# Vestis Corp: Form 10-Q for the period ended Jan 2, 2026

- Company: [Vestis Corp](/companies/vsts.md) (CIK 1967649)
- Form: 10-Q
- Filed: 2026-02-10
- Accepted by EDGAR: Feb 10, 2026, 07:14 ET
- Period: 2026-01-02
- Accession: 0001628280-26-006647
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1967649/000162828026006647/vsts-20260102.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1967649/000162828026006647/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-01-02.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-10-04 to 2026-01-02 | $663.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Selling, general and administrative | 3 months, 2025-10-04 to 2026-01-02 | $120.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-10-04 to 2026-01-02 | $16.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-10-04 to 2026-01-02 | −$2.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-10-04 to 2026-01-02 | −$6.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-10-04 to 2026-01-02 | −$0.05 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-10-04 to 2026-01-02 | −$0.05 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-10-04 to 2026-01-02 | 131,904,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-10-04 to 2026-01-02 | $37.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-10-04 to 2026-01-02 | $9.4m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 3 months, 2025-10-04 to 2026-01-02 | $0 | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2026-01-02 | $41.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-01-02 | $853.1m | us-gaap:AssetsCurrent |
| Total assets | at 2026-01-02 | $2.88bn | us-gaap:Assets |
| Current liabilities | at 2026-01-02 | $392.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-01-02 | $2.02bn | us-gaap:Liabilities |
| Long-term debt | at 2026-01-02 | $1.15bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2026-01-02 | $0 | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2026-01-02 | $864.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 30,463 characters.

*The following discussion and analysis of Vestis Corporation’s (“Vestis”, the “Company”, “our”, “we” or “us”) financial condition and results of operations for the three months ended January 2, 2026 and December 27, 2024 should be read in conjunction with our audited Consolidated and Combined Financial Statements and the notes to those statements for the fiscal year ended October 3, 2025 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC") on December 2, 2025.*

*This discussion contains forward-looking statements, such as our plans, objectives, opinions, expectations, anticipations, intentions, and beliefs, that are based upon our current expectations but that involve risks and uncertainties. Actual results and the timing of events could differ materially from those anticipated in those forward-looking statements as a result of a number of factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q.*

*All amounts discussed are in thousands of U.S. dollars, unless otherwise indicated.*

### Company Overview

We are a leading provider of uniforms and workplace supplies across the United States and Canada. We provide a full range of uniform programs, managed restroom supply services, first aid supplies and safety products, as well as ancillary items such as floor mats, towels, and linens across the United States and Canada. We compete with national, regional, and local providers who vary in size, scale, capabilities and product and service offering. Primary methods of competition include product quality, service quality and price. Notable competitors of size include Cintas Corporation and UniFirst Corporation, as well as numerous regional and local competitors. Additionally, many businesses perform certain aspects of our product and service offerings in-house rather than outsourcing them to a third party and leveraging the benefits of full-service programs.

Our full-service uniform offering includes the design, sourcing, manufacturing, customization, personalization, delivery, laundering, sanitization, repair, and replacement of uniforms. Our uniform options include shirts, pants, outerwear, gowns, scrubs, high visibility garments, particulate-free garments, and flame-resistant garments, along with shoes and accessories. We service our customers on a recurring rental basis, typically weekly, delivering clean uniforms while, during the same visit, picking up worn uniforms for inspection, cleaning and repair or replacement. In addition to our weekly, recurring customer contracts, we offer customized uniforms through direct sales agreements, typically for large, regional, or national companies.

In addition to uniforms, we also provide workplace supplies including managed restroom supply services, first aid supplies and safety products, floor mats, towels, and linens. Similar to our uniform offering, on a recurring rental basis, generally weekly, we pick up used and soiled floor mats, towels and linens, replacing them with clean products. We also restock restroom supplies, first aid supplies and safety products as needed.

We manage and operate our business in two reportable segments, United States and Canada. Both segments provide uniforms and workplace supplies, as described above, to customers within their specific geographic territories.

### Fiscal Year

Our fiscal year is the 52- or 53-week period which ends on the Friday nearest to September 30th. The fiscal year ended October 3, 2025, referred to as fiscal 2025, was a 53-week period and the fiscal year ending October 2, 2026, referred to as fiscal 2026, is a 52-week period.

### Key Trends Affecting Our Results of Operations

We serve the uniforms, mats, towels, linens, restroom supplies, first-aid supplies and safety products industry within the United States and Canada. This includes businesses that outsource these services through rental programs or direct purchases, as well as non-programmers, or businesses that maintain these services in-house. We believe that demand in this industry is largely influenced by macro-economic conditions, employment levels, increasing standards for workplace hygiene and safety and an ongoing trend of businesses outsourcing non-core, back-end operations. As a result of the diversity of our customers and the wide variety of industries in which they participate, demand for our products and services is not specifically linked to the cyclical nature of any one sector.

Global events, including ongoing geopolitical events, have adversely affected global economies, disrupted global supply chains and labor force participation, and created significant volatility and disruption of financial markets. While we do not have direct operations in Russia and Ukraine or in Israel, conflicts in those regions further disrupted global supply chains and heightened volatility and disruption of global financial markets. The ongoing volatility and disruption of financial markets caused by these global events, as well as other current global economic factors, triggered inflation in labor and energy costs and has driven significant changes in foreign currencies. The impact on our longer-term operational and financial performance will depend on future developments, including our response and governmental response to inflation, tariffs, the duration and severity of the ongoing volatility and disruption of global financial markets and our ability to effectively hire and retain personnel. Some of these future developments are outside of our control and are highly uncertain.

On May 1, 2025, we amended our Credit Agreement. As part of the amendment, among other things, we agreed to restrict all dividends and share repurchases until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as we are then in compliance with the financial covenants and (ii) when we achieve a net leverage ratio below or equal to 4.5x as of the last day of two consecutive quarters through the end of fiscal 2026.

Our financial performance and a prolonged decrease in our stock price during fiscal 2025 resulted in a triggering event for a goodwill impairment test for both of our reporting units in fiscal 2025. While no impairment of goodwill was recognized in fiscal 2025, if our future operating results do not meet current forecasts or if we experience a sustained decline in our market capitalization that is determined to be indicative of a reduction in fair value of one or more of our reporting units within either of our segments, we may be required to record future impairment charges for goodwill.

### Transformation and Restructuring Plan

During the first quarter of fiscal 2026, we approved and initiated a formal multi-year business transformation and restructuring plan (the “Plan”) to support the Company’s initiatives to make the Company more agile, efficient and customer focused. Developed in collaboration with leading third-party advisors, the Plan is structured around three strategic priorities: Commercial Excellence, Operational Excellence and Asset and Network Optimization. These priorities establish a clear framework for near-term performance improvement and long-term value creation through disciplined execution, continuous improvement and a relentless focus on serving customers.

- Operational Excellence. Implementing a standardized operating framework across its facilities and business units and streamlining the Company’s organizational structure in order to improve operating leverage, simplify execution, modernize core processes and systems and create a more scalable and efficient cost structure.
- Commercial Excellence. Executing commercial initiatives to improve customer retention, enhance profitability, and support a return to sustainable growth. Vestis is expanding product offerings and deploying new processes, tools and systems designed to strengthen customer segmentation, optimize strategic pricing and reinforce commercial discipline.
- Asset & Network Optimization. Rationalizing network redundancies, reallocating equipment to higher-utilization markets, and making targeted capital investments to improve reliability and asset performance.

Plan implementation began during the first quarter of fiscal 2026 and is expected to generate annual operating cost savings of at least $75 million by the end of fiscal 2026 and to also enhance revenue. Currently, we anticipate that the Plan will be substantially complete by the end of fiscal 2027 and we estimate costs of the Plan to be in the range of $25 million to $30 million, with approximately $20 million related to third-party consulting and support, and up to $10 million in severance and related costs. During the first quarter of fiscal 2026, the Company recognized $7.8 million of third-party consulting fees and $5.5 million of severance costs related to the transformation.

The estimate of the charges that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates. In addition, the Company may incur other charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan.

### Results of Operations Three Months Ended January 2, 2026 compared with December 27, 2024

The following table presents an overview of our results along with the amount of and percentage change between periods for the three months ended January 2, 2026 and December 27, 2024 (dollars in thousands).

|  | Three Months Ended January 2, 2026 | December 27, 2024 | Change $% | Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $663,388 | $683,780 | $(20,392) | (3.0%) |
| Operating Expenses: |  |  |  |  |
| Cost of services provided(1) | 492,217 | 495,260 | (3,043) | (0.6%) |
| Depreciation and amortization | 34,341 | 36,936 | (2,595) | (7.0%) |
| Selling, general and administrative expenses | 120,252 | 121,185 | (933) | (0.8%) |
| Total Operating Expenses | 646,810 | 653,381 | (6,571) | (1.0%) |
| Operating Income (Loss) | 16,578 | 30,399 | (13,821) | (45.5%) |
| Loss (Gain) on Sale of Equity Investments | — | 2,150 | (2,150) | (100.0%) |
| Interest Expense, net | 22,191 | 23,097 | (906) | (3.9%) |
| Other Expense (Income), net | 2,946 | 3,612 | (666) | (18.4%) |
| Income (Loss) Before Income Taxes | (8,559) | 1,540 | (10,099) | (655.8%) |
| Provision (Benefit) for Income Taxes | (2,168) | 708 | (2,876) | (406.2%) |
| Net Income (Loss) | $(6,391) | $832 | $(7,223) | (868.1%) |

(1) Exclusive of depreciation and amortization

Consolidated revenue of $663.4 million decreased $20.4 million, or 3.0%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decline in revenue compared to the prior year reflects a $19.2 million decline in uniforms and a $1.2 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms. Consolidated revenue was positively impacted by $0.2 million from the impact of foreign exchange on currency related to our Canadian operations.

Cost of services provided decreased $3.0 million, or 0.6%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decrease was primarily driven by a $5.0 million decline in merchandise costs and a $1.3 million reduction in delivery costs. These decreases were partially offset by a $3.7 million increase in plant operating costs.

Depreciation and amortization expense of $34.3 million for the three months ended January 2, 2026 decreased $2.6 million, or 7.0%, compared to the three months ended December 27, 2024.

Selling, general and administrative expenses ("SG&A") decreased $0.9 million, or 0.8%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decrease in SG&A was primarily driven by headcount reductions and other cost savings measures, a $3.3 million decrease in separation-related charges, as well as a $2.8 million decrease in share-based compensation, which were partially offset by transformation costs of $7.8 million.

Operating income of $16.6 million decreased from $30.4 million, or 45.5%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 from the impact of changes in revenue and costs noted above.

Interest expense, net, decreased $0.9 million for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 primarily due to lower interest rates.

Other expense, net of other income, decreased $0.7 million for the three months ended January 2, 2026 compared to the three months ended December 27, 2024 primarily due to a decrease in A/R Facility fees of $0.5 million.

The provision for income taxes for the three months ended January 2, 2026 was recorded at an effective rate of 25.3% compared to an effective rate of 45.9% for the three months ended December 27, 2024. The lower effective tax rate was due to the impact of tax adjustments, largely share-based compensation and changes in year over year earnings.

Net loss of $6.4 million for the three months ended January 2, 2026 represented a decrease of $7.2 million, or 868.1%, compared to net income of $0.8 million for the three months ended December 27, 2024, due to the impact of changes to revenue and expenses noted above.

### Results of Operations—United States Results Three Months Ended January 2, 2026 compared with December 27, 2024

The following table presents an overview of our United States reportable segment results along with the amount of and percentage change between periods for the three months ended January 2, 2026 and December 27, 2024 (dollars in thousands).

|  | Three Months Ended January 2, 2026 | December 27, 2024 | Change $% | Change |
| --- | ---: | ---: | ---: | ---: |
| Segment Revenue | $602,901 | $621,716 | $(18,815) | (3.0%) |
| Segment Operating Income | 36,207 | 58,033 | (21,826) | (37.6%) |
| Segment Operating Income % | 6.0% | 9.3% |  |  |

United States revenue of $602.9 million decreased $18.8 million, or 3.0%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decline in revenue compared to the prior year reflects an $18.1 million decline in uniforms and a $0.7 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms.

Segment operating income of $36.2 million for the three months ended January 2, 2026 decreased $21.8 million, or 37.6%, compared to the three months ended December 27, 2024, primarily driven by the decrease in revenue during the three months ended January 2, 2026, as described above.

Segment operating income margin decreased approximately 330 basis points from 9.3% for the three months ended December 27, 2024 to approximately 6.0% for the three months ended January 2, 2026.

### Results of Operations—Canada Results Three Months Ended January 2, 2026 compared with December 27, 2024

The following table presents an overview of our Canada reportable segment results along with the amount of and percentage change between periods for the three months ended January 2, 2026 and December 27, 2024 (dollars in thousands).

|  | Three Months Ended January 2, 2026 | December 27, 2024 | Change $% | Change |
| --- | ---: | ---: | ---: | ---: |
| Segment Revenue | $60,487 | $62,064 | $(1,577) | (2.5%) |
| Segment Operating Income | 2,161 | 1,912 | 249 | 13.0% |
| Segment Operating Income % | 3.6% | 3.1% |  |  |

Canada revenue of $60.5 million decreased $1.6 million, or 2.5%, for the three months ended January 2, 2026 compared to the three months ended December 27, 2024. The decline in revenue compared to the prior year reflects a $1.1 million decline in uniforms and a $0.5 million decline in workplace supplies on consistent total overall volume levels measured as pounds processed in our plants. The decline in revenue is attributable to a product mix shift towards more workplace supplies, which includes linen, that brings lower overall revenue per pound when compared to uniforms. Canada revenue was positively impacted by $0.2 million from the impact of foreign exchange on currency.

Segment operating income of $2.2 million for the three months ended January 2, 2026 increased $0.2 million, or 13.0%, compared to the three months ended December 27, 2024.

Segment operating income margin increased approximately 50 basis points from 3.1% for the three months ended December 27, 2024, to approximately 3.6% for the three months ended January 2, 2026.

### Liquidity and Capital Resources

### Overview

As part of our capital structure, we entered into a Credit Agreement on September 29, 2023 (the "Credit Agreement"). The Credit Agreement included senior secured term loan facilities consisting of term loan A-1 tranche due September 2025 in the amount of $800 million ("Term Loan A-1"), term loan A-2 tranche due September 2028 in the amount of $700 million ("Term Loan A-2") and a revolving credit facility. On February 22, 2024, we entered into Amendment No. 1 to our Credit Agreement and refinanced our Term Loan A-1 ("Term Loan A-1") with an $800 million Term Loan B-1 due February 2031 ("Term Loan B-1"). The Term Loan B-1 requires $2.0 million of principal payments each quarter until the maturity date, at which point the remaining unpaid principal amount is due.

The Term Loan B-1 interest rate is at the Secured Overnight Financing Rate ("SOFR") plus a margin that is between 2.0% and 2.25%, depending on the Company's Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement. The applicable margin on Term Loan B-1 was 2.25% during the three months ended January 2, 2026 and December 27, 2024, and will adjust to SOFR plus 200 basis points once the Company reaches a 3.30x Net Leverage as defined in the Credit Agreement.

The Term Loan A-2 interest rate is SOFR plus a Credit Spread Adjustment of 10 basis points and a margin that is between 1.5%% and 2.50%, depending on the Company's Consolidated Total Net Leverage Ratio, as defined in the Credit Agreement. The applicable margin on Term Loan A-2 was 2.50% and 2.33% during the three months ended January 2, 2026 and December 27, 2024, respectively.

On May 1, 2025, the Company amended its Credit Agreement. As part of the amendment, the Company agreed to restrict all dividends and share repurchases until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as the Company is then in compliance with the financial covenants and (ii) when the Company achieves a net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.

On August 2, 2024, Vestis Services, LLC (“Vestis Services”) and certain other subsidiaries of the Company entered into a three-year $250.0 million accounts receivable securitization facility (the “A/R Facility”). Under the A/R Facility, Vestis Services and certain other wholly-owned subsidiaries of the Company transfer accounts receivable and certain related assets to VS Financing, LLC, a bankruptcy remote special purpose entity formed as a wholly-owned subsidiary of Vestis Services ("SPE"), who in turn, may sell the receivables to one or more financial institutions ("Purchasers"). The net proceeds of the A/R Facility were used to repay a portion of the outstanding borrowings under the existing term loans. The A/R Facility is scheduled to terminate on August 2, 2027, unless terminated earlier pursuant to its terms. As of January 2, 2026 and October 3, 2025, the total value of accounts receivable sold from the SPE to the Purchasers under the A/R Facility and derecognized from the Company's Condensed Consolidated Balance Sheet was $217.2 million and $202.5 million, respectively.

As of January 2, 2026, we had approximately $41.5 million of cash and cash equivalents and $275.2 million of availability under our revolving credit facility. As of January 2, 2026, we had $1,161.5 million of total principal debt compared to $1,168.5 million as of October 3, 2025. The servicing of this debt will be supported by cash flows from our operations.

The table below summarizes our cash activity (in thousands):

|  | Three months ended January 2, 2026 | December 27, 2024 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $37,687 | $3,780 |
| Net cash (used in) provided by investing activities | (9,121) | 17,854 |
| Net cash used in financing activities | (16,528) | (34,610) |

Reference to the Condensed Consolidated Statements of Cash Flows will facilitate an understanding of the discussion that follows.

#### Cash Flows Provided by (Used in) Operating Activities

Net cash provided by operating activities was $37.7 million for the three months ended January 2, 2026 and $3.8 million for the three months ended December 27, 2024. The increase in net cash provided by operating activities of $33.9 million was due, in part, to the change in operating assets and liabilities of $41.0 million, when comparing the three months ended January 2, 2026 to the three months ended December 27, 2024, partially offset by

the net loss for the three months ended January 2, 2026 of $6.4 million compared to net income for the three months ended December 27, 2024 of $0.8 million, as discussed in "Results of Operations" above.

The change in operating assets and liabilities was, in part, due to improved management and collections of accounts receivable, increased utilization of the A/R Facility, strategic shifts in inventory management and changes in accounts payable and accrued expenses (that reflect reduced operational spending, partly related to decreased revenue and partly related to certain cost reduction initiatives).

#### Cash Flows Provided by (Used in) Investing Activities

Net cash used in investing activities was $9.1 million for the three months ended January 2, 2026 compared to net cash provided by investing activities of $17.9 million for the three months ended December 27, 2024. The decrease of $27.0 million was primarily due to net proceeds from the sale of an equity investment during the first quarter of fiscal 2025 of $36.8 million, partially offset by $5.3 million lower year-over-year purchases of property and equipment and lower acquisition-related investments of $4.6 million. The acquisition-related investment in the first quarter of fiscal 2025 was related to a tuck-in acquisition.

#### Cash Flows Provided by (Used in) Financing Activities

During the three months ended January 2, 2026, cash used in financing activities was primarily impacted by the following:

- proceeds from long-term borrowings of $48.0 million;
- payments of long-term borrowings of $55.0 million; and
- payments related to finance leases of $9.2 million.

During the three months ended December 27, 2024, cash used in financing activities was primarily impacted by the following:

- payments for long-term borrowings of $20.0 million;
- payments related to finance leases of $8.3 million; and
- dividend payments of $4.6 million.

### Material Cash Requirements

In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. There have not been material changes to our cash requirements since our Annual Report on Form 10-K for the fiscal year ended October 3, 2025 filed with the SEC on December 2, 2025. Additional information regarding our obligations under debt and lease arrangements are provided in Note 4. *Borrowings* and Note 6. *Leases* to the Financial Statements contained elsewhere in this Quarterly Report on Form 10-Q.

### Covenant Compliance

The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; issue preferred stock or provide guarantees; create liens on assets; engage in mergers or consolidations; sell or dispose of assets; pay dividends, make distributions or repurchase our capital stock; engage in certain transactions with affiliates; make investments, loans or advances; create restrictions on the payment of dividends or other amounts to the Company from its restricted subsidiaries; amend material agreements governing our subordinated debt; repay or repurchase any subordinated debt, except as scheduled or at maturity; make certain acquisitions; change our fiscal year; and fundamentally change our business. The Credit Agreement contains certain customary affirmative covenants. The Credit Agreement also includes customary events of default and other provisions that could require all amounts due thereunder to become immediately due and payable, at the option of the lenders, if we fail to comply with the terms of the Credit Agreement or if other customary events occur.

Under the Credit Agreement, we are required to satisfy and maintain specified financial ratios and other financial condition tests and covenants. Our continued ability to meet those financial ratios, tests and covenants can be affected by events beyond our control, and there can be no assurance that we will meet those ratios, tests and covenants.

Prior to our May 1, 2025 amendment, which is described below, our Credit Agreement required us to maintain a maximum Consolidated Total Net Leverage Ratio, defined as consolidated total indebtedness in excess of unrestricted cash divided by Covenant Adjusted EBITDA (as defined in the Credit Agreement), not to exceed 5.25x for any fiscal quarter ending prior to March 31, 2025, and not to exceed 4.50x for any fiscal quarter ending on or after March 31, 2025, subject to certain exceptions. Consolidated total indebtedness is defined in the Credit Agreement as total indebtedness consisting of debt for borrowed money, finance leases, disqualified and preferred stock and advances under any receivables facility. Covenant Adjusted EBITDA is defined in the Credit Agreement as consolidated net income increased by interest expense, taxes, depreciation and amortization expense, initial public company costs, restructuring charges, write-offs and noncash charges, non-controlling interest expense, net cost savings in connection with any acquisition, disposition, or other permitted investment under the Credit Agreement, share-based compensation expense, non-recurring or unusual gains and losses, reimbursable insurance costs, cash expenses related to earn outs, and insured losses.

The Credit Agreement establishes a minimum Interest Coverage Ratio, defined as Covenant Adjusted EBITDA divided by consolidated interest expense. The minimum Interest Coverage Ratio is required to be at least 2.00x for the term of the Credit Agreement.

### Fiscal 2025 Amendment to Credit Agreement

On May 1, 2025, the Company entered into Amendment No. 2 to its Credit Agreement. This amendment increased the Consolidated Total Net Leverage Ratio from 4.50x to (i) 5.25x for any fiscal quarter ending prior to July 3, 2026, (ii) 5.00x for the fiscal quarter ending July 3, 2026 and (iii) 4.75x for the fiscal quarter ending October 2, 2026. Pursuant to this amendment, the Consolidated Total Net Leverage Ratio will remain at 4.50x for the first quarter of fiscal 2027 through maturity.

This amendment also provided a $15 million bad debt expense adjustment to Adjusted EBITDA in the fiscal quarter ended March 28, 2025 for the purposes of determining compliance with the financial covenants.

The principal amounts of both the revolving credit facility commitment and term loan facility remain unchanged following this amendment.

As part of this amendment, the Company agreed to limit the aggregate size of its A/R Facility and any other receivables facilities to $250 million and restrict all dividends and share repurchases, in each case until the earlier of (i) any fiscal quarter ending after October 2, 2026 so long as the Company is then in compliance with the financial covenants and (ii) when the Company achieves a net leverage ratio below or equal to 4.50x as of the last day of two consecutive quarters through the end of fiscal 2026.

At January 2, 2026, we were in compliance with all covenants under the Credit Agreement.

### Critical Accounting Policies and Estimates

Our significant accounting policies are described in the notes to the audited Consolidated and Combined Financial Statements included in our Annual Report on form 10-K, filed with the SEC on December 2, 2025. For a more complete discussion of the critical accounting policies and estimates that we have identified in the preparation of the Financial Statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, filed with the SEC on December 2, 2025. Management believes that there have been no significant changes during the three months ended January 2, 2026 to the items that we disclosed as our critical accounting policies and estimates in our Annual Report on Form 10-K for the fiscal year ended October 3, 2025.

In preparing financial statements, management is required to make estimates and assumptions that, among other things, affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are most significant where they involve levels of subjectivity and judgment necessary to account for highly uncertain matters or matters susceptible to change, and where they can have a material impact on our financial condition and operating performance. If actual results were to differ materially from the estimates made, the reported results could be materially affected.

Critical accounting estimates and the related assumptions are evaluated periodically as conditions warrant, and changes to such estimates are recorded as new information or changed conditions require.

## Market risk

As filed, 1,404 characters.

#### Foreign Currency Risk

We are exposed to market risk from changes in foreign currency exchange rates. This exposure results from revenues and profits denominated in foreign currencies being translated into U.S. dollars and from our legal entities entering into transactions denominated in a foreign currency other than their functional currency. We currently do not enter into financial instruments to manage this foreign currency translation risk.

#### Interest Rate Risk

We are exposed to interest rate risk through fluctuations in interest rates on our debt obligations. Our outstanding Term Loan Facilities bear interest at variable rates. As a result, increases in interest rates could increase the cost of servicing our debt and could materially reduce our profitability and cash flows. There has been no material change to this market risk exposure to interest rates from that which was previously disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in our Annual Report on Form 10-K for the year ended October 3, 2025.

#### Commodity Price Risk

We are exposed to changes in prices of commodities used in our operations, primarily associated with gasoline, diesel and natural gas fuel. We seek to manage exposure to adverse commodity price changes through our normal operations as well as, from time to time, entering into commodity derivative agreements.

## Controls and procedures

As filed, 1,167 characters.

### Evaluation of Disclosure Controls and Procedures

Under the direction of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), we have evaluated the effectiveness of our disclosure controls and procedures as of January 2, 2026 (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on their evaluation, our CEO and CFO concluded that, as of January 2, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosures.

There were no changes in our internal control over financial reporting during the fiscal quarter ended January 2, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 216 characters.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended October 3, 2025 filed with the SEC on December 2, 2025.

Filed Feb 10, 2026.
Source: SEC EDGAR, the filing index for accession 0001628280-26-006647. Last ingested by Listed: Nov 3, 2026, 20:50 ET. No prices; not investment advice.