UniFirst Announces Financial Results for the First Quarter of Fiscal 2017
Core Laundry revenues in the quarter were
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.
Outlook
Mr. Croatti said, “At this time, we continue to expect that our fiscal 2017 revenues will be between
Conference Call Information
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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
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.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) | November 26, 2016 |
August 27, 2016 |
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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 | |||||
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 | % | ||
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 | ||||
CONTACT:Steven S. Sintros , Senior Vice President & CFO Phone: 978-658-8888 Fax: 978-988-0659 Email: ssintros@UniFirst.com