UNF - Earnings call transcript Q4 2021

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Operator

Greetings and welcome to the UniFirst Corporation 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. At that time if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an Operator, please press star, zero. to Chief conference Executive like Sintros, to now and President Officer. would turn over the Steven I Please go ahead.

Steven Sintros

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

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

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

what As of we continues over are to have and we we a operating in our what environment. face look be back pleased accomplished team with fiscal XXXX, year the as challenging a unique

public as improvements vaccines the to made of for the pandemic. the certainly company with many year, Progress as the in allowed we of the situation in of has the serve and our well that COVID-XX introduction as deal reopening During operate and the health businesses. impact communities overall continued was

to other us continued customers over team yet. highlight of aware, for however, challenging worked for are and COVID-XX that many to the put these take behind our and and the pandemic. their also face a evolve in efforts all each related them obstacles I They to you personally are our performance. by partners year extraordinary have I extraordinarily to during just thank have want As hard of continue extremely the not tremendous fully to continue to challenges forth the created want times, to keenly care now,

we year showing the For this XXXX, would beginning our reported provided outcome. guidance billion, billion. be we full with we total of fiscal any therefore, fiscal of fiscal revenues during XXXX’s of $X.XXX pleased company growth XXXX year, overall articulated a were the When that the had at fiscal exceeding $X.XXX challenge;

half well operations core revenue were increases the of Our customer level impacted over a as reopenings second laundry positively of sale as PPE. the of by in the year modest

was segment specialty the top shortly. results year a bottom a half our the per due were was greatest of perspective. In the form of earnings $X.XX share compared of on fourth results Shane fiscal customer a garment perspective, From profit results, contributor line our from also to $X.XX overall record XXXX. producing The a comparison year in addition, fiscal our improved strong full and earnings to diluted of full was provide to depressed pandemic year business, XXXX the details our the when second COVID-XX in for quarter in impact our will primarily primarily closures. the

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

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

rollout positioning, about initiatives in progressing are the about continue a of terms which our competitive we capabilities are CRM quite number excited a our ahead we spoken first bit key we new company overall to previously. of the being have to and look there As we fiscal system as XXXX, of transform the

will XXXX initiative, We on key this through continue progress fiscal solid and continue XXXX. well make to which into fiscal

The in second UniFirst is the brand. an investment

a has will years and this an revitalization, invested and and and UniFirst our for company is Our employees. but in been area excited not the not for customers why solidify around what the stand feel we who existing are a internally and over that for we prospective message we externally significantly and which evolve as only choice of brand is look are will great

currently procurement capabilities This core focus of of XXXX and integrate and as standpoint, well solid, XXXX we business selling be fiscal an the embarking new implement our fiscal system will existing the the on the footprint external UniFirst’s carry during a very both momentum supply has complement in a multi-year we has we corporate-wide customers. to on initiative will perspective from operating technology. technology challenges and CRM solid as phased top project are heading with internally From a a year. the performance that strong Finally, automation endured, chain our system deploying. into sales the been ERP become into to will Despite line team

our fiscal recent improved compared much customer was for years. retention to In XXXX addition,

We the also experiencing our work be will share clearly various in the business. are increases with of in cost looking that to customers to we aspects

will been top for there to challenges perspective, years. from what shortly. outlook we’ve line are two of fiscal these fiscal experiencing of bottom perspective costs recent details the expect drivers, expect a growth result we XXXX line to of present organic categories Shane provide From we in in exceed our margin a a As XXXX.

costs depressed the being pandemic by Last quarter, are inflationary The these and environment. travel. labor, and increasingly bouncing the amortization, the energy that impacted and I of from first supply cost some highlighted related to retain including items, during merchandise levels the are of consists chain and costs raw materials disruption, hire that group costs to back overall

growth, are to consists of capabilities building services, others. we relate feel among company investments improve subset profitability. investments including costs to ultimately and The These areas, as accelerate A of efficiency overall group stronger our being marketing, the and supply these necessary making are in and made future competitiveness, a are company. second in chain, several that resources, human we enhance our of central

addition, in earlier. years are fiscal costs to discrete discussed upcoming three invested XXXX initiatives and I to related In significant be expected the

carving forward, portion Going completed. be initiatives we continue until related of excluding out of initiatives report them measure key adjusted a to costs are we’ll are and these the view will transitionary to we profitability that these from that

these our be earnings of You sense these better regarding costs. we’ll some our look like excluding regular can investors during are our large ’XX benefits so what costs excluding that communication a related transitory feel be large capabilities; Even continue initiatives to we provide. we will the make the will believe in can pressured calls expect initiatives, about these strongly in in costs need investments extending have during we and invest providing future these however, quarterly results to overall to in they of our areas fiscal margins these by

efficiency technology that to of firmly opportunities only We support overall cost initiatives, initiatives, multiple through costs also side this transformation. the to these currently to be will the rationalize on not there these but is improve our believe other working direct structure of related systems the to

make challenges Our solid growth our meet ongoing our strengthen to balance continuing well sheet investments while business. and these in us to positions

capital We our also continue to allocation. around routinely strategy evaluate

our increasing per that As we XX% we will announced Class $X.XX $X.XX by of and dividend to our stock allocation common that with on our over the foundational be earlier cash free capital this today a share to company’s per the will time which generation quarterly expands our review, strategy. commensurate part stock. time, share company’s dividend of common B be a to we At believe increase continued annual flow piece

to to allow million its $XXX we share our reloaded up outstanding authorization In company the purchase program addition, have shares. to of purchase for

we selling value services existing focus valuable continue business. on providing always, can UniFirst as their to products the our new Finally, bring and customers to customers to and on

discussed, our to turn our As for who and that, ’XX. call over we has clearly will hygienically garments the for the We of the Shane and and the demand like highlighted services. economic and our positions have provide support landscape. for quarter our evolving outlook details results the the fourth environments With clean to fiscal nature I’d work essential of to the well need company products believe pandemic

Shane O’Connor

Steve. to $X.XX quarter or $XX.X increased our quarter were XXXX from million, $XX.X diluted X.X% of income of ago. per share $X.XX from revenues increased increase Thanks or an million operating from or $XXX.X fourth Consolidated for million million $XX.X share. XX.X%. $XXX.X the million diluted $XX.X per Consolidated in income million, a year Net to

Our effective tax in prior the was year. XX.X% to in XX% the quarter compared rate

with on reminder, employee period As discrete tax a payments. to period can share-based efficiencies benefits events, move from and rate associated based including excess tax our

of the increase in X.X%. operations levels laundry prior was Canadian This laundry and by Core operating and XXXX. the well million year, claims driven up XXXX’s million from was effect our as for $XXX.X a in year, growth, XX.X% higher dollar, wearer quarter compared fluctuations travel. as primarily amortization increase offset for significantly laundry the percentage fourth for prior margin X.X% quarter, due the and of in of well the pandemic operations performance partially improved $XX.X in merchandise adjusts the the an revenues XXXX. as income XXXX. by customer solid segment’s to COVID-XX in quarter organic margin customers’ and impacting sales acquisitions Core operating as healthcare in of primarily core X.X% retention lower from million, The operating was as which costs, were to to estimated increase revenues, increased $XX.X energy, Our was

our as during fourth costs revenues operating to revenues decontamination garment a and that by of X.X% ago. year-ago the increased or as we XXXX, was in claims and Segment the was as year X.X% initiatives the casualty revenues over production to segment’s million of increased by revenues. providing up Energy XXXX, quarter These leverage incurred in increase European as both strong nuclear higher performance were a improved growth resulting a well U.S. increased as merchandise from driven of its operations. room X.X% of in performance services lower in company’s comparison. revenues. The favorable quarter Steve to or for expense top as $XX.X a higher as also million responding prior earlier. partially of costs which revenue of The a in primarily offset delivers prepared This Revenues and of clean of costs period. nuclear due and percentage of clean quarter XX.X% percentage fourth the percentage offset the for specialized increase fiscal as were key from trended the discussed but benefits G&A costs income addition, well payroll line segment, specialty an million its revenues products $X.X $X In from operating room improved advanced we to pandemic were XX.X% costs by XXXX. the strong year

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

decreased segment XXXX van growth business. million, PPE by from in the due Our the of the in partially in year to quarter revenues $XX.X sales first aid offset million elevated aid fourth to $XX.X prior primarily first

addition, continued to into In operating results company’s geographies. investment $X quarter’s in compared in van aid initiative XXXX. reflect had $X.X of loss million new segment the of its income the The to business the an current million first in operating expand quarter operating

capital meet fiscal will our for business that long long Capital as as cash and have decrease our facility strategic no totaling during year decrease balances. $XXX.X us to term $XXX.X of million XXXX to the activities working to was with asset maintain returned Cash cash, operating prior pandemic, solid automation of investments which needs end and abnormally to our from year. with were million of sheet totaled future and million some the This term fiscal debt additions, systems positions, primarily we a the We continued and depressed was due million, a continue by provided $XXX.X term position equivalents at help $XX.X pre-pandemic of new the sizeable objectives. the in XXXX. invest updates, balance short for expenditures financial expansions,

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

XX, project. capitalized August the to of related we As CRM XXXX, $XX.X million had

started we to system anticipate fiscal and our through continue earlier XXXX the into year and deploying a well will As fiscal this XXXX. in locations reminder, this

the amortization over system the approximately support capabilities, drivers, in hardware this We additional and are installed devices depreciating for life. million mobile Including to like new estimate of million system a that $X XXXX. $X fiscal our our depreciation depreciation XX-year handheld we the we in and we total an XXXX, eventually in of $X route incurred ramp hardware per and to $X million expect related year. approximate will In will to amortization the million

anticipate in for range. was I’d XXXX look $X.XXX fiscal opportunity $X.XX top targets assumes XXXX. our At midpoint like fiscal acquisitions we our activity additional growth the strategy. and will nominal, full X.X% relatively remain fiscal Although XXXX provide as part aggressively guidance of and billion this year outlook integral time, billion. acquisition growth rate organic approximately an the of for to be overall laundry between line core a to to we pursue this revenues our This take continue of for at our

as improved well customer that rate anticipated primarily our to seeing growth in in a As customer the expected cost share solid XXXX, and our sales with reopening, efforts fiscal of business. result Steve this as performance, customers retention are increases we mentioned, is strong organic

we XXXX, $X.XX. the fiscal diluted key our $XX ERP of expect fully that initiatives, earnings year will and the our directly branding further costs fiscal to to $X.XX per initiatives our million guidance efforts. attributable expect system This discussed: between Steve and For CRM be includes that incur in three that share we and

discussed in challenges, operating core this depressed from employment prices, Excluding that will incurring and modeling these laundry labor margin levels the we X.X% in and This up making the to related of energy we our range operations the like global well merchandise are retain adjusted inflationary pandemic, input XXXX, to costs as overall as hire X.X%. costs, costs, the our margin core XXXX. during additional midpoint we increase current are transitory our are energy amortization investment environment adjusted revenues travel assumption chain costs elevated from in capabilities. challenging Based the environment, at to costs normalizing supply is certain costs X.X% the strengthening reflects operating investments laundry the and in of in previously are current fiscal on operations’

compared fiscal rate effective to XX% XX% XXXX. tax year’s Next is be to assumed in

Our the operating to XXXX; however, approximately XX%. flat specialty be income is forecast expected compared down garment segment are segment’s relatively to be to revenues

timing both was record its a bottom relative and a for operating outages and the profitability As and XXXX is a work. the reminder, decline fiscal top to from anticipated of and line planned year in this segment margin perspective, due project

be compared out segment’s we result profitability aid segment Our this operations. to continue to relatively marginal up be geographic XXXX; van XX% first in revenues building in however, are as to will approximately footprint of expected XXXX a our the investments of make the

We XXXX expect million. expenditures in will that $XXX our approximate capital

fiscal no outstanding related also deterioration economic potential Our impact the shares, assumes level in of for and current to guidance environment. no our common tax reform, current ’XX

effective XXX requirements finalized been date month sure I’m sweeping that are more President an with In rules aware, addition, companies broad Biden has last yet than and/or as vaccine testing you issued been not nor employees. all for have These communicated.

expect requirements. we not costs be forecast happy with questions answer be prepared any comply our This you would in we do that incurred have these that As remarks, to we now would our may any and such, concludes included have. to

Operator

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

Tim Mulrooney

Steve, morning. good Shane,

Steven Sintros

Good morning.

Tim Mulrooney

guidance first. on one Maybe

the back any long you look digit that investment come segment If leverage Excluding be to is structural extra as back term reason of so operating of margin get can off can’t is my the costs, operating XX% the start more laundry to volumes $XX back of would range? get margin was double costs, why range, to some these a closer business and I X.X% to in this years, transitory question XXXX. core million XX% few in there

Steven Sintros

goal, that’s certainly Yes, the Tim.

terms hard once is look but certainly not not Certainly a I chain talk I headwind, investments making, think around that you but year. costs, are this right Part grow things companies margin labor the short seeing say only it’s to challenges time. for over to the the in three are the it some of it when causing impacting in those how outlook we’re we’re Yes, in things will supply we lot some of term, of volumes of at we cost some environment year that think supply disruption and light as numbers about lot I we the challenges environment the be energy, two, the other the chain to next some certainly of but structure of to back what even a yes, so margin or think goal. of initiatives is. grow, being things costs get causing that out eventually over as market. doing only investments as at out in hopefully some big in the hitting world of kind all the labor of situation, what’s we’re of smooth those Certainly will, of temporary the play the these things and capabilities our in the the into move benefit now strengthen those of this view

Tim Mulrooney

Okay, thanks. little answer. tail these so, of be--have Yes, that you I more a some of costs a can that may bit to but appreciate for thank them,

having you’d and as look this over quarter I the to months labor, curious, to last if last the you though, is last needed gotten improved environment all from all it at at six I’m about talked or you the it quarter availability specifically? as quarter, you worse, mentioned talent about same an service Moving as relates environment positions. labor quarter, availability sequentially or it again filling characterize to this issue, labor and the kind is know the labor of sourcing

Steven Sintros

but challenging, extremely still probably as Tim, it, characterize probably marginally would I Yes, better.

wages. additional and so but on, to around of quite some moving that relates investing capabilities think sourcing in frankly just also efforts our and I

move well very again, I more say of would as different areas marginally know, better challenging. think but it some is of I still heard of continuing lapsing, wages some key tie unemployment by in as--you in along operators benefits to our a local we but to the that improvements market some markets so have between lot and market, would

Tim Mulrooney

we effort to Okay, the what geography out the a profit why concerted operating you. I’m of curious, great. negative basis. missed like of guys taking your looks from van Thank if first I so by The were I I one percentage in that business were out me, you the building at just understand your effort fact a that completion quarter. last maybe it aid operations, was think though, on look build

best the what think business I right laundry overlap your now and your your business, first way ultimately ask you is like question is core to and where would the to be? aid that geographically current between

Steven Sintros

can bit of so give Yes, a you little I context.

aid If back, and regional safety first not in. operations there a from of a our were was laundry that had core that and years, we say you very we perspective, aid first business markets were couple go many in

done things. have two We

a so We acquisitions had depth markets, we that’s of working customers together. say don’t call, have operations much resources sales two to those some vans have it’s in a some we in continued a majority the needs we be adding just for one would most the together we’re a routes with operations little that from the markets, those effectively as capacity say and some market but may years. and take to I we’d When service scale over from of can have or will but over segment, what to we this the as in out reliable and and is markets, some few organically the not the right build on look next I we to give about you and sales filled done There’s more advantage be and adding in to of challenges There are and market some closely our they’re as hitting laundry so doing attacking that couple need at markets, have continue been just a a the into markets Early operate to opportunity operating years. for we a acquisitions be of scale. more right business. out really many to larger continue really lot big importantly, where small need of scale and the margin of way a but add sort integrated we of opportunities. major next is a it. like more really added now be have could bit returns that to perspective, have get perspective, market now in the percent we so part, the vans of those have of resources laundry of presence percent, still to cross-selling cross-selling invest we solid to I’d very to you continued most a segment, that I have in fill key example

Tim Mulrooney

you, Thank Understood. my and questions. Good luck thanks for ’XX. in taking

Steven Sintros

Thank you, Tim.

Operator

Thank you.

further to the a came on questions from JP line question one time--actually, no four question, Steinerman As coming up. There with the with a for this proceed please register by have We a of Please just your question do question. are press Morgan. at your Andrew one telephone. reminder, followed the

Andrew Steinerman

terms that transitory you costs? just define calling amount, of ’XX by Hi what go and fiscal categories if mean mean they forward, Shane. you Do then at don’t or are stay you in Could in us going which and and XXXX transitory they costs, you us could both for go Steve for and do in you mean they us you’re the they they what and circle specifically repeat? level that give that

Steven Sintros

so for of as talked will that them this well as costs certainly be project our have, about the into Absolutely, will in example year. of were have we that continue three kicking CRM, stuff up call, talking costs few will have I would project will multi-year be and rollout and start about CRM XXXX, those Those investment I Andrew. then to cost initiatives the a XXXX out. branding and a about years. rationalized costs of we’ll talking the of The what continue ERP on magnitude tied then continue that XXXX, of of each about present deployment project transitionary for talk give a we’ll in the large in lot detail be can they’ll in we our Shane be a you we’re to those to future for some you When the in be the years. XXXX, more to maybe we little ERP mentioned primarily some about, that be we’ll the XXXX, off update certainly

Some ramp, will Shane give some further transition from get capital we our fade, project, will will as into color to some you ERP more more can little operating expenses there. so a

Shane O’Connor

out Yes between and million approximately key breakdown of of there. that’s $XX we $XX $XX of related be those the we image for we’re that, that new CRM when to worth A initiatives, attributable of million implementation, that support in large again, as a go and incur Then look people we’re and rebranding system obviously we - at lot activities them, then million costs Andrew, expecting locations the company’s that three our consistently each system a to incremental for additional teams for branding, have to to we of be have supporting visible be that to are move throughout trucks have the billboards will will costs. traveling going that. million is deploy consulting we during ERP, for The incremental out as to portion our have we going our to including teams initiative, bringing that our built the $X most the that those responsibilities the to travel that we that conversions. system, specifically and costs take that, to

advertising and consulting in well. there’s as new be Our additional then costs as trucks the as will costs image, well for rebranded

Andrew Steinerman

certain Right, the ’XX, nearly things, invest but you then is didn’t back ’XX that transition. area, costs, away in cost? branding level and Shane, now Sintros’ depending into Steven that bleed ratchet an Yes, to ’XX. branding that go more on the of thing, the big this branding ongoing but in is or somewhat It somewhat is that we as maybe more - A thing, to mention, the on do elevated will be not investment in will primarily that may maybe does a of a ’XX, over a down of rate timing one-time

Andrew Steinerman

much. very you thank Okay,

Steven Sintros

Thank you.

Operator

you, Thank there are and this questions no time. further at

Steven Sintros

results to great would again like review when joining we year day. forward and first for January our well report fiscal Thank speaking to as fiscal as ’XX. to everyone remainder thank to We quarter I a Okay, expect for with look you fourth in for XXXX. and performance, today you, have the of our quarter full us our outlook

Operator

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

UniFirst (UNF) 20 Oct 212021 Q4 Earnings call transcript