Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to the UniFirst Corp.

First Quarter Earnings Call.

During the presentation, all participants will be in a listen-only mode after which we'll conduct a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Steven Sintros, UniFirst 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 Shane you our we today quarter will Officer. a conference me be is first, to prepared results I'd Chief President call disclaimer. listen-only XXXX. brief like remarks, Financial for and on fiscal but to This our a complete welcome review to year Corporation's O'Connor, UniFirst first Executive call Vice until mode

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

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

results our infrastructure and came with in pleased be of first for steady quarter anticipated, progress to continue key the technology I initiatives. our largely and as the Overall,

for dedicated in We partners are for and on focused to long-term business other team to come. I ensure our each making to deliver growth and our years continue to of designed to providing thank accelerate profitability investments thousands as be well customers. services as our we industry-leading to always want continue

on the year, shortly unchanged as our of call. XX.X%. first results Consolidated XX.X% year-end as adjusted remains the Shane comment revenues and grew per will earnings the provide our which our full in share details from grew for first quarter earnings fiscal outlook well quarter

with sales well which the of We account customer performances solid to continue in are as retention. as both new team, deliver our pleased execution

environment. our quarter XXXX in customers the Continuing we have the price revenue also with throughout from from experienced worked as and we related cost the the prior increases quarters, the adjustments growth strong have of inflationary to share reflects trend impact to

prior be of system, transform As will Company corporate-wide rollout the our UniFirst three capabilities are discussed initiatives brand. to the CRM we designed ERP These to system of in large overall terms positioning. we our in and continue the and investments have competitive on a calls, focused initiatives in

we With respect systems internal with to our in good deploying our system CRM our making project, new progress are schedule. line

deployed our we expect the will and our call, and last fiscal As communicated during over fiscal locations, into the The by deployment XXXX. of of XXXX. be U.S. of have earnings Core the deployed we XX% cleanroom Laundry we end remaining to carry operations over locations Canadian U.S. smaller

new XXXX, During -- global we the chain a Cloud our will and will growth project. technology we as be fiscal The for phase ERP Oracle focused implementation on also and of our system to be procurement of provide overall ERP efficiency. initiative an foundation multiyear design supply designed on our well will as be focused transform capabilities

a during series earnings we national ads. officially new through of 'XX, we our discussed as finally, And launched prior calls, TV brand also on fiscal

Our deliver always message be companies, for their deliver them. who UniFirst, serving their At always their and will ongoing focuses families. people focus to our for on customers

us. expended in Although the expenditures to will behind this some brand costs transformation one-time are related be mostly larger fiscal 'XX,

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

of related adjusted the for results to continue these impact to report direct investments. We costs

we through market As we'll closely. fiscal be continue XXXX, conditions the dynamic watching

market have that customer what operating will impact environment remain interest significant stable. a the seen. where and on to we quarter, customers our our be rates higher have the overall change and During see been the levels did When not base to and

Over business and our to brings, proved of are what many next cycle execute resilient ability confident in cycles we the years, economic our regardless the in against has different our plan.

will service taking while family. adversely don't And we in bringing UniFirst focus execute into continue always, transformational our affect employees, ability our initiatives of to to or we areas assuring new customers our on maintain sharp levels. impact We can manage control, we'll a our costs customer customers as and care the on our

quarter Shane, results. with will And turn to on our to I'd details call over more who that, the like provide first

Shane O'Connor

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

Our three in of first fiscal results XXXX million approximately and Steve respectively, directly the initiatives to the key included XXXX quarters and attributable million, discussed. $XX financial of costs $X.X that

$XX.X to from or Excluding prior and increased XX.X%. increased $XX.X costs, $XX.X year from or to share operating income increased $X net Adjusted diluted million these million $XX.X initiative million, adjusted $X.XX X.X%. to adjusted million to per in compared earnings income

customer Laundry was the well first million, the the of XX.X% acquisitions of which incurred retention to cost Core Core Canadian up strong fluctuations Operations well environment. efforts have revenues quarter year effect was customers last the the we inflationary dollar, for and XX.X%. performance from over that XXXX. with in rate estimated the as as sales Our business our result growth, This solid for as share primarily quarter growth $XXX.X the as to adjusts Laundry were ongoing our due organic of increases organic in

the the decreased in costs we margin million. $XX.X key The in for prior from to year to X.X% or X.X% Operations million Laundry our incurred excluding costs, operating operating related initiatives year. margin X.X% were Core to recorded And adjusted $XX.X X.X% Laundry the prior Core quarter decreased segment's from segment. to or these

levels in products inflationary item effect on largest merchandise the to the prior from operating be higher year customers certain to as with resulting our our customers impacting support in The additions cost national adjusted service energy-dependent in compared sales, account as our well of markets, of margin continues investments. activity new amortization, well as solid at wearer our as XXXX elevated increased to put merchandise account our

also health revenues was up quarter costs the Energy claims Partially quarter headwinds XXXX, XXXX. care lower to in offsetting prior of these X.X% from first year. expense increased X.X% of to in in compared the

cleanroom million work increased our in was strong This Garments cleanroom specialized due million $XX.X growth XX.X%. segment, our Specialty prior from primarily Revenues $XX.X or our North American which and nuclear decontamination increase delivers to project well increased from and year to as in services, operations. in as operations nuclear products

from margin operating primarily strong its segment's to the top performance. of line result XX.X%, XX.X% The increased

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

Our First increased XX.X%. or $XX.X revenues Aid million segment's $XX.X to year prior from in million

had operating out quarter. results the million larger $X.X investment segment These and a support an business. the to Aid reflect continued eventually infrastructure of First the in during loss expanding our necessary building much business However, our van

our not end debt to repurchase continue and position program repurchase stock totaling solid investments financial of under fiscal during We common We did the cash, at long-term a XXXX. million quarter maintain $XXX.X short-term quarter. balance our current any additional and first stock of the and with equivalents cash sheet no

the by compared to due million prior of in provided to year, lower $X.X increased primarily capital million activities Cash operating $XX.X needs for working quarter business. to the

to with in totaling acquisition continue two and We we $X.X quarter businesses the our $XX in invest the which future expenditures paid of million for capital million.

to million be earnings time, At of our an further to $X.XX. we and this $X.XXX key provide costs $X.XXX between take $X.XX opportunity of that be an our I'd update continue $XX in for diluted We outlook per to between also like fiscal our directly be expect attributable outlook. on this revenues XXXX continue to expect continues estimate initiatives will and will full share will billion. XXXX. billion expensed assume year fiscal to This to

Core Laundry diluted from margin as a XX% and adjusted and developments. any tax Operations adverse rate of well significantly range share at future between adjusted as of X.X%, or and per $X.XX, buybacks adjusted earnings impact the no GAAP of economic share the midpoint operating unexpected $X.XX

concludes can have. questions you be This for questions. we and that happy to prepared we line might now the our would remarks, Operator, open answer any

Operator

Our from go Instructions] Wittmann of with Baird. line phone first ahead. Please Andy the question [Operator is

open. line is Your

Andy Wittmann

growth Great. organic total the core I I'd say, outlook. there. the just I like But was guidance thought of X.X% growth for Good, XX.X%. year your year. in would of suggests start The the a the revenue question of X.X% for with good the pretty on result rest the rest to implied segment a

little guidance but deceleration. bit first that I'm is market that is pretty level this a raised understand I why just the there So of deceleration just a quarter, curious as because surprising. to totally wasn't

thought hoping So little to bit can process detail that. provide you as behind of a the

Steven Sintros

a it's question. good Andy, Yes,

our think happened at when of which and next year with look some were have revenues experiencing. to trajectory of I impact obviously you obviously of the about We been the and inflation, we're talking customers impacted offset been with working the of look some we've we've heavy to the what our business. in talking try the still inflationary as all about things you XXXX at that

don't that the that in of as some half expect that we of annualize We activity be XXXX. to happened as latter significant

a was expected. the when comment That really we at as you look case made the as from result was our line top perspective well. so therefore, of the And first it quarter, that mostly

deceleration So, of that largely and the result activities, that anticipate of related energy the some something to some prices. those think pricing I is specifically we is including

Andy Wittmann

it. Got

about those with than for down. talked lot categories I -- other Are had you lower labor. fuel surcharges talked key quarter away 'XX things last So in of are the support so? obviously, maybe would, balance merchandise, the just several not about there other cost might energy last there's the coming trends guess, things the seeing a there I prices year mean, this go price that prices, or quarters, other or adjustments for moderating that over structure? Are you've you on

Steven Sintros

you sort inflationary the say, would environment of, is but it the look say challenging a couple are a hit we I Yes, cost of the of and labor gasoline. And from seeing cost can in areas, environment the some you've at still see energy. on perspective, you I think moderation. when larger

high. accelerate high and Electricity XXXX, during aspects not but We're remained like still other are also natural the gas way seeing during probably many pretty things seeing are retreat quarter. has were not the many they energy some was -- there things high. we're Some remain of still dynamic,

labor the larger that of of minor say, I'd So, ones, remains pockets labor in cautiously although cost one will still and terms availability, in of improvements less perspective. of that But challenging optimistic high. we're balance a from dynamic some, the increase seeing be the than 'XX 'XX there's we're of still cost labor area

Operator

question JPMorgan. you. next Steinerman Please Thank ahead. of go with Andrew the And our line is from

line Your is open.

Andrew Steinerman

willing be year? you how the in us was Would basis the merchandise drag in a kind terms? margins will suggesting full amortization to much of quarter. share much to the How first core Merchandise in you're with amortization affect percentage points

Shane O'Connor

absolutely. Yes,

Sort indicated quarter, had merchandise was the of a merchandise that going from approximate first I the the of about for we was point. amortization And a believe year, that year that's I last about the that to the at the still headwind saw end case. headwind in point.

that, expect headwind continue to throughout year. we that is the So, going

Andrew Steinerman

also as for for you year? you're energy percentage penciling And of tell the could in us Great. revenues what a

Shane O'Connor

Yes.

expectation for energy my is So X.X%. year, the

Operator

questions. [Operator further Instructions] at moment, Thank I'm And you. no this showing

Steven Sintros

review thank to XXXX. report Thank the in everyone XXXX. speaking to we and quarter fiscal everyone to again as for quarter our with of like remainder I'd you, outlook our performance day. March look for to We expect first well have joining us as great the forward a when Okay. fiscal second

Operator

gentlemen, your day. you. a Thank please disconnect today's have and your you ask Ladies thank that lines, call. that We participation and conclude and does you for good

UniFirst (UNF) 4 Jan 232023 Q1 Earnings call transcript