10-Q 1 unf-20240224.htm 10-Q 10-Q
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u

 

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 24, 2024

OR

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

 

img19628452_0.jpg 

 

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 as of March 28, 2024 were 15,068,056 and 3,590,295, respectively.

 

 


 

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Thirteen and Twenty-Six Weeks Ended February 24, 2024

Table of Contents

Part I – FINANCIAL INFORMATION

3

 

 

Item 1 – Financial Statements (unaudited)

3

 

 

Consolidated Statements of Income for the Thirteen and Twenty-Six Weeks ended February 24, 2024 and February 25, 2023

3

 

 

Consolidated Statements of Comprehensive Income for the Thirteen and Twenty-Six Weeks ended February 24, 2024 and February 25, 2023

4

 

 

Consolidated Balance Sheets as of February 24, 2024 and August 26, 2023

5

 

 

Consolidated Statements of Shareholders’ Equity for the Thirteen and Twenty-Six Weeks ended February 24, 2024 and February 25, 2023

6

 

 

Consolidated Statements of Cash Flows for the Twenty-Six Weeks ended February 24, 2024 and February 25, 2023

7

 

 

Notes to Consolidated Financial Statements

8

 

 

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

25

 

 

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

36

 

 

Item 4 – Controls and Procedures

37

 

 

Part II – OTHER INFORMATION

38

 

 

Item 1 – Legal Proceedings

38

 

 

Item 1A – Risk Factors

38

 

 

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

38

 

 

Item 3 – Defaults Upon Senior Securities

38

 

 

Item 4 – Mine Safety Disclosures

38

 

 

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

2


 

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 24, 2024

 

 

February 25, 2023

 

 

February 24, 2024

 

 

February 25, 2023

 

Revenues

 

$

590,711

 

 

$

542,691

 

 

$

1,184,236

 

 

$

1,084,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

   Cost of revenues (1)

 

 

396,191

 

 

 

369,896

 

 

 

779,987

 

 

 

723,868

 

   Selling and administrative expenses (1)

 

 

131,417

 

 

 

122,190

 

 

 

254,276

 

 

 

239,553

 

   Depreciation and amortization

 

 

35,160

 

 

 

29,895

 

 

 

68,893

 

 

 

56,940

 

     Total operating expenses

 

 

562,768

 

 

 

521,981

 

 

 

1,103,156

 

 

 

1,020,361

 

Operating income

 

 

27,943

 

 

 

20,710

 

 

 

81,080

 

 

 

64,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

   Interest income, net

 

 

(350

)

 

 

(3,031

)

 

 

(3,184

)

 

 

(5,800

)

   Other expense, net

 

 

575

 

 

 

114

 

 

 

1,291

 

 

 

905

 

     Total other expense (income), net

 

 

225

 

 

 

(2,917

)

 

 

(1,893

)

 

 

(4,895

)

Income before income taxes

 

 

27,718

 

 

 

23,627

 

 

 

82,973

 

 

 

69,023

 

Provision for income taxes

 

 

7,261

 

 

 

5,817

 

 

 

20,191

 

 

 

17,256

 

Net income

 

$

20,457

 

 

$

17,810

 

 

$

62,782

 

 

$

51,767

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

$

1.14

 

 

$

0.99

 

 

$

3.49

 

 

$

2.88

 

   Class B Common Stock

 

$

0.91

 

 

$

0.79

 

 

$

2.79

 

 

$

2.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

$

1.09

 

 

$

0.95

 

 

$

3.35

 

 

$

2.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

$

17,188

 

 

$

14,962

 

 

$

52,754

 

 

$

43,488

 

   Class B Common Stock

 

$

3,269

 

 

$

2,848

 

 

$

10,028

 

 

$

8,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

$

20,457

 

 

$

17,810

 

 

$

62,782

 

 

$

51,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

 

15,106

 

 

 

15,087

 

 

 

15,110

 

 

 

15,084

 

   Class B Common Stock

 

 

3,590

 

 

 

3,590

 

 

 

3,590

 

 

 

3,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

   Common Stock

 

 

18,754

 

 

 

18,767

 

 

 

18,758

 

 

 

18,757

 

 

(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.

3


 

Consolidated Statements of Comprehensive Income

UniFirst Corporation and Subsidiaries

(Unaudited)

 

 

 

Thirteen Weeks Ended

 

 

Twenty-Six Weeks Ended

 

(In thousands)

 

February 24, 2024

 

 

February 25, 2023

 

 

February 24, 2024

 

 

February 25, 2023

 

Net income

 

$

20,457

 

 

$

17,810

 

 

$

62,782

 

 

$

51,767

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

   Foreign currency translation adjustments

 

 

919

 

 

 

(1,473

)

 

 

768

 

 

 

(3,251

)

   Change in fair value of derivatives, net of income taxes

 

 

(34

)

 

 

59

 

 

 

(46

)

 

 

111

 

     Other comprehensive income (loss)

 

 

885

 

 

 

(1,414

)

 

 

722

 

 

 

(3,140

)

Comprehensive income

 

$

21,342

 

 

$

16,396

 

 

$

63,504

 

 

$

48,627

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

4


 

Consolidated Balance Sheets

UniFirst Corporation and Subsidiaries

(Unaudited)

(In thousands, except share and par value data)

 

February 24, 2024

 

 

August 26, 2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

90,538

 

 

$

79,443

 

Short-term investments

 

 

11,392

 

 

 

10,157

 

Receivables, less reserves of $21,978 and $17,185

 

 

291,784

 

 

 

279,078

 

Inventories

 

 

158,279

 

 

 

148,334

 

Rental merchandise in service

 

 

241,340

 

 

 

248,323

 

Prepaid taxes

 

 

9,563

 

 

 

20,907

 

Prepaid expenses and other current assets

 

 

61,582

 

 

 

53,876

 

Total current assets

 

 

864,478

 

 

 

840,118

 

Property, plant and equipment, net

 

 

772,223

 

 

 

756,540

 

Goodwill

 

 

648,829

 

 

 

647,900

 

Customer contracts, net

 

 

94,335

 

 

 

103,452

 

Other intangible assets, net

 

 

38,143

 

 

 

42,166

 

Deferred income taxes

 

 

617

 

 

 

567

 

Operating lease right-of-use assets, net

 

 

69,726

 

 

 

62,565

 

Other assets

 

 

132,602

 

 

 

116,667

 

Total assets

 

$

2,620,953

 

 

$

2,569,975

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

86,318

 

 

$

92,730

 

Accrued liabilities

 

 

158,478

 

 

 

156,408

 

Accrued taxes

 

 

 

 

 

352

 

Operating lease liabilities, current

 

 

18,068

 

 

 

17,739

 

Total current liabilities

 

 

262,864

 

 

 

267,229

 

Accrued liabilities

 

 

123,446

 

 

 

121,682

 

Accrued and deferred income taxes

 

 

131,248

 

 

 

130,084

 

Operating lease liabilities

 

 

53,710

 

 

 

47,020

 

Total liabilities

 

 

571,268

 

 

 

566,015

 

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; 15,086,572 and
  
15,104,317 shares issued and outstanding as of February 24, 2024 and
  August 26, 2023, respectively

 

 

1,509

 

 

 

1,510

 

Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,590,295 and
  
3,590,295 shares issued and outstanding as of February 24, 2024 and August 26, 2023,
  respectively

 

 

359

 

 

 

359

 

Capital surplus

 

 

101,197

 

 

 

99,303

 

Retained earnings

 

 

1,969,659

 

 

 

1,926,549

 

Accumulated other comprehensive loss

 

 

(23,039

)

 

 

(23,761

)

Total shareholders’ equity

 

 

2,049,685

 

 

 

2,003,960

 

Total liabilities and shareholders’ equity

 

$

2,620,953

 

 

$

2,569,975

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements

5


 

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 27, 2022

 

 

15,075

 

 

 

3,590

 

 

$

1,508

 

 

$

359

 

 

$

93,131

 

 

$

1,845,163

 

 

$

(24,290

)

 

$

1,915,871

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,957

 

 

 

 

 

 

33,957

 

Change in fair value of derivatives (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52

 

 

 

52

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,778

)

 

 

(1,778

)

Dividends declared Common Stock
   ($
0.31 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,680

)

 

 

 

 

 

(4,680

)

Dividends declared Class B Common Stock
   ($
0.248 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(890

)

 

 

 

 

 

(890

)

Share-based compensation, net (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(567

)

 

 

 

 

 

 

 

 

(567

)

Share-based awards exercised, net (1)

 

 

20

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, November 26, 2022

 

 

15,095

 

 

 

3,590

 

 

$

1,509

 

 

$

359

 

 

$

92,564

 

 

$

1,873,550

 

 

$

(26,016

)

 

$

1,941,966

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,810

 

 

 

 

 

 

17,810

 

Change in fair value of derivatives (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59

 

 

 

59

 

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,473

)

 

 

(1,473

)

Dividends declared Common Stock
   ($
0.31 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,682

)

 

 

 

 

 

(4,682

)

Dividends declared Class B Common Stock
   ($
0.248 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(890

)

 

 

 

 

 

(890

)

Share-based compensation, net (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,297

 

 

 

 

 

 

 

 

 

2,297

 

Share-based awards exercised, net (1)

 

 

8

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Balance, February 25, 2023

 

 

15,103

 

 

 

3,590

 

 

$

1,510

 

 

$

359

 

 

$

94,861

 

 

$

1,885,788

 

 

$

(27,430

)

 

$

1,955,088

 

 

(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 26, 2023

 

 

15,104

 

 

 

3,590

 

 

$

1,510

 

 

$

359

 

 

$

99,303

 

 

$

1,926,549

 

 

$

(23,761

)

 

$

2,003,960

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,325

 

 

 

 

 

 

42,325

 

Change in fair value of derivatives (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

(12

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(151

)

 

 

(151

)

Dividends declared Common Stock
   ($
0.33 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,993

)

 

 

 

 

 

(4,993

)

Dividends declared Class B Common Stock
   ($
0.264 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(948

)

 

 

 

 

 

(948

)

Repurchase of Common Stock

 

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

(245

)

 

 

 

 

 

(255

)

Share-based compensation, net (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

244

 

 

 

 

 

 

 

 

 

244

 

Share-based awards exercised, net (1)

 

 

26

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Balance, November 25, 2023

 

 

15,128

 

 

 

3,590

 

 

$

1,513

 

 

$

359

 

 

$

99,537

 

 

$

1,962,688

 

 

$

(23,924

)

 

$

2,040,173

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,457

 

 

 

 

 

 

20,457

 

Change in fair value of derivatives (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

919

 

 

 

919

 

Dividends declared Common Stock
   ($
0.33 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,976

)

 

 

 

 

 

(4,976

)

Dividends declared Class B Common Stock
   ($
0.264 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(948

)

 

 

 

 

 

(948

)

Repurchase of Common Stock

 

 

(45

)

 

 

 

 

 

(4

)

 

 

 

 

 

(298

)

 

 

(7,562

)

 

 

 

 

 

(7,864

)

Share-based compensation, net (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,958

 

 

 

 

 

 

 

 

 

1,958

 

Share-based awards exercised, net (1)

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, February 24, 2024

 

 

15,087

 

 

 

3,590

 

 

$

1,509

 

 

$

359

 

 

$

101,197

 

 

$

1,969,659

 

 

$

(23,039

)

 

$

2,049,685

 

(1)
These amounts are shown net of the effect of income taxes.
(2)
These amounts are shown net of any shares withheld by the Company to satisfy certain tax withholding obligations in connection with the vesting of certain restricted stock units.

The accompanying notes are an integral part of these Consolidated Financial Statements.

6


 

Consolidated Statements of Cash Flows

UniFirst Corporation and Subsidiaries

(Unaudited)

Twenty-Six Weeks Ended
 (in thousands)

 

February 24, 2024

 

 

February 25, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

62,782

 

 

$

51,767

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization (1)

 

 

68,893

 

 

 

56,940

 

Share-based compensation

 

 

4,842

 

 

 

4,533

 

Accretion on environmental contingencies

 

 

632

 

 

 

518

 

Accretion on asset retirement obligations

 

 

467

 

 

 

458

 

Deferred income taxes

 

 

897

 

 

 

1,080

 

Other

 

 

963

 

 

 

119

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Receivables, less reserves

 

 

(12,574

)

 

 

(27,636

)

Inventories

 

 

(9,935

)

 

 

683

 

Rental merchandise in service

 

 

7,127

 

 

 

(13,592

)

Prepaid expenses and other current assets and Other assets

 

 

(14,036

)

 

 

(4,459

)

Accounts payable

 

 

(8,035

)

 

 

(900

)

Accrued liabilities

 

 

(6,205

)

 

 

(17,072

)

Prepaid and accrued income taxes

 

 

10,907

 

 

 

11,730

 

Net cash provided by operating activities

 

 

106,725

 

 

 

64,169

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of businesses, net of cash acquired

 

 

 

 

 

(7,059

)

Capital expenditures, including capitalization of software costs

 

 

(72,902

)

 

 

(74,847

)

Purchases of investments

 

 

(11,394

)

 

 

(107,000

)

Maturities of investments

 

 

10,217

 

 

 

6,000

 

Proceeds from sale of assets

 

 

632

 

 

 

345

 

Net cash used in investing activities

 

 

(73,447

)

 

 

(182,561

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of share-based awards

 

 

3

 

 

 

3

 

Taxes withheld and paid related to net share settlement of equity awards

 

 

(2,638

)

 

 

(2,802

)

Repurchase of Common Stock

 

 

(8,119

)

 

 

 

Payment of cash dividends

 

 

(11,512

)

 

 

(10,954

)

Net cash used in financing activities

 

 

(22,266

)

 

 

(13,753

)

 

 

 

 

 

 

Effect of exchange rate changes

 

 

83

 

 

 

(156

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

11,095

 

 

 

(132,301

)

Cash and cash equivalents at beginning of period

 

 

79,443

 

 

 

376,399

 

Cash and cash equivalents at end of period

 

$

90,538

 

 

$

244,098

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Non-cash capital expenditures

 

 

8,928

 

 

 

8,250

 

 

(1)
Depreciation and amortization for the twenty-six weeks ended February 24, 2024 and 2023 included approximately $9.2 million and $5.1 million, respectively, of non-cash amortization expense recognized on acquisition-related intangible assets.

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

7


 

UniFirst Corporation and Subsidiaries

Notes to Consolidated Financial Statements

1. Basis of Presentation

These Consolidated Financial Statements of UniFirst Corporation (the “Company”) included herein have been prepared, without audit, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the information furnished reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period.

It is suggested that these Consolidated Financial Statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 26, 2023. There have been no material changes in the accounting policies followed by the Company during the current fiscal year other than with respect to the recent accounting pronouncements discussed in Note 2, “Recent Accounting Pronouncements”. Results for an interim period are not indicative of any future interim periods or for an entire fiscal year.

2. Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued updated guidance to improve the accounting for acquired revenue contracts with customers in a business combination. The Company adopted this guidance on August 27, 2023. The adoption of this guidance did not have a material impact on its financial statements.

In December 2022, the FASB issued updated guidance to align with the deferral of the cessation date for LIBOR by the United Kingdom’s Financial Conduct Authority (“FCA”). The FASB is changing the sunset date for use of LIBOR by all entities from December 31, 2022 to December 31, 2024 to allow for time for modifications to occur after the FCA’s cessation date of June 30, 2023 for using LIBOR for overnight through twelve-month tenors. The Company’s Credit Agreement (defined below) includes a provision for the phasing out of LIBOR and the Company has elected to transition out of using LIBOR to Secured Overnight Financing Rate (“SOFR”) based on the amendment to the Credit Agreement as described in this report in Note 14, “Long-Term Debt”. The Company’s adoption of this standard did not have a material impact on its financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances effective tax rate reconciliation disclosure requirements and provides clarity to the disclosures of income taxes paid, income before taxes and provision for income taxes. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC have not had, or are not believed by management to have, a material impact on the Company’s present or future financial statements.

 

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3. Revenue Recognition

The following table presents the Company’s revenues for the thirteen and twenty-six weeks ended February 24, 2024 and February 25, 2023, respectively, disaggregated by service type:

 

 

 

Thirteen Weeks Ended

 

 

Twenty-Six Weeks Ended

 

 

 

February 24, 2024