Exhibit 99.1
Angelica Announces Fourth Quarter and Fiscal 2005 Financial Results;
Fiscal Year Continuing Operations Revenues Increase 35.8% to $418.4
Million with EPS for Year of $0.25
ST. LOUIS--(BUSINESS WIRE)--April 11, 2006--Angelica Corporation (NYSE:
AGL), a leading provider of healthcare linen management services, announced
today fourth quarter and fiscal year 2005 financial results for the periods
ended on January 28, 2006. For the year, revenues from continuing operations
were $418.4 million, up 35.8% from fiscal year 2004. Earnings per share (EPS)
from continuing operations were $0.25, slightly over prior guidance due to a
higher than anticipated tax benefit.
Fourth Quarter Ended January 28, 2006
Revenues from continuing operations for the fourth quarter of fiscal 2005
were $105.1 million, a 31.8% increase from $79.7 million recorded in the fourth
quarter of fiscal 2004. Acquisitions, net of divestitures, added $22.7 million
of the $25.4 million increase in fiscal fourth quarter 2005 revenue, or 28.4%.
Organic growth year-over-year was $2.7 million, a 3.4% increase in revenues.
Gross profit from continuing operations for the fourth quarter of fiscal
2005 was $11.1 million, a 0.6% decrease from $11.2 million in the fourth quarter
of fiscal 2004. Higher revenues were offset by natural gas costs increasing as a
percent of revenue to 7.5% from 5.0% in fourth quarter fiscal 2004. Our fourth
quarter fiscal 2005 reorganization, in which 56 employees were terminated, added
$0.3 million in field operations severance costs. Savings in linen procurement
costs partially offset other cost increases. As a result, gross profit margin
was 10.6% in fourth quarter fiscal 2005, a decrease from 14.0% in the fourth
quarter of fiscal 2004.
Selling, general and administrative (SG&A) expenses from continuing
operations in fourth quarter fiscal 2005 were $14.0 million compared to $8.2
million in fourth quarter fiscal 2004. SG&A as a percent of revenue was 13.3% in
fourth quarter fiscal 2005 versus 10.2% in fourth quarter fiscal 2004. Fourth
quarter fiscal 2005 includes $0.8 million in reorganization costs, including
severance, $0.6 million for our operations process improvement project, $0.7
million in higher bad debt expense, $0.3 million related to a state tax audit,
and $0.4 million for legal costs related to union initial contract negotiations
and the Board of Directors' Special Committee.
Amortization expense in fourth quarter fiscal 2005 was $1.1 million,
substantially related to acquisitions, compared to $0.2 million in fourth
quarter fiscal 2004. Other operating income for fourth quarter fiscal 2005 was
$5.5 million compared to $0.1 million in fourth quarter fiscal 2004. Fourth
quarter fiscal 2005 includes $5.4 million reflecting the gain on the sale of
non-healthcare assets in Long Beach and Stockton, California. Higher interest
rates and borrowings to finance acquisitions account for interest expense
increasing to $2.2 million in fourth quarter fiscal 2005 from $0.5 million in
fourth quarter fiscal 2004.
Income from continuing operations for fourth quarter fiscal 2005 was $1.1
million, or $0.12 per diluted share, compared to income from continuing
operations of $2.5 million, or $0.27 per diluted share in the fourth quarter of
fiscal 2004.
Fourth quarter fiscal 2005 loss from discontinued operations net of tax was
$0.5 million, reflecting final operating and disposal costs associated with our
third quarter fiscal 2005 exit from the St. Louis market, as well as the tax
impact related to our second quarter fiscal 2004 sale of the Life Uniform retail
business segment and other discontinued operations. Fourth quarter fiscal 2004
income from discontinued operations was $0.6 million, which includes $0.7
million of income attributed to the discontinued retail business segment.
Including the discontinued operations, we recorded net income in the fourth
quarter fiscal 2005 of $0.5 million, or $0.06 per diluted share, compared to net
income of $3.1 million, or $0.34 per diluted share in the fourth quarter of
fiscal 2004.
Fiscal Year 2005 Ended January 28, 2006
For the twelve months ended January 28, 2006, revenues from continuing
operations were $418.4 million, a 35.8% increase from $308.0 million in fiscal
2004. Acquisitions, net of divestitures, added $100.6 million to fiscal 2005
revenue, a 32.6% increase. Organic growth year-over-year was $9.8 million, a
3.2% increase in revenues.
Gross profit from continuing operations for fiscal 2005 was $54.1 million,
a 10.8% increase from $48.8 million in fiscal 2004. The $5.3 million increase in
gross profit reflects higher revenues offset primarily by production payroll
costs increasing as a percent of revenue to 34.7% from 33.3% in fiscal 2004 and
natural gas and delivery fuel costs increasing as a percent of revenue to 7.6%
in fiscal 2005 versus 5.9% in fiscal 2004. The production payroll cost increase
includes higher workers' compensation expense and increased payroll related to
labor strike contingency planning during the first half of this fiscal year, as
well as costs associated with the closure of our Vallejo facility, consolidation
of our two Dallas facilities into one, and severance expense associated with our
fourth quarter field reorganization. Savings in linen procurement costs
partially offset other cost increases. Gross profit margin was 12.9% in fiscal
2005, down from 15.8% in fiscal 2004.
Selling, general and administrative (SG&A) expenses from continuing
operations in fiscal 2005 were $50.1 million, up 32.8% from $37.7 million in
fiscal 2004. Fiscal 2005 SG&A included $1.3 million of management transition
expense related to the senior management change and fourth quarter
reorganization, $1.2 million of legal expenses associated with union campaign
and organizational expenses and the Board of Directors' Special Committee, $0.7
million of consulting fees for our operations process improvement
implementation, and $0.4 million of expenses associated with the financing
alternative during the year that the Company chose not to complete. Fiscal 2005
SG&A also includes a $1.0 million increase in bad debt expense. Nevertheless,
SG&A decreased as a percent of revenue to 12.0% in fiscal 2005, compared to
12.2% in fiscal 2004.
Amortization expense for fiscal 2005 increased to $4.0 million from $0.9
million, reflecting the impact of our acquisitions completed in fiscal 2005 and
late fiscal 2004. Other operating income for fiscal 2005 was $6.4 million
compared to other operating income of $1.7 million in fiscal 2004. Fiscal 2005
other income includes gains from the sale of non-healthcare business in Long
Beach, San Diego and Stockton, California whereas fiscal 2004 other income
includes the gain from our sale of non-healthcare business in Daytona Beach,
Florida. Interest expense for fiscal 2005 was $7.2 million compared to $1.4
million in fiscal 2004 due to increased borrowings for acquisitions and higher
interest rates.
Non-operating income declined to $1.6 million in fiscal 2005 from $2.7
million in fiscal 2004, due primarily to a real estate gain included in the
prior year.
Income tax benefit for fiscal 2005 was $1.6 million, compared to a $2.4
million expense in fiscal 2004. Lower income tax expense in fiscal 2005 was
primarily due to lower pretax income.
Income from continuing operations for fiscal 2005 was $2.3 million, or
$0.25 per diluted share, compared to $10.7 million, or $1.18 per diluted share
in fiscal 2004.
The loss from discontinued operations net of tax for fiscal 2005 was $2.1
million, including a $1.3 million loss from operations of our Columbia, Illinois
facility and a $0.3 million loss on disposal, plus the tax impact of $0.4
million related to our second quarter fiscal 2004 sale of our retail business
segment and other discontinued operations. Fiscal 2004 loss from discontinued
operations was $4.4 million, $4.0 million of which was attributed to the
discontinued retail business segment.
Net income for fiscal 2005 was $0.2 million, or $0.03 per diluted share
compared to net income of $6.4 million, or $0.70 per diluted share, in fiscal
2004.
Steve O'Hara, Chairman and CEO, commenting on the results, said, "The
results reported today are basically consistent with the guidance provided since
last fall except we had a slightly higher tax benefit than expected. The real
story of fiscal year 2005 was our transition to a larger organization more
focused on serving our healthcare customers better. Fiscal year 2005 was a
difficult transition year with union organizational activity, soaring energy
costs and the expense associated with reorganizing to a customer centric
business model. While further implementation of operations process improvements
and customer service programs continue into fiscal 2006, as well as higher year
over year energy costs, we expect to build quickly upon our fourth quarter
results."
Mr. O'Hara continued, "Specifically, we remain committed to achieving a
20.0% gross margin by fiscal 2008 and reducing SG&A as a percentage of revenues
to 11.0% by fiscal 2008 through the customer service and operational programs
discussed throughout the past year. In 2006, we expect to see sequential quarter
to quarter improvements in our gross margin from fourth quarter fiscal 2005
beginning with the current quarter, with a second half fiscal 2006 gross margin
of over 15.0%."
Angelica Corporation, traded on the New York Stock Exchange under the
symbol AGL, is a leading provider of textile rental and linen management
services to the U.S. healthcare market. More information about Angelica is
available on its website, www.angelica.com.
Forward-Looking Statements
Any forward-looking statements made in this document reflect the Company's
current views with respect to future events and financial performance and are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that may cause actual results to differ materially from those set
forth in these statements. These potential risks and uncertainties include, but
are not limited to, competitive and general economic conditions, the ability to
retain current customers and to add new customers in competitive market
environments, competitive pricing in the marketplace, delays in the shipment of
orders, availability of labor at appropriate rates, availability and cost of
energy and water supplies, the cost of workers' compensation and healthcare
benefits, the ability to attract and retain key personnel, the ability of the
Company to recover its seller note and avoid future lease obligations as part of
its sale of Life Uniform, the ability of the Company to accomplish its strategy
of redirecting its resources to its healthcare linen management business in a
timely and financially advantageous manner, unusual or unexpected cash needs for
operations or capital transactions, the effectiveness the Company's recently
announced initiatives to reduce key operating costs as a percentage of revenues,
the ability to obtain financing in required amounts and at appropriate rates and
terms, the ability to identify, negotiate, fund, consummate and integrate
acquisitions, and other factors which may be identified in the Company's filings
with the Securities and Exchange Commission.
Unaudited condensed balance sheets as of January 28, 2006 and
January 29, 2005 (dollars in thousands):
January 28, January 29,
2006 2005
------------ ------------
ASSETS
- ------
Current Assets:
Cash $ 4,377 $ 926
Receivables, less reserves of $994 and
$510 58,151 44,454
Linens in service 43,785 37,660
Prepaid expenses and other current assets 3,602 3,817
Deferred income taxes - 5,386
Assets of discontinued operations held for
sale - 3,617
------------ ------------
Total Current Assets 109,915 95,860
Property and Equipment, net 106,293 99,366
Goodwill 49,259 31,272
Other Acquired Assets 42,470 24,728
Other Long-Term Assets 23,491 37,727
------------ ------------
Total Assets $ 331,428 $ 288,953
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Current maturities of long-term debt $ 319 $ 419
Accounts payable 37,229 19,349
Accrued wages and other compensation 7,037 5,145
Other accrued liabilities 36,833 30,805
------------ ------------
Total Current Liabilities 81,418 55,718
Long-Term Debt, less current maturities 85,096 67,811
Other Long-Term Obligations 15,366 14,068
Shareholders' Equity 149,548 151,356
------------ ------------
Total Liabilities and Shareholders' Equity $ 331,428 $ 288,953
============ ============
Unaudited results for fourth quarter and fiscal year ended January 28, 2006
compared with same periods ended January 29, 2005 (dollars in thousands, except
per share amounts):
Fourth Quarter Ended
-----------------------------------
January 28, January 29, Percent
2006 2005 Change
------------ ------------ ---------
Continuing Operations:
Textile service revenues $ 105,076 $ 79,742 31.8%
Cost of textile services (93,965) (68,569) 37.0%
------------ ------------ ---------
Gross profit 11,111 11,173 -0.6%
Selling, general and
administrative expenses (13,987) (8,158) 71.5%
Amortization of other acquired
assets (1,084) (244) nm
Other operating income, net 5,544 101 nm
------------ ------------ ---------
Income from operations 1,584 2,872 -44.8%
Interest expense (2,247) (531) nm
Non-operating income, net 434 193 nm
------------ ------------ ---------
(Loss) income from continuing
operations pretax (229) 2,534 -109.0%
Benefit (provision) for income
taxes 1,321 (75) nm
------------ ------------ ---------
Income from continuing operations 1,092 2,459 -55.6%
------------ ------------ ---------
Discontinued Operations:
(Loss) income from discontinued
operations, net of tax (118) 94 nm
(Loss) gain on disposal of
discontinued operations, net of
tax (431) 551 nm
------------ ------------ ---------
(Loss) income from discontinued
operations (549) 645 nm
------------ ------------ ---------
Net income $ 543 $ 3,104 -82.5%
============ ============ =========
Basic earnings (loss) per share:
Income from continuing
operations $ 0.12 $ 0.28 -57.1%
(Loss) income from discontinued
operations (0.06) 0.07 nm
------------ ------------ ---------
Net income $ 0.06 $ 0.35 -82.9%
============ ============ =========
Diluted earnings (loss) per share:
Income from continuing
operations $ 0.12 $ 0.27 -55.6%
(Loss) income from discontinued
operations (0.06) 0.07 nm
------------ ------------ ---------
Net income $ 0.06 $ 0.34 -82.4%
============ ============ =========
Fiscal Year Ended
-----------------------------------
January 28, January 29, Percent
2006 2005 Change
------------ ------------ ---------
Continuing Operations:
Textile service revenues $ 418,357 $ 308,034 35.8%
Cost of textile services (364,300) (259,265) 40.5%
------------ ------------ ---------
Gross profit 54,057 48,769 10.8%
Selling, general and
administrative expenses (50,092) (37,721) 32.8%
Amortization of other acquired
assets (4,036) (906) nm
Other operating income, net 6,384 1,743 nm
------------ ------------ ---------
Income from operations 6,313 11,885 -46.9%
Interest expense (7,198) (1,356) nm
Non-operating income, net 1,613 2,659 -39.3%
------------ ------------ ---------
(Loss) income from continuing
operations pretax 728 13,188 -94.5%
Benefit (provision) for income
taxes 1,591 (2,440) nm
------------ ------------ ---------
Income from continuing operations 2,319 10,748 -78.4%
------------ ------------ ---------
Discontinued Operations:
(Loss) income from discontinued
operations, net of tax (1,286) (1,369) -6.1%
(Loss) gain on disposal of
discontinued operations, net of
tax (785) (3,018) -74.0%
------------ ------------ ---------
(Loss) income from discontinued
operations (2,071) (4,387) -52.8%
------------ ------------ ---------
Net income $ 248 $ 6,361 -96.1%
============ ============ =========
Basic earnings (loss) per share:
Income from continuing
operations $ 0.26 $ 1.20 -78.3%
(Loss) income from discontinued
operations (0.23) (0.49) -53.1%
------------ ------------ ---------
Net income $ 0.03 $ 0.71 -95.8%
============ ============ =========
Diluted earnings (loss) per share:
Income from continuing
operations $ 0.25 $ 1.18 -78.8%
(Loss) income from discontinued
operations (0.22) (0.48) -54.2%
------------ ------------ ---------
Net income $ 0.03 $ 0.70 -95.7%
============ ============ =========
CONTACT: Angelica Corporation
Jim Shaffer, 314-854-3800
www.angelica.com
or
Integrated Corporate Relations, Inc.
Devlin Lander, 310-395-2215