Cintas Corporation

Good day, everyone, and welcome to the Cintas Fourth Quarter Fiscal Year 21 Earnings Release Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Paul Adler, Vice President and Treasurer of Investor Relations. Please go ahead, sir.

Thank you, Nick, and thank you for joining us. With me today is Scott Farmer, Cintas Executive Chairman of the Board of Directors. Todd Schneider, President and Chief Executive Officer, and Mike Hansen, Executive Vice President and Chief Financial Officer. We will discuss our fourth quarter results for fiscal 2021. After our commentary, we will be happy to answer questions. 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. I'll now turn the call over to Mike Hanson.

Thanks, Paul. Our fiscal 2021 fourth quarter revenue was $1.84 billion, compared to $1.62 billion in last year's fourth quarter, an increase of 13.3%. Earnings per diluted share, or EPS, were $2.47, an increase of 83% from last year's fourth quarter. The organic revenue growth rate adjusted for acquisitions, divestitures, foreign currency exchange rate fluctuations, and differences in the number of workdays was 11.5%. for the fourth quarter of fiscal 21. Organic revenue for the uniform rental and facility services operating segment was 13.7%. Organic revenue for the first aid and safety services operating segment declined 6.8%. Gross margin for the fourth quarter of fiscal 21 was $859.1 million compared to $707.8 million in last year's fourth quarter. Gross margin as a percent of revenue increased 310 basis points to 46.8% for the fourth quarter of fiscal 21, compared to 43.7% in the fourth quarter of fiscal 20. Selling and administrative expenses improved as a percent of revenue to 27.4% in the fourth quarter of fiscal 21, compared to 30.9% last year. Operating income for the fourth quarter of fiscal 21 of $356.4 million increased 71.8%. Operating margin increased 660 basis points to 19.4% in the fourth quarter of fiscal 21 compared to 12.8% in the fourth quarter of fiscal 20. Fiscal 20 fourth quarter operating income was affected by many items caused by COVID-19, including additional reserves on accounts receivable and inventory, severance and asset impairment expenses, and lower incentive compensation expense. Excluding these items, the fiscal 20 fourth quarter operating margin was 15.5%. All of these items were recorded in last year's selling and administrative expenses. Our effective tax rate for the fourth quarter of fiscal 21 was 19.4% compared to 20.4% last year. The tax rate can move from period to period based on discrete events, including the impact of stock compensation. Net income for the fourth quarter of fiscal 21 was $267.7 million, an increase of 85.2%. EPS was $2.47. an increase of 83% from last year's fourth quarter. Our balance sheet and cash flow remain strong. Our leverage calculation for our credit facility definition was 1.5 times debt to EBITDA at May 31st, 2021. On June 1st, 2021, $250 million of debt bearing an interest rate of 4.3% matured and was repaid with cash on hand. We have an untapped credit facility of $1 billion. During the fourth quarter of fiscal 21 and our first quarter of fiscal 22 to date, we purchased $979 million of Cintas common stock under our buyback program. On June 15, 2021, Cintas paid shareholders $79.2 million in quarterly dividends. For the fiscal year ended May 31st, 2021, revenue was $7.12 billion compared to $7.09 billion for fiscal 20. EPS for fiscal 21 were $10.24 compared to $8.11 for last fiscal year. Revenue and adjusted EPS have grown 50 of the past 52 years. Fiscal 21 free cash flow, which is defined as net cash provided by operating activities, less capital expenditures, was $1.22 billion, an increase of 14.7% compared to last year. For our fiscal 22, we expect our revenue to be in the range of $7.53 billion to $7.63 billion, and diluted EPS to be in the range of $10.35, to $10.75. Please note the following regarding our guidance. Our fiscal 22 effective tax rate is expected to be in the range of 19.5% to 20.5% compared to a rate of 13.7% in fiscal 21. The higher effective tax rate negatively impacts fiscal 22 EPS guidance by about 85 cents and EPS growth by about 800 basis points. Guidance does not include any future share buybacks or potential tax reform. We remain in a dynamic environment that can continue to change. Our guidance contemplates a steadily improving economy absent any economic or pandemic-related setbacks. For financial modeling purposes, please note that there are no workday differences when comparing fiscal 22 to 21. Both fiscal years contain 66 days in the first quarter 65 in the second, 64 in the third, and 66 in the fourth quarter. I'll now turn the call to Paul for commentary on the performance of each of our businesses.