Unifirst Announces Financial Results for the First Quarter of Fiscal 2023

WILMINGTON, Mass., Jan. 05, 2023 (GLOBE NEWSWIRE) — UniFirst Corporation (NYSE: UNF) (the “Company,” “UniFirst” or “we”) today reported results for its first quarter ended November 27, 2023 as compared to the corresponding period in the prior fiscal year:

Q1 2023 Financial Highlights

• Consolidated revenues for the first quarter increased 8.8% to $486.2 million.
• Operating income was $44.8 million, a decrease of 20.1%.
• The quarterly tax rate decreased to 24.6% compared to 25.0% in the prior year.
• Net income decreased to $33.7 million, or 19.6%.
• Diluted earnings per share decreased to $1.77 from $2.20 in the prior year, or 19.5%.

The Company’s financial results for the first quarter of fiscal 2023 included $5.9 million of costs directly attributable to its CRM, ERP and branding initiatives (the “Key Initiatives”). Excluding these Key Initiative costs:

• Adjusted operating income was $50.7 million.
• Adjusted net income was $38.1 million.
• Adjusted diluted earnings per share was $2.00.

Steven Sintros, UniFirst President and Chief Executive Officer, said, “Overall, we are pleased with our results for the first quarter of fiscal 2023. Our team continues to focus on providing industry leading services to our customers as well as selling prospective customers on the value that UniFirst can bring to their businesses. I want to thank our thousands of Team Partners who despite a challenging operating environment continue to deliver every day for each other and our customers.”

Segment Reporting Highlights

Core Laundry Operations

• Revenues for the quarter increased 9.1% to $428.8 million.
• Organic growth, which excludes the effect of acquisitions and fluctuations in the Canadian dollar, was 8.6%
• Operating margin decreased to 8.5% from 12.4%.

The costs incurred during the quarter related to the Key Initiatives, discussed above, were recorded to the Core Laundry Operations’ segment. Excluding these Key Initiative costs:

• Core Laundry adjusted operating margin was 9.9%. The decrease from prior year’s operating margin was primarily due to higher merchandise costs, energy and travel costs as a percentage of revenues as well as increased costs to hire and retain employees due to the challenging employment environment.

Specialty Garments

• Revenues for the quarter were $39.5 million, an increase of 3.5%. This increase was driven by growth in the cleanroom operations and European nuclear operations.
• Operating margin increased to 21.9% from 18.8% a year ago, primarily driven by lower 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 $478.1 million as of November 27, 2023.
• The Company had no long-term debt outstanding as of November 27, 2023.
• Under its previously announced stock repurchase authorization, the Company repurchased 22,750 shares of common stock for $4.8 million in the first quarter of fiscal 2023. As of November 27, 2023, the Company has $97.3 million remaining under its current authorization.
• Weighted average shares outstanding – Diluted for each of the first quarters of fiscal 2023 and fiscal 2023 were 19.0 million.

Financial Outlook

Mr. Sintros continued, “We now expect revenues for fiscal 2023 to be between $1.940 billion and $1.955 billion. This revised top-line guidance includes the impact of two small acquisitions that closed subsequent to the end of our fiscal Q1 that we anticipate will add approximately $10.0 million to our fiscal 2023 revenues. We further expect diluted earnings per share to be between $5.50 and $5.80. This earnings per share guidance assumes an effective tax rate of 24.0% and continues to include an estimate of $38.0 million of costs directly attributable to our Key Initiatives that will be expensed in fiscal 2023. Please also note the following regarding our guidance:

• Core Laundry Operations’ adjusted operating margin at the midpoint of the range is 9.2%, which reflects continued pressure from costs that had trended lower during the pandemic and the current inflationary environment.
• Our assumed adjusted tax rate for fiscal 2023 is 24.25%
• Adjusted diluted earnings per share is expected to be between $7.00 and $7.30.
• Guidance does not include the impact of any future share buybacks or potential tax reform.
• Guidance assumes a stable economic environment with no pandemic-related headwinds, including government COVID-19 mandates.”

See “Reconciliation of GAAP to Non-GAAP Financial Measures” below.

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,” 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 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 Securities and Exchange Commission, New York Stock Exchange and accounting rules, strikes and unemployment levels, our efforts to evaluate and potentially reduce internal costs, economic and other developments associated with the war on terrorism and its impact on the economy, the impact of foreign trade policies and tariffs or other impositions on imported goods on our business, results of operations and financial condition, general economic conditions, our ability to successfully implement our business strategies and processes, including our capital allocation strategies and the other factors described under “Part I, Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 28, 2023, “Part II, Item 1.A. 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.

Investor Relations Contact
Shane O’Connor, Executive Vice President & CFO
UniFirst Corporation        
978-658-8888
[email protected]

Consolidated Statements of Income
(Unaudited)

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

Condensed Consolidated Balance Sheets
(Unaudited)

Detail of Operating Results
(Unaudited)

Revenues

Operating Income

Operating Margin

Consolidated Statements of Cash Flows
(Unaudited)

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 consolidated operating income, consolidated net income and diluted earnings per share (“EPS”) on a GAAP basis to adjusted operating income, adjusted net income and adjusted diluted EPS on a non-GAAP basis is presented in the following table. In addition, 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 these non-GAAP measures to their most directly comparable GAAP financial measures, which are provided below.

Supplemental reconciliations of the Company’s fiscal 2023 financial outlook for consolidated operating income, consolidated net income and diluted earnings per share on a GAAP basis to adjusted operating income, adjusted net income and adjusted diluted EPS on a non-GAAP basis are presented in the following tables. In addition, a supplemental reconciliation of the fiscal 2023 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 are provided below. The Company’s outlook contains forward-looking statements and information. Actual results may differ materially. See “Forward-Looking Statements Disclosure.”