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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 26, 2022

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

 

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

 

 

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 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.  

3


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.

4


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

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 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

 

6


 

 

 

(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