Cintas Corp. (CTAS, Financial) filed Quarterly Report for the period ended 2008-11-30.
Cintas Corp. provides a specialized service to businesses of all types - from small service and manufacturing companies to major corporations. The company is divided into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents to its customers. The Other Services operating segment involves the design manufacture and direct sale of uniforms to its customers as well as the sale of ancillary services including sanitation supplies first aid products and cleanroom supplies. Cintas Corp. has a market cap of $3.33 billion; its shares were traded at around $24.04 with a P/E ratio of 10.5 and P/S ratio of 0.85. The dividend yield of Cintas Corp. stocks is 2.11%. Cintas Corp. had an annual average earning growth of 10.5% over the past 10 years. GuruFocus rated Cintas Corp. the business predictability rank of 5-star.
As discussed above, Rental Uniforms and Ancillary Products revenue increased from $708.8 million to $711.5 million, or 0.4%, and the cost of rental uniforms and ancillary products increased $9.4 million, or 2.4%. The operating segments gross margin was $309.8 million, or 43.6% of revenue. This gross margin percent to sales of 43.6% was lower than last fiscal years second quarter of 44.7% mainly due to increased energy related costs and hanger costs. Energy related costs include natural gas, electric and gas, and they increased a combined 30 basis points over last years second quarter. Hanger costs increased 40 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.
Cost of rental uniforms and ancillary products consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other rental items. Cost of rental uniforms and ancillary products increased $25.2 million, or 3.2%, for the six months ended November 30, 2008, as compared to the six months ended November 30, 2007. This increase was mainly due to increased Rental Uniforms and Ancillary Products operating segment revenue, a $10.5 million increase in energy costs and a $6.2 million increase in hanger costs.
As discussed above, Rental Uniforms and Ancillary Products revenue increased from $1.42 billion to $1.43 billion, or 1.0%, and the cost of rental uniforms and ancillary products increased $25.2 million, or 3.2%. The operating segments gross margin was $623.9 million, or 43.5% of revenue. This gross margin percent to sales of 43.5% was lower than the 44.8% in the same period in the prior fiscal year mainly due to increased energy related costs and hanger costs. Energy related costs include natural gas, electric and gas, and they increased a combined 70 basis points over the same period in the prior fiscal year. Hanger costs increased 40 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.
At November 30, 2008, Cintas had $127.3 million in cash and cash equivalents and marketable securities which is 33.6% less than the $191.7 million at May 31, 2008. Capital expenditures were $96.0 million for the six months ended November 30, 2008. We expect capital expenditures for the year ended May 31, 2009 to be between $150 million and $170 million. Cash and cash equivalents and marketable securities are expected to be used to finance future acquisitions, capital expenditures, expansion and additional purchases under the share buyback program as detailed below.
In May 2005, Cintas announced that the Board of Directors authorized a $500.0 million share buyback program at market prices. In July 2006, Cintas announced that the Board of Directors approved the expansion of its share buyback program by an additional $500.0 million. Cintas made no purchases under the share buyback program during the three months ended November 30, 2008. From the inception of the share buyback program through December 31, 2008, Cintas has purchased a total of approximately 20.3 million shares of Cintas common stock, or approximately 12% of the total shares outstanding at the beginning of the program, at an average price of $39.31 per share for a total purchase price of approximately $797.9 million. The maximum approximate dollar value of shares that may yet be purchased under the plan as of December 31, 2008, is $202.1 million. The Board of Directors did not specify an expiration date for this program.
Read the The complete Report
Gurus buys and sells of CTAS
10-year financial history of CTAS.
Insider buys/sells of CTAS.
Cintas Corp. provides a specialized service to businesses of all types - from small service and manufacturing companies to major corporations. The company is divided into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents to its customers. The Other Services operating segment involves the design manufacture and direct sale of uniforms to its customers as well as the sale of ancillary services including sanitation supplies first aid products and cleanroom supplies. Cintas Corp. has a market cap of $3.33 billion; its shares were traded at around $24.04 with a P/E ratio of 10.5 and P/S ratio of 0.85. The dividend yield of Cintas Corp. stocks is 2.11%. Cintas Corp. had an annual average earning growth of 10.5% over the past 10 years. GuruFocus rated Cintas Corp. the business predictability rank of 5-star.
Highlight of Business Operations:
Selling and administrative expenses increased $9.5 million, or 3.4%, for the three months ended November 30, 2008, as compared to the three months ended November 30, 2007. Medical costs increased by $8.0 million over the same period in the prior fiscal year reflecting continued rising costs in the healthcare industry and additional claims incurred. In addition, bad debt expense increased by $1.3 million.As discussed above, Rental Uniforms and Ancillary Products revenue increased from $708.8 million to $711.5 million, or 0.4%, and the cost of rental uniforms and ancillary products increased $9.4 million, or 2.4%. The operating segments gross margin was $309.8 million, or 43.6% of revenue. This gross margin percent to sales of 43.6% was lower than last fiscal years second quarter of 44.7% mainly due to increased energy related costs and hanger costs. Energy related costs include natural gas, electric and gas, and they increased a combined 30 basis points over last years second quarter. Hanger costs increased 40 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.
Cost of rental uniforms and ancillary products consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, shop towels and other rental items. Cost of rental uniforms and ancillary products increased $25.2 million, or 3.2%, for the six months ended November 30, 2008, as compared to the six months ended November 30, 2007. This increase was mainly due to increased Rental Uniforms and Ancillary Products operating segment revenue, a $10.5 million increase in energy costs and a $6.2 million increase in hanger costs.
As discussed above, Rental Uniforms and Ancillary Products revenue increased from $1.42 billion to $1.43 billion, or 1.0%, and the cost of rental uniforms and ancillary products increased $25.2 million, or 3.2%. The operating segments gross margin was $623.9 million, or 43.5% of revenue. This gross margin percent to sales of 43.5% was lower than the 44.8% in the same period in the prior fiscal year mainly due to increased energy related costs and hanger costs. Energy related costs include natural gas, electric and gas, and they increased a combined 70 basis points over the same period in the prior fiscal year. Hanger costs increased 40 basis points primarily as a result of an import tariff imposed by the U.S. government on hangers produced in China.
At November 30, 2008, Cintas had $127.3 million in cash and cash equivalents and marketable securities which is 33.6% less than the $191.7 million at May 31, 2008. Capital expenditures were $96.0 million for the six months ended November 30, 2008. We expect capital expenditures for the year ended May 31, 2009 to be between $150 million and $170 million. Cash and cash equivalents and marketable securities are expected to be used to finance future acquisitions, capital expenditures, expansion and additional purchases under the share buyback program as detailed below.
In May 2005, Cintas announced that the Board of Directors authorized a $500.0 million share buyback program at market prices. In July 2006, Cintas announced that the Board of Directors approved the expansion of its share buyback program by an additional $500.0 million. Cintas made no purchases under the share buyback program during the three months ended November 30, 2008. From the inception of the share buyback program through December 31, 2008, Cintas has purchased a total of approximately 20.3 million shares of Cintas common stock, or approximately 12% of the total shares outstanding at the beginning of the program, at an average price of $39.31 per share for a total purchase price of approximately $797.9 million. The maximum approximate dollar value of shares that may yet be purchased under the plan as of December 31, 2008, is $202.1 million. The Board of Directors did not specify an expiration date for this program.
Read the The complete Report
Gurus who own CTAS
CTAS is in the portfolios of Jean-Marie Eveillard, Tweedy Browne. More on CTAS:Gurus buys and sells of CTAS
10-year financial history of CTAS.
Insider buys/sells of CTAS.
