UniFirst Specialty Garments produces record results for Q3

01 Jul '10

4 min read

UniFirst Corporation announced results for the third quarter and first nine months of fiscal 2010, which ended on May 29, 2010.

Revenues for the third quarter of fiscal 2010 were $261.2 million, up 3.6% compared to $252.1 million for the same period in the prior year. Third quarter net income was $19.3 million ($0.98 per diluted common share), an 11.0% decrease from the third quarter of fiscal 2009 when net income was $21.7 million ($1.12 per diluted common share). For the first nine months of fiscal 2010, revenues were down 0.1% and net income was up 0.5% compared to the first nine months of fiscal 2009.

Ronald D. Croatti, UniFirst President and Chief Executive Officer said, "We are pleased with the Company's overall results for the third quarter. The performance of our core laundry operations met our expectations and our sales force continues to have success expanding our customer base. In addition, our Specialty Garments segment produced record results for the quarter and likely will end the year with record revenues and profits."

The Company's core laundry revenues were $227.8 million in the third quarter of fiscal 2010, up 1.8% from the same period in fiscal 2009. After excluding the impact of acquisitions as well as a stronger Canadian dollar, the Company's core laundry revenues decreased 1.0% comparing the same periods. Core laundry operating income declined to $26.2 million in the third quarter of fiscal 2010 from $33.3 million for the same period in the prior year and the operating margin fell to 11.5% in the third quarter of fiscal 2010 from 14.9% in the third quarter of fiscal 2009. The margin decline primarily relates to a higher cost of revenues, including energy, payroll and merchandise costs. The Company also incurred higher selling and administrative costs, including stock compensation expense during the quarter which was partially offset by lower costs associated with environmental contingencies compared to the third quarter of fiscal 2009.

The Company's Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, increased its revenues $4.6 million or 22.0% compared to the third quarter of 2009. This increase was primarily the result of higher than expected revenues from certain US and Canadian reactor projects. As a result of this increase in revenues, operating income for this segment increased to $5.2 million in the third quarter of fiscal 2010 from $3.0 million in the third quarter of fiscal 2009.

The Company's decrease in net income was also the result of exchange rate losses of $0.6 million in the third quarter of fiscal 2010 compared to gains of $0.8 million in the third quarter of fiscal 2009.

As expected, the Company's effective income tax rate for the quarter was lower than the prior year as a result of reductions in tax contingency reserves. The effective income tax rate for the quarter was 35.0% compared to 39.3% for the third quarter of fiscal 2009.

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