Yesterday, Cintas Corp. (CTAS) declared first quarter fiscal 2010 financial results. Quarterly revenue of $891.6 million declined 11% year-over-year but was up 1.5% sequentially. The yearly decline in revenue was primarily due to an extremely challenging economic environment that resulted in massive job cuts in almost all businesses.

On a GAAP basis, net income was $54 million or 35 cents per share, compared to a net income of $78.6 million or 51 cents in the prior-year quarter and a net income of $4.1 million or 3 cents per share in the previous quarter. However, Cintas’ quarterly adjusted (excluding special items) profit of $66 million or 43 cents per share beats the Zacks Consensus Estimate of 40 cents.

Quarterly gross margin was 42.9%, up from 42.4% a year ago and 38.1% in the previous quarter. This reflects aggressive cost-cutting measures taken by management during the past year. Operating expenses were $283.9 million compared to $287.3 million in the prior-year quarter and $312.8 million in the previous quarter. Management has streamlined the cost structure to improve productive efficiency.

At the end of the first quarter, Cintas had $357.9 million of cash and marketable securities on its balance sheet compared to $250.1 million at the end of the previous quarter. Total debt was $786.5 million, almost the same as the $786.7 million at the end of the previous quarter. Debt-to-capitalization ratio was 24.5% at the end of the reported quarter, compared to 29.3% at the end of the year-ago quarter and 24.9% at the end of the previous quarter.

During the quarter, Cintas generated cash from operation of $144.9 million compared to just $88.3 million in the prior-year quarter. Quarterly free cash flow (cash flow from operation less capital expenditure) was $120.1 million compared to $33.9 million in the year-ago quarter.

Rental Uniforms & Ancillary Products Segment

Quarterly revenue was $655.6 million compared to $721.4 million in the prior-year quarter and $647.5 million in the previous quarter. This segment continues to generate the bulk (74%) of total revenue. Gross margin was 44.6% compared to 43.5% in the year-ago quarter and 42.3% in the previous quarter.

Other Services Segment

Other services consist of Uniform direct sales; first aid, safety & fire protection and document management. Quarterly revenue was $235.9 million compared to $280.8 million in the prior-year quarter and $231.2 million in the previous quarter. This segment generated the rest 26% of total revenue. Gross margin was 38.2% compared to 39.5% in the year-ago quarter and 26.3% in the previous quarter.

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