10-QPeriod: Q1 FY2021

CINTAS CORP Quarterly Report for Q1 Ended Aug 31, 2020

Filed October 9, 2020For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported its fiscal 2021 first-quarter results for the period ending August 31, 2020. Despite a 3.6% decrease in total revenue to $1.75 billion, primarily due to the impact of COVID-19 on business operations, the company demonstrated strong profitability. Net income increased by 19.6% to $300.0 million, leading to a 19.8% rise in diluted earnings per share to $2.78. This performance was driven by effective cost management, including significant reductions in selling and administrative expenses, and improved gross margins in the Uniform Rental and Facility Services segment, which offset lower sales volumes. The company's financial position remains solid, with net cash provided by operating activities increasing by $35.4 million to $312.3 million. Cintas also maintained a strong liquidity position, with cash and cash equivalents at $421.5 million and access to a $1.0 billion revolving credit facility. While the COVID-19 pandemic continues to present uncertainties, Cintas has implemented health and safety measures and has been designated an essential business, allowing for continued operations.

Financial Highlights

50 data points
Beta

Revenue

$1.75B

Net Income

$300.00M

17.2% Net Margin

EPS (Diluted)

$0.69

Total Assets

$8.04B

Cash & Equivalents

$421.54M

Free Cash Flow

$281.42M

Financial Statements
Beta
Revenue$1.75B
SG&A Expenses$476.50M
Operating Income$349.71M
Interest Expense$24.55M
Net Income$300.00M
EPS (Basic)$0.71
EPS (Diluted)$0.69
Shares Outstanding (Basic)416.44M
Shares Outstanding (Diluted)428.52M

Key Highlights

  • 1Total revenue decreased by 3.6% to $1.75 billion, primarily impacted by COVID-19 related business disruptions.
  • 2Net income increased significantly by 19.6% to $300.0 million, indicating strong cost control and operational efficiency.
  • 3Diluted earnings per share (EPS) rose by 19.8% to $2.78, reflecting improved profitability.
  • 4Operating income increased by 13.6% to $349.7 million due to lower costs and improved margins.
  • 5Net cash provided by operating activities increased by 12.8% to $312.3 million, demonstrating robust cash generation.
  • 6The First Aid and Safety Services segment saw revenue growth of 18.8%, driven in part by increased demand for personal protective equipment.
  • 7The company maintained a strong liquidity position with $421.5 million in cash and cash equivalents and an undrawn $1.0 billion revolving credit facility.

Frequently Asked Questions

Total revenue decreased by 3.6% to $1.75 billion due to COVID-19 related business closures and disruptions. However, the company managed costs effectively, leading to a significant 19.6% increase in net income to $300.0 million and a 19.8% rise in diluted EPS to $2.78. Operating income also increased by 13.6%.

Cintas maintains a strong financial and liquidity position. Net cash provided by operating activities increased by 12.8% to $312.3 million. The company ended the quarter with $421.5 million in cash and cash equivalents and has access to a $1.0 billion revolving credit facility, providing ample resources to navigate the ongoing uncertainties.

The Uniform Rental and Facility Services segment experienced a revenue decrease of 4.1% due to pandemic impacts, though its gross margin improved. The First Aid and Safety Services segment showed strong growth of 18.8%, partly driven by demand for personal protective equipment related to COVID-19. Overall revenue was down, but profitability improved due to cost management across the business.

During the three months ended August 31, 2020, Cintas acquired shares for employee payroll taxes related to vested stock awards, totaling $69.0 million. The company also reduced its total debt outstanding, contributing to a decrease in net interest expense. While a $1.0 billion share buyback program is authorized, no significant open market repurchases were made under this program during this specific quarter. The company did take on a new $250,000,000 senior note due within one year.