Cintas(CTAS)2024-04-05 16:16Financial Performance - Net income for the nine months ended February 29, 2024, was $1,157,277, compared to $1,001,809 for the same period in 2023, reflecting a 15.5% increase[33] - Net income for the period ending February 29, 2024, was $397,579 thousand, contributing to retained earnings of $10,341,248 thousand[38] - Net income for the nine months ended February 29, 2024, was $1.157 billion, with diluted earnings per share of $11.15[56] - Net income for the three months ended February 29, 2024 was $397.6 million, compared to $325.8 million for the same period in 2023, representing a 22% increase[78] - Basic earnings per share for the three months ended February 29, 2024 was $3.90, up from $3.19 for the same period in 2023, a 22.3% increase[78] - For the nine months ended February 29, 2024, net income was $1.16 billion, compared to $1.00 billion for the same period in 2023, a 15.5% increase[78] - Total revenue increased 9.9% to $2,406.2 million for the three months ended February 29, 2024, compared to $2,190.0 million for the three months ended February 28, 2023[106] - Organic revenue growth rate was 7.7% for the three months ended February 29, 2024[106] - Other revenue increased 11.8% to $529.5 million for the three months ended February 29, 2024, compared to $473.8 million for the three months ended February 28, 2023[107] - Total revenue for the nine months ended February 29, 2024, was $7,125.7 million, compared to $6,531.3 million for the nine months ended February 28, 2023[99] - Income before income taxes for the nine months ended February 29, 2024, was $1,446.5 million, compared to $1,247.3 million for the nine months ended February 28, 2023[99] Cash Flow and Liquidity - Cash and cash equivalents increased to $128,483 as of February 29, 2024, from $124,149 as of February 28, 2023[13] - Net cash provided by operating activities for the nine months ended February 29, 2024, was $1,386,741, compared to $1,044,191 for the same period in 2023[16] - Capital expenditures for the nine months ended February 29, 2024, were $307,558, compared to $224,116 for the same period in 2023[16] - Dividends paid for the nine months ended February 29, 2024, were $393,310, compared to $332,421 for the same period in 2023[16] - Dividends paid during the period ending February 29, 2024, amounted to $137,598 thousand[38] - Cash and cash equivalents as of February 29, 2024, were $128.483 million, classified as Level 1 in the fair value hierarchy[52] - The credit agreement has a capacity of $2.0 billion under the revolving credit facility, with an accordion feature allowing for an additional $500.0 million[113] - Cintas was in compliance with all debt covenants for all periods presented, with no significant defaults impacting liquidity or future capital raising[115] Assets and Liabilities - Accounts receivable, net, increased to $1,262,077 as of February 29, 2024, from $1,152,993 as of February 28, 2023[13] - Inventories, net, decreased to $451,215 as of February 29, 2024, from $506,604 as of February 28, 2023[13] - Total current assets increased to $3,030,996 as of February 29, 2024, from $2,938,459 as of February 28, 2023[13] - Total shareholders' equity increased to $4,234,083 as of February 29, 2024, from $3,863,986 as of February 28, 2023[13] - Total assets at fair value as of February 29, 2024, amounted to $215.384 million, including $86.901 million from interest rate lock agreements[52] - Total assets as of February 29, 2024, were $8,978.9 million, compared to $8,466.0 million as of February 28, 2023[99] - Goodwill balance as of February 29, 2024, was $3,212.4 million, compared to $3,056.2 million as of June 1, 2023[109] - Total debt due after one year as of February 29, 2024, was $2,474.9 million[112] - The carrying value of Cintas' debt as of February 29, 2024 was $2.49 billion, with a fair value of $2.41 billion[87] Revenue Breakdown - Total revenue for February 2024 was $2,406,173 thousand, with Uniform Rental and Facility Services contributing $1,876,642 thousand (78.0% of total revenue)[46] - First Aid and Safety Services revenue for February 2024 was $262,602 thousand, representing 10.9% of total revenue[46] - Fire Protection Services revenue for February 2024 was $182,410 thousand, accounting for 7.6% of total revenue[46] - Uniform Direct Sales revenue for February 2024 was $84,519 thousand, making up 3.5% of total revenue[46] - Approximately 95% of the company's revenue is derived from route servicing of Uniform Rental and Facility Services, First Aid and Safety Services, and Fire Protection Services[46] Share Repurchases and Dividends - Repurchase of common stock for the nine months ended February 29, 2024, amounted to $468,146, compared to $370,917 for the same period in 2023[16] - The company repurchased common stock worth $45,018 thousand during the period ending February 29, 2024[38] - The company has authorized share buyback programs totaling $2.5 billion, with $1.5 billion announced on July 27, 2021, and $1.0 billion on July 26, 2022[56] Operating Expenses and Costs - Amortization expense for service contracts and other assets for the nine months ended February 29, 2024, was $117.9 million[60] - Operating lease costs for the nine months ended February 29, 2024, were $61.5 million[72] - The weighted-average remaining lease term for operating leases as of February 29, 2024, was 5.30 years with a weighted-average discount rate of 3.38%[74] - The total present value of lease payments for operating leases as of February 29, 2024, was $190.490 million[74] - Inventory obsolescence reserves were $74.1 million as of February 29, 2024, down from $80.1 million as of May 31, 2023[64] - Total future amortization expense is projected to be $703.3 million[111] Acquisitions and Investments - The fair value of assets acquired during the nine months ended February 29, 2024 was $204.1 million, compared to $35.8 million for the same period in 2023[93] - Total consideration for acquisitions, net of cash acquired, was $185.0 million for the nine months ended February 29, 2024, up from $33.0 million for the same period in 2023[93] - Service contracts acquired during the nine months ended February 29, 2024 totaled $29.4 million, with $25.4 million allocated to Uniform Rental and Facility Services[84] Tax and Legal Matters - Cintas' effective tax rate was 19.9% for the three months ended February 29, 2024, down from 22.1% for the same period in 2023[92] - Unrecognized tax benefits were $27.9 million as of February 29, 2024, compared to $29.3 million as of May 31, 2023[116] - The balance of unrecognized tax benefits is not expected to materially change for the fiscal year ending May 31, 2024[117] - A class action lawsuit alleging ERISA violations was settled in principle in November 2023, with an immaterial payment covered by insurance[127] Comprehensive Income and Other Financial Metrics - Comprehensive income for the period ending February 29, 2024, was $390,563 thousand, compared to $317,835 thousand in the previous year[35] - The amortization of interest rate locks resulted in a decrease to other comprehensive income of $1.5 million for both the three months ended February 29, 2024 and February 28, 2023[88] - Accumulated other comprehensive income (loss) balance was $86.323 million as of February 29, 2024, down from $93.339 million as of November 30, 2023[121] - Amortization of interest rate locks, net of tax, was $1.524 million for the three months ended February 29, 2024, and $4.461 million for the nine months ended February 29, 2024[123] Segment Performance and Corporate Assets - Cintas evaluates operating segment performance based on revenue and income before income taxes, with corporate assets including cash and cash equivalents[125]