01—Abstract
Summary
Summary of the 10-K filed July 30, 2010. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation's Form 10-K for the fiscal year ended May 31, 2010, reveals a company navigating a challenging economic environment.
Total revenue saw a decrease of 6.0%a year-over-year, largely due to the lingering effects of the economic downturn which impacted customer employee levels and spending on ancillary products and services. Despite the revenue decline, the company demonstrated resilience by increasing net cash provided by operating activities by 7.3% and continuing its track record of consecutive annual dividend increases for the 27th year. The company's core Rental Uniforms and Ancillary Products segment experienced a revenue decrease, but performance in the Document Management Services segment showed robust growth, up 18.6% driven by increased destruction services and higher recycled paper revenue.
Cintas maintained a strong balance sheet, with a reduced debt-to-capitalization ratio and a significant cash position. The company also addressed operational inefficiencies by implementing cost reduction initiatives and restructuring activities in response to lower volumes.
02—Key points
Key Highlights
- Total revenue for fiscal year 2010 decreased by 6.0% to $3.55 billion, reflecting the impact of the economic downturn on customer demand.
- Despite revenue challenges, net cash provided by operating activities increased by 7.3% to $561.6 million, indicating strong operational cash generation.
- The Document Management Services segment was a standout performer, with revenue growing by 18.6% organically, driven by increased demand for destruction services and higher recycled paper prices.
- Cintas continued its commitment to shareholders by increasing its annual dividend for the 27th consecutive year, to $0.48 per share.
- The company actively managed its cost structure, undertaking restructuring activities and implementing cost-reduction initiatives across segments to align with lower volumes.
- The debt-to-capitalization ratio improved, decreasing from 24.9% to 23.7% year-over-year, demonstrating a strengthened financial position.
- The company maintained effective internal controls over financial reporting, as attested by its independent registered public accounting firm.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Cintas Corp kept $0.06.
- Revenue$3.55B100.0%
- Cost of revenue−$2.05B57.8%
- Gross profit$1.50B42.2%
- Operating costs−$1.11B31.2%
- Operating income$390.8M11.0%
- Interest, other & tax−$175.2M4.9%
- Net income$215.6M6.1%
Where FY2010 revenue went
$3.55B- Cost of revenue: $2.05B, 58% of revenue
- SG&A: $1.09B, 31% of revenue
- Net income: $215.6M, 6.1% of revenue
- Other operating costs: $20.6M, 0.6% of revenue
- Interest, other & tax: $175.2M, 4.9% of revenue
Kept 6.1% as net incomeNet income $215.6M · 6.1%Other operating costs $20.6M · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed July 30, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $3.55B$3.77B | −6.0% |
| Gross Profit | $1.50B— | — |
| SG&A Expenses | $1.09B$1.08B | +0.3% |
| Operating Income | $390.81M$409.06M | −4.5% |
| Interest Expense | $48.61M$50.24M | −3.2% |
| Net Income | $215.62M$226.36M | −4.7% |
| EPS (Basic) | $0.35$0.37 | −5.4% |
| EPS (Diluted) | $0.35$0.37 | −5.4% |
| Shares Outstanding (Basic) | 611.43M— | — |
| Shares Outstanding (Diluted) | 611.43M— | — |
05—Questions
Frequently Asked Questions
How did the economic downturn affect Cintas' revenue in fiscal year 2010?
The economic downturn significantly impacted Cintas' revenue, leading to a 6.0% decrease to $3.55 billion. This was primarily due to decreased uniform wearers resulting from job losses, and reduced customer spending on ancillary products like mats and towels due to tighter budgets.
Which operating segments performed best and worst during fiscal year 2010?
The Document Management Services segment was the strongest performer, with revenue growing 18.6% due to increased demand for destruction services and higher recycled paper prices. The Rental Uniforms and Ancillary Products segment, while still the largest, saw a revenue decrease of 6.7%, reflecting the broader economic challenges.
What steps did Cintas take to manage costs and improve efficiency in response to the economic conditions?
Cintas implemented several cost management strategies, including reducing excess capacity by closing or converting rental processing plants, workforce reductions, hiring and wage freezes, and cutting discretionary spending. They also engaged in restructuring activities to align costs with lower volumes.
How did Cintas manage its debt and maintain financial flexibility?
Cintas maintained a strong financial position by reducing its debt-to-capitalization ratio from 24.9% to 23.7%. The company also ended the fiscal year with a substantial cash balance of $566.1 million and no outstanding commercial paper, supported by its credit facility.
06—Continue