UniFirst (NYSE:UNF) Q1 2026 Earnings Call January 07, 2026 09:00 AM ET Company ParticipantsShane O’Connor - EVP and CFOSteven Sintros - President and CEOConference Call ParticipantsRonan Kennedy - AnalystTim Mulrooney - AnalystAlexander Hess - AnalystJoshua Chan - AnalystOperatorGood day, and thank you for standing by. Welcome to the Q1 2026 UniFirst Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer sessi ...

Financial Data and Key Metrics Changes - Revenues increased to $621.3 million, up 2.7% from the prior year period [3][9] - Operating income decreased to $45.3 million from $55.5 million year-over-year [9] - Net income for the quarter decreased to $34.4 million, or $1.89 per diluted share, down from $43.1 million, or $2.31 per diluted share [9] - Consolidated Adjusted EBITDA was $82.8 million compared to $94 million in the prior year [9] - Effective tax rate increased to 26.9% from 25.6% in the prior year [9] Business Line Data and Key Metrics Changes - Uniform and Facility Service Solutions segment revenues increased to $565.9 million, with organic growth of 2.4% [10][11] - First Aid and Safety Solutions segment revenues grew by 15.3% to $30.2 million, driven by investments in the First Aid Van Business [5][12] - Other segment revenues decreased by 2.9% to $25.2 million due to anticipated project wind-downs [12][13] - Operating margin for Uniform and Facility Service Solutions was 7.4%, down from 8.8% in the previous year [11] Market Data and Key Metrics Changes - The employment climate has softened, affecting both rental and direct sale accounts [5][6] - Energy costs represented 4.1% of revenues in the first quarter [11] Company Strategy and Development Direction - The company is focused on investments in sales and service organizations to build a sustainable growth platform [3][4] - Key initiatives include operational excellence through the UniFirst Way, enhanced inventory management, and digital transformation [4][5] - The company is evaluating an unsolicited proposal from Cintas, engaging independent advisors to determine the best course of action [7][8] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the ongoing investments yielding measurable improvements in growth metrics [6] - The full-year fiscal 2026 guidance remains unchanged, with consolidated revenue expected between $2.475 billion and $2.495 billion [15] - Management anticipates steady improvement towards mid-single-digit organic growth and high-teens adjusted EBITDA margins by 2027-2028 [17][18] Other Important Information - The company repurchased approximately $32 million of common stock during the quarter and increased the common stock dividend [6] - Capital expenditures for the quarter were $38.9 million, with four first-aid businesses acquired for $14.9 million [14] Q&A Session Summary Question: Timeline for achieving long-term objectives - Management expects to see steady improvement towards mid-single-digit organic growth and high-teens adjusted EBITDA margins by 2027-2028, with significant milestones anticipated in the next 18-24 months [17][18] Question: New account growth and customer mix - New account growth is being driven by a tiered sales organization focusing on mid-size accounts, which has shown positive results [26][27] Question: Impact of employment climate on growth - The employment climate has become a headwind, but the company is making progress in product placements and customer retention [28][30] Question: Unchanged revenue guidance - Management feels positive about top-line momentum but believes it is too early to make meaningful changes to guidance due to economic weaknesses affecting customer purchasing [33][34] Question: ERP implementation status - The ERP project is ongoing, with foundational releases scheduled for this year and supply chain enhancements expected in 2027 [44][45]