UNF - Earnings call transcript Q1 2021

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Operator

Greetings and welcome to the UniFirst First 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 CEO. Please go ahead.

Steven Sintros

morning. good and you Thank I am Chief Officer. President Sintros, UniFirst’s and Executive Steven

forward-looking that call call results complete remarks, on brief for subject O'Connor, today the President with our like The welcome may depending Corporation’s factors. differ will of prepared to risks me statements. reflect indicate is estimate, Executive listen-only may current company’s respect those that We events on This to This statements from These our conference a materially disclaimer. quarter UniFirst to be uncertainties. variety expressions Joining believe, future future views forward-looking performance. fiscal year Shane Actual call a financial and you expect, future forward-looking mode events would but Officer. Vice similar to identify risk contain first first review anticipated intend Financial words conference a and and XXXX. to results Chief and until we anticipate, optimistic, statements and are certain trends

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

expenses impacted once our times. I thank have down expected $XXX.X to many a the from which exceeded Overall team our being topline first last the Fully pleased I sincerely and came the partners customers our of to projections. for to we're challenging quarter expectations Consolidated from tremendous first results other $X.XX again taking put as fiscal forth those dealing a trended are earnings results couple from XXXX continue all million, with that also effort our care the the were our of of These during want both they segment. virus. perspective. which of was I quarter the cleanroom our for for As each diluted Garments by quarter start quarter. our in share these safety mostly impact saying lower nuclear and and variable by quarters, than revenues quarter this of thoughts said our Specialty operations well as were foremost X% want per for and the the first strong with

discussed, hygienically has We support position highlighted of clean positions As we have demand clearly services. confident businesses, but uneven and essential well to our for our work nature to and pandemic evolving to the the the the garments company's and be need we believe bumpy, the company quarters products the in many and the storm. weather be Like to continue economic ahead landscape. expect we environments,

to resources and also today take our that as exist advantages the We to sales in the continue market recovers. opportunities economy of position

the installs roughly same positive new Some as the ago a include as first quarter of business at quarter note level customer year retention. well the as trends improved

reductions continue XXXX levels, is being optimism quarters by when vaccine at wearers dependent outlook the normal how be balanced and significant economy. Vaccine movement the markets positive quickly the fourth difficult energy the create although addition, have reductions to as to experienced Overall, of In uncertainty moderate. in our in forecast. continues the in and fiscal to to during started third higher than will

of positive could an states, provinces in has surge on cause restrictions municipalities. have potential or certain recent increased and to forward. moving the addition, these business in our In impact results impact restrictions COVID cases further started The

this ongoing time. we As not any a will providing result guidance of the at uncertainty, be

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

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

us this to growth positions will Certain COVID-XX and sheet scheduled challenges balance system. our strengthen continue of pandemic for invest to the business. Our in investments by year meet the ongoing while solid CRM new presented as continuing the well including our deployment planned,

talked strongly turn the we investments critical will the to will near-term; have these schedule provide margins about of will company Shane, these back some that, on before, keeping details first however, call over we quarter. I'd with that pressure the our success. who long-term in results on for our like of As our to to improvements be feel to And the

Shane O'Connor

Steve. Thanks

in share X% consolidated $XX Net from Steve and or $X.XX operating million million, to the or diluted quarter were $XX.X decreased down first million per X.X%. of share. $XXX.X mentioned, $X.XX decreased from per diluted XXXX, $XX.X for consolidated to quarter million $XX.X income a $XXX.X our ago, or As from year revenues million income million

rate to which effective tax quarter was in year, impacted XX% EPS comparison. in XX.X% Our the prior the compared unfavorably the

revenues Laundry our organic operations Laundry quarter effect our from estimated dollar Throughout revenues the remained adjusts for the Canadian million, quarter, as X.X%. as also XXXX. of Core well Core of stable. which Our relatively growth fluctuations $XXX.X the down first weekly the acquisitions was quarter in for were X.X%

the However, margin unfavorably as in for compared healthcare our the the prior Laundry Core pricing quarter was $XX.X primarily segment’s expected, million travel to profitability or related, and impact to The to annual costs. our which year. rental by or million. lower in of structure, year timing offset organic cost partially prior prior decreased of the sequential in was due the from adjustments revenues in quarter operating $XX.X the energy decline to XX.X% due decrease growth our certain rate trended on XX.X%

to exceeded income trended with favorably However, number that combined revenue costs due other compared expectations. expectations stronger our to the operating of a segment’s a performance, our slightly

the by lower year. healthcare decreased prior energy can costs the year X.X% XX.X%. decontamination forecast X.X% costs. as of delivery or XX.X% Energy as was quarterly Revenues due of some sale direct Garments well to first nuclear half XXXX trending segment, our as cleanroom sales percentage $XX.X which Segment’s a increased a pressure margins topline Specialty project expectations additional We that project XXXX, increase been direct the the down and costs quarters These eventually significantly profit related came was Specialty in The variable a nuclear costs have exceeded to the the that in related, some related to lower through our offset have number to performance deferred merchandise COVID-XX that percentage fiscal quarter-to-quarter expense difficult be well that past, Garments these as from of short-term. were will and discussed in been specialized items were production we in of primarily well due revenues. of in direct This as expenses had the of growth and and as delivers in XXXX pandemic fiscal continued margin million As operating as the activity the increased to normalize anticipated finally from to do cleanroom sales as expect our travel favorably operations. XX.X%. revenues increase prior from from of in revenues and in in quarter higher higher second certain This ahead. $XX.X later million realized, as work partially early. Canadian was U.S. and work and primarily operations, related and services and products from in and

and from projects to period past, services. timing mentioned in reactor period segment’s the seasonality of significantly can outages require our results vary we’ve the to specialized this that due As nuclear and

$XX.X Our Aid million million First $XX.X revenues were prior to in segment’s compared year.

wholesale This of compared higher continued in However, nominal XXXX. margin, period geographies. this company’s the to sales comparable in reduced expand segment’s to million into its First segment’s $X.X Aid business with operating decrease from combined business to profit primarily investment due van the was is new initiative the

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

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

a in purchase service York primarily a building City of us quarterly which $XX.X New for to spend will for Our was location CapEx future million, provide a strategic elevated the center. due

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

at had total end we a of project. our CRM the of capitalized As quarter to $XX.X the million related

begin call, of our are ramp deployment depreciating expense depreciation of drivers, new capabilities, our will million we to per mobile route million the in which for hardware $X we a additional Eventually, install on at to locations devices to that discussed we of system, we depreciation an estimated time $X last our year, like year. of expect a support additional will handheld with will piloting start system. the combined the As this half fiscal and the number broader will second

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

As had under November the common XX, $XX.X total program. of of XXXX, million XXX,XXX the a for repurchased shares company

As be quickly COVID economy, will Steve as will to not customers relief response in to providing states, municipalities surge time. our discussed, at continued cases, the due provide how this regarding will to and as pandemic the how we provinces, guidance uncertainty positive recent the well vaccine

incur. that to margin you second of certain tends the remind due fiscal be to will seasonality I our we quarter that lower a However, quarter expenses

would current comparable you year revenue to quarters, have we by concludes our been might an Throughout we and December, trends. rental to recent compared to questions in X%. the now we As in wanted prepared any provide trending that done to the answer remarks billings laundry in our be you happy our down This prior X.X% also weeks weekly on approximately operations have. have update core our

Operator

J.P. Instructions] Morgan. comes Andrew Thank the first line of question from proceed. you. Steinerman [Operator Our Please with

Andrew Steinerman

New Hi, didn't… happy Year. I

Shane O'Connor

Happy New Year.

Andrew Steinerman

was to or statement. was of to year-over-year the is referring December much. catch in a to X%, said I’m Laundry because referring and Laundry, so on hearing most you Core your your into in that last well. Hope down what business Core month November total you revenues all that When interested didn’t basis? did how period I X.X% Thank and

Shane O'Connor

and was to December, actually laundry our that was that so related core operations the Andrew, period Yes, was time throughout revenues the last… our

Andrew Steinerman

So, December? throughout

Shane O'Connor

right. That’s

Andrew Steinerman

Okay compares November then? just us sense give that a so you could of year-over-year to how in

Shane O'Connor

That would similar. be

Andrew Steinerman

November, that when and your went in over with question, it price core annual did in increase your kick last and December? trends just did Okay, laundry revenue you affect

Steven Sintros

Andrew so this Steve. Yes, is

that talked to first would into the a that We’re not exact fully And later trends and we talked year-over-year be, what little we quarter in compared it that bit of December the on kind lot as was change would running just know, timing. at quarter. about. based numbers you a timing the that of of the baked into It’s the get to about, was going

stand we that now. So right that where -- Shane pretty you gave are indication just good those numbers a of

Andrew Steinerman

Perfect. Thank you.

Shane O'Connor

you. Thank

Operator

the proceed. And our from with Wittmann next question Baird. comes Please of line Andrew

Andrew Wittmann

good guys. morning Yes,

Shane O'Connor

Good morning.

Steven Sintros

Good morning.

Andrew Wittmann

two think could in, guess think I quantify interest little you the time. makes down, digging hi, the still bit, any point and may be items be that the if guess to sense or moving I would help quantified us I time are margins us any energy, probably you you the pieces you for a I so wondering those if helped had are that at in want digging in that but margins this the leverage, into other would to these healthcare want that were one are you guess margins of us? on and understand, decremental just that it. things a factors operating other things had I are particular mentioned, was travel order offset from flag to to there I understand in the magnitude the basis maybe just of that margins, also reduced year-over-year

Steven Sintros

continues impacting costs the payroll our dynamic. that obviously environment say costs that's this as be our a as as talk primarily revenues. quarter structure, perspective impact relatively the of lower would we cost revenues a of well depreciation I about to, the in percentage cost Yes, from When on our

perspective, haven't capabilities invest talked think sales continue about I in our and our our to a from we we've and G&A organization. -- we invest necessarily in we before, initiatives continue to

to lower necessarily the restrictions haven't going the we Similarly, to that then fuel on. fuel in as we the increase, of and have sized, result XX of IT impact but or So gone travel opposite a costs payroll well. as pandemic, given costs revenues our initiatives those on the items as has difference, of in implemented travel. we've our The probably that's basis that our points healthcare, the XX down, those And right continues fact percentage CapEx of down, decline expenses facilities our invest to our costs, healthcare, direction. basis my those to the a travel, a it that the largest well. is energy prepared percentage really prior sort call the ones related and points. revenue the of of revenue. those the being When those, largest were and as boil as the XX increased really we other you are of in basis to I revenues And remarks energy then XX to called out those of points period XX percentage comparable lower continue compared

but that continues favorably, largest to are, trended I very the a will time from just that other items, perspective. are there it items those be So because a dynamic cost say

Andrew Wittmann

heard, actually cost more to in anything newer mean, the bit, anything do you little I'm that didn't of but some I sure investing -- you trying doing that I Okay, in sales, always adjust to been I significant there's anything terms in investments. I revenue at there's and level. holistically, didn't a didn't I looking did, hear you're response. structure mean, a significant. that or

have that in fair quarter well? guys that. as methodical to continued been pretty that You it Is about this assume

Steven Sintros

say Yes, would right. I that's

I with when you process. think investments going changes through and didn't look make on, major heads any at to this the there initiatives we SG&A

production, the -- structuring is direct service challenging with production there. the bit the major are now prior to and the trend, particularly compared a revenue But more service obviously little some the because and no our less on more follow route year correct, up the of efficiency just the costs routes. costs, on of in side capacity Service changes more those On side. cost little and a and you're the

Andrew Wittmann

Yes.

customers Okay and that of you and good context that out retention lot is went the some weren't or sounds the of customers last of down retention. like during there is, quarter? then that the it just talked just inclusive customer It was on of my question I customers business, shut of out maybe remarks? And in question, just guess that, rate going I from May about business Steve exclusive prepared pretty my your quarter. guess on a

Steven Sintros

Andrew. That's question, good a

we've previously, the So since that talked about and we've the be pandemic has down because been to closed had of customers pandemic. started, we've not build this

revenue we're in capacities experiencing has customers to off still sort now, So, are the come wares, from reductions from some or of but far most of and reduced that the side. shut right shortfall are at come down some those

future of wild those accounts, to or still have that that lost reduced that's do services, on accounts either in shut further still lost reductions businesses that have or those yet. relationships been So not in at services increases significantly are But card and your down. come point, potential we that some represent levels either still these so with back still the remains

some card reinstitute being the further? reductions talked start back that we've that's reopen, to they're at back of hold. in reduced in businesses services through higher What Does business think as I I we than is and so further wild way customers, seeing And come to coming do levels. fallout been them about more, reductions. normal. different vaccine Some as come start those have of of the takes

come and why they're So, someone's schools, my being the for reflecting around hotels, are project give of and it's are part true back. as reflected our reduced, some now. is it's some services accounts we're been businesses If the of difficult reduced at or being some have that out business in but guess state, capacity not education, lost, lost commentary outlook. of opportunities of still that just of the that in reflected other more hospitality, excluding of retention to lost reason are services examples, sort What's suspended other accounts. And businesses significantly restaurants steady them the are some to a those significantly unknowns shut where the we've down to I

Andrew Wittmann

Have you it. Got comments. a day. Thank very the much good for

Steven Sintros

Thank you.

Shane O'Connor

Thanks.

Operator

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

Tim Mulrooney

Good morning, Steve. Good morning, Shane.

Steven Sintros

morning. Good

Shane O'Connor

Good morning.

Tim Mulrooney

guys. you ones Just quick a for couple

any revenue see to but sales? the the to mean, all? and demand. this the given high industry PPE a called minor think in PP&E for we've from was you at out from trend release, I has don't the have you driver this is benefit So material Is continued did I customers press broader changing sales

Steven Sintros

been the big PPE I sales, is, whether is term PPE it other what say of little as for be well. think any but sales, customers not offsetting us, sales? as that it as masks or time. from for be we of those But of had long some some far a competitors increased has more steady, lift surging would question to or focused sanitizer As maybe some point. providing I at we some say have to some ongoing it be our some outlook will continue to necessarily of significant benefits products. of during more not less programs, continues I new us a or those decreasing ongoing than provided has but And existing there it products this major the blips, this on and customers

Tim Mulrooney

that's helpful, very expect No, spikes, anyway, that's types probably I any major but think near but that's so didn't future really major any in things the drop off of me see from helpful. that wouldn't telling you those

Steven Sintros

I think that's right.

Tim Mulrooney

Okay.

prepared Specialty your is wise, the know you quarter to there and -- the business, it gears strong revenue Shifting I a remarks, Garments on touched profits but pretty in Specialty your in had we or orders quarter? section in call whether out Q&A to out rest year first the just a the just in model the few is of else larger here, here, there as fiscal Okay. anything

Steven Sintros

them of with job the kind quarter their relationship we despite for pretty that pandemic as have up that the the first that they pretty and Usually whose of close had does year. direct well we close team to through, customer the came of some later ended quarter-to-quarter from were that them. as up sort the some to business and of quarter there project sales in forecasting. some volatility upside. pulled that down provided Shane business kind their kind one management of good of unusual did uncertain do, in Yes, the that mentioned, a projects was from And timing usually were some as with But

they've the you volatility. quarter that end, had guidance, strong but look far in of not And it of really will did rest there be reminder, and some the first Clean that best nuclear we're lot a should I in provide a certainly division just that two as you is and businesses, modeled, probably be environment giving the was really Room segment wise the Again, to by but of made steadier. has moderate Clean as will year, Nuclear it what last And Services if think been it's something profit the along. So customers not the year year. our goes really segment, look and quarter, our at the The Room up that and is projects segment. it's this segment as really the ever

shapes the quarters. see how we in type year but up, expect future the beat we'll same of So, don't

Tim Mulrooney

Understood.

now? here, a last the election With update results think, XX quarter the give capital thoughts with share in one are allocation your general being hoping update for your cash on more for changed was Steve. -- on net Okay, plans and honestly, see hours have million, with an you I us but where allocation some right at your could just they special views you repurchase this this position did in on year. your I I you capital now $XXX

Steven Sintros

prepared not Excellent questions and You're some answer. up-to-date [indiscernible]. I'm really probably An to getting one question

Shane O'Connor

I didn’t try. had I to think so.

Steven Sintros

very to and but it's going at. we're look good that continue The to uncertainty question here, a one

it plans, I the makes think about not for term and as and going we As opportunities, start to I acquisitions willingness be money the mean, said, long opportunistic like far to there. whether to from that events we what to look a opportunities. buyback to -- for buying back capital the be other put monitor to shown share as had as or overall will market we'll and some think making shy use continue we've investments shares need we're we we And be what determine and far our sense continue to opportunities we

So next week and we'll of some more digest quarter. the have the events

Tim Mulrooney

and open repurchases to And further additional as still share year… the M&A

Steven Sintros

Yes.

Tim Mulrooney

That's time. okay. you much great. your Okay, for so Thank

Steven Sintros

Thank you.

Operator

O'Connor, are time. Mr. this And there at questions other no

Shane O'Connor

joining reporting Thank speaking Thank financial performance. and everyone quarter us like our in our second with and when be first forward our financial you. of a I'd have quarter to review to day. thank we great for expect we for look results you March, you again again to

Operator

for That participation please for disconnect great thank and ask your does today. the call Thank We conclude Have your that a you you you. day. lines.

UniFirst (UNF) 6 Jan 212021 Q1 Earnings call transcript