CINCINNATI, March 20, 2003 -- Cintas Corporation (Nasdaq:CTAS) today reported that total revenue for its fiscal third quarter ended February 28,2003, increased 22 percent to $664 million from $545 million a year ago. Net income of $59 million for the third quarter increased 6 percent from $56 million reported in last year's third quarter. Earnings per share advanced 6 percent to 34 cents per share (diluted) from 32 cents.
For the quarter, rental revenue grew 23 percent while other services revenue, which includes uniform sales, was up 17 percent. The company noted that there was one more workday in this year’s third quarter versus last year. On a comparable basis, rental revenue and other services revenue rose 21 percent and 15 percent, respectively. After adjusting for acquisitions, total revenue of $664 million grew organically by 4 percent.
Robert J. Kohlhepp, Chief Executive Officer of Cintas, noted, “February was another terrible month for employment. The number of people employed decreased by over 300,000, one of the largest drops in employment in the last twenty years. Many of these new, unemployed people were wearing Cintas uniforms. This shrinkage in the number of people employed by our customers has continued to put pressure on our sales. In spite of this, our sales increased organically by 4 percent and profits increased by 6 percent. Our four business services—uniform rental, uniform sales, facility services and first aid and safety—are running very well. We are confident in our ability to continue to grow both sales and profits.”
Strong Margins / Strong Balance Sheet
Gross margins of 41.3 percent were strong in spite of higher
energy and employee benefit costs. These higher costs were
partially offset by the synergies realized from the integration
of Omni Services, an acquisition made in May 2002. To date,
Cintas has consolidated more than one-half of Omni’s
rental facilities. In addition, all of the customer service
systems, including ordering, billing and collection, for the
new customers obtained through the acquisition have been converted
to Cintas’ computer and operating systems. In January,
Omni’s payroll systems were converted to Cintas’
platform and the Omni headquarters operation was closed.
The Company’s balance sheet is strong and the company has reduced its long-term debt to total capitalization from 33 percent at May 31, 2002, to 27 percent at February 28, 2003. Through the end of our third quarter, the company has reduced the amount of its commercial paper outstanding by paying down $170 million, or 65%, of the peak level borrowed in early May 2002 to finance the Omni acquisition. Shareholders' equity reached $1.6 billion, up from $1.4 billion last year.
Nine Months Results
For the first nine months of fiscal 2003, total revenue advanced
21 percent to $2.01 billion from $1.67 billion in the comparable
prior period. Net income increased 8 percent to $184 million,
or $1.07 per share (diluted) versus $170 million, or 99 cents,
last year.
"Cintas has reported 33 consecutive years of uninterrupted growth in sales and profits, and we are confident that fiscal 2003 will continue that record, " Kohlhepp said.
Mr. Kohlhepp continued, “We remain very enthused about our long-term prospects because of our leadership position in our markets and the significant market potential in all of our businesses. Cintas is well-positioned to tap a $31 billion potential market for uniform rentals, uniform sales, facility services and first aid and safety services. We are confident that once the external forces negatively impacting the North American economy are eliminated, Cintas will return to its historical growth rate and profitability level.”
Outlook
Mr. Kohlhepp commented, “We are reiterating our previous
guidance for fiscal 2003 for total revenue to be in a range
of $2.675 to $2.725 billion compared to $2.27 billion last
year. Earnings per share are forecast to be $1.43 to $1.50
versus $1.36 last year.”
Cintas Named One of “America’s
Most Admired Companies” for Third Consecutive Year
Fortune Magazine recently recognized Cintas Corporation as
one of “America’s Most Admired Companies”
for the third consecutive year. Cintas was also ranked in
the top 3 of all U.S. companies in long-term investment value
and use of corporate assets. Mr. Kohlhepp commented, “This
recognition is a direct reflection of our unique culture that
respects our employee-partners, focuses on our customers,
and promotes a spirit of teamwork and cooperation. It is the
reason people want to work at Cintas and customers want to
do business with us. It is the basis for our success over
the past 33 years and the reason we will continue to be successful
in the future.”
About Cintas
Headquartered in Cincinnati, Cintas Corporation is the leader
in the corporate identity uniform industry providing uniforms
to a wide variety of industries nationwide. The Company also
provides a range of outsourcing services including entrance
mats, sanitation supplies, cleanroom services and first aid
and safety products and services. Cintas is a publicly held
company traded over the Nasdaq National Market under the symbol
CTAS, and is a Nasdaq-100 company and component of the Standard
& Poor’s 500 Index. The Company has achieved 33
consecutive years of growth in sales 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. This news release contains
forward-looking statements that reflect the Company's current
views as to future events and financial performance with respect
to its operations. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those set forth in this news release. Factors that might
cause such a difference include the possibility of greater
than anticipated operating costs, lower sales volumes, the
performance and costs of integration of acquisitions, including,
without limitation, the recent acquisitions of Omni Services,
Inc., and certain assets of Angelica Corporation, fluctuations
in costs of materials and labor, the outcome of pending environmental
matters, the initiation or outcome of litigation, higher assumed
sourcing or distribution costs of products and the reactions
of competitors in terms of price and service. Forward-looking
statements speak only as of the date made. Cintas undertakes
no obligation to update any forward-looking statements to
reflect the events or circumstances arising after the date
on which they are made.
For additional information, contact:
William C. Gale
Vice President-Finance and CFO
(513)573-4211
Karen L. Carnahan
Vice President and Treasurer
(513)573-4013
| Cintas
Corporation Consolidated Condensed Statements of Income
(Unaudited) (In thousands except per share data) |
||||||
Three Months Ended
|
Nine Months Ended | |||||
| Feb 28, 2003 | Feb 28, 2002 | % Chng. | Feb 28, 2003 | Feb 28, 2002 | % Chng. | |
| Revenue: | ||||||
| Rentals | $523,195 | $425,296 | 23.0 | $1,573,162 | $1,291,076 | 21.9 |
| Other services | 140,562 | 120,195 | 16.9 | 437,279 | 376,163 | 16.3 |
|
$663,757 | $545,491 | 21.7 | $2,010,441 | $1,667,239 | 20.6 |
| Costs and expenses (income): | ||||||
| Cost of rentals | $293,938 | $230,627 | 27.5 | $876,029 | $703,165 | 24.6 |
| Cost of other services | 95,403 | 85,524 | 11.6 | 294,160 | 264,557 | 11.2 |
| Selling and admin. expenses | 174,192 | 140,263 | 24.2 | 526,870 | 425,370 | 23.9 |
| Interest income | (825) | (1,527) | -46.0 | (2,176) | (4,068) | -46.5 |
| Interest expense | 7,434 | 2,389 | 211.2 | 23,470 | 8,196 | 186.4 |
|
$570,142 | $457,276 | 24.7 | $1,718,353 | $1,397,220 | 23.0 |
| Income before income taxes | 93,615 | 88,215 | 6.1 | 292,088 | 270,019 | 8.2 |
| Income taxes | 34,560 | 32,631 | 5.9 | 108,046 | 99,910 | 8.1 |
|
$59,055 | $55,584 | 6.2 | $184,042 | $170,109 | 8.2 |
| Per share data: | ||||||
| Basic earnings per share | $.35 | $.33 | 6.1 | $1.08 | $1.00 | 8.0 |
| Diluted earnings per share | $.34 | $.32 | 6.3 | $1.07 | $.99 | 8.1 |
| Basic shares outstanding | 170,322 | 169,786 | 170,177 | 169,675 | ||
| Diluted shares outstanding | 171,963 | 172,293 | 172,138 | 172,119 | ||
| CINTAS CORPORATION SUPPLEMENTAL DATA | ||||||
Three Months
Ended |
Nine Months Ended
|
|||||
| Feb 28, 2003 | Feb 28, 2002 | % Chng. | Feb 28, 2003 | Feb 28, 2002 | % Chng. | |
| EBIT | $100,224 | $89,077 | 12.5 | $313,382 | $274,147 | 14.3 |
| EBIT/revenue | 15.1% | 16.3% | 15.6% | 16.4% | ||
| EBITDA | $135,906 | $119,405 | 13.8 | $422,376 | $363,503 | 16.2 |
| EBITDA/revenue | 20.5% | 21.9% | 21.0% | 21.8% | ||
| Rental gross margin | 43.8% | 45.8% | 44.3% | 45.5% | ||
| Other services gross margin | 32.1% | 28.9% | 32.7% | 29.7% | ||
| Total gross margin | 41.3% | 42.0% | 41.8% | 42.0% | ||
| Net margin | 8.9% | 10.2% | 9.2% | 10.2% | ||
| Depreciation and amortization | $35,682 | $30,328 | 17.7 | $108,994 | $89,356 | 22.0 |
| Capital expenditures | $29,065 | $23,937 | 21.4 | $80,447 | $84,977 | -5.3 |
| Debt to Total Capitalization | 27.1% | 13.1% | 27.1% | 13.1% | ||
| Cintas
Corporation Consolidated Condensed Balance Sheets (Unaudited) (In thousands except share data) |
||
| Feb 28, 2003 | Feb 28, 2002 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $42,175 | $86,257 |
| Marketable securities | 35,024 | 152,885 |
| Accounts receivable, net | 273,372 | 237,694 |
| Inventories | 230,171 | 194,360 |
| Uniforms and other rental items in service | 302,328 | 255,853 |
| Prepaid expenses | 8,078 | 9,755 |
| Total current assets | 891,148 | 936,804 |
| Property and equipment, at cost, net | 772,614 | 712,688 |
| Goodwill | 708,445 | 145,845 |
| Service contracts | 146,432 | 56,041 |
| Other assets | 58,574 | 46,984 |
| $2,577,213 | $1,898,362 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $49,912 | $38,205 |
| Accrued liabilities | 187,942 | 153,577 |
| Current income taxes | 40,293 | 28,074 |
| Deferred income taxes | 58,285 | 60,380 |
| Long-term debt due within one year | 16,223 | 18,139 |
| Total current liabilities | 352,655 | 298,375 |
| Long-term debt due after one year | 566,737 | 186,143 |
| Deferred income taxes | 88,033 | 55,549 |
| Shareholders’ equity: | ||
Preferred stock, no par value, 100,000 shares authorized, none outstanding |
- | - |
Common stock, no par value, 425,000,000 shares authorized, 170,420,402 shares issued and outstanding (169,825,861 at February 28, 2002) |
71,303 | 65,365 |
| Retained earnings | 1,503,174 | 1,301,179 |
| Other accumulated comprehensive loss: | ||
| Foreign currency translation | (2,023) | (7,330) |
| Unrealized loss on derivatives | (2,666) | (919) |
| Total shareholders' equity | 1,569,788 | 1,358,295 |
| $2,577,213 | $1,898,362 | |
| Cintas Corporation Consolidated Condensed Statements of Cash Flows (unaudited) (In thousands) |
||
| Nine Months Ended | ||
| February 28, 2003 | February 28, 2002 | |
| Cash flows from operating activities: | ||
| Net income | $184,042 | $170,109 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 87,700 | 75,146 |
| Amortization of deferred charges | 21,294 | 14,210 |
| Deferred income taxes | 5,355 | 9,160 |
| Change in current assets and liabilities, net of acquisitions of businesses: | ||
| Accounts receivable | 10,735 | 9,214 |
| Inventories | (36,169) | 20,936 |
| Uniforms and other rental items in service | (21,388) | (12,942) |
| Prepaid expenses | 2,120 | (1,233) |
| Accounts payable | (10,556) | (6,676) |
| Accrued compensation and related liabilities | (2,521) | (2,662) |
| Accrued liabilities | (17,186) | (9,133) |
| Income taxes payable | 28,502 | 14,662 |
| Net cash provided by operating activities | 251,928 | 280,791 |
| Cash flows from investing activities: | ||
| Capital expenditures | (80,447) | (84,977) |
| Proceeds from sale or redemption of marketable securities | 14,038 | 47,486 |
| Purchase of marketable securities | (4,604) | (163,866) |
| Acquisitions of businesses, net of cash acquired | (24,535) | (30,349) |
| Other | (12,732) | 580 |
| Net cash used in investing activities | (108,280) | (231,126) |
| Cash flows from financing activities: | ||
| Repayment of long-term debt | (150,092) | (37,263) |
| Stock options exercised | 3,987 | 2,442 |
| Other | 4,004 | (2,311) |
| Net cash used in financing activities | (142,101) | (37,132) |
| Net increase in cash and cash equivalents | 1,547 | 12,533 |
| Cash and cash equivalents at beginning of period | 40,628 | 73,724 |
| Cash and cash equivalents at end of period | $42,175 | $86,257 |
For further information
William C. Gale,
Vice President - Finance and CFO, 513-573-4211, or
Karen L. Carnahan,
Vice President and Treasurer, 513-573-4013,
both of Cintas Corporation
Web site: http://www.cintas.com