10-QPeriod: Q2 FY2010

CINTAS CORP Quarterly Report for Q2 Ended Nov 30, 2009

Filed January 8, 2010For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported its financial results for the second quarter and first half of fiscal year 2010, ending November 29, 2009. The company experienced a significant revenue decline of 10.2% for the quarter and 10.6% for the first half, attributed to the challenging U.S. and Canadian economic conditions leading to job losses and reduced customer spending. Despite the revenue decrease, Cintas demonstrated effective cost management, with selling and administrative expenses decreasing by 8.9% for the quarter and 8.4% for the half. This cost control, combined with a substantial increase in cash generated from operations, helped to mitigate the impact of the economic downturn on profitability, although net income and EPS saw declines compared to the prior year. The company also reported progress in its Document Management Services segment, which showed revenue growth.

Financial Highlights

24 data points
Beta

Revenue

$884.51M

Net Income

$57.18M

6.5% Net Margin

EPS (Diluted)

$0.09

Cash & Equivalents

$342.01M

Free Cash Flow

$126.01M

Financial Statements
Beta
Revenue$884.51M
SG&A Expenses$259.41M
Operating Income$106.39M
Interest Expense$12.58M
Net Income$57.18M
EPS (Basic)$0.09
EPS (Diluted)$0.09

Key Highlights

  • 1Total revenue declined by 10.2% for the quarter and 10.6% for the first half due to a challenging economic environment impacting customer demand.
  • 2Significant cost control measures were implemented, with Selling and Administrative expenses decreasing by 8.9% for the quarter and 8.4% for the first half.
  • 3Net income decreased by 20.4% for the quarter and 26.1% for the first half, with Diluted EPS falling to $0.37 and $0.72 respectively.
  • 4The Rental Uniforms and Ancillary Products segment, the largest revenue contributor, saw a 9.5% decrease in quarterly revenue.
  • 5Document Management Services segment was a bright spot, with revenue increasing by 12.6% for the quarter, driven by new customer acquisition and acquisitions.
  • 6Cintas significantly improved its liquidity, with cash and cash equivalents and marketable securities increasing by $230.1 million to $480.2 million, driven by strong cash flow from operations.
  • 7The company reported an effective tax rate of 39.3% for the quarter and 38.7% for the first half.

Frequently Asked Questions

The primary reason for the revenue decline is the challenging macroeconomic environment in the U.S. and Canada, which has led to customer job losses and reduced spending on Cintas' products and services, particularly in the Rental Uniforms and Ancillary Products and Uniform Direct Sales segments.

Cintas is implementing cost reduction initiatives, including reducing headcount and controlling labor and payroll tax expenses. Selling and administrative expenses have decreased significantly for both the quarter and the first half of the fiscal year.

The Document Management Services segment showed positive growth, with a 12.6% increase in revenue for the quarter. This growth was driven by acquiring new customers and strategic acquisitions, indicating resilience despite the broader economic challenges.

Yes, Cintas has strengthened its financial position by significantly increasing its cash and cash equivalents and marketable securities, reaching $480.2 million. This improvement is a result of strong cash flow generated from operations, which more than offset capital expenditures.