UniFirst Corporation (UNF) Q2 2014 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the second quarter earnings conference call. [Operator Instructions] I would now like to turn the conference over to Steven Sintros, Chief Financial Officer. Please go ahead, sir.

Thank you, and welcome to the UniFirst Corporation conference call to review our second quarter results for fiscal 2014 and to discuss our expectations going forward. I'm Steven Sintros, UniFirst's Chief Financial Officer. Joining me is Ronald Croatti, UniFirst's President and Chief Executive Officer. This call will be on a listen-only mode until we complete our prepared remarks. Now before I turn the call over to Ron, I would like to give a brief disclaimer. This conference call may contain forward-looking statements that reflect the company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties. The words anticipate, optimistic, believe, estimate, expect, intend and similar expressions that indicate future events and trends identify forward-looking statements. Actual future results may differ materially from those anticipated depending on a variety of risk factors. I refer you to the discussion of our risk factors in our most recent 10-K and 10-Q filings with the Securities and Exchange Commission. Now I will turn the call over to Ron Croatti for his comments.

Thanks, Steve, and welcome, everyone, for joining us for the review of UniFirst's second quarter and 6 months financial results for fiscal 2014. I'll be providing a brief review of our recent performance, and I'll turn it back over to Steve, who'll go in -- over all the details. UniFirst Corporation's revenues for the second quarter of fiscal 2014 came in at $344 million, a 2.9% increase over the $334.3 million reported for the same quarter 2013. Six months year-to-date revenues were $690.7 million, a 3.6% increase over last year's mid-year mark. It should be noted that both revenue and profit comparisons were negatively impacted by a customer-related specialty merchandise buyout in the second quarter of 2013. Excluding the effect of this buyout, overall revenues for the second quarter would have increased 3.6% over the same period last year and earnings per share would have been up at $1.27 per share. Similarly, when excluding these items, revenue and EPS for the 6-month period would have increased 3.9% and 6%, respectively, over 2013. Our Core Laundry Operations, which account for approximately 90% of our total business, once again led the company's performance during the quarter, with revenue and operating income improving by 4.6% and 2.1%, respectively, which excludes the impact of the customer merchandise buyout a year ago. These year-over-year quarterly gains were achieved primarily as the results of solid new sales accounts, both locally and national accounts, some positive impact from customer pricing and ongoing improvement in operational efficiencies in our processing plants. The Core Laundry segment was challenged throughout the quarter by several external factors, including a very difficult winter weather season, high energy prices and a weaker Canadian exchange rate. But despite these conditions, the Core Laundry business continued for more -- produced solid results. Meanwhile, our Specialty Garments segment, which is our specialized nuclear cleanroom service unit, reported a drop in both revenues and operating income when compared to second quarter of fiscal 2013. Although some quarterly declines were anticipated, the segment's results fell short of our previous expectations. We believe the cyclical challenges for the Specialty Garment group will remain through 2014. We anticipate a down year for this division, but we've mentioned it in previous webcast, we expect this segment to begin bouncing back in the coming years through an increased number of larger nuclear reactor projects scheduled for specialized services and anticipated increase in decommissioning opportunities in Europe. And as far as our First Aid segment, here it showed a top line growth of 2.9% for the second quarter over last year and also recorded a dip in operating income. The results came in comparison to a particularly strong fiscal 2013 performance. First Aid division has continued to make performance gains by reaping the benefit of major distributor partnerships that were strengthened last year. Today, the First Aid unit is offering more product lines from asking [ph] more business customers and prospects than years past. Additionally, the group's route-based business continues to bounce back from the impact of the recessionary years, and the pharmaceutical packaging and wholesale operation continue to gain market share by meeting increased demand from retail chain stores and specialty distributors for private-label OTC medications. While we continue to hesitate from our existing customers -- I'm sorry, where we continue to see hesitations from our existing customer base to add new employees, which, of course, affect our overall uniform wearer opportunities, our professional sales and service team have continually been doing a better job communicating to prospective customers the UniFirst difference, which outlines in a concrete fashion why we're a better alternative to company's uniform current supplier programs; how we can improve their operations, their business image and their bottom line; and what non-uniform ancillary products, services we can also provide them to become the valued single-source service provider. This path has proven to be successful to help drive growth. So going forward, our team will remain steadfast with the important communications of the UniFirst's value to the business community. As we look ahead beyond the fiscal year, we expect that -- these challenged, like many other companies, with the impact of the Affordable Care Act as well as the implementation and deployment of our Unity 20/20 project. As some may recall, Unity 20/20 initiative is an overhauling of our company's CRM and service systems to ultimately improve overall efficiencies and maximize capabilities in all our service operations. Steve will provide more color on these points in a moment. But through the sincere dedication of our thousands of team partners throughout North America and abroad, all working with an unrelenting commitment to our customers to deliver the highest level of service satisfactions. And by continually identifying, planning for, capitalizing on our various market opportunities, we will continue to bring in long-term gain to our customers, our employees and our shareholders. And with that said, I'll turn it back over to Chief Financial Officer, Steve Sintros, for more details on our second quarter and the numbers and our outlook for the remainder of the fiscal year.

Thank you, Ron. Second quarter revenues were $344 million, up 2.9% from $334.3 million a year ago. Net income of $25.6 million or $1.27 per diluted share was down from $26.6 million or $1.33 per diluted share reported in the second quarter of fiscal '13. Revenue and profit comparisons, as Ron mentioned, were affected by a customer-related specialty merchandise buyout in the second quarter of 2013. Excluding the effect of this buyout, overall revenues would have increased 3.6% and fully diluted earnings per share would have been $1.27 for both periods. Revenues for the quarter in the Core Laundry Operations were $313.2 million, up 3.8% from those reported in last year's second quarter. Excluding the impact of the weaker Canadian dollar and the specialty merchandise buyout, as well as the positive effect of acquisitions, revenues grew 4.3% for the Core Laundry Operations. As Ron mentioned, growth was driven by solid new account sales, as well as the impact of annual price increases. Wearer additions versus reductions were negative for the quarter and slightly negative year-to-date. This segment's operating income grew 2.1% compared to adjusted operating income for the second quarter of fiscal '13. Its operating margin was 12.6% compared to an adjusted operating margin of 12.9% a year ago. Adjusted operating income and operating margin for the second quarter of fiscal '13 exclude the effect of the customer-related merchandise buyout. This dip in operating margin was primarily due to higher costs related to our plant operations, energy, depreciation and bad debt expense as a percentage of revenues. Energy cost for the second quarter were 5.4%, up from 5.2% in the second quarter of fiscal 2013. In addition, during the quarter, we incurred certain start-up costs related to a new garment manufacturing facility that is not yet in full production. Current quarter profits were also impacted by higher legal and environmental costs compared to a year ago. The current quarter included a $0.4 million charge related to increases in interest rates used to discount our environmental liabilities. In addition, we incurred higher legal costs related to the ongoing litigation surrounding the New England Compounding Center matter, which we have discussed in prior quarters. Our guidance to this point and for the remainder of the year does not take into account this uptick in legal costs as we are currently in discussions with our insurance providers concerning the level of reimbursement of our defense costs. These higher costs were partially offset by lower healthcare claims expensed during the quarter. Our operations were also somewhat challenged by a particularly difficult winter storm season. Although we are used to dealing with a normal amount of winter weather during our second quarter, this year was unique with many locations that are not typically affected by winter storms forced to shut down for multiple days at a time. As it is difficult to quantify the true financial impact of this disruption, we don't want to place undue emphasis on it other than to note it was a unique operating challenge we faced during the quarter. Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $20.4 million, down 9.7% from $22.6 million in the second quarter of 2013. This decrease was primarily the result of less power reactor business in the U.S. and Canada compared to a year ago. As a result of the revenue decline, this segment's income from operations fell to $0.3 million from $1.3 million in the comparable period in fiscal 2013. This segment's revenues and profits were also impacted by the weaker Canadian dollar during the quarter. Although we expect a strong power reactor outage season in the spring, we do not expect this segment to achieve its full year profit goals, which were included in our guidance a quarter ago. First Aid segment revenues increased 2.9% to $10.4 million in the quarter compared to $10.1 million a year ago. Income from operations for this segment fell to $1 million in the quarter from $1.3 million in 2013. Looking ahead, we also expect our First Aid segment to fall short of its annual goals. The expected shortfall is primarily the result of revised forecasts for a large retail customer served by the segment's pill packaging operation. The effective income tax rate for the second quarter of fiscal '14 was 37.8% compared to 38.4% in the second quarter of fiscal '13. We continue to expect our full year fiscal 2014 effective income tax rate to be approximately 38.5%. UniFirst continues to maintain a solid balance sheet and financial position. Cash provided by operating activities for the first 6 months of fiscal '14 was $109.1 million, up 17.9% compared to $92.5 million for the first 6 months of last year. The improved cash flows were primarily the result of higher earnings, as well as the timing of income tax payments compared to a year ago. Cash and cash equivalents at the end of the quarter totaled $157.2 million, down from $197.5 million at the end of fiscal 2013. This decrease was the result of September repayment of $100 million in private placement notes that came due. Of our cash on hand, $61.8 million has been accumulated by our foreign subsidiaries and is intended for future investments outside the United States. The company also continues to have significant capacity under its existing bank line of credit to continue funding acquisition activity or other capital allocation options. Capital expenditures for the first half of 2014 were $44.1 million. We continue to invest in our Unity 20/20 systems project. So far this year, we have capitalized $8.4 million related to this project. We also continue to invest in plant updates, expansions and automation that will allow us to achieve our long-term strategic objectives. We continue to expect capital expenditures in fiscal 2014 will be between $90 million and $100 million. Year-to-date, the company has not expended any significant capital on acquisitions, although we continue to look at acquisition targets as they remain an integral part of our overall growth strategy. At this time, we'd like to provide you an update regarding our outlook for the remainder of the year. In October, we communicated we expect fiscal 2014 revenues to be between $1.372 billion and $1.385 billion and full year diluted earnings per share to be between $5.60 and $5.85. During our first quarter earnings call in January, we stated that we expected our full year results to be at the higher end of these ranges. Now that we are halfway through our fiscal year, we want to again provide an update on the remainder of the year. The weaker-than-projected Canadian dollar is impacting our full year revenue projections by approximately $3.5 million. Despite this headwind, as well as further uncertainty around our Specialty Garments segment, we believe that we'll be well within the range of our original full year revenue guidance. We now expect fiscal 2014 diluted earnings per share to be between $5.60 and $5.75 per share. Our outlook for the remainder of the year includes lower expectations for the performance of our Specialty Garments and First Aid segments, as well as an assumption that the recently weaker Canadian dollar and higher energy prices will continue to impact our results. As a reminder, fiscal 2014 will be a 52-week year for the company compared to fiscal 2013, which was a 53-week year. The extra week occurred in our fourth quarter of fiscal 2013. The negative comparison of 1 less week of operations will have the impact of reducing our year-over-year revenues by approximately 2% and our fourth quarter revenues by approximately 7.1%. At this time, we also want to give you an update regarding our expected impact of the Affordable Care Act, or ACA. As we discussed last quarter, UniFirst obtained a waiver under the transitional rules of the ACA that allowed our existing healthcare coverage to remain intact through August 2014. At the beginning of our fiscal 2015, the ACA requires us to modify one of the healthcare plans we currently provide to our employees. These plan modifications, as well as the payment of the ACA transitional reinsurance fee, will cause our cost to rise. There remains a significant amount of uncertainty as to how much our healthcare costs will ultimately increase, including the impact of the planned changes on our claims experience, as well as the potential for increased enrollment in our health plans as a result of the individual mandate provisions of the ACA. We continue to explore ways to mitigate the impact of the ACA on our operating results. However, at this time, we currently project that the combined impact of the ACA's requirements, normal annual increases in our healthcare costs and other changes in employee benefit programs will likely pressure our operating margin between 35 and 65 basis points in fiscal 2015. Again, we do want to stress that this range relies on numerous estimates and assumptions that could cause the actual results to vary materially from this range. One fundamental assumption is that the Affordable Care Act will remain intact as currently constructed. Given the recent and continued modifications to the law, the range we have provided could be affected by future changes in healthcare laws. We also would like to take this opportunity to update you on our Unity 20/20 CRM systems project. We currently don't anticipate beginning deployment of this system to our locations until the second half of fiscal 2015. As we have mentioned previously, the increased expense to our operations once deployed will primarily be the result of incremental depreciation related to the new system that we currently estimate will be approximately $6 million per year once fully deployed. We also expect to incur certain nonrecurring costs associated with the training and deployment effort associated with our new system in fiscal '15. Although we do not give guidance regarding our next fiscal year this far in advance, we do want to emphasize that the impact related to the Affordable Care Act, as well as the deployment of our Unity 20/20 system, are real costs that will affect our results in 2015. We recognize there is a fair amount of uncertainty and variability around our estimates regarding the ACA, as well as the timing and cost impact of our Unity 20/20 system. However, we want to make sure that external expectations around fiscal 2015 are taking these items into account. We will continue to update you on these items in future quarters. This completes our prepared remarks. We'll now be happy to answer any questions you might have.

[Operator Instructions] Our first question comes from the line of Joe Box with KeyBanc Capital Markets.

This is Sean Egan on for Joe Box. I realized that you weren't going to -- or you didn't quantify the weather impact during the quarter, but do you think that instead you can give us a sense for maybe some lost business days or temporary branch shutdowns in this quarter compared to last year?

Yes, Joe -- or Sean. We intentionally didn't quantify it because it is very difficult to quantify. There were several locations that were shut down for a day here, a day there, in some cases, 2 or 3 days. Certainly, as an operation, we attempt to make up those routes and try to make those deliveries on Saturdays and to make up for the routes. But we do know there was some shortfall related to that. Again, we don't want to quantify it because we don't -- we really don't want to place undue emphasis on it. Other than the -- probably the small amount of revenue loss we did have, there are probably some additional costs related to that as well, related to energy, as well as some other costs just with the disruption of the locations being closed and so on and so forth. So I think that's probably all we can really say about that at this point.

Okay, great. And then in a similar theme, I was just curious, during the quarter, due to weather, were there any kind of revenue pushouts, say, that would spill into the next quarter? You kind of -- you kept your top line guidance the same, so are you expecting just a shift in revenue or were you looking at lost revenue?

I think there was a small amount of lost revenue in the quarter. I wouldn't say that it would shift out. Our guidance for the full year on the revenue side, when you look at what we thought it was last quarter, we were saying we were going to be at the higher end of that range. I think we're a little bit off that target mainly because of the Canadian exchange rate. Other than that, we're pretty much on line with where our revenue is expected to be.

Okay, great. And then just one follow-up on the cost side getting away from the top line. Regarding the new plant, could you maybe quantify the impact of the new plant and maybe put some perspective around where capacity utilization was in the quarter and where you see that moving forward and along what timeline?

Just to clarify, I think the comment I made about the new plant was a new manufacturing operation that we're opening up in Central America. We have 3 such operations right now. The new manufacturing operation will give us additional capacity to self-manufacture garments. At this point, we have to supplement our self-manufacturing with some subcontract manufacturing and purchases from outside vendors. So that was the plan I was referring to. It is not yet in full production, and so there are some start-up costs we're absorbing in the meantime until it's in full production.

And when do you expect that to be in full production?

Probably by the end of our fiscal year.

The next question comes from the line of Andy Wittmann with Robert W. Baird.

Steve, just a couple maybe technical questions here to start out. You mentioned the discount rate on the environmental liabilities hit you for the quarter. Now is that something that's going to continue until we annualize that? Or is that going to -- is that a onetime kind of catch-up and now you're at the right place?

Yes. Every quarter, Andrew, we true up our environmental liabilities because they're a discounted liability based on the current discount rate. And so as interest rates increase or decrease, there is some fluctuation to that liability. Assuming no further, there was a slight decline in the long-term interest rates, believe it or not, during our fiscal quarter and that caused an increase to that liability. If you believe what you read and interest rates are going to continue to go up, we'll probably have some benefits related to the revaluing of that liability as we move along, but assuming interest rates stay where they are today, it would have no further impact over the remainder of the year.

Got you. And then just on energy, it shouldn't be too surprising. Obviously, natural gas spiked during the quarter, starting to get normal again or normalized, getting closer back to last year levels at, I guess, $4.34 here today. It sounded like you guys are kind of baking in the elevated energy prices that you saw in the quarter. But can you maybe split that up so we have a better sense as to what's really in the energy assumption? Are you assuming that natural gas stays at $6 for the balance of the year? Or how should we be thinking about that?

No. It takes into account, Andrew, more of a current natural gas rate. Now to the extent it normalizes further, you mentioned $4.34, not to get into too many specifics, but it was probably around $4.50 when I was kind of doing my projection for the remainder of the year. That still is higher than where it was last year at this time. But you're correct, it's not at the $6 level that it spiked up to. It's kind of more of a normalized. But if it starts to back down in the 3s, that will certainly impact what I have baked in right now. On the flip side, gasoline has come up a little bit as well from where we were and where we were a year ago.

Got you. But the driver for the quarter was natural gas in terms of kind of the impact...

That was certainly the primary driver, correct.

Yes, the -- okay. So just in terms of -- maybe digging into sales productivity, Ron, you had some comments that you're kind of pleased. Were new wins for the team this quarter up? Are we getting better productivity? Or is the environment a little bit harder for them to sell into -- for the -- on the new business in the competitive...

No. Our sales were good. They were up a little bit. So we're pleased with the sales organization.

Is that on a per head basis? Or is that overall just [indiscernible] to the investment that you make in the sales force?

[indiscernible] on a what we call a productive week basis.

Okay. But in terms -- and so delivered on a man-week basis, so...

That is correct.

Okay. And then maybe just final question here. Previously, Steve, you talked about Specialty, you're looking for revenues down 10%, EBIT down 15%. Obviously, you're coming in a little shy of that. Do you care to update kind of what you're thinking now for that segment?

Sure. Those numbers, just to kind of put it right out there, that we originally gave had the profits coming in around -- right around $9 million for the full year. What I have baked into the guidance now is a little short of $8 million, high 7s. And that really assumes kind of that the second half of the year does what the second half of last year did, and they are optimistic about a strong spring outage season. But that being said, my revised expectations are over $1 million off from where they were a quarter ago, and a lot of that shortfall came in this quarter.

Our your next question comes from the line of Chris McGinnis with Sidoti & Company.

Steve, just a follow-up on that last question. I guess the visibility into that, the back-half profitability on the Specialty Garments.

Is the question what our visibility is?

Yes, yes, I'm sorry about that. Yes, yes, just how visible when -- you talked about the pickup in terms of profitability, how -- I guess how confident are you in that pickup itself?

Well, I think you can probably tell by our track record with this one, Chris, that there is a fair amount of variability to it. Certainly there are some scheduled outages for the spring. The spring is always better than the winter, so there's no question we expect to have a much stronger spring than our second quarter. Now compared to last year, there are some projects that are scheduled for the May, June time frame, as well as our fourth quarter. And it won't be -- it wouldn't be the first year if some of those got pushed out slightly and ended up into the fall. And so those kinds of things happen with this business, and it does provide variability to the results. And I think we feel fairly confident, but I'd be lying if I didn't say there was some variability there that I wouldn't be concerned about as well, at least for the near term.

Sure. And then I guess just on the core business, can you maybe talk about the competitive landscape and whether pricing -- and just, I guess, some of the bigger contracts [indiscernible]?

This is Ron. What we have seen in the competitive landscape is competition has continued to be aggressive. The pricing on discrete [ph] business has come up a little bit. National Account is very aggressive. That's really what I can tell you. I mean, it's a competitive, mature business and it's out there, that's all I can say.

And then just lastly, obviously, the balance sheet is pretty strong. Just maybe, is the industry consolidation you see loosening up at all at anytime soon? Or is it just still -- the pricing variance is still too high?

Well, first of all, you need a willing seller, and that's probably the primary thing. And I guess a lot of the willing sellers centers around the estate issues or siblings coming into the business or what have you. If you get a willing seller, then it's going to make financial sense to bring it in and what it does for us on a market share basis and so forth. So some guys still got telephone numbers out there, but quality of the business is not as great.

Our last question comes from the line of Kevin Steinke with Barrington Research.

I was wondering if you could -- you touched on legal, environmental and energy costs. So I'm wondering if any of the other cost items that you discussed, plant operations, energy and depreciation were perhaps higher than your expectations. And also, could you just kind of rank order the various items in terms of their impact on margin in the quarter?

Sure, Kevin. I think we did quantify the gas, natural gas impact or overall energy impact. The unique part about this quarter and the reason why we had so many items listed that impacted our results is that none of them in particular impacted us in an overly significant way. Typically, individually, I probably wouldn't even mention a lot of these items based on the fact that they had an impact of -- in the neighborhood of several hundred thousand dollars, but none of them were overly significant. I talked about bad debt expense, it was in that range. We had a new -- not to be confused with our new manufacturing facility, we had a new laundry plant open up during the quarter, and we had to flush through some depreciation related to that start-up. It was $200,000 or $300,000. That's just trying to give you a flavor. None of those items were overly significant. And some of them we don't anticipate are necessarily a trend either. But when you look at kind of versus last year and some of our comparisons, we had some difficult comparisons in some of those areas. So hopefully, that somewhat answers your question. I think purposefully, we didn't quantify those because we really don't want to get into that level of quantification for items that were relatively small, but when added up, did have an impact on the quarter.

Yes, that's helpful. And could you also just touch on merchandise amortization expense, how did that trend in the quarter and what are your expectations going forward?

Merchandise amortization for the quarter was effectively flat as a percentage of revenues. It might have been down 1/10. It was very, very close. It's starting to moderate though. I think the last couple of quarters, we were getting a larger benefit. As you know, it cycled over the years. It was up for a number of years, then it started to come back down, and now we're kind of flattish. And it's something we're watching very closely. That's an area, as Ron mentioned, as you get into the competitive environment that the company can be hurt as you have the put more merchandise into your accounts. And so it's an area we're watching, but I think for the remainder of the year, we expect it to be somewhat flattish impact on margin.

Okay. And taking all those factors into account, what sort of Core Laundry operating margin are you incorporating in guidance? I don't know if the midpoint is the relevant way to think about it, but any color on that would be helpful.

Sure. I think the full year at kind of the midpoint of the guidance is a little bit lower than last year. Last year, when adjusting some of these unusual items out, like we talked about the buyout, it was a little bit under 14%, about 13.7%, 13.8%. Our full year numbers are in that 13.6%, 13.7% range. And that's kind of toward the midpoint of the guidance we provided, so a little lower on the back half of the year. Some of that is the result of the fourth quarter having, if you go back and look, an unusual gain related to kind of the actuarial adjustments around our workers compensation reserve, a couple of million dollars. And also, there are some assumptions in there. Last week in the -- last year in the fourth quarter is when we had our extra week of operations. And although we take the vast majority of our costs, we do have an extra week of costs as well. There is a slightly benefit to that quarter related to the extra week in profitability. So that's what's baked into the Core Laundry guidance right now.

That's helpful. And did you actually start growing the sales force this quarter, selling and administrative expenses up as a percent of revenue? And is that something we should expect continuing for the rest of the year?

I think it was up a tick this quarter as it relates to our sales force. I think there were some other unusual items in the SG&A this quarter. We talked about higher legal costs. Some of that may continue. But I think we're at probably our headcount for the remainder of the year from a selling perspective.

Okay. One last question for me. Just could you, if possible, quantify the impact on Core Laundry growth of acquisitions and also the Canadian dollar?

Sure. The base growth in Core Laundry is 3.8%. The acquisition was about 1.1%. The foreign exchange was 0.8% of a headwind. And the other headwind we mentioned was the buyout from last year, and that was 0.7%. So when you add all those up, you get to the 4.3% we mentioned.

And we do have a follow-up from Andy Wittmann with Robert W. Baird.

So Steve, with the new garment manufacturing plant and the laundry facility that just are coming online or near coming online, is depreciation unusually high this quarter and then maybe ticks down next quarter? Just curious.

It may, Andrew. There was a few hundred thousand dollars in there in the current quarter that was kind of a onetime related to the laundry plant coming live. So it may tick down slightly next quarter, although we've been pretty heavy on the capital investment side. It is still trending up, but there was a little bit of an unusual item in there.

Got you. And then, Ron, same question as always, the public market time frame on things with the balance sheet deployment are obviously different from yours and understandably so. But are you any closer today than you were 90 days ago on thinking about the balance sheet and where the balance sheet could go?

Well, again, our balance sheet is always focused towards acquisitions. And there's not a week that don't go by that I'm not talking to somebody. So our main focus for the capital is certainly for acquisitions. If we got the right share price, we'd certainly buy back.

Yes, if you do a buyback, the liquidity concerns there, how do you balance that? Is that a concern that you have? Is that something you think about? Or are you unconcerned about that given kind of your ownership time frame?

Well, I don't think we're concerned about it.

And there are no further questions at this time. I'll now turn the call back to you.

We'd like to thank you, all, again for your interest in our company. We look forward to updating you on UniFirst's third quarter results for fiscal 2014 in our July webcast. Thank you, and have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line.