GlobeNewswire Inc | Jun 30, 2021 08:00AM EDT

June 30, 2021

WILMINGTON, Mass., June 30, 2021 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF) (the Company, UniFirst or we) today reported results for its third quarter endedMay 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 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, 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 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)

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

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



Condensed Consolidated Balance Sheets(Unaudited)

(In thousands) May 29, August 29, 2021 2020Assets Current assets: Cash, cash equivalents and short-term $ 535,005 $ 474,838 investmentsReceivables, 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 85,910 85,536 assets, netDeferred 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(Unaudited)

Revenues

(In Thirteen Thirteenthousands, weeks ended weeks ended Dollar Percent except May 29, May 30, Change Changepercentages) 2021 2020Core Laundry $ 409,031 $ 388,411 20,620 5.3 %OperationsSpecialty 38,236 36,163 2,073 5.7 %GarmentsFirst Aid 17,056 20,944 (3,888 ) (18.6 )%Consolidated $ 464,323 $ 445,518 $ 18,805 4.2 %total

(In Thirty-nine Thirty-ninethousands, weeks ended weeks ended Dollar Percent except May 29, 2021 May 30, 2020 Change Changepercentages) Core Laundry $ 1,200,456 $ 1,216,901 $ (16,445 ) (1.4 )%OperationsSpecialty 111,592 105,545 6,047 5.7 %GarmentsFirst Aid 48,892 53,070 (4,178 ) (7.9 )%Consolidated $ 1,360,940 $ 1,375,516 $ (14,576 ) (1.1 )%total

Operating Income

(In Thirteen Thirteenthousands, weeks ended weeks ended Dollar Percent except May 29, May 30, Change Changepercentages) 2021 2020Core Laundry $ 45,634 $ 19,691 $ 25,943 131.8 %OperationsSpecialty 8,300 6,380 1,920 30.1 %GarmentsFirst Aid 225 1,637 (1,412 ) (86.3 )%Consolidated $ 54,159 $ 27,708 $ 26,451 95.5 %total

(In Thirty-nine Thirty-ninethousands, weeks ended weeks ended Dollar Percent except May 29, May 30, Change Changepercentages) 2021 2020Core Laundry $ 129,870 $ 111,856 $ 18,014 16.1 %OperationsSpecialty 20,693 15,886 4,807 30.3 %GarmentsFirst Aid 331 4,188 (3,857 ) (92.1 )%Consolidated $ 150,894 $ 131,930 $ 18,964 14.4 %total

Operating Margin

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



Consolidated Statements of Cash Flows(Unaudited)

Thirty-nine Thirty-nine(In thousands) weeks ended weeks ended May 29, 2021 May 30, 2020Cash 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 5,433 3,669 and Other assetsAccounts 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 (7,128 ) (41,098 )acquiredCapital expenditures, including (96,645 ) (91,155 )capitalization of software costsProceeds 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 3 75 awardsTaxes withheld and paid related to net (4,003 ) (3,423 )share settlement of equity awardsRepurchase 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 60,167 35,912 short-term investmentsCash, cash equivalents and short-term 474,838 385,341 investments at beginning of periodCash, cash equivalents and short-term $ 535,005 $ 421,253 investments at end of period

Investor Relations ContactShane OConnor, Executive Vice President & CFOUniFirst Corporation 978-658-8888shane_oconnor@unifirst.com