UniFirst Announces Financial Results for the First Quarter

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News Desk 2018
UniFirst Announces Financial Results for the First Quarter of Fiscal 2016

WILMINGTON, Mass., Jan. 06, 2016 (GLOBE NEWSWIRE) -- UniFirst Corporation (NYSE: UNF ) today announced results for its first quarter of fiscal 2016 which ended November 28, 2015. Revenues for the quarter were $373.4 million, up 0.8% from $370.4 million in the year ago period.  Net income was $35.9 million ($1.78 per diluted share), down 4.1% from $37.4 million ($1.85 per diluted share) in the first quarter of fiscal 2015.

Ronald D. Croatti, UniFirst President and Chief Executive Office said, “As anticipated, our growth during the first quarter was impacted by the loss of uniform wearers and customers in energy dependent markets in the United States and Canada during the last year.  In addition, our top and bottom lines were affected by the further weakening of the Canadian Dollar.  Despite these challenges, we continue to focus on emphasizing the value of our products and services to new and existing customers, improving our overall customer service levels and other factors within our control.”

Core Laundry revenues in the quarter were $335.0 million, down 0.2% from those reported in the prior year’s first quarter.  Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenues grew 0.4%.  This segment’s income from operations decreased 6.9% compared to the first quarter of fiscal 2015, while the operating margin decreased to 15.8% from 16.9% a year ago.  The margin decline primarily reflects higher merchandise costs, selling and administrative expenses and depreciation as a percentage of revenues.  These items were partially offset by lower energy and legal expenses during the quarter compared to a year ago.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $26.8 million, up 19.1% from $22.5 million in the first quarter of fiscal 2015.  Due primarily to the improved revenue performance, this segment’s income from operations increased to $4.3 million in the current quarter from $2.3 million in last year’s comparable period. These favorable comparisons were primarily driven by this segment’s U.S. and Canadian nuclear decontamination operations. 

UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances. Net cash provided by operating activities during the quarter was $57.6 million, up 9.1% from the same quarter in fiscal 2015 and cash and cash equivalents at the end of the fiscal quarter totaled $311.5 million, up from $276.6 million at the end of fiscal 2015.

Outlook Mr. Croatti continued, “Based on the further weakening of the Canadian dollar to the current level, we now believe that full year fiscal 2016 revenues will be between $1.460 billion and $1.475 billion and that our full year diluted EPS will be between $5.60 and $5.80. This guidance assumes no significant further deterioration in our wearer base as a result of additional layoffs in energy dependent markets that we service.”

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 more than 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 may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” or the negative versions thereof, and similar expressions and by the context in which they are used. Such forward looking statements are based upon our current expectations and speak only as of the date made. Such statements are highly dependent upon a variety of risks, uncertainties and other 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, our ability to compete successfully without any significant degradation in our margin rates, uncertainties caused by the continuing adverse worldwide economic conditions and their impact on our customers’ businesses and workforce levels, 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, uncertainties regarding our ability to consummate and successfully integrate acquired businesses, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the continuing increase in domestic healthcare costs, including the ultimate impact of the Affordable Care Act, our retention of customers and renewal of customer contracts, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the negative effect on our business from sharply depressed oil prices, fluctuation on our revenue and net income from our specialty garments segment, the effect of currency fluctuations on our results of operations and financial condition, rampant criminal activity and instability in Mexico where our principal garment manufacturing plants are located, the impact on our goodwill and intangibles that might result from adverse financial and economic changes, our ability to properly and efficiently design, construct, implement and operate our new customer relationship management (“CRM”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, failure to comply with other state and federal regulations that might result in penalties or costs, seasonal and quarterly fluctuations in business levels, any loss of key management or other personnel,  our dependence on third parties to supply us with raw materials, 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, demand and prices for our products and services, 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 our Annual Report on Form 10-K for the year ended August 29, 2015 and in our other filings with the Securities and Exchange Commission. We undertake 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  
Consolidated Statements of Income  
                 
      Thirteen       Thirteen  
      weeks ended       weeks ended  
      November 28,       November 29,  
(In thousands, except per share data)     2015 (2)       2014 (2)  
                 
Revenues   $ 373,384     $ 370,361  
                 
Operating expenses:                
Cost of revenues (1)     222,603       219,353  
Selling and administrative expenses (1)     72,749       72,382  
Depreciation and amortization     19,738       18,037  
Total operating expenses     315,090       309,772  
                 
Income from operations     58,294       60,589  
                 
Other (income) expense:                
Interest expense     221       188  
Interest income     (764 )     (804 )
Foreign exchange loss     479       371  
Total other (income) expense      (64 )     (245 )
                 
Income before income taxes     58,358       60,834  
Provision for income taxes     22,468       23,421  
                 
Net income    $ 35,890     $ 37,413  
                 
Income per share – Basic                
Common Stock    $ 1.88     1.96  
Class B Common Stock    $ 1.50     1.57  
                 
Income per share – Diluted                
Common Stock    $ 1.78     $ 1.85  
                 
Income allocated to – Basic                
Common Stock    $ 28,539     29,649  
Class B Common Stock    $ 7,193     7,434  
                 
Income allocated to – Diluted                
Common Stock    $ 35,741     $ 37,101  
                 
Weighted average number of shares outstanding – Basic                
Common Stock     15,218       15,128  
Class B Common Stock     4,795       4,741  
                 
Weighted average number of shares outstanding – Diluted                
Common Stock     20,132       20,008  
                 

(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets  

(2) Unaudited

UniFirst Corporation and Subsidiaries  
Condensed Consolidated Balance Sheets  
               
      November 28,     August 29,  
(In thousands)     2015 (1)     2015  
Assets              
Current assets:              
Cash and cash equivalents   $ 311,532   $ 276,553  
Receivables, net     168,924     151,851  
Inventories     76,856     80,449  
Rental merchandise in service     141,489     140,384  
Prepaid and deferred income taxes     198     204  
Prepaid expenses and other current assets     14,670     12,382  
               
Total current assets     713,669     661,823  
               
Property, plant and equipment, net     516,457     513,853  
               
Goodwill     313,062     313,133  
Customer contracts and other intangible assets, net     37,968     40,049  
Deferred income taxes     1,453     1,475  
Other assets     3,076     2,904  
               
    $ 1,585,685   $ 1,533,237  
               
Liabilities and shareholders' equity              
Current liabilities:              
Loans payable   $ 601   $ 1,385  
Accounts payable     58,654     50,826  
Accrued liabilities     107,391     113,022  
Accrued and deferred income taxes     33,706     18,878  
               
Total current liabilities     200,352     184,111  
               
Long-term liabilities:              
Accrued liabilities     55,551     54,566  
Accrued and deferred income taxes     52,843     52,352  
               
Total long-term liabilities     108,394     106,918  
               
Shareholders' equity:              
Common Stock     1,526     1,525  
Class B Common Stock     485     485  
Capital surplus     69,254     67,611  
Retained earnings     1,232,172     1,197,000  
Accumulated other comprehensive (loss) income     (26,498 )   (24,413 )
               
Total shareholders' equity     1,276,939     1,242,208  
               
    $ 1,585,685   $ 1,533,237  

 (1) Unaudited

UniFirst Corporation and Subsidiaries  
Detail of Operating Results  
   
Revenues  
                       
    Thirteen     Thirteen            
    weeks ended     weeks ended            
    November 28,     November 29,     Dollar   Percent  
(In thousands, except percentages)   2015 (1)     2014 (1)     Change   Change  
                       
Core Laundry Operations $ 335,037   $ 335,847   $ (810 ) -0.2 %
Specialty Garments   26,770     22,476     4,294   19.1  
First Aid   11,577     12,038     (461 ) -3.8  
Consolidated total $ 373,384   $ 370,361   $ 3,023   0.8 %
Income from Operations  
                       
    Thirteen     Thirteen            
    weeks ended     weeks ended            
    November 28,     November 29,       Dollar   Percent  
(In thousands, except percentages)   2015 (1)     2014 (1)     Change   Change  
                       
Core Laundry Operations $ 52,972   $ 56,873   $ (3,901 ) -6.9 %
Specialty Garments   4,286     2,268     2,018   89.0  
First Aid   1,036     1,448     (412 ) -28.4  
Consolidated total $ 58,294   $ 60,589   $ (2,295 ) -3.8 %

(1) Unaudited

UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
     
  Thirteen Thirteen
  weeks ended weeks ended
  November 28, November 29,
(In thousands) 2015 (1) 2014 (1)
Cash flows from operating activities:                
Net income     $ 35,890   $ 37,413  
Adjustments to reconcile net income to cash provided by operating activities:                
Depreciation       17,643     15,865  
Amortization of intangible assets       2,095     2,172  
Amortization of deferred financing costs       52     52  
Share-based compensation       1,260     1,615  
Accretion on environmental contingencies       167     151  
Accretion on asset retirement obligations       199     194  
Deferred income taxes       26     21  
Changes in assets and liabilities, net of acquisitions:                
Receivables       (17,376 )   (16,039 )
Inventories       3,452     645  
Rental merchandise in service       (1,280 )   (1,744 )
Prepaid expenses and other current assets       (2,286 )   (6,847 )
Accounts payable       7,913     559  
Accrued liabilities       (4,967 )   (2,796 )
Prepaid and accrued income taxes       14,853     21,587  
Net cash provided by operating activities       57,641     52,848  
                 
Cash flows from investing activities:                
Acquisition of businesses, net of cash acquired       (73 )   (10,846 )
Capital expenditures       (21,049 )   (17,453 )
Other       223     100  
Net cash used in investing activities       (20,899 )   (28,199 )
                 
Cash flows from financing activities:                
Proceeds from loans payable and long-term debt           2,008  
Payments on loans payable and long-term debt       (764 )   (3,508 )
Proceeds from exercise of Common Stock options, including excess tax benefits       383     1,750  
Payment of cash dividends       (717 )   (715 )
Net cash used in financing activities       (1,098 )   (465 )
                 
Effect of exchange rate changes on cash       (665 )   (2,979 )
                 
Net increase in cash and cash equivalents       34,979     21,205  
Cash and cash equivalents at beginning of period       276,553     191,769  
                 
Cash and cash equivalents at end of period     $ 311,532   $ 212,974  

(1) Unaudited

 

CONTACT: Steven S. Sintros Senior Vice President & CFO 978-658-8888 ssintros@unifirst.com

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