UniFirst Announces Fiscal 2013 Fourth Quarter and Full Year Results Business Wire WILMINGTON, Mass. -- October 23, 2013 UniFirst Corporation (NYSE: UNF) today announced results for its fourth fiscal quarter ended August 31, 2013. Revenues were $352.9 million, up 13.0% from $312.4 million in the year ago period. Net income was $30.6 million ($1.52 per diluted share), compared to $22.5 million ($1.13 per diluted share) reported in the year ago period. The fourth quarter as well as the full fiscal year included an extra week of operations compared to fiscal 2012 as fiscal 2013 was a 53 week year for the Company. The extra week in fiscal 2013 accounted for revenue growth of approximately 8.1% and 2.0% compared to the fourth quarter and full year of fiscal 2012, respectively. Full year revenues were $1.356 billion, up 7.9% from $1.256 billion in fiscal 2012. Net income per diluted share for the full year was $5.81 compared to $4.76 in the same period a year ago. Full year results in fiscal 2012 included an environmental litigation settlement which resulted in a $6.7 million pre-tax gain in the third quarter of fiscal 2012. The gain was recorded as a reduction of selling and administrative expenses. Diluted earnings per share for fiscal 2012 adjusted to eliminate the effect of the gain were $4.55. Fiscal 2013 diluted earnings per share increased 27.7% compared to the adjusted earnings from a year ago. Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We are very pleased with our results for the quarter and the full fiscal year which saw the company once again reach new heights for revenues and profits. Our success continues to be the result of the teamwork and execution by our thousands of employees who provide what we believe are industry leading products and service.” Fourth quarter revenues in the Core Laundry Operations were $320.4 million, up 13.8% from those reported in the prior year’s fourth quarter. Excluding the impact of the extra week of operations, acquisitions and a slightly weaker Canadian dollar, revenues grew 5.3%. Operating margin in the Core Laundry Operations for the quarter was 14.2% compared to 12.3% a year ago. This increase in the quarterly operating margin was primarily the result of lower merchandise amortization, plant labor and bad debt expense as a percentage of revenues compared to the prior year. These favorable comparisons were partially offset by higher health care claims and other payroll related costs as a percentage of revenues. Both the fourth quarter of fiscal 2013 and fiscal 2012 also benefited from reductions in reserves for worker’s compensation and other insurance related liabilities of approximately $2.3 million and $1.9 million, respectively, based on changes in third-party actuarial estimates. Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $19.9 million, up slightly from $19.7 million in the fourth quarter of fiscal 2012. This segment had income from operations for the quarter of $1.0 million, compared to a loss from operations of $0.7 million in the same quarter a year ago. This improvement in profitability was primarily the result of several non-recurring expense items in the fourth quarter of fiscal 2012. The effective income tax rate was 36.5% for both the fourth quarter of fiscal 2013 and fiscal 2012. UniFirst continues to maintain a solid balance sheet and financial position. Cash and cash equivalents at year end totaled $197.5 million, up from $120.1 million at the end of fiscal 2012. Cash provided by operating activities for fiscal 2013 was $211.6 million, up 30.8% compared to $161.7 million for fiscal 2012. The improved cash flows were primarily the result of higher earnings as well as lower cash outflows related to merchandise in service investments. In addition, the Company’s cash position also benefited from a change in tax regulations impacting the timing of deductions allowable for certain merchandise in service. Subsequent to the fiscal year end, the Company used cash on hand to pay down $100 million in private placement notes that came due during September. Outlook Mr. Croatti continued, “As we look towards fiscal 2014, we continue to experience economic uncertainty as well as prospective customers that are hesitant to make new buying decisions. Based on the current environment, we expect fiscal 2014 revenues to be between $1.372 billion and $1.385 billion and full year EPS to be between $5.60 and $5.85. As a reminder, fiscal 2014 will be a 52 week year for the Company compared to fiscal 2013 which was a 53 week year. This guidance assumes a further decline in our Specialty Garments’ revenues and operating income of 9% and 15%, respectively, as well as no deterioration in the U.S. economy.” 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 11,500 Team Partners who serve more than 250,000 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, 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 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 Fourteen Thirteen Fifty-three Fifty-two weeks weeks weeks ended weeks ended ended ended August August August 31, August 31, 25, 25, (In thousands, except per 2013 (2) 2012 (2) 2013 (2) 2012 share data) Revenues $ 352,876 $ 312,374 $ 1,355,515 $ 1,256,289 Operating expenses: Cost of 218,136 198,935 836,174 797,944 revenues (1) Selling and administrative 68,640 61,369 263,531 240,798 expenses (1) Depreciation and 18,542 16,824 69,607 66,439 amortization Total operating 305,318 277,128 1,169,312 1,105,181 expenses Income from 47,558 35,246 186,203 151,108 operations Other (income) expense: Interest 327 493 1,651 2,132 expense Interest (729 ) (702 ) (3,201 ) (2,738 ) income Exchange rate (177 ) (48 ) 144 980 (gain) loss (579 ) (257 ) (1,406 ) 374 Income before 48,137 35,503 187,609 150,734 income taxes Provision for 17,576 12,971 70,924 55,745 income taxes Net income $ 30,561 $ 22,532 $ 116,685 $ 94,989 Income per share – Basic Common Stock $ 1.61 $ 1.19 $ 6.14 $ 5.02 Class B Common $ 1.29 $ 0.95 $ 4.91 $ 4.01 Stock Income per share – Diluted Common Stock $ 1.52 $ 1.13 $ 5.81 $ 4.76 Income allocated to – Basic Common Stock $ 24,123 $ 17,717 $ 91,916 $ 74,643 Class B Common $ 6,033 $ 4,416 $ 22,913 $ 18,630 Stock Income allocated to – Diluted Common Stock $ 30,178 $ 22,153 $ 114,927 $ 93,358 Weighted average number of shares outstanding – Basic Common Stock 15,017 14,912 14,975 14,882 Class B Common 4,694 4,647 4,666 4,643 Stock Weighted average number of shares outstanding – Diluted Common Stock 19,882 19,664 19,789 19,616 (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 31, August 25, (In thousands) 2013 (1) 2012 Assets Current assets: Cash and cash equivalents $ 197,479 $ 120,123 Receivables, net 142,217 135,327 Inventories 74,351 75,420 Rental merchandise in service 132,630 138,284 Prepaid and deferred income taxes 7,079 12,785 Prepaid expenses 7,618 5,741 Total current assets 561,374 487,680 Property, plant and equipment: Land, buildings and leasehold improvements 376,222 355,568 Machinery and equipment 474,402 425,274 Motor vehicles 153,219 141,370 1,003,843 922,212 Less - accumulated depreciation 546,157 510,008 457,686 412,204 Goodwill 302,363 288,137 Customer contracts and other intangible 49,344 50,531 assets, net Other assets 2,658 1,982 $ 1,373,425 $ 1,240,534 Liabilities and shareholders' equity Current liabilities: Loans payable and current maturities of $ 111,253 $ 6,831 long-term debt Accounts payable 54,221 52,340 Accrued liabilities 86,994 78,174 Accrued and deferred income taxes 6,421 8,180 Total current liabilities 258,889 145,525 Long-term liabilities: Long-term debt, net of current maturities 155 100,155 Accrued liabilities 45,037 43,420 Accrued and deferred income taxes 55,946 54,509 Total long-term liabilities 101,138 198,084 Shareholders' equity: Common Stock 1,513 1,506 Class B Common Stock 487 488 Capital surplus 51,445 42,984 Retained earnings 958,508 844,676 Accumulated other comprehensive income 1,445 7,271 Total shareholders' equity 1,013,398 896,925 $ 1,373,425 $ 1,240,534 (1) Unaudited UniFirst Corporation and Subsidiaries Detail of Operating Results Revenues Fourteen Thirteen weeks ended weeks ended August 31, August 25, Dollar Percent (In thousands, 2013 (1) 2012 (1) Change Change except percentages) Core Laundry $ 320,447 $ 281,662 $ 38,785 13.8 % Operations Specialty Garments 19,884 19,726 158 0.8 First Aid 12,545 10,986 1,559 14.2 Consolidated total $ 352,876 $ 312,374 $ 40,502 13.0 % Fifty-three Fifty-two weeks ended weeks ended August 31, August 25, Dollar Percent (In thousands, except 2013 (1) 2012 Change Change percentages) Core Laundry $ 1,214,365 $ 1,112,323 $ 102,042 9.2 % Operations Specialty 96,688 102,758 (6,070 ) -5.9 Garments First Aid 44,462 41,208 3,254 7.9 Consolidated $ 1,355,515 $ 1,256,289 $ 99,226 7.9 % total Income from Operations Fourteen Thirteen weeks weeks ended ended August 31, August Dollar Percent 25, (In thousands, except 2013 (1) 2012 (1) Change Change percentages) Core Laundry $ 45,451 $ 34,579 $ 10,872 31.4 % Operations Specialty 984 (715 ) 1,699 237.6 Garments First Aid 1,123 1,382 (259 ) -18.7 Consolidated $ 47,558 $ 35,246 $ 12,312 34.9 % total Fifty-three Fifty-two weeks ended weeks ended August 31, August 25, Dollar Percent (In thousands, except 2013 (1) 2012 Change Change percentages) Core Laundry $ 170,662 $ 133,285 $ 37,377 28.0 % Operations Specialty 10,539 13,460 (2,921 ) -21.7 Garments First Aid 5,002 4,363 639 14.6 Consolidated $ 186,203 $ 151,108 $ 35,095 23.2 % total (1) Unaudited UniFirst Corporation and Subsidiaries Consolidated Statements of Cash Flows Fifty-three Fifty-two weeks ended weeks ended August 31, August 25, (In thousands) 2013 (1) 2012 Cash flows from operating activities: Net income $ 116,685 $ 94,989 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 59,810 55,877 Amortization of intangible assets 9,797 10,562 Amortization of deferred financing costs 238 238 Share-based compensation 6,315 6,714 Accretion on environmental contingencies 542 631 Accretion on asset retirement obligations 676 632 Deferred income taxes 20,666 (330 ) Changes in assets and liabilities, net of acquisitions: Receivables (6,666 ) (7,595 ) Inventories 1,146 590 Rental merchandise in service 7,079 (12,017 ) Prepaid expenses (939 ) (1,763 ) Accounts payable 2,130 (3,688 ) Accrued liabilities 9,452 5,518 Prepaid and accrued income taxes (15,360 ) 11,360 Net cash provided by operating activities 211,571 161,718 Cash flows from investing activities: Acquisition of businesses (30,714 ) — Capital expenditures (103,526 ) (74,549 ) Other 54 (508 ) Net cash used in investing activities (134,186 ) (75,057 ) Cash flows from financing activities: Proceeds from loans payable and long-term 4,533 40,410 obligations Payments on loans payable and long-term (24 ) (55,851 ) obligations Proceeds from exercise of Common Stock 5,488 2,410 options, including excess tax benefits Taxes withheld and paid related to net share (3,332 ) — settlement of equity awards Payment of cash dividends (2,851 ) (2,840 ) Net cash provided by (used in) financing 3,814 (15,871 ) activities Effect of exchange rate changes (3,843 ) 521 Net increase in cash and cash equivalents 77,356 71,311 Cash and cash equivalents at beginning of 120,123 48,812 period Cash and cash equivalents at end of period $ 197,479 $ 120,123 (1) Unaudited Contact: UniFirst Corporation Steven S. Sintros, 978-658-8888 Vice President & CFO Fax: 978-988-0659 ssintros@UniFirst.com
UniFirst Announces Fiscal 2013 Fourth Quarter and Full Year Results
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