10-QPeriod: Q2 FY2023

CINTAS CORP Quarterly Report for Q2 Ended Nov 30, 2022

Filed January 6, 2023For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported strong financial performance for the fiscal second quarter ended November 30, 2022. Total revenue increased by 13.1% year-over-year to $2.17 billion, driven by robust organic growth of 12.8%, indicating the company's ability to expand its customer base and penetrate existing accounts effectively. Both major segments, Uniform Rental and Facility Services and First Aid and Safety Services, demonstrated significant revenue growth. Net income rose by 10.1% to $324.3 million, translating to a diluted EPS of $3.12, a 13.0% increase compared to the prior year's quarter. This growth was supported by improved operating margins, efficient cost management, and a reduction in diluted weighted average common shares outstanding due to ongoing share repurchases. The company also highlighted strong operating cash flow and reaffirmed its liquidity position, signaling continued financial health and capacity for strategic investments and shareholder returns.

Financial Highlights

49 data points
Beta

Revenue

$2.17B

Net Income

$324.29M

14.9% Net Margin

EPS (Diluted)

$0.78

Total Assets

$8.43B

Cash & Equivalents

$89.80M

Free Cash Flow

$244.60M

Financial Statements
Beta
Revenue$2.17B
SG&A Expenses$577.51M
Operating Income$444.93M
Interest Expense$28.92M
Net Income$324.29M
EPS (Basic)$0.80
EPS (Diluted)$0.78
Shares Outstanding (Basic)406.55M
Shares Outstanding (Diluted)413.42M

Key Highlights

  • 1Total revenue for the quarter reached $2.17 billion, a 13.1% increase year-over-year, with strong organic growth of 12.8%.
  • 2Uniform Rental and Facility Services segment revenue grew 11.4% year-over-year, demonstrating continued demand for core services.
  • 3First Aid and Safety Services segment revenue saw a significant increase of 16.7% year-over-year, indicating strong performance in this diversification area.
  • 4Net income increased by 10.1% to $324.3 million, and diluted EPS grew by 13.0% to $3.12.
  • 5Operating income margin improved to 20.5% from 19.8% in the prior year's quarter, driven by improved gross margins and operating leverage.
  • 6The company continued its capital allocation strategy, with $348.7 million in share repurchases during the six-month period, contributing to the EPS growth.
  • 7Operating cash flow remained strong, providing ample liquidity for operations and strategic initiatives.

Frequently Asked Questions

The primary driver of Cintas' revenue growth was strong organic growth, which was 12.8% for the quarter. This was fueled by new business acquisition, increased penetration of additional products and services into existing customer accounts, and strategic price increases across its core segments, particularly Uniform Rental and Facility Services and First Aid and Safety Services.

Cintas managed its costs effectively, with cost of sales increasing at a slightly lower rate than revenue, leading to improved gross margins. While selling and administrative expenses increased primarily due to higher employee-related costs (including medical expenses), Cintas was able to offset some of this pressure through efficiencies in other areas, resulting in an overall improvement in operating income margin.

Cintas maintained strong operating cash flow and a solid liquidity position, supported by a $2.0 billion revolving credit facility. The company continues to prioritize strategic objectives such as acquisitions, share repurchases, and dividend payments, indicating confidence in its financial health and future prospects.

The company continues to report on its two main segments: Uniform Rental and Facility Services and First Aid and Safety Services, with Fire Protection Services and Uniform Direct Sales aggregated into 'All Other'. There were no material changes in accounting policies or new accounting pronouncements that significantly impacted the financial statements for this period.