|
FOR IMMEDIATE RELEASE
July 12, 2004
Cintas Corporation Posts 35th
Consecutive Year
of Growth in Revenue and Earnings
• Record Fourth Quarter
2004 Revenue and Earnings
• Fourth Quarter Total Revenue increased 9
percent
• Fourth Quarter Profits up 12 percent
• Company is
recognized by employees and customers
CINCINNATI, OH, JULY 12, 2004 – Cintas Corporation
(Nasdaq: CTAS) today reported record revenue for fiscal 2004 of $2.81
billion, a 5 percent increase from last year’s $2.69 billion. The company
also reported a 9 percent increase in net income of $272.2 million
compared to $249.3 million last year. After-tax margins were a solid 9.7%
of revenue. Earnings per diluted share of $1.58 increased 9% from last
year’s $1.45 per diluted share.
Scott D. Farmer, Chief Executive Officer of Cintas, stated, “On behalf
of our Cintas employee-partners, I am proud to report our 35th consecutive
year of uninterrupted growth in sales and profits. In addition to
achieving this milestone, we experienced healthy improvements in
profitability, cash flow and balance sheet strength. This was accomplished
while finalizing the integration of the largest uniform rental acquisition
in the Company’s history, Omni Services, Inc. The Other Services segment
of our business, which includes uniform sales, first aid and safety
services and other business services, also saw improvements in sales
growth, profit margins and productivity.”
RECORD FOURTH QUARTER RESULTS
Cintas reported record revenue for the fiscal fourth quarter, ended May
31, of $738 million, an increase of 9 percent from last year’s $676
million. The Company also reported record net income for the quarter of
$72.7 million, up 12 percent from $65.2 million last year. Earnings of
$.42 per diluted share, were up 11 percent from last year.
“For the fourth quarter, our organic growth in the rental business was
5.3% while our other services segment grew 3.7%, all on a comparable
workday basis. Both segments showed sequential improvements in organic
growth compared to our third quarter results,” Mr. Farmer stated.
STRONG BALANCE SHEET
The Company’s balance sheet is strong and the Company has reduced its
debt to total capitalization from 25.5 percent at May 31, 2003 to 20.4
percent at May 31, 2004. Cash and marketable securities reached $254
million at May 31, 2004 compared to $58 million at May 31, 2003, a 340
percent increase. Shareholders’ equity reached $1.9 billion compared to
$1.6 billion last year.
OUTLOOK IS POSITIVE
Mr. Farmer continued, “We expect revenue for fiscal 2005 in the range
of $3.0 billion to $3.2 billion, with full year earnings per share
(diluted) in the range of $1.70 to $1.80, assuming a continued improvement
in the economy. We continue to see opportunities to expand our customer
base and leverage our vast geographic presence and nationwide distribution
and sales network.”
RECOGNITION
In fiscal 2004, Cintas was recognized for outstanding customer service
and management excellence. Cintas is proud of the following
recognition:
• Named among “America’s Best Managed Companies” by Forbes magazine
• Recognized as one of “America’s Most Admired Companies” for the
fourth consecutive year by Fortune magazine
• Recognized as a top
company to work for in Canada, the state of Oregon and the city of Las
Vegas
• Presented “Exemplary Employer Award” by State of Massachusetts
for its record of providing opportunities to people with disabilities
•
Received the “Corporate Humanitarian Award”, the highest honor bestowed by
Matthew 25: Ministries for public service
• Named “Best In The
Business” by Food Processing Magazine
• Received the “Supplier
Excellence Award”, the highest award for vendor quality from Royal
Caribbean Cruise Lines
• Presented “Image of the Year Award” for
exceptional style and design, the highest honor given for uniform designs
in the uniform industry
“Our employee-partners deserve the credit for these prestigious
awards,” said Scott Farmer. “Their commitment to excellence exemplifies
the Cintas culture and our principal objective, which is to maximize the
long-term value of Cintas for our shareholders and working partners by
exceeding our customers’ expectations. We are truly honored by this
recognition.”
ABOUT CINTAS
Headquartered in Cincinnati, Ohio, Cintas Corporation provides highly
specialized services to businesses of all types throughout North America.
Cintas designs, manufactures and implements corporate identity uniform
programs, provides entrance mats, restroom supplies, promotional products,
and first aid and safety products and services for over 500,000
businesses. 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
35 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.
Forward-looking statements may be identified by words such as estimates,
anticipates, projects, plans, expects, intends, believes, should and
similar expressions and by the context in which they are used. Such
statements are based upon current expectations of the Company and speak
only as of the date made. These statements are subject to various risks,
uncertainties and other factors that could cause actual results to differ
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, fluctuations in costs of materials and labor, costs and
possible effects of union organizing activities, 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 under the
Act 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
Senior 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 |
|
Twelve Months Ended |
|
| |
May 31, 2004 |
May 31, 2003 |
% Chng. |
May 31, 2004 |
May 31, 2003 |
% Chng. |
| Revenue: |
|
|
|
|
|
|
|
Rentals |
$567,071 |
$528,623 |
7.3 |
$2,201,405 |
$2,101,785 |
4.7 |
| Other
services |
171,083 |
147,521 |
16.0 |
612,654 |
584,800 |
4.8 |
|
Total revenue |
$738,154 |
$676,144 |
9.2 |
$2,814,059 |
$2,686,585 |
4.7 |
| |
|
|
|
|
|
|
| Costs and expenses (income): |
|
|
|
|
|
|
| Cost
of rentals |
$315,687 |
$297,637 |
6.1 |
$1,222,638 |
$1,173,666 |
4.2 |
| Cost
of other services |
112,571 |
99,551 |
13.1 |
404,929 |
393,711 |
2.8 |
|
Selling and admin. expenses |
189,515 |
168,567 |
12.4 |
727,618 |
695,437 |
4.6 |
|
Interest income |
(871) |
(729) |
19.5 |
(2,650) |
(2,905) |
-8.8 |
|
Interest expense |
5,795 |
7,447 |
-22.2 |
25,101 |
30,917 |
-18.8 |
| Write
off of loan receivable |
- |
- |
N/A |
4,343 |
- |
N/A |
|
Total costs and expenses |
$622,697 |
$572,473 |
8.8 |
$2,381,979 |
$2,290,826 |
4.0 |
| |
|
|
|
|
|
|
| Income before income taxes |
$115,457 |
$103,671 |
11.4 |
$432,080 |
$395,759 |
9.2 |
| Income taxes |
42,729 |
38,460 |
11.1 |
159,875 |
146,506 |
9.1 |
|
Net income |
$72,728 |
$65,211 |
11.5 |
$272,205 |
$249,253 |
9.2 |
| |
|
|
|
|
|
|
| Per share data: |
|
|
|
|
|
|
| Basic earnings per share |
$0.42 |
$0.38 |
10.5 |
$1.59 |
$1.46 |
8.9 |
| Diluted earnings per share |
$0.42 |
$0.38 |
10.5 |
$1.58 |
$1.45 |
9.0 |
| |
|
|
|
|
|
|
|
Basic shares outstanding |
171,299 |
170,516 |
|
170,960 |
170,262 |
|
|
Diluted shares
outstanding |
172,666 |
171,795 |
|
172,372 |
172,037 |
|
|
CINTAS
CORPORATION SUPPLEMENTAL DATA |
| |
Three Months Ended |
|
Twelve Months Ended |
|
| |
May 31, 2004 |
May 31, 2003 |
% Chng. |
May 31, 2004 |
May 31, 2003 |
% Chng. |
| EBIT |
$120,381 |
$110,389 |
9.1 |
$454,531 |
$423,771 |
7.3 |
| EBIT/Revenue |
16.3% |
16.3% |
|
16.2% |
15.8% |
|
| EBITDA |
$156,445 |
$144,456 |
8.3 |
$597,790 |
$566,832 |
5.5 |
| EBITDA/Revenue |
21.2% |
21.4% |
|
21.2% |
21.1% |
|
| Rental gross margin |
44.3% |
43.7% |
|
44.5% |
44.2% |
|
| Other services gross margin |
34.2% |
32.5% |
|
33.9% |
32.7% |
|
| Total gross margin |
42.0% |
41.3% |
|
42.2% |
41.7% |
|
| Net margin |
9.9% |
9.6% |
|
9.7% |
9.3% |
|
| |
|
|
|
|
|
|
| Depreciation and amortization |
$36,064 |
$34,067 |
5.9 |
$143,259 |
$143,061 |
0.1 |
| Capital expenditures |
$27,869 |
$34,572 |
-19.4 |
$112,888 |
$115,019 |
-1.9 |
| |
|
|
|
|
|
|
| Long-term debt to capitalization |
20.4% |
25.5% |
|
20.4% |
25.5% |
|
|
Cintas
Corporation Consolidated Condensed Balance Sheets
(Unaudited)
(In thousands except share data) |
| |
May 31, 2004 |
May 31, 2003 |
| |
|
|
| ASSETS |
|
|
| Current assets: |
|
|
|
Cash and cash
equivalents |
$87,357 |
$32,239 |
|
Marketable securities
|
166,964 |
25,420 |
|
Accounts receivable,
net |
285,592 |
278,147 |
|
Inventories |
185,585 |
228,410 |
|
Uniforms and other
rental items in service |
301,350 |
305,721 |
|
Prepaid expenses
|
7,395 |
7,607 |
| Total current assets |
1,034,243 |
877,544 |
| |
|
|
| Property and equipment, at cost, net |
785,310 |
777,432 |
| |
|
|
| Goodwill |
805,441 |
721,855 |
| Service contracts |
144,664 |
144,899 |
| Other assets |
40,639 |
61,216 |
| |
|
|
| |
$2,810,297 |
$2,582,946 |
| |
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$53,451 |
$53,909 |
| Accrued liabilities
|
178,030 |
153,134 |
|
Income taxes: |
|
|
|
Current |
36,640 |
16,527 |
|
Deferred |
47,042 |
53,018 |
|
Long-term debt due
within one year |
10,523 |
28,251 |
| Total current liabilities |
325,686 |
304,839 |
| |
|
|
| Long-term debt due after one year |
473,685 |
534,763 |
| |
|
|
| Deferred income taxes |
122,957 |
97,012 |
| |
|
|
| Shareholders' equity: |
|
|
|
Preferred stock, no
par value, 100,000 shares |
|
|
|
authorized, none
outstanding |
- |
- |
|
Common stock
171,377,679 and 170,599,993 |
|
|
|
shares issued and
outstanding, respectively |
94,569 |
76,124 |
| Retained earnings |
1,790,547 |
1,568,071 |
| Other accumulated
comprehensive income (loss): |
|
|
|
Foreign currency
translation |
4,474 |
4,427 |
|
Unrealized loss on
derivatives |
(1,621) |
(2,290) |
| Total shareholders' equity |
1,887,969 |
1,646,332 |
| |
|
|
| |
$2,810,297 |
$2,582,946 |
| |
|
|
|
Cintas
Corporation
Consolidated Condensed Statements of Cash
Flows
(Unaudited)
(In thousands) |
| |
Twelve Months Ended |
| |
May 31, 2004 |
May 31, 2003 |
| Cash flows from operating activities: |
|
|
| |
|
|
| Net income |
$272,205 |
$249,253 |
| |
|
|
| Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation |
117,285 |
115,320 |
|
Amortization of
deferred charges |
25,974 |
27,741 |
|
Deferred income
taxes |
15,839 |
7,648 |
|
Change in current
assets and liabilities, net of acquisitions
of
businesses: |
|
|
|
Accounts
receivable |
(488) |
4,044 |
|
Inventories |
46,396 |
(35,638) |
|
Uniforms and other rental
items in service |
4,381 |
(24,781) |
|
Prepaid expenses |
246 |
2,597 |
|
Accounts payable |
(3,223) |
(6,648) |
|
Accrued compensation and
related liabilities |
6,552 |
(3,734) |
|
Accrued
liabilities |
4,429 |
(9,851) |
|
Income taxes
payable |
20,113 |
4,736 |
|
Net cash provided by operating activities |
509,709 |
330,687 |
| |
|
|
| Cash flows from investing activities: |
|
|
| |
|
|
| Capital expenditures |
(112,888) |
(115,019) |
| Proceeds from sale or redemption of marketable securities |
48,078 |
23,790 |
| Purchase of marketable securities |
(189,622) |
(4,752) |
| Acquisitions of businesses, net of cash acquired |
(101,654) |
(37,173) |
| Other |
12,282 |
(3,068) |
|
Net cash used in
investing activities |
(343,804) |
(136,222) |
| |
|
|
| Cash flows from financing activities: |
|
|
| |
|
|
| Repayment of long-term debt |
(68,764) |
(172,891) |
| Stock options exercised |
5,868 |
5,699 |
| Dividends paid |
(49,634) |
(46,003) |
| Other |
1,743 |
10,341 |
| Net cash used
in financing activities |
(110,787) |
(202,854) |
| |
|
|
| Net increase in cash and cash equivalents |
55,118 |
(8,389) |
| Cash and cash equivalents at beginning of period |
32,239 |
40,628 |
| Cash and cash equivalents at end of period |
$87,357 |
$32,239 |
For additional information, contact:
William C. Gale
Senior Vice President
- Finance and Chief Financial Officer
(513)573-4211
Karen L. Carnahan
Vice President and
Treasurer
(513)573-4013
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