Scott D. Farmer, Chief Executive Officer, stated, “We are pleased to report a solid start to our fiscal 2014 year. All four of our operating segments had strong revenue performance in the first quarter, with each segment reporting organic growth of better than six percent.”
Operating income increased to $140.1 million, or 12.5% of revenue. The operating margin of 12.5% was lower than last year’s first quarter operating margin of 13.2% due to the effects of one less workday in this year’s first quarter, route capacity added in fiscal 2013 and lower recycled paper prices.
Net income increased 1.3% to $77.8 million as compared to $76.7 million in last year’s first quarter. Earnings per diluted share (EPS) for the first quarter were $0.63, a 5.0% increase over the $0.60 EPS in last year’s first quarter.
During the first quarter and into September, Cintas purchased 3.0 million shares of its common stock at a cost of approximately $147.0 million. The total purchases included acquiring 2.1 million shares at a cost of approximately $100.7 million during the latter part of the first quarter, and the remaining 0.9 million shares were purchased through September 19, 2013, at a cost of approximately $46.3 million.
While it had no impact on the first quarter EPS, the share buyback is expected to benefit fiscal year 2014 EPS by approximately $0.04. The Cintas Board of Directors authorized a $500.0 million share buyback program in October 2011 and approved an additional share repurchase program of $500.0 million on July 30, 2013.
As of September 19, 2013, the Company had available for future share repurchases $15.4 million under the October 2011 share buyback program and $500.0 million under the July 2013 program.
Mr. Farmer concluded, “When we introduced our fiscal 2014 guidance in July, we indicated our outlook was based on an uncertain U.S. economic landscape which caused delays to the hiring and investment decisions of our customers. We have not seen any evidence since that time to change our outlook of the U.S. economy. With that in mind, we reiterate our fiscal 2014 revenue expectations to be in the range of $4.5 billion to $4.6 billion.
“We are updating our full year EPS guidance to incorporate the impact of the share buybacks through September 19, 2013. As a result, we now expect EPS to be in the range of $2.70 to $2.79. This guidance assumes no deterioration in the U.S. economy and does not consider any additional share buybacks. It does incorporate the impact of having one less workday in fiscal 2014 compared to fiscal 2013 and our current estimate of the impact of the Affordable Care Act on our cost structure during fiscal year 2014.”
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