Cintas Corporation (NASDAQ:CTAS) Q4 2019 Earnings Conference Call - Final Transcript

Jul 16, 2019 • 05:00 pm ET

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Cintas Corporation (NASDAQ:CTAS) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone and welcome to the Cintas Quarterly Earnings Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the call over to Mr. Mike Hansen, Executive Vice President and Chief Financial Officer. Please go ahead, sir.

Executive
Mike Hansen

Good evening and thank you for joining us. With me is Paul Adler, Cintas, Vice President and Treasurer. We will discuss our fourth quarter results for fiscal 2019. After our commentary, we'll be happy to answer questions. The Private Securities Litigation Reform Act of 1995 provides us safe harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the Company's current views as to future events and financial performance.

These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the SEC. Revenue for the fourth quarter of fiscal 2019 was a record $1.79 billion, an increase of 7.4% over last year's fourth quarter. The organic growth rate which adjusts for the impacts of acquisitions and foreign currency exchange rate fluctuations was 7.6%. In the fourth quarter of fiscal '19, the organic growth rate for the Uniform Rental and Facility Services operating segment was 6.8% and the organic growth rate for the First Aid and Safety Services operating segment was 10.7% . Gross margin for the fourth quarter of fiscal '19 of $823.6 million increased 9.5%. Gross margin as a percent of revenue was 45.9% for the fourth quarter of fiscal '19 compared to 45.1% in the fourth quarter of fiscal '18.

Uniform Rental and Facility Services operating segment gross margin as a percent of revenue improved 100 basis points from last year's fourth quarter to 46% and the First Aid and Safety Services operating segment gross margin percentage improved 70 basis points to 47.7%. Reported operating income for the fourth quarter of fiscal '19 of $314.4 million increased 18.4%, operating margin was 17.5% in the fourth quarter of fiscal '19 compared to 15.9% in fiscal '18. Operating income was negatively impacted by integration expenses relating to the G&K acquisition by $900,000 in the fourth quarter of fiscal '19 and $15 million in the fourth quarter of fiscal '18.

Excluding the integration expenses related to the G&K acquisition, operating income increased 12.4% and operating margin improved 80 basis points to 17.6% in the fourth quarter of fiscal '19 compared to 16.8% in the fourth quarter of fiscal '18. Reported net income for continuing operations for the fourth quarter of fiscal '19 was $226.2 million and reported earnings per diluted share from continuing operations for the fourth quarter of fiscal '19 were $2.06. Reported EPS was negatively impacted by integration expenses related to the G&K acquisition by $0.01 in the fourth quarter of fiscal '19. Excluding the G&K acquisition integration expenses, net income dollars increased 13.5% and net income margin was 12.6% compared to 12% last year.