Summary
Cintas Corporation's (CTAS) 10-Q filing for the period ending August 31, 2013, demonstrates solid top-line growth driven by its core Rental Uniforms and Ancillary Products segment, which saw a 5.0% revenue increase. Overall revenue grew by 6.6% to $1.12 billion, with organic growth of 7.1% indicating strong underlying business performance. While net income saw a modest increase of 1.3% to $77.8 million, diluted earnings per share rose 5.0% to $0.63, benefiting from a reduction in outstanding shares due to ongoing share repurchases. The company's financial health remains robust, supported by consistent operating cash flow, although slightly lower than the prior year. Cintas continues to actively manage its capital structure, with significant share buybacks undertaken during the quarter. Management highlights operational efficiencies, particularly in selling and administrative expenses, which grew slower than revenue, indicating effective cost leverage. However, investors should note potential headwinds from reduced industrial paper prices impacting the Document Management Services segment and the ongoing litigation risks, though management currently believes these will not have a material adverse effect.
Financial Highlights
50 data points| Revenue | $1.10B |
| Gross Profit | $456.10M |
| SG&A Expenses | $316.48M |
| Operating Income | $139.61M |
| Interest Expense | $16.52M |
| Net Income | $77.75M |
| EPS (Basic) | $0.16 |
| EPS (Diluted) | $0.16 |
| Shares Outstanding (Basic) | 488.52M |
| Shares Outstanding (Diluted) | 491.57M |
Key Highlights
- 1Total revenue increased by 6.6% to $1.12 billion for the three months ended August 31, 2013, compared to the prior year period.
- 2Rental Uniforms and Ancillary Products segment revenue grew 5.0% to $792.9 million, indicating strength in the core business.
- 3Net income rose slightly by 1.3% to $77.8 million, while diluted earnings per share increased by 5.0% to $0.63.
- 4Operating cash flow was $82.6 million, a decrease from the prior year but indicative of continued operational generation.
- 5The company continued its share repurchase program, buying back 2.1 million shares for $100.8 million during the quarter.
- 6Selling and administrative expenses as a percentage of revenue were managed effectively, increasing at a slower rate than overall revenue.
- 7Document Management Services segment revenue grew 10.3%, but profitability was impacted by a 25% decrease in recycled paper prices.