10-KPeriod: FY2021

CINTAS CORP Annual Report, Year Ended May 31, 2021

Filed July 28, 2021For Securities:CTAS

Summary

Cintas Corporation's 2021 10-K filing reveals a company that navigated the challenges of the COVID-19 pandemic while demonstrating resilience and growth. Total revenue saw a modest increase of 0.4% to $7.1 billion, with the Uniform Rental and Facility Services segment remaining the largest contributor. Despite initial impacts from business closures and customer payment delays, the company's designation as an "essential business" allowed for continued operations. The latter half of fiscal year 2021 saw a positive impact from vaccine rollouts and the lifting of restrictions, leading to a significant rebound in organic revenue, particularly in the fourth quarter. Financially, Cintas reported a robust increase in net income by 26.8% to $1.11 billion, translating to diluted earnings per share of $10.24, up from $8.11 in the prior year. This growth was driven by improved cost controls, operational efficiencies, and a one-time gain from the sale of certain operating assets. The company also continued its commitment to shareholder returns through increased dividends and active share repurchases, underscoring a strong financial position and confidence in future performance.

Financial Highlights

54 data points
Beta

Revenue

$7.12B

46.6% Gross Margin

Net Income

$1.11B

15.6% Net Margin

EPS (Diluted)

$2.56

Total Assets

$8.24B

Cash & Equivalents

$493.64M

Free Cash Flow

$1.22B

Financial Statements
Beta
Revenue$7.12B
Gross Profit$3.31B
SG&A Expenses$1.93B
Operating Income$1.39B
Interest Expense$98.21M
Net Income$1.11B
EPS (Basic)$2.63
EPS (Diluted)$2.56
Shares Outstanding (Basic)419.50M
Shares Outstanding (Diluted)430.83M

Key Highlights

  • 1Total revenue for fiscal year 2021 reached $7.1 billion, a slight increase of 0.4% compared to the prior year, demonstrating stability amidst pandemic-related disruptions.
  • 2Net income saw a significant increase of 26.8% to $1.11 billion, resulting in diluted earnings per share of $10.24, up from $8.11 in fiscal year 2020.
  • 3The Uniform Rental and Facility Services segment, Cintas' largest, showed a revenue increase of 0.8% to $5.69 billion, highlighting its consistent performance.
  • 4First Aid and Safety Services segment revenue grew by 10.7% to $784.3 million, reflecting increased demand for safety products during the pandemic.
  • 5Operating cash flow remained strong, providing $1.36 billion in net cash, a 5.3% increase from the prior year, indicating healthy operational liquidity.
  • 6Cintas continued its capital allocation strategy, paying $530.5 million in dividends and repurchasing shares, demonstrating a commitment to shareholder returns.
  • 7The company experienced a positive revenue trend in the fourth quarter of fiscal year 2021 with 11.5% organic growth, signaling a strong recovery from pandemic impacts.

Frequently Asked Questions

While the COVID-19 pandemic initially caused disruptions, including temporary business closures impacting some customers and potential delays in payments, Cintas was designated an "essential business," allowing for continued operations. The company saw a positive impact in the latter half of the fiscal year due to vaccine rollouts and the easing of restrictions, leading to an overall revenue increase and a strong rebound in organic growth, particularly in Q4.

Cintas reported a 0.4% increase in total revenue to $7.1 billion and a significant 26.8% jump in net income to $1.11 billion. The Uniform Rental and Facility Services segment showed stable growth, while the First Aid and Safety Services segment experienced robust expansion. The company's strategy focuses on increasing penetration with existing customers and broadening its customer base, supported by strong operational efficiencies and cost management, indicating a positive outlook for continued profitable growth.

Cintas demonstrated a strong commitment to shareholder returns by increasing its quarterly dividend and actively engaging in share repurchases. In fiscal year 2021, the company paid $530.5 million in dividends and completed a $1 billion share buyback program, reflecting confidence in its financial health and a strategy to enhance shareholder value.

Key risks identified include negative global and North American economic factors, increased competition potentially leading to price pressures, challenges in opening new cost-effective facilities, risks associated with acquisitions and their integration, supplier-related disruptions, cybersecurity threats, and the need to maintain effective internal controls. The ongoing impact of the COVID-19 pandemic and its long-term effects on the economy and customer behavior also remain a significant uncertainty.