CINCINNATI, July 19, 2016 -- Cintas Corporation (Nasdaq: CTAS) today reported results for its fourth quarter and full fiscal year ended May 31, 2016.
Revenue for the fourth quarter of fiscal year 2016 was $1.27 billion, an increase of 11.3% over the prior year period. Organic growth, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and workday differences, was 6.7%. Operating income for the fourth quarter of fiscal year 2016 of $202.9 million increased 14.2% from the prior year period. Operating income margin improved to 16.0% from 15.6% of revenue in last year’s fourth quarter.
Net income from continuing operations for the fourth quarter of fiscal 2016 was $118.0 million compared to $100.6 million in the prior year period, and earnings per diluted share (EPS) from continuing operations for the fourth quarter of fiscal 2016 were $1.08 compared to $0.86 for last year’s fourth quarter. Fourth quarter of fiscal 2016 net income and EPS from continuing operations increased 17.3% and 25.6%, respectively, compared to the prior year period. Net income from continuing operations as a percent of revenue improved to 9.3% from 8.8% in last fiscal year’s fourth quarter.
Scott D. Farmer, Cintas’ Chief Executive Officer, stated, “This year we initiated our first national branding campaign and introduced our new tagline, Ready for the WorkdayTM. This new tagline communicates the value we provide our customers by addressing their business needs with our broad range of products and services. Our fourth quarter results are a reflection of the success of our employees, whom we call partners, in being READYTM for our customers. I’d like to thank our partners for delivering industry-leading growth rates and operating income margins and a significant increase in EPS.”
For the fiscal year ended May 31, 2016, revenue was $4.90 billion, an increase of 9.6% over the prior fiscal year. Organic growth was 6.7%. Operating income for fiscal year 2016 of $781.7 million increased 12.3% from the prior fiscal year. Operating income margin improved to 15.9% from 15.6% of revenue last fiscal year. Net income from continuing operations was $456.9 million compared to $410.5 million in the prior year period, and EPS from continuing operations for fiscal 2016 were $4.09 compared to $3.46 for last fiscal year. Excluding a non-recurring gain in the first quarter of fiscal 2015 of $13.6 million or EPS of $0.11, fiscal 2016 net income and EPS from continuing operations increased 15.1% and 22.1%, respectively, compared to the prior year period. Net income from continuing operations as a percent of revenue improved to 9.3% from 8.9% last fiscal year, excluding the prior year non-recurring gain.
“I am proud to report that we achieved record revenue and EPS in fiscal year 2016,” added Mr. Farmer. “We have increased EPS by double-digits in six consecutive years. Our balance sheet and cash flow remain very strong. In addition, I am pleased with our continued ability to deploy cash to many priorities. In fiscal 2016, those priorities included capex and strategic investments like our SAP project and new branding campaign; acquisitions in our Uniform Rental and Facility Services, First Aid and Fire businesses; a 23.5% increase in the regular dividend; and the repurchase of shares under our buyback program at an aggregate cost of $759.2 million.”
Mr. Farmer concluded, “We expect fiscal 2017 revenue to be in the range of $5.150 billion to $5.225 billion and fiscal 2017 EPS from continuing operations to be in the range of $4.35 to $4.45. This guidance does not include any potential deterioration in the U.S. economy or share buybacks. It does include our expectations for our continued SAP system implementation and the impact of one less workday in fiscal 2017 compared to fiscal 2016.”
The table below provides a comparison of fiscal 2016 revenue and EPS from continuing operations to our fiscal 2017 guidance.
Cintas Corporation helps more than 900,000 businesses of all types and sizes get Ready™ to open their doors with confidence every day by providing a wide range of products and services that enhance our customers’ image and help keep their facilities and employees clean, safe and looking their best. With products and services including uniforms, floor care, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety and compliance training, Cintas helps customers get Ready for the Workday™. Headquartered in Cincinnati, 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, our ability to promptly and effectively integrate acquisitions, including ZEE Medical; our ability to realize any synergies from acquisitions, including ZEE Medical; 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, including the acquisition of ZEE Medical; 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; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; 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; costs of our SAP system implementation; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; 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; and the finalization of our financial statements for the year ended May 31, 2016. 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, 2015 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:
J. Michael Hansen, Vice President-Finance and Chief Financial Officer – 513-701-2079
Paul F. Adler, Vice President and Treasurer – 513-573-4195