Cintas Corporation Announces Fiscal 2011 First Quarter Results
CINCINNATI, September 21, 2010 — Cintas Corporation (Nasdaq:CTAS) today reported its results for the first quarter of its fiscal year 2011. Revenue for the quarter, which ended August 31, 2010, was $924 million, representing a 3.6% increase compared to last year’s first quarter. When adjusting for the impact of acquisitions, the organic revenue growth was 2.8%.
Net income and earnings per diluted share for the quarter were $61 million and $0.40, respectively. Last year’s net income and earnings per diluted share were $54 million and $0.35, respectively. Last year’s first quarter results included a legal settlement, net of insurance proceeds, which reduced net income and earnings per diluted share by $12 million and $0.08, respectively.
First quarter earnings per diluted share were positively impacted by $0.03 due to the resolution of several tax audits which we anticipated would be resolved later in the fiscal year. The resolution of these tax audits during the first quarter resulted in an effective tax rate of 30.8%. We expect tax rates to be higher in subsequent quarters resulting in an annual rate of approximately 37.3%.
Scott D. Farmer, Chief Executive Officer, stated, “We continue to be encouraged by our performance in this period of economic uncertainty and sluggish private sector job growth. We have been able to generate revenue growth by focusing our sales force on both adding new customers and penetrating existing customer accounts with additional products and services.”
Mr. Farmer also announced, “During our first quarter and into September, we purchased 7.6 million shares of our common stock at a cost of approximately $202 million, completing our authorized share buyback program. The total purchases included acquiring 4.9 million shares at a cost of approximately $130 million during the latter part of the first quarter, and the remaining 2.7 million shares were purchased during September at a cost of approximately $72 million. Our strong cash position enabled us to take advantage of the opportunity to complete our program without incurring any additional debt. Going forward, we will continue to use our strong cash generation to take advantage of opportunities that maximize the long-term value of Cintas for our shareholders and working partners.”
The Company’s balance sheet remains very strong. Cash and marketable securities were $369 million at August 31, 2010. The current ratio was 3.8 to one and total debt to total capitalization was 24%.
Mr. Farmer concluded, “Based on our first quarter results, we reiterate our fiscal 2011 revenue expectations to be in the range of $3.55 billion to $3.75 billion. Although the purchases under our share buyback program had no impact on the first quarter results, they will impact our earnings per diluted share for the remainder of the fiscal year. As a result, we now expect fiscal 2011 earnings per diluted share to be in the range of $1.55 to $1.63.”
Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily 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 Press 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, disruptions caused by the unavailability of computer systems, 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, 2010 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, Sr. Vice President-Finance and Chief Financial Officer – 513-573-4211
J. Michael Hansen, Vice President and Treasurer – 513-701-2079