sheets. On May 13, 2022, Cake Love Co. (“Cake Love”) commenced a putative class action lawsuit against AmeriPride Services, LLC (“AmeriPride”), a subsidiary of Vestis, in the United States District Court for the District of Minnesota. The lawsuit was subsequently updated to add an additional named plaintiff, Q-Mark Manufacturing, Inc. (“Q-Mark” and, together with Cake Love, the “Plaintiffs”). Plaintiffs allege that the defendants increased certain pricing charged to members of the purported class without the proper notice required by service agreements between AmeriPride and members of the purported class and that AmeriPride breached the duty of good faith and fair dealing. Plaintiffs seek damages on behalf of the purported class representing the amount of the allegedly improperly noticed price increases along with attorneys’ fees, interest and costs. The parties have engaged in discovery. AmeriPride has moved for summary judgment related to Cake Love. The parties engaged in meditation, which has resulted in ongoing settlement discussions. The case is currently stayed until May 9, 2024. The stay may or may not be extended while settlement discussions are ongoing. The Company believes it has numerous defenses and intends to continue to vigorously defend the action. The Company cannot predict the outcome of this legal matter, nor can it predict whether any outcome will have a material adverse effect on the combined statements of income and/or combined statements of cash flows. Accordingly, the Company has made no material provision for this legal matter in the Consolidated and Combined Financial Statements.
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BUSINESS SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENTS | BUSINESS SEGMENTS: The Company manages and evaluates its business activities based on geography and, as a result, determined that its United States and Canada businesses are its operating segments. The United States and Canada operating segments both provide a full range of uniform programs, managed restroom supply services and first-aid and safety products, as well as ancillary items such as floor mats, towels and linens. The Company’s operating segments are also its reportable segments. Corporate includes administrative expenses not specifically allocated to an individual segment. The Company evaluates the performance of each operating segment based on several factors of which the primary financial measure is operating income. Financial information by segment is as follows (in thousands):
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EARNINGS PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE | EARNINGS PER SHARE: Basic earnings per share is computed using the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share is computed using the weighted average number of common shares outstanding adjusted to include the potentially dilutive effect of stock awards. On September 30, 2023, the Company separated from Aramark. As referenced in Note 1. "Nature of Business and Basis of Presentation", the Separation resulted in the initial issuance of approximately 131.2 million shares of Vestis common stock. For purposes of computing basic and diluted earnings per common share for the three and six months ended March 31, 2023, the number of Vestis common shares issued upon completion of the Separation were used to reflect the outstanding shares. The following table sets forth the computation of basic and diluted earnings per share attributable to the Company's stockholders (in thousands, except per share data):
__________________ (1)Diluted earnings per share excludes certain shares issuable under share-based compensation plans because the effect would have been antidilutive.
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INCOME TAXES |
6 Months Ended |
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Mar. 29, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES: The Company’s operations were included in Aramark’s U.S. federal and state tax returns for taxable periods through the Company’s Separation from Aramark on September 30, 2023. With respect to such taxable periods, income taxes on the Company’s financial statements were calculated on a separate tax return basis. Beginning after the Separation, the Company is filing tax returns separate from Aramark, and its deferred taxes and effective tax rates may differ from those of the historical periods. The Company's effective tax rate was 28.5% and 25.6% for the three months ended March 29, 2024 and March 31, 2023, respectively. For the six months ended March 29, 2024 and March 31, 2023, the Company's effective tax rate was 27.5% and 25.3%, respectively. The Company’s effective tax rate for the six months ended March 29, 2024 was higher than the U.S. statutory rate primarily due to state taxes, permanent book/tax differences, and international operations in jurisdictions with higher income tax rates. For the six months ended March 31, 2023, the Company’s effective tax rate was higher than the U.S. statutory rate primarily due to state taxes and international operations in jurisdictions with higher income tax rates. In connection with the Separation, the Company's net deferred tax liabilities decreased by $8.5 million, primarily related to shared-based compensation, inventoriable costs and tax attributes that were not part of the Company while consolidated with Aramark. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was approximately $0.2 million as of March 29, 2024 and $4.4 million as of September 29, 2023. Our unrecognized benefits with respect to our uncertain tax positions decreased by $4.2 million as these remained the obligation of Aramark under the Tax Matters Agreement. The amount of accrued interest and penalties payable related to unrecognized tax benefits was less than $0.1 million as of March 29, 2024. It is reasonably possible that the amount of unrecognized benefits with respect to certain of our unrecognized tax positions will increase or decrease within the next 12 months. At this time, we estimate that the amount of gross unrecognized tax positions will not decrease within the next 12 months.
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RELATED PARTIES |
6 Months Ended |
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Mar. 29, 2024 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES: Prior to Separation The Company’s Combined Financial Statements for the three and six months ended March 31, 2023 include general corporate expenses of Aramark, which were not historically allocated to the Company for certain support functions that are provided on a centralized basis by Aramark and are not recorded at the Company level, such as expenses related to finance, supply chain, human resources, information technology, share-based compensation, insurance and legal, among others (collectively, “General Corporate Expenses”). For purposes of these Combined Financial Statements, General Corporate Expenses have been allocated to the Company. General Corporate Expenses are included in the Combined Statements of Income in “Selling, general and administrative expenses” with the impact related to Aramark’s gasoline, diesel and natural gas derivative agreements included in “Cost of services provided”. These expenses have been allocated to the Company on the basis of direct usage where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount or other drivers. Management believes the assumptions underlying the Combined Financial Statements, including the assumptions regarding allocating General Corporate Expenses from Aramark, are reasonable. Nevertheless, the Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect the Company’s combined results of operations, financial position and cash flows had it been a standalone public company during the periods presented. Actual costs that would have been incurred if the Company had been a standalone public company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. During the three and six months ended March 31, 2023, General Corporate Expenses allocated to the Company were $8.1 million and $16.1 million, respectively. After Separation On September 30, 2023, the Separation was completed through the Distribution of the Company’s common stock to Aramark shareholders who held shares of Aramark common stock as of the close of business on September 20, 2023, the record date for the Distribution, which resulted in the issuance of approximately 131.2 million shares of common stock. As a result of the Distribution, Aramark shareholders received one share of the Company’s common stock for every two shares of common stock, par value $0.01, of Aramark. On October 2, 2023, the Company began trading as an independent, publicly traded company under the stock symbol “VSTS” on the NYSE. In connection with the Separation, the Company entered into or adopted several agreements that provide a framework for the relationship between the Company and Aramark, including, but not limited to the following: Separation and Distribution Agreement - governs the rights and obligations of the parties regarding the distribution following the completion of the separation, including the transfer of assets and assumption of liabilities, and establishes certain rights and obligations between the Company and Aramark following the distribution, including procedures with respect to claims subject to indemnification and related matters. Transition Services Agreement - governs services between the Company and Aramark and their respective affiliates to provide each other on an interim, transitional basis, various services, including, but not limited to, administrative, information technology and cybersecurity support services and certain finance, treasury, tax and governmental function services. The services commenced on the distribution date and terminate no later than 24 months following the distribution date. Tax Matters Agreement - governs the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes. In addition, the Company is restricted from taking certain actions that could prevent the distribution and certain related transactions from being tax-free for U.S. federal income tax purposes, including specific restrictions on its ability to pursue or enter into acquisition, merger, sale and redemption transactions with respect to the Company’s stock. Employee Matters Agreement - governs the allocation of liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. During the three and six months ended March 29, 2024, the Company paid $3.3 million and $7.9 million, respectively, to Aramark under the various agreements described above. Current amounts due from and to Aramark as of March 29, 2024 were not material.
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EQUITY |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY: Accumulated Other Comprehensive Loss The changes in each component of accumulated other comprehensive loss, net of tax, for the three and six months ended March 29, 2024 and March 31, 2023 were as follows (in thousands):
Dividends On February 20, 2024, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.035 per common share payable on April 4, 2024 to shareholders of record at the close of business on March 15, 2024. The dividend payable of $4.6 million was recorded within Accrued expenses and other current liabilities on the Consolidated Balance Sheet as of March 29, 2024. The amount and timing of any future dividend payment is subject to the approval of the Company's Board of Directors.
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SUBSEQUENT EVENTS |
6 Months Ended |
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Mar. 29, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS: On April 19, 2024, Consolidated Mills Supply, Inc., operating as Vestis Group, an entity involved in the food ingredients business, provided a notice to the Company alleging trademark infringement based on the Company's use of the “Vestis” trademark and logo. On April 30, 2024, the United States Patent and Trademark Office granted the Company three federal trademark registrations for the Company's “Vestis” trademarks and the Company's associated logos for use in connection with several classes of goods and services that the Company offers to its customers. On April 30, 2024, the Company responded to Consolidated Mills Supply denying any trademark infringement. The Company believes Consolidated Mills Supply’s claims lack merit and that the Company has strong defenses to the alleged infringement claims. The Company will rigorously defend itself against this claim of infringement. The Company cannot predict the outcome of this legal matter, nor can it predict whether any outcome will have a material adverse effect on the combined statements of income and/or combined statements of cash flows.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Mar. 29, 2024 |
Dec. 29, 2023 |
Mar. 31, 2023 |
Dec. 30, 2022 |
Mar. 29, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||||||
Net Income | $ 5,965 | $ 12,266 | $ 36,855 | $ 33,468 | $ 18,233 | $ 70,323 |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 29, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies) |
6 Months Ended |
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Mar. 29, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The Consolidated and Combined Financial Statements (the "Financial Statements") were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. The Financial Statements reflect the historical results of operations, comprehensive income and cash flows for the three and six months ended March 29, 2024 and March 31, 2023 and the financial position as of March 29, 2024 and September 29, 2023 for the Company and are denominated in United States (“U.S.”) dollars. Prior to the Separation, the Company’s business functioned together with other Aramark businesses. The assets, liabilities, revenue and expenses of the Company prior to the Separation have been reflected as Combined Financial Statements on a historical cost basis, as included in the consolidated financial statements of Aramark, using the historical accounting policies applied by Aramark. Prior to the Separation, separate financial statements had not been prepared for the Company, and it has not operated as a standalone business from Aramark. The historical results of operations, financial position and cash flows of the Company prior to the Separation presented in these Combined Financial Statements may not be indicative of what they would have been had the Company actually been an independent standalone public company. Transactions between the Company and Aramark for the three and six months ended March 31, 2023 have been included in the Combined Financial Statements and are considered related party transactions (see Note 13. "Related Parties"). After the Separation, Vestis became a standalone public company and the Consolidated Financial Statements were prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in the Consolidated Financial Statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These Consolidated and Combined Financial Statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to fairly state, in all material respects, our financial position, results of operations and cash flows for the periods presented.
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Intercompany Transactions | All intercompany transactions and balances within the Company have been eliminated. |
New Accounting Standards Updates | New Accounting Standards Updates Adopted Standards (from most to least recent date of issuance) In September 2022, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") to enhance the transparency of supplier finance programs, which may be referred to as reverse factoring, payables finance or structured payables arrangements. The guidance requires that a buyer in a supplier finance program disclose the program’s nature, activity and potential magnitude. The guidance was effective for the Company in the first quarter of fiscal 2024. The Company adopted the ASU prospectively and adoption of this guidance did not have an impact on the Consolidated Financial Statements. In October 2021, the FASB issued an ASU which requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers as if it had originated the contracts. The guidance was effective for the Company in the first quarter of fiscal 2024. The Company adopted the ASU prospectively and adoption of this guidance did not have a material impact on the Consolidated Financial Statements. Standards Not Yet Adopted (from most to least recent date of issuance) In December 2023, the FASB issued an ASU which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning October 4, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the ASU to determine its impact on the Company’s disclosures. In November 2023, the FASB issued an ASU which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. The amendments are effective for the Company's annual periods beginning September 28, 2024, and interim periods beginning October 4, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the ASU to determine its impact on the Company's disclosures. Other new accounting pronouncements recently issued or newly effective were not applicable to the Company, did not have a material impact on the Consolidated and Combined Financial Statements or are not expected to have a material impact on the Consolidated and Combined Financial Statements.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the Consolidated and Combined Financial Statements and accompanying notes. The Company utilizes key estimates in preparing the financial statements including environmental estimates, goodwill, intangibles, insurance reserves, income taxes and long-lived assets. These estimates are based on historical information, current trends and information available from other sources. Actual results could materially differ from those estimates.
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Fair Value of Financial Assets and Financial Liabilities | Fair Value of Financial Assets and Financial Liabilities Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are classified based upon the level of judgment associated with the inputs used to measure their fair value. The hierarchical levels related to the subjectivity of the valuation inputs are defined as follows: •Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets •Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument •Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement Recurring Fair Value Measurements The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, financing leases, derivatives and borrowings. Management believes that the carrying value of cash and cash equivalents, accounts receivable, accounts payable, financing leases and borrowings are representative of their respective fair values. All derivatives are recognized as either assets or liabilities on the balance sheet at fair value at the end of each quarter (refer to Note 5. "Derivative Instruments" for additional information). Nonrecurring Fair Value Measurements The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, indefinite-lived intangible assets and goodwill. The Company reviews the carrying amounts of such assets at least annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurement of the assets are considered to be Level 3 measurements.
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Inventories | Inventories Inventories are valued at the lower of cost (principally the first-in, first-out method) or net realizable value. The Company records valuation adjustments to its inventories if the cost of inventory on hand exceeds the amount it expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future demand and market conditions and analysis of historical experience.
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Rental merchandise in service | Rental merchandise in service Rental merchandise in service represents personalized work apparel, linens and other rental items in service. Rental merchandise in service is valued at cost less amortization, calculated using the straight-line method. Rental merchandise in service is amortized over its useful life, which primarily range from to four years. The amortization rates are based on the Company’s specific experience and wear tests performed by the Company. These factors are critical to determining the amount of rental merchandise in service and related "Cost of services provided (exclusive of depreciation and amortization)" that are presented in the Consolidated and Combined Financial Statements. Material differences may result in the amount and timing of operating income if management makes significant changes to these estimates.
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Revenue Recognition Policy | Revenue Recognition Policy The Company generates and recognizes approximately 94% of its total revenue from route servicing contracts on both Uniforms, which the Company generally manufactures, and Workplace Supplies, such as mats, towels, and linens that are procured from third-party suppliers. Revenue from these contracts represent a single-performance obligation and are recognized over time as services are performed based on the nature of services provided and contractual rates (output method). The Company generates its remaining revenue primarily from the direct sale of uniforms to customers, with such revenue being recognized when the Company’s performance obligation is satisfied, typically upon the transfer of control of the promised product to the customer. Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for the services or products described above and is presented net of sales and other taxes we collect on behalf of governmental authorities. Certain customer route servicing contracts include terms and conditions that include components of variable consideration, which are typically in the form of consideration paid to a customer based on performance metrics specified within the contract. Some contracts provide for customer discounts or rebates that can be earned through the achievement of specified volume levels. Each component of variable consideration is earned based on the Company’s actual performance during the measurement period specified within the contract. To determine the transaction price, the Company estimates the variable consideration using the most likely amount method, based on the specific contract provisions and known performance results during the relevant measurement period. When assessing if variable consideration should be limited, the Company evaluates the likelihood of whether uncontrollable circumstances could result in a significant reversal of revenue. The Company’s performance period generally corresponds with the monthly invoice period. No significant constraints on the Company’s revenue recognition were applied during the three or six months ended March 29, 2024 or three or six months ended March 31, 2023. The Company reassesses these estimates during each reporting period. The Company maintains a liability for these discounts and rebates within “Accrued expenses and other current liabilities” on the Consolidated and Combined Balance Sheets. Variable consideration can also include consideration paid to a customer at the beginning of a contract. This type of variable consideration is capitalized as an asset (in “Other Assets” on the Consolidated and Combined Balance Sheets) and is amortized over the life of the contract as a reduction to revenue in accordance with the accounting guidance for revenue recognition.
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NATURE OF BUSINESS AND BASIS OF PRESENTATION (Tables) |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventories | The components of inventories are as follows (in thousands):
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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill Changes | Changes in total goodwill for our reporting units during the six months ended March 29, 2024 are as follows (in thousands):
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Schedule of Other Finite Intangible Assets | Other intangible assets consist of (in thousands):
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Schedule of Other Indefinite Intangible Assets | Other intangible assets consist of (in thousands):
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BORROWINGS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Borrowings, Net | Long-term borrowings, net, are summarized in the following table (in thousands):
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DERIVATIVE INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of (Gain) Loss of Derivatives not Designated as Hedging Instruments | The following table summarizes the location of realized and unrealized (gain) loss for the Company’s derivatives not designated as hedging instruments in the Consolidated and Combined Statements of Income (in thousands):
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REVENUE RECOGNITION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Disaggregated by Revenue Source | The following table presents revenue disaggregated by revenue source (in thousands):
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Location of Lease Related Costs | The following table summarizes operating lease costs, consisting of fixed lease costs, variable lease costs and short-term lease costs. Additionally, the table summarizes finance lease costs, consisting of amortization of right-of-use asset and interest on lease liabilities (in thousands):
Supplemental cash flow information related to leases for the period reported is as follows (in thousands):
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Schedule of Other Information Related to the Operating Leases | Other information related to the operating lease right-of-use assets, net and operating lease liabilities was as follows (in thousands):
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Schedule of Minimum Operating Lease Payments | Future minimum lease payments under non-cancelable leases as of March 29, 2024 are as follows (in thousands):
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Schedule of Minimum Finance Lease Payments | Future minimum lease payments under non-cancelable leases as of March 29, 2024 are as follows (in thousands):
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SHARE-BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Share-based Compensation Expense | The following table summarizes the share-based compensation expense and related information for Time-Based Options (“TBOs”), Time-Based Restricted Stock Units (“RSUs”), Performance Stock Units (“PSUs”), Deferred Stock Units ("DSUs") and Employee Stock Purchase Plan (“ESPP”) classified as “Selling, general and administrative expenses” on the Consolidated and Combined Statements of Income (in thousands).
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Summary of Shares Granted and Weighted-Average Grant-Date Fair Value | The below table summarizes the number of shares granted and the weighted-average grant-date fair value per unit during the six months ended March 29, 2024:
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BUSINESS SEGMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Information by Segment | Financial information by segment is as follows (in thousands):
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EARNINGS PER SHARE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share attributable to the Company's stockholders (in thousands, except per share data):
__________________ (1)Diluted earnings per share excludes certain shares issuable under share-based compensation plans because the effect would have been antidilutive.
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EQUITY (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss, Net of Tax | The changes in each component of accumulated other comprehensive loss, net of tax, for the three and six months ended March 29, 2024 and March 31, 2023 were as follows (in thousands):
|
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Narrative (Details) $ / shares in Units, shares in Thousands |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023
$ / shares
shares
|
Mar. 29, 2024
USD ($)
$ / shares
|
Dec. 29, 2023
USD ($)
shares
|
Mar. 31, 2023
USD ($)
|
Mar. 29, 2024
USD ($)
$ / shares
shares
|
Mar. 31, 2023
USD ($)
|
Sep. 29, 2023
USD ($)
$ / shares
|
||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Common stock par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Separation-related adjustments | $ (3,079,000) | $ 9,485,000 | $ 6,400,000 | |||||||
Net cash transfers paid to Aramark | 2,500,000 | 6,051,000 | $ 46,941,000 | |||||||
Deferred income taxes liabilities adjustments | (600,000) | 12,700,000 | ||||||||
Inventory valuation reserves | 17,800,000 | 17,800,000 | $ 18,700,000 | |||||||
Amortization of rental merchandise in service | 81,200,000 | $ 92,200,000 | 162,000,000 | 169,900,000 | ||||||
Interest paid | 22,700,000 | 0 | 52,100,000 | 0 | ||||||
Income tax paid | $ 14,900,000 | $ 200,000 | $ 15,400,000 | $ 300,000 | ||||||
Minimum | ||||||||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Rental merchandise, useful life | 1 year | 1 year | ||||||||
Maximum | ||||||||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Rental merchandise, useful life | 4 years | 4 years | ||||||||
Common Stock | ||||||||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Shareholders received conversion ratio (in shares) | shares | 131,200 | 131,225 | [1] | |||||||
Common Stock | Aramark | ||||||||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Shareholders received conversion ratio | 0.5 | |||||||||
Common Stock | Aramark donor advised fund | ||||||||||
Basis Of Presentation And Summary Of Significant Accounting Policies Line Items [Line Items] | ||||||||||
Shareholders received conversion ratio (in shares) | shares | 500 | 500 | ||||||||
|
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Schedule of Components of Inventories (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Sep. 29, 2023 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw Materials | $ 24,636 | $ 35,332 |
Work in Process | 1,386 | 1,104 |
Finished Goods | 114,909 | 138,283 |
Inventories, net | $ 140,931 | $ 174,719 |
SEVERANCE (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
Sep. 29, 2023 |
|
Restructuring Cost and Reserve [Line Items] | |||||
Severance charges | $ 0.0 | $ 6.6 | $ 0.0 | $ 6.6 | |
Employee Severance | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Unpaid severance obligations | $ 1.1 | $ 1.1 | $ 3.4 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Goodwill Changes (Details) $ in Thousands |
6 Months Ended |
---|---|
Mar. 29, 2024
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 963,543 |
Translation | 191 |
Goodwill, ending balance | 963,734 |
United States | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 896,237 |
Translation | 0 |
Goodwill, ending balance | 896,237 |
Canada | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 67,306 |
Translation | 191 |
Goodwill, ending balance | $ 67,497 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Sep. 29, 2023 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated Amortization | $ (174,781) | $ (161,773) |
Indefinite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 400,438 | 400,381 |
Net Amount | 225,657 | 238,608 |
Trade names | ||
Indefinite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 16,558 | 16,512 |
Customer relationship assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amount | 383,880 | 383,869 |
Accumulated Amortization | (174,781) | (161,773) |
Net Amount | $ 209,099 | $ 222,096 |
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 6.5 | $ 6.5 | $ 13.0 | $ 13.0 |
BORROWINGS - Schedule of Long-term Borrowings, Net (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Feb. 22, 2024 |
Sep. 29, 2023 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Total principal debt issued | $ 1,437,500 | $ 1,500,000 | |
Unamortized debt issuance costs | (16,673) | (11,057) | |
Discounts | (1,978) | 0 | |
Less - current portion | (8,000) | (26,250) | |
Long-term borrowings, net of current portion | 1,410,849 | 1,462,693 | |
Secured loan | Credit facility | Senior secured term loan facility, due September 2025 | |||
Debt Instrument [Line Items] | |||
Total principal debt issued | 0 | 800,000 | |
Secured loan | Credit facility | Senior secured term loan facility, due September 2028 | |||
Debt Instrument [Line Items] | |||
Total principal debt issued | 637,500 | 700,000 | |
Secured loan | Credit facility | Senior secured term loan facility, due February 2031 | |||
Debt Instrument [Line Items] | |||
Total principal debt issued | $ 800,000 | $ 0 | |
Discounts | $ (2,000) |
BORROWINGS - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Feb. 22, 2024 |
Mar. 29, 2024 |
Mar. 29, 2024 |
Feb. 21, 2024 |
Sep. 29, 2023 |
|
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 1,978,000 | $ 1,978,000 | $ 0 | ||
Letters of credit outstanding | 5,300,000 | $ 5,300,000 | |||
Secured loan | Credit facility | |||||
Debt Instrument [Line Items] | |||||
Weighted-average interest rate | 7.71% | ||||
Secured loan | Senior secured term loan facility, due September 2025 | Credit facility | |||||
Debt Instrument [Line Items] | |||||
Debt amount | $ 800,000,000 | ||||
Unamortized debt issuance costs write-off | $ 3,900,000 | ||||
Secured loan | Senior secured term loan facility, due February 2031 | Credit facility | |||||
Debt Instrument [Line Items] | |||||
Debt amount | $ 800,000,000 | ||||
Quarterly payments | $ 2,000,000 | ||||
Debt instrument, net leverage ratio | 3.30 | ||||
Debt issuance costs | $ 11,100,000 | ||||
Debt issuance costs | $ 2,000,000 | ||||
Secured loan | Senior secured term loan facility, due February 2031 | Credit facility | SOFR | Initial period | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 2.25% | ||||
Secured loan | Senior secured term loan facility, due February 2031 | Credit facility | SOFR | Contingent period | |||||
Debt Instrument [Line Items] | |||||
Variable rate | 2.00% | ||||
Secured loan | Senior secured term loan facility, due September 2028 | Credit facility | |||||
Debt Instrument [Line Items] | |||||
Repayments of Lines of Credit | 45,000,000 | 700,000,000 | |||
Revolving credit facility | Credit facility | |||||
Debt Instrument [Line Items] | |||||
Remaining borrowing capacity | $ 294,700,000 | $ 294,700,000 |
DERIVATIVE INSTRUMENTS - Narrative (Details) - Gasoline, diesel and natural fuel agreements - Derivatives not Designated in Hedging Relationships gal in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024
USD ($)
|
Mar. 31, 2023
USD ($)
|
Mar. 29, 2024
USD ($)
dth
gal
|
Mar. 31, 2023
USD ($)
|
|
Derivative [Line Items] | ||||
Derivative (in gallons) | gal | 1.0 | |||
Derivative (in dth) | dth | 0.2 | |||
Gain (loss) on derivative | $ 0.9 | $ (1.5) | $ 0.1 | $ (1.3) |
Gasoline, diesel and natural gas fuel agreements | $ 0.2 | $ 0.2 |
DERIVATIVE INSTRUMENTS - Schedule of (Gain) Loss of Derivatives not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Gasoline, diesel and natural fuel agreements | Derivatives not Designated in Hedging Relationships | ||||
Derivative [Line Items] | ||||
(Gain) loss reclassified recognized in income | $ (1,979) | $ 3,701 | $ (2,274) | $ 3,243 |
REVENUE RECOGNITION - Schedule of Revenue Disaggregated by Revenue Source (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 705,368 | $ 699,305 | $ 1,423,291 | $ 1,400,002 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 642,056 | 636,918 | 1,295,296 | 1,274,663 |
Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 63,312 | 62,387 | 127,995 | 125,339 |
Uniforms | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 263,390 | 265,374 | 537,056 | 538,696 |
Uniforms | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 24,197 | 24,961 | 50,230 | 50,715 |
Workplace Supplies | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 378,666 | 371,544 | 758,240 | 735,967 |
Workplace Supplies | Canada | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 39,115 | $ 37,426 | $ 77,765 | $ 74,624 |
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
Sep. 29, 2023 |
|
Disaggregation of Revenue [Line Items] | |||||
Deferred costs amortization period | 9 years | 9 years | |||
Employee sales commissions recorded as assets | $ 105.0 | $ 105.0 | $ 104.4 | ||
Employee sales commissions | $ 5.3 | $ 4.9 | $ 10.5 | $ 9.9 | |
Revenue | Product Concentration Risk | Transferred over Time | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue percentage | 94.00% |
LEASES - Schedule of Operating and Finance Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Lease costs: | ||||
Operating lease costs | $ 10,358 | $ 10,450 | $ 20,729 | $ 20,883 |
Finance lease costs | $ 9,824 | $ 8,249 | $ 18,113 | $ 17,021 |
LEASES - Schedule of supplemental Cash Flow (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 12,064 | $ 12,179 |
Operating cash flows from finance leases | 2,779 | 1,995 |
Financing cash flows from finance leases | 15,148 | 13,852 |
Lease assets obtained in exchange for lease obligations: | ||
Operating leases | 7,207 | 8,589 |
Finance leases | $ 22,643 | $ 17,930 |
LEASES - Schedule of Other Information Related to the Operating Leases (Details) |
Mar. 29, 2024 |
Sep. 29, 2023 |
---|---|---|
Weighted average remaining lease term (in years) | ||
Operating leases | 4 years 7 months 6 days | 4 years 8 months 12 days |
Finance leases | 5 years 8 months 12 days | 5 years 8 months 12 days |
Weighted average discount rate | ||
Operating leases | 4.70% | 4.40% |
Finance leases | 4.50% | 4.30% |
LEASES - Schedule of Minimum Lease Payments (Details) $ in Thousands |
Mar. 29, 2024
USD ($)
|
---|---|
Operating leases | |
2024 (remaining six months) | $ 11,691 |
2025 | 19,356 |
2026 | 13,732 |
2027 | 9,741 |
2028 | 6,785 |
Thereafter | 9,918 |
Total future minimum lease payments | 71,223 |
Less: Interest | (8,476) |
Present value of lease liabilities | 62,747 |
Finance leases | |
2024 (remaining six months) | 17,444 |
2025 | 32,912 |
2026 | 27,984 |
2027 | 23,661 |
2028 | 19,425 |
Thereafter | 32,456 |
Total future minimum lease payments | 153,882 |
Less: Interest | (15,405) |
Present value of lease liabilities | 138,477 |
Total | |
2024 (remaining six months) | 29,135 |
2025 | 52,268 |
2026 | 41,716 |
2027 | 33,402 |
2028 | 26,210 |
Thereafter | 42,374 |
Total future minimum lease payments | 225,105 |
Less: Interest | (23,881) |
Present value of lease liabilities | $ 201,224 |
SHARE-BASED COMPENSATION - Summary of Share-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 4,731 | $ 2,485 | $ 9,447 | $ 5,954 |
TBOs | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | 1,399 | 288 | 2,186 | 600 |
RSUs | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | 1,892 | 1,966 | 3,512 | 4,323 |
PSUs | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | 1,350 | 231 | 2,302 | 434 |
DSUs | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | 90 | 0 | 1,447 | 0 |
ESPP | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 0 | $ 0 | $ 597 |
SHARE-BASED COMPENSATION - Narrative (Details) - RSUs - $ / shares |
3 Months Ended | 6 Months Ended |
---|---|---|
Mar. 29, 2024 |
Mar. 29, 2024 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares granted (in shares) | 54,800 | 396,000 |
Weighted-average grant-date fair value (dollars per share) | $ 18.98 | $ 18.69 |
SHARE-BASED COMPENSATION - Summary of Shares Granted and Weighted-Average Grant-Date Fair Value (Details) - $ / shares |
3 Months Ended | 6 Months Ended |
---|---|---|
Mar. 29, 2024 |
Mar. 29, 2024 |
|
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares Granted (in thousands) | 1,768,000 | |
Weighted-Average Grant-Date Fair Value (dollars per share) | $ 6.53 | |
Total | 2,909,000 | |
RSUs | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares Granted (in thousands) | 54,800 | 396,000 |
Weighted-Average Grant-Date Fair Value (dollars per share) | $ 18.98 | $ 18.69 |
PSUs | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares Granted (in thousands) | 660,000 | |
Weighted-Average Grant-Date Fair Value (dollars per share) | $ 17.89 | |
DSUs | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares Granted (in thousands) | 85,000 | |
Weighted-Average Grant-Date Fair Value (dollars per share) | $ 17.01 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
Mar. 29, 2024 |
Sep. 29, 2023 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Current environmental-related accruals | $ 7.6 | $ 6.8 |
Noncurrent environmental-related accruals | 16.2 | 17.3 |
Liability for asset retirement obligation | $ 12.7 | $ 12.3 |
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 705,368 | $ 699,305 | $ 1,423,291 | $ 1,400,002 |
Total Operating Income | 43,054 | 49,394 | 90,655 | 93,768 |
Interest Expense and Other, net | (34,713) | 161 | (65,488) | 351 |
Income Before Income Taxes | 8,341 | 49,555 | 25,167 | 94,119 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 642,056 | 636,918 | 1,295,296 | 1,274,663 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 63,312 | 62,387 | 127,995 | 125,339 |
Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating Income | 72,175 | 69,705 | 150,806 | 138,900 |
Operating Segments | United States | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating Income | 71,200 | 68,174 | 145,276 | 132,011 |
Operating Segments | Canada | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating Income | 975 | 1,531 | 5,530 | 6,889 |
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Total Operating Income | $ (29,121) | $ (20,311) | $ (60,151) | $ (45,132) |
EARNINGS PER SHARE - Narrative (Details) - shares |
Mar. 29, 2024 |
Sep. 30, 2023 |
---|---|---|
Earnings Per Share [Abstract] | ||
Common stock outstanding (in shares) | 131,450,628 | 131,200,000 |
EARNINGS PER SHARE - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 29, 2024 |
Dec. 29, 2023 |
Mar. 31, 2023 |
Dec. 30, 2022 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Earnings: | ||||||
Net Income | $ 5,965 | $ 12,266 | $ 36,855 | $ 33,468 | $ 18,233 | $ 70,323 |
Shares: | ||||||
Basic weighted-average shares outstanding (in shares) | 131,524 | 130,725 | 131,457 | 130,725 | ||
Effect of dilutive securities (in shares) | 369 | 0 | 331 | 0 | ||
Diluted weighted-average shares outstanding (in shares) | 131,893 | 130,725 | 131,788 | 130,725 | ||
Basic earnings per share (in usd per share) | $ 0.05 | $ 0.28 | $ 0.14 | $ 0.54 | ||
Diluted earnings per share (in usd per share) | $ 0.05 | $ 0.28 | $ 0.14 | $ 0.54 | ||
Antidilutive securities (in shares) | 2,020 | 0 | 1,829 | 0 |
INCOME TAXES (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
Sep. 29, 2023 |
|
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate | 28.50% | 25.60% | 27.50% | 25.30% | |
Net deferred tax liabilities decrease | $ 8.5 | $ 8.5 | |||
Unrecognized tax benefits that, if recognized, would impact the effective tax rate | 0.2 | 0.2 | $ 4.4 | ||
Unrecognized tax benefits decrease | 4.2 | ||||
Accrued interest and penalties payable related to unrecognized tax benefits | $ 0.1 | $ 0.1 |
RELATED PARTIES (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023
$ / shares
shares
|
Mar. 29, 2024
USD ($)
$ / shares
|
Dec. 29, 2023
shares
|
[1] |
Mar. 31, 2023
USD ($)
|
Mar. 29, 2024
USD ($)
$ / shares
|
Mar. 31, 2023
USD ($)
|
Sep. 29, 2023
$ / shares
|
|||
Related Party Transaction [Line Items] | ||||||||||
Selling, general and administrative expenses | $ 122,684 | $ 116,828 | $ 255,264 | $ 243,151 | ||||||
Common stock par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Common Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Shareholders received conversion ratio (in shares) | shares | 131,200 | 131,225 | ||||||||
Aramark | Common Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Shareholders received conversion ratio | 0.5 | |||||||||
Aramark | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Common stock par value (in usd per share) | $ / shares | $ 0.01 | |||||||||
Related Party | Aramark | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Selling, general and administrative expenses | $ 8,100 | $ 16,100 | ||||||||
Transition Services Agreement termination (no later than) | 24 months | |||||||||
Paid under various agreements | $ 3,300 | $ 7,900 | ||||||||
|
EQUITY - Components of Accumulated Other Comprehensive Loss, Net of Tax (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Mar. 29, 2024 |
Mar. 31, 2023 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 904,158 | $ 2,384,105 | $ 877,360 | $ 2,335,812 |
Other comprehensive income (loss) | (6,449) | 40 | 191 | 5,788 |
Ending balance | 900,711 | 2,372,932 | 900,711 | 2,372,932 |
Accumulated Other Comprehensive Loss | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (24,533) | (25,932) | (31,173) | (31,680) |
Ending balance | (30,982) | (25,892) | (30,982) | (25,892) |
Foreign Currency Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (19,463) | (21,518) | (26,103) | (27,266) |
Other comprehensive income (loss) | (6,449) | 40 | 191 | 5,788 |
Ending balance | (25,912) | (21,478) | (25,912) | (21,478) |
Pension-related | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | (5,070) | (4,414) | (5,070) | (4,414) |
Other comprehensive income (loss) | 0 | 0 | 0 | 0 |
Ending balance | $ (5,070) | $ (4,414) | $ (5,070) | $ (4,414) |
EQUITY - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Feb. 20, 2024 |
Mar. 29, 2024 |
Dec. 29, 2023 |
|
Equity [Abstract] | |||
Dividends declared per common share (in usd per share) | $ 0.035 | $ 0.035 | $ 0.035 |
Dividend payable | $ 4.6 |
SUBSEQUENT EVENTS (Details) - Subsequent event |
Apr. 30, 2024
trademark
|
---|---|
Subsequent Events [Abstract] | |
Federal trademark registrations | 3 |
Subsequent Event [Line Items] | |
Federal trademark registrations | 3 |
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