Vestis Corporation (NYSE:VSTS), a wholesale distributor of miscellaneous nondurable goods, announced today that Timothy Donovan, the company's Executive Vice President, Chief Legal Officer, and General Counsel, will extend his tenure beyond his planned retirement date of October 4, 2024. The decision was disclosed in a regulatory filing with the Securities and Exchange Commission.
Donovan had previously informed Vestis Corp of his intention to retire on April 2, 2024. However, both parties have now agreed that he will continue serving in his current roles past the initially announced retirement date. The company's brief statement did not provide a new retirement date or reasons for the extension of Donovan's service.
In other recent news, Vestis has announced a series of significant developments. The company has agreed to sell its 39% equity interest in Aramark Uniform Services Japan Corporation to Mitsui & Co., Ltd. for approximately $37 million, a move aimed at reducing its debt. The sale is expected to be completed by the end of October 2024, pending regulatory approvals.
Simultaneously, Vestis has been in acquisition discussions with Elis SA. Analysts from Stifel and Baird have maintained their hold and neutral ratings on Vestis, respectively, amid these talks. Concerns have been raised about Elis's financial leverage strategy and potential tax implications of the acquisition.
In the financial sphere, Vestis reported a 1.6% decrease in revenue year-over-year in its fiscal third quarter 2024 earnings, and a 260 basis point reduction in adjusted EBITDA margin, now standing at 12.4%. The adjusted EBITDA for the quarter was $87 million, consistent with the previous quarter but down $20 million year-over-year. Despite these figures, Vestis has seen growth through new business wins and improved customer retention rates.
The company's Board of Directors approved a quarterly cash dividend of $0.035 per share. Vestis anticipates a sequential decline in EBITDA in the fourth quarter due to non-repeating one-time benefits from the third quarter, but targets a leverage ratio between 1.5 and 2.5 times. These are the latest developments in the ongoing operations of Vestis Corporation.
InvestingPro Insights
As Vestis Corporation navigates this executive transition, InvestingPro data offers additional context for investors. The company's market capitalization stands at $1.95 billion, with a P/E ratio of 14.32, suggesting a relatively modest valuation compared to some industry peers. Vestis has demonstrated a strong return over the last three months, with a price total return of 30.62%, indicating recent positive momentum despite a challenging year-to-date performance.
InvestingPro Tips highlight that Vestis has been profitable over the last twelve months, with analysts predicting continued profitability this year. This financial stability could provide a solid foundation as the company manages its executive transition. Additionally, Vestis's liquid assets exceed short-term obligations, which may offer flexibility during this period of change.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide deeper insights into Vestis's financial health and market position.
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