UniFirst Announces Fiscal 2013 Third Quarter Results

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UniFirst Announces Fiscal 2013 Third Quarter Results

WILMINGTON, Mass.--(BUSINESS WIRE)-- UniFirst Corporation (NYS: UNF) today announced results for its third fiscal quarter ended May 25, 2013. Revenues were $335.8 million, up 4.6% from $320.9 million in the year ago period. Net income was $28.7 million ($1.43 per diluted share), compared to $27.5 million ($1.37 per diluted share) reported in the year ago period. The results of the third quarter of fiscal 2012 included the positive effect of a settlement related to environmental litigation. The settlement resulted in a $6.7 million gain which was recorded as a reduction of selling and administrative expenses. Diluted earnings per share for the third quarter of fiscal 2012 adjusted to eliminate the effect of the gain were $1.16. Current quarter diluted earnings per share increased 23.3% compared to the adjusted earnings from a year ago.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, "We are very pleased with our results which continue to demonstrate our ability to grow our business and improve its profitability. Our strong operating results and solid financial condition also allow us to continue making investments in our infrastructure and technology that will improve our already high levels of customer service and satisfaction."


Third quarter revenues in the Core Laundry Operations were $297.7 million, up 5.9% from those reported in the prior year's third quarter. This segment's income from operations increased 36.5% compared to the third quarter of fiscal 2012 when adjusted to exclude the impact of the $6.7 million gain referred to above. Operating margin for the quarter was 13.6% compared to an operating margin of 10.5% a year ago when adjusted to exclude the $6.7 million gain. Increased profitability in this segment was primarily the result of improved operating leverage that came with our revenue growth. Expenses related to merchandise, payroll and energy were lower as a percentage of revenue compared to the prior year. In addition, comparisons were positively impacted by expenses incurred in the third quarter of fiscal 2012 related to the Company's initiative to update its CRM computer systems.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $26.3 million, down 10.0% from $29.3 million in the third quarter of fiscal 2012. This segment had income from operations for the quarter of $3.6 million, down from $5.0 million in the same quarter a year ago. The decline in revenue and profits was due primarily to the absence of revenues from two large power reactor rebuild projects that ended in the fourth quarter of fiscal 2012 as well as a lighter than expected spring outage season.

UniFirst continues to maintain a solid balance sheet and financial position. Cash and cash equivalents at the end of the quarter totaled $175.6 million, up from $120.1 million at the end of fiscal 2012. Cash provided by operating activities for the first nine months of the year was $139.5 million, up 30.6% compared to $106.8 million for the first nine months 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 $110.9 million, or 10.1% of total capital.

Outlook

Mr. Croatti continued, "We continue to expect full year revenues to be between $1.344 billion and $1.354 billion. Due to the weaker than expected third quarter results from our Specialty Garments segment as well as the fourth quarter outlook for this segment, we are reducing and narrowing our full year profit guidance to a range of $5.60 per share to $5.70 per share from the previously communicated $5.65 per share to $5.80 per share. As a reminder, our guidance includes one extra week of operations in our fiscal fourth quarter."

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 ended Thirty-nine weeks ended
(In thousands, except per share data)May 25,
2013 (2)
 May 26,
2012 (2)
May 25,
2013 (2)
 May 26,
2012 (2)
 
Revenues$335,764$320,931$1,002,639$943,915
 
Operating expenses:
Cost of revenues (1)208,066202,433618,038599,009
Selling and administrative expenses (1)64,78659,108194,891179,429
Depreciation and amortization17,11516,71851,06549,615
Total operating expenses289,967278,259863,994828,053
 
Income from operations45,79742,672138,645115,862
 
Other (income) expense:
Interest expense4645111,3241,639
Interest income(781)(656)(2,472)(2,036)
Exchange rate loss2834573211,028
Total other (income) expense(34)312(827)631
 
Income before income taxes45,83142,360139,472115,231
Provision for income taxes17,10914,90153,34842,774
 
Net income$28,722$27,459$86,124$72,457
 
Income per share - Basic
Common Stock$1.51$1.45$4.53$3.83
Class B Common Stock$1.21$1.16$3.63$3.06
 
Income per share - Diluted
Common Stock$1.43$1.37$4.29$3.63
 
Income allocated to - Basic
Common Stock$22,638$21,587$67,793$59,926
Class B Common Stock$5,647$5,381$16,880$14,214
 
Income allocated to - Diluted
Common Stock$28,307$26,993$84,747$71,205
 
Weighted average number of shares outstanding - Basic
Common Stock14,99314,90514,96014,872
Class B Common Stock4,6754,6444,6564,642
 
Weighted average number of shares outstanding - Diluted
Common Stock19,82019,64619,75119,600
 

(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)    May 25,

2013 (1)

  August 25,

2012

Assets
Current assets:
Cash and cash equivalents$175,591$120,123
Receivables, net147,170135,327
Inventories72,35575,420
Rental merchandise in service133,741138,284
Prepaid and deferred income taxes12,81312,785
Prepaid expenses9,5655,741
 
Total current assets551,235487,680
 
Property, plant and equipment:
Land, buildings and leasehold improvements373,530355,568
Machinery and equipment461,576425,274
Motor vehicles153,411141,370
 
Total property, plant and equipment988,517922,212
Less - accumulated depreciation539,994510,008
Total property, plant and equipment, net448,523412,204
 
Goodwill288,620288,137
Customer contracts and other intangible assets, net43,97650,531
Other assets2,4281,982
 
Total assets$1,334,782$1,240,534
 
Liabilities and shareholders' equity
Current liabilities:
Loans payable and current maturities of long-term debt$110,716$6,831
Accounts payable55,53152,340
Accrued liabilities85,64178,174
Accrued income taxes1,4628,180
 
Total current liabilities253,350145,525
 
Long-term liabilities:
Long-term debt, net of current maturities155100,155
Accrued liabilities44,93343,420
Accrued and deferred income taxes54,48854,509
 
Total long-term liabilities99,576198,084
 
Shareholders' equity:
Common Stock1,5121,506
Class B Common Stock487488
Capital surplus47,44942,984
Retained earnings928,661844,676
Accumulated other comprehensive income3,7477,271
 
Total shareholders' equity981,856896,925
 
Total liabilities and shareholders' equity$1,334,782$1,240,534
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