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 21, 2019 |
CINTAS CORPORATION | |||||
Date: | March 21, 2019 | By: | /s/ J. Michael Hansen | ||
J. Michael Hansen | |||||
Executive Vice President and Chief Financial Officer |
Exhibit Number | Description | ||
Three Months Ended | ||||||||||
Earnings Per Share Results | February 28, 2019 | February 28, 2018 | Growth vs. FY 2018 | |||||||
EPS - continuing operations | $ | 1.83 | $ | 2.66 | ||||||
G&K integration expenses | 0.01 | 0.06 | ||||||||
One-time cash payment to employees | — | 0.24 | ||||||||
One-time deferred tax benefit of Tax Act | — | (1.59 | ) | |||||||
EPS excluding above items | $ | 1.84 | $ | 1.37 | 34.3 | % | ||||
Nine Months Ended | ||||||||||
February 28, 2019 | February 28, 2018 | Growth vs. FY 2018 | ||||||||
EPS - continuing operations | $ | 5.91 | $ | 5.35 | ||||||
G&K integration expenses | 0.09 | 0.16 | ||||||||
One-time cash payment to employees | — | 0.24 | ||||||||
Non-recurring gain on sale of investment | (0.47) | — | ||||||||
One-time deferred tax benefit of Tax Act | — | (1.59 | ) | |||||||
EPS excluding above items | $ | 5.53 | $ | 4.16 | 32.9 | % |
Fiscal 2018 | Fiscal 2019 Low End of Range | Growth vs. 2018 | Fiscal 2019 High End of Range | Growth vs. 2018 | |||||||||||
Fiscal 2019 Revenue Guidance | |||||||||||||||
($s in millions) | |||||||||||||||
Revenue Guidance | $ | 6,476.6 | $ | 6,870.0 | 6.1% | $ | 6,885.0 | 6.3% | |||||||
Fiscal 2019 Earnings Per Share Guidance | |||||||||||||||
EPS - continuing operations | $ | 7.03 | $ | 7.80 | $ | 7.86 | |||||||||
G&K integration expenses | 0.26 | 0.09 | 0.09 | ||||||||||||
One-time cash payment to employees | 0.24 | — | — | ||||||||||||
Non-recurring gain on sale of investment | — | (0.47 | ) | (0.47 | ) | ||||||||||
One-time deferred tax benefit of Tax Act | (1.59 | ) | — | — | |||||||||||
EPS Guidance | $ | 5.94 | $ | 7.42 | 24.9% | $ | 7.48 | 25.9% |
Three Months Ended | |||||||||
February 28, 2019 | February 28, 2018 | % Change | |||||||
Revenue: | |||||||||
Uniform rental and facility services | $ | 1,358,322 | $ | 1,284,516 | 5.7% | ||||
Other | 324,008 | 304,622 | 6.4% | ||||||
Total revenue | 1,682,330 | 1,589,138 | 5.9% | ||||||
Costs and expenses: | |||||||||
Cost of uniform rental and facility services | 748,971 | 718,138 | 4.3% | ||||||
Cost of other | 178,206 | 170,537 | 4.5% | ||||||
Selling and administrative expenses | 476,099 | 490,618 | (3.0)% | ||||||
G&K Services, Inc. integration expenses | 799 | 9,821 | (91.9)% | ||||||
Operating income | 278,255 | 200,024 | 39.1% | ||||||
Interest income | (70 | ) | (384 | ) | (81.8)% | ||||
Interest expense | 26,770 | 25,901 | 3.4% | ||||||
Income before income taxes | 251,555 | 174,507 | 44.2% | ||||||
Income taxes | 50,632 | (121,282 | ) | (141.7)% | |||||
Income from continuing operations | 200,923 | 295,789 | (32.1)% | ||||||
Income from discontinued operations, net of tax | 2,411 | 6,306 | (61.8)% | ||||||
Net income | $ | 203,334 | $ | 302,095 | (32.7)% | ||||
Basic earnings per share: | |||||||||
Continuing operations | $ | 1.89 | $ | 2.73 | (30.8)% | ||||
Discontinued operations | 0.02 | 0.06 | (66.7)% | ||||||
Basic earnings per share | $ | 1.91 | $ | 2.79 | (31.5)% | ||||
Diluted earnings per share: | |||||||||
Continuing operations | $ | 1.83 | $ | 2.66 | (31.2)% | ||||
Discontinued operations | 0.02 | 0.05 | (60.0)% | ||||||
Diluted earnings per share | $ | 1.85 | $ | 2.71 | (31.7)% | ||||
Weighted average number of shares outstanding | 105,080 | 106,558 | |||||||
Diluted average number of shares outstanding | 108,162 | 110,175 |
Nine Months Ended | |||||||||
February 28, 2019 | February 28, 2018 | % Change | |||||||
Revenue: | |||||||||
Uniform rental and facility services | $ | 4,124,038 | $ | 3,904,338 | 5.6% | ||||
Other | 974,535 | 902,744 | 8.0% | ||||||
Total revenue | 5,098,573 | 4,807,082 | 6.1% | ||||||
Costs and expenses: | |||||||||
Cost of uniform rental and facility services | 2,256,543 | 2,148,961 | 5.0% | ||||||
Cost of other | 537,007 | 501,936 | 7.0% | ||||||
Selling and administrative expenses | 1,472,404 | 1,444,985 | 1.9% | ||||||
G&K Services, Inc. integration expenses | 13,496 | 26,866 | (49.8)% | ||||||
Operating income | 819,123 | 684,334 | 19.7% | ||||||
Gain on sale of a cost method investment | 69,373 | — | 100.0% | ||||||
Interest income | (957 | ) | (972 | ) | (1.5)% | ||||
Interest expense | 75,954 | 85,347 | (11.0)% | ||||||
Income before income taxes | 813,499 | 599,959 | 35.6% | ||||||
Income taxes | 157,035 | 5,325 | 2,849.0% | ||||||
Income from continuing operations | 656,464 | 594,634 | 10.4% | ||||||
Income from discontinued operations, net of tax | 2,398 | 61,781 | (96.1)% | ||||||
Net income | $ | 658,862 | $ | 656,415 | 0.4% | ||||
Basic earnings per share: | |||||||||
Continuing operations | $ | 6.10 | $ | 5.50 | 10.9% | ||||
Discontinued operations | 0.02 | 0.57 | (96.5)% | ||||||
Basic earnings per share | $ | 6.12 | $ | 6.07 | 0.8% | ||||
Diluted earnings per share: | |||||||||
Continuing operations | $ | 5.91 | $ | 5.35 | 10.5% | ||||
Discontinued operations | 0.02 | 0.55 | (96.4)% | ||||||
Diluted earnings per share | $ | 5.93 | $ | 5.90 | 0.5% | ||||
Weighted average number of shares outstanding | 106,147 | 106,210 | |||||||
Diluted average number of shares outstanding | 109,583 | 109,254 |
Three Months Ended | |||||
February 28, 2019 | February 28, 2018 | ||||
Uniform rental and facility services gross margin | 44.9 | % | 44.1 | % | |
Other gross margin | 45.0 | % | 44.0 | % | |
Total gross margin | 44.9 | % | 44.1 | % | |
Nine Months Ended | |||||
February 28, 2019 | February 28, 2018 | ||||
Uniform rental and facility services gross margin | 45.3 | % | 45.0 | % | |
Other gross margin | 44.9 | % | 44.4 | % | |
Total gross margin | 45.2 | % | 44.9 | % |
Three Months Ended | ||||||||||
February 28, 2019 | February 28, 2018 | Growth vs. FY 2018 | ||||||||
EPS - continuing operations | $ | 1.83 | $ | 2.66 | ||||||
G&K Services, Inc. integration expenses | 0.01 | 0.06 | ||||||||
One-time cash payment to employees | — | 0.24 | ||||||||
One-time deferred tax benefit of Tax Act | — | (1.59 | ) | |||||||
EPS excluding above items | $ | 1.84 | $ | 1.37 | 34.3 | % | ||||
Nine Months Ended | ||||||||||
February 28, 2019 | February 28, 2018 | Growth vs. FY 2018 | ||||||||
EPS - continuing operations | $ | 5.91 | $ | 5.35 | ||||||
G&K Services, Inc. integration expenses | 0.09 | 0.16 | ||||||||
One-time cash payment to employees | — | 0.24 | ||||||||
Non-recurring gain on sale of investment | (0.47 | ) | — | |||||||
One-time deferred tax benefit of Tax Act | — | (1.59 | ) | |||||||
EPS excluding above items | $ | 5.53 | $ | 4.16 | 32.9 | % |
Nine Months Ended | |||||||
February 28, 2019 | February 28, 2018 | ||||||
Net cash provided by operations | $ | 670,717 | $ | 660,864 | |||
Capital expenditures | (207,805 | ) | (196,040 | ) | |||
Free cash flow | $ | 462,912 | $ | 464,824 |
Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Corporate | Total | ||||||||||||||||
For the three months ended February 28, 2019 | ||||||||||||||||||||
Revenue | $ | 1,358,322 | $ | 149,170 | $ | 174,838 | $ | — | $ | 1,682,330 | ||||||||||
Gross margin | $ | 609,351 | $ | 71,890 | $ | 73,912 | $ | — | $ | 755,153 | ||||||||||
Selling and administrative expenses | $ | 369,414 | $ | 50,268 | $ | 56,417 | $ | — | $ | 476,099 | ||||||||||
G&K Services, Inc. integration expenses | $ | 799 | $ | — | $ | — | $ | — | $ | 799 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (70 | ) | $ | (70 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 26,770 | $ | 26,770 | ||||||||||
Income (loss) before income taxes | $ | 239,138 | $ | 21,622 | $ | 17,495 | $ | (26,700 | ) | $ | 251,555 | |||||||||
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. 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 nine months ended February 28, 2019 | ||||||||||||||||||||
Revenue | $ | 4,124,038 | $ | 455,935 | $ | 518,600 | $ | — | $ | 5,098,573 | ||||||||||
Gross margin | $ | 1,867,495 | $ | 219,045 | $ | 218,483 | $ | — | $ | 2,305,023 | ||||||||||
Selling and administrative expenses | $ | 1,140,436 | $ | 154,112 | $ | 177,856 | $ | — | $ | 1,472,404 | ||||||||||
G&K Services, Inc. integration expenses | $ | 13,496 | $ | — | $ | — | $ | — | $ | 13,496 | ||||||||||
Gain on sale of a cost method investment | $ | — | $ | — | $ | — | $ | 69,373 | $ | 69,373 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (957 | ) | $ | (957 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 75,954 | $ | 75,954 | ||||||||||
Income (loss) before income taxes | $ | 713,563 | $ | 64,933 | $ | 40,627 | $ | (5,624 | ) | $ | 813,499 | |||||||||
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. 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 |
February 28, 2019 | May 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 80,859 | $ | 138,724 | |||
Accounts receivable, net | 878,037 | 804,583 | |||||
Inventories, net | 339,805 | 280,347 | |||||
Uniforms and other rental items in service | 773,534 | 702,261 | |||||
Income taxes, current | 42,552 | 19,634 | |||||
Prepaid expenses and other current assets | 108,969 | 32,383 | |||||
Total current assets | 2,223,756 | 1,977,932 | |||||
Property and equipment, net | 1,424,063 | 1,382,730 | |||||
Investments | 191,818 | 175,581 | |||||
Goodwill | 2,847,783 | 2,846,888 | |||||
Service contracts, net | 508,402 | 545,768 | |||||
Other assets, net | 237,851 | 29,315 | |||||
$ | 7,433,673 | $ | 6,958,214 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 214,567 | $ | 215,074 | |||
Accrued compensation and related liabilities | 136,814 | 140,654 | |||||
Accrued liabilities | 425,470 | 420,129 | |||||
Debt due within one year | 217,500 | — | |||||
Total current liabilities | 994,351 | 775,857 | |||||
Long-term liabilities: | |||||||
Debt due after one year | 2,536,958 | 2,535,309 | |||||
Deferred income taxes | 439,011 | 352,581 | |||||
Accrued liabilities | 283,861 | 277,941 | |||||
Total long-term liabilities | 3,259,830 | 3,165,831 | |||||
Shareholders’ equity: | |||||||
Preferred stock, no par value: 100,000 shares authorized, none outstanding | — | — | |||||
Common stock, no par value: 425,000,000 shares authorized FY19: 184,559,502 issued and 104,932,029 outstanding FY18: 182,723,471 issued and 106,326,383 outstanding | 826,175 | 618,464 | |||||
Paid-in capital | 197,327 | 245,211 | |||||
Retained earnings | 6,465,121 | 5,837,827 | |||||
Treasury stock: FY19: 79,627,473 shares FY18: 76,397,088 shares | (4,309,543 | ) | (3,701,319 | ) | |||
Accumulated other comprehensive income | 412 | 16,343 | |||||
Total shareholders’ equity | 3,179,492 | 3,016,526 | |||||
$ | 7,433,673 | $ | 6,958,214 |
Nine Months Ended | |||||||
February 28, 2019 | February 28, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 658,862 | $ | 656,415 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 164,380 | 157,319 | |||||
Amortization of intangible assets and capitalized contract costs | 101,949 | 47,583 | |||||
Stock-based compensation | 105,553 | 86,044 | |||||
Gain on sale of a cost method investment | (69,373 | ) | — | ||||
Gain on sale of business | (2,419 | ) | (99,060 | ) | |||
Deferred income taxes | 25,079 | (120,428 | ) | ||||
Change in current assets and liabilities, net of acquisitions of businesses: | |||||||
Accounts receivable, net | (61,102 | ) | (40,046 | ) | |||
Inventories, net | (70,716 | ) | 4,011 | ||||
Uniforms and other rental items in service | (72,336 | ) | (44,050 | ) | |||
Prepaid expenses and other current assets and capitalized contract costs | (85,123 | ) | (17,925 | ) | |||
Accounts payable | 79 | (580 | ) | ||||
Accrued compensation and related liabilities | (3,866 | ) | (2,209 | ) | |||
Accrued liabilities and other | 3,614 | 10,997 | |||||
Income taxes, current | (23,864 | ) | 22,793 | ||||
Net cash provided by operating activities | 670,717 | 660,864 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (207,805 | ) | (196,040 | ) | |||
Proceeds from redemption of marketable securities and investments | — | 146,302 | |||||
Purchase of marketable securities and investments | (17,544 | ) | (157,528 | ) | |||
Proceeds from sale of a cost method investment | 73,342 | — | |||||
Proceeds from sale of business | 3,200 | 127,835 | |||||
Acquisitions of businesses, net of cash acquired | (7,403 | ) | (12,298 | ) | |||
Other, net | (6,804 | ) | 1,746 | ||||
Net cash used in investing activities | (163,014 | ) | (89,983 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of commercial paper, net | 217,500 | 137,000 | |||||
Repayment of debt | — | (550,000 | ) | ||||
Proceeds from exercise of stock-based compensation awards | 54,274 | 35,838 | |||||
Dividends paid | (220,760 | ) | (175,589 | ) | |||
Repurchase of common stock | (608,224 | ) | (37,050 | ) | |||
Other, net | (8,088 | ) | (2,489 | ) | |||
Net cash used in financing activities | (565,298 | ) | (592,290 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (270 | ) | 4,706 | ||||
Net decrease in cash and cash equivalents | (57,865 | ) | (16,703 | ) | |||
Cash and cash equivalents at beginning of period | 138,724 | 169,266 | |||||
Cash and cash equivalents at end of period | $ | 80,859 | $ | 152,563 |