On June 26, 2024, UniFirst Corp (UNF, Financial) released its 8-K filing reporting financial results for the third quarter of fiscal 2024, ending May 25, 2024. UniFirst Corp provides workplace uniforms, protective clothing, and other workplace products and services to businesses in the United States, Canada, and Europe.
Performance Overview
UniFirst Corp (UNF, Financial) reported consolidated revenues of $603.3 million for Q3 2024, a 4.6% increase from the prior year, surpassing the analyst estimate of $601.29 million. The company also reported a significant increase in net income, which rose to $38.1 million from $24.3 million in the previous year, marking a 56.8% increase. Diluted earnings per share (EPS) increased to $2.03, exceeding the analyst estimate of $1.70 and up from $1.29 in the prior year.
Segment Performance
The Core Laundry Operations segment, which is the largest contributor to UniFirst's revenue, saw a 5.3% increase in revenues to $528.5 million. The segment's operating margin improved to 7.0% from 4.2%, and its EBITDA margin increased to 13.1% from 9.9%. This growth was driven by lower merchandise, payroll, and other operating input costs as a percentage of revenues.
However, the Specialty Garments segment experienced a 3.7% decline in revenues to $47.6 million, primarily due to a decrease in revenue from nuclear operations. Despite this, the segment's cleanroom operations showed growth. The operating margin for Specialty Garments decreased to 23.9% from 25.2% due to increased production costs and selling payroll costs.
Financial Achievements
UniFirst Corp (UNF, Financial) achieved a notable increase in operating income, which rose by 45.1% to $48.5 million. The company's EBITDA also saw a significant increase of 29.0%, reaching $82.5 million. Cash flow from operating activities increased by 35.2% to $193.0 million in the first nine months of 2024.
Balance Sheet and Capital Allocation
As of May 25, 2024, UniFirst Corp (UNF, Financial) had cash, cash equivalents, and short-term investments totaling $125.4 million, with no long-term debt outstanding. The company repurchased 47,250 shares of Common Stock for $7.8 million during the third quarter, leaving $84.0 million remaining under its existing share repurchase authorization.
Key Metrics
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Revenue | $603.3 million | $576.7 million | 4.6% |
| Net Income | $38.1 million | $24.3 million | 56.8% |
| Diluted EPS | $2.03 | $1.29 | 57.4% |
| EBITDA | $82.5 million | $64.0 million | 29.0% |
Commentary
Steven Sintros, UniFirst President and Chief Executive Officer, said, “We are pleased with the results for our third quarter, which delivered solid growth in revenues, EBITDA and cash flows from operating activities. I want to sincerely thank all our Team Partners who continue to Always Deliver for each other and our customers as we strive towards our vision of being universally recognized as the best service provider in the industry. …all while living our Mission of Serving the People Who do the Hard Work.”
Analysis
UniFirst Corp (UNF, Financial) has demonstrated strong financial performance in Q3 2024, exceeding analyst estimates for both revenue and earnings. The company's ability to increase operating income and EBITDA significantly, while maintaining a healthy balance sheet with no long-term debt, positions it well for future growth. The challenges faced by the Specialty Garments segment highlight the importance of diversification within the company's operations. Overall, UniFirst's strong financial results and strategic initiatives indicate a positive outlook for the company in the business services industry.
Explore the complete 8-K earnings release (here) from UniFirst Corp for further details.
