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 December 21, 2017 |
CINTAS CORPORATION | |||||
Date: | December 21, 2017 | By: | /s/ J. Michael Hansen | ||
J. Michael Hansen | |||||
Senior Vice President and Chief Financial Officer |
Exhibit Number | Description | ||
Earnings Per Share Results | Three Months Ended | |||||||||
November 30, 2017 | November 30, 2016 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 1.24 | $ | 1.12 | ||||||
G&K transaction and integration expenses | 0.07 | 0.02 | ||||||||
EPS after above items | $ | 1.31 | $ | 1.14 | 14.9 | % | ||||
Six Months Ended | ||||||||||
November 30, 2017 | November 30, 2016 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 2.69 | $ | 2.36 | ||||||
G&K transaction and integration expenses | 0.10 | 0.04 | ||||||||
EPS after above items | $ | 2.79 | $ | 2.40 | 16.3 | % |
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 | $ | 6,365.0 | 19.6% | $ | 6,430.0 | 20.8% | |||||||
Earnings Per Share Guidance | |||||||||||||||
EPS - continuing operations | $ | 4.17 | $ | 5.29 | $ | 5.36 | |||||||||
G&K transaction and integration expenses | 0.60 | 0.10 | 0.10 | ||||||||||||
EPS after above items | $ | 4.77 | $ | 5.39 | 13.0% | $ | 5.46 | 14.5% |
Three Months Ended | ||||||||||
November 30, 2017 | November 30, 2016 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 1,308,038 | $ | 1,000,015 | 30.8% | |||||
Other | 298,403 | 271,062 | 10.1% | |||||||
Total revenue | 1,606,441 | 1,271,077 | 26.4% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 723,960 | 551,498 | 31.3% | |||||||
Cost of other | 166,112 | 154,361 | 7.6% | |||||||
Selling and administrative expenses | 468,084 | 361,415 | 29.5% | |||||||
G&K Services, Inc. transaction and integration expenses | 13,074 | 3,347 | 290.6% | |||||||
Operating income | 235,211 | 200,456 | 17.3% | |||||||
Interest income | (291 | ) | (31 | ) | 838.7% | |||||
Interest expense | 29,129 | 13,267 | 119.6% | |||||||
Income before income taxes | 206,373 | 187,220 | 10.2% | |||||||
Income taxes | 68,636 | 65,270 | 5.2% | |||||||
Income from continuing operations | 137,737 | 121,950 | 12.9% | |||||||
(Loss) income from discontinued operations, net of tax | (628 | ) | 18,427 | (103.4)% | ||||||
Net income | $ | 137,109 | $ | 140,377 | (2.3)% | |||||
Basic earnings (loss) per share: | ||||||||||
Continuing operations | $ | 1.27 | $ | 1.15 | 10.4% | |||||
Discontinued operations | (0.01 | ) | 0.17 | (105.9)% | ||||||
Basic earnings per share | $ | 1.26 | $ | 1.32 | (4.5)% | |||||
Diluted earnings (loss) per share: | ||||||||||
Continuing operations | $ | 1.24 | $ | 1.12 | 10.7% | |||||
Discontinued operations | (0.01 | ) | 0.17 | (105.9)% | ||||||
Diluted earnings per share | $ | 1.23 | $ | 1.29 | (4.7)% | |||||
Weighted average number of shares outstanding | 106,340 | 104,957 | ||||||||
Diluted average number of shares outstanding | 109,818 | 107,647 |
Six Months Ended | ||||||||||
November 30, 2017 | November 30, 2016 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 2,619,822 | $ | 1,994,297 | 31.4% | |||||
Other | 598,122 | 543,430 | 10.1% | |||||||
Total revenue | 3,217,944 | 2,537,727 | 26.8% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 1,430,823 | 1,088,595 | 31.4% | |||||||
Cost of other | 331,399 | 307,487 | 7.8% | |||||||
Selling and administrative expenses | 954,367 | 731,118 | 30.5% | |||||||
G&K Services, Inc. transaction and integration expenses | 17,045 | 6,134 | 177.9% | |||||||
Operating income | 484,310 | 404,393 | 19.8% | |||||||
Interest income | (588 | ) | (96 | ) | 512.5% | |||||
Interest expense | 59,446 | 27,439 | 116.6% | |||||||
Income before income taxes | 425,452 | 377,050 | 12.8% | |||||||
Income taxes | 126,607 | 118,892 | 6.5% | |||||||
Income from continuing operations | 298,845 | 258,158 | 15.8% | |||||||
Income from discontinued operations, net of tax | 55,475 | 20,310 | 173.1% | |||||||
Net income | $ | 354,320 | $ | 278,468 | 27.2% | |||||
Basic earnings per share: | ||||||||||
Continuing operations | $ | 2.77 | $ | 2.42 | 14.5% | |||||
Discontinued operations | 0.51 | 0.19 | 168.4% | |||||||
Basic earnings per share | $ | 3.28 | $ | 2.61 | 25.7% | |||||
Diluted earnings per share: | ||||||||||
Continuing operations | $ | 2.69 | $ | 2.36 | 14.0% | |||||
Discontinued operations | 0.50 | 0.19 | 163.2% | |||||||
Diluted earnings per share | $ | 3.19 | $ | 2.55 | 25.1% | |||||
Weighted average number of shares outstanding | 106,039 | 104,719 | ||||||||
Diluted average number of shares outstanding | 108,938 | 107,278 |
Three Months Ended | ||||||
November 30, 2017 | November 30, 2016 | |||||
Uniform rental and facility services gross margin | 44.7 | % | 44.9 | % | ||
Other gross margin | 44.3 | % | 43.1 | % | ||
Total gross margin | 44.6 | % | 44.5 | % | ||
Net income margin, continuing operations | 8.6 | % | 9.6 | % | ||
Six Months Ended | ||||||
November 30, 2017 | November 30, 2016 | |||||
Uniform rental and facility services gross margin | 45.4 | % | 45.4 | % | ||
Other gross margin | 44.6 | % | 43.4 | % | ||
Total gross margin | 45.2 | % | 45.0 | % | ||
Net income margin, continuing operations | 9.3 | % | 10.2 | % |
Three Months Ended | ||||||||
November 30, 2017 | November 30, 2016 | |||||||
Income from continuing operations | $ | 137,737 | $ | 121,950 | ||||
Less: income from continuing operations allocated to participating securities | 2,111 | 1,923 | ||||||
Income from continuing operations available to common shareholders | $ | 135,626 | $ | 120,027 | ||||
Basic weighted average common shares outstanding | 106,340 | 104,957 | ||||||
Effect of dilutive securities - employee stock options | 3,478 | 2,690 | ||||||
Diluted weighted average common shares outstanding | 109,818 | 107,647 | ||||||
Diluted earnings per share from continuing operations | $ | 1.24 | $ | 1.12 | ||||
Six Months Ended | ||||||||
November 30, 2017 | November 30, 2016 | |||||||
Income from continuing operations | $ | 298,845 | $ | 258,158 | ||||
Less: income from continuing operations allocated to participating securities | 5,298 | 4,775 | ||||||
Income from continuing operations available to common shareholders | $ | 293,547 | $ | 253,383 | ||||
Basic weighted average common shares outstanding | 106,039 | 104,719 | ||||||
Effect of dilutive securities - employee stock options | 2,899 | 2,559 | ||||||
Diluted weighted average common shares outstanding | 108,938 | 107,278 | ||||||
Diluted earnings per share from continuing operations | $ | 2.69 | $ | 2.36 |
Three Months Ended | ||||||||||
November 30, 2017 | November 30, 2016 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 1.24 | $ | 1.12 | ||||||
G&K Services, Inc. transaction and integration expenses | 0.07 | 0.02 | ||||||||
EPS after above items | $ | 1.31 | $ | 1.14 | 14.9 | % | ||||
Six Months Ended | ||||||||||
November 30, 2017 | November 30, 2016 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 2.69 | $ | 2.36 | ||||||
G&K Services, Inc. transaction and integration expenses | 0.10 | 0.04 | ||||||||
EPS after above items | $ | 2.79 | $ | 2.40 | 16.3 | % |
Six Months Ended | ||||||||
November 30, 2017 | November 30, 2016 | |||||||
Net cash provided by operations | $ | 379,009 | $ | 301,721 | ||||
Capital expenditures | (132,466 | ) | (155,173 | ) | ||||
Free cash flow | $ | 246,543 | $ | 146,548 |
Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Corporate | Total | ||||||||||||||||
For the three months ended November 30, 2017 | ||||||||||||||||||||
Revenue | $ | 1,308,038 | $ | 139,090 | $ | 159,313 | $ | — | $ | 1,606,441 | ||||||||||
Gross margin | $ | 584,078 | $ | 65,260 | $ | 67,031 | $ | — | $ | 716,369 | ||||||||||
Selling and administrative expenses | $ | 367,190 | $ | 47,285 | $ | 53,609 | $ | — | $ | 468,084 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 13,074 | $ | — | $ | — | $ | — | $ | 13,074 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (291 | ) | $ | (291 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 29,129 | $ | 29,129 | ||||||||||
Income (loss) before income taxes | $ | 203,814 | $ | 17,975 | $ | 13,422 | $ | (28,838 | ) | $ | 206,373 | |||||||||
For the three months ended November 30, 2016 | ||||||||||||||||||||
Revenue | $ | 1,000,015 | $ | 124,797 | $ | 146,265 | $ | — | $ | 1,271,077 | ||||||||||
Gross margin | $ | 448,517 | $ | 57,545 | $ | 59,156 | $ | — | $ | 565,218 | ||||||||||
Selling and administrative expenses | $ | 268,223 | $ | 42,766 | $ | 50,426 | $ | — | $ | 361,415 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 3,347 | $ | — | $ | — | $ | — | $ | 3,347 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (31 | ) | $ | (31 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 13,267 | $ | 13,267 | ||||||||||
Income (loss) before income taxes | $ | 176,947 | $ | 14,779 | $ | 8,730 | $ | (13,236 | ) | $ | 187,220 | |||||||||
For the six months ended November 30, 2017 | ||||||||||||||||||||
Revenue | $ | 2,619,822 | $ | 279,672 | $ | 318,450 | $ | — | $ | 3,217,944 | ||||||||||
Gross margin | $ | 1,188,999 | $ | 132,035 | $ | 134,688 | $ | — | $ | 1,455,722 | ||||||||||
Selling and administrative expenses | $ | 749,230 | $ | 94,649 | $ | 110,488 | $ | — | $ | 954,367 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 17,045 | $ | — | $ | — | $ | — | $ | 17,045 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (588 | ) | $ | (588 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 59,446 | $ | 59,446 | ||||||||||
Income (loss) before income taxes | $ | 422,724 | $ | 37,386 | $ | 24,200 | $ | (58,858 | ) | $ | 425,452 | |||||||||
For the six months ended November 30, 2016 | ||||||||||||||||||||
Revenue | $ | 1,994,297 | $ | 249,636 | $ | 293,794 | $ | — | $ | 2,537,727 | ||||||||||
Gross margin | $ | 905,702 | $ | 114,671 | $ | 121,272 | $ | — | $ | 1,141,645 | ||||||||||
Selling and administrative expenses | $ | 537,833 | $ | 88,381 | $ | 104,904 | $ | — | $ | 731,118 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 6,134 | $ | — | $ | — | $ | — | $ | 6,134 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (96 | ) | $ | (96 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 27,439 | $ | 27,439 | ||||||||||
Income (loss) before income taxes | $ | 361,735 | $ | 26,290 | $ | 16,368 | $ | (27,343 | ) | $ | 377,050 |
November 30, 2017 | May 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 236,002 | $ | 169,266 | ||||
Marketable securities | 22,732 | 22,219 | ||||||
Accounts receivable, net | 763,555 | 736,008 | ||||||
Inventories, net | 272,830 | 278,218 | ||||||
Uniforms and other rental items in service | 674,572 | 635,702 | ||||||
Income taxes, current | 35,700 | 44,320 | ||||||
Prepaid expenses and other current assets | 38,058 | 30,132 | ||||||
Assets held for sale | — | 38,613 | ||||||
Total current assets | 2,043,449 | 1,954,478 | ||||||
Property and equipment, net | 1,353,159 | 1,323,501 | ||||||
Investments | 175,663 | 164,788 | ||||||
Goodwill | 2,811,796 | 2,782,335 | ||||||
Service contracts, net | 565,574 | 586,988 | ||||||
Other assets, net | 29,160 | 31,967 | ||||||
$ | 6,978,801 | $ | 6,844,057 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 162,981 | $ | 177,051 | ||||
Accrued compensation and related liabilities | 113,430 | 149,635 | ||||||
Accrued liabilities | 577,960 | 429,809 | ||||||
Debt due within one year | 300,000 | 362,900 | ||||||
Liabilities held for sale | — | 11,457 | ||||||
Total current liabilities | 1,154,371 | 1,130,852 | ||||||
Long-term liabilities: | ||||||||
Debt due after one year | 2,534,222 | 2,770,624 | ||||||
Deferred income taxes | 539,043 | 469,328 | ||||||
Accrued liabilities | 198,132 | 170,460 | ||||||
Total long-term liabilities | 3,271,397 | 3,410,412 | ||||||
Shareholders’ equity: | ||||||||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | — | — | ||||||
Common stock, no par value: 425,000,000 shares authorized FY18: 182,338,749 issued and 106,470,073 outstanding FY17: 180,992,605 issued and 105,400,629 outstanding | 600,563 | 485,068 | ||||||
Paid-in capital | 192,191 | 223,924 | ||||||
Retained earnings | 5,349,539 | 5,170,830 | ||||||
Treasury stock: FY18: 75,868,676 shares FY17: 75,591,976 shares | (3,609,697 | ) | (3,574,000 | ) | ||||
Accumulated other comprehensive income (loss) | 20,437 | (3,029 | ) | |||||
Total shareholders’ equity | 2,553,033 | 2,302,793 | ||||||
$ | 6,978,801 | $ | 6,844,057 |
Six Months Ended | ||||||||
November 30, 2017 | November 30, 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 354,320 | $ | 278,468 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 107,578 | 79,590 | ||||||
Amortization of intangible assets | 31,261 | 7,460 | ||||||
Stock-based compensation | 55,204 | 39,582 | ||||||
Gain on sale of business | (99,060 | ) | — | |||||
Gain on Shred-it | — | (25,876 | ) | |||||
Deferred income taxes | 42,162 | (3,833 | ) | |||||
Change in current assets and liabilities, net of acquisitions of businesses: | ||||||||
Accounts receivable, net | (24,800 | ) | (44,920 | ) | ||||
Inventories, net | 2,595 | (14,616 | ) | |||||
Uniforms and other rental items in service | (33,294 | ) | (4,315 | ) | ||||
Prepaid expenses and other current assets | (18,573 | ) | (1,952 | ) | ||||
Accounts payable | (8,706 | ) | 15,451 | |||||
Accrued compensation and related liabilities | (36,480 | ) | (18,936 | ) | ||||
Accrued liabilities and other | (1,940 | ) | (4,866 | ) | ||||
Income taxes, current | 8,742 | 484 | ||||||
Net cash provided by operating activities | 379,009 | 301,721 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (132,466 | ) | (155,173 | ) | ||||
Proceeds from redemption of marketable securities and investments | 100,259 | 172,968 | ||||||
Purchase of marketable securities and investments | (99,877 | ) | (118,270 | ) | ||||
Proceeds from sale of business | 127,835 | — | ||||||
Proceeds from sale of investment in Shred-it | — | 25,876 | ||||||
Acquisitions of businesses, net of cash acquired | (1,099 | ) | (17,778 | ) | ||||
Other, net | (870 | ) | 332 | |||||
Net cash used in investing activities | (6,218 | ) | (92,045 | ) | ||||
Cash flows from financing activities: | ||||||||
(Payments) issuance of commercial paper, net | (50,500 | ) | 66,000 | |||||
Repayment of debt | (250,000 | ) | (250,000 | ) | ||||
Prepaid short-term debt financing fees | — | (13,495 | ) | |||||
Proceeds from exercise of stock-based compensation awards | 28,558 | 19,225 | ||||||
Repurchase of common stock | (35,697 | ) | (19,230 | ) | ||||
Other, net | (1,882 | ) | (5,572 | ) | ||||
Net cash used in financing activities | (309,521 | ) | (203,072 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 3,466 | (2,388 | ) | |||||
Net increase in cash and cash equivalents | 66,736 | 4,216 | ||||||
Cash and cash equivalents at beginning of period | 169,266 | 139,357 | ||||||
Cash and cash equivalents at end of period | $ | 236,002 | $ | 143,573 |