UniFirst Announces Financial Results For The Third Quarter And First Nine Months Of Fiscal 2012

UniFirst Corporation (NYSE: UNF) today announced results for its third quarter of fiscal 2012, which ended on May 26, 2012. Revenues were $320.9 million, up 10.1% from $291.6 million for the third quarter a year ago.

Net income for the quarter was $27.5 million ($1.37 per diluted share) compared to $18.4 million ($0.93 per diluted share) reported in the year ago period. Third quarter results include the positive effect of a settlement related to environmental litigation that the Company entered into during the quarter. 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 quarter, adjusted to eliminate the effect of the gain, was $1.16, up 24.7% from the $0.93 reported in the same period a year ago.

Revenues for the first nine months of fiscal 2012 were $943.9 million, up 11.9% from $843.3 million in the first nine months of fiscal 2011. Net income per diluted share for the first nine months of fiscal 2012 was $3.63, compared to $2.94 in the same period a year ago.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We are very pleased with the results of our third fiscal quarter. Although the employment situation remains sluggish, we continue to focus on areas within our control. Our success continues to be the result of strong execution from our sales and service organizations.”

Revenues for the third quarter of fiscal 2012 in the Core Laundry Operations were $281.1 million, up 11.5% from those reported in the prior year’s third quarter. Excluding the effects of acquisitions and a slightly weaker Canadian dollar, revenues grew 10.9%. Segment income from operations adjusted to eliminate the $6.7 million gain referred to above increased 31.4% year to year. The adjusted operating margin expanded to 10.5% from 8.9% a year earlier. Increased profitability arose from improved operating leverage that came with strong revenue growth. Expenses related to plant operations, depreciation, energy and overall selling and administrative outlays were all lower as a percentage of revenue compared to the prior year. These improvements were partially offset by higher merchandise costs and expenses associated with the Company’s initiative to update its customer service systems.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $29.3 million for the third quarter of fiscal 2012, down from a record $30.6 in the third quarter of fiscal 2011. Income from operations for this segment also decreased to $5.0 million in the quarter compared to $5.7 million in the same quarter a year ago.

The net income comparison for the quarter benefited from a decrease in net interest expense of $1.1 million from the third quarter of fiscal 2011. The decrease was due to the expiration of an interest rate swap in March 2011 and the repayment of $75.0 million in private placement notes that came due in June 2011.

UniFirst continues to maintain a solid balance sheet and overall financial position. Cash and cash equivalents at the end of the quarter totaled $78.8 million. Cash provided by operating activities year to date was $106.8 million, up 90.9% compared to $56.0 million in the first nine months of fiscal 2011. The improved cash flows were primarily the result of higher earnings as well as lower cash outflows related to working capital compared to a year ago. At the end of the quarter, long term debt, including current maturities was $104.6 million or 10.7% of total capital.

OutlookMr. Croatti continued, “Based on the strength of our year to date results and our outlook for the fourth quarter, we are raising our full year guidance. We now project fiscal 2012 revenues to be between $1.252 billion and $1.257 billion and diluted earnings per share to be between $4.60 and $4.70.”

Conference Call InformationUniFirst 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 CorporationUniFirst 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 StatementsThis 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, 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, 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 27, 2011 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 SubsidiariesConsolidated Statements of Income

 
               
Thirteen weeks ended Thirty-nine weeks ended
(In thousands, except per share data)

May 26,2012 (2)
    May 28,2011 (2) May 26,2012 (2)     May 28,2011 (2)
 
Revenues $ 320,931 $ 291,567 $ 943,915 $ 843,252
 
Operating expenses:
Cost of revenues (1) 202,433 185,217 599,009 524,685
Selling and administrative expenses (1) 59,108 60,852 179,429 174,649
Depreciation and amortization 16,718 16,365 49,615 47,942
Total operating expenses 278,259 262,434 828,053 747,276
 
Income from operations 42,672 29,133 115,862 95,976
 
Other expense (income):
Interest expense 511 1,586 1,639 5,991
Interest income (656 ) (616 ) (2,036 ) (1,852 )
Exchange rate loss (gain) 457 (291 ) 1,028 (682 )
312 679 631 3,457
 
Income before income taxes 42,360 28,454 115,231 92,519
Provision for income taxes 14,901 10,023 42,774 34,047
 
Net income $ 27,459 $ 18,431 $ 72,457 $ 58,472
 
Income per share – Basic
Common Stock $ 1.45 $ 0.98 $ 3.83 $ 3.10
Class B Common Stock $ 1.16 $ 0.78 $ 3.06 $ 2.48
 
Income per share – Diluted
Common Stock $ 1.37 $ 0.93 $ 3.63 $ 2.94
 
Income allocated to – Basic
Common Stock $ 21,587 $ 14,453 $ 59,926 $ 45,810
Class B Common Stock $ 5,381 $ 3,635 $ 14,214 $ 11,555
 
Income allocated to – Diluted
Common Stock $ 26,993 $ 18,105 $ 71,205 $ 57,420
 
Weighted average number of shares outstanding – Basic
Common Stock 14,905 14,810 14,872 14,780
Class B Common Stock 4,644 4,656 4,642 4,660
 
Weighted average number of shares outstanding – Diluted
Common Stock 19,646 19,549 19,600 19,522
 
 

(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 26,2012 (1)

August 27,2011
Assets
Current assets:
Cash and cash equivalents $ 78,821 $ 48,812
Receivables, net 140,140 128,377
Inventories 76,291 76,460
Rental merchandise in service 140,327 126,536
Prepaid and deferred income taxes 7,232 11,358
Prepaid expenses 8,506 3,647
 
Total current assets 451,317 395,190
 
Property, plant and equipment:
Land, buildings and leasehold improvements 350,698 346,738
Machinery and equipment 419,581 393,530
Motor vehicles 140,975 129,762
 
911,254 870,030
Less - accumulated depreciation 501,206 474,963
410,048 395,067
 
Goodwill 287,982 288,249
Customer contracts and other intangible assets, net 52,888 60,905
Other assets 2,178 2,109
 
$ 1,204,413 $ 1,141,520
 
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt $ 4,492 $ 20,133
Accounts payable 58,492 56,064
Accrued liabilities 76,328 76,630
Accrued income taxes 2,569 -
 
Total current liabilities 141,881 152,827
 
Long-term liabilities:
Long-term debt, net of current maturities 100,157 100,163
Accrued liabilities 43,124 39,698
Accrued and deferred income taxes 50,198 50,890
 
Total long-term liabilities 193,479 190,751
 
Shareholders' equity:
Common Stock 1,505 1,499
Class B Common Stock 488 488
Capital surplus 40,648 33,588
Retained earnings 822,856 752,530
Accumulated other comprehensive income 3,556 9,837
 
Total shareholders' equity 869,053 797,942
 
$ 1,204,413 $ 1,141,520
 
 

(1) Unaudited
 
 
UniFirst Corporation and Subsidiaries
Detail of Operating Results
                                           
Revenues
Thirteen weeks ended
(In thousands, except percentages)            

May 26,2012 (1)
May 28,2011 (1) DollarChange PercentChange
 
Core Laundry Operations $ 281,141 $ 252,052 $ 29,089 11.5 %
Specialty Garments 29,263 30,575 (1,312 ) -4.3
First Aid 10,527 8,940 1,587 17.7
Consolidated total $ 320,931 $ 291,567 $ 29,364 10.1 %
 
Thirty-nine weeks ended
(In thousands, except percentages)             May 26,2012 (1) May 28,2011 (1) DollarChange PercentChange
 
Core Laundry Operations $ 830,661 $ 737,611 $ 93,050 12.6 %
Specialty Garments 83,032 79,902 3,130 3.9
First Aid 30,222 25,739 4,483 17.4
Consolidated total $ 943,915 $ 843,252 $ 100,663 11.9 %
 
 
 
Income from Operations
Thirteen weeks ended
(In thousands, except percentages)             May 26,2012 (1) May 28,2011 (1) DollarChange PercentChange
 
Core Laundry Operations $ 36,275 $ 22,505 $ 13,770 61.2 %
Specialty Garments 5,033 5,685 (652 ) -11.5
First Aid 1,364 943 421 44.7
Consolidated total $ 42,672 $ 29,133 $ 13,539 46.5 %
 
Thirty-nine weeks ended
(In thousands, except percentages)             May 26,2012 (1) May 28,2011 (1) DollarChange PercentChange
 
Core Laundry Operations $ 98,706 $ 79,997 $ 18,709 23.4 %
Specialty Garments 14,175 13,442 733 5.4
First Aid 2,981 2,537 444 17.5
Consolidated total $ 115,862 $ 95,976 $ 19,886 20.7 %
 
(1) Unaudited
       
 
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
 

Thirty-nine weeks ended(In thousands)

May 26,2012 (1)
       

May 28,2011 (1)
Cash flows from operating activities:      
Net income $ 72,457 $ 58,472
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 41,644 40,171
Amortization of intangible assets 7,971 7,771
Amortization of deferred financing costs 178 202
Share-based compensation 5,202 5,180
Accretion on environmental contingencies 474 511
Accretion on asset retirement obligations 473 442
Deferred income taxes 362 5,598
Changes in assets and liabilities, net of acquisitions:
Receivables (12,985 ) (20,434 )
Inventories (320 ) (18,835 )
Rental merchandise in service (14,475 ) (25,653 )
Prepaid expenses (4,870 ) (2,416 )
Accounts payable 2,629 4,264
Accrued liabilities 2,411 4,398
Prepaid and accrued income taxes 5,666 (3,718 )
Net cash provided by operating activities 106,817 55,953
 
Cash flows from investing activities:
Acquisition of businesses - (17,317 )
Capital expenditures (59,325 ) (49,416 )
Other (436 ) (544 )
Net cash used in investing activities (59,761 ) (67,277 )
 
Cash flows from financing activities:
Proceeds from long-term debt 40,410 -
Payments on long-term debt (55,845 ) (1,404 )
Payments of deferred financing costs - (975 )
Proceeds from exercise of Common Stock options 2,000 1,164
Payment of cash dividends (2,129 ) (2,122 )
Net cash used in financing activities (15,564 ) (3,337 )
 
Effect of exchange rate changes (1,483 ) 2,411
 
Net increase (decrease) in cash and cash equivalents 30,009 (12,250 )
Cash and cash equivalents at beginning of period 48,812 121,258
 
Cash and cash equivalents at end of period $ 78,821 $ 109,008
 
 

(1) Unaudited

Copyright Business Wire 2010

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