Top 40 distributor Cintas (asi/162167) reported $1.29 billion in revenue for its fiscal first quarter, an increase of 7.9% over the prior year period. The company recorded 5.7% in organic growth, excluding exchange rate fluctuations and the impact of its August merger with uniform rental company G&K Services, Inc. (asi/199845).
In the quarter, the company’s operating income increased 11.6% for a total of $207 million. Net income from continuing operations jumped up nearly $32 million to $138.1 million, while EPS from continuing operations increased to $1.26 from 93 cents in last year’s fiscal first quarter. Operating income margin ticked up as well.
“In our recently ended fiscal year 2016, we achieved record revenue and EPS and increased EPS by double-digits for the sixth consecutive year. We are pleased to report a continuation of strong results into the first quarter of fiscal 2017,” said Cintas CEO Scott D. Farmer. “This solid start positions us for another year of record-breaking results.”
Cintas saw consistent quarterly growth in its Uniform Rental and Facility Services (6.4%) and Other (5.4%) segments, while posting a substantial 25.5% increase in its First Aid and Safety Services segment. As customary, the company did not break out promotional product revenue figures.
In an earnings call, Cintas declined many questions regarding G&K Services, citing that the closing of the $2.2 billion merger was ongoing and subject to the approval by G&K shareholders and regulators. Cintas executives on the call said the merger timeline had not been altered since it was announced two months ago. In response to a question, Cintas VP and CFO Mike Hansen said that Cintas would be able to take advantage of G&K’s industrial and delivery capabilities, and added that “We certainly anticipate that many of those employees of G&K will come over to become Cintas partners.” When the merger was announced, Cintas said it anticipated between $130-$140 million in additional synergies with G&K.
The company also issued full-year fiscal guidance of revenue growth between 5.2%-6.5% and EPS growth between 11.2%-13.2%.