01—Abstract
Summary
Summary of the 10-K filed July 30, 2012. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation's 2012 Form 10-K report highlights a year of steady growth, with total revenue reaching $4.1 billiona, a 7.7% increase over the prior year.
This growth was driven by a combination of organic expansion and strategic acquisitions, particularly within the Document Management and First Aid, Safety, and Fire Protection Services segments. The company's core Rental Uniforms and Ancillary Products segment also showed robust performance, with revenue up 8.2%b driven by improved sales representative productivity and capacity utilization. Financially, Cintas demonstrated strong operational efficiency, with selling and administrative expenses decreasing as a percentage of revenue.
Net income saw a significant increase of 20.5% to $297.6 millionc, and diluted earnings per share grew by 35.1% to $2.27, partly due to share repurchases. The company also continued its track record of increasing dividends, marking the 29th consecutive year of dividend growth. Cintas maintains a solid liquidity position, with substantial operating cash flow and access to credit facilities, supported by favorable credit ratings.
02—Key points
Key Highlights
- Total revenue increased by 7.7% to $4.1 billion in fiscal year 2012.
- Net income grew by 20.5% to $297.6 million, with diluted EPS rising 35.1% to $2.27.
- The Rental Uniforms and Ancillary Products segment remains the largest revenue contributor, growing 8.2% year-over-year.
- Acquisitions contributed to growth, particularly in the Document Management and First Aid, Safety and Fire Protection Services segments.
- Selling and administrative expenses decreased as a percentage of revenue (29.2% vs. 30.7%), indicating improved operational efficiency.
- Cintas demonstrated a commitment to shareholder returns by repurchasing $129.6 million in common stock during the period and increasing its annual dividend for the 29th consecutive year.
- The company maintained strong liquidity with $469.9 million in cash flow from operations and access to a revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Cintas Corp kept $0.07.
- Revenue$4.10B100.0%
- Cost of revenue−$2.36B57.6%
- Gross profit$1.74B42.4%
- Operating costs−$1.20B29.2%
- Operating income$539.6M13.2%
- Interest, other & tax−$242.0M5.9%
- Net income$297.6M7.3%
Where FY2012 revenue went
$4.10B- Cost of revenue: $2.36B, 58% of revenue
- SG&A: $1.20B, 29% of revenue
- Net income: $297.6M, 7.3% of revenue
- Interest, other & tax: $242.0M, 5.9% of revenue
Kept 7.3% as net incomeNet income $297.6M · 7.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed July 30, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $4.10B$3.81B | +7.7% |
| Gross Profit | $1.74B$1.61B | +8.0% |
| SG&A Expenses | $1.20B$1.17B | +2.6% |
| Operating Income | $539.63M$440.34M | +22.5% |
| Interest Expense | $70.63M$49.70M | +42.1% |
| Net Income | $297.64M$246.99M | +20.5% |
| EPS (Basic) | $0.57$0.42 | +35.1% |
| EPS (Diluted) | $0.57$0.42 | +35.1% |
| Shares Outstanding (Basic) | 519.56M586.34M | −11.4% |
| Shares Outstanding (Diluted) | 520.13M586.34M | −11.3% |
05—Questions
Frequently Asked Questions
What were the key drivers of Cintas' revenue growth in fiscal year 2012?
Revenue growth in fiscal year 2012 was driven by a combination of factors. Organic growth accounted for 6.1%, stemming from improved sales representative productivity and customer retention. Acquisitions also contributed 1.2% to the growth, primarily in the Document Management and First Aid, Safety, and Fire Protection Services segments. Additionally, there was a slight positive impact of 0.4% from an extra workday in fiscal 2012 compared to fiscal 2011.
How did Cintas manage its costs and expenses in fiscal year 2012?
Cintas demonstrated effective cost management. While selling and administrative expenses increased in absolute terms by $30.0 million due to higher labor and employee-related costs, they decreased as a percentage of revenue from 30.7% in fiscal 2011 to 29.2% in fiscal 2012. This improvement was attributed to enhanced sales representative productivity and focused cost control initiatives.
What is Cintas' strategy for future growth?
Cintas' primary objective is to exceed customer expectations to maximize long-term value. Their growth strategy focuses on increasing penetration within existing customer accounts and broadening their customer base by serving new business segments. They also aim to identify and launch additional product and service opportunities. Geographic expansion, particularly in emerging businesses like first aid, safety, and document management, as well as strategic acquisitions, are also key components of their growth strategy.
What were the main financial risks highlighted by Cintas in this filing?
The company highlighted several financial risks, including the adverse impact of negative global economic factors on financial performance and demand for services. Increased competition could lead to price reductions. Risks associated with their acquisition strategy, such as integration difficulties and unforeseen liabilities, were also noted. Additionally, fluctuations in fuel and energy costs, unionization campaigns, supplier risks, foreign currency exchange rate volatility, and the potential for impairment charges were identified as potential challenges.
06—Continue