Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported)
January 3, 2018


UNIFIRST CORPORATION
(Exact Name of Registrant as Specified in Charter)


Massachusetts
 
001-08504
 
04-2103460
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)


68 Jonspin Road, Wilmington, Massachusetts 01887
(Address of Principal Executive Offices) (Zip Code)


Registrant's telephone number, including area code: (978) 658-8888


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


[ ]
Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 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.






Item 2.02.
Results of Operations and Financial Condition.

On January 3, 2018, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the first quarter of fiscal 2018, which ended on November 25, 2017. A copy of the Press Release is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Item 2.02, including the exhibit attached hereto, shall not be deemed “filed” for any purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01.
Financial Statements and Exhibits.
 
 
(d) Exhibits
 
 
 
EXHIBIT NO.
DESCRIPTION
 
 
99
Press release of the Company dated January 3, 2018







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


UNIFIRST CORPORATION


Date: January 3, 2018
By:
/s/ Steven S. Sintros
 
Name:
Steven S. Sintros
 
Title:
Chief Executive Officer, President and Chief Financial Officer






EXHIBIT INDEX


EXHIBIT NO.
DESCRIPTION
 
 




Exhibit
Exhibit 99

 
https://cdn.kscope.io/862e394cb06ebcbf3888e7d01f2fe58d-unfheaderlefta02.jpg
 
https://cdn.kscope.io/862e394cb06ebcbf3888e7d01f2fe58d-ungheaderrighta01.jpg
 
 
 
For Immediate Release
UniFirst Corporation
68 Jonspin Road
Wilmington, MA 01887
Phone: 978- 658-8888
Fax: 978-988-0659
Email: ssintros@UniFirst.com
 
 
 
 
 
 
 
January 3, 2018
 
 
CONTACT: Steven S. Sintros, President & CEO
 
 
 



UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2018

Wilmington, MA (January 3, 2018) -- UniFirst Corporation (NYSE: UNF) today announced results for its first quarter which ended November 25, 2017. Revenues for the quarter were $415.8 million, up 7.7% from $386.1 million in the same year ago period. Net income in the quarter was $34.2 million ($1.67 per diluted share), compared to net income of $28.2 million ($1.38 per diluted share) in the first quarter of fiscal 2017.

During our first quarter of fiscal 2018 we adopted Accounting Standards Update 2016-09 (ASU 2016-09), Improvements to Employee Share-Based Payment Accounting. Under ASU 2016-09, excess tax benefits and deficiencies associated with employee share-based payments are no longer recognized as additional paid-in capital on the balance sheet but instead recognized directly to income tax expense or benefit in the income statement in the reporting period in which they occur. The net benefit in our first quarter to fully diluted earnings per share from the adoption of ASU 2016-09 was $0.07. The full year 2018 outlook provided by the Company in its October 2017 earnings release did not include any expected benefit from this change in accounting.

Steven S. Sintros, UniFirst President and Chief Executive Officer said, “We are pleased with the overall results of our first quarter. With our Core Laundry Operations leading the way, all of our operating segments contributed to the positive top and bottom line results.”

Our Core Laundry Operations produced first quarter revenues of $373.8 million, up 6.2% from those in the first quarter of the prior year. Adjusting for the estimated effect of acquisitions, primarily from the September 2016 purchase of Arrow Uniform, as well as a stronger Canadian dollar, Core Laundry revenues grew 4.5%. Core Laundry operating income was $46.4 million during the quarter, a 6.1% increase from the first quarter of the prior year. The Core Laundry operating margin in the first quarter of 2018 was 12.4%, consistent with the same period a year ago. The operating margin comparison was positively impacted by lower merchandise costs as a percentage of revenues as well as lower stock compensation expense compared to the first quarter a year ago. These positive comparisons were offset by higher costs related to healthcare claims, service and administrative payroll and legal and environmental contingencies.

Revenues in the first quarter of fiscal 2018 for our Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $28.4 million, up 27.2% in the quarter compared to the same period a year ago. Operating income was $4.5 million compared to $1.2 million in the prior year first quarter. The year to year improvement was primarily due to increased outages and project-based activity in the US and Canada as well as gains from this segment's European operations. This segment’s results can vary significantly due to seasonality and the timing of reactor outages and projects.

Our first quarter profit comparison to the prior period also benefited from Other Income which was $0.8 million higher than the same quarter a year ago, primarily the result of higher interest income.

UniFirst continues to maintain a strong balance sheet with no long-term debt and significant cash balances. Cash, cash equivalents and short-term investments increased $24.3 million to $374.0 million at the end of the first quarter of fiscal 2018.




Outlook
Mr. Sintros continued, “At this time, we expect that our fiscal 2018 revenues will be between $1.630 billion and $1.650 billion and full year diluted earnings per share will be between $5.10 and $5.30. This outlook includes the $0.07 per share impact of the adoption of ASU 2016-9 in our first quarter. Our outlook does not include any further tax benefits related to the adoption of this ASU for the remainder of the fiscal year. In addition, while we expect our future results to substantially benefit from the recent U.S. tax reform, our earnings per share guidance also does not reflect this impact as our analysis is preliminary.”

Conference Call Information
UniFirst will hold a conference call today at 10:00 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 250 service locations, over 300,000 customer locations, and 14,000 employee Team Partners, the company outfits nearly 2 million workers each business day. UniFirst is a publicly held company traded on the New York Stock Exchange under the symbol UNF and is a component of the Standard & Poor's 600 Small Cap Index. For more information, contact UniFirst at 800.455.7654 or visit www.unifirst.com.

Forward Looking Statements
This public announcement contains forward looking statements 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,” 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, the performance and success of our new Chief Executive Officer, our ability to efficiently design, construct, and implement a new customer relationship management (“CRM”) computer system, our ability to maintain and grow Arrow’s customer base and enhance its operating margins, our ability to compete successfully without any significant degradation in our margin rates, uncertainties caused by adverse worldwide economic conditions and their impact on our customers’ businesses and workforce levels, 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, uncertainties regarding our ability to consummate and successfully integrate acquired businesses, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the continuing increase in domestic healthcare costs, including the ultimate impact of the Affordable Care Act, our retention of customers and renewal of customer contracts, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the negative effect on our business from sharply depressed oil prices, fluctuation on our revenue and net income from our specialty garments segment, the effect of currency fluctuations on our results of operations and financial condition, rampant criminal activity and instability in Mexico where our principal garment manufacturing plants are located, the impact on our goodwill and intangibles that might result from adverse financial and economic changes, interruptions or failures of our information technology systems, including as a result of cyber-attacks, failure to comply with other state and federal regulations that might result in penalties or costs, seasonal and quarterly fluctuations in business levels, any loss of key management or other personnel, our dependence on third parties to supply us with raw materials, increased costs as a result of any future changes in federal or state laws, rules and regulations or governmental interpretation of such laws, rules and regulations, the anticipated impact of recent U.S. tax reform on our business, results of operations and financial condition, demand and prices for our products and services, economic and other developments associated with the war on terrorism and its impact on the economy, general economic conditions and other factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 26, 2017 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 such statements are made.




UniFirst Corporation and Subsidiaries
Consolidated Statements of Income
(Unaudited)    
(In thousands, except per share data)
 
Thirteen
weeks ended
November 25,
2017
 
Thirteen
weeks ended
November 26,
2016

 


 


Revenues
 
$
415,778

 
$
386,108

 
 


 


Operating expenses:
 
 
 
 
Cost of revenues (1)
 
253,650

 
238,765

Selling and administrative expenses (1)
 
87,510

 
79,446

Depreciation and amortization
 
22,707

 
22,140

Total operating expenses
 
363,867

 
340,351

 
 


 


Income from operations
 
51,911

 
45,757


 


 


Other (income) expense:
 
 
 
 
Interest income, net
 
(1,276
)
 
(801
)
Other expense, net
 
154

 
494

Total other income, net
 
(1,122
)
 
(307
)

 


 


Income before income taxes
 
53,033

 
46,064

Provision for income taxes
 
18,827

 
17,850


 


 


Net income
 
$
34,206

 
$
28,214


 


 


Income per share – Basic:
 
 
 
 
Common Stock
 
$
1.77

 
$
1.46

Class B Common Stock
 
$
1.42

 
$
1.17


 

 

Income per share – Diluted:
 
 
 
 
Common Stock
 
$
1.67

 
$
1.38


 

 

Income allocated to – Basic:
 

 
 
Common Stock
 
$
27,384

 
$
22,342

Class B Common Stock
 
$
6,822

 
$
5,668


 

 

Income allocated to – Diluted:
 
 
 
 
Common Stock
 
$
34,206

 
$
28,020


 

 

Weighted average number of shares outstanding – Basic:
 
 
 
 
Common Stock
 
15,462

 
15,285

Class B Common Stock
 
4,816

 
4,847


 

 

Weighted average number of shares outstanding – Diluted:
 
 
 
 
Common Stock
 
20,434

 
20,249


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




UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
November 25,
2017
 
August 26,
2017
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash, cash equivalents and short-term investments
 
$
374,036

 
$
349,752

Receivables, net
 
200,148

 
187,174

Inventories
 
81,972

 
79,068

Rental merchandise in service
 
151,354

 
151,340

Prepaid taxes
 
12,969

 
29,968

Prepaid expenses and other current assets
 
22,241

 
16,924

 
 
 
 
 
Total current assets
 
842,720

 
814,226

 
 
 
 
 
Property, plant and equipment, net
 
524,130

 
525,115

Goodwill
 
377,104

 
376,110

Customer contracts and other intangible assets, net

 
69,456

 
71,744

Deferred income taxes
 
407

 
394

Other assets
 
31,013

 
31,539

 
 
 
 
 
 
 
$
1,844,830

 
$
1,819,128

 
 
 
 
 
Liabilities and shareholders’ equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
63,901

 
$
64,691

Accrued liabilities
 
104,099

 
112,236

Accrued taxes
 

 
921

 
 
 
 
 
Total current liabilities
 
168,000

 
177,848

 
 
 
 
 
Long-term liabilities:
 
 
 
 
Accrued liabilities
 
107,481

 
106,736

Accrued and deferred income taxes
 
83,741

 
81,352

 
 
 
 
 
Total long-term liabilities
 
191,222

 
188,088

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common Stock
 
1,547

 
1,545

Class B Common Stock
 
482

 
482

Capital surplus
 
87,844

 
86,245

Retained earnings
 
1,419,180

 
1,386,438

Accumulated other comprehensive loss
 
(23,445
)
 
(21,518
)
 
 
 
 
 
Total shareholders’ equity
 
1,485,608

 
1,453,192

 
 


 


 
 
$
1,844,830

 
$
1,819,128





UniFirst Corporation and Subsidiaries
Detail of Operating Results
(Unaudited)

Revenues

(In thousands, except percentages)
 
Thirteen
weeks ended
November 25,
2017
 
Thirteen
weeks ended
November 26,
2016
 
Dollar
Change
 
Percent
Change
 
 
 
 
 
 
 
 
 
Core Laundry Operations
 
$
373,796

 
$
351,843

 
$
21,953

 
6.2
%
Specialty Garments
 
28,427

 
22,356

 
6,071

 
27.2
%
First Aid
 
13,555

 
11,909

 
1,646

 
13.8
%
Consolidated total
 
$
415,778

 
$
386,108

 
$
29,670

 
7.7
%

Income from Operations

(In thousands, except percentages)
 
Thirteen
weeks ended
November 25,
2017
 
Thirteen
weeks ended
November 26,
2016
 
Dollar
Change
 
Percent
Change
 
 


 


 


 


Core Laundry Operations
 
$
46,358

 
$
43,673

 
$
2,685

 
6.1
%
Specialty Garments
 
4,477

 
1,151

 
3,326

 
289.1
%
First Aid
 
1,076

 
933

 
143

 
15.3
%
Consolidated total
 
$
51,911

 
$
45,757

 
$
6,154

 
13.4
%





UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

(In thousands)
 
Thirteen
weeks ended
November 25,
2017
 
Thirteen
weeks ended
November 26,
2016
Cash flows from operating activities:
 
 
 
 
Net income
 
$
34,206

 
$
28,214

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
 
Depreciation
 
19,540

 
18,500

Amortization of intangible assets
 
3,167

 
3,640

Amortization of deferred financing costs
 
28

 
28

Share-based compensation
 
1,114

 
2,015

Accretion on environmental contingencies
 
173

 
150

Accretion on asset retirement obligations
 
240

 
205

Deferred income taxes
 
2,031

 
(746
)
Changes in assets and liabilities, net of acquisitions:
 
 
 
 
Receivables, less reserves
 
(12,879
)
 
(13,112
)
Inventories
 
(2,882
)
 
7,526

Rental merchandise in service
 
(82
)
 
152

Prepaid expenses and other current assets and Other assets
 
(4,901
)
 
9,288

Accounts payable
 
(1,092
)
 
(1,113
)
Accrued liabilities
 
(7,456
)
 
(8,837
)
Prepaid and accrued income taxes
 
16,420

 
17,589

Net cash provided by operating activities
 
47,627

 
63,499


 

 

Cash flows from investing activities:
 
 
 
 
Acquisition of businesses, net of cash acquired
 
(2,671
)
 
(120,391
)
Capital expenditures
 
(19,033
)
 
(18,233
)
Other
 
318

 
281

Net cash used in investing activities
 
(21,386
)
 
(138,343
)

 

 

Cash flows from financing activities:
 
 
 
 
Proceeds from exercise of share-based awards, including excess tax benefits
 
267

 
929

Taxes withheld and paid related to net share settlement of equity awards
 
(522
)
 
(566
)
Payment of cash dividends
 
(726
)
 
(724
)
Net cash used in financing activities
 
(981
)
 
(361
)

 


 


Effect of exchange rate changes
 
(976
)
 
(2,471
)

 


 


Net increase (decrease) in cash, cash equivalents and short-term investments
 
24,284

 
(77,676
)
Cash, cash equivalents and short-term investments at beginning of period
 
349,752

 
363,795


 


 


Cash, cash equivalents and short-term investments at end of period
 
$
374,036

 
$
286,119