We will continue to vigilantly focus on cost controls - UniFirst President
UniFirst Corporation announced results for the second quarter and first six months of fiscal 2010, which ended on February 27, 2010.
Revenues for the second quarter of fiscal 2010 were $253.6 million, a 1.4% decrease from the previous year's $257.3 million. Second quarter net income was $16.2 million, or $0.83 per diluted common share, an 11.2% decrease from the second quarter of fiscal 2009, when net income was $18.3 million, or $0.94 per diluted common share.
Revenues for the first six months of fiscal 2010 decreased 1.9% compared to the first six months of fiscal 2009. Net income for the first half of fiscal 2010 was $39.8 million or $2.05 per diluted common share, a 7.2% increase from the first half of fiscal 2009, when net income was $37.1 million or $1.92 per diluted common share.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, "Although our overall profits for the quarter were lower than the prior year, they met our expectations and we are pleased with the results. We are also encouraged that our core laundry operations achieved sequential improvements in revenues in both the first and second quarters, which indicates continued stabilization of our customer base."
The Company's core laundry revenues in the second quarter of 2010 declined 2.8% compared to the same period in fiscal 2009. As a result of the revenue decline, income from operations from the core laundry business was $26.8 million in the quarter compared to $32.1 million a year ago. Although operating expenses were down on a gross dollar basis, lower revenues resulted in higher payroll and payroll related costs, energy and depreciation as a percentage of revenues. These items were partially offset by lower merchandise costs as a percentage of revenues.
Revenues in the Company's Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, increased 14.7% compared to the second quarter of fiscal 2009. This increase was the result of a larger number of power reactor outages occurring in the second quarter of fiscal 2010 compared to the same period a year ago. As a result of this revenue increase, operating income for this segment increased from $1.7 million in the second quarter of fiscal 2009 to $2.1 million in the second quarter of fiscal 2010.
The Company's effective income tax rate for the quarter was 39.1% compared to 42.7% for the same quarter a year ago. The fiscal 2009 rate was impacted by increases to the Company's reserves for tax contingencies.
UniFirst continues to generate strong cash flows and maintain a solid balance sheet. At the end of the second quarter, the Company had $84.2 million of cash and cash equivalents on hand, up from $60.2 million at the end of fiscal 2009. Cash produced by operating activities for the first six months of fiscal 2010 was up 8.0% to $65.1 million compared to $60.3 million a year earlier. In addition, as of theend of the second quarter, total debt as a percentage of capital declined to 21.3% from 22.5% at the end of fiscal 2009.