Cintas Corp. (CTAS, Financial) filed Quarterly Report for the period ended 2010-08-31.
Cintas Corp. has a market cap of $4.19 billion; its shares were traded at around $27.42 with a P/E ratio of 18.7 and P/S ratio of 1.2. The dividend yield of Cintas Corp. stocks is 1.8%. Cintas Corp. had an annual average earning growth of 3.7% over the past 10 years.CTAS is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, Robert Olstein of Olstein Financial Alert Fund, Arnold Van Den Berg of Century Management, Arnold Van Den Berg of Century Management, Tweedy Browne of Tweedy Browne CO LLC, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Selling and administrative expenses increased $29.0 million, or 11.0%, for the three months ended August 31, 2010, compared to the three months ended August 31, 2009. Labor and payroll tax expenses increased by $16.1 million compared to the same period in the prior fiscal year primarily as a result of an increase in the number of sales representatives. In addition, bad debt expense increased $3.7 million, and professional services increased $2.2 million due to costs related to our enterprise wide system conversion.
As discussed above, Rental Uniforms and Ancillary Products operating segment revenue increased from $655.6 million to $657.6 million, or 0.3%, and the cost of rental uniforms and ancillary products increased $8.6 million, or 2.4%. The operating segments gross margin was $286.0 million, or 43.5% of revenue. This gross margin percent of revenue of 43.5% was 110 basis points lower than the prior fiscal years first quarter of 44.6%. Maintenance costs increased $2.8 million and energy related costs, which include natural gas, electric and gas, increased $1.2 million from the prior fiscal years first quarter.
At August 31, 2010, Cintas had $369.4 million in cash and cash equivalents and marketable securities which is $196.7 million less than the $566.1 million at May 31, 2010. This decrease is primarily due to the share repurchases made in the first quarter of $131.3 million, capital expenditures of $48.2 million and acquisitions of $47.8 million. Cash and cash equivalents and marketable securities are expected to be used to finance expansion, capital expenditures and future acquisitions.
As of August 31, 2010, we had $775 million in fixed rate notes outstanding with maturities ranging from 2012 to 2036. Cintas had a commercial paper program with a capacity of $600.0 million that was fully supported by a backup revolving credit facility through a credit agreement with our banking group. This revolving credit facility was renewed on September 27, 2010, with a capacity of $300.0 million and an accordion feature that allows for a maximum borrowing capacity of $450 million and an expiration date of September 26, 2014. We believe this program will be adequate to provide necessary funding for our operations. As of August 31, 2010 and May 31, 2010, we had no commercial paper outstanding and no outstanding borrowings on our revolving credit facility.
For the three months ended August 31, 2010, Cintas purchased 4,944,931 shares of Cintas common stock under this program at an average price of $26.34 per share for a total purchase price of $130.2 million. From the inception of the share buyback program through September 30, 2010, Cintas has purchased a total of approximately 28.0 million shares of Cintas stock at an average price of $35.78 per share for a total purchase price of $1 billion.
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Cintas Corp. has a market cap of $4.19 billion; its shares were traded at around $27.42 with a P/E ratio of 18.7 and P/S ratio of 1.2. The dividend yield of Cintas Corp. stocks is 1.8%. Cintas Corp. had an annual average earning growth of 3.7% over the past 10 years.CTAS is in the portfolios of Jean-Marie Eveillard of First Eagle Investment Management, LLC, Robert Olstein of Olstein Financial Alert Fund, Arnold Van Den Berg of Century Management, Arnold Van Den Berg of Century Management, Tweedy Browne of Tweedy Browne CO LLC, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, George Soros of Soros Fund Management LLC, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Rental Uniforms and Ancillary Products operating segment revenue increased 0.3% for the three months ended August 31, 2010, over the same period in the prior fiscal year from $655.6 million to $657.6 million. Other Services revenue, consisting of revenue from the reportable operating segments of Uniform Direct Sales, First Aid, Safety and Fire Protection Services and Document Management Services, increased 12.9% for the three months ended August 31, 2010, over the same period in the prior fiscal year from $235.9 million to $266.3 million. The increase primarily resulted from an organic increase of 10.4%. The remaining 2.5% represents growth derived through acquisitions mainly in our First Aid, Safety and Fire Protection Services operating segment and our Document Management Services operating segment during the quarter. The positive internal growth rate for the quarter was primarily the result of a 23.2% increase in Document Management operating segment revenue and a 10.6% increase in Uniform Direct Sales operating segment revenue.Selling and administrative expenses increased $29.0 million, or 11.0%, for the three months ended August 31, 2010, compared to the three months ended August 31, 2009. Labor and payroll tax expenses increased by $16.1 million compared to the same period in the prior fiscal year primarily as a result of an increase in the number of sales representatives. In addition, bad debt expense increased $3.7 million, and professional services increased $2.2 million due to costs related to our enterprise wide system conversion.
As discussed above, Rental Uniforms and Ancillary Products operating segment revenue increased from $655.6 million to $657.6 million, or 0.3%, and the cost of rental uniforms and ancillary products increased $8.6 million, or 2.4%. The operating segments gross margin was $286.0 million, or 43.5% of revenue. This gross margin percent of revenue of 43.5% was 110 basis points lower than the prior fiscal years first quarter of 44.6%. Maintenance costs increased $2.8 million and energy related costs, which include natural gas, electric and gas, increased $1.2 million from the prior fiscal years first quarter.
At August 31, 2010, Cintas had $369.4 million in cash and cash equivalents and marketable securities which is $196.7 million less than the $566.1 million at May 31, 2010. This decrease is primarily due to the share repurchases made in the first quarter of $131.3 million, capital expenditures of $48.2 million and acquisitions of $47.8 million. Cash and cash equivalents and marketable securities are expected to be used to finance expansion, capital expenditures and future acquisitions.
As of August 31, 2010, we had $775 million in fixed rate notes outstanding with maturities ranging from 2012 to 2036. Cintas had a commercial paper program with a capacity of $600.0 million that was fully supported by a backup revolving credit facility through a credit agreement with our banking group. This revolving credit facility was renewed on September 27, 2010, with a capacity of $300.0 million and an accordion feature that allows for a maximum borrowing capacity of $450 million and an expiration date of September 26, 2014. We believe this program will be adequate to provide necessary funding for our operations. As of August 31, 2010 and May 31, 2010, we had no commercial paper outstanding and no outstanding borrowings on our revolving credit facility.
For the three months ended August 31, 2010, Cintas purchased 4,944,931 shares of Cintas common stock under this program at an average price of $26.34 per share for a total purchase price of $130.2 million. From the inception of the share buyback program through September 30, 2010, Cintas has purchased a total of approximately 28.0 million shares of Cintas stock at an average price of $35.78 per share for a total purchase price of $1 billion.
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