Vestis Corporation (NYSE:VSTS) Q4 2023 Earnings Call Transcript

Andy Wittmann : Okay. Okay. So then, I guess, stepping back, my last question. There’s a lot, Tim, that you’re doing to kind of move the margin profile in a lot of different ways. As you look here over the past 3 months or so, what are the kind of key initiatives where you’re really focused on today that your employees are feeling in terms of how they’re going to talk to their customers or changes that they’re seeing in the routes or in the plant. What are the real things that today that you’re working on?

Kim Scott: Thanks, Andy, appreciate that question. So cross-selling the base is a very attractive margin accretive activity. So we are hyper-focused on growing share of wallet with existing customers. And we’ve already incurred that fixed cost. We already have route drivers serving them plans assets tied to those customer locations. So 1 of the single most important areas of focus that our whole team is rallied around is cross-selling existing customers so that we can capture share of wallet and leverage fixed assets and get that flow through revenue. And I would say our team is fully mobilized. As I mentioned when I was speaking earlier, we had selling activity on 96% of our routes. I shared with you guys during Analyst Day that we were not leveraging our fantastic frontline teammates to sell our customers to cross-sell our customers when I joined the company a couple of years ago.

So to be able to share now that we have 96% of our routes containing sales activity is tremendous momentum. And that does take the entire organization coming together. So service managers, frontline teammates managers out in market centers as well as sell teammates supporting them and marketing with collateral. So that is a full-on team effort that everyone is mobilized around. The other really very large initiative that requires the whole company to move in the same direction as our building a center of logistics excellence. So this notion of rerouting customers and conducting flow optimization across these market centers requires a tremendous amount of collaboration between facilities as we are rerouting customers working very diligently to ensure that is a seamless and invisible process for the customer.

So it requires all hands on deck out in the field working together, not just to remap it from a logistics perspective using great technology and tools. But it is also a large change management undertaking that requires all of us to work together to get that done. So if I had to really choose key areas of focus for us. I would say it is cross-selling workplace supplies to existing customers and leveraging those fixed assets and optimizing our network from a logistics perspective.

Operator: Our next question will come from Andrew Steinerman with JP Morgan.

Andrew Steinerman : Could you please comment on recent trends in Ad Stop, Net New and Retention.

Kim Scott: Ad Stop, Net New and what was the last one?

Andrew Steinerman : Retention.

Kim Scott: Got it. So obviously, we continue to focus on creating an amazing customer experience, and we talked a lot about — some of the things that we’re doing to enhance that experience from training our frontline teammates and our territory managers with playbooks around how to do a great job taking care of the customer to also providing our route drivers, our frontline teammates with tools to let them know when there’s an opportunity to improve with the customer and then also to launching our customer portal, which we’re getting great feedback on. So we feel really good about the momentum around protecting and growing our customer base. We are seeing really, really great feedback from our customers around these initiatives. And so we feel very, very good about the establishment of a service excellence culture across the company. We also continue to deliver retention rates that are above 90% as we stated in our Form 10. So we continue to emphasize that greatly.

Andrew Steinerman : And add stops and net new?

Kim Scott: Ad Stop and Net New, we haven’t given out those metrics specifically, but we obviously continue to add new business. We’re pleased with the progress that we’re seeing from our frontline sales team to do that, and we continue to see growth in our business. We’re not really using the quite alert.

Andrew Steinerman : Have Add stop held up?

Kim Scott: We don’t actually use a metric of Ad stop. And I think it’s also important to note on your question around Net New that we actually aren’t communicating and we’re shifting away from that Net New metrics that we were using at Aramark as well. Because it doesn’t reflect growth in our base, so that Net New metric is a discrete metric around customers who are with you and then leave and are no longer customers, and it does not reflect the growth in the base, which is our key focus area. So you’re going to see us shift away from the conversation around that new and talking about that metric. And you’re going to hear us talk more about macro level growth that includes cross-selling and adding products and services to existing customers, and that’s not reflected in that net new number.