WILMINGTON, Mass., March 30, 2022 (GLOBE NEWSWIRE) — UniFirst Corporation (NYSE: UNF) today reported results for its second quarter ended February 26, 2022 as compared to the corresponding period in the prior fiscal year:
Q2 2022 Financial Highlights
- Consolidated revenues for the second quarter increased 8.2% to $486.7 million.
- Operating income was $22.6 million, a decrease of 44.4%.
- The quarterly tax rate decreased to 19.0% compared to 22.7% in the prior year.
- Net income decreased to $18.5 million, or 43.4%.
- Diluted earnings per share decreased to $0.97 from $1.71 in the prior year, or 43.3%.
The Company’s financial results for the second quarter of fiscal 2022 included $6.7 million of costs directly attributable to its CRM, ERP and branding initiatives (the “Key Initiatives”). Excluding these Key Initiative costs:
- Adjusted operating income was $29.4 million.
- Adjusted net income was $23.5 million.
- Adjusted diluted earnings per share was $1.24.
Steven Sintros, UniFirst President and Chief Executive Officer, said, “Our second quarter results reflect a strong top-line performance as well as a margin trend that was largely in-line with our expectations while also reflecting continued inflationary pressure. I want to thank our thousands of Team Partners who, despite a challenging operating environment, continue to Always Deliver for each other and our customers.”
Segment Reporting Highlights
Core Laundry Operations
- Revenues for the quarter increased 8.7% to $433.1 million.
- Organic growth, which excludes the effect of acquisitions and fluctuations in the Canadian dollar, was 8.0%
- Operating margin decreased to 4.3% from 8.9%.
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 5.9%. The decrease from prior year’s operating margin was primarily due to higher merchandise amortization, 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 $35.5 million, an increase of 0.9%. This increase was driven by growth in the cleanroom and European nuclear operations which was partially offset by higher direct sale activity in the prior year.
- Operating margin decreased to 10.8% from 14.9% a year ago, primarily due to higher gross margin on its prior year direct sales as well as higher labor 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 $425.9 million as of February 26, 2022.
- The Company had no long-term debt outstanding as of February 26, 2022.
- Under its previously announced stock repurchase authorization, the Company repurchased 52,500 shares of common stock for $10.0 million in the second quarter of fiscal 2022. As of February 26, 2022, the Company has $87.3 million remaining under its current authorization.
- Weighted average shares outstanding – Diluted for each of the second quarters of fiscal 2022 and fiscal 2021 were 19.0 million.
Financial Outlook
Mr. Sintros continued, “We now expect revenues for fiscal 2022 to be between $1.967 billion and $1.980 billion. We further expect diluted earnings per share to be between $5.62 and $5.82. This earnings per share guidance assumes an effective tax rate of 24.0% and now includes a revised estimate of $30.0 million of costs directly attributable to our Key Initiatives that will be expensed in fiscal 2022. Please also note the following regarding our guidance:
- Core Laundry Operations’ adjusted operating margin at the midpoint of the range is now 8.6%, which reflects continued pressure from the current inflationary environment including the recent surge in energy prices.
- Our adjusted tax rate for fiscal 2022 is 24.2%
- Adjusted diluted earnings per share is now expected to be between $6.80 and $7.00.
- 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.”
See “Reconciliation of GAAP to Non-GAAP Financial Measures” below.
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.
