Cintas Corporation Achieves 38th Consecutive Year of Growth in Revenue and Earnings
Total Revenue of $3.7 billion, increase of 8.9%
Earnings per Diluted Share also increases 8.9%
CINCINNATI - July 18, 2007—Cintas
Corporation (Nasdaq:CTAS) today reported revenue for its fiscal year ended May 31, 2007, of $3.7 billion, an 8.9 percent increase from previous year revenue of $3.4 billion. Net income of $334.5 million increased 3.4 percent from $323.4 million last year, and earnings per diluted share of $2.09 increased 8.9 percent from $1.92 per diluted share last year.
For the fourth quarter ended May 31, 2007, revenue was $964.1 million, a 6.2 percent increase over prior year fourth quarter revenue of $907.9 million. Fourth quarter net income of $90.3 million decreased 1.3 percent from $91.5 million in last year’s fourth quarter due to higher interest costs related to increased long-term debt levels, while earnings per diluted share increased 3.6 percent to $0.57 per diluted share from $0.55 per diluted share in last year’s fourth quarter.
Scott D. Farmer, President and Chief Executive Officer, stated, “I am pleased to announce that we have recently completed our 38th consecutive year of growth in both revenue and earnings. This achievement is due to the dedication and effort put forth by our 34,000 employee-partners. They are our driving force, enabling us to provide world-class service to approximately 800,000 business customers.
“Our efforts and success as a company continue to be recognized. This year we were again selected by FORTUNE magazine as one of “America’s Most Admired Companies” and were listed as the number one company in the “Diversified Outsourcing Industry” category. We were presented the Matthew 25 Ministries “Humanitarian Hall of Fame Award” for our assistance to this charitable organization. And, we were ranked as one of the top military-friendly businesses as chosen by G.I Jobs magazine.”
Addressing current year results, Mr. Farmer stated, “We experienced economic pressure throughout the year from the continued off-shoring of manufacturing jobs as well as the ripple effect felt at other customers that serve these manufacturing businesses. In addition, the restructuring of our sales force has taken longer and been more costly in the current year than we anticipated. Despite these conditions, we achieved 8.9 percent revenue growth and experienced growth in all of our business units.”
Mr. Farmer added, “We are a leader in business services, with a wide array of products and services for businesses of any size and any type. There is hardly a business or industry that you can think of that does not need one or more of our products and services. With approximately 14 million businesses in the United States and Canada and our vast field presence allowing us to reach over 90% of the population, we continue to be excited about our future growth opportunities, especially as our new sales organization gains strength.”
The Company’s gross margin for the year was 42.7 percent, which is consistent with the level attained in fiscal 2006. Selling and administrative expenses increased from 26.8 percent of revenue to 27.1 percent of revenue, reflecting increased medical costs and the increased investment in our sales organization. Net income for the year was 9.0 percent of revenue versus 9.5 percent of revenue in fiscal 2006, reflecting increased interest expense on higher long-term debt levels taken on to fund acquisitions and share buybacks. Income before interest and taxes was 15.6 percent of revenue.
The Company’s balance sheet remains strong. Current assets at May 31, 2007, exceeded current liabilities by approximately $754 million, almost a three to one margin. Debt to total capitalization was 28.9 percent at May 31, 2007, versus 27.6 percent as of May 31, 2006.
Mr. Farmer stated, “We are excited with the opportunities ahead of us, especially as our new sales organization generates improved levels of new business as we progress through fiscal 2008. We expect revenue for fiscal 2008 to be in the range of $3.9 billion to $4.1 billion, with full year earnings per diluted share in the range of $2.15 to $2.25.”
Mr. Farmer continued, “In addition to striving for these financial results, we continue to focus on the long-term best interests of the Company for the benefit of our customers, our employee-partners and our shareholders. By emphasizing customer service, we will build on existing customer relationships, providing them with more of our products and services. We will continue to expand our customer base as we introduce our products and services to new prospects and as we make strategic acquisitions. And, we will continue to find additional products and services to become an even more valuable resource to businesses of all types. While there will certainly be challenges along the way, we are confident that we have the products, the capital and, most importantly, the people to continue our success.”
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 800,000 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 and Poor’s 500 Index. The Company has achieved 38 consecutive years of growth in revenue 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”, “predicts”, “projects”, “plans”, “expects”, “intends”, “target”, “forecast”, “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, loss of customers due to outsourcing trends, 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, failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety, 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 whether as a results of new information or to reflect events or circumstances arising after the date on which they are made. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8K and 10-K reports to the SEC.
For additional information, contact:
William C. Gale
Senior Vice President-Finance
and Chief Financial Officer
Michael L. Thompson
Vice President and Treasurer