Cintas Corporation Announces Fiscal 2021 Fourth Quarter and Full Year Results

CINCINNATI--()--Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2021 fourth quarter ended May 31, 2021. Revenue for the fourth quarter of fiscal 2021 was $1.84 billion compared to $1.62 billion in last year’s fourth quarter. Diluted earnings per share (EPS) were $2.47 in the fourth quarter of fiscal 2021, an increase of 83.0% from last year's fourth quarter diluted EPS of $1.35.

The organic revenue growth rate for the fourth quarter of fiscal 2021, which is adjusted for the impacts of acquisitions, divestitures, foreign currency exchange rate fluctuations and differences in the number of workdays, was 11.5%. The organic revenue growth rate for the Uniform Rental and Facility Services reportable operating segment was 13.7%. Organic revenue for the First Aid and Safety Services reportable operating segment declined 6.8%.

Gross margin for the fourth quarter of fiscal 2021 was $859.1 million compared to $707.8 million in last year’s fourth quarter. Gross margin as a percentage of revenue increased 310 basis points to 46.8% for the fourth quarter of fiscal 2021 compared to 43.7% in the fourth quarter of fiscal 2020.

Operating income for the fourth quarter of fiscal 2021 of $356.4 million increased 71.8% from last year’s fourth quarter operating income of $207.4 million. Operating income as a percentage of revenue increased 660 basis points to 19.4% in the fourth quarter of fiscal 2021 compared to 12.8% in the fourth quarter of fiscal 2020. Fiscal 2020 fourth quarter operating income was affected by many items caused by the COVID-19 pandemic including incremental allowances for doubtful accounts, inventory reserves, employee-partner termination costs, asset impairment charges, and lower incentive compensation expense.

Net income from continuing operations was $267.7 million for the fourth quarter of fiscal 2021, an increase of 85.2% from last year's fourth quarter net income from continuing operations of $144.6 million. Fourth quarter of fiscal 2021 diluted EPS was $2.47, an increase of 83.0% from last year's fourth quarter diluted EPS of $1.35.

During the fourth quarter of fiscal 2021 and our first quarter of fiscal 2022 to date, Cintas purchased $979.0 million of Cintas common stock under its buyback program. On June 15, 2021, Cintas paid shareholders $79.2 million in quarterly dividends in the aggregate.

For the fiscal year ended May 31, 2021, revenue was $7.12 billion compared to $7.09 billion for fiscal 2020. Diluted EPS for fiscal 2021 was $10.24 compared to $8.11 in fiscal 2020. For the fiscal year ended May 31, 2021, free cash flow, which is defined as net cash provided by operating activities less capital expenditures, was $1.22 billion, an increase of 14.7% compared to the fiscal year ended May 31, 2020.

Todd M. Schneider, Cintas' President and Chief Executive Officer, stated, "We are pleased with our fourth quarter financial results. They conclude a fiscal year of significant accomplishments. These include procuring hard-to-find and potentially lifesaving items such as facemasks and gloves, providing hygienically-cleaned healthcare scrubs and isolation gowns, and developing services including hand sanitizer dispensing and sanitizing spray services. Additionally, we improved shareholder returns by increasing the dollar amount of dividends paid and completing share repurchases. Finally, we issued our inaugural Environmental, Social and Governance, or ESG, report."

Mr. Schneider continued, “Our prospects for continued growth are great. Our value proposition is strong, and we have a vast total addressable market. Also, our continued investment in technology is a competitive advantage."

Mr. Schneider concluded, "For our fiscal 2022, we expect revenue to be in the range of $7.53 billion to $7.63 billion and diluted EPS to be in the range of $10.35 to $10.75. Please note the following regarding guidance:

  • Our fiscal 2022 effective tax rate is expected to be in the range of 19.5% to 20.5% compared to a rate of 13.7% for fiscal 2021. The higher effective tax rate negatively impacts fiscal 2022 EPS guidance by about $0.85 and diluted EPS growth by about 800 basis points;
  • Guidance does not include any future share buybacks or potential tax reform; and
  • We remain in a dynamic environment that can continue to change. Our guidance contemplates a steadily improving economy absent any economic or pandemic-related setbacks."

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 2021 fourth 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, 2020 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

 

May 31,
2021

 

May 31,
2020

 

%
Change

Revenue:

 

 

 

 

 

Uniform rental and facility services

$

1,466,868

 

 

$

1,270,970

 

 

15.4%

Other

368,793

 

 

348,614

 

 

5.8%

Total revenue

1,835,661

 

 

1,619,584

 

 

13.3%

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of uniform rental and facility services

766,441

 

 

716,602

 

 

7.0%

Cost of other

210,170

 

 

195,162

 

 

7.7%

Selling and administrative expenses

502,604

 

 

500,386

 

 

0.4%

 

 

 

 

 

 

Operating income

356,446

 

 

207,434

 

 

71.8%

 

 

 

 

 

 

Interest income

(98)

 

 

(196)

 

 

(50.0)%

Interest expense

24,551

 

 

25,952

 

 

(5.4)%

 

 

 

 

 

 

Income before income taxes

331,993

 

 

181,678

 

 

82.7%

Income taxes

64,271

 

 

37,093

 

 

73.3%

Net income

$

267,722

 

 

$

144,585

 

 

85.2%

 

 

 

 

 

 

Basic earnings per share

$

2.53

 

 

$

1.38

 

 

83.3%

 

 

 

 

 

 

Diluted earnings per share

$

2.47

 

 

$

1.35

 

 

83.0%

 

 

 

 

 

 

Basic weighted average common shares outstanding

105,143

 

 

103,758

 

 

 

Diluted weighted average common shares outstanding

107,726

 

 

106,231

 

 

 

Cintas Corporation

Consolidated Condensed Statements of Income

(In thousands except per share data)

 

 

Twelve Months Ended

 

May 31,
2021

 

May 31,
2020

 

%
Change

Revenue:

 

 

 

 

 

Uniform rental and facility services

$

5,689,632

 

 

$

5,643,494

 

 

0.8%

Other

1,426,708

 

 

1,441,626

 

 

(1.0)%

Total revenue

7,116,340

 

 

7,085,120

 

 

0.4%

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

Cost of uniform rental and facility services

2,983,514

 

 

3,055,145

 

 

(2.3)%

Cost of other

818,175

 

 

796,227

 

 

2.8%

Selling and administrative expenses

1,929,159

 

 

2,071,052

 

 

(6.9)%

 

 

 

 

 

 

Operating income

1,385,492

 

 

1,162,696

 

 

19.2%

 

 

 

 

 

 

Interest income

(467)

 

 

(988)

 

 

(52.7)%

Interest expense

98,210

 

 

105,393

 

 

(6.8)%

 

 

 

 

 

 

Income before income taxes

1,287,749

 

 

1,058,291

 

 

21.7%

Income taxes

176,781

 

 

181,931

 

 

(2.8)%

Income from continuing operations

1,110,968

 

 

876,360

 

 

26.8%

Loss from discontinued operations, net of tax

 

 

(323)

 

 

(100.0)%

Net income

$

1,110,968

 

 

$

876,037

 

 

26.8%

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

Continuing operations

$

10.52

 

 

$

8.36

 

 

25.8%

Discontinued operations

0.00

 

 

0.00

 

 

—%

Basic earnings per share

$

10.52

 

 

$

8.36

 

 

25.8%

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

Continuing operations

$

10.24

 

 

$

8.11

 

 

26.3%

Discontinued operations

0.00

 

 

0.00

 

 

—%

Diluted earnings per share

$

10.24

 

 

$

8.11

 

 

26.3%

 

 

 

 

 

 

Basic weighted average common shares outstanding

104,874

 

 

103,816

 

 

 

Diluted weighted average common shares outstanding

107,707

 

 

107,012

 

 

 

CINTAS CORPORATION SUPPLEMENTAL DATA

 

Gross Margin and Net Income Margin Results

 

 

Three Months Ended

 

May 31,
2021

 

May 31,
2020

 

 

 

 

Uniform rental and facility services gross margin

47.7%

 

43.6%

Other gross margin

43.0%

 

44.0%

Total gross margin

46.8%

 

43.7%

Net income margin

14.6%

 

8.9%

 

 

 

 

 

Twelve Months Ended

 

May 31,
2021

 

May 31,
2020

 

 

 

 

Uniform rental and facility services gross margin

47.6%

 

45.9%

Other gross margin

42.7%

 

44.8%

Total gross margin

46.6%

 

45.6%

Net income margin, continuing operations

15.6%

 

12.4%

Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure

The press release contains non-GAAP financial measures 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 measures of cash flow and workday adjusted revenue growth. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. A reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables within the narrative of the press release or below.

Computation of Free Cash Flow

 

 

Twelve Months Ended

 

May 31,
2021

 

May 31,
2020

Net cash provided by operations

$

1,360,740

 

 

$

1,291,483

 

Capital expenditures

(143,470)

 

 

(230,289)

 

Free cash flow

$

1,217,270

 

 

$

1,061,194

 

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.

Computation of Growth on a Constant Workday Basis

 

 

Three Months Ended

 

Twelve Months Ended

 

May 31,
2021

 

May 31,
2020

 

Growth
%

 

May 31,
2021

 

May 31,
2020

 

Growth
%

 

A

 

B

 

G

 

I

 

J

 

O

Revenue

$

1,835,661

 

 

$

1,619,584

 

 

13.3%

 

$

7,116,340

 

 

$

7,085,120

 

 

0.4%

 

 

 

 

 

G=(A-B)/B

 

 

 

 

 

O=(I-J)/J

 

C

 

D

 

 

 

K

 

L

 

 

Workdays in the period

66

 

65

 

 

 

261

 

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

E

 

F

 

H

 

M

 

N

 

P

Workday adjusted

revenue growth

$

1,807,848

 

 

$

1,619,584

 

 

11.6%

 

$

7,089,074

 

 

$

7,085,120

 

 

0.1%

 

E=(A/C)*D

 

F=(B/D)*D

 

H=(E-F)/F

 

M=(I/K)*L

 

N=(J/L)*L

 

P=(M-N)/N

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition, divestitures

and foreign currency

exchange impact, net

 

 

 

 

(0.1)%

 

 

 

 

 

0.1%

 

 

 

 

 

 

 

 

 

 

 

 

Organic growth

 

 

 

 

11.5%

 

 

 

 

 

0.2%

Management believes that organic revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days and excludes the impact from acquisitions, divestitures and foreign currency exchange rate fluctuations.

SUPPLEMENTAL SEGMENT DATA

 

 

Uniform Rental
and Facility
Services

 

First Aid
and Safety
Services

 

All
Other

 

Corporate

 

Total

For the three months ended May 31, 2021

 

 

 

 

 

 

 

 

Revenue

$

1,466,868

 

 

$

186,917

 

 

$

181,876

 

 

$

 

 

$

1,835,661

 

Gross margin

$

700,427

 

 

$

80,294

 

 

$

78,329

 

 

$

 

 

$

859,050

 

Selling and administrative expenses

$

388,627

 

 

$

64,964

 

 

$

49,013

 

 

$

 

 

$

502,604

 

Interest income

$

 

 

$

 

 

$

 

 

$

(98)

 

 

$

(98)

 

Interest expense

$

 

 

$

 

 

$

 

 

$

24,551

 

 

$

24,551

 

Income (loss) before income taxes

$

311,800

 

 

$

15,330

 

 

$

29,316

 

 

$

(24,453)

 

 

$

331,993

 

 

 

 

 

 

 

 

 

 

 

For the three months ended May 31,2020

 

 

 

 

 

 

 

 

Revenue

$

1,270,970

 

 

$

196,270

 

 

$

152,344

 

 

$

 

 

$

1,619,584

 

Gross margin

$

554,368

 

 

$

90,389

 

 

$

63,063

 

 

$

 

 

$

707,820

 

Selling and administrative expenses

$

376,809

 

 

$

57,599

 

 

$

65,978

 

 

$

 

 

$

500,386

 

Interest income

$

 

 

$

 

 

$

 

 

$

(196)

 

 

$

(196)

 

Interest expense

$

 

 

$

 

 

$

 

 

$

25,952

 

 

$

25,952

 

Income (loss) before income taxes

$

177,559

 

 

$

32,790

 

 

$

(2,915)

 

 

$

(25,756)

 

 

$

181,678

 

 

 

 

 

 

 

 

 

 

 

For the twelve months ended May 31, 2021

 

 

 

 

 

 

 

 

Revenue

$

5,689,632

 

 

$

784,291

 

 

$

642,417

 

 

$

 

 

$

7,116,340

 

Gross margin

$

2,706,118

 

 

$

332,336

 

 

$

276,197

 

 

$

 

 

$

3,314,651

 

Selling and administrative expenses

$

1,480,278

 

 

$

251,153

 

 

$

197,728

 

 

$

 

 

$

1,929,159

 

Interest income

$

 

 

$

 

 

$

 

 

$

(467)

 

 

$

(467)

 

Interest expense

$

 

 

$

 

 

$

 

 

$

98,210

 

 

$

98,210

 

Income (loss) before income taxes

$

1,225,840

 

 

$

81,183

 

 

$

78,469

 

 

$

(97,743)

 

 

$

1,287,749

 

 

 

 

 

 

 

 

 

 

 

For the twelve months ended May 31, 2020

 

 

 

 

 

 

 

 

Revenue

$

5,643,494

 

 

$

708,569

 

 

$

733,057

 

 

$

 

 

$

7,085,120

 

Gross margin

$

2,588,349

 

 

$

338,661

 

 

$

306,738

 

 

$

 

 

$

3,233,748

 

Selling and administrative expenses

$

1,583,791

 

 

$

231,769

 

 

$

255,492

 

 

$

 

 

$

2,071,052

 

Interest income

$

 

 

$

 

 

$

 

 

$

(988)

 

 

$

(988)

 

Interest expense

$

 

 

$

 

 

$

 

 

$

105,393

 

 

$

105,393

 

Income (loss) before income taxes

$

1,004,558

 

 

$

106,892

 

 

$

51,246

 

 

$

(104,405)

 

 

$

1,058,291

 

Cintas Corporation

Consolidated Condensed Balance Sheets

(In thousands except per share data)

 

 

May 31,
2021

 

May 31,
2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

493,640

 

 

$

145,402

 

Accounts receivable, net

901,710

 

 

870,369

 

Inventories, net

481,797

 

 

408,898

 

Uniforms and other rental items in service

810,104

 

 

770,411

 

Income taxes, current

22,282

 

 

 

Prepaid expenses and other current assets

133,776

 

 

114,619

 

Total current assets

2,843,309

 

 

2,309,699

 

 

 

 

 

Property and equipment, net

1,318,438

 

 

1,403,065

 

 

 

 

 

Investments

274,616

 

 

214,847

 

Goodwill

2,913,069

 

 

2,870,020

 

Service contracts, net

408,445

 

 

451,529

 

Operating lease right-of-use assets, net

168,532

 

 

159,967

 

Other assets, net

310,414

 

 

260,758

 

 

$

8,236,823

 

 

$

7,669,885

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

230,786

 

 

$

230,995

 

Accrued compensation and related liabilities

241,469

 

 

127,417

 

Accrued liabilities

518,910

 

 

456,653

 

Income taxes, current

 

 

27,099

 

Operating lease liabilities, current

43,850

 

 

43,031

 

Debt due within one year

899,070

 

 

 

Total current liabilities

1,934,085

 

 

885,195

 

 

 

 

 

Long-term liabilities:

 

 

 

Debt due after one year

1,642,833

 

 

2,539,705

 

Deferred income taxes

386,647

 

 

388,579

 

Operating lease liabilities

130,774

 

 

122,695

 

Accrued liabilities

454,637

 

 

498,509

 

Total long-term liabilities

2,614,891

 

 

3,549,488

 

 

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock, no par value:

 

 

 

100,000 shares authorized, none outstanding

Common stock, no par value:

1,417,343

 

 

1,102,689

 

425,000,000 shares authorized

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

FY 2020: 186,793,207 issued and 103,415,368 outstanding

Paid-in capital

98,859

 

 

171,521

 

Retained earnings

7,877,015

 

 

7,296,509

 

Treasury stock:

(5,736,258)

 

 

(5,182,137)

 

FY 2021: 85,009,794 shares

FY 2020: 83,377,839 shares

Accumulated other comprehensive income (loss)

30,888

 

 

(153,380)

 

Total shareholders’ equity

3,687,847

 

 

3,235,202

 

 

$

8,236,823

 

 

$

7,669,885

 

Cintas Corporation

Consolidated Condensed Statements of Cash Flows

(In thousands)

 

 

Twelve Months Ended

 

May 31,
2021

 

May 31,
2020

Cash flows from operating activities:

 

 

 

Net income

$

1,110,968

 

 

$

876,037

 

 

 

 

 

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

 

 

 

Depreciation

243,836

 

 

235,905

 

Amortization of intangible assets and capitalized contract costs

144,115

 

 

143,148

 

Stock-based compensation

112,035

 

 

115,435

 

Net gain on sale of operating assets

(22,030)

 

 

 

Long-lived asset impairment

5,114

 

 

9,220

 

Deferred income taxes

(42,242)

 

 

(16,252)

 

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

 

 

 

Accounts receivable, net

(32,576)

 

 

39,681

 

Inventories, net

(75,501)

 

 

(74,773)

 

Uniforms and other rental items in service

(35,659)

 

 

12,773

 

Prepaid expenses and other current assets and capitalized contract costs

(102,600)

 

 

(110,248)

 

Accounts payable

(2,604)

 

 

2,629

 

Accrued compensation and related liabilities

113,769

 

 

(26,476)

 

Accrued liabilities and other

(6,735)

 

 

49,906

 

Income taxes, current

(49,150)

 

 

34,498

 

Net cash provided by operating activities

1,360,740

 

 

1,291,483

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(143,470)

 

 

(230,289)

 

Purchases of investments

(4,299)

 

 

(10,031)

 

Proceeds from sale of operating assets, net of cash disposed

31,705

 

 

13,300

 

Acquisitions of businesses, net of cash acquired

(10,038)

 

 

(53,720)

 

Other, net

(11,113)

 

 

(4,658)

 

Net cash used in investing activities

(137,215)

 

 

(285,398)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

Payments of commercial paper, net

 

 

(112,500)

 

Repayment of debt

 

 

(200,000)

 

Proceeds from exercise of stock-based compensation awards

129,957

 

 

90,519

 

Dividends paid

(451,327)

 

 

(267,956)

 

Repurchase of common stock

(554,121)

 

 

(464,518)

 

Other, net

(4,377)

 

 

(752)

 

Net cash used in financing activities

(879,868)

 

 

(955,207)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

4,581

 

 

(2,121)

 

 

 

 

 

Net increase in cash and cash equivalents

348,238

 

 

48,757

 

Cash and cash equivalents at beginning of year

145,402

 

 

96,645

 

Cash and cash equivalents at end of year

$

493,640

 

 

$

145,402

 

 

Contacts

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

Contacts

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