UniFirst reported improved fiscal first-quarter results compared to the previous year, yet costs associated with specific projects impacted earnings. The uniform rental company has also adjusted the top end of its full-year sales forecast. The net income for the quarter ending in November was recorded at $2.31 per share, rising from $2.26 the year prior.
This surpassed the expectations of three analysts polled by FactSet, who had anticipated a figure of $2.09. Sales figures also saw a slight increase of 1.9%, reaching $604.9 million, although this fell short of analysts' expectations, which were set at $606.6 million. The company disclosed incurring approximately $2.5 million in costs related to its customer relationship management (CRM) computer system and enterprise resource planning (ERP) projects.
This expenditure resulted in a $0.09 headwind to earnings per share (EPS). Moreover, total operating expenses surged to $549.4 million from $540.4 million in the same quarter of the prior year. Chief Executive Steven Sintros expressed satisfaction with the first quarter results during an earnings call, stating, "We are pleased with the results from our first quarter, which represent a solid start to our fiscal year and were largely in-line with our expectations." However, the earnings report comes in the wake of a bold acquisition attempt by Cintas, a larger uniform supplier.
On Tuesday, Cintas went public with its intention to acquire UniFirst in a cash offer estimated at around $5.3 billion, an offer that UniFirst swiftly rejected. Cintas proposed an acquisition price of $275 per share, asserting that this reflected a 46% premium to UniFirst's average share price over the previous 90 days. During the earnings call, Sintros reiterated that UniFirst's board had concluded that the proposal from Cintas wasn’t in the best interests of the company and its shareholders.
Sintros remarked, "We believe a potential combination could be highly accretive, but initial opposition from UNF's controlling shareholders may make it difficult to get a transaction over the finish line." Analysts at Truist Securities noted potential hurdles for the acquisition, indicating that initial opposition from UniFirst's founding family could pose significant challenges.
They added that a potential transaction might also attract antitrust scrutiny. Focusing on revenue from core laundry operations, where the costs of CRM and ERP projects were recorded, UniFirst saw an increase of 1.7% year over year to $532.7 million in the first quarter. Sintros commented, "As the market has emerged from a period of significantly elevated inflation levels, a more challenging pricing environment has developed, which has had a corresponding impact on our retention rates.
This has impacted our overall growth in our core laundry operations." Sales in the specialty garments segment improved by 2.9% to $45.9 million, primarily driven by growth in European and North American nuclear sectors, although this was slightly offset by a decline in cleanroom operations. Looking ahead to fiscal 2025, UniFirst has revised its revenue expectations to range between $2.425 billion and $2.44 billion, lowering the previous top end from $2.445 billion.
The company has also reiterated its EPS forecast for the year, estimating it will fall between $6.79 and $7.19. According to FactSet, three analysts project GAAP EPS at $6.98, alongside an anticipated sales figure of $2.43 billion. The company's guidance continues to factor in about $16 million of costs tied to the ongoing CRM and ERP projects. Stock performance shows a price of 211.21, with a change of +6.52, reflecting a percent change of +3.19..