Cintas' Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

Core Insights - Cintas Corporation (CTAS) reported first-quarter fiscal 2026 earnings of $1.20 per share, exceeding the Zacks Consensus Estimate of $1.19, with a year-over-year increase of 9.1% [1] - Total revenues reached $2.72 billion, surpassing the consensus estimate of $2.70 billion, and reflecting an 8.7% year-over-year growth driven by higher segmental revenues [1] Segmental Results - The Uniform Rental and Facility Services segment generated revenues of $2.09 billion, accounting for 76.9% of total sales, marking an 8.1% increase year over year [2] - The First Aid and Safety Services segment reported revenues of $334.7 million, representing 12.3% of total sales, with a year-over-year growth of 14.4% [3] - Revenues from All Other businesses totaled $292.4 million, making up 10.8% of total sales, and increased by 6.3% year over year [3] Margin Profile - Cintas' cost of sales rose 8.2% year over year to $1.35 billion, constituting 49.7% of net sales, while gross profit increased 9.1% to $1.37 billion, resulting in a gross margin of 50.3% compared to 50.1% in the previous year [4] - Selling and administrative expenses totaled $748.7 million, reflecting an 8.3% increase from the prior year, representing 27.5% of net sales [5] - Operating income increased by 10.1% year over year to $617.9 million, with an operating margin of 22.7% compared to 22.4% in the year-ago quarter [5] Balance Sheet & Cash Flow - As of the end of the first three months of fiscal 2026, Cintas had cash and cash equivalents of $138.1 million, down from $264 million at the end of fiscal 2025, while long-term debt slightly increased to about $2.43 billion [6] - The company generated net cash of $414.5 million from operating activities, a decrease of 10% year over year, with capital expenditures totaling $102 million, up 9.7% [7] - Free cash flow decreased by 14.9% year over year to $312.5 million, and share repurchases amounted to $266.1 million compared to $614.8 million in the previous year [7] FY26 Guidance - Cintas raised its fiscal 2026 revenue guidance to a range of $11.06-$11.18 billion, up from the previous estimate of $11-$11.15 billion, and EPS guidance was adjusted to $4.74-$4.86 from $4.71-$4.85 [9][10] - The company anticipates net interest expenses of approximately $97 million, compared to $95 million in fiscal 2025, with an expected effective tax rate of 20% [10]