UniFirst Announces Fiscal 2013 Fourth Quarter and Full Year Results

  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
 
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