Cintas Corporation Achieves 37th Consecutive Year of Growth in Revenue and Earnings
Total Revenue of $3.4 billion, increase of 11%
Earnings per Diluted Share increases 11.5%
CINCINNATI - July 13, 2006 – (Nasdaq:CTAS) today reported revenue for its fiscal year ended May 31, 2006 of $3.40 billion, an 11 percent increase from previous year revenue of $3.07 billion. Net income of $327.2 million increased 8.9 percent from $300.5 million last year, and earnings per diluted share of $1.94 increased 11.5 percent from $1.74 per diluted share last year.
For the fourth quarter ended May 31, 2006, revenue was $908 million, a 12.2 percent increase over prior year fourth quarter revenue of $809 million. Fourth quarter net income of $92 million increased 10.8 percent from $83 million in last year’s fourth quarter, and earnings per diluted share increased 14.6 percent to $0.55 per diluted share from $0.48 per diluted share in last year’s fourth quarter.
Scott D. Farmer, President and Chief Executive Officer, stated, “I am proud to report another record year at Cintas. By striving to exceed our customers’ expectations on a daily basis, our 32,000 employee partners have provided Cintas with our 37th consecutive year of growth in both revenue and earnings.
“We continue to become a more valuable resource to our customers by taking care of important details for them, adding new products and services as we find opportunity. For example, during our fiscal year 2006 we added a restroom cleaning service, a service we call Sanis UltraClean, to our growing list of business services. After an initial test of this service, we have successfully rolled out this new service throughout the United States and Canada. This service is just another example of how we continue to evolve as “Cintas, The Service Professionals”. Our expanding distribution network now extends to over 93% of the population in the United States and Canada. Be it uniform rental or sales programs, entrance mat programs, restroom supply or cleaning services, first aid and safety supplies, fire protection equipment and services or document management services, we believe all businesses in North America can use at least one, and many times more than one, of the products and services that we offer.”
During February 2006, Cintas announced the acquisition of certain assets of Van Dyne Crotty, Inc. In providing an update on that acquisition, Mr. Farmer commented, “We have been very pleased with this acquisition and are at or ahead of schedule in all aspects of assimilating their business with ours. As of May 31, 2006, the Van Dyne Crotty corporate functions have been completely assimilated into Cintas.”
Mr. Farmer stated, “We continue to be excited about the growth opportunities in all of our businesses. We currently service approximately 700,000 business customers, the majority of whom only use one or two of our services. In addition there are approximately 14 million businesses in the United States and Canada alone, which means we are only doing business with 5 percent of these businesses.
“Despite higher energy costs, our gross margins improved to 42.7 percent for the year, up from 42.5 percent for the prior year and to 43.6 percent for the fourth quarter as compared to 43.1 percent for the fourth quarter of fiscal 2005. Our after-tax margins remained healthy, at 9.6 percent of sales for the year and 10.1 percent for the fourth quarter.”
The Company’s balance sheet remains strong. Current assets at May 31, 2006, exceeded current liabilities by approximately $766 million, almost a three to one ratio. Debt to total capitalization was 27.6 percent at May 31, 2006, versus 18.3 percent as of May 31, 2005. The increased borrowings were due to the acquisition of certain assets of Van Dyne Crotty and additional purchases under the Company’s stock repurchase program. Mr. Farmer commented, “On May 2, 2005, the Company announced that our Board of Directors authorized a $500 million stock repurchase program at market prices. The Company has now expended approximately $496 million of the $500 million authorized repurchase level.”
Mr. Farmer stated, “We are also proud to be included in NASDAQ’s newly created Global Select Market. The Global Select Market has the highest initial listing standards of any exchange in the world based on financial and liquidity requirements. Our inclusion in this newly created market is a further testament to our results.”
Mr. Farmer commented, “We expect revenue for fiscal 2007 to be in the range of $3.77 billion to $3.85 billion, with full year earning per share (diluted) in the range of $2.10 to $2.20. These ranges assume a steady economy with no significant increases in energy costs from the levels seen in the fourth quarter.”
Mr. Farmer continued, “We believe the future continues to be bright for Cintas, with opportunities within our current customer base as well as opportunities with new customers. We will also continue to search out additional products and services to become an even more valuable resource for our customers. We look forward to the challenges of fiscal 2007 with the intention of continuing our track record of consecutive growth in sales and profits.”
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