CINCINNATI, July 15, 2003 -- Cintas Corporation (Nasdaq:CTAS) today reported record revenue for fiscal 2003 of $2.69 billion, an 18 percent increase from fiscal 2002’s revenue of $2.27 billion. The company also reported a 6 percent increase in net income of $249 million compared to $234 million last year. Earnings per diluted share of $1.45 increased 7 percent from last year’s $1.36 per diluted share. This is Cintas’ 34th consecutive year of growth in sales and profits. Cintas is one of only three public companies with such a prolonged track record of increasing sales and profits; the other two are ADP and Wal-Mart.
Scott D.Farmer, Chief Executive Officer of Cintas, stated, “On behalf of my Cintas partners, I am proud to report that our Company achieved another successful year on many fronts. Our sales and profits continued to increase, giving us the ability to extend our services to 13 new cities and build six new, state-of-the-art uniform rental facilities. During the year, we integrated the largest acquisition in the Company’s history, Omni Services. In addition, our balance sheet strengthened as we paid down a substantial portion of the debt incurred to buy Omni. Cintas has grown through all economic cycles, even in today’s tough environment. We attribute this success to our people, who share a common set of values and beliefs—things like honesty, integrity, competitive urgency and positive discontent. We are always trying to make our Company better.”
Mr. Farmer continued, “The sluggish economy has continued to put pressure on our customers’ businesses and, as a result, our business has been negatively impacted. Many of our customers have cut the size of their workforce and closed operations altogether. However, Cintas continues to have a great opportunity to grow in North America where our market share is about 9 percent of the total potential market. Our biggest opportunity is to convince companies without uniforms that they need a uniform service. Each year, including fiscal 2003 that just ended, the majority of our new customers are companies who never had a uniform program before. We continue to see opportunities to expand our customer base, leveraging our vast geographic coverage and nationwide sales and distribution network while creating new innovative products and exciting job opportunities for our partners.”
Strong Margins / Strong Balance Sheet
Net income margins of 9.3 percent were strong in spite of higher energy and employee benefit costs, and the expected costs of integrating the Omni operations into Cintas. Omni is now fully integrated, giving Cintas the ability to focus on increasing Omni’s profit margins to Cintas’ historical levels.
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 25 percent at May 31, 2003. To date, the company has reduced the amount of its commercial paper outstanding by paying down $190 million, or 83%, of the peak level borrowed in early May 2002. Shareholders' equity reached $1.6 billion, up from $1.4 billion last year.
Record Fourth Quarter Results
For the quarter ended May 31, 2003, Cintas reported record revenue of $676 million, an increase of 12 percent over the fourth quarter of last year. The company noted that there was one less workday in this year’s fourth quarter versus last year. On a comparable workday basis, total revenue rose 13.7 percent. For the fourth quarter, rental revenue increased organically by 4 percent, on a comparable workday basis, while total revenue grew 3 percent, organically. Strong net income margins were achieved at 9.6 percent of revenues for the fourth quarter.
Outlook
Mr. Farmer commented, “Our customers continue to pare back their employment levels, which reflects the sluggishness they see in their business and the overall economy. The uncertainty about the future direction of the economy results in the following guidance for fiscal 2004. Our forecast is for revenue to be in a range of $2.75 to $2.95 billion compared to fiscal 2003’s revenue of $2.69 billion. Our guidance for earnings per share is $1.52 to $1.64 compared to $1.45 for fiscal 2003. Capital expenditures for fiscal 2004 will be approximately $150 million.”
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, hygiene 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 34 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, 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
Senior Vice President-Finance and Chief Financial Officer
(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, 2003 | May 31, 2002 | % Chng. | May 31, 2003 | May 31, 2002 | % Chng. | |
| Revenue: | ||||||
| Rentals | $528,623 | $462,292 | 14.3 | $2,101,785 | $1,753,368 | 19.9 |
| Other services | 147,521 | 141,521 | 4.2 | 584,800 | 517,684 | 13.0 |
|
$676,144 | $603,813 | 12.0 | $2,686,585 | $2,271,052 | 18.3 |
| Costs and expenses (income): | ||||||
| Cost of rentals | $297,637 | $250,187 | 19.0 | $1,173,666 | $953,352 | 23.1 |
| Cost of other services | 99,551 | 98,071 | 1.5 | 393,711 | 360,330 | 9.3 |
| Selling and admin. expenses | 168,567 | 152,801 | 10.3 | 695,437 | 580,469 | 19.8 |
| Interest income | (729) | (1,568) | (53.5) | (2,905) | (5,636) | (48.5) |
| Interest expense | 7,447 | 2,756 | 170.2 | 30,917 | 10,952 | 182.3 |
|
$572,473 | $502,247 | 14.0 | $2,290,826 | $1,899,467 | 20.6 |
| Income before income taxes | 103,671 | 101,566 | 2.1 | 395,759 | 371,585 | 6.5 |
| Income taxes | 38,460 | 37,424 | 2.8 | 146,506 | 137,334 | 6.7 |
|
$65,211 | $64,142 | 1.7 | $249,253 | $234,251 | 6.4 |
| Per share data: | ||||||
| Basic earnings per share | $.38 | $.38 | 0.0 | $1.46 | $1.38 | 5.8 |
| Diluted earnings per share | $.38 | $.37 | 2.7 | $1.45 | $1.36 | 6.6 |
| Basic shares outstanding | 170,516 | 169,876 | 170,262 | 169,713 | ||
| Diluted shares outstanding | 171,795 | 172,503 | 172,037 | 172,244 | ||
| CINTAS CORPORATION SUPPLEMENTAL DATA | ||||||
| Three Months Ended | Twelve Months Ended | |||||
| May 31, 2003 | May 31, 2002 | % Chng. | May 31, 2003 | May 31, 2002 | % Chng. | |
| EBIT | $110,389 | $102,754 | 7.4 | $423,771 | $376,901 | 12.4 |
| EBIT/revenue | 16.3% | 17.0% | 15.8% | 16.6% | ||
| EBITDA | $144,456 | $133,423 | 8.3 | $566,832 | $496,926 | 14.1 |
| EBITDA/revenue | 21.4% | 22.1% | 21.1% | 21.9% | ||
| Rental gross margin | 43.7% | 45.9% | 44.2% | 45.6% | ||
| Other services gross margin | 32.5% | 30.7% | 32.7% | 30.4% | ||
| Total gross margin | 41.3% | 42.3% | 41.7% | 42.2% | ||
| Net margin | 9.6% | 10.6% | 9.3% | 10.3% | ||
| Depreciation and amortization | $34,067 | $30,669 | 11.1 | $143,061 | $120,025 | 19.2 |
| Capital expenditures | $34,572 | $22,307 | 55.0 | $115,019 | $107,284 | 7.2 |
| Debt to Total Capitalization | 25.5% | 33.6% | 25.5% | 33.6% | ||
| Cintas
Corporation Consolidated Condensed Balance Sheets (Unaudited) (In thousands except share data) |
||
| May 31, 2003 | May 31, 2002 | |
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $32,239 | $40,628 |
| Marketable securities | 25,420 | 44,458 |
| Accounts receivable, net | 278,147 | 283,234 |
| Inventories | 228,410 | 193,821 |
| Uniforms and other rental items in service | 305,721 | 280,936 |
| Prepaid expenses | 7,607 | 10,173 |
| Total current assets | 877,544 | 853,250 |
| Property, plant and equipment, at cost, net | 777,432 | 778,402 |
| Goodwill | 721,855 | 678,598 |
| Service Contracts | 144,899 | 158,529 |
| Other assets | 61,216 | 50,455 |
| $2,582,946 | $2,519,234 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $53,909 | $60,393 |
| Accrued liabilities | 153,134 | 160,709 |
| Income Taxes: | ||
| Current | 16,527 | 11,791 |
| Deferred | 53,018 | 61,372 |
| Long-term debt due within one year | 28,251 | 18,369 |
| Total current liabilities | 304,839 | 312,634 |
| Long-term debt due after one year | 534,763 | 703,250 |
| Deferred income taxes | 97,012 | 79,591 |
| Shareholders’ equity: | ||
| Preferred stock, no par value, 100,000 shares authorized, none outstanding | - | - |
| Common stock, no par value, 425,000,000 shares authorized, 170,599,993 shares issued and outstanding (169,930,290 at May 31, 2002) | 76,124 | 66,508 |
| Retained earnings | 1,568,071 | 1,365,136 |
| Other accumulated comprehensive loss: | ||
| Foreign currency translation | 4,427 | (4,863) |
| Unrealized loss on derivatives | (2,290) | (3,022) |
| Total shareholders' equity | 1,646,332 | 1,423,759 |
| $2,582,946 | $2,519,234 | |
| Cintas Corporation Consolidated Condensed Statements of Cash Flows (Unaudited) (In thousands) |
||
| Twelve Months Ended | ||
| May 31, 2003 | May 31, 2002 | |
| Cash flows from operating activities: | ||
| Net income | $249,253 | $234,251 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 115,320 | 101,215 |
| Amortization of deferred charges | 27,741 | 18,810 |
| Deferred income taxes | 7,648 | 20,629 |
| Change in current assets and liabilities, net of acquisitions of businesses: | ||
| Accounts receivable | 4,044 | 3,162 |
| Inventories | (35,638) | 31,731 |
| Uniforms and other rental items in service | (24,781) | (27,257) |
| Prepaid expenses | 2,597 | 1,330 |
| Accounts payable | (6,648) | 3,345 |
| Accrued compensation and related liabilities | (3,734) | (12,696) |
| Accrued liabilities | (9,851) | 4,534 |
| Income taxes payable | 4,736 | (1,621) |
| Net cash provided by operating activities | 330,687 | 377,433 |
| Cash flows from investing activities: | ||
| Capital expenditures | (115,019) | (107,284) |
| Proceeds from sale or redemption of marketable securities | 23,790 | 157,419 |
| Purchase of marketable securities | (4,752) | (165,372) |
| Acquisitions of businesses, net of cash acquired | (37,173) | (732,227) |
| Other | (3,068) | (1,882) |
| Net cash used in investing activities | (136,222) | (849,346) |
| Cash flows from financing activities: | ||
| Proceeds from issuance of long-term debt | 0 | 640,245 |
| Repayment of long-term debt | (172,891) | (160,612) |
| Stock options exercised | 5,699 | 3,247 |
| Dividends paid | (46,003) | (42,454) |
| Other | 10,341 | (1,609) |
| Net cash (used in) provided by financing activities | (202,854) | 438,817 |
| Net (decrease) in cash and cash equivalents | (8,389) | (33,096) |
| Cash and cash equivalents at beginning of period | 40,628 | 73,724 |
| Cash and cash equivalents at end of period | $32,239 | $40,628 |
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