Cintas Corporation Reports Third Quarter Fiscal 2007 Revenue and Earnings
Revenue increases 8%
Earnings Per Diluted
Share increases 7%
CINCINNATI - March 20, 2007 – Cintas
Corporation (Nasdaq:CTAS) today reported revenue
for the third quarter of fiscal 2007 of $905.4
million, an 8.2% increase from the previous year’s
third quarter revenue of $836.4 million. Earnings
per diluted share of $0.48 increased 6.7% from
$0.45 per diluted share last year, and net income
of $76.7 million increased from last year’s
net income of $76.6 million. Current year
net income is being impacted by increased interest
expense related to the Company’s share
buyback program.
Scott D. Farmer, President and Chief Executive Officer, stated, “We posted
solid growth in revenue and profits for our third quarter, delivering 8.2% revenue
growth and 6.7% growth in earnings per diluted share. While all of our
businesses are growing, growth in the third quarter was impacted by three things. First,
the very mild winter weather into early February impacted the seasonal jacket
and mat rental volume that normally occurs in this quarter.
“In addition, we continue to experience economic pressure in our uniform
business due to the continued off-shoring of manufacturing jobs and the ripple
effect this causes to other businesses serving these operations.
“Finally, our new sales force re-organization was completed at the end
of the calendar year. We are encouraged about the early results and the
new organization’s impact on cross-selling and overall improved revenue
growth. In the short term, this change has caused disruption due to the
promotion of many high-performing sales reps into management jobs, the time to
train them in their new roles and the time necessary to develop their newly hired
replacements. The full benefit of this new organization will be felt as
these new sales representatives come up to speed, which is generally a 6-month
to 1-year process.”
Mr. Farmer added, “Despite these top line pressures, we achieved solid
growth and delivered earnings before interest and income taxes of 14.7% of revenue. We
continue to increase our product line and service offerings in all of our businesses. Revenue
growth in our First Aid and Safety, Fire Protection and Document Management businesses
continues to be strong as we expand our geographic presence.”
Share Buyback Program
During the third quarter, Cintas purchased approximately
1.4 million shares of Cintas common stock under
an authorized share buyback program at a cost
of $57 million. Since the inception of
this program, the Company has bought back approximately
14.2 million of the outstanding shares, or
approximately 8% of the total shares outstanding
at the beginning of the program, at a cost
of approximately $580 million. The Company
continues to operate under this program and
has $420 million remaining under its current
authorization.
Strong Balance Sheet
The Company’s balance sheet continues to
be strong. Despite increased debt levels
related to acquisitions and the share buyback
program, debt to total capitalization as of February
28, 2007, was only 30.1%. Cash and marketable
securities were $157.5 million at the end of
the third quarter. As marketable securities
mature, it is the Company’s intention to
use the funds to reduce its outstanding debt
under its commercial paper program, contingent
upon other cash needs. Total shareholders’ equity
was $2.1 billion.
Outlook
Mr. Farmer stated, “Based on our third
quarter results and the continuing economic pressure
on our customer base, we are lowering our current
year revenue and earnings guidance. We
now estimate that revenue for fiscal 2007 will
be $3.675 to $3.725 billion and earnings per
diluted share will be $2.03 to $2.08. We
expect this year will be another record year
at Cintas, which would result in our 38th consecutive
year of growth in sales and earnings.
“We continue to be recognized by our customers and the business community
in general for the services we provide our customers. In fact, we were
recently named the “Most Admired Company” in the diversified outsourcing
industry by FORTUNE magazine. We have consistently ranked among
the top five “Most Admired” organizations in our industry sector
since 2001 and this marks the fourth time we have topped this prestigious list. We
have also been ranked among the “Best Employers in Canada” by Report
on Business magazine in 2007 and were named “Reader’s Choice” as
the best uniform supplier to the food processing industry by Food Processing magazine. This
marks the fifth consecutive year that Cintas received “Golden Supplier” distinction
from food industry professionals.”
Mr. Farmer added, “The accolades that we
receive are a direct result of our employee-partners
servicing our customers every day. We are
excited about the future as we continue to expand
our role as the professional services company
of choice.”
About Cintas
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
513-573-4211
Michael L. Thompson
Vice President and Treasurer
513-573-4133
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