UniFirst announces financial results for Q1
UniFirst Corporation announced revenues and earnings for its first quarter of fiscal 2009 which ended November 29, 2008. Revenues for the first quarter of fiscal 2009 were $262.6 million, a 6.2% increase from the previous year's first quarter of $247.3 million. First quarter net income for fiscal 2009 was $18.9 million or $0.97 per diluted common share, a 14.5% increase from the first quarter of fiscal 2008, when net income was $16.5 million or $0.85 per diluted common share.
First quarter revenues from the core laundry operations, which exclude the Company's Specialty Garments and First Aid segments, grew 6.9%. Revenues from the core laundry operations, net of the effect of acquisitions and changes in foreign currency increased 6.6%.
Income from operations from the Company's core laundry business was up 17.9% compared to the first quarter of fiscal 2008 as the operating margin increased to 13.7% from 12.4% a year earlier. The improvement is due primarily to lower merchandise amortization and lower payroll costs as a percentage of revenues.
The core laundry's operating results in the first quarter also were helped by lower health-care and workers' compensation costs compared to fiscal 2008. These costs fluctuate from quarter to quarter and the Company does not anticipate that this benefit will continue throughout the year.
These benefits were partially offset by higher energy costs and a $1.6 million accounting charge related to environmental obligations. Accounting rules require the discounting of certain liabilities using a risk-free interest rate. The Company's projected liabilities for environmental remediation are discounted in this manner as disclosed in its quarterly financial statements. Due to the significant decline in interest rates during the first fiscal quarter, the Company discounted its liability using a lower interest rate resulting in this non-cash charge to earnings.
The Specialty Garments and First Aid segments' operating results were comparable to the first quarter of fiscal 2008. The Company's overall results benefitted from lower interest expense related to its variable rate debt. However, this benefit was more than offset by foreign exchange losses in the current quarter as well as a higher effective tax rate compared to the first quarter of fiscal 2008. The Company's effective tax rate in the first quarter of fiscal 2009 increased to 39.7% compared to 38.5% in the first quarter of fiscal 2008.
Ronald D. Croatti, UniFirst President and Chief Executive Officer, stated, “Our strong first quarter was the result of a continued focus on maximizing the output of our professional sales and services organizations. In addition, we have intensified our cost control efforts throughout the Company. However, we will need to be even more diligent in these areas going forward."
"The level of headcount reductions in our customer base has accelerated considerably throughNovember and December and we expect that the general economic weakness will negatively impact our revenues for the balance of our fiscal year. Despite the challenging economic environment, we will continue to focus on factors within our control such as providing superior service and value to our customers.”