UniFirst Q1 Earnings Surpass Estimates, Revenues Rise Y/Y

Zacks

UniFirst Corporation UNF reported first-quarter fiscal 2025 (ended Nov. 30, 2024) adjusted earnings of $2.40 per share, which surpassed the Zacks Consensus Estimate of $2.27. The company reported adjusted earnings of $2.46 per share in the year-ago quarter. On a reported basis, the company’s earnings were $2.31 per share, up 2.2% year over year.

UniFirst’s total revenues of $605 million came in line with the consensus estimate. The top line increased 1.9% year over year.

UNF’s shares jumped 4.8% on the last trading day to eventually close the trading session at $214.48.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Segmental Discussion

Revenues from the Core Laundry Operations segment increased 1.7% year over year to $532.7 million. The consensus estimate for the segment’s revenues was pegged at $532 million. The segment’s organic revenues increased 1.7%. Operating margin increased 10 basis points year over year to 8.1%.

Revenues from the Specialty Garments segment increased 2.9% year over year to $45.9 million, driven by growth in the European and North American nuclear operations. The consensus estimate for the segment’s revenues was pegged at $44 million. Operating margin decreased 60 basis points from the year-ago figure to 26.5%.

Revenues from the First Aid segment rose 5.4% year over year to $26.2 million. The consensus estimate for the segment’s revenues was pegged at $28.8 million. The segment’s EBITDA margin increased 600 basis points year over year to 4.8%.

Unifirst Corporation Price, Consensus and EPS Surprise

Unifirst Corporation price-consensus-eps-surprise-chart | Unifirst Corporation Quote

Margin Profile

UniFirst’s cost of sales decreased 0.7% year over year to $381.1 million. Selling and administrative expenses increased 8.7% to $133.5 million. Depreciation and amortization totaled $34.8 million, up 3.2% year over year.

UNF recorded an operating income of $55.5 million, up 4.5% year over year. Operating margin increased to 9.2% from 9% in the year-ago quarter.

UNF’s Balance Sheet and Cash Flow

At the end of the fiscal first quarter, UniFirst had cash and cash equivalents of $166.2 million compared with $161.6 million at the end of fiscal 2024. The company had no long-term debt outstanding while exiting the reported quarter.

In the first three months of fiscal 2025, UNF generated net cash of $58.1 million from operating activities compared with $27.3 million in the year-ago period.

In the same period, the company rewarded its shareholders with a dividend payment of $5.9 million, up 5.8% year over year. Also, it bought back shares worth $6.4 million.

Major Development

On Jan. 7, 2025, UNF announced that the company’s board of directors has rejected Cintas Corporation’s CTAS offer to acquire the company for $275 per share. It is worth noting that Cintas’ offer was made in November and December 2024. The board, after consulting with independent advisors, concluded that the offer was not in the best interests of UniFirst and its shareholders considering growth potential and shareholder feedback.

Fiscal 2025 Outlook

Management expects revenues to be in the range of $2.425-$2.440 billion. UNF anticipates earnings per share to be in the band of $6.79-$7.19 for the fiscal year.

UNF’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked companies are discussed below.

Graham Corporation GHM currently sports a Zacks Rank #1.GHM delivered a trailing four-quarter average earnings surprise of 101.9%.

In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has increased 8.4%.

Gates Industrial Corporation plc GTES currently carries a Zacks Rank #2 (Buy). GTES delivered a trailing four-quarter average earnings surprise of 11.8%.

In the past 60 days, the Zacks Consensus Estimate for Gates Industrial’s 2024 earnings has remained unchanged.

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MSM Q1 Earnings Beat, Dips Y/Y on Low Volumes & Higher Expenses

Zacks

MSC Industrial Direct

MSC Industrial Direct Company, Inc. MSM reported first-quarter fiscal 2025 (ended on Nov. 30, 2024) adjusted earnings per share (EPS) of 86 cents, beating the Zacks Consensus Estimate of 73 cents.

The bottom line marked a 31% plunge from earnings of $1.25 in the year-ago quarter. The downfall was attributed to lower sales, higher operating expenses and elevated interest costs.

Including one-time items, MSC Industrial reported EPS of 83 cents compared with the year-ago quarter’s $1.22.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

MSM Stock Price, Consensus and EPS Surprise

MSC Industrial Direct Company, Inc. price-consensus-eps-surprise-chart | MSC Industrial Direct Company, Inc. Quote

MSC Industrial’s Revenues Hurt by Weak Demand

MSM generated revenues of $928.5 million in the quarter under review, down 2.7% from the year-ago quarter. Revenues were impacted by weak demand, unfavorable foreign exchange impacts and negative impacts of pricing. The top line, however, surpassed the Zacks Consensus Estimate of $905 million.

Average daily sales fell 2.7% year over year in the quarter, led by lower volumes, somewhat offset by acquisition benefits. However, this came in higher than MSC Industrial’s guidance of a 4.5-5.5% decline.

Low Volumes & Higher Expenses Dent MSM’s Margins

The cost of goods sold decreased 1.9% year over year to $550 million. Gross profit moved down 4% to $378 million. The gross margin in the first quarter of fiscal 2025 was 40.7% compared with the year-ago quarter’s 41.2%. The gross margin contracted 50 basis points due to lower volumes, and acquisitions created a 20-basis-point headwind.

Operating expenses rose 4% year over year to around $304 million in the fiscal first quarter. The year-over-year increase was driven by higher payroll costs due to higher associate headcount to support MSM’s strategic growth investments and annual merit increases, and investments made to supporting digital initiatives and solutions growth.

MSC Industrial reported an operating income of $72.3 million compared with $101.6 million in the year-ago quarter.

Excluding restructuring and other costs, MSM’s adjusted operating income amounted to $74.6 million, down 28% from $104 million in the prior-year quarter. The adjusted operating margin was 8% in the reported quarter compared with the prior-year quarter’s 10.9% due to higher operating expenses on lower revenues.

MSC Industrial’s Cash & Debt Position

MSM had cash and cash equivalents of $57.3 million at the end of the fiscal first quarter of 2025 compared with $29.6 million at the end of fiscal 2024. The company generated cash flow from operating activities of $102 million in the first quarter of fiscal 2025 compared with $81 million in the first quarter of fiscal 2024.

MSC Industrial repurchased approximately 150 thousand shares in the quarter, and returned in excess of $60 million to shareholders as dividends and share repurchases

The company’s long-term debt was $290 million at the end of the reported quarter, up from $279 million at the end of fiscal 2024.

MSM Anticipates Average Daily Sales to Decline in Q2

Citing challenging macro conditions and the weak performance in December, MSC Industrial expects average daily sales to decline 3-5% year over year in the second quarter of fiscal 2025. The adjusted operating margin for the quarter is expected between 6.5% and 7.5%.

MSC Industrial Stock Price Performance

The company’s shares have declined 11.9% in the past year compared with the industrial services industry’s growth of 8.8%.

MSM’s Zacks Rank & Stocks to Consider

MSC Industrial currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Industrial Products sector are Graham Corporation GHM, Federal Signal Corporation FSS and Gates Industrial Corporation plc GTES. GHM sports a Zacks Rank #1 (Strong Buy), and FSS and GTES have a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

Graham delivered an average trailing four-quarter earnings surprise of 101.85%. The Zacks Consensus Estimate for GHM’s 2024 earnings is pinned at $1.03 per share, which indicates a year-over-year upsurge of 145.2%. The company’s shares have skyrocketed 132% in a year.

Federal Signal delivered an average trailing four-quarter earnings surprise of 11.8%. The Zacks Consensus Estimate for FSS’s 2024 earnings is pinned at $3.34 per share, which indicates year-over-year growth of 29.5%. The company’s shares have gained 27% in a year.

The Zacks Consensus Estimate for Gates Industrial’s 2024 earnings is pegged at $1.34 per share. The company delivered a trailing four-quarter average earnings surprise of 11.8%. GTES shares have gained 51% in a year.

Zacks Investment Research

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Dj Correction To Unifirst Stock Is Up 40% On $5.3 Billion Takeover Offer - Barrons.Com

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UniFirst Stock Is Up 40% on $5.3 Billion Takeover Offer — Barrons.com

Dow Jones Newswires

UniFirst

+2.90%

Karishma Vanjani

UniFirst shares are surging in response to news that Cintas, a competitor in manufacturing work uniforms, has made an offer to acquire the company, valuing it at $5.3 billion.

Cintas, which offers first aid and safety and other uniforms, is proposing to pay $275 per share for all of UniFirst's outstanding common and Class B shares. The stock closed at $169.33 on Monday, implying a 62% gain in the price.

The stock rose in premarket trading after The Wall Street Journal reported that Cintas had made the offer. Cintas confirmed the news shortly before the market opened, saying that while the offer was delivered to UniFirst on Nov. 8, its board has refused to meet despite repeated attempts by Cintas to have a collaborative discussion.

UniFirst didn't respond to a request for comment.

In the past three years, UniFirst has rebuffed Cintas' offers twice. Investors now seem to believe the deal may go through: UniFirst's stock surged 44% to more than $243.7 after the market opened.

Corrections & Amplifications: Cintas has tried to buy UniFirst in the past. A caption on an earlier version of this article incorrectly said UniFirst has tried to buy Cintas.

Write to Karishma Vanjani at karishma.vanjani@dowjones.com.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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