01—Abstract
Summary
Summary of the 10-Q filed April 9, 2013. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation's filing for the nine months ended February 28, 2013, demonstrates continued revenue growth, with a 4.6% increase to $3.2 billiona, driven by solid organic performance in its core Rental Uniforms and Ancillary Products segment and strategic acquisitions in the First Aid, Safety and Fire Protection Services and Document Management segments.
Net income saw a modest increase of 4.8% to $229.5 millionb for the nine-month period. Despite some pressure on gross margins in the Rental segment due to increased material and service costs, and a decline in the Document Management segment influenced by lower recycled paper prices, the company's operational efficiency and strategic focus on sales representative productivity have supported overall profitability. The company also highlighted continued share repurchases and a stable financial position, supported by its credit ratings and access to debt markets.
02—Key points
Key Highlights
- Total revenue for the nine months ended February 28, 2013, increased by 4.6% to $3.2 billion compared to the prior year period.
- Net income for the nine months increased by 4.8% to $229.5 million, with diluted EPS rising 9.6% to $1.83 due to a decrease in weighted average shares outstanding from share repurchases.
- The Rental Uniforms and Ancillary Products segment, the largest revenue contributor, experienced a 4.5% revenue increase, driven by improved sales representative productivity.
- Acquisitions contributed to growth in the First Aid, Safety and Fire Protection Services (9.3% revenue increase) and Document Management Services (0.1% revenue increase) segments.
- Gross margin for the Rental Uniforms and Ancillary Products segment saw a decrease of 100 basis points to 42.4% due to increased material costs and route expansion expenses.
- The company's financial liquidity remains strong, with net cash provided by operating activities increasing to $368.3 million for the nine-month period.
- Cintas continued its share repurchase program, buying back 4.4 million shares for $179.4 million in the first nine months of fiscal 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Cintas Corp kept $0.07.
- Revenue$1.08B100.0%
- Cost of revenue−$633.7M58.9%
- Gross profit$441.9M41.1%
- Operating costs−$308.9M28.7%
- Operating income$133.0M12.4%
- Interest, other & tax−$58.3M5.4%
- Net income$74.7M6.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed April 9, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $1.08B$1.01B | +6.3% |
| Gross Profit | $441.94M$425.90M | +3.8% |
| SG&A Expenses | $308.92M$288.37M | +7.1% |
| Operating Income | $133.02M$137.54M | −3.3% |
| Interest Expense | $16.30M$17.22M | −5.3% |
| Net Income | $74.70M$76.03M | −1.7% |
| EPS (Basic) | $0.15$0.14 | +3.4% |
| EPS (Diluted) | $0.15$0.14 | +3.4% |
| Shares Outstanding (Basic) | 492.48M518.94M | −5.1% |
| Shares Outstanding (Diluted) | 495.03M519.78M | −4.8% |
05—Questions
Frequently Asked Questions
How did Cintas' revenue performance trend in the reported period?
Cintas reported a 4.6% increase in total revenue for the nine months ended February 28, 2013, reaching $3.2 billion. This growth was primarily driven by organic increases in its core Rental Uniforms and Ancillary Products segment and contributions from acquisitions in other segments.
What is the outlook for profitability given cost pressures?
While Cintas experienced some gross margin pressure in its Rental segment due to rising material and service costs, and a dip in the Document Management segment related to paper prices, overall net income still saw a slight increase. The company's focus on sales representative productivity and strategic acquisitions are key factors in maintaining profitability.
How is Cintas managing its capital and liquidity?
The company demonstrated strong liquidity with an increase in net cash provided by operating activities to $368.3 million for the nine-month period. Cintas also continued its share repurchase program, indicating a commitment to returning value to shareholders and managing its capital structure effectively.
Are there any significant legal or regulatory issues impacting Cintas?
The filing mentions ongoing litigation, specifically class-action lawsuits related to alleged hiring discrimination. While Cintas is contesting these, the outcome could potentially impact financial condition, but any estimated liability is not determinable at this time. The company stated that ordinary course of business legal matters are not expected to have a material adverse effect.
06—Continue