New book by Larry Connors Click here Improve your trading - See how
Net income and earnings per diluted share for the quarter were $54 million and $0.35, respectively. First quarter results included a previously announced legal settlement, net of insurance proceeds. Without this charge, net income was $66 million and earnings per diluted share were $0.43.
Excluding special charges, the Company's net income and earnings per diluted share for the first quarter ended August 31, 2009 both increased over 13% as compared to the fourth quarter ended May 31, 2009. The special charges impacting these quarters were the legal settlement charge in the current quarter and a restructuring, fixed asset impairment and inventory valuation charge in the fourth quarter of last year. The improvement in net income and earnings per diluted share was primarily due to the Company's continued effort to control costs and right size the organization in the current economic environment.
Scott D. Farmer, Chief Executive Officer, stated, "Over the last twelve months, the U.S. economy has shed employment at levels not experienced since the Great Depression. These job losses make year over year comparisons difficult as our customers continued to shed jobs throughout the year. In order to give investors better information on trends in our business, we have provided comparisons to the fourth quarter of fiscal 2009."
Mr. Farmer emphasized, "While we gain some solace in the recent moderation of job loss, market conditions remain difficult and will continue to impact our businesses. However, we continue to be a market leader in our businesses, with state-of-the-art technology, extremely efficient operations and very dedicated employee-partners. In addition, our balance sheet and cash flow both continue to be strong, with our total cash and marketable securities increasing to over $350 million and our total debt to total capitalization ratio improving to 24.5%. The leadership position in our businesses combined with this strong financial condition will provide us enhanced opportunities when economic conditions improve."
About Cintas
Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types 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 approximately 800,000 businesses. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS, and is a Nasdaq-100 company and 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 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, 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, changes in federal and state tax and labor laws and the reactions of competitors in terms of price and service. 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, 2009 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.
Cintas Corporation
Consolidated Condensed Statements of Income
(Unaudited)
(In thousands except per share data)
Three Months Ended Three Months Ended
August 31, 2009 May 31, 2009 % Chng. August 31, 2008 % Chng.
Revenue:
Rental uniforms and ancillary products $ 655,638 $ 647,487 1.3 $ 721,373 -9.1
Other services 235,931 231,196 2.0 280,806 -16.0
Total revenue $ 891,569 $ 878,683 1.5 $ 1,002,179 -11.0
Costs and expenses:
Cost of rental uniforms and ancillary products $ 362,929 $ 373,860 -2.9 $ 407,290 -10.9
Cost of other services 145,845 170,472 -14.4 169,806 -14.1
Selling and administrative expenses 264,427 253,677 4.2 287,295 -8.0
Restructuring charges - 10,209 N/A - N/A
Impairment of long-lived assets - 48,888 N/A - N/A
Legal settlement, net of insurance proceeds 19,477 - N/A - N/A
Operating income $ 98,891 $ 21,577 358.3 $ 137,788 -28.2
Interest income (359 ) (329 ) 9.1 (1,065 ) -66.3
Interest expense 12,038 12,030 0.1 13,031 -7.6
Income before income taxes $ 87,212 $ 9,876 783.1 $ 125,822 -30.7
Income taxes 33,228 5,804 472.5 47,186 -29.6
Net income $ 53,984 $ 4,072 1,225.7 $ 78,636 -31.3
Per share data:
Basic earnings per share $ 0.35 $ 0.03 1,066.7 $ 0.51 -31.4
Diluted earnings per share $ 0.35 $ 0.03 1,066.7 $ 0.51 -31.4
Weighted average number of shares outstanding 152,828 152,790 153,394
Diluted average number of shares outstanding 152,828 152,790 153,394
Reconciliation of Non-GAAP Financial Measures and Regulation G
Disclosure
Management believes earnings per diluted share excluding the legal
settlement charge, net of insurance proceeds and the restructuring,
impairment and inventory valuation charge provides investors
pertinent information given the one-time nature of these charges.
Three Months Ended Three Months Ended
August 31, 2009 May 31, 2009 % Chng. August 31, 2008 % Chng.
Income before income taxes $ 87,212 $ 9,876 783.1 $ 125,822 -30.7
Excluding:
Restructuring charges $ - $ 10,209 $ -
Impairment of long-lived assets - 48,888 -
Inventory valuation charge (1) - 27,486 -
Legal settlement, net of insurance proceeds 19,477 - -
Total charges $ 19,477 $ 86,583 $ -
Income before income taxes, excluding charges $ 106,689 $ 96,459 10.6 $ 125,822 -15.2
Income taxes, excluding charges 40,649 38,186 47,186
Net income, excluding charges $ 66,040 $ 58,273 13.3 $ 78,636 -16.0
Per share data:
Earnings per diluted share, excluding charges $ 0.43 $ 0.38 13.2 $ 0.51 -15.7
The press release contains non-GAAP financial measures within the
meaning of Regulation G promulgated by the Securities and Exchange
Commission. To supplement its consolidated financial statements
presented in accordance with U.S. generally accepted accounting
principles (GAAP), the Company provides additional measures of
operatings results, net earnings and earnings per share adjusted to
exclude certain costs, expenses and gains and losses. The Company
believes that these non-GAAP financial measures are appropriate to
enhance understanding of its past performance as well as prospects
for future performance. A reconciliation of the differences between
these non-GAAP financial measures with the most directly comparable
financial measures calculated in accordance with GAAP is shown above.
(1) - The inventory valuation charge is included in cost of goods
sold. $8,419 of the charge is included in cost of rental uniforms
and ancillary products and $19,067 is included in cost of other
services.
CINTAS CORPORATION SUPPLEMENTAL DATA
Three Months Ended Three Months Ended
August 31, 2009 May 31, 2009 August 31, 2008
Rental uniforms and ancillary products gross margin 44.6 % 42.3 % 43.5 %
Other services gross margin 38.2 % 26.3 % 39.5 %
Total gross margin 42.9 % 38.1 % 42.4 %
Total gross margin, excluding charges 42.9 % 41.2 % 42.4 %
Net margin 6.1 % 0.5 % 7.8 %
Net margin, excluding charges 7.4 % 6.6 % 7.8 %
Depreciation and amortization $48,905 $49,964 $49,885
Capital expenditures $24,819 $27,309 $54,461
Debt to total capitalization 24.5 % 24.9 % 29.3 %
SUPPLEMENTAL SEGMENT DATA Rental Uniforms Uniform Direct First Aid, Document Corporate Total
and Ancillary Sales Safety and Management
Products Fire
Protection
For the three months ended August 31, 2009
Revenue $ 655,638 $ 89,301 $ 90,001 $ 56,629 $ - $ 891,569
Gross margin $ 292,709 $ 27,245 $ 35,262 $ 27,579 $ - $ 382,795
Selling and administrative expenses $ 190,256 $ 19,156 $ 29,475 $ 25,540 $ - $ 264,427
Legal settlement, net of insurance proceeds $ - $ - $ - $ - $ 19,477 $ 19,477
Interest income $ - $ - $ - $ - $ (359 ) $ (359 )
Interest expense $ - $ - $ - $ - $ 12,038 $ 12,038
Income (loss) before income taxes $ 102,453 $ 8,089 $ 5,787 $ 2,039 $ (31,156 ) $ 87,212
Assets $ 2,497,775 $ 130,721 $ 320,226 $ 472,469 $ 357,879 $ 3,779,070
For the three months ended May 31, 2009
Revenue $ 647,487 $ 93,841 $ 83,038 $ 54,317 $ - $ 878,683
Gross margin $ 273,627 $ 7,900 $ 26,505 $ 26,319 $ - $ 334,351
Selling and administrative expenses $ 175,993 $ 22,041 $ 32,610 $ 23,033 $ - $ 253,677
Restructuring charges $ 8,782 $ 547 $ 564 $ 316 $ - $ 10,209
Impairment of long-lived assets $ 44,204 $ 4,135 $ 543 $ 6 $ - $ 48,888
Interest income $ - $ - $ - $ - $ (329 ) $ (329 )
Interest expense $ - $ - $ - $ - $ 12,030 $ 12,030
Income (loss) before income taxes $ 44,648 $ (18,823 ) $ (7,212 ) $ 2,964 $ (11,701 ) $ 9,876
Assets $ 2,511,902 $ 137,709 $ 321,400 $ 470,619 $ 253,809 $ 3,695,439
For the three months ended August 31, 2008
Revenue $ 721,373 $ 117,483 $ 108,532 $ 54,791 $ - $ 1,002,179
Gross margin $ 314,083 $ 37,377 $ 44,124 $ 29,499 $ - $ 425,083
Selling and administrative expenses $ 207,024 $ 25,374 $ 32,774 $ 22,123 $ - $ 287,295
Interest income $ - $ - $ - $ - $ (1,065 ) $ (1,065 )
Interest expense $ - $ - $ - $ - $ 13,031 $ 13,031
Income (loss) before income taxes $ 107,059 $ 12,003 $ 11,350 $ 7,376 $ (11,966 ) $ 125,822
Assets $ 2,641,223 $ 191,101 $ 352,932 $ 460,448 $ 180,895 $ 3,826,599
Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
ASSETS August 31, 2009 May 31, 2009
(Unaudited)
Current assets:
Cash & cash equivalents $ 227,311 $ 129,745
Marketable securities 130,568 120,393
Accounts receivable, net 359,142 357,678
Inventories, net 185,349 202,351
Uniforms and other rental items in service 329,444 335,447
Income taxes, current - 25,512
Deferred tax asset 70,772 66,368
Prepaid expenses 21,924 17,035
Assets held for sale 15,744 15,744
Total current assets 1,340,254 1,270,273
Property and equipment, at cost, net 901,286 914,627
Goodwill 1,333,319 1,331,388
Service contracts, net 117,337 124,330
Other assets, net 86,874 80,333
$ 3,779,070 $ 3,720,951
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $ 73,362 $ 69,965
Accrued compensation and related liabilities 41,285 48,414
Accrued liabilities 192,647 198,488
Income taxes, current 6,741 -
Long-term debt due within one year 578 598
Total current liabilities 314,613 317,465
Long-term liabilities:
Long-term debt due after one year 785,899 786,058
Deferred income taxes 153,057 149,032
Accrued liabilities 100,460 100,987
Total long-term liabilities 1,039,416 1,036,077
Shareholders' equity:
Preferred stock, no par value: - -
100,000 shares authorized, none outstanding
Common stock, no par value: 131,925 129,215
425,000,000 shares authorized
FY10: 173,202,743 issued and 152,865,470 outstanding
FY09: 173,085,926 issued and 152,790,170 outstanding
Paid-in capital 73,284 72,364
Retained earnings 2,992,403 2,938,419
Treasury stock: (798,847 ) (797,888 )
FY10: 20,337,273 shares
FY09: 20,295,756 shares
Other accumulated comprehensive income (loss):
Foreign currency translation 34,234 33,505
Unrealized loss on derivatives (7,946 ) (8,207 )
Unrealized loss on available-for-sale securities (12 ) 1
Total shareholders' equity 2,425,041 2,367,409
$ 3,779,070 $ 3,720,951
Cintas Corporation
Consolidated Condensed Statement of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
Cash flows from operating August 31, 2009 August 31, 2008
activities:
Net income $ 53,984 $ 78,636
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 38,549 39,040
Amortization of deferred charges 10,356 10,845
Stock-based compensation 3,630 3,535
Deferred income taxes (412 ) (1,482 )
Change in current assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net (1,425 ) (3,369 )
Inventories, net 16,976 (3,795 )
Uniforms and other rental items in service 5,986 (4,437 )
Prepaid expenses (4,890 ) (6,332 )
Accounts payable 3,481 (7,554 )
Accrued compensation and related liabilities (7,118 ) (16,696 )
Accrued liabilities and other (6,433 ) (32,771 )
Income taxes payable 32,210 32,718
Net cash provided by operating activities 144,894 88,338
Cash flows from investing
activities:
Capital expenditures (24,819 ) (54,461 )
Proceeds from sale or redemption of marketable securities - 171
Purchase of marketable securities and investments (19,259 ) (10,379 )
Acquisitions of businesses, net of cash acquired (2,633 ) (12,106 )
Other (25 ) 627
Net cash used in investing activities (46,736 ) (76,148 )
Cash flows from financing
activities:
Proceeds from issuance of debt - 7,000
Repayment of debt (179 ) (261 )
Exercise of stock-based compensation awards 2,710 -
Repurchase of common stock (959 ) (25,847 )
Other (2,194 ) 287
Net cash used in financing activities (622 ) (18,821 )
Effect of exchange rate changes on cash and cash equivalents 30 (1,350 )
Net increase (decrease) in cash and cash equivalents 97,566 (7,981 )
Cash and cash equivalents at beginning of period 129,745 66,224
Cash and cash equivalents at end of period $ 227,311 $ 58,243
SOURCE: Cintas Corporation
Cintas Corporation William C. Gale, 513-573-4211 Sr. Vice President-Finance and Chief Financial Officer or Michael L. Thompson, 513-573-4133 Vice President and Treasurer
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.