UniFirst Corporation Q1 FY2026 earnings call

• Revenues increased 2.7% to $621.3 million. Operating income and adjusted EBITDA declined due to planned investments and higher healthcare claims/legal costs. - Invested in sales and service teams; sales team additions and service team enhancements are improving growth metrics. - Focus on operational excellence via UniFirst Way, ERP implementation for inventory/sourcing, and digital transformation for G&A productivity. - Uniform and Facility Service Solutions had solid organic growth, new customer wins, and improved retention; First Aid and Safety Solutions had robust revenue growth from van operations; Specialty Service Solutions was impacted by project wind-down and reactor outages.

The Uniform and Facility Service Solutions segment saw revenues increase to $565.9 million from $552.8 million in the prior year, with organic growth of 2.4%. Its operating margin was 7.4% and adjusted EBITDA margin was 13.6%. The First Aid and Safety Solutions segment had revenues rise 15.3% to $30.2 million, with a nominal operating loss. The Specialty Service Solutions segment had revenues decrease 2.9% to $25.2 million, with an operating margin of 15.4%.

• Consolidated revenue range for fiscal 2026 is $2.475 billion to $2.495 billion. - Fully diluted earnings per share between $6.58 and $6.98. - Guidance remains unchanged, with an estimated $7 million in costs from Key Initiative. - Tax rate for full year expected to be approximately 26%.

• Tariffs could impact cost structure. - Economic weakness affecting customer purchasing. - Ongoing evaluation of Cintas' unsolicited proposal, with UniFirst's board engaging advisors to determine next steps.

Q: Could you remind us of the timeline for achieving long-term objectives of mid-single-digit organic growth and high teens adjusted EBITDA margins?

A: Expect steady improvement through 2027 and 2028, with inflection likely by the third year. Confidence in plan due to tech transformations and execution.

Q: Why wasn't revenue guidance raised given momentum?

A: Early in the year, some economic weakness and early stage of initiatives mean it's too early to raise guidance.

Q: Where stands the ERP implementation and when might benefits materialize?

A: This year focuses on core finance modules; 2027 has supply chain and procurement enhancements, with benefits materializing in latter half of 2027 and into 2028.