10-QPeriod: Q3 FY2020

CINTAS CORP Quarterly Report for Q3 Ended Feb 29, 2020

Filed March 31, 2020For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported solid financial results for the nine months ending February 29, 2020, demonstrating continued revenue growth and improved profitability. Total revenue increased by 7.2% year-over-year to $5.47 billion, driven by strong organic growth of 7.1%. The Uniform Rental and Facility Services segment, the company's largest, saw revenue grow 6.0% organically, while the First Aid and Safety Services segment also posted robust organic growth of 12.3%. Profitability metrics also showed improvement, with operating income increasing 16.6% to $955.3 million and net income from continuing operations rising 11.5% to $731.8 million. Diluted earnings per share from continuing operations grew 14.4% to $6.76. The company highlighted operational efficiencies and improved gross margins in its key segments as drivers for this performance. While the report was filed just as the COVID-19 pandemic was escalating, the results reflect a strong operational period prior to significant pandemic impacts.

Financial Highlights

50 data points
Beta

Revenue

$1.81B

45.5% Gross Margin

Net Income

$234.52M

13.0% Net Margin

EPS (Diluted)

$0.54

Total Assets

$7.90B

Cash & Equivalents

$234.44M

Free Cash Flow

$299.99M

Financial Statements
Beta
Revenue$1.81B
Gross Profit$824.39M
SG&A Expenses$509.74M
Operating Income$314.65M
Interest Expense$25.94M
Net Income$234.52M
EPS (Basic)$0.56
EPS (Diluted)$0.54
Shares Outstanding (Basic)416.98M
Shares Outstanding (Diluted)430.35M

Key Highlights

  • 1Total revenue for the nine months ended February 29, 2020, increased by 7.2% to $5.47 billion, with organic revenue growth of 7.1%.
  • 2Net income from continuing operations grew by 11.5% to $731.5 million for the nine-month period.
  • 3Diluted earnings per share from continuing operations increased by 14.4% to $6.76 for the nine months.
  • 4Operating income improved significantly, up 16.6% to $955.3 million for the nine-month period.
  • 5Uniform Rental and Facility Services revenue grew 6.0% organically, demonstrating continued strength in the core business.
  • 6First Aid and Safety Services revenue saw strong organic growth of 12.3% for the nine-month period.
  • 7The company had strong cash flow from operations of $934.5 million for the nine months ended February 29, 2020, an increase of $263.8 million year-over-year.

Frequently Asked Questions

For the nine months ended February 29, 2020, Cintas reported a 7.2% increase in total revenue, reaching $5.47 billion, driven by a robust 7.1% organic growth. The company also saw a 7.6% increase in total revenue for the three months ended February 29, 2020, reaching $1.81 billion.

Profitability showed a strong upward trend. For the nine months ended February 29, 2020, net income from continuing operations increased by 11.5% to $731.5 million, and diluted earnings per share from continuing operations rose by 14.4% to $6.76. Operating income also saw significant growth, increasing by 16.6% to $955.3 million over the same period.

The Uniform Rental and Facility Services segment, Cintas' largest, demonstrated continued strength with 6.0% organic revenue growth for the nine-month period. The First Aid and Safety Services segment performed exceptionally well, with organic revenue growth of 12.3% for the nine months.

The filing notes that as of February 29, 2020, the COVID-19 pandemic had not significantly impacted the business. However, management acknowledged that the situation was fluid and evolving, and efforts to contain the virus were intensifying. The company noted that the pandemic and related governmental measures could adversely affect its business operations, supply chain, customer demand, and overall financial condition. Cintas was designated an essential business, allowing it to continue serving customers that remained open.