UniFirst Announces Financial Results for the Fourth Quarter and Full Year of Fiscal 2021; Quarterly Dividend Increase; New $100 Million Share Repurchase Authorization
Q4 2021 Financial Highlights
- Consolidated revenues for the fourth quarter increased 8.5% to
$465.3 million . - Operating income was
$44.9 million , an increase of 10.1%. - The quarterly tax rate decreased to 22.0% compared to 26.6% in the prior year.
- Net income increased to $34.6 million, or 9.7%.
- Diluted earnings per share increased to
$1.82 from$1.66 , or 9.6%.
Fiscal 2021 Financial Highlights
- Full year consolidated revenues were
$1.826 billion , an increase of 1.2%. - Full year operating income was
$195.8 million , an increase of 13.4%. - Net income for the year increased to
$151.1 million , or 11.3%. - Diluted earnings per share increased to
$7.94 from$7.13 , or 11.4%.
Segment Reporting Highlights for Q4 2021
Core Laundry Operations
- Revenues for the quarter increased 7.9% to
$415.1 million primarily driven by the COVID-19 pandemic significantly impacting our customers’ operations and wearer levels in the prior year comparable period as well as solid sales performance and improved customer retention in fiscal 2021. - Operating margin increased to 10.1% from 9.9%. During the quarter, the Company’s margins were pressured by the current inflationary environment as well as a rebound of certain costs that trended lower during the pandemic, including merchandise amortization expense, energy, travel and healthcare claims costs.
Specialty Garments
- Revenues for the quarter were
$33.9 million , an increase of 22.5%. This increase was primarily due to growth in our cleanroom operations as well as growth in ourU.S. and European nuclear operations. - Operating margin increased to 12.1% from 7.1% a year ago. This increase was primarily due to the segment’s top-line performance in the quarter resulting in strong operating leverage as well as lower casualty claims expense as a percentage of revenue. These benefits were partially offset by higher merchandise costs as a percentage of revenue.
- 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
$512.9 million as ofAugust 28, 2021 . - The Company had no long-term debt outstanding as of
August 28, 2021 . - Under its previously announced
$100.0 million share repurchase program, the Company repurchased 7,750 shares of common stock for a total of$1.7 million during the fourth quarter of fiscal 2021. As ofAugust 28, 2021 , the Company had repurchased a total of 375,867 shares of common stock for a total of$63.5 million under the program. - Weighted average shares outstanding – Diluted for the fourth quarter of fiscal 2021 and fiscal 2020 were each 19.0 million shares.
Quarterly Dividend Increase
The amount and timing of any future dividend payment is subject to the approval of the Board of Directors.
New Share Repurchase Authorization
Financial Outlook
Conference Call Information
About
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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, operating margin 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 “guidance,” “outlook,” “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 instability, supply chain disruption or infection among our employees in
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data) | Thirteen weeks ended |
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||||||||||||
Revenues | $ | 465,276 | $ | 428,643 | $ | 1,826,216 | $ | 1,804,159 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenues (1) | 289,415 | 270,971 | 1,141,275 | 1,164,932 | ||||||||||||
Selling and administrative expenses (1) | 104,153 | 89,788 | 383,161 | 361,801 | ||||||||||||
Depreciation and amortization | 26,777 | 27,085 | 105,955 | 104,697 | ||||||||||||
Total operating expenses | 420,345 | 387,844 | 1,630,391 | 1,631,430 | ||||||||||||
Operating income | 44,931 | 40,799 | 195,825 | 172,729 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest income, net | (466 | ) | (792 | ) | (2,568 | ) | (6,382 | ) | ||||||||
Other (income) expense, net | 1,009 | (1,400 | ) | 1,522 | 1,223 | |||||||||||
Total other (income) expense, net | 543 | (2,192 | ) | (1,046 | ) | (5,159 | ) | |||||||||
Income before income taxes | 44,388 | 42,991 | 196,871 | 177,888 | ||||||||||||
Provision for income taxes | 9,774 | 11,428 | 45,760 | 42,118 | ||||||||||||
Net income | $ | 34,614 | $ | 31,563 | $ | 151,111 | $ | 135,770 | ||||||||
Income per share – Basic: | ||||||||||||||||
Common Stock | $ | 1.91 | $ | 1.74 | $ | 8.32 | $ | 7.46 | ||||||||
Class B Common Stock | $ | 1.53 | $ | 1.39 | $ | 6.66 | $ | 5.97 | ||||||||
Income per share – Diluted: | ||||||||||||||||
Common Stock | $ | 1.82 | $ | 1.66 | $ | 7.94 | $ | 7.13 | ||||||||
Income allocated to – Basic: | ||||||||||||||||
Common Stock | $ | 29,058 | $ | 26,499 | $ | 126,848 | $ | 114,017 | ||||||||
Class B Common Stock | $ | 5,556 | $ | 5,064 | $ | 24,263 | $ | 21,753 | ||||||||
Income allocated to – Diluted: | ||||||||||||||||
Common Stock | $ | 34,614 | $ | 31,563 | $ | 151,111 | $ | 135,770 | ||||||||
Weighted average shares outstanding – Basic: | ||||||||||||||||
Common Stock | 15,241 | 15,250 | 15,237 | 15,276 | ||||||||||||
Class B Common Stock | 3,643 | 3,643 | 3,643 | 3,643 | ||||||||||||
Weighted average shares outstanding – Diluted: | ||||||||||||||||
Common Stock | 19,049 | 19,019 | 19,038 | 19,042 |
(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) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash, cash equivalents and short-term investments | $ | 512,868 | $ | 474,838 | ||||
Receivables, net | 208,331 | 190,916 | ||||||
Inventories | 143,591 | 106,269 | ||||||
Rental merchandise in service | 181,531 | 154,278 | ||||||
Prepaid taxes | 16,580 | 7,115 | ||||||
Prepaid expenses and other current assets | 40,891 | 35,918 | ||||||
Total current assets | 1,103,792 | 969,334 | ||||||
Property, plant and equipment, net | 617,719 | 582,470 | ||||||
429,538 | 424,844 | |||||||
Customer contracts and other intangible assets, net | 84,638 | 85,536 | ||||||
Deferred income taxes | 580 | 522 | ||||||
Operating lease right-of-use assets, net | 42,115 | 42,710 | ||||||
Other assets | 102,683 | 93,611 | ||||||
Total assets | $ | 2,381,065 | $ | 2,199,027 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 81,356 | $ | 64,035 | ||||
Accrued liabilities | 159,578 | 132,965 | ||||||
Accrued taxes | 743 | 527 | ||||||
Operating lease liabilities, current | 12,993 | 12,569 | ||||||
Total current liabilities | 254,670 | 210,096 | ||||||
Long-term liabilities: | ||||||||
Accrued liabilities | 134,085 | 132,820 | ||||||
Accrued and deferred income taxes | 89,177 | 85,721 | ||||||
Operating lease liabilities | 30,181 | 29,261 | ||||||
Total long-term liabilities | 253,443 | 247,802 | ||||||
Shareholders’ equity: | ||||||||
Common Stock | 1,524 | 1,525 | ||||||
Class B Common Stock | 364 | 364 | ||||||
Capital surplus | 89,257 | 86,645 | ||||||
Retained earnings | 1,806,643 | 1,684,565 | ||||||
Accumulated other comprehensive loss | (24,836 | ) | (31,970 | ) | ||||
Total shareholders’ equity | 1,872,952 | 1,741,129 | ||||||
Total liabilities and shareholders’ equity | $ | 2,381,065 | $ | 2,199,027 |
Detail of Operating Results
(Unaudited)
Revenues
(In thousands, except percentages) | Thirteen weeks ended |
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Dollar Change |
Percent Change |
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Core Laundry Operations | $ | 415,104 | $ | 384,584 | $ | 30,520 | 7.9 | % | ||||||||
Specialty Garments | 33,862 | 27,640 | 6,222 | 22.5 | % | |||||||||||
First Aid | 16,310 | 16,419 | (109 | ) | (0.7 | )% | ||||||||||
Consolidated total | $ | 465,276 | $ | 428,643 | $ | 36,633 | 8.5 | % |
(In thousands, except percentages) | Fifty-two weeks ended |
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Dollar Change |
Percent Change |
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Core Laundry Operations | $ | 1,615,560 | $ | 1,601,485 | $ | 14,075 | 0.9 | % | ||||||||
Specialty Garments | 145,454 | 133,185 | 12,269 | 9.2 | % | |||||||||||
First Aid | 65,202 | 69,489 | (4,287 | ) | (6.2 | )% | ||||||||||
Consolidated total | $ | 1,826,216 | $ | 1,804,159 | $ | 22,057 | 1.2 | % |
Operating Income
(In thousands, except percentages) | Thirteen weeks ended |
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Dollar Change |
Percent Change |
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Core Laundry Operations | $ | 41,847 | $ | 38,131 | $ | 3,716 | 9.7 | % | ||||||||
Specialty Garments | 4,108 | 1,959 | 2,149 | 109.7 | % | |||||||||||
First Aid | (1,024 | ) | 709 | (1,733 | ) | (244.4 | )% | |||||||||
Consolidated total | $ | 44,931 | $ | 40,799 | $ | 4,132 | 10.1 | % |
(In thousands, except percentages) | Fifty-two weeks ended |
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Dollar Change |
Percent Change |
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Core Laundry Operations | $ | 171,717 | $ | 149,987 | $ | 21,730 | 14.5 | % | ||||||||
Specialty Garments | 24,801 | 17,845 | 6,956 | 39.0 | % | |||||||||||
First Aid | (693 | ) | 4,897 | (5,590 | ) | (114.2 | )% | |||||||||
Consolidated total | $ | 195,825 | $ | 172,729 | $ | 23,096 | 13.4 | % |
Operating Margin
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Core Laundry Operations | 10.1 | % | 9.9 | % | ||||
Specialty Garments | 12.1 | % | 7.1 | % | ||||
First Aid | -6.3 | % | 4.3 | % | ||||
Consolidated | 9.7 | % | 9.5 | % |
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Core Laundry Operations | 10.6 | % | 9.4 | % | ||||
Specialty Garments | 17.1 | % | 13.4 | % | ||||
First Aid | -1.1 | % | 7.0 | % | ||||
Consolidated | 10.7 | % | 9.6 | % |
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) | Fifty-two weeks ended |
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Cash flows from operating activities: | ||||||||
Net income | $ | 151,111 | $ | 135,770 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 105,955 | 104,697 | ||||||
Amortization of deferred financing costs | 147 | 112 | ||||||
Share-based compensation | 7,011 | 5,999 | ||||||
Accretion on environmental contingencies | 448 | 537 | ||||||
Accretion on asset retirement obligations | 985 | 929 | ||||||
Deferred income taxes | 300 | (12,152 | ) | |||||
Other | 391 | 2,524 | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Receivables, less reserves | (16,685 | ) | 14,589 | |||||
Inventories | (37,213 | ) | (5,066 | ) | ||||
Rental merchandise in service | (26,323 | ) | 32,262 | |||||
Prepaid expenses and other current assets and Other assets | 5,015 | 840 | ||||||
Accounts payable | 15,136 | (10,702 | ) | |||||
Accrued liabilities | 16,446 | 19,866 | ||||||
Prepaid and accrued income taxes | (10,422 | ) | (3,521 | ) | ||||
Net cash provided by operating activities | 212,302 | 286,684 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of businesses, net of cash acquired | (8,443 | ) | (41,221 | ) | ||||
Capital expenditures, including capitalization of software costs | (133,639 | ) | (116,717 | ) | ||||
Proceeds from sale of assets | 617 | 322 | ||||||
Net cash used in investing activities | (141,465 | ) | (157,616 | ) | ||||
Cash flows from financing activities: | ||||||||
Payment of deferred financing costs | (822 | ) | — | |||||
Proceeds from exercise of share-based awards | 4 | 73 | ||||||
Taxes withheld and paid related to net share settlement of equity awards | (4,068 | ) | (3,731 | ) | ||||
Repurchase of Common Stock | (11,222 | ) | (21,745 | ) | ||||
Payment of cash dividends | (18,147 | ) | (15,700 | ) | ||||
Net cash used in financing activities | (34,255 | ) | (41,103 | ) | ||||
Effect of exchange rate changes | 1,448 | 1,532 | ||||||
Net increase in cash, cash equivalents and short-term investments | 38,030 | 89,497 | ||||||
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 | $ | 512,868 | $ | 474,838 |
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company reports its consolidated financial results in accordance with generally accepted accounting principles (“GAAP”). To supplement these consolidated financial results, management believes that certain non-GAAP operating results provide a useful measure on which to evaluate and compare the Company’s results of operations for the periods presented. The Company believes these non-GAAP results provide useful supplemental information regarding the Company’s performance to both management and investors by excluding certain non-recurring amounts that impact the comparability of the results. A supplemental reconciliation of the Company’s fiscal 2022 financial outlook for consolidated operating income on a GAAP basis to adjusted operating income on a non-GAAP basis is presented in the following table. In addition, a supplemental reconciliation of the fiscal 2022 financial outlook for Core Laundry Operations operating income and operating margin on a GAAP basis to adjusted operating income and adjusted operating margin on a non-GAAP basis is also presented in the following table. Investors are encouraged to review the reconciliation of the outlook for these non-GAAP measures to the outlook for their most directly comparable GAAP financial measures, which is provided below. The Company’s outlook contains forward-looking statements and information. Actual results may differ materially. See “Forward-Looking Statements Disclosure.”
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Consolidated | Core Laundry Operations | |||||||||||||||||||
(In thousands, except percentages) | Revenue | Operating Income |
Revenue | Operating Income |
Operating Margin |
|||||||||||||||
Guidance - at the midpoint | $ | 1,932,500 | $ | 148,000 | $ | 1,716,000 | $ | 125,000 | 7.3 | % | ||||||||||
Key Initiatives | — | 38,000 | — | 38,000 | 2.2 | % | ||||||||||||||
As adjusted | $ | 1,932,500 | $ | 186,000 | $ | 1,716,000 | $ | 163,000 | 9.5 | % |
Investor Relations Contact
Shane O’Connor, Executive Vice President & CFO
UniFirst Corporation
978-658-8888
shane_oconnor@unifirst.com
Source: UniFirst Corporation