10-QPeriod: Q2 FY2024

CINTAS CORP Quarterly Report for Q2 Ended Nov 30, 2023

Filed January 8, 2024For Securities:CTAS

Summary

Cintas Corporation reported strong performance for the six months and three months ended November 30, 2023, demonstrating consistent growth across its key operating segments. Total revenue saw a significant increase, driven by robust organic growth in both Uniform Rental and Facility Services and First Aid and Safety Services. The company effectively managed its costs, leading to improved operating income and net income. Diluted earnings per share also showed a healthy increase, reflecting the strong operational performance. Financially, Cintas maintained a solid liquidity position with substantial cash flow from operations, supporting its capital expenditures, dividend payments, and share repurchase programs. The company's strategic investments in sales resources and infrastructure are contributing to its growth trajectory. Cintas remains confident in its ability to meet its financial obligations and pursue strategic objectives, including acquisitions and shareholder returns.

Financial Highlights

49 data points
Beta

Revenue

$2.38B

Net Income

$374.61M

15.8% Net Margin

EPS (Diluted)

$0.90

Total Assets

$8.81B

Cash & Equivalents

$85.56M

Free Cash Flow

$298.86M

Financial Statements
Beta
Revenue$2.38B
SG&A Expenses$641.87M
Operating Income$499.68M
Interest Expense$26.59M
Net Income$374.61M
EPS (Basic)$0.92
EPS (Diluted)$0.90
Shares Outstanding (Basic)406.67M
Shares Outstanding (Diluted)413.07M

Key Highlights

  • 1Total revenue increased by 9.3% to $2,377.2 million for the three months ended November 30, 2023, with an organic growth rate of 9.0%.
  • 2Net income for the three months ended November 30, 2023, rose by 15.5% to $374.6 million compared to the prior year period.
  • 3Diluted earnings per share (EPS) increased by 15.7% to $3.61 for the three months ended November 30, 2023.
  • 4Uniform Rental and Facility Services segment revenue grew by 8.2% to $1,850.5 million for the three months, with a 7.9% organic growth rate.
  • 5First Aid and Safety Services segment revenue increased by 12.9% to $266.4 million for the three months, with a 12.7% organic growth rate.
  • 6Net cash provided by operating activities for the six months ended November 30, 2023, was $729.6 million, an increase of 17.9% year-over-year.
  • 7The company repurchased $423.1 million of common stock during the six months ended November 30, 2023, indicating a strong commitment to returning capital to shareholders.

Frequently Asked Questions

Revenue growth was driven by strong organic performance in both the Uniform Rental and Facility Services (7.9% organic growth) and First Aid and Safety Services (12.7% organic growth) segments. This growth was attributed to new business acquisition, increased penetration of additional products and services into existing customer base, and strategic price increases, partially offset by lost business. Acquisitions also contributed positively to revenue growth.

The company demonstrated effective cost management. While costs for uniform rental and facility services increased primarily due to higher sales volume, cost of other improved as a percentage of revenue due to favorable sales mix and productivity initiatives. Selling and administrative expenses increased, reflecting investments in sales resources and talent acquisition for future growth, but operating income as a percentage of revenue improved due to operating leverage and efficiency gains.

Cintas maintains a strong financial position. Net cash provided by operating activities was $729.6 million for the six months ended November 30, 2023, indicating robust cash generation. The company has access to a $2.0 billion revolving credit facility, providing ample liquidity. Strategic investments in capital expenditures and ongoing share repurchase programs are being funded through operating cash flows and existing credit facilities, suggesting financial stability and a commitment to shareholder value.

Cintas is actively returning capital to shareholders through both dividends and share repurchases. The company paid dividends totaling $255.8 million for the six months ended November 30, 2023. Additionally, Cintas repurchased $423.1 million of its common stock during the same period, demonstrating a strong commitment to enhancing shareholder value.