# UniFirst Corporation (NYSE: UNF) Q3 Financial Results Analysis
UniFirst Corporation recently reported its financial results for the third quarter of fiscal 2025 compared to the same period in the prior year. The company operates as a North American leader in uniform and workwear programs, facility services, and first aid supplies.
## Q3 2025 Financial Highlights:
– Consolidated revenues for Q3 increased by **1.2%** to $610.8 million.
– Operating income was $48.2 million, reflecting a decrease of **0.6%**.
– Quarterly tax rate increased to **25.7%** from 22.9% in the prior year.
– Net income rose to $39.7 million compared to $38.1 million in the prior year, marking a **4.3%** increase.
– Diluted earnings per share increased to $2.13 from $2.03 in the prior year, a **4.9%** improvement.
– Adjusted EBITDA increased to $85.8 million, up by **1.2%**.
## Segment Reporting Highlights – Core Laundry Operations:
– Revenues for the Core Laundry Operations increased by **0.9%** to $533.2 million.
– Organic growth, excluding acquisitions and currency fluctuations, was **1.1%**.
– Operating margin decreased to **6.9%** from 7.0%.
– Adjusted Core Laundry Operations’ EBITDA margin remained unchanged at **13.5%**.
## Balance Sheet and Capital Allocation:
– Cash, cash equivalents, and short-term investments totaled $211.9 million as of May 31, 2025.
– Cash flows from operating activities were $196.5 million in the first nine months of fiscal 2025.
– The company repurchased $13.6 million of shares in Q3 2025 and had $86.4 million remaining under its buyback authorization.
## Financial Outlook and Guidance:
– UniFirst is maintaining the annual revenue guidance in the range of $2.422 billion to $2.432 billion.
– Diluted earnings per share guidance was raised to $7.60 to $8.00.
– Updated Key Initiative costs for fiscal 2025 are estimated to be approximately $7.5 million.
## Additional Insights:
– The financial results included costs related to customer relationship and enterprise resource planning projects.
– A gain of $2.8 million from the sale of a non-operating property impacted net income and diluted earnings per share positively.
– The CEO mentioned that recent investments are starting to yield returns and acknowledged the efforts of the team partners for their contributions.
## Reconciliation of GAAP to Non-GAAP Financial Measures:
– Adjusted EBITDA and Adjusted EBITDA margin are used as non-GAAP financial metrics to evaluate UniFirst’s performance.
– Adjusted EBITDA for Q3 2025 was $85.8 million, with a margin of **14.1%**.
– This metric helps in analyzing the underlying operating performance of the company and its segments.
Overall, UniFirst Corporation’s third-quarter results reflect steady revenue growth, margin fluctuations in Core Laundry Operations, and an increase in net income and earnings per share. The company’s focus on cost management and strategic initiatives is notable in driving its financial performance.
## Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
| Thirteen Weeks Ended May 31, 2025 | Thirteen Weeks Ended May 25, 2024 | Thirty-Nine Weeks Ended May 31, 2025 | Thirty-Nine Weeks Ended May 25, 2024 | |
|---|---|---|---|---|
| Revenues | $610,778 | $603,328 | $1,817,905 | $1,787,564 |
| Operating expenses: | ||||
| Cost of revenues (1) | $385,189 | $391,244 | $1,160,388 | $1,171,231 |
| Selling and administrative expenses (1) | $142,690 | $129,074 | $418,119 | $383,350 |
| Depreciation and amortization | $34,722 | $34,560 | $104,476 | $103,453 |
| Total operating expenses | $562,601 | $554,878 | $1,682,983 | $1,658,034 |
| Operating income | $48,177 | $48,450 | $134,922 | $129,530 |
| Other (income) expense: | ||||
| Interest income, net | ($2,514) | ($1,406) | ($7,422) | ($4,590) |
| Other (income) expense, net | ($2,704) | $522 | ($1,620) | $1,813 |
| Total other income, net | ($5,218) | ($884) | ($9,042) | ($2,777) |
| Income before income taxes | $53,395 | $49,334 | $143,964 | $132,307 |
| Provision for income taxes | $13,715 | $11,277 | $36,720 | $31,468 |
| Net income | $39,680 | $38,057 | $107,244 | $100,839 |
| Income per share – Basic: | ||||
| Common Stock | $2.22 | $2.12 | $6.01 | $5.61 |
| Class B Common Stock | $1.78 | $1.70 | $4.80 | $4.49 |
| Income per share – Diluted: | ||||
| Common Stock | $2.13 | $2.03 | $5.76 | $5.38 |
| Income allocated to – Basic: | ||||
| Common Stock | $33,346 | $31,962 | $90,126 | $84,716 |
| Class B Common Stock | $6,334 | $6,095 | $17,118 | $16,123 |
| Income allocated to – Diluted: | ||||
| Common Stock | $39,680 | $38,057 | $107,244 | $100,839 |
| Weighted average shares outstanding – Basic: | ||||
| Common Stock | 14,990 | 15,062 | 15,007 | 15,094 |
| Class B Common Stock | 3,557 | 3,590 | 3,563 | 3,590 |
| Weighted average shares outstanding – Diluted: | ||||
| Common Stock | 18,607 | 18,705 | 18,633 | 18,738 |
(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.
## Condensed Consolidated Balance Sheets (Unaudited)
| May 31, 2025 | August 31, 2024 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $211,910 | $161,571 |
| Short-term investments | $— | $13,505 |
| Receivables, net | $281,815 | $278,851 |
| Inventories | $148,847 | $156,908 |
| Rental merchandise in service | $227,580 | $237,969 |
| Prepaid taxes | $12,133 | $14,893 |
| Prepaid expenses and other current | $55,589 | $51,979 |
| assets | ||
| Total current assets | $937,874 | $915,676 |
| Property, plant and equipment, net | $817,931 | $801,612 |
| Goodwill | $653,300 | $648,850 |
| Customer contracts and other | $107,282 | $119,999 |
| intangible assets, net | ||
| Deferred income taxes | $851 | $833 |
| Operating lease right-of-use assets | $72,461 | $66,682 |
| Other assets | $170,328 | $142,761 |
| Total assets | $2,760,027 | $2,696,413 |
## End of tables
