(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
(Address of Principal Executive Offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
(d) | Exhibits. |
Exhibit Number | Description | ||
CINTAS CORPORATION | |||||
Date: | September 24, 2019 | By: | /s/ J. Michael Hansen | ||
J. Michael Hansen | |||||
Executive Vice President and Chief Financial Officer |
Three Months Ended | |||||||||
August 31, 2019 | August 31, 2018 | Growth vs. FY 2019 | |||||||
EPS - continuing operations | $ | 2.32 | $ | 1.89 | |||||
G&K integration expenses | 0.00 | 0.04 | |||||||
EPS excluding above items | $ | 2.32 | $ | 1.93 | 20.2% |
Fiscal 2019 | Fiscal 2020 Low End of Range | Growth vs. 2019 | Fiscal 2020 High End of Range | Growth vs. 2019 | |||||||||||
Fiscal 2020 Revenue Guidance | |||||||||||||||
($s in millions) | |||||||||||||||
Revenue guidance | $ | 6,892.3 | $ | 7,280.0 | 5.6% | $ | 7,320.0 | 6.2% | |||||||
Growth on constant workday basis (1) | 6.0% | 6.6% | |||||||||||||
Fiscal 2020 Earnings Per Share Guidance | |||||||||||||||
EPS - continuing operations | $ | 7.97 | $ | 8.47 | $ | 8.57 | |||||||||
G&K integration expenses | 0.10 | ||||||||||||||
Non-recurring gain on sale of investment | (0.47 | ) | |||||||||||||
EPS guidance (2) (3) | $ | 7.60 | $ | 8.47 | 11.4% | $ | 8.57 | 12.8% |
(1) | Fiscal 2020 contains one less workday than fiscal 2019. One less workday negatively impacts revenue growth by 40 basis points. |
(2) | One less workday negatively impacts fiscal 2020 EPS guidance by about $0.06 and EPS growth by about 90 basis points. |
(3) | Fiscal 2020 guidance assumes an effective tax rate of 20.3% compared to a rate of 19.7% for fiscal 2019. The higher effective tax rate negatively impacts fiscal 2020 EPS guidance by about $0.06 and EPS growth by about 80 basis points. |
Three Months Ended | |||||||||
August 31, 2019 | August 31, 2018 | % Change | |||||||
Revenue: | |||||||||
Uniform rental and facility services | $ | 1,454,527 | $ | 1,374,938 | 5.8% | ||||
Other | 356,612 | 323,037 | 10.4% | ||||||
Total revenue | 1,811,139 | 1,697,975 | 6.7% | ||||||
Costs and expenses: | |||||||||
Cost of uniform rental and facility services | 768,676 | 746,453 | 3.0% | ||||||
Cost of other | 193,321 | 176,810 | 9.3% | ||||||
Selling and administrative expenses | 542,996 | 504,634 | 7.6% | ||||||
G&K Services, Inc. integration expenses | — | 4,850 | (100.0)% | ||||||
Operating income | 306,146 | 265,228 | 15.4% | ||||||
Interest income | (162 | ) | (496 | ) | (67.3)% | ||||
Interest expense | 27,321 | 24,304 | 12.4% | ||||||
Income before income taxes | 278,987 | 241,420 | 15.6% | ||||||
Income taxes | 28,175 | 28,873 | (2.4)% | ||||||
Income from continuing operations | 250,812 | 212,547 | 18.0% | ||||||
Loss from discontinued operations, net of tax | — | (32 | ) | (100.0)% | |||||
Net income | $ | 250,812 | $ | 212,515 | 18.0% | ||||
Basic earnings per share: | |||||||||
Continuing operations | $ | 2.40 | $ | 1.96 | 22.4% | ||||
Discontinued operations | 0.00 | 0.00 | —% | ||||||
Basic earnings per share | $ | 2.40 | $ | 1.96 | 22.4% | ||||
Diluted earnings per share: | |||||||||
Continuing operations | $ | 2.32 | $ | 1.89 | 22.8% | ||||
Discontinued operations | 0.00 | 0.00 | —% | ||||||
Diluted earnings per share | $ | 2.32 | $ | 1.89 | 22.8% | ||||
Weighted average number of shares outstanding | 103,543 | 106,835 | |||||||
Diluted average number of shares outstanding | 107,083 | 110,648 |
Three Months Ended | |||
August 31, 2019 | August 31, 2018 | ||
Uniform rental and facility services gross margin | 47.2% | 45.7% | |
Other gross margin | 45.8% | 45.3% | |
Total gross margin | 46.9% | 45.6% | |
Net income margin, continuing operations | 13.8% | 12.5% |
Three Months Ended | |||||||||
August 31, 2019 | August 31, 2018 | Growth vs. FY 2019 | |||||||
EPS - continuing operations | $ | 2.32 | $ | 1.89 | |||||
G&K Services, Inc. integration expenses | 0.00 | 0.04 | |||||||
EPS excluding above items | $ | 2.32 | $ | 1.93 | 20.2% |
Three Months Ended | |||||||
August 31, 2019 | August 31, 2018 | ||||||
Net cash provided by operations | $ | 276,901 | $ | 162,985 | |||
Capital expenditures | (64,743 | ) | (64,528 | ) | |||
Free cash flow | $ | 212,158 | $ | 98,457 |
Three Months Ended | |||||||||
August 31, 2019 | August 31, 2018 | Growth % | |||||||
A | B | G | |||||||
Revenue | $ | 1,811,139 | $ | 1,697,975 | 6.7% | ||||
G=(A-B)/B | |||||||||
C | D | ||||||||
Workdays in the period | 65 | 66 | |||||||
E | F | H | |||||||
Revenue adjusted for workday difference | $ | 1,839,003 | $ | 1,697,975 | 8.3% | ||||
E=(A/C)*D | F=(B/D)*D | H=(E-F)/F |
Fiscal 2019 | Fiscal 2020 Low End of Range | Growth vs. 2019 | Fiscal 2020 High End of Range | Growth vs. 2019 | |||||||||||
Fiscal 2020 Revenue Guidance | |||||||||||||||
($s in millions) | A | B | C | D | E | ||||||||||
Revenue guidance | $ | 6,892.3 | $ | 7,280.0 | 5.6% | $ | 7,320.0 | 6.2% | |||||||
C=(B-A)/A | E=(D-A)/A | ||||||||||||||
F | G | G | |||||||||||||
Workdays in the period | 261 | 260 | 260 | ||||||||||||
H | I | J | K | L | |||||||||||
Revenue guidance adjusted for workday difference | $ | 6,892.3 | $ | 7,308.0 | 6.0% | $ | 7,348.2 | 6.6% | |||||||
H=(A/F)*F | I=(B/G)*F | J=(I-H)/H | K=(D/G)*F | L=(K-H)/H |
Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Corporate | Total | ||||||||||||||||
For the three months ended August 31, 2019 | ||||||||||||||||||||
Revenue | $ | 1,454,527 | $ | 172,090 | $ | 184,522 | $ | — | $ | 1,811,139 | ||||||||||
Gross margin | $ | 685,851 | $ | 84,287 | $ | 79,004 | $ | — | $ | 849,142 | ||||||||||
Selling and administrative expenses | $ | 416,840 | $ | 59,518 | $ | 66,638 | $ | — | $ | 542,996 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (162 | ) | $ | (162 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 27,321 | $ | 27,321 | ||||||||||
Income (loss) before income taxes | $ | 269,011 | $ | 24,769 | $ | 12,366 | $ | (27,159 | ) | $ | 278,987 | |||||||||
For the three months ended August 31, 2018 | ||||||||||||||||||||
Revenue | $ | 1,374,938 | $ | 153,417 | $ | 169,620 | $ | — | $ | 1,697,975 | ||||||||||
Gross margin | $ | 628,485 | $ | 73,485 | $ | 72,742 | $ | — | $ | 774,712 | ||||||||||
Selling and administrative expenses | $ | 392,101 | $ | 51,502 | $ | 61,031 | $ | — | $ | 504,634 | ||||||||||
G&K Services, Inc. integration expenses | $ | 4,850 | $ | — | $ | — | $ | — | $ | 4,850 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (496 | ) | $ | (496 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 24,304 | $ | 24,304 | ||||||||||
Income (loss) before income taxes | $ | 231,534 | $ | 21,983 | $ | 11,711 | $ | (23,808 | ) | $ | 241,420 |
August 31, 2019 | May 31, 2019 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 102,131 | $ | 96,645 | |||
Accounts receivable, net | 917,535 | 910,120 | |||||
Inventories, net | 336,290 | 334,589 | |||||
Uniforms and other rental items in service | 796,187 | 784,133 | |||||
Income taxes, current | — | 7,475 | |||||
Prepaid expenses and other current assets | 137,675 | 103,318 | |||||
Total current assets | 2,289,818 | 2,236,280 | |||||
Property and equipment, net | 1,422,351 | 1,430,685 | |||||
Investments | 208,987 | 192,346 | |||||
Goodwill | 2,849,613 | 2,842,441 | |||||
Service contracts, net | 482,977 | 494,595 | |||||
Operating lease right-of-use assets, net | 163,089 | — | |||||
Other assets, net | 245,065 | 240,315 | |||||
$ | 7,661,900 | $ | 7,436,662 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 237,242 | $ | 226,020 | |||
Accrued compensation and related liabilities | 99,200 | 155,509 | |||||
Accrued liabilities | 395,416 | 433,940 | |||||
Income taxes, current | 9,238 | — | |||||
Operating lease liabilities, current | 43,010 | — | |||||
Debt due within one year | 338,776 | 312,264 | |||||
Total current liabilities | 1,122,882 | 1,127,733 | |||||
Long-term liabilities: | |||||||
Debt due after one year | 2,538,057 | 2,537,507 | |||||
Deferred income taxes | 436,755 | 438,179 | |||||
Operating lease liabilities | 125,684 | — | |||||
Accrued liabilities | 387,816 | 330,522 | |||||
Total long-term liabilities | 3,488,312 | 3,306,208 | |||||
Shareholders’ equity: | |||||||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | — | — | |||||
Common stock, no par value: 425,000,000 shares authorized FY20: 185,952,964 issued and 103,364,545 outstanding FY19: 184,790,626 issued and 103,284,401 outstanding | 1,036,125 | 840,328 | |||||
Paid-in capital | 110,441 | 227,928 | |||||
Retained earnings | 6,939,240 | 6,691,236 | |||||
Treasury stock: FY20: 82,588,419 shares FY19: 81,506,225 shares | (4,974,449 | ) | (4,717,619 | ) | |||
Accumulated other comprehensive loss | (60,651 | ) | (39,152 | ) | |||
Total shareholders’ equity | 3,050,706 | 3,002,721 | |||||
$ | 7,661,900 | $ | 7,436,662 |
Three Months Ended | |||||||
August 31, 2019 | August 31, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 250,812 | $ | 212,515 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 56,726 | 52,745 | |||||
Amortization of intangible assets and capitalized contract costs | 35,268 | 33,550 | |||||
Stock-based compensation | 40,395 | 46,172 | |||||
Deferred income taxes | 7,910 | 9,022 | |||||
Change in current assets and liabilities, net of acquisitions of businesses: | |||||||
Accounts receivable, net | (6,636 | ) | (15,051 | ) | |||
Inventories, net | (1,726 | ) | (34,629 | ) | |||
Uniforms and other rental items in service | (11,305 | ) | (23,019 | ) | |||
Prepaid expenses and other current assets and capitalized contract costs | (41,928 | ) | (46,930 | ) | |||
Accounts payable | 13,357 | (329 | ) | ||||
Accrued compensation and related liabilities | (58,718 | ) | (56,186 | ) | |||
Accrued liabilities and other | (24,082 | ) | (27,556 | ) | |||
Income taxes, current | 16,828 | 12,681 | |||||
Net cash provided by operating activities | 276,901 | 162,985 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (64,743 | ) | (64,528 | ) | |||
Proceeds from redemption of marketable securities and investments | — | 1,558 | |||||
Purchase of marketable securities and investments | (9,391 | ) | — | ||||
Acquisitions of businesses, net of cash acquired | (3,896 | ) | (7,613 | ) | |||
Other, net | (109 | ) | (202 | ) | |||
Net cash used in investing activities | (78,139 | ) | (70,785 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of commercial paper, net | 26,500 | — | |||||
Proceeds from exercise of stock-based compensation awards | 37,915 | 27,512 | |||||
Repurchase of common stock | (256,830 | ) | (139,468 | ) | |||
Other, net | (1,192 | ) | (552 | ) | |||
Net cash used in financing activities | (193,607 | ) | (112,508 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 331 | (60 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 5,486 | (20,368 | ) | ||||
Cash and cash equivalents at beginning of period | 96,645 | 138,724 | |||||
Cash and cash equivalents at end of period | $ | 102,131 | $ | 118,356 |
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Cover |
Sep. 26, 2019 |
---|---|
Cover page. | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | Sep. 24, 2019 |
Entity Registrant Name | Cintas Corp |
Entity Central Index Key | 0000723254 |
Entity Incorporation, State or Country Code | WA |
Entity File Number | 0-11399 |
Entity Tax Identification Number | 31-1188630 |
Entity Address, Address Line One | 6800 Cintas Boulevard, P.O. Box 625737, |
Entity Address, City or Town | Cincinnati, |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 45262-5737 |
City Area Code | 513 |
Local Phone Number | 459-1200 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common stock, no par value |
Trading Symbol | CTAS |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |