UNIFIRST CORP Q4 FY2024 earnings call

• Full year 2024 revenues reached a record $2.427 billion, up 8.7% from fiscal 2023, boosted by an extra week of operations and the March 2023 acquisition of Clean Uniform. - Core Laundry Operations organic growth for fiscal '24 was 4.6%. - Costs related to technology transformation declined as CRM deployment wound down and ERP project costs were capitalized. - First Aid and Safety division exceeded $100 million in fiscal 2024 and is expected to have double-digit growth in fiscal 2025. - Kelly Rooney was welcomed to the senior leadership team as Chief Operating Officer to enhance service and operational execution.

Core Laundry Operations: Fourth quarter revenues were $564.1 million, an increase of 11.7% from the fourth quarter of 2023. Core Laundry organic growth (adjusting for acquisitions, Canadian dollar fluctuations, and extra week) was 3.9%. Operating margin for the quarter was 8% ($45.4 million) compared to 6% ($30.2 million) in the prior year. Specialty Garments: Fourth quarter 2024 revenues were $46.5 million, a 12.3% increase from the prior year. After adjusting for the extra week, organic growth was 4.4%, primarily due to growth in the cleanroom business and stronger US nuclear operations. First Aid segment: Fourth quarter 2024 revenues increased to $29.3 million (15.1% increase). Organic growth within the segment was 6.8%, primarily due to growth in route-based van operations.

• Fiscal 2025 full year revenues expected to be between $2.425 billion and $2.445 billion. - Fully diluted earnings per share expected between $6.79 and $7.19, including $16 million in key initiative costs reducing EPS by $0.64. - Core Laundry Operations organic growth projected to be between 1.3% and 2.3% in 2025. - Specialty Garments revenues forecasted down ~4% in 2025 due to nuclear business decline and extra week in 2024, with operating income expected down ~12%. - First Aid segment revenues expected up ~13% in 2025, with operating income nominally positive. - Capital expenditures in 2025 approximated $155 million, with ERP implementation expected to carry through 2027, having capitalized ~$18.9 million in fiscal 2024 and total project cost expected between $85 million and $100 million.

• Competitive industry dynamics that could impact market share. - Economic uncertainties that may affect customer spending and retention. - Volatility in Specialty Garments due to seasonality and the timing/profitability of nuclear reactor outages and projects. - Challenges in achieving expected margins without successful ERP implementation.

Q: Thoughts on recent industry activity? And if there's any insights from the discussions with Elis on their potential entry into the US market?

A: Steven Sintros stated he doesn't have much to add beyond public statements, mentioned UniFirst's untapped potential and competitive industry dynamics.

Q: Impact of economic cycle on net wearer metrics and pricing?

A: Net wearer metrics are slightly negative sequentially, but new account growth in the quarter was solid; existing customer pricing is different than 2 years ago, with some cyclicality due to recent inflation challenges.

Q: Outlook for large account market in Core Laundry?

A: Similar number of large accounts, but challenging to match last year's top account, though healthy prospects exist.

Q: NPS score and ambitions?

A: NPS program is new, starting from a solid place with goals to differentiate and establish by location/region.