UniFirst Corporation (NYSE: UNF) today announced results for its
fiscal 2015 second quarter ended February 28, 2015. Revenues were
$361.5 million, up 5.1% from $344.0 million in the year ago period.
Net income was $25.4 million ($1.26 per diluted share), compared to
$25.6 million ($1.27 per diluted share) reported a year ago. The
current quarter’s results were limited by a $3.6 million charge to
selling and administrative expenses related to an increase in the
Company’s environmental contingency reserves. Excluding the effect
of this item, net income would have been $27.7 million ($1.37 per
diluted share), an increase of 7.8% from the prior year.
Ronald D. Croatti, UniFirst President and Chief Executive
Officer said, “Our solid quarterly results reflect a continued
focus on maximizing the output of our professional sales and
service organizations. Although Core Laundry revenues have begun to
be challenged by headcount reductions at many of our energy related
customers, we will continue to focus on actions within our control
such as providing superior service and value to our customer
base.”
Revenues in the Core Laundry Operations were $332.1 million, up
6.0% from those reported in the prior year’s second quarter.
Adjusting for the effects of acquisitions and a weaker Canadian
dollar, revenues grew 6.1%. Excluding the environmental charge
discussed above, this segment’s income from operations increased
12.9% compared to the second quarter of fiscal 2014, while the
adjusted operating margin expanded to 13.4% from 12.6% a year ago.
The margin improvement was due primarily to lower energy costs
during the quarter.
The increase to the Company’s environmental contingency reserves
was mainly due to additional costs the Company expects to incur
associated with a planned municipal project that is near one of our
environmental sites. To a lesser extent, the Company’s reserves
also were increased due to the effect of lower interest rates on
the discounting of its environmental liabilities.
Revenues for the Specialty Garments segment, which consists of
nuclear decontamination and cleanroom operations, were $18.7
million, down 8.6% from $20.4 million in the second quarter of
fiscal 2014. This decrease was primarily the result of reduced
power reactor business in North America compared to a year ago as
well as the impact of foreign currency. As a result of the revenue
decline, this segment reported a loss from operations for the
quarter of $0.4 million compared to income from operations of $0.3
million in the prior year quarter.
Current quarter profits were also limited by foreign exchange
rate losses of $0.9 million compared to $0.2 million a year ago due
to the weakening of the Canadian dollar and Euro against the US
dollar.
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 $231.5 million, up
from $191.8 million at end of fiscal 2014.
OutlookMr. Croatti continued, “As a
result of the weaker Canadian dollar as well as the negative impact
that the low price of oil is having on portions of our customer
base, we now believe that full year fiscal 2015 revenues will be at
the lower end of our previously communicated range of $1.450
billion to $1.470 billion. We also believe that full year diluted
EPS will be between $5.65 and $5.85 per share. This EPS range has
been lowered from our previously communicated guidance primarily to
reflect the impact of the environmental charge taken during the
quarter.”
Conference Call InformationUniFirst
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
CorporationHeadquartered 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, 260,000 customer locations, and approximately
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 StatementsThis
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, including suits relating to the New England Compounding
Center matter, 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
Consolidated Statements of
Income
(In thousands, except per share data)
Thirteenweeks
endedFebruary 28,2015 (2)
Thirteenweeks endedMarch
1,2014 (2)
Twenty-sixweeks
endedFebruary 28,2015 (2)
Twenty-sixweeks
endedMarch 1,2014 (2)
Revenues $ 361,462 $ 343,967 $ 731,823 $ 690,671
Operating expenses: Cost of revenues (1) 223,874 215,560 443,227
423,697 Selling and administrative expenses (1) 77,245 69,853
149,627 135,482 Depreciation and amortization 18,792 17,830 36,829
35,128 Total operating expenses 319,911 303,243 629,683 594,307
Income from operations 41,551 40,724 102,140 96,364
Other (income) expense: Interest expense 239 216 427 424 Interest
income (944 ) (877 ) (1,748 ) (1,642 ) Foreign exchange loss 880
161 1,251 2 Total other (income) expense 175 (500 ) (70 ) (1,216 )
Income before income taxes 41,376 41,224 102,210 97,580
Provision for income taxes 15,930 15,577 39,351 37,471 Net
income $ 25,446 $ 25,647 $ 62,859 $ 60,109
Income per
share – Basic Common Stock $ 1.33 $ 1.34 $ 3.29 $ 3.15 Class B
Common Stock $ 1.06 $ 1.08 $ 2.63 $ 2.52
Income per share
– Diluted Common Stock $ 1.26 $ 1.27 $ 3.11 $ 2.98
Income allocated to – Basic Common Stock $ 20,182 $ 20,267 $
49,834 $ 47,479 Class B Common Stock $ 5,041 $ 5,041 $ 12,472 $
11,836
Income allocated to – Diluted Common Stock $
25,235 $ 25,326 $ 62,335 $ 59,357
Weighted average number
of shares outstanding – Basic Common Stock 15,185 15,077 15,156
15,053 Class B Common Stock 4,741 4,687 4,741 4,690
Weighted average number of shares outstanding – Diluted
Common Stock 20,065 19,924 20,028 19,897
(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
(In thousands) February 28,
2015 (1)
August 30,
2014
Assets Current assets: Cash and cash equivalents $ 231,461 $
191,769 Receivables, net 159,102 152,523 Inventories 84,817 78,858
Rental merchandise in service 144,839 146,449 Prepaid and deferred
income taxes 3,188 13,342 Prepaid expenses and other current assets
15,979 6,349 Total current assets 639,386 589,290
Property, plant and equipment: Land, buildings and leasehold
improvements 397,004 393,584 Machinery and equipment 529,849
512,842 Motor vehicles 171,049 166,573 1,097,902 1,072,999
Less - accumulated depreciation 602,732 586,717 495,170 486,282
Goodwill 310,909 303,648 Customer contracts and other
intangible assets, net 41,449 41,477 Deferred income taxes 1,235
1,403 Other assets 2,418 2,061 $ 1,490,567 $ 1,424,161
Liabilities and shareholders' equity Current liabilities:
Loans payable and current maturities of long-term debt $ 5,637 $
7,704 Accounts payable 57,241 59,177 Accrued liabilities 107,847
100,818 Accrued and deferred income taxes 22,964 23,342
Total current liabilities 193,689 191,041 Long-term
liabilities: Long-term debt, net of current maturities — 155
Accrued liabilities 56,899 50,235 Accrued and deferred income taxes
54,516 48,271 Total long-term liabilities 111,415 98,661
Shareholders' equity: Common Stock 1,528 1,519 Class B
Common Stock 486 486 Capital surplus 67,788 59,415 Retained
earnings 1,136,996 1,075,572 Accumulated other comprehensive (loss)
income (21,335 ) (2,533 ) Total shareholders' equity
1,185,463 1,134,459 $ 1,490,567 $ 1,424,161
(1) Unaudited
UniFirst Corporation and
SubsidiariesDetail of Operating Results
Revenues
(In thousands, except
percentages)
Thirteenweeks
endedFebruary 28,2015 (1)
Thirteenweeks endedMarch
1,2014 (1)
DollarChange
PercentChange
Core Laundry Operations $ 332,068 $ 313,181 $ 18,887 6.0 %
Specialty Garments 18,661 20,406 (1,745 ) -8.6 First Aid 10,733
10,380 353 3.4 Consolidated total $ 361,462 $ 343,967 $ 17,495 5.1
%
(In thousands, except percentages)
Twenty-sixweeks
endedFebruary 28,2015 (1)
Twenty-sixweeks
endedMarch 1,2014 (1)
DollarChange
PercentChange
Core Laundry Operations $ 667,915 $ 625,187 $ 42,728 6.8 %
Specialty Garments 41,137 44,849 (3,712 ) -8.3 First Aid 22,771
20,635 2,136 10.4 Consolidated total $ 731,823 $ 690,671 $ 41,152
6.0 %
Income from Operations
(In thousands, except
percentages)
Thirteenweeks
endedFebruary 28,2015 (1)
Thirteenweeks endedMarch
1,2014 (1)
DollarChange
PercentChange
Core Laundry Operations $ 40,924 $ 39,443 $ 1,481 3.8 %
Specialty Garments (435 ) 312 (747 ) -239.1 First Aid 1,062 969 93
9.5 Consolidated total $ 41,551 $ 40,724 $ 827 2.0 %
(In
thousands, except percentages)
Twenty-sixweeks
endedFebruary 28,2015 (1)
Twenty-sixweeks
endedMarch 1,2014 (1)
DollarChange
PercentChange
Core Laundry Operations $ 97,797 $ 91,815 $ 5,982 6.5 %
Specialty Garments 1,833 3,071 (1,238 ) -40.3 First Aid 2,510 1,478
1,032 69.8 Consolidated total $ 102,140 $ 96,364 $ 5,776 6.0 %
(1) Unaudited
UniFirst Corporation and
Subsidiaries
Consolidated Statements of Cash
Flows
(In thousands)
Twenty-sixweeks
endedFebruary 28,2015 (1)
Twenty-sixweeks
endedMarch 1,2014 (1)
Cash flows from operating activities: Net income $ 62,859 $
60,109 Adjustments to reconcile net income to cash provided by
operating activities: Depreciation 32,495 30,465 Amortization of
intangible assets 4,334 4,663 Amortization of deferred financing
costs 104 104 Share-based compensation 3,369 3,388 Accretion on
environmental contingencies 302 358 Accretion on asset retirement
obligations 316 362 Deferred income taxes 7,040 (190 ) Changes in
assets and liabilities, net of acquisitions: Receivables (11,048 )
(9,545 ) Inventories (6,578 ) 5,173 Rental merchandise in service
718 (4,960 ) Prepaid expenses and other current assets (7,187 )
(1,504 ) Accounts payable (1,384 ) 4,340 Accrued liabilities 11,605
6,248 Prepaid and accrued income taxes 10,092 10,094 Net cash
provided by operating activities 107,037 109,105 Cash flows
from investing activities: Acquisition of businesses (15,086 ) (681
) Capital expenditures (45,542 ) (44,087 ) Other (202 ) 401 Net
cash used in investing activities (60,830 ) (44,367 ) Cash
flows from financing activities: Proceeds from loans payable and
long-term debt 4,937 4,927 Payments on loans payable and long-term
debt (6,887 ) (107,620 ) Proceeds from exercise of Common Stock
options, including excess tax benefits 4,975 2,005 Payment of cash
dividends (1,433 ) (1,428 ) Net cash provided by (used in)
financing activities 1,592 (102,116 ) Effect of exchange
rate changes on cash (8,107 ) (2,859 ) Net increase
(decrease) in cash and cash equivalents 39,692 (40,237 ) Cash and
cash equivalents at beginning of period 191,769 197,479 Cash
and cash equivalents at end of period $ 231,461 $ 157,242
(1) Unaudited
UniFirst CorporationSteven S. Sintros, 978- 658-8888Senior Vice
President & CFOssintros@UniFirst.com
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