Why Uniform & Workwear Company UniFirst Shares Are Dipping Today

UniFirst Corp UNF shares are trading lower after the company reported Q1 FY24 results.

Sales grew 9.5% Y/Y to $593.5 million, beating the consensus of $589.6 million.

Adjusted EPS of $2.38 beat the analyst consensus of $2.18.

Q1 FY24 and Q1 FY23 results included costs attributable to its customer relationship management system, enterprise resource planning system, and branding initiatives, which curbed operating income and EBITDA by $2.9 million and $10.0 million, respectively.

Segment Revenue: Core Laundry Operations rose 9.8% Y/Y to $524.0 million, and Specialty Garments revenues grew 1.3% Y/Y to $44.7 million.

The company's operating income was up 22.4% Y/Y to $53.1 million in the quarter. Net income increased to $42.3 million from $34.0 million a year ago.

As of November 25, 2023, the company held $88.8 million in cash and cash equivalents and no long-term debt outstanding.

On October 24, 2023, UNF's Board of Directors authorized a new share repurchase program to buy up to $100.0 million worth of shares, including the available balance under the share repurchase program previously approved on October 18, 2021. 

Under the new program, UNF repurchased 1,500 shares for $0.3 million in Q1 FY24. As of November 25, 2023, it had $99.7 million worth of shares remaining under its new program.

On October 24, the company also raised quarterly cash dividends to $0.330 per share and $0.264 on the class B common share.

FY24 Outlook: UniFirst reiterated revenue guidance of $2.415 billion- $2.435 billion but sees the lower half of the range as more likely achievable due to recent trends in its Core Laundry Operations in the latter half of the quarter.

Also, UNF continues to expect EPS of $6.52-$7.16 versus a $7.49 estimate.

Price Action: UNF shares traded lower by 8.79% at $164.55 on the last check Wednesday.