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10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 25, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-08504

UNIFIRST CORPORATION

(Exact name of Registrant as Specified in Its Charter)


Massachusetts	04-2103460
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

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

(978) 658-8888

(Registrant’s Telephone Number, Including Area Code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller Reporting Company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

The number of outstanding shares of UniFirst Corporation Common Stock and Class B Common Stock at April 3, 2023 were 15,103,752 and 3,590,295, respectively.

UniFirst Corporation

Quarterly Report on Form 10-Q

For the Quarter ended February 25, 2023

Table of Contents


Part I – FINANCIAL INFORMATION	3

Item 1 – Financial Statements (unaudited)	3

Consolidated Statements of Income for the Thirteen and Twenty-six Weeks ended February 25, 2023 and February 26, 2022	3

Consolidated Statements of Comprehensive Income for the Thirteen and Twenty-six Weeks ended February 25, 2023 and February 26, 2022	4

Consolidated Balance Sheets as of February 25, 2023 and August 27, 2022	5

Consolidated Statements of Shareholders’ Equity for the Thirteen and Twenty-six Weeks ended February 25, 2023 and February 26, 2022	6

Consolidated Statements of Cash Flows for the Twenty-six Weeks ended February 25, 2023 and February 26, 2022	8

Notes to Consolidated Financial Statements	9

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3 – Quantitative and Qualitative Disclosures About Market Risk	34

Item 4 – Controls and Procedures	35

Part II – OTHER INFORMATION	37

Item 1 – Legal Proceedings	37

Item 1A – Risk Factors	37

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3 – Defaults Upon Senior Securities	37

Item 4 – Mine Safety Disclosures	37

Item 5 – Other Information	37

Item 6 – Exhibits	38

Signatures	39

Certifications
Ex-31.1 Section 302 Certification of CEO
Ex-31.2 Section 302 Certification of CFO
Ex-32.1 Section 906 Certification of CEO
Ex-32.2 Section 906 Certification of CFO

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Statements of Income

UniFirst Corporation and Subsidiaries

(Unaudited)


	Thirteen weeks ended						Twenty-six weeks ended
(In thousands, except per share data)	February 25, 2023			February 26, 2022			February 25, 2023			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.

The accompanying notes are an integral part of these

Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

UniFirst Corporation and Subsidiaries

(Unaudited)


	Thirteen weeks ended						Twenty-six weeks ended
(In thousands)	February 25, 2023			February 26, 2022			February 25, 2023			February 26, 2022
Net income	$	17,810		$	18,451		$	51,767		$	52,156
Other comprehensive (loss) income:
Foreign currency translation adjustments		(1,473	)		1,149			(3,251	)		(1,650	)
Change in fair value of derivatives, net of income taxes		84			(40	)		156			45
Derivative financial instruments reclassified to earnings		(25	)		(15	)		(45	)		(53	)
Other comprehensive (loss) income		(1,414	)		1,094			(3,140	)		(1,658	)
Comprehensive income	$	16,396		$	19,545		$	48,627		$	50,498

The accompanying notes are an integral part of these

Consolidated Financial Statements.

Consolidated Balance Sheets

UniFirst Corporation and Subsidiaries

(Unaudited)


(In thousands, except share and par value data)	February 25, 2023			August 27, 2022
Assets
Current assets:
Cash and cash equivalents	$	244,098		$	376,399
Short-term investments		101,000			—
Receivables, less reserves of $19,751 and $15,605		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, net		46,358			49,053
Other intangible assets, net		36,609			35,920
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

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
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred Stock, $1.00 par value; 2,000,000 shares authorized; no shares issued and outstanding		—			—
Common Stock, $0.10 par value; 30,000,000 shares authorized; 15,103,416 and 15,075,425 shares issued and outstanding as of February 25, 2023 and August 27, 2022, respectively		1,510			1,508
Class B Common Stock, $0.10 par value; 20,000,000 shares authorized; 3,590,295 and 3,590,295 shares issued and outstanding as of February 25, 2023 and August 27, 2022, respectively		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

The accompanying notes are an integral part of these

Consolidated Financial Statements

Consolidated Statements of Shareholders’ Equity

UniFirst Corporation and Subsidiaries

(Unaudited)


(In thousands)	Common Shares			Class B Common Shares			Common Stock			Class B Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total Equity
Balance, August 28, 2021		15,236			3,643		$	1,524		$	364		$	89,257		$	1,806,643		$	(24,836	)	$	1,872,952
Net income		—			—			—			—			—			33,705			—			33,705
Change in fair value of derivatives		—			—			—			—			—			—			47			47
Foreign currency translation		—			—			—			—			—			—			(2,799	)		(2,799	)
Dividends declared Common Stock ($0.25 per share)		—			—			—			—			—			(4,566	)		—			(4,566	)
Dividends declared Class B Common Stock ($0.20 per share)		—			—			—			—			—			(874	)		—			(874	)
Repurchase of Common Stock		(23	)		—			(2	)		—			(124	)		(4,645	)		—			(4,771	)
Share-based compensation, net (1)		—			—			—			—			1,207			—			—			1,207
Share-based awards exercised, net (2)		7			—			—			—			—			—			—			—
Balance, November 27, 2021		15,220			3,643		$	1,522		$	364		$	90,340		$	1,830,263		$	(27,588	)	$	1,894,901
Net income		—			—			—			—			—			18,451			—			18,451
Change in fair value of derivatives		—			—			—			—			—			—			(55	)		(55	)
Foreign currency translation		—			—			—			—			—			—			1,149			1,149
Dividends declared Common Stock ($0.25 per share)		—			—			—			—			—			(4,561	)		—			(4,561	)
Dividends declared Class B Common Stock ($0.20 per share)		—			—			—			—			—			(870	)		—			(870	)
Repurchase of Common Stock		(53	)		—			(5	)		—			(286	)		(9,704	)		—			(9,995	)
Share-based compensation, net (1)		—			—			—			—			(48	)		—			—			(48	)
Share-based awards exercised, net (2)		25			—			3			—			—			—			—			3
Shares converted		17			(17	)		1			(1	)		—