Unifirst Corporation (UNF)

Q3 2010 Earnings Call

January 5, 2011 10:00 am ET


Ronald Croatti – President, Chief Executive Officer

Steven Sintros – Chief Financial Officer


John Healy – Northcoast Research

Molly McGarrett – JPMorgan

Andrew Whitman – Robert W. Baird

Chris McGinnis – Sidoti & Company

Michael Kim – Imperial Capital



Ladies and gentlemen, thank you for standing by. Welcome to the Unifirst Corporation First Quarter Earnings Results conference 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 the star followed by the zero.

I would now like to turn the conference over to Mr. Steve Sintros, Chief Financial Officer at Unifirst Corporation. Please go ahead, sir.

Steven Sintros

Thank you and welcome to the Unifirst Corporation conference call to review our first quarter results for fiscal 2011 and to discuss our expectations going forward. I’m Steven Sintros, Unifirst’s Chief Financial Officer. Joining me today is Ronald Croatti, Unifirst’s President and Chief Executive Officer. This call will be on a listen-only mode until we complete our prepared remarks.

Now before I turn the call over to Ron, I would like to give 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 factors, including but not limited to the continued availability of credit and the performance of capital markets, the performance of acquisitions, fluctuations in the costs of materials, fuel and labor, and the outcome of pending and future and litigation and environmental matters. I refer you to our discussion of these points in our most recent Form 10-K filing with the Securities and Exchange Commission.

Now I will turn the call over to Ron Croatti for his comments.

Ronald Croatti

Thank you, Steve. I’d like to welcome all of you who are joining us for the review of our first quarter fiscal 2011, a period that once again produced record revenues and profits for our Company. Steve will cover the details in a few minutes, but let me start with a short summary.

Revenues for the first quarter of fiscal 2011 were a record 273.1 million, a 6.6% increase over the 256.2 million reported for the same period a year ago. A major upside influence came from better than expected growth in our core laundry business with operations showing an increase of 5.7% over last year’s first quarter. These results were complimented by a record-setting revenue for both our specialty garments and our first aid business as well. Specialty garments, which is made up of our nuclear and clean-room operations, showed a 12.8% revenue increase on a quarter to quarter basis this year compared to last. This improvement reflects strong activities with U.S. and Canadian customers and continued positive results from our European expansion efforts and improved safety supply sales.

Our first aid business reported a 14.3% revenue increase over the same period in fiscal 2010. The record-setting performance was primarily the result of private label wholesale distribution in pharmaceutical packaging areas continuing to develop and capitalize on the respective niche markets.

Unifirst net income for the first quarter of 2011 was up slightly over last year’s comparable period, reporting 23.8 million versus 23.6 million a year ago. At the most basic level, Unifirst is a service company. In our core laundry operations, we continue to reap benefits from our ongoing commitment to provide consistently high service levels and product quality to our customers. We are also seeing positive results from our internal training certification programs for all our service staff. Although facing tough market conditions, our team partners have consistently stepped up to make solid improvements in company-wide customer retention rates, which makes significant contributions to revenue and profits.

But we recognize there is always room for improvement, so we remain tightly focused on doing all we can do to best service our customers. We are firmly dedicated to sustaining Company growth and adding to our existing customer base, despite the economic and market challenges. So as of the case with our service organization, we continue to invest in our sales staff and sales productivity tools and sales training programs; and these efforts continue to generate return on investment.

Led by our national account group, first quarter new business sales for our core laundry operations were up 6% over the first quarter of last year. Although new account pricing remains overly aggressive in the marketplace as competitors often use price alone as a strategy to gain new business, our sales teams are scoring consistent wins by effectively demonstrating Unifirst’s overall value proposition to the prospective buyers, versus simply quoting lowball line item pricing; and notably, our sales are coming from both competitive accounts seeking improvement in their current programs and from no-programmer accounts realizing the range of business benefits associated with a managed rental program from Unifirst.

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