Cintas’ 2017 Fiscal Year Closes With 11-Percent Increase
Cintas Corporation (PPAI 303547) has released the results for its fourth quarter and 2017 fiscal year, which ended May 31. The Mason, Ohio-based distributor’s fourth quarter revenue of $1.53 billion was up 23.1 percent from the same period last year, while the fiscal year’s $5.32 billion in revenue represents an 11-percent year-over-year increase.
“Our strong finish to the fiscal year helped us to achieve a seventh consecutive year of organic growth in the mid to high single digits,” says Scott D. Farmer, Cintas’ chairman and CEO. “We continue to grow revenue in multiples of gross domestic product and employment growth. I thank our employees, whom we call partners, for the solid execution that enables us to achieve our vision of increasing the number of businesses we help get Ready for the Workday™, and of adding greater value to our existing customers by providing them with more of our industry-leading products and services.”
The company places its organic growth rate for fourth quarter, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, at 8.1 percent. Operating income for the quarter, $177.3 million, decreased 11.2 percent from last year’s fourth quarter operating income and was negatively affected by $63.7 million of transaction and integration expenses related to its acquisition of G&K Services, Inc., a provider of branded uniform and facility services, completed in March 2017.
The organic growth rate for the fiscal year was 6.7 percent. The fiscal year’s operating income of $773.7 million increased 0.6 percent from the previous fiscal year. It was negatively affected by $79.2 million of transaction and integration expenses related to the G&K acquisition.
Farmer adds, “The financial results of fiscal 2017 were affected by items including a change in accounting standards related to equity compensation, and transaction and integration expenses related to the largest acquisition in our history. At the core, however, is a consistently growing and profitable company with a record of success that includes 46 of the past 48 years of growing both revenue and net income and achieving double-digit growth in EPS for seven consecutive years. We are proud of our accomplishments, but our focus remains on the bright future. Significant opportunities exist in all of our businesses. In addition, long-term investments such as the G&K acquisition and the implementation of an enterprise resource planning system contribute to a long runway for continued growth.”
Looking ahead to fiscal year 2018, Cintas expects revenues of between $6.27 to $6.36 billion. Assumptions supporting the forecast include no transaction and integration expenses, revenue of approximately $870 million to $900 million, compared to a prior year annualized amount of $965 million; synergies of approximately $50 million to $55 million; purchase price amortization (specifically related to intangible assets) of $50 million; and interest expense on G&K acquisition debt of approximately $65 million; and EPS contribution of 15 cents to 17 cents, inclusive of all items above.