CTAS Cintas Corporation

Cintas Corporation (Nasdaq: CTAS) today reported results for its fiscal 2025 first quarter ended August 31, 2024. Revenue for the first quarter of fiscal 2025 was $2.50 billion compared to $2.34 billion in last year’s first quarter. First quarter revenue growth was 6.8%, which was negatively impacted by one less workday in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024. On a same workday basis, first quarter revenue growth was 8.4%. The organic revenue growth rate for the first quarter of fiscal 2025, which adjusts for the impacts of acquisitions, foreign currency exchange rate fluctuations and differences in the number of workdays, was 8.0%.

Gross margin for the first quarter of fiscal 2025 was $1.25 billion compared to $1.14 billion in last year’s first quarter, an increase of 9.7%. Gross margin as a percentage of revenue was 50.1% for the first quarter of fiscal 2025 compared to 48.7% in last year's first quarter, an increase of 140 basis points. Energy expenses comprised of gasoline, natural gas and electricity were 20 basis points lower for the first quarter of fiscal 2025 compared to last year's first quarter.

Operating income for the first quarter of fiscal 2025 increased 12.1% to $561.0 million compared to $500.6 million in last year's first quarter. Operating income as a percentage of revenue was 22.4% in the first quarter of fiscal 2025 compared to 21.4% in last year's first quarter.

Net income was $452.0 million for the first quarter of fiscal 2025 compared to $385.1 million in last year's first quarter, an increase of 17.4%. The first quarter of fiscal 2025 effective tax rate was 15.8% compared to 19.2% in last year's first quarter. The tax rates in both quarters were impacted by certain discrete items, primarily the tax accounting impact for stock-based compensation. First quarter of fiscal 2025 diluted earnings per share (EPS) was $1.10 compared to $0.93 in last year's first quarter, an increase of 18.3%. The diluted EPS in each period is reflective of the impact of the four-for-one split of Cintas' common stock on September 11, 2024.

Cash flow from operating activities was $466.7 million for the first quarter of fiscal 2025 compared to $336.9 million in the first quarter of fiscal 2024, an increase of 38.5%. During the first quarter of fiscal 2025, Cintas purchased shares of Cintas common stock for a total purchase price of $473.6 million. Cintas increased its quarterly dividend per share of common stock by 15.6%, which resulted in an aggregate quarterly cash dividend payment on September 3, 2024 of $157.9 million to shareholders.

Todd M. Schneider, Cintas' President and Chief Executive Officer, stated, “Our first quarter fiscal 2025 results reflect the strength and breadth of Cintas’ value proposition for businesses of all types and stellar execution by our employee-partners. Cintas delivered revenue and earnings growth, continued margin expansion and strong cash generation, all of which enabled our balanced approach to capital allocation. Alongside returning capital to shareholders through our 41st consecutive annual dividend increase and significant share repurchase activity in the quarter, Cintas continued to reinvest in our customers and our employee-partners to ensure we are best positioned to deliver long-term value for our shareholders.”

Mr. Schneider concluded, "We are increasing our full fiscal year financial guidance. We are raising our annual revenue expectations from a range of $10.16 billion to $10.31 billion to a range of $10.22 billion to $10.32 billion and increasing our diluted EPS guidance from a range of $4.06 to $4.19 to a range of $4.17 to $4.25. Our raised fiscal 2025 outlook reflects the continued momentum we see across the business and the exceptional dedication of our employee-partners in helping our customers meet their image, safety, cleanliness and compliance needs. I look forward to another successful fiscal year.”

Please keep in mind there are two fewer workdays in fiscal 2025 compared to fiscal 2024. The following table helps illustrate the impact of two fewer workdays:

 

 

 

 

Initial Guidance

 

 

Updated Guidance

Fiscal 2025

Fiscal 2025

(in millions)

Fiscal 2024

 

 

Low end of Range

Growth vs. 2024

 

High end of Range

Growth vs. 2024

 

 

Low end of Range

Growth vs. 2024

 

High end of Range

Growth vs. 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A

 

 

B

E

 

H

I

 

 

L

M

 

P

Q

Total revenue

$ 9,596.6

 

 

$ 10,160.0

5.9%

 

$ 10,310.0

7.4%

 

 

$ 10,220.0

6.5%

 

$ 10,320.0

7.5%

 

 

 

 

 

E=(B-A)/A

 

 

I=(H-A)/A

 

 

 

M=(L-A)/A

 

 

Q=(P-A)/A

 

C

 

 

D

 

 

D

 

 

 

D

 

 

D

 

Workdays in the period

262

 

 

260

 

 

260

 

 

 

260

 

 

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A

 

 

F

G

 

J

K

 

 

N

O

 

R

S

Workday adjusted revenue

$ 9,596.6

 

 

$ 10,238.2

6.7%

 

$ 10,389.3

8.3%

 

 

$ 10,298.6

7.3%

 

$ 10,399.4

8.4%

 

 

 

 

F=(B/D)*C

E=(F-A)/A

 

F=(H/D)*C

K=(J-A)/A

 

 

N=(L/D)*C

O=(N-A)/A

 

R=(P/D)*C

S=(R-A)/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition impact

 

 

 

 

(0.3)%

 

 

(0.3)%

 

 

 

(0.3)%

 

 

(0.3)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Organic revenue growth

 

 

 

 

6.4%

 

 

8.0%

 

 

 

7.0%

 

 

8.1%

Please note the following regarding the total revenue guidance:

• Guidance does not assume any future acquisitions.

• Guidance assumes a constant foreign currency exchange rate.

For fiscal 2025, we are raising our diluted EPS expectations from a range of $4.06 to $4.19, after giving effect to the four-for-one stock split of Cintas' common stock on September 11, 2024, to a range of $4.17 to $4.25.

 

 

 

 

Initial Guidance

 

 

Updated Guidance

Fiscal 2025

Fiscal 2025

 

Fiscal 2024 (1)

 

 

Low end of Range

Growth vs. 2024

 

High end of Range

Growth vs. 2024

 

 

Low end of Range

Growth vs. 2024

 

High end of Range

Growth vs. 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

$

3.79

 

 

$

4.06

7.1

%

 

$

4.19

10.6

%

 

 

$

4.17

10.0

%

 

$

4.25

12.1

%

(1)

 

Fiscal 2024 diluted EPS reflects the four-for-one split of Cintas' common stock on September 11, 2024.

Please note the following regarding diluted EPS guidance:

• Fiscal year 2025 interest, net is expected to be approximately $101.0 million compared to $95.0 million in fiscal year 2024, predominately as a result of higher variable rate debt used to complete a portion of the previously mentioned share buybacks. This may change as a result of future share buybacks or acquisition activity.

• Fiscal year 2025 effective tax rate is expected to be 20.4%, the same compared to fiscal year 2024.

• Our diluted EPS guidance includes no future share buybacks or significant economic disruptions or downturn.

Cintas

Cintas Corporation helps more than one million businesses of all types and sizes get Ready™ to open their doors with confidence every day by providing products and services that help keep their customers’ facilities and employees clean, safe and looking their best. With offerings including uniforms, mats, mops, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety training, Cintas helps customers get Ready for the Workday®. Headquartered in Cincinnati, Cintas is a publicly held Fortune 500 company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of both the Standard & Poor’s 500 Index and Nasdaq-100 Index.

Cintas will host a live webcast to review the fiscal 2025 first quarter results today at 10:00 a.m., Eastern Time. The webcast will be available to the public on Cintas' website at www.Cintas.com. A replay of the webcast will be available approximately two hours after the completion of the live call and will remain available for two weeks.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This Press Release contains forward-looking statements regarding our future business plans and expectations, including the company's fiscal 2025 full-year guidance. The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the possibility of greater than anticipated operating costs including energy and fuel costs; lower sales volumes; loss of customers due to outsourcing trends; the performance and costs of integration of acquisitions; supply chain constraints and macroeconomic conditions, including inflationary pressures and higher interest rates; fluctuations in costs of materials and labor, including increased medical costs; costs and possible effects of union organizing activities; failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety; the effect on operations of exchange rate fluctuations, tariffs and other political, economic and regulatory risks; uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation; our ability to meet our aspirations relating to environmental, social and governance (ESG) opportunities, improvements and efficiencies; the cost, results and ongoing assessment of internal controls for financial reporting; the effect of new accounting pronouncements; risks associated with cybersecurity threats, including disruptions caused by the inaccessibility of computer systems data and cybersecurity management, the initiation or outcome of litigation, investigations or other proceedings; higher assumed sourcing or distribution costs of products; the disruption of operations from catastrophic or extraordinary events including global health pandemics; the amount and timing of repurchases of our common stock, if any; changes in global tax and labor laws; and the reactions of competitors in terms of price and service. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made, except otherwise as required by law. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2024 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us, or that we currently believe to be immaterial, may also harm our business.

Cintas Corporation

Consolidated Condensed Statements of Income

(Unaudited)

(In thousands except per share data)

 

 

 

Three Months Ended

 

 

August 31, 2024

 

August 31, 2023

 

% Change

Revenue:

 

 

 

 

 

 

Uniform rental and facility services

 

$

1,933,839

 

 

$

1,826,825

 

 

5.9

%

Other

 

 

567,748

 

 

 

515,505

 

 

10.1

%

Total revenue

 

 

2,501,587

 

 

 

2,342,330

 

 

6.8

%

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

Cost of uniform rental and facility services

 

 

981,163

 

 

 

947,583

 

 

3.5

%

Cost of other

 

 

268,293

 

 

 

253,176

 

 

6.0

%

Selling and administrative expenses

 

 

691,100

 

 

 

641,015

 

 

7.8

%

 

 

 

 

 

 

 

Operating income

 

 

561,031

 

 

 

500,556

 

 

12.1

%

 

 

 

 

 

 

 

Interest income

 

 

(1,250

)

 

 

(422

)

 

196.2

%

Interest expense

 

 

25,619

 

 

 

24,544

 

 

4.4

%

 

 

 

 

 

 

 

Income before income taxes

 

 

536,662

 

 

 

476,434

 

 

12.6

%

Income taxes

 

 

84,629

 

 

 

91,349

 

 

(7.4

)%

Net income

 

$

452,033

 

 

$

385,085

 

 

17.4

%

 

 

 

 

 

 

 

Basic earnings per share

 

$

1.12

 

 

$

0.94

 

 

19.1

%

 

 

 

 

 

 

 

Diluted earnings per share

 

$

1.10

 

 

$

0.93

 

 

18.3

%

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

403,382

 

 

 

407,580

 

 

 

Diluted weighted average common shares outstanding

 

 

410,496

 

 

 

414,289

 

 

 

CINTAS CORPORATION SUPPLEMENTAL DATA

Gross Margin and Net Income Margin Results

 

 

 

Three Months Ended

 

 

August 31, 2024

 

August 31, 2023

 

 

 

 

 

Uniform rental and facility services gross margin

 

49.3

%

 

48.1

%

Other gross margin

 

52.7

%

 

50.9

%

Total gross margin

 

50.1

%

 

48.7

%

Net income margin

 

18.1

%

 

16.4

%

Reconciliation of Non-GAAP Financial Measures

The press release contains non-GAAP financial measures within the meaning of the rules promulgated by the U.S. Securities and Exchange Commission. To supplement its consolidated condensed financial statements presented in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides these additional non-GAAP financial measures of free cash flow and organic revenue growth. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its past performance as well as prospects for future performance. A reconciliation of the differences between these non-GAAP financial measures with the most directly comparable financial measures calculated in accordance with GAAP are shown in the tables below.

Computation of Free Cash Flow

 

 

 

Three Months Ended

(In thousands)

 

August 31, 2024

 

August 31, 2023

 

 

 

 

 

Net cash provided by operations

 

$

466,732

 

 

$

336,945

 

Capital expenditures

 

 

(92,921

)

 

 

(106,697

)

Free cash flow

 

$

373,811

 

 

$

230,248

 

Management uses free cash flow to assess the financial performance of the Company. Management believes that free cash flow is useful to investors because it relates the operating cash flow of the Company to the capital that is spent to continue, improve and grow business operations.

Computation of Organic Revenue Growth

 

 

 

Three Months Ended

 

 

August 31, 2024

 

August 31, 2023

 

Growth %

 

 

A

 

B

 

G

Revenue

 

$

2,501,587

 

$

2,342,330

 

6.8

%

 

 

 

 

 

 

G=(A-B)/B

 

 

C

 

D

 

 

Workdays in the period

 

 

65

 

 

66

 

 

 

 

 

 

 

 

 

 

 

E

 

F

 

H

Workday adjusted revenue

 

$

2,540,073

 

$

2,342,330

 

8.4

%

 

 

E=(A/C)*D

 

F=(B/D)*D

 

H=(E-F)/F

 

 

 

 

 

 

 

Acquisition and foreign currency exchange impact, net

 

 

 

 

 

(0.4

)%

 

 

 

 

 

 

 

Organic revenue growth

 

 

 

 

 

8.0

%

Management believes that organic revenue growth is valuable to investors because it reflects the revenue performance compared to a prior period with the same number of revenue generating days and excludes the impact from acquisitions and foreign currency exchange rate fluctuations.

SUPPLEMENTAL SEGMENT DATA

   

(In thousands)

 

Uniform Rental and Facility Services

 

First Aid and Safety Services

 

All Other

 

Total

For the three months ended August 31, 2024

 

 

 

 

 

 

 

Revenue

 

$

1,933,839

 

$

292,567

 

$

275,181

 

$

2,501,587

Gross margin

 

$

952,676

 

$

168,803

 

$

130,652

 

$

1,252,131

Selling and administrative expenses

 

$

506,238

 

$

97,515

 

$

87,347

 

$

691,100

Operating income

 

$

446,438

 

$

71,288

 

$

43,305

 

$

561,031

 

 

 

 

 

 

 

 

 

For the three months ended August 31, 2023

 

 

 

 

 

 

 

Revenue

 

$

1,826,825

 

$

260,693

 

$

254,812

 

$

2,342,330

Gross margin

 

$

879,242

 

$

145,776

 

$

116,553

 

$

1,141,571

Selling and administrative expenses

 

$

472,713

 

$

86,196

 

$

82,106

 

$

641,015

Operating income

 

$

406,529

 

$

59,580

 

$

34,447

 

$

500,556

Cintas Corporation

Consolidated Condensed Balance Sheets

(In thousands except per share data)

 

 

 

August 31, 2024

 

May 31, 2024

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

101,373

 

 

$

342,015

 

Accounts receivable, net

 

 

1,293,791

 

 

 

1,244,182

 

Inventories, net

 

 

399,078

 

 

 

410,201

 

Uniforms and other rental items in service

 

 

1,061,065

 

 

 

1,040,144

 

Prepaid expenses and other current assets

 

 

188,085

 

 

 

148,665

 

Total current assets

 

 

3,043,392

 

 

 

3,185,207

 

 

 

 

 

 

Property and equipment, net

 

 

1,554,640

 

 

 

1,534,168

 

 

 

 

 

 

Investments

 

 

325,651

 

 

 

302,212

 

Goodwill

 

 

3,223,528

 

 

 

3,212,424

 

Service contracts, net

 

 

311,199

 

 

 

321,902

 

Operating lease right-of-use assets, net

 

 

190,965

 

 

 

187,953

 

Other assets, net

 

 

419,332

 

 

 

424,951

 

 

 

$

9,068,707

 

 

$

9,168,817

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

395,931

 

 

$

339,166

 

Accrued compensation and related liabilities

 

 

125,004

 

 

 

214,130

 

Accrued liabilities

 

 

717,093

 

 

 

761,283

 

Income taxes, current

 

 

84,622

 

 

 

18,618

 

Operating lease liabilities, current

 

 

46,537

 

 

 

45,727

 

Debt due within one year

 

 

615,702

 

 

 

449,595

 

Total current liabilities

 

 

1,984,889

 

 

 

1,828,519

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Debt due after one year

 

 

2,026,448

 

 

 

2,025,934

 

Deferred income taxes

 

 

474,461

 

 

 

475,512

 

Operating lease liabilities

 

 

149,345

 

 

 

146,824

 

Accrued liabilities

 

 

412,141

 

 

 

375,656

 

Total long-term liabilities

 

 

3,062,395

 

 

 

3,023,926

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Preferred stock, no par value:

 

 

—

 

 

 

—

 

400,000 shares authorized, none outstanding

Common stock, no par value, and paid-in capital:

 

 

2,415,723

 

 

 

2,305,301

 

1,700,000,000 shares authorized

FY 2025: 775,230,624 issued and 403,258,456 outstanding

FY 2024: 773,097,184 issued and 405,007,976 outstanding

Retained earnings

 

 

10,912,033

 

 

 

10,617,955

 

Treasury stock:

 

 

(9,389,711

)

 

 

(8,698,085

)

FY 2025: 371,972,168 shares

FY 2024: 368,089,208 shares

Accumulated other comprehensive income

 

 

83,378

 

 

 

91,201

 

Total shareholders’ equity

 

 

4,021,423

 

 

 

4,316,372

 

 

 

$

9,068,707

 

 

$

9,168,817

 

Cintas Corporation

Consolidated Condensed Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

August 31, 2024

 

August 31, 2023

Cash flows from operating activities:

 

 

 

 

Net income

 

$

452,033

 

 

$

385,085

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

 

73,838

 

 

 

67,613

 

Amortization of intangible assets and capitalized contract costs

 

 

41,366

 

 

 

39,199

 

Stock-based compensation

 

 

33,367

 

 

 

30,242

 

Deferred income taxes

 

 

1,887

 

 

 

(1,367

)

Change in current assets and liabilities, net of acquisitions of businesses:

 

 

 

 

Accounts receivable, net

 

 

(49,129

)

 

 

(43,892

)

Inventories, net

 

 

11,318

 

 

 

8,541

 

Uniforms and other rental items in service

 

 

(20,144

)

 

 

(7,414

)

Prepaid expenses and other current assets and capitalized contract costs

 

 

(68,719

)

 

 

(66,791

)

Accounts payable

 

 

56,698

 

 

 

12,443

 

Accrued compensation and related liabilities

 

 

(86,965

)

 

 

(124,408

)

Accrued liabilities and other

 

 

(44,268

)

 

 

(48,952

)

Income taxes, current

 

 

65,450

 

 

 

86,646

 

Net cash provided by operating activities

 

 

466,732

 

 

 

336,945

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

 

(92,921

)

 

 

(106,697

)

Purchases of investments

 

 

(7,124

)

 

 

(6,525

)

Acquisitions of businesses, net of cash acquired

 

 

(9,436

)

 

 

(55,651

)

Other, net

 

 

(4,851

)

 

 

(963

)

Net cash used in investing activities

 

 

(114,332

)

 

 

(169,836

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Issuance of commercial paper, net

 

 

166,000

 

 

 

—

 

Repayment of debt

 

 

—

 

 

 

(10,000

)

Proceeds from exercise of stock-based compensation awards

 

 

231

 

 

 

479

 

Dividends paid

 

 

(138,237

)

 

 

(117,565

)

Repurchase of common stock

 

 

(614,802

)

 

 

(73,276

)

Other, net

 

 

(5,984

)

 

 

(2,013

)

Net cash used in financing activities

 

 

(592,792

)

 

 

(202,375

)

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(250

)

 

 

(757

)

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(240,642

)

 

 

(36,023

)

Cash and cash equivalents at beginning of period

 

 

342,015

 

 

 

124,149

 

Cash and cash equivalents at end of period

 

$

101,373

 

 

$

88,126

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240925521842/en/

J. Michael Hansen, Executive Vice President & Chief Financial Officer - 513-972-2079

Jared S. Mattingley, Vice President, Treasurer & Investor Relations - 513-972-4195