Cintas Corporation Announces Fiscal 2014 First Quarter Results
CINCINNATI, September 19, 2013 — Cintas Corporation (Nasdaq:CTAS) today reported revenue for its first quarter ended August 31, 2013, of $1.12 billion, a 6.6% increase compared to last year’s first quarter. Adjusting for one less workday in this year’s first quarter compared to last year’s first quarter, revenue grew 8.2%. Organic growth, which adjusts for the impact of acquisitions and the impact of one less workday, was 7.1%.
Scott D. Farmer, Chief Executive Officer, stated, “We are pleased to report a solid start to our fiscal 2014 year. All four of our operating segments had strong revenue performance in the first quarter, with each segment reporting organic growth of better than six percent.”
Operating income increased to $140.1 million, or 12.5% of revenue. The operating margin of 12.5% was lower than last year’s first quarter operating margin of 13.2% due to the effects of one less workday in this year’s first quarter, route capacity added in fiscal 2013 and lower recycled paper prices. Net income increased 1.3% to $77.8 million as compared to $76.7 million in last year’s first quarter. Earnings per diluted share (EPS) for the first quarter were $0.63, a 5.0% increase over the $0.60 EPS in last year’s first quarter.
During the first quarter and into September, Cintas purchased 3.0 million shares of its common stock at a cost of approximately $147.0 million. The total purchases included acquiring 2.1 million shares at a cost of approximately $100.7 million during the latter part of the first quarter, and the remaining 0.9 million shares were purchased through September 19, 2013, at a cost of approximately $46.3 million. While it had no impact on the first quarter EPS, the share buyback is expected to benefit fiscal year 2014 EPS by approximately $0.04. The Cintas Board of Directors authorized a $500.0 million share buyback program in October 2011 and approved an additional share repurchase program of $500.0 million on July 30, 2013. As of September 19, 2013, the Company had available for future share repurchases $15.4 million under the October 2011 share buyback program and $500.0 million under the July 2013 program.
Mr. Farmer concluded, “When we introduced our fiscal 2014 guidance in July, we indicated our outlook was based on an uncertain U.S. economic landscape which caused delays to the hiring and investment decisions of our customers. We have not seen any evidence since that time to change our outlook of the U.S. economy. With that in mind, we reiterate our fiscal 2014 revenue expectations to be in the range of $4.5 billion to $4.6 billion. We are updating our full year EPS guidance to incorporate the impact of the share buybacks through September 19, 2013. As a result, we now expect EPS to be in the range of $2.70 to $2.79. This guidance assumes no deterioration in the U.S. economy and does not consider any additional share buybacks. It does incorporate the impact of having one less workday in fiscal 2014 compared to fiscal 2013 and our current estimate of the impact of the Affordable Care Act on our cost structure during fiscal year 2014.”
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 over one million businesses. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a 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 and fuel 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 inaccessibility of computer systems data, 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, the amount and timing of repurchases of our common stock, if any, changes in federal and state tax and labor laws, the reactions of competitors in terms of price and service, the ultimate impact of the Affordable Care Act and the finalization of our financial statements for the quarter ended August 31, 2013. 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, 2013 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
J. Michael Hansen
Vice President and Treasurer