Unifirst Corporation

Greetings and welcome to the first quarter earnings 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 star zero. I would now like to turn the conference over to Mr. Steven Sintros, universe president and chief executive officer. Please go ahead, sir.

Thank you and good morning. I'm Steven Sintros, Unifirst President and Chief Executive Officer. Joining me today is Shane O'Connor, Senior Vice President and Chief Financial Officer. We'd like to welcome you to Unifirst Corporation's conference call to review our first quarter results for fiscal year 2020 and to discuss our expectations going forward. 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 10-K filing with the Securities and Exchange Commission. I'm happy to report that Unifor's first quarter of fiscal year 2020 produced solid results for the company relative to both our top and bottom line. Shane will go into the details shortly, but I wanted to first take a moment to step back and recap the quarter's results. For the first quarter of 2020, Unifor set Record highs for both revenues and profits. Consolidated first quarter revenues were $465.4 million, an increase of 6.1% over the same quarter a year ago. Meanwhile, operating income and net income were $60.1 million and $48.2 million respectively, representing increases of 19.2% and 25.9% when compared to the first quarter of last year. As always, I'd like to acknowledge that we do not achieve our company's successes alone. That said, I want to take this opportunity to thank those who are so critical to Unifirst's day-to-day accomplishments, our 14,000-plus employee team partners throughout North and Central America and in Europe who work so hard week in and week out to take care of our customers, each other, and our company. Our strong first quarter results were primarily influenced by our core laundry operations, which make up approximately 90% of our overall revenues and operating income. With respect to the primary growth drivers of this segment, the quarterly results were largely positive, but there were some areas of caution to be noted as we look over the remainder of the year. During the first quarter, new account sales exceeded the strong first quarter sales we achieved in fiscal year 2019. However, December activity combined with future sales projections have our second quarter new sales expectations softening when compared to the first quarter and prior year's activities. In addition, our additions versus reductions metric, which measures wearer levels within existing accounts, trended negatively compared to the prior year. Both of these trends are partially due to reduced business activity in the energy-dependent markets that we service. We've used this term, energy-dependent markets, in the past to describe those geographies in the United States and Canada that have a significant portion of their economic activities tied to the oil and gas industries. Of course, as always, an ever-changing macroeconomic environment makes it difficult to predict exactly how long and to what extent this trend may persist. In addition, overall customer retention slipped some in the first quarter, partially related to select large accounts where we made the economic decision not to renew our service agreements. We expect these developments to make for more difficult top-line comparisons for the remainder of the year, when comparing to what was a strong fiscal year performance in 2019 for new account sales and customer retention. In the meantime, we'll continue to focus on executing on our strategic plan, which includes defined goals for improving customer service and retention, sales organization effectiveness, and retention of our employee team partners. As far as our other business segments go, specialty garments, which provide specialized workwear and niche services for nuclear and cleanroom industries, and our First Aid and Safety Division, both contributed positively to our overall results of the first quarter. Looking forward, we remain committed to maximizing our results and delivering long-term value to our shareholders and our team partners. We'll achieve these ends with a continued focus on strengthening customer loyalties and growing our base through excellence in personalized business services and continued investments in our service production and sales teams. Our customer-focused philosophy remains at the core of our company's success today. Our strong balance sheet, healthy cash position, and ongoing cash flows allow us to continue making solid investments in all principal areas of our business, as well as to be competitively pursue business acquisitions that make business sense. All helping us to meet our primary long-term corporate objective to be universally recognized as the best service provider in our industry. And with that, I'd like to turn the call back over to Shane will provide the details of our results for the first quarter and our outlook over the remainder of fiscal year 2020. Thanks, Steve.