01—Abstract
Summary
Summary of the 10-Q filed April 9, 2012. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation (CTAS) reported strong financial results for the nine months and third quarter ended February 29, 2012.
Revenue saw a significant increase of 7.9%a year-over-year for the third quarter and 8.9% for the nine-month period, driven by organic growth and strategic acquisitions across its diverse business segments. The company demonstrated effective cost management, with selling and administrative expenses growing at a slower pace than revenue, leading to improved operating income and net income. Diluted earnings per share also saw a substantial increase, bolstered by revenue growth and a reduction in outstanding shares due to ongoing share repurchase programs.
The company's core Rental Uniforms and Ancillary Products segment continues to be a strong performer, showing robust revenue growth and improved margins. Other segments, including First Aid, Safety and Fire Protection Services, and Uniform Direct Sales, also contributed positively to the overall performance. While the Document Management Services segment experienced some headwinds due to declining recycled paper prices, overall revenue and income growth across the company remain positive.
Cintas maintains a healthy balance sheet and strong liquidity, with ample cash flow from operations to fund its business and shareholder returns. The company reaffirmed its financial position and operational strength, projecting continued growth and value creation for its shareholders.
02—Key points
Key Highlights
- Total revenue increased by 7.9% to $1.01 billion for the third quarter and 8.9% to $3.05 billion for the nine months ended February 29, 2012, compared to the prior year periods.
- Net income rose by 28.7% to $76.0 million for the third quarter and 24.3% to $219.0 million for the nine months, demonstrating strong profitability.
- Diluted earnings per share (EPS) grew significantly, reaching $0.58 for the third quarter and $1.67 for the nine months, reflecting improved profitability and a reduced share count from buybacks.
- The Rental Uniforms and Ancillary Products segment showed strong performance with an 8.4% revenue increase in the third quarter and a 9.2% increase for the nine months, along with improved gross margins.
- Selling and administrative expenses as a percentage of revenue decreased for both the third quarter and nine-month periods, indicating effective cost management and operational efficiency.
- The company generated robust operating cash flow of $307.7 million for the nine months ended February 29, 2012, a substantial increase from the prior year, supporting liquidity and investment.
- Cintas continued its share repurchase program, with a new $500 million authorization announced, contributing to the increase in diluted EPS by reducing the number of outstanding shares.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2012, Cintas Corp kept $0.08.
- Revenue$1.01B100.0%
- Cost of revenue−$586.2M57.9%
- Gross profit$425.9M42.1%
- Operating costs−$288.4M28.5%
- Operating income$137.5M13.6%
- Interest, other & tax−$61.5M6.1%
- Net income$76.0M7.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2012filed April 9, 2012Financial Statements
Q3 FY2012 against Q3 FY2011
| Line item | Q3 FY2012Q3 FY2011 | Change |
|---|---|---|
| Revenue | $1.01B$937.83M | +7.9% |
| Gross Profit | $425.90M$391.92M | +8.7% |
| SG&A Expenses | $288.37M$283.05M | +1.9% |
| Operating Income | $137.54M$108.88M | +26.3% |
| Interest Expense | $17.22M$12.52M | +37.5% |
| Net Income | $76.03M$59.07M | +28.7% |
| EPS (Basic) | $0.14$0.10 | +41.5% |
| EPS (Diluted) | $0.14$0.10 | +41.5% |
| Shares Outstanding (Basic) | 518.94M581.21M | −10.7% |
| Shares Outstanding (Diluted) | 519.78M581.21M | −10.6% |
05—Questions
Frequently Asked Questions
How did Cintas' revenue perform in the third quarter of fiscal year 2012?
Cintas reported a 7.9% increase in total revenue for the third quarter ended February 29, 2012, reaching $1.01 billion compared to $937.8 million in the prior year period. This growth was driven by a combination of organic growth (5.9%) and contributions from acquisitions, along with the benefit of an extra workday in the quarter.
What is the trend in Cintas' profitability and earnings per share?
Profitability significantly improved, with net income increasing by 28.7% to $76.0 million for the third quarter and 24.3% to $219.0 million for the nine months. Diluted earnings per share also saw substantial growth, rising by 41.5% to $0.58 for the quarter and 40.3% to $1.67 for the nine months, partly due to share repurchases reducing the number of outstanding shares.
How is the Rental Uniforms and Ancillary Products segment performing?
The core Rental Uniforms and Ancillary Products segment demonstrated strong performance, with revenue growing 8.4% in the third quarter to $721.0 million. The segment also experienced an improvement in gross margin percentage, driven by increased revenue and effective cost management, including lower energy-related costs.
What is Cintas' current liquidity and cash flow situation?
Cintas maintains a strong liquidity position, evidenced by $307.7 million in net cash provided by operating activities for the nine months ended February 29, 2012, an increase from the prior year. The company ended the period with $218.0 million in cash and cash equivalents and $134.6 million in marketable securities, providing ample resources for operations, expansion, and shareholder returns.
06—Continue