8-K
false000071795400007179542023-06-282023-06-28

 

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): June 28, 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 June 28, 2023, UniFirst Corporation (the “Company”) issued a press release (“Press Release”) announcing financial results for the third quarter of fiscal 2023, which ended on May 27, 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 June 28, 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: June 28, 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 THIRD QUARTER OF FISCAL 2023

Wilmington, MA – June 28, 2023 – UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or “we”) today reported results for its third quarter ended May 27, 2023 as compared to the corresponding period in the prior fiscal year:

Q3 2023 Financial Highlights

Consolidated revenues increased 12.7% to $576.7 million.
Operating income was $33.4 million, a decrease of 0.9%.
The quarterly tax rate increased to 27.2% compared to 25.4% in the prior year.
Net income decreased to $24.3 million from $25.1 million in the prior year, or 3.2%.
Diluted earnings per share decreased to $1.29 from $1.33 in the prior year, or 3.0%.
EBITDA increased to $64.0 million compared to $60.3 million in the prior year, or 6.1%.

 

The Company's financial results for the third quarter of fiscal 2023 and 2022 included approximately $8.4 million and $11.4 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 third quarter of fiscal 2023 of approximately $0.7 million. The effect of these items on the third quarter of fiscal 2023 and 2022 combined to decrease:

Operating income and EBITDA by $9.1 million and $11.4 million, respectively.
Net income by $6.8 million and $8.4 million, respectively.
EPS by $0.37 and $0.44, respectively.

 

Steven Sintros, UniFirst President and Chief Executive Officer, said, “We are pleased with our strong top line performance in the quarter, but continue to be focused as a Company on mitigating the cost pressures impacting our operations. The early days of our recently closed acquisition of Clean Uniform have been very constructive with initial efforts being focused primarily on retaining Clean’s most important assets its people and its customers. We continue to be excited about the strength and quality of the Clean business and what we continue to believe the combined companies will be able to achieve in the markets we serve together. 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 11.5% to $501.7 million.
Organic growth, which excludes the effect of acquisitions and fluctuations in the Canadian dollar, was 7.8%.
Operating margin decreased to 4.2% from 5.9%.
Core Laundry Operations' EBITDA margin decreased to 9.9% from 11.4%.

 

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 Operations' operating and EBITDA margin for the third quarters of fiscal 2023 and 2022 by 1.8% and 2.5%, respectively.

 

The segment's operating and EBITDA margin were also impacted by approximately $5.3 million of additional expense compared to prior year related to high healthcare claims and costs incurred related to a legal matter as well as higher merchandise and other operating costs as a percentage of revenues which are being impacted by the inflationary environment. These increases were partially offset by lower energy costs during the quarter compared to prior year. The preliminary purchase accounting for the recent Clean Uniform acquisition further impacted the segment’s operating margin, most notably in the form of elevated non-cash intangibles amortization.


 

 

Specialty Garments

Revenues for the quarter were $49.4 million, an increase of 19.9%, which was driven by growth in the segment's cleanroom and North American nuclear operations.
Operating margin increased to 25.2% from 17.4% a year ago, primarily the result of the strong top line performance.
Specialty Garments' EBITDA margin increased to 27.1% from 19.9%.
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 $69.3 million as of May 27, 2023.
The Company had no long-term debt outstanding as of May 27, 2023.
The Company did not repurchase any shares of common stock in the third quarter of fiscal 2023. As of May 27, 2023, the Company had $63.6 million remaining under its current stock repurchase program.
Weighted average shares outstanding – Diluted for the third quarter of fiscal 2023 and fiscal 2022 were 18.7 million and 18.9 million, respectively.

 

Financial Outlook

 

The Company now expects its revenues for fiscal 2023 to be between $2.220 billion and $2.230 billion, primarily as a result of the strong top-line performance in the Specialty Garments' business. We continue to expect diluted earnings per share to be between $5.02 and $5.37, which currently reflects:

 

Core Laundry Operations’ operating and EBITDA margin at the midpoint of the range of 4.7% and 10.5%, respectively.
The impact of strong profitability in the Specialty Garments’ business in the current quarter, as well as improved expectations for the remainder of the year.
An estimate of $37.0 million of costs directly attributable to our Key Initiatives as well as $3.0 million of Clean acquisition-related expenses, which combined to decrease the Core Laundry Operations' operating and EBITDA margin assumptions by 2.1% and EPS by $1.60.
An effective tax rate of 25.75%.
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, facility service products, as well as first aid and safety supplies and services. Together with its subsidiaries, the Company also manages specialized garment programs for the cleanroom and nuclear industries. In addition to partnering with leading brands, UniFirst manufactures its own branded workwear, protective clothing, and floorcare products at its five Company-owned ISO-9001-certified manufacturing facilities. With more than 270 service locations, over 300,000 customer locations, and 14,000-plus employee Team Partners, the Company outfits more than 2 million workers every day. For more information, contact UniFirst at 888.296.2740 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 acquisitions 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)

 

 

Thirteen weeks ended

 

 

Thirty-nine weeks ended

 

(In thousands, except per share data)

 

May 27, 2023

 

 

May 28, 2022

 

 

May 27, 2023

 

 

May 28, 2022

 

Revenues

 

$

576,668

 

 

$

511,548

 

 

$

1,661,157

 

 

$

1,484,408

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (1)

 

 

379,419

 

 

 

334,633

 

 

 

1,103,287

 

 

 

969,579

 

Selling and administrative expenses (1)

 

 

132,677

 

 

 

116,191

 

 

 

372,230

 

 

 

332,985

 

Depreciation and amortization

 

 

31,175

 

 

 

27,027

 

 

 

88,115

 

 

 

80,744

 

Total operating expenses

 

 

543,271

 

 

 

477,851

 

 

 

1,563,632

 

 

 

1,383,308

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

33,397

 

 

 

33,697

 

 

 

97,525

 

 

 

101,100

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

(553

)

 

 

(340

)

 

 

(6,353

)

 

 

(1,739

)

Other expense, net

 

 

621

 

 

 

431

 

 

 

1,526

 

 

 

1,761

 

Total other expense (income), net

 

 

68

 

 

 

91

 

 

 

(4,827

)

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

33,329

 

 

 

33,606

 

 

 

102,352

 

 

 

101,078

 

Provision for income taxes

 

 

9,053

 

 

 

8,539

 

 

 

26,309

 

 

 

23,855

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

24,276

 

 

$

25,067

 

 

$

76,043

 

 

$

77,223

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

1.35

 

 

$

1.39

 

 

$

4.23

 

 

$

4.26

 

Class B Common Stock

 

$

1.08

 

 

$

1.11

 

 

$

3.39

 

 

$

3.41

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per share – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

1.29

 

 

$

1.33

 

 

$

4.06

 

 

$

4.07

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

20,394

 

 

$

21,037

 

 

$

63,882

 

 

$

64,835

 

Class B Common Stock

 

$

3,882

 

 

$

4,030

 

 

$

12,161

 

 

$

12,388

 

 

 

 

 

 

 

 

 

 

 

 

 

Income allocated to – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

$

24,276

 

 

$

25,067

 

 

$

76,043

 

 

$

77,223

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

15,087

 

 

 

15,170

 

 

 

15,084

 

 

 

15,211

 

Class B Common Stock

 

 

3,590

 

 

 

3,632

 

 

 

3,590

 

 

 

3,632

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

18,748

 

 

 

18,875

 

 

 

18,751

 

 

 

18,958

 

 

(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)

 

May 27, 2023

 

 

August 27, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,303

 

 

$

376,399

 

Short-term investments

 

 

10,012

 

 

 

 

Receivables, net

 

 

279,485

 

 

 

249,198

 

Inventories

 

 

150,253

 

 

 

151,459

 

Rental merchandise in service

 

 

246,998

 

 

 

219,392

 

Prepaid taxes

 

 

17,700

 

 

 

25,523

 

Prepaid expenses and other current assets

 

 

49,254

 

 

 

41,921

 

 

 

 

 

 

 

Total current assets

 

 

813,005

 

 

 

1,063,892

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

739,607

 

 

 

665,119

 

Goodwill

 

 

648,404

 

 

 

457,259

 

Customer contracts and other intangible assets, net

 

 

151,329

 

 

 

84,973

 

Deferred income taxes

 

 

528

 

 

 

498

 

Operating lease right-of-use assets, net

 

 

62,744

 

 

 

50,050

 

Other assets

 

 

109,886

 

 

 

106,181

 

 

 

 

 

 

 

Total assets

 

$

2,525,503

 

 

$

2,427,972

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

89,496

 

 

$

82,131

 

Accrued liabilities

 

 

150,921

 

 

 

146,808

 

Accrued taxes

 

 

 

 

 

1,204

 

Operating lease liabilities, current

 

 

18,515

 

 

 

13,602

 

 

 

 

 

 

 

Total current liabilities

 

 

258,932

 

 

 

243,745

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Accrued liabilities

 

 

124,434

 

 

 

123,979

 

Accrued and deferred income taxes

 

 

119,398

 

 

 

106,307

 

Operating lease liabilities

 

 

45,888

 

 

 

38,070

 

 

 

 

 

 

 

Total liabilities

 

 

548,652

 

 

 

512,101

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common Stock

 

 

1,510

 

 

 

1,508

 

Class B Common Stock

 

 

359

 

 

 

359

 

Capital surplus

 

 

97,154

 

 

 

93,131

 

Retained earnings

 

 

1,904,490

 

 

 

1,845,163

 

Accumulated other comprehensive loss

 

 

(26,662

)

 

 

(24,290

)

 

 

 

 

 

 

Total shareholders’ equity

 

 

1,976,851

 

 

 

1,915,871

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,525,503

 

 

$

2,427,972

 

 

 

 


 

 

Detail of Operating Results

(Unaudited)

 

 

 

 

Thirteen weeks ended May 27, 2023

 

 

Thirteen weeks ended May 28, 2022

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

 

Operations

 

Garments

 

Aid

 

Total

 

 

Operations

 

Garments

 

Aid

 

Total

 

Revenues

 

$

501,719

 

$

49,407

 

$

25,542

 

$

576,668

 

 

$

450,039

 

$

41,198

 

$

20,311

 

$

511,548

 

Revenue Growth %

 

 

11.5

%

 

19.9

%

 

25.8

%

 

12.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

20,995

 

$

12,455

 

$

(53

)

$

33,397

 

 

$

26,431

 

$

7,161

 

$

105

 

$

33,697

 

Operating Margin

 

 

4.2

%

 

25.2

%

 

-0.2

%

 

5.8

%

 

 

5.9

%

 

17.4

%

 

0.5

%

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (1), (2)

 

$

49,812

 

$

13,400

 

$

739

 

$

63,951

 

 

$

51,292

 

$

8,198

 

$

802

 

$

60,292

 

EBITDA Margin

 

 

9.9

%

 

27.1

%

 

2.9

%

 

11.1

%

 

 

11.4

%

 

19.9

%

 

3.9

%

 

11.8

%

 

(1)
The Company’s financial results for the third quarter of fiscal 2023 and 2022 included approximately $8.4 million and $11.4 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 third quarter of fiscal 2023 of approximately $0.7 million. These costs were recorded to the Core Laundry Operations segment.
(2)
The Key Initiative and acquisition-related costs resulted in a decrease in Core Laundry Operations' operating and EBITDA margin for the third quarter of fiscal 2023 and 2022 of 1.8% and 2.5%, respectively.

 

 

 

 

 

 

Thirty-nine weeks ended May 27, 2023

 

 

Thirty-nine weeks ended May 28, 2022

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

Core Laundry

 

Specialty

 

First

 

 

 

 

 

Operations

 

Garments

 

Aid

 

Total

 

 

Operations

 

Garments

 

Aid

 

Total

 

Revenues

 

$

1,456,167

 

$

135,613

 

$

69,377

 

$

1,661,157

 

 

$

1,311,941

 

$

116,220

 

$

56,247

 

$

1,484,408

 

Revenue Growth %

 

 

11.0

%

 

16.7

%

 

23.3

%

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

68,468

 

$

30,683

 

$

(1,626

)

$

97,525

 

 

$

81,683

 

$

19,640

 

$

(223

)

$

101,100

 

Operating Margin

 

 

4.7

%

 

22.6

%

 

-2.3

%

 

5.9

%

 

 

6.2

%

 

16.9

%

 

-0.4

%

 

6.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (3), (4)

 

$

149,754

 

$

33,668

 

$

692

 

$

184,114

 

 

$

155,714

 

$

22,738

 

$

1,631

 

$

180,083

 

EBITDA Margin

 

 

10.3

%

 

24.8

%

 

1.0

%

 

11.1

%

 

 

11.9

%

 

19.6

%

 

2.9

%

 

12.1

%

 

(3)
The Company's financial results for the first nine months of fiscal 2023 and 2022 included approximately $27.5 million and $24.1 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 nine months of fiscal 2023 of approximately $2.7 million. These costs were recorded to the Core Laundry Operations segment.
(4)
The Key Initiative and acquisition-related costs resulted in a decrease in Core Laundry Operations' operating and EBITDA margin for the first nine months of fiscal 2023 and 2022 of 2.1% and 1.8%, respectively.

 

 

 


 

 


 

 

Consolidated Statements of Cash Flows

(Unaudited)

 

(In thousands)

 

Thirty-nine weeks ended May 27, 2023

 

 

Thirty-nine weeks ended May 28, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

76,043

 

 

$

77,223

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

88,115

 

 

 

80,744

 

Share-based compensation

 

 

6,874

 

 

 

7,114

 

Accretion on environmental contingencies

 

 

777

 

 

 

447

 

Accretion on asset retirement obligations

 

 

690

 

 

 

732

 

Deferred income taxes

 

 

11,709

 

 

 

1,823

 

Other

 

 

16

 

 

 

20

 

Changes in assets and liabilities, net of acquisitions:

 

 

 

 

 

 

Receivables, less reserves

 

 

(22,148

)

 

 

(31,998

)

Inventories

 

 

2,110

 

 

 

(8,258

)

Rental merchandise in service

 

 

(19,544

)

 

 

(25,788

)

Prepaid expenses and other current assets and Other assets

 

 

67

 

 

 

3,603

 

Accounts payable

 

 

3,492

 

 

 

850

 

Accrued liabilities

 

 

(13,152

)

 

 

(21,172

)

Prepaid and accrued income taxes

 

 

7,758

 

 

 

3,498

 

Net cash provided by operating activities

 

 

142,807

 

 

 

88,838

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisition of businesses, net of cash acquired

 

 

(306,192

)

 

 

(42,680

)

Capital expenditures, including capitalization of software costs

 

 

(124,067

)

 

 

(97,259

)

Purchases of investments

 

 

(117,012

)

 

 

 

Maturities of investments

 

 

107,000

 

 

 

 

Proceeds from sale of assets

 

 

517

 

 

 

133

 

Net cash used in investing activities

 

 

(439,754

)

 

 

(139,806

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Payment of deferred financing costs

 

 

(851

)

 

 

(5

)

Borrowings under line of credit

 

 

80,000

 

 

 

 

Repayments under line of credit

 

 

(80,000

)

 

 

 

Proceeds from exercise of share-based awards

 

 

3

 

 

 

3

 

Taxes withheld and paid related to net share settlement of equity awards

 

 

(2,850

)

 

 

(3,898

)

Repurchase of Common Stock

 

 

 

 

 

(30,453

)

Payment of cash dividends

 

 

(16,527

)

 

 

(15,407

)

Net cash used in financing activities

 

 

(20,225

)

 

 

(49,760

)

 

 

 

 

 

 

Effect of exchange rate changes

 

 

76

 

 

 

(1,545

)

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(317,096

)

 

 

(102,273

)

Cash and cash equivalents at beginning of period

 

 

376,399

 

 

 

512,868

 

Cash and cash equivalents at end of period

 

$

59,303

 

 

$

410,595

 

 

 

 


 

 

 

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 the Company’s consolidated financial results in this press release, the Company also presents EBITDA and EBITDA margin, which are non-GAAP financial measures. The Company defines EBITDA as net income before interest, income taxes, depreciation and amortization. EBITDA margin is defined as EBITDA for a period divided by revenue for the same period.

 

The Company believes these non-GAAP financial measures provide useful supplemental information regarding the performance of the Company and its segments to both management and investors. These non-GAAP financial measures exclude certain items that may impact the comparability of the Company’s results. In addition, by excluding certain items, these non-GAAP financial measures enable management and investors to further evaluate the underlying operating performance of the Company.

 

Supplemental reconciliations of the Company’s consolidated net income on a GAAP basis to EBITDA and net income margin on a GAAP basis to EBITDA margin are presented in the following table. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures, which are provided below. EBITDA and EBITDA margin should be considered in addition to, and not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

 

The Company does not allocate its provision for income taxes to its business segments and as a result, presents it in a separate column in the following tables:

 

 

Thirteen weeks ended May 27, 2023

 

 

 

Core Laundry

 

 

Specialty

 

 

First

 

 

 

 

 

 

 

(In thousands, except percentages)

 

Operations

 

 

Garments

 

 

Aid

 

 

Other

 

 

Total

 

Revenue

 

$

501,719

 

 

$

49,407

 

 

$

25,542

 

 

$

 

 

$

576,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

20,927

 

 

$

12,455

 

 

$

(53

)

 

$

(9,053

)

 

$

24,276

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

9,053

 

 

 

9,053

 

Interest income, net

 

 

(553

)

 

 

 

 

 

 

 

 

 

 

 

(553

)

Depreciation and amortization

 

 

29,438

 

 

 

945

 

 

 

792

 

 

 

 

 

 

31,175

 

EBITDA

 

$

49,812

 

 

$

13,400

 

 

$

739

 

 

$

 

 

$

63,951

 

EBITDA Margin

 

 

9.9

%

 

 

27.1

%

 

 

2.9

%

 

 

 

 

 

11.1

%

 

 

Thirteen weeks ended May 28, 2022

 

 

 

Core Laundry

 

 

Specialty

 

 

First

 

 

 

 

 

 

 

(In thousands, except percentages)

 

Operations

 

 

Garments

 

 

Aid

 

 

Other

 

 

Total

 

Revenue

 

$

450,039

 

 

$

41,198

 

 

$

20,311

 

 

$

 

 

$

511,548

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

26,339

 

 

$

7,161

 

 

$

106

 

 

$

(8,539

)

 

$

25,067

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

8,539

 

 

 

8,539

 

Interest income, net

 

 

(340

)

 

 

 

 

 

 

 

 

 

 

 

(340

)

Depreciation and amortization

 

 

25,293

 

 

 

1,037

 

 

 

697

 

 

 

 

 

 

27,027

 

EBITDA

 

$

51,292

 

 

$

8,198

 

 

$

802

 

 

$

 

 

$

60,292

 

EBITDA Margin

 

 

11.4

%

 

 

19.9

%

 

 

3.9

%

 

 

 

 

 

11.8

%

 

 

Thirty-nine weeks ended May 27, 2023

 

 

 

Core Laundry

 

 

Specialty

 

 

First

 

 

 

 

 

 

 

(In thousands, except percentages)

 

Operations

 

 

Garments

 

 

Aid

 

 

Other

 

 

Total

 

Revenue

 

$

1,456,167

 

 

$

135,613

 

 

$

69,377

 

 

$

 

 

$

1,661,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

73,295

 

 

$

30,683

 

 

$

(1,626

)

 

$

(26,309

)

 

$

76,043

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

26,309

 

 

 

26,309

 

Interest income, net

 

 

(6,353

)

 

 

 

 

 

 

 

 

 

 

 

(6,353

)

Depreciation and amortization

 

 

82,812

 

 

 

2,985

 

 

 

2,318

 

 

 

 

 

 

88,115

 

EBITDA

 

$

149,754

 

 

$

33,668

 

 

$

692

 

 

$

 

 

$

184,114

 

EBITDA Margin

 

 

10.3

%

 

 

24.8

%

 

 

1.0

%

 

 

 

 

 

11.1

%

 


 

 

 

Thirty-nine weeks ended May 28, 2022

 

 

 

Core Laundry

 

 

Specialty

 

 

First

 

 

 

 

 

 

 

(In thousands, except percentages)

 

Operations

 

 

Garments

 

 

Aid

 

 

Other

 

 

Total

 

Revenue

 

$

1,311,941

 

 

$

116,220

 

 

$

56,247

 

 

$

 

 

$

1,484,408

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

81,661

 

 

$

19,640

 

 

$

(223

)

 

$

(23,855

)

 

$

77,223

 

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

23,855

 

 

 

23,855

 

Interest income, net

 

 

(1,739

)

 

 

 

 

 

 

 

 

 

 

 

(1,739

)

Depreciation and amortization

 

 

75,792

 

 

 

3,098

 

 

 

1,854

 

 

 

 

 

 

80,744

 

EBITDA

 

$

155,714

 

 

$

22,738

 

 

$

1,631

 

 

$

 

 

$

180,083

 

EBITDA Margin

 

 

11.9

%

 

 

19.6

%

 

 

2.9

%

 

 

 

 

 

12.1

%