LONDON, UK / ACCESSWIRE / September 29, 2016 / Active Wall St. announces its post-earnings coverage on Cintas Corporation (NASDAQ: CTAS). The company posted its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 27, 2016. The Cincinnati, Ohio-based company's Q1 FY17 total revenue and net income from continuing operations surged 7.9% and 30.0% on y-o-y basis, respectively; both beating market expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
Today, AWS is promoting its earnings coverage on CTAS; touching on G&K Services, Inc. (NASDAQ: GK). Get our free coverage by signing up to http://www.activewallst.com/registration-3/?symbol=CTAS.
Earnings Reviewed
For the quarter ended on August 31, 2016, Cintas reported total revenue of $1.29 billion compared to total revenue of $1.20 billion recorded at the end of Q1 FY16. The increase in quarterly total revenue was primarily driven by new business gains, with the existing customer engaging in some more products and services, and strong customer retention efforts.
The business services company's net income surged to $138.09 million, or $1.29 per diluted share, in Q1 FY17 from $100.18 million, or $0.89 per diluted share, in the previous year's quarter. Moreover, net income from continuing operations for Q1 FY17 came in at $138.09 million, or $1.29 per diluted share, which was above $106.20 million, or $0.94 per diluted share, reported in Q1 FY16 and market consensus estimate of $1.08 per diluted share.
For the earnings releases, Scott D. Farmer, Cintas' Chief Executive Officer, stated:
"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. This solid start positions us for another year of record-breaking results."
Operational Metrics
In Q1 FY17, Cintas operating income grew 11.6% y-o-y to $206.96 million from $185.51 million, recorded in the year ago period. The company's Q1 FY17 operating income included transaction expenses amounting to $2.8 million pertaining to the recently announced agreement to acquire G&K Services, Inc. (NASDAQ: GK). Furthermore, operating margin for Q1 FY17 also improved to16% of total revenues from 15.5% of total revenues in the prior year's reported quarter.
Segment-wise
Cintas' Uniform rental and facility services segment total revenue for Q1 FY17 increased 6.5% y-o-y to $999.60 million from $938.41 million reported in Q1 FY16. The segment's Q1 FY17 income before income taxes surged to $185.25 million from $165.38 million in Q1 FY16.
The company's First Aid and Safety Services segment total revenue for Q1 FY17 grew 25% y-o-y to $124.84 million from $99.49 million in Q1 FY16. Furthermore, the segment's income before income taxes improved to $11.51 million in Q1 FY17 from $8.59 million in Q1 FY16.
Cash Matters and Balance Sheet
In Q1 FY17, the company posted a positive cash flow from operations of $157.59 million compared to a positive cash flow from operations of $143.08 million in the last year's quarter. Additionally, the company recorded cash and cash equivalents balance of $99.21 million on August 31, 2016, compared to $139.36 million as on close of books on May 31, 2016.
Acquisition
On August 16, 2016, Cintas entered into a definitive agreement to acquire rival G&K Services for $97.50 per share in cash. The purchase price represented a premium of 19% on the closing price of G&K Services' stock as on August 15, 2016. The merger deal is still under process with pending approvals from G&K's shareholders and regulatory clearances from both the US and Canada.
Guidance
After a robust Q1 FY17, the company updated its earnings outlook for full year FY17. The company now forecast revenues for FY17 to be in the range of $5.160 billion to $5.225 billion, up 5.2%–6.5% on y-o-y basis. The company's management expects earnings from continuing operations to lie between $4.55 per share and$4.63 per share, with a year-over-year growth in the range of 11.2% to 13.2%.
Stock Performance
On Wednesday, the stock closed the trading session at $116.17, climbing 2.42% from its previous closing price of $113.43. A total volume of 1.48 million shares have exchanged hands, which was higher than the 3-month average volume of 712.16 thousand shares. Cintas' stock price advanced 21.45% in the last three months, 29.35% in the past six months, and 38.57% in the previous twelve months. Furthermore, since the start of the year, shares of the company has gained 27.59%. The stock is trading at a PE ratio of 27.93 and has a dividend yield of 0.90%.
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