8-K

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): October 21, 2020

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 October 21, 2020, UniFirst Corporation (the “Company”) issued a press release (“Press Release”) announcing financial results for the fourth quarter of fiscal 2020, which ended on August 29, 2020. 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 October 21, 2020
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: October 21, 2020	By:	/s/ Steven S. Sintros
		Steven S. Sintros
		President and Chief Executive Officer
	By:	/s/ Shane O’Connor
		Shane O’Connor
		Senior Vice President and Chief Financial Officer

EX-99

Exhibit 99

Investor Relations Contact

Shane O’Connor, Senior Vice President & CFO

UniFirst Corporation

978-658-8888

shane_oconnor@unifirst.com

FOR IMMEDIATE RELEASE

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF FISCAL 2020

Wilmington, MA – October 21, 2020 – UniFirst Corporation (NYSE: UNF) (the “Company”) today reported results for its fourth quarter and full year ended August 29, 2020, as compared to the comparable periods in its prior fiscal year. The fourth quarter as well as the full year in fiscal 2019 included an extra week as compared to fiscal 2020.

Q4 2020 Financial Highlights

• Consolidated revenues for the quarter decreased 10.6% to $428.6 million.

• Excluding the impact of the extra week in fiscal 2019, consolidated revenues decreased 3.5%.

• Operating income was $40.8 million, a decrease of 30.8%.

• The quarterly tax rate was 26.6% compared to 24.4% in the prior year.

• Net income decreased to $31.6 million, or 31.4%.

• Diluted earnings per share decreased to $1.66 from $2.40, or 30.8%.

Steven Sintros, UniFirst President and Chief Executive Officer, said, “Overall, we are pleased with our results for the fourth quarter and full fiscal year given the headwinds that we faced during this unprecedented time in our history.  Our ability to continue generating solid results and strong cash flows speaks to the resiliency of our Company and the value of the products and services that we provide to our customers.  I want to again sincerely thank our Team Partners for the tremendous effort they put forth and continue to put forth ensuring that they are taking care of each other and our customers during these challenging times.  They truly continue to deliver in every way.”

Fiscal 2020 Financial Highlights

• Full year consolidated revenues were $1.804 billion, down 0.3%.

• Excluding the impact of the extra week in fiscal 2019, full year revenues increased 1.6%.

• Full year operating income was $172.7 million, a decrease of 25.6%.

• Net income for the year decreased to $135.8 million, or 24.2%.

• Diluted earnings per share decreased to $7.13 from $9.33, or 23.6%.

Operating income in fiscal 2019 benefited from a pre-tax gain of $21.1 million, which was recorded in selling and administrative expenses. This amount reflects a settlement with the lead contractor for the version of the customer relationship management system for which the Company recorded a $55.8 million impairment charge in fiscal 2017 (the “CRM Settlement”).  Excluding the impact of the CRM Settlement:

• Full year operating income decreased 18.1% compared to the prior year’s adjusted operating income of $210.9 million.

• Net income decreased 17.0% from the prior year’s adjusted net income of $163.6 million.

• Diluted earnings per share decreased 16.3% from the prior year’s adjusted amount of $8.52.

See the Reconciliation of GAAP to Non-GAAP Financial Measures below.

Segment Reporting Highlights for Q4 2020

Core Laundry Operations

• Revenues for the quarter decreased 10.9% to $384.6 million.  

• Excluding the effect of the extra week, revenues decreased 3.8%.  This decrease was primarily due to the continued impact of COVID-19 on our customer’s operations and wearer levels.

• Operating margin decreased to 9.9% from 12.9% in the fiscal 2019 quarter. This segment’s profitability was negatively impacted by the decline in rental revenues on our cost structure, additional costs the Company incurred responding to COVID-19 as well as higher casualty claims expense. These items were partially offset by lower travel-related and energy costs during the quarter.  

Specialty Garments

• Revenues for the quarter were $27.6 million, a decrease of approximately 11.6%. This decrease was primarily due to the extra week in the fourth quarter of fiscal 2019.

• Operating margin increased to 7.1% from 6.6%. This increase was primarily due to lower production and delivery costs as a percentage of revenues, which were partially offset by higher merchandise amortization costs as a percentage of revenues.

• 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 $474.8 million as of August 29, 2020.

• The Company had no long-term debt outstanding as of August 29, 2020.

• In its fourth fiscal quarter of 2020, the Company did not repurchase any shares of common stock under its previously announced share repurchase authorization.  As of August 29, 2020, the Company had repurchased a total of 315,000 shares of common stock for a total of $52.3 million under the authorization.

• Diluted weighted average shares outstanding decreased to 19.0 million shares from 19.2 million shares in the fourth quarter of fiscal 2019, or 0.7%.

Financial Outlook

Mr. Sintros continued, “Due to the continued uncertainty surrounding the COVID-19 pandemic and its impact on our communities, we will only be providing guidance for our fiscal 2021 first quarter at this time. We currently expect our revenues for the first quarter of fiscal 2021 to be between $433.0 million and $443.0 million and diluted earnings per share to be between $1.55 and $1.70. Although our visibility is limited, we do expect showing growth for the full year to be a challenge based on the impact of the pandemic as well as the related impact on the demand for oil and the energy dependent markets that we serve.  In fiscal 2021, our strong balance sheet and cash flows will continue to empower us to invest in our long-term strategic initiatives.”

Financial Outlook Highlights and Assumptions

• Core Laundry organic growth, which excludes the effect of fluctuations in the Canadian exchange rate and the benefit of acquisitions, is assumed to be a decline of 6.8% at the midpoint of the range.

• Core Laundry’s operating margin is assumed to be 9.1% at the midpoint of the range.

• The income tax rate is assumed to be 25.0%.

Conference Call Information

UniFirst will hold a conference call today at 9:00 a.m. (ET) to discuss its quarterly and annual 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 over 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 visitUniFirst.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 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,” “strategy,” “objective,” “positions,” “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 (“CRM”) 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 “Item 1A. Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended August 31, 2019, “Item 1.A. Risk Factors” and elsewhere in our 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 August 29, 2020			Fourteen weeks ended August 31, 2019			Fifty-two weeks ended August 29, 2020			Fifty-three weeks ended August 31, 2019
Revenues	$	428,643		$	479,621		$	1,804,159		$	1,809,376
Operating expenses:
Cost of revenues (1)		270,971			300,574			1,164,932			1,139,195
Selling and administrative expenses (1)		89,788			92,353			361,801			334,840
Depreciation and amortization		27,085			27,770			104,697			103,333
Total operating expenses		387,844			420,697			1,631,430			1,577,368
Operating income		40,799			58,924			172,729			232,008
Other (income) expense:
Interest income, net		(792	)		(3,075	)		(6,382	)		(9,082	)
Other expense (income), net		(1,400	)		1,129			1,223			3,166
Total other income, net		(2,192	)		(1,946	)		(5,159	)		(5,916	)
Income before income taxes		42,991			60,870			177,888			237,924
Provision for income taxes		11,428			14,882			42,118			58,790
Net income	$	31,563		$	45,988		$	135,770		$	179,134
Income per share – Basic:
Common Stock	$	1.74		$	2.52		$	7.46		$	9.77
Class B Common Stock	$	1.39		$	2.01		$	5.97		$	7.81
Income per share – Diluted:
Common Stock	$	1.66		$	2.40		$	7.13		$	9.33
Income allocated to – Basic:
Common Stock	$	26,499		$	38,619		$	114,017		$	150,247
Class B Common Stock	$	5,064		$	7,369		$	21,753		$	28,887
Income allocated to – Diluted:
Common Stock	$	31,563		$	45,988		$	135,770		$	179,134
Weighted average shares outstanding – Basic:
Common Stock		15,250			15,340			15,276			15,385
Class B Common Stock		3,643			3,659			3,643			3,697
Weighted average shares outstanding – Diluted:
Common Stock		19,019			19,159			19,042			19,196

(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)	August 29, 2020			August 31, 2019
Assets
Current assets:
Cash, cash equivalents and short-term investments	$	474,838		$	385,341
Receivables, net		190,916			203,457
Inventories		106,269			100,916
Rental merchandise in service		154,278			184,318
Prepaid taxes		7,115			4,060
Prepaid expenses and other current assets		35,918			35,699
Total current assets		969,334			913,791
Property, plant and equipment, net		582,470			574,509
Goodwill		424,844			401,178
Customer contracts and other intangible assets, net		85,536			72,720
Deferred income taxes		522			448
Operating lease right-of-use assets, net		42,710			—
Other assets		93,611			84,674
Total assets	$	2,199,027		$	2,047,320
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	64,035		$	77,918
Accrued liabilities		132,965			111,721
Accrued taxes		527			205
Operating lease liabilities, current		12,569			—
Total current liabilities		210,096			189,844
Long-term liabilities:
Accrued liabilities		132,820			117,074
Accrued and deferred income taxes		85,721			99,172
Operating lease liabilities		29,261			—
Total long-term liabilities		247,802			216,246
Shareholders’ equity:
Common Stock		1,525			1,533
Class B Common Stock		364			364
Capital surplus		86,645			84,946
Retained earnings		1,684,565			1,588,075
Accumulated other comprehensive loss		(31,970	)		(33,688	)
Total shareholders’ equity		1,741,129			1,641,230
Total liabilities and shareholders’ equity	$	2,199,027		$	2,047,320

Detail of Operating Results

(Unaudited)

Revenues

(In thousands, except percentages)	Thirteen weeks ended August 29, 2020		Fourteen weeks ended August 31, 2019		Dollar Change			Percent Change
Core Laundry Operations	$	384,584	$	431,539	$	(46,955	)		(10.9	)%
Specialty Garments		27,640		31,261		(3,621	)		(11.6	)%
First Aid		16,419		16,821		(402	)		(2.4	)%
Consolidated total	$	428,643	$	479,621	$	(50,978	)		(10.6	)%

(In thousands, except percentages)	Fifty-two weeks ended August 29, 2020		Fifty-three weeks ended August 31, 2019		Dollar Change			Percent Change
Core Laundry Operations	$	1,601,485	$	1,616,205	$	(14,720	)		(0.9	)%
Specialty Garments		133,185		132,767		418			0.3	%
First Aid		69,489		60,404		9,085			15.0	%
Consolidated total	$	1,804,159	$	1,809,376	$	(5,217	)		(0.3	)%

Operating Income

(In thousands, except percentages)	Thirteen weeks ended August 29, 2020		Fourteen weeks ended August 31, 2019		Dollar Change			Percent Change
Core Laundry Operations	$	38,131	$	55,616	$	(17,485	)		(31.4	)%
Specialty Garments		1,959		2,072		(113	)		(5.5	)%
First Aid		709		1,236		(527	)		(42.6	)%
Consolidated total	$	40,799	$	58,924	$	(18,125	)		(30.8	)%

(In thousands, except percentages)	Fifty-two weeks ended August 29, 2020		Fifty-three weeks ended August 31, 2019		Dollar Change			Percent Change
Core Laundry Operations	$	149,987	$	212,954	$	(62,967	)		(29.6	)%
Specialty Garments		17,845		14,145		3,700			26.2	%
First Aid		4,897		4,909		(12	)		(0.2	)%
Consolidated total	$	172,729	$	232,008	$	(59,279	)		(25.6	)%

Operating Margin

	Thirteen weeks ended August 29, 2020			Fourteen weeks ended August 31, 2019
Core Laundry Operations		9.9	%		12.9	%
Specialty Garments		7.1	%		6.6	%
First Aid		4.3	%		7.3	%
Consolidated		9.5	%		12.3	%

	Fifty-two weeks ended August 29, 2020			Fifty-three weeks ended August 31, 2019
Core Laundry Operations		9.4	%		13.2	%
Specialty Garments		13.4	%		10.7	%
First Aid		7.0	%		8.1	%
Consolidated		9.6	%		12.8	%

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)	Fifty-two weeks ended August 29, 2020			Fifty-three weeks ended August 31, 2019
Cash flows from operating activities:
Net income	$	135,770		$	179,134
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		104,697			103,333
Amortization of deferred financing costs		112			112
Forgiveness of a liability		—			(7,346	)
Share-based compensation		5,999			5,761
Accretion on environmental contingencies		537			755
Accretion on asset retirement obligations		929			865
Deferred income taxes		(12,152	)		8,896
Other		2,524			(283	)
Changes in assets and liabilities, net of acquisitions:
Receivables, less reserves		14,589			(3,189	)
Inventories		(5,066	)		(10,736	)
Rental merchandise in service		32,262			(10,324	)
Prepaid expenses and other current assets and Other assets		840			(8,011	)
Accounts payable		(10,702	)		3,365
Accrued liabilities		19,866			(1,027	)
Prepaid and accrued income taxes		(3,521	)		20,837
Net cash provided by operating activities		286,684			282,142
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired		(41,221	)		(4,919	)
Capital expenditures, including capitalization of software costs		(116,717	)		(119,815	)
Proceeds from sale of assets		322			405
Net cash used in investing activities		(157,616	)		(124,329	)
Cash flows from financing activities:
Proceeds from exercise of share-based awards		73			51
Taxes withheld and paid related to net share settlement of equity awards		(3,731	)		(2,767	)
Repurchase of Common Stock		(21,745	)		(30,515	)
Payment of cash dividends		(15,700	)		(8,260	)
Net cash used in financing activities		(41,103	)		(41,491	)
Effect of exchange rate changes		1,532			(1,493	)
Net increase in cash, cash equivalents and short-term investments		89,497			114,829
Cash, cash equivalents and short-term investments at beginning of period		385,341			270,512
Cash, cash equivalents and short-term investments at end of period	$	474,838		$	385,341

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 more meaningful measure on which to 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 fiscal 2019 consolidated operating income, net income and earnings per diluted share on a GAAP basis to adjusted operating income, net income and earnings per diluted share 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 is provided below.

	Fifty-three weeks ended August 31, 2019
	Consolidated											Core Laundry Operations
(In thousands, except percentages)	Revenue		Operating Income			Net Income			Diluted EPS			Revenue		Operating Income			Operating Margin
As reported	$	1,809,376	$	232,008		$	179,134		$	9.33		$	1,616,205	$	212,954			13.2	%
CRM Settlement		—		(21,127	)		(15,566	)		(0.81	)		—		(21,127	)		(1.3	)%
As adjusted	$	1,809,376	$	210,881		$	163,568		$	8.52		$	1,616,205	$	191,827			11.9	%

XML

Document and Entity Information	Oct. 21, 2020
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 21, 2020
Entity Registrant Name	UNIFIRST CORP
Entity Central Index Key	0000717954
Entity Emerging Growth Company	false
Entity File Number	001-08504
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2103460
Entity Address, Address Line One	68 Jonspin Road
Entity Address, City or Town	Wilmington
Entity Address, State or Province	MA
Entity Address Postal Zip Code	01887
City Area Code	978
Local Phone Number	658-8888
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock, $0.10 par value per share
Trading symbol	UNF
Name of each exchange on which registered	NYSE