Counselor Top 40 distributor Cintas Corporation asi/162167) reported total revenue of $1.1 billion for its fiscal 2015 first quarter, ended on August 31, a 0.2% year-over-year increase. However, the company excluded earnings from its document shredding business because of a transaction earlier this year with Shred-it International Inc., where the two companies combined business. Accounting for acquisitions, including the deal with Shred-it, Cintas’ organic growth was 7.2% for the quarter.
“Our first quarter results reflect the continued good execution by our employees,” said CEO Scott D. Farmer. “We have focused on selling good, profitable business over the past few years, as well as managing our cost structure and continuously improving the efficiency of our processes. This focus has resulted in improved margins and better customer retention.”
Cintas’ Q1 operating income grew by 17.1% compared to last year’s first quarter for a total of $163.5 million. Net income totaled $110.1 million, and earnings per diluted share (EPS) were $0.93. The latter increased by $0.15 due to a sale of stock in an equity method investment and additional gains from the Shred-it transaction. Cintas saw its greatest growth in rental uniforms and ancillary products. The segment totaled $856.9 million for the quarter, with year-over-year growth of 8.1%. The company’s uniform direct sales fell by 2.2% in the quarter, slipping to $140.1 million. As is customary, Cintas did not break out quarterly ad specialty revenues in its earnings statement.
Farmer says the company expects its fiscal 2015 revenue to fall between $4.4 billion and $4.475 billion, with EPS between $3.20 and $3.29. He added the figures were based on the assumption of no contributed income from the Shred-it partnership due to expenses from integration and transition in the first year. Cintas has reclassified its Document Storage and Imaging business as discontinued operations.
“We are encouraged by the solid start to our fiscal 2015 year,” Farmer said. “When we introduced our fiscal 2015 guidance in July, we indicated that we were still looking for more consistency in the U.S. economy. We continue to see inconsistent employment figures resulting in no real change to our customers’ hiring patterns, and we see heightened global uncertainty that may affect U.S. businesses.”
Counselor estimates Cintas generated 2013 North American ad specialty sales of $149.4 million, ranking the company as the 9th largest distributor in the industry.