{ "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": 46, "pageCount": 73, "prevPage": 45, "nextPage": 47, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 30, "notes": "Uses red boxes to highlight contradictory statements and a red line to visually connect the G&K projections to the Cintas guidance.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "data_table", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-ce8e8f2b4a97/46", "deckHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ce8e8f2b4a97#slide-46", "components": [ { "bbox": null, "kind": "callout", "text": "Commentary from G&K and its financial projections illustrated how it expected to achieve approximately 3.5% - 5.3% annual revenue growth from 2016 - 2018. Yet, when Cintas issued guidance for FY 2018 including G&K, it implied a -4.2% annual revenue decline at the guidance midpoint!", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b65-734e-a97b-692a74ed763e", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "revenue growth: -4.2%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-2b65-734e-a97b-714eb00ab403", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.91, "x": 0.05, "y": 0.16 }, "kind": "paragraph", "text": "Commentary from G&K and its financial projections illustrated how it expected to achieve approximately 3.5% - 5.3% annual revenue growth from 2016 – 2018. Yet, when Cintas issued guidance for FY 2018 including G&K, it implied a -4.2% annual revenue decline at the guidance midpoint! Pay close attention, and notice that CTAS' revenue guidance was ~$165 - $195m below G&K projections.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "06684eec-9ba7-4b9d-a69d-7a1a95992954", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.73, "x": 0.23, "y": 0.74 }, "kind": "quote", "text": "And finally, we are excited about our recent acquisition of G&K. Preliminary results are very encouraging. We are on track to meet our financial and non-financial objectives and look forward to the many opportunities G&K provides. Our guidance includes the following assumptions related to the acquired G&K business: no transaction and integration expenses; revenue of $870 million to $900 million, compared to a prior year run rate of $965 million", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "01c10960-4152-409a-87d4-c15a7be98e7a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.13, "w": 0.73, "x": 0.23, "y": 0.29 }, "kind": "quote", "text": "We're not yet giving our 2017 guidance in total but we did give some light on how we thought the top-line might shape up. And what we said is, it'll be at the low-end of the organic revenue range you've seen from us in the last several years. So, that was the qualitative comment. So, I can put numbers around that, our organic growth rate has ranged from 3.5% to 6.5% over the last call it three years", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a9fd0eaf-4bf1-4f35-82fd-2fdcd388e0d4", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"And what we said is, it'll be at the low-end of the organic revenue range you've seen from us in the last several years. So, that was the qualitative comment. So, I can put numbers around that, our organic growth rate has ranged from 3.5% to 6.5% over the last call it three years\" — G&K CEO, June 9, 2016. \"And finally, we are excited about our recent acquisition of G&K. Preliminary results are very encouraging. We are on track to meet our financial and non-financial objectives and look forward to the many opportunities G&K provides\" — Cintas CEO, July 20, 2017.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-2b65-734e-a97b-6cd55a677fbe", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.85, "x": 0.02, "y": 0.96 }, "kind": "source-note", "text": "1) Source: Deal proxy. Figures are for Fiscal Yr which historically ended in June or 1st week of July. Projections exclude deal costs and any synergies", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f5d4ff6b-0b8a-4552-a0ad-5765ae2d56c2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.73, "x": 0.23, "y": 0.47 }, "kind": "table", "text": "Summary of the G&K Projections (dollars in millions, except per share data) Total Sales 2016: 960, 2017: 1001, 2018: 1065, 2019: 1133, 2020: 1210, 2021: 1293", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bb3b1b12-9674-4c60-906a-c67bef019820", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.68, "x": 0.28, "y": 0.03 }, "kind": "title", "text": "Evidence Suggests That Cintas Spring-Loaded G&K's Financial Results", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0bd6acdb-c48d-4dc8-800d-8712cd95bda2", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "a9c40327-df57-4bea-a460-d1f31e74b64f", "evidence": "Contrasting G&K CEO quote with Cintas CEO quote regarding revenue guidance.", "confidence": 0.9 } ], "arcBeats": [ { "to": 73, "from": 41, "beatId": "9295e289-b490-44ae-9536-0b75d2572428", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Victory", "beatSlug": "overcoming-monster-the-victory", "evidence": "The deck concludes with a clear call to action for investors and a valuation analysis.", "position": 3, "confidence": 0.8, "parentBeatName": "Turn", "parentBeatSlug": "turn" } ], "loops": [ { "to": 50, "from": 40, "name": "Hypothesis Test", "slug": "42-hypothesis-test", "bestFor": "Strategy validation, due diligence, research presentations", "matchId": "419bea6a-e653-4797-aa13-d8f59b9ebe1e", "evidence": "The deck presents evidence that Cintas' 'beat and raise' story is not justified.", "position": 2, "objective": "Is Cintas' 'beat and raise' story justified?", "structure": "The Hypothesis -> Test 1 (Supports/Refutes) -> Test 2 (Supports/Refutes) -> Conclusion (Validated/Pivoted)", "confidence": 0.8, "description": "State a hypothesis upfront, then systematically prove or disprove it with evidence" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }