UniFirst Corporation announced results for its fiscal 2014 second quarter, which ended March 1, 2014. Revenues were $344.0 million, up 2.9% from $334.3 million in the year ago period.
Net income of $25.6 million ($1.27 per diluted share), was down from $26.6 million ($1.33 per diluted share) reported in the year ago period.
Revenue and profit comparisons were affected by a customer related specialty merchandise buyout in the year ago second quarter. Excluding the effect of this buyout, overall revenues would have increased 3.6% and fully diluted earnings per share would have been $1.27 for both quarterly periods.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We were pleased that our core laundry business continued to produce solid results despite being challenged by several external factors during the quarter. These items included a weaker Canadian exchange rate, higher energy prices and a difficult winter season.”
Revenues in the Core Laundry Operations were $313.2 million, up 3.8% from those reported in the prior year’s second quarter. Excluding the negative impact of the weaker Canadian dollar and the specialty merchandise buyout, as well as the positive effect of acquisitions, the Core Laundry Operations’ revenues grew 4.3%.
This segment’s operating income grew 2.1% compared to adjusted operating income from the second quarter of fiscal 2013 and its operating margin was 12.6% compared to an adjusted operating margin of 12.9% a year ago. Adjusted operating income and operating margin for the second quarter of fiscal 2013 exclude the impact of the customer related specialty merchandise buyout.
Narrower operating margins were primarily due to higher costs related to our plant operations, energy, depreciation and bad debt expense as a percentage of revenues. In addition, the quarter was also impacted by higher legal and environmental costs compared to the prior year. These higher costs were partially offset by lower health care claims expense during the quarter.
Revenues for the Specialty Garments’ segment, which consists of nuclear decontamination and cleanroom operations, were $20.4 million, down 9.7% from $22.6 million in the second quarter of fiscal 2013.
This decrease was primarily the result of fewer power reactor outage projects in the United States and Canada compared to a year ago. This segment’s income from operations for the quarter fell to $0.3 million from $1.3 million in the comparable period in fiscal 2013.
UniFirst continues to maintain a solid balance sheet and financial position. Cash provided by operating activities year to date was $109.1 million, up 17.9% compared to $92.5 million for the first half of fiscal 2013. The improved cash flows were primarily the result of higher earnings as well as the timing of income tax payments compared to the prior year.
We ended the period with essentially no long term debt and cash and cash equivalent balances of $157.2 million, down from $197.5 million at the end of fiscal 2013. This decrease was due to the Company’s repayment of $100.0 million in private placement notes that came due in September 2013.