01—Abstract
Summary
Summary of the 10-Q filed April 8, 2016. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation reported solid financial results for the nine months and third quarter ended February 29, 2016.
Total revenue saw a healthy increase of 9.7%a year-over-year for the quarter and 9.0% for the nine-month period, driven by both organic growth and strategic acquisitions, notably the acquisition of ZEE Medical Inc. The company demonstrated strong operational execution, with its core Uniform Rental and Facility Services segment continuing to be a reliable performer, showing consistent revenue growth and improved gross margins. The company's profitability also improved, with net income from continuing operations increasing by 16.9% for the quarter and 9.4% for the nine-month period. Diluted earnings per share from continuing operations showed significant growth, reflecting improved profitability and the impact of share repurchases.
Cintas continues to actively manage its capital structure, with substantial share buyback programs in place and a stable credit rating, indicating financial strength and a commitment to returning value to shareholders. The company also successfully completed the sale of its investment in Shred-it, further streamlining its operations.
02—Key points
Key Highlights
- Total revenue increased by 9.7% to $1,216.1 million for the three months ended February 29, 2016, compared to the prior year period.
- Net income from continuing operations rose by 16.9% to $117.3 million for the three months ended February 29, 2016, compared to the prior year period.
- Diluted earnings per share from continuing operations increased by 23.5% to $1.05 for the three months ended February 29, 2016, compared to the prior year period.
- The Uniform Rental and Facility Services segment revenue grew by 6.0% year-over-year for the quarter, with gross margin improving by 70 basis points.
- The acquisition of ZEE Medical Inc. contributed significantly to the First Aid and Safety Services segment's revenue growth of 49.8% for the quarter, although integration costs impacted gross margins in this segment.
- Cintas completed the sale of its investment in Shred-it during the quarter, which is now reported under discontinued operations.
- The company repurchased a substantial amount of its common stock under its authorized share buyback programs, contributing to the increase in diluted EPS.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2016, Cintas Corp kept $0.10.
- Revenue$1.19B100.0%
- Cost of revenue−$672.7M56.5%
- Gross profit$517.9M43.5%
- Operating costs−$324.9M27.3%
- Operating income$193.0M16.2%
- Interest, other & tax−$75.6M6.4%
- Net income$117.3M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2016filed April 8, 2016Financial Statements
Q3 FY2016 against Q3 FY2015
| Line item | Q3 FY2016Q3 FY2015 | Change |
|---|---|---|
| Revenue | $1.19B$1.11B | +7.4% |
| Gross Profit | $517.85M$475.31M | +9.0% |
| SG&A Expenses | $331.66M$301.69M | +9.9% |
| Operating Income | $192.95M$173.62M | +11.1% |
| Interest Expense | $16.16M$16.25M | −0.6% |
| Net Income | $117.34M$94.88M | +23.7% |
| EPS (Basic) | $0.27$0.20 | +32.1% |
| EPS (Diluted) | $0.26$0.20 | +31.3% |
| Shares Outstanding (Basic) | 431.37M464.71M | −7.2% |
| Shares Outstanding (Diluted) | 437.85M471.47M | −7.1% |
05—Questions
Frequently Asked Questions
How did Cintas perform in the third quarter of fiscal year 2016?
In the third quarter ended February 29, 2016, Cintas reported a 9.7% increase in total revenue to $1.216 billion and a 16.9% increase in net income from continuing operations to $117.3 million. Diluted earnings per share from continuing operations grew by 23.5% to $1.05, driven by revenue growth and share repurchases.
What was the impact of the ZEE Medical acquisition on Cintas' financial results?
The acquisition of ZEE Medical Inc. significantly boosted the revenue of the First Aid and Safety Services segment, leading to a 49.8% increase in segment revenue for the quarter. However, integration costs and lower efficiency of acquired routes led to a decrease in gross margin for this segment during the period.
What is the status of the Shred-it investment and its impact on the financials?
Cintas completed the sale of its investment in Shred-it during the quarter. The results of Shred-it are now classified as discontinued operations for all periods presented, and the company received $578.3 million in proceeds from the sale.
How is Cintas managing its capital and returning value to shareholders?
Cintas continues to actively repurchase its common stock under its authorized programs, which contributed to the increase in diluted earnings per share. The company also maintains a strong credit rating, indicating financial stability and access to capital markets.
06—Continue