01—Abstract
Summary
Summary of the 10-Q filed January 7, 2011. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation's (CTAS) 10-Q filing for the period ending November 30, 2010, shows a revenue increase of 5.9% to $936.6 milliona for the quarter, driven by organic growth and strategic acquisitions, particularly in the Document Management and First Aid segments.
While overall net income saw a slight decrease of 2.3% to $55.9 millionb for the quarter ($0.38 EPS), the six-month period demonstrated a 5.4% increase in net income to $117.1 million ($0.78 EPS), reflecting strong performance in the "Other Services" revenue streams. The company continues to invest in growth, with capital expenditures increasing significantly year-over-year, primarily for system conversions and expansion.
Cintas also significantly repurchased $203.3 millionc of its common stock during the six-month period, utilizing existing cash reserves, and announced a new $500 million share buyback program. The company remains compliant with its debt covenants and maintained stable credit ratings, indicating a solid financial position despite increased operating expenses like selling and administrative costs and energy prices.
02—Key points
Key Highlights
- Total revenue increased by 5.9% to $936.6 million for the three months ended November 30, 2010, compared to the prior year period.
- Net income for the three months ended November 30, 2010, decreased by 2.3% to $55.9 million, resulting in diluted EPS of $0.38.
- For the six months ended November 30, 2010, net income increased by 5.4% to $117.1 million, with diluted EPS of $0.78.
- "Other Services" revenue (Uniform Direct Sales, First Aid, Safety & Fire Protection, Document Management) saw a substantial 15.7% increase for the quarter, driven by organic growth and acquisitions.
- Cintas repurchased approximately $203.3 million of its common stock in the six months ended November 30, 2010, and announced a new $500 million share buyback program.
- Capital expenditures increased significantly to $88.1 million in the six-month period, supporting expansion and system conversions.
- The company resolved a significant portion of its legal settlements during the period, including a $24 million settlement in the Veliz wage and hour lawsuit.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Cintas Corp kept $0.06.
- Revenue$936.6M100.0%
- Cost of revenue−$545.9M58.3%
- Gross profit$390.6M41.7%
- Operating costs−$288.3M30.8%
- Operating income$102.3M10.9%
- Interest, other & tax−$46.5M5.0%
- Net income$55.9M6.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed January 7, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $936.57M$884.51M | +5.9% |
| Gross Profit | $390.65M— | — |
| SG&A Expenses | $288.30M$259.41M | +11.1% |
| Operating Income | $102.34M$106.39M | −3.8% |
| Interest Expense | $12.16M$12.58M | −3.3% |
| Net Income | $55.87M$57.18M | −2.3% |
| EPS (Basic) | $0.10$0.09 | +2.7% |
| EPS (Diluted) | $0.10$0.09 | +2.7% |
| Shares Outstanding (Basic) | 582.04M— | — |
| Shares Outstanding (Diluted) | 582.04M— | — |
05—Questions
Frequently Asked Questions
What is Cintas Corporation's revenue performance for this reporting period?
For the three months ended November 30, 2010, Cintas Corporation reported a total revenue increase of 5.9% to $936.6 million compared to the same period in the prior year. The six-month period also showed a 4.8% increase in total revenue to $1.86 billion.
How did Cintas' profitability change in this quarter?
For the three months ended November 30, 2010, net income decreased slightly by 2.3% to $55.9 million, resulting in diluted earnings per share of $0.38. This was primarily due to increased selling and administrative expenses and higher energy costs, partially offset by revenue growth.
What is the company's strategy for growth and capital allocation?
Cintas is pursuing growth through increasing penetration at existing customers and broadening its customer base, including through strategic acquisitions in its emerging businesses. The company is also actively returning capital to shareholders through share repurchases, having spent $203.3 million in the six-month period and announcing a new $500 million buyback program. Capital expenditures are also increasing to support expansion and system improvements.
Are there any significant legal matters impacting the company?
Cintas reached a settlement in principle for approximately $24 million in the Veliz wage and hour lawsuit, which was accrued in current liabilities. The company also had other legal settlements totaling $4.1 million net of insurance proceeds. While management believes ordinary course litigation will not materially affect the financial position, specific larger litigation is ongoing and could potentially have material impacts.
06—Continue