Welcome to the Vestis Corporation Fiscal Fourth Quarter and Full Year 2024 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. [Operator Instructions] I would now like to turn the call over to Michael Aurelio, Vice President, Investor Relations.

Thank you, Ashley and good morning, everyone. Welcome to the Vestis Corporation Fiscal Fourth Quarter and Full Year 2024 Earnings Call. With me here today are our President and CEO, Kim Scott; and our CFO, Rick Dillon. As a reminder, a telephonic replay of this call will be available on the Investor Relations section of the vestis.com website shortly after the completion of the call. Also, access to the materials discussed on today's call are available on the Vestis website under the Investor Relations section. Before we begin, I would like to remind you that this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include remarks about management's future expectations, beliefs, estimates, plans and prospects. Such statements are subject to a variety of risks, uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements. Such risks and other factors are set forth in our periodic and current reports filed with the Securities and Exchange Commission. We do not undertake any duty to update them. With that, I would like to turn the call over to Kim.

Thank you, Michael. Good morning, everyone. Thank you for joining our fiscal fourth quarter 2024 earnings call. Vestis recently celebrated its first year anniversary as a stand-alone public company. And I want to begin by recognizing our teammates and the collective effort behind that milestone. Over the past year, our team has been hard at work building a strong foundation that will allow Vestis to capitalize on the tremendous opportunity ahead. To each of our 20,000 dedicated teammates, thank you for your continued commitment and support of our customers and shareholders. We delivered solid fourth quarter financial results that were in-line with our expectations for revenue and ahead of our expectations for adjusted EBITDA. Fourth quarter revenue was $684 million and on a full year basis, fiscal 2024 revenue was $2.8 billion. We are very pleased with our fourth quarter adjusted EBITDA performance, which allowed us to deliver $353 million in EBITDA for the full year representing a margin of 12.6% versus our guidance of 12% to 12.4%. Q4 adjusted EBITDA was $81 million versus our implied Q4 guide of $76 million. As a reminder, our 2024 results include the impact of incremental public company costs, which impacted fourth quarter and full year 2024 margin by 75 basis points and 65 basis points, respectively. We continue to generate strong free cash flow in-line with our conversion target. That has supported our strategic priorities to delever, and we ended the year with a 3.6 times net leverage ratio. I want to focus my discussion today on simple, but important themes. We are building commercial momentum. We continue to drive efficiencies across our operations, and we remain highly focused on elevating our customers' experience. A lot is working well at Vestis, which we will talk about today, but we still have more…

Thanks, Kim, and good morning, everyone. So let's start with fourth quarter revenue bridge on Slide 8. Revenue of $684 million decreased by 4% year-over-year. The impact of volume growth was more than offset by lost business in the quarter. Volume growth from recurring revenue, including new customers and expanding our existing customer penetration through cross-selling, provided approximately 700 basis points of growth in the quarter. New customers contributed approximately 600 basis points of growth and existing customers growth contributed 100 basis points with route sales up 18% year-over-year. Net customer losses reduced fourth quarter revenues by approximately 900 basis points. The lost business impact consists of $5 million from known customer losses as we exited 2023 and $60 million from customer losses during the fiscal year. As Kim noted, we improved fourth quarter retention by over 400 basis points year-over-year and full year retention by 150 basis points, ending the year at 91.9%. As a result of this improvement, retention will be less of a headwind in fiscal '25 than we have seen in fiscal '24. 60 basis points of in-year pricing actions was more than offset by the negative impact from the roll-back of significant prior year pricing actions as we progress through the fourth quarter of 2023 and the front half of 2024. Direct sales drove a 60 basis point decline in the fourth quarter year-over-year, driven almost entirely by the lost revenue from the large direct sale national account previously disclosed. Excluding the impact of the direct sale business, our Uniform business was down 6% year-over-year and Workplace supplies down 3% year-over-year. Moving on to Slide 9 of adjusted EBITDA. Adjusted EBITDA was $81 million in the fourth quarter of fiscal '24 down approximately $32 million from the fourth quarter of '23. The operating leverage on…

Thank you. The floor is now open for questions. [Operator Instructions] Our first question is coming from Andy Wittmann with Baird. Please go ahead.

Hi. Thank you for taking my questions and thank you for all the detail on your initiatives inside the company during the quarter. That's all very helpful context. Kim, I just thought I'd have you elaborate a little bit more on kind of the status of your pricing conversations. It sounded like through some of your commentary here that the price comps maybe for the first half of this year are a little tougher, but underline that and with the new base for the second half, it gets a little bit better. Can you just maybe just put a little bit more meat on that bone and talk about kind of the discussions you're having and what gives you the confidence that the pricing environment is firming up after FY '24, which is kind of a transition year?

Yes. Thanks, Andy. It's good to hear from you this morning. So as we said in our prepared remarks, pricing will be a positive contributor for our business in FY '25. So you're right, we've got some headwinds and some comps we've got to deal with in the first half of the year. But as we move into the back half of the year, we will see pricing coming through the business. We also have done a great deal of work around our culture and our customer-first focus, and our delivery metrics and our shortages. And so the things that I talked about around the service enhancements are really starting to take root inside the organization. Also, our new Chief Operating Officer, Bill Seward has really done an outstanding job out the gate, instilling this customer service and customer-first mindset. All of that is giving our team more confidence to hold price, to take price and to be really confident about the service that we provide and the value of the service that we provide. So we are starting to see momentum in the organization around standing behind price and being confident in taking that price, and you'll start to see that flowing in the back half.

Okay. Great. And then I just thought I would ask for just an update on the overall rollout of your network densification strategies. Obviously, you've been doing this for some time, and it's always incremental you're doing kind of market by market at the time. How far along are you on this? How much did you do in the quarter? And how much more is planned for '25? Anything around that topic, I think it would be helpful for all of us.

Yes. I'm really very pleased with the progress that we've made in logistics optimization. We started down this path several years ago. And so this program is quite mature for us. It's become the way we work now. So we are constantly optimizing and ensuring that our routes are as efficient as possible while we're still marching down the path of addressing footprint optimization. So locations that are not where they belong or additional depots and cross docks in our networks that are driving empty miles and wasted miles. So we continue down that path. And in fact, we're accelerating. So each year, we're doing more events. We have a dedicated team that's on the ground doing that by location. We will enjoy carryover benefits from logistics cost out from activities that we did in '24, while also accelerating and generating more of those in '25. So this program continues. And really this program will never end. So we'll get through our first assessment in our first optimization model across the next zero to 5 years, as we've been in this journey now about 2 years. We've got about 3 years to go on the first wave but there are more rounds of this to go. Andy, and this will continuously be optimized as we grow our network and we add volume. We will keep doing this type of activity. So we'll see good dollars flowing through and good cost out coming in '25 from the rollover as well as the new events, and you'll see it again in '26.

That's super helpful. I just had one final question, and I'm guessing this one is probably more for Rick. And the question is just really just to help people get their expectations set for their models through the year having to do with the $28 million of items that were kind of beneficial last year that were kind of onetime or exit charges or things of that nature. Where do those fall in terms of a quarterly cadence. I just want to make sure that we all kind of look at the revenue and the margins that happen from those on a year-over-year basis and try to get those right. So any context you could give on that, I think it would be helpful for us to kind of level set expectations.

Sure. And that really speaks to the front half, back half nature of our guidance. There's roughly about $13 million of exit costs. If you think about those, they happen primarily in the front half of the year, almost split evenly across the first two quarters, and a similar discussion around the exit of a large national direct sale account really front half weighted with similar quarterly growth in the front half. Both of those work their way out of the system here in the front half, and we returned to not lapping that headwind when we get to the back half of the year.

Okay, super helpful. Thanks and have a good day.

Thank you. We will take our next question from Shlomo Rosenbaum with Stifel. Please go ahead.

Hi, good morning. Thank you for taking my questions. Kim, I wanted to follow up on your comment about the sales force attrition that you kind of let happen as you're trying to work through getting a new sales leader and you're looking to kind of add to your sales force. Can you talk about like how many people you are looking to add or percentage-wise, what you're looking to add? And then how long does it take from when you start -- you bring someone on board until when they really hit their stride and you could expect them to deliver the type of revenue growth that you would expect from a seasoned salesperson? And after that, I have another question.

Okay. Thank you for joining the call and for your question. So let me maybe just step back for a second and talk about how we think about our sales ramp because there's really several levers inside that. We have an existing group of teammates who are here today. And as I mentioned in my prepared remarks, we are seeing great productivity improvements with those teammates. We're really proud of the work that they're doing under our new sales leadership, and we're seeing their revenue per head go up dramatically, and we're very pleased about that. We're also setting those teammates up for success so that we retain them and they stay with the company and we lower turnover. The third lever is adding new teammates. And so what we are doing is closely monitoring the productivity levels that we're getting from existing teammates, and we will turn the dial for adding new teammates, as we see the need to replenish the team. We purposely did let teams attrit, starting in the second quarter, as I mentioned in our earnings call in the second quarter, we allowed those teams to attrit and we did not throw dollars at headcount to put bodies in place without the right processes and the right leadership. Now we have that leadership, and we will add heads as needed to replenish the team while we monitor the productivity per head, because we are going to turn all three of those dials. What's happening with turnover, what's happening with revenue per teammate and then what is happening with new sales adds. And so as we move through the year, we'll turn those dials appropriately. So it wouldn't be appropriate for me to give you a number because that number could change depending on how fast our…

Okay. Thank you. And then can you just give us a little bit more detail in progress that you're seeing in some of the things that were challenged. You listed three things before last quarter or two, new wins not ramping as expected. You had service quality issues. And then deliberately moderated pricing. We talked a little bit about pricing here. But are you seeing improvements in new wins and kind of ramping the way that more the way that you'd expect? And can you quantify any improvements there in kind of the service quality issues.

Yes. So we absolutely are seeing progress in new wins, and I mentioned some very exciting national account wins, including that large food services provider that we brought into our portfolio. And we truly believe that, that is an opportunity for that customer to become the largest customer that we have at Vestis. So that is very exciting. We also are seeing great, what I call, lane expansion, so including adding additional locations to an existing set of customers, and we've seen great progress there. I highlighted an example of that around one of our top 10 customers in the restaurant industry, who is now adding additional services with us adding additional locations with us and they are growing, which means we are also growing with them. So I'm really excited about the focus that we are seeing on the national account pipeline as well as the frontline field sellers that we spoke about just a moment ago. So we are definitely seeing momentum. We also have an extensive and robust national account pipeline that is very thorough, rigorous, detailed and being harvested by our national account team. You might recall that I mentioned on our last call that we have put new leadership over national accounts as well, a very proven leader inside our organization is now leading that team, and she's doing an outstanding job. So I'm very pleased with what we're seeing as it relates to frontline field sellers as well as harvesting a national account pipeline. From a service perspective, I also touched on some key areas that we are hyper focused on. Starting with culture. We are having a revolution inside this business around obsessing over our customer, taking great care of our customer, putting our customers first in all we do. And we have…

We'll take our next question from Stephanie Moore with Jefferies. Please go ahead.

Hi, this is Harold Antor on for Stephanie Moore. So I guess, good progress you made on the leverage profile. I guess when looking at 2025, how much do you plan to delever in 2025 and I guess, and achieve your target? And I guess if you could talk about any progress you've been seeing from the AR securitization.

Sure. I would say, in 2025, we expect to continue, as we've said this year really devote any excess cash towards delevering. And we did that over the past year in addition to driving delevering from really focusing on managing our balance sheet. So from the AR securitization, there was about $233 million of operating cash benefit from doing that initial draw from the facility. And as we've talked about, we also have sold a Japanese joint venture. We did that subsequent to the quarter. That gives us an additional $35 million to channel towards debt. And this past year, we did some asset sales that also provided cash for us against debt. So we expect to continue to leverage our balance sheet. There are more opportunities there. And as I've noted, we're excited that we continue to meet our cash conversion targets and using that cash to continue down the path of delevering while also maintaining our 3% CapEx investment.

Yes. And I guess just on the retention side of things. I guess, what's the implied retention you guys are assuming in fiscal year '25 to achieve revenue growth targets.

So we're not giving a retention target for the year, but what I can tell you is we continue to improve related to retention. So we are very pleased with the progress that we made in FY '24 versus FY '23. We are entering FY '25 on solid footing as it relates to mitigating rollover losses. If you'll recall, we had to face rollover losses from FY '23 into FY '24, and we had to absorb those losses throughout the course of the year. We're very pleased that we're entering in a much stronger position as we come into FY '25. We improved our rate in '24, as I mentioned in my prepared remarks, and we expect that we will continue to improve throughout FY '25. Also, I mentioned our October performance, which is 93.7% retention. We're very pleased to see that progress as we move through the first quarter.

Thank you.

Thank you. We will take our next question from Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. Thank you for taking my question. Can I just ask for some further insight with regards to the cost initiatives, perhaps some further context and/or quantification. I know you said that there is an expectation to realize meaningful cost savings of '24 benefits. I think you referenced some actions being taken in the current quarter, et cetera, around improving field services, G&A, et cetera. Can you expand upon that in terms of quantification time line for realization run rate, that type of thing?

Yes. So yes, thanks for raising your question. It's good to hear from you this morning. So absolutely. And I think it is really important, and we want to make sure that everyone understands this. We are absolutely taking appropriate actions to ensure that we have the right cost structure inside this business. And of course, we're always going to be diligent about doing that. One of the key components of our strategy is efficient operations. So we've been constantly looking at and evaluating and finding ways to take cost out of our system, and we've been very diligent about doing that. We do have some carryover that will come from '24 into '25. But also I want to provide assurances to all of you that we have a very strong foundation in place to deliver our FY '25 commitments and we are confident about that related to all of the things that we've talked about around sales and improving the customer experience, but we have also taken significant action to lower our cost base and to take costs out of the business. We have taken those actions -- many of those actions already. So prior to this call, we have taken action to reduce the number of head count across our business that has resulted in eliminating positions. We have significantly taken down the head count across particular teams, including our finance team most recently. And then we have also done a great deal of work around discretionary spending and making sure that we have very tight controls around spending across the company. and we are accelerating our logistics initiatives in '25 beyond what we had originally planned in our original strategic plan. So there is a great deal of good things happening across the organization to lower our cost base. and we have high confidence in the contributions that we'll make to our '25 numbers.

That's very helpful. And then may I confirm on the CapEx 3% of revenues. I think you referenced again being underutilized, I think to the square 35%. How should we think about what the CapEx and the investments are being made in the areas of focus there for investment?

As we said on when we launched that we would channel first two years of CapEx around some maintenance items, but then also leave enough flexibility to drive operating efficiencies within our plants. So that could be automation of particular equipment in the plant. It could be investing in further use of our existing ABS system, but those investments are project specific delivering specific returns. And so as Kim noted, we are at 35% capacity -- we do have 35% capacity within our existing facilities. And so that CapEx is not needed to build new buildings, but we are still investing on equipment and processes within our facilities.

Got it. And then could you just comment as to where you think you are in terms of whether it's the famous sports analogy, what inning with regards to automation of equipment in the plant use of ABS, et cetera, broader technology?

Yes, I'll take that. So just in general, I would say a couple of things. For those of you who have been following us for a while, you would know that we moved our entire network onto ABS, which is essentially a work order system, and we standardize that across all of our locations, including Canada. So we are all operating on 1 platform across all locations, which gives us a great ability to do things quickly inside the company if we want to make changes, if we want to adjust the way that we operate that allows us to do that. So we feel really good about the operating platform. We have a great IT stack. So we already feel great about the systems that we have in place, and we are very pleased about that. Where we're leveraging technology is really for our customers. You might recall that we launched a world-class portal that our customers are using to do quite a bit of self-serve and management of their accounts, and we continue to evolve that portal, and we continue to add new features, also spoke about our on-time delivery notification, which allows our frontline teammates that are serving our customers to also notify them automatically and electronically when we provided that service so that they have that information at their fingertips. And so we're really merging the technology stack that we have to create new initiatives for our customers that are creating a positive experience. As it relates to our plants we are just getting started to be honest with you. I think there's tremendous opportunity to continue to optimize the layouts in our plants, the flow of product through our plants. We have good technology that allows us to look at labor productivity and to understand our teammates productivity in the facilities, but there is great opportunity to create better lean layouts and footprints in those facilities, and that's not even a part of our current short-term plan. So more opportunity to come there in the future.

That’s very helpful. Thank you very much. Appreciate it.

We will take our next question from Tim Mulrooney with William Blair. Please go ahead.

This is [indiscernible] on for Tim Mulrooney. Thanks for taking our questions today. Maybe just to start here, one on guidance. Curious for your 2025 outlook, what the assumptions are as it relates to underlying performance in your Uniforms and Workplace Supplies categories? And should we expect performance in those service offerings to vary at all across our US and Canada reporting segments?

So you're referring to the mix, look, the mix of workplace supplies versus uniforms?

That's correct. Yes. Just kind of expectations for performance there as we move through 2025 year.

Sure. We expect -- in terms of overall mix, we expect the mix you're seeing to sustain itself as we continue to execute the strategy on cross-selling. Where you talk about some of the national account pipeline and even our field sales, you will start to see Uniform wins pick up and therefore, you'll see some growth in the Uniforms and Workplace Supplies. But we do expect Workplace Supplies to continue to outpace Uniforms.

Excellent. Really helpful. And then maybe just switching gears here. Obviously, you guys have seen some really nice improvement on the customer retention front. I noticed a comment in the slide deck around improving frontline employee retention as well. Maybe you could just speak to that a bit, perhaps how employee churn has historically trended and maybe what you've been doing differently now to support better retention on that front line.

Yes. I appreciate you noticing that. We're really proud of the work that we've done to take great care of our frontline teammates. We have made significant strides really over the last three years, but in particular we had step change last year as it related to employee turnover. These are our outstanding teammates that serve us in our plants and serve our customers and our plants on the front line as well as our route service representatives that are out delivering and taking great care of our customers every day. So we need to be taking great care of them. So I'm really pleased with the way that our leaders have embraced our frontline teammates. We have started driving engagement processes. We're seeing very good performance related to employee engagement. And we've done a lot of things to make sure that our teammates know how valued and how important they are. And I can tell you, in this business model, the best thing that we have and the most important asset that we have to take care of our customers and our shareholders is to take care of our teammates. They do the hard work every day. And so we are really putting a focus on embracing them and engaging them and making sure that they fill valued inside the company. We are also improving training and processes, though I talked about some of the training and some of the things that we're doing around standard operating procedures and people thrive when they know how to be great at their jobs. And when they feel empowered to do their job and if they have the skills and resources to do their job. So all of the work that we are doing around standard operating procedures and training is also helping engage them, which is causing the turnover to go down as well. We've also installed new leadership in our field under our new COO, and we also moved to 10 regions, as I mentioned with our regional vice presidents now having smaller spans of control. All of that is allowing us to better engage and touch our teammates and make sure that they are driving inside this organization. So we're really thrilled with the progress there. Thank you for pointing that out.

Great. Thank you so much.

Thank you. We'll take our next question from Oliver Davies with Redburn Atlantic. Please go ahead.

Yes. Hi, Kim. Hi, Rick. Two questions for me. Can you give as an indication of the gap between the sales force productivity in the region that you described best class or best-in-class versus kind of the average across the company. And then the second one, you mentioned some momentum on the national account side. So can you discuss the reasons you are having better success here? And if there have been any changes to your pricing strategy?

Yes, for sure. So we'll start with the frontline sales productivity that we spoke about. It is significantly higher multiples higher than what we have seen historically. So I will just let you know, it's a dramatic step change what we are seeing. And in fact, one of the regions that is hitting that watermark is also a new field sales leader underneath Pete. So Pete has brought in some additional resources and leadership as well. And so we are really seeing transformation happen here across this frontline sales team. And so I will just tell you it is significant and meaningful. So once we are able to institutionalize this as we are working to do, and we will see all of these levels stabilize and start to rise which is great. In your question related to what's happening with National Accounts, I mentioned in my prepared remarks, this was not a focus for the organization pre-spin. And what I arrived here, I was really kind of surprised to find that there was not a strong understanding of how important volume is for Vestis. And so when you understand that you have 35% idle plant capacity and that pushing volume through that system is going to create massive operating leverage, you quickly grow to value the volume that you get from National Account customers. And I will tell you at first blush, if you look at it very tactically, you might assume that it is not as profitable perhaps as SME business. And when you understand the attribute of density and the contribution that National Accounts make, you get significant value from that volume. That is -- those are very valuable accounts. Because our team did not understand that, there really was no focus or pipeline on new business for National Accounts. They were actually not out hunting National Accounts. We've driven that education and that understanding across the organization now regarding how valuable these large pieces of volume are for our company. And we've put new leadership and we've renewed that team around hunting and winning National Account customers. So we have developed a strong pipeline, and we are marching through that pipeline, fostering those relationships and closing those deals. I mentioned two great wins. In particular, one of those was a new win, a new logo around National Accounts that we believe will be potentially our largest customer over time. So great, great progress there around engaging the organization to hunt and win National Accounts.

Great. Thank you.

Thank you. We'll take our next question from George Tong with Goldman Sachs. Please go ahead.

Hi, thanks good morning. You mentioned pricing will be a positive contributor to revenue growth in fiscal 2025. Can you elaborate on how much pricing you're embedding into your guide? And when you might expect pricing increases to begin exceeding input cost increases given your service quality initiatives.

So we won't give exactly how much pricing is in the guide. But we -- as we talked about, it definitely flips positive as we lap the impact of carryover pricing and so it does have -- it's a positive contributor to our guide in 2025. It is important to note that we have continued to note that we continue to take price, you saw in your pricing in Q3 and Q4. We will continue those actions very disciplined and not as moderated because we talked about moderating our pricing in the back half of '24. And so pricing becomes a positive contributor for the year. We do have front half carryover -- 2023 carryover that will create a headwind but expect positive net pricing for the year?

Right. And the second half of the question around when you might expect pricing increases to begin to overtake input cost increases?

I'm sorry George, can you say that again? I couldn't quite hear what you said.

Yes. When you expect pricing increases to begin to overtake input cost increases? So things like wage inflation, fuel inflation, when you would expect those price increases that exceed your input cost increases?

Yes. So without specifically talking about when those lines cross or when pricing fully absorbs inflation, I think that's your question. We are just continuing to focus on earning the right to take price, which we feel very confident we have done through our service initiatives and the work that we have done to put our customer first. And so we will continue to evolve pricing over time, we'll continue to take pricing as appropriate with our customers, and we feel confident that we have a really solid plan in place to absorb inflation, to take price as appropriate and also to drive cost out of the system as appropriate. I spoke a moment ago about the significant cost takeout actions that we've already implemented this year to set us up for success, and we will always continue to do that as well. So I think it is a healthy balance between price increases and also self-help and taking costs out of your system appropriately to make sure that you underpin your commitments and drive the numbers that you need to drive. And that's what we are set up to do this year. So it is a healthy balance of cost takeout that's already been executed as well as pricing actions that will occur throughout the year.

Got it. That's helpful. And then with respect to customer service, approximately what proportion of your branches is hitting your desired goals? And how long do you think it will take for the rest of your operations to achieve sufficient service quality?

Yes. So we have pockets of outstanding performance. So there are opportunities always to improve, and we will do that in every location. But I will tell you, we're seeing the level of performance rise across the system with particular focus on those locations that are underperforming versus the norm. Our goal is to raise the entire bar for the whole organization. We're seeing that happen on-time delivery already. I mentioned the measurement system that we put in place as well as the notification to customers just by driving that level of accountability, just by everyone knowing that we have an expectation that we're going to tell our customers how we performed is already raising the level of performance. So we do have some aggressive goals for our team, and we are starting to see them move in that direction. So pockets of outstanding performance. pockets of opportunity. And across the system, the whole system is rising and the level of play is getting stronger. So I would just say we're going to continuously improve across the board, and we are doing that.

Thanks very much.

Thank you George, for your questions.

We do have time for one more question. We'll take our final question from Andrew Steinerman with JPMorgan. Please go ahead.

Hi, Kim, I actually have two questions. The first one, I still don't fully understand when looking at your fiscal '25, you are looking for enhanced client retention, positive realized pricing, improved new sales and cross-selling. But when you talk about core revenue, excluding the one-timers, you're just looking for 1% to 2% growth in fiscal '25. And let me just give you my second question. My second question, you caught my ear when you talked about kind of tactical selling strategies for both targeting competitor business and converting nonprogrammers. I was just hoping you could elaborate on this comment a little bit more, particularly about the competitive environment.

Yes, absolutely. So we'll start with the price, and I'll let Rick come behind me with some numbers as well. But it is important, Andrew, to remember that we have some pricing headwinds in the first half of the year. So some costs that we are battling where we had some pricing that rolled over from '23 into the first quarter and beyond of '24. So we are lapping those headwinds. And that's part of the reason that you're seeing. If you look at the macro level, excluding those one-timers, you are seeing a lower growth rate. But when you carve that out on an underlying basis, you are starting to see good growth emerge inside this business, and you particularly get to see that as we move into the back half because we lap those comps. Rick, anything you would add to that?

Sure. Just based on the disclosures that we've given -- we've got $37 million net carryover pricing in 2024. And if you split that -- the back half was negative due to price erosion, the front half was positive. And so it's that front half positive that we have to lap and again, just looking at our disclosure, that is about $57 million in the front half and a negative $20 million in the back half to get you to the $37 million. We are talking about the $57 million but we do have in your pricing, and we will continue to have in your pricing, and it will be a positive sequential year-over-year pricing impact. And so you'll see that come through the numbers in the back half, but it's at $57 million, net $37 million that we've got to kind of lap here in terms of net -- what you're seeing in our year-over-year growth. But sequential, we're very pleased with what you're going to see from a pricing perspective next year.

And then, Andrew in relation to your question around our tactical selling strategies and the great work we're doing to train our team and institutionalize those processes, we are being very, very thoughtful about how we are competing in the marketplace with really strong go-to-market and value proposition strategies for customers that are already rental customers and being served by one of our competitors versus customers that are non-programmers and we're selling the value of our rental program. So we've really bifurcated our focus which is really allowing us to perform incredibly well with both of those audiences. And so we are competing and winning new business from our competitors and we are also selling the value proposition to nonprogrammers and converting those as well. We're seeing a really healthy balance of competitive wins as well as conversions of nonprogrammers. So we really like the state of play, and we like how we're performing and competing out there in the marketplace, and we're really excited about some of these wins that we've been bringing home of late. So more to come there, but great progress.

Appreciate it. Thank you.

Thank you, Andrew. Appreciate you.

Thank you. And this will conclude today's Vestis Corporation's Fiscal Fourth Quarter and Full Year 2024 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.