Cintas(US:CTAS)2021-07-15 18:16Financial Data and Key Metrics Changes - Fiscal 2021 Q4 revenue was $1.84 billion, an increase of 13.3% from $1.62 billion in the same quarter last year [6] - Earnings per diluted share (EPS) were $2.47, an increase of 83% from last year's fourth quarter [6][11] - Organic revenue growth rate was 11.5% for Q4, with Uniform Rental and Facility Services segment at 13.7% and First Aid and Safety Services segment declining by 6.8% [7] - Gross margin increased to $859.1 million, representing 46.8% of revenue, up from 43.7% in the previous year [8] - Operating income rose to $356.4 million, a 71.8% increase, with operating margin improving to 19.4% from 12.8% [9] Business Line Data and Key Metrics Changes - Uniform Rental and Facility Services revenue was $1.47 billion, up from $1.27 billion last year, with gross margin increasing to 47.7% [18] - First Aid and Safety Services revenue was $186.9 million, down from $196.3 million last year, with gross margin at 43.0% compared to 46.1% last year [20][22] - All Other category revenue, including Fire Protection Services, was $181.9 million, up from $152.3 million, with Fire business organic revenue increasing by 22.4% [24] Market Data and Key Metrics Changes - The company noted that inflationary pressures increased certain costs but were offset by increased revenue from businesses reopening as COVID-19 restrictions were lifted [19] - The company expects continued growth in key verticals such as hospitality, healthcare, and education, with a focus on traditional services as PPE demand normalizes [76][90] Company Strategy and Development Direction - The company aims for organic revenue growth in the mid to high single digits and double-digit EPS growth, with a strong focus on capital allocation towards business growth and M&A [30][70] - The company is committed to enhancing its ESG initiatives and has issued its inaugural ESG report, emphasizing sustainable practices [28][39] - The company is investing in technology, including the implementation of SAP, to improve operational efficiencies, data analytics, and customer service [35][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate inflationary pressures and labor challenges, citing proactive wage adjustments made during the pandemic [49][51] - The company anticipates a steady improvement in the economy and expects revenue for fiscal 2022 to be in the range of $7.53 billion to $7.63 billion [14][15] - Management highlighted the importance of maintaining strong customer relationships and adapting to changing market conditions as businesses reopen [62][64] Other Important Information - The company repurchased $979 million of its common stock and increased its annual dividend by 10.2%, transitioning to quarterly dividends [13][27] - The company has a strong balance sheet with a leverage ratio of 1.5 times debt-to-EBITDA and an untapped credit facility of $1 billion [12] Q&A Session All Questions and Answers Question: Can you discuss the impact of inflationary factors on your business? - Management acknowledged inflationary pressures, particularly in labor and material costs, but indicated that they have been proactive in managing these challenges and do not expect significant issues moving forward [46][49] Question: What is the outlook for organic growth by segment? - Management expects high single-digit growth across all segments, with some potential bumpiness in the First Aid segment due to tough comparisons from the previous year [67][68] Question: How do you view the competitive dynamics in the Fire Protection business? - Management expressed confidence in their position within the Fire Protection business, highlighting ongoing investments and a strong national offering [80] Question: What are your expectations for energy costs in the upcoming fiscal year? - Management indicated that energy costs are expected to remain elevated, with total energy costs for the quarter at 2.1% of revenue, up from previous periods [115][116]