UniFirst Corporation (UNF) on Q1 2023 Results - Earnings Call Transcript
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. I would now like to turn the conference over to Steven Sintros, UniFirst President and Chief Executive Officer. Please go ahead. Steven Sintros: Thank you, and good morning. I'm Steven Sintros, UniFirst's President and Chief Executive Officer. Joining me today is Shane O'Connor, Executive Vice President and Chief Financial Officer. I'd like to welcome you to UniFirst Corporation's conference call to review our first quarter results for fiscal year 2023. This call will be on a listen-only mode until we complete our prepared remarks, but first, a brief disclaimer. This conference call may contain forward-looking statements that reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties. The words anticipate, optimistic, believe, estimate, expect, intend and similar expressions that indicate future events and trends identify forward-looking statements. Actual future results may differ materially from those anticipated depending on a variety of risk factors. For more information, please refer to the discussion of these risk factors in our most recent Form 10-K and 10-Q filings with the Securities and Exchange Commission. Overall, our results for the first quarter came in largely as anticipated, and I continue to be pleased with the steady progress of our key technology and infrastructure initiatives. We continue to be focused on making long-term investments in our business designed to accelerate growth and profitability as well as ensure we are providing industry-leading services for years to come. I want to thank our thousands of dedicated team partners to continue to always deliver for each other and our customers. Consolidated revenues in the first quarter grew 11.4% and adjusted earnings per share grew 10.5%. Shane will provide the details of our first quarter results shortly as well as comment on our outlook for the full fiscal year, which remains unchanged from our year-end earnings call. We are pleased with the execution of our team, which continue to deliver solid performances in both new account sales as well as customer retention. Continuing the trend from prior quarters, the strong revenue growth in the quarter also reflects the impact of price adjustments from throughout 2022 as we have worked with our customers to share and cost increases we have experienced related to the inflationary environment. As we have discussed in prior calls, we will continue to be focused on three large initiatives designed to transform the Company in terms of our overall capabilities and competitive positioning. These initiatives are the rollout of our CRM system, a corporate-wide ERP system and investments in the UniFirst brand. With respect to our CRM systems project, we are making good progress deploying our new system in line with our internal schedule. As we communicated during the last earnings call, we have deployed over 50% of our U.S. Core Laundry locations, and we expect the remaining U.S. locations to be deployed by the end of fiscal 2023. The deployment of our smaller Canadian and cleanroom operations will carry over into fiscal 2024. During fiscal 2023, we will be focused on -- we will also be focused on the global design phase of our ERP project. The implementation of our new Oracle Cloud ERP system will be a multiyear initiative designed to transform our supply chain and procurement capabilities as well as provide an overall technology foundation for growth and efficiency. And finally, as we also discussed on prior earnings calls, during fiscal '22, we officially launched our new brand through a series of national TV ads. Our message focuses on serving people who always deliver for their companies, their customers and their families. At UniFirst, our ongoing focus will be to always deliver for them. Although some costs related to this brand transformation will be expended in fiscal '23, the larger one-time expenditures are mostly behind us. All of our investments are designed to deliver solid long-term returns for UniFirst stakeholders and are integral components of our primary long-term objective to be universally recognized as the best service provider in our industry. We continue to report results adjusted for the impact of direct costs related to these investments. As we continue through fiscal 2023, we'll be watching the dynamic market conditions closely. During the quarter, we did not see a significant change to the operating environment and where levels that our customers have been stable. When and what impact higher interest rates will have on our customer base and the overall market remain to be seen. Over the years, our business has proved resilient in many different economic cycles and regardless of what the next cycle brings, we are confident in our ability to execute against our plan. We will continue to manage costs in areas we can control, while assuring we don't impact our ability to execute on our transformational initiatives or adversely affect our customer service levels. And as always, we'll maintain a sharp focus on taking care of our employees, our customers and bringing new customers into the UniFirst family. And with that, I'd like to turn the call over to Shane, who will provide more details on our first quarter results. Shane O'Connor: Thanks, Steve. In our first quarter of 2023, consolidated revenues were $541.8 million, up 11.4% from $486.2 million a year ago, and consolidated operating income decreased to $43.4 million from $44.8 million or 3.1%. Net income for the quarter increased to $34 million or $1.81 per diluted share from $33.7 million or $1.77 per diluted share. Our financial results in the first quarters of fiscal 2023 and 2022 included approximately $10 million and $5.9 million, respectively, of costs directly attributable to the three key initiatives that Steve discussed. Excluding these initiative costs, adjusted operating income increased to $53.5 million compared to $50.7 million in prior year or 5.4%. Adjusted net income increased to $41.5 million from $38.1 million, and adjusted diluted earnings per share increased to $2.21 from $2 or 10.5%. Our Core Laundry Operations revenues for the quarter were $477.4 million, up 11.3% from the first quarter of 2022. Core Laundry organic growth, which adjusts for the estimated effect of acquisitions as well as fluctuations in the Canadian dollar, was 10.7%. This strong organic growth rate was primarily the result of solid sales performance and customer retention as well as efforts over the last year to share with our customers cost increases that we have incurred in our business due to the ongoing inflationary environment. Core Laundry operating margin decreased to 7.1% for the quarter or $33.8 million from 8.5% in prior year or $36.5 million. The costs we incurred related to our key initiatives were recorded to the Core Laundry Operations segment. And excluding these costs, the segment's adjusted operating margin decreased to 9.2% from 9.9% in prior year. The largest item impacting our adjusted operating margin compared to prior year continues to be merchandise amortization, resulting from the inflationary effect on the cost of our products as well as higher levels of merchandise put in service with our customers in 2022 to support solid new account sales, increased activity in our energy-dependent markets, elevated wearer additions at our customers as well as certain national account investments. Energy costs also increased to 4.7% of revenues in the first quarter of 2023, up from 4.3% in 2022. Partially offsetting these headwinds was lower health care claims expense in the quarter compared to prior year. Revenues from our Specialty Garments segment, which delivers specialized nuclear decontamination and cleanroom products and services, increased to $44.1 million from $39.5 million in prior year or 11.6%. This increase was primarily due to strong growth in our cleanroom operations as well as increased project work in our North American nuclear operations. The segment's operating margin increased to 23.1% from 21.9%, primarily the result of its strong top line performance. As we've mentioned in the past, this segment's results can vary significantly from period to period due to seasonality and the timing of nuclear reactor outages and projects that require our specialized services. Our First Aid segment's revenues increased to $20.3 million from $17.8 million in prior year or 13.9%. However, the segment had an operating loss of $0.6 million during the quarter. These results reflect our continued investment in expanding our First Aid van business and building out the infrastructure necessary to eventually support a much larger business. We continue to maintain a solid balance sheet and financial position with no long-term debt and cash, cash equivalents and short-term investments totaling $351.2 million at the end of our first quarter of fiscal 2023. We did not repurchase any additional common stock under our current stock repurchase program during the quarter. Cash provided by operating activities for the quarter increased to $27.7 million compared to $7.8 million in prior year, primarily due to lower working capital needs of the business. We continue to invest in our future with capital expenditures in the quarter totaling $39 million and the acquisition of two businesses for which we paid $6.6 million. I'd like to take this opportunity to provide an update on our outlook. At this time, we continue to expect our full year revenues for fiscal 2023 will be between $2.145 billion and $2.160 billion. We further continue to expect diluted earnings per share will be between $5.50 and $5.90. This outlook also continues to assume an estimate of $40 million of costs directly attributable to our key initiatives that will be expensed in fiscal 2023. Core Laundry Operations adjusted operating margin at the midpoint of the range of 8.1%, a GAAP and adjusted tax rate of 25% and adjusted diluted earnings per share between $7.10 and $7.50, as well as no impact from any future share buybacks or unexpected significantly adverse economic developments. This concludes our prepared remarks, and we would now be happy to answer any questions that you might have. Operator, we can open the line for questions. Operator: Our first phone question is from the line of Andy Wittmann with Baird. Please go ahead. Your line is open. Andy Wittmann: Great. I just thought I would start with a question on your outlook. The organic growth in the core segment was 10.7%. Good, I'd say, a pretty good result there. But the implied revenue guidance for the rest of the year suggests total growth of like 5.8% to 6.8% for the rest of the year. So pretty market deceleration. I totally understand that this is just the first quarter, but I'm just curious as to why there wasn't a guidance raised because that level of deceleration is a little bit surprising. So hoping you can provide a little bit of detail as to the thought process behind that. Steven Sintros: Yes, Andy, it's a good question. I think when you look at next year and you look at the trajectory of our revenues and what happened in 2022 with the heavy inflation, some of which we're still obviously experiencing. We were obviously working with our customers as we've been talking about to try to offset some of the inflationary impact of all the things we've been talking about that have impacted the business. We don't expect that to be as significant as we annualize some of that activity that happened in the latter half of 2022. And so therefore, when you look at the result of our first quarter, we made the comment that it was mostly as expected. That was really the case from a top line perspective as well. So, I think that deceleration is something that we anticipate and is largely the result of some of those pricing activities, including some specifically related to the energy prices. Andy Wittmann: Got it. So energy prices, maybe there's fuel surcharges or other things that might go away with prices coming down. Are there other things on the cost structure? I mean, obviously, you talked a lot about merchandise, not just this quarter for the last several quarters, talked about labor. Are there -- are you seeing moderating trends in those other key categories that would, I guess, support lower price adjustments for the balance of '23 than you've had over the last year or so? Steven Sintros: Yes, I think when you look at the inflationary environment you've hit on a couple of the larger areas, sort of labor and energy. I would say the environment is still challenging from a cost perspective, but we are seeing some moderation. And you can see it in the cost of, say, gasoline. Some other aspects of energy are still dynamic, like natural gas was still pretty high during the quarter. Electricity has remained high. We're probably not seeing things accelerate the way they were during 2022, but there are many things we're also not seeing retreat and some -- many remain high. So, we're cautiously optimistic that the balance of '23 will be less dynamic than '22 from a cost increase perspective. But there's still pockets of challenging and labor still one of the larger ones, although we're seeing some, I'd say, minor improvements in that area in terms of labor availability, the cost of labor remains high. Operator: Thank you. And our next question is from the line of Andrew Steinerman with JPMorgan. Please go ahead. Your line is open. Andrew Steinerman: Would you be willing to share with us how much kind of in basis points in percentage terms? Merchandise amortization was a drag to the core margins in the first quarter. How much you're suggesting merchandise amortization will affect the full year? Shane O'Connor: Yes, absolutely. Sort of at the end of last year, I had indicated that the merchandise headwind for the year was going to approximate about a point. I still believe that that's the case. And in the first quarter, the headwind that we saw from merchandise amortization was about a point. So, we expect that, that headwind is going to continue throughout the year. Andrew Steinerman: Great. And could you also tell us what you're penciling in for energy as a percentage of revenues for the year? Shane O'Connor: Yes. So for the year, my energy expectation is 4.5%. Operator: Thank you. And at this moment, I'm showing no further questions. Steven Sintros: Okay. I'd like to thank everyone for joining us to review our first quarter fiscal 2023. We look forward to speaking with everyone again in March when we expect to report our second quarter performance as well as the outlook for the remainder of fiscal 2023. Thank you, and have a great day. Operator: Thank you. Ladies and gentlemen, that does conclude today's call. We thank you for your participation and ask that you please disconnect your lines, and have a good day.
UniFirst Corporation (NYSE: UNF) Q3 Earnings Overview
- UniFirst Corporation (NYSE:UNF) reported a solid Q3 earnings with an EPS of $2.17, surpassing the Zacks Consensus Estimate.
- The company's revenue was slightly below estimates at $610.8 million, but still showed a year-over-year increase.
- UniFirst showcased a strong financial health with a low debt-to-equity ratio of 0.033 and a high current ratio of 3.38.
UniFirst Corporation (NYSE:UNF), a leading player in the uniform and related industry, has once again demonstrated its robust financial performance in the third quarter of 2025. The company reported earnings per share (EPS) of $2.17, beating the Zacks Consensus Estimate of $2.12. This achievement marks a continuation of UniFirst's trend of surpassing consensus EPS estimates over the past four quarters.
Despite the positive EPS outcome, UniFirst's revenue for the quarter stood at $610.8 million, slightly missing the estimated $614.5 million. Nevertheless, this figure represents a 1.2% increase from the $603.33 million reported in the same period last year, indicating a steady growth trajectory. The company has managed to exceed consensus revenue estimates twice in the last four quarters.
UniFirst's financial health remains strong, highlighted by a low debt-to-equity ratio of 0.033 and a robust current ratio of 3.38. These metrics underscore the company's minimal reliance on debt and its ability to cover short-term liabilities efficiently. Despite a slight decline in operating income by 0.6%, totaling $48.2 million, the company's net income and diluted earnings per share saw increases of 4.3% and 4.9%, respectively, demonstrating UniFirst's capability to maintain profitability amidst operational challenges.
The company's valuation metrics, including a price-to-earnings (P/E) ratio of 21.63 and a price-to-sales ratio of 1.28, reflect the market's confidence in its sales and earnings potential. Additionally, the enterprise value to sales ratio of 1.23 and the enterprise value to operating cash flow ratio of 9.48 further highlight UniFirst's efficient resource utilization.
UniFirst Beats Q3 EPS, Raises Full-Year Earnings Guidance
UniFirst (NYSE:UNF) shares fell over 3% intra-day today despite the company reporting third-quarter adjusted earnings that surpassed expectations and raising its full-year earnings outlook.
For the quarter, UniFirst posted adjusted EPS of $2.13, ahead of the $2.10 consensus. Revenue grew 1.2% year-over-year to $610.8 million, just below analyst estimates of $614.5 million. Net income rose 4.3% to $39.7 million from $38.1 million a year earlier.
By segment, Core Laundry Operations revenue increased 0.9% to $533.2 million, with organic growth of 1.1%. Specialty Garments revenue ticked up 0.5% to $47.8 million, while the First Aid segment led with robust 9.1% growth.
Encouraged by lower-than-expected costs for key initiatives—now forecast at about $7.5 million for fiscal 2025—UniFirst raised its full-year earnings guidance to a range of $7.60–$8.00 per share, up from prior projections. The company reaffirmed its revenue outlook of $2.422–$2.432 billion.
UniFirst Corporation (NYSE:UNF) Stock Analysis: A Deep Dive into Financials and Market Position
- The consensus price target for UniFirst Corporation (NYSE:UNF) has been adjusted, with Robert W. Baird setting a new target of $195, indicating a positive outlook.
- UniFirst announced a $100 million share repurchase authorization, signaling confidence in the company's financial health and a strategy to enhance shareholder value.
- The company's recent earnings report showed a positive trend, with EPS of $1.40, surpassing expectations and indicating financial growth.
UniFirst Corporation (NYSE:UNF) is a leading entity in the uniform and protective workwear industry, catering to a diverse range of sectors such as automotive, healthcare, and government agencies. The company prides itself on offering comprehensive services from design to delivery, ensuring clients receive customized uniform solutions. With operations spanning the United States, Europe, and Canada, UniFirst stands as a formidable competitor in the market.
The consensus price target for UniFirst's stock has experienced a downward adjustment from $185.75 last year to $174.50 in recent months. This change could be attributed to various factors, including shifts in analyst sentiment and overall market conditions. Nonetheless, Robert W. Baird has recently set a new price target of $195, reflecting a more optimistic view on the stock's future trajectory.
UniFirst's announcement of a $100 million share repurchase authorization represents a strategic initiative to boost shareholder value. This move, along with the anticipation surrounding the upcoming third-quarter earnings release, could significantly influence the stock's price target. Analysts and investors are poised to scrutinize the earnings report for insights into the company's financial stability and operational efficiency.
The company's latest earnings report for the second quarter showcased a positive trend, with earnings per share (EPS) exceeding expectations at $1.40, compared to the Zacks Consensus Estimate of $1.31. This improvement from $1.22 per share in the corresponding quarter of the previous year underscores UniFirst's financial growth. Additionally, the company's revenue saw a 1.9% increase, reaching $602.2 million, further bolstering the optimistic outlook.
Despite a recent 20.84% decline in stock value, UniFirst is now deemed to be in oversold territory, hinting at a possible trend reversal. The positive revisions in earnings estimates and the Zacks Rank #2 (Buy) upgrade reflect increasing confidence in the company's prospective performance. As the third-quarter earnings release draws near, investors are eager to discover if these positive trends will persist.
UniFirst Corporation (NYSE: UNF) Earnings Overview
- UniFirst Corporation (NYSE: UNF) reported an EPS of $1.32, slightly above the estimated $1.31, continuing its trend of surpassing earnings expectations.
- The company's revenue of $602.2 million fell short of the estimated $615 million but still reflects a 1.9% increase from the previous year.
- UniFirst projects full-year revenue between $2.42 billion and $2.43 billion and full-year EPS to range from $7.30 to $7.70, above the consensus of $7.09.
UniFirst Corporation (NYSE: UNF) is a key player in the uniform and related services industry. The company provides workplace uniforms and protective clothing, serving a wide range of industries. UniFirst competes with other uniform service providers, focusing on quality and customer satisfaction. The company has a strong track record of financial performance, consistently exceeding earnings expectations.
On April 2, 2025, UniFirst reported earnings per share (EPS) of $1.32, slightly above the estimated $1.31. This marks a continuation of its trend of surpassing earnings expectations. Despite the positive earnings, UniFirst's revenue of $602.2 million fell short of the estimated $615 million. However, this revenue figure still reflects a 1.9% increase from the previous year. The company has a history of exceeding revenue estimates in three of the last four quarters, demonstrating its resilience in a competitive market.
UniFirst's financial health is further supported by its strong liquidity position, with a current ratio of 3.51. This indicates the company's ability to cover short-term liabilities with its short-term assets. Additionally, UniFirst maintains a low debt-to-equity ratio of 0.03, highlighting its conservative approach to debt management.
Looking ahead, UniFirst projects full-year revenue between $2.42 billion and $2.43 billion, slightly adjusted due to the Canadian Dollar exchange rate. Despite this, the company expects full-year EPS to range from $7.30 to $7.70, significantly higher than the consensus of $7.09. This optimistic outlook is driven by improved projections in its Core Laundry business and lower-than-expected costs for key initiatives.
UniFirst Corporation (NYSE: UNF) Earnings Overview
- UniFirst Corporation (NYSE: UNF) reported an EPS of $1.32, slightly above the estimated $1.31, continuing its trend of surpassing earnings expectations.
- The company's revenue of $602.2 million fell short of the estimated $615 million but still reflects a 1.9% increase from the previous year.
- UniFirst projects full-year revenue between $2.42 billion and $2.43 billion and full-year EPS to range from $7.30 to $7.70, above the consensus of $7.09.
UniFirst Corporation (NYSE: UNF) is a key player in the uniform and related services industry. The company provides workplace uniforms and protective clothing, serving a wide range of industries. UniFirst competes with other uniform service providers, focusing on quality and customer satisfaction. The company has a strong track record of financial performance, consistently exceeding earnings expectations.
On April 2, 2025, UniFirst reported earnings per share (EPS) of $1.32, slightly above the estimated $1.31. This marks a continuation of its trend of surpassing earnings expectations. Despite the positive earnings, UniFirst's revenue of $602.2 million fell short of the estimated $615 million. However, this revenue figure still reflects a 1.9% increase from the previous year. The company has a history of exceeding revenue estimates in three of the last four quarters, demonstrating its resilience in a competitive market.
UniFirst's financial health is further supported by its strong liquidity position, with a current ratio of 3.51. This indicates the company's ability to cover short-term liabilities with its short-term assets. Additionally, UniFirst maintains a low debt-to-equity ratio of 0.03, highlighting its conservative approach to debt management.
Looking ahead, UniFirst projects full-year revenue between $2.42 billion and $2.43 billion, slightly adjusted due to the Canadian Dollar exchange rate. Despite this, the company expects full-year EPS to range from $7.30 to $7.70, significantly higher than the consensus of $7.09. This optimistic outlook is driven by improved projections in its Core Laundry business and lower-than-expected costs for key initiatives.
UniFirst Corporation (NYSE:UNF) Earnings Preview: A Look into the Future
- UniFirst Corporation is set to release its quarterly earnings with an anticipated EPS of $1.31, indicating a 7.4% year-over-year growth.
- The company's revenue is projected at $602.8 million, slightly below estimates but up 2.1% from the previous year.
- Financial health remains strong with a low debt-to-equity ratio of 0.03 and a solid current ratio of 3.51.
UniFirst Corporation, trading as NYSE:UNF, is a prominent player in the uniform rental and facility services industry. The company provides a wide range of workwear and protective clothing, serving various sectors including healthcare, automotive, and food processing. UniFirst competes with other industry giants like Cintas Corporation and Aramark, striving to maintain its market position through quality service and customer satisfaction.
As UniFirst prepares to release its quarterly earnings on April 2, 2025, Wall Street anticipates an earnings per share (EPS) of $1.31. This figure represents a 7.4% increase from the previous year, showcasing the company's growth trajectory. The revenue is projected to be around $602.8 million, slightly below the $603 million estimate, yet still reflecting a 2.1% rise from the same quarter last year.
The stability in the consensus EPS estimate over the past 30 days suggests that analysts have confidence in UniFirst's performance. This lack of revisions indicates that the company is likely to meet or exceed expectations, which can positively impact investor sentiment and stock price. Historical data shows that changes in earnings projections often lead to significant stock price movements.
UniFirst's financial metrics provide insight into its market valuation and operational efficiency. With a price-to-earnings (P/E) ratio of 22.11, the company is valued moderately compared to its earnings. The price-to-sales ratio of 1.27 and enterprise value to sales ratio of 1.23 highlight the market's perception of its sales performance. Additionally, the enterprise value to operating cash flow ratio of 9.77 indicates efficient cash flow management.
The company's financial health is further underscored by its low debt-to-equity ratio of 0.03, suggesting minimal reliance on debt. A strong current ratio of 3.51 indicates robust short-term financial stability, ensuring UniFirst can meet its obligations. The earnings yield of 4.52% reflects the earnings generated per dollar invested, offering a solid return for investors.
UniFirst Corporation (NYSE:UNF) Earnings Preview: A Look into the Future
- UniFirst Corporation is set to release its quarterly earnings with an anticipated EPS of $1.31, indicating a 7.4% year-over-year growth.
- The company's revenue is projected at $602.8 million, slightly below estimates but up 2.1% from the previous year.
- Financial health remains strong with a low debt-to-equity ratio of 0.03 and a solid current ratio of 3.51.
UniFirst Corporation, trading as NYSE:UNF, is a prominent player in the uniform rental and facility services industry. The company provides a wide range of workwear and protective clothing, serving various sectors including healthcare, automotive, and food processing. UniFirst competes with other industry giants like Cintas Corporation and Aramark, striving to maintain its market position through quality service and customer satisfaction.
As UniFirst prepares to release its quarterly earnings on April 2, 2025, Wall Street anticipates an earnings per share (EPS) of $1.31. This figure represents a 7.4% increase from the previous year, showcasing the company's growth trajectory. The revenue is projected to be around $602.8 million, slightly below the $603 million estimate, yet still reflecting a 2.1% rise from the same quarter last year.
The stability in the consensus EPS estimate over the past 30 days suggests that analysts have confidence in UniFirst's performance. This lack of revisions indicates that the company is likely to meet or exceed expectations, which can positively impact investor sentiment and stock price. Historical data shows that changes in earnings projections often lead to significant stock price movements.
UniFirst's financial metrics provide insight into its market valuation and operational efficiency. With a price-to-earnings (P/E) ratio of 22.11, the company is valued moderately compared to its earnings. The price-to-sales ratio of 1.27 and enterprise value to sales ratio of 1.23 highlight the market's perception of its sales performance. Additionally, the enterprise value to operating cash flow ratio of 9.77 indicates efficient cash flow management.
The company's financial health is further underscored by its low debt-to-equity ratio of 0.03, suggesting minimal reliance on debt. A strong current ratio of 3.51 indicates robust short-term financial stability, ensuring UniFirst can meet its obligations. The earnings yield of 4.52% reflects the earnings generated per dollar invested, offering a solid return for investors.
