Why is the net loss small despite positive operating incomeâwhat are the nonâoperating expenses?
Short answer
- Operating performance:âŻVestis generated $25âŻmillion of operating income in Q3âŻ2025, meaning its core business (uniforms and workplaceâsupply services) was profitable.
- Net result:âŻAfter everything else is taken into account, the company posted a net loss of $0.7âŻmillion.
- What bridges the gap?âŻThe ââŻ$25âŻmillion difference between the $25âŻmillion operating profit and the $0.7âŻmillion net loss must come from nonâoperating itemsâthe costs and losses that are not part of the companyâs regular operations.
Why the net loss is only a small loss despite positive operating income
| Item | Approximate impact (based on the numbers given) |
|---|---|
| Operating income | +âŻ$25âŻmillion |
| Nonâoperating expenses | aboutâŻâ$25.7âŻmillion (the amount needed to turn the +$25âŻm into â$0.7âŻm) |
| Net result | âŻâ$0.7âŻmillion (loss) |
Thus, around $25â$26âŻmillion of nonâoperating charges were recorded for the quarter, almost entirely wiping out the operating profit and leaving only a modest net loss.
Typical nonâoperating items that can produce that ââŻ$25âŻmillion âgapâ
The news release does not spell out the exact composition of those nonâoperating costs, but in a company of Vestisâs size and capital structure, the most common sources of such a swing are:
| Category | Typical items that could be present in Vestisâs case |
|---|---|
| Interest expense | Debtârelated interest on term loans, revolving credit facilities, or bond obligations. If the company carries significant debt, interest alone can easily run into the $10â$20âŻmillion range on a $290âŻmillion liquidity base. |
| Debtârelated amortization | Amortization of debtâ issuance costs, netâinterest expense, or any covenantârelated fees. |
| Incomeâtax expense (or benefit) | Although a net loss can generate a tax benefit, the preâtax loss (the net loss before tax) must have been offset by a tax expense (e.g., nonâcash deferred tax adjustments, or a oneâtime tax charge). |
| Impact of foreignâexchange (FX) movements | If the company has significant overseas revenues or expenses, a change in currency rates can create a foreignâexchange loss that is recorded outside of operating income. |
| Nonâoperating (or other) expenses | ⢠Asset impairments or inventory writeâdowns (e.g., a writeâdown of inventory or property, plant & equipment). ⢠Restructuring or severance costs related to organizational changes. ⢠Legal settlements or litigation expenses. ⢠Gains/losses on derivatives or hedging instruments that are not considered part of operating earnings. |
| Shareâbased compensation (if accounted below operating income) | Some companies expense stockâbased compensation but record it in nonâoperating items for reporting purposes. |
| Other nonâoperating income/expenses | Oneâtime gains or losses from (for example) disposal of assets, investments, or the amortization of intangible assets. |
What it means for investors:
- The operational health of Vestis is solidâprofitability is coming from its core business.
- The small net loss is largely a financing/strategicâcost issue that does not reflect a failure in the core operating model.
- Because the nonâoperating hit was roughly equal to the operating profit, the companyâs cash flow remains healthy (operating cash flow of $23âŻmillion, free cash flow of $8âŻmillion) and it still has $290âŻmillion of liquidity (including $24âŻmillion cash). This suggests the nonâoperating items are mostly accountingâtype items (interest, taxes, perhaps a oneâtime gain/loss) rather than a cash burn or ongoing loss of core business.
Bottom line
- Operating income (+$25âŻM) shows the core business is profitable.
- Nonâoperating items (~â$25â$26âŻM) wiped out almost all that profit, leaving a modest net loss of $0.7âŻM.
- While the press release does not detail the exact items, typical contributors (interest expense, taxes, foreignâexchange losses, impairments, or other nonâoperational charges) would explain the gap.
Investors should therefore focus on operational performance and cash generationâthe âcoreâ numbers are positiveâwhile keeping an eye on the companyâs debt profile and any extraordinary items that could recur in future periods.