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Exhibit 99

 

 

  

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR OF FISCAL 2016

 

Wilmington, MA (October 19, 2016) -- UniFirst Corporation (NYSE: UNF) today announced results for its fourth quarter and full year ended August 27, 2016. Revenues for the quarter were $363.8 million, up 1.3% from $359.2 million in the same year ago period. Net income was $35.5 million ($1.74 per diluted share), compared to $28.9 million ($1.43 per diluted share) in the fourth quarter of fiscal 2015. Full year revenues were $1.468 billion, up 0.8% from fiscal 2015. Net income for the full year was $125.0 million ($6.17 per diluted share) compared to $124.3 million ($6.15 per diluted share) in the prior year.

 

These results include the positive effect of a settlement the Company entered into during the fourth quarter. The settlement related to environmental litigation and resulted in a $15.9 million gain that was recorded as a reduction of fourth quarter and full year selling and administrative expenses. Excluding the effect of this settlement, adjusted net income for the quarter was $25.8 million ($1.27 per diluted share), down 10.8% from a year ago. Full year adjusted net income was $115.3 million ($5.69 per diluted share) down 7.2% from net income in the prior fiscal year. (See reconciliation table for details)

 

The current quarter results also reflect a $3.5 million increase to the Company’s reserves for environmental contingencies. This charge, which is unrelated to the settlement discussed above, was also recorded in selling and administrative expense and decreased fourth quarter net income by $2.1 million ($0.11 per diluted share). By comparison, in the fourth quarter of fiscal 2015, the Company increased its reserves for environmental contingencies by $1.3 million, which reduced net income by $0.8 million ($0.04 per diluted share).

 

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “Our growth during the fourth quarter continued to be negatively affected by the loss of uniform wearers and customers in energy dependent markets in the United States and Canada. However, we are encouraged that the recent trend of wearer levels at our existing customers, although still negative, appears to be improving as we move into fiscal 2017. We continue to focus on matters within our control, such as providing high quality service to our broad customer base as well as selling prospective customers on the value of our products and services.”

 

Core Laundry revenues in the quarter were $331.7 million, up 1.6% from those reported in the prior year’s fourth quarter. Adjusting for the effect of acquisitions and a weaker Canadian dollar, revenues grew 1.1%. This segment’s operating income, adjusted to exclude the positive affect of the settlement discussed above (see reconciliation for details), was $38.3 million in the quarter, a 10.6% decrease from the prior year. Its adjusted operating margin was 11.6%, down from 13.1% for the same period in fiscal 2015. This decline was partially the result of the increase made to reserves for environmental contingencies discussed earlier. In addition, many of this segment’s expenses, including those related to its production facilities as well as selling and administrative efforts, were higher as a percentage of revenues than in the prior year. These items were partially offset by lower energy expenses during the quarter compared to a year ago.

 

 
 

 

 

Revenues and operating income in the quarter for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, declined 2.8% and 18.5%, respectively, compared to a year ago. This segment’s results can vary significantly from period to period due to seasonality and the timing of reactor outages and projects. For the full year, this segment produced solid results, with revenues and operating income growing 4.3% and 38.7%, respectively, over the same period a year ago.

 

UniFirst continues to maintain a strong balance sheet with no long-term debt and increasing cash balances. Net cash provided by operating activities for full year fiscal 2016 was $207.6 million and cash and equivalents at the end of fiscal 2016 totaled $363.8 million, up from $276.6 million at the end of fiscal 2015.

 

Outlook

Mr. Croatti continued, “At this time, we expect that our fiscal 2017 revenues will be between $1.550 billion and $1.565 billion and full year diluted EPS will be between $5.00 and $5.15. The projected decline in our earnings next year is primarily the result of the slower top line growth we have recently been experiencing coupled with increases in labor and labor related costs as well as the impact of other investments we continue to make in our Company. Our guidance assumes no significant further deterioration in our wearer base as a result of additional layoffs in energy dependent markets that we service.” This guidance includes the results of Arrow Uniform, the acquisition which was completed in September 2016. The Company expects this acquisition to add between $62 million and $65 million to its annual revenues and that it will be dilutive to fiscal 2017 earnings, partially due to non-cash purchase accounting charges.

 

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 240 service locations, 300,000 customer locations, and 13,000 employee Team Partners, the company outfits nearly 2 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, contact UniFirst at 800.455.7654 or 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 maintain and grow Arrow’s customer base and enhance its operating margins, 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

August 27,

   

Thirteen

weeks ended

August 29,

   

Fifty-two

weeks ended

August 27,

   

Fifty-two

weeks ended

August 29,

 

(In thousands, except per share data)

 

2016

   

2015

   

2016

   

2015

 
                                 

Revenues

  $ 363,766     $ 359,208     $ 1,468,046     $ 1,456,605  
                                 

Operating expenses:

                               

Cost of revenues (1)

    223,220       219,442       900,427       884,664  

Selling and administrative expenses (1)

    62,134       72,612       284,847       294,444  

Depreciation and amortization

    21,656       21,262       81,612       77,113  

Total operating expenses

    307,010       313,316       1,266,886       1,256,221  
                                 

Income from operations

    56,756       45,892       201,160       200,384  
                                 

Other (income) expense:

                               

Interest expense

    277       225       927       873  

Interest income

    (912

)

    (778

)

    (3,470

)

    (3,310

)

Foreign exchange loss

    76       230       332       1,553  

Total other income

    (559

)

    (323

)

    (2,211

)

    (884

)

                                 

Income before income taxes

    57,315       46,215       203,371       201,268  

Provision for income taxes

    21,821       17,274       78,345       76,969  
                                 

Net income

  $ 35,494     $ 28,941     $ 125,026     $ 124,299  
                                 

Income per share – Basic

                               

Common Stock

  $ 1.84     $ 1.51     $ 6.51     $ 6.50  

Class B Common Stock

  $ 1.47     $ 1.21     $ 5.21     $ 5.20  
                                 

Income per share – Diluted

                               

Common Stock

  $ 1.74     $ 1.43     $ 6.17     $ 6.15  
                                 

Income allocated to – Basic

                               

Common Stock

  $ 28,097     $ 23,011     $ 99,282     $ 98,665  

Class B Common Stock

  $ 7,139     $ 5,803     $ 25,093     $ 24,761  
                                 

Income allocated to – Diluted

                               

Common Stock

  $ 35,250     $ 28,821     $ 124,409     $ 123,472  
                                 

Weighted average number of shares outstanding – Basic

                               

Common Stock

    15,268       15,210       15,245       15,182  

Class B Common Stock

    4,850       4,795       4,816       4,763  
                                 

Weighted average number of shares outstanding – Diluted

                               

Common Stock

    20,223       20,142       20,154       20,079  

 

(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

(Unaudited)

 

(In thousands)

 

August 27,

2016 (1)

   

August 29,

2015

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 363,795     $ 276,553  

Receivables, net

    156,578       151,851  

Inventories

    78,887       80,449  

Rental merchandise in service

    138,105       140,384  

Prepaid and deferred income taxes

    10,418       204  

Prepaid expenses and other current assets

    29,831       12,382  
                 

Total current assets

    777,614       661,823  
                 

Property, plant and equipment, net

    539,818       513,853  
                 

Goodwill

    320,641       313,133  

Customer contracts and other intangible assets, net

    38,664       40,049  

Deferred income taxes

    97       1,475  

Other assets

    25,173       2,904  
                 
    $ 1,702,007     $ 1,533,237  
                 

Liabilities and shareholders' equity

               

Current liabilities:

               

Loans payable

  $     $ 1,385  

Accounts payable

    50,884       50,826  

Accrued liabilities

    100,782       113,022  

Accrued and deferred income taxes

    969       18,878  
                 

Total current liabilities

    152,635       184,111  
                 

Long-term liabilities:

               

Accrued liabilities

    104,921       54,566  

Accrued and deferred income taxes

    79,670       52,352  
                 

Total long-term liabilities

    184,591       106,918  
                 

Shareholders' equity:

               

Common Stock

    1,542       1,525  

Class B Common Stock

    485       485  

Capital surplus

    72,561       67,611  

Retained earnings

    1,319,142       1,197,000  

Accumulated other comprehensive (loss) income

    (28,949

)

    (24,413

)

                 

Total shareholders' equity

    1,364,781       1,242,208  
                 
    $ 1,702,007     $ 1,533,237  

 

 

(1)

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

August 27,

   

Thirteen

weeks ended

August 29,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 331,749     $ 326,643     $ 5,106       1.6

%

Specialty Garments

    19,955       20,522       (567

)

    -2.8  

First Aid

    12,062       12,043       19       0.2  

Consolidated total

  $ 363,766     $ 359,208     $ 4,558       1.3

%

 

   

Fifty-two

weeks ended

August 27,

   

Fifty-two

weeks ended

August 29,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 1,329,375     $ 1,322,328     $ 7,047       0.5

%

Specialty Garments

    91,257       87,513       3,744       4.3  

First Aid

    47,414       46,764       650       1.4  

Consolidated total

  $ 1,468,046     $ 1,456,605     $ 11,441       0.8

%

 

 

Income from Operations

 

   

Thirteen

weeks ended

August 27,

   

Thirteen

weeks ended

August 29,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 54,189     $ 42,855     $ 11,334       26.5

%

Specialty Garments

    1,213       1,490       (277

)

    -18.5  

First Aid

    1,354       1,547       (193

)

    -12.5  

Consolidated total

  $ 56,756     $ 45,892     $ 10,864       23.7

%

 

   

Fifty-two

weeks ended

August 27,

   

Fifty-two

weeks ended

August 29,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 186,074     $ 187,586     $ (1,512

)

    -0.8

%

Specialty Garments

    10,204       7,355       2,849       38.7  

First Aid

    4,882       5,443       (561

)

    -10.3  

Consolidated total

  $ 201,160     $ 200,384     $ 776       0.4

%

  

 
 

 

 

UniFirst Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

(In thousands)

 

Fifty-two

weeks ended

August 27,

2016

   

Fifty-two

weeks ended

August 29,

2015

 

Cash flows from operating activities:

               

Net income

  $ 125,026     $ 124,299  

Adjustments to reconcile net income to cash provided by operating activities:

               

Depreciation

    72,983       68,164  

Amortization of intangible assets

    8,629       8,949  

Amortization of deferred financing costs

    184       209  

Share-based compensation

    5,628       5,366  

Accretion on environmental contingencies

    669       603  

Accretion on asset retirement obligations

    826       690  

Deferred income taxes

    9,899       (3,473

)

Changes in assets and liabilities, net of acquisitions:

               

Receivables

    (3,949

)

    (3,494

)

Inventories

    1,467       (2,236

)

Rental merchandise in service

    3,945       4,900  

Prepaid expenses and other current assets and Other assets

    (38,443

)

    (4,005

)

Accounts payable

    49       (7,648

)

Accrued liabilities

    31,954       17,832  

Prepaid and accrued income taxes

    (11,231

)

    16,761  

Net cash provided by operating activities

    207,636       226,917  
                 

Cash flows from investing activities:

               

Acquisition of businesses, net of cash acquired

    (16,583

)

    (22,359

)

Capital expenditures

    (98,235

)

    (101,163

)

Other

    149       (747

)

Net cash used in investing activities

    (114,669

)

    (124,269

)

                 

Cash flows from financing activities:

               

Proceeds from loans payable and long-term debt

          6,866  

Payments on loans payable and long-term debt

    (1,301

)

    (13,055

)

Payment of deferred financing costs

    (813

)

     

Proceeds from exercise of Common Stock options, including excess tax benefits

    5,313       7,799  

Taxes withheld and paid related to net share settlement of equity awards

    (5,965

)

    (5,002

)

Payment of cash dividends

    (2,878

)

    (2,869

)

Net cash used in financing activities

    (5,644

)

    (6,261

)

                 

Effect of exchange rate changes on cash

    (81

)

    (11,603

)

                 

Net increase in cash and cash equivalents

    87,242       84,784  

Cash and cash equivalents at beginning of period

    276,553       191,769  
                 

Cash and cash equivalents at end of period

  $ 363,795     $ 276,553  

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Reconciliation of GAAP to Non-GAAP Financial Measures

 

The Company reports its consolidated financial results in accordance with generally accepted accounting principles (“GAAP”). To supplement these consolidated financial results, management believes that certain non-GAAP operating results provide a more meaningful measure on which to compare the Company’s results of operations for the periods presented. The Company believes these non-GAAP results provide useful information regarding the Company’s performance to both management and investors by excluding certain non-recurring amounts that impact the comparability of the results. A reconciliation of consolidated operating income, net income and earnings per diluted share on a GAAP basis to adjusted earnings per diluted share on a non-GAAP basis is presented in the following tables. In addition, Core Laundry Operations operating income and operating margin on a GAAP basis to adjusted operating income and adjusted operating margin on a non-GAAP basis are presented in the following tables.

 

   

Thirteen weeks ended August 27, 2016

 
   

Consolidated

   

Core Laundry Operations

 

(In thousands, except percentages)

 

Revenue

   

Operating

Income

   

Net

Income

   

Diluted

EPS

   

Revenue

   

Operating

Income

   

Operating

Margin

 
                                                         

As reported

  $ 363,766     $ 56,756     $ 35,494     $ 1.74     $ 331,749     $ 54,189       16.3

%

Settlement of environmental litigation

          (15,861 )     (9,691 )     (0.48 )           (15,861 )     -4.8  

As adjusted

  $ 363,766     $ 40,895     $ 25,803     $ 1.27     $ 331,749     $ 38,328       11.6

%

 

 

   

Fifty-two weeks ended August 27, 2016

 
   

Consolidated

   

Core Laundry Operations

 

(In thousands, except percentages)

 

Revenue

   

Operating

Income

   

Net

Income

   

Diluted

EPS

   

Revenue

   

Operating

Income

   

Operating

Margin

 
                                                         

As reported

  $ 1,468,046     $ 201,160     $ 125,026     $ 6.17     $ 1,329,375     $ 186,074       14.0

%

Settlement of environmental litigation

          (15,861 )     (9,691 )     (0.48 )           (15,861 )     -1.2  

As adjusted

  $ 1,468,046     $ 185,299     $ 115,335     $ 5.69     $ 1,329,375     $ 170,213       12.8

%

 

 

These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.