10-QPeriod: Q2 FY2025

CINTAS CORP Quarterly Report for Q2 Ended Nov 30, 2024

Filed January 8, 2025For Securities:CTAS

Summary

Cintas Corporation (CTAS) reported strong financial performance for the second quarter of fiscal year 2025, demonstrating robust revenue growth and improved profitability. Total revenue increased by 7.8% to $2.56 billion for the three months ended November 30, 2024, driven by solid organic growth of 7.1% across its key segments, particularly Uniform Rental and Facility Services and First Aid and Safety Services. This top-line growth, combined with effective cost management and operational efficiencies, led to a significant increase in profitability. Net income rose by an impressive 19.7% to $448.5 million, translating to a diluted earnings per share of $1.09, up 21.1% from the prior year. The company also reported an improvement in operating margin to 23.1%, reflecting successful cost control measures and operating leverage. Cintas continues to execute on its growth strategies, including increasing penetration at existing customers and broadening its customer base, supported by strategic acquisitions and consistent capital allocation towards share repurchases and dividends.

Financial Highlights

50 data points
Beta

Revenue

$2.56B

49.8% Gross Margin

Net Income

$448.50M

17.5% Net Margin

EPS (Diluted)

$1.09

Total Assets

$9.37B

Cash & Equivalents

$122.39M

Free Cash Flow

$343.32M

Financial Statements
Beta
Revenue$2.56B
Cost of Revenue$1.29B
Gross Profit$1.28B
SG&A Expenses$685.31M
Operating Income$591.39M
Net Income$448.50M
EPS (Basic)$1.11
EPS (Diluted)$1.09
Shares Outstanding (Basic)403.58M
Shares Outstanding (Diluted)410.67M

Key Highlights

  • 1Total revenue grew 7.8% to $2.56 billion for the three months ended November 30, 2024, with organic revenue growth of 7.1%.
  • 2Net income increased by 19.7% to $448.5 million.
  • 3Diluted earnings per share (EPS) rose 21.1% to $1.09.
  • 4Operating income margin improved to 23.1% from 21.0% in the prior year's comparable period.
  • 5Uniform Rental and Facility Services revenue increased 7.6%, with organic growth of 6.9%.
  • 6First Aid and Safety Services revenue saw a substantial increase of 12.4%, with organic growth of 12.3%.
  • 7The company repurchased $651.5 million of common stock during the six months ended November 30, 2024, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

Cintas' revenue growth was primarily driven by a combination of organic growth across its core segments, particularly Uniform Rental and Facility Services and First Aid and Safety Services, as well as contributions from strategic acquisitions. New business acquisition, increased penetration of additional products and services into existing customer base, and price increases were also key factors.

Cintas demonstrated strong cost management by improving its cost of goods sold as a percentage of revenue in both its main segments. Efficiencies were achieved through gains in energy and in-service inventory usage, improved leverage of fixed costs, favorable sales mix, and sourcing and productivity initiatives. Selling and administrative expenses also improved as a percentage of revenue.

Cintas continues to return capital to shareholders through dividends and share repurchases. For the six months ended November 30, 2024, the company paid $295.6 million in dividends and repurchased $651.5 million of its common stock, indicating a consistent strategy of balancing growth investments with shareholder distributions.

The company highlighted several forward-looking risks including potential increases in operating costs (energy, fuel, materials, labor), macroeconomic conditions (inflation, interest rates), supply chain disruptions, changes in global trade policies, cybersecurity threats, and the outcome of litigation. Investors should monitor these factors as they could impact future financial performance.