10-QPeriod: Q1 FY2016

CINTAS CORP Quarterly Report for Q1 Ended Aug 31, 2015

Filed October 9, 2015For Securities:CTAS

Summary

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 billion, 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 $0.93. 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.

Financial Highlights

49 data points
Beta

Revenue

$1.17B

44.2% Gross Margin

Net Income

$100.18M

8.6% Net Margin

EPS (Diluted)

$0.22

Total Assets

$4.12B

Cash & Equivalents

$146.86M

Free Cash Flow

$80.45M

Financial Statements
Beta
Revenue$1.17B
Gross Profit$516.89M
SG&A Expenses$338.64M
Operating Income$185.51M
Interest Expense$16.41M
Net Income$100.18M
EPS (Basic)$0.22
EPS (Diluted)$0.22
Shares Outstanding (Basic)442.39M
Shares Outstanding (Diluted)448.92M

Key Highlights

  • 1Total revenue increased by 8.8% to $1.199 billion, with 6.8% attributed to organic growth.
  • 2Uniform Rental and Facility Services segment revenue grew 7.4%, indicating continued strength in its core business.
  • 3First Aid and Safety Services segment revenue surged by 24.5%, boosted by acquisitions and organic growth.
  • 4Net income from continuing operations was stable at $106.2 million, with diluted EPS from continuing operations increasing to $0.93 due to share buybacks.
  • 5The company is actively returning capital to shareholders, with significant share repurchases continuing under its authorized programs.
  • 6Cintas is divesting non-core assets, with the sale of its investment in Shred-it expected to close, impacting future financial reporting.
  • 7Strong liquidity position maintained with $146.9 million in cash and cash equivalents and an undrawn revolving credit facility.

Frequently Asked Questions

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.

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.

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.

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.