Cintas Corporation Reports Third Quarter Fiscal 2006 Revenue and Earnings
Total Revenue increases 10.7%
Earnings Per Diluted Share Increases 12.2%
CINCINNATI - March 16, 2006 – Cintas Corporation (Nasdaq:CTAS) today reported revenue for the third quarter of fiscal 2006 of $836 million, a 10.7 percent increase from the previous year's third quarter revenue of $755 million. Net income of $77.7 million increased 9.0 percent from $71.3 million last year and earnings per diluted share of $.46 increased 12.2 percent from $.41 per diluted share last year.
Scott D. Farmer, President and Chief Executive Officer, stated, "On behalf of our Cintas employee partners, I am proud to report another quarter of solid results. We achieved double-digit growth in our business and delivered increased profit. For the third quarter, our revenue grew about 8 percent on an organic basis. Our gross margins were strong at 42.2 percent, up from 41.9 percent in the second quarter of fiscal 2006. These results continue to reflect historically high energy costs, which increased approximately 8 percent, or 0.3 percent of revenue, from the second quarter of fiscal 2006. In fact, energy costs have risen 39 percent, or 0.8 percent of revenue, from the third quarter of fiscal 2005."
For the nine months ended February 28, 2006, revenue of $2.50 billion increased 10.5 percent compared to $2.26 billion over the prior year, while earnings per share rose to $1.39 per diluted share from $1.26 per diluted share, a 10.3 percent increase over the prior year.
Mr. Farmer added, "We recently announced our acquisition of certain assets of Van Dyne Crotty, Inc. This acquisition closed three weeks prior to the end of the quarter and we are very pleased with the results and integration progress to date. The Van Dyne Crotty acquisition demonstrates our commitment to the uniform rental industry, but we also continue to expand into other products and services which capitalize on our service expertise and infrastructure. Recently, we expanded our services even further by offering our new Sanis Ultra-Clean service, a restroom cleaning service. We are excited about the long-term potential of this service, which is yet another example of how we have truly become "Cintas, The Service Professionals".
Cintas was also recently included in the NASDAQ Dividend Achievers Index, a new index designed for dividend-focused investors to track the performance of U.S. companies which are listed on NASDAQ and meet certain long-term dividend performance criteria. Mr. Farmer commented, "Our inclusion in this Index is a tribute to our track record of increasing our annual dividend every year since we went public in 1983. During that timeframe, we have increased our dividend by 21 percent on a compound annual basis. We are honored to be identified and included in this new Index."
Strong Balance Sheet
The Company's balance sheet continues to be strong. Despite the increased debt related to the acquisition of certain Van Dyne Crotty assets, debt to total capitalization is only at 22.6 percent as of February 28, 2006, versus 18.5 percent as of February 28, 2005. Cash and marketable securities were $251 million as of February 28, 2006, compared to $368 million a year ago. Total shareholders' equity was $2.2 billion as of February 28, 2006.
Mr. Farmer commented, "Our financial results continue to be negatively impacted by the hurricanes that hit the Gulf Coast region. We are actively pursuing settlement of our losses with our insurance carrier and to date have not offset these losses in our financial statements. Additionally, the rapid rise in energy costs during this fiscal year continues to impact our results and we anticipate continued cost pressure in this area."
Headquartered in Cincinnati , Cintas Corporation provides highly specialized services to businesses of all types throughout North America . Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, promotional products, first aid and safety products, fire protection services and document management services for approximately 700,000 businesses. Cintas is a publicly held company traded over the Nasdaq National Market under the symbol CTAS, and is a Nasdaq-100 company and component of the Standard & Poor's 500 Index. The Company has achieved 36 consecutive years of growth in sales and earnings, to date.
Caution Concerning Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as "estimates", "anticipates", "projects", "plans", "expects", "intends", "believes", "seeks", "could", "should", "may", and "will" or the negative versions thereof and similar expressions and by the context in which they are used. Such statements are based upon current expectations of the Company and speak only as of the date made. These statements are subject to various risks, uncertainties and other factors that could cause actual results to differ from those set forth in or implied by this news release. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including fuel costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor including medical costs, costs and possible effects of union organizing activities, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002, the initiation or outcome of litigation, higher assumed sourcing or distribution costs of products, the disruption of operations from catastrophic events, changes in federal or state tax laws and the reactions of competitors in terms of price and service. Forward-looking statements speak only as of the date made. Cintas undertakes no obligation to update any forward-looking statements to reflect the events or circumstances arising after the date on which they are made.
For additional information, contact:
William C. Gale
Senior Vice President-Finance and Chief Financial Officer