UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2015 third quarter ended May 30, 2015. Revenues were $365.6 million, up 3.8% from $352.2 million in the year ago period. Net income was $32.5 million ($1.61 per diluted share), up 5.0% compared to $30.9 million ($1.53 per diluted share) reported a year ago.
Ronald D. Croatti, UniFirst President and Chief Executive Officer, said, “Our growth continued to be limited by macroeconomic factors including headcount reductions at many of our energy related customers as well as weaker foreign currency exchange rates adversely affecting our Canadian and European operations. Despite these challenges, we are pleased with the results of our third quarter and will continue to focus on factors within our control.”
Revenues in the Core Laundry Operations were $327.8 million, up 4.6% from those reported in the prior year’s third quarter. Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenue grew 4.7%. This segment’s income from operations increased 5.5% compared to the third quarter of fiscal 2014, while the operating margin increased slightly to 14.3% from 14.2% a year ago. The margin benefited from lower energy costs during the quarter which were offset partially by higher merchandise costs and administrative expenses as a percentage of revenues.
Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $25.9 million, down 6.4% from $27.6 million in the third quarter of fiscal 2014. This decrease in revenues was due primarily to the impact of a weaker Canadian dollar and Euro. This segment reported income from operations of $4.0 million in both the current quarter and last year’s fiscal third quarter. In addition, the Company’s First Aid segment continued to produce strong top and bottom line results.
UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances. Cash and cash equivalents at the end of the quarter totaled $235.7 million, up from $191.8 million at the end of fiscal 2014.
Outlook
Mr. Croatti continued, “Based
primarily on the effect of these macroeconomic factors, we expect our
growth rate to continue to decline in the fourth quarter. As a result,
we believe that full year fiscal 2015 revenues will be between $1.452
billion and $1.458 billion. We also believe that full year diluted EPS
will be between $5.90 and $6.00. As a reminder, this EPS range includes
the impact of the $3.6 million environmental charge incurred during our
second quarter.”
Conference Call Information
UniFirst
will hold a conference call today at 10:00 a.m. (ET) to discuss its
quarterly financial results, business highlights and outlook. A
simultaneous live webcast of the call will be available over the
Internet and can be accessed at www.unifirst.com.
About UniFirst Corporation
Headquartered
in Wilmington, Mass., UniFirst Corporation is 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 its
subsidiaries, the company also provides first aid and safety products,
and manages specialized garment programs for the cleanroom and nuclear
industries. UniFirst manufactures its own branded workwear, protective
clothing, and floorcare products, and with over 225 service locations,
275,000 customer locations, and 12,000 employee Team Partners, the
company outfits more than 1.5 million workers each business day.
UniFirst is a publicly held company traded on the New York Stock
Exchange under the symbol UNF and is a component of the Standard &
Poor's 600 Small Cap Index. For more information visit www.unifirst.com.
Forward Looking Statements
This public
announcement contains forward looking statements that reflect the
Company’s current views with respect to future events and financial
performance, including projected revenues and earnings per share.
Forward looking statements contained in this public announcement are
subject to the safe harbor created by the Private Securities Litigation
Reform Act of 1995 and are highly dependent upon a variety of 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 regarding the Company’s ability to
consummate and successfully integrate acquired 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, the Company’s ability to
compete successfully without any significant degradation in its margin
rates, seasonal 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, any loss of key management or other personnel, increased
costs as a result of any future changes in federal or state laws, rules
and regulations or governmental interpretation of such laws, rules and
regulations, uncertainties regarding the price levels of natural gas,
electricity, fuel and labor, the impact of turbulent economic conditions
and the current tight credit markets on our customers and such
customers’ workforce, the level and duration of workforce reductions by
our customers, the continuing increase in domestic healthcare costs,
including the ultimate impact of the Affordable Care Act, demand and
prices for our products and services, rampant criminal activity and
instability in Mexico where our principal garment manufacturing plants
are located, our ability to properly and efficiently design, construct,
implement and operate our new CRM computer system, interruptions or
failures of our information technology systems, including as a result of
cyber-attacks, additional professional and internal costs necessary for
compliance with recent and proposed future changes in Securities and
Exchange Commission, New York Stock Exchange and accounting rules,
strikes and unemployment levels, the Company’s efforts to evaluate and
potentially reduce internal costs, economic and other developments
associated with the war on terrorism and its impact on the economy,
general economic conditions and other factors described under “Item 1A.
Risk Factors” in the Company’s Annual Report on Form 10-K for the year
ended August 30, 2014 and in other filings with the Securities and
Exchange Commission. When used in this public announcement, the words
“anticipate,” “optimistic,” “believe,” “estimate,” “expect,” “intend,”
and similar expressions as they relate to the Company are included to
identify such forward looking statements. The Company undertakes no
obligation to update any forward looking statements to reflect events or
circumstances arising after the date on which such statements are made.
UniFirst Corporation and Subsidiaries | |||||||||||||||||
| (In thousands, except per share data) | Thirteen | Thirteen | Thirty-nine | Thirty-nine | |||||||||||||
| Revenues | $ | 365,574 | $ | 352,238 | $ | 1,097,397 | $ | 1,042,909 | |||||||||
| Operating expenses: | |||||||||||||||||
| Cost of revenues (1) | 221,995 | 216,644 | 665,222 | 640,341 | |||||||||||||
| Selling and administrative expenses (1) | 72,205 | 67,996 | 221,832 | 203,478 | |||||||||||||
| Depreciation and amortization | 19,022 | 18,109 | 55,851 | 53,237 | |||||||||||||
| Total operating expenses | 313,222 | 302,749 | 942,905 | 897,056 | |||||||||||||
| Income from operations | 52,352 | 49,489 | 154,492 | 145,853 | |||||||||||||
| Other (income) expense: | |||||||||||||||||
| Interest expense | 221 | 109 | 648 | 533 | |||||||||||||
| Interest income | (784 | ) | (773 | ) | (2,532 | ) | (2,415 | ) | |||||||||
| Foreign exchange loss | 72 | 39 | 1,323 | 41 | |||||||||||||
| Total other (income) expense | (491 | ) | (625 | ) | (561 | ) | (1,841 | ) | |||||||||
| Income before income taxes | 52,843 | 50,114 | 155,053 | 147,694 | |||||||||||||
| Provision for income taxes | 20,344 | 19,170 | 59,695 | 56,641 | |||||||||||||
| Net income | $ | 32,499 | $ | 30,944 | $ | 95,358 | $ | 91,053 | |||||||||
| Income per share – Basic | |||||||||||||||||
| Common Stock | $ | 1.70 | $ | 1.62 | $ | 4.99 | $ | 4.78 | |||||||||
| Class B Common Stock | $ | 1.36 | $ | 1.30 | $ | 3.99 | $ | 3.82 | |||||||||
| Income per share – Diluted | |||||||||||||||||
| Common Stock | $ | 1.61 | $ | 1.53 | $ | 4.72 | $ | 4.52 | |||||||||
| Income allocated to – Basic | |||||||||||||||||
| Common Stock | $ | 25,817 | $ | 24,493 | $ | 75,650 | $ | 71,971 | |||||||||
| Class B Common Stock | $ | 6,483 | $ | 6,127 | $ | 18,954 | $ | 17,962 | |||||||||
| Income allocated to – Diluted | |||||||||||||||||
| Common Stock | $ | 32,310 | $ | 30,637 | $ | 94,644 | $ | 89,992 | |||||||||
| Weighted average number of shares outstanding – Basic | |||||||||||||||||
| Common Stock | 15,207 | 15,102 | 15,173 | 15,069 | |||||||||||||
| Class B Common Stock | 4,773 | 4,722 | 4,752 | 4,701 | |||||||||||||
| Weighted average number of shares outstanding – Diluted | |||||||||||||||||
| Common Stock | 20,118 | 19,977 | 20,057 | 19,921 | |||||||||||||
(1) Exclusive of depreciation on the Company’s property, plant and
equipment and amortization on its intangible assets
(2) Unaudited
UniFirst Corporation and Subsidiaries | ||||||||
| (In thousands) | May 30, 2015 (1) | August 30, 2014 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 235,672 | $ | 191,769 | ||||
| Receivables, net | 157,871 | 152,523 | ||||||
| Inventories | 83,897 | 78,858 | ||||||
| Rental merchandise in service | 144,535 | 146,449 | ||||||
| Prepaid and deferred income taxes | 5,336 | 13,342 | ||||||
| Prepaid expenses and other current assets | 16,523 | 6,349 | ||||||
| Total current assets | 643,834 | 589,290 | ||||||
| Property, plant and equipment: | ||||||||
| Land, buildings and leasehold improvements | 400,236 | 393,584 | ||||||
| Machinery and equipment | 534,916 | 512,842 | ||||||
| Motor vehicles | 192,466 | 166,573 | ||||||
| 1,127,618 | 1,072,999 | |||||||
| Less - accumulated depreciation | 612,137 | 586,717 | ||||||
| 515,481 | 486,282 | |||||||
| Goodwill | 313,670 | 303,648 | ||||||
| Customer contracts and other intangible assets, net | 40,316 | 41,477 | ||||||
| Deferred income taxes | 1,237 | 1,403 | ||||||
| Other assets | 3,070 | 2,061 | ||||||
| $ | 1,517,608 | $ | 1,424,161 | |||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Loans payable and current maturities of long-term debt | $ | 3,376 | $ | 7,704 | ||||
| Accounts payable | 56,542 | 59,177 | ||||||
| Accrued liabilities | 105,996 | 100,818 | ||||||
| Accrued and deferred income taxes | 22,991 | 23,342 | ||||||
| Total current liabilities | 188,905 | 191,041 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, net of current maturities | — | 155 | ||||||
| Accrued liabilities | 57,419 | 50,235 | ||||||
| Accrued and deferred income taxes | 54,569 | 48,271 | ||||||
| Total long-term liabilities | 111,988 | 98,661 | ||||||
| Shareholders' equity: | ||||||||
| Common Stock | 1,525 | 1,519 | ||||||
| Class B Common Stock | 485 | 486 | ||||||
| Capital surplus | 66,912 | 59,415 | ||||||
| Retained earnings | 1,168,777 | 1,075,572 | ||||||
| Accumulated other comprehensive (loss) income | (20,984 | ) | (2,533 | ) | ||||
| Total shareholders' equity | 1,216,715 | 1,134,459 | ||||||
| $ | 1,517,608 | $ | 1,424,161 | |||||
(1) Unaudited
UniFirst Corporation and Subsidiaries Revenues | ||||||||||||||
| (In thousands, except percentages) | Thirteen | Thirteen | Dollar | Percent | ||||||||||
| Core Laundry Operations | $ | 327,770 | $ | 313,305 | $ | 14,465 | 4.6 | % | ||||||
| Specialty Garments | 25,854 | 27,619 | (1,765 | ) | -6.4 | |||||||||
| First Aid | 11,950 | 11,314 | 636 | 5.6 | ||||||||||
| Consolidated total | $ | 365,574 | $ | 352,238 | $ | 13,336 | 3.8 | % | ||||||
(In thousands, except percentages) | Thirty-nine | Thirty-nine | Dollar | Percent | ||||||||||
| Core Laundry Operations | $ | 995,685 | $ | 938,492 | $ | 57,193 | 6.1 | % | ||||||
| Specialty Garments | 66,991 | 72,468 | (5,477 | ) | -7.6 | |||||||||
| First Aid | 34,721 | 31,949 | 2,772 | 8.7 | ||||||||||
| Consolidated total | $ | 1,097,397 | $ | 1,042,909 | $ | 54,488 | 5.2 | % | ||||||
Income from Operations | ||||||||||||||
| (In thousands, except percentages) | Thirteen | Thirteen | Dollar | Percent | ||||||||||
| Core Laundry Operations | $ | 46,934 | $ | 44,498 | $ | 2,436 | 5.5 | % | ||||||
| Specialty Garments | 4,032 | 3,992 | 40 | 1.0 | ||||||||||
| First Aid | 1,386 | 999 | 387 | 38.7 | ||||||||||
| Consolidated total | $ | 52,352 | $ | 49,489 | $ | 2,863 | 5.8 | % | ||||||
| (In thousands, except percentages) | Thirty-nine | Thirty-nine | Dollar | Percent | ||||||||||
| Core Laundry Operations | $ | 144,731 | $ | 136,313 | $ | 8,418 | 6.2 | % | ||||||
| Specialty Garments | 5,865 | 7,063 | (1,198 | ) | -17.0 | |||||||||
| First Aid | 3,896 | 2,477 | 1,419 | 57.3 | ||||||||||
| Consolidated total | $ | 154,492 | $ | 145,853 | $ | 8,639 | 5.9 | % | ||||||
(1) Unaudited
UniFirst Corporation and Subsidiaries | |||||||||
(In thousands) | Thirty-nine | Thirty-nine | |||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | 95,358 | $ | 91,053 | |||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||
| Depreciation | 49,270 | 46,432 | |||||||
| Amortization of intangible assets | 6,581 | 6,805 | |||||||
| Amortization of deferred financing costs | 156 | 156 | |||||||
| Share-based compensation | 4,413 | 4,541 | |||||||
| Accretion on environmental contingencies | 452 | 537 | |||||||
| Accretion on asset retirement obligations | 503 | 756 | |||||||
| Deferred income taxes | 6,668 | (134 | ) | ||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||
| Receivables | (9,463 | ) | (11,573 | ) | |||||
| Inventories | (5,714 | ) | 4,550 | ||||||
| Rental merchandise in service | 1,417 | (8,882 | ) | ||||||
| Prepaid expenses and other current assets | (7,812 | ) | (2,108 | ) | |||||
| Accounts payable | (2,106 | ) | (11,445 | ) | |||||
| Accrued liabilities | 10,283 | 4,874 | |||||||
| Prepaid and accrued income taxes | 8,408 | 6,713 | |||||||
| Net cash provided by operating activities | 158,414 | 132,275 | |||||||
| Cash flows from investing activities: | |||||||||
| Acquisition of businesses | (19,815 | ) | (841 | ) | |||||
| Capital expenditures | (82,272 | ) | (74,466 | ) | |||||
| Other | (1,160 | ) | 480 | ||||||
| Net cash used in investing activities | (103,247 | ) | (74,827 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Proceeds from loans payable and long-term debt | 5,401 | 7,107 | |||||||
| Payments on loans payable and long-term debt | (9,580 | ) | (109,383 | ) | |||||
| Proceeds from exercise of Common Stock options, including excess tax benefits | 8,055 | 5,630 | |||||||
| Taxes withheld and paid related to net share settlement of equity awards | (5,002 | ) | (3,527 | ) | |||||
| Payment of cash dividends | (2,151 | ) | (2,145 | ) | |||||
| Net cash used in financing activities | (3,277 | ) | (102,318 | ) | |||||
| Effect of exchange rate changes on cash | (7,987 | ) | (1,588 | ) | |||||
| Net increase (decrease) in cash and cash equivalents | 43,903 | (46,458 | ) | ||||||
| Cash and cash equivalents at beginning of period | 191,769 | 197,479 | |||||||
| Cash and cash equivalents at end of period | $ | 235,672 | $ | 151,021 | |||||
(1) Unaudited
View source version on businesswire.com: http://www.businesswire.com/news/home/20150701005308/en/
Contacts:
Steven S. Sintros, 978- 658-8888
Senior
Vice President & CFO
ssintros@UniFirst.com
