UNF - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the Fourth 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 Steven UniFirst’s Sintros, Thank Officer. morning. and Executive President you, I'm

Joining our Shane you will This today quarter and Officer. mode conference me to is listen-only to be and We'd prepared Chief President call we expectations fiscal until like on Financial year-end and discuss results a to year our our call welcome review to remarks. for Corporation's O'Connor, UniFirst complete fourth Senior XXXX Vice forward. going

statements. those call factors. and conference and The a intend, the are This contain words These disclaimer. forward-looking and with reflect similar brief risk a certain expect, Actual uncertainties. anticipate, anticipated first, variety statements that may of expressions forward-looking may company’s and respect future materially differ depending statements believe, But risks forward-looking future to subject results that to on from optimistic, financial views current future events estimate, indicate identify events trends performance.

refer of filings to and with Commission. For XX-K more Exchange the the and factors information, these in most XX-Q discussion please Securities recent our risk

well that details closed wanted take to expectations. report ahead our good toward our a will our progress high of the profits coming minute UniFirst revenues that I happy the in of and a produced year recap Shane our one made into ahead company go step note shortly, I'm objectives but back with quarterly on and a full results year to results, solid is year the and original I would where and guidance. characterize

an the week fiscal million, XXXX, impact the due fiscal income of our milestone compared increase $X.XXX to week Meanwhile profits. UniFirst this to an highs approximately of XX coming year. in an operations Annual last another at was achieved revenues when calendar. full year $XXX.X $X.X net increase X.X% X.X% year both mark record and full the over set billion of X.X% For past year year exceeding extra year of billion, revenues excluding for when

that and achieve we alone. comparison. XXXX Fiscal years not items results our of but Net onetime do provide successes approximately for better adjusting these increased out to reconciled we course after our of both income large XXXX both onetime items XX% had a

So thank take to our so this opportunity to I'd who are like accomplishments. those to ongoing critical

North Our XX,XXX Partners day-out day-in plus and so our America our in take of employee and work care Team Europe Central throughout who and and each to other company. customers, hard

we fiscal core the a accounting pronouncement to number that XXXX. with of of impacted and adoption fourth of sales that that items however we're as affected recognition included the the year by commissions. full in comparisons favorably that of to results our a year operations our our highlight results our both have quarter new do We the Overall throughout laundry impacted want pleased year. were These

X.X% worker's approximately CRM A that $X the workers’ first cumulative their in to our items ago, related quarter, XXXX. margin the costs impact environmental our lower when capitalized items costs million healthcare compared internal lower were compensation, greater These positive by Other of operations than and was and year recognized but gain from operating to costs in our costs, litigation and the compensation systems benefited contemplated core laundry a guidance were anticipated. fiscal of our these together healthcare than project. settlement

year. context for help overall our I the results items mentioned put into these to

rep and been original improved productivity compared focusing to sales by of when positively, retention rep our sales, particularly sales on customer items, excluding the accounts areas expectations. would results However, view many we improved and even full results encouraging year's including accomplishment in were these new when There driven these within reduced this certainly reported very record impact we've turnover.

strong and it oil growth customers; also charges. partially We weakening environment within growth versus accounts benefited to area our in additions to caution our – solid our and in some slid in it, weakening, as to respect relates quarter merchandise due One fourth reductions where gas some with recovery growth commonly sector. to a refer which existing of from pricing we the

Although negative metric at call is indicator be moving can a softening, trend. economic a movement lead what in time and concerning watching forward, experiencing something we'll it to are of it is we this premature overall be this

our provides specialized to clean the revenues and which also Both addition industries, the laundry division year services the coupled for our for results year. In and positively garments segments core solid to other room specifically specialty nuclear profitability. safety contributed our operations, our workwear record for and overall segment and date with first achieved

continue on expect year opportunities. capitalizing past momentum market from benefiting ahead we and the fiscal this from to Looking our

As throughout be our infrastructure our and the in we've to continue we good talked on making about year, people, our focused investments technologies.

our All primary deliver industry. of our universally UniFirst the intricate and service in our components be provider long-term as objective to are investments to our designed all best returns long-term recognized stakeholders solid to to

to business A allow sense investments strong that cash continue ongoing acquisitions cash us and balance as make well for considering and these opportunities. sheet capital making as position deployment other flows healthy pursuing competitive

details XXXX. to And year-end results for with outlook our that, over year to on fiscal the Shane, our I'd quarterly like who’ll call and further turn provide and

Shane O'Connor

Steve. Thanks

up year. revenue The XX.X% Revenues ago. fourth the timing year million, to $XXX.X of million quarter fourth from an which were to fiscal fourth a of of $XXX.X X.X% approximately our calendar, our of of week extra in for due accounted growth of the operations XXXX quarter compared XXXX prior included quarter

million fourth million to the quarter increased quarter $XX year net employees administrative million and per selling income a by prior from Operating benefits sharing $X.X Reform. in and approximately the $XX period expenses. income Tax bonus This per to was recorded for bonus onetime XXXX net $X.XX the our of $X.XX and increased Operating received the affected million the were diluted of XXXX share for to quarter from or for share. US from income fourth to $XX.X in to $XX.X diluted million the income

years income Excluding operating the $XX.X from per increased one-time increased XX.X% or compared of effect net share. XX.X% income of years the income prior adjusted million adjusted prior net $X.XX diluted to income and bonus operating

Our due adjusted XXXX, rate quarter recorded by in was net the compared well tax adjustments positive tax impact related fourth XXXX XX.X% to as to primarily a lower to US quarterly year's reform XX.X% XXXX in impacted as mostly other credits. income comparison discrete in of in prior of tax

XX.X% make growth effect of XX% up core XXXX. acquisitions, Our dollar estimated Core the of the the impact fourth total reported operations UniFirst’s quarter was Canadian up as adjusts extra which revenues for as fourth the a well to of the million, business close X.X%. of from quarter $XXX.X organic which week of laundry the for laundry weaker

benefited organic from sales our new strong quarter, improved retention. the and account customer During growth

million However, operating as year. $XX.X was income to prior increased was the to up million Core operating more XXXX. the XX% anticipated and from due adjustments pricing in segment to modest laundry year compared in $XX.X XX.X% compared quarter, timing the of for margin certain prior

as cost in guide of in first the for commission as compensation due percentage in of $XX.X workers’ as well quarter year XX.X% the XXXX; or prior primarily the due the energy a fiscal Adjusting would The sales our to of expense income of lower adoption new revenues. capitalization to revenues. was cost of the accounting effect of million one-time and operating XXXX margin XXXX’s increase in adjusted been have bonus operating

of payroll merchandise service ago. higher tomorrow quarter partially In XXXX. X.X% at several a which contributed operating trended by These offset in of other were Energy the expenses were addition, and revenues. cost and improvement, and to fourth amortization percentage in partly due items we favorably from XXXX, a fiscal to down revenues of administrative the costs X.X% decreased margin believe as week least year extra

increase Revenues This year our period. and decontamination primarily to was of million quarter compared of services, the which nuclear fiscal extra the of prior fourth quarter in segment, and XXXX, specialty garments from X.X% for XXXX. over to week due the products fourth XXXX cleanroom increase were the specialized $XX.X delivers an

in $X.X offset higher increase percentage year-ago segment’s to primarily X.X% merchandise to and of percentage a or the The costs income of were amortization partially This from period. revenues, million increased lower revenues as or a was as cost operating of which revenues. $X.X million delivery by revenues of X.X% production due

from profitability of and in segment’s this can past, the mentioned timing due results and reactor period significantly to to the outages we’ve period vary nuclear projects. As well as as seasonality

the increases period. XX.X% are higher the segment's as by primarily First distribution Our prior by These XXXX, week to of Aid to and business revenues extra the in increased fourth to well XX.X% $XX.X due the our operating compared fourth benefit million. as of $X.X the of in income wholesale year quarter in sales it's to quarter XXXXincreased million

business. band Aid In experienced addition, our First solid in growth we

equivalents We and balance of investments cash position continue term no fiscal long to end maintain a and the and short financial sheet $XXX.X totaling solid debt XXXX. term with million at cash,

$XX.X by XXXX, a which provided with increase reported activities agreement of Cash as $XXX.X to as for well respect million cash System the settlement lead from of year. million, fiscal in primarily our was an to CRM from the income a of operating second This quarter received XXXX. charge of the million contractor year we the $XX.X was fiscal version net with impairment million expansion in prior former the increase due $XX for

of $X the of capital as needs first in litigation by quarter environmental paid to as the increase received quarter fiscal contributing business during employees our settlement lower Also bonus were also million of working the XXXX. onetime increase XXXX. offset the partially others was for This fiscal to from the the first well

continue automation future objective. us new long-term $XXX.X our million expenditures that expansions, Capital meet will help as facility additions, to totaled we our our and updates fiscal XXXX invest for strategic in systems with

million $X.X both costs During third-party related we consulting of the capitalized cost. ongoing our quarter, labor consisted project internal to which and capitalized CRM

to August in we was to of $X.X XXXX. related project of internal capitalized the labor million $XX.X million related As CRM had XXXX fiscal XX, which capitalized

as relatively part acquisition our and an strategy. our targets XXXX Although we aggressively was for in continue to pursue overall additional integral activity remain nominal, growth fiscal of acquisitions look

acquisition after this City, XXXX $XX.X in market and Missouri presence million is we revenue September to our in significantly completed year contribute which end, In approximately our an anticipated Kansas fiscal increased fiscal to in XXXX. additional

fiscal stock we a of million year a million full for of quarter of fourth repurchased under under XXX,XXX program. XXXX $XX.X the In we common total stock of common for XX,XXX shares shares announced repurchased the total stock During fiscal the our previously repurchase program. of $X.X

include this for to share will fiscal to for $X.XX to take We anticipate be opportunity our revenues and per $X.XX compared like our XXXX and expect XXXX full year between to year fiscal between provide outlook will be $X.XX. which $X.XX one billion last billion we full week earnings I'd XXXX. diluted fiscal and

of impact fiscal the midpoint assumes The top that of the the organic the rate, in well exchange approximately growth a X.X% fluctuations rate excludes extra Canadian guidance at week as acquisitions laundry the in line range. the of core which as of benefit XXXX,

of XX.X%. In guidance the City discussed core the acquisition earlier. also includes is midpoint the range of approximately benefit the that laundry the in I addition, operating at margin The Kansas

margin primarily fiscal in that from the are related we XXXX expense the realized ongoing claims expense related compensation company as expect to to decline continue is in to well worker's our The initiative. not incur XXXX CRM physical in to XXXX, due as and additional benefits healthcare to forecasted

started modeling current that that headwind XXXX be a the merchandise in the fiscal although in amortization on in fiscal costs which have as is revenues. expecting prices, XXXX, energy Based addition, percentage to flatten, line of are In a in to slight X.X% of were merchandise service XXXX due are additions we XXXX. placed energy revenues with fiscal will of we amounts costs higher fiscal in our

assumed effective be to is Next tax to XX% XX.X% fiscal year, the in rate XXXX. compared

based events, our compensation reminder, a As quarter-to-quarter impact from will on of benefits. fluctuate tax the including rate stock discrete

coming between X% Our segment of strong year. out historically to are Specialty increase revenues Garments forecast X% and

segment’s the outages relative its project planned be relatively and decline operating is anticipated the However, and its XXXX. to profitability compared operating to work. income forecast of in timing to margin The flat due is

XXXX fiscal segments Our expected revenues of be are First operating income approximately to X%. by Aid and ahead

our that based million that will and expenditures We these in will generate projections of on $XXX cash excess flows expect capital $XXX we free in expect approximate XXXX we million.

our well aggressively acquisition existing strategies. explore to with cash to not free as allocation pursue additional combined flow, investments in business, continues position make cash, as additional targets our available capital This

current fiscal economic for level of no current XXXX assumes the deterioration and guidance our shares common Our in outstanding also environment.

For XXXX. project, to an our CRM pleased the progress of systems be on our with initiative update continue we in

labor includes system. related project We support handheld license costs, of fees, which capitalized costs will and still to the capitalize $XX this consulting believe costs, the that deployment between internal million $XX hardware devices we million to and

we at between we XXXX. will this again in In related project that We to will to half not do we begin incur the expense year, any $XX and this of piloting time million capitalized that second and locations. expect test several expect the will $X million project XXXX, some fiscal in fiscal at we depreciation

concludes our remarks, questions This to happy we now might would any that have. you prepared and be answer

Operator

first question of Andrew with Steinerman Our the with Please JPMorgan. question. Instructions] [Operator line coming your from proceed

Andrew Steinerman

guide the mentioned obviously In higher quarter growth it timing do core with assumption you revenue of in the to adjustment. and have organic had of laundry that you the a pricing I fourth think

of might when in. the be I annual that timing think kick your adjustments pricing

we when should about do be of higher with about you kick could more talk organic? the kind pricing and that's if outlook that thinking in of a little why And they adjustments, detail so those

Steven Sintros

Yes, Andrew.

talked annual the than adjustments covered were little the in Shane timing think quarter quarter. timing, a I fourth the last it. different this they fourth were about that bit He

really that it that So third comparisons as saw year and caused in the year-over-year - change well. quarter third you

As kind a over of what more that of what we growth expect the X% range next in course back should around this year that ran organic full really and us we timing is - have year. we get which been we've the into normal

at So a of growth look we more to as the don't return acceleration really timing. a or of deceleration just normal organic it in

Andrew Steinerman

your Right. And fiscal you're into year. already

the in already? level question my is, of growth So you seeing organic numbers already that my, are

Steven Sintros

the visibility from through that we certainly September, online for for we're have sure. Well,

Operator

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

Andrew Wittmann

want talk we mentioned for don't some but seen trends little are what bit in costs, I flattening your yet expect some items helpful? about. the hear Core of those outlook people the some continue. you're guess the on the you've to here if to just that's guidance you business the way I the that little more that bit that a margin I today and the that that you side margin well, on think Laundry more sounded of be in a influence that like, makes probably It guidance guess area in that you that in of detail segment, could seeing some of key Steve, saying, guide you would

Steven Sintros

Sure.

side a this mentioned, So what at larger our as particularly couple on midpoint side, and low. we’re the to year consider been level, year comp may a workmen's little Shane of the more abnormally modeling of range for benefits back we feel of a the this normal healthcare have being we would bit

perform higher in I continue there's of that we the areas. our there range upside end think to well indicate if those

headwind some would the you fourth of back flattening merchandise encouraging. that and is aside a based are component. core get seeing when put of year, cost year merchandise the this we the so next being payroll business, quarter to those the level of of of which of mentioned in more largest Shane far on merchandise we that But the be the experienced operating somewhat we've although inputs level still

prepared to respect but levels mention more have extent understaffing, how of we what to variable With that to another We somewhat and into year. benefited those from and area, but some kind quarter go optimal. strides made didn't we service to up we remarks about as we some in build working staffing the we last next did production cost we're that's of also payroll quarter, a of and this, consider this in particularly little levels bit any

our of levels projections of up that coming over course year environment staffing of last now so. more right overall the been have or staffing some. a the terms dynamic in And It's

getting Some of related fully some of staffed it growth-related related it and to to ads.

a So payroll-related as Shane of cost overall as terms covered the little The drag that, that just think some or system. a mention being on of cost, but in we the to I related the margins, the well has payroll of preparation piece bigger our didn't but is, bit of the impact of one-tenth two-tenth.

Andrew Wittmann

have of mentioned fourth week benefit you of helped, think you know the extra but… at little the do I In extra the there’s cover gave was? costs there estimation much I and least may quarter kind the that of a some in your margin benefit there. a also you think week quarter, How helped you maybe some

Steven Sintros

Every some five and talked know sort the things quarter or that answer that it and utilities, schedule, get merchandise and costs. a six two all three-tenths normal I extra and sort mean, other or on we've could as difficult you But of those week like regular before, about worth you a years to an And purchase we be costs in have question. always extra supplies costs certainly payroll week's of rents it's have you depreciation that we don't one of costs. of

And the quantify so to - that difficult it’s does the quarter. provide edges kind of some margin boost does but improvement, certainly around

Andrew Wittmann

is the just question curious as XXXX? XXXX? deal the know last you just I is here, fiscal City how this there, ability seeing franchise. in look you in M&A general be you ahead you’re at wondering and out in do of my can you size then, Kansas like active those about was opportunities that, M&A I you thinking and front how to decent that the feel pretty environment on in execute today, maybe announced in just the And actually

Steven Sintros

Yes.

I poised we’re think, that. certainly, to do

their I does multiples decisions interest it industry family up. right sales. happening, and there's the you some and the family they're sellers core, sellers noticed these to there's environment it when sees in again think is overall now. we've as some the I XX it, drive take there up decent businesses than I to at But do healthy was seem a as that’s on the to of talked do the of well mean the think, come I deals been - the out less like perks like there of like these that have healthy sales. where feel I there's we reasonably Kansas that environment City past, less, And opportunities for think know, still getting been but continue ago years about think

Operator

[Operator at now there call are the questions you. Instructions] I no turn will further Sintros, this back to Mr. time.

Steven Sintros

review to we a year-end when fiscal to January Okay. as us Well, and day. great everyone reporting fourth have speaking for We Thank I'd on thank well to the expect again like with to look quarter for today our in you you our quarter the joining for our year. be performance remainder and of forward first expectations XXXX, results. as

Operator

the you and does your please you that participation lines. We That call conference conclude thank ask for today. your for disconnect

UniFirst (UNF) 23 Oct 192019 Q4 Earnings call transcript