Company Announcements

Cintas Corporation Announces Fiscal 2022 First Quarter Results

CINCINNATI--(BUSINESS WIRE)--Sep. 29, 2021-- Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2022 first quarter ended August 31, 2021. Revenue for the first quarter of fiscal 2022 was $1.90 billion compared to $1.75 billion in last year’s first quarter, an increase of 8.6%. The organic revenue growth rate for the first quarter of fiscal 2022, which adjusts for the impacts of acquisitions, divestitures and foreign currency exchange rate fluctuations, was also 8.6%. Diluted earnings per share (EPS) were $3.11 in the first quarter of fiscal 2022, an increase of 11.9% from last year's first quarter diluted EPS.

Gross margin for the first quarter of fiscal 2022 was $902.8 million compared to $826.2 million in last year’s first quarter. Gross margin as a percentage of revenue increased 30 basis points to 47.6% for the first quarter of fiscal 2022 compared to 47.3% in the first quarter of fiscal 2021.

Operating income for the first quarter of fiscal 2022 of $394.1 million increased 12.7% from last year’s first quarter operating income of $349.7 million. Operating income as a percentage of revenue increased 80 basis points to 20.8% in the first quarter of fiscal 2022 compared to 20.0% in the first quarter of fiscal 2021.

Net income was $331.2 million for the first quarter of fiscal 2022, an increase of 10.4% from last year's first quarter net income of $300.0 million. First quarter of fiscal 2022 diluted EPS was $3.11, an increase of 11.9% from last year's first quarter diluted EPS of $2.78.

On September 15, 2021, Cintas paid shareholders $98.8 million in quarterly dividends in the aggregate. The amount per share of common stock paid of $0.95 represents a 26.7% increase over the Company's previous quarterly dividend.

Todd M. Schneider, Cintas' President and Chief Executive Officer, stated, "We are pleased with our start to fiscal 2022. I am proud of the execution of our employee-partners. They continue to navigate an unsettled environment by focusing on providing businesses with the products and services needed to help our customers get Ready for the Workday®. I look forward to another successful fiscal year."

Mr. Schneider concluded, "We are increasing our fiscal 2022 financial guidance. We are raising our annual revenue expectations from a range of $7.53 billion to $7.63 billion to a range of $7.58 billion to $7.67 billion and diluted EPS from a range of $10.35 to $10.75 to a range of $10.60 to $10.90. Please note the following regarding guidance:

  • Our fiscal 2022 effective tax rate is expected to be approximately 19.5% compared to a rate of 13.7% for fiscal 2021. The higher effective tax rate negatively impacts fiscal 2022 diluted EPS guidance by about $0.77 and diluted EPS growth by about 760 basis points;
  • Guidance does not include the impact of any future share buybacks or potential tax reform; and
  • Guidance assumes an uneven economic recovery caused by the surging COVID-19 delta variant. However, guidance does not contemplate significant COVID-19 pandemic-related setbacks such as stay-at-home orders and other restrictions, commonly referred to as lockdowns."

Cintas

Cintas Corporation helps more than one million businesses of all types and sizes get Ready to open their doors with confidence every day by providing products and services that help keep their customers’ facilities and employees clean, safe and looking their best. With offerings including uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday®. The Company is also the creator of the Total Clean Program — a first-of-its-kind service that includes scheduled delivery of essential cleaning supplies, hygienically clean laundering, and sanitizing and disinfecting products and services. Headquartered in Cincinnati, Cintas is a publicly held Fortune 500 company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor’s 500 Index and Nasdaq-100 Index.

Cintas will host a live webcast to review the fiscal 2022 first quarter results today at 10:00 a.m., Eastern Time. The webcast will be available to the public on Cintas' website at www.Cintas.com. A replay of the webcast will be available approximately two hours after the completion of the live call and will remain available for two weeks.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; fluctuations in costs of materials and labor including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; disruptions caused by the inaccessibility of computer systems data, including cybersecurity risks; the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events including viral pandemics such as the COVID-19 coronavirus; the amount and timing of repurchases of our common stock, if any; changes in federal and state tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2021 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us, or that we currently believe to be immaterial, may also harm our business.

Cintas Corporation

Consolidated Condensed Statements of Income

(Unaudited)

(In thousands except per share data)

 

 

Three Months Ended

 

August 31,
2021

 

August 31,
2020

 

%
Change

Revenue:

 

 

 

 

 

Uniform rental and facility services

$

1,508,176

 

 

 

$

1,394,411

 

 

 

8.2

%

Other

388,774

 

 

 

352,164

 

 

 

10.4

%

Total revenue

1,896,950

 

 

 

1,746,575

 

 

 

8.6

%

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of uniform rental and facility services

779,301

 

 

 

715,412

 

 

 

8.9

%

Cost of other

214,893

 

 

 

204,962

 

 

 

4.8

%

Selling and administrative expenses

508,655

 

 

 

476,495

 

 

 

6.7

%

 

 

 

 

 

 

Operating income

394,101

 

 

 

349,706

 

 

 

12.7

%

 

 

 

 

 

 

Interest income

(56

)

 

 

(64

)

 

 

(12.5

)%

Interest expense

21,854

 

 

 

24,550

 

 

 

(11.0

)%

 

 

 

 

 

 

Income before income taxes

372,303

 

 

 

325,220

 

 

 

14.5

%

Income taxes

41,124

 

 

 

25,215

 

 

 

63.1

%

Net income

$

331,179

 

 

 

$

300,005

 

 

 

10.4

%

 

 

 

 

 

 

Basic earnings per share

$

3.19

 

 

 

$

2.86

 

 

 

11.5

%

 

 

 

 

 

 

Diluted earnings per share

$

3.11

 

 

 

$

2.78

 

 

 

11.9

%

 

 

 

 

 

 

Basic weighted average common shares outstanding

103,295

 

 

 

104,110

 

 

 

 

Diluted weighted average common shares outstanding

105,944

 

 

 

107,129

 

 

 

 

CINTAS CORPORATION SUPPLEMENTAL DATA

Gross Margin and Net Income Margin Results

 

 

Three Months Ended

 

August 31,
2021

 

August 31,
2020

 

 

 

 

Uniform rental and facility services gross margin

48.3

%

 

48.7

%

Other gross margin

44.7

%

 

41.8

%

Total gross margin

47.6

%

 

47.3

%

Net income margin

17.5

%

 

17.2

%

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. To supplement its consolidated condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides the additional non-GAAP financial measure of cash flow. The Company believes that this non-GAAP financial measure is appropriate to enhance understanding of its past performance as well as prospects for future performance. A reconciliation of the difference between this non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP is shown in the table within the narrative of the press release or below.

Computation of Free Cash Flow

 

 

Three Months Ended

 

August 31,
2021

 

August 31,
2020

Net cash provided by operations

$

262,141

 

 

 

$

312,292

 

 

Capital expenditures

(48,748

)

 

 

(30,876

)

 

Free cash flow

$

213,393

 

 

 

$

281,416

 

 

Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.

SUPPLEMENTAL SEGMENT DATA

 

 

Uniform Rental
and Facility
Services

 

First Aid
and Safety
Services

 

All
Other

 

Corporate

 

Total

For the three months ended August 31, 2021

 

 

 

 

 

 

 

 

Revenue

$

1,508,176

 

$

199,116

 

$

189,658

 

$

 

 

$

1,896,950

 

Gross margin

$

728,875

 

$

89,275

 

$

84,606

 

$

 

 

$

902,756

 

Selling and administrative expenses

$

399,493

 

$

63,547

 

$

45,615

 

$

 

 

$

508,655

 

Interest income

$

 

$

 

$

 

$

(56

)

 

$

(56

)

Interest expense

$

 

$

 

$

 

$

21,854

 

 

$

21,854

 

Income (loss) before income taxes

$

329,382

 

$

25,728

 

$

38,991

 

$

(21,798

)

 

$

372,303

 

 

 

 

 

 

 

 

 

 

 

For the three months ended August 31, 2020

 

 

 

 

 

 

 

 

Revenue

$

1,394,411

 

$

204,481

 

$

147,683

 

$

 

 

$

1,746,575

 

Gross margin

$

678,999

 

$

82,104

 

$

65,098

 

$

 

 

$

826,201

 

Selling and administrative expenses

$

363,971

 

$

63,577

 

$

48,947

 

$

 

 

$

476,495

 

Interest income

$

 

$

 

$

 

$

(64

)

 

$

(64

)

Interest expense

$

 

$

 

$

 

$

24,550

 

 

$

24,550

 

Income (loss) before income taxes

$

315,028

 

$

18,527

 

$

16,151

 

$

(24,486

)

 

$

325,220

 

Cintas Corporation

Consolidated Condensed Balance Sheets

(In thousands except per share data)

 

 

August 31,
2021

 

May 31,
2021

 

(Unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

79,749

 

 

$

493,640

 

Accounts receivable, net

927,360

 

 

901,710

 

Inventories, net

463,692

 

 

481,797

 

Uniforms and other rental items in service

846,656

 

 

810,104

 

Income taxes, current

11,249

 

 

22,282

 

Prepaid expenses and other current assets

148,960

 

 

133,776

 

Total current assets

2,477,666

 

 

2,843,309

 

 

 

 

 

Property and equipment, net

1,301,233

 

 

1,318,438

 

 

 

 

 

Investments

295,268

 

 

274,616

 

Goodwill

2,924,993

 

 

2,913,069

 

Service contracts, net

403,982

 

 

408,445

 

Operating lease right-of-use assets, net

159,289

 

 

168,532

 

Other assets, net

295,319

 

 

310,414

 

 

$

7,857,750

 

 

$

8,236,823

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

202,968

 

 

$

230,786

 

Accrued compensation and related liabilities

155,212

 

 

241,469

 

Accrued liabilities

592,384

 

 

518,910

 

Operating lease liabilities, current

43,308

 

 

43,850

 

Debt due within one year

1,275,167

 

 

899,070

 

Total current liabilities

2,269,039

 

 

1,934,085

 

 

 

 

 

Long-term liabilities:

 

 

 

Debt due after one year

1,343,222

 

 

1,642,833

 

Deferred income taxes

395,599

 

 

386,647

 

Operating lease liabilities

122,291

 

 

130,774

 

Accrued liabilities

418,396

 

 

454,637

 

Total long-term liabilities

2,279,508

 

 

2,614,891

 

 

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock, no par value:

 

 

 

100,000 shares authorized, none outstanding

Common stock, no par value, and paid-in capital:

1,625,594

 

 

1,516,202

 

425,000,000 shares authorized

FY 2022: 190,127,513 issued and 103,329,218 outstanding

FY 2021: 189,071,185 issued and 104,061,391 outstanding

Retained earnings

8,109,368

 

 

7,877,015

 

Treasury stock:

(6,395,493

)

 

(5,736,258

)

FY 2022: 86,798,295 shares

FY 2021: 85,009,794 shares

Accumulated other comprehensive (loss) income

(30,266

)

 

30,888

 

Total shareholders’ equity

3,309,203

 

 

3,687,847

 

 

$

7,857,750

 

 

$

8,236,823

 

Cintas Corporation

Consolidated Condensed Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

Three Months Ended

 

August 31,
2021

 

August 31,
2020

Cash flows from operating activities:

 

 

 

Net income

$

331,179

 

 

$

300,005

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

60,955

 

 

60,574

 

Amortization of intangible assets and capitalized contract costs

36,994

 

 

35,605

 

Stock-based compensation

36,496

 

 

29,055

 

Gain on sale of operating assets

(12,178

)

 

 

Deferred income taxes

22,887

 

 

(8,716

)

Change in current assets and liabilities, net of acquisitions of businesses:

 

 

 

Accounts receivable, net

(27,742

)

 

7,118

 

Inventories, net

14,986

 

 

(77,944

)

Uniforms and other rental items in service

(39,274

)

 

16,552

 

Prepaid expenses and other current assets and capitalized contract costs

(36,724

)

 

(42,277

)

Accounts payable

(26,272

)

 

20,358

 

Accrued compensation and related liabilities

(85,834

)

 

(10,067

)

Accrued liabilities and other

(24,342

)

 

(14,297

)

Income taxes, current

11,010

 

 

(3,674

)

Net cash provided by operating activities

262,141

 

 

312,292

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(48,748

)

 

(30,876

)

Purchases of investments

(8,738

)

 

(4,940

)

Proceeds from sale of operating assets

15,070

 

 

 

Acquisitions of businesses, net of cash acquired

(35,725

)

 

(1,984

)

Other, net

(6,180

)

 

(2,142

)

Net cash used in investing activities

(84,321

)

 

(39,942

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Issuance of commercial paper, net

326,000

 

 

 

Repayment of debt

(250,000

)

 

 

Proceeds from exercise of stock-based compensation awards

72,896

 

 

72,123

 

Dividends paid

(79,135

)

 

 

Repurchase of common stock

(659,235

)

 

(69,011

)

Other, net

(610

)

 

(869

)

Net cash (used in) provided by financing activities

(590,084

)

 

2,243

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

(1,627

)

 

1,547

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

(413,891

)

 

276,140

 

Cash and cash equivalents at beginning of period

493,640

 

 

145,402

 

Cash and cash equivalents at end of period

$

79,749

 

 

$

421,542

 

 

J. Michael Hansen, Executive Vice President and Chief Financial Officer - 513-972-2079
Paul F. Adler, Vice President - Treasurer & Investor Relations - 513-972-4195

Source: Cintas Corporation