EX-99 2 ex99.htm EXHIBIT 99 ex99-1.htm

Exhibit 99

 

 

 

April 1, 2015

CONTACT: Steven S. Sintros, Senior Vice President & CFO

For Immediate Release
UniFirst Corporation
68 Jonspin Road
Wilmington, MA 01887
Phone: 978- 658-8888
Fax: 978-988-0659
Email:
ssintros@UniFirst.com

 

 

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE SECOND QUARTER AND FIRST HALF OF FISCAL 2015

 

Wilmington, MA (April 1, 2015) -- UniFirst Corporation (NYSE: UNF) today announced results for its fiscal 2015 second quarter ended February 28, 2015. Revenues were $361.5 million, up 5.1% from $344.0 million in the year ago period. Net income was $25.4 million ($1.26 per diluted share), compared to $25.6 million ($1.27 per diluted share) reported a year ago. The current quarter’s results were limited by a $3.6 million charge to selling and administrative expenses related to an increase in the Company’s environmental contingency reserves. Excluding the effect of this item, net income would have been $27.7 million ($1.37 per diluted share), an increase of 7.8% from the prior year.

 

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “Our solid quarterly results reflect a continued focus on maximizing the output of our professional sales and service organizations. Although Core Laundry revenues have begun to be challenged by headcount reductions at many of our energy related customers, we will continue to focus on actions within our control such as providing superior service and value to our customer base.”

 

Revenues in the Core Laundry Operations were $332.1 million, up 6.0% from those reported in the prior year’s second quarter. Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenues grew 6.1%. Excluding the environmental charge discussed above, this segment’s income from operations increased 12.9% compared to the second quarter of fiscal 2014, while the adjusted operating margin expanded to 13.4% from 12.6% a year ago. The margin improvement was due primarily to lower energy costs during the quarter.

 

The increase to the Company’s environmental contingency reserves was mainly due to additional costs the Company expects to incur associated with a planned municipal project that is near one of our environmental sites. To a lesser extent, the Company’s reserves also were increased due to the effect of lower interest rates on the discounting of its environmental liabilities.

 

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $18.7 million, down 8.6% from $20.4 million in the second quarter of fiscal 2014. This decrease was primarily the result of reduced power reactor business in North America compared to a year ago as well as the impact of foreign currency. As a result of the revenue decline, this segment reported a loss from operations for the quarter of $0.4 million compared to income from operations of $0.3 million in the prior year quarter.

 

Current quarter profits were also limited by foreign exchange rate losses of $0.9 million compared to $0.2 million a year ago due to the weakening of the Canadian dollar and Euro against the US dollar.

 

UniFirst continues to maintain a solid balance sheet with no long term debt and increasing cash balances. Cash and cash equivalents at the end of the quarter totaled $231.5 million, up from $191.8 million at end of fiscal 2014.

  

 
 

 

 

Outlook

Mr. Croatti continued, “As a result of the weaker Canadian dollar as well as the negative impact that the low price of oil is having on portions of our customer base, we now believe that full year fiscal 2015 revenues will be at the lower end of our previously communicated range of $1.450 billion to $1.470 billion. We also believe that full year diluted EPS will be between $5.65 and $5.85 per share. This EPS range has been lowered from our previously communicated guidance primarily to reflect the impact of the environmental charge taken during the quarter.”

 

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, 260,000 customer locations, and approximately 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, including suits relating to the New England Compounding Center matter, 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

February 28,

   

Thirteen

weeks ended

March 1,

   

Twenty-six

weeks ended

February 28,

   

Twenty-six

weeks ended

March 1,

 

(In thousands, except per share data)

  2015 (2)     2014 (2)     2015 (2)     2014 (2)  
                                 

Revenues

  $ 361,462     $ 343,967     $ 731,823     $ 690,671  
                                 

Operating expenses:

                               

Cost of revenues (1)

    223,874       215,560       443,227       423,697  

Selling and administrative expenses (1)

    77,245       69,853       149,627       135,482  

Depreciation and amortization

    18,792       17,830       36,829       35,128  

Total operating expenses

    319,911       303,243       629,683       594,307  
                                 

Income from operations

    41,551       40,724       102,140       96,364  
                                 

Other (income) expense:

                               

Interest expense

    239       216       427       424  

Interest income

    (944

)

    (877

)

    (1,748

)

    (1,642

)

Foreign exchange loss

    880       161       1,251       2  

Total other (income) expense

    175       (500

)

    (70

)

    (1,216

)

                                 

Income before income taxes

    41,376       41,224       102,210       97,580  

Provision for income taxes

    15,930       15,577       39,351       37,471  
                                 

Net income

  $ 25,446     $ 25,647     $ 62,859     $ 60,109  
                                 

Income per share – Basic

                               

Common Stock

  $ 1.33     $ 1.34     $ 3.29     $ 3.15  

Class B Common Stock

  $ 1.06     $ 1.08     $ 2.63     $ 2.52  
                                 

Income per share – Diluted

                               

Common Stock

  $ 1.26     $ 1.27     $ 3.11     $ 2.98  
                                 

Income allocated to – Basic

                               

Common Stock

  $ 20,182     $ 20,267     $ 49,834     $ 47,479  

Class B Common Stock

  $ 5,041     $ 5,041     $ 12,472     $ 11,836  
                                 

Income allocated to – Diluted

                               

Common Stock

  $ 25,235     $ 25,326     $ 62,335     $ 59,357  
                                 

Weighted average number of shares outstanding – Basic

                               

Common Stock

    15,185       15,077       15,156       15,053  

Class B Common Stock

    4,741       4,687       4,741       4,690  
                                 

Weighted average number of shares outstanding – Diluted

                               

Common Stock

    20,065       19,924       20,028       19,897  

 

(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)

 

February 28,

2015 (1)

   

August 30,

2014

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 231,461     $ 191,769  

Receivables, net

    159,102       152,523  

Inventories

    84,817       78,858  

Rental merchandise in service

    144,839       146,449  

Prepaid and deferred income taxes

    3,188       13,342  

Prepaid expenses and other current assets

    15,979       6,349  
                 

Total current assets

    639,386       589,290  
                 

Property, plant and equipment:

               

Land, buildings and leasehold improvements

    397,004       393,584  

Machinery and equipment

    529,849       512,842  

Motor vehicles

    171,049       166,573  
                 
      1,097,902       1,072,999  

Less - accumulated depreciation

    602,732       586,717  
      495,170       486,282  
                 

Goodwill

    310,909       303,648  

Customer contracts and other intangible assets, net

    41,449       41,477  

Deferred income taxes

    1,235       1,403  

Other assets

    2,418       2,061  
                 
    $ 1,490,567     $ 1,424,161  
                 

Liabilities and shareholders' equity

               

Current liabilities:

               

Loans payable and current maturities of long-term debt

  $ 5,637     $ 7,704  

Accounts payable

    57,241       59,177  

Accrued liabilities

    107,847       100,818  

Accrued and deferred income taxes

    22,964       23,342  
                 

Total current liabilities

    193,689       191,041  
                 

Long-term liabilities:

               

Long-term debt, net of current maturities

          155  

Accrued liabilities

    56,899       50,235  

Accrued and deferred income taxes

    54,516       48,271  
                 

Total long-term liabilities

    111,415       98,661  
                 

Shareholders' equity:

               

Common Stock

    1,528       1,519  

Class B Common Stock

    486       486  

Capital surplus

    67,788       59,415  

Retained earnings

    1,136,996       1,075,572  

Accumulated other comprehensive (loss) income

    (21,335

)

    (2,533

)

                 

Total shareholders' equity

    1,185,463       1,134,459  
                 
    $ 1,490,567     $ 1,424,161  

 

 

(1) Unaudited

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Detail of Operating Results

 

Revenues

 

   

Thirteen

weeks ended February 28,

   

Thirteen

weeks ended

March 1,

   

Dollar

   

Percent

 

(In thousands, except percentages)

  2015 (1)     2014 (1)    

Change

   

Change

 
                                 

Core Laundry Operations

  $ 332,068     $ 313,181     $ 18,887       6.0

%

Specialty Garments

    18,661       20,406       (1,745

)

    -8.6  

First Aid

    10,733       10,380       353       3.4  

Consolidated total

  $ 361,462     $ 343,967     $ 17,495       5.1

%

 

   

Twenty-six

weeks ended February 28,

   

Twenty-six

weeks ended

March 1,

   

Dollar

   

Percent

 

(In thousands, except percentages)

  2015 (1)     2014 (1)    

Change

   

Change

 
                                 

Core Laundry Operations

  $ 667,915     $ 625,187     $ 42,728       6.8

%

Specialty Garments

    41,137       44,849       (3,712

)

    -8.3  

First Aid

    22,771       20,635       2,136       10.4  

Consolidated total

  $ 731,823     $ 690,671     $ 41,152       6.0

%

 

 

 

Income from Operations

 

   

Thirteen

weeks ended February 28,

   

Thirteen

weeks ended

March 1,

   

Dollar

   

Percent

 

(In thousands, except percentages)

  2015 (1)     2014 (1)    

Change

   

Change

 
                                 

Core Laundry Operations

  $ 40,924     $ 39,443     $ 1,481       3.8

%

Specialty Garments

    (435

)

    312       (747

)

    -239.1  

First Aid

    1,062       969       93       9.5  

Consolidated total

  $ 41,551     $ 40,724     $ 827       2.0

%

 

   

Twenty-six

weeks ended February 28,

   

Twenty-six

weeks ended

March 1,

   

Dollar

   

Percent

 

(In thousands, except percentages)

  2015 (1)     2014 (1)    

Change

   

Change

 
                                 

Core Laundry Operations

  $ 97,797     $ 91,815     $ 5,982       6.5

%

Specialty Garments

    1,833       3,071       (1,238

)

    -40.3  

First Aid

    2,510       1,478       1,032       69.8  

Consolidated total

  $ 102,140     $ 96,364     $ 5,776       6.0

%

 

(1) Unaudited 

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Consolidated Statements of Cash Flows

 

(In thousands)

 

Twenty-six

weeks ended

February 28,

2015 (1)

   

Twenty-six

weeks ended

March 1,

2014 (1)

 

Cash flows from operating activities:

               

Net income

  $ 62,859     $ 60,109  

Adjustments to reconcile net income to cash provided by operating activities:

               

Depreciation

    32,495       30,465  

Amortization of intangible assets

    4,334       4,663  

Amortization of deferred financing costs

    104       104  

Share-based compensation

    3,369       3,388  

Accretion on environmental contingencies

    302       358  

Accretion on asset retirement obligations

    316       362  

Deferred income taxes

    7,040       (190

)

Changes in assets and liabilities, net of acquisitions:

               

Receivables

    (11,048

)

    (9,545

)

Inventories

    (6,578

)

    5,173  

Rental merchandise in service

    718       (4,960

)

Prepaid expenses and other current assets

    (7,187

)

    (1,504

)

Accounts payable

    (1,384

)

    4,340  

Accrued liabilities

    11,605       6,248  

Prepaid and accrued income taxes

    10,092       10,094  

Net cash provided by operating activities

    107,037       109,105  
                 

Cash flows from investing activities:

               

Acquisition of businesses

    (15,086

)

    (681

)

Capital expenditures

    (45,542

)

    (44,087

)

Other

    (202

)

    401  

Net cash used in investing activities

    (60,830

)

    (44,367

)

                 

Cash flows from financing activities:

               

Proceeds from loans payable and long-term debt

    4,937       4,927  

Payments on loans payable and long-term debt

    (6,887

)

    (107,620

)

Proceeds from exercise of Common Stock options, including excess tax benefits

    4,975       2,005  

Payment of cash dividends

    (1,433

)

    (1,428

)

Net cash provided by (used in) financing activities

    1,592       (102,116

)

                 

Effect of exchange rate changes on cash

    (8,107

)

    (2,859

)

                 

Net increase (decrease) in cash and cash equivalents

    39,692       (40,237

)

Cash and cash equivalents at beginning of period

    191,769       197,479  
                 

Cash and cash equivalents at end of period

  $ 231,461     $ 157,242  

 

(1) Unaudited