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 March 22, 2018 |
CINTAS CORPORATION | |||||
Date: | March 22, 2018 | 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 | |||||||||
February 28, 2018 | February 28, 2017 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 2.66 | $ | 1.06 | ||||||
G&K transaction and integration expenses | 0.06 | 0.06 | ||||||||
One-time cash payment to employees | 0.24 | — | ||||||||
Benefit of the Tax Act | (1.59) | — | ||||||||
EPS after above items | $ | 1.37 | $ | 1.12 | 22.3 | % | ||||
Nine Months Ended | ||||||||||
February 28, 2018 | February 28, 2017 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 5.35 | $ | 3.42 | ||||||
G&K transaction and integration expenses | 0.16 | 0.10 | ||||||||
One-time cash payment to employees | 0.24 | — | ||||||||
Benefit of the Tax Act | (1.59) | — | ||||||||
EPS after above items | $ | 4.16 | $ | 3.52 | 18.2 | % |
Three Months Ended | ||||||||||
February 28, 2018 | February 28, 2017 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 1,284,516 | $ | 988,178 | 30.0% | |||||
Other | 304,622 | 267,189 | 14.0% | |||||||
Total revenue | 1,589,138 | 1,255,367 | 26.6% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 718,138 | 542,790 | 32.3% | |||||||
Cost of other | 170,537 | 152,653 | 11.7% | |||||||
Selling and administrative expenses | 490,618 | 358,589 | 36.8% | |||||||
G&K Services, Inc. transaction and integration expenses | 9,821 | 9,344 | 5.1% | |||||||
Operating income | 200,024 | 191,991 | 4.2% | |||||||
Interest income | (384 | ) | (11 | ) | 3,390.9% | |||||
Interest expense | 25,901 | 13,696 | 89.1% | |||||||
Income before income taxes | 174,507 | 178,306 | (2.1)% | |||||||
Income tax (benefit) expense | (121,282 | ) | 61,352 | (297.7)% | ||||||
Income from continuing operations | 295,789 | 116,954 | 152.9% | |||||||
Income from discontinued operations, net of tax | 6,306 | 1,051 | 500.0% | |||||||
Net income | $ | 302,095 | $ | 118,005 | 156.0% | |||||
Basic earnings per share: | ||||||||||
Continuing operations | $ | 2.73 | $ | 1.09 | 150.5% | |||||
Discontinued operations | 0.06 | 0.01 | 500.0% | |||||||
Basic earnings per share | $ | 2.79 | $ | 1.10 | 153.6% | |||||
Diluted earnings per share: | ||||||||||
Continuing operations | $ | 2.66 | $ | 1.06 | 150.9% | |||||
Discontinued operations | 0.05 | 0.01 | 400.0% | |||||||
Diluted earnings per share | $ | 2.71 | $ | 1.07 | 153.3% | |||||
Weighted average number of shares outstanding | 106,558 | 105,093 | ||||||||
Diluted average number of shares outstanding | 110,175 | 107,892 |
Nine Months Ended | ||||||||||
February 28, 2018 | February 28, 2017 | % Change | ||||||||
Revenue: | ||||||||||
Uniform rental and facility services | $ | 3,904,338 | $ | 2,982,475 | 30.9% | |||||
Other | 902,744 | 810,619 | 11.4% | |||||||
Total revenue | 4,807,082 | 3,793,094 | 26.7% | |||||||
Costs and expenses: | ||||||||||
Cost of uniform rental and facility services | 2,148,961 | 1,631,385 | 31.7% | |||||||
Cost of other | 501,936 | 460,140 | 9.1% | |||||||
Selling and administrative expenses | 1,444,985 | 1,089,707 | 32.6% | |||||||
G&K Services, Inc. transaction and integration expenses | 26,866 | 15,478 | 73.6% | |||||||
Operating income | 684,334 | 596,384 | 14.7% | |||||||
Interest income | (972 | ) | (107 | ) | 808.4% | |||||
Interest expense | 85,347 | 41,135 | 107.5% | |||||||
Income before income taxes | 599,959 | 555,356 | 8.0% | |||||||
Income taxes | 5,325 | 180,244 | (97.0)% | |||||||
Income from continuing operations | 594,634 | 375,112 | 58.5% | |||||||
Income from discontinued operations, net of tax | 61,781 | 21,361 | 189.2% | |||||||
Net income | $ | 656,415 | $ | 396,473 | 65.6% | |||||
Basic earnings per share: | ||||||||||
Continuing operations | $ | 5.50 | $ | 3.51 | 56.7% | |||||
Discontinued operations | 0.57 | 0.20 | 185.0% | |||||||
Basic earnings per share | $ | 6.07 | $ | 3.71 | 63.6% | |||||
Diluted earnings per share: | ||||||||||
Continuing operations | $ | 5.35 | $ | 3.42 | 56.4% | |||||
Discontinued operations | 0.55 | 0.20 | 175.0% | |||||||
Diluted earnings per share | $ | 5.90 | $ | 3.62 | 63.0% | |||||
Weighted average number of shares outstanding | 106,210 | 104,842 | ||||||||
Diluted average number of shares outstanding | 109,254 | 107,508 |
Three Months Ended | ||||||
February 28, 2018 | February 28, 2017 | |||||
Uniform rental and facility services gross margin | 44.1 | % | 45.1 | % | ||
Other gross margin | 44.0 | % | 42.9 | % | ||
Total gross margin | 44.1 | % | 44.6 | % | ||
Net income margin, continuing operations | 18.6 | % | 9.3 | % | ||
Nine Months Ended | ||||||
February 28, 2018 | February 28, 2017 | |||||
Uniform rental and facility services gross margin | 45.0 | % | 45.3 | % | ||
Other gross margin | 44.4 | % | 43.2 | % | ||
Total gross margin | 44.9 | % | 44.9 | % | ||
Net income margin, continuing operations | 12.4 | % | 9.9 | % |
Three Months Ended | ||||||||
February 28, 2018 | February 28, 2017 | |||||||
Income from continuing operations | $ | 295,789 | $ | 116,954 | ||||
Less: income from continuing operations allocated to participating securities | 5,248 | 2,573 | ||||||
Income from continuing operations available to common shareholders | $ | 290,541 | $ | 114,381 | ||||
Basic weighted average common shares outstanding | 106,558 | 105,093 | ||||||
Effect of dilutive securities - employee stock options | 3,617 | 2,799 | ||||||
Diluted weighted average common shares outstanding | 110,175 | 107,892 | ||||||
Diluted earnings per share from continuing operations | $ | 2.66 | $ | 1.06 | ||||
Nine Months Ended | ||||||||
February 28, 2018 | February 28, 2017 | |||||||
Income from continuing operations | $ | 594,634 | $ | 375,112 | ||||
Less: income from continuing operations allocated to participating securities | 10,546 | 7,348 | ||||||
Income from continuing operations available to common shareholders | $ | 584,088 | $ | 367,764 | ||||
Basic weighted average common shares outstanding | 106,210 | 104,842 | ||||||
Effect of dilutive securities - employee stock options | 3,044 | 2,666 | ||||||
Diluted weighted average common shares outstanding | 109,254 | 107,508 | ||||||
Diluted earnings per share from continuing operations | $ | 5.35 | $ | 3.42 |
Three Months Ended | ||||||||||
February 28, 2018 | February 28, 2017 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 2.66 | $ | 1.06 | ||||||
G&K Services Inc. transaction and integration expenses | 0.06 | 0.06 | ||||||||
One-time cash payment to employees | 0.24 | — | ||||||||
Benefit of the Tax Act | (1.59) | — | ||||||||
EPS after above items | $ | 1.37 | $ | 1.12 | 22.3 | % | ||||
Nine Months Ended | ||||||||||
February 28, 2018 | February 28, 2017 | Growth vs. FY 2017 | ||||||||
EPS - continuing operations | $ | 5.35 | $ | 3.42 | ||||||
G&K Services Inc. transaction and integration expenses | 0.16 | 0.10 | ||||||||
One-time cash payment to employees | 0.24 | — | ||||||||
Benefit of the Tax Act | (1.59) | — | ||||||||
EPS after above items | $ | 4.16 | $ | 3.52 | 18.2 | % |
Nine Months Ended | ||||||||
February 28, 2018 | February 28, 2017 | |||||||
Net cash provided by operations | $ | 660,864 | $ | 483,758 | ||||
Capital expenditures | (196,040 | ) | (218,621 | ) | ||||
Free cash flow | $ | 464,824 | $ | 265,137 |
Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Corporate | Total | ||||||||||||||||
For the three months ended February 28, 2018 | ||||||||||||||||||||
Revenue | $ | 1,284,516 | $ | 137,327 | $ | 167,295 | $ | — | $ | 1,589,138 | ||||||||||
Gross margin | $ | 566,378 | $ | 64,348 | $ | 69,737 | $ | — | $ | 700,463 | ||||||||||
Selling and administrative expenses | $ | 383,270 | $ | 47,643 | $ | 59,705 | $ | — | $ | 490,618 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 9,821 | $ | — | $ | — | $ | — | $ | 9,821 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (384 | ) | $ | (384 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 25,901 | $ | 25,901 | ||||||||||
Income (loss) before income taxes | $ | 173,287 | $ | 16,705 | $ | 10,032 | $ | (25,517 | ) | $ | 174,507 | |||||||||
For the three months ended February 28, 2017 | ||||||||||||||||||||
Revenue | $ | 988,178 | $ | 124,239 | $ | 142,950 | $ | — | $ | 1,255,367 | ||||||||||
Gross margin | $ | 445,388 | $ | 55,681 | $ | 58,855 | $ | — | $ | 559,924 | ||||||||||
Selling and administrative expenses | $ | 264,111 | $ | 43,446 | $ | 51,032 | $ | — | $ | 358,589 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 9,344 | $ | — | $ | — | $ | — | $ | 9,344 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (11 | ) | $ | (11 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 13,696 | $ | 13,696 | ||||||||||
Income (loss) before income taxes | $ | 171,933 | $ | 12,235 | $ | 7,823 | $ | (13,685 | ) | $ | 178,306 | |||||||||
For the nine months ended February 28, 2018 | ||||||||||||||||||||
Revenue | $ | 3,904,338 | $ | 416,999 | $ | 485,745 | $ | — | $ | 4,807,082 | ||||||||||
Gross margin | $ | 1,755,377 | $ | 196,383 | $ | 204,425 | $ | — | $ | 2,156,185 | ||||||||||
Selling and administrative expenses | $ | 1,132,500 | $ | 142,292 | $ | 170,193 | $ | — | $ | 1,444,985 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 26,866 | $ | — | $ | — | $ | — | $ | 26,866 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (972 | ) | $ | (972 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 85,347 | $ | 85,347 | ||||||||||
Income (loss) before income taxes | $ | 596,011 | $ | 54,091 | $ | 34,232 | $ | (84,375 | ) | $ | 599,959 | |||||||||
For the nine months ended February 28, 2017 | ||||||||||||||||||||
Revenue | $ | 2,982,475 | $ | 373,875 | $ | 436,744 | $ | — | $ | 3,793,094 | ||||||||||
Gross margin | $ | 1,351,090 | $ | 170,352 | $ | 180,127 | $ | — | $ | 1,701,569 | ||||||||||
Selling and administrative expenses | $ | 801,944 | $ | 131,827 | $ | 155,936 | $ | — | $ | 1,089,707 | ||||||||||
G&K Services, Inc. transaction and integration expenses | $ | 15,478 | $ | — | $ | — | $ | — | $ | 15,478 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (107 | ) | $ | (107 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 41,135 | $ | 41,135 | ||||||||||
Income (loss) before income taxes | $ | 533,668 | $ | 38,525 | $ | 24,191 | $ | (41,028 | ) | $ | 555,356 |
February 28, 2018 | May 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 152,563 | $ | 169,266 | ||||
Marketable securities | 33,693 | 22,219 | ||||||
Accounts receivable, net | 779,220 | 736,008 | ||||||
Inventories, net | 274,819 | 278,218 | ||||||
Uniforms and other rental items in service | 682,438 | 635,702 | ||||||
Income taxes, current | 12,907 | 44,320 | ||||||
Prepaid expenses and other current assets | 35,192 | 30,132 | ||||||
Assets held for sale | — | 38,613 | ||||||
Total current assets | 1,970,832 | 1,954,478 | ||||||
Property and equipment, net | 1,367,580 | 1,323,501 | ||||||
Investments | 178,527 | 164,788 | ||||||
Goodwill | 2,819,867 | 2,782,335 | ||||||
Service contracts, net | 557,477 | 586,988 | ||||||
Other assets, net | 25,566 | 31,967 | ||||||
$ | 6,919,849 | $ | 6,844,057 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 172,181 | $ | 177,051 | ||||
Accrued compensation and related liabilities | 145,066 | 149,635 | ||||||
Accrued liabilities | 412,826 | 429,809 | ||||||
Debt due within one year | 187,500 | 362,900 | ||||||
Liabilities held for sale | — | 11,457 | ||||||
Total current liabilities | 917,573 | 1,130,852 | ||||||
Long-term liabilities: | ||||||||
Debt due after one year | 2,534,760 | 2,770,624 | ||||||
Deferred income taxes | 376,665 | 469,328 | ||||||
Accrued liabilities | 196,854 | 170,460 | ||||||
Total long-term liabilities | 3,108,279 | 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: 182,558,025 issued and 106,681,417 outstanding FY17: 180,992,605 issued and 105,400,629 outstanding | 611,485 | 485,068 | ||||||
Paid-in capital | 219,389 | 223,924 | ||||||
Retained earnings | 5,651,656 | 5,170,830 | ||||||
Treasury stock: FY18: 75,876,608 shares FY17: 75,591,976 shares | (3,611,050 | ) | (3,574,000 | ) | ||||
Accumulated other comprehensive income (loss) | 22,517 | (3,029 | ) | |||||
Total shareholders’ equity | 2,893,997 | 2,302,793 | ||||||
$ | 6,919,849 | $ | 6,844,057 |
Nine Months Ended | ||||||||
February 28, 2018 | February 28, 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 656,415 | $ | 396,473 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 157,319 | 120,493 | ||||||
Amortization of intangible assets | 47,583 | 11,221 | ||||||
Stock-based compensation | 86,044 | 63,578 | ||||||
Gain on sale of business | (99,060 | ) | — | |||||
Gain on Shred-it | — | (25,876 | ) | |||||
Deferred income taxes | (120,428 | ) | (3,472 | ) | ||||
Change in current assets and liabilities, net of acquisitions of businesses: | ||||||||
Accounts receivable, net | (40,046 | ) | (28,646 | ) | ||||
Inventories, net | 4,011 | (23,364 | ) | |||||
Uniforms and other rental items in service | (44,050 | ) | (53 | ) | ||||
Prepaid expenses and other current assets | (17,925 | ) | (11,387 | ) | ||||
Accounts payable | (580 | ) | 15,538 | |||||
Accrued compensation and related liabilities | (2,209 | ) | (5,812 | ) | ||||
Accrued liabilities and other | 2,253 | (6,079 | ) | |||||
Income taxes, current | 31,537 | (18,856 | ) | |||||
Net cash provided by operating activities | 660,864 | 483,758 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (196,040 | ) | (218,621 | ) | ||||
Proceeds from redemption of marketable securities and investments | 146,302 | 172,506 | ||||||
Purchase of marketable securities and investments | (157,528 | ) | (125,634 | ) | ||||
Proceeds from sale of business | 127,835 | — | ||||||
Proceeds from sale of investment in Shred-it | — | 25,876 | ||||||
Acquisitions of businesses, net of cash acquired | (12,298 | ) | (19,630 | ) | ||||
Other, net | 1,746 | 28 | ||||||
Net cash used in investing activities | (89,983 | ) | (165,475 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of commercial paper, net | 137,000 | 99,500 | ||||||
Repayment of debt | (550,000 | ) | (250,000 | ) | ||||
Prepaid short-term debt financing fees | — | (13,949 | ) | |||||
Proceeds from exercise of stock-based compensation awards | 35,838 | 25,114 | ||||||
Dividends paid | (175,589 | ) | (142,444 | ) | ||||
Repurchase of common stock | (37,050 | ) | (20,054 | ) | ||||
Other, net | (2,489 | ) | (5,801 | ) | ||||
Net cash used in financing activities | (592,290 | ) | (307,634 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 4,706 | (2,762 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (16,703 | ) | 7,887 | |||||
Cash and cash equivalents at beginning of period | 169,266 | 139,357 | ||||||
Cash and cash equivalents at end of period | $ | 152,563 | $ | 147,244 |