UniFirst Corp. (NYSE:UNF) Q3 2017 Earnings Conference Call - Final Transcript
Jun 28, 2017 • 10:00 am ET
Ladies and gentlemen, thank you for standing by and welcome to the UniFirst Corporation Third Quarter Earnings Call. [Operator Instructions]. And afterwards, we will conduct a question-and-answer session [Operator Instructions].
I would now like to turn the conference over to Steven Sintros, Chief Financial Officer. Please go ahead, sir.
Steven S. Sintros
Thank you, and good morning. I'm Steven Sintros, UniFirst's Chief Financial Officer and welcome to the UniFirst Corporation Conference Call to review our third quarter results for fiscal '17 and to discuss our expectations going forward. This call will be on a listen-only mode until I complete our prepared remarks.
Before I begin, I'd like to give a brief disclaimer. This conference call may contain forward-looking statements that reflect the company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties. The words anticipate, optimistic, believe, estimate, expect, intend and similar expressions that indicate future events and trends identify forward-looking statements. Actual future results may differ materially from those anticipated, depending on a variety of risk factors. I refer you to our discussion of these risk factors in our most recent 10-Q and 10-K filings with the Securities and Exchange Commission.
And now, I will provide an overview of our quarterly results. Revenues for the third quarter were $409.8 million, up 11.4% from $367.8 million reported in the same period in fiscal '16.
Net income was $24.4 million or $1.19 per diluted share, down from $30.1 million or $1.49 per diluted share reported in last year's third quarter. These quarterly results included $6.5 million of stock-based compensation expense related to the April 2016 restricted stock grant to our former Chief Executive Officer, Ronald Croatti. Of this expense, $5.4 million was the result of accelerated vesting on certain shares upon its passing this May.
Excluding the effect of the accelerated vesting, adjusted net income was $27.7 million or $1.36 per diluted share, down 8.1% from a year ago. Our core laundry operations, which make up 90% of UniFirst total business, reported revenues for the quarter at $367.1 million, up 10.8% from the revenues achieved for the prior year's third quarter. The impact of acquisitions on growth was estimated to be 6.2% and was primarily related to our acquisition of Arrow Uniform in September, as well as the impact from a smaller acquisition in Chattanooga, Tennessee during the third quarter of last year.
Adjusted for the estimated effect of acquisitions, as well as a slightly weaker Canadian dollar compared to a year ago, core laundry revenues grew 4.8%. We continue to be encouraged by the improvement of our core laundry operation's organic growth rate. During the quarter, we benefited from improved ad over-reductions compared to a year ago, as well as a positive price environment and increased collections on merchandize recovery charges.
In addition, overall new sales as well as customer retention trended positively compared to the first nine months of 2016. Core laundry operating income when adjusted to exclude the negative effect of