UniFirst Announces Fiscal 2013 Second Quarter Results

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 ended

Twenty-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)

208,421

201,437

409,972

396,576

Selling and administrative expenses (1)

65,817

61,197

130,105

120,321

Depreciation and amortization

17,179

16,489

33,950

32,897

Total operating expenses

291,417

279,123

574,027

549,794

Income from operations

42,889

30,836

92,848

73,190

Other (income) expense:

Interest expense

400

555

860

1,128

Interest income

(924

)

(749

)

(1,691

)

(1,380

)

Exchange rate loss (gain)

198

(56

)

38

571

(326

)

(250

)

(793

)

319

Income before income taxes

43,215

31,086

93,641

72,871

Provision for income taxes

16,573

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 Stock

14,962

14,873

14,943

14,856

Class B Common Stock

4,647

4,640

4,647

4,640

Weighted average number of shares outstanding - Diluted

Common Stock

19,747

19,605

19,714

19,575

(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, net

146,368

135,327

Inventories

74,386

75,420

Rental merchandise in service

129,697

138,284

Prepaid and deferred income taxes

12,785

12,785

Prepaid expenses

8,143

5,741

Total current assets

534,658

487,680

Property, plant and equipment:

Land, buildings and leasehold improvements

369,819

355,568

Machinery and equipment

450,767

425,274

Motor vehicles

145,090

141,370

965,676

922,212

Less - accumulated depreciation

532,500

510,008

433,176

412,204

Goodwill

288,674

288,137

Customer contracts and other intangible assets, net

46,101

50,531

Other assets

2,412

1,982

$

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 payable

49,055

52,340

Accrued liabilities

84,252

78,174

Accrued income taxes

5,621

8,180

Total current liabilities

249,614

145,525

Long-term liabilities:

Long-term debt, net of current maturities

155

100,155

Accrued liabilities

44,230

43,420

Accrued and deferred income taxes

54,725

54,509

Total long-term liabilities

99,110

198,084

Shareholders' equity:

Common Stock

1,512