Cintas Corporation (NASDAQ:CTAS) Q3 2020 Earnings Conference Call - Final Transcript

Mar 19, 2020 • 05:00 pm ET


Cintas Corporation (NASDAQ:CTAS) Q3 2020 Earnings Conference Call - Final Transcript


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Good day, everyone, and welcome to the Cintas Quarterly Earnings Results Conference Call. [Operator Instructions]

At this time, I would like to turn the call over to Mr. Mike Hansen, Executive Vice President and Chief Financial Officer. Sir, please begin.

J. Michael Hansen

Thank you and good evening. And thanks for joining us tonight.

With me is Paul Adler, Cintas' Vice President and Treasurer. We will discuss our third quarter results for fiscal 2020.

The Private Securities Litigation Reform Act of 1995 provides a 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.

Before discussing the financials, I want to say that our thoughts go out to all of those impacted by the COVID - 19 coronavirus. This is a challenging time for all of us, and we can't thank enough our employees whom we call partners for doing all that they can to keep our customers' places of business clean, safe and ready for the workday. We currently find ourselves at the peak of uncertainty as it relates to the pandemic's impact on the economy. The response of our country in each state evolves daily.

A week ago, we hadn't seen much impact to our business and we were expecting today to increase revenue and EPS guidance based on our year-to-date results and fourth quarter outlook. However, much has changed in a matter of days, and more changes are likely to come. Due to this uncertainty, including the severity and duration of the pandemic, we are not providing guidance for the fourth quarter of fiscal 2020 at this time. We certainly remain focused, though, on the safety and well-being of our employee partners and the care of our customers.

So let's move to providing our third quarter results and then we will open it up for questions. Our fiscal 2020 third quarter revenue was $1.81 billion, an increase of 7.6% over last year's third quarter. Earnings per diluted share or EPS from continuing operations were $2.16, an increase of 17.4% over last year's third quarter, adjusted for G&K integration expenses. Free cash flow for this year's third quarter was $300 million, an increase of 17.2%.

The organic growth rate which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and differences in the number of workdays was 5.7% for the third quarter of fiscal '20. The organic growth rate for the Uniform Rental and Facility Services operating segment was 4.8%, and the organic growth rate for the First Aid and Safety Services operating segment was 12.5%.

Gross margin for the third quarter of fiscal '20 of $824.4 million increased 9.2%. Gross margin as a percentage of revenue was 45.5% for the third quarter