Cintas Corporation Announces Third Quarter Fiscal 2009 Results
CINCINNATI, March 18, 2009 — Cintas Corporation (Nasdaq: CTAS) today reported results for its third quarter of fiscal 2009, which ended on February 28, 2009. Revenue for the third quarter was $909 million, a 7% decrease from fiscal 2008 third quarter revenue of $976 million. Net income of $72 million decreased 12% from the prior year third quarter while diluted earnings per share were $0.47, an 11% decrease as compared to the third quarter of last fiscal year.
Scott D. Farmer, Chief Executive Officer of the Company, stated, “The economic environment continues to be very challenging. The U.S. economy lost 4.4 million jobs since the beginning of the recession in December 2007, with approximately 3.7 million of those jobs lost during the last six months alone. Our customers are reducing head count and closing facilities, which has negatively impacted our revenue. We have not seen such a sudden and dramatic change in our business since we started our company in 1968.
"In response to these conditions, we are actively reducing our cost structure and right-sizing our entire organization. We have reduced our operating costs and selling and administrative expenses by approximately $50 million in the quarter as compared to last year. By streamlining our processes and procedures we have been able to reduce our headcount by over 9%."
In December, the Company announced the closure of two manufacturing facilities. Severance and closing costs related to those closures and additional cost reduction measures totaled approximately $4 million during the third quarter. The Company also indicated that revenue during the third quarter was negatively impacted by approximately 1% due to the impact of a weaker Canadian dollar.
While the operating environment is challenging, the Company continues to explore strategic expansion opportunities, when appropriate valuations exist. In that regard, Mr. Farmer stated, "I am pleased to announce that we have acquired Aktenmühle, a document management business headquartered in Munich, Germany. Aktenmühle services customers in most of the major cities in Germany. This acquisition is our second expansion of our document management services into Europe, as we purchased our first company in the Netherlands a little more than a year ago. We will continue to look for other expansion opportunities for our document management business, both domestically and abroad."
Cintas continues to generate strong cash flow and maintain a solid balance sheet position. Net cash provided by operations was $340 million through the third quarter, and the Company’s current ratio was 3.2 to 1 as of February 28, 2009. The strong cash flow and balance sheet position allowed the Company to reduce outstanding debt by $84 million during the third quarter, paying off its remaining borrowings under its commercial paper program. This reduction in outstanding debt improved the Company’s debt to total capitalization ratio to 25% as of February 28, 2009.
On March 11, 2009, the Company paid its annual dividend to shareholders. The Company increased its dividend payment to $0.47 cents per share, continuing a tradition of raising its dividend every year since going public in 1983.
In closing, Mr. Farmer stated, "Our top priority continues to be to take care of our customers, providing them valuable products and superior service. We will also continue to aggressively manage our cost structure and streamline our organization, while maintaining a strong balance sheet and cash flow."
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, safety, fire protection products and 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 & Poor’s 500 Index.
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 words, terms and 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. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Quarterly Report. 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, investigations or other proceedings, higher assumed sourcing or distribution costs of products, the disruption of operations from catastrophic or extraordinary events, changes in federal and state tax and labor laws and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2008 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.
For additional information, contact:
William C. Gale
Senior Vice President-Finance and Chief Financial Officer
Michael L. Thompson
Vice President and Treasurer