Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - UNIFIRST CORP | unf20160329_8k.htm |
Ex-99
 |
 |
|
|
|
| |
|
March 30, 2016 CONTACT: Steven S. Sintros, Senior Vice President & CFO |
|
UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER OF FISCAL 2016
Wilmington, MA (March 30, 2016) -- UniFirst Corporation (NYSE: UNF) today announced results for its second quarter ended February 27, 2016. Revenues for the quarter were $363.1 million, up 0.5% from $361.5 million in the year ago period. Net income was $23.5 million ($1.16 per diluted share), down 7.7% from $25.4 million ($1.26 per diluted share) in the second quarter of fiscal 2015. As a reminder, the results in the second quarter of fiscal 2015 included a $3.6 million charge to selling and administrative expenses to increase the Company’s environmental contingency reserves. Excluding the effect of this item, net income for the second quarter a year ago would have been $27.7 million ($1.37 per diluted share). In addition, the comparison of net income was negatively impacted by a higher effective tax rate in the current quarter compared to the same period a year ago due to a change in the mix of jurisdictional earnings.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “Our growth during the second quarter continued to be negatively impacted by the loss of uniform wearers and customers in energy dependent markets in the United States and Canada. In fact, during the quarter, uniform wearer reductions accelerated from our first quarter experience.”
Core Laundry revenues in the quarter were $331.4 million, down 0.2% from those reported in the prior year’s second quarter. Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenues grew 0.5%. Excluding the environmental charge from the second quarter of fiscal 2015, this segment’s operating margin decreased to 10.9% from an adjusted operating margin of 13.4% a year ago. The largest driver of the margin decline was significantly higher healthcare claims incurred during the quarter compared to a year ago which impacted the margin comparison by a full 1%. Merchandise as well as many of our other costs were also higher than the prior year which negatively impacted the margin further due to the lack of top line growth in this segment. These items were partially offset by lower energy expenses during the quarter compared to a year ago.
Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $20.5 million, up 9.6% from $18.7 million in the second quarter of fiscal 2015. Due primarily to the improved revenue performance, this segment’s income from operations increased to $1.1 million in the current quarter from a loss of $0.4 million in last year’s comparable period.
UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances. Net cash provided by operating activities in the first six months of fiscal 2016 was $105.5 million, down only slightly from the same period in fiscal 2015, and cash and cash equivalents at the end of the fiscal quarter totaled $335.0 million, up from $276.6 million at the end of fiscal 2015.
Outlook
Mr. Croatti continued, “At this time we are adjusting our guidance to reflect the effect of the continuing weak energy market conditions on our customer base. In addition, the new guidance includes the effect of higher than anticipated healthcare claims experienced in the first half of the fiscal year as well as a higher effective tax rate. We now believe full year fiscal 2016 revenues will be between $1.455 billion and $1.467 billion and full year diluted EPS will be between $5.45 and $5.65.”
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
Headquartered 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 more than 225 service locations, 275,000 customer locations, and 12,000 employee Team Partners, the Company outfits more than 1.5 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 visit www.unifirst.com.
Forward Looking Statements
This 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 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 29, 2015 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 Subsidiaries
Consolidated Statements of Income
(Unaudited)
|
Thirteen weeks ended February 27, |
Thirteen weeks ended February 28, |
Twenty-six weeks ended February 27, |
Twenty-six weeks ended February 28, |
|||||||||||||
|
(In thousands, except per share data) |
2016 |
2015 |
2016 |
2015 |
||||||||||||
|
Revenues |
$ | 363,097 | $ | 361,462 | $ | 736,481 | $ | 731,823 | ||||||||
|
Operating expenses: |
||||||||||||||||
|
Cost of revenues (1) |
229,672 | 223,874 | 452,275 | 443,227 | ||||||||||||
|
Selling and administrative expenses (1) |
75,423 | 77,245 | 148,172 | 149,627 | ||||||||||||
|
Depreciation and amortization |
19,809 | 18,792 | 39,547 | 36,829 | ||||||||||||
|
Total operating expenses |
324,904 | 319,911 | 639,994 | 629,683 | ||||||||||||
|
Income from operations |
38,193 | 41,551 | 96,487 | 102,140 | ||||||||||||
|
Other (income) expense: |
||||||||||||||||
|
Interest expense |
218 | 239 | 439 | 427 | ||||||||||||
|
Interest income |
(892 |
) |
(944 |
) |
(1,656 |
) |
(1,748 |
) | ||||||||
|
Foreign exchange (gain) loss |
(132 |
) |
880 | 347 | 1,251 | |||||||||||
|
Total other (income) expense |
(806 |
) |
175 | (870 |
) |
(70 |
) | |||||||||
|
Income before income taxes |
38,999 | 41,376 | 97,357 | 102,210 | ||||||||||||
|
Provision for income taxes |
15,501 | 15,930 | 37,969 | 39,351 | ||||||||||||
|
Net income |
$ | 23,498 | $ | 25,446 | $ | 59,388 | $ | 62,859 | ||||||||
|
Income per share – Basic |
||||||||||||||||
|
Common Stock |
$ | 1.23 | $ | 1.33 | $ | 3.10 | $ | 3.29 | ||||||||
|
Class B Common Stock |
$ | 0.98 | $ | 1.06 | $ | 2.48 | $ | 2.63 | ||||||||
|
Income per share – Diluted |
||||||||||||||||
|
Common Stock |
$ | 1.16 | $ | 1.26 | $ | 2.94 | $ | 3.11 | ||||||||
|
Income allocated to – Basic |
||||||||||||||||
|
Common Stock |
$ | 18,691 | $ | 20,182 | $ | 47,232 | $ | 49,834 | ||||||||
|
Class B Common Stock |
$ | 4,704 | $ | 5,041 | $ | 11,896 | $ | 12,472 | ||||||||
|
Income allocated to – Diluted |
||||||||||||||||
|
Common Stock |
$ | 23,401 | $ | 25,235 | $ | 59,141 | $ | 62,335 | ||||||||
|
Weighted average number of shares outstanding – Basic |
||||||||||||||||
|
Common Stock |
15,241 | 15,185 | 15,230 | 15,156 | ||||||||||||
|
Class B Common Stock |
4,795 | 4,741 | 4,795 | 4,741 | ||||||||||||
|
Weighted average number of shares outstanding – Diluted |
||||||||||||||||
|
Common Stock |
20,138 | 20,065 | 20,127 | 20,028 | ||||||||||||
(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.
UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
|
(In thousands) |
February 27, 2016 (1)(2) |
August 29, 2015 |
||||||
|
Assets |
||||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ | 334,992 | $ | 276,553 | ||||
|
Receivables, net |
157,947 | 151,851 | ||||||
|
Inventories |
75,566 | 80,449 | ||||||
|
Rental merchandise in service |
136,605 | 140,384 | ||||||
|
Prepaid and deferred income taxes |
2,460 | 204 | ||||||
|
Prepaid expenses and other current assets |
13,327 | 12,382 | ||||||
|
Total current assets |
720,897 | 661,823 | ||||||
|
Property, plant and equipment, net |
521,324 | 513,853 | ||||||
|
Goodwill |
313,033 | 313,133 | ||||||
|
Customer contracts and other intangible assets, net |
35,602 | 40,049 | ||||||
|
Deferred income taxes |
— | 1,475 | ||||||
|
Other assets |
2,978 | 2,904 | ||||||
| $ | 1,593,834 | $ | 1,533,237 | |||||
|
Liabilities and shareholders' equity |
||||||||
|
Current liabilities: |
||||||||
|
Loans payable |
$ | 277 | $ | 1,385 | ||||
|
Accounts payable |
50,652 | 50,826 | ||||||
|
Accrued liabilities |
112,603 | 113,022 | ||||||
|
Accrued and deferred income taxes |
— | 18,878 | ||||||
|
Total current liabilities |
163,532 | 184,111 | ||||||
|
Long-term liabilities: |
||||||||
|
Accrued liabilities |
57,247 | 54,566 | ||||||
|
Accrued and deferred income taxes |
73,344 | 52,352 | ||||||
|
Total long-term liabilities |
130,591 | 106,918 | ||||||
|
Shareholders' equity: |
||||||||
|
Common Stock |
1,529 | 1,525 | ||||||
|
Class B Common Stock |
485 | 485 | ||||||
|
Capital surplus |
71,173 | 67,611 | ||||||
|
Retained earnings |
1,254,951 | 1,197,000 | ||||||
|
Accumulated other comprehensive (loss) income |
(28,427 |
) |
(24,413 |
) | ||||
|
Total shareholders' equity |
1,299,711 | 1,242,208 | ||||||
| $ | 1,593,834 | $ | 1,533,237 | |||||
|
(1) |
Unaudited |
|
(2) |
In the second fiscal quarter of 2016, the Company adopted updated accounting guidance on the presentation of deferred income taxes. This adoption required that deferred tax liabilities and assets be classified as noncurrent in the Consolidated Balance Sheet. The Company elected to account for this change in presentation prospectively and prior periods were not retroactively adjusted. |
UniFirst Corporation and Subsidiaries
Detail of Operating Results
(Unaudited)
Revenues
|
Thirteen weeks ended February 27, |
Thirteen weeks ended February 28, |
Dollar |
Percent |
|||||||||||||
|
(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
||||||||||||
|
Core Laundry Operations |
$ | 331,365 | $ | 332,068 | $ | (703 |
) |
-0.2 |
% | |||||||
|
Specialty Garments |
20,451 | 18,661 | 1,790 | 9.6 | ||||||||||||
|
First Aid |
11,281 | 10,733 | 548 | 5.1 | ||||||||||||
|
Consolidated total |
$ | 363,097 | $ | 361,462 | $ | 1,635 | 0.5 |
% | ||||||||
|
Twenty-six weeks ended February 27, |
Twenty-six weeks ended February 28, |
Dollar |
Percent |
|||||||||||||
|
(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
||||||||||||
|
Core Laundry Operations |
$ | 666,402 | $ | 667,915 | $ | (1,513 |
) |
-0.2 |
% | |||||||
|
Specialty Garments |
47,221 | 41,137 | 6,084 | 14.8 | ||||||||||||
|
First Aid |
22,858 | 22,771 | 87 | 0.4 | ||||||||||||
|
Consolidated total |
$ | 736,481 | $ | 731,823 | $ | 4,658 | 0.6 |
% | ||||||||
Income from Operations
|
Thirteen weeks ended February 27, |
Thirteen weeks ended February 28, |
Dollar |
Percent |
|||||||||||||
|
(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
||||||||||||
|
Core Laundry Operations |
$ | 36,129 | $ | 40,924 | $ | (4,795 |
) |
-11.7 |
% | |||||||
|
Specialty Garments |
1,146 | (435 |
) |
1,581 | 364.1 | |||||||||||
|
First Aid |
918 | 1,062 | (144 |
) |
-13.6 | |||||||||||
|
Consolidated total |
$ | 38,193 | $ | 41,551 | $ | (3,358 |
) |
-8.1 |
% | |||||||
|
Twenty-six weeks ended February 27, |
Twenty-six weeks ended February 28, |
Dollar |
Percent |
|||||||||||||
|
(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
||||||||||||
|
Core Laundry Operations |
$ | 89,101 | $ | 97,797 | $ | (8,696 |
) |
-8.9 |
% | |||||||
|
Specialty Garments |
5,432 | 1,833 | 3,599 | 196.3 | ||||||||||||
|
First Aid |
1,954 | 2,510 | (556 |
) |
-22.1 | |||||||||||
|
Consolidated total |
$ | 96,487 | $ | 102,140 | $ | (5,653 |
) |
-5.5 |
% | |||||||
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
|
(In thousands) |
Twenty-six weeks ended February 27, 2016 |
Twenty-six weeks ended February 28, 2015 |
||||||
|
Cash flows from operating activities: |
||||||||
|
Net income |
$ | 59,388 | $ | 62,859 | ||||
|
Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
|
Depreciation |
35,297 | 32,495 | ||||||
|
Amortization of intangible assets |
4,250 | 4,334 | ||||||
|
Amortization of deferred financing costs |
104 | 104 | ||||||
|
Share-based compensation |
2,537 | 3,369 | ||||||
|
Accretion on environmental contingencies |
334 | 302 | ||||||
|
Accretion on asset retirement obligations |
398 | 316 | ||||||
|
Deferred income taxes |
5,978 | 7,040 | ||||||
|
Changes in assets and liabilities, net of acquisitions: |
||||||||
|
Receivables |
(6,528 |
) |
(11,048 |
) | ||||
|
Inventories |
4,733 | (6,578 |
) | |||||
|
Rental merchandise in service |
3,477 | 718 | ||||||
|
Prepaid expenses and other current assets |
(851 |
) |
(7,187 |
) | ||||
|
Accounts payable |
(79 |
) |
(1,384 |
) | ||||
|
Accrued liabilities |
1,574 | 11,605 | ||||||
|
Prepaid and accrued income taxes |
(5,131 |
) |
10,092 | |||||
|
Net cash provided by operating activities |
105,481 | 107,037 | ||||||
|
Cash flows from investing activities: |
||||||||
|
Acquisition of businesses, net of cash acquired |
(73 |
) |
(15,086 |
) | ||||
|
Capital expenditures |
(44,028 |
) |
(45,542 |
) | ||||
|
Other |
111 | (202 |
) | |||||
|
Net cash used in investing activities |
(43,990 |
) |
(60,830 |
) | ||||
|
Cash flows from financing activities: |
||||||||
|
Proceeds from loans payable and long-term debt |
— | 4,937 | ||||||
|
Payments on loans payable and long-term debt |
(1,046 |
) |
(6,887 |
) | ||||
|
Proceeds from exercise of Common Stock options, including excess tax benefits |
1,026 | 4,975 | ||||||
|
Payment of cash dividends |
(1,436 |
) |
(1,433 |
) | ||||
|
Net cash (used in) provided by financing activities |
(1,456 |
) |
1,592 | |||||
|
Effect of exchange rate changes on cash |
(1,596 |
) |
(8,107 |
) | ||||
|
Net increase in cash and cash equivalents |
58,439 | 39,692 | ||||||
|
Cash and cash equivalents at beginning of period |
276,553 | 191,769 | ||||||
|
Cash and cash equivalents at end of period |
$ | 334,992 | $ | 231,461 | ||||