unf20170103_8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported)

January 4, 2017

 

 

UNIFIRST CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

 

Massachusetts

 

001-08504

 

04-2103460

(State or Other Jurisdiction of Incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

68 Jonspin Road, Wilmington, Massachusetts 01887

(Address of Principal Executive Offices) (Zip Code)

 

 

Registrant's telephone number, including area code: (978) 658-8888

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

[ ]

Written communications pursuant to Rule 425 under the Securities Act

(17 CFR 230.425)

   

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act

(17 CFR 240.14a-12)

   

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 240.14d-2(b))

   

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

(17 CFR 240.13e-4(c))

 

 
 

 

  

Item 2.02.

Results of Operations and Financial Condition.

 

On January 4, 2017, UniFirst Corporation (the “Company”) issued a press release ("Press Release") announcing financial results for the first quarter of fiscal 2017, which ended on November 26, 2016. A copy of the Press Release is attached as Exhibit 99 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The information in this Item 2.02, including the exhibit attached hereto, shall not be deemed “filed” for any purpose, including for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

   

(d) Exhibits

 
   

EXHIBIT NO.

DESCRIPTION

   

99

Press release of the Company dated January 4, 2017

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

UNIFIRST CORPORATION

 

 

Date: January 4, 2017

By:

/s/ Ronald D. Croatti

 

Name:

Ronald D. Croatti

 

Title:

Chairman of the Board, Chief

Executive Officer and President

     
 

By:

/s/ Steven S. Sintros

 

Name:

Steven S. Sintros

 

Title:

Senior Vice President and Chief Financial Officer

  

 
 

 

 

EXHIBIT INDEX

 

 

EXHIBIT NO.

DESCRIPTION

   

99

Press release of the Company dated January 4, 2017

 

ex99.htm

Exhibit 99

  

 

UNIFIRST ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER OF FISCAL 2017

 

Wilmington, MA (January 4, 2017) -- UniFirst Corporation (NYSE: UNF) today announced results for its first quarter of fiscal 2017 which ended November 26, 2016. Revenues for the quarter were $386.1 million, up 3.4% from $373.4 million in the year ago period. Net income was $28.2 million ($1.38 per diluted share), down 21.4% from $35.9 million ($1.78 per diluted share) in the first quarter of fiscal 2016. Results from the first quarter include the impact of the Company’s acquisition of Arrow Uniform (Arrow) which was completed in September 2016.

 

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “First quarter growth was affected by the loss of uniform wearers and customers in North American energy-dependent markets.  However, we are encouraged by recent trends in these markets.  Wearer levels at the existing customers have shown improvement which suggests energy-related headwinds may be subsiding.  If these trends continue, our organic growth rates should improve as fiscal 2017 unfolds.”

 

Core Laundry revenues in the quarter were $351.8 million, up 5.0% from those in the prior year’s first quarter. Adjusting for the effect of acquisitions, Core Laundry revenues grew 0.6%. This segment’s operating income was $43.7 million, a 17.6% decrease from the prior year. Its operating margin was 12.4%, down from 15.8% for the same period in fiscal 2016. The margin decline was primarily the result of higher costs of revenues and selling and administrative expenses combined with low organic growth. In addition, the impact of the acquisition of Arrow, including the effect of non-cash purchase accounting charges, decreased the Core Laundry operating margin by approximately 1.1%.

 

Revenues and operating income from our Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, declined 16.5% and 73.1%, respectively, in the quarter compared to the same period a year ago. This segment’s results can vary significantly from period to period due to seasonality and the timing of reactor outages and projects. The quarterly results for this segment largely met our expectations and we currently expect this segment’s full year results will meet or exceed its fiscal 2016 revenues and operating income.

 

UniFirst continues to maintain a strong balance sheet with no long-term debt and significant cash balances. Excluding the cash expended on Arrow, cash balances increased $42.2 million during the quarter and finished the quarter at $286.1 million.

 

 
 

 

 

Outlook

Mr. Croatti said, “At this time, we continue to expect that our fiscal 2017 revenues will be between $1.550 billion and $1.565 billion. We now expect that our full year diluted EPS will be between $4.85 and $5.00. Although the year is unfolding mostly as anticipated, certain items, including worker’s compensation claims and other operating expenses are trending higher. As a result, we are modifying our full year earnings expectations.”

 

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 240 service locations, 300,000 customer locations, and 13,000 employee Team Partners, the company outfits nearly 2 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, contact UniFirst at 800.455.7654 or 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 may be identified by words such as “estimates,” “anticipates,” “projects,” “plans,” “expects,” “intends,” “believes,” “seeks,” “could,” “should,” “may,” “will,” or the negative versions thereof, and similar expressions and by the context in which they are used. Such forward looking statements are based upon our current expectations and speak only as of the date made. Such statements are highly dependent upon a variety of risks, uncertainties and other 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, our ability to maintain and grow Arrow’s customer base and enhance its operating margins, our ability to compete successfully without any significant degradation in our margin rates, uncertainties caused by the continuing adverse worldwide economic conditions and their impact on our customers’ businesses and workforce levels, 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, uncertainties regarding our ability to consummate and successfully integrate acquired businesses, our ability to preserve positive labor relationships and avoid becoming the target of corporate labor unionization campaigns that could disrupt our business, the continuing increase in domestic healthcare costs, including the ultimate impact of the Affordable Care Act, our retention of customers and renewal of customer contracts, uncertainties regarding the price levels of natural gas, electricity, fuel and labor, the negative effect on our business from sharply depressed oil prices, fluctuation on our revenue and net income from our specialty garments segment, the effect of currency fluctuations on our results of operations and financial condition, rampant criminal activity and instability in Mexico where our principal garment manufacturing plants are located, the impact on our goodwill and intangibles that might result from adverse financial and economic changes, our ability to properly and efficiently design, construct, implement and operate our new customer relationship management (“CRM”) computer system, interruptions or failures of our information technology systems, including as a result of cyber-attacks, failure to comply with other state and federal regulations that might result in penalties or costs, seasonal and quarterly fluctuations in business levels, any loss of key management or other personnel, our dependence on third parties to supply us with raw materials, 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, demand and prices for our products and services, 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 our Annual Report on Form 10-K for the year ended August 27, 2016 and in our other filings with the Securities and Exchange Commission. We undertake 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

(Unaudited)

 

   

Thirteen

weeks ended

November 26,

   

Thirteen

weeks ended

November 28,

 

(In thousands, except per share data)

 

2016

   

2015

 
                 

Revenues

  $ 386,108     $ 373,384  
                 

Operating expenses:

               

Cost of revenues (1)

    238,765       222,603  

Selling and administrative expenses (1)

    79,446       72,749  

Depreciation and amortization

    22,140       19,738  

Total operating expenses

    340,351       315,090  
                 

Income from operations

    45,757       58,294  
                 

Other (income) expense:

               

Interest expense

    182       221  

Interest income

    (983

)

    (764

)

Foreign exchange loss

    494       479  

Total other (income) expense

    (307

)

    (64

)

                 

Income before income taxes

    46,064       58,358  

Provision for income taxes

    17,850       22,468  
                 

Net income

  $ 28,214     $ 35,890  
                 

Income per share – Basic

               

Common Stock

  $ 1.46     $ 1.88  

Class B Common Stock

  $ 1.17     $ 1.50  
                 

Income per share – Diluted

               

Common Stock

  $ 1.38     $ 1.78  
                 

Income allocated to – Basic

               

Common Stock

  $ 22,342     $ 28,539  

Class B Common Stock

  $ 5,668     $ 7,193  
                 

Income allocated to – Diluted

               

Common Stock

  $ 28,020     $ 35,741  
                 

Weighted average number of shares outstanding – Basic

               

Common Stock

    15,285       15,218  

Class B Common Stock

    4,847       4,795  
                 

Weighted average number of shares outstanding – Diluted

               

Common Stock

    20,249       20,132  

 

(1) Exclusive of depreciation on the Company’s property, plant and equipment and amortization on its intangible assets.

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands)

 

November 26,

2016

   

August 27,

2016

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 286,119     $ 363,795  

Receivables, net

    176,404       156,578  

Inventories

    73,164       78,887  

Rental merchandise in service

    144,637       138,105  

Prepaid taxes

          10,418  

Prepaid expenses and other current assets

    23,917       29,831  
                 

Total current assets

    704,241       777,614  
                 

Property, plant and equipment, net

    541,300       539,818  
                 

Goodwill

    367,663       320,641  

Customer contracts and other intangible assets, net

    81,329       38,664  

Deferred income taxes

    338       97  

Other assets

    29,914       25,173  
                 
    $ 1,724,785     $ 1,702,007  
                 

Liabilities and shareholders' equity

               

Current liabilities:

               

Accounts payable

  $ 49,255     $ 50,884  

Accrued liabilities

    94,202       100,782  

Accrued taxes

    7,621       969  
                 

Total current liabilities

    151,078       152,635  
                 

Long-term liabilities:

               

Accrued liabilities

    104,193       104,921  

Accrued and deferred income taxes

    79,742       79,670  
                 

Total long-term liabilities

    183,935       184,591  
                 

Shareholders' equity:

               

Common Stock

    1,543       1,542  

Class B Common Stock

    485       485  

Capital surplus

    74,941       72,561  

Retained earnings

    1,346,633       1,319,142  

Accumulated other comprehensive (loss) income

    (33,830

)

    (28,949

)

                 

Total shareholders' equity

    1,389,772       1,364,781  
                 
    $ 1,724,785     $ 1,702,007  

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Detail of Operating Results

(Unaudited)

 

Revenues

 

   

Thirteen

weeks ended

November 26,

   

Thirteen

weeks ended

November 28,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 351,843     $ 335,037     $ 16,806       5.0

%

Specialty Garments

    22,356       26,770       (4,414

)

    -16.5  

First Aid

    11,909       11,577       332       2.9  

Consolidated total

  $ 386,108     $ 373,384     $ 12,724       3.4

%

 

 

Income from Operations

 

   

Thirteen

weeks ended

November 26,

   

Thirteen

weeks ended

November 28,

   

Dollar

   

Percent

 

(In thousands, except percentages)

 

2016

   

2015

   

Change

   

Change

 
                                 

Core Laundry Operations

  $ 43,673     $ 52,972     $ (9,299

)

    -17.6

%

Specialty Garments

    1,151       4,286       (3,135

)

    -73.1  

First Aid

    933       1,036       (103

)

    -10.0  

Consolidated total

  $ 45,757     $ 58,294     $ (12,537

)

    -21.5

%

 

 
 

 

 

UniFirst Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

 

(In thousands)

 

Thirteen

weeks ended

November 26,

2016

   

Thirteen

weeks ended

November 28,

2015

 

Cash flows from operating activities:

               

Net income

  $ 28,214     $ 35,890  

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

               

Depreciation

    18,500       17,643  

Amortization of intangible assets

    3,640       2,095  

Amortization of deferred financing costs

    28       52  

Share-based compensation

    2,015       1,260  

Accretion on environmental contingencies

    150       167  

Accretion on asset retirement obligations

    205       199  

Deferred income taxes

    (746

)

    26  

Changes in assets and liabilities, net of acquisitions:

               

Receivables

    (13,112

)

    (17,376

)

Inventories

    7,526       3,452  

Rental merchandise in service

    152       (1,280

)

Prepaid expenses and other current assets and Other assets

    9,288       (2,286

)

Accounts payable

    (1,113

)

    7,913  

Accrued liabilities

    (8,837

)

    (4,967

)

Prepaid and accrued income taxes

    17,589       14,853  

Net cash provided by operating activities

    63,499       57,641  
                 

Cash flows from investing activities:

               

Acquisition of businesses, net of cash acquired

    (120,391

)

    (73

)

Capital expenditures

    (18,233

)

    (21,049

)

Other

    281       223  

Net cash used in investing activities

    (138,343

)

    (20,899

)

                 

Cash flows from financing activities:

               

Payments on loans payable and long-term debt

          (764

)

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

    929       383  

Taxes withheld and paid related to net share settlement of equity awards

    (566

)

     

Payment of cash dividends

    (724

)

    (717

)

Net cash used in financing activities

    (361

)

    (1,098

)

                 

Effect of exchange rate changes on cash

    (2,471

)

    (665

)

                 

Net (decrease) increase in cash and cash equivalents

    (77,676

)

    34,979  

Cash and cash equivalents at beginning of period

    363,795       276,553  
                 

Cash and cash equivalents at end of period

  $ 286,119     $ 311,532