8-K
false000071795400007179542023-03-292023-03-29

 

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): March 29, 2023

 

UNIFIRST CORPORATION

(Exact name of registrant as specified in its 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

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

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 (see General Instructions A.2. below):

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))

 

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 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 March 29, 2023, UniFirst Corporation (the “Company”) issued a press release (“Press Release”) announcing financial results for the second quarter of fiscal 2023, which ended on February 25, 2023. 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

Number

 

Description

 99

 

Press release of the Company dated March 29, 2023

 104

 

 Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 


SIGNATURES

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

 

 

 

UNIFIRST CORPORATION

 

 

 

 

Date: March 29, 2023

 

By:

/s/ Steven S. Sintros

 

 

 

Steven S. Sintros

 

 

 

President and Chief Executive Officer

 

 

 

 

 

 

By:

/s/ Shane O’Connor

 

 

 

Shane O’Connor

 

 

 

Executive Vice President and Chief Financial Officer

 


EX-99

 

 

Exhibit 99

Investor Relations Contact

Shane O’Connor, Executive Vice President & CFO

UniFirst Corporation

978-658-8888

shane_oconnor@unifirst.com

 

 

 

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER OF FISCAL 2023

Wilmington, MA – March 29, 2023 – UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or “we”) today reported results for its second quarter ended February 25, 2023 as compared to the corresponding period in the prior fiscal year:

Q2 2023 Financial Highlights

Consolidated revenues increased 11.5% to $542.7 million.
Operating income was $20.7 million, a decrease of 8.4%.
The quarterly tax rate increased to 24.6% compared to 19.0% in the prior year.
Net income decreased to $17.8 million from $18.5 million in the prior year, or 3.5%.
Diluted earnings per share decreased to $0.95 from $0.97 in the prior year, or 2.1%.

 

The Company's financial results for the second quarter of fiscal 2023 and 2022 included approximately $9.1 million and $6.7 million, respectively, of costs directly attributable to its CRM, ERP and branding initiatives (the "Key Initiatives"). In addition, the Company incurred costs related to the acquisition of Clean Uniform during the second quarter of fiscal 2023 of approximately $2.0 million. The effect of these items on the second quarter of fiscal 2023 and 2022 combined to decrease:

Operating income by $11.1 million and $6.7 million, respectively.
Net income by $8.3 million and $5.1 million, respectively.
EPS by $0.44 and $0.27, respectively.

 

Steven Sintros, UniFirst President and Chief Executive Officer, said, “We are pleased with our strong top line performance in the quarter which was partially fueled by our ongoing efforts to mitigate the cost pressures that we have been experiencing in our business. We are also pleased with the progress we are making advancing our technology and infrastructure initiatives. As always, I want to thank our over 14,000 Team Partners who continue to Always Deliver for each other and our customers as we strive towards our vision of being universally recognized as the best service provider in the industry.

Segment Reporting Highlights

Core Laundry Operations

Revenues for the quarter increased 10.2% to $477.1 million.
Organic growth, which excludes the effect of acquisitions and fluctuations in the Canadian dollar, was 10.1%.
Operating margin decreased to 2.9% from 4.3%.

 

The costs incurred related to the Key Initiatives and Clean Uniform acquisition, discussed above, were recorded to the Core Laundry Operations' segment, and decreased the Core Laundry operating margin for the second quarters of fiscal 2023 and 2022 by 2.3% and 1.6%, respectively.

 

Excluding these costs, the segment's operating margin decreased primarily due to higher merchandise costs as a percentage of revenues as well as continued cost pressure from the inflationary environment, which were partially offset by lower healthcare and casualty claims expense as a percentage of revenues compared to prior year.

Specialty Garments

Revenues for the quarter were $42.1 million, an increase of 18.5%, which was driven by growth in the segment's cleanroom and North American nuclear operations.
Operating margin increased to 19.1% from 10.8% a year ago, primarily the result of the strong top line performance.

 

 

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 and cash equivalents and Short-term investments totaled $345.1 million as of February 25, 2023.
The Company had no long-term debt outstanding as of February 25, 2023.
The Company did not repurchase any shares of common stock in the second quarter of fiscal 2023. As of February 25, 2023, the Company had $63.6 million remaining under its current stock repurchase program.
Weighted average shares outstanding – Diluted for the second quarters of fiscal 2023 and fiscal 2022 were 18.8 million and 19.0 million, respectively.

 

Acquisition of Clean Uniform

Mr. Sintros continued, “I am happy to announce that on March 13th we successfully closed on our previously announced purchase of Clean Uniform. Our purchase of Clean is consistent with our focus on making long-term investments to strengthen our business. Due to the strong leadership and service reputation that Clean brings, as well as the complexities of where we are in our technology transformation, we will be strategic and patient in the integration of the two businesses to minimize the impact and risk on Clean’s most valuable assets: its employees and its customers. Currently, the Clean Uniform business is operating at an EBITDA margin of approximately 10%, however, we will seek to more than double that performance by the end of the third full year following the acquisition.”

Our current assumptions regarding the impact of the Clean acquisition on our operating results for the year, the actual results of which will be recorded to our Core Laundry Operations, are as follows:

An increase in revenues of $42.0 million.
A decrease in operating income of $0.5 million, which includes an assumption of purchase-related intangible amortization expense of $3.0 million.
Acquisition-related expenses of $4.0 million, which includes the $2.0 million expensed in the second quarter of fiscal 2023.

 

Financial Outlook

 

The Company now expects its revenues for fiscal 2023 to be between $2.210 billion and $2.220 billion. We further expect diluted earnings per share to be between $5.02 and $5.37. This outlook includes the estimated impact of the Clean acquisition, noted above, and further assumes:

 

Core Laundry Operations’ operating margin at the midpoint of the range of 5.2%.
An estimate of $40.0 million of costs directly attributable to our Key Initiatives as well as the $4.0 million of Clean acquisition-related expenses. These items combined to decrease the Core Laundry Operations' operating margin assumption by 2.2% and EPS by $1.76.
An effective tax rate of 25.0%.
No impact from any future share buybacks or unexpected significantly adverse economic developments.

 

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, 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,” “design,” “assumption,” “vision” 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 an economic recession or other adverse economic conditions, including, without limitation, as a result of continued high inflation rates or further increases in inflation or interest rates or extraordinary events or circumstances such as geopolitical conflicts like the conflict between Russia and Ukraine or 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, including Clean Uniform, and the performance of such 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 or the conflict between Russia and Ukraine, any loss of key management or other personnel, increased costs as a result of any changes in federal, state, international or other laws, rules and regulations or governmental interpretation of such laws, rules and regulations, uncertainties regarding, or adverse impacts from continued high price levels of natural gas, electricity, fuel and labor or increases in such costs, 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 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 or additional Securities and Exchange Commission, New York Stock Exchange and accounting or other rules, including, without limitation, recent rules proposed by the Securities and Exchange Commission regarding climate-related and cybersecurity-related disclosures, 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, our ability to successfully remediate the material weakness in internal control over financial reporting disclosed in our Annual Report on Form 10-K for the year ended August 27, 2022 and the other factors described under Part I, Item 1A. “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 27, 2022, Part II, Item 1A. “Risk Factors” and elsewhere in our subsequent 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 25, 2023

 

 

Thirteen weeks ended February 26, 2022

 

 

Twenty-six weeks ended February 25, 2023

 

 

Twenty-six weeks ended February 26, 2022

 

Revenues

 

$

542,691

 

 

$

486,696

 

 

$

1,084,489

 

 

$

972,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (1)

 

 

369,896

 

 

 

324,816

 

 

 

723,868

 

 

 

634,946

 

Selling and administrative expenses (1)

 

 

122,190

 

 

 

112,406

 

 

 

239,553

 

 

 

216,794

 

Depreciation and amortization

 

 

29,895

 

 

 

26,861

 

 

 

56,940

 

 

 

53,717

 

Total operating expenses

 

 

521,981

 

 

 

464,083

 

 

 

1,020,361

 

 

 

905,457

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

20,710

 

 

 

22,613

 

 

 

64,128

 

 

 

67,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

(3,031

)

 

 

(751

)

 

 

(5,800

)

 

 

(1,399

)

Other expense, net

 

 

114

 

 

 

594

 

 

 

905

 

 

 

1,330

 

Total other income, net

 

 

(2,917

)

 

 

(157

)

 

 

(4,895

)

 

 

(69

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

23,627

 

 

 

22,770

 

 

 

69,023

 

 

 

67,472

 

Provision for income taxes

 

 

5,817

 

 

 

4,319

 

 

 

17,256

 

 

 

15,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

17,810

 

 

$

18,451

 

 

$

51,767

 

 

$

52,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

0.99

 

 

$

1.02

 

 

$

2.88

 

 

$

2.88

 

Class B Common Stock

 

$

0.79

 

 

$

0.81

 

 

$

2.31

 

 

$

2.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

0.95

 

 

$

0.97

 

 

$

2.76

 

 

$

2.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

14,962

 

 

$

15,492

 

 

$

43,488

 

 

$

43,792

 

Class B Common Stock

 

$

2,848

 

 

$

2,959

 

 

$

8,279

 

 

$

8,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

17,810

 

 

$

18,451

 

 

$

51,767

 

 

$

52,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

15,087

 

 

 

15,210

 

 

 

15,084

 

 

 

15,225

 

Class B Common Stock

 

 

3,590

 

 

 

3,635

 

 

 

3,590

 

 

 

3,635

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

18,767

 

 

 

18,967

 

 

 

18,757

 

 

 

18,999

 

 

(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 25, 2023

 

 

August 27, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

244,098

 

 

$

376,399

 

Short-term investments

 

 

101,000

 

 

 

 

Receivables, net

 

 

276,560

 

 

 

249,198

 

Inventories

 

 

150,907

 

 

 

151,459

 

Rental merchandise in service

 

 

232,543

 

 

 

219,392

 

Prepaid taxes

 

 

12,601

 

 

 

25,523

 

Prepaid expenses and other current assets

 

 

49,571

 

 

 

41,921

 

 

 

 

 

 

 

 

Total current assets

 

 

1,067,280

 

 

 

1,063,892

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

685,182

 

 

 

665,119

 

Goodwill

 

 

461,050

 

 

 

457,259

 

Customer contracts and other intangible assets, net

 

 

82,967

 

 

 

84,973

 

Deferred income taxes

 

 

511

 

 

 

498

 

Operating lease right-of-use assets, net

 

 

48,543

 

 

 

50,050

 

Other assets

 

 

108,787

 

 

 

106,181

 

 

 

 

 

 

 

 

Total assets

 

$

2,454,320

 

 

$

2,427,972

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

80,556

 

 

$

82,131

 

Accrued liabilities

 

 

137,108

 

 

 

146,808

 

Accrued taxes

 

 

 

 

 

1,204

 

Operating lease liabilities, current

 

 

14,472

 

 

 

13,602

 

 

 

 

 

 

 

 

Total current liabilities

 

 

232,136

 

 

 

243,745

 

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Accrued liabilities

 

 

123,764

 

 

 

123,979

 

Accrued and deferred income taxes

 

 

107,697

 

 

 

106,307

 

Operating lease liabilities

 

 

35,635

 

 

 

38,070

 

 

 

 

 

 

 

 

Total liabilities

 

 

499,232

 

 

 

512,101

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common Stock

 

 

1,510

 

 

 

1,508

 

Class B Common Stock

 

 

359

 

 

 

359

 

Capital surplus

 

 

94,861

 

 

 

93,131

 

Retained earnings

 

 

1,885,788

 

 

 

1,845,163

 

Accumulated other comprehensive loss

 

 

(27,430

)

 

 

(24,290

)

 

 

 

 

 

 

 

Total shareholders’ equity

 

 

1,955,088

 

 

 

1,915,871

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,454,320

 

 

$

2,427,972

 

 

 

 


 

 

Detail of Operating Results

(Unaudited)

 

 

 

 

Thirteen weeks ended February 25, 2023

 

 

Thirteen weeks ended February 26, 2022

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

 

Operations

 

Garments

 

Aid

 

Total

 

 

Operations

 

Garments

 

Aid

 

Total

 

Revenues

 

$

477,050

 

$

42,127

 

$

23,514

 

$

542,691

 

 

$

433,056

 

$

35,538

 

$

18,102

 

$

486,696

 

Revenue Growth %

 

 

10.2

%

 

18.5

%

 

29.9

%

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss) (1), (2)

 

$

13,642

 

$

8,045

 

$

(977

)

$

20,710

 

 

$

18,745

 

$

3,850

 

$

18

 

$

22,613

 

Operating Margin

 

 

2.9

%

 

19.1

%

 

-4.2

%

 

3.8

%

 

 

4.3

%

 

10.8

%

 

0.1

%

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
The Company’s financial results for the second quarter of fiscal 2023 and 2022 included approximately $9.1 million and $6.7 million, respectively, of costs directly attributable to its Key Initiatives. In addition, the Company incurred costs related to the acquisition of Clean Uniform during the second quarter of fiscal 2023 of approximately $2.0 million. These costs were recorded to the Core Laundry Operations.
(2)
The Key Initiative and acquisition-related costs resulted in a decrease in Core Laundry Operations' operating margin for the second quarter of fiscal 2023 and 2022 of 2.3% and 1.6%, respectively.

 

 

 

 

 

Twenty-six weeks ended February 25, 2023

 

 

Twenty-six weeks ended February 26, 2022

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

 

Operations

 

Garments

 

Aid

 

Total

 

 

Operations

 

Garments

 

Aid

 

Total

 

Revenues

 

$

954,448

 

$

86,206

 

$

43,835

 

$

1,084,489

 

 

$

861,902

 

$

75,022

 

$

35,936

 

$

972,860

 

Revenue Growth %

 

 

10.7

%

 

14.9

%

 

22.0

%

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss) (3), (4)

 

$

47,473

 

$

18,228

 

$

(1,573

)

$

64,128

 

 

$

55,252

 

$

12,479

 

$

(328

)

$

67,403

 

Operating Margin

 

 

5.0

%

 

21.1

%

 

-3.6

%

 

5.9

%

 

 

6.4

%

 

16.6

%

 

-0.9

%

 

6.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)
The Company's financial results for the first half of fiscal 2023 and 2022 included approximately $19.1 million and $12.7 million, respectively, of costs directly attributable to its Key Initiatives. In addition, the Company incurred costs related to the acquisition of Clean Uniform during the first half of fiscal 2023 of approximately $2.0 million. These costs were recorded to the Core Laundry Operations.
(4)
The Key Initiative and acquisition-related costs resulted in a decrease in Core Laundry Operations' operating margin for the first half of fiscal 2023 and 2022 of 2.2% and 1.5%, respectively.

 

 


 

 


 

 

Consolidated Statements of Cash Flows

(Unaudited)

 

(In thousands)

 

Twenty-six weeks ended February 25, 2023

 

 

Twenty-six weeks ended February 26, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

51,767

 

 

$

52,156

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

56,940

 

 

 

53,717

 

Share-based compensation

 

 

4,533

 

 

 

4,961

 

Accretion on environmental contingencies

 

 

518

 

 

 

298

 

Accretion on asset retirement obligations

 

 

458

 

 

 

491

 

Deferred income taxes

 

 

1,080

 

 

 

1,733

 

Other

 

 

119

 

 

 

76

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Receivables, less reserves

 

 

(27,636

)

 

 

(27,855

)

Inventories

 

 

683

 

 

 

(17,189

)

Rental merchandise in service

 

 

(13,592

)

 

 

(13,317

)

Prepaid expenses and other current assets and Other assets

 

 

(13,516

)

 

 

(3,926

)

Accounts payable

 

 

(900

)

 

 

5,357

 

Accrued liabilities

 

 

(8,015

)

 

 

(16,928

)

Prepaid and accrued income taxes

 

 

11,730

 

 

 

5,319

 

Net cash provided by operating activities

 

 

64,169

 

 

 

44,893

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of businesses, net of cash acquired

 

 

(7,059

)

 

 

(42,325

)

Capital expenditures, including capitalization of software costs

 

 

(74,847

)

 

 

(60,178

)

Purchases of investments

 

 

(107,000

)

 

 

 

Maturities of investments

 

 

6,000

 

 

 

 

Proceeds from sale of assets

 

 

345

 

 

 

27

 

Net cash used in investing activities

 

 

(182,561

)

 

 

(102,476

)

 

 

 

 

 

 

 

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

 

 

(2,802

)

 

 

(3,803

)

Repurchase of Common Stock

 

 

 

 

 

(14,766

)

Payment of cash dividends

 

 

(10,954

)

 

 

(9,976

)

Net cash used in financing activities

 

 

(13,753

)

 

 

(28,542

)

 

 

 

 

 

 

 

Effect of exchange rate changes

 

 

(156

)

 

 

(856

)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(132,301

)

 

 

(86,981

)

Cash and cash equivalents at beginning of period

 

 

376,399

 

 

 

512,868

 

Cash and cash equivalents at end of period

 

$

244,098

 

 

$

425,887