Cintas Corporation (NASDAQ:CTAS) Q3 2016 Earnings Conference Call - Final Transcript

Mar 22, 2016 • 05:00 pm ET


Cintas Corporation (NASDAQ:CTAS) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, everyone, and welcome to the Cintas Quarterly Earnings Results Conference Call. Today's call is being recorded.

At this time, I would like to turn the call over to Mr. Mike Hansen, Vice President of Finance and Chief Financial Officer. Please go ahead, sir.

Mike Hansen

Good evening, and thank you for joining us.

With me is Paul Adler, Cintas' Vice President and Treasurer. We will discuss our third quarter results for fiscal 2016. After our commentary, we'll be happy to answer any questions.

The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the SEC.

We're pleased to report third quarter revenue of $1,216 million, an increase of 9.7% from the prior year's third quarter. Organic revenue growth which adjusts for the impact of acquisitions and foreign currency exchange rate fluctuations was 6.8%. Organic growth for the Uniform Rental and Facility Services operating segment was 6.1% and the First Aid and Safety Services organic growth was 11.9%.

Third quarter operating income was $193 million, an increase of 11.1% over last year's third quarter. Operating margin improved to 15.9% of revenue compared to an operating margin of 15.7% in the prior year period. The Uniform Rental and Facility Services segment led the way with a margin of 17.9%.

Net income from continuing operations for the third quarter of fiscal 2016 was $117 million compared to $100 million in the prior year period, an increase of 16.9%. Net income from continuing operations as a percent of revenue improved to 9.6% from 9.0% of revenue in last fiscal year's third quarter.

Earnings per diluted share or EPS from continuing operations for the third quarter were $1.05 compared to $0.85 from the third quarter of last year. Third quarter EPS from continuing operations increased 23.5% compared to the prior year period.

As a result of a third quarter results, we are updating our annual guidance. We expect fiscal 2016 revenue to be in the range of $4,860 million to $4,890 million, and fiscal 2016 EPS from continuing operations to be in the range of $3.98 to $4.03. This guidance does not include any potential deterioration in the U.S. economy or additional share buybacks. The EPS guidance is detailed in the table within today's press release.

Since the beginning of fiscal year 2016, Cintas repurchased about 5.7 million shares under our buyback program at an aggregate cost of about $483 million, including $100 million of repurchases in the third quarter. The company still has $280 million available under the current Board of Directors stock repurchase authorization.

Before Paul provides more details of company financial performance, I want to take the opportunity