Washington | 0-11399 | 31-1188630 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio | 45262-5737 | |
(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)) |
(d) | Exhibits. |
Exhibit Number | Description | ||
99 | Press release dated July 20, 2017 |
CINTAS CORPORATION | |||||
Date: | July 20, 2017 | By: | /s/ J. Michael Hansen | ||
J. Michael Hansen | |||||
Sr. Vice President and Chief Financial Officer |
Exhibit Number | Description | ||
99 | Press release dated July 20, 2017 |
Q4 Fiscal 2017 | Q4 Fiscal 2016 | ||||||||||||||||||||||
G&K Acquisition | |||||||||||||||||||||||
Cintas Legacy (1) | % of Revenue | G&K Results (2) | Transaction and Integration (3) | ASU 2016-09 (4) | Reported (5) | % of Revenue | Reported (5) | % of Revenue | |||||||||||||||
Revenue | $ | 1,342.6 | $ | 187.7 | $ | — | $ | — | $ | 1,530.3 | $ | 1,243.5 | |||||||||||
Gross margin | 603.3 | 44.9% | 75.4 | — | — | 678.7 | 44.4% | 546.4 | 43.9% | ||||||||||||||
SG&A | 383.1 | 28.5% | 51.8 | — | 2.8 | 437.7 | 28.6% | 346.6 | 27.9% | ||||||||||||||
G&K transaction and integration expenses | — | 0.0% | — | 63.7 | — | 63.7 | 4.2% | — | 0.0% | ||||||||||||||
Operating profit | 220.2 | 16.4% | 23.6 | (63.7 | ) | (2.8 | ) | 177.3 | 11.6% | 199.8 | 16.1% | ||||||||||||
Interest expense, net | 13.7 | 1.0% | 14.5 | 17.1 | — | 45.3 | 3.0% | 15.5 | 1.2% | ||||||||||||||
Income before income taxes | 206.5 | 15.4% | 9.1 | (80.8 | ) | (2.8 | ) | 132.0 | 8.6% | 184.3 | 14.8% | ||||||||||||
Income taxes | 80.6 | 6.0% | 3.4 | (27.5 | ) | (6.6 | ) | 49.9 | 3.3% | 68.6 | 5.5% | ||||||||||||
Income, continuing operations | $ | 125.9 | 9.4% | $ | 5.7 | $ | (53.3 | ) | $ | 3.8 | $ | 82.1 | 5.4% | $ | 115.7 | 9.3% | |||||||
Diluted EPS, continuing operations | $ | 1.18 | $ | 0.05 | $ | (0.50 | ) | $ | 0.02 | $ | 0.75 | $ | 1.06 |
Fiscal 2017 | Fiscal 2016 | ||||||||||||||||||||||
G&K Acquisition | |||||||||||||||||||||||
Cintas Legacy (1) | % of Revenue | G&K Results (2) | Transaction and Integration (3) | ASU 2016-09 (4) | Reported (5) | % of Revenue | Reported (5) | % of Revenue | |||||||||||||||
Revenue | $ | 5,135.7 | $ | 187.7 | $ | — | $ | — | $ | 5,323.4 | $ | 4,795.8 | |||||||||||
Gross margin | 2,304.9 | 44.9% | 75.4 | — | — | 2,380.3 | 44.7% | 2,101.3 | 43.8% | ||||||||||||||
SG&A | 1,467.3 | 28.6% | 51.8 | — | 8.3 | 1,527.4 | 28.7% | 1,332.4 | 27.8% | ||||||||||||||
G&K transaction and integration expenses | — | 0.0% | — | 79.2 | — | 79.2 | 1.5% | — | 0.0% | ||||||||||||||
Operating profit | 837.6 | 16.3% | 23.6 | (79.2 | ) | (8.3 | ) | 773.7 | 14.5% | 768.9 | 16.0% | ||||||||||||
Interest expense, net | 54.7 | 1.1% | 14.5 | 17.1 | — | 86.3 | 1.6% | 63.6 | 1.3% | ||||||||||||||
Income before income taxes | 782.9 | 15.2% | 9.1 | (96.3 | ) | (8.3 | ) | 687.4 | 12.9% | 705.3 | 14.7% | ||||||||||||
Income taxes | 289.9 | 5.6% | 3.4 | (30.7 | ) | (32.5 | ) | 230.1 | 4.3% | 256.7 | 5.4% | ||||||||||||
Income-continuing operations | $ | 493.0 | 9.6% | $ | 5.7 | $ | (65.6 | ) | $ | 24.2 | $ | 457.3 | 8.6% | $ | 448.6 | 9.4% | |||||||
Diluted EPS, continuing operations | $ | 4.53 | $ | 0.05 | $ | (0.60 | ) | $ | 0.19 | $ | 4.17 | $ | 4.02 |
• | No transaction and integration expenses |
• | Revenue of approximately $870 million to $900 million, compared to a prior year annualized amount of $965 million; |
• | Synergies of approximately $50 million to $55 million; |
• | Purchase price amortization (specifically related to intangible assets) of $50 million; |
• | Interest expense on G&K acquisition debt of approximately $65 million; and |
• | EPS contribution of 15 cents to 17 cents, inclusive of all items above. |
Fiscal 2017 | Fiscal 2018 Low end of Range | Growth vs. 2017 | Fiscal 2018 High end of Range | Growth vs. 2017 | |||||||||||
Revenue Guidance | |||||||||||||||
($s in millions) | |||||||||||||||
Total Revenue | $ | 5,323.4 | $ | 6,270.0 | 17.8% | $ | 6,360.0 | 19.5% | |||||||
Earnings Per Share Guidance | |||||||||||||||
EPS, continuing operations | $ | 4.17 | $ | 5.15 | $ | 5.25 | |||||||||
G&K transaction and integration expenses | 0.60 | — | — | ||||||||||||
EPS after above items | $ | 4.77 | $ | 5.15 | 8.0% | $ | 5.25 | 10.1% |
Three Months Ended | ||||||||||
May 31, 2017 | May 31, 2016 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 1,220,015 | $ | 959,721 | 27.1% | |||||
Other | 310,272 | 283,827 | 9.3% | |||||||
Total revenue | 1,530,287 | 1,243,548 | 23.1% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 676,389 | 533,543 | 26.8% | |||||||
Cost of other | 175,172 | 163,634 | 7.1% | |||||||
Selling and administrative expenses | 437,672 | 346,610 | 26.3% | |||||||
G&K Services, Inc. transaction and integration expenses | 63,746 | — | 100.0% | |||||||
Operating income | 177,308 | 199,761 | (11.2)% | |||||||
Interest income | (130 | ) | (331 | ) | (60.7)% | |||||
Interest expense | 45,389 | 15,776 | 187.7% | |||||||
Income before income taxes | 132,049 | 184,316 | (28.4)% | |||||||
Income taxes | 49,875 | 68,605 | (27.3)% | |||||||
Income from continuing operations | 82,174 | 115,711 | (29.0)% | |||||||
Income from discontinued operations, net of tax | 2,063 | 15,187 | (86.4)% | |||||||
Net income | $ | 84,237 | $ | 130,898 | (35.6)% | |||||
Basic earnings per share: | ||||||||||
Continuing operations | $ | 0.76 | $ | 1.07 | (29.0)% | |||||
Discontinued operations | 0.02 | 0.14 | (85.7)% | |||||||
Basic earnings per share | $ | 0.78 | $ | 1.21 | (35.5)% | |||||
Diluted earnings per share: | ||||||||||
Continuing operations | $ | 0.75 | $ | 1.06 | (29.2)% | |||||
Discontinued operations | 0.01 | 0.14 | (92.9)% | |||||||
Diluted earnings per share | $ | 0.76 | $ | 1.20 | (36.7)% | |||||
Weighted average number of shares outstanding | 105,325 | 106,136 | ||||||||
Diluted average number of shares outstanding | 109,023 | 107,797 |
Twelve Months Ended | ||||||||||
May 31, 2017 | May 31, 2016 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 4,202,490 | $ | 3,759,524 | 11.8% | |||||
Other | 1,120,891 | 1,036,248 | 8.2% | |||||||
Total revenue | 5,323,381 | 4,795,772 | 11.0% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 2,307,774 | 2,092,833 | 10.3% | |||||||
Cost of other | 635,312 | 601,599 | 5.6% | |||||||
Selling and administrative expenses | 1,527,380 | 1,332,399 | 14.6% | |||||||
G&K Services, Inc. transaction and integration expenses | 79,224 | — | 100.0% | |||||||
Operating income | 773,691 | 768,941 | 0.6% | |||||||
Interest income | (237 | ) | (896 | ) | (73.5)% | |||||
Interest expense | 86,524 | 64,522 | 34.1% | |||||||
Income before income taxes | 687,404 | 705,315 | (2.5)% | |||||||
Income taxes | 230,118 | 256,710 | (10.4)% | |||||||
Income from continuing operations | 457,286 | 448,605 | 1.9% | |||||||
Income from discontinued operations, net of tax | 23,422 | 244,915 | (90.4)% | |||||||
Net income | $ | 480,708 | $ | 693,520 | (30.7)% | |||||
Basic earnings per share: | ||||||||||
Continuing operations | $ | 4.27 | $ | 4.08 | 4.7% | |||||
Discontinued operations | 0.22 | 2.22 | (90.1)% | |||||||
Basic earnings per share | $ | 4.49 | $ | 6.30 | (28.7)% | |||||
Diluted earnings per share: | ||||||||||
Continuing operations | $ | 4.17 | $ | 4.02 | 3.7% | |||||
Discontinued operations | 0.21 | 2.19 | (90.4)% | |||||||
Diluted earnings per share | $ | 4.38 | $ | 6.21 | (29.5)% | |||||
Weighted average number of shares outstanding | 104,964 | 108,221 | ||||||||
Diluted average number of shares outstanding | 107,783 | 109,956 |
Three Months Ended | ||||||
May 31, 2017 | May 31, 2016 | |||||
Uniform rental and facility services gross margin | 44.6 | % | 44.4 | % | ||
Other gross margin | 43.5 | % | 42.3 | % | ||
Total gross margin | 44.4 | % | 43.9 | % | ||
Net income margin, continuing operations | 5.4 | % | 9.3 | % | ||
Twelve Months Ended | ||||||
May 31, 2017 | May 31, 2016 | |||||
Uniform rental and facility services gross margin | 45.1 | % | 44.3 | % | ||
Other gross margin | 43.3 | % | 41.9 | % | ||
Total gross margin | 44.7 | % | 43.8 | % | ||
Net income margin, continuing operations | 8.6 | % | 9.4 | % |
Three Months Ended | ||||||||
May 31, 2017 | May 31, 2016 | |||||||
Income from continuing operations | $ | 82,174 | $ | 115,711 | ||||
Less: income from continuing operations allocated to participating securities | 951 | 1,882 | ||||||
Income from continuing operations available to common shareholders | $ | 81,223 | $ | 113,829 | ||||
Basic weighted average common shares outstanding | 105,325 | 106,136 | ||||||
Effect of dilutive securities - employee stock options | 3,698 | 1,661 | ||||||
Diluted weighted average common shares outstanding | 109,023 | 107,797 | ||||||
Diluted earnings per share from continuing operations | $ | 0.75 | $ | 1.06 | ||||
Twelve Months Ended | ||||||||
May 31, 2017 | May 31, 2016 | |||||||
Income from continuing operations | $ | 457,286 | $ | 448,605 | ||||
Less: income from continuing operations allocated to participating securities | 8,168 | 7,131 | ||||||
Income from continuing operations available to common shareholders | $ | 449,118 | $ | 441,474 | ||||
Basic weighted average common shares outstanding | 104,964 | 108,221 | ||||||
Effect of dilutive securities - employee stock options | 2,819 | 1,735 | ||||||
Diluted weighted average common shares outstanding | 107,783 | 109,956 | ||||||
Diluted earnings per share from continuing operations | $ | 4.17 | $ | 4.02 |
Twelve Months Ended | |||||
May 31, 2017 | May 31, 2016 | Growth % | |||
A | B | G | |||
Revenue | $5,323,381 | $4,795,772 | 11.0% | ||
G=(A-B)/B | |||||
C | D | ||||
Workdays in the period | 261 | 262 | |||
E | F | H | |||
Revenue adjusted for workday difference | $5,343,777 | $4,795,772 | 11.4% | ||
H=(E-F)/F | |||||
E=(A/C)*D | F=(B/D)*D |
Twelve Months Ended | ||||||||
May 31, 2017 | May 31, 2016 | |||||||
Net cash provided by operations | $ | 763,887 | $ | 465,845 | ||||
Capital expenditures | (273,317 | ) | (275,385 | ) | ||||
Free cash flow | $ | 490,570 | $ | 190,460 |
Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Corporate | Total | ||||||||||||||||
For the three months ended May 31, 2017 | ||||||||||||||||||||
Revenue | $ | 1,220,015 | $ | 134,358 | $ | 175,914 | $ | — | $ | 1,530,287 | ||||||||||
Gross margin | $ | 543,626 | $ | 59,814 | $ | 75,286 | $ | — | $ | 678,726 | ||||||||||
Selling and administrative expenses | $ | 336,400 | $ | 45,551 | $ | 55,721 | $ | — | $ | 437,672 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 63,746 | $ | — | $ | — | $ | — | $ | 63,746 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (130 | ) | $ | (130 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 45,389 | $ | 45,389 | ||||||||||
Income (loss) before income taxes | $ | 143,480 | $ | 14,263 | $ | 19,565 | $ | (45,259 | ) | $ | 132,049 | |||||||||
For the three months ended May 31, 2016 | ||||||||||||||||||||
Revenue | $ | 959,721 | $ | 122,793 | $ | 161,034 | $ | — | $ | 1,243,548 | ||||||||||
Gross margin | $ | 426,178 | $ | 52,631 | $ | 67,562 | $ | — | $ | 546,371 | ||||||||||
Selling and administrative expenses | $ | 255,870 | $ | 39,197 | $ | 51,543 | $ | — | $ | 346,610 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (331 | ) | $ | (331 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 15,776 | $ | 15,776 | ||||||||||
Income (loss) before income taxes | $ | 170,308 | $ | 13,434 | $ | 16,019 | $ | (15,445 | ) | $ | 184,316 | |||||||||
For the twelve months ended May 31, 2017 | ||||||||||||||||||||
Revenue | $ | 4,202,490 | $ | 508,233 | $ | 612,658 | $ | — | $ | 5,323,381 | ||||||||||
Gross margin | $ | 1,894,716 | $ | 230,166 | $ | 255,413 | $ | — | $ | 2,380,295 | ||||||||||
Selling and administrative expenses | $ | 1,138,345 | $ | 177,378 | $ | 211,657 | $ | — | $ | 1,527,380 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 79,224 | $ | — | $ | — | $ | — | $ | 79,224 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (237 | ) | $ | (237 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 86,524 | $ | 86,524 | ||||||||||
Income (loss) before income taxes | $ | 677,147 | $ | 52,788 | $ | 43,756 | $ | (86,287 | ) | $ | 687,404 | |||||||||
For the twelve months ended May 31, 2016 | ||||||||||||||||||||
Revenue | $ | 3,759,524 | $ | 461,783 | $ | 574,465 | $ | — | $ | 4,795,772 | ||||||||||
Gross margin | $ | 1,666,691 | $ | 197,010 | $ | 237,639 | $ | — | $ | 2,101,340 | ||||||||||
Selling and administrative expenses | $ | 994,590 | $ | 147,503 | $ | 190,306 | $ | — | $ | 1,332,399 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (896 | ) | $ | (896 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 64,522 | $ | 64,522 | ||||||||||
Income (loss) before income taxes | $ | 672,101 | $ | 49,507 | $ | 47,333 | $ | (63,626 | ) | $ | 705,315 |
May 31, 2017 | May 31, 2016 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 169,266 | $ | 139,357 | ||||
Marketable securities | 22,219 | 70,405 | ||||||
Accounts receivable, net | 736,008 | 546,488 | ||||||
Inventories, net | 278,218 | 249,362 | ||||||
Uniforms and other rental items in service | 635,702 | 538,286 | ||||||
Income taxes, current | 44,320 | 1,712 | ||||||
Prepaid expenses and other current assets | 30,132 | 25,948 | ||||||
Assets held for sale | 38,613 | 19,021 | ||||||
Total current assets | 1,954,478 | 1,590,579 | ||||||
Property and equipment, at cost, net | 1,323,501 | 993,692 | ||||||
Investments | 164,788 | 124,952 | ||||||
Goodwill | 2,782,335 | 1,276,076 | ||||||
Service contracts, net | 586,988 | 78,194 | ||||||
Other assets, net | 31,967 | 14,283 | ||||||
Long-term assets held for sale | — | 21,039 | ||||||
$ | 6,844,057 | $ | 4,098,815 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 177,051 | $ | 110,940 | ||||
Accrued compensation and related liabilities | 149,635 | 101,391 | ||||||
Accrued liabilities | 429,809 | 343,266 | ||||||
Debt due within one year | 362,900 | 250,000 | ||||||
Liabilities held for sale | 11,457 | 9,958 | ||||||
Total current liabilities | 1,130,852 | 815,555 | ||||||
Long-term liabilities: | ||||||||
Debt due after one year | 2,770,624 | 1,044,422 | ||||||
Deferred income taxes | 469,328 | 259,475 | ||||||
Accrued liabilities | 170,460 | 136,704 | ||||||
Total long-term liabilities | 3,410,412 | 1,440,601 | ||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | — | — | ||||||
Common stock, no par value: 425,000,000 shares authorized FY17: 180,992,605 issued and 105,400,629 outstanding FY16: 179,598,516 issued and 104,213,479 outstanding | 485,068 | 409,682 | ||||||
Paid-in capital | 223,924 | 205,260 | ||||||
Retained earnings | 5,170,830 | 4,805,867 | ||||||
Treasury stock: FY17: 75,591,976 shares FY16: 75,385,037 shares | (3,574,000 | ) | (3,553,276 | ) | ||||
Accumulated other comprehensive loss | (3,029 | ) | (24,874 | ) | ||||
Total shareholders’ equity | 2,302,793 | 1,842,659 | ||||||
$ | 6,844,057 | $ | 4,098,815 |
Twelve Months Ended | ||||||||
May 31, 2017 | May 31, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 480,708 | $ | 693,520 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 171,565 | 149,691 | ||||||
Amortization of intangible assets | 25,030 | 15,588 | ||||||
Stock-based compensation | 88,868 | 79,293 | ||||||
Gain on Storage | (1,460 | ) | (15,786 | ) | ||||
Gain on Shred-it | (25,457 | ) | (354,071 | ) | ||||
Asset impairment charge | 23,331 | — | ||||||
G&K Services, Inc. transaction and integration expenses | 31,445 | — | ||||||
Short-term debt financing fees included in net income | 17,062 | — | ||||||
Settlement of interest rate hedge | 30,194 | — | ||||||
Deferred income taxes | 3,902 | (59,302 | ) | |||||
Change in current assets and liabilities, net of acquisitions of businesses: | ||||||||
Accounts receivable, net | (93,557 | ) | (52,762 | ) | ||||
Inventories, net | (668 | ) | (17,917 | ) | ||||
Uniforms and other rental items in service | (8,732 | ) | (6,306 | ) | ||||
Prepaid expenses and other current assets | 24,201 | (965 | ) | |||||
Accounts payable | 13,726 | (564 | ) | |||||
Accrued compensation and related liabilities | 13,654 | 13,512 | ||||||
Accrued liabilities and other | (501 | ) | 22,714 | |||||
Income taxes, current | (29,424 | ) | (800 | ) | ||||
Net cash provided by operating activities | 763,887 | 465,845 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (273,317 | ) | (275,385 | ) | ||||
Proceeds from redemption of marketable securities | 218,324 | 434,179 | ||||||
Purchase of marketable securities and investments | (181,065 | ) | (494,146 | ) | ||||
Proceeds from Storage transactions | 2,400 | 35,338 | ||||||
Proceeds from sale of investment in Shred-it | 25,876 | 580,837 | ||||||
Acquisitions of businesses, net of cash acquired | (2,102,371 | ) | (156,579 | ) | ||||
Other, net | (196 | ) | 4,137 | |||||
Net cash (used in) provided by investing activities | (2,310,349 | ) | 128,381 | |||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of commercial paper, net | 50,500 | — | ||||||
Proceeds from issuance of debt, net | 1,932,229 | — | ||||||
Repayment of debt | (250,000 | ) | (16 | ) | ||||
Payment of short-term debt financing fees | (17,062 | ) | — | |||||
Proceeds from exercise of stock-based compensation awards | 31,870 | 28,226 | ||||||
Dividends paid | (142,433 | ) | (115,273 | ) | ||||
Repurchase of common stock | (20,724 | ) | (780,151 | ) | ||||
Other, net | (5,878 | ) | 490 | |||||
Net cash provided by (used in) financing activities | 1,578,502 | (866,724 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (2,131 | ) | (5,218 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 29,909 | (277,716 | ) | |||||
Cash and cash equivalents at beginning of year | 139,357 | 417,073 | ||||||
Cash and cash equivalents at end of year | $ | 169,266 | $ | 139,357 |