UniFirst Earnings 2020-05-30

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

unf-10q_20200530.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 May 30, 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 July 2, 2020 were 15,248,511 and 3,643,009, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Quarter ended May 30, 2020

Table of Contents

Part I – FINANCIAL INFORMATION	3

Item 1 – Unaudited Financial Statements	3

Consolidated Statements of Income for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	3

Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	4

Consolidated Balance Sheets as of May 30, 2020 and August 31, 2019	5

Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	6

Consolidated Statements of Cash Flows for the Thirty-nine Weeks ended May 30, 2020 and May 25, 2019	8

Notes to Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	36

Item 4 – Controls and Procedures	36

Part II – OTHER INFORMATION	37

Item 1 – Legal Proceedings	37

Item 1A – Risk Factors	37

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3 – Defaults Upon Senior Securities	39

Item 4 – Mine Safety Disclosures	39

Item 5 – Other Information	39

Item 6 – Exhibits	40

Signatures	41

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						Thirty-nine weeks ended
(In thousands, except per share data)	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Revenues	$	445,518		$	453,720		$	1,375,516		$	1,329,755
Operating expenses:
Cost of revenues (1)		303,223			279,900			893,961			838,621
Selling and administrative expenses (1)		88,405			88,207			272,013			242,487
Depreciation and amortization		26,182			25,401			77,612			75,563
Total operating expenses		417,810			393,508			1,243,586			1,156,671

Operating income		27,708			60,212			131,930			173,084
Other (income) expense:
Interest income, net		(1,054	)		(2,293	)		(5,590	)		(6,007	)
Other expense, net		1,556			805			2,623			2,037
Total other income, net		502			(1,488	)		(2,967	)		(3,970	)

Income before income taxes		27,206			61,700			134,897			177,054
Provision for income taxes		5,921			14,480			30,690			43,908
Net income	$	21,285		$	47,220		$	104,207		$	133,146
Income per share – Basic:
Common Stock	$	1.17		$	2.58		$	5.73		$	7.25
Class B Common Stock	$	0.94		$	2.06		$	4.58		$	5.80
Income per share – Diluted:
Common Stock	$	1.12		$	2.46		$	5.46		$	6.93
Income allocated to – Basic:
Common Stock	$	17,871		$	39,563		$	87,519		$	111,626
Class B Common Stock	$	3,414		$	7,657		$	16,688		$	21,520
Income allocated to – Diluted:
Common Stock	$	21,285		$	47,220		$	104,207		$	133,146
Weighted average shares outstanding – Basic:
Common Stock		15,255			15,341			15,285			15,400
Class B Common Stock		3,643			3,710			3,643			3,710
Weighted average shares outstanding – Diluted:
Common Stock		18,995			19,168			19,074			19,220

(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						Thirty-nine weeks ended
(In thousands)	May 30, 2020			May 25, 2019			May 30, 2020			May 25, 2019
Net income	$	21,285		$	47,220		$	104,207		$	133,146
Other comprehensive income (loss):
Foreign currency translation adjustments		(3,835	)		(2,649	)		(3,615	)		(3,513	)
Pension benefit liabilities		—			—			350			—
Change in fair value of derivatives, net of income taxes		79			184			156			277
Derivative financial instruments reclassified to earnings		(47	)		(46	)		(107	)		(122	)
Other comprehensive income (loss)		(3,803	)		(2,511	)		(3,216	)		(3,358	)
Comprehensive income	$	17,482		$	44,709		$	100,991		$	129,788

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)	May 30, 2020			August 31, 2019
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	421,253		$	385,341
Receivables, less reserves of $17,611 and $9,935		200,110			203,457
Inventories		104,503			100,916
Rental merchandise in service		161,732			184,318
Prepaid taxes		1,713			4,060
Prepaid expenses and other current assets		36,201			35,699
Total current assets		925,512			913,791

Property, plant and equipment, net		584,299			574,509
Goodwill		424,588			401,178
Customer contracts, net		60,061			56,588
Other intangible assets, net		26,868			16,132
Deferred income taxes		458			448
Operating lease right-of-use assets, net		44,670			—
Other assets		86,817			84,674
Total assets	$	2,153,273		$	2,047,320

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	57,701		$	77,918
Accrued liabilities		126,342			111,721
Accrued taxes		—			205
Operating lease liabilities, current		12,191			—
Total current liabilities		196,234			189,844

Accrued liabilities		119,608			117,074
Accrued and deferred income taxes		98,192			99,172
Operating lease liabilities		31,139			—

Total liabilities		445,173			406,090
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; 15,247,440 and 15,332,759 shares issued and outstanding as of May 30, 2020 and August 31, 2019, respectively		1,525			1,533
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,643,009 shares issued and outstanding as of May 30, 2020 and August 31, 2019, respectively		364			364
Capital surplus		85,572			84,946
Retained earnings		1,657,543			1,588,075
Accumulated other comprehensive loss		(36,904	)		(33,688	)

Total shareholders’ equity		1,708,100			1,641,230

Total liabilities and shareholders’ equity	$	2,153,273		$	2,047,320

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 25, 2018		15,431		3,710	$	1,543	$	371	$	82,973	$	1,405,239		$	(25,159	)	$	1,464,967
Net income		—		—		—		—		—		38,320			—			38,320
Change in fair value of derivatives		—		—		—		—		—		—			88			88
Foreign currency translation		—		—		—		—		—		—			(2,282	)		(2,282	)
Dividends declared Common Stock ($0.1125 per share)		—		—		—		—		—		(1,736	)		—			(1,736	)
Dividends declared Class B Common Stock ($0.0900 per share)		—		—		—		—		—		(334	)		—			(334	)
Share-based compensation, net (2)		—		—		—		—		1,042		—			—			1,042
Share-based awards exercised, net (1)		2		—		—		—		—		—			—			—
Cumulative effect of change in accounting principle, net		—		—		—		—		—		39,433			—			39,433
Balance, November 24, 2018		15,433		3,710		1,543		371		84,015		1,480,922			(27,353	)		1,539,498
Net income		—		—	$	—	$	—	$	—	$	47,606		$	—		$	47,606
Change in fair value of derivatives		—		—		—		—		—		—			(71	)		(71	)
Foreign currency translation		—		—		—		—

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	2020-05-30	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	2020-07-01	Earnings, Exhibits
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_6.htm
EX-32.1	unf-ex321_7.htm
EX-32.2	unf-ex322_9.htm

UNF 10Q Quarterly Report

UniFirst Earnings 2020-05-30