UniFirst Announces Financial Results for the Fourth Quarter and Full Year Fiscal 2012

  UniFirst Announces Financial Results for the Fourth Quarter and Full Year
  Fiscal 2012

Business Wire

WILMINGTON, Mass. -- October 17, 2012

UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2012
fourth quarter and full year ended August 25, 2012. Fourth quarter revenues
were $312.4 million, up 7.4% from $290.9 million in the year ago period. Net
income for the quarter was $22.5 million ($1.13 per diluted share), up 25.1%
compared to $18.0 million ($0.90 per diluted share) reported in the year ago
period.

Full year revenues were $1.256 billion, up 10.8% from $1.134 billion in fiscal
2011. Net income per diluted share for the full year was $4.76 compared to
$3.85 in the same period a year ago. Full year results include the positive
effect of a settlement related to environmental litigation which resulted in a
$6.7 million pre-tax gain in the third quarter. The gain was recorded as a
reduction of selling and administrative expenses. Net income per diluted share
for the full year, adjusted to eliminate the gain, was $4.55, up 18.2% from
the $3.85 in the same period a year ago.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said,
“Despite the continued worldwide economic volatility, we are very pleased with
the efforts of our thousands of employees which helped us achieve double digit
percentage growth in both revenues and profits in fiscal 2012. This impressive
feat was accomplished while continuing to provide industry leading products
and services to our diverse customer base.”

Fourth quarter revenues in the Core Laundry Operations were $281.7 million, up
8.6% from those reported in the prior year’s fourth quarter. Excluding the
effects of acquisitions and a slightly weaker Canadian dollar, revenues grew
8.9%. This segment’s income from operations increased 34.4% quarter to
quarter. The operating margin expanded to 12.3% from 9.9% a year earlier.
Increased profitability resulted from improved operating leverage that came
with the strong revenue growth. Expenses related to plant operations,
depreciation and overall selling and administrative outlays were all lower as
a percentage of revenue compared to the prior year. Energy costs also were
lower in the fourth quarter compared to a year ago due to lower average costs
of fuel and natural gas. This segment’s quarterly results also benefited from
a reduction in reserves for worker’s compensation and other insurance related
liabilities of approximately $1.9 million due to changes in third-party
actuarial estimates. These positive comparisons were partially offset by
higher merchandise amortization expense.

Revenues for the Specialty Garments segment, which consists of nuclear
decontamination and cleanroom operations, were $19.7 million for the fourth
quarter of fiscal 2012, down from $23.4 in the fourth quarter of fiscal 2011.
This segment had a loss from operations for the quarter of $0.7 million
compared to income from operations of $1.8 million in the same quarter a year
ago. The decrease in revenues and profits were primarily the result of the
completion of two large power reactor rebuild projects and fewer power reactor
outages during the quarter. First Aid segment revenues of $11.0 million in the
quarter increased 35.5% compared to the fourth quarter of fiscal 2011. Income
from operations in this segment also improved to $1.4 million from $0.4
million a year ago.

The effective income tax rate for the fourth quarter was 36.5% compared to
35.8% in the same quarter in fiscal 2011.

UniFirst continues to maintain a solid balance sheet and overall financial
position. Cash and cash equivalents at the end of the quarter totaled $120.1
million, up from $48.8 million at the end of fiscal 2011. Cash provided by
operating activities for the full fiscal year was $161.7 million, up 87.6%
compared to $86.2 million in fiscal 2011. The improved cash flows were
primarily the result of higher earnings as well as lower cash outflows related
to working capital. At the end of the year, long-term debt was $104.7 million
or 10.5% of total capital.

Outlook

Mr. Croatti continued, “We move into fiscal 2013 with a high level of
uncertainty regarding the trajectory of employment levels and the economy as a
whole. We are currently projecting our fiscal 2013 revenues to be between
$1.325 billion and $1.338 billion and diluted earnings per share to be between
$4.65 and $4.85. Our guidance for fiscal 2013 includes one extra week of
operations compared to fiscal 2012 due to the timing of our fiscal calendar.
Also embedded in this guidance is a projected decline in the revenues and
operating income of our Specialty Garments segment of approximately 10% and
20%, respectively, compared to fiscal 2012. Despite these projected declines,
we are optimistic regarding the longer term outlook for this segment.”

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

UniFirst 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 Statements

This 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 Subsidiaries
Consolidated Statements of Income
                                                                             
                    Thirteen weeks ended          Fifty-two weeks ended
(In thousands,      August         August         August 25,       August
except per          25,           27,            2012 (2)        27,
share data)         2012 (2)       2011 (2)                        2011
                                                                             
Revenues          $ 312,374      $ 290,874      $ 1,256,289      $ 1,134,126
                                                                             
Operating
expenses:
Cost of             198,935        187,624        797,944          712,309
revenues (1)
Selling and
administrative      61,369         58,462         240,798          233,111
expenses (1)
Depreciation
and                 16,824         16,791         66,439           64,733
amortization
Total operating     277,128        262,877        1,105,181        1,010,153
expenses
                                                                             
Income from         35,246         27,997         151,108          123,973
operations
                                                                             
Other (income)
expense:
Interest            493            747            2,132            6,738
expense
Interest income     (702     )     (700     )     (2,738     )     (2,552    )
Exchange rate       (48      )     (103     )     980              (785      )
(gain) loss
                    (257     )     (56      )     374              3,401
                                                                             
Income before       35,503         28,053         150,734          120,572
income taxes
Provision for       12,971         10,039         55,745           44,086
income taxes
                                                                             
Net income        $ 22,532       $ 18,014       $ 94,989         $ 76,486
                                                                             
Income per
share – Basic
Common Stock      $ 1.19         $ 0.95         $ 5.02           $ 4.05
Class B Common    $ 0.95         $ 0.76         $ 4.01           $ 3.24
Stock
                                                                             
Income per
share – Diluted
Common Stock      $ 1.13         $ 0.90         $ 4.76           $ 3.85
                                                                             
Income
allocated to –
Basic
Common Stock      $ 17,717       $ 14,132       $ 74,643         $ 59,944
Class B Common    $ 4,416        $ 3,549        $ 18,630         $ 15,104
Stock
                                                                             
Income
allocated to –
Diluted
Common Stock      $ 22,153       $ 17,698       $ 93,358         $ 75,118
                                                                             
Weighted
average number
of shares
outstanding –
Basic
Common Stock        14,912         14,822         14,882           14,791
Class B Common      4,647          4,653          4,643            4,658
Stock
                                                                             
Weighted
average number
of shares
outstanding –
Diluted
Common Stock        19,664         19,559         19,616           19,532
                                                                             
(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
                                                                    
                                                     August 25,     August 27,
(In thousands)
                                                     2012 (1)       2011
Assets
Current assets:
Cash and cash equivalents                          $ 120,123      $ 48,812
Receivables, net                                     135,327        128,377
Inventories                                          75,420         76,460
Rental merchandise in service                        138,284        126,536
Prepaid and deferred income taxes                    12,785         11,358
Prepaid expenses                                     5,741          3,647
                                                                    
Total current assets                                 487,680        395,190
                                                                    
Property, plant and equipment:
Land, buildings and leasehold improvements           355,568        346,738
Machinery and equipment                              425,274        393,530
Motor vehicles                                       141,370        129,762
                                                                    
                                                     922,212        870,030
Less - accumulated depreciation                      510,008        474,963
                                                     412,204        395,067
                                                                    
Goodwill                                             288,137        288,249
Customer contracts and other intangible              50,531         60,905
assets, net
Other assets                                         1,982          2,109
                                                                    
                                                   $ 1,240,534    $ 1,141,520
                                                                    
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt               $ 4,530        $ 20,133
Accounts payable                                     52,340         56,064
Accrued liabilities                                  80,475         76,630
Accrued income taxes                                 8,180          -
                                                                    
Total current liabilities                            145,525        152,827
                                                                    
Long-term liabilities:
Long-term debt, net of current maturities            100,155        100,163
Accrued liabilities                                  43,420         39,698
Accrued and deferred income taxes                    54,509         50,890
                                                                    
Total long-term liabilities                          198,084        190,751
                                                                    
Shareholders' equity:
Common Stock                                         1,506          1,499
Class B Common Stock                                 488            488
Capital surplus                                      42,984         33,588
Retained earnings                                    844,676        752,530
Accumulated other comprehensive income               7,271          9,837
                                                                    
Total shareholders' equity                           896,925        797,942
                                                                    
                                                   $ 1,240,534    $ 1,141,520
                                                                    
(1) Unaudited

                                                                
                                                                             
UniFirst Corporation and Subsidiaries
Detail of Operating Results

Revenues
                                                                             
                        Thirteen weeks ended
(In thousands,          August 25,     August 27,       Dollar     Percent
except percentages)     2012 (1)         2011 (1)         Change     Change
                                                                             
Core Laundry          $ 281,662        $ 259,346        $ 22,316     8.6     %
Operations
Specialty Garments      19,726           23,420           (3,694 )  -15.8
First Aid               10,986           8,108            2,878      35.5
Consolidated total    $ 312,374        $ 290,874        $ 21,500     7.4     %

                                                                
                                                                             
                       Fifty-two weeks ended
(In thousands,         August 25,       August 27,       Dollar      Percent
except                 2012 (1)       2011             Change      Change
percentages)
                                                                             
Core Laundry         $ 1,112,323      $ 996,957        $ 115,366     11.6    %
Operations
Specialty Garments     102,758          103,322          (564    )  -0.5
First Aid              41,208           33,847           7,361       21.7
Consolidated total   $ 1,256,289      $ 1,134,126      $ 122,163     10.8    %

                                                                
                                                                             
Income from
Operations
                                                                             
                         Thirteen weeks ended
(In thousands,           August 25,       August          Dollar     Percent
except percentages)      2012 (1)        27,             Change     Change
                                          2011 (1)
                                                                             
Core Laundry           $ 34,579         $ 25,728        $ 8,851      34.4    %
Operations
Specialty Garments       (715         )   1,850           (2,565 )  -138.6
First Aid                1,382            419             963        229.6
Consolidated total     $ 35,246         $ 27,997        $ 7,249      25.9    %

                                                              
                                                                             
                        Fifty-two weeks ended
(In thousands,          August 25,     August 27,       Dollar     Percent
except percentages)     2012 (1)         2011             Change     Change
                                                                             
Core Laundry          $ 133,285        $ 105,725        $ 27,560     26.1    %
Operations
Specialty Garments      13,460           15,292           (1,832   ) -12.0
First Aid               4,363            2,956            1,407      47.6
Consolidated total    $ 151,108        $ 123,973        $ 27,135     21.9    %
                                                                             
(1) Unaudited

                                                              
                                                                   
UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
                                                                   
Fifty-two weeks ended                              August 25,      August 27,
                                                              
(In thousands)                                     2012 (1)        2011
Cash flows from operating activities:
Net income                                         $ 94,989        $ 76,486
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation                                         55,877          54,188
Amortization of intangible assets                    10,562          10,545
Amortization of deferred financing costs             238             261
Share-based compensation                             6,714           6,732
Accretion on environmental contingencies             631             681
Accretion on asset retirement obligations            632             589
Deferred income taxes                                (330    )       13,318
Changes in assets and liabilities, net of
acquisitions:
Receivables                                          (7,595  )       (20,881 )
Inventories                                          590             (28,413 )
Rental merchandise in service                        (12,017 )       (36,369 )
Prepaid expenses                                     (1,763  )       (247    )
Accounts payable                                     (3,688  )       9,796
Accrued liabilities                                  5,518           2,654
Prepaid and accrued income taxes                     11,360          (3,147  )
Net cash provided by operating activities            161,718         86,193
                                                                             
Cash flows from investing activities:
Acquisition of businesses                            -               (32,556 )
Capital expenditures                                 (74,549 )       (63,847 )
Other                                                (508    )       (397    )
Net cash used in investing activities                (75,057 )       (96,800 )
                                                                             
Cash flows from financing activities:
Proceeds from long-term obligations                  40,410          30,000
Payments on long-term obligations                    (55,851 )       (91,464 )
Payments of deferred financing costs                 -               (975    )
Proceeds from exercise of Common Stock               2,410           1,360
options
Payment of cash dividends                            (2,840  )       (2,830  )
Net cash used in financing activities                (15,871 )       (63,909 )
                                                                             
Effect of exchange rate changes                      521             2,070
                                                                             
Net increase (decrease) in cash and cash             71,311          (72,446 )
equivalents
Cash and cash equivalents at beginning of            48,812          121,258
period
                                                                             
Cash and cash equivalents at end of period         $ 120,123       $ 48,812
                                                                             
(1) Unaudited

Contact:

UniFirst Corporation
Steven S. Sintros, 978-658-8888
Fax: 978-988-0659
Vice President & CFO
ssintros@UniFirst.com
 
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