Attached files
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| 8-K - FORM 8-K - UNIFIRST CORP | unf20170103_8k.htm |
Exhibit 99
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UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2017
Wilmington, MA (January 4, 2017) -- UniFirst Corporation (NYSE: UNF) today announced results for its first quarter of fiscal 2017 which ended November 26, 2016. Revenues for the quarter were $386.1 million, up 3.4% from $373.4 million in the year ago period. Net income was $28.2 million ($1.38 per diluted share), down 21.4% from $35.9 million ($1.78 per diluted share) in the first quarter of fiscal 2016. Results from the first quarter include the impact of the Company’s acquisition of Arrow Uniform (Arrow) which was completed in September 2016.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “First quarter growth was affected by the loss of uniform wearers and customers in North American energy-dependent markets. However, we are encouraged by recent trends in these markets. Wearer levels at the existing customers have shown improvement which suggests energy-related headwinds may be subsiding. If these trends continue, our organic growth rates should improve as fiscal 2017 unfolds.”
Core Laundry revenues in the quarter were $351.8 million, up 5.0% from those in the prior year’s first quarter. Adjusting for the effect of acquisitions, Core Laundry revenues grew 0.6%. This segment’s operating income was $43.7 million, a 17.6% decrease from the prior year. Its operating margin was 12.4%, down from 15.8% for the same period in fiscal 2016. The margin decline was primarily the result of higher costs of revenues and selling and administrative expenses combined with low organic growth. In addition, the impact of the acquisition of Arrow, including the effect of non-cash purchase accounting charges, decreased the Core Laundry operating margin by approximately 1.1%.
Revenues and operating income from our Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, declined 16.5% and 73.1%, respectively, in the quarter compared to the same period 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. The quarterly results for this segment largely met our expectations and we currently expect this segment’s full year results will meet or exceed its fiscal 2016 revenues and operating income.
UniFirst continues to maintain a strong balance sheet with no long-term debt and significant cash balances. Excluding the cash expended on Arrow, cash balances increased $42.2 million during the quarter and finished the quarter at $286.1 million.
Outlook
Mr. Croatti said, “At this time, we continue to expect that our fiscal 2017 revenues will be between $1.550 billion and $1.565 billion. We now expect that our full year diluted EPS will be between $4.85 and $5.00. Although the year is unfolding mostly as anticipated, certain items, including worker’s compensation claims and other operating expenses are trending higher. As a result, we are modifying our full year earnings expectations.”
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 27, 2016 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)
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Thirteen weeks ended November 26, |
Thirteen weeks ended November 28, |
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(In thousands, except per share data) |
2016 |
2015 |
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Revenues |
$ | 386,108 | $ | 373,384 | ||||
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Operating expenses: |
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Cost of revenues (1) |
238,765 | 222,603 | ||||||
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Selling and administrative expenses (1) |
79,446 | 72,749 | ||||||
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Depreciation and amortization |
22,140 | 19,738 | ||||||
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Total operating expenses |
340,351 | 315,090 | ||||||
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Income from operations |
45,757 | 58,294 | ||||||
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Other (income) expense: |
||||||||
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Interest expense |
182 | 221 | ||||||
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Interest income |
(983 |
) |
(764 |
) | ||||
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Foreign exchange loss |
494 | 479 | ||||||
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Total other (income) expense |
(307 |
) |
(64 |
) | ||||
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Income before income taxes |
46,064 | 58,358 | ||||||
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Provision for income taxes |
17,850 | 22,468 | ||||||
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Net income |
$ | 28,214 | $ | 35,890 | ||||
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Income per share – Basic |
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Common Stock |
$ | 1.46 | $ | 1.88 | ||||
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Class B Common Stock |
$ | 1.17 | $ | 1.50 | ||||
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Income per share – Diluted |
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Common Stock |
$ | 1.38 | $ | 1.78 | ||||
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Income allocated to – Basic |
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Common Stock |
$ | 22,342 | $ | 28,539 | ||||
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Class B Common Stock |
$ | 5,668 | $ | 7,193 | ||||
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Income allocated to – Diluted |
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Common Stock |
$ | 28,020 | $ | 35,741 | ||||
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Weighted average number of shares outstanding – Basic |
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Common Stock |
15,285 | 15,218 | ||||||
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Class B Common Stock |
4,847 | 4,795 | ||||||
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Weighted average number of shares outstanding – Diluted |
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Common Stock |
20,249 | 20,132 | ||||||
(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)
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(In thousands) |
November 26, 2016 |
August 27, 2016 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | 286,119 | $ | 363,795 | ||||
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Receivables, net |
176,404 | 156,578 | ||||||
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Inventories |
73,164 | 78,887 | ||||||
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Rental merchandise in service |
144,637 | 138,105 | ||||||
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Prepaid taxes |
— | 10,418 | ||||||
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Prepaid expenses and other current assets |
23,917 | 29,831 | ||||||
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Total current assets |
704,241 | 777,614 | ||||||
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Property, plant and equipment, net |
541,300 | 539,818 | ||||||
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Goodwill |
367,663 | 320,641 | ||||||
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Customer contracts and other intangible assets, net |
81,329 | 38,664 | ||||||
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Deferred income taxes |
338 | 97 | ||||||
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Other assets |
29,914 | 25,173 | ||||||
| $ | 1,724,785 | $ | 1,702,007 | |||||
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Liabilities and shareholders' equity |
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Current liabilities: |
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Accounts payable |
$ | 49,255 | $ | 50,884 | ||||
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Accrued liabilities |
94,202 | 100,782 | ||||||
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Accrued taxes |
7,621 | 969 | ||||||
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Total current liabilities |
151,078 | 152,635 | ||||||
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Long-term liabilities: |
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Accrued liabilities |
104,193 | 104,921 | ||||||
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Accrued and deferred income taxes |
79,742 | 79,670 | ||||||
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Total long-term liabilities |
183,935 | 184,591 | ||||||
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Shareholders' equity: |
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Common Stock |
1,543 | 1,542 | ||||||
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Class B Common Stock |
485 | 485 | ||||||
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Capital surplus |
74,941 | 72,561 | ||||||
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Retained earnings |
1,346,633 | 1,319,142 | ||||||
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Accumulated other comprehensive (loss) income |
(33,830 |
) |
(28,949 |
) | ||||
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Total shareholders' equity |
1,389,772 | 1,364,781 | ||||||
| $ | 1,724,785 | $ | 1,702,007 | |||||
UniFirst Corporation and Subsidiaries
Detail of Operating Results
(Unaudited)
Revenues
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Thirteen weeks ended November 26, |
Thirteen weeks ended November 28, |
Dollar |
Percent |
|||||||||||||
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(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
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Core Laundry Operations |
$ | 351,843 | $ | 335,037 | $ | 16,806 | 5.0 |
% | ||||||||
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Specialty Garments |
22,356 | 26,770 | (4,414 |
) |
-16.5 | |||||||||||
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First Aid |
11,909 | 11,577 | 332 | 2.9 | ||||||||||||
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Consolidated total |
$ | 386,108 | $ | 373,384 | $ | 12,724 | 3.4 |
% | ||||||||
Income from Operations
|
Thirteen weeks ended November 26, |
Thirteen weeks ended November 28, |
Dollar |
Percent |
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(In thousands, except percentages) |
2016 |
2015 |
Change |
Change |
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Core Laundry Operations |
$ | 43,673 | $ | 52,972 | $ | (9,299 |
) |
-17.6 |
% | |||||||
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Specialty Garments |
1,151 | 4,286 | (3,135 |
) |
-73.1 | |||||||||||
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First Aid |
933 | 1,036 | (103 |
) |
-10.0 | |||||||||||
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Consolidated total |
$ | 45,757 | $ | 58,294 | $ | (12,537 |
) |
-21.5 |
% | |||||||
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
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(In thousands) |
Thirteen weeks ended November 26, 2016 |
Thirteen weeks ended November 28, 2015 |
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Cash flows from operating activities: |
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Net income |
$ | 28,214 | $ | 35,890 | ||||
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Adjustments to reconcile net income to cash provided by operating activities: |
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Depreciation |
18,500 | 17,643 | ||||||
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Amortization of intangible assets |
3,640 | 2,095 | ||||||
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Amortization of deferred financing costs |
28 | 52 | ||||||
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Share-based compensation |
2,015 | 1,260 | ||||||
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Accretion on environmental contingencies |
150 | 167 | ||||||
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Accretion on asset retirement obligations |
205 | 199 | ||||||
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Deferred income taxes |
(746 |
) |
26 | |||||
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Changes in assets and liabilities, net of acquisitions: |
||||||||
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Receivables |
(13,112 |
) |
(17,376 |
) | ||||
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Inventories |
7,526 | 3,452 | ||||||
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Rental merchandise in service |
152 | (1,280 |
) | |||||
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Prepaid expenses and other current assets and Other assets |
9,288 | (2,286 |
) | |||||
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Accounts payable |
(1,113 |
) |
7,913 | |||||
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Accrued liabilities |
(8,837 |
) |
(4,967 |
) | ||||
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Prepaid and accrued income taxes |
17,589 | 14,853 | ||||||
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Net cash provided by operating activities |
63,499 | 57,641 | ||||||
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Cash flows from investing activities: |
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Acquisition of businesses, net of cash acquired |
(120,391 |
) |
(73 |
) | ||||
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Capital expenditures |
(18,233 |
) |
(21,049 |
) | ||||
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Other |
281 | 223 | ||||||
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Net cash used in investing activities |
(138,343 |
) |
(20,899 |
) | ||||
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Cash flows from financing activities: |
||||||||
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Payments on loans payable and long-term debt |
— | (764 |
) | |||||
|
Proceeds from exercise of Common Stock options, including excess tax benefits |
929 | 383 | ||||||
|
Taxes withheld and paid related to net share settlement of equity awards |
(566 |
) |
— | |||||
|
Payment of cash dividends |
(724 |
) |
(717 |
) | ||||
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Net cash used in financing activities |
(361 |
) |
(1,098 |
) | ||||
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Effect of exchange rate changes on cash |
(2,471 |
) |
(665 |
) | ||||
|
Net (decrease) increase in cash and cash equivalents |
(77,676 |
) |
34,979 | |||||
|
Cash and cash equivalents at beginning of period |
363,795 | 276,553 | ||||||
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Cash and cash equivalents at end of period |
$ | 286,119 | $ | 311,532 | ||||