Vestis Corporation

Welcome to the Vestas Corporation Fiscal Third Quarter 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. To enable others to hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should need any operator assistance, please press star zero. I would now like to turn the call over to Stephon Neely with Vallum Advisors.

Thank you, operator, and thank you all for joining us on the call this morning. Leading the call with me today is Jim Barber, President and Chief Executive Officer, and Kelly Jansen, Executive Vice President and Chief Financial Officer. Jim and Kelly will provide prepared remarks, and then we will open the line to questions. Before I turn the call over to Jim, I wanted to remind everyone that today's discussion contains forward-looking statements about future business and financial expectations. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for such forward-looking statements. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Further, this call will include the discussion of certain non-GAAP financial measures. Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release and corresponding supplemental materials, which are available at ir.cestus.com. With that, I would like to turn the call over to Jim.

Thank you, Stephan. Good morning, everyone, and thank you for joining us. Before I begin, I would like to thank Philip, the board, and the leadership team for helping to facilitate a smooth transition for me into the CEO role here at Vestas. Now that I'm two months into the role, my belief is that this company has tremendous potential and a team capable of achieving great things. I was attracted to this opportunity because I spent much of my career leading businesses with similar route-based asset-intensive models. Businesses such as this succeed when they execute well at the local level, driven by strong customer relationships that are built upon reliability, excellent service quality, and the ability to control daily operating costs. These outcomes are produced by frontline teams of loyal and capable people, supported by robust, repeatable processes and technology that enhances execution. Starting in June, I spent a great deal of my time getting to know the business through engaging with our teams, visiting with customers, and diving deep into the operational and strategic levers that drive performance. And what is clear to me is that while Vestas has faced its share of challenges, it is a company with a fundamentally sound foundation. What I believe this business needs now is a sharp focus on commercial processes, operational discipline, and a clear strategy to unlock operating leverage. To do this, we will focus on the key inputs that drive operating leverage. These are value-based pricing, favorable product mix, and efficient cost of service. Foundational to this is our ability as an organization to efficiently utilize our assets, both our people and infrastructure, to serve our customers. First is pricing. Pricing is one of the most important levers for driving improved operating leverage. This focus does not just pertain to setting prices, but also ensuring that they reflect the value we deliver and the cost of our service. The right pricing requires a rigorous, data-driven approach, and we're building out a value-based pricing model designed to optimize product profitability. Price integrity, however, can only be successful when it is supported by service quality, and to that end, we are committed to raising our service standards to support long-term customer relationships and improve customer retention. The strength of our customer relationships is built at the local level with our RSRs, and we are investing in the tools, systems, and processes to support and empower them and other frontline team members to succeed in providing customers the best possible experience. The second key driver is product mix. We are looking to evolve our sales approach to prioritize profitability over volume. In order to do this, we need to be more selective, managing the mix of the products we sell more deliberately in order to maximize capacity utilization with a focus on margin accretive growth. we are shifting our mindset from how much we grow to how well we grow and the third driver is optimizing cost of service our teams have already made meaningful progress over the last few quarters in identifying and implementing a variety of different cost actions however there is still more work to be done we are evaluating ways to increase our variable to fixed cost ratio enhance plant reliability, and optimize capacity utilization. And none of this can be accomplished if we don't have a strong customer-centric culture. That culture is firmly grounded in our people's determination to serve customers supported by proper training, infrastructure, and processes. All of this should be underpinned by constructive management, employee and union working relationships. For the remainder of this fiscal year, I'm focused on stabilizing performance and quickly launching initiatives that we expect to result in near-term financial improvement. In addition, the team and I are taking a hard look at every aspect of the business to build a roadmap for success in 2026 and beyond. As part of that roadmap, we are also laying the groundwork for investing in modernizing our technology infrastructure to better support execution and long-term priorities. Smart, scalable systems are fundamental to improving the customer experience, unlocking efficiencies, and enabling data-driven decision-making. In a moment, Kelly will walk through our third quarter financial performance in detail. But before she does that, I would also like to provide some brief context. While our results were in line with expectations, we continue to see ongoing revenue pressure as churn outpaces conversion. I believe that our improvement initiatives will soon yield positive results. However, our expectation is that the near-term performance will be similar to what we saw over this last quarter. I want to assure you that I'm committed to seeing Vestas improve in 2026 and look forward to sharing more details, including financial and operational goals, during our fourth quarter call. Yes, there are challenges that we need to address, but there are also opportunities,