Cintas Corporation (Nasdaq: CTAS) today reported results
for its fiscal 2024 second quarter ended November 30, 2023. Revenue
for the second quarter of fiscal 2024 was $2.38 billion compared to
$2.17 billion in last year’s second quarter, an increase of 9.3%.
The organic revenue growth rate for the second quarter of fiscal
2024, which adjusts for the impacts of acquisitions and foreign
currency exchange rate fluctuations, was 9.0%.
Gross margin for the second quarter of fiscal 2024 was $1.14
billion compared to $1.02 billion in last year’s second quarter, an
increase of 11.6%. Gross margin as a percentage of revenue was
48.0% for the second quarter of fiscal 2024 compared to 47.0% in
last year's second quarter, an increase of 100 basis points. Energy
expenses comprised of gasoline, natural gas and electricity were 40
basis points lower for the second quarter of fiscal 2024 compared
to last year's second quarter.
Selling and administrative expenses increased $64.4 million, or
11.1%, in the second quarter of fiscal 2024 compared to the same
period of the prior fiscal year. The increase reflects investments
in selling resources, technology and our management trainee
program.
Operating income for the second quarter of fiscal 2024 increased
12.3% to $499.7 million compared to $444.9 million in last year's
second quarter. Operating income as a percentage of revenue was
21.0% in the second quarter of fiscal 2024 compared to 20.5% in
last year's second quarter.
Net income was $374.6 million for the second quarter of fiscal
2024 compared to $324.3 million in last year's second quarter. The
second quarter of fiscal 2024 effective tax rate was 20.9% compared
to 22.1% in last year's second quarter. The tax rates in both
quarters were impacted by certain discrete items, primarily the tax
accounting impact for stock-based compensation. Second quarter of
fiscal 2024 diluted earnings per share (EPS) was $3.61 compared to
$3.12 in last year's second quarter, an increase of 15.7%.
On December 15, 2023, Cintas paid an aggregate quarterly cash
dividend of $137.5 million to shareholders, an increase of 17.1%
from the amount paid last December. In addition, we continue to be
opportunistic with our share buyback program. During the second
quarter, Cintas purchased 658,202 shares of Cintas common stock at
an average price of $486.58 per share, for a total purchase price
of $320.3 million.
Todd M. Schneider, Cintas' President and Chief Executive
Officer, stated, "We are pleased with our second quarter fiscal
2024 financial results. Each of our operating segments continue to
execute at a high level, leading to robust revenue growth of 9.3%,
high operating margin of 21.0% and diluted EPS growth of 15.7%.
This strong execution is the result of the exceptional dedication
of our employee-partners. Whether it's image, safety, cleanliness
or compliance, we have innovative products and services to help
businesses across North America stay focused on the work that
matters most."
Mr. Schneider concluded, "We are increasing our full fiscal year
financial guidance. We are raising our annual revenue expectations
from a range of $9.40 billion to $9.52 billion to a range of $9.48
billion to $9.56 billion and our diluted EPS from a range of $14.00
to $14.45 to a range of $14.35 to $14.65." Please note the
following regarding guidance:
- Fiscal year 2024 interest expense is expected to be
approximately $100.0 million compared to $109.5 million in fiscal
year 2023, predominately as a result of less variable rate debt.
This may change as a result of future share buybacks or acquisition
activity.
- Fiscal year 2024 effective tax rate is expected to be 21.3%
compared to a rate of 20.4% in fiscal year 2023. The higher
effective tax rate negatively impacts fiscal 2024 diluted EPS
guidance by approximately $0.16 and diluted EPS growth by
approximately 120 basis points.
- Our diluted EPS guidance includes no future share
buybacks.
- Guidance includes the impact of having one more workday in
fiscal year 2024 compared to fiscal year 2023.
Cintas
Cintas Corporation helps more than one million businesses of all
types and sizes get Ready™ to open their doors with
confidence every day by providing products and services that help
keep their customers’ facilities and employees clean, safe and
looking their best. With offerings including uniforms, mats, mops,
restroom supplies, first aid and safety products, fire
extinguishers and testing, and safety training, Cintas helps
customers get Ready for the Workday®. Headquartered in
Cincinnati, Cintas is a publicly held Fortune 500 company traded
over the Nasdaq Global Select Market under the symbol CTAS and is a
component of both the Standard & Poor’s 500 Index and
Nasdaq-100 Index.
Cintas will host a live webcast to review the fiscal 2024 second
quarter results today at 10:00 a.m., Eastern Time. The webcast will
be available to the public on Cintas' website at www.Cintas.com. A
replay of the webcast will be available approximately two hours
after the completion of the live call and will remain available for
two weeks.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a
safe harbor from civil litigation for forward-looking statements.
Forward-looking statements may be identified by words such as
“estimates,” “anticipates,” “predicts,” “projects,” “plans,”
“expects,” “intends,” “target,” “forecast,” “believes,” “seeks,”
“could,” “should,” “may” and “will” or the negative versions
thereof and similar words, terms and expressions and by the context
in which they are used. Such statements are based upon current
expectations of Cintas and speak only as of the date made. You
should not place undue reliance on any forward-looking statement.
We cannot guarantee that any forward-looking statement will be
realized. These statements are subject to various risks,
uncertainties, potentially inaccurate assumptions and other factors
that could cause actual results to differ from those set forth in
or implied by this Press Release. Factors that might cause such a
difference include, but are not limited to, the possibility of
greater than anticipated operating costs including energy and fuel
costs; lower sales volumes; loss of customers due to outsourcing
trends; the performance and costs of integration of acquisitions;
inflationary pressures and fluctuations in costs of materials and
labor, including increased medical costs; interest rate volatility;
costs and possible effects of union organizing activities; failure
to comply with government regulations concerning employment
discrimination, employee pay and benefits and employee health and
safety; the effect on operations of exchange rate fluctuations,
tariffs and other political, economic and regulatory risks;
uncertainties regarding any existing or newly-discovered expenses
and liabilities related to environmental compliance and
remediation; our ability to meet our goals relating to
environmental, social and governance (ESG) opportunities,
improvements and efficiencies; the cost, results and ongoing
assessment of internal controls for financial reporting; the effect
of new accounting pronouncements; disruptions caused by the
inaccessibility of computer systems data, including cybersecurity
risks; the initiation or outcome of litigation, investigations or
other proceedings; higher assumed sourcing or distribution costs of
products; the disruption of operations from catastrophic or
extraordinary events including global health pandemics such as the
COVID-19 coronavirus; the amount and timing of repurchases of our
common stock, if any; changes in federal and state tax and labor
laws; and the reactions of competitors in terms of price and
service. Cintas undertakes no obligation to publicly release any
revisions to any forward-looking statements or to otherwise update
any forward-looking statements whether as a result of new
information or to reflect events, circumstances or any other
unanticipated developments arising after the date on which such
statements are made, except otherwise as required by law. A further
list and description of risks, uncertainties and other matters can
be found in our Annual Report on Form 10-K for the year ended May
31, 2023 and in our reports on Forms 10-Q and 8-K. The risks and
uncertainties described herein are not the only ones we may face.
Additional risks and uncertainties presently not known to us, or
that we currently believe to be immaterial, may also harm our
business.
Cintas Corporation
Consolidated Condensed
Statements of Income
(Unaudited)
(In thousands except per share
data)
Three Months Ended
November 30,
2023
November 30, 2022
% Change
Revenue:
Uniform rental and facility services
$
1,850,542
$
1,709,987
8.2%
Other
526,635
464,871
13.3%
Total revenue
2,377,177
2,174,858
9.3%
Costs and expenses:
Cost of uniform rental and facility
services
974,231
906,727
7.4%
Cost of other
261,398
245,684
6.4%
Selling and administrative expenses
641,865
577,513
11.1%
Operating income
499,683
444,934
12.3%
Interest income
(769
)
(344
)
123.5%
Interest expense
26,590
28,920
(8.1)%
Income before income taxes
473,862
416,358
13.8%
Income taxes
99,249
92,065
7.8%
Net income
$
374,613
$
324,293
15.5%
Basic earnings per share
$
3.67
$
3.18
15.4%
Diluted earnings per share
$
3.61
$
3.12
15.7%
Basic weighted average common shares
outstanding
101,667
101,637
Diluted weighted average common shares
outstanding
103,266
103,356
Cintas Corporation
Consolidated Condensed
Statements of Income
(Unaudited)
(In thousands except per share
data)
Six Months Ended
November 30,
2023
November 30, 2022
% Change
Revenue:
Uniform rental and facility services
$
3,677,367
$
3,407,759
7.9%
Other
1,042,140
933,553
11.6%
Total revenue
4,719,507
4,341,312
8.7%
Costs and expenses:
Cost of uniform rental and facility
services
1,921,814
1,797,493
6.9%
Cost of other
514,574
493,260
4.3%
Selling and administrative expenses
1,282,880
1,165,505
10.1%
Operating income
1,000,239
885,054
13.0%
Interest income
(1,191
)
(499
)
138.7%
Interest expense
51,134
56,640
(9.7)%
Income before income taxes
950,296
828,913
14.6%
Income taxes
190,598
152,931
24.6%
Net income
$
759,698
$
675,982
12.4%
Basic earnings per share
$
7.43
$
6.63
12.1%
Diluted earnings per share
$
7.32
$
6.51
12.4%
Basic weighted average common shares
outstanding
101,781
101,530
Diluted weighted average common shares
outstanding
103,418
103,343
CINTAS CORPORATION SUPPLEMENTAL DATA
Gross Margin and Net Income
Margin Results
Three Months Ended
Six Months Ended
November 30,
2023
November 30, 2022
November 30,
2023
November 30, 2022
Uniform rental and facility services gross
margin
47.4%
47.0%
47.7%
47.3%
Other gross margin
50.4%
47.2%
50.6%
47.2%
Total gross margin
48.0%
47.0%
48.4%
47.2%
Net income margin
15.8%
14.9%
16.1%
15.6%
Reconciliation of Non-GAAP Financial
Measures and Regulation G Disclosure
The press release contains non-GAAP financial measures within
the meaning of Regulation G promulgated by the Securities and
Exchange Commission. To supplement its consolidated condensed
financial statements presented in accordance with U.S. generally
accepted accounting principles (GAAP), the Company provides the
additional non-GAAP financial measure of cash flow. The Company
believes that this non-GAAP financial measure is appropriate to
enhance understanding of its past performance as well as prospects
for future performance. A reconciliation of the difference between
this non-GAAP financial measure with the most directly comparable
financial measure calculated in accordance with GAAP is shown in
the table below.
Computation of Free Cash
Flow
Six Months Ended
(In thousands)
November 30,
2023
November 30, 2022
Net cash provided by operations
$
729,631
$
619,149
Capital expenditures
(200,527
)
(146,404
)
Free cash flow
$
529,104
$
472,745
Management uses free cash flow to assess the financial
performance of the Company. Management believes that free cash flow
is useful to investors because it relates the operating cash flow
of the Company to the capital that is spent to continue, improve
and grow business operations.
SUPPLEMENTAL SEGMENT DATA
(In thousands)
Uniform Rental and Facility
Services
First Aid and Safety Services
All Other
Corporate
Total
For the three months ended November 30,
2023
Revenue
$
1,850,542
$
266,401
$
260,234
$
—
$
2,377,177
Gross margin
$
876,311
$
145,316
$
119,921
$
—
$
1,141,548
Selling and administrative expenses
$
476,700
$
86,785
$
78,380
$
—
$
641,865
Interest income
$
—
$
—
$
—
$
(769
)
$
(769
)
Interest expense
$
—
$
—
$
—
$
26,590
$
26,590
Income (loss) before income taxes
$
399,611
$
58,531
$
41,541
$
(25,821
)
$
473,862
For the three months ended November 30,
2022
Revenue
$
1,709,987
$
235,974
$
228,897
$
—
$
2,174,858
Gross margin
$
803,260
$
119,153
$
100,034
$
—
$
1,022,447
Selling and administrative expenses
$
434,165
$
73,658
$
69,690
$
—
$
577,513
Interest income
$
—
$
—
$
—
$
(344
)
$
(344
)
Interest expense
$
—
$
—
$
—
$
28,920
$
28,920
Income (loss) before income taxes
$
369,095
$
45,495
$
30,344
$
(28,576
)
$
416,358
For the six months ended November 30,
2023
Revenue
$
3,677,367
$
527,094
$
515,046
$
—
$
4,719,507
Gross margin
$
1,755,553
$
291,092
$
236,474
$
—
$
2,283,119
Selling and administrative expenses
$
949,414
$
172,980
$
160,486
$
—
$
1,282,880
Interest income
$
—
$
—
$
—
$
(1,191
)
$
(1,191
)
Interest expense
$
—
$
—
$
—
$
51,134
$
51,134
Income (loss) before income taxes
$
806,139
$
118,112
$
75,988
$
(49,943
)
$
950,296
For the six months ended November 30,
2022
Revenue
$
3,407,759
$
470,135
$
463,418
$
—
$
4,341,312
Gross margin
$
1,610,266
$
235,290
$
205,003
$
—
$
2,050,559
Selling and administrative expenses
$
876,400
$
148,949
$
140,156
$
—
$
1,165,505
Interest income
$
—
$
—
$
—
$
(499
)
$
(499
)
Interest expense
$
—
$
—
$
—
$
56,640
$
56,640
Income (loss) before income taxes
$
733,866
$
86,341
$
64,847
$
(56,141
)
$
828,913
Cintas Corporation
Consolidated Condensed Balance
Sheets
(In thousands except per share
data)
November 30,
2023
May 31, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
85,556
$
124,149
Accounts receivable, net
1,273,974
1,152,993
Inventories, net
474,840
506,604
Uniforms and other rental items in
service
1,035,717
1,011,918
Prepaid expenses and other current
assets
166,652
142,795
Total current assets
3,036,739
2,938,459
Property and equipment, net
1,463,826
1,396,476
Investments
270,006
247,191
Goodwill
3,120,506
3,056,201
Service contracts, net
329,511
346,574
Operating lease right-of-use assets,
net
179,154
178,464
Other assets, net
414,127
382,991
$
8,813,869
$
8,546,356
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
316,697
$
302,292
Accrued compensation and related
liabilities
154,452
239,086
Accrued liabilities
619,288
632,504
Income taxes, current
13,102
12,470
Operating lease liabilities, current
44,063
43,710
Debt due within one year
210,000
—
Total current liabilities
1,357,602
1,230,062
Long-term liabilities:
Debt due after one year
2,474,287
2,486,405
Deferred income taxes
497,198
498,356
Operating lease liabilities
138,936
138,278
Accrued liabilities
351,365
329,269
Total long-term liabilities
3,461,786
3,452,308
Shareholders’ equity:
Preferred stock, no par value: 100,000
shares authorized, none outstanding
—
—
Common stock, no par value, and paid-in
capital: 425,000,000 shares authorized FY 2024: 192,861,307 issued
and 101,347,603 outstanding FY 2023: 192,198,938 issued and
101,732,148 outstanding
2,179,951
2,031,542
Retained earnings
10,081,267
9,597,315
Treasury stock: FY 2024: 91,513,704 shares
FY 2023: 90,466,790 shares
(8,360,076
)
(7,842,649
)
Accumulated other comprehensive income
93,339
77,778
Total shareholders’ equity
3,994,481
3,863,986
$
8,813,869
$
8,546,356
Cintas Corporation
Consolidated Condensed
Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
November 30,
2023
November 30, 2022
Cash flows from operating
activities:
Net income
$
759,698
$
675,982
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
136,803
126,561
Amortization of intangible assets and
capitalized contract costs
79,235
74,693
Stock-based compensation
53,182
51,537
Deferred income taxes
(7,105
)
18,565
Change in current assets and liabilities,
net of acquisitions of businesses:
Accounts receivable, net
(120,881
)
(133,897
)
Inventories, net
32,093
(43,266
)
Uniforms and other rental items in
service
(21,649
)
(73,475
)
Prepaid expenses and other current assets
and capitalized contract costs
(80,056
)
(85,532
)
Accounts payable
14,981
61,421
Accrued compensation and related
liabilities
(86,725
)
(28,212
)
Accrued liabilities and other
(30,453
)
(33,352
)
Income taxes, current
508
8,124
Net cash provided by operating
activities
729,631
619,149
Cash flows from investing
activities:
Capital expenditures
(200,527
)
(146,404
)
Purchases of investments
(7,475
)
(5,182
)
Acquisitions of businesses, net of cash
acquired
(73,997
)
(15,457
)
Other, net
(196
)
(4,381
)
Net cash used in investing activities
(282,195
)
(171,424
)
Cash flows from financing
activities:
Issuance of commercial paper, net
210,000
124,046
Repayment of debt
(13,450
)
—
Proceeds from exercise of stock-based
compensation awards
929
2,125
Dividends paid
(255,839
)
(215,017
)
Repurchase of common stock
(423,128
)
(348,682
)
Other, net
(4,322
)
(8,840
)
Net cash used in financing activities
(485,810
)
(446,368
)
Effect of exchange rate changes on cash
and cash equivalents
(219
)
(2,029
)
Net decrease in cash and cash
equivalents
(38,593
)
(672
)
Cash and cash equivalents at beginning of
period
124,149
90,471
Cash and cash equivalents at end of
period
$
85,556
$
89,799
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231221596115/en/
J. Michael Hansen, Executive Vice President & Chief
Financial Officer - 513-972-2079 Jared S. Mattingley, Vice
President, Treasurer & Investor Relations - 513-972-4195
Cintas (NASDAQ:CTAS)
Historical Stock Chart
From Apr 2024 to May 2024
Cintas (NASDAQ:CTAS)
Historical Stock Chart
From May 2023 to May 2024