Cintas Corporation (PPAI 303547) has released results for its fiscal 2019 second quarter, which ended November 30. Revenue for the Mason, Ohio-based distributor was $1.72 billion, an increase of seven percent over last year’s second quarter. The organic growth rate, which adjusts for the effects of acquisitions and foreign currency exchange rate fluctuations, was also seven percent. Cintas’ Uniform Rental and Facility Services operating segment posted an organic growth rate of 6.6 percent—up from 4.9 percent in the first quarter—and the organic growth of its First Aid and Safety Services segment was 10.2 percent.

“We are pleased with our second quarter and year-to-date performance,” says Scott D. Farmer, Cintas’ chairman and CEO. “We continue to make significant progress on integrating the G&K acquisition and implementing our enterprise resource-planning system. The company is on pace to achieve another year of strong growth in revenue, earnings and cash flow generation. I thank our employee-partners for the consistently high execution that helps get our customers ‘Ready for the Workday.’”

The company’s gross margin for the quarter of $775.2 million increased 8.2 percent from last year’s second quarter. Furthermore, gross margin as a percentage of revenue was 45.1 percent compared to 44.6 percent in the second quarter of the previous fiscal year. Uniform Rental and Facility Services’ gross margin as a percentage of revenue improved to 45.3 percent for second quarter fiscal 2019 from 44.7 percent in the second quarter of last fiscal year.

Operating income in the quarter of $275.6 million increased 17.2 percent from last year’s second quarter operating income of $235.2 million. The company reports that operating income was negatively impacted by integration expenses related to the G&K Services, Inc. acquisition by $7.8 million in second quarter fiscal 2019 and $13.1 million in second quarter fiscal 2018. Operating income as a percentage of revenue was 16 percent in second quarter compared to 14.6 percent in second quarter fiscal 2018. Excluding the integration expenses related to G&K, operating income as a percentage of revenue was 16.5 percent in the second quarter compared to 15.5 percent in the second quarter last fiscal year.

Farmer adds, “Earlier this month, on December 7th, we paid an annual dividend of $2.05 per share, an increase of 26.5 percent over last year’s annual dividend. We have increased the annual dividend for 35 consecutive years. In addition, we increased total shareholder return by executing on the share buyback program. In fiscal 2019, through the end of our second quarter, we have purchased $447 million of Cintas stock under our buyback program.”

Cintas reports net income from continuing operations for the second quarter of fiscal 2019 of $243 million, an increase of 76.4 percent since the previous year’s second quarter. Earnings per diluted share (EPS) were $2.18, an increase of 75.8 percent from last year’s $1.24. Net income and EPS from continuing operations were positively impacted by a lower effective tax rate in this fiscal year’s second quarter compared to last fiscal year’s second quarter, primarily from the enactment of The Tax Cuts and Jobs Act (the Tax Act). Additionally, fiscal 2019 second quarter EPS from continuing operations included a one-time, positive impact of $0.47 from a gain on the sale of a cost method investment. Finally, fiscal 2019 and fiscal 2018 second quarter EPS from continuing operations included a negative impact of $0.05 and $0.07, respectively, from integration expenses related to the G&K acquisition.

“Following our second quarter results, we are increasing our annual guidance for fiscal 2019,” Farmer says. “We are raising our revenue guidance from a range of $6.80 billion to $6.855 billion to a range of $6.87 billion to $6.91 billion and EPS from continuing operations excluding certain items from a range of $7.19 to $7.29 to a range of $7.30 to $7.38. Fiscal 2019 guidance excludes any future integration expenses related to the acquired G&K business.”