Steven S. Sintros - Chief Financial Officer, Principal Accounting Officer and Vice President Ronald D.

Croatti - Chairman, Chief Executive Officer and President

Andrew J. Wittmann - Robert W.

Baird & Co. Incorporated, Research Division John M.

Healy - Northcoast Research Molly R. McGarrett - JP Morgan Chase & Co, Research Division Dan Dolev - Jefferies LLC, Research Division Christopher McGinnis - Sidoti & Company, LLC Joe Box - KeyBanc Capital Markets Inc., Research Division Kevin M.

Steinke - Barrington Research Associates, Inc., Research Division

Thank you and welcome to the UniFirst Corporation conference call to review our first 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.

The forward-looking statements are subject to certain risks and uncertainties. Words like 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 factors, including, but not limited to, the continued availability of credit and the performance of the capital markets; the performance of acquisitions; fluctuations in the costs of materials, fuel and labor; and the outcome of pending and future legal and environmental matters. I refer you to our discussion of our risk factors in our most recent 10-K and 10-Q filings with the Securities and Exchange Commission.

Now I would like to turn the call over to Ron Croatti for his comments.

Thanks, Steve. I'd like to welcome everyone joining us for this financial review of UniFirst's first quarter of fiscal 2014.

Steven will cover all the details in a moment. But first, I'll provide an overview.

UniFirst revenues for the first quarter of fiscal 2014 set another new record at $346.7 million, a 4.3% increase over the $332.6 million reported for the same period in 2013. Net income for the quarter was also a new UniFirst record at $34.5 million, a 12% increase over the $30.8 million reported 1 year ago.

Organic growth for the Core Laundry Operations, which accounts for 90% of the UniFirst total business, was the primary driver of our positive first quarter performance. Our laundry set a new quarterly record for new account sales for making slight gains in our uniform wearers adds over reduction matrix.

These are positive factors contributing to our Core Laundry Operations, improving revenue by 5.9% and operating income by 17.6%, when compared to last year's first quarter. Meanwhile, Specialty Garments segment, which includes specialized nuclear, cleanroom laundries and ancillary services, reported a 12.3% revenue decrease and a 41.3% operating income dip for the quarter, which compared to the same period in 2013.

These results were expected, as we've mentioned in our last webcast, based on the cyclical nature of the nuclear industry and with the nuclear arm of the segment representing the majority of Specialty Garment business. Moving forward, we continue to expect the cyclical challenges to remain throughout 2014 and anticipate a down year for the Specialty Garment unit.

And we also expect this segment to begin bouncing back in coming years as increased number of large nuclear reactor projects are scheduled with the anticipated increase in decommissioning opportunities in Europe. In the meantime, the Specialty Garment unit will continue to seek, expand upon niche products and service offerings in the nuclear cleanroom communities to take advantage of additional revenue opportunities.

And finally, our First Aid & Safety segment continue to perform well in the first quarter with the group reporting a slight revenue increase and a modest operating income dip when compared to the same period 1 year ago. We fully expect the First Aid unit to continue with their positive performance trends of recent years and anticipate another year of quality growth in 2014 by providing more first aid cabinets, medications, safety supplies to companies, wholesalers and suppliers under its own and private label brands, as well as providing added safety training classes and new ancillary services to businesses of all type.

Overall, we are pleased with the first quarter 2014, and we'll continue challenging our thousands of UniFirst Team Partners to maintain and find new innovative ways to improve the quality of sales and service momentum achieved over the first 13 weeks of the fiscal year. As we look ahead to the balance of 2014, we expect our Core Laundry Operations to continue driving company growth, benefiting from improved sales productivity as a result of our investment in our sales professionals and our training skills through prospecting technologies and our sales incentive programs.

We also look to our service folks to remain committed and focused on continuous improvement in all areas related to delivering consistent, high-quality customer products and services. Accordingly, we continue expanding and implementing our service certification programs for all Team Partners who directly interact with customers.

Whether new hires or long-termed tenured personnel, all service staff are required to complete comprehensive training programs to better prepare them to excel in customer service at all levels at all times in all locations. By ensuring our customer needs are met, week in and week out, we know our customer satisfaction level will continue to climb, customer attention will benefit, ancillary service sales will grow, new account referrals will increase and our top and bottom line will advance.

So despite the slow growth forecast projected for the national economy in 2014, we believe our managers in all UniFirst business segments will again succeed by continuing to focus on and by effectively executing our short- and long-term business strategies as laid out in our Vision 2020 business plan. This comprehensive corporate plan is our business bible as it details our path to annual success into achieving solid growth in both revenue and margin with defined yearly targets.

By continuing to adhere to this plan and by keeping our customers the focus of everything we do, UniFirst will continue to grow and provide quality returns for our shareholders. And with that said, I'll turn it back over to Chief Financial Officer, Steven Sintros, for more details on the first quarter.

Thanks, Ron. Revenues for the first quarter were $346.7 million, up 4.3% from $332.6 million 1 year ago.

Net income was $34.5 million or $1.71 per diluted share, compared to $30.8 million or $1.54 per diluted share reported in the first quarter of fiscal 2013. First quarter revenues in our Core Laundry Operations were $312 million, up 5.9% from those reported in the prior year's first quarter.

Excluding the impact of acquisitions and a weaker Canadian dollar, revenues grew 5.1%. Solid new account sales as well as certain annual price adjustments contributed to our top line performance in the quarter.

New account sales, account retention and wearer additions versus reductions, all trended positively compared to the first quarter of 2013. Wearer additions versus reductions were slightly positive during the quarter compared to flat in the same quarter 1 year ago.

Core Laundry operating margin for the quarter was 16.8% compared to 15.1% 1 year ago. Merchandise amortization, energy and bad debt expense were all lower as a percentage of revenues compared to the prior year.

Selling, payroll and certain other payroll-related costs were also lower than the prior year as a percentage of revenues. Energy costs for the first quarter of fiscal 2014 were 4.8%, compared to 5.1% for the first quarter of fiscal 2013.

Merchandise in service addition did trend higher in the quarter, which could be an indication of increased merchandise amortization as the year continues. Revenues for the Specialty Garments segment, which consists of the nuclear decontamination and cleanroom operations, were $24.4 million for the first quarter of fiscal '14, down 12.3% from $27.9 million in the first quarter of 2013.

This anticipated decline in revenues is a result of fewer U.S. and Canadian power reactor outages compared to 1 year ago.

As a result of this revenue decline, this segment's income from operations decreased to $2.8 million from $4.7 million 1 year ago. Looking further ahead, early indications are that the second half of fiscal 2015 and beyond will bring significant new revenues for this segment as large new power reactor projects are scheduled with existing customers.

As always, we will continue to keep you updated throughout the year regarding our expectations for this segment's results. First Aid segment revenues increased 1.3% to $10.3 million in the quarter compared to $10.1 million in the same quarter 1 year ago.

Income from operations for the segment fell slightly to $0.5 million in the quarter from $0.7 million in 2013. The effective income tax rate for the quarter -- first quarter of fiscal 2014 was 38.9% compared to 39% in the first quarter of fiscal '13.

We now expect our full year fiscal 2014 effective income tax rate will be approximately 38.5%. UniFirst continued to maintain a solid balance sheet and financial position.

Cash provided from operating activities for the first quarter was $68.6 million, up 22.2% compared to $56.2 million for the first quarter 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 1 year ago.

Cash and cash equivalents at the end of the quarter totaled $141.8 million, down from $197.5 million at the end of fiscal 2013. This decrease is the result of the September repayment of $100 million in private placement notes that came due.

Of our cash on hand, $61.9 million has been accumulated by our foreign subsidiaries and 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 quarter of 2014 were $22.8 million. We continue to invest capital in our Unity 20/20 CRM systems project.

During the quarter, we capitalized $6.4 million related to our 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. During the first quarter, the company did not expend any significant capital on acquisitions.

We continue to look for additional acquisition targets as acquisitions remain an integral part of our overall growth strategy. At this time, we would like to provide you with an update regarding our outlook for full 2014 fiscal year.

In October, we communicated that 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. Based on our first quarter performance, we now expect that our full year results will be at the higher end of these ranges.

As a reminder, fiscal 2014 will be a 52-week year for the company, compared to fiscal 2013 which was a 53-week year for the company. The extra week occurred in the 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%. As we also discussed last quarter, UniFirst has obtained a waiver that will allow our existing health care coverage to remain intact through August 2014.

And as a result, the company is not required to fully comply with the provisions of the Affordable Care Act until the beginning of our fiscal 2015. As we continue to evaluate the impact of adopting this act and potential changes to our health care offerings, it is clear that our health care costs will increase and pressure our current margin levels.

The company feels strongly about providing affordable health care coverage for our employees and intends to continue its long practice of doing so. In the upcoming quarterly calls, we plan on providing more specifics regarding the expected financial impact of the Affordable Care Act when it is available.

In addition to the cost pressure from the Affordable Care Act, we have discussed in prior quarters how the cost of and transition to our new Unity 20/20 CRM system will also provide margin headwinds in fiscal 2015. On the positive side, we view these investments in health care and technology as investments in 2 of our more -- most important assets, our workforce and our service systems.

Both have been crucial to our recent success and require continued reinvestment to maximize their effectiveness. Finally, I want to provide a brief update regarding the status of claims against us related to New England Compounding Center.

As you may remember, NECC was a company that compounded and sold tainted drugs, which reportedly resulted in widespread outbreak of fungal meningitis and other infections. As we have previously disclosed, we provided limited once-a-month cleaning services to portions of NECC's cleanrooms.

In the fall, we disclosed in our 10-K filing that we expected that we'd be named as defendant in a number of suits related to NECC. That occurred in November when we, along with many other parties, were named as defendants in a master complaint filed by the plaintiffs' steering committee.

Individual plaintiffs have now piggybacked on the master complaint to file claims against us. To date, we have received claims from over 200 parties in this matter.

While we cannot predict the final outcome of these claims, based on our preliminary review, we believe we have substantial defenses. In addition, we are in discussions with our insurers concerning coverage matters.

We will respond to these claims as appropriate, and we expect it's litigation to take its normal course. This completes our prepared remarks and we'd now be happy to answer any questions that you may have.

So in the last few years we haven't had a lot of positive commentary on add-stops. I think the words slight improvement is about as good as it's gotten.

So just for context here, it this -- it's obviously slight, is this the best add-stops that we've seen in a few years, or how would you put this in a -- kind of a longer-term context versus the past few years?

I would say that this probably is the best quarter we have had in 2 or 3 years. I made the comment that it was better than the first quarter of last year.

Sometimes in our first fiscal quarter, it tends to be a little bit better than some other quarters, which is why I provided the perspective versus the first quarter 1 year ago. So we are seeing a little momentum.

We did say slight because we don't want to give the impression it was robust. It was not.

We're very interested in seeing how it progresses over the next quarter as we were slightly negative for the last 9 months of last year. So we're as interested as anyone to see if it continues over the next several months.

Is there any end markets? I mean, is this manufacturing?

Is this like a trades thing? Energy we've heard is strong, can you just give us some details as to where you might be seeing it?

Well, I think energy certainly continues to be strong. But we are seeing in some other parts of the country that would indicate that it's more broad than just energy.

I don't know if -- Ron, you want to add to that?

No, I think Steve said it all. We measure it by area of the country, and there are a couple of sectors that are down and poorer sectors that are up.

Okay, that's good. And moving on to maybe some National commentary -- you didn't have anything really in the prepared remarks, at least that I heard.

How much National Account business is out there? And is any of the competitive pressures that we've been hearing about, from you guys and maybe even others, is that subsiding as everybody is getting more full and we're seeing capacity additions in the industry?

Are big contracts like that now being more scrutinized for price and ones that maybe wouldn't be as aggressive today as they were yesterday?

I think the National Account arena is still highly competitive, number one. There still is a consolidation of a lot of smaller industries or grocery markets, or so forth, into a National Account arena, and I think you'll see that trend to continue.

But the competition has not let up in that arena, that's the only thing I can tell you.

Okay. And just kind of a long -- I kind of asked -- mentioned in my question there, but just kind of want to get your thoughts.

I mean, we see your CapEx guidance, 90 to 100 -- we know that CRM's in there, automation. Are there new plants that need to be constructed at UniFirst in the next year or 2 where you're just growing out of facilities that you have or major expansion, which should actually kind of functionally be a new plant?

Are those the types of things that you're seeing inside the company today, Ron?

We basically put 2 plants a year on, and we will do that. We've done it the last 2 years, and we will do that the next couple of years.

We've had substantial growth that we need capacity at the markets. And we know when we have a plant over our branch in the market we do better in sales and gaining market share, so we like that approach.

And plus, we're always adding to a couple of plants. So we -- basically, you have 4 to 5 major projects going a year.

Sounds busy. Last question, just on capacity additions.

What about routes, Ron? Where are you on your -- on the route curve?

Are you -- is this an area where you think you might need outside investment? Are you too full now or have you recently made those?

I just want to get a sense of kind of where the investment is and how that it can impact margins.

I will never say a route is too full. I mean, we like to have full routes, it keeps our employees stable.

And -- but as required in a location, we add routes. We add routes every year, just as part of doing the business.

Yes. I don't think we're at a tipping point one way or the other.

I think it's more business as usual. And some locations are adding routes, but many still have capacity to absorb additional business.

Wanted to ask you a little bit more about the add-stop trajectory, I'm afraid to hear the inflection there. But was curious, like throughout the quarter, was there a trajectory to the add-stops?

And I guess just, by and large, let me get a little bit of color and just in terms of how the business progress in terms of strength or weakness throughout the quarter. And I believe in the guidance for the full year, I think last quarter you mentioned that -- it implied that add-stops will be a little bit negative for the year and I was wondering if that's changed in the guidance as well.

I think for the first quarter, there wasn't any. And we track it every week, and there wasn't a substantial difference toward the end of the quarter versus the beginning of the quarter, John.

As far as the rest of the year goes, our guidance at this point probably assumes a flattish or slightly negative adds-reductions until we see differently. I mentioned our first quarter is typically our strongest adds-reductions quarter, and although this first quarter was a little bit better than 1 year ago, I think we want to see it before we start building it in.

And until we see another couple of months of it, I'm not sure we're going to be convinced it's a trend yet.

Okay, fair enough. And I wanted to ask just about kind of the December business.

I know we've had some -- a little bit of volatile weather and I know Christmas kind of fell at a different point of the calendar and it's impacted some service companies. And I was just curious to know if there's been any sort of -- anything you'd want to call out on December in terms of how it affected the calendar or weather, anything like that.

Yes, I think on balance, we're a little behind the year-over-year -- at least as it relates to the holiday impact. I think it was a little stronger this year based on the way the holidays fell.

And your point about the weather is a good one. We've been hit hard here particularly in the Northeast and even in some other markets that aren't traditionally impacted as much by the weather.

We've had some plant closures for a day here, a day there. And so, we don't think it'll have a real material impact on our second quarter, but there'll be some incremental impact.

Okay. And then just final question on the M&A side.

I know when there's something to be said, we'll all read about it in a filing from you. But I was just curious to know if you feel like the activity level in 2014 is going to bring more to the market than we've seen in the prior years.

I know we've been kind of waiting for buyer and seller expectations to align, but when I look at your company and with the pristine balance sheet and the operational progress you've made that I just kind of wonder if you guys are at a point where you think you might be willing to pull the trigger on maybe some midsized or larger deals at some point in the near future.

Well, we're always looking and shopping. And as individual companies, number one, have to do their tax returns in the first quarter of the year, ownership generally wakes up to their current status, and then some opportunity window usually in late spring or early summer to talk to them.

But we're talking to people every day as we possibly can. And we have to find the larger acquisition at the right return at the right price, and the seller has to be willing, and want someone in that position today at this point.

It's Molly McGarrett for Andrew. Last quarter, you gave guidance for Specialty Garments to be down 9% in revenues and 15% in operating profit for the full fiscal year.

Should we still assume those numbers?

Yes, I think you can stick with those numbers, Molly. The first quarter was a little further off those numbers, but that was somewhat expected as it was planned to be somewhat of a light outage season.

The spring outage season in the third quarter is expected to be the stronger quarter this year, which last year was a little bit flip-flopped. And so we do still feel at this point we can achieve those numbers that we put out there.

Okay. And then given the strong performance in the first quarter, I know you guided to the high end of guidance, but what's holding you back from raising guidance for the full year, and particularly within -- with margin pressures?

Could you maybe rank the margin pressures going forward, where you think there could be a possible bias towards the downside?

Well, I think there's a couple of items we just want to make sure we highlight from a comparative standpoint to make sure you're taking into account. The first being, in the fourth quarter, obviously, the extra week.

But also, in the fourth quarter, we called out last year we had a $2.3 million adjustment to some of our workers' compensation reserves that was a benefit in the fourth quarter that's not built into our guidance this year. In addition, if you remember in the second quarter last year, we had a buyout on a large account that provided about $1.7 million of profit that was somewhat of an unusual item.

So there's a few kind of negative comparisons coming from some of those items over the last 9 months of the year. After taking those into account, a couple of the areas that give us some reason to pause about the remainder of the year and the profit trajectory, I mentioned merchandise.

With the solid sales in the first quarter and the better-than-expected adds, we did also have higher-than-expected merchandise additions. And so we want to see how that's developing over the next quarter or so before we move too much on the guidance and the profit sizes as that's a large driver of our guidance.

Okay, great. And just one quick modeling if I could.

Could you give a breakout of growth from acquisitions and FX impact?

Yes, the acquisitions was 1.3%, Molly, in the Core Laundry business and the balance is from the FX.

I've got 2 quick questions. The first one is on growth.

The net add-stop to wearer additions seems to be ticking upwards. But just to make sure I don't miss anything, it looks like the comps are about 100 basis points easier this quarter and yet your growth has slightly decelerated.

How should we think about growth going forward, especially as comps are getting a little bit easier throughout the rest of the year?

As far as the growth over the remainder of the year, the organic growth that is in the assumption at the higher end of the range is slightly lower than where we ended up this quarter. Now part of that is my assumption that adds-reductions are going to be slightly negative for the remainder of the year.

If they outpace that, there's probably some upside there. But that's what's built into the guidance right now.

Got it. And my next -- my last question is on margins.

Everybody knows that better wearer additions should be good for margins, and margins are indeed expanding. But if my numbers are correct, it looks like the operating margin growth on a year-over-year basis is about 170 basis points this quarter, which is slightly below the last quarter, which is about 190, and well below 3Q, which was about 300.

So how should we think about kind of the positive impact of higher wearers per existing customers on margins going forward?

I think everything else being equal, Dan, your assumption is correct. I think there's -- if you go back over the last several quarters, there are just many other factors that are causing those positive comparisons, the trajectory of merchandise being one of them.

So I think the comment is a good one, but I think that we've talked about last year how some of the year-over-year benefit that we got from improvement at underperforming locations and improved collection of extra charges. I mean, those things were some of the things that were driving the improved margin to the level that it was at.

And those things have somewhat moderated, at least the impact of them, from a year-over-year basis. And so I think those are some of the things that are causing, I guess, what you call a deceleration of the margin improvement even though adds versus reductions are getting a little bit better.

So hopefully, that helps your question.

Steve, just a quick question on SG&A levels, and can you just talk maybe throughout the year how this compares to just kind of growth year-over-year on your SG&A spending?

Well, SG&A was definitely low for the quarter. We mentioned selling costs being down.

And I don't believe we said it in our prepared remarks, but at this point of the year, we feel we're a little bit understaffed on the selling side. We continue to grow the sales force to take advantage of opportunities out there.

And from a sales productivity standpoint, we had a good quarter. But we're still pushing to get those headcounts up and to increase the overall number of tenured reps that we have on the street, and so that will potentially cause the selling cost to come up as the year goes along.

We hope it does, because that's really our strategy, to continue to push on the new sales side.

Just a follow-up on a prior question. I think you noted that the guidance assumes a slightly negative add-quit for the rest of the year.

If we were to basically just assume that the current situation holds with respect to positive wearer levels, how should we think about the sensitivity to Core Laundry organic growth? I think last quarter, you guys were looking for about a 4% organic growth improvement for the full year, so what would be the sensitivity to that number if the wearer levels hold?

Yes, Joe, because we are making a lot of the adds-reductions -- and I think it is an important trend to keep watching. But we made the comment that it was a slight positive because the reality is, if the slight negative I'm projecting becomes a slight positive, it's not going to mean another percent on the growth, for example.

It's going to be more muted and incremental on what we've estimated at this point. And that just kind of highlights the fact that we're not seeing real robust adds.

They are slightly positive. But to go from slightly positive for the remainder of the year to where we are in the first quarter, it wouldn't be a full percent on the revenues.

I'm not even sure it'd be 0.5%, to be honest.

That's perfect. Could you maybe rank or put some color around how much some of the revenue drivers like new account sales, flame-resistant garments and collection of ancillary charges are contributing to your organic revenue growth?

I mean, I think this quarter we didn't really call out anything in particular, because I think where we are now and kind of having to annualize some of the strong growth in some of those areas, it's more balanced. I'm not sure -- we still are growing higher than average in our protective garment apparel, but it's not to the extent that it was over the last several years and such a large driver in improving the growth from 5% to 7%, for example.

So I'd say it's much more balanced. It was a good quarter all around and with contributions from many areas.

Understood. Just relative to pricing, what are you seeing a bigger contributor from right now?

Is it the collection of ancillary fees or are you actually seeing a decent move on core pricing changes?

I think it's both. I mean, I think -- again, we highlighted that ancillary charges last year because some of the improvements we made there.

But again, I think we're more balanced, at least in this quarter, that there's normal contributions from the core pricing. And we continue to push ancillary charges, they're always going to be a part of our offering.

But I wouldn't say there was a real trend one way or the other.

Okay. And one last one for you, Steve.

I think you mentioned 1 minute ago that you expect to see more sales productivity gains this year. You guys have absolutely done fantastic in that arena over the last several years, so do you have some new programs in place or can you point us to anything specifically that should drive it higher?

Well, I think as Steven basically mentioned, our issue -- our headcount is an issue at this point. And what we -- if we can get our headcount where we want it to be, we think we'll be able to pick that up.

Steve, I was just wondering of the factors you outlined that contributed to margin expansion in the Core Laundry business, if it would be possible to somewhat rank what the largest contributors to the margin expansion were.

Sure, Kevin. I think from a directional standpoint, merchandise was the largest contributor.

The selling cost differential was probably next, which you can see in our SG&A line. And then energy with a few tenths, and then there was a few other small things as well.

But those were the bigger areas.

Okay. And as you talked about merchandise amortization going forward might not be as big of a contributor, so that perhaps implies that some of the slower margin expansion that you might expect in addition to those onetime items, is that correct?

Exactly. That's what's built in right now, yes.

Okay. So I think last quarter, you talked about at the midpoint of your guidance you would expect Core Laundry Operating margin to be down a few tenths.

Now that you expect towards a higher end of the range, what sort of a Core Laundry margin are you baking into that updated expectation?

The full year Core Laundry margin is slightly over 14% based on that high end of that range. And adding in what we expect nuclear to do and First Aid, that will get you to the high end of that range.

I have a hunch you know what this question is going to be. But Ron, any increase in the sense of urgency on your balance sheet and how you're thinking about it here today?

Great cash flow quarter, it sounds like there's some timing stuff in there. But regardless, we're over $6 per share net cash, several hundreds of millions of dollars of capacity here.

What should shareholders be expecting you to be thinking about and may be doing with that excess cash.

We still follow the Warren Buffett rule, take that cash and we look for acquisitions. And like I said earlier, we're talking to people almost daily.

We have a pretty sizable list of potential people we keep talking to. And that's where that cash is going to go, to expand the business.

Is there the kinds of opportunities out there to deploy that kind of capital out there? Do those companies exist?

Every other thing -- if you look at all private businesses out there, they all have issues to resolve and they're all basically deal around family issues, state issues, children fighting that -- that are second or third generation. And the parents, I guess, have to make tough decisions.

And when they do that, that opportunity arises. And I can't go out there and solve those problems, I can just go out there and...

Offer solutions.

Offer a solution to their problem.

Okay. Do you think it's a little bit easier, at least from your ability to underwrite deals here today, kind of where your stock is trading.

Clearly, markets extensive, or at least historically extensive. Does that -- do you feel like you're able to reach a little bit more to narrow the gap on your side of the equation.

I know that you'll always going to be disciplined, you're not going to overpay. But are you able to get a little closer to some of those seller expectations which maybe have been high, historically?

I guess it varies on the quality of the business. I mean, if you go back to what I've always said, we're 65% garment, and garments are the sticky part of the business.

I mean, that controls your loss business numbers. And when you look at some of these guys businesses, if they're only 30% garment, but they still want that same evaluation, and that's where you get the issues.

Very good. We'd like to thank everyone for joining us this morning to review UniFirst's first quarter results for fiscal 2014.

We look forward to speaking to you again in March where we'll be reporting our second quarter and our 6-month numbers. Have a great day, and happy and healthy new year.

And thank you much.