UNF
$224.41
Unifirst
$1.33
.60%
Earnings Details
2nd Quarter February 2021
Wednesday, March 31, 2021 8:00:00 AM
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Summary

Unifirst Misses

Unifirst (UNF) reported 2nd Quarter February 2021 earnings of $1.71 per share on revenue of $449.8 million. The consensus earnings estimate was $1.67 per share on revenue of $446.4 million. The Earnings Whisper number was $1.73 per share. Revenue fell 3.2% compared to the same quarter a year ago.

The company said it expects fiscal 2021 earnings of $7.30 to $7.65 per share on revenue of $1.793 billion to $1.803 billion. The current consensus earnings estimate is $7.50 per share on revenue of $1.80 billion for the year ending August 31, 2021.

UniFirst Corp together with its subsidiaries is engaged in designing, manufacturing, personalizing, renting, cleaning, delivering and selling uniforms & protective clothing, including shirts, jackets, coveralls, lab coats and specialized protective wear.

Results
Reported Earnings
$1.71
Earnings Whisper
$1.73
Consensus Estimate
$1.67
Reported Revenue
$449.8 Mil
Revenue Estimate
$446.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

UniFirst Announces Financial Results for the Second Quarter of Fiscal 2021

WILMINGTON, Mass., March 31, 2021 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or “we”) today reported results for its second quarter ended February 27, 2021 as compared to the corresponding period in the prior fiscal year:

Q2 2021 Financial Highlights

  • Consolidated revenues for the second quarter decreased 3.2% to $449.8 million.
  • Operating income was $40.7 million, a decrease of 7.8%.
  • The quarterly tax rate decreased to 22.7% compared to 24.2% in the prior year.
  • Net income decreased to $32.6 million, or 6.0%.
  • Diluted earnings per share decreased to $1.71 from $1.82, or 6.0%.

Steven Sintros, UniFirst President and Chief Executive Officer, said, “During the quarter, our business and the economy continued to be impacted by the COVID-19 pandemic. In addition, our results were affected by the severe winter storms in Texas and the surrounding states during February.  Taking into account these challenges, we are pleased with the solid results for our quarter. I want to thank our Team Partners again sincerely for the tremendous effort they continue to put forth ensuring that they are taking care of each other and our customers during these challenging times. They truly continue to deliver in every way.”

Segment Reporting Highlights

Core Laundry Operations

  • Revenues for the quarter decreased 3.4% to $398.2 million. This decrease was primarily due to the continued impact of the COVID-19 pandemic on our customers’ operations and wearer levels. In addition, severe winter storms in Texas and the surrounding states during February contributed to the decline.
  • Operating margin decreased to 8.9% from 9.3%. This segment’s profitability was negatively impacted by the pandemic-related decline in rental revenues on our cost structure, the impact of the severe winter storms in Texas and the surrounding states during February as well as higher healthcare claims costs. These items were partially offset by lower merchandise and travel-related costs.

Specialty Garments

  • Revenues for the quarter were $35.2 million, a decrease of 2.1%. This decrease was primarily due to decreased revenues from our U.S. and Canadian nuclear operations which were partially offset by higher direct sales in our cleanroom operations.
  • Operating margin increased to 14.9% from 12.9% a year ago. This increase was primarily due to a higher gross margin on direct sales as well as lower travel-related costs. These benefits were partially offset by higher payroll costs as a percentage of revenues.
  • Specialty Garments consists of nuclear decontamination and cleanroom operations, and its results can vary significantly due to seasonality and the timing of reactor outages and projects.

Balance Sheet and Capital Allocation

  • Cash, cash equivalents and short-term investments totaled $509.6 million as of February 27, 2021.
  • The Company had no long-term debt outstanding as of February 27, 2021.
  • Under its previously announced stock repurchase program, the Company repurchased 12,200 shares of common stock for a total of $2.3 million during its second fiscal quarter of 2021. As of February 27, 2021, the Company had repurchased a total of 368,117 shares of common stock for a total of $61.8 million under the program.
  • Weighted average shares outstanding – Diluted for the second quarter of fiscal 2021 and fiscal 2020 was 19.0 million and 19.1 million shares, respectively.

Financial Outlook

Mr. Sintros continued, “During the latter part of our second quarter, positive COVID-19 cases in the markets we serve declined sharply from the surge experienced over the holidays.  This decline has created more stability in our operating environment even though economic activity continues to be at reduced levels including in the energy dependent markets that we service. Although the recent impacts of COVID-19 could continue to change at any time, this recent stability has improved our ability to project our results over the remainder of our fiscal year.  At this time, we expect revenues for fiscal 2021 to be between $1.793 billion and $1.803 billion and fully diluted earnings per share to be between $7.30 and $7.65.”

Conference Call Information

UniFirst Corporation will hold a conference call today at 9:00 a.m. (ET) to discuss its quarterly financial results, business highlights and outlook. A simultaneous live webcast of the call will be available over the Internet and can be accessed at www.unifirst.com.

About UniFirst Corporation

Headquartered in Wilmington, Mass., UniFirst Corporation (NYSE: UNF) is a North American leader in the supply and servicing of uniform and workwear programs, as well as the delivery of facility service programs. Together with its subsidiaries, the Company also provides first aid and safety products, and manages specialized garment programs for the cleanroom and nuclear industries. UniFirst manufactures its own branded workwear, protective clothing, and floorcare products; and with 260 service locations, over 300,000 customer locations, and 14,000-plus employee Team Partners, the Company outfits nearly 2 million workers each business day. For more information, contact UniFirst at 800.455.7654 or visit UniFirst.com.

Forward-Looking Statements Disclosure

This public announcement contains forward-looking statements within the meaning of the federal securities laws that reflect the Company’s current views with respect to future events and financial performance, including projected revenues and earnings per share. Forward-looking statements contained in this public announcement are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995 and may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” “strategy,” “objective,” “assume,” “strive,” or the negative versions thereof, and similar expressions and by the context in which they are used. Such forward-looking statements are based upon our current expectations and speak only as of the date made. Such statements are highly dependent upon a variety of risks, uncertainties and other important factors that could cause actual results to differ materially from those reflected in such forward-looking statements. Such factors include, but are not limited to, uncertainties caused by adverse economic conditions, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, and their impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers in connection with extraordinary events or circumstances such as the COVID-19 pandemic, uncertainties regarding our ability to consummate and successfully integrate acquired businesses, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, any adverse outcome of pending or future contingencies or claims, our ability to compete successfully without any significant degradation in our margin rates, seasonal and quarterly fluctuations in business levels, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the effect of currency fluctuations on our results of operations and financial condition, our dependence on third parties to supply us with raw materials, which such supply could be severely disrupted as a result of extraordinary events or circumstances such as the COVID-19 pandemic, any loss of key management or other personnel, increased costs as a result of any changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the negative effect on our business from sharply depressed oil and natural gas prices, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, the continuing increase in domestic healthcare costs, increased workers’ compensation claim costs, increased healthcare claim costs, including as a result of extraordinary events or circumstances such as the COVID-19 pandemic, our ability to retain and grow our customer base, demand and prices for our products and services, fluctuations in our Specialty Garments business, political or other instability, supply chain disruption or infection among our employees in Mexico and Nicaragua where our principal garment manufacturing plants are located, including, without limitation, as a result of extraordinary events or circumstances such as the COVID-19 pandemic, our ability to properly and efficiently design, construct, implement and operate a new customer relationship management (“CRM”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, additional professional and internal costs necessary for compliance with any changes in Securities and Exchange Commission, New York Stock Exchange and accounting rules, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, general economic conditions, our ability to successfully implement our business strategies and processes, including our capital allocation strategies and the other factors described under “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 29, 2020, “Item 1.A. Risk Factors” and elsewhere in our Quarterly Reports on Form 10-Q and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements to reflect events or circumstances arising after the date on which they are made.

Consolidated Statements of Income
(Unaudited)

(In thousands, except per share data) Thirteen weeks ended February 27, 2021  Thirteen weeks ended February 29, 2020  Twenty-six weeks ended February 27, 2021  Twenty-six weeks ended February 29, 2020 
Revenues $449,764  $464,600  $896,617  $929,998 
                 
Operating expenses:                
Cost of revenues (1)  289,455   301,422   565,255   590,738 
Selling and administrative expenses (1)  93,329   93,080   182,032   183,608 
Depreciation and amortization  26,287   25,971   52,595   51,430 
Total operating expenses  409,071   420,473   799,882   825,776 
                 
Operating income  40,693   44,127   96,735   104,222 
                 
Other (income) expense:                
Interest income, net  (863)  (2,175)  (1,431)  (4,536)
Other (income) expense, net  (584)  539   165   1,067 
Total other income, net  (1,447)  (1,636)  (1,266)  (3,469)
                 
Income before income taxes  42,140   45,763   98,001   107,691 
Provision for income taxes  9,555   11,083   23,520   24,769 
                 
Net income $32,585  $34,680  $74,481  $82,922 
                 
Income per share – Basic:                
Common Stock $1.80  $1.90  $4.10  $4.55 
Class B Common Stock $1.44  $1.52  $3.28  $3.64 
                 
Income per share – Diluted:                
Common Stock $1.71  $1.82  $3.91  $4.34 
                 
Income allocated to – Basic:                
Common Stock $27,349  $29,129  $62,520  $69,654 
Class B Common Stock $5,236  $5,551  $11,961  $13,268 
                 
Income allocated to – Diluted:                
Common Stock $32,585  $34,680  $74,481  $82,922 
                 
Weighted average shares outstanding – Basic:                
Common Stock  15,223   15,293   15,235   15,300 
Class B Common Stock  3,643   3,643   3,643   3,643 
                 
Weighted average shares outstanding – Diluted:                
Common Stock  19,037   19,105   19,032   19,114 

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


Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands) February 27, 2021  August 29, 2020 
Assets        
Current assets:        
Cash, cash equivalents and short-term investments $509,563  $474,838 
Receivables, net  204,068   190,916 
Inventories  110,701   106,269 
Rental merchandise in service  155,410   154,278 
Prepaid taxes  5,263   7,115 
Prepaid expenses and other current assets  38,459   35,918 
         
Total current assets  1,023,464   969,334 
         
Property, plant and equipment, net  599,144   582,470 
Goodwill  429,511   424,844 
Customer contracts and other intangible assets, net  85,142   85,536 
Deferred income taxes  543   522 
Operating lease right-of-use assets, net  41,203   42,710 
Other assets  96,751   93,611 
         
Total assets $2,275,758  $2,199,027 
         
Liabilities and shareholders’ equity        
Current liabilities:        
Accounts payable $61,177  $64,035 
Accrued liabilities  152,171   132,965 
Accrued taxes     527 
Operating lease liabilities, current  12,783   12,569 
         
Total current liabilities  226,131   210,096 
         
Long-term liabilities:        
Accrued liabilities  132,910   132,820 
Accrued and deferred income taxes  87,229   85,721 
Operating lease liabilities  28,378   29,261 
         
Total liabilities  474,648   457,898 
         
Shareholders’ equity:        
Common Stock  1,523   1,525 
Class B Common Stock  364   364 
Capital surplus  86,979   86,645 
Retained earnings  1,740,737   1,684,565 
Accumulated other comprehensive loss  (28,493)  (31,970)
         
Total shareholders’ equity  1,801,110   1,741,129 
         
Total liabilities and shareholders’ equity $2,275,758  $2,199,027 


Detail of Operating Results
(Unaudited)

Revenues

(In thousands, except percentages) Thirteen weeks ended February 27, 2021  Thirteen weeks ended February 29, 2020  Dollar
Change
  Percent
Change
 
Core Laundry Operations $398,235  $412,192   (13,957)  (3.4)%
Specialty Garments  35,222   35,980   (758)  (2.1)%
First Aid  16,307   16,428   (121)  (0.7)%
Consolidated total $449,764  $464,600  $(14,836)  (3.2)%


(In thousands, except percentages) Twenty-six weeks ended February 27, 2021  Twenty-six weeks ended February 29, 2020  Dollar
Change
  Percent
Change
 
                 
Core Laundry Operations $791,425  $828,490  $(37,065)  (4.5)%
Specialty Garments  73,356   69,382   3,974   5.7%
First Aid  31,836   32,126   (290)  (0.9)%
Consolidated total $896,617  $929,998  $(33,381)  (3.6)%

Operating Income

(In thousands, except percentages) Thirteen weeks ended February 27, 2021  Thirteen weeks ended February 29, 2020  Dollar
Change
  Percent
Change
 
Core Laundry Operations $35,366  $38,357  $(2,991)  (7.8)%
Specialty Garments  5,234   4,627   607   13.1%
First Aid  93   1,143   (1,050)  (91.9)%
Consolidated total $40,693  $44,127  $(3,434)  (7.8)%


(In thousands, except percentages) Twenty-six weeks ended February 27, 2021  Twenty-six weeks ended February 29, 2020  Dollar
Change
  Percent
Change
 
Core Laundry Operations $84,236  $92,165  $(7,929)  (8.6)%
Specialty Garments  12,393   9,506   2,887   30.4%
First Aid  106   2,551   (2,445)  (95.8)%
Consolidated total $96,735  $104,222  $(7,487)  (7.2)%

Operating Margin

  Thirteen weeks ended February 27, 2021  Thirteen weeks ended February 29, 2020 
Core Laundry Operations  8.9%  9.3%
Specialty Garments  14.9%  12.9%
First Aid  0.6%  7.0%
Consolidated total  9.0%  9.5%


  Twenty-six weeks ended February 27, 2021  Twenty-six weeks ended February 29, 2020 
Core Laundry Operations  10.6%  11.1%
Specialty Garments  16.9%  13.7%
First Aid  0.3%  7.9%
Consolidated total  10.8%  11.2%

Consolidated Statements of Cash Flows
(Unaudited)

(In thousands) Twenty-six weeks ended February 27, 2021  Twenty-six weeks ended February 29, 2020 
Cash flows from operating activities:        
Net income $74,481  $82,922 
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization  52,595   51,430 
Amortization of deferred financing costs  56   56 
Share-based compensation  3,266   3,227 
Accretion on environmental contingencies  224   269 
Accretion on asset retirement obligations  492   463 
Deferred income taxes  847   727 
Other  19   16 
Changes in assets and liabilities, net of acquisitions:        
Receivables, less reserves  (12,511)  (4,867)
Inventories  (4,287)  6,125 
Rental merchandise in service  (338)  6,839 
Prepaid expenses and other current assets and Other assets  2,267   2,170 
Accounts payable  (1,923)  (5,815)
Accrued liabilities  11,460   (1,752)
Prepaid and accrued income taxes  1,368   (4,941)
Net cash provided by operating activities  128,016   136,869 
         
Cash flows from investing activities:        
Acquisition of businesses, net of cash acquired  (7,018)  (41,021)
Capital expenditures, including capitalization of software costs  (66,855)  (62,271)
Proceeds from sale of assets  281   236 
Net cash used in investing activities  (73,592)  (103,056)
         
Cash flows from financing activities:        
Proceeds from exercise of share-based awards  3   75 
Taxes withheld and paid related to net share settlement of equity awards  (2,643)  (3,281)
Repurchase of Common Stock  (9,534)  (14,203)
Payment of cash dividends  (9,069)  (6,609)
Net cash used in financing activities  (21,243)  (24,018)
         
Effect of exchange rate changes  1,544   187 
         
Net increase in cash, cash equivalents and short-term investments  34,725   9,982 
Cash, cash equivalents and short-term investments at beginning of period  474,838   385,341 
Cash, cash equivalents and short-term investments at end of period $509,563  $395,323 

Investor Relations Contact
Shane O’Connor, Executive Vice President & CFO
UniFirst Corporation        
978-658-8888
shane_oconnor@unifirst.com


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Source: UniFirst Corporation