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) |
Registrant's telephone number, including area code: (513) 459-1200 |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | 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 | ||
Common stock, no par value | CTAS | The NASDAQ Stock Market LLC (NASDAQ Global Select Market) |
(d) | Exhibits. |
Exhibit Number | Description | ||
CINTAS CORPORATION | |||||
Date: | July 16, 2019 | By: | /s/ J. Michael Hansen | ||
J. Michael Hansen | |||||
Executive Vice President and Chief Financial Officer |
Three Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | Growth vs. FY 2018 | |||||||
EPS - continuing operations | $ | 2.06 | $ | 1.68 | |||||
G&K integration expenses | 0.01 | 0.09 | |||||||
EPS excluding above items | $ | 2.07 | $ | 1.77 | 16.9% | ||||
Twelve Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | Growth vs. FY 2018 | |||||||
EPS - continuing operations | $ | 7.97 | $ | 7.03 | |||||
G&K integration expenses | 0.10 | 0.26 | |||||||
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 | $ | 7.60 | $ | 5.94 | 27.9% |
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 | $ | 7,240.0 | 5.0% | $ | 7,310.0 | 6.1% | |||||||
Growth on Constant Workday Basis (1) | 5.4% | 6.5% | |||||||||||||
Fiscal 2020 Earnings Per Share Guidance | |||||||||||||||
EPS - continuing operations | $ | 7.97 | $ | 8.30 | $ | 8.45 | |||||||||
G&K integration expenses | 0.10 | ||||||||||||||
Non-recurring gain on sale of investment | (0.47 | ) | |||||||||||||
EPS Guidance (2) (3) | $ | 7.60 | $ | 8.30 | 9.2% | $ | 8.45 | 11.2% |
(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 21.0% compared to a rate of 19.9% for fiscal 2019. The higher effective tax rate negatively impacts fiscal 2020 EPS guidance by about $0.14 and EPS growth by about 180 basis points. |
Three Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | % Change | |||||||
Revenue: | |||||||||
Uniform rental and facility services | $ | 1,428,392 | $ | 1,342,786 | 6.4% | ||||
Other | 365,338 | 326,764 | 11.8% | ||||||
Total revenue | 1,793,730 | 1,669,550 | 7.4% | ||||||
Costs and expenses: | |||||||||
Cost of uniform rental and facility services | 771,056 | 737,998 | 4.5% | ||||||
Cost of other | 199,109 | 179,214 | 11.1% | ||||||
Selling and administrative expenses | 508,240 | 471,807 | 7.7% | ||||||
G&K Services, Inc. integration expenses | 914 | 15,031 | (93.9)% | ||||||
Operating income | 314,411 | 265,500 | 18.4% | ||||||
Interest income | (271 | ) | (370 | ) | (26.8)% | ||||
Interest expense | 25,782 | 24,828 | 3.8% | ||||||
Income before income taxes | 288,900 | 241,042 | 19.9% | ||||||
Income taxes | 62,729 | 51,744 | 21.2% | ||||||
Income from continuing operations | 226,171 | 189,298 | 19.5% | ||||||
Loss from discontinued operations, net of tax | (52 | ) | (3,127 | ) | (98.3)% | ||||
Net income | $ | 226,119 | $ | 186,171 | 21.5% | ||||
Basic earnings (loss) per share: | |||||||||
Continuing operations | $ | 2.13 | $ | 1.74 | 22.4% | ||||
Discontinued operations | 0.00 | (0.03 | ) | (100.0)% | |||||
Basic earnings per share | $ | 2.13 | $ | 1.71 | 24.6% | ||||
Diluted earnings (loss) per share: | |||||||||
Continuing operations | $ | 2.06 | $ | 1.68 | 22.6% | ||||
Discontinued operations | 0.00 | (0.02 | ) | (100.0)% | |||||
Diluted earnings per share | $ | 2.06 | $ | 1.66 | 24.1% | ||||
Weighted average number of shares outstanding | 105,018 | 106,879 | |||||||
Diluted average number of shares outstanding | 108,339 | 110,574 |
Twelve Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | % Change | |||||||
Revenue: | |||||||||
Uniform rental and facility services | $ | 5,552,430 | $ | 5,247,124 | 5.8% | ||||
Other | 1,339,873 | 1,229,508 | 9.0% | ||||||
Total revenue | 6,892,303 | 6,476,632 | 6.4% | ||||||
Costs and expenses: | |||||||||
Cost of uniform rental and facility services | 3,027,599 | 2,886,959 | 4.9% | ||||||
Cost of other | 736,116 | 681,150 | 8.1% | ||||||
Selling and administrative expenses | 1,980,644 | 1,916,792 | 3.3% | ||||||
G&K Services, Inc. integration expenses | 14,410 | 41,897 | (65.6)% | ||||||
Operating income | 1,133,534 | 949,834 | 19.3% | ||||||
Gain on sale of a cost method investment | 69,373 | — | 100.0% | ||||||
Interest income | (1,228 | ) | (1,342 | ) | (8.5)% | ||||
Interest expense | 101,736 | 110,175 | (7.7)% | ||||||
Income before income taxes | 1,102,399 | 841,001 | 31.1% | ||||||
Income taxes | 219,764 | 57,069 | 285.1% | ||||||
Income from continuing operations | 882,635 | 783,932 | 12.6% | ||||||
Income from discontinued operations, net of tax | 2,346 | 58,654 | (96.0)% | ||||||
Net income | $ | 884,981 | $ | 842,586 | 5.0% | ||||
Basic earnings per share: | |||||||||
Continuing operations | $ | 8.23 | $ | 7.24 | 13.7% | ||||
Discontinued operations | 0.02 | 0.54 | (96.3)% | ||||||
Basic earnings per share | $ | 8.25 | $ | 7.78 | 6.0% | ||||
Diluted earnings per share: | |||||||||
Continuing operations | $ | 7.97 | $ | 7.03 | 13.4% | ||||
Discontinued operations | 0.02 | 0.53 | (96.2)% | ||||||
Diluted earnings per share | $ | 7.99 | $ | 7.56 | 5.7% | ||||
Weighted average number of shares outstanding | 106,080 | 106,593 | |||||||
Diluted average number of shares outstanding | 109,495 | 109,810 |
Three Months Ended | |||
May 31, 2019 | May 31, 2018 | ||
Uniform rental and facility services gross margin | 46.0% | 45.0% | |
Other gross margin | 45.5% | 45.2% | |
Total gross margin | 45.9% | 45.1% | |
Net income margin, continuing operations | 12.6% | 11.3% | |
Twelve Months Ended | |||
May 31, 2019 | May 31, 2018 | ||
Uniform rental and facility services gross margin | 45.5% | 45.0% | |
Other gross margin | 45.1% | 44.6% | |
Total gross margin | 45.4% | 44.9% | |
Net income margin, continuing operations | 12.8% | 12.1% |
Three Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | Growth vs. FY 2018 | |||||||
EPS - continuing operations | $ | 2.06 | $ | 1.68 | |||||
G&K Services, Inc. integration expenses | 0.01 | 0.09 | |||||||
EPS excluding above items | $ | 2.07 | $ | 1.77 | 16.9% | ||||
Twelve Months Ended | |||||||||
May 31, 2019 | May 31, 2018 | Growth vs. FY 2018 | |||||||
EPS - continuing operations | $ | 7.97 | $ | 7.03 | |||||
G&K Services, Inc. integration expenses | 0.10 | 0.26 | |||||||
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 | $ | 7.60 | $ | 5.94 | 27.9% |
Twelve Months Ended | |||||||
May 31, 2019 | May 31, 2018 | ||||||
Net cash provided by operations | $ | 1,067,862 | $ | 964,160 | |||
Capital expenditures | (276,719 | ) | (271,699 | ) | |||
Free cash flow | $ | 791,143 | $ | 692,461 |
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 | $ | 7,240.0 | 5.0% | $ | 7,310.0 | 6.1% | |||||||
C=(B-A)/A | E=(D-A)/A | ||||||||||||||
F | G | G | |||||||||||||
Workdays in the period | 261 | 260 | 260 | ||||||||||||
H | I | J | K | L | |||||||||||
Revenue Adjusted for Workday Difference | $ | 6,892.3 | $ | 7,267.8 | 5.4% | $ | 7,338.1 | 6.5% | |||||||
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 May 31, 2019 | ||||||||||||||||||||
Revenue | $ | 1,428,392 | $ | 163,535 | $ | 201,803 | $ | — | $ | 1,793,730 | ||||||||||
Gross margin | $ | 657,336 | $ | 78,029 | $ | 88,200 | $ | — | $ | 823,565 | ||||||||||
Selling and administrative expenses | $ | 393,275 | $ | 52,878 | $ | 62,087 | $ | — | $ | 508,240 | ||||||||||
G&K Services, Inc. integration expenses | $ | 914 | $ | — | $ | — | $ | — | $ | 914 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (271 | ) | $ | (271 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 25,782 | $ | 25,782 | ||||||||||
Income (loss) before income taxes | $ | 263,147 | $ | 25,151 | $ | 26,113 | $ | (25,511 | ) | $ | 288,900 | |||||||||
For the three months ended May 31, 2018 | ||||||||||||||||||||
Revenue | $ | 1,342,786 | $ | 147,707 | $ | 179,057 | $ | — | $ | 1,669,550 | ||||||||||
Gross margin | $ | 604,788 | $ | 69,402 | $ | 78,148 | $ | — | $ | 752,338 | ||||||||||
Selling and administrative expenses | $ | 368,144 | $ | 48,275 | $ | 55,388 | $ | — | $ | 471,807 | ||||||||||
G&K Services, Inc. integration expenses | $ | 15,031 | $ | — | $ | — | $ | — | $ | 15,031 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (370 | ) | $ | (370 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 24,828 | $ | 24,828 | ||||||||||
Income (loss) before income taxes | $ | 221,613 | $ | 21,127 | $ | 22,760 | $ | (24,458 | ) | $ | 241,042 | |||||||||
For the twelve months ended May 31, 2019 | ||||||||||||||||||||
Revenue | $ | 5,552,430 | $ | 619,470 | $ | 720,403 | $ | — | $ | 6,892,303 | ||||||||||
Gross margin | $ | 2,524,831 | $ | 297,074 | $ | 306,683 | $ | — | $ | 3,128,588 | ||||||||||
Selling and administrative expenses | $ | 1,533,711 | $ | 206,990 | $ | 239,943 | $ | — | $ | 1,980,644 | ||||||||||
G&K Services, Inc. integration expenses | $ | 14,410 | $ | — | $ | — | $ | — | $ | 14,410 | ||||||||||
Gain on sale of a cost method investment | $ | — | $ | — | $ | — | $ | 69,373 | $ | 69,373 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (1,228 | ) | $ | (1,228 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 101,736 | $ | 101,736 | ||||||||||
Income (loss) before income taxes | $ | 976,710 | $ | 90,084 | $ | 66,740 | $ | (31,135 | ) | $ | 1,102,399 | |||||||||
For the twelve months ended May 31, 2018 | ||||||||||||||||||||
Revenue | $ | 5,247,124 | $ | 564,706 | $ | 664,802 | $ | — | $ | 6,476,632 | ||||||||||
Gross margin | $ | 2,360,165 | $ | 265,785 | $ | 282,573 | $ | — | $ | 2,908,523 | ||||||||||
Selling and administrative expenses | $ | 1,500,644 | $ | 190,567 | $ | 225,581 | $ | — | $ | 1,916,792 | ||||||||||
G&K Services, Inc. integration expenses | $ | 41,897 | $ | — | $ | — | $ | — | $ | 41,897 | ||||||||||
Interest income | $ | — | $ | — | $ | — | $ | (1,342 | ) | $ | (1,342 | ) | ||||||||
Interest expense | $ | — | $ | — | $ | — | $ | 110,175 | $ | 110,175 | ||||||||||
Income (loss) before income taxes | $ | 817,624 | $ | 75,218 | $ | 56,992 | $ | (108,833 | ) | $ | 841,001 |
May 31, 2019 | May 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 96,645 | $ | 138,724 | |||
Accounts receivable, net | 910,120 | 804,583 | |||||
Inventories, net | 334,589 | 280,347 | |||||
Uniforms and other rental items in service | 784,133 | 702,261 | |||||
Income taxes, current | 7,475 | 19,634 | |||||
Prepaid expenses and other current assets | 103,318 | 32,383 | |||||
Total current assets | 2,236,280 | 1,977,932 | |||||
Property and equipment, net | 1,430,685 | 1,382,730 | |||||
Investments | 192,346 | 175,581 | |||||
Goodwill | 2,842,441 | 2,846,888 | |||||
Service contracts, net | 494,595 | 545,768 | |||||
Other assets, net | 240,315 | 29,315 | |||||
$ | 7,436,662 | $ | 6,958,214 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 226,020 | $ | 215,074 | |||
Accrued compensation and related liabilities | 155,509 | 140,654 | |||||
Accrued liabilities | 433,940 | 420,129 | |||||
Debt due within one year | 312,264 | — | |||||
Total current liabilities | 1,127,733 | 775,857 | |||||
Long-term liabilities: | |||||||
Debt due after one year | 2,537,507 | 2,535,309 | |||||
Deferred income taxes | 438,179 | 352,581 | |||||
Accrued liabilities | 330,522 | 277,941 | |||||
Total long-term liabilities | 3,306,208 | 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: 184,790,626 issued and 103,284,401 outstanding FY18: 182,723,471 issued and 106,326,383 outstanding | 840,328 | 618,464 | |||||
Paid-in capital | 227,928 | 245,211 | |||||
Retained earnings | 6,691,236 | 5,837,827 | |||||
Treasury stock: FY19: 81,506,225 shares FY18: 76,397,088 shares | (4,717,619 | ) | (3,701,319 | ) | |||
Accumulated other comprehensive (loss) income | (39,152 | ) | 16,343 | ||||
Total shareholders’ equity | 3,002,721 | 3,016,526 | |||||
$ | 7,436,662 | $ | 6,958,214 |
Twelve Months Ended | |||||||
May 31, 2019 | May 31, 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 884,981 | $ | 842,586 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 223,631 | 215,476 | |||||
Amortization of intangible assets and capitalized contract costs | 136,462 | 63,940 | |||||
Stock-based compensation | 139,210 | 112,835 | |||||
Gain on sale of a cost method investment | (69,373 | ) | — | ||||
Gain on sale of business | (3,200 | ) | (96,400 | ) | |||
Deferred income taxes | 31,708 | (119,295 | ) | ||||
Change in current assets and liabilities, net of acquisitions of businesses: | |||||||
Accounts receivable, net | (94,918 | ) | (66,267 | ) | |||
Inventories, net | (60,039 | ) | (3,323 | ) | |||
Uniforms and other rental items in service | (90,228 | ) | (64,299 | ) | |||
Prepaid expenses and other current assets and capitalized contract costs | (100,765 | ) | (15,526 | ) | |||
Accounts payable | 12,276 | 35,275 | |||||
Accrued compensation and related liabilities | 15,321 | (9,392 | ) | ||||
Accrued liabilities and other | 30,910 | 42,468 | |||||
Income taxes, current | 11,886 | 26,082 | |||||
Net cash provided by operating activities | 1,067,862 | 964,160 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (276,719 | ) | (271,699 | ) | |||
Proceeds from redemption of marketable securities and investments | — | 179,857 | |||||
Purchase of marketable securities and investments | (17,841 | ) | (153,708 | ) | |||
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 | (9,813 | ) | (19,346 | ) | |||
Other, net | (7,807 | ) | 1,363 | ||||
Net cash used in investing activities | (235,638 | ) | (135,698 | ) | |||
Cash flows from financing activities: | |||||||
Issuance (payments) of commercial paper, net | 112,500 | (50,500 | ) | ||||
Proceeds from issuance of debt, net | 200,000 | — | |||||
Repayment of debt | — | (550,000 | ) | ||||
Proceeds from exercise of stock-based compensation awards | 65,371 | 41,848 | |||||
Dividends paid | (220,764 | ) | (175,589 | ) | |||
Repurchase of common stock | (1,016,300 | ) | (127,319 | ) | |||
Other, net | (14,112 | ) | (2,580 | ) | |||
Net cash used in financing activities | (873,305 | ) | (864,140 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (998 | ) | 5,136 | ||||
Net decrease in cash and cash equivalents | (42,079 | ) | (30,542 | ) | |||
Cash and cash equivalents at beginning of year | 138,724 | 169,266 | |||||
Cash and cash equivalents at end of year | $ | 96,645 | $ | 138,724 |