01—Abstract
Summary
Summary of the 10-K filed July 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Cintas Corporation's 2023 Form 10-K highlights a strong fiscal year characterized by robust revenue growth and consistent profitability.
The company reported a 12.2% increase in total revenue, reaching $8.8 billiona, primarily driven by organic growth across its key segments: Uniform Rental and Facility Services, and First Aid and Safety Services. This growth was fueled by expanding its customer base, increasing penetration with existing clients, and strategic price adjustments. The Uniform Rental and Facility Services segment remains the largest contributor, showing a 10.8% revenue increase, while the First Aid and Safety Services segment demonstrated impressive growth of 14.3%.
Financially, Cintas maintained healthy operating income and net income growth, translating to diluted earnings per share of $12.99b, an 11.5% increase year-over-year. The company also returned significant value to shareholders through dividends and share repurchases, underscoring its financial strength and commitment to shareholder returns. Cintas' operational efficiency, evidenced by improved gross margins and effective cost management, positions it well to navigate economic uncertainties and continue its growth trajectory.
02—Key points
Key Highlights
- Total revenue increased by 12.2% to $8.8 billion in fiscal year 2023, driven by organic growth of 12.2%.
- Uniform Rental and Facility Services segment revenue grew by 10.8%, while First Aid and Safety Services revenue increased by 14.3%.
- Diluted earnings per share (EPS) rose by 11.5% to $12.99.
- Gross margin improved from 46.2% in fiscal 2022 to 47.3% in fiscal 2023, indicating improved operational efficiencies.
- The company returned approximately $469.8 million in dividends to shareholders and repurchased $398.9 million of its common stock during fiscal year 2023.
- Cintas maintained effective internal controls over financial reporting, with an unqualified audit opinion from its independent registered public accounting firm.
- The company ended the fiscal year with a strong liquidity position, reporting $1.6 billion in cash flow from operating activities and maintaining access to a $2.0 billion revolving credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Cintas Corp kept $0.15.
- Revenue$8.82B100.0%
- Cost of revenue−$4.64B52.7%
- Gross profit$4.17B47.3%
- Operating costs−$2.37B26.9%
- Operating income$1.80B20.4%
- Interest, other & tax−$454.7M5.2%
- Net income$1.35B15.3%
Where FY2023 revenue went
$8.82B- Cost of revenue: $4.64B, 53% of revenue
- SG&A: $2.37B, 27% of revenue
- Net income: $1.35B, 15% of revenue
- Interest, other & tax: $454.7M, 5.2% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed July 27, 2023Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $8.82B$7.85B | +12.2% |
| Cost of Revenue | $4.64B— | — |
| Gross Profit | $4.17B$3.63B | +14.9% |
| SG&A Expenses | $2.37B$2.04B | +15.9% |
| Operating Income | $1.80B$1.59B | +13.6% |
| Interest Expense | $111.23M$88.84M | +25.2% |
| Net Income | $1.35B$1.24B | +9.1% |
| EPS (Basic) | $3.30$2.98 | +10.7% |
| EPS (Diluted) | $3.25$2.91 | +11.6% |
| Shares Outstanding (Basic) | 406.58M412.69M | −1.5% |
| Shares Outstanding (Diluted) | 413.51M422.09M | −2.0% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Cintas' revenue growth in fiscal year 2023?
Cintas' revenue growth in fiscal year 2023 was primarily driven by organic growth, stemming from new business acquisition, increased penetration of additional products and services with existing customers, and strategic price increases. The company's expanded sales force and improved sales representative productivity also contributed significantly.
How did Cintas manage its operating costs in the face of inflationary pressures?
Cintas demonstrated effective cost management. While experiencing impacts from inflation such as higher labor, fuel, and transportation costs, the company was able to mitigate these pressures through pricing strategies and various efficiency initiatives. This resulted in an improvement in the cost of uniform rental and facility services as a percentage of revenue and favorable changes in the sales mix for other segments.
What is Cintas' approach to shareholder returns?
Cintas demonstrates a commitment to shareholder returns through a combination of regular dividend payments and share repurchases. In fiscal year 2023, the company declared and paid approximately $469.8 million in dividends and repurchased $398.9 million of its common stock under its authorized share buyback programs.
What are the main risks Cintas has identified for its business operations?
Cintas has identified several key risks, including negative global economic factors, increased competition, challenges in opening new cost-effective facilities, risks associated with its acquisition strategy, and reliance on suppliers. Additionally, the company is exposed to risks related to its extensive reliance on computer systems, cybersecurity threats, and the need to maintain effective internal controls. Regulatory compliance, environmental matters, and potential legal proceedings are also significant considerations.
06—Continue