Cintas Corporation Reports First Quarter Fiscal 2007 Revenue and Earnings
Revenue increases 11%
Earnings Per Diluted Share increases 15.2%
CINCINNATI - September 20, 2006 – (Nasdaq:CTAS) today reported revenue for the first quarter of fiscal 2007 of $914.2 million, an 11.0% increase from the previous year’s first quarter revenue of $823.5 million. Net income of $85.0 million increased 8.3% from $78.4 million last year and earnings per diluted share of $0.53 increased 15.2% from $0.46 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 our first quarter results. We have again achieved double-digit revenue growth and delivered strong operating margins, despite increases in energy costs. Our earnings before interest and taxes improved a healthy 11.8% over the first quarter of fiscal 2006.”
Mr. Farmer continued, “The implementation of our new sales structure, which we announced a few months ago, continues to be on schedule. This new structure is designed to develop additional cross-selling opportunities and improve sales productivity. The new sales organization, in conjunction with our vast product and service offerings, is expected to drive improvements in future internal growth.”
Strong Balance Sheet
The Company’s balance sheet continues to be strong. Despite increased debt levels related to acquisitions made in late fiscal 2006 and the Company’s share repurchase program, debt to total capitalization as of August 31, 2006 was only 29%. Cash and marketable securities were $175 million as of August 31, 2006. Total shareholders’ equity was $2.05 billion.
Adoption of FAS Statement No. 123(R)
During the first quarter of fiscal 2007, the Company adopted FAS Statement No. 123(R), Share-Based Payment. This statement requires all share based payments to employees, including grants of employee stock options, to be recognized as an expense in the statement of income based on their fair values. The Company adopted this statement using the modified retrospective method, which included the restatement of prior periods. This adoption lowered earnings per diluted share for the first quarter of fiscal 2006 from $0.47 per diluted share to $0.46 per diluted share.
Mr. Farmer commented, “Based on our sales results through the first quarter, a leveling off of energy costs as compared to the fourth quarter of fiscal 2006 and a less active hurricane season to date, we reiterate our fiscal 2007 guidance which calls for fiscal 2007 revenue of $3.77 to $3.85 billion and diluted earnings per share of $2.10 to $2.20. We expect fiscal 2007 to be another record year at Cintas, which would result in our 38th consecutive year of growth in sales and earnings.”
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 Global Select Market under the symbol CTAS, and is a Nasdaq-100 company and component of the Standard & Poor’s 500 Index. The Company has achieved 37 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 Cintas 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 energy costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor including increased 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, the cost, 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 and state tax laws and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to update any forward-looking statements to reflect 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
Michael L. Thompson
Vice President and Treasurer