UniFirst Announces Financial Results for the Fiscal 2009 Fourth Quarter and Full Year
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WILMINGTON, Mass.--(BUSINESS WIRE)-- UniFirst Corporation (NYSE: UNF) today announced results for its fiscal fourth quarter and full year, which ended on August 29, 2009.
Revenues for the fourth quarter of fiscal 2009 were $241.5 million, a 3.8% decrease from the previous year's $251.0 million. Fourth quarter net income was $17.0 million or $0.88 per diluted common share, a 38.6% increase from the fourth quarter of fiscal 2008, when net income was $12.3 million or $0.63 per diluted common share.
Fiscal 2009 full year revenues were down slightly to $1.013 billion from $1.023 billion in fiscal 2008. However, on a comparable work week basis, revenues increased by 1.0% over the prior year, as fiscal 2008 included an extra week compared to fiscal 2009. Net income for the full year was $75.9 million or $3.92 per diluted common share, a 24.4% increase from fiscal 2008, when net income was $61.0 million or $3.15 per diluted common share.
"The rapid pace of job losses and related wearer reductions in our customer base caused a sequential decline in our quarterly revenues during the year, even as we produced solid levels of new sales and customer retention," said Ronald D. Croatti, UniFirst President and Chief Executive Officer. "Despite these challenging economic conditions, we were able to achieve record profit levels. I would like to personally thank all our thousands of Team Partner employees throughout North America and Europe for their consistent hard work and sacrifices in what proved to be a very challenging year for our Company."
The Company's core laundry revenues in the fourth quarter declined 4.0% compared to the same period in fiscal 2008; however, its income from operations increased 31.0%. Total expenses in the core laundries were down $15.5 million from the same quarter a year ago which resulted in a fourth quarter operating margin of 12.6% compared to 9.3% a year earlier. The decline in expenses was the result of lower energy, payroll, and merchandise costs. Gasoline and natural gas costs were significantly lower in the fourth quarter of 2009, as compared with the historically high levels in the same quarter of fiscal 2008. Payroll costs declined from the prior year as a result of headcount reductions made earlier in fiscal 2009. Lower workers' compensation insurance and travel costs also contributed to the decrease in expenses. These benefits were partially offset by higher healthcare and depreciation expense as well as increases to our reserve for environmental contingencies.
The Company's Specialty Garments and First Aid segments both contributed to the Company's overall growth in fourth quarter profits compared to the prior year.
UniFirst continues to generate strong cash flows and maintain a solid balance sheet. Cash produced by operating activities in fiscal 2009 was $159.2 million compared to $119.5 million a year earlier. Free cash flow was used primarily to reduce outstanding debt by $53.1 million. Total debt, as a percentage of capital, as of the end of fiscal 2009, declined to 22.5% from 29.7% at the prior year end. In addition, the year end cash balance increased by $34.5 million to $60.2 million.
"We're very pleased with the results of our fourth quarter and have begun to see signs of economic stabilization in our customer base," Croatti said. "However, the overall employment condition remains weak and will continue to challenge our top line performance. As always, our top priority is providing first class service to our diverse customer base. In this environment, continuing to optimize the efficiency of our sales force as well as controlling costs will also be essential to achieving our short term and long term financial goals."
Conference Call Information
UniFirst will hold a conference call today at 10:00 a.m. (EDT) 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 nearly 10,000 Team Partners who serve more than 200,000 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, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the impact of negative economic conditions on the Company's customers and such customers' workforce, the continuing increase in domestic healthcare costs, demand and prices for the Company's products and services, additional professional and internal costs necessary for compliance with recent and proposed future changes in Securities and Exchange Commission (including the Sarbanes-Oxley Act of 2002), 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 and general economic conditions. 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 Thirteen Fifty-two Fifty-three
weeks weeks ended weeks weeks ended
ended ended
August 29, August 30, August August 30,
29,
(In thousands,
except share 2009 (2) 2008 (2) 2009 2008
and per share
data)
Revenues $ 241,472 $ 251,010 $ 1,013,416 $ 1,023,175
Costs and
expenses:
Operating 144,997 163,089 609,629 643,886
costs (1)
Selling and
administrative 52,210 52,366 211,962 216,867
expenses (1)
Depreciation
and 15,106 13,690 57,789 53,784
amortization
212,313 229,145 879,380 914,537
Income from 29,159 21,865 134,036 108,638
operations
Other expense
(income):
Interest 2,172 2,569 9,313 11,999
expense
Interest (500 ) (556 ) (1,992 ) (2,224 )
income
Foreign
exchange (90 ) 585 250 164
(gain)/loss
1,582 2,598 7,571 9,939
Income before 27,577 19,267 126,465 98,699
income taxes
Provision for 10,556 6,984 50,613 37,721
income taxes
Net income $ 17,021 $ 12,283 $ 75,852 $ 60,978
Income per
share - Basic:
Common Stock $ 0.93 $ 0.67 $ 4.14 $ 3.33
Class B Common $ 0.74 $ 0.54 $ 3.31 $ 2.66
Stock
Income per
share -
Diluted:
Common Stock $ 0.88 $ 0.63 $ 3.92 $ 3.15
Weighted
average number
of shares
outstanding -
Basic:
Common Stock 14,408 14,380 14,394 14,363
Class B Common 4,933 4,936 4,935 4,937
Stock
19,341 19,316 19,329 19,300
Weighted
average number
of shares
outstanding -
Diluted:
Common Stock 19,415 19,387 19,373 19,353
Dividends per
share:
Common Stock $ 0.0375 $ 0.0375 $ 0.1500 $ 0.1500
Class B Common $ 0.0300 $ 0.0300 $ 0.1200 $ 0.1200
Stock
(1) Exclusive of depreciation on the Company's fixed assets and amortization on its intangible assets
(2) Unaudited
UniFirst Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
August 29, August 30,
(In thousands)
2009 2008
Assets
Current assets:
Cash and cash equivalents $ 60,151 $ 25,655
Receivables, net 97,784 102,830
Inventories 43,586 46,154
Rental merchandise in service 73,063 92,315
Deferred income taxes 24,901 15,431
Prepaid expenses 2,889 1,720
Total current assets 302,374 284,105
Property, plant and equipment:
Land, buildings and leasehold improvements 325,034 314,370
Machinery and equipment 352,511 327,705
Motor vehicles 113,048 102,805
790,593 744,880
Less - accumulated depreciation 407,823 376,319
382,770 368,561
Goodwill 261,171 258,836
Customer contracts and other intangible assets, 60,054 67,450
net
Other assets 2,416 2,715
$ 1,008,785 $ 981,667
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term obligations $ 6,447 $ 4,222
Accounts payable 41,180 54,822
Accrued liabilities 104,003 91,837
Accrued income taxes 2,437 --
Total current liabilities 154,067 150,881
Long-term obligations, net of current maturities 175,568 231,317
Deferred income taxes 52,115 42,699
Shareholders' equity:
Common Stock 1,443 1,438
Class B Common Stock 493 494
Capital surplus 20,137 18,240
Retained earnings 605,262 532,164
Accumulated other comprehensive (loss)/income (300 ) 4,434
Total shareholders' equity 627,035 556,770
$ 1,008,785 $ 981,667
UniFirst Corporation and Subsidiaries
Detail of Operating Results
Revenues
Thirteen Thirteen
weeks ended weeks ended
August 29, August 30, Dollar Percent
(In thousands, except 2009 (1) 2008 (1) Change Change
percentages)
Core Laundry Operations $ 217,667 $ 226,643 $ (8,976 ) -4.0 %
Specialty Garments 16,620 16,854 (234 ) -1.4
First Aid 7,185 7,513 (328 ) -4.4
Consolidated total $ 241,472 $ 251,010 $ (9,538 ) -3.8 %
Fifty-two Fifty-three
weeks ended weeks ended
August 29, August 30, Dollar Percent
(In thousands, except 2009 2008 Change Change
percentages)
Core Laundry Operations $ 912,661 $ 919,986 $ (7,325 ) -0.8 %
Specialty Garments 72,340 71,637 703 1.0
First Aid 28,415 31,552 (3,137 ) -9.9
Consolidated total $ 1,013,416 $ 1,023,175 $ (9,759 ) -1.0 %
Income from Operations
Thirteen Thirteen
weeks ended weeks ended
August 29, August 30, Dollar Percent
(In thousands, except 2009 (1) 2008 (1) Change Change
percentages)
Core Laundry Operations $ 27,462 $ 20,968 $ 6,494 31.0 %
Specialty Garments 949 364 585 160.8
First Aid 748 533 215 40.1
Consolidated total $ 29,159 $ 21,865 $ 7,294 33.4 %
Fifty-two Fifty-three
weeks ended weeks ended
August 29, August 30, Dollar Percent
(In thousands, except 2009 2008 Change Change
percentages)
Core Laundry Operations $ 125,393 $ 103,547 $ 21,846 21.1 %
Specialty Garments 7,360 4,204 3,156 75.1
First Aid 1,283 887 396 44.5
Consolidated total $ 134,036 $ 108,638 $ 25,398 23.4 %
(1) Unaudited
UniFirst Corporation and Subsidiaries Consolidated Statements of Cash Flows Year ended August 29, August 30, (In thousands) 2009 2008 Cash flows from operating activities: Net income $ 75,852 $ 60,978 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 48,855 45,432 Amortization of intangible assets 8,934 8,352 Amortization of deferred financing costs 267 267 Share-based compensation 1,024 1,118 Accretion on asset retirement obligations 517 486 Deferred income taxes 1,328 1,206 Changes in assets and liabilities, net of acquisitions: Receivables 4,079 (8,542 ) Inventories 2,452 (1,816 ) Rental merchandise in service 19,334 (2,011 ) Prepaid expenses (1,174 ) 9 Accounts payable (13,365 ) 9,606 Accrued liabilities 8,224 3,775 Accrued income taxes 2,868 605 Net cash provided by operating activities 159,195 119,465 Cash flows from investing activities: Acquisition of businesses, net of cash acquired (4,730 ) (60,952 ) Capital expenditures (65,323 ) (73,795 ) Other 304 1,116 Net cash used in investing activities (69,749 ) (133,631 ) Cash flows from financing activities: Proceeds from long-term obligations 140,628 175,455 Payments on long-term obligations (193,761 ) (145,620 ) Proceeds from exercise of Common Stock options 689 518 Payment of cash dividends (2,754 ) (2,748 ) Net cash (used in) provided by financing activities (55,198 ) 27,605 Effect of exchange rate changes 248 (482 ) Net increase in cash and cash equivalents 34,496 12,957 Cash and cash equivalents at beginning of period 25,655 12,698 Cash and cash equivalents at end of period $ 60,151 $ 25,655
Source: UniFirst Corporation
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