UniFirst achieves record revenues in challenging economy
UniFirst Corporation announced results for the fourth quarter and full year of fiscal 2010, which ended on August 28, 2010.
Revenues for the fourth quarter were $255.0 million, up 5.6% compared to $241.5 million for the same period in the prior year. Fourth quarter net income was $17.3 million ($0.87 per diluted common share), a 1.6% increase from net income in the fourth quarter of fiscal 2009 of $17.0 million ($0.88 per diluted common share). For the full fiscal year, revenues were $1.026 billion, up 1.2% from $1.013 billion in fiscal 2009. Net income for the full year was $76.4 million ($3.90 per diluted common share), up 0.7% from $75.9 million ($3.92 per diluted common share) in fiscal 2009.
Ronald D. Croatti, UniFirst President and Chief Executive Officer said, “We are pleased with the Company's overall results for the fourth quarter as well as our full year performance. The fact that we were able to again achieve record revenues and net income for fiscal 2010 in a very challenging economy is a notable accomplishment and a testament to the hard work and dedication of all of our employees.”
The Company's core laundry revenues were $227.0 million in the fourth quarter, up 4.3% from those reported in the same period a year ago. After excluding the positive effect of acquisitions as well as a stronger Canadian dollar, the Company's core laundry revenues increased 2.2% organically. Core laundry operating income declined to $26.0 million in the fourth quarter from $27.5 million for the same period in the prior year. The operating margin fell to 11.4% in the fourth quarter from 12.6% in the fourth quarter of fiscal 2009. The margin decline primarily relates to a higher cost of revenues, including energy, merchandise and payroll. In addition, higher payroll-related costs, including stock compensation expense, also contributed to the margin decline.
The Company's Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, continued its strong year, posting revenues of $20.0 million, up 20.5% compared to the fourth quarter of 2009. Operating income for this segment increased to $2.0 million in the fourth quarter of fiscal 2010 from $0.9 million in the fourth quarter of fiscal 2009.
The Company's increase in fourth quarter net income was helped by exchange rate gains of $0.5 million compared to a $0.1 million gain a year ago. In addition, the 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 37.1% compared to 38.3% for the fourth quarter of fiscal 2009.
UniFirst continues to generate strong cash flows and maintain a solid balance sheet. Cash produced by operating activities for the full fiscal year was $134.0 million. Cash and cash equivalents on hand at year-end was $121.3 million, up from $60.2 million at the end of fiscal 2009. In addition, the year ended with total debt as a percentage of capital of 20.4%, down from 22.5% at the end of fiscal 2009.