UNF - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session [Operator Instructions]. I would now like to turn the conference over to Steven Sintros, President and Chief Executive Officer. ahead. go Please

Steven Sintros

good Chief and Steve UniFirst's Sintros, Thank Officer. morning. and Executive President you, I'm

Joining Shane you for on will that statements. today of future factors identify variety materially $XXX.X quarter discuss Commission. XX-Q Securities to Officer. indicate from year. revenues XXXX conference me our is our until second to a results We'd most same Chief President call forward. may XXXX differ like listen-only Financial for and report of trends fiscal expectations and fiscal you with second mode recent to and Actual our going be the welcome of review discussion to XX-K these refer those I year results for Corporation's to expressions anticipated O'Connor, on UniFirst quarter forward-looking results second Senior to Vice record from forward-looking solid events at X.X% period call the This risk our produced risk and that prepared first conference and uncertainties. happy Exchange new These performance. high a our quarter shareholders. company I'm achieved million, remarks, company’s subject call that and depending views Overall, a our up reflect statements filings UniFirst's future similar in and last optimistic, and disclaimer. certain factors. words, intend are the to current future the contain both complete the believe, we events to a may forward-looking but respect estimate, anticipate, statements The risks brief expect, financial with and This

reported for to diluted came fully quarter $X.XX lower the year quarter side, profit a $X.XX same per in the ago. share the per at earnings share compared for On

settlement tax share earnings financial the U.S. period's by of these impact details a for with However, development by quarter per in the one-time will earnings XXXX further moment. items positively both aided CRM systems affected non-recurring should be was noted reform, strengthened significant Shane share per was by project. on events. our contractor that The were two our with while earnings quarterly XXXX second a previously you provide it the

items, these of same $XX.X down quarter our in our $XX revenues XXXX. expectations. million million, in from slightly the for reported was operating second we internal Excluding came quarter for quarter performances and income ahead in adjusted the Both the profit

to a I'd their Europe North like throughout always, and achieve of whole, thousands sincerely America America, to employee results. As to continued that all team for thank loyalty helps financial as our our Central company customers and us loyalty of our partners solid

to on service. successes, committed family As designed towards exemplary our empowering continue our motivated focus culture team workforce creating partners and focused that drive our to is company efforts wide. strengthening will engaged our All we an customer customer providing

look to of to As majority year, core the vast growth. our we we revenue continue of laundry operations the drive on growing will remainder UniFirst on to count the

record new first of by levels. year, encouraged exceeding performance the our the account with are year's for sales sales months organization We last six of this totals strong

customer marginally been ago. year addition, In compared retention has a to favorable

across expect to our on higher to customers. merchandise by levels the sacrificing continue to we of service While we to continue our the aggressively over be payroll remainder levels managing and year, costs without laundry challenged focus locations our

being objective fuel our allow achieve us and technology the in to Our team the results partners, ability producing investments industry. as provider on service infrastructure recognized execute to of our and continue best our our this overall solid to will service universally plan overall ultimately our in

pursuing position and further will cash opportunity allow invest strategic simultaneously drivers, call, our strong flow our discussed for that, healthy to to additional remainder sheet as to results growth on in turn value I'd our deploy us details additional our over of while like outlook provide we Shane, earnings with Finally, quarterly And to it our and continue last who the balance the on capital to and will fiscal to shareholders. create opportunities XXXX.

Shane O'Connor

year in the or up a X.X% or million, million share and income $XX.X diluted second quarter net million Revenues prior million quarter second million $XXX.X of quarter Operating XXXX diluted to per our ago. increased were from Steve. year decreased $XX.X of period per from in $XX.X XX.X% the Thanks in $XXX.X million by $XX for to the $X.XX XXXX. income $X.XX from share

fiscal of to in we and income impairment a million million EPS XXXX. due the operating settlement both and related the maintenance. net previously amounts quarterly affected gain contractor in by CRM the related receipt of second lead and This The recorded a entered one-time income certain quarter fiscal tax in well gain uneven the charge which for net payment million, with contractor, for we from version included income a the a to benefited of the settlement system, comparisons $XX.X cash XXXX. $XX.X $XX of Our of as rates. the amount of a pretax receipt into hardware forgiveness of were This as

reform The second one-time tax tax XXXX rate largely of compared benefit on taxes net in was was prior deferred impacted effective year income liability. a to the which provisions by a quarter Our This our XX.X% U.S. million. taxes for the to quarter to provision a of of the second that in of due significantly revaluation period was $XX.X in income tax negative rate XXXX. one-time for benefit our December enacted resulted XX, XXXX, tax was

quarter compared just reform in second share was diluted $XX.X million year and $XX the period. ago net fiscal income XXXX for of the share settlements adjusted share to of primarily per quarter or per decline second diluted was was and per by lower EPS we diluted effect Adjusted income Excluding quarter and this made The earnings of shares the outstanding the the fiscal $XX.X limited prior share year fewer due XXXX. million over $XX in the the in in ago. income decline to compared operating months, the the tax impact in in million was a to diluted I have The the year adjusted onetime to period. or which rate XX tax $X.XX a discussed, last year adjusted our X% million repurchases benefit $X.XX net resulted CRM-related effective compared

Laundry during total million, of Laundry of approximately second the impact revenues Core Operations, Canadian a Our year acquisitions, from for Adjusting X%. as for the which Core revenue last the was growth dollar, up estimated makes XX% of the UniFirst weaker of quarter up reported effect business, achieved well quarter. $XXX.X as revenues organic X.X% our

by increases quarter, from retention, merchandise slightly Core new the growth as The quarter million benefit year which to to organic price of our income impacted for from the operating was the in account the quarter, positively period. segment's continued certain CRM as operating settlement, up During margin, Laundry the sales, was compared was charge. prior $XX.X adjustments fiscal and XX% well solid related of XXXX. recovery the $XX.X improved in impact million customer second in XX%

to as claims, second XX% payroll margin the X.X%. Core higher decrease from to Excluding Laundry the as well operating decreased of CRM of costs adoption accounting of service as settlements, the primarily the due sales health costs, amortization fiscal XXXX. a This as higher new were the fiscal well first quarter XXXX due the as was guidance related of commission perfectly percentage in adjusted These offset and to production impact our items quarter merchandise revenues. capitalization care in by lower

from XXXX, to In the down revenues of second in quarter decreased addition, of X.X% energy X.X% year ago. costs a

labor internal our capitalization During the CRM for quarter, new income also operating segment's of project. costs from benefited our the

these our which due the XXXX, for project and specialized million in to increase largely and increased Specialty a Segment's costs by quarter. Garments which segments, initiatives; revenues $XX.X operating $X.X increased However, ago XX.X% deliver $X.X nuclear we increased in to and decontamination that was primarily from by the million the million of year to period. technology This compared room acquisitions XX.X%. in non-capitalized other second fiscal by benefit quarterly related revenues were income was clean offset products consulting services, incurred

we've and operating our specialized decreased in margin that Garments' results period-to-period vary past, seasonality timing and from can the this mentioned projects the to of Specialty services. require outages due reactor As segment's significantly X.X% casualty claims and from period, to due acquisitions, costs a XXXX its amortization primarily production as prior to XX.X% related merchandise of as year the well expense revenues. nuclear higher payroll, in percentage as higher

and the segment's Our operating for relatively revenues of in first-aid million segment reported year the the with $X.X consistent and period. which prior million quarter, respectively performance income were $XX.X

of environmental of position This continued $XXX.X $X.X balance September cash million maintain investments of of million solid to our amounts million the end employees balance were payout an in $X the operating year million of fiscal of the sheet for provided quarter was was from half These well with $XXX.X year the and $XXX.X XXXX in as at bonus second second the end due the activities increase million. year. primarily million no fiscal million, to operating debt We a was previously to when offset XXXX. This first from one-time XXXX. first the and quarter -related totaling XXXX. increase related partially short-term the cash, prior of prior received an to of announced the million received $X.X represents of fiscal CRM litigation first Cash and the cash by $XX.X the of half settlements, in equivalents provided activities from cash as financial by $XX of settlement our our long-term by of fiscal of increase quarter the

XXXX, our help we that of with For strategic objectives. new additions, $XX.X invest expansions, in us fiscal our will continued to and million future systems half automation updates the capital first totaled meet facility long-term expenditures as

At than to anticipated we consisted expect approximately During $X.X CRM consulting is internal capitalized $XXX from a down originally expenditures capital to time, anticipated million, be primarily million to new progress projects. full-year large of which $XXX couple project, due our capitalized costs million. labor both of this related costs. the the slower on quarter, and decrease building we This now

shares of repurchased of common XX,XXX fiscal share $XXX.XX. the During second quarter average we price an at XXXX,

now will acquisitions update our expect fiscal XXXX of continue to our first fiscal We activity our pursue for like XXXX overall take we between that fiscal part to to in on integral growth as $X.XXX aggressively and and was of targets revenues billion. outlook an Although, an remain nominal, I'd $X.XXX be XXXX. acquisition this additional billion for our the look half provide strategy. opportunity

mentioned, full-year expect increase be results, diluted between and well exceeded these earnings $X.XX previously on of customer CRM-related income as an during quarter as XXXX better-than-expected by than the operating amortization Based as settlements, the we we now both our support our quarterly as half to and our will our impact revised make anticipated of outlook tempered continued As of stronger had on our to $X.XX. share the base. expectations. our well due second the our we've net sales, investments inclusion per existing the new fiscal the forecasted income, results to The merchandise was to for merchandise

rate that happy XX.X%. prepared the questions calendar timing of our we to will XXXX that remarks. might to fiscal expect includes This future extra concludes XXXX compared for operations, no now guidance be also our effective of fiscal We have. any our assumes fiscal This tax for week answer to repurchases. and be approximately would share And you XXXX one due

Operator

[Operator you Instructions]. Thank

the JP first comes Steinerman question. your Andrew Our of Morgan. line question with proceed Please from with

Andrew Steinerman

quarter. being performance at all current the Do quarter, or the winter sales season strong revenue in be did about And talked you hold growth similar second will sense organic third up the second that the than better quarter? you quarter the selling? Steve,

Steven Sintros

of year half range right growth organic the Our guidance the second the over X% at around has that the midpoint.

So, the into last sales year strong from I performance this year. continues think

think beat record marginally I level. year's we last

that that rate So, a that experienced quarter the second we and in portion it we're projecting. to of continues be key organic growth

same projected. So I bit have at don't which higher levels, than much think be were will better but we it little the a

did not have particularly from the season. we the impacts far winter impacts, As unusual as any other

Operator

with proceed Wittmann comes with question next Baird. your line from Andrew question. the W. Robert Please of Our

Andrew Wittmann

beat you one different your internal guidance How bit I'm the being due quarter of a of away release that just when little Just expected of and in year beat raise. was versus guidance better to build press last comments. trying the the recognizing much better balance to understand you consensus than being at you your look the on here Steve, raise, want obviously, And that said expected, of you mentioned of the least a in the net the things guidance than at your view couple plan. item. on to your way. one-time

so sense that So us rest we I how the thought you have the of thinking could just can about for year? you're of a that tie out

Steven Sintros

Yes, than think of projections. think rest our quarter I as the the some mean, at I certainly of internal year. we the look I was better

we've merchandise to control. us a impact I we I expected to we in that something where the impacted key I bit payroll that think overall that, think more trouble miscellaneous would payroll merchandise little quarter-to-quarter. or and been early working be about some And Obviously, the as the pegging of negatively there. on beats little expected. healthcare were drivers Other mentioned impacted But did the did continue say the us, us some the referenced Shane year probably along than side. and which were better very have expenses places is lines accurately we there a than often and revenue beat,

look that some internal as I far by year the being from expectations as merchandise. at the be is current of So remainder beat continues quarter, think we to again, accelerating as tempered of the to the least our what

work control and improve continue where we to can. We the payrolls revenues to

amortization one is project so going have. our the that, the next you how than on cast how die that merchandise is think our merchandising or mostly quarter as The area is over we higher works. the I amortization merchandise look what and to know,

have the fourth Some the of in the to quarter beats carried healthcare, and like forward the on we quarter. third not

least the second as back So at compared probably quarter tampered that some the well. to of half

Andrew Wittmann

next to just CRM on wanted question, your an my I get I for here think update maybe implementation.

of it's your sense for all more this can one. be thoughts as you're better Can us details as importantly haven't total than go maybe estimate you expense when the you to going to you'd given go lot you Can you timing to depreciation into And of new this going us happening this other a getting that's You with what's one? do live? on give maybe, And entail. you moving once cost a have what the on that think any that even on and live? associated

Steven Sintros

asked won't little toward new So of of system I you working a can not color, you just rollout I now, but and just for. you component eventual that an but additional give every bit give yet. that Right begun we probably have go-live rollout we're a

we're the in be had have first the are iteration still appreciate sure Shane think want of we holding as with say when be able and able as making pretty this referenced another live front be so our and will We endeavor. into anecdotally, provide or previously about pretty far be I clear more but that's as progress confident or estimate well. timeline I guidance to I'm anecdotally can the system some At qualitatively from we As that cost it on when we this that something that publicly last we point, discussions. new probably year-end introduced don't initiative, is before those not quarter I of get and to introduce numbers to but or being communicate we away publicly. me, well you that will one and process optimistic going our communicating not we're going the will I will this based to

Andrew Wittmann

better and positioning to want and asked couple about just And these obviously, transactions step competitively own that back they've questions than get a your today, you're those aren't here overall basis, margins, happened picture at I'm years, expected been competitors. are historical going to bigger your positioned that transactions UniFirst's question large of get then your just of here. recognizing your on now certainly at and And asked, integrated that here while sense here I have really guess a been have still to ask the How your the where but sense more wanted becoming company. competitive

meets road? to share, overall and want to And think sense gain your you the peers? stacks I competition to profile relative when as guys or well up your just your profitability So where rubber your ability today the versus as get how you stand on that'll maintain

Steven Sintros

feel that to it larger a some service improve wins as doing a good versus we talked I we versus share such competitors. be. in our in We lot and strong gaining investments we still competitors I do are and But terms think as think shore can doing to of we're up about continue lot feel job some against it's our win initiatives our to our market. to results And of as in make market. continue of can of the we're losses of this a our sure proving

and consolidation are say can we the competitors unchanged we with today. the stay from of a from three there but Certainly dynamic out the try focused. in would the more ago, operating less about internally years largely talked year having change the the it’s four ago. at You market, environment I seeing to or end day

And doing at of the we're win and capable we the that levels of know business so we service job doing competitive. a that we're good providing can be

I like and some we there the expansion efficiencies. as our investments we're are future So technology, provide will feel we for of in making automation opportunities that and still opportunities improve the those think that margin

have good we feel like question And that. some technology to that plan similar sound your done executing is work that we're about that So be initiative, we're to toward but feel progress. and the we game making still we

Operator

question with William question. Our the Please [Operator line Instructions] Mulrooney your comes with Tim from Blair. next proceed of

Tim Mulrooney

a right. full business? know What down your don't you I to you year? if I think specialty that that my little this the that's bit I initially in are half have maybe What back the business notes for expecting year? of you were, here specialty, guys expecting be for are in expecting the for

Shane O'Connor

European nuclear -- year anticipating off specialty take was benefit business XXXX to customers, very, originally we segment had some penetrate was year. anticipated. XXXX. to quarter point look to as than a well. Canadian as stronger coming of that some its this second in And time very at as when got the prior we flat our be nuclear from this or strong as this compared well year of were historically We larger a going relatively the continued Tim, at was

the our ahead we the top-line perspective to that be So year. prior expect do least segment of is Garments at going from Specialty nominally

perspective a at and be However, know vary profitability to of backward upon And the quarter segment see year. We from it's been second that will can this the of segment depending year. we of that prior in got it, the do to least you've that able the compared profitability the going. expect slightly profitability that projects that

Tim Mulrooney

and in margins, these adoption I [Technical think just new wondering benefited to just moving some were things the standards. merchandise on these business. much things costs lower there accounting impacts negative how just me remind higher I think -- much payroll into amortization. can Laundry Difficulty]? It healthcare I'm like from and how the Core And if you just are of

Shane O'Connor

compared the… take at we about If a talking look the you're to So year. the prior quarter

Tim Mulrooney

Yes...

Shane O'Connor

expected our as XX%, attributable if basis and year XX take a costs adjusted we in compared was as this -- well CRM those our the so exclude be About as So, up. year to look both merchandise, basis had operating at X.X%, we margin I about a to the about prior guided. core points guess, our went payroll Previously attributable quarter is to settlement from XX half we to points. to down -- point both adjusted to merchandise the

well. also points was payroll And of benefit commissions, sales claims our XX as benefit as healthcare basis Our us as then about provided a as well selling related well.

Tim Mulrooney

a basis? So and on that combined merchandise basis from points payroll were XX each

Shane O'Connor

That's for each.

Tim Mulrooney

How you. what's you that driving is mentioned relative account if is growth, lastly driving account that revenue to sales. sales, new organic new I talked of quarters? last and wondering of And growth? about am Thank just you how trending couple much

Shane O'Connor

last done as ever side. best year very we'd XX% a was strong about I sales to on before, the year, XX%, new alluded think sales by new I the

are into six of to 'XX momentum first year. months so for has driven some the that over the same somewhat first ahead quarters, And the we this of that 'XX. not XXXX, extent And two was

is momentum. year of So was very we're strong what the that a and helping ahead

growth it with ahead think And to bit I as growth, components, I'd our is better a retention, a recovery being are coming we the like higher our charges, merchandise little bit better all components. it's I mean, new always extra all expectations. well. of contributing little this mentioned the all better in organic charges sales, year, say performance the

Operator

at appears time. be There this questions to further no

Shane O'Connor

everyone joining us very our be thank June great want to with a in we forward have third review to you Okay, speaking you again and call. results. UniFirst's second much. today expect thank quarter when I for We you look day. quarter to to Thank reporting

Operator

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

UniFirst (UNF) 27 Mar 192019 Q2 Earnings call transcript