UniFirst Earnings 2020-11-28

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

unf-10q_20201128.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 November 28, 2020


☐	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 January 4, 2021 were 15,214,959 and 3,643,009, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Quarter ended November 28, 2020

Table of Contents

Part I – FINANCIAL INFORMATION	3

Item 1 – Unaudited Financial Statements	3

Consolidated Statements of Income for the Thirteen Weeks ended November 28, 2020 and November 30, 2019	3

Consolidated Statements of Comprehensive Income for the Thirteen Weeks ended November 28, 2020 and November 30, 2019	4

Consolidated Balance Sheets as of November 28, 2020 and August 29, 2020	5

Consolidated Statements of Shareholders’ Equity for the Thirteen Weeks ended November 28, 2020 and November 30, 2019	6

Consolidated Statements of Cash Flows for the Thirteen Weeks ended November 28, 2020 and November 30, 2019	7

Notes to Consolidated Financial Statements	8

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	30

Item 4 – Controls and Procedures	30

Part II – OTHER INFORMATION	31

Item 1 – Legal Proceedings	31

Item 1A – Risk Factors	31

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3 – Defaults Upon Senior Securities	31

Item 4 – Mine Safety Disclosures	31

Item 5 – Other Information	31

Item 6 – Exhibits	32

Signatures	33

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
(In thousands, except per share data)	November 28, 2020			November 30, 2019
Revenues	$	446,853		$	465,398
Operating expenses:
Cost of revenues (1)		275,800			289,316
Selling and administrative expenses (1)		88,703			90,528
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, net		181			(1,833	)

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 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
(In thousands)	November 28, 2020			November 30, 2019
Net income	$	41,896		$	48,242
Other comprehensive income (loss):
Foreign currency translation adjustments		1,310			989
Change in fair value of derivatives, net of income taxes		(10	)		25
Derivative financial instruments reclassified to earnings		(11	)		(30	)
Other comprehensive income		1,289			984
Comprehensive income	$	43,185		$	49,226

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)	November 28, 2020			August 29, 2020
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	473,010		$	474,838
Receivables, less reserves of $14,224 and $12,125		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, net		54,820			56,946
Other intangible assets, net		30,330			28,590
Deferred 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

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
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; 15,220,271 and 15,251,176 shares issued and outstanding as of November 28, 2020 and August 29, 2020, respectively		1,522			1,525
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,643,009 shares issued and outstanding as of November 28, 2020 and August 29, 2020, respectively		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

The accompanying notes are an integral part of these

Consolidated Financial Statements

Consolidated Statements of Shareholders’ Equity

UniFirst Corporation and Subsidiaries

(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 31, 2019		15,333			3,643	$	1,533		$	364	$	84,946		$	1,588,075		$	(33,688	)	$	1,641,230
Net income		—			—		—			—		—			48,242			—			48,242
Change in fair value of derivatives		—			—		—			—		—			—			(5	)		(5	)
Foreign currency translation		—			—		—			—		—			—			989			989
Dividends declared Common Stock ($0.25 per share)		—			—		—			—		—			(3,825	)		—			(3,825	)
Dividends declared Class B Common Stock ($0.20 per share)		—			—		—			—		—			(729	)		—			(729	)
Share-based compensation, net (1)		—			—		—			—		1,575			—			—			1,575
Share-based awards exercised, net (2)		16			—		2			—		(1,498	)		—			—			(1,496	)
Repurchase of Common Stock		(51	)				(5	)				(274	)		(9,694	)					(9,973	)
Balance, November 30, 2019		15,298			3,643		1,530			364		84,749			1,622,069			(32,704	)		1,676,008

(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

(1)	These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholdings obligations in connection with the vesting of certain shares of restricted stock or restricted stock units.

(2)	These amounts are shown net of the effect of income taxes.

The accompanying notes are an integral part of these

Consolidated Financial Statements.

Consolidated Statements of Cash Flows

UniFirst Corporation and Subsidiaries

(Unaudited)

Thirteen weeks ended (In thousands)	November 28, 2020			November 30, 2019
Cash 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 Other assets		(2,812	)		(2,074	)
Accounts 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 acquired		(603	)		(39,286	)
Capital expenditures, including capitalization of software costs		(41,836	)		(28,975	)
Proceeds from sale of assets		15			61
Net cash used in investing activities		(42,424	)		(68,200	)
	<

Price	171.46	EPS	9
Shares	19	P/E	20
MCap	3,295	P/FCF	13
Net Debt	-349	EBIT	220
TEV	2,946	TEV/EBIT	13
TTM 2019-05-25, in MM, except price, ratios

10-Q	2020-11-28	Filed 2021-01-07
10-K	2020-08-29	Filed 2020-10-28
10-Q	2020-05-30	Filed 2020-07-09
10-Q	2020-02-29	Filed 2020-04-06
10-Q	2019-11-30	Filed 2020-01-09
10-K	2019-08-31	Filed 2019-10-30
10-Q	2019-05-25	Filed 2019-07-02
10-Q	2019-02-23	Filed 2019-04-04
10-Q	2018-11-24	Filed 2019-01-03
10-K	2018-08-25	Filed 2018-10-22
10-Q	2018-05-26	Filed 2018-07-03
10-Q	2018-02-24	Filed 2018-04-04
10-Q	2017-11-25	Filed 2018-01-04
10-K	2017-08-26	Filed 2017-10-25
10-Q	2017-05-27	Filed 2017-07-06
10-Q	2017-02-25	Filed 2017-04-06
10-Q	2016-11-26	Filed 2017-01-05
10-K	2016-08-27	Filed 2016-10-26
10-Q	2016-05-28	Filed 2016-07-07
10-Q	2016-02-27	Filed 2016-04-07
10-Q	2015-11-28	Filed 2016-01-07
10-K	2015-08-29	Filed 2015-10-28
10-Q	2015-05-30	Filed 2015-07-09
10-Q	2015-02-28	Filed 2015-04-09
10-Q	2014-11-29	Filed 2015-01-08
10-K	2014-08-30	Filed 2014-10-29
10-Q	2014-03-01	Filed 2014-04-10
10-Q	2013-11-30	Filed 2014-01-09
10-K	2013-08-31	Filed 2013-10-30
10-Q	2013-05-25	Filed 2013-07-03
10-Q	2013-02-23	Filed 2013-04-04
10-Q	2012-11-24	Filed 2013-01-03
10-K	2012-08-25	Filed 2012-10-24
10-Q	2012-05-26	Filed 2012-07-05
10-Q	2012-02-25	Filed 2012-04-05
10-Q	2011-11-26	Filed 2012-01-05
10-K	2011-08-27	Filed 2011-10-26
10-Q	2011-05-28	Filed 2011-07-07
10-Q	2011-02-26	Filed 2011-04-07
10-Q	2010-11-27	Filed 2011-01-06
10-K	2010-08-28	Filed 2010-10-27
10-Q	2010-05-29	Filed 2010-07-08
10-Q	2010-02-27	Filed 2010-04-08
10-Q	2009-11-28	Filed 2010-01-07

8-K	2020-10-21
8-K	2020-07-01
8-K	2020-04-01
8-K	2020-01-14
8-K	2020-01-08
8-K	2019-10-23
8-K	2019-06-26
8-K	2019-03-27
8-K	2019-01-08
8-K	2019-01-03
8-K	2018-10-17
8-K	2018-06-27
8-K	2018-03-28
8-K	2018-01-09
8-K	2018-01-03

EX-31.1	unf-ex311_8.htm
EX-31.2	unf-ex312_7.htm
EX-32.1	unf-ex321_9.htm
EX-32.2	unf-ex322_6.htm

UNF 10Q Quarterly Report

UniFirst Earnings 2020-11-28