UniFirst Corp (NYSE: UNF) reported Q2 EPS of $1.82, $0.17 better than the analyst estimate of $1.65. Revenue for the quarter came in at $464.6 million versus the consensus estimate of $457.48 million.

Q2 2020 Financial Highlights

• Consolidated revenues for the second quarter increased 6.2% to $464.6 million.
• Operating income was $44.1 million, a decrease of 29.3%.
• The effective tax rate for the quarter decreased to 24.2% from 24.9%.
• Net income in the quarter decreased to $34.7 million from $47.6 million, or 27.2%.
• Diluted earnings per share decreased to $1.82 from $2.48, or 26.6%.

Operating income in the second quarter of fiscal 2019 benefited from a pre-tax gain of $21.1 million, which was recorded in selling and administrative expenses. This amount reflected a settlement with the lead contractor for the version of the customer relationship management system for which the Company had recorded a $55.8 million impairment charge in fiscal 2017 (the “CRM Settlement”). This settlement included the receipt of a one-time cash payment of $13.0 million, the forgiveness of amounts previously due the contractor as well as the receipt of certain hardware and related maintenance. Excluding the effect of the CRM Settlement:

• Operating income increased 6.8% compared to prior year’s adjusted operating income.
• Net income increased 8.2% from prior year’s adjusted net income of $32.0 million.
• Diluted earnings per share increased 9.0% from prior year’s adjusted amount of $1.67.

Steven Sintros, UniFirst President and Chief Executive Officer, said, “We are pleased with the results of our second quarter which largely met our expectations and showed solid top and bottom-line growth. However, the Company’s attention has now turned toward our pandemic response efforts. Our top priority is working to ensure the safety of our Team Partners while continuing to provide our value-added products and services to the many essential businesses that are keeping our communities safe and operating. I want to thank our Team Partners for their continued efforts as they demonstrate unwavering commitment and dedication.”

Financial Outlook

Mr. Sintros continued, “Due to the evolving pandemic, our ability to assess the financial impact on our business remains limited. As a result, we are not providing guidance for the remainder of our fiscal 2020. Although we are not able to quantify, we expect the disruption related to this pandemic will clearly have a negative impact on our revenues and profitability. We also expect that if sustained for an extended period, the sharp decline in oil prices as well as the decline in the Canadian exchange rate will further challenge our performance. Our strong balance sheet positions us well to weather this disruption and maintain focus on the care of our Team Partners, our customers and our communities.”

For earnings history and earnings-related data on UniFirst Corp (UNF) click here.