Vestis Corporation

Welcome to the Vestas Corporation fiscal fourth quarter and full year 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 require operator assistance, please press star zero. I would now like to turn the call over to Stephan Neely with Fallon Advisors.

Stephan Neely 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 want 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 risk 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.vestis.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. We have spent the past several months looking at every aspect of our business, how we operate, how we serve customers, and how we create long-term value. That work culminated in a comprehensive multi-year business transformation plan, which we recently began executing. It's a plan that I feel confident will position Vestas to unlock operating leverage and deliver consistent, profitable growth over the long term. But before we dive into the specifics of our plan, I want to share some insights related to certain challenges I've identified since arriving to the company. First, over the past several years, Vestas prioritized revenue growth without sufficient focus on revenue quality. Much of the new revenue recently brought into the business did not meet the financial thresholds required for sustainable, profitable growth. Second, we lost focus on customer service in certain areas of our business. This led to attrition of some of our higher quality revenue accounts. Tactically, this showed up as a pricing approach that alienated certain customers, coupled with underinvestment in key processes and infrastructure expected to deliver consistent, high-level service. As some customers moved away, we were behind in implementing a coordinated strategy to address their concerns necessary to better manage nutrition. Third, while we were winning new customers, we lost discipline in managing our product mix, over-indexing on low-margin workplace supplies at the expense of our core uniform business where we generate our strongest long-term margins. This lack of discipline has negatively impacted our operating leverage. The transformation plan we have developed addresses each of these issues head-on. It focuses on implementing scalable processes, restoring customer centricity, and recommitting to best practices to run the business more effectively. It was put together with the help from leading third-party advisors and will be executed in phases, which we expect to substantially complete by the end of fiscal 2027. It is built around three strategic pillars, commercial excellence, operational excellence, and asset and network optimization. Let me walk through each of these and the related actions we are taking. Our first pillar is commercial excellence, and at the center of this is the customer. In 2026, we are focused on deepening relationships and delivering value in a way that is high quality and profitable, both of which will improve retention. To do that, we are taking several key steps. First, we are rolling out new tools that give us better visibility into customer segmentation and product profitability. These tools are critical to all aspects of our strategic execution. We are also taking a new strategic approach to our pricing strategy. We are committed to ensuring that our pricing accurately reflects the value we deliver and our costs of service, while remaining transparent, fair, and competitive. In addition, we are deploying market development representatives across our business to grow volume with our existing customers and better support their needs. Finally, we're also introducing a new tool to measure and improve satisfaction that will capture customer feedback at the point of delivery, allowing us to address concerns in real time. We will be launching this in the coming weeks. Our second pillar is operational excellence, and the priority for 2026 is improving plant performance and overall organizational efficiency. This pillar is fundamental to driving improved operating leverage and includes initiatives such as standardizing processes to improve safety and service quality, tightening cost controls, and investing in technology to increase visibility and accountability. We are also taking a series of steps to streamline our organization. that means ensuring our sales and administrative functions are sized appropriately and positioned to support the business with agility in the fourth quarter we made targeted reductions in our field sales team where our cost structure was misaligned with revenue and growth opportunities and more recently we made further reductions in various areas across the business where we believe we will operate more efficiently These were difficult decisions, but necessary to support our future business objectives. I want to emphasize that the steps we're taking to streamline our organization will not impact our ability to deliver high-quality service. They are solely focused on simplifying our structure so we can operate more efficiently while continuing to serve our customers with excellence. Finally, our third pillar is asset and network optimization. where we are focused on optimizing our asset base and redesigning our service delivery network. This is not a new priority, but in 2026, we are accelerating that work through comprehensive initiatives to evaluate route efficiency and consolidate underutilized locations. We're also continuing to invest in our facilities, upgrading equipment and infrastructure to improve service quality and reduce downtime. These are relatively modest investments with strong returns. Foundational to all of this is a strong culture. We are prioritizing training, succession planning, and employee engagement to improve turnover and foster a high-performance, customer-centric culture that wins. I am incredibly optimistic about launching this plan. Not only does it include significant enhancements to how we operate, but it's also one that supports meaningful financial improvement. Inclusive of the plan initiatives, our 2026 full-year adjusted EBITDA guidance midpoint is $300 million, $40 million higher than the Q4 2025 normalized exit run rate of $260 million. We've already made progress, but I want to emphasize that this is a multi-year journey. The actions we are taking in 2026 are foundational, designed to position Vestas for sustainable organic growth in 2027 and beyond. In a moment, Kelly will walk through our fourth quarter financial performance along with our fiscal 2026 guidance in more detail. But before I turn it over, I would like to take this opportunity to thank the entire Vestas team for welcoming me into the organization and for their hard work, determination, and commitment over the last year. My optimism for the future is strong, and I look forward to continuing to collaborate with this team as we move to the next chapter. Now I'll turn it over to Kelly.