UniFirst Corporation (NYSE: UNF) today announced results for its
fiscal 2014 first quarter, which ended November 30, 2013. First
quarter revenues were $346.7 million, up 4.3% from $332.6 million
in the year ago period. Net income of $34.5 million ($1.71 per
diluted share), was 12.0% ahead of the $30.8 million ($1.54 per
diluted share) reported in the year ago period.
Ronald D. Croatti, UniFirst President and Chief Executive
Officer said, “We are very pleased with the results for our first
quarter. During the quarter, we experienced positive trends in
sales representative productivity and customer retention as well as
a slight uptick in the wearer levels at our customers.”
Revenues in the Core Laundry Operations were $312.0 million, up
5.9% from those reported in the prior year’s first quarter.
Excluding the effect of acquisitions and a weaker Canadian dollar,
revenues grew 5.1%. This segment’s income from operations increased
17.6% compared to the first quarter of fiscal 2013, while the
operating margin expanded to 16.8% from 15.1%. Merchandise
amortization, energy and bad debt expense for the Core Laundry
Operations were all lower as a percentage of revenues compared to
the prior year. Selling payroll and certain other payroll-related
costs were also lower than in the prior year as a percentage of
revenues.
Revenues for the Specialty Garments’ segment, which consists of
nuclear decontamination and cleanroom operations, were $24.4
million, down 12.3% from $27.9 million in the first quarter of
fiscal 2013. This decrease was primarily the result of less power
reactor business in the U.S. and Canada compared to a year ago. As
a result of the revenue decline, this segment’s income from
operations for the quarter fell to $2.8 million from $4.7 million
in the comparable period in fiscal 2013.
UniFirst continues to maintain a solid balance sheet and
financial position. Cash provided by operating activities for the
quarter was $68.6 million, up 22.2% compared to $56.2 million for
the first quarter of fiscal 2013. The improved cash flows were
primarily the result of higher earnings as well as the timing of
income tax payments compared to the prior year. Cash and cash
equivalents at the end of the quarter totaled $141.8 million, down
from $197.5 million at the end of fiscal 2013. This decrease was
due to the Company’s repayment of $100.0 million in private
placement notes that came due in September 2013.
Outlook
Mr. Croatti continued, “In October, we told investors that we
expected fiscal 2014 revenues to be between $1.372 billion and
$1.385 billion and full year EPS to be between $5.60 and $5.85. As
a reminder, fiscal 2014 will be a 52 week year for the Company
compared to fiscal 2013 which was a 53 week year. Based on the
first quarter performance, we now anticipate our full year results
will be at the higher end of these ranges.”
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
UniFirst Corporation is one of the largest providers of
workplace uniforms, protective clothing, and facility services
products in North America. The Company employs approximately 11,500
Team Partners who serve more than 250,000 customer locations in 45
U.S. states, Canada, and Europe from over 200 customer service,
distribution, and manufacturing facilities. 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.
Forward Looking Statements
This public announcement may contain forward looking statements
that reflect the Company’s current views with respect to future
events and financial performance. 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,
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 31, 2013 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
Thirteen weeks ended November 30,
November 24, (In thousands, except
per share data) 2013 (2) 2012 (2) Revenues
$ 346,704 $ 332,569 Operating expenses: Cost of revenues (1)
208,137 201,551 Selling and administrative expenses (1) 65,629
64,288 Depreciation and amortization 17,298 16,771 Total operating
expenses 291,064 282,610 Income from operations 55,640
49,959 Other (income) expense: Interest expense 208 460
Interest income (765 ) (767 ) Exchange rate (gain) loss (159 ) (160
) Total other (income) expense (716 ) (467 ) Income before
income taxes 56,356 50,426 Provision for income taxes 21,894 19,666
Net income $ 34,462 $ 30,760
Income per share –
Basic Common Stock $ 1.81 $ 1.62 Class B Common Stock $ 1.45 $
1.30
Income per share – Diluted Common Stock $ 1.71 $
1.54
Income allocated to – Basic Common Stock $
27,208 $ 24,191 Class B Common Stock $ 6,798 $ 6,025
Income allocated to – Diluted Common Stock $ 34,031 $ 30,244
Weighted average number of shares outstanding – Basic
Common Stock 15,029 14,925 Class B Common Stock 4,693 4,647
Weighted average number of shares outstanding – Diluted
Common Stock 19,891 19,693
(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) November 30,
2013 (1)
August 31,
2013
Assets Current assets: Cash and cash equivalents $ 141,825 $
197,479 Receivables, net 155,283 142,217 Inventories 66,038 74,351
Rental merchandise in service 138,967 132,630 Prepaid and deferred
income taxes — 7,099 Prepaid expenses 9,734 7,618 Total
current assets 511,847 561,394 Property, plant and
equipment: Land, buildings and leasehold improvements 385,031
376,222 Machinery and equipment 485,034 474,402 Motor vehicles
153,610 153,219 1,023,675 1,003,843 Less - accumulated
depreciation 557,668 546,157 466,007 457,686 Goodwill
302,668 302,363 Customer contracts and other intangible assets, net
47,013 49,344 Deferred income taxes 1,417 1,417 Other assets 2,325
2,658 $ 1,331,277 $ 1,374,862 Liabilities and
shareholders' equity Current liabilities: Loans payable and current
maturities of long-term debt $ 10,481 $ 111,253 Accounts payable
60,771 54,221 Accrued liabilities 87,520 86,994 Accrued and
deferred income taxes 25,023 12,506 Total current
liabilities 183,795 264,974 Long-term liabilities: Long-term
debt, net of current maturities 155 155 Accrued liabilities 45,758
45,037 Accrued and deferred income taxes 52,293 51,298 Total
long-term liabilities 98,206 96,490 Shareholders' equity:
Common Stock 1,516 1,513 Class B Common Stock 487 487 Capital
surplus 53,780 51,445 Retained earnings 992,256 958,508 Accumulated
other comprehensive income 1,237 1,445 Total shareholders'
equity 1,049,276 1,013,398 $ 1,331,277 $ 1,374,862
(1) Unaudited
UniFirst Corporation and
Subsidiaries
Detail of Operating Results
Revenues
Thirteen weeks ended November 30,
November 24, Dollar Percent
(In thousands, except percentages) 2013 (1) 2012
(1) Change Change Core Laundry Operations
$ 312,006 $ 294,560 $ 17,446 5.9 % Specialty Garments 24,443 27,884
(3,441 ) -12.3 First Aid 10,255 10,125 130 1.3 Consolidated total $
346,704 $ 332,569 $ 14,135 4.3 %
Income from Operations
Thirteen weeks ended
November 30,
November 24, Dollar Percent (In thousands,
except percentages) 2013 (1) 2012 (1)
Change Change Core Laundry Operations $ 52,372
$ 44,528 $ 7,844 17.6 % Specialty Garments 2,759 4,704 (1,945 )
-41.3 First Aid 509 727 (218 ) -30.0 Consolidated total $ 55,640 $
49,959 $ 5,681 11.4 %
(1) Unaudited
UniFirst Corporation and
Subsidiaries
Consolidated Statements of Cash
Flows
Thirteen weeks ended
(In thousands)
November 30,
2013 (1)
November 24,
2012 (1)
Cash flows from operating activities: Net income $ 34,462 $
30,760 Adjustments to reconcile net income to cash provided by
operating activities: Depreciation 14,850 14,305 Amortization of
intangible assets 2,448 2,466 Amortization of deferred financing
costs 52 59 Share-based compensation 1,483 1,705 Accretion on
environmental contingencies 179 136 Accretion on asset retirement
obligations 181 166 Deferred income taxes (195 ) (18 ) Changes in
assets and liabilities, net of acquisitions: Receivables (12,978 )
(18,457 ) Inventories 8,490 221 Rental merchandise in service
(6,409 ) 2,102 Prepaid expenses (2,114 ) (2,867 ) Accounts payable
6,532 11,183 Accrued liabilities 875 2,373 Prepaid and accrued
income taxes 20,786 12,033 Net cash provided by operating
activities 68,642 56,167 Cash flows from investing
activities: Acquisition of businesses (495 ) — Capital expenditures
(22,796 ) (25,103 ) Other 297 (318 ) Net cash used in investing
activities (22,994 ) (25,421 ) Cash flows from financing
activities: Proceeds from loans payable and long-term debt 2,935
2,662 Payments on loans payable and long-term debt (103,953 ) (708
) Proceeds from exercise of Common Stock options 854 757 Payment of
cash dividends (714 ) (713 ) Net cash (used in) provided by
financing activities (100,878 ) 1,998 Effect of exchange
rate changes (424 ) (203 ) Net (decrease) increase in cash
and cash equivalents (55,654 ) 32,541 Cash and cash equivalents at
beginning of period 197,479 120,123 Cash and cash
equivalents at end of period $ 141,825 $ 152,664
(1) Unaudited
UniFirst CorporationSteven S. Sintros, 978-658-8888Vice
President & CFOFax: 978-988-0659ssintros@UniFirst.com
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