UniFirst Corp (NYSE: UNF) stock fell 7.69% on January 3rd, 2019 (Source: Google finance) after the company posted mixed results for the first quarter of FY 19. Core Laundry Operations, which make up approximately 90% of the UniFirst total business, reported revenues for the quarter of $390.5 million, up 4.5% from the revenues achieved during last year’s first quarter. Adjusting for the estimated effective acquisitions, as well as the impact of a weaker Canadian dollar, the Core Laundry revenues grew 4.1%. Core Laundry operating income was $44.8 million for the quarter, down from $46.4 million in the prior year period. The segment’s operating margin decreased to 11.5%, compared to 12.4% in the first quarter of fiscal 2018. The margins in the Core Laundry Operations were challenged primarily due to higher payrolls, as well as increases in merchandise amortization and related costs. These areas impacted the quarterly results at higher levels than originally anticipated. Energy cost increased to 4.2% of revenues in the first quarter of 2019, up from 4.1% a year ago.

UNF in the first quarter of FY 19 has reported the adjusted earnings per share of $1.88, missing the analysts’ estimates for the adjusted earnings per share of $1.92. The quarterly earnings per share was positively affected by the U.S. tax reform, as well as the buyback of 1.178 million shares of Class B and common stock in the third quarter of fiscal 2018.  The company had reported the adjusted revenue growth of 5.5 percent to $438.6 million in the first quarter of FY 19, beating the analysts’ estimates for revenue of $434.28 million. Operating income for the quarter was $50.4 million, compared to $51.9 million in the prior year period. Net income for the quarter increased to $38.3 million, from $34.2 million in the first quarter of 2018. Both the operating income and net income benefited from a $3 million pre-tax gain the company recognized in the first quarter of 2019 related to the settlement of environmental litigation, which equated to $0.11 per diluted share.

Our net income comparison in the quarter also benefited from a lower tax rate in 2019 of 26.2%, compared to 35.5% in the prior year period, primarily due to the positive impact of the recent U.S. tax reform

UniFirst expects full-year earnings in the range of $6.65 to $6.90 per share, with revenue in the range of $1.77 billion to $1.79 billion.