OREANDA-NEWS. UniFirst Corporation (NYSE:UNF) today announced results for its third quarter ended May 28, 2016. Revenues for the quarter were $367.8 million, up 0.6% from $365.6 million in the same year ago period.  Net income was $30.1 million ($1.49 per diluted share), down 7.2% from $32.5 million ($1.61 per diluted share) in the third quarter of fiscal 2015.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “Our growth during the third quarter continued to be negatively impacted by the loss of uniform wearers and customers in energy dependent markets in the United States and Canada as well as uneven growth in recent non-farm payroll employment.  We are addressing these challenges by continuing our focus on matters within our control, such as providing high quality service to our broad customer base.”

Core Laundry revenues in the quarter were $331.2 million, up 1.1% from those reported in the prior year’s third quarter.  Adjusting for the effects of acquisitions and a weaker Canadian dollar, revenues grew 1.0%.  This segment’s operating income decreased 8.8% and its operating margin declined to 12.9% from 14.3% for the same period, a year ago.  Many of this segment’s expenses, including those related to its production facilities, selling and administrative efforts and depreciation were higher than the prior year.  In the absence of more significant revenue growth, the increase in expenses negatively impacted this segment’s margin.  These items were partially offset by lower energy and legal expenses during the quarter compared to a year ago.

Revenues and operating income for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, declined 6.9% and 11.7%, respectively, compared to a year ago. As a reminder, the results from this segment can vary significantly from quarter to quarter due to seasonality and timing of reactor outages and related projects. Through the first nine months of fiscal 2016, this segment has produced solid results, with revenues and operating income growing 6.4% and 53.3%, respectively, over the same period a year ago. 

UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances. Net cash provided by operating activities in the first nine months of fiscal 2016 was $161.1 million, up 1.7% from the same period in fiscal 2015, and cash and cash equivalents at the end of the fiscal quarter totaled $347.6 million, up from $276.6 million at the end of fiscal 2015.

Outlook
Mr. Croatti continued, “At this time, we expect that our fiscal 2016 revenues will be between $1.460 billion and $1.470 billion and continue to believe that our full year diluted EPS will be between $5.45 and $5.65.”

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 more than 225 service locations, 275,000 customer locations, and 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.

                                 
UniFirst Corporation and Subsidiaries                                
Consolidated Statements of Income                                
(Unaudited)                                
                                 
      Thirteen
weeks ended
May 28,		       Thirteen
weeks ended
May 30,		       Thirty-nine
weeks ended
May 28,		       Thirty-nine
weeks ended
May 30,		  
(In thousands, except per share data)     2016       2015       2016       2015  
                                 
Revenues   $ 367,799     $ 365,574     $ 1,104,280     $ 1,097,397  
                                 
Operating expenses:                                
  Cost of revenues (1)     224,932       221,995       677,207       665,222  
  Selling and administrative expenses (1)     74,541       72,205       222,713       221,832  
  Depreciation and amortization     20,409       19,022       59,956       55,851  
  Total operating expenses     319,882       313,222       959,876       942,905  
                                 
Income from operations     47,917       52,352       144,404       154,492  
                                 
Other (income) expense:                                
  Interest expense     211       221       650       648  
  Interest income     (902 )     (784 )     (2,558 )     (2,532 )
  Foreign exchange (gain) loss     (91 )     72       256       1,323  
  Total other (income) expense      (782 )     (491 )     (1,652 )     (561 )
                                 
Income before income taxes     48,699       52,843       146,056       155,053  
Provision for income taxes     18,555       20,344       56,524       59,695  
                                 
Net income   $ 30,144     $ 32,499     $ 89,532     $ 95,358  
                                 
Income per share – Basic                                
  Common Stock   $ 1.57     $ 1.70     $ 4.67     $ 4.99  
  Class B Common Stock   $ 1.26     $ 1.36     $ 3.74     $ 3.99  
                                 
Income per share – Diluted                                
  Common Stock   $ 1.49     $ 1.61     $ 4.43     $ 4.72  
                                 
Income allocated to – Basic                                
  Common Stock   $ 23,939     $ 25,817     $ 71,172     $ 75,650  
  Class B Common Stock   $ 6,061     $ 6,483     $ 17,956     $ 18,954  
                                 
Income allocated to – Diluted                                
  Common Stock   $ 30,007     $ 32,310     $ 89,149     $ 94,644  
                                 
Weighted average number of shares outstanding –
Basic		                                
  Common Stock     15,253       15,207       15,238       15,173  
  Class B Common Stock     4,827       4,773       4,805       4,752  
                                 
Weighted average number of shares outstanding –
Diluted		                                
  Common Stock     20,183       20,118       20,141       20,057  
                                 

(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)       May 28,
2016 (1)		     August 29,
2015		  
Assets                
Current assets:                
  Cash and cash equivalents     $ 347,583   $ 276,553  
  Receivables, net       158,273     151,851  
  Inventories       76,347     80,449  
  Rental merchandise in service       140,279     140,384  
  Prepaid and deferred income taxes       424     204  
  Prepaid expenses and other current assets       12,993     12,382  
                 
  Total current assets       735,899     661,823  
                 
Property, plant and equipment, net       532,881     513,853  
                 
Goodwill       320,247     313,133  
Customer contracts and other intangible assets, net       38,576     40,049  
Deferred income taxes       —     1,475  
Other assets       3,388     2,904  
                 
      $ 1,630,991   $ 1,533,237  
                 
Liabilities and shareholders' equity                
Current liabilities:                
  Loans payable     $ —   $ 1,385  
  Accounts payable       49,216     50,826  
  Accrued liabilities       120,425     113,022  
  Accrued and deferred income taxes       —     18,878  
                 
  Total current liabilities       169,641     184,111  
                 
Long-term liabilities:                
  Accrued liabilities       58,151     54,566  
  Accrued and deferred income taxes       73,623     52,352  
                 
  Total long-term liabilities       131,774     106,918  
                 
Shareholders' equity:                
  Common Stock       1,540     1,525  
  Class B Common Stock       485     485  
  Capital surplus       68,179     67,611  
  Retained earnings       1,284,373     1,197,000  
  Accumulated other comprehensive (loss) income       (25,001 )   (24,413 )
                 
  Total shareholders' equity       1,329,576     1,242,208  
                 
      $ 1,630,991   $ 1,533,237  
                 

(1) In the second fiscal quarter of 2016, the Company adopted updated accounting guidance on the presentation of deferred income taxes. This adoption required that deferred tax liabilities and assets be classified as noncurrent in the Consolidated Balance Sheet. The Company elected to account for this change in presentation prospectively and prior periods were not retroactively adjusted.  

                       
UniFirst Corporation and Subsidiaries                  
Detail of Operating Results                      
(Unaudited)                      
                       
Revenues                      
                       
    Thirteen
weeks ended
May 28,		     Thirteen
weeks ended
May 30,		      Dollar   Percent  
(In thousands, except percentages)   2016     2015     Change   Change  
                       
  Core Laundry Operations $ 331,224   $ 327,770   $ 3,454   1.1 %
  Specialty Garments   24,081     25,854     (1,773 ) -6.9  
  First Aid   12,494     11,950     544   4.6  
Consolidated total $ 367,799   $ 365,574   $ 2,225   0.6 %
    Thirty-nine
weeks ended
May 28,		     Thirty-nine
weeks ended
May 30,		     Dollar   Percent  
(In thousands, except percentages)   2016     2015     Change   Change  
                       
  Core Laundry Operations $ 997,626   $ 995,685   $ 1,941   0.2 %
  Specialty Garments   71,302     66,991     4,311   6.4  
  First Aid   35,352     34,721     631   1.8  
Consolidated total $ 1,104,280   $ 1,097,397   $ 6,883   0.6 %
Income from Operations                      
    Thirteen
weeks ended
May 28,		     Thirteen
weeks ended
May 30,		     Dollar   Percent  
(In thousands, except percentages)   2016     2015     Change   Change  
                       
  Core Laundry Operations $ 42,784   $ 46,934   $ (4,150 ) -8.8 %
  Specialty Garments   3,559     4,032     (473 ) -11.7  
  First Aid   1,574     1,386     188   13.6  
Consolidated total $ 47,917   $ 52,352   $ (4,435 ) -8.5 %
    Thirty-nine
weeks ended
May 28,		     Thirty-nine
weeks ended
May 30,		     Dollar   Percent  
(In thousands, except percentages)   2016     2015     Change   Change  
                       
  Core Laundry Operations $ 131,885   $ 144,731   $ (12,846 ) -8.9 %
  Specialty Garments   8,991     5,865     3,126   53.3  
  First Aid   3,528     3,896     (368 ) -9.4  
Consolidated total $ 144,404   $ 154,492   $ (10,088 ) -6.5 %
UniFirst Corporation and Subsidiaries              
Consolidated Statements of Cash Flows              
(Unaudited)              
               
 

(In thousands)

   Thirty-nine
weeks ended
May 28,
2016		       Thirty-nine
weeks ended
May 30,
2015		  
Cash flows from operating activities:                  
Net income     $ 89,532     $ 95,358  
Adjustments to reconcile net income to cash provided by operating activities:                  
  Depreciation       53,556       49,270  
  Amortization of intangible assets       6,400       6,581  
  Amortization of deferred financing costs       156       156  
  Share-based compensation       3,625       4,413  
  Accretion on environmental contingencies       502       452  
  Accretion on asset retirement obligations       599       503  
  Deferred income taxes       6,034       6,668  
  Changes in assets and liabilities, net of acquisitions:                  
   Receivables       (5,698 )     (9,463 )
   Inventories       4,063       (5,714 )
   Rental merchandise in service       1,571       1,417  
   Prepaid expenses and other current assets       (1,356 )     (7,812 )
   Accounts payable       (1,627 )     (2,106 )
  Accrued liabilities       6,358       10,283  
   Prepaid and accrued income taxes       (2,635 )     8,408  
Net cash provided by operating activities       161,080       158,414  
                   
Cash flows from investing activities:                  
  Acquisition of businesses, net of cash acquired       (10,861 )     (19,815 )
  Capital expenditures       (72,065 )     (82,272 )
  Other       (64 )     (1,160 )
Net cash used in investing activities       (82,990 )     (103,247 )
                   
Cash flows from financing activities:                  
  Proceeds from loans payable and long-term debt       —       5,401  
  Payments on loans payable and long-term debt       (1,326 )     (9,580 )
  Payment of deferred financing costs       (813 )     —  
  Proceeds from exercise of Common Stock options, including excess tax benefits       1,394       8,055  
  Taxes withheld and paid related to net share settlement of equity awards       (4,425 )     (5,002 )
  Payment of cash dividends       (2,155 )     (2,151 )
Net cash used in financing activities       (7,325 )     (3,277 )
                   
Effect of exchange rate changes on cash       265       (7,987 )
                   
Net increase in cash and cash equivalents       71,030       43,903  
Cash and cash equivalents at beginning of period       276,553       191,769  
                   
Cash and cash equivalents at end of period     $ 347,583     $ 235,672