Exhibit 99.1
Angelica Announces Fiscal 2006 Earnings per Share of $0.39
Fiscal 2006 Fourth Quarter Net Income Increases to $3.3 Million
ST. LOUIS--(BUSINESS WIRE)--April 10, 2007--Angelica Corporation
(NYSE: AGL), a leading provider of healthcare linen management
services, today announced fiscal year 2006 fourth quarter and full
year financial results for the period ended January 27, 2007. Fiscal
2006 fourth quarter gross margin was 14.0%, up 3.4 percentage points
from 10.6% in fiscal 2005 fourth quarter, while fiscal 2006 full year
gross margin was 14.5%, up from 12.9% reported in fiscal 2005. Net
income from continuing operations was $3.3 million and $3.6 million in
the 2006 fourth quarter and fiscal year, respectively, compared to
$1.1 million and $2.3 million for the same periods in the prior year.
Diluted earnings per share from continuing operations (EPS) was $0.35
and $0.39 in the 2006 fourth quarter and fiscal year, respectively,
compared to $0.12 and $0.25 for the same periods in the prior year.
Fourth Quarter Ended January 27, 2007
Revenues for the fourth quarter fiscal 2006 were $105.7 million,
compared to $105.1 million in the fourth quarter fiscal 2005. Organic
growth contributed $2.6 million of the increase, representing an
organic growth rate of 2.9%, substantially all of which came from
improved pricing. Fiscal 2005 acquisitions contributed $0.7 million of
the increase, which were more than offset by the loss of $2.7 million
of revenues due to the sale of non-healthcare customer accounts in
fiscal 2005 and 2006. Total healthcare revenues in fourth quarter
fiscal 2006 were $102.6 million, a 3.4% increase from $99.2 million in
fourth quarter 2005.
Gross profit for the fourth quarter fiscal 2006 was $14.8 million,
a 32.9% increase from $11.1 million in the fourth quarter of fiscal
2005. Gross margin for the fourth quarter fiscal 2006 increased to
14.0% from 10.6% in the same period last year. The improvement in
gross margin reflects organic revenue growth and pricing improvements,
as well as a decrease in linen, delivery, and natural gas costs,
resulting in expenses being lower as a percentage of sales.
Selling, general and administrative (SG&A) expenses in the fourth
quarter fiscal 2006 were $10.1 million, compared to $14.0 million in
fourth quarter fiscal 2005. The $3.9 million decrease primarily
reflects a $1.0 million reversal of amortization expense related to
our long-term incentive compensation plan, and a $1.0 million decrease
in short-term incentive compensation and bad debt accruals. Fourth
quarter fiscal 2005 also included $0.8 million in reorganization
costs, including severance, $0.6 million for our operations process
improvement project, $0.3 million related to a state tax audit, and
$0.3 million in higher legal costs related to union contract
negotiations and the Board of Directors' Special Committee.
Other operating income for the fourth quarter fiscal 2006 was $0.1
million compared to $5.5 million recorded in the fourth quarter fiscal
2005. Fourth quarter fiscal 2005 included $5.4 million in gains on the
sale of non-healthcare business in Long Beach and Stockton,
California. Interest expense for the fourth quarter fiscal 2006 was
$2.4 million compared to $2.2 million in the fourth quarter fiscal
2005 due to higher interest rates.
Non-operating income for the fourth quarter fiscal 2006 was $1.9
million, an increase of $1.4 million from the same period last year.
Fourth quarter fiscal 2006 included a $1.7 million gain on the sale of
real estate, while fourth quarter fiscal 2005 included a $0.4 million
death benefit from a Company-owned life insurance policy.
Income from continuing operations was $3.3 million, or $0.35 per
diluted share, in fourth quarter fiscal 2006 compared with $1.1
million, or $0.12 per diluted share, in fourth quarter fiscal 2005.
Fiscal Year 2006 Ended January 27, 2007
For the twelve months ended January 27, 2007, revenues were $425.7
million, a 1.8% increase from $418.4 million in fiscal 2005. Organic
growth from net new business additions and price increases contributed
$12.6 million of the increase, representing an organic growth rate of
3.5%. Of the organic growth rate, pricing represented 3.1 percentage
points and volume represented 0.4 percentage points. Fiscal 2005
acquisitions contributed $11.4 million of the increase, which was more
than offset by the loss of $16.6 million of revenues due to the sale
of non-healthcare customer accounts in fiscal 2005 and 2006. Total
healthcare revenues in fiscal 2006 were $411.3 million, up 6.6% from
$386.0 million in fiscal 2005.
Gross profit for the twelve months ended January 27, 2007, was
$61.9 million, a 14.6% increase from $54.1 million in fiscal 2005.
Gross margin in fiscal 2006 increased to 14.5% from 12.9% in fiscal
2005, reflecting current year organic revenue growth and pricing
improvements offset partially by higher energy and labor costs.
SG&A expenses in fiscal 2006 were $51.3 million, compared to $50.1
million recorded in fiscal 2005. The increase was primarily a result
of an increase in professional fees of $1.3 million related to our
operations process improvement implementation and financial consulting
projects, an increase in legal and shareholder relation expenses of
$0.6 million associated with the Board of Director's Special
Committee, $0.6 million in higher incentive compensation accruals, and
$0.4 million of higher life insurance expense net of dividends. Fiscal
2005 also included $0.8 million in fees related to a review of
financing alternatives and changes in senior management and $0.7
million related to a union corporate campaign.
We recorded $4.3 million of amortization expense in fiscal 2006, a
$0.3 million increase versus the same period last year related to
acquisitions made in fiscal 2005. Other operating income for fiscal
2006 was $3.0 million, reflecting gains from the sale of real estate
and a settlement received relating to the Vallejo service center
eminent domain proceeding. The $6.4 million in other operating income
recorded in fiscal 2005 was primarily from the divestiture of
non-healthcare business. Interest expense for fiscal 2006 was $9.4
million compared to $7.2 million in fiscal 2005 due to both higher
interest rates and higher average borrowings.
Income from continuing operations for fiscal 2006 was $3.6
million, or $0.39 per diluted share, compared to $2.3 million, or
$0.25 per diluted share in fiscal 2005.
Commenting on the results, Steve O'Hara, chairman, president and
chief executive officer, stated, "We are pleased to report results
consistent with the guidance we have provided throughout the year.
Fiscal 2006 was an important turnaround year for Angelica as we grew
our core healthcare revenues 6.6% and began to restore gross margin
which had been eroded by the 2005 energy cost explosion. Most
importantly, we built a firm customer base from which to grow by
executing our delightful service initiative. This is best evidenced by
sharp improvements in our customer satisfaction ratings, including an
increase in customers willing to recommend us from 80% in 2005 to 91%
in 2006.
Mr. O'Hara continued, "However, we are seeking even further gains
in customer satisfaction in 2007 which we believe is the cornerstone
of improved financial performance. As previously mentioned, we expect
these initiatives will translate to about an average 5% organic growth
rate in fiscal 2007, with the second half growth rate greater than the
first half. We expect fiscal 2007 gross margin to exceed prior year
comparable gross margin in each quarter. While this gain may be modest
in the first half as we incur higher merchandise costs from our
improved product initiative and continue to realize operating
efficiencies and pricing gains, we expect second half gross margin to
be two to three percentage points higher than fiscal 2006 second half
gross margin of 15.0%. By holding SG&A expenses roughly flat to fiscal
2006, we expect to see earnings before interest and taxes grow by over
50% in fiscal 2007 from fiscal 2006's level of $11.8 million."
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
its former Life Uniform division, the ability of the Company to
execute its operational strategies , unusual or unexpected cash needs
for operations or capital transactions, the effectiveness of the
Company's initiatives to reduce key operating costs as a percent 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 results for fourth quarter and fiscal year ended January 27,
2007 compared with same periods ended January 28, 2006 (dollars in
thousands, except per share amounts):
Fourth Quarter Ended
-------------------------------
January 27, January 28, Percent
2007 2006 Change
----------- ----------- -------
Continuing Operations:
Revenues $105,675 $105,076 0.6%
Cost of services (90,907) (93,965) -3.3%
----------- ----------- -------
Gross profit 14,768 11,111 32.9%
Selling, general and administrative
expenses (10,069) (13,987) -28.0%
Amortization of other acquired assets (1,060) (1,084) -2.2%
Other operating income, net 75 5,544 -98.6%
----------- ----------- -------
Income from operations 3,714 1,584 nm
Interest expense (2,357) (2,247) 4.9%
Non-operating income, net 1,857 434 nm
----------- ----------- -------
Income (loss) from continuing
operations pretax 3,214 (229) nm
Income tax benefit 58 1,321 -95.6%
----------- ----------- -------
Income from continuing operations 3,272 1,092 nm
----------- ----------- -------
Discontinued Operations:
Loss from discontinued operations, net
of tax - (118) nm
Loss on disposal of discontinued
operations, net of tax - (431) nm
----------- ----------- -------
Loss from discontinued operations - (549) nm
----------- ----------- -------
Net income $3,272 $543 nm
=========== =========== =======
Basic earnings (loss) per share:
Income from continuing operations $0.36 $0.12 nm
Loss from discontinued operations - (0.06) nm
----------- ----------- -------
Net income $0.36 $0.06 nm
=========== =========== =======
Diluted earnings (loss) per share:
Income from continuing operations $0.35 $0.12 nm
Loss from discontinued operations - (0.06) nm
----------- ----------- -------
Net income $0.35 $0.06 nm
=========== =========== =======
Fiscal Year Ended
-------------------------------
January 27, January 28, Percent
2007 2006 Change
----------- ----------- -------
Continuing Operations:
Revenues $425,735 $418,357 1.8%
Cost of services (363,800) (364,300) -0.1%
----------- ----------- -------
Gross profit 61,935 54,057 14.6%
Selling, general and administrative
expenses (51,306) (50,092) 2.4%
Amortization of other acquired assets (4,281) (4,036) 6.1%
Other operating income, net 2,987 6,384 -53.2%
----------- ----------- -------
Income from operations 9,335 6,313 47.9%
Interest expense (9,412) (7,198) 30.8%
Non-operating income, net 2,424 1,613 50.3%
----------- ----------- -------
Income (loss) from continuing
operations pretax 2,347 728 nm
Income tax benefit 1,286 1,591 -19.2%
----------- ----------- -------
Income from continuing operations 3,633 2,319 56.7%
----------- ----------- -------
Discontinued Operations:
Loss from discontinued operations, net
of tax - (1,286) nm
Loss on disposal of discontinued
operations, net of tax - (785) nm
----------- ----------- -------
Loss from discontinued operations - (2,071) nm
----------- ----------- -------
Net income $3,633 $248 nm
=========== =========== =======
Basic earnings (loss) per share:
Income from continuing operations $0.40 $0.26 53.8%
Loss from discontinued operations - (0.23) nm
----------- ----------- -------
Net income $0.40 $0.03 nm
=========== =========== =======
Diluted earnings (loss) per share:
Income from continuing operations $0.39 $0.25 56.0%
Loss from discontinued operations - (0.22) nm
----------- ----------- -------
Net income $0.39 $0.03 nm
=========== =========== =======
Unaudited condensed balance sheets as of January 27, 2007 and January
28, 2006
(dollars in thousands):
January 27, January 28,
2007 2006
----------- -----------
ASSETS
- ----------------------------------------------
Current Assets:
Cash and cash equivalents $6,254 $4,377
Receivables, less reserves of $848 and $994 56,874 58,151
Linens in service 50,902 43,785
Prepaid expenses and other current assets 4,019 3,602
----------- -----------
Total Current Assets 118,049 109,915
Property and Equipment, net 96,456 106,293
Goodwill 49,259 49,259
Other Acquired Assets 38,108 42,470
Other Long-Term Assets 34,433 23,491
----------- -----------
Total Assets $336,305 $331,428
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ----------------------------------------------
Current Liabilities:
Current maturities of long-term debt $96 $319
Life insurance policy loans 8,298 -
Accounts payable 32,867 35,877
Accrued wages and other compensation 8,961 8,338
Other accrued liabilities 36,046 36,884
----------- -----------
Total Current Liabilities 86,268 81,418
Long-Term Debt, less current maturities 85,300 85,096
Other Long-Term Obligations 17,191 15,366
Shareholders' Equity 147,546 149,548
----------- -----------
Total Liabilities and Shareholders' Equity $336,305 $331,428
=========== ===========
Unaudited statements of cash flows for the years ended January 27,
2007 and January 28, 2006
(dollars in thousands):
For Years Ended January 27, January 28,
(Dollars in thousands) 2007 2006
- ----------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Income from continuing operations $3,633 $2,319
Non-cash items included in income from
continuing operations:
Depreciation 15,143 14,865
Amortization 4,498 4,677
Deferred income taxes (406) (1,591)
Cash surrender value of life insurance (1,423) (693)
Gain on sale of assets (3,409) (6,190)
Change in working capital components of
continuing operations, net of businesses
acquired/disposed (13,075) 8,583
Other, net (792) (1,532)
- ----------------------------------------------------------------------
Net cash provided by operating activities of
continuing operations 4,169 20,438
- ----------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property and equipment (8,001) (18,377)
Cost of businesses and assets acquired - (52,930)
Disposals of assets 8,010 9,481
Life insurance premiums paid, net (265) (1,048)
- ----------------------------------------------------------------------
Net cash used in investing activities of
continuing operations (256) (62,874)
- ----------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long-term debt (115,019) (223,015)
Borrowings of long-term debt 115,000 240,200
Repayments of life insurance policy loans (7,801) (24,040)
Borrowings from life insurance policy loans 9,580 53,216
Debt issuance costs (48) (1,466)
Dividends paid (4,161) (4,064)
Stock options exercised 623 1,553
- ----------------------------------------------------------------------
Net cash (used in) provided by financing
activities of continuing operations (1,826) 42,384
- ----------------------------------------------------------------------
CASH FLOWS FROM DISCONTINUED OPERATIONS
Operating cash flows (210) 915
Investing cash flows - 2,588
- ----------------------------------------------------------------------
Net increase in cash and cash equivalents 1,877 3,451
Cash and cash equivalents at beginning of year 4,377 926
- ----------------------------------------------------------------------
Cash and cash equivalents at end of year $6,254 $4,377
======================================================================
MULTIMEDIA AVAILABLE:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=5374294
CONTACT: Angelica Corporation
Jim Shaffer, (314) 854-3800
Chief Financial Officer
or
Integrated Corporate Relations, Inc.
Devlin Lander, (203) 682-8200