Cintas Releases Third Quarter Financials

Top 40 distributor Cintas (asi/162167) reported that revenue for the third quarter of its 2016 fiscal year was $1.216 billion, an increase of 9.7% year-over-year. Organic growth, which excludes the impacts of acquisitions and exchange rate fluctuations, was 6.8%. Operating income for the third quarter was $193 million, an increase of 11.1% year-over-year, and operating income margin improved to 15.9% from 15.7% of revenue.

Net income from continuing operations for the third quarter of fiscal 2016 was $117.3 million, compared to $100.3 million in the same quarter last year. Earnings per diluted share (EPS) from continuing operations were $1.05, compared to $0.85 for the prior year period. Net income increased 16.9% while EPS increased 23.5%. Net income from continuing operations as a percent of revenue improved to 9.6% from 9.0% in the third quarter of the 2015 fiscal year.

Since the first quarter of fiscal 2016, Cintas has repurchased approximately 5.7 million shares via its buyback program at an aggregate cost of $482.9 million, including $100 million of repurchases in the third quarter. At the end of the third quarter, $280 million remains available under the current Board of Directors stock repurchase authorization.

Scott D. Farmer, CEO of Cintas, attributed positive third quarter results to the company’s first national branding campaign, called “Ready for the Workday,” that emphasizes the expanded services Cintas offers its 900,000 customers. “This new tagline speaks to the value we provide our customers in helping them prepare for their workdays, and we’re excited about the energy surrounding this campaign,” said Farmer in an official company statement. “We continue to reach new businesses and add value to existing customers by addressing their specific needs with our innovative products and services. Our organic growth rates remain strong and well in excess of gross domestic product and employment growth.”

Organic growth for the company’s Uniform Rental and Facility Services segment in the third quarter of fiscal 2016 was 6.1%, and 11.9% for the First Aid and Safety Services segment. As is customary in its earnings release, Cintas did not break out figures for promotional products sales and profits.  

Counselor ranks Cintas as the tenth-largest distributor in the industry, after estimating its 2014 North American promotional product sales to be $153.9 million.