UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or
“we”) today reported results for its third quarter ended May 27,
2023 as compared to the corresponding period in the prior fiscal
year:
Q3 2023 Financial
Highlights
- Consolidated
revenues increased 12.7% to $576.7 million.
- Operating income was $33.4 million,
a decrease of 0.9%.
- The quarterly tax rate increased to
27.2% compared to 25.4% in the prior year.
- Net income decreased to $24.3
million from $25.1 million in the prior year, or 3.2%.
- Diluted earnings per share
decreased to $1.29 from $1.33 in the prior year, or 3.0%.
- EBITDA increased to $64.0 million
compared to $60.3 million in the prior year, or 6.1%.
The Company's financial results for the third
quarter of fiscal 2023 and 2022 included approximately $8.4 million
and $11.4 million, respectively, of costs directly attributable to
its CRM, ERP and branding initiatives (the "Key Initiatives"). In
addition, the Company incurred costs related to the acquisition of
Clean Uniform during the third quarter of fiscal 2023 of
approximately $0.7 million. The effect of these items on the third
quarter of fiscal 2023 and 2022 combined to decrease:
- Operating income
and EBITDA by $9.1 million and $11.4 million, respectively.
- Net income by $6.8 million and $8.4
million, respectively.
- EPS by $0.37 and $0.44,
respectively.
Steven Sintros, UniFirst President and Chief
Executive Officer, said, “We are pleased with our strong top line
performance in the quarter, but continue to be focused as a Company
on mitigating the cost pressures impacting our operations. The
early days of our recently closed acquisition of Clean Uniform have
been very constructive with initial efforts being focused primarily
on retaining Clean’s most important assets — its people and its
customers. We continue to be excited about the strength and quality
of the Clean business and what we continue to believe the combined
companies will be able to achieve in the markets we serve together.
As always, I want to thank our over 14,000 Team Partners who
continue to Always Deliver for each other and our
customers as we strive towards our vision of being universally
recognized as the best service provider in the industry.”
Segment Reporting
Highlights
Core Laundry Operations
- Revenues for the quarter increased
11.5% to $501.7 million.
- Organic growth, which excludes the
effect of acquisitions and fluctuations in the Canadian dollar, was
7.8%.
- Operating margin decreased to 4.2%
from 5.9%.
- Core Laundry Operations' EBITDA
margin decreased to 9.9% from 11.4%.
The costs incurred related to the Key
Initiatives and Clean Uniform acquisition, discussed above, were
recorded to the Core Laundry Operations' segment, and decreased the
Core Laundry Operations' operating and EBITDA margin for the third
quarters of fiscal 2023 and 2022 by 1.8% and 2.5%,
respectively.
The segment's operating and EBITDA margin were
also impacted by approximately $5.3 million of additional expense
compared to prior year related to high healthcare claims and costs
incurred related to a legal matter as well as higher merchandise
and other operating costs as a percentage of revenues which are
being impacted by the inflationary environment. These increases
were partially offset by lower energy costs during the quarter
compared to prior year. The preliminary purchase accounting for the
recent Clean Uniform acquisition further impacted the segment’s
operating margin, most notably in the form of elevated non-cash
intangibles amortization.
Specialty Garments
- Revenues for the quarter were $49.4
million, an increase of 19.9%, which was driven by growth in the
segment's cleanroom and North American nuclear operations.
- Operating margin increased to 25.2%
from 17.4% a year ago, primarily the result of the strong top line
performance.
- Specialty Garments' EBITDA margin
increased to 27.1% from 19.9%.
- Specialty Garments consists of
nuclear decontamination and cleanroom operations, and its results
can vary significantly due to seasonality and the timing of reactor
outages and projects.
Balance Sheet and Capital
Allocation
- Cash and cash
equivalents and Short-term investments totaled $69.3 million as of
May 27, 2023.
- The Company had no long-term debt
outstanding as of May 27, 2023.
- The Company did not repurchase any
shares of common stock in the third quarter of fiscal 2023. As of
May 27, 2023, the Company had $63.6 million remaining under its
current stock repurchase program.
- Weighted average shares outstanding
– Diluted for the third quarter of fiscal 2023 and fiscal 2022 were
18.7 million and 18.9 million, respectively.
Financial Outlook
The Company now expects its revenues for fiscal
2023 to be between $2.220 billion and $2.230 billion, primarily as
a result of the strong top-line performance in the Specialty
Garments' business. We continue to expect diluted earnings per
share to be between $5.02 and $5.37, which currently reflects:
- Core Laundry Operations’ operating and EBITDA margin at the
midpoint of the range of 4.7% and 10.5%, respectively.
- The impact of strong profitability in the Specialty Garments’
business in the current quarter, as well as improved expectations
for the remainder of the year.
- An estimate of $37.0 million of costs directly attributable to
our Key Initiatives as well as $3.0 million of Clean
acquisition-related expenses, which combined to decrease the Core
Laundry Operations' operating and EBITDA margin assumptions by 2.1%
and EPS by $1.60.
- An effective tax rate of 25.75%.
- No impact from any future share buybacks or unexpected
significantly adverse economic developments.
Conference Call Information
UniFirst Corporation will hold a conference call
today at 9:00 a.m. (ET) to discuss its quarterly financial results,
business highlights and outlook. A simultaneous live webcast of the
call will be available over the Internet and can be accessed at
www.unifirst.com.
About UniFirst Corporation
Headquartered in Wilmington, Mass., UniFirst
Corporation (NYSE: UNF) is a North American leader in the supply
and servicing of uniform and workwear programs, facility service
products, as well as first aid and safety supplies and services.
Together with its subsidiaries, the Company also manages
specialized garment programs for the cleanroom and nuclear
industries. In addition to partnering with leading brands, UniFirst
manufactures its own branded workwear, protective clothing, and
floorcare products at its five Company-owned ISO-9001-certified
manufacturing facilities. With more than 270 service locations,
over 300,000 customer locations, and 14,000-plus employee Team
Partners, the Company outfits more than 2 million workers every
day. For more information, contact UniFirst at 888.296.2740 or
visit UniFirst.com.
Forward-Looking Statements
Disclosure
This public announcement contains
forward-looking statements within the meaning of the federal
securities laws that reflect the Company’s current views with
respect to future events and financial performance, including
projected revenues, operating margin and earnings per share.
Forward-looking statements contained in this public announcement
are subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995 and may be identified by words such
as “guidance,” “outlook,” “estimates,” “anticipates,” “projects,”
“plans,” “expects,” “intends,” “believes,” “seeks,” “could,”
“should,” “may,” “will,” “strategy,” “objective,” “assume,”
“strive,” “design,” “assumption,” “vision” or the negative versions
thereof, and similar expressions and by the context in which they
are used. Such forward-looking statements are based upon our
current expectations and speak only as of the date made. Such
statements are highly dependent upon a variety of risks,
uncertainties and other important factors that could cause actual
results to differ materially from those reflected in such
forward-looking statements. Such factors include, but are not
limited to, uncertainties caused by an economic recession or other
adverse economic conditions, including, without limitation, as a
result of continued high inflation rates or further increases in
inflation or interest rates or extraordinary events or
circumstances such as geopolitical conflicts like the conflict
between Russia and Ukraine or the COVID-19 pandemic, and their
impact on our customers’ businesses and workforce levels,
disruptions of our business and operations, including limitations
on, or closures of, our facilities, or the business and operations
of our customers or suppliers in connection with extraordinary
events or circumstances such as the COVID-19 pandemic,
uncertainties regarding our ability to consummate acquisitions and
successfully integrate acquired businesses, including Clean
Uniform, and the performance of such businesses, uncertainties
regarding any existing or newly-discovered expenses and liabilities
related to environmental compliance and remediation, any adverse
outcome of pending or future contingencies or claims, our ability
to compete successfully without any significant degradation in our
margin rates, seasonal and quarterly fluctuations in business
levels, our ability to preserve positive labor relationships and
avoid becoming the target of corporate labor unionization campaigns
that could disrupt our business, the effect of currency
fluctuations on our results of operations and financial condition,
our dependence on third parties to supply us with raw materials,
which such supply could be severely disrupted as a result of
extraordinary events or circumstances such as the COVID-19 pandemic
or the conflict between Russia and Ukraine, any loss of key
management or other personnel, increased costs as a result of any
changes in federal, state, international or other laws, rules and
regulations or governmental interpretation of such laws, rules and
regulations, uncertainties regarding, or adverse impacts from
continued high price levels of natural gas, electricity, fuel and
labor or increases in such costs, the negative effect on our
business from sharply depressed oil and natural gas prices,
including, without limitation, as a result of extraordinary events
or circumstances such as the COVID-19 pandemic, the continuing
increase in domestic healthcare costs, increased workers’
compensation claim costs, increased healthcare claim costs,
including as a result of extraordinary events or circumstances such
as the COVID-19 pandemic, our ability to retain and grow our
customer base, demand and prices for our products and services,
fluctuations in our Specialty Garments business, political or other
instability, supply chain disruption or infection among our
employees in Mexico and Nicaragua where our principal garment
manufacturing plants are located, including, without limitation, as
a result of extraordinary events or circumstances such as the
COVID-19 pandemic, our ability to properly and efficiently design,
construct, implement and operate a new customer relationship
management computer system, interruptions or failures of our
information technology systems, including as a result of
cyber-attacks, additional professional and internal costs necessary
for compliance with any changes in or additional Securities and
Exchange Commission, New York Stock Exchange and accounting or
other rules, including, without limitation, recent rules proposed
by the Securities and Exchange Commission regarding climate-related
and cybersecurity-related disclosures, strikes and unemployment
levels, our efforts to evaluate and potentially reduce internal
costs, economic and other developments associated with the war on
terrorism and its impact on the economy, the impact of foreign
trade policies and tariffs or other impositions on imported goods
on our business, results of operations and financial condition,
general economic conditions, our ability to successfully implement
our business strategies and processes, including our capital
allocation strategies, our ability to successfully remediate the
material weakness in internal control over financial reporting
disclosed in our Annual Report on Form 10-K for the year ended
August 27, 2022 and the other factors described under Part I, Item
1A. “Risk Factors” and elsewhere in our Annual Report on Form 10-K
for the year ended August 27, 2022, Part II, Item 1A. “Risk
Factors” and elsewhere in our subsequent Quarterly Reports on Form
10-Q and in our other filings with the Securities and Exchange
Commission. We undertake no obligation to update any
forward-looking statements to reflect events or circumstances
arising after the date on which they are made.
Consolidated Statements of
Income(Unaudited)
|
|
Thirteen weeks ended |
|
|
Thirty-nine weeks ended |
|
(In thousands, except per share data) |
|
May 27, 2023 |
|
|
May 28, 2022 |
|
|
May 27, 2023 |
|
|
May 28, 2022 |
|
Revenues |
|
$ |
576,668 |
|
|
$ |
511,548 |
|
|
$ |
1,661,157 |
|
|
$ |
1,484,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (1) |
|
|
379,419 |
|
|
|
334,633 |
|
|
|
1,103,287 |
|
|
|
969,579 |
|
Selling and administrative expenses (1) |
|
|
132,677 |
|
|
|
116,191 |
|
|
|
372,230 |
|
|
|
332,985 |
|
Depreciation and amortization |
|
|
31,175 |
|
|
|
27,027 |
|
|
|
88,115 |
|
|
|
80,744 |
|
Total operating expenses |
|
|
543,271 |
|
|
|
477,851 |
|
|
|
1,563,632 |
|
|
|
1,383,308 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
33,397 |
|
|
|
33,697 |
|
|
|
97,525 |
|
|
|
101,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
(553 |
) |
|
|
(340 |
) |
|
|
(6,353 |
) |
|
|
(1,739 |
) |
Other expense, net |
|
|
621 |
|
|
|
431 |
|
|
|
1,526 |
|
|
|
1,761 |
|
Total other expense (income), net |
|
|
68 |
|
|
|
91 |
|
|
|
(4,827 |
) |
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
33,329 |
|
|
|
33,606 |
|
|
|
102,352 |
|
|
|
101,078 |
|
Provision for income
taxes |
|
|
9,053 |
|
|
|
8,539 |
|
|
|
26,309 |
|
|
|
23,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
24,276 |
|
|
$ |
25,067 |
|
|
$ |
76,043 |
|
|
$ |
77,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share –
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.35 |
|
|
$ |
1.39 |
|
|
$ |
4.23 |
|
|
$ |
4.26 |
|
Class B Common Stock |
|
$ |
1.08 |
|
|
$ |
1.11 |
|
|
$ |
3.39 |
|
|
$ |
3.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share –
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.29 |
|
|
$ |
1.33 |
|
|
$ |
4.06 |
|
|
$ |
4.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income allocated to –
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
20,394 |
|
|
$ |
21,037 |
|
|
$ |
63,882 |
|
|
$ |
64,835 |
|
Class B Common Stock |
|
$ |
3,882 |
|
|
$ |
4,030 |
|
|
$ |
12,161 |
|
|
$ |
12,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income allocated to –
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
24,276 |
|
|
$ |
25,067 |
|
|
$ |
76,043 |
|
|
$ |
77,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
15,087 |
|
|
|
15,170 |
|
|
|
15,084 |
|
|
|
15,211 |
|
Class B Common Stock |
|
|
3,590 |
|
|
|
3,632 |
|
|
|
3,590 |
|
|
|
3,632 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding – Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
18,748 |
|
|
|
18,875 |
|
|
|
18,751 |
|
|
|
18,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Exclusive of depreciation on the Company’s
property, plant and equipment and amortization on its intangible
assets. |
Condensed Consolidated Balance
Sheets(Unaudited)
(In thousands) |
|
May 27, 2023 |
|
|
August 27, 2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
59,303 |
|
|
$ |
376,399 |
|
Short-term investments |
|
|
10,012 |
|
|
|
— |
|
Receivables, net |
|
|
279,485 |
|
|
|
249,198 |
|
Inventories |
|
|
150,253 |
|
|
|
151,459 |
|
Rental merchandise in service |
|
|
246,998 |
|
|
|
219,392 |
|
Prepaid taxes |
|
|
17,700 |
|
|
|
25,523 |
|
Prepaid expenses and other current assets |
|
|
49,254 |
|
|
|
41,921 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
813,005 |
|
|
|
1,063,892 |
|
|
|
|
|
|
|
|
Property, plant and equipment,
net |
|
|
739,607 |
|
|
|
665,119 |
|
Goodwill |
|
|
648,404 |
|
|
|
457,259 |
|
Customer contracts and other
intangible assets, net |
|
|
151,329 |
|
|
|
84,973 |
|
Deferred income taxes |
|
|
528 |
|
|
|
498 |
|
Operating lease right-of-use
assets, net |
|
|
62,744 |
|
|
|
50,050 |
|
Other assets |
|
|
109,886 |
|
|
|
106,181 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,525,503 |
|
|
$ |
2,427,972 |
|
|
|
|
|
|
|
|
Liabilities and shareholders’
equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
89,496 |
|
|
$ |
82,131 |
|
Accrued liabilities |
|
|
150,921 |
|
|
|
146,808 |
|
Accrued taxes |
|
|
— |
|
|
|
1,204 |
|
Operating lease liabilities, current |
|
|
18,515 |
|
|
|
13,602 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
258,932 |
|
|
|
243,745 |
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
Accrued liabilities |
|
|
124,434 |
|
|
|
123,979 |
|
Accrued and deferred income
taxes |
|
|
119,398 |
|
|
|
106,307 |
|
Operating lease
liabilities |
|
|
45,888 |
|
|
|
38,070 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
548,652 |
|
|
|
512,101 |
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
Common Stock |
|
|
1,510 |
|
|
|
1,508 |
|
Class B Common Stock |
|
|
359 |
|
|
|
359 |
|
Capital surplus |
|
|
97,154 |
|
|
|
93,131 |
|
Retained earnings |
|
|
1,904,490 |
|
|
|
1,845,163 |
|
Accumulated other
comprehensive loss |
|
|
(26,662 |
) |
|
|
(24,290 |
) |
|
|
|
|
|
|
|
Total shareholders’
equity |
|
|
1,976,851 |
|
|
|
1,915,871 |
|
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity |
|
$ |
2,525,503 |
|
|
$ |
2,427,972 |
|
Detail of Operating
Results(Unaudited)
|
|
Thirteen weeks ended May 27, 2023 |
|
|
Thirteen weeks ended May 28, 2022 |
|
|
|
Core Laundry |
|
Specialty |
|
First |
|
|
|
|
Core Laundry |
|
Specialty |
|
First |
|
|
|
|
|
Operations |
|
Garments |
|
Aid |
|
Total |
|
|
Operations |
|
Garments |
|
Aid |
|
Total |
|
Revenues |
|
$ |
501,719 |
|
$ |
49,407 |
|
$ |
25,542 |
|
$ |
576,668 |
|
|
$ |
450,039 |
|
$ |
41,198 |
|
$ |
20,311 |
|
$ |
511,548 |
|
Revenue Growth % |
|
|
11.5 |
% |
|
19.9 |
% |
|
25.8 |
% |
|
12.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) (1),
(2) |
|
$ |
20,995 |
|
$ |
12,455 |
|
$ |
(53 |
) |
$ |
33,397 |
|
|
$ |
26,431 |
|
$ |
7,161 |
|
$ |
105 |
|
$ |
33,697 |
|
Operating Margin |
|
|
4.2 |
% |
|
25.2 |
% |
|
-0.2 |
% |
|
5.8 |
% |
|
|
5.9 |
% |
|
17.4 |
% |
|
0.5 |
% |
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (1), (2) |
|
$ |
49,812 |
|
$ |
13,400 |
|
$ |
739 |
|
$ |
63,951 |
|
|
$ |
51,292 |
|
$ |
8,198 |
|
$ |
802 |
|
$ |
60,292 |
|
EBITDA Margin |
|
|
9.9 |
% |
|
27.1 |
% |
|
2.9 |
% |
|
11.1 |
% |
|
|
11.4 |
% |
|
19.9 |
% |
|
3.9 |
% |
|
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company’s financial results for the
third quarter of fiscal 2023 and 2022 included approximately $8.4
million and $11.4 million, respectively, of costs directly
attributable to its Key Initiatives. In addition, the Company
incurred costs related to the acquisition of Clean Uniform during
the third quarter of fiscal 2023 of approximately $0.7 million.
These costs were recorded to the Core Laundry Operations
segment.(2) The Key Initiative and
acquisition-related costs resulted in a decrease in Core Laundry
Operations' operating and EBITDA margin for the third quarter of
fiscal 2023 and 2022 of 1.8% and 2.5%, respectively. |
|
|
Thirty-nine weeks ended May 27, 2023 |
|
|
Thirty-nine weeks ended May 28, 2022 |
|
|
|
Core Laundry |
|
Specialty |
|
First |
|
|
|
|
Core Laundry |
|
Specialty |
|
First |
|
|
|
|
|
Operations |
|
Garments |
|
Aid |
|
Total |
|
|
Operations |
|
Garments |
|
Aid |
|
Total |
|
Revenues |
|
$ |
1,456,167 |
|
$ |
135,613 |
|
$ |
69,377 |
|
$ |
1,661,157 |
|
|
$ |
1,311,941 |
|
$ |
116,220 |
|
$ |
56,247 |
|
$ |
1,484,408 |
|
Revenue Growth % |
|
|
11.0 |
% |
|
16.7 |
% |
|
23.3 |
% |
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss) (3),
(4) |
|
$ |
68,468 |
|
$ |
30,683 |
|
$ |
(1,626 |
) |
$ |
97,525 |
|
|
$ |
81,683 |
|
$ |
19,640 |
|
$ |
(223 |
) |
$ |
101,100 |
|
Operating Margin |
|
|
4.7 |
% |
|
22.6 |
% |
|
-2.3 |
% |
|
5.9 |
% |
|
|
6.2 |
% |
|
16.9 |
% |
|
-0.4 |
% |
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA (3), (4) |
|
$ |
149,754 |
|
$ |
33,668 |
|
$ |
692 |
|
$ |
184,114 |
|
|
$ |
155,714 |
|
$ |
22,738 |
|
$ |
1,631 |
|
$ |
180,083 |
|
EBITDA Margin |
|
|
10.3 |
% |
|
24.8 |
% |
|
1.0 |
% |
|
11.1 |
% |
|
|
11.9 |
% |
|
19.6 |
% |
|
2.9 |
% |
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) The Company's financial results for the
first nine months of fiscal 2023 and 2022 included approximately
$27.5 million and $24.1 million, respectively, of costs directly
attributable to its Key Initiatives. In addition, the Company
incurred costs related to the acquisition of Clean Uniform during
the first nine months of fiscal 2023 of approximately $2.7 million.
These costs were recorded to the Core Laundry Operations
segment.(4) The Key Initiative and
acquisition-related costs resulted in a decrease in Core Laundry
Operations' operating and EBITDA margin for the first nine months
of fiscal 2023 and 2022 of 2.1% and 1.8%, respectively. |
Consolidated Statements of Cash
Flows(Unaudited)
(In thousands) |
|
Thirty-nine weeks endedMay 27, 2023 |
|
|
Thirty-nine weeks endedMay 28, 2022 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net income |
|
$ |
76,043 |
|
|
$ |
77,223 |
|
Adjustments to reconcile net
income to cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and
amortization |
|
|
88,115 |
|
|
|
80,744 |
|
Share-based compensation |
|
|
6,874 |
|
|
|
7,114 |
|
Accretion on environmental
contingencies |
|
|
777 |
|
|
|
447 |
|
Accretion on asset retirement
obligations |
|
|
690 |
|
|
|
732 |
|
Deferred income taxes |
|
|
11,709 |
|
|
|
1,823 |
|
Other |
|
|
16 |
|
|
|
20 |
|
Changes in assets and
liabilities, net of acquisitions: |
|
|
|
|
|
|
Receivables, less
reserves |
|
|
(22,148 |
) |
|
|
(31,998 |
) |
Inventories |
|
|
2,110 |
|
|
|
(8,258 |
) |
Rental merchandise in
service |
|
|
(19,544 |
) |
|
|
(25,788 |
) |
Prepaid expenses and other
current assets and Other assets |
|
|
67 |
|
|
|
3,603 |
|
Accounts payable |
|
|
3,492 |
|
|
|
850 |
|
Accrued liabilities |
|
|
(13,152 |
) |
|
|
(21,172 |
) |
Prepaid and accrued income
taxes |
|
|
7,758 |
|
|
|
3,498 |
|
Net cash provided by operating
activities |
|
|
142,807 |
|
|
|
88,838 |
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
Acquisition of businesses, net
of cash acquired |
|
|
(306,192 |
) |
|
|
(42,680 |
) |
Capital expenditures,
including capitalization of software costs |
|
|
(124,067 |
) |
|
|
(97,259 |
) |
Purchases of investments |
|
|
(117,012 |
) |
|
|
— |
|
Maturities of investments |
|
|
107,000 |
|
|
|
— |
|
Proceeds from sale of
assets |
|
|
517 |
|
|
|
133 |
|
Net cash used in investing
activities |
|
|
(439,754 |
) |
|
|
(139,806 |
) |
|
|
|
|
|
|
|
Cash flows from financing
activities: |
|
|
|
|
|
|
Payment of deferred financing
costs |
|
|
(851 |
) |
|
|
(5 |
) |
Borrowings under line of
credit |
|
|
80,000 |
|
|
|
— |
|
Repayments under line of
credit |
|
|
(80,000 |
) |
|
|
— |
|
Proceeds from exercise of
share-based awards |
|
|
3 |
|
|
|
3 |
|
Taxes withheld and paid
related to net share settlement of equity awards |
|
|
(2,850 |
) |
|
|
(3,898 |
) |
Repurchase of Common
Stock |
|
|
— |
|
|
|
(30,453 |
) |
Payment of cash dividends |
|
|
(16,527 |
) |
|
|
(15,407 |
) |
Net cash used in financing
activities |
|
|
(20,225 |
) |
|
|
(49,760 |
) |
|
|
|
|
|
|
|
Effect of exchange rate
changes |
|
|
76 |
|
|
|
(1,545 |
) |
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents |
|
|
(317,096 |
) |
|
|
(102,273 |
) |
Cash and cash equivalents at
beginning of period |
|
|
376,399 |
|
|
|
512,868 |
|
Cash and cash equivalents at
end of period |
|
$ |
59,303 |
|
|
$ |
410,595 |
|
Reconciliation of GAAP to Non-GAAP Financial
Measures
The Company reports its consolidated financial results in
accordance with generally accepted accounting principles (“GAAP”).
To supplement the Company’s consolidated financial results in this
press release, the Company also presents EBITDA and EBITDA margin,
which are non-GAAP financial measures. The Company defines EBITDA
as net income before interest, income taxes, depreciation and
amortization. EBITDA margin is defined as EBITDA for a period
divided by revenue for the same period.
The Company believes these non-GAAP financial measures provide
useful supplemental information regarding the performance of the
Company and its segments to both management and investors. These
non-GAAP financial measures exclude certain items that may impact
the comparability of the Company’s results. In addition, by
excluding certain items, these non-GAAP financial measures enable
management and investors to further evaluate the underlying
operating performance of the Company.
Supplemental reconciliations of the Company’s consolidated net
income on a GAAP basis to EBITDA and net income margin on a GAAP
basis to EBITDA margin are presented in the following table.
Investors are encouraged to review the reconciliations of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures, which are provided below. EBITDA and EBITDA
margin should be considered in addition to, and not as substitutes
for, or in isolation from, measures prepared in accordance with
GAAP.
The Company does not allocate its provision for income taxes to
its business segments and as a result, presents it in a separate
column in the following tables:
|
|
Thirteen weeks ended May 27, 2023 |
|
|
|
Core Laundry |
|
|
Specialty |
|
|
First |
|
|
|
|
|
|
|
(In thousands, except percentages) |
|
Operations |
|
|
Garments |
|
|
Aid |
|
|
Other |
|
|
Total |
|
Revenue |
|
$ |
501,719 |
|
|
$ |
49,407 |
|
|
$ |
25,542 |
|
|
$ |
— |
|
|
$ |
576,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
20,927 |
|
|
$ |
12,455 |
|
|
$ |
(53 |
) |
|
$ |
(9,053 |
) |
|
$ |
24,276 |
|
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,053 |
|
|
|
9,053 |
|
Interest income, net |
|
|
(553 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(553 |
) |
Depreciation and
amortization |
|
|
29,438 |
|
|
|
945 |
|
|
|
792 |
|
|
|
— |
|
|
|
31,175 |
|
EBITDA |
|
$ |
49,812 |
|
|
$ |
13,400 |
|
|
$ |
739 |
|
|
$ |
— |
|
|
$ |
63,951 |
|
EBITDA Margin |
|
|
9.9 |
% |
|
|
27.1 |
% |
|
|
2.9 |
% |
|
|
|
|
|
11.1 |
% |
|
|
Thirteen weeks ended May 28, 2022 |
|
|
|
Core Laundry |
|
|
Specialty |
|
|
First |
|
|
|
|
|
|
|
(In thousands, except percentages) |
|
Operations |
|
|
Garments |
|
|
Aid |
|
|
Other |
|
|
Total |
|
Revenue |
|
$ |
450,039 |
|
|
$ |
41,198 |
|
|
$ |
20,311 |
|
|
$ |
— |
|
|
$ |
511,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
26,339 |
|
|
$ |
7,161 |
|
|
$ |
106 |
|
|
$ |
(8,539 |
) |
|
$ |
25,067 |
|
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,539 |
|
|
|
8,539 |
|
Interest income, net |
|
|
(340 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(340 |
) |
Depreciation and
amortization |
|
|
25,293 |
|
|
|
1,037 |
|
|
|
697 |
|
|
|
— |
|
|
|
27,027 |
|
EBITDA |
|
$ |
51,292 |
|
|
$ |
8,198 |
|
|
$ |
802 |
|
|
$ |
— |
|
|
$ |
60,292 |
|
EBITDA Margin |
|
|
11.4 |
% |
|
|
19.9 |
% |
|
|
3.9 |
% |
|
|
|
|
|
11.8 |
% |
|
|
Thirty-nine weeks ended May 27, 2023 |
|
|
|
Core Laundry |
|
|
Specialty |
|
|
First |
|
|
|
|
|
|
|
(In thousands, except percentages) |
|
Operations |
|
|
Garments |
|
|
Aid |
|
|
Other |
|
|
Total |
|
Revenue |
|
$ |
1,456,167 |
|
|
$ |
135,613 |
|
|
$ |
69,377 |
|
|
$ |
— |
|
|
$ |
1,661,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
73,295 |
|
|
$ |
30,683 |
|
|
$ |
(1,626 |
) |
|
$ |
(26,309 |
) |
|
$ |
76,043 |
|
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26,309 |
|
|
|
26,309 |
|
Interest income, net |
|
|
(6,353 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,353 |
) |
Depreciation and
amortization |
|
|
82,812 |
|
|
|
2,985 |
|
|
|
2,318 |
|
|
|
— |
|
|
|
88,115 |
|
EBITDA |
|
$ |
149,754 |
|
|
$ |
33,668 |
|
|
$ |
692 |
|
|
$ |
— |
|
|
$ |
184,114 |
|
EBITDA Margin |
|
|
10.3 |
% |
|
|
24.8 |
% |
|
|
1.0 |
% |
|
|
|
|
|
11.1 |
% |
|
|
Thirty-nine weeks ended May 28, 2022 |
|
|
|
Core Laundry |
|
|
Specialty |
|
|
First |
|
|
|
|
|
|
|
(In thousands, except percentages) |
|
Operations |
|
|
Garments |
|
|
Aid |
|
|
Other |
|
|
Total |
|
Revenue |
|
$ |
1,311,941 |
|
|
$ |
116,220 |
|
|
$ |
56,247 |
|
|
$ |
— |
|
|
$ |
1,484,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
81,661 |
|
|
$ |
19,640 |
|
|
$ |
(223 |
) |
|
$ |
(23,855 |
) |
|
$ |
77,223 |
|
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,855 |
|
|
|
23,855 |
|
Interest income, net |
|
|
(1,739 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,739 |
) |
Depreciation and
amortization |
|
|
75,792 |
|
|
|
3,098 |
|
|
|
1,854 |
|
|
|
— |
|
|
|
80,744 |
|
EBITDA |
|
$ |
155,714 |
|
|
$ |
22,738 |
|
|
$ |
1,631 |
|
|
$ |
— |
|
|
$ |
180,083 |
|
EBITDA Margin |
|
|
11.9 |
% |
|
|
19.6 |
% |
|
|
2.9 |
% |
|
|
|
|
|
12.1 |
% |
Investor Relations ContactShane O’Connor,
Executive Vice President & CFOUniFirst
Corporation 978-658-8888shane_oconnor@unifirst.com
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