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Uniforms & services provider 'Unifirst' posts double digit growth
31
Oct '08
UniFirst Corporation today announced record revenues and earnings for its fiscal fourth quarter and full year which ended August 30, 2008.

Revenues were $251.0 million for the quarter, an increase of 10.3% over the fourth quarter of fiscal 2007. For the full year, revenues increased 13.4% to $1.023 billion from $902.1 million in fiscal 2007. Fiscal 2008 included an extra week compared to fiscal 2007 which accounted for 2.2 percentage points of year over year revenue growth.

Fourth quarter net income increased 13.7% to $12.3 million, or $0.63 per diluted common share, from last year's fourth quarter net income of $10.8 million, or $0.56 per diluted common share. Net income for the full year increased 34.9% to $61.0 million, or $3.15 per diluted common share, from $45.2 million, or $2.34 per diluted common share for the comparable period in 2007.

Ronald D. Croatti, UniFirst President and Chief Executive Officer, stated, "We are very pleased to report another year of record profits and revenues, one that also saw us achieve our long time goal of becoming a billion dollar company.

In addition to strong organic revenue growth, we were able to show significant improvement in the margins of our core laundry operations. I want to thank the entire management team as well as our thousands of employees throughout North America and Europe who worked so hard to achieve these results."

The primary reason for the Company's strong full year results was the performance of the Company's core laundry operations, which makes up approximately 90% of the Company's revenues. Core laundry revenues increased 10.7% and 13.9%, respectively, for the quarter and full year compared to fiscal 2007.

The organic revenue growth for the core laundry business, which excludes the effects of the extra week, acquisitions and fluctuations in the Canadian exchange rate, was 6.6% for the fourth quarter and 7.5% for the full year.

For the full year, the income from operations for the core laundry business as a percentage of revenues increased to 11.3% in fiscal 2008 from 9.7% in fiscal 2007. This improvement was primarily the result of lower merchandise amortization as well as lower payroll and payroll related costs as a percentage of revenues.

In addition, the results in 2007 were affected by severance expense and increases to the Company's environmental reserves that decreased income from operations by $2.3 million. These positive comparisons were partially offset by higher energy costs as a percentage of revenues.

For the fourth quarter, the core laundry income from operations as a percentage of revenues decreased from 10.0% in 2007 to 9.3% in 2008. This drop in margin is due primarily to increases in the cost of energy and other commodities. The cost of gasoline and natural gas increased sharply during the fourth quarter and had a large impact on operating results compared to the same quarter in 2007.

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