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UniFirst Announces Financial Results for the First Quarter of Fiscal 2013

  UniFirst Announces Financial Results for the First Quarter of Fiscal 2013

Business Wire

WILMINGTON, Mass. -- January 3, 2013

UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2013
first quarter, which ended November 24, 2012. First quarter revenues were
$332.6 million, up 6.2% from $313.0 million in the year ago period. Net income
for the quarter was $30.8 million ($1.54 per diluted share), up 19.2% compared
to $25.8 million ($1.30 per diluted share) reported in the year ago period.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We
are very pleased with the results of our first fiscal quarter. Although
employee levels at our existing customers remained unchanged during the
quarter, we were able to deliver profitable growth by continuing to sell the
value of our services to current and prospective customers.”

First quarter revenues in the Core Laundry Operations were $294.6 million, up
8.2% from those reported in the prior year’s first quarter. Excluding the
effect of a stronger Canadian dollar, revenues grew 8.0%. This segment’s
income from operations increased 27.3% year to year. The operating margin
expanded to 15.1% from 12.8% a year earlier. Increased profitability resulted
from improved operating leverage that came with our strong revenue growth.
Expenses related to plant operations, depreciation and selling and
administrative outlays were all lower as a percentage of revenue compared to
the prior year. Lower energy costs also contributed to the improved operating
margin. Merchandise amortization was flat as a percentage of revenues compared
to the same quarter a year ago.

Revenues for the Specialty Garments segment, which consists of nuclear
decontamination and cleanroom operations, were $27.9 million for the first
quarter of fiscal 2013, down 7.9% from $30.3 million in the first quarter of
fiscal 2012. This segment had income from operations for the quarter of $4.7
million down from $6.6 million in the same quarter a year ago.

Net income comparisons benefited from exchange rate gains of $0.2 million in
the first quarter of fiscal 2013 compared to exchange rate losses of $0.6
million a year ago. The effective income tax rate for the first quarter was
39.0% compared to 38.3% in the same quarter in fiscal 2012.

UniFirst continues to maintain a solid balance sheet and financial position.
Cash and cash equivalents at the end of the quarter totaled $152.7 million, up
from $120.1 million at the end of fiscal 2012. Cash provided by operating
activities for the quarter was $56.2 million, up 83.2% compared to $30.7
million for the first quarter of fiscal 2012. 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 quarter, total debt was $109.0 million
or 10.5% of total capital.

Outlook

Mr. Croatti continued, “Based on the strength of our first quarter and our
current outlook for the remainder of the year, we are increasing our full year
guidance. We are currently projecting our fiscal 2013 revenues to be between
$1.335 billion and $1.348 billion and diluted earnings per share to be between
$5.10 and $5.25. Our guidance assumes no deterioration of the U.S. economy and
also includes one extra week of operations compared to fiscal 2012 due to the
timing of our fiscal calendar.”

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, our ability to
properly and efficiently design, construct, implement and operate our new CRM
computer system, 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 25, 2012 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
                                             November 24,     November 26,
(In thousands, except per share              2012 (2)           2011 (2)
data)
                                                                             
Revenues                                   $ 332,569          $ 313,025
                                                                             
Operating expenses:
Cost of revenues (1)                         201,551            195,139
Selling and administrative expenses          64,288             59,124
(1)
Depreciation and amortization                16,771            16,408    
Total operating expenses                     282,610           270,671   
                                                                             
Income from operations                       49,959            42,354    
                                                                             
Other (income) expense:
Interest expense                             460                573
Interest income                              (767      )       (631      )  
Exchange rate (gain) loss                    (160      )       627       
                                             (467      )       569       

Income before income taxes                   50,426             41,785
Provision for income taxes                   19,666            15,983    
                                                                             
Net income                                 $ 30,760          $ 25,802    
                                                                             
Income per share – Basic
Common Stock                               $ 1.62             $ 1.37
Class B Common Stock                       $ 1.30             $ 1.09
                                                                             
Income per share – Diluted
Common Stock                               $ 1.54             $ 1.30
                                                                             
Income allocated to – Basic
Common Stock                               $ 24,191           $ 20,258
Class B Common Stock                       $ 6,025            $ 5,068
                                                                             
Income allocated to – Diluted
Common Stock                               $ 30,244           $ 25,350
                                                                             
Weighted average number of shares
outstanding – Basic
Common Stock                                 14,925             14,838
Class B Common Stock                         4,647              4,641
                                                                             
Weighted average number of shares
outstanding – Diluted
Common Stock                                 19,693             19,557

(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)                                   November 24,       August 25,
                                                 2012 (1)           2012
Assets
Current assets:
Cash and cash equivalents                      $ 152,664          $ 120,123
Receivables, net                                 153,899            135,327
Inventories                                      75,309             75,420
Rental merchandise in service                    136,219            138,284
Prepaid and deferred income taxes                12,721             12,785
Prepaid expenses                                 8,611              5,741
                                                                    
Total current assets                             539,423            487,680
                                                                    
Property, plant and equipment:
Land, buildings and leasehold                    365,575            355,568
improvements
Machinery and equipment                          437,614            425,274
Motor vehicles                                   141,978            141,370
                                                                    
                                                 945,167            922,212
Less - accumulated depreciation                  522,094            510,008
                                                 423,073            412,204
                                                                    
Goodwill                                         288,158            288,137
Customer contracts and other intangible          48,006             50,531
assets, net
Other assets                                     2,596              1,982
                                                                    
                                               $ 1,301,256        $ 1,240,534
                                                                    
Liabilities and shareholders' equity
Current liabilities:
Loans payable and current maturities of        $ 108,847          $ 6,831
long-term debt
Accounts payable                                 63,545             52,340
Accrued liabilities                              80,125             78,174
Accrued income taxes                             20,142             8,180
                                                                    
Total current liabilities                        272,659            145,525
                                                                    
Long-term liabilities:
Long-term debt, net of current                   155                100,155
maturities
Accrued liabilities                              44,091             43,420
Accrued and deferred income taxes                54,543             54,509
                                                                    
Total long-term liabilities                      98,789             198,084
                                                                    
Shareholders' equity:
Common Stock                                     1,508              1,506
Class B Common Stock                             488                488
Capital surplus                                  45,443             42,984
Retained earnings                                874,723            844,676
Accumulated other comprehensive income           7,646              7,271
                                                                    
Total shareholders' equity                       929,808            896,925
                                                                    
                                               $ 1,301,256        $ 1,240,534

(1) Unaudited

UniFirst Corporation and Subsidiaries
Detail of Operating Results
Revenues
                                                                
                     Thirteen weeks ended
                     November 24,     November          Dollar     Percent
                                        26,
(In thousands,
except               2012 (1)           2011 (1)          Change     Change
percentages)
                                                                             
Core Laundry       $ 294,560          $ 272,273         $ 22,287     8.2     %
Operations
Specialty            27,884             30,268            (2,384 )   -7.9
Garments
First Aid            10,125            10,484           (359   )   -3.4
Consolidated       $ 332,569         $ 313,025        $ 19,544     6.2     %
total

Income from Operations

                     Thirteen weeks ended                       
                      November 24,     November         Dollar     Percent
                                         26,
(In thousands,
except                2012 (1)           2011 (1)         Change     Change
percentages)
                                                                             
Core Laundry        $ 44,528           $ 34,982         $ 9,546      27.3    %
Operations
Specialty             4,704              6,566            (1,862 )   -28.3
Garments
First Aid             727               806             (79    )   -9.8
Consolidated        $ 49,959          $ 42,354        $ 7,605      18.0    %
total

(1) Unaudited

UniFirst Corporation and Subsidiaries
Consolidated Statements of Cash Flows
                                                
Fifty-two weeks ended                              November 24,   November 26,
                                                 2012 (1)      2011 (1)
(In thousands)
Cash flows from operating activities:
Net income                                         $   30,760     $  25,802
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation                                           14,305        13,727
Amortization of intangible assets                      2,466         2,681
Amortization of deferred financing costs               59            59
Share-based compensation                               1,705         1,668
Accretion on environmental contingencies               136           158
Accretion on asset retirement obligations              166           158
Deferred income taxes                                  (18      )    51
Changes in assets and liabilities, net of
acquisitions:
Receivables                                            (18,457  )    (16,100 )
Inventories                                            221           2,332
Rental merchandise in service                          2,102         (7,505  )
Prepaid expenses                                       (2,867   )    (3,137  )
Accounts payable                                       11,183        3,529
Accrued liabilities                                    2,373         623
Prepaid and accrued income taxes                       12,033        6,608
Net cash provided by operating activities              56,167        30,654
                                                                             
Cash flows from investing activities:
Capital expenditures                                   (25,103  )    (13,966 )
Other                                                  (318     )    (118    )
Net cash used in investing activities                  (25,421  )    (14,084 )
                                                                             
Cash flows from financing activities:
Proceeds from long-term obligations                    -             7,000
Payments on long-term obligations                      -             (15,371 )
Proceeds from exercise of Common Stock options         757           248
Payment of cash dividends                              (713     )    (709    )
Other                                                  1,954         -
Net cash provided by (used in) financing               1,998         (8,832  )
activities
                                                                             
Effect of exchange rate changes                        (203     )    (2,427  )
                                                                             
Net increase in cash and cash equivalents              32,541        5,311
Cash and cash equivalents at beginning of              120,123       48,812
period
                                                                             
Cash and cash equivalents at end of period         $   152,664    $  54,123

(1) Unaudited

Contact:

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