01—Abstract
Summary
Summary of the 10-Q filed October 9, 2015. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation reported its first-quarter fiscal year 2016 results, ending August 31, 2015.
The company demonstrated solid top-line growth, with total revenue increasing by 8.8% to $1.199 billiona, driven by a 6.8% organic growth rate and contributions from acquisitions. The core Uniform Rental and Facility Services segment showed a 7.4% revenue increase, while the First Aid and Safety Services segment experienced robust growth of 24.5%. Despite increased operating expenses and costs associated with acquisitions, Cintas managed to maintain its net income from continuing operations at $106.2 million, a slight increase from the prior year.
Diluted earnings per share from continuing operations also saw a modest rise to $0.93b. The company is actively managing its capital structure, with significant share repurchases continuing under its authorized buyback programs.
Cintas also announced the pending sale of its investment in Shred-it, which, along with the prior sale of its Storage business, led to these operations being classified as discontinued. The company's liquidity remains strong, with substantial cash flows from operations and an unused revolving credit facility, positioning it well for ongoing strategic initiatives and shareholder returns.
02—Key points
Key Highlights
- Total revenue increased by 8.8% to $1.199 billion, with 6.8% attributed to organic growth.
- Uniform Rental and Facility Services segment revenue grew 7.4%, indicating continued strength in its core business.
- First Aid and Safety Services segment revenue surged by 24.5%, boosted by acquisitions and organic growth.
- Net income from continuing operations was stable at $106.2 million, with diluted EPS from continuing operations increasing to $0.93 due to share buybacks.
- The company is actively returning capital to shareholders, with significant share repurchases continuing under its authorized programs.
- Cintas is divesting non-core assets, with the sale of its investment in Shred-it expected to close, impacting future financial reporting.
- Strong liquidity position maintained with $146.9 million in cash and cash equivalents and an undrawn revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2016, Cintas Corp kept $0.09.
- Revenue$1.17B100.0%
- Cost of revenue−$653.7M55.8%
- Gross profit$516.9M44.2%
- Operating costs−$331.4M28.3%
- Operating income$185.5M15.8%
- Interest, other & tax−$85.3M7.3%
- Net income$100.2M8.6%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2016filed October 9, 2015Financial Statements
Q1 FY2016 against Q1 FY2015
| Line item | Q1 FY2016Q1 FY2015 | Change |
|---|---|---|
| Revenue | $1.17B$1.10B | +6.2% |
| Gross Profit | $516.89M$477.95M | +8.1% |
| SG&A Expenses | $338.64M$314.46M | +7.7% |
| Operating Income | $185.51M$163.49M | +13.5% |
| Interest Expense | $16.41M$16.58M | −1.0% |
| Net Income | $100.18M$110.11M | −9.0% |
| EPS (Basic) | $0.22$0.23 | −5.3% |
| EPS (Diluted) | $0.22$0.23 | −5.4% |
| Shares Outstanding (Basic) | 442.39M466.64M | −5.2% |
| Shares Outstanding (Diluted) | 448.92M472.12M | −4.9% |
05—Questions
Frequently Asked Questions
How did Cintas perform in the first quarter of fiscal year 2016?
Cintas reported an 8.8% increase in total revenue to $1.199 billion, driven by organic growth and acquisitions. Net income from continuing operations was $106.2 million, and diluted earnings per share from continuing operations rose to $0.93. The company also continued its share repurchase program.
What is the status of the Shred-it investment sale?
Cintas entered into a definitive agreement to sell its investment in Shred-it on July 15, 2015, and announced the completion of this transaction on October 1, 2015. As a result, Shred-it's results were reported under discontinued operations for the periods presented. The financial impact will be reflected in the second quarter results.
How did the acquisition of ZEE Medical impact the financial results?
Cintas acquired ZEE Medical for $134.0 million on August 1, 2015. This acquisition expands Cintas' footprint in the First Aid and Safety Services segment. While the results of ZEE Medical were not material to the consolidated financial statements for the period presented, it contributed to the robust revenue growth in the First Aid and Safety Services segment and added $77.6 million in goodwill.
What is the company's capital allocation strategy?
Cintas continues to prioritize returning capital to shareholders. This is demonstrated through ongoing share repurchase programs, with significant amounts spent on buybacks during the quarter. The company also maintains a strong focus on funding operations, expansion, and dividends through its operating cash flows and debt facilities.
06—Continue