Cintas(CTAS) - 2026 Q1 - Quarterly Results

Executive Summary & Financial Highlights Cintas Corporation reported strong financial results for the first quarter of fiscal 2026, with significant increases across revenue, gross margin, operating income, net income, and diluted EPS. The company also continued its share buyback program and increased quarterly dividends Fiscal 2026 First Quarter Financial Performance (YoY) | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :-------------------------------- | :---------- | :---------- | :------- | | Revenue | $2.72 billion | $2.50 billion | 8.7% | | Organic Revenue Growth Rate | - | - | 7.8% | | Gross Margin | $1.37 billion | $1.25 billion | 9.1% | | Gross Margin as % of Revenue | 50.3% | 50.1% | +20 bps | | Operating Income | $617.9 million | $561.0 million | 10.1% | | Operating Income as % of Revenue | 22.7% | 22.4% | +30 bps | | Net Income | $491.1 million | $452.0 million | 8.7% | | Diluted Earnings Per Share (EPS) | $1.20 | $1.10 | 9.1% | Shareholder Returns (Q1 FY2026) | Activity | Amount | | :------------------ | :------------- | | Share Buybacks | $347.4 million | | Quarterly Dividend Paid | $182.3 million | | Dividend Increase (YoY) | 15.4% | Management Commentary and Outlook CEO Todd M. Schneider highlighted strong Q1 performance driven by disciplined execution and strategic investments. The company is focused on operational excellence, investing in people and platforms for sustainable growth, and maintaining balanced capital allocation. Cintas has also raised its full fiscal year 2026 financial guidance for both revenue and diluted EPS - Cintas' President and CEO, Todd M. Schneider, attributed strong Q1 revenue growth and margin expansion to disciplined execution, ongoing investment in technology and talent, and employee-partner commitment, reflecting the strength of their value proposition[7] - The company is focused on operational excellence, investing in people and platforms to position Cintas for sustainable growth and long-term value creation, supported by robust cash flow generation and balanced capital allocation[8] Updated Fiscal Year 2026 Financial Guidance | Metric | Previous Guidance | Updated Guidance | | :---------------- | :---------------------- | :--------------------- | | Annual Revenue | $11.00 billion to $11.15 billion | $11.06 billion to $11.18 billion | | Diluted EPS | $4.71 to $4.85 | $4.74 to $4.86 | - The total revenue guidance assumes the same number of workdays as fiscal year 2025, no future acquisitions, and a constant foreign currency exchange rate[8] Company Profile and Webcast Information Cintas Corporation, a Fortune 500 company, provides a wide range of products and services to over one million businesses, helping them maintain clean, safe, and professional facilities and employees. The company also announced details for its fiscal 2026 first quarter results webcast - Cintas Corporation helps over one million businesses by providing products and services including uniforms, mats, mops, restroom supplies, workplace water services, first aid and safety products, safety training, and fire protection services[9] - Cintas is headquartered in Cincinnati, a publicly held Fortune 500 company traded on the Nasdaq Global Select Market under the symbol CTAS, and is a component of both the S&P 500 and Nasdaq-100 Indices[9] - A live webcast to review the fiscal 2026 first quarter results was scheduled for September 24, 2025, at 10:00 a.m. Eastern Time, available on Cintas' website, with a replay available for two weeks[9] Caution Concerning Forward-Looking Statements This section serves as a cautionary statement regarding forward-looking statements made in the press release, emphasizing that such statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations - The press release contains forward-looking statements, including fiscal 2026 full-year guidance, protected by the Private Securities Litigation Reform Act of 1995[10] - Forward-looking statements are based on current expectations and are subject to various risks, uncertainties, and assumptions that could cause actual results to differ[10] - Factors that might cause differences include operating costs, sales volumes, customer loss, acquisition integration, supply chain constraints, macroeconomic conditions, changes in trade policies, material and labor costs, regulatory compliance, exchange rate fluctuations, environmental liabilities, cybersecurity threats, and litigation[10] Additional Financial Guidance Details This section provides specific assumptions and expectations for Cintas' fiscal year 2026 financial guidance, particularly concerning net interest, effective tax rate, and the factors not included in the diluted EPS guidance - Fiscal year 2026 interest, net is expected to be approximately $97.0 million, an increase from $95.0 million in fiscal year 2025, primarily due to refinancing senior notes at a higher interest rate, partially offset by lower variable rate interest[11] - The expected interest, net may change based on future share buybacks or acquisition activity[11] - The fiscal year 2026 effective tax rate is expected to remain at 20.0%, consistent with fiscal year 2025[11] - The diluted EPS guidance does not include any future share buybacks or significant economic disruptions or downturns[11] Consolidated Condensed Statements of Income This section presents the unaudited consolidated condensed statements of income for Cintas Corporation for the three months ended August 31, 2025, and August 31, 2024, detailing revenue, costs, operating income, and net income Consolidated Condensed Statements of Income (Unaudited, In thousands except per share data) | | Three Months Ended | | | | :-------------------------------------- | :---------------- | :---------------- | :------- | | | August 31, 2025 | August 31, 2024 | % Change | | Revenue: | | | | | Uniform rental and facility services | $ 2,091,066 | $ 1,933,839 | 8.1% | | Other | 627,056 | 567,748 | 10.4% | | Total revenue | 2,718,122 | 2,501,587 | 8.7% | | Costs and expenses: | | | | | Cost of uniform rental and facility services | 1,052,553 | 981,163 | 7.3% | | Cost of other | 299,008 | 268,293 | 11.4% | | Selling and administrative expenses | 748,702 | 691,100 | 8.3% | | Operating income | 617,859 | 561,031 | 10.1% | | Interest income | (2,209) | (1,250) | 76.7% | | Interest expense | 24,161 | 25,619 | (5.7)% | | Income before income taxes | 595,907 | 536,662 | 11.0% | | Income taxes | 104,767 | 84,629 | 23.8% | | Net income | $ 491,140 | $ 452,033 | 8.7% | | Basic earnings per share | $ 1.21 | $ 1.12 | 8.0% | | Diluted earnings per share | $ 1.20 | $ 1.10 | 9.1% | | Basic weighted average common shares outstanding | 403,292 | 403,382 | | | Diluted weighted average common shares outstanding | 409,294 | 410,496 | | Supplemental Financial Data This section provides additional financial details, including a breakdown of gross margins by service type, a reconciliation of non-GAAP free cash flow, and a detailed segment-level performance analysis for the first quarter of fiscal 2026 and 2025 Gross Margin and Net Income Margin Results Analysis of gross margin performance for uniform rental and facility services, other services, and total gross margin, alongside the net income margin for the first quarter of fiscal 2026 compared to the prior year Gross Margin and Net Income Margin Results | | Three Months Ended | | :------------------------------------ | :---------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | Uniform rental and facility services gross margin | 49.7% | 49.3% | | Other gross margin | 52.3% | 52.7% | | Total gross margin | 50.3% | 50.1% | | Net income margin | 18.1% | 18.1% | Non-GAAP Financial Measures: Free Cash Flow This section reconciles net cash provided by operations (GAAP) to free cash flow (non-GAAP), which management uses to evaluate the company's financial performance and its ability to fund ongoing business operations and growth Computation of Free Cash Flow (In thousands) | | Three Months Ended | | :-------------------------- | :---------------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | Net cash provided by operations | $ 414,481 | $ 460,357 | | Capital expenditures | (101,957) | (92,921) | | Free cash flow | $ 312,524 | $ 367,436 | - Management uses free cash flow to assess the Company's financial performance, believing it is useful to investors as it relates operating cash flow to capital spent for continuing, improving, and growing business operations[19] Supplemental Segment Data Detailed financial data is provided for Cintas' key segments: Uniform Rental and Facility Services, First Aid and Safety Services, and All Other, showing revenue, cost of sales, gross margin, selling and administrative expenses, and operating income for the first quarter of fiscal 2026 and 2025 Supplemental Segment Data (In thousands) | | Uniform Rental and Facility Services | First Aid and Safety Services | All Other | Total | | :------------------------------------ | :-------------------------------- | :---------------------------- | :---------- | :---------- | | For the three months ended August 31, 2025 | | | | | | Revenue | $ 2,091,066 | $ 334,657 | $ 292,399 | $ 2,718,122 | | Cost of sales | 1,052,553 | 144,489 | 154,519 | 1,351,561 | | Gross margin | 1,038,513 | 190,168 | 137,880 | 1,366,561 | | Selling and administrative expenses | 538,576 | 109,841 | 100,285 | 748,702 | | Operating income | $ 499,937 | $ 80,327 | $ 37,595 | $ 617,859 | | For the three months ended August 31, 2024 | | | | | | Revenue | $ 1,933,839 | $ 292,567 | $ 275,181 | $ 2,501,587 | | Cost of sales | 981,163 | 123,764 | 144,529 | 1,249,456 | | Gross margin | 952,676 | 168,803 | 130,652 | 1,252,131 | | Selling and administrative expenses | 506,238 | 97,515 | 87,347 | 691,100 | | Operating income | $ 446,438 | $ 71,288 | $ 43,305 | $ 561,031 | Consolidated Condensed Balance Sheets This section presents the unaudited consolidated condensed balance sheets for Cintas Corporation as of August 31, 2025, and May 31, 2025, detailing assets, liabilities, and shareholders' equity Consolidated Condensed Balance Sheets (In thousands) | | August 31, 2025 | May 31, 2025 | | :------------------------------------------ | :---------------- | :---------------- | | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | $ 138,143 | $ 263,973 | | Accounts receivable, net | 1,421,047 | 1,417,381 | | Inventories, net | 449,739 | 447,408 | | Uniforms and other rental items in service | 1,172,321 | 1,137,361 | | Prepaid expenses and other current assets | 194,676 | 170,046 | | Total current assets | 3,375,926 | 3,436,169 | | Property and equipment, net | 1,677,021 | 1,652,474 | | Investments | 369,503 | 339,518 | | Goodwill | 3,410,729 | 3,400,227 | | Service contracts, net | 298,025 | 309,828 | | Operating lease right-of-use assets, net | 244,067 | 224,383 | | Other assets, net | 462,419 | 462,642 | | Total Assets | $ 9,837,690 | $ 9,825,241 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Current liabilities: | | | | Accounts payable | $ 462,315 | $ 485,109 | | Accrued compensation and related liabilities | 135,185 | 229,538 | | Accrued liabilities | 779,672 | 875,077 | | Income taxes, current | 78,956 | 4,034 | | Operating lease liabilities, current | 51,691 | 50,744 | | Total current liabilities | 1,507,819 | 1,644,502 | | Long-term liabilities: | | | | Debt due after one year | 2,425,757 | 2,424,999 | | Deferred income taxes | 484,443 | 471,740 | | Operating lease liabilities | 197,818 | 178,738 | | Accrued liabilities | 466,153 | 420,781 | | Total long-term liabilities | 3,574,171 | 3,496,258 | | Shareholders' equity: | | | | Common stock, no par value, and paid-in capital | 2,694,077 | 2,593,479 | | Retained earnings | 12,107,250 | 11,798,451 | | Treasury stock | (10,125,516) | (9,791,838) | | Accumulated other comprehensive income | 79,889 | 84,389 | | Total shareholders' equity | 4,755,700 | 4,684,481 | | Total Liabilities and Shareholders' Equity | $ 9,837,690 | $ 9,825,241 | Consolidated Condensed Statements of Cash Flows This section presents the unaudited consolidated condensed statements of cash flows for Cintas Corporation for the three months ended August 31, 2025, and August 31, 2024, detailing cash flows from operating, investing, and financing activities Consolidated Condensed Statements of Cash Flows (Unaudited, In thousands) | | Three Months Ended | | :---------------------------------------------------------- | :---------------- | :---------------- | | | August 31, 2025 | August 31, 2024 | | Cash flows from operating activities: | | | | Net income | $ 491,140 | $ 452,033 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation | 77,589 | 73,838 | | Amortization of intangible assets and capitalized contract costs | 48,348 | 46,554 | | Stock-based compensation | 30,348 | 33,367 | | Deferred income taxes | 13,496 | 1,887 | | Change in current assets and liabilities, net of acquisitions of businesses: | | | | Accounts receivable, net | (3,635) | (49,129) | | Inventories, net | (2,398) | 11,318 | | Uniforms and other rental items in service | (34,760) | (20,144) | | Prepaid expenses and other current assets and capitalized contract costs | (62,382) | (80,282) | | Accounts payable | (22,501) | 56,698 | | Accrued compensation and related liabilities | (94,275) | (86,965) | | Accrued liabilities and other | (101,114) | (44,268) | | Income taxes, current | 74,625 | 65,450 | | Net cash provided by operating activities | 414,481 | 460,357 | | Cash flows from investing activities: | | | | Capital expenditures | (101,957) | (92,921) | | Purchases of investments | (6,538) | (7,124) | | Acquisitions of businesses, net of cash acquired | (7,602) | (9,436) | | Other, net | (130) | 1 | | Net cash used in investing activities | (116,227) | (109,480) | | Cash flows from financing activities: | | | | Issuance of commercial paper, net | — | 166,000 | | Proceeds from exercise of stock-based compensation awards | 2,669 | 231 | | Dividends paid | (157,766) | (138,237) | | Repurchase of common stock | (266,097) | (614,802) | | Other, net | (2,807) | (4,461) | | Net cash used in financing activities | (424,001) | (591,269) | | Effect of exchange rate changes on cash and cash equivalents | (83) | (250) | | Net decrease in cash and cash equivalents | (125,830) | (240,642) | | Cash and cash equivalents at beginning of period | 263,973 | 342,015 | | Cash and cash equivalents at end of period | $ 138,143 | $ 101,373 |