Cintas Reports Revenue Up In Fiscal 2019 Fourth Quarter, Full-Year Financials
In the financial results for its fiscal 2019 fourth quarter and the full year ending May 31, Cintas Corporation (PPAI 303547) reported record revenue and net income. The Cincinnati, Ohio-based distributor’s revenue for fourth quarter of fiscal 2019 was $1.79 billion, an increase of 7.4 percent over last year’s fourth quarter, and the organic revenue growth rate, which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations, was 7.6 percent. Revenue for the year was $6.89 billion, an increase of 6.4 percent over the prior fiscal year. The organic revenue growth rate was 6.5 percent.
Cintas’s gross margin for the fourth quarter of fiscal 2019 of $823.6 million increased 9.5 percent from the previous year, and gross margin as a percentage of revenue was 45.9 percent for the fourth quarter of fiscal 2019 compared to 45.1 percent in the fourth quarter of the last fiscal year. For the fiscal year, revenue was $6.89 billion, an increase of 6.4 percent over the prior fiscal year. The organic revenue growth rate was 6.5 percent.
The fourth-quarter operating income increased 18.4 percent from the previous year’s fourth quarter, from $265.5 million to $314.4 million, and as a percentage of revenue, operating income was 17.5 percent in the fourth quarter of fiscal 2019 compared to 15.9 percent last year. Operating income was negatively impacted by integration expenses related to the G&K Services, Inc. acquisition by $900,000 in the fourth quarter of fiscal 2019, and $15 million in the fourth quarter of fiscal 2018. Excluding the integration expenses related to that acquisition, operating income as a percentage of revenue was 17.6 percent in the fourth quarter of fiscal 2019, up from 16.8 percent one year earlier. Net income from continuing operations was $226.2 million for fourth quarter, compared to $189.3 million in fourth quarter fiscal 2018, an increase of 19.5 percent.
The company reported that the organic revenue growth rate for its Uniform Rental and Facility Services operating segment was 6.8 percent, and the organic revenue growth rate for the First Aid and Safety Services operating segment was 10.7 percent. The Uniform Rental and Facility Services operating segment’s gross margin as a percentage of revenue improved 100 basis points from last year’s fourth quarter to 46 percent, and the First Aid and Safety Services operating segment gross margin percentage improved 70 basis points to 47.7 percent.
Scott D. Farmer, Cintas's chairman and CEO, says, "We are pleased with these fourth quarter financial results, which conclude a very successful year. For the ninth consecutive year, our organic revenue growth was in the mid to high single digits and EPS grew double digits when adjusted for one-time and special items. Additionally, our strong cash flow and balance sheet enabled us to deploy cash to increase shareholder value. In fiscal 2019 we paid an annual dividend of $220.8 million that increased 26.5 percent over the prior year, and we purchased 4.8 million shares of company stock in a total amount of $953.4 million."
Farmer adds, “The Cintas story is one of growth. We have grown revenue and profit 48 of the past 50 years. Our opportunity for continued growth is great. We have a product or service to help nearly every business get ‘Ready for the Workday.’ All businesses care about image, safety, cleanliness or compliance, and businesses continue to outsource to concentrate on their core competency. We remain well-positioned to benefit from these tailwinds.”
“For our fiscal 2020, we expect revenue to be in the range of $7.24 billion to $7.31 billion, and EPS from continuing operations to be in the range of $8.30 to $8.45,” says Farmer. “This guidance does not include any potential deterioration in the U.S. economy or future share buybacks.”