Cintas Corporation Reports Growth in First Quarter Fiscal 2006 Revenue and Earnings
Total Revenue increases 10.4%
Earnings Per Share increases 11.9%
CINCINNATI, OH, September 21, 2005 – Cintas Corporation (Nasdaq:CTAS) today reported revenue for the first quarter of fiscal 2006 of $823.5 million, a 10.4 percent increase from last year’s revenue of $746 million. The Company also reported a 9.5 percent increase in net income of $79.5 million compared to $72.7 million last year. Earnings per diluted share of $.47 increased 11.9 percent from last year’s $.42 per diluted share.
Scott D. Farmer, Chief Executive Officer of Cintas, stated, “On behalf of our Cintas employee-partners, I am proud to report these solid results for the first quarter of fiscal 2006. We grew our total revenue at a double-digit pace. Rental revenue increased 8 percent while Other Services revenue grew 19 percent over the previous year. We continued to show steady improvement in the Company’s organic growth rate. This quarter’s organic growth rate of 8.4 percent compares to 7.5 percent in the fourth quarter of fiscal 2005.”
Mr. Farmer continued, “Gross margins continued to strengthen as well, rising to 43.2 percent compared to 42.7 percent in last year’s first quarter. These margins reflect continued cost reductions and productivity improvements from our Six Sigma initiatives, better capacity utilization and progress in building new business services platforms. These solid results reflect the teamwork and spirit, which our employee-partners exhibit every day at Cintas. We appreciate all of the efforts put forth by our employee-partners across our Company.”
STOCK REPURCHASE PLAN
In the first quarter, the Company continued its stock repurchase program that the Board of Directors had authorized and announced in May 2005. During the quarter, the Company purchased approximately 2.6 million shares. To date, the Company has purchased approximately 4.4 million shares at an average price of approximately $39.50 per share.
STRONG BALANCE SHEET
As of August 31, 2005, the Company had $258 million in cash, cash equivalents and marketable securities, and total debt to capitalization was 19.8 percent. Total shareholders’ equity stood at $2.1 billion as of August 31st.
REVENUE AND EARNINGS GUIDANCE
Mr. Farmer stated, “We are continuing to assess the impact of Hurricane Katrina on our operations. While damage to our facilities appears, at this point, to be minimal, the impact on our employee-partners and customers in the affected areas continues to be a major concern to the Company. We are assisting our employee-partners at our operations in New Orleans and Gulfport through salary continuation and other financial assistance. The ultimate cost of this assistance, combined with lower business volume at the affected operations, will have an impact on our results.”
Mr. Farmer continued, “Additionally, the rapid increase in the cost of energy could impact our results, unless such costs return to levels seen in our first quarter. All of these factors will impact our Fiscal 2006 results. Although it is too early to know the exact impact, we are reiterating our original revenue and earnings per share guidance for Fiscal 2006. That guidance is for revenue to be in the range of $3.35 billion to $3.45 billion with full year earnings per share (diluted) in the range of $1.95 to $2.05. However, at this point, our preliminary analysis of the impact of Hurricane Katrina, as well as higher energy costs, could move us to the low end of our earnings per share range. Despite this setback in the Gulf Coast region, our Company is very strong financially and Cintas partners are pulling together as is characteristic of our culture.”
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, 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, the disruption of operations from catastrophic events 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 CFO
Karen L. Carnahan
Vice President and Treasurer