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 October 21, 2015 - 8:00 AM EDT
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UniFirst Announces Financial Results for the Fourth Quarter and Full Year of Fiscal 2015

UniFirst Corporation (NYSE: UNF) today announced results for its fourth quarter and full year ended August 29, 2015. Revenues for the quarter were $359.2 million, up 2.1% from $352.0 million in the year ago period. Net income was $28.9 million ($1.43 per diluted share) unchanged from the fourth quarter of fiscal 2014. The comparison of net income in the quarter was impacted by a lower effective income tax rate of 37.4% compared to 39.4% in the prior year. For the full year, revenues were $1.457 billion, up 4.4% from fiscal 2014. Net income was $124.3 million ($6.15 per diluted share) up 3.6% from $119.9 million ($5.95 per diluted share) reported in the prior year.

Ronald D. Croatti, UniFirst President and Chief Executive Office said, “In our fourth quarter, growth continued to be limited by macroeconomic factors including headcount reductions at many of our energy related customers as well as weaker foreign currency exchange rates adversely affecting our Canadian and European operations. Although we are pleased with our overall results for fiscal 2015, we expect these factors to challenge our top and bottom line results throughout fiscal 2016.”

Revenues in the fourth quarter for our Core Laundry Operations were $326.6 million, up 1.8% from those reported in the prior year’s fourth quarter. Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenue grew 2.2%. This segment’s income from operations decreased 6.7% compared to the fourth quarter of fiscal 2014, while the operating margin decreased to 13.1% from 14.3% a year ago. The margin decline reflects higher merchandise costs, selling and administrative expenses and depreciation as a percentage of revenues. These items were partially offset by lower energy, payroll related and legal 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 7.9% from $19.0 million in the fourth quarter of fiscal 2014. Due in part to the improved revenue performance, this segment’s income from operations increased to $1.5 million in the current quarter from $0.1 million in last year’s comparable quarter.

UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances. Net cash provided by operating activities during fiscal 2015 was $226.9 million, up 16.6% from fiscal 2014 and cash and cash equivalents at the end of the fiscal year totaled $276.6 million, up from $191.8 million at the end of fiscal 2014.

Outlook
Mr. Croatti continued, “We believe that full year fiscal 2016 revenues will be between $1.460 billion and $1.480 billion. We also believe that full year diluted EPS will be between $5.60 and $5.80. This guidance assumes no significant further deterioration in our wearer base as a result of additional layoffs in energy dependent markets that we service.”

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 over 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 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 turbulent 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, including the ultimate impact of the Affordable Care Act, 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, interruptions or failures of our information technology systems, including as a result of cyber-attacks, 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 30, 2014 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

August 29,

Thirteen

weeks ended

August 30,

Fifty-two

weeks ended

August 29,

Fifty-two

weeks ended

August 30,

(In thousands, except per share data)

2015 (2)

2014 (2) 2015 (2) 2014
 
Revenues $ 359,208 $ 351,988 $ 1,456,605 $ 1,394,897
 
Operating expenses:
Cost of revenues (1) 219,442 217,965 884,664 858,306
Selling and administrative expenses (1) 72,612 68,086 294,444 271,564
Depreciation and amortization 21,262 18,515 77,113 71,752
Total operating expenses 313,316 304,566 1,256,221 1,201,622
 
Income from operations 45,892 47,422 200,384 193,275
 
Other (income) expense:
Interest expense 225 239 873 772
Interest income (778 ) (716 ) (3,310 ) (3,131 )
Foreign exchange loss 230 242 1,553 283
Total other (income) expense (323 ) (235 ) (884 ) (2,076 )
 
Income before income taxes 46,215 47,657 201,268 195,351
Provision for income taxes 17,274 18,785 76,969 75,426
 
Net income $ 28,941 $ 28,872 $ 124,299 $ 119,925
 
Income per share – Basic
Common Stock $ 1.51 $ 1.51 $ 6.50 $ 6.29
Class B Common Stock $ 1.21 $ 1.21 $ 5.20 $ 5.03
 
Income per share – Diluted
Common Stock $ 1.43 $ 1.43 $ 6.15 $ 5.95
 
Income allocated to – Basic
Common Stock $ 23,011 $ 22,876 $ 98,665 $ 94,849
Class B Common Stock $ 5,803 $ 5,742 $ 24,761 $ 23,705
 
Income allocated to – Diluted
Common Stock $ 28,821 $ 28,631 $ 123,472 $ 118,626
 
Weighted average number of shares outstanding – Basic
Common Stock 15,210 15,113 15,182 15,080
Class B Common Stock 4,795 4,741 4,763 4,711
 
Weighted average number of shares outstanding – Diluted
Common Stock 20,142 20,007 20,079 19,939

(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) August 29,

2015 (1)

August 30,

2014

Assets
Current assets:
Cash and cash equivalents $ 276,553 $ 191,769
Receivables, net 151,851 152,523
Inventories 80,449 78,858
Rental merchandise in service 140,384 146,449
Prepaid and deferred income taxes 204 13,342
Prepaid expenses and other current assets 12,382 6,349
 
Total current assets 661,823 589,290
 
Property, plant and equipment:
Land, buildings and leasehold improvements 402,781 393,584
Machinery and equipment 535,698 512,842
Motor vehicles 193,643 166,573
 
1,132,122 1,072,999
Less - accumulated depreciation 618,269 586,717
513,853 486,282
 
Goodwill 313,133 303,648
Customer contracts and other intangible assets, net 40,049 41,477
Deferred income taxes 1,475 1,403
Other assets 2,904 2,061
 
$ 1,533,237 $ 1,424,161
 
Liabilities and shareholders' equity
Current liabilities:
Loans payable and current maturities of long-term debt $ 1,385 $ 7,704
Accounts payable 50,826 59,177
Accrued liabilities 113,022 100,818
Accrued and deferred income taxes 18,878 23,342
 
Total current liabilities 184,111 191,041
 
Long-term liabilities:
Long-term debt, net of current maturities 155

 

Accrued liabilities 54,566 50,235
Accrued and deferred income taxes 52,352 48,271
 
Total long-term liabilities 106,918 98,661
 
Shareholders' equity:
Common Stock 1,525 1,519
Class B Common Stock 485 486
Capital surplus 67,611 59,415
Retained earnings 1,197,000 1,075,572
Accumulated other comprehensive (loss) income (24,413

)

(2,533

)

 
Total shareholders' equity 1,242,208 1,134,459
 
$ 1,533,237 $ 1,424,161
 

(1) Unaudited

UniFirst Corporation and Subsidiaries

           

Detail of Operating Results

 

 

Revenues

 
Thirteen

Thirteen

weeks ended weeks ended

 

 

August 29, August 30,

Dollar

Percent

(In thousands, except percentages) 2015 (1) 2014 (1) Change Change
 
Core Laundry Operations $ 326,643 $ 320,993 $ 5,650 1.8 %
Specialty Garments 20,522 19,016 1,506 7.9
First Aid 12,043 11,979 64 0.5
Consolidated total $ 359,208 $ 351,988 $ 7,220 2.1 %
 
  Fifty-two     Fifty-two      
weeks ended weeks ended

 

 

August 29, August 30,

Dollar

Percent

(In thousands, except percentages) 2015 (1) 2014 (1) Change Change
 
Core Laundry Operations $ 1,322,328 $ 1,259,485 $ 62,843 5.0 %
Specialty Garments 87,513 91,484 (3,971 ) -4.3
First Aid 46,764 43,928 2,836 6.5
Consolidated total $ 1,456,605 $ 1,394,897 $ 61,708 4.4 %
 

Income from Operations

           
 
Thirteen Thirteen
weeks ended weeks ended

 

 

August 29, August 30,

Dollar

Percent

(In thousands, except percentages) 2015 (1) 2014 (1) Change Change
 
Core Laundry Operations $ 42,855 $ 45,937 $ (3,082 ) -6.7 %
Specialty Garments 1,490 115 1,375 1,195.7
First Aid 1,547 1,370 177 12.9
Consolidated total $ 45,892 $ 47,422 $ (1,530 ) -3.2 %
 
  Fifty-two     Fifty-two        
weeks ended weeks ended

 

 

August 29, August 30,

Dollar

Percent

(In thousands, except percentages) 2015 (1) 2014 (1) Change Change
 
Core Laundry Operations $ 187,586 $ 182,250 $ 5,336 2.9 %
Specialty Garments 7,355 7,178 177 2.5
First Aid 5,443 3,847 1,596 41.5
Consolidated total $ 200,384 $ 193,275 $ 7,109 3.7 %
 

(1) Unaudited

UniFirst Corporation and Subsidiaries

   
Consolidated Statements of Cash Flows
 
Fifty-two Fifty-two
weeks ended weeks ended
August 29, August 30,
(In thousands) 2015 (1)     2014
Cash flows from operating activities:      
Net income $ 124,299 $ 119,925
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 68,164 62,791
Amortization of intangible assets 8,949 8,961
Amortization of deferred financing costs 209 209
Share-based compensation 5,366 5,601
Accretion on environmental contingencies 603 716
Accretion on asset retirement obligations 690 941
Deferred income taxes (3,473 ) 8,439
Changes in assets and liabilities, net of acquisitions:
Receivables (3,494 ) (11,541 )
Inventories (2,236 ) (4,450 )
Rental merchandise in service 4,900 (14,002 )
Prepaid expenses and other current assets (4,005 ) 2,623
Accounts payable (7,648 ) 13,646
Accrued liabilities 17,832 6,890
Prepaid and accrued income taxes 16,761 (6,130 )
Net cash provided by operating activities 226,917 194,619
 
Cash flows from investing activities:
Acquisition of businesses (22,359 ) (3,635 )
Capital expenditures (101,163 ) (91,808 )
Other (747 ) 1,269
Net cash used in investing activities (124,269 ) (94,174 )
 
Cash flows from financing activities:
Proceeds from loans payable and long-term debt 6,866 9,388
Payments on loans payable and long-term debt (13,055 ) (113,247 )
Proceeds from exercise of Common Stock options, including excess tax benefits 7,799 5,899
Taxes withheld and paid related to net share settlement of equity awards (5,002 ) (3,527 )
Payment of cash dividends (2,869 ) (2,860 )
Net cash used in financing activities (6,261 ) (104,347 )
 
Effect of exchange rate changes on cash (11,603 ) (1,808 )
 
Net increase (decrease) in cash and cash equivalents 84,784 (5,710 )
Cash and cash equivalents at beginning of period 191,769 197,479
 
Cash and cash equivalents at end of period $ 276,553 $ 191,769
 

(1) Unaudited

UniFirst Corporation
Steven S. Sintros, 978-658-8888
Senior Vice President & CFO


Source: Business Wire (October 21, 2015 - 8:00 AM EDT)

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