UNF UniFirst Corp

UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2015 first quarter, which ended November 29, 2014. Revenues were $370.4 million, up 6.8% from $346.7 million in the year ago period. Net income of $37.4 million ($1.85 per diluted share), was 8.6% ahead of the $34.5 million ($1.71 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. Our ongoing commitment to customer service and our goal of creating ‘Customers for Life’ has, and will continue to be, an integral part of achieving profitable growth.”

Revenues in the Core Laundry Operations were $335.8 million, up 7.6% from those reported in the prior year’s first quarter. Excluding the effect of acquisitions and a weaker Canadian dollar, revenues grew 7.8%. This segment’s income from operations increased 8.6% compared to the first quarter of fiscal 2014, while the operating margin expanded slightly to 16.9% from 16.8%. Costs of revenues for the Core Laundry Operations were lower as a percentage of revenues compared to the prior year primarily due to reductions in payroll, energy and merchandise amortization. These benefits were partially offset by higher legal costs as well as costs related to the update of our IT systems.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $22.5 million, down 8.0% from $24.4 million in the first quarter of fiscal 2014. This decrease was primarily the result of reduced power reactor business in North America compared to a year ago. As a result of the revenue decline, this segment’s income from operations for the quarter fell to $2.3 million from $2.8 million in the comparable period in fiscal 2014. This decline was offset by a strong performance from our First Aid segment which grew its revenues 17.4% from the prior year first quarter and generated $1.4 million in operating income compared to $0.5 million a year ago.

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 $213.0 million, up from $191.8 million three month earlier.

Outlook

Mr. Croatti continued, “The fiscal year is off to a strong start. We continue to believe that our full year fiscal 2015 revenues will be between $1.450 billion and $1.470 billion and that full year diluted EPS will be between $5.75 and $6.00 per share as communicated in October. We are cautious in our outlook as a result of our significant presence in energy producing regions in the U.S. and Canada. We believe that if oil prices remain depressed, our operating results will be negatively impacted.”

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, 260,000 customer locations, and approximately 12,000 employee Team Partners. 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, 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 Thirteen weeks ended November 29,       November 30, (In thousands, except per share data) 2014 (2) 2013 (2)   Revenues $ 370,361 $ 346,704   Operating expenses: Cost of revenues (1) 219,353 208,137 Selling and administrative expenses (1) 72,382 65,629 Depreciation and amortization 18,037 17,298 Total operating expenses 309,772 291,064   Income from operations 60,589 55,640   Other (income) expense: Interest expense 188 208 Interest income (804 ) (765 ) Exchange rate (gain) loss 371 (159 ) Total other (income) expense (245 ) (716 )   Income before income taxes 60,834 56,356 Provision for income taxes 23,421 21,894   Net income $ 37,413 $ 34,462   Income per share – Basic Common Stock $ 1.96 $ 1.81 Class B Common Stock $ 1.57 $ 1.45   Income per share – Diluted Common Stock $ 1.85 $ 1.71   Income allocated to – Basic Common Stock $ 29,649 $ 27,208 Class B Common Stock $ 7,434 $ 6,798   Income allocated to – Diluted Common Stock $ 37,101 $ 34,031   Weighted average number of shares outstanding – Basic Common Stock 15,128 15,029 Class B Common Stock 4,741 4,693   Weighted average number of shares outstanding – Diluted Common Stock 20,008 19,891

(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 29,2014 (1)

 

August 30,2014

 

Assets Current assets: Cash and cash equivalents $ 212,974 $ 191,769 Receivables, net 168,161 152,523 Inventories 77,963 78,858 Rental merchandise in service 148,267 146,449 Prepaid and deferred income taxes — 13,342 Prepaid expenses 13,067 6,349   Total current assets 620,432 589,290   Property, plant and equipment: Land, buildings and leasehold improvements 395,459 393,584 Machinery and equipment 520,447 512,842 Motor vehicles 165,506 166,573   1,081,412 1,072,999 Less - accumulated depreciation 595,583 586,717 485,829 486,282   Goodwill 309,578 303,648 Customer contracts and other intangible assets, net 42,323 41,477 Deferred income taxes 1,334 1,403 Other assets 2,310 2,061   $ 1,461,806 $ 1,424,161   Liabilities and shareholders' equity Current liabilities: Loans payable and current maturities of long-term debt $ 6,138 $ 7,704 Accounts payable 59,548 59,177 Accrued liabilities 96,572 100,818 Accrued and deferred income taxes 31,440 23,342   Total current liabilities 193,698 191,041   Long-term liabilities: Long-term debt, net of current maturities — 155 Accrued liabilities 53,654 50,235 Accrued and deferred income taxes 47,487 48,271   Total long-term liabilities 101,141 98,661   Shareholders' equity: Common Stock 1,524 1,519 Class B Common Stock 486 486 Capital surplus 62,811 59,415 Retained earnings 1,112,268 1,075,572 Accumulated other comprehensive income (10,122 ) (2,533 )   Total shareholders' equity 1,166,967 1,134,459   $ 1,461,806 $ 1,424,161

(1) Unaudited

UniFirst Corporation and Subsidiaries                   Detail of Operating Results  

Revenues

 

Thirteen weeks ended November 29,       November 30, Dollar Percent (In thousands, except percentages) 2014 (1) 2013 (1) Change Change   Core Laundry Operations $ 335,847 $ 312,006 $ 23,841 7.6 % Specialty Garments 22,476 24,443 (1,967 ) -8.0 First Aid 12,038 10,255 1,783 17.4 Consolidated total $ 370,361 $ 346,704 $ 23,657 6.8 %                    

Income from Operations

  Thirteen weeks ended November 29,       November 30, Dollar Percent (In thousands, except percentages) 2014 (1) 2013 (1) Change Change   Core Laundry Operations $ 56,873 $ 52,372 $ 4,501 8.6 % Specialty Garments 2,268 2,759 (491 ) -17.8 First Aid 1,448 509 939 184.6 Consolidated total $ 60,589 $ 55,640 $ 4,949 8.9 %

(1) Unaudited

          UniFirst Corporation and Subsidiaries Consolidated Statements of Cash Flows     Thirteen weeks ended

(In thousands)

    November 29,

2014 (1)

      November 30,

2013 (1)

Cash flows from operating activities:   Net income $ 37,413 $ 34,462 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 15,865 14,850 Amortization of intangible assets 2,172 2,448 Amortization of deferred financing costs 52 52 Share-based compensation 1,615 1,483 Accretion on environmental contingencies 151 179 Accretion on asset retirement obligations 194 181 Deferred income taxes 21 (195 ) Changes in assets and liabilities, net of acquisitions: Receivables (16,039 ) (12,951 ) Inventories 645 8,490 Rental merchandise in service (1,744 ) (6,409 ) Prepaid expenses (6,847 ) (2,141 ) Accounts payable 559 9,490 Accrued liabilities (2,796 ) (2,083 ) Prepaid and accrued income taxes 21,587 20,786 Net cash provided by operating activities 52,848 68,642   Cash flows from investing activities: Acquisition of businesses (10,846 ) (495 ) Capital expenditures (17,453 ) (22,796 ) Other 100 297 Net cash used in investing activities (28,199 ) (22,994 )   Cash flows from financing activities: Proceeds from loans payable and long-term debt 2,008 2,935 Payments on loans payable and long-term debt (3,508 ) (103,953 ) Proceeds from exercise of Common Stock options 1,750 854 Payment of cash dividends (715 ) (714 ) Net cash used in financing activities (465 ) (100,878 )   Effect of exchange rate changes (2,979 ) (424 )   Net increase (decrease) in cash and cash equivalents 21,205 (55,654 ) Cash and cash equivalents at beginning of period 191,769 197,479   Cash and cash equivalents at end of period $ 212,974 $ 141,825

(1) Unaudited

UniFirst CorporationSteven S. Sintros, 978- 658-8888Senior Vice President & CFOssintros@UniFirst.com