Cintas Releases Fiscal Fourth-Quarter And Full-Year Financial Results
Cintas Corporation (PPAI 303547, D12) has reported the results of its fiscal 2020 fourth quarter, which ended May 31, with revenue of $1.62 billion for the quarter, representing a 9.7-percent decline over last year’s fourth quarter. For the fiscal year, however, revenue of $7.09 billion was up 2.8 percent over the prior fiscal year.
In the Cincinnati, Ohio, distributor’s fiscal fourth quarter, earnings per diluted share (EPS) from continuing operations were $1.35, down 34.5 percent. Net cash provided by operating activities for the fourth quarter of fiscal 2020 was $356.9 million, while free cash flow, which is defined as net cash provided by operating activities with less capital expenditures, was the highest of fiscal 2020, totaling $316 million. EPS from continuing operations for fiscal 2020 were $8.11 compared to $7.99 for the last fiscal year. Free cash flow for the fiscal year was $1.06 billion, an increase of 34.1 percent.
Fourth quarter’s organic revenue, which is adjusted for acquisitions, foreign currency exchange rate fluctuations and differences in the number of workdays, declined 8.4 percent. Organic revenue for the Uniform Rental and Facility Services operating segment declined 9.6 percent while organic revenue for the First Aid and Safety Services operating segment increased 21.9 percent.
"The COVID-19 coronavirus pandemic was a significant disruption to the economy as well as to our business in our fiscal 2020 fourth quarter,” says Scott D. Farmer, Cintas' chairman and CEO. “The government-required closure of many businesses certainly had an impact on our fiscal 2020 fourth quarter financial results. Our priorities have been to keep our employees, whom we call ‘partners,’ healthy and safe, and to remain committed to serving our customers in any way possible."
Gross margin for the fourth quarter of fiscal 2020 of $707.8 million decreased 14.1 percent from last year’s fourth quarter. Gross margin as a percentage of revenue was 43.7 percent for the fourth quarter of fiscal 2020 compared to 45.9 percent in the year-ago period. Operating income was $207.4 million, down 34 percent from last year’s fourth quarter operating income of $314.4 million. Operating income as a percentage of revenue was 12.8 percent compared to 17.5 percent in the fourth quarter of fiscal 2019. Fiscal fourth quarter’s operating income was affected by several effects of the COVID-19 pandemic, including additional reserves on accounts receivable and inventory, severance and asset impairment expenses, and lower incentive compensation expense.
The company reports that net income from continuing operations was $144.6 million for the quarter and earnings per share (EPS) from continuing operations were $1.35. In fourth quarter fiscal 2019, net income from continuing operations was $226.2 million and EPS from continuing operations were $2.06. Net cash provided by operating activities for the quarter was $356.9 million, compared to $397.1 million last year. Fourth quarter free cash flow was $316 million compared to $328.2.
“Visibility to future financial performance remains impaired due to the COVID-19 pandemic,” says Farmer. “The recent increase in people contracting the virus and the actions governments are taking again in response only add to the uncertainty of the pace of the economic recovery. Therefore, we are not providing fiscal year financial guidance at this time. However, since we are more than halfway through our fiscal 2021 first quarter, we will provide our first quarter financial estimates. We expect our first quarter revenue to be in the range of $1.675 billion to $1.7 billion and EPS to be in the range of $2 to $2.20. Despite the uncertainty, I'm confident in our ability to manage the short-term volatility and maintain focus on our long-term objectives."
Farmer adds, “Our employee-partners have been consistent and diligent in their care of each other and our customers, providing essential products and services. I'm proud of their ability to persevere and adapt in the midst of unprecedented adversity. In addition, I'm excited as ever about our principal objective of exceeding our customers' expectations to maximize the long-term value of Cintas. Our value proposition of getting businesses Ready for the Workday® by providing essential, unparalleled image, safety, cleanliness and compliance has never resonated more than it does today. A new trend of a greater focus on health, readiness, and outsourcing of non-core activities is underway. Cintas is well-positioned to benefit from the new normal.”