Cintas Corporation Reports Second Quarter Fiscal 2006 Revenue and Earnings
- Total Revenue increases 10.4%
- Earnings Per Share increases 7.0%
CINCINNATI - December 22, 2005 – Cintas Corporation (Nasdaq: CTAS) today reported healthy increases in revenue and profits in spite of the business interruption caused by hurricanes in the Gulf Coast region and escalating energy prices. Revenue for the second quarter of fiscal 2006 of $835.8 million increased 10.4 percent compared to last year’s revenue of $756.8 million. The Company also reported a 6 percent increase in net income of $78 million compared to $73.6 million last year. Earnings per diluted share of $.46 increased 7 percent from last year’s $.43 per diluted share.
Scott D. Farmer, Chief Executive Officer of Cintas, stated, “I am proud to report these solid results for the second quarter of fiscal 2006, which are a tribute to the hard work, dedication and team spirit of Cintas employee-partners throughout North America. In the aftermath of the devastating hurricanes in the Gulf Coast region, Cintas partners rallied together to help one another while continuing to provide important services to our customers.”
Mr. Farmer continued, “During the second quarter, we grew our total revenue at a double-digit pace, or 10.4 percent. Rental revenue increased 8.2 percent while Other Services revenue grew 18 percent over the previous year. Total organic growth was 8 percent and would have been more than 8.5 percent if the hurricanes had not disrupted our business. In addition, gross margins strengthened from 41.7 percent to 41.9 percent. Once again, these results reflect historically high energy costs, which increased 24 percent, or .6 percent of revenues, versus the first quarter of the fiscal year.”
For the six months ended November 30, revenue of $1.66 billion increased 10.4 percent compared to $1.5 billion, while earnings per share rose 9.4 percent from $.85 per diluted share to $.93 per diluted share. Mr. Farmer commented, “All of our business services are growing nicely. Cintas is well-positioned to provide a service to every business in North America, which has an estimated $42.5 billion potential market for all of our products and services.”
STRONG BALANCE SHEET
REVENUE AND EARNINGS GUIDANCE
As of November 30, 2005, the Company had $256 million in cash and marketable securities. During the quarter, the Company also purchased an additional 288,400 shares of its stock. To date, the Company has purchased 4,360,930 shares of its stock at an average price of $39.53 per share. Total debt to capitalization dropped to 17.7 percent, reflecting the repayment of all commercial paper which the Company had utilized for its share repurchase program. Total shareholders’ equity stood at $2.2 billion as of November 30, 2005.
Mr. Farmer stated, "Our financial results have taken the full brunt of the negative impact of the hurricanes that hit the Gulf Coast region. We have not settled any of these losses with the insurance company, nor have we recognized any anticipated settlements in our financial statements. At this point, we do not have a clear indication of when a settlement agreement will be reached with our insurance carrier."
Mr. Farmer continued, “Additionally, the rapid increase in the cost of energy has impacted our results. Although there has been a mild retreat in gasoline prices, we anticipate continued cost pressures from energy prices. However, we are still reiterating our original revenue guidance for Fiscal 2006. That guidance is for revenue to be in the range of $3.35 billion to $3.45 billion. We are refining our full year earnings per share (diluted) guidance to be in the range of $1.93 to $2.00 because of the negative impact of the hurricanes as well as higher energy prices.”
Headquartered in Cincinnati, Ohio, Cintas Corporation provides highly specialized services to businesses of all types throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, 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 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 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 CFO
Karen L. Carnahan
Vice President and Treasurer