UniFirst Announces Financial Results for the Third Quarter of Fiscal 2021

WILMINGTON, Mass., June 30, 2021 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or “we”) today reported results for its third quarter ended May 29, 2021 as compared to the corresponding period in the prior fiscal year:

Q3 2021 Financial Highlights

  • Consolidated revenues for the third quarter increased 4.2% to $464.3 million.
  • Operating income was $54.2 million, an increase of 95.5%.
  • The quarterly tax rate increased to 22.9% compared to 21.8% in the prior year.
  • Net income increased to $42.0 million, or 97.4%.
  • Diluted earnings per share increased to $2.21 from $1.12, or 97.3%.

Steven Sintros, UniFirst President and Chief Executive Officer, said, “For over a year, our Team Partners have continued to put forth tremendous efforts in the face of the many obstacles created by the pandemic. They have worked extremely hard to take care of each other and our customers during these challenging times and I want to personally thank them for their extraordinary performance.”

Segment Reporting Highlights

Core Laundry Operations

  • Revenues for the quarter increased 5.3% to $409.0 million primarily driven by the COVID-19 pandemic significantly impacting our customers’ operations and wearer levels in the prior year comparable period. This increase was partially offset by a large direct sale of $20.1 million also in the prior year.
  • Operating margin increased to 11.2% from 5.1%. The increase was primarily driven by several items affecting our prior year comparable period, including the impact of the decline in rental revenues on our cost structure, higher cost of revenues related to the large $20.1 million direct sale, higher bad debt expense and additional costs the Company incurred responding to the COVID-19 pandemic.

Specialty Garments

  • Revenues for the quarter were $38.2 million, an increase of 5.7%. This increase was primarily due to growth in our cleanroom operations as well as growth in European nuclear operations.
  • Operating margin increased to 21.7% from 17.6% a year ago. This increase was primarily due to lower merchandise costs and bad debt expense as percentage of revenue as well as costs incurred in the prior year responding to the COVID-19 pandemic. These benefits were partially offset by higher healthcare and payroll-related costs as a percentage of revenue.
  • 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, cash equivalents and short-term investments totaled $535.0 million as of May 29, 2021.
  • The Company had no long-term debt outstanding as of May 29, 2021.
  • In the third fiscal quarter of 2021, the Company did not purchase any shares of common stock under its previously announced $100.0 million stock repurchase program. As of May 29, 2021, the Company had repurchased a total of 368,117 shares of common stock for a total of $61.8 million under the program.
  • Weighted average shares outstanding – Diluted for the third quarter of fiscal 2021 and fiscal 2020 were 19.1 million and 19.0 million shares, respectively.

Financial Outlook

Mr. Sintros continued, “Based on our results to date as well as our outlook for the remainder of the year, we now expect our revenues for fiscal 2021 to be between $1.810 billion and $1.817 billion and fully diluted earnings per share to be between $7.80 and $8.00. Increased business activity from a recovering economy is a welcome sight. However, as we look forward to fiscal 2022, we do expect our margins to be pressured by the current inflationary environment as well as a rebound of certain costs that trended lower during the pandemic.”

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, as well as the delivery of facility service programs. Together with its subsidiaries, the Company also provides first aid and safety products, and manages specialized garment programs for the cleanroom and nuclear industries. UniFirst manufactures its own branded workwear, protective clothing, and floorcare products; and with 260 service locations, over 300,000 customer locations, and 14,000-plus employee Team Partners, the Company outfits nearly 2 million workers each business day. For more information, contact UniFirst at 800.455.7654 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 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 “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” “strategy,” “objective,” “assume,” “strive,” 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 adverse economic conditions, including, without limitation, as a result of extraordinary events or circumstances such as 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 and successfully integrate acquired 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, any loss of key management or other personnel, increased costs as a result of any changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, 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 (“CRM”) 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 Securities and Exchange Commission, New York Stock Exchange and accounting rules, 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 and the other factors described under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 29, 2020, “Item 1.A. Risk Factors” and elsewhere in our 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

(In thousands, except per share data) Thirteen weeks ended
May 29, 2021
  Thirteen weeks ended
May 30, 2020
  Thirty-nine weeks ended
May 29, 2021
  Thirty-nine weeks ended
May 30, 2020
Revenues $464,323  $445,518  $1,360,940  $1,375,516 
Operating expenses:                
Cost of revenues (1)  286,605   303,223   851,860   893,961 
Selling and administrative expenses (1)  96,976   88,405   279,008   272,013 
Depreciation and amortization  26,583   26,182   79,178   77,612 
Total operating expenses  410,164   417,810   1,210,046   1,243,586 
Operating income  54,159   27,708   150,894   131,930 
Other (income) expense:                
Interest income, net  (671)  (1,054)  (2,102)  (5,590)
Other expense, net  348   1,556   513   2,623 
Total other (income) expense, net  (323)  502   (1,589)  (2,967)
Income before income taxes  54,482   27,206   152,483   134,897 
Provision for income taxes  12,466   5,921   35,986   30,690 
Net income $42,016  $21,285  $116,497  $104,207 
Income per share – Basic:                
Common Stock $2.31  $1.17  $6.42  $5.73 
Class B Common Stock $1.85  $0.94  $5.13  $4.58 
Income per share – Diluted:                
Common Stock $2.21  $1.12  $6.12  $5.46 
Income allocated to – Basic:                
Common Stock $35,270  $17,871  $97,792  $87,519 
Class B Common Stock $6,746  $3,414  $18,705  $16,688 
Income allocated to – Diluted:                
Common Stock $42,016  $21,285  $116,497  $104,207 
Weighted average shares outstanding – Basic:                
Common Stock  15,238   15,255   15,238   15,285 
Class B Common Stock  3,643   3,643   3,643   3,643 
Weighted average shares outstanding – Diluted:                
Common Stock  19,051   18,995   19,041   19,074 

(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.

Condensed Consolidated Balance Sheets

(In thousands) May 29, 2021  August 29, 2020 
Current assets:        
Cash, cash equivalents and short-term investments $535,005  $474,838 
Receivables, net  200,136   190,916 
Inventories  120,337   106,269 
Rental merchandise in service  168,234   154,278 
Prepaid taxes  9,264   7,115 
Prepaid expenses and other current assets  37,171   35,918 
Total current assets  1,070,147   969,334 
Property, plant and equipment, net  606,663   582,470 
Goodwill  429,762   424,844 
Customer contracts and other intangible assets, net  85,910   85,536 
Deferred income taxes  553   522 
Operating lease right-of-use assets, net  40,423   42,710 
Other assets  102,463   93,611 
Total assets $2,335,921  $2,199,027 
Liabilities and shareholders’ equity        
Current liabilities:        
Accounts payable $69,553  $64,035 
Accrued liabilities  155,729   132,965 
Accrued taxes     527 
Operating lease liabilities, current  13,002   12,569 
Total current liabilities  238,284   210,096 
Long-term liabilities:        
Accrued liabilities  133,417   132,820 
Accrued and deferred income taxes  91,066   85,721 
Operating lease liabilities  27,955   29,261 
Total liabilities  490,722   457,898 
Shareholders’ equity:        
Common Stock  1,524   1,525 
Class B Common Stock  364   364 
Capital surplus  87,545   86,645 
Retained earnings  1,778,212   1,684,565 
Accumulated other comprehensive loss  (22,446)  (31,970)
Total shareholders’ equity  1,845,199   1,741,129 
Total liabilities and shareholders’ equity $2,335,921  $2,199,027 


Detail of Operating Results


(In thousands, except percentages) Thirteen weeks ended
May 29, 2021
  Thirteen weeks ended
May 30, 2020
Core Laundry Operations $409,031  $388,411   20,620   5.3%
Specialty Garments  38,236   36,163   2,073   5.7%
First Aid  17,056   20,944   (3,888)  (18.6)%
Consolidated total $464,323  $445,518  $18,805   4.2%

(In thousands, except percentages) Thirty-nine weeks ended
May 29, 2021
  Thirty-nine weeks ended
May 30, 2020
Core Laundry Operations $1,200,456  $1,216,901  $(16,445)  (1.4)%
Specialty Garments  111,592   105,545   6,047   5.7%
First Aid  48,892   53,070   (4,178)  (7.9)%
Consolidated total $1,360,940  $1,375,516  $(14,576)  (1.1)%

Operating Income

(In thousands, except percentages) Thirteen weeks ended
May 29, 2021
  Thirteen weeks ended
May 30, 2020
Core Laundry Operations $45,634  $19,691  $25,943   131.8%
Specialty Garments  8,300   6,380   1,920   30.1%
First Aid  225   1,637   (1,412)  (86.3)%
Consolidated total $54,159  $27,708  $26,451   95.5%

(In thousands, except percentages) Thirty-nine weeks ended
May 29, 2021
  Thirty-nine weeks ended
May 30, 2020
Core Laundry Operations $129,870  $111,856  $18,014   16.1%
Specialty Garments  20,693   15,886   4,807   30.3%
First Aid  331   4,188   (3,857)  (92.1)%
Consolidated total $150,894  $131,930  $18,964   14.4%

Operating Margin

  Thirteen weeks ended
May 29, 2021
  Thirteen weeks ended
May 30, 2020
Core Laundry Operations  11.2%  5.1%
Specialty Garments  21.7%  17.6%
First Aid  1.3%  7.8%
Consolidated total  11.7%  6.2%

  Thirty-nine weeks ended
May 29, 2021
  Thirty-nine weeks ended
May 30, 2020
Core Laundry Operations  10.8%  9.2%
Specialty Garments  18.5%  15.1%
First Aid  0.7%  7.9%
Consolidated total  11.1%  9.6%


Consolidated Statements of Cash Flows

(In thousands) Thirty-nine weeks ended
May 29, 2021
  Thirty-nine weeks ended
May 30, 2020
Cash flows from operating activities:        
Net income $116,497  $104,207 
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization  79,178   77,612 
Amortization of deferred financing costs  85   84 
Share-based compensation  5,193   4,617 
Accretion on environmental contingencies  336   403 
Accretion on asset retirement obligations  740   694 
Deferred income taxes  2,025   81 
Other  (199)  36 
Changes in assets and liabilities, net of acquisitions:        
Receivables, less reserves  (7,657)  4,517 
Inventories  (13,871)  (3,570)
Rental merchandise in service  (12,169)  23,900 
Prepaid expenses and other current assets and Other assets  5,433   3,669 
Accounts payable  4,019   (17,846)
Accrued liabilities  11,636   5,246 
Prepaid and accrued income taxes  (3,723)  1,782 
Net cash provided by operating activities  187,523   205,432 
Cash flows from investing activities:        
Acquisition of businesses, net of cash acquired  (7,128)  (41,098)
Capital expenditures, including capitalization of software costs  (96,645)  (91,155)
Proceeds from sale of assets  551   261 
Net cash used in investing activities  (103,222)  (131,992)
Cash flows from financing activities:        
Payment of deferred financing costs  (822)   
Proceeds from exercise of share-based awards  3   75 
Taxes withheld and paid related to net share settlement of equity awards  (4,003)  (3,423)
Repurchase of Common Stock  (9,534)  (21,745)
Payment of cash dividends  (13,610)  (11,159)
Net cash used in financing activities  (27,966)  (36,252)
Effect of exchange rate changes  3,832   (1,276)
Net increase in cash, cash equivalents and short-term investments  60,167   35,912 
Cash, cash equivalents and short-term investments at beginning of period  474,838   385,341 
Cash, cash equivalents and short-term investments at end of period $535,005  $421,253 

Investor Relations Contact
Shane O’Connor, Executive Vice President & CFO
UniFirst Corporation