01—Abstract
Summary
Summary of the 10-Q filed March 31, 2020. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 $6.76b. 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.
02—Key points
Key Highlights
- Total revenue for the nine months ended February 29, 2020, increased by 7.2% to $5.47 billion, with organic revenue growth of 7.1%.
- Net income from continuing operations grew by 11.5% to $731.5 million for the nine-month period.
- Diluted earnings per share from continuing operations increased by 14.4% to $6.76 for the nine months.
- Operating income improved significantly, up 16.6% to $955.3 million for the nine-month period.
- Uniform Rental and Facility Services revenue grew 6.0% organically, demonstrating continued strength in the core business.
- First Aid and Safety Services revenue saw strong organic growth of 12.3% for the nine-month period.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Cintas Corp kept $0.13.
- Revenue$1.81B100.0%
- Cost of revenue−$986.3M54.5%
- Gross profit$824.4M45.5%
- Operating costs−$509.7M28.2%
- Operating income$314.7M17.4%
- Interest, other & tax−$80.1M4.4%
- Net income$234.5M13.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed March 31, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $1.81B$1.68B | +7.6% |
| Gross Profit | $824.39M$755.15M | +9.2% |
| SG&A Expenses | $509.74M$476.10M | +7.1% |
| Operating Income | $314.65M$278.25M | +13.1% |
| Interest Expense | $25.94M$26.77M | −3.1% |
| Net Income | $234.52M$203.33M | +15.3% |
| EPS (Basic) | $0.56$0.48 | +16.8% |
| EPS (Diluted) | $0.54$0.46 | +16.8% |
| Shares Outstanding (Basic) | 416.98M420.32M | −0.8% |
| Shares Outstanding (Diluted) | 430.35M432.65M | −0.5% |
05—Questions
Frequently Asked Questions
How did Cintas' revenue perform in the period?
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.
What was the profitability trend during this period?
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.
How did the company's key business segments perform?
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.
What is the company's outlook given the emerging COVID-19 pandemic?
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.
06—Continue