UniFirst Announces Fiscal 2013 Third Quarter Results
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, | May 26, | May 25, | May 26, | ||||||||||||
Revenues | $ | 335,764 | $ | 320,931 | $ | 1,002,639 | $ | 943,915 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenues (1) | 208,066 | 202,433 | 618,038 | 599,009 | ||||||||||||
Selling and administrative expenses (1) | 64,786 | 59,108 | 194,891 | 179,429 | ||||||||||||
Depreciation and amortization | 17,115 | 16,718 | 51,065 | 49,615 | ||||||||||||
Total operating expenses | 289,967 | 278,259 | 863,994 | 828,053 | ||||||||||||
Income from operations | 45,797 | 42,672 | 138,645 | 115,862 | ||||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense | 464 | 511 | 1,324 | 1,639 | ||||||||||||
Interest income | (781 | ) | (656 | ) | (2,472 | ) | (2,036 | ) | ||||||||
Exchange rate loss | 283 | 457 | 321 | 1,028 | ||||||||||||
Total other (income) expense | (34 | ) | 312 | (827 | ) | 631 | ||||||||||
Income before income taxes | 45,831 | 42,360 | 139,472 | 115,231 | ||||||||||||
Provision for income taxes | 17,109 | 14,901 | 53,348 | 42,774 | ||||||||||||
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 Stock | 14,993 | 14,905 | 14,960 | 14,872 | ||||||||||||
Class B Common Stock | 4,675 | 4,644 | 4,656 | 4,642 | ||||||||||||
Weighted average number of shares outstanding - Diluted | ||||||||||||||||
Common Stock | 19,820 | 19,646 | 19,751 | 19,600 | ||||||||||||
(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, net | 147,170 | 135,327 | ||||||||
Inventories | 72,355 | 75,420 | ||||||||
Rental merchandise in service | 133,741 | 138,284 | ||||||||
Prepaid and deferred income taxes | 12,813 | 12,785 | ||||||||
Prepaid expenses | 9,565 | 5,741 | ||||||||
Total current assets | 551,235 | 487,680 | ||||||||
Property, plant and equipment: | ||||||||||
Land, buildings and leasehold improvements | 373,530 | 355,568 | ||||||||
Machinery and equipment | 461,576 | 425,274 | ||||||||
Motor vehicles | 153,411 | 141,370 | ||||||||
Total property, plant and equipment | 988,517 | 922,212 | ||||||||
Less - accumulated depreciation | 539,994 | 510,008 | ||||||||
Total property, plant and equipment, net | 448,523 | 412,204 | ||||||||
Goodwill | 288,620 | 288,137 | ||||||||
Customer contracts and other intangible assets, net | 43,976 | 50,531 | ||||||||
Other assets | 2,428 | 1,982 | ||||||||
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 payable | 55,531 | 52,340 | ||||||||
Accrued liabilities | 85,641 | 78,174 | ||||||||
Accrued income taxes | 1,462 | 8,180 | ||||||||
Total current liabilities | 253,350 | 145,525 | ||||||||
Long-term liabilities: | ||||||||||
Long-term debt, net of current maturities | 155 | 100,155 | ||||||||
Accrued liabilities | 44,933 | 43,420 | ||||||||
Accrued and deferred income taxes | 54,488 | 54,509 | ||||||||
Total long-term liabilities | 99,576 | 198,084 | ||||||||
Shareholders' equity: | ||||||||||
Common Stock | 1,512 | 1,506 | ||||||||
Class B Common Stock | 487 | 488 | ||||||||
Capital surplus | 47,449 | 42,984 | ||||||||
Retained earnings | 928,661 | 844,676 | ||||||||
Accumulated other comprehensive income | 3,747 | 7,271 | ||||||||
Total shareholders' equity | 981,856 | 896,925 | ||||||||
Total liabilities and shareholders' equity | $ | 1,334,782 | $ | 1,240,534 | ||||||
