GlobeNewswire Inc | Jan 6, 2021 08:00AM EST

January 06, 2021

WILMINGTON, Mass., Jan. 06, 2021 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF) (the Company) today reported results for its first quarter endedNovember 28, 2020 as compared to the corresponding period in the prior fiscal year:

Q1 2021 Financial Highlights

-- Consolidated revenues for the first quarter decreased 4.0% to $446.9 million. -- Operating income was $56.0 million, a decrease of 6.7%. -- The quarterly tax rate increased to 25.0% compared to 22.1% in prior year. -- Net income decreased to$41.9 million, or 13.2%. -- Diluted earnings per share decreased to $2.20 from $2.52, or 12.7%.

Steven Sintros, UniFirst President and Chief Executive Officer, said, Overall, we are pleased with our first quarter results which were achieved despite the impact that the COVID-19 pandemic continues to have on our business and the economy as a whole. As a Company, our top priorities continue to be the safety of our employee Team Partners as well as servicing our customers, many of whom are critical to keeping our communities up and running. I want to again sincerely thank our Team Partners for the tremendous effort they continue to put forth ensuring that they are taking care of each other and our customers during these challenging times.They truly continue to deliver in every way.

Segment Reporting Highlights

Core Laundry Operations

-- Revenues for the quarter decreased 5.6% to $393.2 million. This decrease was primarily due to the continued impact of the COVID-19 pandemic on our customers operations and wearer levels. -- Operating margin decreased to 12.4% from 12.9%. This segments profitability was negatively impacted by the decline in rental revenues on our cost structure, which was partially offset by lower travel-related, energy and healthcare costs during the quarter.

Specialty Garments

-- Revenues for the quarter were $38.1 million, an increase of 14.2%. This increase was primarily due to higher direct sales and project-related work in the U.S. and Canadian nuclear operations as well as growth in our cleanroom operations. -- Operating margin increased to 18.8% from 14.6% a year ago. This increase was primarily due to lower production and delivery costs as a percentage of revenues as well as lower travel-related, energy and healthcare costs. These decreases were partially offset by higher merchandise expense as a percentage of revenues. -- 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 $473.0 million as of November 28, 2020. -- The Company had no long-term debt outstanding as of November 28, 2020. -- Under its previously announced stock repurchase program, the Company repurchased 41,000 shares of common stock for a total of $7.2 million during its first fiscal quarter of 2021. As of November 28, 2020, the Company had repurchased a total of 355,917 shares of common stock for a total of $59.5 million under the program. -- Weighted average shares outstanding Diluted for the first quarter of fiscal 2021 and fiscal 2020 was 19.0 million and 19.1 million shares, respectively.

Financial Outlook

Mr. Sintros continued, At this time, our overall outlook in the quarters ahead remains uncertain. Recent increases in positive COVID-19 cases have caused certain states, provinces and municipalities to reimplement temporary restrictions on businesses. The impact of these or further restrictions as well as the potential positive impact of a broader vaccine distribution are currently difficult to project. As a result, we will not be providing further guidance at this time. Our solid balance sheet positions us well to meet the ongoing challenges presented by COVID-19 while continuing to invest in growth and strengthen our business.

Conference Call Information

UniFirst 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 atwww.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 Companys 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, positions, assume, strive, maintain, 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 August29, 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(Unaudited)

(In thousands, except per share Thirteen weeks Thirteen weeksdata) ended November ended November 28, 2020 30, 2019Revenues $ 446,853 $ 465,398 Operating expenses: Cost of revenues (1) 275,800 289,316 Selling and administrative 88,703 90,528 expenses (1)Depreciation and amortization 26,308 25,459 Total operating expenses 390,811 405,303 Operating income 56,042 60,095 Other (income) expense: Interest income, net (568 ) (2,361 )Other expense, net 749 528 Total other (income) expense, 181 (1,833 )net Income before income taxes 55,861 61,928 Provision for income taxes 13,965 13,686 Net income $ 41,896 $ 48,242 Income per share ? Basic: Common Stock $ 2.31 $ 2.65 Class B Common Stock $ 1.85 $ 2.12 Income per share ? Diluted: Common Stock $ 2.20 $ 2.52 Income allocated to ? Basic: Common Stock $ 35,171 $ 40,526 Class B Common Stock $ 6,725 $ 7,716 Income allocated to ? Diluted: Common Stock $ 41,896 $ 48,242 Weighted average shares outstanding ? Basic:Common Stock 15,247 15,308 Class B Common Stock 3,643 3,643 Weighted average shares outstanding ? Diluted:Common Stock 19,019 19,123

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

Condensed Consolidated Balance Sheets(Unaudited)

(In thousands) November 28, August 29, 2020 2020Assets Current assets: Cash, cash equivalents and short-term $ 473,010 $ 474,838 investmentsReceivables, net 209,916 190,916 Inventories 104,525 106,269 Rental merchandise in service 155,100 154,278 Prepaid taxes 3,612 7,115 Prepaid expenses and other current assets 40,661 35,918 Total current assets 986,824 969,334 Property, plant and equipment, net 598,719 582,470 Goodwill 424,881 424,844 Customer contracts and other intangible 85,150 85,536 assets, netDeferred income taxes 522 522 Operating lease right-of-use assets, net 42,033 42,710 Other assets 96,031 93,611 Total assets $ 2,234,160 $ 2,199,027 Liabilities and shareholders? equity Current liabilities: Accounts payable $ 60,268 $ 64,035 Accrued liabilities 138,693 132,965 Accrued taxes ? 527 Operating lease liabilities, current 12,731 12,569 Total current liabilities 211,692 210,096 Long-term liabilities: Accrued liabilities 133,600 132,820 Accrued and deferred income taxes 86,642 85,721 Operating lease liabilities 28,874 29,261 Total liabilities 460,808 457,898 Shareholders? equity: Common Stock 1,522 1,525 Class B Common Stock 364 364 Capital surplus 87,210 86,645 Retained earnings 1,714,937 1,684,565 Accumulated other comprehensive loss (30,681 ) (31,970 ) Total shareholders? equity 1,773,352 1,741,129 Total liabilities and shareholders? equity $ 2,234,160 $ 2,199,027

Detail of Operating Results(Unaudited)

Revenues

(In Thirteen Thirteenthousands, weeks ended weeks ended Dollar Percent except November November Change Changepercentages) 28, 2020 30, 2019Core Laundry 393,190 416,298 (23,108 ) (5.6 )%OperationsSpecialty 38,134 33,402 4,732 14.2 %GarmentsFirst Aid 15,529 15,698 (169 ) (1.1 )%Consolidated $ 446,853 $ 465,398 $ (18,545 ) (4.0 )%total



Operating Income

(In Thirteen Thirteenthousands, weeks ended weeks ended Dollar Percent except November November Change Changepercentages) 28, 2020 30, 2019Core Laundry $ 48,870 $ 53,808 $ (4,938 ) (9.2 )%OperationsSpecialty 7,159 4,879 2,280 46.7 %GarmentsFirst Aid 13 1,408 (1,395 ) (99.1 )%Consolidated $ 56,042 $ 60,095 $ (4,053 ) (6.7 )%total



Operating Margin

Thirteen weeks ended Thirteen weeks ended November 28, 2020 November 30, 2019Core Laundry 12.4 % 12.9 %OperationsSpecialty 18.8 % 14.6 %GarmentsFirst Aid 0.1 % 9.0 %Consolidated 12.5 % 12.9 %total



Consolidated Statements of Cash Flows(Unaudited)

Thirteen Thirteen(In thousands) weeks ended weeks ended November 28, November 30, 2020 2019Cash flows from operating activities: Net income $ 41,896 $ 48,242 Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization 26,308 25,459 Amortization of deferred financing costs 28 28 Loss on sale of property, plant & equipment 5 ? Share-based compensation 1,622 1,575 Accretion on environmental contingencies 112 134 Accretion on asset retirement obligations 245 232 Deferred income taxes 242 245 Other 28 5 Changes in assets and liabilities, net of acquisitions:Receivables, less reserves (18,875 ) (12,771 )Inventories 1,783 1,195 Rental merchandise in service (684 ) 1,370 Prepaid expenses and other current assets and (2,812 ) (2,074 )Other assetsAccounts payable (3,127 ) (5,031 )Accrued liabilities 2,876 (2,678 )Prepaid and accrued income taxes 3,094 (3,497 )Net cash provided by operating activities 52,741 52,434 Cash flows from investing activities: Acquisition of businesses, net of cash (603 ) (39,286 )acquiredCapital expenditures, including (41,836 ) (28,975 )capitalization of software costsProceeds from sale of assets 15 61 Net cash used in investing activities (42,424 ) (68,200 ) Cash flows from financing activities: Proceeds from exercise of share-based awards 1 74 Taxes withheld and paid related to net share (834 ) (1,570 )settlement of equity awardsRepurchase of Common Stock (7,216 ) (9,973 )Payment of cash dividends (4,541 ) (2,056 )Net cash used in financing activities (12,590 ) (13,525 ) Effect of exchange rate changes 445 538 Net decrease in cash, cash equivalents and (1,828 ) (28,753 )short-term investmentsCash, cash equivalents and short-term 474,838 385,341 investments at beginning of periodCash, cash equivalents and short-term $ 473,010 $ 356,588 investments at end of period

Investor Relations ContactShane OConnor, Executive Vice President & CFOUniFirst Corporation978-658-8888shane_oconnor@unifirst.com