{
  "docId": "019dd923-622c-750b-8b98-ce8e8f2b4a97",
  "docSlug": "c5a10320e53e",
  "documentTitle": "Cintas Corp. (CTAS)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-11-13 00:00:00",
  "orientation": "landscape",
  "aspectRatio": 1.3333334,
  "pageNumber": 26,
  "pageCount": 73,
  "prevPage": 25,
  "nextPage": 27,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 24,
  "notes": "Uses a 'bridge' style calculation to strip out G&K acquisition impact.",
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  "slideHref": "/slides/019dd923-622c-750b-8b98-ce8e8f2b4a97/26",
  "deckHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97",
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      "kind": "callout",
      "text": "CFO: \"The Cintas legacy gross margins continue to expand and the G&K gross margins will too as we realize the acquisition synergies.\" Spruce Point: Hard to disprove this statement on gross margins due to limited disclosures, but it's clear to us that EBITDA margins did not expand",
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    {
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      "kind": "callout",
      "text": "EBITDA growth lower than sales growth shows diminishing earnings leverage; Underlying margins for Cintas are flat",
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      "kind": "metric",
      "text": "EBITDA margin: 19.8%",
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      "kind": "paragraph",
      "text": "In FY 2018, the last year that G&K can be unraveled from Cintas core business, we find that EBITDA growth fell below revenue growth and margins stalled. The CFO claims that legacy Cintas gross margins continued to expand, which is hard to disprove with limited disclosures; however, we believe legacy Cintas EBITDA margins did not expand.",
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      "kind": "quote",
      "text": "CFO: \"The Cintas legacy gross margins continue to expand and the G&K gross margins will too as we realize the acquisition synergies.\" — Cintas CFO Q1 2018 Earnings Call Sept 26, 2017",
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      "kind": "table",
      "text": "Financial table showing reported vs underlying sales and EBITDA for FY 2016-2018",
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      "kind": "title",
      "text": "Pressures Mounting In Cintas Core Business",
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    {
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      "name": "Cost Of Inaction",
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      "evidence": "The deck presents a detailed analysis of Cintas' financial strain.",
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      "objective": "What is the cost of inaction for Cintas' investors?",
      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
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