The 5 Most Interesting Analyst Questions From Vestis's Q1 Earnings Call

Vestis Corporation's second quarter results drew a strongly negative market reaction, as the company missed Wall Street’s expectations for revenue, adjusted EBITDA, and earnings per share. Management explained that the decline was mainly due to lower volumes from existing customers, seasonal demand reductions among hospitality clients, and a notable drop in direct sales. Interim CEO Phillip Holloman openly described the performance as “disappointing,” attributing much of the underperformance to unresolved service issues, customer credits, and a fixed cost structure amplifying margin pressure.

Is now the time to buy VSTS? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Vestis’s Q1 Earnings Call

• Andy Wittmann (Baird) questioned management’s confidence that current earnings levels represent the bottom. Interim CEO Phillip Holloman expressed confidence in the guidance, citing improved revenue trends, while CFO Kelly Janzen pointed to normalized seasonal patterns and better operational control.

• Andy Wittmann (Baird) also asked about additional cost structure actions. Janzen noted ongoing plant consolidations but stressed that future focus will prioritize service investments over further cuts to avoid risking customer retention.

• Shlomo Rosenbaum (Stifel) pressed on the root causes and solutions for service issues, noting competitor Cintas did not see similar volume declines. Holloman cited renewed organizational focus, frontline training, and differences in customer mix as key factors.

• Ronan Kennedy (Barclays) sought clarity on whether guidance cuts were due to internal or external factors. Janzen confirmed it was mainly internal execution and forecasting issues, with macroeconomic concerns being a secondary consideration.

• Stephanie Moore (Jefferies) asked why customers would switch to Vestis given recent service problems. Holloman highlighted that 56% of new wins came from competitors, emphasizing improved service and new tools to retain these accounts.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) whether customer service improvements and reduced credits translate into higher retention and lower lost business, (2) sustained productivity gains and momentum in new customer installations from a fully staffed sales force, and (3) the impact of leadership changes on operational discipline and cultural transformation. Progress on deleveraging and free cash flow generation will also be critical signposts.

Vestis currently trades at $6.14, down from $8.71 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.