UniFirst Corporation (UNF) reported an 18.5% dip in earnings for the second quarter of fiscal 2019 due to the uneven effective tax rates. However, the results exceeded analysts’ expectations. The uniform provider raised its revenue outlook for fiscal 2019.
Net income fell 18.5% to $47.6 million and earnings dropped 13% to $2.48 per share. The results were affected by uneven effective tax rates. The prior year period tax rate was significantly impacted by the U.S. Tax Cuts and Jobs Act, which resulted in a one-time benefit to provision for income taxes. Adjusted earnings decreased by 10.7% to $1.67 per share.
Revenue grew 4.3% to $437.5 million. Core Laundry revenues increased 4.1% and revenues from Specialty Garments segment climbed 10.1%.
The results of the Specialty Garments segment can vary significantly due to seasonality and the timing of reactor outages and projects. This segment’s top-line benefited from acquisitions in fiscal 2018 that increased quarterly revenues by 10.8%.
Looking ahead into fiscal 2019, the company lifted its revenue outlook to the range of $1.785 billion to $1.795 billion from the prior range of $1.765 billion to $1.785 billion. Earnings guidance are now anticipated to be in the range of $7.65 to $7.90 per share, which is based on better-than-expected results to date as well as the inclusion of the CRM settlement. This assumes no future share repurchases and includes one extra week of operations compared to fiscal 2018 due to the timing of its fiscal calendar.
UniFirst continues to maintain a strong balance sheet with no long-term debt and significant cash balances. At the end of the company’s second quarter, cash, cash equivalents, and short-term investments totaled $335.3 million. During the quarter, the company repurchased 45,000 common shares at an average share price $139.57 under the stock repurchase program.
Shares of UniFirst ended Tuesday’s regular session down 0.21% at $139.24 on the NYSE. Following the earnings release, the stock inched up over 3% in the premarket session.