Cintas Corporation Announces Fiscal 2012 Results

  Cintas Corporation Announces Fiscal 2012 Results

Business Wire

CINCINNATI -- July 16, 2012

Cintas Corporation (Nasdaq:CTAS) today reported results for its fourth quarter
ended May 31, 2012. Revenue for the fourth quarter was $1.05 billion,
representing a 4.1% increase compared to last year’s fourth quarter. Organic
growth, which adjusts for the impact of acquisitions, compared to last year’s
fourth quarter, was 4.0%. Net income increased 11.1% to $78.6 million as
compared to $70.8 million in last year’s fourth quarter. Earnings per diluted
share (EPS) for the fourth quarter were $0.60, a 22.4% increase over the $0.49
earnings per diluted share in last year’s fourth quarter.

Scott D. Farmer, Chief Executive Officer, stated, “In an increasingly
challenging economy, we are pleased to report record quarterly revenue and
solid operating results. We continue to be pleased with the performance of all
of our businesses and the execution of our game plan.”

For the fiscal year ended May 31, 2012, revenue was a record $4.1 billion, a
7.7% increase from the prior fiscal year. Organic growth was 6.1%. Net income
increased 20.5% to $297.6 million as compared to last fiscal year. Earnings
per diluted share increased 35.1% to $2.27 as compared to last fiscal year.

Mr. Farmer added, “This concludes a very successful year for Cintas in which
our revenue topped the $4 billion mark for the first time and EPS hit a record
level of $2.27. We also significantly improved our operating margins for the
fiscal year to 13.2% as compared to 11.6% last fiscal year. Cash flows from
operations increased by 37.8% to $469.9 million compared to last year’s $340.9
million. Our employees, who we call partners, did a great job of executing our
game plan throughout the past twelve months. Congratulations to these partners
on their achievements this year.”

During the fourth quarter, Cintas purchased 3.3 million shares of its common
stock at an aggregate cost of $129.6 million. This share buyback had no impact
on fourth quarter results since it occurred so late in the fiscal year.
However, it is expected to benefit fiscal year 2013 earnings per diluted
shared by approximately $0.06. The Cintas Board of Directors authorized a $500
million share buyback program in October 2011. As of May 31, 2012, the Company
has $370.4 million available under the current Board authorization.

Mr. Farmer concluded, “We enter fiscal 2013 in a U.S. economy without
momentum. The U.S. job growth has significantly slowed to the point of only
adding 225,000 jobs in the past three months. Many forecasts indicate U.S. GDP
growth during our fiscal year 2013 to be less than 2%. Because of these
factors, combined with the uncertainty of potential changes in tax law for
2013, we view fiscal year 2013 with caution. We expect our fiscal 2013 revenue
to be in the range of $4.25 billion to $4.35 billion, with full year earnings
per diluted share in the range of $2.47 to $2.55. This guidance assumes no
further deterioration in the U.S. economy and some improvement in recycled
paper prices from our fourth quarter level. It also incorporates the share
buyback executed in our fourth quarter, but does not consider any additional
share buyback.”

About Cintas

Headquartered in Cincinnati, Cintas Corporation provides highly specialized
services to businesses of all types primarily 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 over 900,000 businesses. 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, 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,
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, disruptions caused by the inaccessibility of
computer systems data, 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, 2012. 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, 2011 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
(In thousands except per share data)
                                                                
                                                                       
                                   Three Months Ended
                                   (Unaudited)
                                   May 31,         May 31,         % Chng.
                                   2012              2011
                                                                       
Revenue:
Rental uniforms and ancillary      $ 749,037         $ 711,861         5.2
products
Other services                      304,545       300,226        1.4
Total revenue                      $ 1,053,582       $ 1,012,087       4.1
                                                                       
Costs and expenses:
Cost of rental uniforms and        $ 424,940         $ 401,246         5.9
ancillary products
Cost of other services               184,774           177,794         3.9
Selling and administrative          303,036       304,170        -0.4
expenses
                                                                       
Operating income                   $ 140,832         $ 128,877         9.3
                                                                       
Interest income                    $ (801      )     $ (778      )     3.0
Interest expense                    18,344        12,749         43.9
                                                                       
Income before income taxes         $ 123,289         $ 116,906         5.5
Income taxes                        44,675        46,130         -3.2
Net income                         $ 78,614       $ 70,776         11.1
                                                                       
Per share data:
Basic earnings per share           $ 0.60         $ 0.49           22.4
Diluted earnings per share         $ 0.60         $ 0.49           22.4
                                                                       
Weighted average number of           128,788           143,317
shares outstanding
Diluted average number of            129,040           143,362
shares outstanding
                                                                       
                                                                       
                                                                       
                                   Twelve Months Ended
                                   May 31,         May 31,         % Chng.
                                   2012              2011
                                                                       
Revenue:
Rental uniforms and ancillary      $ 2,912,261       $ 2,692,248       8.2
products
Other services                      1,189,739     1,118,136      6.4
Total revenue                      $ 4,102,000       $ 3,810,384       7.7
                                                                       
Costs and expenses:
Cost of rental uniforms and        $ 1,648,551       $ 1,530,456       7.7
ancillary products
Cost of other services               714,841           670,641         6.6
Selling and administrative          1,198,981     1,168,944      2.6
expenses
                                                                       
Operating income                   $ 539,627         $ 440,343         22.5
                                                                       
Interest income                    $ (1,942    )     $ (2,030    )     -4.3
Interest expense                    70,625        49,704         42.1
                                                                       
Income before income taxes         $ 470,944         $ 392,669         19.9
Income taxes                        173,307       145,680        19.0
Net income                         $ 297,637      $ 246,989        20.5
                                                                       
Per share data:
Basic earnings per share           $ 2.27         $ 1.68           35.1
Diluted earnings per share         $ 2.27         $ 1.68           35.1
                                                                       
Weighted average number of           129,891           146,586
shares outstanding
Diluted average number of            130,033           146,586
shares outstanding
                                                                       
                                                                       
CINTAS CORPORATION
SUPPLEMENTAL DATA
                                   Three Months Ended
                                   May 31,         May 31,
                                   2012              2011
Rental uniforms and ancillary        43.3      %       43.6      %
products gross margin
Other services gross margin          39.3      %       40.8      %
Total gross margin                   42.1      %       42.8      %
Net margin                           7.5       %       7.0       %
                                                                       
Depreciation and amortization      $ 49,080          $ 49,175
Capital expenditures               $ 43,086          $ 40,294
                                                                       
                                                                       
                                   Twelve Months Ended
                                   May 31,         May 31,
                                   2012              2011
Rental uniforms and ancillary        43.4      %       43.2      %
products gross margin
Other services gross margin          39.9      %       40.0      %
Total gross margin                   42.4      %       42.2      %
Net margin                           7.3       %       6.5       %
                                                                       
Depreciation and amortization      $ 194,165         $ 193,467
Capital expenditures               $ 160,802         $ 182,592
                                                                       

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

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 operating results, net earnings, net margin 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 below.

Management believes organic growth adjusted for acquisitions and the number of
workdays allows investors to review our results on a comparable basis.

                                      Three Months Ended  
                                       May 31,               
                                       2012
                                                             
Revenue Growth                              4.1        %
Acquisition adjustment                     -0.1       %
Organic Growth                             4.0        %
                                                             
                                       Twelve Months Ended
                                       May 31,               
                                       2012
                                                             
Revenue Growth                              7.7        %
Workday adjustment
(262 days in FY12, 261 days in FY11)        -0.4       %
Acquisition adjustment                     -1.2       %
Organic Growth                             6.1        %
                                                             
                                                             
Computation of Free Cash Flow
                                                             
                                       Twelve Months Ended
                                       May 31,              May 31,
                                       2012                  2011
                                                             
Net Cash Provided by Operations        $    469,862          $ 340,886
                                                             
Capital Expenditures                   $    (160,802   )    $ (182,592 )
                                                             
Free Cash Flow                         $    309,060          $ 158,294

        Management uses free cash flow to assess the financial performance of
        the Company. Management believes that free cash flow is useful to
Note:  investors because it relates the operating cash flow of the Company to
        the capital that is spent to continue, improve and grow business
        operations.

                                                                            
                 Rental                    First Aid,
SUPPLEMENTAL     Uniforms      Uniform     Safety and   Document
SEGMENT DATA     and          Direct     Fire        Management  Corporate    Total
                 Ancillary     Sales       Protection
                 Products
For the three
months ended
May 31, 2012
Revenue          $ 749,037     $ 111,232   $ 108,895    $  84,418    $ -           $ 1,053,582
Gross margin     $ 324,097     $ 34,153    $ 46,119     $  39,499    $ -           $ 443,868
Selling and
administrative   $ 210,963     $ 21,246    $ 36,061     $  34,766    $ -           $ 303,036
expenses
Interest         $ -           $ -         $ -          $  -         $ (801    )   $ (801      )
income
Interest         $ -           $ -         $ -          $  -         $ 18,344      $ 18,344
expense
Income (loss)
before income    $ 113,134     $ 12,907    $ 10,058     $  4,733     $ (17,543 )   $ 123,289
taxes
                                                                                   
For the three
months ended
May 31, 2011
Revenue          $ 711,861     $ 109,055   $ 99,619     $  91,552    $ -           $ 1,012,087
Gross margin     $ 310,615     $ 33,751    $ 41,580     $  47,101    $ -           $ 433,047
Selling and
administrative   $ 212,941     $ 21,005    $ 33,637     $  36,587    $ -           $ 304,170
expenses
Interest         $ -           $ -         $ -          $  -         $ (778    )   $ (778      )
income
Interest         $ -           $ -         $ -          $  -         $ 12,749      $ 12,749
expense
Income (loss)
before income    $ 97,674      $ 12,746    $ 7,943      $  10,514    $ (11,971 )   $ 116,906
taxes
                                                                                   
For the twelve
months ended
May 31, 2012
Revenue          $ 2,912,261   $ 433,994   $ 415,703    $  340,042   $ -           $ 4,102,000
Gross margin     $ 1,263,710   $ 129,614   $ 178,465    $  166,819   $ -           $ 1,738,608
Selling and
administrative   $ 834,210     $ 80,577    $ 143,338    $  140,856   $ -           $ 1,198,981
expenses
Interest         $ -           $ -         $ -          $  -         $ (1,942  )   $ (1,942    )
income
Interest         $ -           $ -         $ -          $  -         $ 70,625      $ 70,625
expense
Income (loss)
before income    $ 429,500     $ 49,037    $ 35,127     $  25,963    $ (68,683 )   $ 470,944
taxes
Assets           $ 2,765,691   $ 136,478   $ 362,128    $  556,784   $ 339,825     $ 4,160,906
                                                                                   
For the twelve
months ended
May 31, 2011
Revenue          $ 2,692,248   $ 419,222   $ 377,663    $  321,251   $ -           $ 3,810,384
Gross margin     $ 1,161,792   $ 126,475   $ 156,060    $  164,960   $ -           $ 1,609,287
Selling and
administrative   $ 822,230     $ 78,220    $ 134,604    $  133,890   $ -           $ 1,168,944
expenses
Interest         $ -           $ -         $ -          $  -         $ (2,030  )   $ (2,030    )
income
Interest         $ -           $ -         $ -          $  -         $ 49,704      $ 49,704
expense
Income (loss)
before income    $ 339,562     $ 48,255    $ 21,456     $  31,070    $ (47,674 )   $ 392,669
taxes
Assets           $ 2,721,261   $ 154,109   $ 355,332    $  595,912   $ 525,326     $ 4,351,940
                                                                                               

                                                         
Cintas Corporation
Consolidated Balance Sheets
(In thousands except share data)
 
                                                                
ASSETS                                     May 31,             May 31,
                                           2012                 2011
                                                                
Current assets:
  Cash & cash equivalents                  $ 339,825            $ 438,106
  Marketable securities                      -                    87,220
  Accounts receivable, net                   450,861              429,131
  Inventories, net                           251,205              249,658
  Uniforms and other rental items in         452,785              393,826
  service
  Income taxes, current                      22,188               33,542
  Deferred tax asset                         -                    45,813
  Prepaid expenses and other                24,704             23,481     
     Total current assets                    1,541,568            1,700,777
                                                                
Property and equipment, at cost, net         944,305              946,218
                                                                
Goodwill                                     1,485,375            1,487,882
Service contracts, net                       76,822               102,312
Other assets, net                           112,836            114,751    
                                                                
                                           $ 4,160,906         $ 4,351,940  
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                
Current liabilities:
  Accounts payable                         $ 94,840             $ 110,279
  Accrued compensation and related           91,214               79,834
  liabilities
  Accrued liabilities                        256,642              242,691
  Deferred tax liability                     2,559                -
  Long-term debt due within one year        225,636            1,335      
     Total current liabilities               670,891              434,139
                                                                
Long-term liabilities:
  Long-term debt due after one year          1,059,166            1,284,790
  Deferred income taxes                      204,581              196,321
  Accrued liabilities                       87,133             134,041    
     Total long-term liabilities             1,350,880            1,615,152
                                                                
Shareholders' equity:
  Preferred stock, no par value:             -                    -
     100,000 shares authorized, none
     outstanding
  Common stock, no par value:                148,255              135,401
     425,000,000 shares authorized
     FY12: 173,745,913 issued and
     126,519,758 outstanding
     FY11: 173,346,180 issued and
     137,583,884 outstanding
  Paid-in capital                            107,019              95,732
  Retained earnings                          3,482,073            3,255,256
  Treasury stock:
     FY12: 47,226,155 shares
     FY11: 35,762,296 shares                 (1,634,875 )         (1,242,547 )
  Other accumulated comprehensive
  income (loss):
     Foreign currency translation            52,399               70,214
     Unrealized loss on derivatives          (16,104    )         (12,326    )
     Other                                  368                919        
     Total shareholders' equity              2,139,135            2,302,649
                                                                
                                           $ 4,160,906         $ 4,351,940  
                                                                             

                                                         
Cintas Corporation
Consolidated Condensed Statements of Cash Flows
(In thousands)
                                                                 
                                                                 
                                              Twelve Months Ended
Cash flows from operating activities:         May 31, 2012       May 31, 2011
                                                                 
Net income                                    $ 297,637          $ 246,989
                                                                 
Adjustments to reconcile net income to
net cash provided by operating
activities:
         Depreciation                           155,831            150,886
         Amortization of deferred               38,334             42,581
         charges
         Stock-based compensation               20,312             15,203
         Deferred income taxes                  56,727             47,908
         Change in current assets and
         liabilities, net of
         acquisitions of businesses:
                   Accounts receivable,         (24,261  )         (48,986   )
                   net
                   Inventories, net             (2,330   )         (78,824   )
                   Uniforms and other
                   rental items in              (60,279  )         (58,180   )
                   service
                   Prepaid expenses and         (1,496   )         360
                   other
                   Accounts payable             (12,557  )         29,215
                   Accrued compensation
                   and related                  11,625             12,493
                   liabilities
                   Accrued liabilities          (20,371  )         (2,167    )
                   Income taxes payable        10,690           (16,592   )
                                                                 
         Net cash provided by operating         469,862            340,886
         activities
                                                                 
Cash flows from investing activities:
                                                                 
Capital expenditures                            (160,802 )         (182,592  )
Proceeds from redemption of marketable          665,016            139,056
securities
Purchase of marketable securities and           (585,655 )         (78,307   )
investments
Acquisitions of businesses, net of cash         (24,864  )         (171,552  )
acquired
Other                                          2,011            (5,198    )
                                                                 
         Net cash used in investing             (104,294 )         (298,593  )
         activities
                                                                 
Cash flows from financing activities:
                                                                 
Proceeds from issuance of debt                  -                  1,002,281
Repayment of debt                               (1,323   )         (502,208  )
Exercise of stock-based compensation            3,341              -
awards
Dividends paid                                  (70,820  )         (71,812   )
Repurchase of common stock                      (392,328 )         (443,690  )
Other                                          555              (4,609    )
                                                                 
         Net cash used in financing             (460,575 )         (20,038   )
         activities
                                                                 
Effect of exchange rate changes on cash         (3,274   )         4,570
and cash equivalents
                                                                 
Net (decrease) increase in cash and             (98,281  )         26,825
cash equivalents
                                                                 
Cash and cash equivalents at beginning         438,106          411,281   
of period
                                                                 
Cash and cash equivalents at end of           $ 339,825         $ 438,106   
period

Contact:

Cintas Corporation
William C. Gale, Sr. Vice President-Finance and Chief Financial Officer,
513-573-4211
J. Michael Hansen, Vice President and Treasurer, 513-701-2079
 
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