UniFirst Announces Fiscal 2013 Second Quarter Results

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UniFirst Announces Fiscal 2013 Second Quarter Results

WILMINGTON, Mass.--(BUSINESS WIRE)-- UniFirst Corporation (NYS: UNF) today announced results for its second fiscal quarter, which ended February 23, 2013. Revenues were $334.3 million, up 7.9% from $310.0 million in the year ago period. Net income was $26.6 million ($1.33 per diluted share), up 38.8% compared to $19.2 million ($0.96 per diluted share) reported in the year ago period.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, "Our excellent results for the first half of the year are due to strong execution in all facets of our operations. We are very pleased with these results, particularly as we have been faced with a challenging economic environment. Businesses remain hesitant to add new costs, including new employees who are potential wearers of our uniforms."


Second quarter revenues in the Core Laundry Operations were $301.6 million, up 8.8% from those reported in the prior year's second quarter. Excluding the effect of acquisitions and a stronger Canadian dollar, revenues grew 8.3%. Revenues in this segment were positively affected in the period by the impact of a customer related specialty merchandise buyout that added approximately 0.8% to the organic growth. This segment's income from operations increased 46.9% year to year and its operating margin expanded to 13.4% from 9.9%. Excluding the impact of the merchandise buyout discussed above, this segment's second quarter operating margin would have been 12.9% and diluted earnings per share would have been $1.27. Increased profitability in this segment was primarily the result of improved operating leverage that came with our strong revenue growth. Expenses related to merchandise, energy, payroll and other costs related to our plant operations were all lower as a percentage of revenue compared to the prior year.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $22.6 million, down 3.9% from $23.5 million in the second quarter of fiscal 2012. This segment had income from operations for the quarter of $1.3 million down from $2.6 million in the same quarter a year ago. These results were impacted by a weaker than anticipated performance from this segment's European operations as well as the completion of two large projects in the latter part of fiscal 2012.

UniFirst continues to maintain a solid balance sheet and financial position. Cash and cash equivalents at the end of the quarter totaled $163.3 million, up from $120.1 million at the end of fiscal 2012. Cash provided by operating activities for the first half of the year was $92.5 million, up 53.1% compared to $60.4 million for the first half of fiscal 2012. The improved cash flows were primarily the result of higher earnings as well as lower cash outflows related to working capital. At the end of the quarter, total debt was $110.8 million, or 10.4% of total capital.

Outlook

Mr. Croatti continued, "Based on the strength of the first half and our current outlook for the remainder of the year, we are increasing our previously communicated guidance. We project our fiscal 2013 revenues to be between $1.344 billion and $1.354 billion and diluted earnings per share to be between $5.65 and $5.80. Our guidance assumes no further deterioration of the U.S. economy and also includes one extra week of operations in our fourth quarter due to the timing of our fiscal calendar."

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 11,000 Team Partners who serve more than 240,000 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 adverse 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, 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 25, 2012 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 endedTwenty-six weeks ended
February 23, February 25,February 23,  February 25,
(In thousands, except per share data)2013 (2)2012 (2)2013 (2)2012 (2)
 
Revenues$334,306$309,959$666,875$622,984
 
Operating expenses:
Cost of revenues (1)208,421201,437409,972396,576
Selling and administrative expenses (1)65,81761,197130,105120,321
Depreciation and amortization17,179 16,489 33,950 32,897 
Total operating expenses291,417 279,123 574,027 549,794 
 
Income from operations42,889 30,836 92,848 73,190 
 
Other (income) expense:
Interest expense4005558601,128
Interest income(924)(749)(1,691

)

 

(1,380

)

 

Exchange rate loss (gain)198 (56

)

 

38 571 
(326

)

 

(250

)

 

(793

)

 

319 
 
Income before income taxes43,21531,08693,64172,871
Provision for income taxes16,573 11,890 36,239 27,873 
 
Net income$26,642 $19,196 $57,402 $44,998 
 
Income per share - Basic
Common Stock$1.40$1.01$3.02$2.38
Class B Common Stock$1.12$0.81$2.42$1.90
 
Income per share - Diluted
Common Stock$1.33$0.96$2.86$2.26
 
Income allocated to - Basic
Common Stock$20,963$15,081$45,155$35,341
Class B Common Stock$5,209$3,765$11,233$8,832
 
Income allocated to - Diluted
Common Stock$26,196$18,863$56,440$44,213
 
Weighted average number of shares outstanding - Basic
Common Stock14,96214,87314,94314,856
Class B Common Stock4,6474,6404,6474,640
 
Weighted average number of shares outstanding - Diluted
Common Stock19,74719,60519,71419,575

(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 23,
2013 (1)

August 25,
2012

Assets
Current assets:
Cash and cash equivalents$163,279$120,123
Receivables, net146,368135,327
Inventories74,38675,420
Rental merchandise in service129,697138,284
Prepaid and deferred income taxes12,78512,785
Prepaid expenses8,1435,741
 
Total current assets534,658487,680
 
Property, plant and equipment:
Land, buildings and leasehold improvements369,819355,568
Machinery and equipment450,767425,274
Motor vehicles145,090141,370
 
965,676922,212
Less - accumulated depreciation532,500510,008
433,176412,204
 
Goodwill288,674288,137
Customer contracts and other intangible assets, net46,10150,531
Other assets2,4121,982
 
$1,305,021$1,240,534
 
Liabilities and shareholders' equity
Current liabilities:
Loans payable and current maturities of long-term debt$110,686$6,831
Accounts payable49,05552,340
Accrued liabilities84,25278,174
Accrued income taxes5,6218,180
 
Total current liabilities249,614145,525
 
Long-term liabilities:
Long-term debt, net of current maturities155100,155
Accrued liabilities44,23043,420
Accrued and deferred income taxes54,72554,509
 
Total long-term liabilities99,110198,084
 
Shareholders' equity:
Common Stock1,512 Read Full Story

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