Vestis Corporation · NYSE:VSTS
Vestis — Investor Day (September 2023)
69 slides from Vestis's investor day presentation, Sep 13, 2023
Slide 1: Analyst Day 2023: Aramark Uniform Services is now Vestis
ANALYST DAY 2023 Aramark Uniform Services is now Vestis™ TM 09.13.23
Slide 2: Special Note About Forward-Looking Statements
2TM Special Note About Forward-Looking Statements This presentation and other materials Aramark and Vestis have filed or will file with the Securities and Exchange Commission (and oral communications that Aramark or Vestis may make) contain or incorporate by reference “forward-looking statements” wi
Slide 3: Today's Agenda
3TM Today’s Agenda Welcome Introducing Vestis Pathway to Value Creation Financial Overview Q&A Kim Scott Chief Executive Officer Rick Dillon Chief Financial Officer
Slide 4: Introducing Vestis, Pathway to Value Creation
4TM Kim Scott Chief Executive Officer Introducing Vestis Pathway to Value Creation
Slide 5: Introducing Vestis
_ INTRODUCING 3 2 VESTIS 4 \
Slide 6: Our Purpose
6TM Deliver uniforms and supplies that empower people to do good work and good things for others while at work. Our Purpose
Slide 7: Our Comprehensive Offering
7TM Uniforms and Workwear First-Aid and Safety Products Managed Restroom Supply Services Floor Care (Mats) $1.2B ~44% $395M ~15% $316M ~11% $165M ~6% $63M ~2% $579M ~22% Towels and Aprons Linen Services Our Comprehensive Offering ~350 facilities ~3.4K routes ~300K customer locations ~20K teammates $
Slide 8: A Compelling Opportunity
8TM A Compelling Opportunity | NYSE: VSTS Attractive B2B Industrial Services Offering ✓ Uniforms & workwear ✓ Floor care ✓ Towels & aprons ✓ First aid & safety ✓ Managed restroom supply services ~20,000 Teammates Strong ✓ 81% positive response in engagement survey from participating teammates3 ✓ Sea
Slide 9: We Operate in a Large, Growing and Fragmented Industry
9TM Vestis Competitor 1 Competitor 2 74% Self-Serve or Served by Local and Regional Players Workplace Supplies $27B Uniforms $21B $48B Total Addressable Market1 We Operate in a Large, Growing and Fragmented Industry 1) Represents management’s estimate of annual revenue opportunity for Vestis’ servic
Slide 10: Large and Diverse Existing Customer Base
10TM Large and Diverse Existing Customer Base Wide Range of Verticals Served Small to Medium Enterprise (SME) 84% National Accounts2 16% Broad Customer Base1 Low concentration with largest 10 customers representing less than 10% of total revenue in FY22 36% Manufacturing 18% Hospitality 15% Retail 8
Slide 11: We Provide the Things Our Customers Need
We Provide the Things Our Customers Need 11 Our network and scale typically allow us to provide a lower cost solution than servicing in-house We enable our customers to focus on their core business We enhance our customers’ brands and help them project a positive image Our solutions improve workplac
Slide 12: What Our Customers Say About Vestis
12TM —Alex Cook, Purchasing Manager “Every Vestis employee helps make my job simpler… It’s the people who make it worth recommending.” “The route reps get in there and know what we need and when we need it… It’s seamless. They are in and out in the background.” “Vestis allows us not to think about t
Slide 13: Pathway to Value Creation
13TM PATHWAY TO VALUE CREATION
Slide 14: We Have a Robust Strategic Plan to Deliver Shareholder Value
14TM We Have a Robust Strategic Plan to Deliver Shareholder Value 5-7% Organic Revenue CAGR1 FY23-28 18-20% Adjusted EBITDA Margin1 FY28 1) See Appendix for a discussion of forward-looking non-GAAP information and definitions of non-GAAP measures.
Slide 15: Clear Path to Value Creation
15TM Efficient O peratio n sH ig h -Q ua lit y Gro wth Disciplined Capital Allocation Performance-Driven Culture Performance-Driven Culture Build a high-performing team with capabilities aligned to our strategy and a data-driven approach to decision making High-Quality Growth Prioritize highest marg
Slide 16: Focused on High-Quality Growth
16TM Efficient O peration sH ig h -Q ua lit y Gro wth Disciplined Capital Allocation Performance-Driven Culture ease of doing business (retain) cross-sell with base customers (gain) high-quality new growth (grow) Focused on High-Quality Growth
Slide 17: Focused on Retaining the Base by Providing Excellent Service
17TM Customer-Centric Culture Analytics & Reporting Digital Tools → Service and quality: providing high-quality uniforms, supplies and service experience → Meaningful customer impact: ensuring that every interaction with our customers makes their day better → Training: launched service manager playb
Slide 18: Launched New Customer Portal
18TM Launched New Customer Portal Digitizing the Customer Experience Empowers self-management via access to specialized reports Assigns role-based permissions Improves access to self-serve tools Enables secure invoice payments Intuitive, easy-to-use interface Phased rollout of additional new feature
Slide 19: Highly Underpenetrated, Margin-Accretive Offerings
19TM Highly Underpenetrated, Margin-Accretive Offerings Large Opportunity with Existing Base Enhances Flow Through on Existing Fixed Assets Cross-Sell Existing Customers 30-40% of our offering used by the average customer ~$900M annual revenue opportunity by cross-selling one additional product1 Dri
Slide 20: Case Study: Margin Expansion from RSR Cross-Selling
20TM Case Study: Margin Expansion from RSR Cross-Selling | Add One Product Before Uniform Rental After ~373 bps Margin Improvement Uniform Rental Mat Rental Paramount, CA – Added 2 mats to a single location
Slide 21: Growing Customer Relationships by Mobilizing Route Service Representatives
21TM Growing Customer Relationships by Mobilizing Our Route Service Representatives ~108% increase in sales activity on FY23 routes compared to FY211 1) Calculated as the change in the number of routes with sales activity in FY23 as compared to FY21 on legacy U.S. routes (excluding routes added with
Slide 22: Targeting High-Quality Verticals
22TM Targeting High-Quality Verticals We have identified 8 high-quality sub- verticals with attractive key attributes 1 2 3 4 Opportunity Size Substantial and growing serviceable revenue opportunity High revenue potential per stop Customer Scale High product penetration opportunity Product Penetrati
Slide 23: Case Study: Automotive Dealers
23TM Case Study: Automotive Dealers Automotive dealers represent a high-quality growth sub-vertical where we have proven expertise Opportunity Size Product Penetration >$500M annual revenue opportunity1 ~4% annual growth rate ~257K technicians $300 average weekly revenue per stop with existing deale
Slide 24: Case Study: Automotive Dealers by Region
24TM Case Study: Automotive Dealers We have a proven track record of success on the West Coast, and we will follow the same playbook Total Auto Dealership Opportunity by Region Implied Vestis Auto Dealership Penetration by Region $153M $64M $89M $111M $129M $545M total 24% 15% 11% 9% 3% West Northea
Slide 25: Case Study: Optimizing our Direct Sales Business
25TM → The percentage of direct sales for SME customers, the most profitable segment, increased since launching this initiative → In addition to this favorable channel shift, the pricing models used to secure new business and the go-to-market strategy yielded significantly higher gross margin rates
Slide 26: Strengthening Operational Capability
26TM Efficient O peratio n sH ig h -Q ua lit y Gro wth Disciplined Capital Allocation enhance workforce productivity optimize network and logistics cost and merchandise management Strengthening Operational Capability Performance-Driven Culture
Slide 27: Case Study: Enhancing Workforce Productivity
27TM ~$28M in sustainable annualized savings from actions taken in FY23 to streamline our operations and deliver operating efficiencies Field Team Optimization Functional Alignment Regional Consolidation Shared Services Optimization Case Study: Enhancing Workforce Productivity Aligning Our Team for
Slide 28: Institutionalizing Logistics Best Practices
28TM ▶ Significant cross-over of territories and sub-optimal flow paths creates inefficient lanes ▶ Customers assigned to single best existing service location $30-50M in potential savings and/or redeployed capacity across our system by FY28 HISTORICAL customer flows OPTIMIZED customer flows Institu
Slide 29: Optimizing Customer Flows
29TM Optimizing Customer Flows We have a dedicated team in place and are implementing a disciplined and methodical approach to network optimization 1 Constrain route service radius to ensure no deterioration in overall customer reach Customer volume within 50 miles remains at ±1% of historical level
Slide 30: Case Study: Southern CA Route Optimization
30TM Large “Multi-Area” Project Market Centers: 5 | Customers: 17,157 21.4% 33.2% 6.3% 1,055 gals Reduced distance Increased revenue/hour Increased revenue/mile Lowered fuel/week Case Study: Southern, CA Route Optimization Before After
Slide 31: Case Study: Orlando, FL Route Optimization
31TM Case Study: Orlando, FL Route Optimization Before After Small “Single-Area” Project Market Centers: 1 | Customers: 3,704 20.7% 25.9% 3.1% 341 gals Reduced distance Increased revenue/hour Increased revenue/mile Lowered fuel/week
Slide 32: Driving Density through Surgical Prospecting of New Customers
32TM Focused on Driving Density through Surgical Prospecting of New Customers Sales, Route Planning and Pricing Teams Working Together to Maximize Route Density 1 Identify customer prospects by leveraging third- party data 2 Overlay prospects and current customers to determine optimal geographic are
Slide 33: Mobilized Around Our Merchandise Management Opportunity
33TM Mobilized Around Our Merchandise Management Opportunity Today: Long-Term:Immediate-Term: Stockroom Optimization → Increase utilization of high-use, used SKUs → Standardize and visualize metrics with bespoke targets by market center Stockroom Consolidation → Implement consolidated stockroom foot
Slide 34: Performance-Driven Culture
34TM data-driven decision making align actions with financial outcomes inspire excellence | be experts build competitive muscle | be winners help teammates be the best version of themselves Efficient O peration sH ig h -Q ua lit y Gro wth Disciplined Capital Allocation Performance-Driven Culture Per
Slide 35: Building a Performance-Driven Culture
35TM Starting from a Strong Foundation Building a Performance- Driven Culture Building a Culture of Accountability We are shifting our culture towards accountability for results and financial outcomes while preserving the positive attributes that foster employee engagement Standardized, intuitive to
Slide 36: Meet the Vestis Team
36TM We make a good day's work a good day for others Meet the Vestis Team
Slide 37: Experienced Board of Directors
37TM Phillip Holloman (Chairman) Former President & COO, Cintas Doug Pertz (Vice Chairman) Former CEO & Chairman, The Brinks Company Kim Scott President & CEO, Vestis Richard Burke Former Chairman and CEO, Advanced Disposal Services Tracy Jokinen Former EVP & CFO, G&K Services and Vyaire Medical Lyn
Slide 38: Strong Management Team
38TM Strong Management Team Kim Scott President & Chief Executive Officer Rick Dillon Chief Financial Officer Tim Donovan Chief Legal Officer Angie Kervin Chief Human Resources Officer Grant Shih Chief Technology Officer Chris Synek Chief Operating Officer
Slide 39: Financial Overview
39TM Rick Dillon Chief Financial Officer Financial Overview
Slide 40: Trajectory of Operating Results as Segment of Parent
40TM Trajectory of Operating Results as Segment of Parent We are pleased with the trajectory of our performance in FY23 with 9-month YTD adjusted revenue growth of 5.7% and adjusted operating income growth of 8.1% $2,594 $2,474 $2,408 $2,642 FY19 FY20 FY21 FY22 ------ COVID-19 ------ Adjusted Revenu
Slide 41: Building Momentum through FY23
41TM Building Momentum through FY23 Delivering quarterly revenue growth above historical levels as we move past the COVID volume recovery and temporary energy fees included in FY22 results. AOI progression reflects a favorable revenue mix from cross-selling and the onset of benefits from the deliver
Slide 42: Resilient Pro Forma Standalone Financial Profile
42TM $180M $147M $247M FY20 FY21 FY22 Resilient Pro Forma Standalone Financial Profile Adjusted Revenue1 Adjusted Operating Income1 Adjusted EBITDA1 Audited historical carve-out standalone reporting further highlights our compelling performance and solid foundation as we enter FY24 $2.5B $2.5B $2.7B
Slide 43: Public Company Costs
TM 43 Public Company Costs • Our estimate of the incremental costs of being a fully independent public company is ~$20-25M, including costs associated with: ✓ IT infrastructure and cyber security ✓ Risk management and compliance costs (i.e., insurance, audit, tax and SEC) ✓ Executive Leadership Team
Slide 44: Standalone Segment Reporting and Revenue Details
44TM Standalone Segment Reporting and Revenue Details Our reporting segments going forward will be U.S. and Canada, and we will provide disaggregated revenue information for Uniforms and Workplace Supplies $2.7B FY22 Revenue Canada $240M U.S. $2.4B Workplace Supplies $1.5B Uniforms $1.2B ▶ Shirts ▶
Slide 45: Positioned to Deliver Long-Term Revenue Growth and Margin Expansion Targets
45TM Positioned to Deliver Long-Term Revenue Growth and Margin Expansion Targets FY23-28 organic revenue CAGR1 5-7% • High-quality new growth: +2-3% ✓ Target attractive sub-verticals ✓ Route density • Retain and gain with base: +2-3% ✓ Ease of doing business ✓ Cross-sell high-value products ✓ Expand
Slide 46: Sources and Uses of Cash – Transaction Overview
46TM Sources and Uses of Cash – Transaction Overview Sources ($M) Uses ($M) Cash on Balance Sheet $15 Transaction Fees $13 New Term Loan A-1 $800 Cash Transfer to Parent $1,472 New Term Loan A-2 $700 Total Sources $1,515 Total Uses $1,485 Sources and Uses Pro forma as of FYE23 ($M) Tenor Amount Cash
Slide 47: Strong Free Cash Flow Generation
TM 47 $231M $244M $233M FY20 FY21 FY22 Strong Free Cash Flow Generation • Business model generates strong and stable cash from operations and free cash flow1 • Weekly recurring revenue model and short conversion cycle provides a high degree of visibility and predictability • Reuse model provides wor
Slide 48: Capital Allocation Priorities
48TM Efficient O peration sH ig h -Q ua lit y Gro wth Disciplined Capital Allocation Capital Allocation Priorities Performance-Driven Culture Strengthen Balance Sheet • Focused on deleveraging • Optimal net leverage ratio range of 1.5x-2.5x by FY26 • Expect available cash of $30M, undrawn revolver o
Slide 49: Vestis: A Compelling Investment
49TM Attractive addressable market Strategic focus • ~$48B total addressable market • Fragmented competition • Focused on fast-growing sub-verticals and current base share of wallet • High-quality growth • Efficient operations • Performance-driven culture • Disciplined capital allocation Vestis: A C
Slide 50: Appendix
50TM APPENDIX
Slide 51: Separation Rationale
51TM Enable the executive leadership and boards of each standalone company to focus solely on its respective business Each business’ narrowed focus, and the ability to compensate employees with equity incentives linked solely to its own performance, enhances the ability to attract and retain strong
Slide 52: Separation Timeline
52TM SEPT 5 SEPT 5 SEPT 8 SEPT 13 SEPT 20 SEPT 27 SEPT 30 OCT 2 Separation Timeline Launched Vestis Brand Aramark Board Approval of Spin Form 10 Effective Analyst Day Record Date When-Issued Trading Begins Distribution Date First Day of Regular-Way Trading
Slide 53: Kim Scott, President and Chief Executive Officer
53TM Kim Scott, 51, will serve as the President and Chief Executive Officer of Vestis. She joined Aramark in October 2021 to serve as President and Chief Executive Officer of Aramark Uniform Services and to prepare Vestis to be a standalone, independent public company. Previously, Ms. Scott served a
Slide 54: Timothy Donovan, Chief Legal Officer
54TM Timothy Donovan, 67, will serve as an Executive Vice President, Chief Legal Officer and General Counsel of Vestis. Mr. Donovan joined Aramark Uniform Services as General Counsel and Senior Vice President in January 2022. Mr. Donovan has over 40 years of experience in legal and operational leade
Slide 55: Meet the Vestis Management Team
55TM Meet the Vestis Management Team Angela Kervin, 48, will serve as Executive Vice President and Chief Human Resources Officer of Vestis. Ms. Kervin is currently Senior Vice President and Chief Human Resources Officer of Aramark Uniform Services. Prior to her appointment as the Chief Human Resourc
Slide 56: Phillip Holloman, Chairman
56TM Phillip Holloman, 68, retired from Cintas as president and chief operating officer in 2018. Other roles during his 22-year career with Cintas included rental division president and chief operating officer, senior vice president of global supply chain management, executive champion of Six Sigma
Slide 57: Tracy Jokinen, Director
57TM Tracy Jokinen, 54, has over 30 years of finance and accounting experience across various global industries, where she focused on accelerating profitable growth and business transformation in her role as chief financial officer for both public and private companies. Most recently, Ms. Jokinen wa
Slide 58: Mary Anne Whitney and Ena Williams, Directors
58TM Mary Anne Whitney, 60, has served as executive vice president and chief financial officer of Waste Connections (NYSE: WCN) since February 2021 and has more than 25 years of deep financial expertise. During her 17-year tenure at Waste Connections, Ms. Whitney has held executive-level finance rol
Slide 59: Methodology to Calculate Total Addressable Market
59TM Methodology to Calculate Total Addressable Market Triangulate top-down and bottom-up approaches Bottom-up approachTop-down approach Model uses census employment and establishment data (BLS) as the basis for estimating 2023 Total Addressable Market (TAM) TAM is calculated for each product separa
Slide 60: Historical Results Included in Form 10
60TM Historical Results Included in Form 10 The Audited Financial Statements for Fiscal Years 2020, 2021 and 2022 and Pro forma 2023 were prepared on a carve-out basis as Vestis did not operate as an independent publicly traded company for the periods presented As a result, these financial statement
Slide 61: Standalone Segment Reporting and Revenue Details
61TM Our reporting segments going forward will be U.S. and Canada, and we will provide disaggregated revenue information for Uniforms and Workplace Supplies. Standalone Segment Reporting and Revenue Details Fiscal Year Disaggregated 2020 2021 2022 United States Uniforms $ 1,158.1 $ 1,076.3 $ 1,067.8
Slide 62: Non-GAAP Definitions
62TM Non-GAAP Definitions This presentation includes certain non-GAAP financial measures, which include Organic Revenue Growth, Adjusted Revenue, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow. Vestis utilizes these measures wh
Slide 63: Forward Looking Non-GAAP Information
63TM Forward Looking Non-GAAP Information This presentation also includes certain non-GAAP financial information that is forward-looking in nature, including without limitation compound annual organic revenue growth for fiscal year 2023-2028 and adjusted EBITDA margin for fiscal year 2028. Vestis be
Slide 64: Non-GAAP Reconciliations: Adjusted Operating Income Margin
64TM Non-GAAP Reconciliations Adjusted Operating Income Margin (Unaudited) (in thousands) Fiscal Year Ended Three Months Ended September 27, 2019 October 2, 2020 October 1, 2021 September 30, 2022 December 31, 2021 April 1, 2022 July 1, 2022 September 30, 2022 December 30, 2022 March 31, 2023 June 3
Slide 65: Non-GAAP Reconciliations: Adjusted Revenue
65TM Non-GAAP Reconciliations Nine Months Ended Fiscal Year Ended June 30, 2023 July 1, 2022 September 30, 2022 October 1, 2021 October 2, 2020 Thousands of Dollars Revenue (U.S. GAAP) $ 2,109,385 $ 2,003,832 $ 2,687,005 $ 2,456,577 $ 2,561,996 Estimated Impact of 53rd Week(a) — — — — (44,740) Adjus
Slide 66: Non-GAAP Reconciliations: Adjusted Operating Income
66TM Non-GAAP Reconciliations Adjusted Operating Income (Non-GAAP Financial Measure) Nine Months Ended Fiscal Year Ended June 30, 2023 July 1, 2022 September 30, 2022 October 1, 2021 October 2, 2020Thousands of Dollars Operating Income (U.S. GAAP) $160,134 $161,665 $192,243 $96,239 $149,720 Amortiza
Slide 67: Non-GAAP Reconciliations: Adjusted Operating Income (continued)
67TM Non-GAAP Reconciliations Adjusted Operating Income (Non-GAAP Financial Measure) (continued from prior page) Historical Nine Months Ended Fiscal Year Ended Thousands of Dollars June 30, 2023 July 1, 2022 September 30, 2022 Salaries and Benefits $5,767 $1,101 $1,434 One-Time Expenses 7,194 807 2,
Slide 68: Non-GAAP Reconciliations: Adjusted EBITDA
68TM Non-GAAP Reconciliations Adjusted EBITDA (Non-GAAP Financial Measure) Nine Months Ended Fiscal Year Ended June 30, 2023 July 1, 2022 September 30, 2022 October 1, 2021 October 2, 2020Thousands of Dollars Net Income (U.S. GAAP) $119,186 $118,466 $141,679 $74,270 $111,647 Provision for Income Tax
Slide 69: Non-GAAP Reconciliations: Adjusted EBITDA (continued)
69TM Non-GAAP Reconciliations Adjusted EBITDA (Non-GAAP Financial Measure) (continued from prior page) (a) EBITDA represents Net Income adjusted for Provision for Income Taxes; Interest Expense and Other, net; and Depreciation and Amortization. (b) Adjustments to eliminate severance expenses in the