UniFirst Corporation (NYSE:UNF) today announced results for its
second quarter of fiscal 2017 which ended February 25, 2017.
Revenues for the quarter were $391.4 million, up 7.8% from $363.1
million in the year ago period. Net income was $22.5 million
($1.10 per diluted share), down 4.2% from $23.5 million ($1.16 per
diluted share) in the second quarter of fiscal 2016. Results for
the second quarter of fiscal 2017 include the impact of the
Company’s acquisition of Arrow Uniform (Arrow) which was completed
in September 2016.
Core Laundry revenues in the quarter were $358.4
million, up 8.2% from those in the prior year’s second
quarter. Adjusting for the estimated effect of acquisitions
as well as a stronger Canadian dollar compared to a year ago, Core
Laundry revenues grew 2.2%.
Ronald D. Croatti, UniFirst President and Chief
Executive Officer said, “We are encouraged by the improvement
during the second quarter of the Core Laundry Operations’ organic
growth rate. Recent trends indicate that wearer levels at
existing customers have stabilized after enduring two years of
significant reductions in our North American energy-dependent
markets. In addition, overall new sales as well as customer
retention are also trending positively compared to the first half
of 2016.”
Core Laundry operating income was $33.1 million
during the quarter, an 8.5% decrease from the prior year. Its
operating margin was 9.2%, down from 10.9% for the same period in
fiscal 2016. The margin decline was primarily the result of
higher selling and administrative expenses as a percentage of
revenues. In addition, the estimated impact of the
acquisition of Arrow decreased the Core Laundry operating margin by
0.6%.
Revenues from our Specialty Garments segment,
which consists of nuclear decontamination and cleanroom operations,
increased 6.5% in the quarter compared to the same period a year
ago, and operating income was $2.1 million compared to $1.1 million
in last year’s second quarter. The improvement in results during
the quarter was driven by this segment’s US and Canadian nuclear
operations. This segment’s results can vary significantly from
period to period due to seasonality and the timing of reactor
outages and projects.
UniFirst continues to maintain a strong balance
sheet with no long-term debt and significant cash balances.
Excluding the $119.9 million cash purchase price paid for the Arrow
acquisition, cash and cash equivalents increased $69.6 million
during the first half of the year. As of February 25, 2017,
our cash and cash equivalents were $313.5 million.
OutlookMr. Croatti said, “During our last
earnings call, we communicated that we expected full year revenues
for fiscal 2017 would be between $1.550 billion and $1.565 billion
and full year diluted earnings per share would be between $4.85 and
$5.00. We now expect that our full year results will come in
at the higher ends of these previously communicated ranges.”
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 240 service locations, 300,000 customer locations, and 13,000
employee Team Partners, the company outfits nearly 2 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, contact UniFirst at 800.455.7654 or 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 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 maintain and grow Arrow’s customer base
and enhance its operating margins, 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 27, 2016 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
SubsidiariesConsolidated Statements of
Income(Unaudited)
|
|
|
Thirteenweeks
endedFebruary 25, |
|
|
|
Thirteenweeks
endedFebruary 27, |
|
|
|
Twenty-sixweeks
endedFebruary 25, |
|
|
|
Twenty-sixweeks
endedFebruary 27, |
|
(In thousands, except per share data) |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
391,427 |
|
|
$ |
363,097 |
|
|
$ |
777,535 |
|
|
$ |
736,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(1) |
|
|
249,280 |
|
|
|
229,672 |
|
|
|
488,045 |
|
|
|
452,275 |
|
Selling and
administrative expenses (1) |
|
|
84,861 |
|
|
|
75,423 |
|
|
|
164,307 |
|
|
|
148,172 |
|
Depreciation and
amortization |
|
|
21,140 |
|
|
|
19,809 |
|
|
|
43,280 |
|
|
|
39,547 |
|
Total operating expenses |
|
|
355,281 |
|
|
|
324,904 |
|
|
|
695,632 |
|
|
|
639,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
36,146 |
|
|
|
38,193 |
|
|
|
81,903 |
|
|
|
96,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
172 |
|
|
|
218 |
|
|
|
354 |
|
|
|
439 |
|
Interest
income |
|
|
(1,292 |
) |
|
|
(892 |
) |
|
|
(2,275 |
) |
|
|
(1,656 |
) |
Foreign exchange
(gain) loss |
|
|
(108 |
) |
|
|
(132 |
) |
|
|
386 |
|
|
|
347 |
|
Total other (income) expense |
|
|
(1,228 |
) |
|
|
(806 |
) |
|
|
(1,535 |
) |
|
|
(870 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
37,374 |
|
|
|
38,999 |
|
|
|
83,438 |
|
|
|
97,357 |
|
Provision for income
taxes |
|
|
14,858 |
|
|
|
15,501 |
|
|
|
32,708 |
|
|
|
37,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
22,516 |
|
|
$ |
23,498 |
|
|
$ |
50,730 |
|
|
$ |
59,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
share – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
$ |
1.17 |
|
|
$ |
1.23 |
|
|
$ |
2.63 |
|
|
$ |
3.10 |
|
Class B Common
Stock |
|
$ |
0.93 |
|
|
$ |
0.98 |
|
|
$ |
2.10 |
|
|
$ |
2.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
share – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
$ |
1.10 |
|
|
$ |
1.16 |
|
|
$ |
2.49 |
|
|
$ |
2.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
allocated to – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
$ |
17,836 |
|
|
$ |
18,691 |
|
|
$ |
40,178 |
|
|
$ |
47,232 |
|
Class B Common
Stock |
|
$ |
4,518 |
|
|
$ |
4,704 |
|
|
$ |
10,184 |
|
|
$ |
11,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
allocated to – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
$ |
22,362 |
|
|
$ |
23,401 |
|
|
$ |
50,381 |
|
|
$ |
59,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
|
15,305 |
|
|
|
15,241 |
|
|
|
15,295 |
|
|
|
15,230 |
|
Class B
Common Stock |
|
|
4,846 |
|
|
|
4,795 |
|
|
|
4,846 |
|
|
|
4,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock |
|
|
20,263 |
|
|
|
20,138 |
|
|
|
20,250 |
|
|
|
20,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Exclusive of depreciation on the Company’s property, plant and
equipment and amortization on its intangible assets. |
UniFirst Corporation and
SubsidiariesCondensed Consolidated Balance
Sheets(Unaudited)
(In thousands) |
|
|
|
February 25,2017 |
|
|
August 27,2016 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
$ |
313,535 |
|
$ |
363,795 |
|
Receivables,
net |
|
|
|
176,564 |
|
|
156,578 |
|
Inventories |
|
|
|
71,493 |
|
|
78,887 |
|
Rental
merchandise in service |
|
|
|
144,603 |
|
|
138,105 |
|
Prepaid
taxes |
|
|
|
1,178 |
|
|
10,418 |
|
Prepaid expenses
and other current assets |
|
|
|
25,873 |
|
|
29,831 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
733,246 |
|
|
777,614 |
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net |
|
|
|
551,053 |
|
|
539,818 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
371,773 |
|
|
320,641 |
|
Customer contracts and
other intangible assets, net |
|
|
|
75,887 |
|
|
38,664 |
|
Deferred income
taxes |
|
|
|
338 |
|
|
97 |
|
Other assets |
|
|
|
29,250 |
|
|
25,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,761,547 |
|
$ |
1,702,007 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
|
$ |
55,250 |
|
$ |
50,884 |
|
Accrued
liabilities |
|
|
|
104,785 |
|
|
100,782 |
|
Accrued
taxes |
|
|
|
— |
|
|
969 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
160,035 |
|
|
152,635 |
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
|
|
|
|
Accrued
liabilities |
|
|
|
105,078 |
|
|
104,921 |
|
Accrued and
deferred income taxes |
|
|
|
79,038 |
|
|
79,670 |
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities |
|
|
|
184,116 |
|
|
184,591 |
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity: |
|
|
|
|
|
|
|
|
Common
Stock |
|
|
|
1,546 |
|
|
1,542 |
|
Class B Common
Stock |
|
|
|
485 |
|
|
485 |
|
Capital
surplus |
|
|
|
77,668 |
|
|
72,561 |
|
Retained
earnings |
|
|
|
1,368,424 |
|
|
1,319,142 |
|
Accumulated
other comprehensive (loss) income |
|
|
|
(30,727 |
) |
|
(28,949 |
) |
|
|
|
|
|
|
|
|
|
Total shareholders' equity |
|
|
|
1,417,396 |
|
|
1,364,781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,761,547 |
|
$ |
1,702,007 |
|
UniFirst Corporation and
SubsidiariesDetail of Operating
Results(Unaudited)
Revenues
|
|
|
Thirteenweeks endedFebruary
25, |
|
|
Thirteenweeks endedFebruary
27, |
|
|
Dollar |
|
Percent |
|
(In thousands, except percentages) |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry
Operations |
|
$ |
358,386 |
|
$ |
331,365 |
|
$ |
27,021 |
|
8.2 |
% |
Specialty
Garments |
|
|
21,787 |
|
|
20,451 |
|
|
1,336 |
|
6.5 |
|
First Aid |
|
|
11,254 |
|
|
11,281 |
|
|
(27 |
) |
-0.2 |
|
Consolidated total |
|
$ |
391,427 |
|
$ |
363,097 |
|
$ |
28,330 |
|
7.8 |
% |
|
|
|
Twenty-sixweeks endedFebruary
25, |
|
|
Twenty-sixweeks endedFebruary
27, |
|
|
Dollar |
|
Percent |
|
(In thousands, except percentages) |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry
Operations |
|
$ |
710,229 |
|
$ |
666,402 |
|
$ |
43,827 |
|
6.6 |
% |
Specialty
Garments |
|
|
44,143 |
|
|
47,221 |
|
|
(3,078 |
) |
-6.5 |
|
First Aid |
|
|
23,163 |
|
|
22,858 |
|
|
305 |
|
1.3 |
|
Consolidated total |
|
$ |
777,535 |
|
$ |
736,481 |
|
$ |
41,054 |
|
5.6 |
% |
Income from Operations
|
|
|
Thirteenweeks endedFebruary
25, |
|
|
Thirteenweeks endedFebruary
27, |
|
|
Dollar |
|
Percent |
|
(In thousands, except percentages) |
|
|
2017 |
|
|
2016 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry
Operations |
|
$ |
33,059 |
|
$ |
36,129 |
|
$ |
(3,070 |
) |
-8.5 |
% |
Specialty
Garments |
|
|
2,095 |
|
|
1,146 |
|
|
949 |
|
82.8 |
|
First Aid |
|
|
992 |
|
|
918 |
|
|
74 |
|
8.0 |
|
Consolidated total |
|
$ |
36,146 |
|
$ |
38,193 |
|
$ |
(2,047 |
) |
-5.4 |
% |
|
|
Twenty-sixweeks endedFebruary
25, |
|
|
Twenty-sixweeks endedFebruary
27, |
|
|
Dollar |
|
Percent |
|
(In thousands, except percentages) |
|
2017 |
|
|
2016 |
|
|
Change |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Laundry
Operations |
$ |
76,732 |
|
$ |
89,101 |
|
$ |
(12,369 |
) |
-13.9 |
% |
Specialty
Garments |
|
3,246 |
|
|
5,432 |
|
|
(2,186 |
) |
-40.2 |
|
First Aid |
|
1,925 |
|
|
1,954 |
|
|
(29 |
) |
-1.5 |
|
Consolidated total |
$ |
81,903 |
|
$ |
96,487 |
|
$ |
(14,584 |
) |
-15.1 |
% |
UniFirst Corporation and
SubsidiariesConsolidated Statements of Cash
Flows(Unaudited)
(In
thousands) |
Twenty-sixweeks
endedFebruary
25,2017 |
Twenty-sixweeks
endedFebruary
27,2016 |
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
|
$ |
50,730 |
|
$ |
59,388 |
|
Adjustments to
reconcile net income to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
37,051 |
|
|
35,297 |
|
Amortization of
intangible assets |
|
|
|
6,229 |
|
|
4,250 |
|
Amortization of
deferred financing costs |
|
|
|
56 |
|
|
104 |
|
Gain on sale of
assets |
|
|
|
(517 |
) |
|
— |
|
Share-based
compensation |
|
|
|
4,370 |
|
|
2,537 |
|
Accretion on
environmental contingencies |
|
|
|
300 |
|
|
334 |
|
Accretion on
asset retirement obligations |
|
|
|
423 |
|
|
398 |
|
Deferred income
taxes |
|
|
|
(1,346 |
) |
|
5,978 |
|
Changes in
assets and liabilities, net of acquisitions: |
|
|
|
|
|
|
|
|
Receivables |
|
|
|
(12,887 |
) |
|
(6,528 |
) |
Inventories |
|
|
|
9,233 |
|
|
4,733 |
|
Rental
merchandise in service |
|
|
|
444 |
|
|
3,477 |
|
Prepaid
expenses and other current assets and Other assets |
|
|
|
7,471 |
|
|
(851 |
) |
Accounts
payable |
|
|
|
3,695 |
|
|
(79 |
) |
Accrued
liabilities |
|
|
|
704 |
|
|
1,574 |
|
Prepaid
and accrued income taxes |
|
|
|
8,793 |
|
|
(5,131 |
) |
Net cash provided by
operating activities |
|
|
|
114,749 |
|
|
105,481 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Acquisition of
businesses, net of cash acquired |
|
|
|
(121,414 |
) |
|
(73 |
) |
Capital
expenditures |
|
|
|
(43,011 |
) |
|
(44,028 |
) |
Proceeds from
sale of assets |
|
|
|
826 |
|
|
— |
|
Other |
|
|
|
123 |
|
|
111 |
|
Net cash used in
investing activities |
|
|
|
(163,476 |
) |
|
(43,990 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Payments on
loans payable and long-term debt |
|
|
|
— |
|
|
(1,046 |
) |
Proceeds from
exercise of Common Stock options, including excess tax
benefits |
|
|
|
2,283 |
|
|
1,026 |
|
Taxes withheld
and paid related to net share settlement of equity awards |
|
|
|
(1,546 |
) |
|
— |
|
Payment of cash
dividends |
|
|
|
(1,448 |
) |
|
(1,436 |
) |
Net cash used in
financing activities |
|
|
|
(711 |
) |
|
(1,456 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
|
(822 |
) |
|
(1,596 |
) |
|
|
|
|
|
|
|
|
|
Net (decrease) increase
in cash and cash equivalents |
|
|
|
(50,260 |
) |
|
58,439 |
|
Cash and cash
equivalents at beginning of period |
|
|
|
363,795 |
|
|
276,553 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period |
|
|
$ |
313,535 |
|
$ |
334,992 |
|
CONTACT: Steven S. Sintros, Senior Vice President & CFO
UniFirst Corporation
68 Jonspin Road
Wilmington, MA 01887
Phone: 978- 658-8888
Fax: 978-988-0659
Email: ssintros@UniFirst.com
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