Cintas Corporation Reports Third Quarter Sales and Profits
Rental Organic Growth Accelerates to 7.5 percent, adjusted for 1 less workday
Other Services Revenue rises over 15 percent
Gross Margins improve despite higher energy costs
CINCINNATI, OH, March 17, 2005 – (Nasdaq:CTAS) today reported revenue for the third quarter of fiscal 2005 of $755 million, an 8.4 percent increase from the previous year’s third quarter revenue of $697 million. Net income of $71.3 million increased 7.3 percent from $66.5 million last year and earnings per share of $.41 increased 5 percent from $.39 last year.
Scott D. Farmer, President and Chief Executive Officer, stated, “We are pleased to report another solid quarter of performance. Our rental revenue grew 7.5 percent on an organic basis when adjusted for one less workday this quarter, up from an organic growth rate of 6.0 percent in the second quarter and 5.8 percent in the first quarter of this fiscal year. Other services revenue, which is primarily the sale of uniforms and first aid and safety products and services, rose 15.5 percent during the quarter, and 5.7 percent organically when adjusted for the one less workday. Total revenue for the company increased 8.4 percent on a reported basis and 7.1 percent on an organic basis when adjusted for the one less workday.”
Mr. Farmer continued, “Our revenue growth continues to accelerate as we add more new customers across all of our business divisions. Recently, we expanded our product and service offerings even further by adding fire protection services, such as fire extinguishers, and further expanding our new Document Management Division to include document storage. The product and service offerings we have today give us the opportunity to achieve our goal of providing a service to every business in the United States and Canada, which encompasses more than 14 million businesses. Today, we serve only 700,000 of those businesses. We are truly expanding into a broader-based business services company as reflected in the recent change in our tagline from “Cintas, The Uniform People” to “Cintas, The Service Professionals”.
Mr. Farmer said, “For the quarter, our gross margins were a solid 42.6 percent versus 42.4 percent of revenue in the third quarter last year. This was achieved despite higher energy prices. In the quarter, selling, general and administrative costs increased to 27.0 percent from 26.5 percent of revenue in the third quarter last year, primarily as a result of continuing to increase our investment in sales and marketing programs and higher healthcare benefit costs.”
Strong Balance Sheet
The Company’s balance sheet continues to strengthen. Debt to total capitalization was 18.5 percent as of February 28, 2005, versus 21.8 percent as of February 29, 2004. Cash and marketable securities climbed to $368 million as of February 28, 2005, compared to $249 million a year ago, or a 48 percent increase. Total shareholders’ equity was $2.1 billion as of February 28, 2005.
Mr. Farmer commented, “We have tightened our guidance for the remainder of fiscal 2005, which is within the guidance we provided at the beginning of this fiscal year. For fiscal 2005, which ends May 31, 2005, our forecast is for revenue to be in a range of $3.05 to $3.07 billion compared to fiscal 2004’s revenue of $2.81 billion. Our guidance for earnings per share is $1.71 to $1.75 compared to $1.58 for fiscal 2004.”
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 & Poors 500 Index. The Company has achieved 35 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, should 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 this news release. Factors that might cause such a difference include the possibility of greater than anticipated operating costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor, costs and possible effects of union organizing activities, outcome of pending environmental matters, the cost, results and timely completion of assessment and remediation 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 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
Karen L. Carnahan
Vice President and Treasurer