GlobeNewswire Inc | Oct 20, 2021 08:00AM EDT

October 20, 2021

WILMINGTON, Mass., Oct. 20, 2021 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF) (the Company, UniFirst or we) today reported results for its fourth quarter and full year endedAugust 28, 2021 as compared to the corresponding periods in its prior fiscal year:

Q4 2021 Financial Highlights

-- Consolidated revenues for the fourth quarter increased 8.5% to $465.3 million. -- Operating income was $44.9 million, an increase of 10.1%. -- The quarterly tax rate decreased to 22.0% compared to 26.6% in the prior year. -- Net income increased to$34.6 million, or 9.7%. -- Diluted earnings per share increased to $1.82 from $1.66, or 9.6%.

Fiscal 2021 Financial Highlights

-- Full year consolidated revenues were $1.826 billion, an increase of 1.2%. -- Full year operating income was $195.8 million, an increase of 13.4%. -- Net income for the year increased to $151.1 million, or 11.3%. -- Diluted earnings per share increased to $7.94 from $7.13, or 11.4%.

Steven Sintros, UniFirst President and Chief Executive Officer, said, We were very pleased with our financial performance for fiscal 2021. We were proud that through the solid execution of our Team Partners we were able to continue our long track record of growing our annual revenues despite the lingering effects of the pandemic.

Segment Reporting Highlights for Q4 2021

Core Laundry Operations

-- Revenues for the quarter increased 7.9% to $415.1 million primarily driven by the COVID-19 pandemic significantly impacting our customers operations and wearer levels in the prior year comparable period as well as solid sales performance and improved customer retention in fiscal 2021. -- Operating margin increased to 10.1% from 9.9%. During the quarter, the Companys margins were pressured by the current inflationary environment as well as a rebound of certain costs that trended lower during the pandemic, including merchandise amortization expense, energy, travel and healthcare claims costs.

Specialty Garments

-- Revenues for the quarter were $33.9 million, an increase of 22.5%. This increase was primarily due to growth in our cleanroom operations as well as growth in our U.S. and European nuclear operations. -- Operating margin increased to 12.1% from 7.1% a year ago. This increase was primarily due to the segments top-line performance in the quarter resulting in strong operating leverage as well as lower casualty claims expense as a percentage of revenue. These benefits were partially offset by higher merchandise 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 $512.9 million as of August28, 2021. -- The Company had no long-term debt outstanding as of August28, 2021. -- Under its previously announced $100.0 million share repurchase program, the Company repurchased 7,750 shares of common stock for a total of $1.7 million during the fourth quarter of fiscal 2021. As of August 28, 2021, the Company had repurchased a total of 375,867 shares of common stock for a total of $63.5 million under the program. -- Weighted average shares outstanding Diluted for the fourth quarter of fiscal 2021 and fiscal 2020 were each 19.0 million shares.

Quarterly Dividend Increase

UniFirst announced today that its Board of Directors approved a quarterly dividend of $0.30 per share on the Companys Common Stock and $0.24 per share on the Companys Class B Common Stock. This represents a 20.0% increase over the Companys previous quarterly dividend. Both dividends are payable on January 4, 2022, to shareholders of record on December 7, 2021.

Mr. Sintros continued, Given UniFirsts strong financial position and history of strong free cash flow generation, we are pleased to announce an increase in our quarterly dividend. As part of the Board of Directors regular evaluation of the Companys capital allocation, we continue to seek to deliver additional value for our shareholders. At this time, we believe that a continued annual increase to our dividend which over time expands commensurate with our free cash flow generation will be a foundational piece to our capital allocation strategy.

The amount and timing of any future dividend payment is subject to the approval of the Board of Directors.

New Share Repurchase Authorization

UniFirst also announced today that its Board of Directors authorized a new share repurchase program allowing the Company to repurchase up to $100.0 million of its outstanding common shares, inclusive of the amount which remained available under the existing share repurchase program approved in January 2019. Repurchases made under the new program, if any, will continue to be made in either the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements, and other relevant factors. The timing, manner, price and amount of any repurchases will depend on a variety of factors and may be suspended or discontinued at any time.

Financial Outlook

Mr. Sintros continued, For fiscal 2022, we expect our revenues to be between $1.920 billion and $1.945 billion and fully diluted earnings per share to be between $5.70 and $6.10, which, at the midpoint, assumes an operating margin in our Core Laundry Operations of 7.3%. However, this guidance includes $38 million of transitionary investment costs directly attributable to key initiatives. Excluding these initiative costs, our Core Laundry Operations adjusted operating margin assumption would be 9.5%. This adjusted operating margin reflects continued pressure from costs that had trended lower during the pandemic, the current inflationary environment, as well as additional investments the Company continues to make in building its capabilities for the future. This guidance further assumes an effective tax rate of 24%, no future share buybacks or potential tax reform, and a stable economic environment with no pandemic-related headwinds.

Conference Call Information

UniFirst Corporation will hold a conference call today at 9:00 a.m. (ET) to discuss its quarterly and annual 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, 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, 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 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 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 Part I, Item 1A. Risk Factors and elsewhere in our Annual Report on Form 10-K for the year ended August29, 2020, Part II, Item 1.A. 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 Thirteen Fifty-two Fifty-two(In thousands, except weeks weeks weeks ended weeks endedper share data) ended ended August August August August 28,2021 29,2020 28,2021 29,2020Revenues $ 465,276 $ 428,643 $ 1,826,216 $ 1,804,159 Operating expenses: Cost of revenues (1) 289,415 270,971 1,141,275 1,164,932 Selling andadministrative expenses 104,153 89,788 383,161 361,801 (1)Depreciation and 26,777 27,085 105,955 104,697 amortizationTotal operating 420,345 387,844 1,630,391 1,631,430 expenses Operating income 44,931 40,799 195,825 172,729 Other (income) expense: Interest income, net (466 ) (792 ) (2,568 ) (6,382 )Other (income) expense, 1,009 (1,400 ) 1,522 1,223 netTotal other (income) 543 (2,192 ) (1,046 ) (5,159 )expense, net Income before income 44,388 42,991 196,871 177,888 taxesProvision for income 9,774 11,428 45,760 42,118 taxes Net income $ 34,614 $ 31,563 $ 151,111 $ 135,770 Income per share ? Basic:Common Stock $ 1.91 $ 1.74 $ 8.32 $ 7.46 Class B Common Stock $ 1.53 $ 1.39 $ 6.66 $ 5.97 Income per share ? Diluted:Common Stock $ 1.82 $ 1.66 $ 7.94 $ 7.13 Income allocated to ? Basic:Common Stock $ 29,058 $ 26,499 $ 126,848 $ 114,017 Class B Common Stock $ 5,556 $ 5,064 $ 24,263 $ 21,753 Income allocated to ? Diluted:Common Stock $ 34,614 $ 31,563 $ 151,111 $ 135,770 Weighted average shares outstanding ? Basic:Common Stock 15,241 15,250 15,237 15,276 Class B Common Stock 3,643 3,643 3,643 3,643 Weighted average shares outstanding ? Diluted:Common Stock 19,049 19,019 19,038 19,042

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

Condensed Consolidated Balance Sheets(Unaudited)

(In thousands) August August 28,2021 29,2020Assets Current assets: Cash, cash equivalents and short-term $ 512,868 $ 474,838 investmentsReceivables, net 208,331 190,916 Inventories 143,591 106,269 Rental merchandise in service 181,531 154,278 Prepaid taxes 16,580 7,115 Prepaid expenses and other current assets 40,891 35,918 Total current assets 1,103,792 969,334 Property, plant and equipment, net 617,719 582,470 Goodwill 429,538 424,844 Customer contracts and other intangible 84,638 85,536 assets, netDeferred income taxes 580 522 Operating lease right-of-use assets, net 42,115 42,710 Other assets 102,683 93,611 Total assets $ 2,381,065 $ 2,199,027 Liabilities and shareholders? equity Current liabilities: Accounts payable $ 81,356 $ 64,035 Accrued liabilities 159,578 132,965 Accrued taxes 743 527 Operating lease liabilities, current 12,993 12,569 Total current liabilities 254,670 210,096 Long-term liabilities: Accrued liabilities 134,085 132,820 Accrued and deferred income taxes 89,177 85,721 Operating lease liabilities 30,181 29,261 Total long-term liabilities 253,443 247,802 Shareholders? equity: Common Stock 1,524 1,525 Class B Common Stock 364 364 Capital surplus 89,257 86,645 Retained earnings 1,806,643 1,684,565 Accumulated other comprehensive loss (24,836 ) (31,970 ) Total shareholders? equity 1,872,952 1,741,129 Total liabilities and shareholders? equity $ 2,381,065 $ 2,199,027

Detail of Operating Results(Unaudited)

Revenues

Thirteen Thirteen(In thousands, weeks weeks Dollar Percentexcept ended ended Change Change percentages) August August 28,2021 29,2020Core Laundry $ 415,104 $ 384,584 $ 30,520 7.9 %OperationsSpecialty 33,862 27,640 6,222 22.5 %GarmentsFirst Aid 16,310 16,419 (109 ) (0.7 )%Consolidated $ 465,276 $ 428,643 $ 36,633 8.5 %total

(In Fifty-two Fifty-twothousands, weeks ended weeks ended Dollar Percent except August August Change Changepercentages) 28,2021 29,2020Core Laundry $ 1,615,560 $ 1,601,485 $ 14,075 0.9 %OperationsSpecialty 145,454 133,185 12,269 9.2 %GarmentsFirst Aid 65,202 69,489 (4,287 ) (6.2 )%Consolidated $ 1,826,216 $ 1,804,159 $ 22,057 1.2 %total

Operating Income

Thirteen Thirteen(In thousands, weeks weeks Dollar Percentexcept ended ended Change Change percentages) August August 28,2021 29,2020Core Laundry $ 41,847 $ 38,131 $ 3,716 9.7 %OperationsSpecialty 4,108 1,959 2,149 109.7 %GarmentsFirst Aid (1,024 ) 709 (1,733 ) (244.4 )%Consolidated $ 44,931 $ 40,799 $ 4,132 10.1 %total

(In Fifty-two Fifty-twothousands, weeks weeks Dollar Percentexcept ended ended Change Change percentages) August August 28,2021 29,2020Core Laundry $ 171,717 $ 149,987 $ 21,730 14.5 %OperationsSpecialty 24,801 17,845 6,956 39.0 %GarmentsFirst Aid (693 ) 4,897 (5,590 ) (114.2 )%Consolidated $ 195,825 $ 172,729 $ 23,096 13.4 %total

Operating Margin

Thirteen Thirteen weeks ended weeks ended August 28,2021 August 29,2020Core Laundry Operations 10.1 % 9.9 %Specialty Garments 12.1 % 7.1 %First Aid -6.3 % 4.3 %Consolidated 9.7 % 9.5 %

Fifty-two Fifty-two weeks ended weeks ended August 28,2021 August 29,2020Core Laundry Operations 10.6 % 9.4 %Specialty Garments 17.1 % 13.4 %First Aid -1.1 % 7.0 %Consolidated 10.7 % 9.6 %

Consolidated Statements of Cash Flows(Unaudited)

Fifty-two Fifty-two weeks weeks(In thousands) ended ended August August 28,2021 29,2020Cash flows from operating activities: Net income $ 151,111 $ 135,770 Adjustments to reconcile net income to cash provided by operating activities:Depreciation and amortization 105,955 104,697 Amortization of deferred financing costs 147 112 Share-based compensation 7,011 5,999 Accretion on environmental contingencies 448 537 Accretion on asset retirement obligations 985 929 Deferred income taxes 300 (12,152 )Other 391 2,524 Changes in assets and liabilities, net of acquisitions:Receivables, less reserves (16,685 ) 14,589 Inventories (37,213 ) (5,066 )Rental merchandise in service (26,323 ) 32,262 Prepaid expenses and other current assets and 5,015 840 Other assetsAccounts payable 15,136 (10,702 )Accrued liabilities 16,446 19,866 Prepaid and accrued income taxes (10,422 ) (3,521 )Net cash provided by operating activities 212,302 286,684 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (8,443 ) (41,221 )Capital expenditures, including capitalization of (133,639 ) (116,717 )software costsProceeds from sale of assets 617 322 Net cash used in investing activities (141,465 ) (157,616 ) Cash flows from financing activities: Payment of deferred financing costs (822 ) ? Proceeds from exercise of share-based awards 4 73 Taxes withheld and paid related to net share (4,068 ) (3,731 )settlement of equity awardsRepurchase of Common Stock (11,222 ) (21,745 )Payment of cash dividends (18,147 ) (15,700 )Net cash used in financing activities (34,255 ) (41,103 ) Effect of exchange rate changes 1,448 1,532 Net increase in cash, cash equivalents and 38,030 89,497 short-term investmentsCash, cash equivalents and short-term investments 474,838 385,341 at beginning of periodCash, cash equivalents and short-term investments $ 512,868 $ 474,838 at end of period

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 these consolidated financial results, management believes that certain non-GAAP operating results provide a useful measure on which to evaluate and compare the Companys results of operations for the periods presented. The Company believes these non-GAAP results provide useful supplemental information regarding the Companys performance to both management and investors by excluding certain non-recurring amounts that impact the comparability of the results. A supplemental reconciliation of the Companys fiscal 2022 financial outlook for consolidated operating income on a GAAP basis to adjusted operating income on a non-GAAP basis is presented in the following table. In addition, a supplemental reconciliation of the fiscal 2022 financial outlook for Core Laundry Operations operating income and operating margin on a GAAP basis to adjusted operating income and adjusted operating margin on a non-GAAP basis is also presented in the following table. Investors are encouraged to review the reconciliation of the outlook for these non-GAAP measures to the outlook for their most directly comparable GAAP financial measures, which is provided below. The Companys outlook contains forward-looking statements and information. Actual results may differ materially. See Forward-Looking Statements Disclosure.

Fifty-two weeks ended August 27, 2022 Consolidated Core Laundry Operations (Inthousands, Revenue Operating Revenue Operating Operating except Income Income Marginpercentages)Guidance - at $ 1,932,500 $ 148,000 $ 1,716,000 $ 125,000 7.3 %the midpointKey ? 38,000 ? 38,000 2.2 %InitiativesAs adjusted $ 1,932,500 $ 186,000 $ 1,716,000 $ 163,000 9.5 %

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