Q2FY16 net drops 7.7% at Unifirst Corp

01 Apr '16

3 min read

For its second fiscal quarter ended February 27, 2016, net income at Unifirst Corp was $23.5 million or $1.16 per diluted share, down 7.7 per cent from $25.4 million or $1.26 per diluted share in the fiscal ago quarter.

In a press release, the company said that the results in the second quarter of fiscal 2015 included a $3.6 million charge to selling and administrative expenses to increase its environmental contingency reserves.

“Excluding the effect of this item, net income for the prior fiscal's second quarter would have been $27.7 million or $1.37 per diluted share,” the company observed.

“In addition, the comparison of net income was negatively impacted by a higher effective tax rate in the reporting quarter compared to the same period a fiscal ago due to a change in the mix of jurisdictional earnings,” it explained.

Revenues for the second quarter of fiscal 2016 were $363.1 million, up 0.5 per cent from $361.5 million in the year previous fiscal's comparable quarter.

Core Laundry revenues in the quarter were $331.4 million, down 0.2 per cent year on year, but adjusting for the effects of acquisitions and a weaker Canadian dollar, revenues grew 0.5 per cent.

Excluding the environmental charge from the second quarter of fiscal 2015, this segment's operating margin decreased to 10.9 per cent from an adjusted operating margin of 13.4 per cent a fiscal ago.

“The largest driver of the margin decline was significantly higher healthcare claims incurred during the quarter compared to a fiscal ago, which impacted the margin comparison by a full 1 per cent,” it added.

Merchandise as well as many other costs were also higher than the prior fiscal which negatively impacted the margin further due to the lack of top line growth in this segment.

“These items were partially offset by lower energy expenses during the quarter compared to a year ago,” the uniform services provider informed.

Revenues for the Specialty Garments segment, which consists of nuclear decontamination and cleanroom operations, were $20.5 million, up 9.6 per cent year on year.

Due, primarily to the improved revenue performance, this segment's income from operations rose to $1.1 million in the quarter under review from a loss of $0.4 million in last fiscal's comparable period.

CEO Ronald Croatti said, “Our growth during the second quarter continued to be negatively impacted by the loss of uniform wearers and customers in energy dependent markets in the US and Canada.”

“In fact, during the quarter, uniform wearer reductions accelerated from our first quarter experience,” Croatti too observed

UniFirst continues to maintain a solid balance sheet with no long-term debt and increasing cash balances.

Net cash provided by operating activities in the first six months of fiscal 2016 was $105.5 million, down only slightly from the same period in fiscal 2015.

While, cash and cash equivalents at the end of the fiscal quarter totaled $335.0 million, up from $276.6 million at the end of fiscal 2015. (AR)

Fibre2Fashion News Desk – India

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