UniFirst Announces Financial Results for the Fourth Quarter and Full Year of Fiscal 2017
Net loss in the quarter was
Adjusted net income for the quarter was
Adjusted net income for the fiscal 2017 fourth quarter and annual period exclude a
The Core Laundry Operations produced fourth quarter revenues of
Revenues in the fourth quarter of 2017 for our Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were
Revenues in the fourth quarter of 2017 for our First Aid segment were
Our fourth quarter profit comparison to the prior year also benefited from Other Income which was
Outlook
Mr. Sintros continued, “At this time, we expect that our fiscal 2018 revenues will be between
Conference Call Information
About
Headquartered in
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, the performance and success of our new Chief Executive Officer, our ability to efficiently design, construct, and implement a new customer relationship management (“CRM”) computer system, 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 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)
(In thousands, except per share data) | Thirteen weeks ended August 26, 2017 |
Thirteen weeks ended August 27, 2016 |
Fifty-two weeks ended August 26, 2017 |
Fifty-two weeks ended August 27, 2016 |
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Revenues | $ | 403,589 | $ | 363,766 | $ | 1,590,958 | $ | 1,468,046 | |||||||||
Operating expenses: | |||||||||||||||||
Cost of revenues (1) | 249,720 | 223,220 | 993,589 | 900,427 | |||||||||||||
Selling and administrative expenses (1) | 85,023 | 62,134 | 342,407 | 284,847 | |||||||||||||
Impairment charge | 55,800 | — | 55,800 | — | |||||||||||||
Depreciation and amortization | 23,437 | 21,656 | 88,879 | 81,612 | |||||||||||||
Total operating expenses | 413,980 | 307,010 | 1,480,675 | 1,266,886 | |||||||||||||
(Loss) income from operations | (10,391 | ) | 56,756 | 110,283 | 201,160 | ||||||||||||
Other (income) expense: | |||||||||||||||||
Interest income, net | (1,539 | ) | (635 | ) | (4,269 | ) | (2,543 | ) | |||||||||
Other (income) expense, net | (1,175 | ) | 76 | (571 | ) | 332 | |||||||||||
Total other income, net | (2,714 | ) | (559 | ) | (4,840 | ) | (2,211 | ) | |||||||||
(Loss) income before income taxes | (7,677 | ) | 57,315 | 115,123 | 203,371 | ||||||||||||
(Benefit) provision for income taxes | (2,781 | ) | 21,821 | 44,927 | 78,345 | ||||||||||||
Net (loss) income | $ | (4,896 | ) | $ | 35,494 | $ | 70,196 | $ | 125,026 | ||||||||
(Loss) income per share – Basic: | |||||||||||||||||
Common Stock | $ | (0.25 | ) | $ | 1.84 | $ | 3.63 | $ | 6.51 | ||||||||
Class B Common Stock | $ | (0.20 | ) | $ | 1.47 | $ | 2.91 | $ | 5.21 | ||||||||
(Loss) income per share – Diluted: | |||||||||||||||||
Common Stock | $ | (0.24 | ) | $ | 1.74 | $ | 3.44 | $ | 6.17 | ||||||||
(Loss) income allocated to – Basic: | |||||||||||||||||
Common Stock | $ | (3,908 | ) | $ | 28,097 | $ | 55,903 | $ | 99,282 | ||||||||
Class B Common Stock | $ | (978 | ) | $ | 7,139 | $ | 13,915 | $ | 25,093 | ||||||||
(Loss) income allocated to – Diluted: | |||||||||||||||||
Common Stock | $ | (4,886 | ) | $ | 35,250 | $ | 69,837 | $ | 124,409 | ||||||||
Weighted average number of shares outstanding – Basic: | |||||||||||||||||
Common Stock | 15,402 | 15,268 | 15,382 | 15,245 | |||||||||||||
Class B Common Stock | 4,818 | 4,850 | 4,786 | 4,816 | |||||||||||||
Weighted average number of shares outstanding – Diluted: | |||||||||||||||||
Common Stock | 20,220 | 20,223 | 20,276 | 20,154 |
(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) | August 26, 2017 |
August 27, 2016 |
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Assets | ||||||||
Current assets: | ||||||||
Cash, cash equivalents and short-term investments | $ | 349,752 | $ | 363,795 | ||||
Receivables, net | 187,174 | 156,578 | ||||||
Inventories | 79,068 | 78,887 | ||||||
Rental merchandise in service | 151,340 | 138,105 | ||||||
Prepaid taxes | 29,968 | 10,418 | ||||||
Prepaid expenses and other current assets | 16,924 | 29,831 | ||||||
Total current assets | 814,226 | 777,614 | ||||||
Property, plant and equipment, net | 525,115 | 539,818 | ||||||
Goodwill | 376,110 | 320,641 | ||||||
Customer contracts and other intangible assets, net | 71,744 | 38,664 | ||||||
Deferred income taxes | 394 | 97 | ||||||
Other assets | 31,539 | 25,173 | ||||||
$ | 1,819,128 | $ | 1,702,007 | |||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 64,691 | $ | 50,884 | ||||
Accrued liabilities | 112,236 | 100,782 | ||||||
Accrued taxes | 921 | 969 | ||||||
Total current liabilities | 177,848 | 152,635 | ||||||
Long-term liabilities: | ||||||||
Accrued liabilities | 106,736 | 104,921 | ||||||
Accrued and deferred income taxes | 81,352 | 79,670 | ||||||
Total long-term liabilities | 188,088 | 184,591 | ||||||
Shareholders’ equity: | ||||||||
Common Stock | 1,545 | 1,542 | ||||||
Class B Common Stock | 482 | 485 | ||||||
Capital surplus | 86,245 | 72,561 | ||||||
Retained earnings | 1,386,438 | 1,319,142 | ||||||
Accumulated other comprehensive loss | (21,518 | ) | (28,949 | ) | ||||
Total shareholders’ equity | 1,453,192 | 1,364,781 | ||||||
$ | 1,819,128 | $ | 1,702,007 | |||||
Detail of Operating Results
(Unaudited)
Revenues
(In thousands, except percentages) | Thirteen weeks ended August 26, 2017 |
Thirteen weeks ended August 27, 2016 |
Dollar Change |
Percent Change |
|||||||||||
Core Laundry Operations | $ | 364,827 | $ | 331,749 | $ | 33,078 | 10.0 | % | |||||||
Specialty Garments | 24,020 | 19,955 | 4,065 | 20.4 | % | ||||||||||
First Aid | 14,742 | 12,062 | 2,680 | 22.2 | % | ||||||||||
Consolidated total | $ | 403,589 | $ | 363,766 | $ | 39,823 | 10.9 | % | |||||||
(In thousands, except percentages) | Fifty-two weeks ended August 26, 2017 |
Fifty-two weeks ended August 27, 2016 |
Dollar Change |
Percent Change |
|||||||||||
Core Laundry Operations | $ | 1,442,149 | $ | 1,329,375 | $ | 112,774 | 8.5 | % | |||||||
Specialty Garments | 98,024 | 91,257 | 6,767 | 7.4 | % | ||||||||||
First Aid | 50,785 | 47,414 | 3,371 | 7.1 | % | ||||||||||
Consolidated total | $ | 1,590,958 | $ | 1,468,046 | $ | 122,912 | 8.4 | % | |||||||
(Loss) income from Operations
(In thousands, except percentages) | Thirteen weeks ended August 26, 2017 |
Thirteen weeks ended August 27, 2016 |
Dollar Change |
Percent Change |
|||||||||||
Core Laundry Operations | $ | (13,887 | ) | $ | 54,189 | $ | (68,076 | ) | (125.6 | )% | |||||
Specialty Garments | 1,591 | 1,213 | 378 | 31.1 | % | ||||||||||
First Aid | 1,905 | 1,354 | 551 | 40.7 | % | ||||||||||
Consolidated total | $ | (10,391 | ) | $ | 56,756 | $ | (67,147 | ) | (118.3 | )% | |||||
(In thousands, except percentages) | Fifty-two weeks ended August 26, 2017 |
Fifty-two weeks ended August 27, 2016 |
Dollar Change |
Percent Change |
|||||||||||
Core Laundry Operations | $ | 96,307 | $ | 186,074 | $ | (89,767 | ) | (48.2 | )% | ||||||
Specialty Garments | 9,018 | 10,204 | (1,186 | ) | (11.6 | )% | |||||||||
First Aid | 4,958 | 4,882 | 76 | 1.6 | % | ||||||||||
Consolidated total | $ | 110,283 | $ | 201,160 | $ | (90,877 | ) | (45.2 | )% | ||||||
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) |
Fifty-two weeks ended August 26, 2017 |
Fifty-two weeks ended August 27, 2016 |
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Cash flows from operating activities: | ||||||||
Net income | $ | 70,196 | $ | 125,026 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation | 76,073 | 72,983 | ||||||
Amortization of intangible assets | 12,806 | 8,629 | ||||||
Amortization of deferred financing costs | 112 | 184 | ||||||
Gain on sale of assets | (567 | ) | — | |||||
Share-based compensation | 12,462 | 5,628 | ||||||
Accretion on environmental contingencies | 600 | 669 | ||||||
Accretion on asset retirement obligations | 853 | 826 | ||||||
Impairment charge | 55,800 | — | ||||||
Deferred income taxes | 955 | 9,899 | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Receivables, less reserves | (22,232 | ) | (3,949 | ) | ||||
Inventories | 1,865 | 1,467 | ||||||
Rental merchandise in service | (5,384 | ) | 3,945 | |||||
Prepaid expenses and other current assets and Other assets | 12,903 | (38,443 | ) | |||||
Accounts payable | 9,594 | 49 | ||||||
Accrued liabilities | 11,728 | 31,954 | ||||||
Prepaid and accrued income taxes | (19,490 | ) | (11,231 | ) | ||||
Net cash provided by operating activities | 218,274 | 207,636 | ||||||
Cash flows from investing activities: | ||||||||
Acquisition of businesses, net of cash acquired | (125,457 | ) | (16,583 | ) | ||||
Capital expenditures | (108,554 | ) | (98,235 | ) | ||||
Proceeds from sale of assets | 876 | — | ||||||
Other | 98 | 149 | ||||||
Net cash used in investing activities | (233,037 | ) | (114,669 | ) | ||||
Cash flows from financing activities: | ||||||||
Payments on loans payable and long-term debt | — | (1,301 | ) | |||||
Payment of deferred financing costs | — | (813 | ) | |||||
Proceeds from exercise of share-based awards, including excess tax benefits | 3,102 | 5,313 | ||||||
Taxes withheld and paid related to net share settlement of equity awards | (2,386 | ) | (5,965 | ) | ||||
Payment of cash dividends | (2,898 | ) | (2,878 | ) | ||||
Net cash used in financing activities | (2,182 | ) | (5,644 | ) | ||||
Effect of exchange rate changes | 2,902 | (81 | ) | |||||
Net (decrease) increase in cash, cash equivalents and short-term investments | (14,043 | ) | 87,242 | |||||
Cash, cash equivalents and short-term investments at beginning of period | 363,795 | 276,553 | ||||||
Cash, cash equivalents and short-term investments at end of period | $ | 349,752 | $ | 363,795 | ||||
Reconciliation of GAAP to Non-GAAP Financial Measures
The Company reports its consolidated financial results in accordance with generally accepted accounting principles (“GAAP”). To supplement these consolidated financial results, management believes that certain non-GAAP operating results provide a more meaningful measure on which to compare the Company’s results of operations for the periods presented. The Company believes these non-GAAP results provide useful supplemental information regarding the Company’s performance to both management and investors by excluding certain non-recurring amounts that impact the comparability of the results. Supplemental reconciliations of consolidated operating (loss) income, net (loss) income and earnings per diluted share on a GAAP basis to adjusted operating income, net income and earnings per diluted share on a non-GAAP basis are presented in the following tables. In addition, Core Laundry Operations operating (loss) income and operating margin on a GAAP basis to adjusted operating income and adjusted operating margin on a non-GAAP basis are presented in the following tables. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which are provided below.
Thirteen weeks ended August 26, 2017 | ||||||||||||||||||||||||||||
Consolidated | Core Laundry Operations | |||||||||||||||||||||||||||
(In thousands, except percentages) | Revenue | Operating (Loss) Income |
Net (Loss) Income |
Diluted EPS |
Revenue | Operating (Loss) Income |
Operating Margin |
|||||||||||||||||||||
As reported | $ | 403,589 | $ | (10,391 | ) | $ | (4,896 | ) | $ | (0.24 | ) | $ | 364,827 | $ | (13,887 | ) | (3.8 | )% | ||||||||||
Impairment charge | — | 55,800 | 34,144 | 1.68 | — | 55,800 | 15.3 | % | ||||||||||||||||||||
As adjusted | $ | 403,589 | $ | 45,409 | $ | 29,248 | $ | 1.44 | $ | 364,827 | $ | 41,913 | 11.5 | % | ||||||||||||||
Thirteen weeks ended August 27, 2016 | ||||||||||||||||||||||||||||
Consolidated | Core Laundry Operations | |||||||||||||||||||||||||||
(In thousands, except percentages) | Revenue | Operating Income |
Net Income |
Diluted EPS |
Revenue | Operating Income |
Operating Margin |
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As reported | $ | 363,766 | $ | 56,756 | $ | 35,494 | $ | 1.74 | $ | 331,749 | $ | 54,189 | 16.3 | % | ||||||||||||||
Settlement of environmental litigation | — | (15,861 | ) | (9,691 | ) | (0.48 | ) | — | (15,861 | ) | (4.8 | )% | ||||||||||||||||
As adjusted | $ | 363,766 | $ | 40,895 | $ | 25,803 | $ | 1.27 | $ | 331,749 | $ | 38,328 | 11.6 | % | ||||||||||||||
Fifty-two weeks ended August 26, 2017 | ||||||||||||||||||||||||||||
Consolidated | Core Laundry Operations | |||||||||||||||||||||||||||
(In thousands, except percentages) | Revenue | Operating Income |
Net Income |
Diluted EPS |
Revenue | Operating Income |
Operating Margin |
|||||||||||||||||||||
As reported | $ | 1,590,958 | $ | 110,283 | $ | 70,196 | $ | 3.44 | $ | 1,442,149 | $ | 96,307 | 6.7 | % | ||||||||||||||
Accelerated stock compensation expense | — | 5,398 | 3,341 | 0.16 | — | 5,398 | 0.4 | % | ||||||||||||||||||||
Impairment charge | — | 55,800 | 34,144 | 1.68 | — | 55,800 | 3.9 | % | ||||||||||||||||||||
As adjusted | $ | 1,590,958 | $ | 171,481 | $ | 107,681 | $ | 5.28 | $ | 1,442,149 | $ | 157,505 | 10.9 | % | ||||||||||||||
Fifty-two weeks ended August 27, 2016 | ||||||||||||||||||||||||||||
Consolidated | Core Laundry Operations | |||||||||||||||||||||||||||
(In thousands, except percentages) | Revenue | Operating Income |
Net Income |
Diluted EPS |
Revenue | Operating Income |
Operating Margin |
|||||||||||||||||||||
As reported | $ | 1,468,046 | $ | 201,160 | $ | 125,026 | $ | 6.17 | $ | 1,329,375 | $ | 186,074 | 14.0 | % | ||||||||||||||
Settlement of environmental litigation | — | (15,861 | ) | (9,691 | ) | (0.48 | ) | — | (15,861 | ) | (1.2 | )% | ||||||||||||||||
As adjusted | $ | 1,468,046 | $ | 185,299 | $ | 115,335 | $ | 5.69 | $ | 1,329,375 | $ | 170,213 | 12.8 | % | ||||||||||||||
These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
CONTACT:Steven S. Sintros , President & CEOUniFirst Corporation 68 Jonspin Road Wilmington, MA 01887 Phone: 978- 658-8888 Fax: 978-988-0659 Email: ssintros@UniFirst.com
Source: Unifirst Corp.