UNIFIRST CORP
For the period ended Nov 30, 2024. Filed Jan 10, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Nov 30, 2024 · Filed Jan 10, 2025
UNF$235.40-3.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-05-25; filed 2024-07-03.
0000950170-24-081314
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-11-30; filed 2025-01-10.
0000950170-25-003833
Item 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 92 current paragraphs.
49 unchanged; 37 reworded; 5 added; 18 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 18 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Headquartered in Wilmington, Massachusetts, we are 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 our subsidiaries, we also provide first aid and safety products, and manage specialized garment programs for the cleanroom and nuclear industries. We manufacture our own branded workwear, protective clothing, and floorcare products, as well as offer products from industry leading suppliers; and with 270 service locations, over 300,000 customer locations, and approximately 16,000 employee Team Partners, we outfit more than 2 million workers each business day.
Current report
On October 29, 2024, our Board of Directors declared increased quarterly cash dividends of $0.350 per share of Common Stock and $0.280 per share of Class B Common Stock, up from $0.33 and $0.264 per share, respectively. Such dividends were paid on January 3, 2025 to shareholders of record on December 6, 2024. The amount and timing of any future dividend payment is subject to the approval of our Board of Directors each quarter.
Current report
The increase in selling and administrative costs during the thirteen weeks ended November 30, 2024 compared to the prior year comparable period was due primarily to increased healthcare costs of $2.6 million, $1.2 million of environmental-related costs, and $1.1 million in executive transition costs related to the hiring of two new executives and the retirement of a former executive. Higher selling costs related to improved staffing and the timing of certain selling events also contributed to the increase.
Current report
Other income, net during the thirteen weeks ended November 30, 2024 remained relatively consistent with the prior year comparable period.
Current report
These increases were partially offset by a $12.0 million decrease in accrued liabilities, which was due primarily to a $7.0 million decrease in accrued payroll and a $3.7 million decrease in the bonus accrual during the thirteen weeks ended November 30, 2024 as compared to the prior year comparable period.
Removed paragraphs (18)
Previous report
We continue to expand into additional geographic markets through acquisitions and organic growth. We currently service over 300,000 customer locations in the U.S., Canada and Europe from over 270 customer service, distribution and manufacturing facilities.
Previous report
On March 13, 2023, we completed our acquisition of the business and certain real estate assets of Clean from Clean Holdco, Inc. and certain of its affiliates for an aggregate purchase price of approximately $299.1 million, net of cash acquired. Clean was a uniform, workwear and facility service program provider with 11 locations covering Missouri, Illinois, Arkansas, Kansas and Oklahoma. The results of operations from Clean were included in our results under the Core Laundry Operations segments subsequent to the acquisition date of March 13, 2023. We paid for the acquisition of Clean with cash on hand and borrowings under the Credit Agreement, which we repaid in full during the third quarter of fiscal 2023.
Previous report
The decrease in selling and administrative costs of 2.7% during the thirteen weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to a decrease in spending on our Key Initiatives from $8.4 million in the third quarter of fiscal 2023 to $3.9 million in the third quarter of fiscal 2024. Also, we benefited from a decrease in healthcare claims expense of $3.4 million compared to the prior year comparable period and costs incurred in the third quarter of fiscal 2023 related to a legal matter of approximately $1.3 million. In addition, we incurred $0.7 million of Clean acquisition-related costs during the third quarter of fiscal 2023. These decreases in costs were partially offset by continued investments we have made in our corporate capabilities over the last year.
Previous report
Other (income) expense, net
Previous report
The increase in other (income) expense, net during the thirteen weeks ended May 25, 2024 as compared to the prior year comparable period was due primarily to approximately $0.5 million of interest expense incurred on borrowings related to the Clean acquisition during the thirteen weeks ended May 27, 2023 of which there were none in the current period.
Previous report
Thirty-nine weeks ended May 25, 2024 compared with thirty-nine weeks ended May 27, 2023
Previous report
Revenues
Previous report
In the thirty-nine weeks ended May 25, 2024, Specialty Garments revenues remained consistent compared to the prior year comparable period due primarily to growth in our cleanroom operations offset by a decline in our North American and European nuclear businesses. First Aid revenues in the same period increased 11.0% compared to the prior year comparable period due primarily to growth in our van business.
Previous report
Cost of revenues
Previous report
The increase in consolidated cost of revenues of 6.2% during the thirty-nine weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to the impact of revenue growth mentioned above. While overall cost of revenues increased, cost of revenues decreased as a percentage of revenue due primarily to lower merchandise costs and production costs.
Previous report
Selling and administrative expenses
Previous report
The increase in selling and administrative costs of 3.0% during the thirty-nine weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to incremental costs from the Clean acquisition as compared to the prior year comparable period.
Previous report
While overall selling and administrative costs increased, selling and administrative costs as a percentage of revenues decreased due primarily to a decrease in spending on our Key Initiatives from $27.5 million in the thirty-nine weeks ended May 27, 2023 to $10.0 million in the thirty-nine weeks ended May 25, 2024. Also, we benefited from a decrease in healthcare claims expense of $2.9 million compared to the prior year comparable period and costs incurred in the third quarter of fiscal 2023 related to a legal matter of approximately $1.3 million. In addition, we incurred $2.7 million of Clean acquisition-related costs during the thirty-nine weeks ended May 27, 2023.
Previous report
Depreciation and amortization
Previous report
Depreciation and amortization expense increased by 17.4% during the thirty-nine weeks ended May 25, 2024 compared to the prior year comparable period due primarily to continued investment in our systems and technology capabilities and infrastructure to support our future growth. Also contributing to this increase was higher depreciation and amortization of $7.6 million related to the Clean acquisition that occurred early in the third quarter of fiscal 2023. Total depreciation and amortization for Clean was $10.7 million and $3.1 million in the thirty-nine weeks ended May 25, 2024 and the prior year comparable period, respectively, of which $7.2 million and $2.2 million were intangibles amortization, respectively.
Previous report
Operating income
Previous report
Other income, net during the thirty-nine weeks ended May 25, 2024 decreased as compared to the prior year comparable period due primarily to lower interest income resulting from lower cash reserves subsequent to the acquisition of Clean in our third fiscal quarter of 2023. This was partially offset by $2.1 million of interest income recorded in the thirty-nine weeks ended May 25, 2024 as a result of a tax dispute we were able to favorably resolve.
Previous report
Provision for income taxes
Reworded paragraphs (37)
Previous wording
This Quarterly Report on Form 10-Q and any documents incorporated by reference may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements contained in this Quarterly Report on Form 10-Q and any documents incorporated by reference are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “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 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, disruption in the Middle East 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, uncertainties regarding our ability to consummate acquisitions and successfully integrate acquired businesses, including Clean Uniform (“Clean”), 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 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 reg…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This Quarterly Report on Form 10-Q and any documents incorporated by reference may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements contained in this Quarterly Report on Form 10-Q and any documents incorporated by reference are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as “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 elevated inflation or interest rates or extraordinary events or circumstances such as geopolitical conflicts like the conflict between Russia and Ukraine and disruption in the Middle East, 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, uncertainties regarding our ability to consummate acquisitions and successfully integrate acquired businesses, 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 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 nat…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
UniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers of workplace uniforms and protective work wear clothing in the U.S. We design, manufacture, personalize, rent, clean, deliver, and sell a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training to a variety of manufacturers, retailers and service companies.
Current wording
UniFirst Corporation, together with its subsidiaries, hereunder referred to as “we”, “our”, the “Company”, or “UniFirst”, is one of the leading providers of workplace uniforms and protective work wear clothing in North America. We design, manufacture, personalize, rent, clean, deliver, and sell a wide range of uniforms and protective clothing, including shirts, pants, jackets, coveralls, lab coats, smocks, aprons and specialized protective wear, such as flame resistant and high visibility garments. We also rent and sell industrial wiping products, floor mats, facility service products and other non-garment items, and provide restroom and cleaning supplies and first aid cabinet services and other safety supplies as well as provide certain safety training to a variety of manufacturers, retailers and service companies.
Previous wording
We serve businesses of all sizes in numerous industry and service categories. Typical customers include automobile service centers and dealers, delivery services, food and general merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durable goods wholesalers, transportation companies, healthcare providers and others who require employee clothing for image, identification, protection or utility purposes. We also provide our customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps.
Current wording
We serve businesses of all sizes across multiple industry sectors. Typical customers include automobile service centers and dealers, delivery services, food and general merchandise retailers, food processors and service operations, light manufacturers, maintenance facilities, restaurants, service companies, soft and durable goods wholesalers, transportation companies, healthcare providers and others who require employee clothing for image, identification, protection or utility purposes. We also provide our customers with restroom and cleaning supplies, including air fresheners, paper products and hand soaps.
Previous wording
As mentioned and described in Note 16, “Segment Reporting,” to our Consolidated Financial Statements, we have five reporting segments: U.S. and Canadian Rental and Cleaning, Manufacturing (“MFG”), Corporate, Specialty Garments and First Aid. We refer to the laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment as “industrial laundries” or “industrial laundry locations”, and to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as our “Core Laundry Operations.”
Current wording
As mentioned and described in Note 16, “Segment Reporting,” to our Consolidated Financial Statements, we have five reporting segments: U.S. and Canadian Rental and Cleaning, Manufacturing (“MFG”), Specialty Garments, First Aid and Corporate. We refer to the laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment as “industrial laundries” or “industrial laundry locations”, and to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as our “Core Laundry Operations.”
Previous wording
In general, we believe that our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage the impacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases and continued focus on improvements of operational productivity. However, the inflationary environment in recent years had a negative impact on our margins, including as a result of increased energy costs for our vehicles and our plants, as well as increasing wages in the labor markets in which we compete. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods. In addition, the U.S. Federal Reserve has delayed decreasing its benchmark interest rate during 2024 in response to sustained elevated inflation. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issues or otherwise are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition.
Current wording
In general, we believe that our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage the impacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases and continued focus on improvements of operational productivity. However, the inflationary environment in recent years had a negative impact on our margins, including as a result of increased energy costs for our vehicles and our plants, as well as increasing wages in the labor markets in which we compete. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods. Adverse economic conditions resulting from inflationary pressures, U.S. Federal Reserve actions, including elevated interest rates and/or increases in interest rates, geopolitical issues or other causes are difficult to predict and may have a material adverse impact on our business, results of operations and financial condition.
Previous wording
The following table presents certain selected financial data, including the percentage of revenues represented by each item, for the thirteen and thirty-nine weeks ended May 25, 2024 and May 27, 2023.
Current wording
The following table presents certain selected financial data, including the percentage of revenues represented by each item, for the thirteen weeks ended November 30, 2024 and November 25, 2023.
Previous wording
Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles and the natural gas or other sources of energy used to operate our plants. Our operating margins have been, and may continue to be, adversely impacted by volatility in energy prices. In addition, as described above, the current inflationary environment has had a negative impact on our margins, and could continue to pressure our margins in future periods.
Current wording
Our operating results are also directly impacted by the costs of the gasoline used to fuel our vehicles, the cost of electricity for our electric vehicles and the natural gas or other sources of energy used to operate our plants. Our operating margins have been, and may continue to be, adversely impacted by volatility in energy prices. In addition, as described above, the inflationary environment in recent years had a negative impact on our margins. While inflation has moderated recently, a period of sustained inflation could pressure our margins in future periods.
Previous wording
Our business is subject to various state and federal regulations, including employment laws and regulations, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements, healthcare insurance mandates and other laws and regulations that impact our labor costs. Labor costs have increased recently as a result of increases in state and local minimum wage levels as well as the overall impact of wage pressure as the result of a low unemployment environment.
Current wording
Our business is subject to various state and federal regulations, including employment laws and regulations, minimum wage requirements, overtime requirements, working condition requirements, citizenship requirements, healthcare insurance mandates and other laws and regulations that impact our labor costs. Labor costs have increased as a result of increases in state and local minimum wage levels as well as the overall impact of wage pressure as the result of a low unemployment environment.
Previous wording
In fiscal 2018, we initiated a multiyear CRM project to further develop, implement and deploy a third-party software application we licensed. This new solution is intended to improve functionality, capability and information flow as well as increase automation for our operations in servicing our customers. We began deployment of our new CRM project during the second half of fiscal 2021 and concluded the deployment to our U.S. locations in the first quarter of fiscal 2024. We are depreciating this system over a 10-year life and recognized $0.9 million and $2.7 million of amortization expense during the thirteen and thirty-nine weeks ended May 25, 2024, respectively.
Current wording
In fiscal 2018, we initiated a multiyear customer relationship management (“CRM”) project to further develop, implement and deploy a third-party software application we licensed. This new solution is intended to improve functionality, capability and information flow as well as increase automation for our operations in servicing our customers. We began deployment of our new CRM project during the second half of fiscal 2021 and concluded the deployment to our U.S. locations in the first quarter of fiscal 2024. We are depreciating this system over a 10-year life and recognized $1.0 million and $0.8 million of amortization expense during the thirteen weeks ended November 30, 2024 and November 25, 2023, respectively.
Previous wording
In fiscal 2022, we initiated a multiyear ERP project that we currently anticipate will continue through 2027, with early phases focused on master data management and finance capabilities followed by subsequent phases with a strong focus on supply chain and procurement automation and technology. We believe that this initiative will become the core of the UniFirst systems technology footprint and will integrate and complement the capabilities of the CRM system. We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and reduced customer churn. Such benefits are expected to be delivered through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes. These capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges that we experienced during the COVID-19 pandemic and inflationary environment of 2022 and 2023.
Current wording
In fiscal 2022, we initiated a multiyear ERP project that we plan to continue through 2027, with early phases focused on master data management and finance capabilities followed by subsequent phases with a strong focus on supply chain and procurement automation and technology. We believe that this initiative will become the core of the UniFirst systems technology footprint and will integrate and complement the capabilities of the CRM system. We expect the ERP system and the new supply chain and procurement capabilities that it will provide to enable lower operating costs and reduced customer churn. Such benefits are expected to be delivered through enhanced inventory utilization and vendor management, improved response times to customer orders and more efficient back-end processes. These capabilities will allow us to more effectively respond to and mitigate the types of supply chain challenges that we experienced during the COVID-19 pandemic and inflationary environment of 2022 and 2023.
Previous wording
We refer to our CRM and ERP projects together as our (“Key Initiatives”). For the thirteen weeks ended May 25, 2024, we expensed $3.9 million of non-recurring costs related to our Key Initiatives, primarily relating to our ERP project. For the thirty-nine weeks ended May 25, 2024, we expensed $10.0 million of non-recurring costs related to our Key Initiatives, primarily relating to our ERP project.
Current wording
We refer to our CRM and ERP projects together as our “Key Initiatives”. For the thirteen weeks ended November 30, 2024, we expensed $2.5 million of non-recurring costs related to our Key Initiatives, primarily relating to our ERP project. As of November 30, 2024, we capitalized $47.2 million related to our CRM project and $24.4 million related to our ERP project.
Previous wording
On October 24, 2023, our Board of Directors authorized a share repurchase program to repurchase up to $100.0 million of our outstanding shares of Common Stock. Repurchases from time to time under the new program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases depend on a variety of factors, including economic and market conditions, our stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program may be funded using available cash or capacity under our Credit Agreement (as defined below) and may be suspended or discontinued at any time.
Current wording
On October 24, 2023, our Board of Directors authorized a share repurchase program to repurchase up to $100.0 million of our outstanding shares of Common Stock, inclusive of the amount which remained available under the existing share repurchase program approved in 2021. Repurchases from time to time under the new program, if any, will be made in either the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases depend on a variety of factors, including economic and market conditions, our stock price, corporate liquidity requirements and priorities, applicable legal requirements and other factors. The share repurchase program has been funded to date with the Company’s available cash and will be funded in the future using available cash or capacity under our Credit Agreement (as defined below) and may be suspended or discontinued at any time.
Previous wording
During the thirteen and thirty-nine weeks ended May 25, 2024, we repurchased 47,250 and 94,000 shares, respectively, for an average price per share of $165.99 and $169.81, respectively, under the share repurchase program. During the thirteen and thirty-nine weeks ended May 27, 2023, we did not repurchase any shares. As of May 25, 2024, we had $84.0 million remaining under our share repurchase program.
Current wording
During the thirteen weeks ended November 30, 2024 and November 25, 2023, we repurchased 33,605 and 1,500 shares, respectively, for an average price per share of $189.64 and $170.07, respectively, under the share repurchase program. As of November 30, 2024, we had $69.8 million remaining to repurchase shares under the share repurchase program.
Previous wording
The increase in consolidated revenues of 4.6% during the thirteen weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to growth in our Core Laundry Operations of 5.3%. The increase in our Core Laundry Operations was due to organic growth of 4.7% and acquisition related growth of 0.6%. The effect of Canadian dollar exchange rate changes on our revenues was nominal. The Core Laundry Operations strong organic growth rate was primarily the result of solid new account sales and improved pricing with our customers.
Current wording
The increase in consolidated revenues of 1.9% during the thirteen weeks ended November 30, 2024 compared to the prior year comparable period was due primarily to growth in our Core Laundry Operations of 1.7%. The increase in our Core Laundry Operations was due to organic growth of 1.7%. The effect of Canadian dollar exchange rate changes on our revenues was nominal. The Core Laundry Operations organic growth rate was primarily the result of solid new account sales and improved pricing with our customers.
Previous wording
In the thirteen weeks ended May 25, 2024, Specialty Garments revenues decreased compared to the prior year comparable period due to the decline in our North American nuclear business, which was partially offset by growth in our cleanroom operations. Specialty Garments’ results are often affected by seasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities.
Current wording
In the thirteen weeks ended November 30, 2024, Specialty Garments revenues increased compared to the prior year comparable period due primarily to the growth in the European and North American nuclear operations partially offset by a decrease in our cleanroom operations. Specialty Garments’ results are often affected by seasonality and the timing and length of its customers’ power reactor outages as well as its project-based activities.
Previous wording
First Aid revenues in the same period increased 6.9% compared to the prior year comparable period due primarily to growth in our van business.
Current wording
First Aid revenues in the same period increased 5.4% compared to the prior year comparable period due to double digit growth in our van business partially offset by a decrease in our wholesale business.
Previous wording
The increase in consolidated cost of revenues of 3.1% during the thirteen weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to the impact of revenue growth mentioned above. While overall cost of revenues increased, cost of revenues as a percentage of revenues decreased due primarily to lower merchandise costs and production costs.
Current wording
Consolidated cost of revenues and cost of revenues as a percentage of revenue both decreased in the thirteen weeks ended November 30, 2024 compared to the prior year comparable period due primarily to lower merchandise costs and other production costs.
Previous wording
Depreciation and amortization expense increased by 10.9% during the thirteen weeks ended May 25, 2024 compared to the prior year comparable period, due primarily to continued investment in our systems and technology capabilities and infrastructure to support our future growth.
Current wording
Depreciation and amortization expense increased by 3.2% during the thirteen weeks ended November 30, 2024 compared to the prior year comparable period, due primarily to continued investment in operating facilities and technology to improve our efficiency and support our continued future growth.
Previous wording
The decrease in the effective tax rate for the thirteen weeks ended May 25, 2024 as compared to the corresponding period in the prior year was due primarily to favorable adjustments to our tax reserves during the current period.
Current wording
The increase in the effective tax rate for the thirteen weeks ended November 30, 2024 as compared to the corresponding period in the prior year was due primarily to favorable adjustments to our tax reserves during the corresponding prior period.
Previous wording
Cash and cash equivalents, and short-term investments totaled $125.4 million as of May 25, 2024, an increase of $35.8 million from $89.6 million as of August 26, 2023. The increase in cash and cash equivalents and short-term investments was largely driven by our cash flows from operating activities. We generated $193.0 million and $142.8 million in cash from operating activities in the thirty-nine weeks ended May 25, 2024 and May 27, 2023, respectively. The increase was due primarily to increased profitability and lower working capital needs of the business. During the thirty-nine weeks ended May 25, 2024, we continued to invest in our business with capital expenditures totaling $121.9 million.
Current wording
Cash and cash equivalents, and short-term investments totaled $181.0 million as of November 30, 2024, an increase of $5.9 million from $175.1 million as of August 31, 2024. The increase in cash and cash equivalents and short-term investments was largely driven by our cash flows from operating activities. We generated $58.1 million and $45.7 million in cash from operating activities in the thirteen weeks ended November 30, 2024 and November 25, 2023, respectively. The increase was due primarily to increased profitability and lower working capital needs of the business. During the thirteen weeks ended November 30, 2024, we continued to invest in our business with capital expenditures totaling $33.6 million.
Previous wording
Pursuant to the share repurchase program approved by our Board of Directors on October 24, 2023, we repurchased 94,000 shares of our Common Stock for an aggregate of approximately $16.0 million during the thirty-nine weeks ended May 25, 2024.
Current wording
Pursuant to the share repurchase program approved by our Board of Directors on October 24, 2023, we repurchased 33,605 shares of our Common Stock for an aggregate of approximately $6.4 million during the thirteen weeks ended November 30, 2024. As of November 30, 2024, we had $69.8 million remaining to repurchase shares under the share repurchase program.
Previous wording
We believe, although there can be no assurance, that our current cash, cash equivalents and short-term investments balances, our cash generated from future operations and amounts available under our Credit Agreement (as defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will enable us to manage the impacts of inflation and address related liquidity needs.
Current wording
We believe, although there can be no assurance, that our current cash and cash equivalents, our cash generated from future operations and amounts available under our Credit Agreement (as defined below) will be sufficient to meet our current anticipated working capital and capital expenditure requirements for at least the next 12 months and will enable us to manage the impacts of inflation and address related liquidity needs.
Previous wording
Sources and uses of cash flows for the thirty-nine weeks ended May 25, 2024 and May 27, 2023, respectively, are summarized as follows:
Current wording
Sources and uses of cash flows for the thirteen weeks ended November 30, 2024 and November 25, 2023, respectively, are summarized as follows:
Previous wording
The net cash provided by operating activities during the thirty-nine weeks ended May 25, 2024 increased as compared to the prior year comparable period due to our improved profitability and benefit of depreciation and amortization as well as positive impacts from rental merchandise in service of $24.9 million, receivables of $16.9 million and accrued liabilities of $9.9 million. These increases were partially offset by a decrease in inventory of $15.2 million, a decrease of in prepaid expenses and other current and noncurrent assets of $11.6 million and a decrease in accounts payable of $8.6 million.
Current wording
The net cash provided by operating activities during the thirteen weeks ended November 30, 2024 increased as compared to the prior year comparable period due to our improved profitability as well as positive impacts from receivables of $16.8 million, rental merchandise in service of $4.1 million, inventories of $1.9 million and a decrease of in prepaid expenses and other current and noncurrent assets of $1.1 million.
Previous wording
The positive impact from merchandise in service was due primarily to fewer garments being placed in service to support our rental customers. The positive impact from receivables was due primarily to a focused effort on collections and timing. The negative impact from inventories was due primarily to higher production that will be used to meet future demand. The negative impact from prepaid expenses and other current assets was due primarily to increases in information technology prepaid contracts and deferred commission costs. The negative impact from accounts payable was due primarily to timing.
Current wording
The positive impact from receivables was due primarily to a focused effort on collections and timing of cash receipts. The positive impact from merchandise in service was due primarily to fewer garments being placed in service to support our rental customers. The positive impact from prepaid expenses and other current assets was due primarily to increases in information technology prepaid contracts and the timing of policy renewals.
Previous wording
The net cash used in investing activities during the thirty-nine weeks ended May 25, 2024 decreased as compared to the prior year comparable period due primarily to the Clean acquisition in the third quarter of fiscal 2023 and a reduced net investment in certificates of deposit of $7.1 million during the thirty-nine weeks ended May 25, 2024.
Current wording
The net cash used in investing activities during the thirteen weeks ended November 30, 2024 decreased as compared to the prior year comparable period due primarily to reduced capital expenditures of $5.5 million. Offsetting this decrease was an increase in cash paid for acquisitions of $2.4 million during the thirteen weeks ended November 30, 2024 as compared to the prior year comparable period.
Previous wording
The net cash used in financing activities during the thirty-nine weeks ended May 25, 2024 increased as compared to the prior year comparable period due primarily to a $16.0 million increase in the repurchase of Common Stock during the period.
Current wording
The net cash used in financing activities during the thirteen weeks ended November 30, 2024 increased as compared to the prior year comparable period due primarily to a $6.1 million increase in the repurchase of Common Stock during the period and increases in taxes withheld and paid related to net-share settlement of equity awards of $1.0 million.
Previous wording
On March 9, 2023, we exercised the accordion feature of the Credit Agreement pursuant to an amendment to the Credit Agreement. The exercise of the accordion feature increased the aggregate commitments under the Credit Agreement by $100.0 million, for a total aggregate commitment of up to $275.0 million. In addition, the amendment provided for the replacement of LIBOR with SOFR such that borrowings are based on, at our election, the SOFR rate or a base rate, plus in each case a spread based on our consolidated funded debt ratio. The amendment also refreshed the accordion feature, so that, provided there is no default or event of default under the Credit Agreement and we are in compliance with our financial covenants on a pro forma basis, we may request an increase in the aggregate commitments under the Credit Agreement (in the form of revolving or term tranches) of up to an additional $100.0 million, for a total aggregate commitment of up to $375.0 million. Availability of credit requires compliance with certain financial and other covenants, including a maximum consolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. We test our compliance with these financial covenants on a fiscal quarterly basis. As of May 25, 2024, the interest rates applicable to our borrowings under the Credit Agreement would be calculated as SOFR plus 1.00% at the time of the respective borrowing.
Current wording
On March 9, 2023, we exercised the accordion feature of the Credit Agreement pursuant to an amendment to the Credit Agreement. The exercise of the accordion feature increased the aggregate commitments under the Credit Agreement by $100.0 million, for a total aggregate commitment of up to $275.0 million. In addition, the amendment provided for the replacement of LIBOR with Secured Overnight Financing Rate (“SOFR”) such that borrowings are based on, at our election, the SOFR rate or a base rate, plus in each case a spread based on our consolidated funded debt ratio. The amendment also refreshed the accordion feature, so that, provided there is no default or event of default under the Credit Agreement and we are in compliance with our financial covenants on a pro forma basis, we may request an increase in the aggregate commitments under the Credit Agreement (in the form of revolving or term tranches) of up to an additional $100.0 million, for a total aggregate commitment of up to $375.0 million. Availability of credit requires compliance with certain financial and other covenants, including a maximum consolidated funded debt ratio and minimum consolidated interest coverage ratio as defined in the Credit Agreement. We test our compliance with these financial covenants on a fiscal quarterly basis. As of November 30, 2024, the interest rates applicable to our borrowings under the Credit Agreement would be calculated as SOFR plus 1.00% at the time of the respective borrowing.
Previous wording
As of May 25, 2024, we had no outstanding borrowings and had outstanding letters of credit amounting to $62.7 million, leaving $212.3 million available for borrowing under the Credit Agreement.
Current wording
As of November 30, 2024, we had no outstanding borrowings and had outstanding letters of credit amounting to $75.8 million, leaving $199.2 million available for borrowing under the Credit Agreement.
Previous wording
As of May 25, 2024, we had forward contracts with a notional value of approximately 4.1 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in prepaid expenses and other current assets with a corresponding gain of $0.1 million in accumulated other comprehensive loss, which was recorded net of tax. During the thirteen and thirty-nine weeks ended May 25, 2024, we reclassified a nominal amount and $0.1 million, respectively, from accumulated other comprehensive loss to revenue related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of May 25, 2024 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
Current wording
As of November 30, 2024, we had forward contracts with a notional value of approximately 3.2 million CAD outstanding and recorded the fair value of the contracts of $0.2 million in prepaid expenses and other current assets with a corresponding gain of $0.1 million in accumulated other comprehensive loss, which was recorded net of tax. During the thirteen weeks ended November 30, 2024, we reclassified a nominal amount from accumulated other comprehensive loss to revenue related to the derivative financial instruments. The gain on these forward contracts that results in a decrease to accumulated other comprehensive loss as of November 30, 2024 is expected to be reclassified to revenues prior to their maturity on August 29, 2026.
Previous wording
We are subject to various federal, state and local laws and regulations governing, among other things, air emissions, waste water discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and must dispose of detergent wastewater and other residues, and, in the past, used perchloroethylene and other dry-cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal. We have settled, or contributed to the settlement of, past actions or claims brought against us relating to the disposal of hazardous materials at several sites and there can be no assurance that we will not have to expend material amounts to remediate the consequences of any such disposal in the future.
Current wording
We are subject to various federal, state and local laws and regulations governing, among other things, air emissions, wastewater discharges, and the generation, handling, storage, transportation, treatment and disposal of hazardous wastes and other substances. In particular, industrial laundries currently use and must properly dispose of detergent wastewater and other residues, and, in the past, used perchloroethylene and other dry-cleaning solvents. We are attentive to the environmental concerns surrounding the disposal of these materials and have, through the years, taken measures to avoid their improper disposal. We have settled, or contributed to the settlement of, past actions or claims brought against us relating to the disposal of hazardous materials at several sites and there can be no assurance that we will not have to expend material amounts to remediate the consequences of any such disposal in the future.
Previous wording
We have accrued certain costs related to certain sites, including but not limited to, sites in Woburn and Somerville, Massachusetts, as it has been determined that the costs are probable and can be reasonably estimated. We, together with multiple other companies, are party to a consent decree related to our property and other parcels of land (the “Central Area”) at a site in Woburn, Massachusetts. The United States Environmental Protection Agency (the “EPA”) has provided us and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site and investigation of environmental conditions in the Central Area. The consent decree does not address any remediation work that may be required in the Central Area. We, and other signatories, have implemented and proposed to do additional work at the Woburn site but many of the EPA’s comments remain to be resolved. We have accrued costs to perform certain work responsive to the EPA’s comments. Additionally, we have implemented mitigation measures and continue to monitor environmental conditions at a site in Somerville, Massachusetts. We have agreed to undertake additional actions responsive to a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that we made in 2009 for a portion of the site. We have received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station was part of an extension of the transit system. We have reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.
Current wording
We have accrued certain costs related to certain sites, including but not limited to, sites in Woburn and Somerville, Massachusetts, as it has been determined that the costs are probable and can be reasonably estimated. We, together with multiple other companies, are party to a consent decree related to our property and other parcels of land (the “Central Area”) at a site in Woburn, Massachusetts. The United States Environmental Protection Agency (the “EPA”) has provided us and other signatories to the consent decree with comments on the design and implementation of groundwater and soil remedies at the Woburn site and investigation of environmental conditions in the Central Area. The consent decree does not address any remediation work that may be required in the Central Area. We, and other signatories, have implemented and proposed to do additional work at the Woburn site but many of the EPA’s comments remain to be resolved. We have accrued costs to perform certain work responsive to the EPA’s comments. Additionally, we have implemented mitigation measures and continue to monitor environmental conditions at a site in Somerville, Massachusetts. We have agreed to undertake additional actions responsive to a notice of audit findings from the Massachusetts Department of Environmental Protection concerning a regulatory submittal that we made in 2009 for a portion of the site. We received in December 2024 an additional notice related to the scope of its ongoing environmental work at the Somerville site, and additional actions responsive to this notice may follow. We have received demands from the local transit authority for reimbursement of certain costs associated with its construction of a new municipal transit station in the area of the Somerville site. This station was part of an extension of the transit system. We have reserved for costs in connection with this matter; however, in light of the uncertainties associated with this matter, these costs and the related reserve may change.
Previous wording
There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, our accruals represent the amount within the range that we believe is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. When we believe that both the amount of a particular liability and the timing of the payments are reliably determinable, we adjust the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discount the cost to present value using current risk-free interest rates. As of May 25, 2024, the risk-free interest rates we utilized ranged from 4.57% to 4.65%.
Current wording
There is usually a range of reasonable estimates of the costs associated with each site. In accordance with U.S. GAAP, our accruals represent the amount within the range that we believe is the best estimate or the low end of a range of estimates if no point within the range is a better estimate. When we believe that both the amount of a particular liability and the timing of the payments are reliably determinable, we adjust the cost in current dollars using a rate of 3% for inflation until the time of expected payment and discount the cost to present value using current risk-free interest rates. As of November 30, 2024, the risk-free interest rates we utilized ranged from 4.36% to 4.45%.
Previous wording
For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income. The changes to the amounts of our environmental liabilities for the thirty-nine weeks ended May 25, 2024 were as follows (in thousands):
Current wording
For environmental liabilities that have been discounted, we include interest accretion, based on the effective interest method, in selling and administrative expenses on the Consolidated Statements of Income. The changes to the amounts of our environmental liabilities for the thirteen weeks ended November 30, 2024 are as follows (in thousands):
Previous wording
Anticipated payments and insurance proceeds relating to currently identified environmental remediation liabilities as of May 25, 2024, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below.
Current wording
Anticipated payments and insurance proceeds relating to currently identified environmental remediation liabilities as of November 30, 2024, for the next five fiscal years and thereafter, as measured in current dollars, are reflected below (in thousands):
Previous wording
Estimated insurance proceeds are primarily received from an annuity received as part of our legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our former operations. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of May 25, 2024, the balance in this escrow account, which is held in a trust and is not recorded in our Consolidated Balance Sheet, was approximately $5.5 million. Also included in estimated insurance proceeds are amounts we are entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at one of our sites.
Current wording
Estimated insurance proceeds are primarily obtained from an annuity received as part of our legal settlement with an insurance company. Annual proceeds of approximately $0.3 million are deposited into an escrow account which funds remediation and monitoring costs for two sites related to our former operations. Annual proceeds received but not expended in the current year accumulate in this account and may be used in future years for costs related to this site through the year 2027. As of November 30, 2024, the balance in this escrow account, which is held in a trust and is not recorded in our Consolidated Balance Sheets, was approximately $5.6 million. Also included in estimated insurance proceeds are amounts we are entitled to receive pursuant to legal settlements as reimbursements from three insurance companies for estimated costs at one of our sites.
Previous wording
In addition, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million, which accrues interest and other charges. We disagree with such tax assessment and are challenging the validity of the tax assessment through an appeal process. While we are unable to ascertain the ultimate outcome of this matter, based on the information currently available, we believe that a loss with respect to this matter is neither probable nor remote. Given the uncertainty associated with the ultimate resolution of this matter, we are unable to reasonably assess an estimate or range of estimates of any potential losses.
Current wording
Federal Tax Court’s determination, we filed a constitutional action before the Federal Administrative Court. In addition, the federal tax authority appealed the determination of the Federal Tax Court. While we are unable to ascertain the ultimate outcome of this matter, based on the information currently available, we believe that a loss with respect to this matter is neither probable nor remote. Given the uncertainty associated with the ultimate resolution of this matter, we are unable to reasonably assess an estimate or range of estimates of any potential losses.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In addition, in the fourth quarter of fiscal 2022, the Mexican federal tax authority issued a tax assessment on our subsidiary in Mexico for fiscal 2016 import taxes, value added taxes and custom processing fees of over $17.0 million, plus surcharges, fines and penalties of over $67.7 million for a total assessment of over $84.7 million. We challenged the validity of the tax assessment through an appeal process. In the first quarter of fiscal 2025, the Federal Tax Court in Mexico made a determination partially in our favor. Following the
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The increase in consolidated revenues of 7.6% during the thirty-nine weeks ended May 25, 2024 compared to the prior year comparable period was due primarily to growth in our Core Laundry Operations of 8.2%. The increase in our Core Laundry Operations was due to organic growth of 4.9% and acquisition related growth of 3.3%. The effect of Canadian dollar exchange rate changes on our revenues was nominal. The Core Laundry Operations strong organic growth rate was primarily the result of solid new account sales and improved pricing with our customers. The impact on our revenues from acquisitions was primarily the result of our acquisition of Clean, which was completed on March 13, 2023.
Previous report — wording carried elsewhere
For the thirty-nine weeks ended May 25, 2024 and May 27, 2023, changes in our revenues and costs as discussed above resulted in the following changes in our operating income and margin:
Previous report — wording carried elsewhere
The decrease in the effective tax rate for the thirty-nine weeks ended May 25, 2024 as compared to the corresponding period in the prior year was due primarily to favorable adjustments to our tax reserves during the current period.