10-QPeriod: Q3 FY2022

CINTAS CORP Quarterly Report for Q3 Ended Feb 28, 2022

Filed April 7, 2022For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported strong performance in its third quarter fiscal year 2022, ending February 28, 2022. Total revenue saw a significant increase of 10.3% year-over-year to $1.96 billion, driven by a robust 10.0% organic growth rate. This growth was primarily fueled by the Uniform Rental and Facility Services segment, which experienced a 9.6% revenue increase, and the First Aid and Safety Services segment and other businesses, which collectively saw a 13.4% rise in revenue. Net income for the quarter grew by 22.1% to $315.4 million, translating to a 25.3% increase in diluted earnings per share to $2.97. This impressive earnings growth was supported by improved operating margins and strategic share repurchases, which reduced the diluted weighted average common shares outstanding. The company's financial health remains strong, with a solid increase in operating income and a positive outlook, despite ongoing economic uncertainties.

Financial Highlights

49 data points
Beta

Revenue

$1.96B

Net Income

$315.45M

16.1% Net Margin

EPS (Diluted)

$0.74

Total Assets

$8.17B

Cash & Equivalents

$84.14M

Free Cash Flow

$336.05M

Financial Statements
Beta
Revenue$1.96B
SG&A Expenses$490.55M
Operating Income$407.61M
Interest Expense$22.03M
Net Income$315.45M
EPS (Basic)$0.76
EPS (Diluted)$0.74
Shares Outstanding (Basic)413.55M
Shares Outstanding (Diluted)422.56M

Key Highlights

  • 1Total revenue increased by 10.3% to $1.96 billion for the three months ended February 28, 2022, compared to $1.78 billion in the prior year period.
  • 2Organic revenue growth was a strong 10.0%, demonstrating healthy underlying business expansion.
  • 3Net income grew by 22.1% to $315.4 million, a significant increase from $258.4 million in the prior year.
  • 4Diluted earnings per share rose by 25.3% to $2.97, up from $2.37 in the comparable prior year period.
  • 5Operating income increased by 25.6% to $407.6 million, with operating margin expanding by 240 basis points to 20.8%.
  • 6The company repurchased approximately 1.4 million shares under its $1.5 billion buyback program during the nine months ended February 28, 2022, contributing to EPS growth.
  • 7Uniform Rental and Facility Services, the largest segment, showed a 9.6% revenue increase, while Other revenue (First Aid and Safety Services and All Other) grew by 13.4%.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in sales volume across its core segments, new business acquisition, penetration of additional products and services into existing customer base, and strategic price increases. The positive impact of acquisitions also contributed to the overall revenue growth.

Profitability significantly improved. Net income increased by 22.1% and diluted earnings per share rose by 25.3%. This was supported by a 240 basis point expansion in operating margin to 20.8%, resulting from increased revenue outpacing expense growth, improved gross margins, and a one-time gain on an equity method investment.

Cintas maintains a strong liquidity position, with significant cash flow from operations. The company expects operating cash flows to remain sufficient to fund operations, expansion activities, and dividends. Access to a $2.0 billion revolving credit facility further strengthens its financial flexibility. Acquisitions, share repurchases, and dividends remain strategic objectives, subject to economic outlook and liquidity.

The company noted that the ongoing rollout of COVID-19 vaccines and the gradual lifting of restrictions had a positive impact on its business during the three and nine months ended February 28, 2022, reversing some of the adverse effects experienced in fiscal year 2021. However, the impact of the pandemic remains fluid.