UNF - Earnings call transcript Q4 2024

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter for UniFirst Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Steven Sintros, President and Chief Executive Officer. Please go ahead.

Steven Sintros

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

Corporation's Executive today to and UniFirst XXXX. review is fiscal me results Vice fourth welcome Call quarter our Shane to like Joining year We'd O'Connor, President for to Officer. Chief you Conference Financial

events prepared conference the will call future call subject forward-looking respect forward-looking that reflect our may current These a first, views a to until we listen-only and contain financial This but mode brief company's statements with certain on to complete uncertainties. be performance. remarks, and disclaimer. This statements are risks

The a words trends expressions identify estimate, of variety those may intend and that Actual statements. and from future results risk factors. anticipate, similar optimistic, believe, forward-looking differ events on indicate depending future materially expect, anticipated

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

closed growth and modestly both strong organizational that fiscal a move the Continue 'XX team report with to in bottom and well that lot top our advancing pleased exceeded initiatives. accomplished as of line performance. the in help as our we we I'm as technology company a year forward. strengthen We that companies expectations will our quarter fourth in other

as of all I towards service the serving strive best we living who continue being want our each mission while industry, work. team the our our the who vision thank to as recognized the customers to do universally other sincerely our partners of provider hard always and all deliver of people in for

running. are customers communities the the existing do who our work as They workforce and own as our team well are keeps that prospective UniFirst partners. our people they as and up the serve We hard

means their to the and is right Our providing to mission safely, clean enhanced our structure team, that services, program, room that services, and providing and we whether to employees right products their partner and job goal the organizations is customer their services successfully uniforms, ensure first for products customers all aid providing with workwear, safety other do or enable businesses services those their by our experience. and service and an facility and products to

details provide of a fiscal of but quick the quarter recap will year. our our shortly, full Shane

full from a $X.XXX came revenues Our year record an in billion, of XXXX. at increase fiscal X.X%

acquisition extra Our well operations an as full revenues revenue full Uniform. of from week year XXXX year as benefited of growth a from our of Clean March

Operations' fiscal adjusted 'XX expended very from was full organic Core income year the Our to our for and compared for EBITDA increased 'XX to significantly key related the growth year lower a Laundry X.X%. fiscal during initiatives. costs Operating solid partially benefiting

EBITDA as benefits, areas. moderating adjusted Excluding key strong we as result for of the The well still these year. operating in full solid growth experienced growth trends cost and income

are pleased for with the the We which in activities also cash year, compared our XX.X% improvement full to operating flows XXXX. fiscal from grew

technology the a we've costs As been over last years of reminder, our related to couple transformation. incurring

to activity and phases largely are now winding capitalized expected, to of the we the current project declined largely due are our surrounding on initiatives the incurring As being key related as down during enter we year project. deployment amounts the the spending CRM our implementation we ERP these expense the of

are growth organic can selling our to we value prospects pleased quarter, the with challenging more for on a well, perform UniFirst organization Overall, bring their pricing continued environment. quarter despite the businesses. the During the sales that

robust metrics, indicating levels a we wearer net mostly is would environment. our stable, continued our decline seen in we existing customer -- hiring have see a classify have less to Although we sequential wearer

has impacted corresponding 'XX. emerged quarter, challenging its pricing impact impact inflation elevated retention revenue significantly sequential fiscal which the levels, last discussed As we environment our the rates a trends of in and from market growth more as on will period rates our

provide will 'XX growth XXXX. in expect we shortly, to but our fiscal organic for Core X.X% X.X% currently our on be detail Shane in between guidance and more Laundry operations

these we about do 'XX deliver, the we a a strong improved growth rates are aspire We there be finished 'XX would to leading our and revenue recently sales the year have are that fiscal ultimately trend of new reasons and an we in not some account to are experiencing. are many Although perspective. from in positive with we to trends retention suggest fiscal performance indicators of poised feel

which the we as us last and were good we example, newer increasing from a in couple as is staffing steadily have at throughout been For contracts program renewing the years. service -- of from scores, have a NPS year, feel our rates improved perspective we

our and our becoming teams with systems taking new advantage more and their addition, more In of are comfortable benefits.

well drive business to a we ability As existing as investments our company, enhance to continue on as customers' and in our to improved enhance new focus customers, experience customers sell the additional products attract retention. to

our efforts In to ongoing reductions on to and addition our to to growth, we profile. cost drive margin enhance excellence continue operating focus our

pleased of trends input costs in and as progress as key well with recent some related such are costs. the merchandise and other the We area in as this

leveraging utilizing including the new across technology mentioned, our and of I our continues CRM, proprietary be As capabilities team optimizing to some Clean's UniFirst. proficient all more of

productivity. standard deploying driving focused and our efforts all processes operations on across local With

In as such represent as enhancement and opportunities. account strategic margin well pricing significant as manufacturing addition, sourcing, areas strategic and profitability

move the in feel going midterm. our of through to the forward that continue some areas be focus near we of enabled will ERP, Although more significantly benefits to the we these these needle others on implementation can and

$XXX Aid double-digit fiscal we for XXXX Safety in First bright this XXXX. million with segment continue first our strongly believe division. future to time, exceeding and We growth of fiscal and the in the finished again We expect

in strong these as to and market in infrastructure to and for as continue prospects the reach services. van make have customers and service our new We can a footprint ensure the investments UniFirst products expand operations on sales that we existing well need

their strong once we solutions Aid First pressing an again Customers investments the integrated achieved is and most in contributor that to important these and to growth issues have quarter. expect solutions. These Safety delivered

As customers services Operating density provide, to Chief improve. this route we of the expect leadership steadily last, Kelly senior that the certainly role as profitability not welcome penetrate well segment we we to continue but our with we Rooney thrilled And of as improve the full team Officer. in our to to are of least, breadth

services we we service Kelly's brings of experiences how waste help can where to we well company. COO Kelly ability X of and but as business-to-business coming long translate feel a to will The new strongly the career Her in that role working industry. UniFirst, a experience out positive in significant route-based evolve. us on and our enhance we effect are to be operational given feel continue as to execution critical change journey especially is experience

fits operational talent with promise to empowering our for our employees. customers a deliver succeed like experience, her culture Alongside passion our and our and workforces and deep her glove to always for

to XXXX. With call our fourth provide the who that, fiscal like as over as outlook will Shane, to quarter for more our well turn I'd results details on

Shane O’Connor

ago. XXXX of our XX.X% Thanks, revenues increase were quarter year $XXX.X an million, of a million from fourth Steve. in $XXX.X Consolidated

$XX.X fourth week reminder, an in fiscal the week the fiscal our for quarter a year due the extra and to fiscal operations year well of This accounted the included of revenue X% from fourth fiscal As of as growth quarter full for extra respectively. per timing full as calendar. increased $XX.X $X.XX approximately or million of for quarter per million quarter share. or XX.X%. the . Consolidated to million XXXX X%, from share diluted income $X.XX diluted and operating $XX.X the million $XX Net income increased or

last March that company the Clean as to commentary. of result increase XXXX. The a X we started more metric to disclose the due Over in EBITDA in of amortization noncash incur quarters, to started a prominent Uniform as in acquisition of its the expense

that will Starting compensation adjusted to is acquisition believe more impacting as this migrate taxes, share-based and amortization, interest, and for and before comparability. meaningful metric further income costs income other the adjusted defined quarter, expense, net items is we an company depreciation EBITDA

and of incur, key the we The the measure but will separately. a the company's not visibility provide profitability items adjust to those more indication We to costs better believe does more provide EBITDA a will the company's non-GAAP flows. that cash future company refined wholesome metric this is generate initiative adjusted view for capacity of

the Consolidated the quarter for year adjusted or in to EBITDA prior XX.X%. increased million $XX compared to $XX.X million

financial Our million, XXXX $X.X fourth quarters the of of respectively, to and our fiscal results attributable million $X.X in XXXX and directly key initiatives. costs included

operating of EPS XXXX respectively. $X.XX, fiscal on The decreased $X.X XXXX and by by income these and and $X.X and respectively. million, $X and effect million million, fourth adjusted million and $X.X respectively, by EBITDA income of Net the diluted $X.XX quarter items

of increase Operations XX.X% of the revenues the for Our $XXX.X Core were fourth quarter an million, quarter XXXX. from Laundry

acquisitions, EBITDA the from extra the as or organic and adjusts year was of million of Laundry or which XX.X% increased growth, segment's X% increased well quarter $XX.X for dollar Core fluctuations Canadian $XX.X margin in in for The to effect from Laundry impact as million the Core the prior the estimated X% operating XX.X%. The margin X.X%. week to the adjusted

Laundry for the Core XXXX Costs we and incurred EBITDA X.X% decreased initiatives Laundry and Operations by respectively. margins were our fiscal to segment X.X%, the fourth and of recorded and key the Core related operating to adjusted XXXX quarters

merchandise, a which XX.X% the fiscal fourth services additional revenues, XXXX and well adjusted of as and of nuclear our the ago. prior year Garments benefited from operating of an lower for Specialty specialized X.X% $XX.X million delivers fourth were operating percentage quarter Segment as of down from fiscal costs payroll cleanroom XXXX and Revenues revenue. the Energy other comparisons for year. from from of decontamination as EBITDA costs and products input a increase for margin the week segment over quarter in quarter X.X%

clean Segment and After results U.S. X.X%, the for year. organic the of quarter over the during business an growth was impact XX.X% of to million, from week, was extra segment's income the nuclear the operations. primarily room growth $X.X increase prior the adjusting in due stronger

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

in segment's fourth operations. quarter Organic Our in or increased to van XX.X%. million route-based the growth First within of to growth the segment's the XXXX was Aid primarily revenues segment due X.X% $XX.X

[ the we with grow we year, equivalents income million. and continue shape first and the operating reflect sheet continue making to of financial are band debt investments solid business. in position to our cash fiscal $XXX.X ] end investments a our nominal no reflect long-term short-term to At cash, totaling balance Segment's and was the quarter and

we $XXX.X needs capital additions, working flows solid of from see due improvement operating XXXX, to In which primarily and business. activities, continued the to our million, lower increased profitability to fiscal in XX.X% cash improved facility Capital updates continue to meet expansions, new million us we in expenditures for strategic enable as that future fiscal XXXX long-term our to totaled our objectives. $XXX.X and systems, invest with will

labor million primarily During the which our we of to and third-party internal capitalized year, both consisted related capitalized consulting costs. costs $XX.X ERP, ongoing

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

also During we common fiscal stock. repurchased million XXXX, worth $XX.X of

will time, share XXXX this between further between like and diluted which XXXX, fiscal calendar. to we fiscal expect fiscal At per to fully billion. for XXXX week will this our earnings opportunity We $X.XXX billion that to of X include timing $X.XX. I'd full operations provide to $X.XXX our fiscal expect our and compared year outlook take for our revenues be due $X.XX less of be the will

EPS key is we this further consolidated relate ERP to $XX range, initiatives, our costs in our the by that our to includes $X.XX assumption guidance incur EBITDA project. and million assumes adjusted our at midpoint of million. point, to $XXX directly expect which primarily guidance At reduced This our attributable

capabilities a we deployed. to of are the operating and year's core made week tax enhanced that Energy and operating Core operations of Core be are company and and input costs subside recently are in on X.X%. result expected last Laundry merchandise impact XX%. decreased operating revenue EBITDA favorable headwinds Laundry has other next organic controls building investments continue of X.X% which to assumed excludes and respectively. inflationary Core both CRM adjusted X.X% system Key continuing our rate it is and effective margin procurement the the revenue costs from recorded operations in margins costs, to to Laundry results adjusted EBITDA XX.X%, growth, in fiscal X capitalizing to trends X.X%. operations be is and merchandise of by initiative laundry and in benefit XXXX,

business. continued forecast to clean are in revenues from the growth XXXX Garments projected due by down by and the room in the Specialty XXXX, in Our to X% declines nuclear the fiscal impact offset be business extra approximately partially of week

business income in XX%. will be have down this the change segment, a mix we to on operating profitability The approximately of and larger expect impact

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

Our be nominally approximately XX% revenues expected segment's to be to XXXX, is First and compared projected Aid segment operating the are positive. up to income

We application approximate ERP remains expect making significantly will related development XXXX $XXX that are higher our million, implementation. capital revenues, most a to expenditures percentage elevated in as to primarily we our due of investments which

an For ERP initiative, the our in made fiscal progress with update are pleased we XXXX. on we

be expect through capitalized the project expect $XX focused our and capabilities. million. solutions this the finance $XX.X approximately on between implementation $XXX XXXX we management to fiscal continue progressing will XXXX carry with master We related million initiative and fiscal total implementation and of ERP will XXXX, to that have million Through the data

assumes generally affecting to would unexpected now you common economy. concludes questions answer current and our any prepared outstanding level and changes This have. remarks, guidance Our be of that the our no shares we happy might

Operator

[Operator Instructions] question first Manav is going Barclays. the line come Patnaik of from to with Our

Ronan Kennedy

entry a This that, ask your uniform their ask just on current industry on for with I into is I if insights for further can from for the to if activity cetera. competitive there's Manav. the any discussions recent and services dynamics, just market, inclined Can on on and on of et the industry assessment U.S. Roni U.S. potential Kennedy comment you're thoughts

Steven Sintros

add I other Ronan. companies. I think I to don't much general, in Thanks, by was mean both what than have publicly said Sure.

market. I think U.S. the they interest expressed in

untapped company. You it's we given feel and said a not that as UniFirst surprising to saw But we're release . in publicly we -- our we towards. what continue that's release, our we've interested of and have think I be quality would think in lot companies of the executing potential, the

I far ourselves it general to we in the think focused on. the to we're our as and dynamics, And As continue that's and industry be industry. position a for place continues future that competitive industry. well what

Ronan Kennedy

corresponding but And it. was is said Got you renewing had could unpack environment, also and a That's there more rates, improving challenging is highlighted a you impact just and NPS then helpful. further contracts there -- on price rates, -- you so can score I improving. retention

pricing high-quality some further just into and insight challenges impact sustaining renewing retention levels you can versus give the and So further service contracts.

dynamics the So kind of there?

Steven Sintros

Yes, absolutely.

labor the inflation, I inflationary industry the through of get in talking impact And the over customers such and a couple our to offset period trying exception no of we've in been year the we of higher price work about could companies were think years where last costs. trying to with last the historic more input other environment. to that the all were going obviously, after of through

on some And companies talked wherever about period recoup to I now, We've industry. the of that think We're sort costs no of try to things customers as trying has they transitioned Companies I way through to in our are manage can. side from different. looking same their are recoup And we've think going been cost heavy inflation. sourcing the the our able our to vendors. such to after do

and renewed these contracts bid, as percentage comments More being other we contract being that put that's impact. are NPS so of and some recent trends on around as rates, out track are having My well obviously, and we to contracts things. on

a positioned those year trending heavy commentary saying, how there my tough worked outcomes. about things periods, is but that coming and I good off how feel to we've think through transition inflationary improve to we we're And of are

couple in very areas to those we show year we're year. experiencing So next in cyclical feel but period, performance what to think I better a the unusual poised is some of

Operator

of from going with Mehta question Our Northcoast . Research. line next to is come the Kartik

Kartik Mehta

are Steve talked and we go neutral? kind a and you to little they of are the where Or today, just are you as Shane. about look a wondering stops, you Steve, tops kind the at ad bit where starting point -- know business in ad I'm negative I cycle. of considering economic are at

Steven Sintros

Yes.

getting -- think categorize sequentially negative from look little yes, course overly this where why trend, is in now, not to meant a are extent that to you I is are say that my an we a wear say at if we to them But as fiscal mostly we concerning of of you 'XX an point, incrementally levels. I at it comments kind some boost seen bit the decline to sort would stable. ago, they a of they're were but over sequential and have activity were that year consistent decent where which

a extent. sort is to . negative small it Now of

Kartik Mehta

pricing the then on just And clarification.

new think existing competitive. and Or said they've in customers, a But always contract on as you've gotten I competitive, little has changed incrementally the still get you price well? are some environment able bit that increases? wins are past, to your

Steven Sintros

and customer working been last general, value retain I all there, think I that of in drive level was . And I challenges the before, also yes, renewals the over said am job, said, normal couple you and I and can the pricing from doing that our existing think, companies in as the good than your as like ago. upon somewhat customers, Kartik. to more that. it general, in ultimately ability think years I the have I've a X And through service? seeing lands certainly pricing experiencing, the we're is is But on, get multifaceted the years challenging different are today view answer course. in customers cyclical is But on, based just I

right and the on. have we so Do relationships

cyclical. some think of things best those make the But we to recent sure to continue we enhance So are trends I outcomes. are the have

Operator

McFadden Our to of with ] line from next William is the come Blair. Luke going [ question

Unknown Analyst

was you're where stops. does more markets broad-based? there net this bit sort just the it acutely any are to end or sticking be and theme particular seeing metrics of of kind around curious, Just a slowdown I most wear ad a seem

Steven Sintros

a I say regionally, it's continues mean to along in pretty this that steadily. point. We I but it's would -- country. at things things the look the sprinkled of broad-based like it's energy we've think it's I kind bit of sector, and at about past the kind Yes. just more years, talked throughout tick

point, broad-based. at would pretty I say it's So . this

Unknown Analyst

to Understood. just impacted wear talk how And if softer we're that But softer Or little net into environment quarter and year. this environment. also just that have follow-up, this growth? account you has continued could during about indicated trended due employment . to new for the you slow new my metrics curious if bit a quarter that into has heading just

Steven Sintros

Yes.

the this was pretty finished Our to that but new last about bolstered new and steady. earlier able overall, business new large in ad somewhat accounts some to were solid. record I we quarter account I in with like the by the levels the as fading. stops talked wouldn't year And of win ability growth think We the sales, is But year. I sell categorize as quarter,

Operator

is of . next to with question our Josh the UBS. from And Chan going come line

Joshua Chan

you XXXX prior think Is some would based retention the the the as in just in slower questions. growth about classify right that I'm think to way way I to XXXX. result you of on it? responded the challenges of the curious that the

Steven Sintros

the steady billing on next the we're before of activity provide in when I influences absolutely. year, really, look what very a build Because I growth growth that at I heavily. that to very obviously, year and you of look business, when forward of of to Yes, when activity think year based year year your you we a subsequent model, the ability at you understand, weekly recurring in most the is think lot our mean you before. look as

in really that retention environment experienced impact mostly so that 'XX it's the and that And on impacts 'XX. pricing we

my comments better think stand of think a about to results I is ability in we 'XX. is of our we more what sequential through where today and drive achievable 'XX harbinger

business on builds the of of that understanding kind way sort the itself. Just .

Joshua Chan

with business. It . And the down can margins about what's margin expecting in that. talk something Core I has Maybe D&A do to Laundry you're like your Great. But could seems margins to question. in pressuring a maybe in the you guidance, ask year? coming be

Steven Sintros

Yes. bit There Certainly, about from an operating a Shane is in little income minute. more talk this perspective decline. some margin a can and

to and margin we to technology, of there's the biggest impact of that is we it's things which infrastructure look our is make in the EBITDA to Now investments the impact well. continue why the operating way the when here significant disclose X continue impact we've some you of as acquisitions, at related disclosed, it is DNA, amortization

EBITDA And be where been general, our that's look expect we bit from to year. think the course testament merchandise you And things expect next them I stable an we've to year. little trends some next in perspective, be trends very a a merchandise of from recently been at when lower we over margins the EBITDA, doing we've to and actually seeing perspective, a of

So Shane can add that. any color to

Shane O’Connor

Yes. No.

that think much it up. pretty I sums

at were operating If key margin, you comp. items be are to related of costs that expected that look from noncash initiatives. impacting . well that would other elevated, stock-based are as some slightly yes, the And incur contributing depreciation headwind our as X then some that the elevated to take to the going a are things

metric that's can better reasons that's a why And do adjusted that that provide profitability. flat. relatively is EBITDA you indication One we think of see we the that, the of

relatively account the margin into from related be take expect business additional the 'XX. is initiatives, you a the our to consistent expense to perspective expected incur to that with key If of we profitability

Operator

Our with next Steinerman to JPMorgan. the come line from going question is of Andrew

Andrew Steinerman

your service. willing to you This service any tell just the you know the have then also long-term in quality score score. a there? of quality commend ask I have when industry highest and NPS ambition reflected NPS NPS the have your in And current what that you new ambitions NPS highest have to having about currently definitely you you an Are score? amongst seeing for I level it's said program. Andrew. you wanted you is program. I us your to Are

Steven Sintros

the little for point, program Yes. a terms to in At baseline I newer, Andrew, disclose starting the of is that. think this

the for about So year of building that's we trends at sample something But in of had in a forward. consider we've it. we're Obviously, can how going program we're now. looking terms

can unfiltered. We yes, look reasons. there's and companies our of out going you the But how to is looking that the put we're opened out impact things way the we can in a it business I of at of we and get that why When other And customers think that program our program I customers and lot NPS again, would is compared from retention, industry. that feedback that in. sort retention that we've at other score say think say, doing. of samples we're getting and to best

like create think and we're really starting and But a establish those a great remarks, prepared vision location I in place. is to differentiator, I goals to from our said internally our by we're solid region. and be starting by

Operator

Baird. [Operator from Andrew line Instructions] with Our next of Wittmann the question . comes

Andrew J. Wittmann

some accounts on earlier decelerate. annualize. your the that and on you organic you the growth laundries going in fiscal year's there of helped those and picked larger here that That's part calls previous this rate growth in expected core were as rate early guess mentioned that call 'XX, I Steve, reason to why up

changed it's street and today there, accounts as kind quite as times. down, the you contract more then has the large not more just it's seeing much back the slowing seeing market Are to the environment where opportunity for on same accounts. of of I'm large normal you're number back to bid, large you as out curious were for seeing or

But versus list on I how maybe it was ago. just little accounts it the I last maybe seemed uptick. and like prospect these year guess, national a was its and could unusual thought today comment compares in a year you

Steven Sintros

Yes.

a in it's similar think Andrew. place, I

think about when top year X I a account. ago, we talked look you at adding a

many there's to Now be When $XX,XXX a they of by week national accounts, week. size. only $XXX,XXX about a can nature, we from that talk anywhere a accounts so

to time, national the what we did of opportunities. there's we But think at range. there good out the for environment overall, So same of I consider that yes, the getting healthy is to we see talking some of is accounts. size those, But match big challenge a last we X about challenging. reasonably And we're what prospects the feel year, and the still

Operator

Steven And the over now to conference would hand to for Sintros remarks. I back like . closing

Steven Sintros

you to to quarter everyone for you again again, us expect look results. day. Thank a in thank report January have with to today our when . again our and joining we first like performance. We forward speaking review I'd to great

Operator

This concludes you call. participating. conference for Thank today's

You disconnect. now may

UniFirst (UNF) 23 Oct 242024 Q4 Earnings call transcript