UNF - Earnings call transcript Q4 2017

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Steven Sintros, UniFirst’s President and Chief Executive Officer. Please go ahead, sir.

Steven Sintros

Thank you, and good morning. President Executive UniFirst's Sintros, Steven and Officer. Chief I'm discuss all Corporation's quarter conference like and full to to UniFirst you welcome to XXXX fiscal fourth I'd call forward. to review results for expectations our going year and our of new [Operator my this is since leadership position at may my Instructions] you know, earnings first As call many executive accepting UniFirst. growth humbled Board And I'd excited opportunities by have our of been our for and to lie company about like to team our that the and say for ahead XX,XXX so honored I'm partners. very Directors, both I'm and recognized employee

discussion XXXX full at fiscal our X.X% full UniFirst results. year up the year in factors. XX-K anticipated that future to Before variety performance. set I respect record and forward-looking estimate, with these disclaimer. to that overview statements subject anticipate, like forward-looking risks views quarterly performance. the risk financial year. reflect now future a from These future from to intend the Actual Securities trends I and with views of I provide expect, filings And statements our give and future optimistic, contain factors our This our the results reflect of billion, an to a to company's These will refer Commission. current those The statements that are forward-looking depending risk most of go brief recent expressions further, identify current you forward-looking I'd I'm and that with pleased and may indicate materially company's may words believe, a financial differ events statements. conference uncertainties. $X.XXX and report prior and call respect certain to events for on XX-Q events Exchange similar revenues and new

All included acquisition XXXX positive our Uniform. of of Arrow to which this growth, the segments strong our operating contributed of effect September

included some discuss our our our year side, systems will charge shortly. quarter previously announced detail and CRM fourth impairment results in related to more full $XX.X I ongoing the On profit which project,

impairment of full this our Executive share our of acceleration guidance. diluted the disclosed our exceeding was quarter, earnings compensation revised the Chief passing to $X.XX, Officer, per original and Excluding as expense which last as year related we well former stock subsequently both

customers our hard donations company-wide for work to with are North staff who and pleased We whom and results and deal a partners of overall and were loss shift as members the thousands also impacted for assistance reconstruction. many Europe full service the and throughout transition and company want their I loss our to America team experienced financial for helped our year. up thank to produce the fiscal with in given smooth partners to Texas continue the both Florida, with of that thank want while America, mourning our CEO, continuing Central longtime a year while challenging expertly of results, our Croatti. team America devastating contributing throughout we many hurricanes stepping for to I for sincerely all North leadership solid Ron our by of of supporting

or last of fiscal the the reported was $XXX.X per fourth $XXX.X loss $XX.X quarter. million net $X.XX services during to need. partners, receive encouraged the Revenues the $X.X others XXXX. year's continue As products from period share, down in share or reported quarter for quarter Net million customers team but not our times answer loyalty our in the helping the in our million same step difficult from sure we're were up who $X.XX a always of XX.X% also million up making and income by company, of in only call fourth their always for per and times,

million of the to the share, the adjusted quarter. results impact quarter net was per fiscal year prior ago. that litigation year, up of impairment income from XX.X% the prior fourth to our a $XX.X recognized $XX.X per are disclosed exclude fourth period the results $XX.X prior share adjusting $X.XX Excluding settlement $X.XX the adjusted year charge, diluted we income of gain the we million net comparing million that for of for environmental When effect in or the year or quarter diluted the in

was business, Our growth Core X.X% our grew during at of X.X%. was Laundry achieved XX% from impact Arrow. make effect of Adjusting be Core million, $XXX.X Laundry to and up quarter. on of quarter primarily acquisitions, reported revenues the revenues which the total approximately of estimated The acquisitions for revenues last Operations, to acquisition up estimated our XX% fourth for year's related

quarter to as well as – the year benefit we reductions from During on as adjustments improved adds continued charges. a improved and merchandise a over recovery to collections well as ago positive price compared price positive

quarter when taken sales adjusted positively due the million the impairment operating to $XX.X mentioned comparison environmental quarter, fiscal positively results. adjusting impacted new charge was income income an environmental operating year. as increase income, the the prior of exclude to in the customer Laundry operating well the operating was earlier, million after lower the X.X% to compared Laundry for adjusted adjusted increase a XX.X%, operating retention prior XX.X% Core in down Company's to of XXXX the overall addition, margins in the of and of was reserves. for fourth when year $X.XX adjusted slightly In of margin settlement as trended by charge margin The litigation. Core from from effect the expense XXXX's a

a the income Core X.X% care, claims Energy acquisition. our increased Operations as the auto impact workers' from in as fourth as margins of of offset also Arrow compensation lower slightly the year were expense X% nuclear the ago. period to improvement well from quarter specialized reported Garments and of revenues. costs same positive segment, as quarter in liability over from last Laundry These compared Specialty our XX.X% year was of delivers Uniform to quarter revenues same from comparisons services, fourth for health and million lower as well operating an quarter. percentage products And stock and a ago. the which year's higher cleanroom benefited $X.X of Revenues the fourth revenues million, decontamination compensation $XX merchandise the to by a levels the addition, $X.X increased million costs in In for

in due As projects timing The of reactor results to other quarters, seasonality was outages in we've number in outages from that vary specialized can and segment's past ago results Canadian compared period year scheduled mentioned well the of as services. the driven operations. nuclear as improvement to in solid a increases U.S. period and reactor projects significantly and primarily our to segment's by the require this nuclear-related

a Our reported of period $XX.X the million million and income were revenues XXXX. that in presence to segment $X.X and and our First by million $X.X million, the same area. in $XX.X compared Aid third strong improvements quarter strengthens performance respectively, market of for quarter business the and These operating fiscal for Georgia aided business the distribution service acquisition the wholesale the and segment's in Atlanta,

the million. first equivalents million million the of fiscal year in of fiscal first down $XXX.X solid our days end million, decline operating also interest our the cash accounts same sheet balance profit to operating activities provided which $XXX.X the position. $XX.X activities was XXXX. quarter by in year quarter categories the to at the financial accrued was of income, operating all offset was result XXXX cash increases investments higher at the flows UniFirst Arrow increase the end changes referred within and litigation also $XXX.X the million year. the working and continues in of period cash receivable of during and from income due and $XX.X exchange primarily other the Our an of were quarter than foreign to is in of $X.X increase in the revenue from and from in prior by result million provided a cash higher prior maintain receipt fourth year our a when outstanding. partially gains. compared of ago, cash benefited prior by comparable impacted acquisition the the was This the accounts to comparison to settlement by an related sales result earlier. environmental our expenses This reported in $XXX.X Uniform totaled payable capital Several segments short-term different Benefits primarily million increase overall growth and quarter. from operations Cash to

increased of the cash has outflow Arrow, the have cash would our United $XXX.X by balances $XX.X and Excluding investments intended million on the for million. subsidiaries by our future foreign hand, been Of closing accumulated expended outside States. cash for

our future and that new us long-term year, million fiscal full meet as continue additions, we to in help $XXX.X expansions, expenditures automation For totaled the objectives. invest strategic facility capital systems will our updates with

opportunity the come will and between our earnings between full provide As always, fiscal outlook We share year year year. $X.XXX take XXXX I'd this like to in and we for for diluted expect next billion our billion $X.XX. be anticipate revenues full and $X.XXX per fiscal to to $X

top Additionally, we also segments. for Specialty organic in It expect our top million. Aid and our Laundry X% and to assumes line come X% growth First of Operations. to an line also capital expenditures at X% rate for assumes guidance X% for approximately Core between $XXX fiscal The XXXX growth Garments

Core XXXX a do revenues, to result operating per earnings On of does and diluted be share We the Texas of the a million at business We estimate approximately be fully as approximately by Laundry impact XX%. estimated to just this hurricanes assumes include margin that that on guidance per and reduced our want in share the profit note hurricanes. $X.XX over $X by this these guidance Florida. side, of fiscal will midpoint, will $X.XX reduced the

our markets overall move and in that rebounds we overall into XXXX, factors be both Low positive market in fiscal results. line for for some an environment see for should our rates energy-dependent should company. solid allowing top we As growth allow unemployment

also fiscal are which Arrow of to continue larger integration the expect be XXXX. in business, our to a contributor We will excited Uniform we the profits

costs impact side, some through to minimum items expense to next also impact environment. laundry continue year. the current overall a unemployment we increase result revenues. On in the expect as plants on low costs energy a as Payroll markets energy increase, we wages in well move margin our as our the of of as of are in an Based do many prices, increasing percentage partially we modeling the

with continue to deal increasing health costs. We care also

fiscal have As of through XXXX, the discussed health half we costs. care second

significant through As our large of a fiscal discussed health care we costs were in headwind part claim have the XXXX, experience. due large second to half

our projections be Although earnings a expectations. this currently from XXXX. area to area headwind in assume result results health care claims projecting point in can costs in basis difficult, in this fiscal our XX could upside Better

to XXXX, Our Specialty projected while increases Aid income modest decrease is First operating projected Garment is in segment a fiscal modest show income. in produce operating to

are At the well strategies. allocation light tax business impairment addition, well I CRM $XX about positioned generate acquisitions expected our Based project In Combined projections, to business, XX.X%. fiscal will I between to of as capital effective XXXX, like to make expect earlier. as in be existing investments spoke cash free exceed is company-wide in flows further fiscal and project available XXXX cash, expectations we to our XX.X% income we for would including in this elaboration rate our and to we our continue time on for additional which provide charge these with significant million. explore systems additional

communicated, to capabilities. we've improve CRM working company's previously overall our we've on As and project been systems modernize significant

few underlying past the due the has the to delays, code. with repeated experienced primarily of years, concerns project and stability Over the performance quality

from it's mentioned, input be project, and that implemented. system we on coupled As lead our with contractor, the no developing the longer that this include – the will outside determined were based that third-party probable the analysis we of CRM completed consultants

will to nor are current that that manner. a provide a we useful move to the I our partners, committed want the improve toward clear systems and functionality designed be us the customers' evaluating system will our other our make customers overall in want that and now result, continue us move be of expectations necessary as the said, expend fiscal robust technology-based most options to ultimate are does technology benefit forward our but goal to through serve also for to elements As I settle and of functional, resources simply with XXXX, and to efficient the UniFirst's to customers not to high-quality team allow developing in the continue a we for not our we initiatives. well. reliable we service. success meet clear, of and investing we'll continue ensure That employee to help this it system

service and us our be not will primary which questions only will prepared that to make addition, and being remarks, in happy help any top to objective our recognized you people the in investments will processes, of technology, my but completes This we as provider continue In might we achieve the have. industry. now answer

Operator

from [Operator is with proceed. Instructions] The Box the question KeyBanc Capital Please Joe line first of Markets.

Joe Box

Yeah, hi Steve.

Steven Sintros

How are you Joe.

Joe Box

ad noted quarter, quit looking comps and obviously, was least in of we're half first forward rolling easy that XXXX. the So the you at for positive at the FY and

the why uniform just Does if X%, in hurricanes? especially be only curious the from could put that around So in organic growth is maybe to going headwind more rate factor does you to the Or about some color that not? X% side.

Steven Sintros

the headwind the in hurricanes. So it factor does from

as the to organic in first projecting, our of the year. the some growth of for the overall least growth X% of you'll the I at based second that half on of And the the the show will organic the see second progresses toward half higher year, year, X% trailing the half year. think strength be we're there'll year as of growth

that you're think year than are and easier the first in right, will the I the the of second So of half half show comps through. the year,

than I with but the be the landing forecast. during we're year. we think performance versus hurricane of of a positive slightly impact, the the quite better prior where were is were some the quarter to said putting that, just compared on clear comparisons And bit quarter, adds year. the negative the fourth to the was on reductions, They us combined net prior the

So I just that. wanted to clarify

Joe Box

an normally quit sequentially it Is softer ad on in basis XQ?

Steven Sintros

a improvement. bit the But stronger have tick-up to In regard. the And put bit tends little year-over-year be meant that to to light quarter the was negative usually does in a that quarter the was little first of in fourth in comment a side. reductions there

Joe Box

to if I clarification the a could we looking here. go was just and okay for Right, claims just side,

XX bit So getting you're here the are claims there's of to Or headwind at maybe level basis that for the about are year, a point in next think net that a you on you headwind? overly little where running baking conservative that expense? actually when safety

Steven Sintros

the I during the fourth quarters too health Joe, think increased through two anyway, fiscal is really weren't the claims, the side And wildcard there, bad. of and first quarter. the they dramatically XXXX, on third

that's some then peg, and to there another in first in next coming first So on be really quarters run item that would full second year, quarter fourth a full in now. to what could a back with basis. result year an obviously, year, second and upside. fourth But year and overall rate of increase year difficult we little at ran If overall expenses bad. our this third not a quite than we've for of weren't the is third for we're higher moderation if right and bit Said our a because the it higher quarter lower it's way, where the quarter, there next but built and year lower that's

Joe Box

left be big M&A these curious a here? only within Just that rolling? now be update where by of balance competitors, the you course, AmeriPride out will switching there there? did cash the seem Of pipeline I'm with names uniform assets. moving Obviously, like period consolidation. space were inclined the getting ball Or out you through now an of so is two a gears, the guys kind buyers backdrop. but to taken more and guys helpful. stand it you Are kind And is started of rapid G&K of Arrow, the that on XX% Is does

Steven Sintros

the those names Sure, left I out were certainly biggest mean there.

still still certainly to out the some available, midsize level to AmeriPride. is think that for right making there think side I certainly buyers. Arrow larger there's in in companies targets and we're look And deals we're still of smaller of we pipeline the and at there us. I the and not think a interested but Certainly,

as it depend opportunities. what other divest we always will sort as in But them desire to the And are families looking the for landscape of will at we be always, those those available, point of time. makes targets think on industry does at that sense have I change of and the what somewhat. the

So a that, don't it I takes certainly large changes but think this off the list. player

Joe Box

Lastly, as your Or above guys to obviously, just a Is down important what the deal for much more breaker multiple? it current they like criteria you there are follow-up that, factors mean, I what a are? you multiples to when kind nail are the of pay most important are.

Steven Sintros

other are presented stringent was that to we would factors, our traditional the right we for if or think would we so us and I upon, think along hold there multiples came that but to came that it. I stretch don't be to deal

think I saying. so And that goes without

Joe Box

you Thank Steve. it. Got

Steven Sintros

Thank you.

Operator

The with next Wittmann Baird. of Andy questions proceed. comes from the Robert line W. Please

Andy Wittmann

morning thanks. Great, Good Steve.

Steven Sintros

morning. Good

Andy Wittmann

I guess, bit. building a last question on maybe just the little

talk your might of or and landscape that out of can more pricing guess affecting the it the mentioned to thoughts terms to not ability that, from rationality, that's been those I deals. go in new get price. customers may that guess, of having? AmeriPride disruption about the the you're some to Now something as shake be to competitive with to after curious you players? Can also or have is ability your deal expected you're be today? this that else as the any Or I'd integration deal loose to seeing pricing two in a G&K combination together you getting may for you remarks change of prepared those Cintas the attribute I while, that that

Steven Sintros

the that's in pieces different we through G&K seeing and country question across so markets of in Cintas would are think. I being approached their work activity different the speeds different of a and Certainly Sure, say. and that different at lot ways I integration disruption, with probably levels to of

out dynamic are The certainly has changed. that. we so of come opportunities And seeing

trying think some advantage vendors same I go now combined options. and do – AmeriPride to the have think other in position of experience the all those and industry expect to been with, to with ourselves Aramark able left of that we'd that, for the when some and And they we've vendors. companies the take And customers looking to extent. with And we're the previously they experiences are with in customers I vendor deal. to were cases,

consolidation without that leave larger particularly will options, the regional think take it saying I that. players, and goes and positioned we're of I less to the advantage national for well think

In terms economic and tends environment transactions pricing bit the But may I some of environment, more impacted a think a of pricing. environment the probably to positive environment allow for to these think be pricing has that been being I by simply the extent. better also little

across increases cost terms these of will that certainly are areas appreciate, a lot wage these of Some think, overall, I in areas and challenges of country come that the prices you in with people minimum increases, up. can see payroll

those environment. price a consider all we reasonably think positive I So items what are impacting of

Andy Wittmann

or the hear things maybe diversified different them, could opportunities that to offerings have far. and your good the that a curious really approach look. fresh with had as services offer what now the is I'd about competitors maybe initial years. that service it's afforded the of about your end the growth of potentially what and eyes you helpful. see you of Thank have, even review seen your really the see to time really question your than to or as to more new through whether avenues innovation offering. Well, Clearly, in as they're kind been UniFirst a company. some the That you guess, level you. in a future I Their markets long your over past of putting could it company is, I one platform discuss desire maybe you've leader follow-up it's be your and so maybe here it's you the key I'd if turn. of assets guess like

Steven Sintros

industry, far, this may way think so of obviously, consolidation think a we have seen we what those lot do and of I in is opportunities. some the Andy, think to other the shape start I change about

the that's changed opportunities, to I continue terms the larger of plenty the game and in in think answered some think has generate that although, that may view when still that to is competencies the of we longer in not and deploy term still I core at past within grow anymore. and there the had extent look there in the be you question, I cash industry our which to our prior capital. as case, been opportunity mid-to the to And

turn myself we the our be think challenge what diversify whether been think, because strategy corner direction, haven't and the to And board competency. our more still the ancillary we areas the I of reputation on provider. more and we migrate closer other to that strong provide at those that today team in terms those areas some what other move being we're our naturally, doing, opportunities. of focus think a and industrial shape in acquisitions, health think I but about mean, area core we execution so I may when we care overall that I thinking some had to But area in marketplace have to solid strength more focused I our our historically other near area into can't say tenure start to linen do as and still or on look could even term are a that talk opportunities. our true along. lies I we service the here into an is in of started will in as management it the likely the the a that certainly or and different continue it will right to opportunities

terms our pushing stability, it's to investment to and – sure. for we on back still make terms the still near are opportunities, to there that things sales, need improving of to we'd be we the the to and in be. lot of were us get the to be technology think in always more I in of improving speaks term, to and at that mean, think which where docket need looked execution really that turnover making migrate like I we're continue our In there's improvements to where retention, change, execution going a of

think game, So the going it's things of new early strategy of but be all I in part those forward. will our

Andy Wittmann

I'm But types helpful. one jump follow-up things to really just and replacement. queue. these update back on Helpful, going ask CFO an in more on maybe here of the search for your

your I'm like that You've be what lot you'd going? around up got How's a much as on timing investors table to sure the certainty you is your think it now, there? shaping like right and as the And do would one. that

Steven Sintros

Yes. working process, would the we're something we have talk and but the to now time I through expect something right that by It's there'll announcement in an make I next not place. on, certainly be

Andy Wittmann

Great. Thanks lot. a

Steven Sintros

you. Thank

Operator

Next proceed. line Please with John the Healy question Northcoast. of from

John Healy

would for you or cause out that kind kind decelerate healthy. year? what component see of trying do just softening organic of it, to mean, growth I'm to midsize backdrop seems things understand side want organic growth of revisit growth XXXX. things. the fairly hear the commentary rate the to When The on businesses talking positive maybe you I look I you're positive seeing Steve, at competitive about of environment, some just for you. I Thank of leveling I the the kind small add rate stop to is of this guys

Steven Sintros

and environment, we slightly of And in I a which, had done price improving pricing the well price years recovery has contradictory area larger billings. in the this in but as said component industry, what about XXXX over the to our charges, become is well as merchandise the our maybe

better of comps trail-off impact some oil being of amounts of some the reduced. the really that those and is And from

area some be up next charge built had comps we And strong So year the of and that more some may as we that regard. in year. there into pricing difficult pretty move in back a extra

retention even to to was just like think over drive to improvement execution. slight the on would that really drive other I XXXX, better. We number continuing that. year areas, about like This we'd continue and really the a it's

but don't coming came right where really particularly where trajectory now. in I over we're how any course revenues think out the So the and at that's the the looking there's concerned year of areas we're the comps, about, and

John Healy

think planning company should the maybe Do you returning returns? allocation of the just standpoint. maybe Okay, on fair past? I deploy business a view I'm think capital the structure to wanted know I you're former set CFO a company. but being capital? now I you some with the a mark on And you're the CEO, shareholders that were that company for but then just enough. putting hey, to capital be say, of ask capital about think how and you're you – And maybe maybe in your just wanted make leverage company a do than at there of comments you how new shareholder Do looking optimal how the driving look at trying eyes, higher this now just the to about not the in ask, you fresh it's to priority might role, how something made the from and

Steven Sintros

Yes.

for something and know we'll I helm, look Ron that's a in a a think years that probably of been pretty closer than at a certainly at approach commentary I that's the take with the reasons. has Ron conservative and past. number over common deployed been question the

change a can more we I that some that well-defined including likely myself, certainly in and area. level, be I of expect the think or that's will a more strategy board strategic think at discussion something

the around as as generate we opportunities also table. continue I there in cash well at off coming factors the to think least commentary the acquisitions the in terms of strong larger

ongoing specifics I think will any at the it into migrate something time likely getting regime. the discussions new these under without level, So here over because is board here that are

John Healy

for question a And me. one Great. final

the well? to Is quarter mentioned of be second into as you storms. reasonable quarter linger does Or that all it think here? $X.XX with expense $X.XX I associated expect will to the first the it of that in

Steven Sintros

those some a as certainly portions just Florida, of amount the the referenced, Texas markets particular, in it first in due customers not fair Well, effect coastal the are base lingering area soon. the of customer that that million anytime because, there certainly aren't well both is as really, make the to quarter, lingers to back, there revenues fact it Southern but $X there's in that I going a in

drag assumes that we little back. of a a that bit of see sort term coming customers longer – right now some So don't don't from

John Healy

Got you. you. Thank

Steven Sintros

you. Thank

Operator

go ahead. Andrew next of Our the question line Steinerman JPMorgan. Please with from comes

Judah Sokel

Steve, you Hi, start new wishing it's congratulations by role. Judah Andrew. I to actually and on on off wanted the for

Steven Sintros

you. Thank

Judah Sokel

first is CRM who could for vendor system question My you're using us remind you the is? the

Steven Sintros

primary the we've was the vendor IBM over years. used that

Judah Sokel

Got that I quarter's could little hoping growth. the organic it. was maybe a bit dive we Then into

on organic You've some quits ad driven quit able given you're willing, versus how you and the us pricing. much whatever by could extent of quantify pricing, growth rental ad cetera? that new and retention, definitely business, To commentary et in was

Steven Sintros

we're accurately to point, for It that to items in not can this basis right a our get going of think, reasons. a the of continue number At the components Yes. portrays buckets those quarter-to-quarter be of the tradition story. that a I way on difficult individual growth, delving into into

the in in been X.X% quarter range. I is row a X.X% second think this to the we've

second part that. I been items the positively. recovery trended strong But some all helped element think of the charges of year, the including merchandise really, over have pricing there's that the of

areas really in going of And down that contributed, but into was so think the all we're breaking the uptick of the pieces. to it I not go an

Judah Sokel

enough. fair Right,

guess seen landscape sort of you now terms So sort this of shift from them from winning is new mix horseback in the Aramark. in Have you're winning maybe the and terms greenfield and shifting of in question away the any that Cintas the business competitive and of and a G&K around to new versus the just competitors? I business, wins also of

Steven Sintros

I'd say dramatically a mix. sort shift from from competition little bit but historical slight a more of our not

Judah Sokel

my Got a how are it. could you give comment doing? the And regions energy on question, perhaps final

Steven Sintros

not back slower and adds a dramatic just market. you've show of are areas an City regions up, has sort with some seen I it's to a perspective, in signs the to burst It's the same West It's and levels. rig slow. of little of think Texas, energy Texas, other Corpus positive thing back in Canada. been Western that some back, little pushback to the prior of particular, starting that – that any But have side from life. reductions into come giving a coming to in of in Oklahoma wearers There area. there work been are counts Christi going other are

smaller I they're they some higher it's wearers we're up So not pockets, were. to pushback But Certainly, stable. like levels. think in seeing reducing

Judah Sokel

Do just Specialty you Got growth one revenue it. for rates question, – handy the may. if for for have the – I Aid? organic and growth And last First

Steven Sintros

I don't have I handy that quarter, apologize. Judah, for the

Judah Sokel

Okay, no problem.

Steven Sintros

small There close impact is the that have Aid, For First Specialty, an reported it's don't I but growth. the number from handy. in we very to acquisition did

Judah Sokel

it. Got

Okay, thank you and congratulations again.

Steven Sintros

Thank you.

Operator

Our Instructions] Barrington the question line Kevin from proceed. Please [Operator next Research. with comes of Steinke

Kevin Steinke

morning. Good

Steven Sintros

morning. Good

Kevin Steinke

the you lessons roll talk So can that impairment out you now of off on still a approach, looking CRM through wondering on to maybe new maybe course went just forward what moving if you've system. mentioned, CRM taken informs learned a as little your how there, the that the and kind investment, system

Steven Sintros

Yes.

lot as we sure it why as sure the this of to have our trying going modifying business I system I these make much utopian larger into that, very seen are we'll probably to And mean, up this about probably some on give of say sure day, we something you've I path end and think won't involved probably at we're project as get the as right make into take on there, have ourselves move further lessons of that the than the learned involve customized activity you or and were, probably customized a the make after success. not trying think your our sure imagine. the there's with And particularly chance be amount that call build. a of is that take that forward you're being certainly business the execution. But at period I of projects, can we build won't we the end can of will lot away. we practices making to we there there can ones we time to But challenging. balance that for of code and for I system a – but just are continue to is probably details the things look and we're get time best is I fair that right

Kevin Steinke

might you Okay. for M&A sales take sales and kind how XXXX, some No, on how about about there of outlook make the opportunity? discussion disruption ramp that's helpful in guess, But the on what's investments Or opportunity. think that a up of and force? fair enough. the the Are activity you that the the going in to does going of to And the advantage lot with then in I also, present investing here investments force? there's fiscal industry been

Steven Sintros

our can Right and as have sort that need we I increases possible. make we're focus some really, modest in team But own now, projecting we sales sure of count. to capabilities making our on effective we think the as

more I necessarily the about think than effectiveness it's numbers. the

to continue grow, team. base as and we effectiveness successful, making that have make we and the I team sure the – now it's Although the a and successful to example, make new and we to those team more training our But for a the acquire do tenured we really investments team numbers a of areas. becomes to Uniform continue tools team we more think and effective right make of Arrow ramp we revenue grow, a have in needs particularly,

up to those to the So as I sure we're make effective we continuing to can just as ramping initiatives be really headcount. think it's as opposed drive being

Kevin Steinke

taking Thanks the Okay. That’s helpful. questions. for

Steven Sintros

you. Thank

Operator

the Please question of is line The Bloomberg Levine from next with Scott proceed. Intelligence.

Scott Levine

my for question. good Hey, and taking thanks morning

Steven Sintros

Sure.

Scott Levine

with merger Not more with you, or color beat G&K-Cintas and it – a not I'd a industry would change response America Is it give us to but maybe have on Is guess the been expected Aramark-AmeriPride whether with horse the closed, I material? the expected? market come since some material? the changes market may Maybe you in what little has line very more been to here consolidation, regard bit indication you deal. as the what the what to ask dead has in the

bit Just a more detail little there.

Steven Sintros

long expected. to think we companies tenured me, the Cintas I making think I your as own the through that excuse obviously mean, I And think – been acquisitions, experience, you're these I had and size, take in know going G&K of industry. our time. it Aramark, any acquisition

to transition. the focus the the You're with on and making comfortable customers customers going are sure

there more, think been has and expected And the be but I disruption, we've that some quality it depends there on of effort. and inevitably some think really and so I will pace and the integration success the

commentary period of approach So these to going I position think ourselves from balanced be we to some are do expect But can deduct continue that to you continue expect take the time synergies to companies you'd see the over which as the integration. to advantage opportunities. realized We'll take about as opportunities. to a of that of

care particularly these like does vendors, not a assuming, a were all previously. that there's They're, you play. uncertainty it's of event the be if that by prior vendor with of of So customers taken their under I'm contracts. add element trying huge in the sudden an with change, all but They're are to

on. are focus But the the those areas of think becoming focus the of care we best themselves. opportunities to said goals I in continue I our if earlier, like take will industry, on service we'll provider So

Scott Levine

than does today active, for two, pipeline. you ago at the service the you're still of uniform those areas? last was, more three less say it. it or Got Would two – that aside? you it's these looking to more One large focus consolidation suggest outside portfolio follow-up guys, deals on you're core likely laundry And the active on say, business years diversifying like one, potentially the M&A or

Steven Sintros

probably and few acquisition is years to the ago. deals, larger a the absent pipeline similar activity more think I

certainly smaller take significant large companies think happen I they see notice deals when at these independent multiples.

does interest. I their pique think that

about think or certainly, where of treatment excited people get the may tax individuals some I they law as have tax changes potential could more transactions doing companies. favorable

to those. be think I so we lookout for And continue the on

to As into far we time. of on I think to strategize something going growth, look as we're over alternative paths likely are that's more

years. future, next we I probably a next not does little think necessarily of XX some about look consolidation way months the maybe of the this but the change bit the five

I the to And probably it. way think characterize so that's best

Scott Levine

Got it, great. you. Thank

Operator

line next The from Blair. is go ahead. the of Mulrooney William with Tim Please question

Tim Mulrooney

Steve. Good morning,

Steven Sintros

morning, Tim. Good

Tim Mulrooney

there Hey, growth organic there FX the growth any some But impact of bit I impact that little questions of late, X.X% your is number? uniform I organic a jumped in apologize number or core if so to these on were answered. weekday business,

Steven Sintros

was biggest out speak called similar it our was and impact year-over-year. – a wasn't the is rate just because, really, obviously, We any It FX of. No. acquisitions similar very there, there to a Canada

so, into calendar to a of else our from anything And speak in extra have perspective, so wasn't we that week short. workdays. we have there no an years Only don't items, So our different comes every number play of. with five or other

Tim Mulrooney

Okay.

Or they headwind? a – is And acting as or Are tailwind a to they still tailwind. thanks. started that kind a markets? still energy continuing end a they Are about growth? as act finally I Okay, neutral to what guess of

Steven Sintros

the from to positive dramatic. subsided, think excuse – and but right get the certainly now. we tailwinds not a it, or small have I it's headwinds, It's pull too starting are it's me, some

Tim Mulrooney

last costs to as energy relative a up? about what sales of And percentage those Are Okay. year?

Steven Sintros

Energy were as current percentage costs a up quarter just the revenues. in X/XX of

think have I X% X/XX, next it up prices, headwind year believe, I was more because energy do have current baked a prices recently. to We come gasoline X.X%. into

depending that for well. an of as baked a now next So area year those in we on increase at, of little volatility. could But bit settle right where have be an

Tim Mulrooney

Okay.

expect about, think just when EPS that talk very the expect would've XXXX, really to EPS expected decline the of midpoint back in organic just integration to in year back you were biggest stock growth guidance. to or I for decline lapping step-up up, I comp, the EPS your Can fiscal step With Arrow suggests XXXX, grow guess, your me EPS helpful. to this guidance year-over-year you did step I EPS believe. The in Let lapping factors you you costs to that and us I that XXXX? XXXX. in to it was last you building up lead would

Steven Sintros

is of items some stability wage in from obviously, helpful low unemployment we in the increasing to about markets. a in script. customers. side talked minimum these some alluded our we And growth the So of our environment Overall,

labor, some is now. with it side, cost headwind providing labor wages the and On increasing of right minimum

in this So we area. about in a our excuse that a in. bit certainly health And half the opportunity better do costs. area care care if the That's moderation about, in is mentioned baked we energy basis in an costs that that performance talked in we were health the we one a to costs the of little remarks, increase we the – health baked me, XX of from areas our that just some some potential the we'd in second year, high wildcard. there's That's particularly of year. have If costs, certainly prepared

up a forward the XXXX course continue support my continuing trying we've some in will, addition, to systems and to as that we'll and well. project. of ramped that those ramped going IT as have will to year-over-year we at evaluation path talked to solution. of throughout fiscal time, a success evaluate of forward. headcount more about some ramp-up impact how cause get – In level we've headcount our And CRM on to a to And options continue the of hope our our over our will we indicate have script commentary for forward move that up and in path But toward commentary deployed our it the getting fiscal about corporate the XXXX, of resources as level,

really and volatility, the particularly and So health all larger care. some the areas, are subject they're energy those the costs to

Tim Mulrooney

one tech of more. tech or the with some Maybe about maybe you're but company, some reps into talk either sure, the plants, That's examples, where or the investing deploying on you the of Okay. system, I'm it maybe? not I'll very areas helpful. CRM sales in can end the Outside

Steven Sintros

Sure.

system in our of all – sales recently out sales prospecting rep mobile the we to sales On including side, technology. new new prospecting reps, a rolled

over their sales opportunities. their technology prospects be on them and converted So managing newer more our is whole effective force now help to should that

live we of fiscal year. with So actually beginning went this that the something at is

the technology bigger current in been of that that that center but There large shipping in in good we're the in And items transition, and will in the investments for of so help live year far, and nice we picking It some working of center, in going the with out items a us. new of so some have to we're automate investment and are a labor has made one soon a our plants, through facility. distribution Kentucky. coming that save automation is our return was the distribution successful and project

team And efficiency so we was continue to work areas business, some based all improving with service The partners. with. on center are there on and other taken on our stage around but unity invested things what success other the of in initiative focused it, being we're obviously going had having

Tim Mulrooney

Thank you. Okay.

Operator

ahead. with question is Box Joe Please KeyBanc Markets. The go from Capital next

Joe Box

for side. be is guys what just, going you labor just versus the just one Steve, function total labor how that expense help inflation? the provide headwind next higher say, me out, parse labor maybe margin of up of hike much minimum could And then on can quick wage wage you So general follow-up a year? Could

Steven Sintros

plant distribution large aggressive In unemployment example the centers I'll We points I to other labor. our of labor some includes in call labor, between wages. XX environment do it's a on XX have use – being of companies minimum low what have the which wage all and where local basis putting plant for increases. about competition cases, not a are, on breakdown I'll Amazon, and

always driving continued rates this tenure last good as we're move getting to couple level the the market our to service be right year we be I And to up. and items to as of have can one our wages have So as years, in competitive but labor people be what's they last mentioned well, to and the is make over it's and able labor minimum of customers. to try sure demand for the stability to just not wage that the

little color breakdown that the So of have more that, on a that's area. but don't I

Joe Box

Thanks. it. Got

Operator

go Andy The W. ahead. with next Please Wittmann from Baird. question Robert is

Andy Wittmann

get costs couple quarters? does hired? a will for of next here the be we Steve, going CFO continue deal to thanks. Great, the executive new are guidance that Or on to include the

Steven Sintros

baked help eventually. I'd figure some in I That's there, get Andy.

Andy Wittmann

but – timing the fiscal will it. the you what remind – compensation of don't adjusted us And Got of the first acceleration the a tailwind you plan, I headwind can guess, Ron's can remind stock the the just part for I us of out least at and that obviously, be you stock know. comp XXXX?

Steven Sintros

where first that me, deal. It in the two the about Ron's dollars had forma-ed – we million quarter or in couple each a the $X was pro quarter we acceleration quarters there’s to out. that million third Yes, related excuse

will at items fiscal level the that repeat those that they So same in XXXX. not did

Andy Wittmann

on just integration. And then and Arrow

quantify You those needed to well, you us expensed their as the costs you any costs and of for and over it if timing onetime integrate. as guys maybe Can have you it? take

Steven Sintros

with Yes. have locations. mean, breakdown a different and It of integration, the that, I don't of to be conversion great the some the certainly really through of facilities money business. year Andy, working was systems terms certainly, I three to probably to we expense you. to do with travel the year in wanted investments the we in there honest the really make the of needed over expended terms was of the in most over facilitate with first of what that four some – or

be that some a costs. those to there right don't meaningful I in would have now. were way onetime really So quantified you

should those of some And subside.

we're of should expecting certainly offset some to of cost that in XXXX. be these So headwinds the some that

Andy Wittmann

a been headwinds. I'm there's of to trying some them. just lot identify on of the about Yes, call focus these

Anything stock be to side? Arrow and comp. on got basis point we've should a about thinking on the potential of else benefits So that margin we that year-over-year terms you'd in

Steven Sintros

Yes.

the think for were that I've those highlighted sure. I comps, be two that positive should

Andy Wittmann

All lot. a right, thanks

Operator

turn the have questions. back you. call further no We to I'll

Steven Sintros

day. to to we be again performance for We speaking to everyone like thank have fiscal you joining quarter UniFirst's to reporting us a Thank results. forward I'd look today and in year with review and expect quarter you, first full XXXX. you. Thank when fourth great January our for

Operator

for today. you that your participation and please Ladies thank for does and disconnect ask call line. you conclude your the that We gentlemen,

UniFirst (UNF) 18 Oct 172017 Q4 Earnings call transcript