UNIFIRST CORP [UNF] Filings

10-Q 1 unf-10q_20220226.htm 10-Q unf-10q_20220226.htm

United States

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 26, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-08504

UNIFIRST CORPORATION

(Exact name of Registrant as Specified in Its Charter)

Massachusetts	04-2103460
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

68 Jonspin Road, Wilmington, MA	01887
(Address of Principal Executive Offices)	(Zip Code)

(978) 658-8888

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value per share	UNF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller Reporting Company	☐

Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of outstanding shares of UniFirst Corporation Common Stock and Class B Common Stock at April 1, 2022 were 15,180,541 and 3,626,009, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Quarter ended February 26, 2022

Table of Contents

Part I – FINANCIAL INFORMATION	3

Item 1 – Unaudited Financial Statements	3

Consolidated Statements of Income for the Thirteen and Twenty-six Weeks ended February 26, 2022 and February 27, 2021	3

Consolidated Statements of Comprehensive Income for the Thirteen and Twenty-six Weeks ended February 26, 2022 and February 27, 2021	4

Consolidated Balance Sheets as of February 26, 2022 and August 28, 2021	5

Consolidated Statements of Shareholders’ Equity for the Thirteen and Twenty-six Weeks ended February 26, 2022 and February 27, 2021	6

Consolidated Statements of Cash Flows for the Twenty-six Weeks ended February 26, 2022 and February 27, 2021	8

Notes to Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	31

Item 4 – Controls and Procedures	32

Part II – OTHER INFORMATION	33

Item 1 – Legal Proceedings	33

Item 1A – Risk Factors	33

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	33

Item 3 – Defaults Upon Senior Securities	33

Item 4 – Mine Safety Disclosures	33

Item 5 – Other Information	33

Item 6 – Exhibits	34

Signatures	35

Certifications
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32.1 Section 906 Certification of CEO
Ex-32.2 Section 906 Certification of CFO

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income

UniFirst Corporation and Subsidiaries

(Unaudited)

	Thirteen weeks ended						Twenty-six weeks ended
(In thousands, except per share data)	February 26, 2022			February 27, 2021			February 26, 2022			February 27, 2021
Revenues	$	486,696		$	449,764		$	972,860		$	896,617
Operating expenses:
Cost of revenues (1)		324,816			289,455			634,946			565,255
Selling and administrative expenses (1)		112,406			93,329			216,794			182,032
Depreciation and amortization		26,861			26,287			53,717			52,595
Total operating expenses		464,083			409,071			905,457			799,882

Operating income		22,613			40,693			67,403			96,735
Other (income) expense:
Interest income, net		(751	)		(863	)		(1,399	)		(1,431	)
Other (income) expense, net		594			(584	)		1,330			165
Total other income, net		(157	)		(1,447	)		(69	)		(1,266	)

Income before income taxes		22,770			42,140			67,472			98,001
Provision for income taxes		4,319			9,555			15,316			23,520
Net income	$	18,451		$	32,585		$	52,156		$	74,481
Income per share – Basic:
Common Stock	$	1.02		$	1.80		$	2.88		$	4.10
Class B Common Stock	$	0.81		$	1.44		$	2.30		$	3.28
Income per share – Diluted:
Common Stock	$	0.97		$	1.71		$	2.75		$	3.91
Income allocated to – Basic:
Common Stock	$	15,492		$	27,349		$	43,792		$	62,520
Class B Common Stock	$	2,959		$	5,236		$	8,364		$	11,961
Income allocated to – Diluted:
Common Stock	$	18,451		$	32,585		$	52,156		$	74,481
Weighted average shares outstanding – Basic:
Common Stock		15,210			15,223			15,225			15,235
Class B Common Stock		3,635			3,643			3,635			3,643
Weighted average shares outstanding – Diluted:
Common Stock		18,967			19,037			18,999			19,032

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

The accompanying notes are an integral part of these

Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

UniFirst Corporation and Subsidiaries

(Unaudited)

	Thirteen weeks ended						Twenty-six weeks ended
(In thousands)	February 26, 2022			February 27, 2021			February 26, 2022			February 27, 2021
Net income	$	18,451		$	32,585		$	52,156		$	74,481
Other comprehensive income (loss):
Foreign currency translation adjustments		1,149			2,244			(1,650	)		3,554
Change in fair value of derivatives, net of income taxes		(40	)		(58	)		45			(68	)
Derivative financial instruments reclassified to earnings		(15	)		2			(53	)		(9	)
Other comprehensive income (loss)		1,094			2,188			(1,658	)		3,477
Comprehensive income	$	19,545		$	34,773		$	50,498		$	77,958

The accompanying notes are an integral part of these

Consolidated Financial Statements.

Consolidated Balance Sheets

UniFirst Corporation and Subsidiaries

(Unaudited)

(In thousands, except share and par value data)	February 26, 2022			August 28, 2021
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	425,887		$	512,868
Receivables, less reserves of $12,569 and $11,122		237,237			208,331
Inventories		160,835			143,591
Rental merchandise in service		196,690			181,531
Prepaid taxes		9,475			16,580
Prepaid expenses and other current assets		48,743			40,891
Total current assets		1,078,867			1,103,792

Property, plant and equipment, net		627,924			617,719
Goodwill		457,718			429,538
Customer contracts, net		53,595			49,129
Other intangible assets, net		36,626			35,509
Deferred income taxes		565			580
Operating lease right-of-use assets, net		51,237			42,115
Other assets		106,064			102,683
Total assets	$	2,412,596		$	2,381,065

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	84,517		$	81,356
Accrued liabilities		151,743			159,578
Accrued taxes		—			743
Operating lease liabilities, current		13,791			12,993
Total current liabilities		250,051			254,670

Accrued liabilities		134,263			134,085
Accrued and deferred income taxes		90,284			89,177
Operating lease liabilities		39,023			30,181
Total liabilities		513,621			508,113
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding		—			—
Common Stock, $0.10 par value; 30,000,000 shares authorized; 15,209,202 and 15,235,601 shares issued and outstanding as of February 26, 2022 and August 28, 2021, respectively		1,521			1,524
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,626,009 and 3,643,009 shares issued and outstanding as of February 26, 2022 and August 28, 2021, respectively		363			364
Capital surplus		90,006			89,257
Retained earnings		1,833,579			1,806,643
Accumulated other comprehensive loss		(26,494	)		(24,836	)

Total shareholders’ equity		1,898,975			1,872,952

Total liabilities and shareholders’ equity	$	2,412,596		$	2,381,065

The accompanying notes are an integral part of these

Consolidated Financial Statements

Consolidated Statements of Shareholders’ Equity

UniFirst Corporation and Subsidiaries

(Unaudited)

(In thousands)	Common Shares			Class B Common Shares		Common Stock			Class B Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, August 29, 2020		15,251			3,643	$	1,525		$	364	$	86,645		$	1,684,565		$	(31,970	)	$	1,741,129
Net income		—			—		—			—		—			41,896			—			41,896
Change in fair value of derivatives		—			—		—			—		—			—			(21	)		(21	)
Foreign currency translation		—			—		—			—		—			—			1,310			1,310
Dividends declared Common Stock ($0.25 per share)		—			—		—			—		—			(3,806	)		—			(3,806	)
Dividends declared Class B Common Stock ($0.20 per share)		—			—		—			—		—			(729	)		—			(729	)
Repurchase of Common Stock		(41	)		—		(4	)		—		(223	)		(6,989	)		—			(7,216	)
Share-based compensation, net (1)		—			—		—			—		788			—			—			788
Share-based awards exercised, net (2)		11			—		1			—		—			—			—			1
Balance, November 28, 2020		15,221			3,643		1,522			364		87,210			1,714,937			(30,681	)		1,773,352
Net income		—			—		—			—		—			32,585			—		$	32,585
Change in fair value of derivatives		—			—		—			—		—			—			(56	)		(56	)
Foreign currency translation		—			—		—			—		—			—			2,244			2,244
Dividends declared Common Stock ($0.25 per share)		—			—		—			—		—			(3,806	)		—			(3,806	)
Dividends declared Class B Common Stock ($0.20 per share)		—			—		—			—		—			(728	)		—			(728	)
Repurchase of Common Stock		(12	)		—		(1	)		—		(66	)		(2,251	)		—			(2,318	)
Share-based compensation, net (1)		—			—		—			—		(165	)		—			—			(165	)
Share-based awards exercised, net (2)		21			—		2			—		—			—			—			2
Balance, February 27, 2021		15,230			3,643	$	1,523		$	364	$	86,979		$	1,740,737		$	(28,493	)	$	1,801,110

(In thousands)	Common Shares		Class B Common Shares		Common Stock		Class B Common Stock		Capital Surplus		Retained Earnings		Accumulated Other Comprehensive Loss			Total Equity
Balance, August 28, 2021		15,236		3,643	$	1,524	$	364	$	89,257	$	1,806,643	$	(24,836	)	$	1,872,952
Net income		—		—		—		—		—		33,705		—			33,705
Change in fair value of derivatives		—		—		—		—		—		—		47			47
Foreign currency translation		—

UNIFIRST CORP [UNF] Filings
10-Q	[2022-04-07]
10-Q	[2022-01-06]
10-K	[2021-10-27]
10-Q	[2021-07-06]
10-Q	[2021-04-08]
10-Q	[2021-01-07]
10-K	[2020-10-28]
10-Q	[2020-07-09]
10-Q	[2020-04-06]
10-Q	[2020-01-09]
10-K	[2019-10-30]
10-Q	[2019-07-02]
10-Q	[2019-04-04]
10-Q	[2019-01-03]
10-K	[2018-10-22]
10-Q	[2018-07-03]
10-Q	[2018-04-04]
10-Q	[2018-01-04]
10-K	[2017-10-25]
10-Q	[2017-07-06]
10-Q	[2017-04-06]
10-Q	[2017-01-05]
10-K	[2016-10-26]
10-Q	[2016-07-07]
10-Q	[2016-04-07]
10-Q	[2016-01-07]
10-K	[2015-10-28]
10-Q	[2015-07-09]
10-Q	[2015-04-09]
10-Q	[2015-01-08]
10-K	[2014-10-29]
10-Q	[2014-07-10]
10-Q	[2014-04-10]
10-Q	[2014-01-09]
10-K	[2013-10-30]
10-Q	[2013-07-03]
10-Q	[2013-04-04]
10-Q	[2013-01-03]
10-K	[2012-10-24]
10-Q	[2012-07-05]
10-Q	[2012-04-05]
10-Q	[2012-01-05]