Segment Reporting

6 Months Ended

Feb. 24, 2024

Segment Reporting [Abstract]

Segment Reporting

16. Segment Reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Company’s chief executive officer. The Company has six operating segments based on the information reviewed by its chief executive officer: U.S. Rental and Cleaning, Canadian Rental and Cleaning, Manufacturing (“MFG”), Corporate, Specialty Garments and First Aid. The U.S. Rental and Cleaning and Canadian Rental and Cleaning operating segments have been combined to form the U.S. and Canadian Rental and Cleaning reporting segment, and as a result, the Company has five reporting segments.

The U.S. and Canadian Rental and Cleaning reporting segment purchases, rents, cleans, delivers and sells uniforms and protective clothing and other non-garment items utilized at the customer locations in the U.S. and Canada. The laundry locations of the U.S. and Canadian Rental and Cleaning reporting segment are referred to by the Company as “industrial laundries” or “industrial laundry locations.”

The MFG operating segment designs and manufactures uniforms and some of the other non-garment items primarily for the purpose of providing these goods to the U.S. and Canadian Rental and Cleaning reporting segment. MFG revenues are primarily generated when goods are shipped from the Company’s manufacturing facilities, or its subcontract manufacturers, to other Company locations. These intercompany revenues are recorded at a transfer price which is typically in excess of the actual manufacturing cost. Manufactured products are carried in inventory until placed in service at which time they are amortized at this transfer price. On a consolidated basis, intercompany revenues and income are eliminated and the carrying value of inventories and rental merchandise in service is reduced to the manufacturing cost. Income before income taxes from MFG net of the intercompany MFG elimination offsets the merchandise amortization costs incurred by the U.S. and Canadian Rental and Cleaning reporting segment as the merchandise costs of this reporting segment are amortized and recognized based on inventories purchased from MFG at the transfer price which is above the Company’s manufacturing cost.

The Corporate operating segment consists of costs associated with the Company’s distribution center, sales and marketing, information systems, engineering, procurement, supply chain, accounting and finance, human resources, other general and administrative costs and interest expense. The revenues generated from the Corporate operating segment represent certain direct sales made by the Company directly from its distribution center. The products sold by this operating segment are the same products rented and sold by the U.S. and Canadian Rental and Cleaning reporting segment. No assets or capital expenditures are allocated to this operating segment in the information reviewed by the chief executive officer. However, depreciation and amortization expense related to certain assets are reflected in operating income and income before income taxes for the Corporate operating segment. The assets that give rise to this depreciation and amortization are included in the total assets of the U.S. and Canadian Rental and Cleaning reporting segment as this is how they are tracked and reviewed by the Company. The majority of expenses accounted for within the Corporate segment relate to costs of the U.S. and Canadian Rental and Cleaning segment, with the remainder of the costs relating to the Specialty Garment and First Aid segments.

The Specialty Garments operating segment purchases, rents, cleans, delivers and sells, specialty garments and non-garment items primarily for nuclear and cleanroom applications and provides cleanroom cleaning services at certain customer locations. The First Aid operating segment sells first aid cabinet services and other safety supplies, provides certain safety training and maintains wholesale distribution and pill packaging operations.

The Company refers to the U.S. and Canadian Rental and Cleaning, MFG, and Corporate reporting segments combined as its “Core Laundry Operations,” which is included as a subtotal in the following table (in thousands):

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	February 24, 2024			February 25, 2023			February 24, 2024			February 25, 2023
Revenues:
U.S. and Canadian Rental and Cleaning	$	507,602		$	463,803		$	1,018,544		$	926,627
MFG		71,038			74,231			156,077			151,742
Net intercompany MFG elimination		(71,038	)		(74,231	)		(156,077	)		(151,742	)
Corporate		14,818			13,247			27,865			27,821
Subtotal: Core Laundry Operations		522,420			477,050			1,046,409			954,448
Specialty Garments		43,462			42,127			88,131			86,206
First Aid		24,829			23,514			49,696			43,835
Total consolidated revenues	$	590,711		$	542,691		$	1,184,236		$	1,084,489
Operating income (loss):
U.S. and Canadian Rental and Cleaning	$	67,390		$	64,010		$	153,036		$	146,655
MFG		19,547			22,252			44,488			45,554
Net intercompany MFG elimination		91			(6,008	)		(4,390	)		(12,791	)
Corporate		(67,982	)		(66,612	)		(131,997	)		(131,945	)
Subtotal: Core Laundry Operations		19,046			13,642			61,137			47,473
Specialty Garments		9,901			8,045			22,018			18,228
First Aid		(1,004	)		(977	)		(2,075	)		(1,573	)
Total consolidated operating income	$	27,943		$	20,710		$	81,080		$	64,128
Other expense (income):
Interest income, net	$	(350	)	$	(3,031	)	$	(3,184	)	$	(5,800	)
Other expense, net		575			114			1,291			905
Total consolidated other expense (income), net	$	225		$	(2,917	)	$	(1,893	)	$	(4,895	)
Total consolidated income before income taxes	$	27,718		$	23,627		$	82,973		$	69,023